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Annual Report 2013

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Corporate Directory GME Resources Ltd ABN 62 009 260 315 Directors Michael Delaney PERROTT AM B.Com, Chairman James Noel SULLIVAN FAICD, Managing Director Peter Ross SULLIVAN BE, MBA, Director Company Secretary Mark Pitts B.Bus FCA Registered Office and Principal Place of Business 247 Balcatta Rd Balcatta WA 6021 Telephone: (08) 9273 1204 (08) 9315 5475 Facsimile: Web Site: www.gmeresources.com.au Auditors HLB Mann Judd Chartered Accountants Level 4, 130 Stirling Street Perth WA 6000 Share Registry Computershare Registry Services Pty Ltd Level 2, Reserve Bank Building 45 St George’s Terrace Perth WA 6000 GPO Box D182 Perth WA 6001 Telephone: (08) 9323 2000 (08) 9323 2033 Facsimile: Securities Exchange Listing The Company’s shares are quoted on the Official List of Australian Securities Exchange Limited Ticker code: GME State of Registration Western Australia Table of Contents Chairman’s Letter Operations Report 2013 Corporate Governance Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Information 1 2 17-22 24-29 30 31 32 33 34 35-51 52 53-54 55 Chairman’s Letter Dear Shareholder Your Directors continue to be encouraged by the quality of our primary asset, the NiWest nickel laterite project. More work is being done globally with nickel laterite which has led to increased confidence in the potential to extract nickel using the heap leach method. I draw your attention to the encouraging metallurgical results the company has achieved through the past year. The increasing confidence and technical development is further assisted by the location of our assets which are subject to Western Australian and Australian laws and regulations. When comparing other resource locations throughout the world with the regulatory and physical environment of our assets one concludes that the project is well located. This provides considerable security to those whom we will work with to develop these resources. In the annual report you will note the considerable additional work which has been done to further support our ability to treat the ore .The test work completed demonstrates the mineralisation contained within the NiWest resources is highly leachable. Combined with the proposed changes to the processing circuit design we believe the engineering study currently underway is the appropriate step forward for the Company. I’d like to thank my fellow Board members once again for their strong and active involvement in the management of the company and the development of the project. In particular I’d like to recognise Mr Geoff Motteram, who stood down from the Board but remains a shareholder and active supporter of the project. We wish Mr Motteram every success in his retirement. We look forward to seeing you at our AGM. Yours faithfully Michael Perrott AM Chairman Page 1 - GME Resources Ltd - Annual Report 2013 Operations Report 2013 “Heap Leaching combined with Direct Solvent Extraction and Electrowinning is a potential game changer for GME’s NiWest Project. The new process adopted by the Company has the capacity to unlock a significant resource of nickel through a simplified low risk process route within a low capital and operating cost environment when compared to traditional nickel laterite process routes. Combining these elements with all of the other unique attributes of the NiWest Project, the development case for a project of this standing is very compelling.” NiWest Nickel Laterite Project: (GME - 100%) Attributes of the NiWest Nickel Laterite Project: • • • • • • • • • • • • Low Sovereign Risk – North Eastern Goldfields of Western Australia Globally Significant Resource (JORC 2004) – 75 million tonnes averaging 1% Nickel and 0.06% Cobalt with over 70% drill tested to measured and indicated categories (0.8% Ni cut-off grade). Sufficient resources to support 20 year operation at a production rate of 3.5 million tonnes per annum Heap Leach Development – simple process, low tech, low capital intensity and low operating cost environment. Extensive column test work completed indicating up to 75% Ni extraction is achievable Scoping Study in progress for Heap Leach Plant and Processing Circuit utilising Direct Solvent Extraction and Electrowinning to produce LME Nickel cathode. Production Target – Heap Leaching Operation - 3.5 million tonnes per annum generating 25,000 tonnes of LME grade Nickel per annum Significant de risking with world first nickel laterite heap leach development commercialised on similar ore types at Glencore Xstrata’s Murrin Murrin Nickel Refinery adjacent to the NiWest Project Existing Major Infrastructure – Open access rail linked to deep water ports, gas pipeline, bitumen road, serviced mining towns. Ideal Heap Leach Environment – Semi desert, unpopulated, flat terrain Development of proprietary Intellectual Property to enhance acid consumption rates Solid Tenure – All resources located on Granted Mining Leases Feasibility Study partially completed includes environmental studies/surveys and delineation of water resources including water license, mine scheduling and trial mine permitting. Page 2 - GME Resources Ltd - Annual Report 2013 2011 Project Overview GME through its 100% owned subsidiary, NiWest Limited owns the NiWest Nickel Laterite Project located at Murrin Murrin in the North Eastern Goldfields of Western Australia. The project contains 100 million tonnes of nickel laterite resource located from surface to 60 metres depth that can be exploited by low strip ratio open pit mining. Resources located at seven areas within close proximity have been extensively drilled tested. A data base of over 4,000 bore holes for 165,000 metres of drilling have been utilised by independent consultants to calculate resource estimates. Over 70% of the resources are drill tested to Measured and Indicated category under JORC 2004. Over the past five years the Company has completed numerous laboratory column test programs simulating a Heap Leach (HL) operation. Results from these programs have consistently returned nickel extraction rates between 70 and 80%. The graphs on following pages demonstrate the typical nickel extraction rates from 4 metre column test programs completed on Hepi, Mt Kilkenny and Eucalyptus (includes Camelback) ore samples. As a result of the successful column leach test programs, the Company completed (2007) a Pre-Feasibility Study (PFS) on developing a 1.5 million tonne per annum heap leach operation. The PFS completed by Aker Kvaerner demonstrated the development of a heap leach project at NiWest was technically feasible and economically attractive. Following a strategic review which included results from the PFS, the NiWest resources base and further encouraging column test results, the scale of the NiWest Project was increased significantly. In 2008 the Company commenced work on a Feasibility Study aimed at optimising the NiWest resources through the development of a large scale heap leach operation targeting an annual production rate of 3.5 million tonnes. Based on a mining head grade averaging 1% nickel, there are sufficient resources to sustain a 20 year mining operation. Work on the Feasibility Study was wound down in 2010 following sustained down turn in global commodity and capital markets. Considerable work was completed up to this point that included infill resource drilling, water resource drilling including a 2.0GL per annum water license, mine scheduling, waste characterisation and environmental surveys covering base line biological flora, fauna and vertebrate. Approval for a trial mine was also granted at the Hepi project. 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(cid:69)(cid:117)(cid:99)(cid:97)(cid:108)(cid:121)(cid:112)(cid:116)(cid:117)(cid:115)(cid:32)(cid:80)(cid:114)(cid:111)(cid:106)(cid:101)(cid:99)(cid:116) (cid:79)(cid:98)(cid:108)(cid:105)(cid:113)(cid:117)(cid:101)(cid:32)(cid:86)(cid:105)(cid:101)(cid:119)(cid:32)(cid:48)(cid:46)(cid:56)(cid:37)(cid:32)(cid:78)(cid:105)(cid:32)(cid:69)(cid:110)(cid:118)(cid:101)(cid:108)(cid:111)(cid:112)(cid:101) (cid:50)(cid:56)(cid:46)(cid:49)(cid:50)(cid:32)(cid:77)(cid:105)(cid:108)(cid:108)(cid:105)(cid:111)(cid:110)(cid:32)(cid:84)(cid:111)(cid:110)(cid:110)(cid:101)(cid:115) (cid:65)(cid:118)(cid:101)(cid:114)(cid:97)(cid:103)(cid:105)(cid:110)(cid:103)(cid:32)(cid:49)(cid:46)(cid:48)(cid:37)(cid:32)(cid:78)(cid:105)(cid:99)(cid:107)(cid:101)(cid:108) Eucalyptus Project: 0.8% Ni Resource envelope -28 million tonnes averaging 1% Ni. Page 4 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED De-Risking the Project Extensive metallurgical test work has been completed on the NiWest nickel laterite ores to date, indicating that they are amenable to heap leaching. Adding further support to the viability of developing a heap leaching project utilising nickel laterites in the Murrin Murrin region was the recent commercialisation of the World’s first fully integrated Nickel Heap Leach operation at the adjacent Murrin Murrin Nickel Refinery. The Company believes that the successful heap leach project at Glencore Xstrata’s Murrin Murrin Nickel Refinery provides substantial de risking at the front end of the operation and strengthens confidence that this low cost, low tech processing option is the optimal development route for the NiWest project. In June the Company appointed MWorx Pty Ltd as metallurgical consultants. Principal, Mr David Readett is a Metallurgical Engineer with over 25 years’ experience in hydrometallurgy specialising in heap leach, solvent extraction and electrowinning technologies. Mr Readett’s most recent position was a six year management role in the Project Development Group at the Murrin Murrin Nickel Refinery that included the development of the nickel heap leach operation on the site. Nickel Extraction v Time % i N , n o i t t c a r t x E % i N , n o i t c a r t t x E 100 90 80 70 60 50 40 30 20 10 0 100 90 80 70 60 50 40 30 20 10 0 Eucalyptus Central Eucalyptus North Camel Back Hepi with floc Hepi Kilkenny 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 Time, days Time days Nickel Extraction v Time Hepi # 1 Comp. MK North # 1 Comp. MK Central # 1 Comp. Mk North # 2 0 20 40 60 80 Time, days 100 120 140 160 Above graphs demonstrate the typical nickel extraction rates from 4 metre column test programs completed on Hepi, Mt Kilkenny and Eucalyptus (includes Camelback) ore samples. Page 5 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED Rational to Metallurgical Test Program Following a review of previous studies and the flow sheet adopted for the large scale plant, the Company elected to undertake a new metallurgical program to test an alternative processing route known as Direct Solvent Extraction (DSX) aimed at simplifying the processing plant and reducing projected development and operating costs for the proposed heap leach project. The original flow sheet adopted for the PFS and FS was designed around a processing circuit that produced a Mixed Sulphide Product which is a high value nickel concentrate (+50%Ni). Whilst this product is highly sort after by refiners, the loss of approximately 20% of the contained nickel value to refining charges impacts significantly on the project economics. The approach to DSX calls for standard iron removal followed by direct application of solvent extraction followed by electro- winning to produce LME grade nickel cathode and a cobalt carbonate bi-product. Other than the obvious benefit gained by producing LME cathode, the DSX process removes capital intensive steps of intermediate product and intermediate product dissolution for refining and metal production, making the development capital more akin to an oxide copper heap leach project. precipitation Based on the above factors the Company formed the view that there were substantial economic and operational benefits to be gained by testing the applicability of DSX EW processing route for the NiWest Project. A schematic of the proposed flow sheet is provided to the right. 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(cid:114)(cid:101)(cid:119)(cid:111)(cid:80) (cid:80)(cid:111)(cid:119)(cid:101)(cid:114) Results from Metallurgical Test Program The first stage of the test work involved running a series of column leach tests to simulate a four stage counter current heap leach generating pregnant nickel solution (PLS). The column tests demonstrated that high nickel extraction rates can be expected from heap leaching the NiWest laterite ores with 79% nickel and 22% cobalt taken up in the PLS, replicating results from previous test work completed. 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With tight control of pH levels the test work demonstrated that iron and aluminium can be precipitated with no loss of nickel or cobalt. Page 6 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED In stage three of the program, Solvent Extraction shake out tests were performed using a range of pH. These tests have indicated that a 90% (per stage) pick up of nickel and cobalt can be achieved with no pick up of calcium and all remaining Aluminium was also picked up in the SX stage. The test work showed the potential to generate a purified and upgraded Ni solution suitable for electrowinning. It was not considered necessary to undertake electrowinning tests at this stage. The test work also produced positive results from the Company’s Acid Regeneration Process (patent application lodged) indicating that a 25-30% reduction in acid consumption may be achievable. This is significant, in that acid costs are expected to represent 40 -50% of the heap leach operating costs. The test work demonstrated that: • • • • • • Counter current column tests on NiWest ore indicate +75% Ni extraction rates are achievable High metal strengths in PLS can be achieved using counter current approach Iron and Aluminium removal can be achieved from the heap leach PLS via pH control Potential exists to minimise limestone consumption using for stage final neutralisation heap Strong potential exists to reduce acid consumption utilising the Company Acid Regeneration process Solvent Extraction has been demonstrated to be able to recover Nickel and Cobalt directly from the neutralised heap leach PLS Scoping Study To progress the development of the new processing flow chart, and prior to proceeding with large scale test work the Company has engaged to complete a Scoping Study that will capital and the investigate operating costs for a heap leach operation utilising Direct Solvent Extraction and Electrowinning applicable to the NiWest Project. engineers two The Company has completed numerous large scale column tests that consistently indicate nickel extraction rates between 70 and 80% are achievable. MWorx has been appointed as the Metallurgical Engineer to oversee the study in conjunction with Tenova Bateman Technologies who are globally recognised as a technology developer with engineering capability and experience in the design and delivery of SXEW plants. Page 7 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED The Scoping Study will be based on a 3.5 million tonne per annum heap leach operation optimising 1% nickel and 0.06% cobalt head grades. The study will also consider a range of smaller start-up operations utilising reagents that are available locally that could scaled up to the optimum size. The study will include the following; • • • • • • • • Conceptual Flow Sheet Preliminary Mass Balance Conceptual Layout Process Description Order of Magnitude Capital Costs Order of Magnitude Operating Costs Preliminary Equipment List Scope of work for large scale metallurgical test program to provide detailed design data for SX EW plant. The Company expects to report the results from the scoping study by December 2013. At this point the company will be in a better position to outline its plan and the timing as to advancing the large scale metallurgical test program and re commencing work on the feasibility study. NiWest Nickel Laterite Project Resource (JORC 2004) Statement at various Ni cut of grades 0.7% COG CATEGORY TOTAL Measured Indicated Inferred Combined 0.8% COG CATEGORY TOTAL Measured Indicated Inferred Combined 1.0% COG CATEGORY TOTAL Measured Indicated Inferred Combined 1.2% COG CATEGORY TOTAL Measured Indicated Inferred Combined Tonnes (Millions) 45.86 32.28 30.32 108.46 Tonnes (Millions) 34.22 22.41 19.09 75.73 Tonnes (Millions) 19.21 8.47 5.07 32.74 Tonnes (Millions) 7.43 2.23 1.29 10.96 %Ni 0.96 0.92 0.89 0.93 %Ni 1.04 0.99 0.96 1.01 %Ni 1.19 1.14 1.14 1.17 %Ni 1.37 1.31 1.28 1.34 %Co 0.06 0.06 0.06 0.06 %Co 0.07 0.06 0.06 0.06 %Co 0.08 0.08 0.07 0.08 %Co 0.09 0.09 0.09 0.09 Ni Metal (tonnes) 441,692 295,631 270,250 1,007,573 Ni Metal (tonnes) 355,198 222,273 184,038 761,509 Ni Metal (tonnes) 228,996 96,299 57,741 383,036 Ni Metal (tonnes) 101,534 29,165 16,591 147,290 Co Metal (tonnes) 28,229 18,502 19,600 66,331 Co Metal (tonnes) 23,037 14,189 11,303 48,529 Co Metal (tonnes) 15,215 6,461 3,786 25,463 Co Metal (tonnes) 6,681 1,981 1,106 10,067 A JORC (2004) compliant resource statement for the NiWest Project was prepared by independent resource geologists / consultants, Ravensgate Minerals Industry Consultants. Over 70% of the resource is drill tested to measured and indicated categories. Page 8 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED GOLD PROJECTS: Golden Cliffs NL (GME - 100%) The Company holds a number of prospective gold projects in Leonora Laverton region through its 100% owned subsidiary Golden Cliffs NL. All of the respective project areas contain historical gold working and have been subjected levels of exploration including mapping, sampling and drilling. varying to Whilst the Company’s gold projects are relatively small in size and potential to discover a stand-alone mine is limited, they are highly prospective and there is very good potential to develop short term, highly profitable mines that can be exploited utilising third part treatment plants within the area. The Devon Gold Project is a good example of this and has been the Company’s principal gold focus over the past year. Devon Gold Project The Devon Gold Project is situated over the Laverton Greenstone Belt within the Central Laverton Domain of the Laverton Tectonic Zone. The Sunrise Dam (>7.7 million ounces) and Red October (>0.5 million ounces) and Wallaby/Granny Smith deposits (>.8.8 million ounces) deposits occur to the north of the Devon Gold Mine. Drilling at the Devon project has delineated continuous mineralisation over a strike length of 700 metres. Gold grades from 1 – 20 grams have been recorded in numerous surface costeans along the strike. Close spaced drilling programs below the costeans and historical working have identified mineralised lodes containing over 50,000 ounces of gold from surface to 80 metres. Metallurgical test work completed indicates the ore is amenable to standard CIL treatment with gold recoveries expected in the range of 91%- 94%. Over the past year, work at the Devon included RC drilling, updated resource estimate, metallurgical test work, site rehabilitation, heritage surveys and optimisation studies. A miscellaneous licence for a haul road to link the project to the Linden-Leonora Road was granted in April this year. The Devon project is a relatively small tenement that hosts a shallow moderate grade gold resource that can be exploited by open pit mining. Development of the project has been delayed while the company works through Native Title matters that are complicated by an association to a previous claim group. Aboriginal Heritage surveys have been completed and have cleared the tenements of sites, paving the way for grant of mining lease once Native Title matters are completed. A further round of drilling in December resulted in a number of significant shallow high grade intersections. These results were incorporated into the data base and used to produce an updated resource estimate. 2012 Drilling Highlights 12DV014 4 metres @ 10.02g/t from 2 metres 12DV011 4 metres @ 7.51g/t from 8 metres 12DV002 1 metres @ 13.65g/t from 6 metres 12DV006 4 metres @ 7.82g/t from 36 metres 12DV017 2 metres @ 8.24g/t from 35 metres 12DV022 3 metres @ 13.28g/t from 5 metres Page 9 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED The revised resource estimate calculated by Ravensgate Minerals Industry Consultants at the Devon resulted in a 4% increase in total contained gold, from 50,000 ounces to 52,000 ounces and an increase in the indicated tonnes by 26% from 274,000 tonnes to 346,000 tonnes. The resource estimate is compliant to JORC 2004 standards. (cid:68)(cid:69)(cid:86)(cid:79)(cid:78)(cid:32)(cid:71)(cid:79)(cid:76)(cid:68)(cid:32)(cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84) Updated Resource Estimate JORC Classification Tonnes Measured 0 g/t Grade Contained Ounces Gold 0 - Indicated 346,165 Inferred 157145 3.07 3.52 34,171 17,786 (cid:78) (cid:109) (cid:32) (cid:48) (cid:48) (cid:48) (cid:44) (cid:48) (cid:54) (cid:55) (cid:44) (cid:54) Total 503,310 3.21 51,957 (cid:79)(cid:76)(cid:89)(cid:77)(cid:80)(cid:73)(cid:67) (cid:80)(cid:51)(cid:57)(cid:47)(cid:52)(cid:54)(cid:51)(cid:55) (cid:68)(cid:69)(cid:86)(cid:79)(cid:78) (cid:80)(cid:51)(cid:57)(cid:47)(cid:52)(cid:54)(cid:51)(cid:56) (cid:76)(cid:51)(cid:57)(cid:47)(cid:50)(cid:50)(cid:50) (cid:72)(cid:97)(cid:117)(cid:108)(cid:32)(cid:82)(cid:111)(cid:97)(cid:100) (cid:84)(cid:101)(cid:110)(cid:101)(cid:109)(cid:101)(cid:110)(cid:116) (cid:76)(cid:97)(cid:121)(cid:111)(cid:117)(cid:116) (cid:52)(cid:52)(cid:54)(cid:44)(cid:48)(cid:48)(cid:48)(cid:32)(cid:109)(cid:69) Above: Devon Gold Project location plan Left: Devon drill hole plan showing high grade results along the strike. Cross section markers are indicated by the red line. The following cross sections located at various points along the Devon lode demonstrate the nature of shallow high grade gold mineralisation intersected by drilling at the Devon Project. The Company continues to explore options for the development of this project. Discussions with third party processors in area indicate there are opportunities to have ore treated. (cid:32) (cid:78) (cid:109) (cid:48) (cid:48) (cid:48) (cid:56) (cid:53) (cid:55) (cid:44) (cid:44) (cid:54) (cid:52)(cid:52)(cid:52)(cid:44)(cid:48)(cid:48)(cid:48)(cid:32)(cid:109)(cid:69) Page 10 - GME Resources Ltd - Annual Report 2013 (cid:52)(cid:48)(cid:48)(cid:82)(cid:76) (cid:51)(cid:53)(cid:48)(cid:82)(cid:76) (cid:52)(cid:48)(cid:48)(cid:82)(cid:76) (cid:51)(cid:53)(cid:48)(cid:82)(cid:76) The following cross sections located at various points along the Devon lode. OPERATIONS REPORT 2013 CONTINUED (cid:53)(cid:50)(cid:48)(cid:48)(cid:109)(cid:69) (cid:53)(cid:50)(cid:53)(cid:48)(cid:109)(cid:78) (cid:53)(cid:51)(cid:48)(cid:48)(cid:109)(cid:78) (cid:53)(cid:51)(cid:53)(cid:48)(cid:109)(cid:69) (cid:68) (cid:86) (cid:71) (cid:68) (cid:68) (cid:86) (cid:80) (cid:86) (cid:80) (cid:48) (cid:48) (cid:48) (cid:48) (cid:57) (cid:57) (cid:53) (cid:55) (cid:56) (cid:49) (cid:50) (cid:68) (cid:86) (cid:48) (cid:50) (cid:50) (cid:50)(cid:109)(cid:32)(cid:64)(cid:32)(cid:50)(cid:46)(cid:52)(cid:53)(cid:103)(cid:47)(cid:116)(cid:32)(cid:65)(cid:117) (cid:51)(cid:109)(cid:32)(cid:64)(cid:32)(cid:49)(cid:57)(cid:46)(cid:50)(cid:56)(cid:103)(cid:47)(cid:116)(cid:32)(cid:65)(cid:117) (cid:52)(cid:109)(cid:32)(cid:64)(cid:32)(cid:49)(cid:49)(cid:46)(cid:57)(cid:55)(cid:103)(cid:47)(cid:116)(cid:32)(cid:65)(cid:117) (cid:75)(cid:101)(cid:121) (cid:50)(cid:48)(cid:49)(cid:50)(cid:32)(cid:100)(cid:114)(cid:105)(cid:108)(cid:108)(cid:32)(cid:104)(cid:111)(cid:108)(cid:101) (cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:105)(cid:115)(cid:101)(cid:100)(cid:32)(cid:105)(cid:110)(cid:116)(cid:101)(cid:114)(cid:115)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110) (cid:80)(cid:114)(cid:101)(cid:32)(cid:50)(cid:48)(cid:49)(cid:50)(cid:32)(cid:100)(cid:114)(cid:105)(cid:108)(cid:108)(cid:32)(cid:104)(cid:111)(cid:108)(cid:101) (cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:105)(cid:115)(cid:101)(cid:100)(cid:32)(cid:105)(cid:110)(cid:116)(cid:101)(cid:114)(cid:115)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110) (cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:105)(cid:115)(cid:101)(cid:100)(cid:32)(cid:122)(cid:111)(cid:110)(cid:101) (cid:70) (cid:97) (cid:117) (cid:108) (cid:116) (cid:50)(cid:53)(cid:109) (cid:71)(cid:77)(cid:69)(cid:32)(cid:82)(cid:101)(cid:115)(cid:111)(cid:117)(cid:114)(cid:99)(cid:101)(cid:115)(cid:32)(cid:76)(cid:105)(cid:109)(cid:105)(cid:116)(cid:101)(cid:100) (cid:68)(cid:101)(cid:118)(cid:111)(cid:110)(cid:32)(cid:80)(cid:114)(cid:111)(cid:106)(cid:101)(cid:99)(cid:116) (cid:67)(cid:114)(cid:111)(cid:115)(cid:115)(cid:32)(cid:83)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110)(cid:32)(cid:51)(cid:49)(cid:50)(cid:50)(cid:48)(cid:109)(cid:78) (cid:53)(cid:50)(cid:48)(cid:48)(cid:109)(cid:69) (cid:53)(cid:50)(cid:53)(cid:48)(cid:109)(cid:78) (cid:53)(cid:51)(cid:48)(cid:48)(cid:109)(cid:78) (cid:68) (cid:86) (cid:80) (cid:49) (cid:49) (cid:52) (cid:49) (cid:50) (cid:68) (cid:86) (cid:48) (cid:49) (cid:52) (cid:52)(cid:109)(cid:32)(cid:64)(cid:32)(cid:49)(cid:48)(cid:46)(cid:48)(cid:50)(cid:103)(cid:47)(cid:116)(cid:32)(cid:65)(cid:117) (cid:75)(cid:101)(cid:121) (cid:50)(cid:48)(cid:49)(cid:50)(cid:32)(cid:100)(cid:114)(cid:105)(cid:108)(cid:108)(cid:32)(cid:104)(cid:111)(cid:108)(cid:101) (cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:105)(cid:115)(cid:101)(cid:100)(cid:32)(cid:105)(cid:110)(cid:116)(cid:101)(cid:114)(cid:115)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110) (cid:80)(cid:114)(cid:101)(cid:32)(cid:50)(cid:48)(cid:49)(cid:50)(cid:32)(cid:100)(cid:114)(cid:105)(cid:108)(cid:108)(cid:32)(cid:104)(cid:111)(cid:108)(cid:101) (cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:105)(cid:115)(cid:101)(cid:100)(cid:32)(cid:105)(cid:110)(cid:116)(cid:101)(cid:114)(cid:115)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110) (cid:77)(cid:105)(cid:110)(cid:101)(cid:114)(cid:97)(cid:108)(cid:105)(cid:115)(cid:101)(cid:100)(cid:32)(cid:122)(cid:111)(cid:110)(cid:101) (cid:50)(cid:109)(cid:32)(cid:64)(cid:32)(cid:50)(cid:46)(cid:52)(cid:53)(cid:103)(cid:47)(cid:116)(cid:32)(cid:65)(cid:117) (cid:70) (cid:97) (cid:117) (cid:108) (cid:116) (cid:50)(cid:53)(cid:109) (cid:71)(cid:77)(cid:69)(cid:32)(cid:82)(cid:101)(cid:115)(cid:111)(cid:117)(cid:114)(cid:99)(cid:101)(cid:115)(cid:32)(cid:76)(cid:105)(cid:109)(cid:105)(cid:116)(cid:101)(cid:100) (cid:68)(cid:101)(cid:118)(cid:111)(cid:110)(cid:32)(cid:80)(cid:114)(cid:111)(cid:106)(cid:101)(cid:99)(cid:116) (cid:67)(cid:114)(cid:111)(cid:115)(cid:115)(cid:32)(cid:83)(cid:101)(cid:99)(cid:116)(cid:105)(cid:111)(cid:110)(cid:32)(cid:51)(cid:49)(cid:51)(cid:48)(cid:48)(cid:109)(cid:78) Page 11 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED (cid:68) (cid:68) (cid:86) (cid:86) (cid:80) (cid:80) (cid:52)(cid:48)(cid:48)(cid:82)(cid:76) (cid:50) (cid:48) (cid:48) (cid:49) (cid:49) (cid:52) (cid:51)(cid:53)(cid:48)(cid:82)(cid:76) (cid:76)(cid:82)(cid:48)(cid:53)(cid:51) (cid:51)(cid:48)(cid:48)(cid:82)(cid:76) (cid:76)(cid:82)(cid:48)(cid:48)(cid:51) (cid:76)(cid:82) (cid:52)(cid:48)(cid:48)(cid:82)(cid:76) (cid:82)(cid:48)(cid:48)(cid:52) (cid:121)(cid:101) (cid:101)(cid:75) (cid:75)(cid:101)(cid:121) (cid:51) (cid:51)(cid:53)(cid:48)(cid:82)(cid:76) (cid:51)(cid:48)(cid:48)(cid:82)(cid:76) (cid:76)(cid:82) (cid:82)(cid:48)(cid:48)(cid:51) (cid:68) (cid:68) (cid:86) (cid:86) (cid:80) (cid:48) (cid:49) (cid:54) (cid:53)(cid:49)(cid:48)(cid:48)(cid:109)(cid:69) (cid:80) (cid:49) (cid:49) (cid:49) (cid:68) (cid:68) (cid:86) (cid:86) (cid:80) (cid:80) (cid:49) (cid:48) (cid:49) (cid:68) (cid:86) (cid:80) (cid:48) (cid:49) (cid:50) (cid:50) (cid:56) (cid:50) (cid:53)(cid:50)(cid:48)(cid:48)(cid:109)(cid:78) (cid:49) (cid:50) (cid:68) (cid:86) (cid:48) (cid:49) (cid:49) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:117)(cid:65)(cid:116)(cid:47)(cid:47)(cid:116)(cid:103)(cid:103)(cid:47)(cid:53) 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(cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) (cid:32) Page 12 - GME Resources Ltd - Annual Report 2013 Laverton Downs - Fairfield Gold Prospect The Fairfield Gold Prospect is located within the Laverton Downs tenement approximately 15 kilometres north of the Laverton town ship. There are numerous historical workings along the strike length of the zone and drilling has extended mineralisation to a depth of up to 50 metres. Mineralisation at Fairfield is hosted by quartz veins associated with the steep west dipping lithological contact between hanging wall basalt and the footwall package of felsic and clastic sediments. OPERATIONS REPORT 2013 CONTINUED Page 13 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED Historic gold workings in the area extend for several hundreds of metres and are intimately associated with a northwest trending felsic-greenstone contact. Historic production is some 411 ounces from 416 tons mined from shafts and drives to a depth of about 30 metres. A number of drilling programs have been undertaken at Fairfield with mixed results, however there does appear to be potential to prove up small high grade pods that could be developed by open pits. With a number of gold plants within a 50km radius of this project, ore could be toll treated or sold at the gate. The cross sections on the previous page show the high grade nature of the Fairfield. Further infill drilling will be required to support the historical drill hole data and confidence that economic grades can be repeated over the mineralised area. Abednego Prospect The Abednego Project is located 45 kilometres east of Leonora. The Leonora – Laverton main road passes through the tenement package. The Abednego Project tenements are centred over the Federation Shear, a northeast trending splay off the northwest trending Keith Kilkenny Tectonic Zone located some 15 kilometres to the southwest of the project area. Historical records show that the Federation and Homeward Bound mines produced 1823 ounces from 1240 tonnes of ore (average grade of 45 g/t). The area has been subjected to numerous exploration phases for various commodities since the early 1960s. The western group of tenements host the historic Federation, Homeward Bound and Federation North gold workings which are located on or adjacent to the Federation Shear, the controlling structure of these gold occurrences. Other than the above mentioned prospects that are clearly identified by historical underground workings, a number of gold anomalies were identified within the tenement package. The Sonex prospect, discovered by a soil geochemical program lies over a shear fault approximately two kilometres east of the Federation share. Shallow aircore Drilling at the Sonex prospect has revealed a body of supergene mineralisation. Further deep drilling intersected high grade primary mineralisation between 70 and 75 metres below surface. Drilling campaigns completed by various companies have been undertaken at all of the gold prospects in the tenement package. Results from these programs have been complied and loaded into the Company’s data base. The table opposite shows a summary of significant drilling results at the respective prospects. Work at the Abednego project over the past year included updating the data base, reviewing all previous results, prospecting and metal detecting by local prospecting groups and rehabilitation of drill sites at the Sonex prospect. The Abednego project is considered to have good potential to provide a pipeline of small to moderate tonnage medium grade open pit gold deposits. The project is located 50 kilometres east of Leonora and is adjacent to the Leonora Laverton bitumen road providing good access to treatment plants in the area. Future exploration will focus on infill drilling programs aimed at upgrading the prospects to evaluate the development potential. Page 14 - GME Resources Ltd - Annual Report 2013 ABEDNEGO PROJECT – Historical Drilling Results OPERATIONS REPORT 2013 CONTINUED Prospect Name Federation Well Federation North Sonex Hole ID HBC31 FRC1 HBC20 HBC47 FRC8 HBC56 FRC4 FRC11 HBC51 FNR3 FNRC10 FNRC8 FNR15 HBR9 HBR8 HBC40 FNR1 FNR17 FNR6 ABC13 ABR93 ABR95 ABC13 ABR29 Intercept 20m @ 2.5g/t 8m @ 5.4g/t 15m @ 2.5g/t 15m @ 2.0g/t 2m @ 14.8g/t 3m @ 7.4g/t 12m @ 1.5g/t 15m @ 1.2g/t 10m @ 1.6g/t 22m @ 2.5g/t 10m @ 3.7g/t 9m @ 3.4g/t 12m @ 3.1g/t 8m @ 5.0g/t 28m @ 1.6g/t 9m @ 2.6g/t 12m @ 1.7g/t 8m @12.5g/t 4m @ 2.9g/t 5m @ 15.0g/t 6m @ 7.2g/t 3m @ 2.6g/t 8m @ 3.1g/t 2m @ 7.8g/t From 22 metres 16 metres 12 metres 45 metres 32 metres 28 metres 9 metres Surface 37 metres 8 metres 1 metre 5 metres Surface 12 metres 2 metres 24 metres Surface Surface 12 metres 70 metres 36 metres 10 metres 57 metres 36 metres Corporate In June, long term Director Geoff Motteram tendered his resignation as a director of the Company. Mr Motteram, a highly experienced Metallurgical Engineer served as director for over 15 years and was instrumental in overseeing and developing the metallurgical processes that are likely to be utilised in the development of the NiWest Heap Leach Project. The Company would like to recognise the importance of Mr Motteram’s technical input over a significant period of time and wish him well in retirement. Rights Issue In February 2013 the Company raised $1,062,853 through a Non Renounceable Rights issue. Under the offer, 40,859,784 entitlements to ordinary fully paid shares issued at 2.6 cents were taken up by shareholders representing 71.4% participation rate. Funds from the rights issue are to be used to continue improving the Company’s Nickel and Gold assets. Tenement Rationalisation Following the sustained down turn and weakness in the market, the Company completed a review of it tenement holding and has relinquished a number of non – core tenements in an effort to conserve cash. None of tenements relinquished contain nickel or gold resources and are not required for the future development. Competent Persons Statement The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Stephen Hyland, who is a member of The Australasian Institute of Mining and Metallurgy. Mr Hyland is a Principal Consultant with Ravensgate Minerals Industry Consultants who consults to the Company. Mr Hyland has sufficient experience, which is relevant to the style of mineralization, type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Hyland consents to the inclusion in the report of the matters based on information provided in the form and context in which it appears. Page 15 - GME Resources Ltd - Annual Report 2013 OPERATIONS REPORT 2013 CONTINUED Tenement Schedule As at 20 September 2013 Project Tenements Company Interest Comments Abednego West P39/4729 - 4733, P39/4736 - 4738 Golden Cliffs 100% Placer Royalty 2% Gold P39/4751, P39/4572, P39/4496, M39/0825, M39/0427 P39/5090 Duck Hill E31/733 GME 50% ATL Exp 50% Eucalyptus M39/744 NiWest 100% Anglo Gold Rights Nickel royalty M39/289, M39/430 M39/344 NiWest 100% Minara Royalty M39/666 and M39/674 M39/313, M39/568, M39/802 - 803 NiWest 100% Old City gold rights Ni Royalty Hawk Nest M38/218 Hepi M39/717 - 718, 819 Laverton Downs E38/1876, Linden P39/4637 - 4638 MLA39/1077 - 1078 P39/2974 - 2976 MLA 39/500 Mertondale M37/591 Mt Kilkenny M39/878 - 879 GME 100% NiWest 100% Golden Cliffs 100% Golden Cliffs 100% GME 100% GME 10% NiWest 100% NiWest 100% 90% Haoma Mining Retford Royalty Murrin Murrin M39/426, 456, 552, 553 and 569 Golden Cliffs rights Nickel laterite royalty (Minara Resources) to non-nickel laterite 20 cents per tonne Murrin North M39/758 Waite Kauri M37/1216 NiWest 100% NiWest 100% Wanbanna M39/460 NiWest 80% 20% Wanbanna Pty Ltd Misc. Licences L39/194, L37/175, L31/46, L40/25 NiWest 100% Haul Roads, Water L39/215, L39/177, L37/205 Resources LEGEND E: Exploration Licence P: Prospecting Licence PLA: Prospecting Licence Application M: Mining Lease ELA: Exploration Licence Application L: Miscellaneous Lease MLA: Mining Lease Application Page 16 - GME Resources Ltd - Annual Report 2013 Corporate Governance Statement INTRODUCTION The Board of Directors of GME Resources Limited (the “Company”) has adopted the following Corporate Governance Principles promulgated by the ASX Corporate Governance Council and is responsible for the adherence to these Principles. These Principles and Practices are reviewed regularly and upgraded or changed to reflect changes in law and what is regarded as best practice. A description of the Company's main Corporate Governance Principles and Practices is set out below. ROLE OF THE BOARD The Board has adopted the following Statement of Matters for which the Board will be responsible: (1) (2) (3) (4) (5) (6) (7) (8) (9) Review and determine the Company's strategic direction and operational policies; Review and approve business plans, budgets and forecasts and set goals for management; Appoint and remunerate Chief Executive Officer and Senior Staff; Review performance of Chief Executive Officer and Senior Staff; Review financial performance against Key Performance Indicators on a monthly basis; Approve acquisition and disposal of tenements; Approve exploration and mining programs; Approve capital, development and other large expenditures; Review risk management and compliance; (10) Oversee the Company's control and accountability systems; (11) Report to shareholders; and (12) Ensure compliance with environmental, taxation, Corporations Act and other laws and regulations. MANAGING DIRECTOR GME's most senior employee is the Managing Director who is appointed and subject to annual reviews by the Board. The Managing Director recommends policies, strategic direction and business plans for the Board's approval and is responsible for managing the Company's day-to-day business. BOARD INDEPENDENCE The Board consists of three directors, but up to 10 directors can serve on the board. Mr James Sullivan is the only executive; the remainder are non-executive. Currently the three Directors are: Michael D Perrott Chairman James N Sullivan Managing Director Peter R Sullivan Geoffrey M Motteram Director Director Director since 1996 Director since 2004 Director since 1996 Resigned 30 June 2013 Mr M Perrott is considered an Independent Director on the Board according to the definitions by the Australian Securities Exchange Corporate Governance Council ("Council"). Mr P Sullivan is a substantial shareholder and Mr J Sullivan is an executive and therefore neither director is considered "independent" in accordance with the definitions of the Council. As such, the Company does not comply, with the Council's recommendation, Item 2.1, that the majority of the Company's Directors should be Independent Directors. Page 17 - GME Resources Ltd - Annual Report 2013 CORPORATE GOVERNANCE CONTINUED The Board has in addition adopted a series of safeguards to ensure that independent judgement is applied when considering the business of the Board: • • • • Directors are entitled to seek independent professional advice at the Company's expense. Prior written approval of the Chairman is required but this is not unreasonably withheld. Directors having a conflict of interest with an item for discussion by the Board must absent themselves from a board meeting where such item is being discussed before commencement of discussion on such topic. The Independent Directors confer on a "needs" basis with the Chairman with such discussion if warranted and considered necessary by the Independent Directors. The Board considers non-executive directors to be independent even if they have minor dealings with the Company provided they are not a substantial shareholder. Transactions with a value in excess of 5% of the Company's annual operating costs are considered material. A director will not be considered independent if he has transactions in excess of this materiality threshold. TENURE OF THE BOARD The Directors are expected to review their membership of the Board from time to time taking into account the length of service on the Board, age, qualification and experience in light of the needs of the Company and direction of the Company together with such other criteria considered desirable for composition of a balanced board and the overall interests of the Company. A Director is expected to resign if the remaining Directors recommend that a Director should not continue in office, but is not obliged to do so. CHAIRMAN The current Chairman is Mr Michael D Perrott - AM. Mr Perrott brings a wealth of business experience, connections and drive to the Board. The Chairman's role is separated from the role of the Managing Director. The Chairman's role includes: • • • • • • Providing effective leadership on formulating the Board's strategy; Representing the views of the Board to the public; Ensuring that that the Board meets at regular intervals throughout the year and that minutes of meeting accurately record decisions taken and where appropriate the views of individual Directors; Guiding the agenda, information flow and conduct of all board meetings; Reviewing the performance of the Board of Directors; and Monitoring the performance of the management of the Company. NOMINATION COMMITTEE Due to the small size of the Company and the number of Board members, the Board does not have a formal nomination committee structure. Any new directors will be selected according to the needs of the Company at that particular time, the composition and the balance of experience on the Board as well as the strategic direction of the Company. Should the need arise to consider a new Board member, some or all of the Directors would form the committee to consider the selection process and appointment of a new director. At each annual general meeting the following directors retire: • • • One third of directors (excluding the Managing Director); Directors appointed by the Board to fill casual vacancies or otherwise; Directors who have held office for more than three years since the last general meeting at which they were elected. DETAILS ON CURRENT DIRECTORS Details on current Directors, including their skills and experience, are included in the Directors' Report. Page 18 - GME Resources Ltd - Annual Report 2013 ETHICAL AND RESPONSIBLE DECISION-MAKING In making decisions, the Directors of the Company, its officers and employees, take into account the needs of all stakeholders: CORPORATE GOVERNANCE CONTINUED • • • • • • Shareholders; Employees; Community; Creditors; Contractors; and Government (Federal, State and Local). The Directors, officers and employees of the Company are expected to: • • • • • • Comply with the laws and regulations both by the letter and in spirit; Act honestly and with integrity; Avoid conflicts of interest by not placing themselves in situations which result in divided loyalties; Use the Company's assets responsibly and in the interests of the Company, not take advantage of property, information or position for personal gain or to compete with the Company; To keep non-public information confidential except where disclosure is authorised or legally mandated; and Be responsible and accountable for their actions and report any unethical behaviour. TRADING IN COMPANY SECURITIES The Company encourages Directors and employees to adopt a long-term attitude to their investment in the Company’s securities. All Directors and employees (including their immediate family or any entity for which they control investment decisions), must ensure that any trading in securities issued by the Company is undertaken within the framework set out in the Securities Trading Policy. The Securities Trading Policy does not prevent Directors or employees (including their immediate family or any entity for which they control investment decisions) from participating in any share plan or share offers established or made by the Company. However, Directors or employees are prevented from trading in the securities once acquired if the individual is in possession of price sensitive information not generally available to all security holders. In keeping with recent listing rule amendments, additional restrictions are placed on trading by Directors, executives and other personnel as determined by the Chairman and Company Secretary from time to time (‘Key Management Personnel’). Key management personnel must not deal in Company Securities at any time if in possession of any inside information relating to those securities. In addition to the overriding prohibition against dealing in the Company's securities when a person is in possession of inside information, Key Management Personnel and their associated parties are at all times prohibited from dealing in the Company's securities during prescribed ‘closed’ periods. The Company has nominated closed periods to be during the week prior to the release of the Company’s Quarterly Reports (including the Appendix 5B) unless exceptional circumstances apply. The Securities Trading Policy also includes a clause prohibiting directors and executives from entering into transactions in associated products which operate to limit the economic risk of security holdings in the Company over unvested entitlements. In accordance with Listing Rules, a director must notify the ASX within 5 business days after any change in the director's relevant interest in securities of the Company or a related body corporate of the Company. A director must notify the Company Secretary in writing of the requisite information within 2 business days in order for the Company Secretary to make the necessary notifications to ASIC and ASX as required by the Corporations Act and the ASX Listing Rules. Page 19 - GME Resources Ltd - Annual Report 2013 CORPORATE GOVERNANCE CONTINUED CORPORATE GOVERNANCE CONTINUED INTEGRITY OF FINANCIAL REPORTING GME's Managing Director and Company Secretary report in writing to the Board: • • That the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and Group; and That the above statement is founded on a sound system of internal control and risk management which implements the policies adopted by the Board and that the Company's risk management and internal controls are operating efficiently in all material respects. AUDIT COMMITTEE The Company does not have a formal audit committee as, in the opinion of the Directors, the scope and size of the Company's operations do not warrant it. As such the Company is not in strict compliance of the Council's Recommendation 4.2 that the Board should establish an audit committee. It should be noted however that when the Council's Recommendation was made it was emphasised that it was more relevant for large companies. The Board regularly reviews the scope of audits, the level of audit fees and the performance of auditors. The Board also is continually assessing to ensure the independence of the external auditor is maintained. The Company will and does, if necessary, use other consultants to avoid any potential independence issues. TIMELY AND BALANCED DISCLOSURE TO AUSTRALIAN SECURITIES EXCHANGE The Company has procedures in place to identify matters that are likely to have a material effect on the price of the Company's securities and to ensure those matters are notified to the Australian Securities Exchange in accordance with its listing rule disclosure requirements. Information to the market and media is handled by the Chairman, the Managing Director or the Company Secretary. In particular, the Company Secretary has been nominated as the person responsible for communications with Australian Securities Exchange. This role includes responsibility for compliance with the continuous disclosure requirements of the Australian Securities Exchange Listing Rules and overseeing and coordinating information disclosures to Australian Securities Exchange, analysts, brokers, shareholders the media and the public. All disclosures to Australian Securities Exchange are posted on the Company's website soon after clearance has been received from Australian Securities Exchange. The Chairman, the Managing Director and Company Secretary are monitoring information in the marketplace to ensure that a false market does not emerge in the Company's securities. COMMUNICATION WITH SHAREHOLDERS It is the Company's communication policy to communicate with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company. The information is communicated to the shareholders through: • • • • • • Continuous disclosure announcements made to the Australian Securities Exchange; Distribution of the annual report to shareholders together with a notice of meeting; Posting of half-yearly results and all Australian Securities Exchange announcements on the Company's website; Posting of all major drilling results; Posting of all media announcements on the Company's website; and Calling of annual general meetings and other meetings of shareholders to obtain approval for Board action as considered appropriate. On the Company's website, information about the Company's projects is shown. At annual general meetings and other general meetings of shareholders, shareholders are encouraged to ask questions of the Board of Directors relating to the operation of the Company. Page 20 - GME Resources Ltd - Annual Report 2013 CORPORATE GOVERNANCE CONTINUED RISK MANAGEMENT Due to its size of operation and size of the Board, there is no formal board committee to identify, assess and monitor and manage risk. Responsibility for day to day control and risk management lies with the Managing Director and Company Secretary (financial risk) with reporting responsibility to the Board. The Board monitors risks including but not limited to compliance with development and environmental approvals, tendering, contracting and development, pricing of products, quality, safety, strategic issues, financial risk, joint venture, accounting and insurance. Any changes in the risk profile for the Company are communicated to its stakeholders via an announcement to Australian Securities Exchange. PERFORMANCE The Board has adopted a self-evaluation process to measure its own performance. The Chairman evaluates the performance of each director, and the Board evaluates the performance of the Chairman. Performance of senior executives is evaluated by the Managing Director in cooperation with the Chairman. All performance evaluations are measured against budget, goals and objectives set. All Directors of the Board have access to the Company Secretary who is appointed by the Board. The Company Secretary reports to the Chairman, in particular to matters relating to corporate governance. All board members have access to professional independent advice at the Company's expense provided they first have obtained the Chairman's approval which will not be unreasonably withheld. REMUNERATION Managing Director and Non-executive Directors The Directors are remunerated for the services they render the Company and such services are normally carried out under normal commercial terms and conditions. Remuneration is also determined having regard to how Directors are remunerated for other similar companies, the time spent on the Company's matters and the performance of the Company. Engagement and payment for such services are approved by the other Directors with no interest in the engagement of services. The Board has no retirement or termination benefits. Payments to all Directors are set out in the Director's Report. Senior Executives The remuneration of senior executives is discussed and determined by the Board upon receiving advice from the Managing Director. The remuneration packages are set at levels intended to attract and retain the executives capable of managing the Company's operations. The remuneration of senior executives, where applicable, is set out in the Directors' Report. General Due to the staff size and the close involvement of the Board in the operations of the Company, the Company does not operate a formal remuneration committee. All remuneration paid to the Chairman, Non-executive Directors, Executive Directors and senior executives are all reviewed and discussed by the Board. The Company does not operate an employee share option plan and there are no options outstanding issued to Directors. INTERESTS OF STAKEHOLDERS It is the Company's objective to create wealth for its shareholders and provide a safe and challenging environment for employees and for the Company to be a valuable member of the community as a whole. The Company's ethical and responsible behaviour is set out under the heading "Ethical and Responsible Decision-making". The Company's core values are summarised as follows: • • • • • • • Provide value to its shareholders through growth in its market capitalisation; Act with integrity and fairness; Create a safe and challenging workplace; Be participative and recognise the needs of the community; Protect the environment; Be commercially competitive; and Strive for high quality performance and development. Page 21 - GME Resources Ltd - Annual Report 2013 CORPORATE GOVERNANCE CONTINUED Diversity The Board has adopted a diversity policy that details the purpose of the policy and the employee selection and appointment guidelines, consistent with the recommendations of the Corporate Governance Council. The Board believes that the adoption of an efficient diversity policy has the effect of broadening the employee recruitment pool, supporting employee retention, including different perspectives and is a socially and economically responsible governance practice. The Company employs new employees and promotes current employees on the basis of performance, ability and attitude. The Board is continually reviewing its practices with a focus on ensuring that the selection process at all levels within the organisation is formal and transparent and that the workplace environment is open, fair and tolerant. Gender Diversity The Company, in keeping with the recommendations of the Corporate Governance Council provides the following information regarding the proportion of gender diversity in the organisation as at 30 June 2013: Females employed in the Company as a whole Females employed in the Company in senior positions Females appointed as a Director of the Company 1 / 4 0 / 0 0 / 3 Proportion of female / total number of persons employed The recommendations of the Corporate Governance Council relating to reporting require a Board to set measurable objectives for achieving diversity within the organisation, and to report against them on an annual basis. The Company has implemented measurable objectives as follows: Measurable Objective Adoption and promotion of a Formal Diversity Policy. Objective Satisfied Yes. To ensure Company policies are consistent with and aligned with the goals of the Diversity Policy. To provide flexible work and salary arrangements to accommodate family commitments, study and self-improvement goals, cultural traditions and other personal choices of current and potential employees. To implement clear and transparent policies governing reward and recognition practices. Yes. Yes. Yes Comment The Company has adopted a formal diversity policy which has been made publicly available via the ASX and the Company’s website. The Company’s selection, remuneration and promotion practices are merit based and as such are consistent with the goals of the Company’s Diversity Policy. The Company does, where considered reasonable, and without prejudice, accommodate requests for flexible working arrangements. The Company grants reward and promotion based solely on merit and responsibility as part of its annual and ongoing review processes. The Company has not implemented specific measurable objectives regarding the proportion of females to be employed within the organisation or implement requirements for a proportion of female candidates for employment and Board positions. The Board considers that the setting of quantitative gender based measurable targets is not consistent with the merit and ability based policies currently implemented by the Company. The Board will consider the future implementation of gender based diversity measurable objectives when more appropriate to the size and nature of the Company’s operations. Page 22 - GME Resources Ltd - Annual Report 2013 Consolidated Financial Report 2013 GME Resources Ltd ABN 62 009 260 315 CONTENTS Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Information 24-29 30 31 32 33 34 35-51 52 53-54 55 Page 23 - GME Resources Ltd - Annual Report 2013 Directors’ Report Your Directors present their report of GME Resources Limited and its controlled entities for the financial year ended 30 June 2013. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: DIRECTORS The names of Directors in office at any time during or since the end of the year are: Michael Delaney Perrott James Noel Sullivan Peter Ross Sullivan Geoffrey Mayfield Motteram (Non-executive - Chairman) (Managing Director) (Non-executive - Director) (Non-executive - Director) Resigned 30 June 2013 Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. PRINCIPAL ACTIVITIES The principal activities of the consolidated entity are mineral exploration and investment. No significant change in the nature of these activities occurred during the year. OPERATING RESULTS The net loss after income tax attributable to members of the Company for the financial year to 30 June 2013 amounted to $939,194 (2012: $1,393,156). OVERVIEW OF OPERATING ACTIVITY The Company, through its 100% owned subsidiary NiWest Limited owns the NiWest Nickel Laterite Project which contains 100 million tonnes of lateritic nickel resources that have systematically drill tested to Jorc 2004 standards. Over the past 5 years the Company has been progressing metallurgical and engineering studies aimed at commercialising the development of a large scale heap leach operation and solution processing circuit. Further test work was completed over the past year that has resulted in a significant change to the processing circuit away from producing a high grade nickel concentrate to producing LME grade nickel Cathode. The new process which utilised the tried and tested process of Solvent Extraction and Electrowinng technology is expected to have a significant impact on the overall economics for the project. The Company has now appointed engineers Tenova Bateman Technologies and MWorx Metallurgical Consultants to complete a scoping study utilising the new flow chart for a 3.0 – 3.5 million tonnes per annum Heap Leaching Solvent Extraction/Electrowinning operation. Deliverables from the study are: o o o o Conceptual Flow Sheet Conceptual Layout Order of Magnitude Capital Costs Preliminary Equipment List o o o Preliminary Mass Balance Process Description Order of Magnitude Operating Costs Resources at the NiWest Project are highly defined with 70% drill tested to measured and indicated categories (JORC 2004) which are sufficient to support a 20 year operation. The results from the scoping study are expected to be available by December 2013, at which time the Company will review and advise of the next phase for the development. The Company also owns a number of gold assets close by to the NiWest Nickel Project through its 100% subsidiary Golden Cliffs NL. Over the year the Company progressed drilling, resource modelling and metallurgical test work at the Devon Gold Project. The Devon gold mine hosts a 500,000 tonnes resource averaging 3.3 g/t (JORC 2004). Mineralised lodes have been drill tested from surface down to 80 metres. The Company continues to work on this project with the view to either develop in its own right or with joint venture partners. Further work is planned in the new financial year. The Company undertook a comprehensive review of it tenement holding of both Nickel and Gold projects. A number of non-core tenements were relinquished to reduce overall holding costs. Page 24 - GME Resources Ltd - Annual Report 2013 DIRECTORS’ REPORT CONTINUED FINANCIAL POSITION At the end of the financial year the consolidated entity had $761,847 (2012: $866,555) in cash and at call deposits. Carried forward exploration and evaluation expenditure was $32,347,488 (2012: $32,104,931). During the year issued capital increased from 343,175,391 to 384,663,864 shares at the end of 2013. The movement related to a non-renounceable rights issue as announced in February 2013. DIVIDENDS No dividends have been paid or declared since the start of the financial year. No recommendation is made as to dividends. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during the financial year. AFTER BALANCE DATE EVENTS No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future financial years. LIKELY DEVELOPMENTS The Group’s areas of interest are in the exploration stage, and although the results of work carried out to date are encouraging it is not possible to predict the likely developments. The Group will continue its mineral exploration and investment activities with the object of finding further mineralised resources and exploiting those already discovered. The Board is following a strategic plan for the growth of the Group, however, further information about likely developments, future prospects and business strategies as they pertain to the operations and expected results of those operations have not been included in this report as the Directors reasonably believe that disclosure of this information would be likely to result in unreasonable prejudice to the Group. INFORMATION ON DIRECTORS AND COMPANY SECRETARY Michael Delaney Perrott AM BCom FAIM (Chairman) Director since 1996 Mr Perrott has been involved in the construction and contracting industry since 1969. He is currently Chairman and director of various listed and unlisted public and private companies. Mr Perrott is also a member of the Board of Notre Dame University and SANE Australia and a council member for the State Ministerial Council for Suicide prevention. Mr Perrott has been Chairman of the Company since his appointment as a director in 1996. Other current directorships of listed companies Director of Schaffer Corporation Limited since February 2005 and VDM Group Ltd since July 2009. Former directorships of listed companies in last 3 years Nil James Noel Sullivan FAICD (Managing Director) Director since 2004 Mr Sullivan has over 20 years experience in commerce providing services to the mining and allied industries. Mr Sullivan was instrumental in establishing and managing the Golden Cliffs Prospecting Syndicate which acquired and pegged a number of prospective tenements in the Eastern Goldfields. The Golden Cliffs Prospecting Syndicate was subsequently acquired by the Company in 1996. Mr Sullivan has extensive knowledge in mining and prospecting in the North Eastern Goldfields and in particular on matters involving tenement administration, native title negotiation and supply and logistics of services. Mr Sullivan’s practical knowledge in these areas will be of great benefit to the Company as it seeks to develop its assets for the benefit of its shareholders. Other current directorships of listed companies Mr Sullivan has been a director of Kumarina Resources Ltd (now Kumarina Resources Pty Ltd) since March 2010, Kumarina was delisted in June 2013. Former directorships of listed companies in last 3 years Nil Page 25 - GME Resources Ltd - Annual Report 2013 DIRECTORS’ REPORT CONTINUED Peter Ross Sullivan BE, MBA (Non-executive Director) Director since 1996 Mr Sullivan is an engineer and has been involved in the management and strategic development of resource companies and projects for more than 20 years. Other current directorships of listed companies Mr Sullivan has been a director of Resolute Mining Limited since June 2001, and Kumarina Resources Ltd (now Kumarina Resources Pty Ltd) since February 2011, Kumarina was delisted in June 2013. Former directorships of listed companies in last 3 years Nil Geoffrey Mayfield Motteram BMetE (Hons), MAusIMM (Non-executive Director) Resigned 30 June 2013 Mr Motteram is a metallurgical engineer with over 30 years’ experience in the development of projects in the Australian resources industry. He has extensive experience in gold and base metals having been involved with WMC’s Kwinana Nickel Refinery and Kalgoorlie Nickel Smelter. He subsequently joined BHP, and later Metals Exploration, where he was involved in the evaluation of gold and base metal projects. Since 1989 he has acted as a Mining Project and Metallurgical Consultant. He was involved in the formation of Minara Resources Limited (formerly Anaconda Nickel Limited) in 1994 and controlled the technical development of the Murrin Murrin Joint Venture until the end of 1997. He is a former director of Minara Resources Limited. Mr Motteram has been a non-executive director of the Company since 1997, and provides technical support to the Company. Former directorships of listed companies in last 3 years Mr Motteram was a director of Mount Magnet South Limited from 31 May 2006 to 14 September 2011, and a director of Kumarina Resources Ltd (now Kumarina Resources Pty Ltd) until 30 June 2013. Kumarina was de-listed in June 2013. Mr Mark Edward Pitts B.Bus FCA (Company Secretary) Mr Pitts was appointed to the position of Company Secretary in February 2009. Mr Pitts is a Chartered Accountant with over 25 years’ experience in statutory reporting and business administration. He has been directly involved with, and consulted to a number of public companies holding senior financial management positions. He is a partner in the corporate advisory firm Endeavour Corporate. Endeavour offers professional services focused on Company Secretarial support, commercial and financial advice and supervision of ASIC and ASX compliance requirements. REMUNERATION REPORT (AUDITED) The remuneration report is set out in the following manner: • • • • Policies used to determine the nature and amount of remuneration Details of remuneration Service agreements Share based compensation Remuneration Policy The Board of Directors is responsible for remuneration policies and the packages applicable to the Directors of the Company. The broad remuneration policy is to ensure that packages offered properly reflect a person’s duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates people of the highest quality. The Managing Director, Executive and Non-executive Directors are remunerated for the services they render to the Company and such services are carried out under normal commercial terms and conditions. Engagement and payment for such services are approved by the other Directors who have no interest in the engagement of services. At the date of this report the Company had not entered into any packages with Directors or senior executives which include performance based components. Page 26 - GME Resources Ltd - Annual Report 2013 Details of Remuneration for Directors Remuneration levels are competitively set to attract and retain appropriately qualified and experienced directors and senior executives. The Board of Directors obtains independent advice as appropriate when reviewing remuneration packages. Details of the nature and amount of each element of the emoluments of the key management personnel of the companies in the Group are: DIRECTORS’ REPORT CONTINUED 2013 Executive Directors James N Sullivan Non-executive Directors Michael D Perrott Geoffrey M Motteram* Peter R Sullivan Executives Mr Mark Pitts * Resigned 30 June 2013 2012 Executive Directors James N Sullivan David J Varcoe * Non-executive Directors Michael D Perrott Geoffrey M Motteram Peter R Sullivan Executives Mr Mark Pitts * Resigned 4 May 2012 Short Term Benefits Post Employment Benefits Salary & Fees $ Superannuation $ Long Term Benefits Options $ 120,000 30,000 24,000 24,000 60,000 258,000 - - - - - - - - - - - - Short Term Benefits Post Employment Benefits Salary & Fees $ Superannuation $ Long Term Benefits Options $ 40,000 216,099 30,000 24,000 24,000 40,228 374,327 - 21,610 - - - - 21,610 - - - - - - - Total $ 120,000 30,000 24,000 24,000 60,000 258,000 Total $ 40,000 237,709 30,000 24,000 24,000 40,228 395,937 Performance Related % - - - - - - Performance Related % - - - - - - - The Company and its subsidiaries had one employee as at 30 June 2013. Service Agreements There are no service agreements with any of the Company’s Directors. Share Based Compensation There is currently no provision in the policies of the Group for the provision of share based compensation to Directors. The interest of Directors in shares and options is set out elsewhere in this report. Loans to Directors and Executives There were no loans entered into with Directors or executives during the financial year under review. Related party transactions with Directors and executives are set out in Note 14 to the Financial Report. END OF REMUNERATION REPORT Page 27 - GME Resources Ltd - Annual Report 2013 DIRECTORS’ REPORT CONTINUED DIRECTORS’ AND EXECUTIVES’ INTERESTS The relevant interests of Directors either directly or through entities controlled by the Directors in the share capital of the Company as at the date of this report are: Director Michael D Perrott James N Sullivan Peter R Sullivan Geoffrey M Motteram Ordinary Shares Opening Balance 15,656,505 16,813,359 16,411,593 6,180,592 Net Change 2,609,417 2,802,224 8,679,982 1,030,098 Ordinary Shares Closing Balance 18,265,922 19,615,583 25,091,575 7,210,690 MEETINGS OF DIRECTORS During the year, 4 meetings of directors were held. Attendances were: Michael D Perrott James N Sullivan Peter R Sullivan Geoffrey M Motteram Number Eligible to Attend Number Attended 4 4 4 4 4 4 4 3 OPTIONS At the date of this report there were no options on issue. There were no shares issued during the year or since the end of the year upon exercise of options. AUDIT COMMITTEE The Board reviews the performance of the external auditors on an annual basis and meets with them during the year to review findings and assist with Board recommendations. The Board does not have a separate audit committee with a composition as suggested in the best practice recommendations. The full Board carries out the function of an audit committee. The Board believes that the Company is not of a sufficient size to warrant a separate committee and that the full board is able to meet objectives of the best practice recommendations and discharge its duties in this area. INDEMNIFYING OFFICERS OR AUDITORS The Company has not, during or since the financial year, in respect of any person who is or has been an officer or the auditor of the Company or of a related body corporate, indemnified or made any relative agreement for indemnifying against a liability incurred as an officer or auditor, including costs and expenses in defending legal proceedings. ENVIRONMENTAL REGULATION The Group’s exploration and mining tenements are located in Western Australia. There are significant regulations under the Western Australian Mining Act 1978 and the Environmental Protection Acts that apply. Licence requirements relating to ground disturbance, rehabilitation and waste disposal exist for all tenements held. The Directors are not aware of any significant breaches during the period covered by this report. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court, pursuant to section 237 of the Corporations Act 2001, to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. Page 28 - GME Resources Ltd - Annual Report 2013 DIRECTORS’ REPORT CONTINUED NON-AUDIT SERVICES Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 11 to the financial statements. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page. This report is signed in accordance with a Resolution of Directors. James Sullivan Managing Director Perth, Western Australia 20th September 2013 Page 29 - GME Resources Ltd - Annual Report 2013 Page 30 - GME Resources Ltd - Annual Report 2013 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2013 Other income Depreciation expense Exploration expenditure written off Management and consulting fees Administration expenses Loss before income tax benefit Income tax benefit Net loss for the year Other comprehensive income Items that will not be reclassified to profit or loss: Reversal of asset revaluation reserve Tax on items that will not be reclassified to profit or loss Total items that will not be reclassified to profit or loss Other comprehensive income for the period, net of tax Note 2 6 2 3 CONSOLIDATED 2013 $ 33,602 2012 $ 172,289 (4,087) (16,907) (729,855) (1,303,595) (70,000) (29,967) (242,248) (214,976) (1,012,588) (1,393,156) 73,394 - (939,194) (1,393,156) - - - - 1,125 - 1,125 1,125 Total comprehensive loss for the year (939,194) (1,392,031) Basic loss per share (cents per share) Diluted loss per share (cents per share) 13 Cents (0.26) (0.26) Cents (0.43) (0.43) The accompanying notes form part of this financial statement. Page 31 - GME Resources Ltd - Annual Report 2013 Consolidated Statement of Financial Position As at 30 June 2013 CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Plant and equipment Deferred exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Option reserve Accumulated losses TOTAL EQUITY The accompanying notes form part of this financial statement. Note 10(b) 4 4 5 6 7 8 8 CONSOLIDATED 2013 $ 761,847 14,849 776,696 2012 $ 866,555 34,834 901,389 183,000 4,117 183,000 8,204 32,347,488 32,104,931 32,534,605 32,296,135 33,311,301 33,197,524 77,911 93,558 77,911 93,558 77,911 93,558 33,233,390 33,103,966 51,180,072 50,111,454 973,537 973,537 (18,920,219) (17,981,025) 33,233,390 33,103,966 Page 32 - GME Resources Ltd - Annual Report 2013 Consolidated Statement of Changes in Equity For the year ended 30 June 2013 CONSOLIDATED Note Issued Capital $ Financial Assets Reserve $ Option Reserve $ Accumulated Losses $ Total $ Balance at 30 June 2011 49,093,323 (1,125) 973,537 (16,587,869) 33,477,866 Loss for the year Re-classification on sale of asset Total comprehensive loss for the year - - - - 1,125 1,125 Transaction with owners in their capacity as owners Shares issued (net of costs) Balance at 30 June 2012 1,018,131 50,111,454 Loss for the year Total comprehensive loss for the year - - Transaction with owners in their capacity as owners Shares issued (net of costs) 8 Balance at 30 June 2013 1,068,618 51,180,072 - - - - - - - - - - (1,393,156) (1,393,156) - 1,125 (1,393,156) (1,392,031) - 1,018,131 973,537 (17,981,025) 33,103,966 - - - (939,194) (939,194) (939,194) (939,194) - 1,068,618 973,537 (18,920,219) 33,233,390 The accompanying notes form part of this financial statement. Page 33 - GME Resources Ltd - Annual Report 2013 Consolidated Statement of Cash Flows For the year ended 30 June 2013 Cash flows from operating activities Proceeds from facilitation fee Payments to suppliers and employees Payments for exploration and evaluation Interest received Research and development tax offset Other income Note CONSOLIDATED 2013 $ 2012 $ - (312,224) (966,994) 31,048 73,394 - 100,000 (287,491) (1,616,535) 45,124 - 20,200 Net cash outflow from operating activities 10(a) (1,174,776) (1,738,702) Cash flows from investing activities Proceeds from sale of assets Net cash inflow from investing activities Cash flows from financing activities Proceeds from issue of shares Payment of costs associated with issue of shares Net cash inflow from financing activities 1,450 1,450 10,864 10,864 1,078,700 1,026,974 (10,082) (8,844) 1,068,618 1,018,130 Net decrease in cash and cash equivalents (104,708) (709,708) Cash and cash equivalents held at the start of the year 866,555 1,576,263 Cash and cash equivalents held at the end of the year 10(b) 761,847 866,555 The accompanying notes form part of this financial statement. Page 34 - GME Resources Ltd - Annual Report 2013 Notes to the Financial Statements For the year ended 30 June 2013 STATEMENT OF ACCOUNTING POLICIES 1. GME Resources Limited (the “Company”) is a listed public Company, incorporated and domiciled in Australia. The consolidated financial statements of the Company for the financial year ended 30 June 2013 comprise the Company and its subsidiaries (together referred to as the “Group”). Basis of preparation (a) The financial statements are a general-purpose financial report, which have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations and complies with other requirements of the law. The financial statements have also been prepared on a historical cost basis. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are presented in Australian dollars. The Company is a listed public Company, incorporated in Australia and operating in Australia. The Group’s principal activities are mineral exploration and investment. (b) Adoption of new and revised standards In the year ended 30 June 2013, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the group’s operations and effective for the current annual reporting period. Amendments to AASB 101 'Presentation of Financial Statements' The amendment (part of AASB 2011-9 'Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income') introduces a new terminology for the statement of comprehensive income and income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income and the income statement is renamed as a statement of profit or loss. The amendments to AASB 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. The company has elected to adopt the new terminology for the statement of profit and loss and other comprehensive income. The amendments to AASB 101 also require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in any impact the financial position or performance of the Company. It has been determined by the Directors that, other than AASB 101, there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and, therefore, no change is necessary to Group accounting policies. The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2013. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and, therefore, no changes are necessary to Group accounting policies. Significant accounting judgements and key estimates (c) The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Page 35 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED The recoverability of the carrying amount of exploration and evaluation costs carried forward has been reviewed by the Directors. In conducting the review, the recoverable amount of the Group’s deferred exploration and evaluation expenditure of $30,376,002 relating to the NiWest nickel laterite project has been assessed by reference to the higher of fair value less costs to sell. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The cashflow model used to support the assessment is calculated over a period of 20 years, being the estimated life of the mine. The discount rate is 8% and for the purpose of this exercise, future nickel and cobalt prices of USD 17,600 and USD 44,000 per tonne respectively have been assumed with a long term AUD/USD exchange rate of $0.90. Variations to expected future cash flows, and timing thereof, could result in significant changes to the impairment test results, which in turn could impact future financial results. The accounting policies and methods of computation adopted in the preparation of the financial statements are consistent with those adopted and disclosed in the Company’s financial statements for the financial year ended 30 June 2012. (d) Going concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. As disclosed in the financial statements, the Group recorded an operating loss of $939,194 and a cash outflow from operating activities of $1,174,776 for the year ended 30 June 2013 and at balance date, had net current assets of $698,785. The Board considers that the consolidated entity is a going concern and recognises that additional funding is required to ensure that the consolidated entity can continue to fund its operations and further develop its mineral exploration and evaluation assets during the twelve month period from the date of this financial report. Such additional funding can be derived from sources including: • • • The placement of securities under the ASX Listing Rule 7.1 or otherwise; An excluded offer pursuant to the Corporations Act 2001; or The sale of assets. Accordingly, the Directors believe that subject to prevailing equity market conditions, the consolidated entity will obtain sufficient funding to enable it to continue as a going concern and that it is appropriate to adopt that basis of accounting in the preparation of the financial report. Should the consolidated entity be unable to obtain sufficient funding as outlined above, there is a material uncertainty that may cause significant doubt as to whether or not the consolidated entity will be able to continue as a going concern and therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern. Statement of compliance (e) The financial statements were authorised for issue on 20th September 2013. The financial statements comply with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial statements, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Basis of consolidation (f) The consolidated financial statements comprise the financial statements of GME Resources Limited and its subsidiaries as at 30 June each year. The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies. Page 36 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the Company has the power to govern the financial and operating policies of a group so as to obtain benefit from its activities. Business combinations have been accounted for using the purchase method of accounting. Unrealised gains or transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and within equity in the Consolidated Statement of Financial Position. Losses are attributable to the non-controlling interests even if that results in a deficit balance. The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised within equity attributable to owners of GME Resources Limited. When the Group ceases to have control, joint control or significant influence, any retained interest in the Group is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interests as an associate, joint controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. Revenue recognition (g) Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. Borrowing costs (h) Borrowing costs are recognised as an expense when incurred except those that relate to the acquisition, construction or production of qualifying assets where the borrowing cost is added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Cash and cash equivalents (i) Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at bank and on hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Trade and other receivables (j) Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified. Page 37 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED Income tax (k) Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Tax consolidation legislation GME Resources Limited and its 100% owned Australian resident subsidiaries have implemented the tax consolidation legislation. Current and deferred tax amounts are accounted for in each individual entity as if each entity continued to act as a taxpayer on its own. GME Resources Limited recognises both its own current and deferred tax amounts and those current tax liabilities, current tax assets and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its controlled entities within the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts payable or receivable from or payable to other entities in the Group. Any difference between the amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) controlled entities in the tax consolidated group. Page 38 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED Other taxes (l) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Consolidated Statement of Financial Position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Consolidated Statement of Financial Position. (m) Plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and equipment – over 4 to 5 years. The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment (i) The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value. An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. (ii) Derecognition and disposal An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. Investments and other financial assets (n) Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available- for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. Page 39 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED (i) Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss. (ii) Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to- maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to- maturity, such as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. (iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. (iv) Available-for-sale investments Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models. Exploration and evaluation expenditure (o) Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Group has obtained the legal rights to explore an area are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: • • the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if: • • sufficient data exists to determine technical feasibility and commercial viability; and facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment accounting policy 1(p)). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. Page 40 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment. Impairment of assets (p) The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). previously recognised An assessment is also made at each reporting date as to whether there is any indication that impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (q) Trade and other payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. Issued capital (r) Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Earnings per share (s) Basic EPS is calculated as net result attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as net result attributable to members, adjusted for: • • • costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with potential dilutive ordinary shares that have been recognised as expenses; and other non discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and potential dilutive ordinary shares, adjusted for any bonus element. Page 41 - GME Resources Ltd - Annual Report 2013 NOTE 1 STATEMENT OF ACCOUNTING POLICIES CONTINUED Segment reporting (t) Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of GME Resources Limited. Leases (u) Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Parent entity financial information (v) The financial information for the parent entity, disclosed in Note 19 has been prepared on the same basis as the consolidated financial statements. CONSOLIDATED 2013 $ 2012 $ 32,152 45,124 - 1,450 - 33,602 36,825 53,005 18,281 12,155 - 77,911 44,071 242,248 100,000 6,965 20,200 172,289 40,228 42,923 31,564 13,978 6,827 53,515 25,941 214,976 2. REVENUE AND EXPENSES Operating Activities (a) Revenue: Interest received Proceeds from: Facilitation fee for prospecting rights Profit on sale of assets Other Total revenue (b) Expenses: Administration costs: Audit Fees Corporate compliance costs Employee expenses Insurance Loss on sale of investments Office costs Other Page 42 - GME Resources Ltd - Annual Report 2013 3. (a) INCOME TAX Income tax recognised in profit and loss The major components of tax expense are: Adjustments recognised in the current year in relation to the current tax – R&D tax offset Total tax benefit CONSOLIDATED 2013 $ 2012 $ 73,394 73,394 - - The prima facie income tax expense on pre-tax accounting result from operations reconciles to the income tax provided in the financial statements as follows: Accounting loss before tax from continuing operations (1,012,588) (1,393,156) - - Income tax benefit calculated at 30% Non-deductible expenses Unused tax losses and tax offset not recognised as deferred tax assets R&D tax incentive offset Unrecognised deferred tax assets/liabilities Income tax benefit reported in the Consolidated Statement of Comprehensive Income. (b) Unrecognised deferred tax balances Unrecognised deferred tax assets comprise: (303,777) (417,947) 196 380,228 73,394 21 527,576 - (76,647) (109,650) 73,394 Losses available for offset against future taxable income 11,567,444 11,187,216 Capital allowance differences Capital raising costs Accrued expenses and liabilities Unrecognised deferred tax liabilities comprise: Exploration expenditure Accrued income 4,089 13,619 5,809 4,079 14,153 5,809 11,590,961 11,211,258 9,704,247 9,631,479 331 9,704,578 9,631,479 Income tax benefit not recognised directly in equity during the year: Capital raising costs 3,024 2,653 Potential deferred tax assets attributable to tax losses and capital losses carried forward have not been brought to account because the Directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. Tax Consolidation Effective 1 July 2003, for the purposes of income taxation, the Company and its 100% wholly owned subsidiaries formed a tax consolidated group. The head entity of the tax consolidated group is GME Resources Limited. Page 43 - GME Resources Ltd - Annual Report 2013 4. TRADE AND OTHER RECEIVABLES Current Accrued interest GST Refundable Non-current Bonds The average credit period on sale of goods and rendering of services is 30 days. 5. PLANT AND EQUIPMENT (NON-CURRENT) Plant and equipment - at cost Less accumulated depreciation Total plant and equipment Reconciliation of the carrying amount of plant and equipment: Carrying amount at the beginning of the year Additions Disposals Depreciation Carrying amount at the end of the year CONSOLIDATED 2013 $ 1,104 13,745 14,849 2012 $ - 34,834 34,834 183,000 183,000 740,666 (736,549) 4,117 743,365 (735,161) 8,204 8,204 - - (4,087) 4,117 27,236 - (2,125) (16,907) 8,204 6. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE (NON-CURRENT) Deferred exploration and evaluation expenditure - at cost Movements: Balance at beginning of the year Direct expenditure Less expenditure written off 32,104,931 31,797,475 972,412 1,611,051 33,077,343 33,408,526 (729,855) (1,303,595) 32,347,488 32,104,931 The ultimate recoupment of the above deferred exploration and evaluation expenditure is dependent on the successful development and commercial exploitation or, alternatively, sale of the respective areas at amounts sufficient to recover the investment. The write-off of expenditure is based on tenements relinquished, and the evaluation of the carrying values of the remaining tenements as at 30 June 2013. 7. PAYABLES (CURRENT) Trade payables and accruals 77,911 77,911 93,558 93,558 Trade payables and accruals are non-interest bearing and normally settled on 30 day terms. Details of exposure to interest rate risk and fair value in respect of liabilities are set out in Note 16. There are no secured liabilities as at 30 June 2013. Page 44 - GME Resources Ltd - Annual Report 2013 CONSOLIDATED 2013 $ 2012 $ 8. CONTRIBUTED EQUITY AND RESERVES 384,663,864 (2012: 343,175,391) ordinary shares, fully paid 51,180,072 50,111,454 Ordinary shares Balance at the beginning of the year Entitlement issue (a) Entitlement issue Costs associated with entitlement issue 50,111,454 49,093,323 1,078,700 - - 1,026,974 (10,082) (8,843) Balance at the end of the year 51,180,072 50,111,454 Balance at the beginning of the year Entitlement issue (a) Entitlement issue Balance at the end of the year No of Shares No of Shares 343,175,391 322,635,902 41,488,473 - - 20,539,489 384,663,864 343,175,391 (a) In February 2013, 41,488,473 ordinary shares were issued under a non-renounceable rights issue at 2.6c per share. Reserves The option reserve is used to record the fair value of options issued and there have been no further issues of options during the year. 9. CONTROLLED ENTITIES Name of Controlled Entity (Country of Incorporation) GME Sulphur Inc (USA) GME Investments Pty Ltd (Australia) Golden Cliffs NL (Australia) NiWest Limited (Australia) Percentage Owned Company’s Cost of Investment 2013 % 100 100 100 100 2012 % 100 100 100 100 2013 $ - - 616,893 4,561,313 5,178,206 2012 $ - - 616,893 4,561,313 5,178,206 Page 45 - GME Resources Ltd - Annual Report 2013 10. CONSOLIDATED STATEMENT OF CASH FLOWS (a) Reconciliation of cash flows from operating activities Loss from ordinary activities after tax (939,194) (1,393,156) CONSOLIDATED 2013 $ 2012 $ Depreciation / amortisation Gain on sale of assets Net loss on sale of shares Exploration costs written off Tenement reversion account written off Exploration costs capitalised (excluding creditors) Decrease/(increase) in receivables Increase/(decrease) in sundry creditors 4,087 (1,450) - 729,855 7,026 16,907 (6,965) 6,827 1,303,595 - (966,994) (1,621,652) (1,106) (7,000) 6,242 (50,500) Net cash outflows from operating activities (1,174,776) (1,738,702) (b) Reconciliation of cash and cash equivalents Cash balance comprises: Cash at bank Deposits at call 10,384 751,463 761,847 28,349 838,206 866,555 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods between 3 to 6 months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. 11. AUDITOR’S REMUNERATION Amounts received or due and receivable by the auditors of GME Resources Ltd for: - - an audit or review of the financial statements of the Company and any other entity in the Group other services in relation to the Company and any other entity in the Group 35,425 27,270 1,400 36,825 12,958 40,228 12. SEGMENT REPORTING The Group has adopted AASB 8 Operating Segments which requires operating segments to be identified on the basis of internal reports about components of the Group that are reviewed by the chief operating decision maker, being the Board of GME Resources Limited, in order to allocate resources to the segment and assess its performance. The Board of GME Resources Limited reviews internal reports prepared as consolidated financial statements and strategic decisions of the Group are determined upon analysis of these internal reports. During the period, the Group operated predominantly in one business and geographical segment being the resources sector in Australia. Accordingly, under the ‘management approach’ outlined only one operating segment has been identified and no further disclosure is required in the notes to the consolidated financial statements. Page 46 - GME Resources Ltd - Annual Report 2013 13. LOSS PER SHARE Basic and diluted loss per share (cents) CONSOLIDATED 2013 $ Cents (0.26) $ 2012 $ Cents (0.43) $ Loss used in calculation of basic and diluted earnings per share (939,194) (1,393,156) Weighted average number of ordinary shares outstanding during the year used in calculation of basic and diluted earnings per share 359,316,112 325,899,711 14. DIRECTORS’ AND EXECUTIVES’ DISCLOSURES (a) Details of Key Management Personnel (i) Directors Michael Delaney Perrott – Non-executive Chairman James Noel Sullivan – Managing Director Peter Ross Sullivan – Non-executive Director Geoffrey Mayfield Motteram – Non-executive Director (Resigned 30 June 2013) (ii) Executives Mark Pitts – Company Secretary (b) Compensation of Key Management Personnel (i) Compensation Policy The Board of Directors is responsible for remuneration policies and the packages applicable to the Directors of the Company. The Board remuneration policy is to ensure that packages offered properly reflect a person’s duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates people of the highest quality. The Managing Director and Non-executive Directors are remunerated for the services they render to the Company and such services are carried out under normal commercial terms and conditions. Engagement and payment for such services are approved by the other Directors who have no interest in the engagement of services. There are no retirement or termination benefits payable to the Board or senior executives. At the date of this report the Company had not entered into any packages with Directors or senior executives which include performance based components. The Company does not operate an employee share option plan. (ii) Compensation of Key Management Personnel for the year ended 30 June 2013 Short Term 2013 Post Employment Benefits Salary & Fees $ Superannuation $ Long Term Benefits Options $ 120,000 30,000 24,000 24,000 60,000 258,000 - - - - - - - - - - - - Total Benefits $ 120,000 30,000 24,000 24,000 60,000 258,000 Executive Directors James N Sullivan Non-executive Directors Michael D Perrott Geoffrey M Motteram* Peter R Sullivan Executives Mr Mark Pitts * Resigned 30 June 2013 Page 47 - GME Resources Ltd - Annual Report 2013 NOTE 14 DIRECTORS’ AND EXECUTIVES’ DISCLOSURES CONTINUED (iii) Compensation of Key Management Personnel for the year ended 30 June 2012 Executive Directors James N Sullivan David J Varcoe * Non-executive Directors Michael D Perrott Geoffrey M Motteram Peter R Sullivan Executives Mr Mark Pitts Short Term 2012 Post Employment Benefits Salary & Fees $ Superannuation $ Long Term Benefits Options $ 40,000 216,099 30,000 24,000 24,000 40,228 374,327 - 21,610 - - - - 21,610 - - - - - - - Total Benefits $ 40,000 237,709 30,000 24,000 24,000 40,228 395,937 * Resigned 4 May 2013 (c) Shareholdings of Key Management Personnel (Consolidated) Director Michael D Perrott James N Sullivan Peter R Sullivan Geoffrey M Motteram Ordinary Shares Opening Balance 15,656,505 16,813,359 16,411,593 6,180,592 Net Change 2,609,417 2,802,224 8,679,982 1,030,098 Ordinary Shares Closing Balance 18,265,922 19,615,583 25,091,575 7,210,690 (d) Other transactions and balances with Key Management Personnel There were no other transactions with key management personnel during this financial year. 15. FINANCIAL INSTRUMENT DISCLOSURES Financial risk management objectives The Group is exposed to market risk (including interest rate), credit risk and liquidity risk. The Group does not issue derivative financial instruments, nor does it believe that it has exposure to such trading or speculative holdings through its investments in associates. Risk management is carried out by the Board as a whole, which provides the principles for overall risk management, as well as policies covering specific areas such as foreign exchange risk, interest rate risk, and liquidity risk. The Group uses different methods to measure different types of risk to which it is exposed. Where appropriate these methods will include sensitivity analysis in the case of interest rate, and other price risks and aging analysis for credit risk. (a) Categories of financial instruments 2013 Financial Assets Cash assets Receivables Payables Weighted Average Effective Rate 3.3% n/a n/a Floating Interest Rate $ 10,384 - 10,384 - - Fixed Interest Rate Maturing Over 1 Within 1 year $ 934,463 - 934,463 - - year $ - - - - - Non-interest Total Bearing $ - 14,849 14,849 77,911 77,911 $ 944,847 14,849 959,696 77,911 77,911 Page 48 - GME Resources Ltd - Annual Report 2013 NOTE 15 FINANCIAL INSTRUMENT DISCLOSURES CONTINUED 2012 Financial Assets Cash assets Receivables Payables Weighted Average Effective Rate 3.92% n/a n/a Floating Interest Rate $ 211,349 - 211,349 - - Fixed Interest Rate Maturing Over 1 Within 1 year $ 838,206 - 838,206 - - year $ - - - - Non-interest Total Bearing $ - 34,834 34,834 93,558 93,558 $ 1,049,555 34,834 1,084,389 93,558 93,558 (b) Interest rate risk sensitivity analysis The Company and the Group are exposed to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates, in respect of the cash balances and deposits. The sensitivity analyses below have been determined based on the exposure to interest rates for instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the change in interest rates. At reporting date, if interest rates had been 50 basis points higher and all other variables were held constant, the Group’s net loss before tax and equity would reduce by $4,248 and increase by $4,248, respectively (2012:$ 5,247). A reduction in the interest rate would have an equal but opposite effect. (c) Liquidity risk The Company manages liquidity risk by continually monitoring cash reserves and cash flow forecasts to ensure that financial commitments can be met as and when they fall due. (d) Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is not significantly exposed to credit risk from its operating activities, however, the Board does monitor receivables as and when they arise. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial asset mentioned above. The Group does not hold collateral as security. No material exposure is considered to exist by virtue of the possible non-performance of the counterparties to financial instruments and cash deposits. (e) Capital management risk The Company controls the capital of the Group in order to maximise the return to shareholders and ensure that the Group can fund its operations and continue as a going concern. The Company effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and the market. These responses include the management of expenditure and debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. (f) Net fair values The net fair value of the financial assets and financial liabilities approximates their carrying value. Other than listed investments that are measured at the quoted bid price at balance date adjusted for transaction costs expected to be incurred, no financial assets and financial liabilities are readily traded on organised markets in standardised form. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the Consolidated Statement of Financial Position and in the notes to and forming part of the financial statements. Page 49 - GME Resources Ltd - Annual Report 2013 16. COMMITMENTS AND CONTINGENT LIABILITIES There were no capital commitments or contingent liabilities, not provided for in the financial statements of the Group as at 30 June 2013, other than: (a) Mineral Tenement Leases In order to maintain current rights of tenure to mining tenements, the Group in its own right or in conjunction with its joint venture partners may be required to outlay amounts of approximately $1,888,500 (2012: $2,017,965) per annum on an ongoing basis in respect of tenement lease rentals and to meet the minimum expenditure requirements of the Western Australian and Queensland Mines Department. These obligations are expected to be fulfilled in the normal course of operations by the Group or its joint venture partners and are subject to variations dependent on various matters, including the results of exploration on the mineral tenements. (b) Claims of Native Title Legislative developments and judicial decisions (in particular the uncertainty created in the area of Aboriginal land rights by the High Court decision in the “Mabo” case and native title legislation) may have an adverse impact on the Group’s exploration and future production activities and its ability to fund those activities. It is impossible at this stage to quantify the impact (if any) which these developments may have on the Group’s operations. Native title claims have been made over ground in which the Group currently has an interest. It is possible that further claims could be made in the future. The Company has established access agreements with the major claimant groups in the area. All of the mineral resources are located on granted mining leases. Once granted there is no opportunity for veto of project development under the Native Title act however owners must adhere to the provisions of the Aboriginal Heritage Act 1972 which regulates how to deal with specific heritage sites that may exist on the tenement. (c) Non-cancellable Operating Lease Commitments Within one year One year or later and no later than five years CONSOLIDATED 2013 $ 10,681 4,853 15,534 2012 $ 45,920 76,680 122,600 17. INTERESTS IN BUSINESS UNDERTAKINGS - JOINT VENTURES The Company has entered into a number of agreements with other companies to gain interests in project areas. These interests will be earned by expending certain amounts of money on exploration expenditure within a specific time. The Company can, however, withdraw from these projects at any time without penalty. The amounts required to be expended in the next year have been included in Note 16 – Commitments and Contingent Liabilities. 18. RELATED PARTIES Total amounts receivable and payable from entities in the wholly owned Group at balance date: Non-current receivables Loans net of provisions for non- recovery Current payables Loans 14,235,410 13,588,952 1,387,360 1,353,728 During the year, the consolidated entity paid $13,801 (2012:$13,498) for commercial rent of a property owned by a director related entity. $46,143 (2012: $1,522) was paid to Kumarina Resources Pty Ltd (a director related entity) for shared premises lease and administrative salaries. $8,844 (21012: nil) was also paid to Kumarina for exploration services, and $15,700 (2012: Nil) was received from Kumarina for shared administrative salaries. Page 50 - GME Resources Ltd - Annual Report 2013 19. PARENT ENTITY DISCLOSURE As at, and throughout, the financial year ended 30 June 2013 the parent Company of the Group was GME Resources Limited. Results of the parent entity Loss for the period Other comprehensive income Total comprehensive result for the period Financial position of the parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising of: Share capital Option reserve Accumulated losses Total equity 20. SUBSEQUENT EVENTS CONSOLIDATED 2013 $ 2012 $ (340,835) (287,589) - 1,125 (340,835) (286,464) 776,696 866,555 34,328,221 33,647,620 1,463,269 1,463,269 1,410,451 1,410,451 51,180,072 50,111,454 973,537 973,537 (19,288,657) (18,947,822) 32,864,952 32,137,169 No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future financial years. Page 51 - GME Resources Ltd - Annual Report 2013 Directors’ Declaration 1. In the opinion of the Directors of GME Resources Limited (the “Company”): a. The financial statements, notes, and the additional disclosures are in accordance with the Corporations Act 2001 including: i) ii) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2013 and of its performance for the year then ended; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2013. b. c. 2. This declaration is signed in accordance with a resolution of the Board of Directors. James Sullivan Managing Director Perth, Western Australia 20th September 2013 Page 52 - GME Resources Ltd - Annual Report 2013 Page 53 - GME Resources Ltd - Annual Report 2013 Page 54 - GME Resources Ltd - Annual Report 2013 Shareholder Information The following additional information, applicable at 1 October 2013 is required by the Australian Securities Exchange Ltd in respect of listed public companies only. Shareholding Distribution of Shareholders a. 1 1,001 5,001 10,001 100,001 1,000 – 5,000 – – 10,000 – 100,000 and over TOTAL b. The number of shareholders holding less than a marketable parcel is 788. Number of Holders 89 301 156 521 218 1,285 c. The names of the substantial shareholders listed in the holding Company’s register as at 1 October 2013 are: Shareholder ICM Limited MANDALUP INVESTMENTS PTY LTD PETER ROSS SULLIVAN JAMES NOEL SULLIVAN d. Voting Rights Number 130,546,281 33,001,231 25,091,575 19,615,583 % of issued capital 33.94 8.58 6.52 5.10 The voting rights attached to each class of equity security are as follows: Ordinary shares — meeting or by proxy has one vote on a show of hands. Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a Page 55 - GME Resources Ltd - Annual Report 2013 e. 20 Largest Shareholders — Ordinary Shares Name 1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MANDALUP INVESTMENTS PTY LTD DUNCRAIG INVESTMENTS SERVICES PTY LTD EQUITY TRUSTEES LIMITED HARDROCK CAPITAL PTY LTD TWO TOPS PTY LTD MR PETER ROSS SULLIVAN MANDALUP INVESTMENTS PTY LTD NAVIGATOR AUSTRALIA LTD MMP (WA) PTY LTD PROTAX NOMINEES PTY LTD SULLIVANS GARAGE PTY LTD MD NICHOLAEFF PTY LTD HARDROCK CAPITAL PTY LTD MR JAMES NOEL SULLIVAN MR DOUGLAS STUART BUTCHER TUNZA HOLDINGS PTY LTD MR DONALD ANTHONY SULLIVAN MS EMILY JESSICA PATTIWAEL MR MERVYN ROSS SULLIVAN + MRS MARY SULLIVAN Number of Ordinary Fully Paid Shares Held % Held of Issued Ordinary Capital 132,568,636 24,517,847 18,265,922 11,508,024 11,394,630 10,390,539 9,027,100 8,483,384 6,677,062 6,261,803 5,663,777 5,388,332 5,232,368 4,478,444 4,288,174 4,267,311 3,603,121 3,032,833 2,590,858 2,510,898 280,151,063 34.46 6.37 4.75 2.99 2.96 2.70 2.35 2.21 1.74 1.63 1.47 1.40 1.36 1.16 1.11 1.11 0.94 0.79 0.67 0.65 72.83 Stock Exchange Listing Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Securities Exchange Limited. The ASX code is GME. Page 56 - GME Resources Ltd - Annual Report 2013

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