LEVEL 3, 10 OUTRAM STREET, WEST PERTH WA 6005
TELE: +61 8 9322 6178 FAX: +61 8 9481 2335
WWW.GENESISMINERALS.COM.AU
ACN 124 772 041
ANNUAL REPORT 2008
Annual Report 2008
Corporate Directory
DIRECTORS
Michael Haynes - Chairman
AUDITORS
Bentleys
Michael Fowler - Managing Director and CEO
Level 1, 12 Kings Park Road
Graeme Smith - Non- Executive Director
WEST PERTH WA 6005
SECRETARY
Graeme Smith
REGISTERED OFFICE
23 Altona Street
WEST PERTH WA 6005
PRINCIPAL PLACE OF BUSINESS
Level 3, 10 Outram Street
WEST PERTH WA 6005
Telephone: +61 8 9322 6178
Facsimile: +61 8 9481 2335
SOLICITORS
Wright Legal
Level 1, 103 Colin Street
WEST PERTH WA 6005
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 2, 45 St George’s Terrace
PERTH WA 6000
Internet Address
www.genesisminerals.com.au
Email Address
info@genesisminerals.com.au
Securities Exchange Listing
Genesis Minerals Limited shares are listed
on the Australian Securities Exchange
(ASX code: GMD)
page b
Annual Report 2008
Highlights 2008
Since listing in August 2007 Genesis Minerals Limited secured an option to acquire a 100%
interest in the Merceditas copper-gold project in northern Chile. The Option was acquired in
January 2008 and the first ever program of RC drilling targeting shallow oxide copper-gold
mineralisation was completed in May 2008. The results from the program confirmed the
potential for a significant copper resource to be defined at Merceditas.
The results from the initial drilling program included:
MERC002
12m @ 1.13 % copper from 4m
22m @ 0.68 % copper from 46m
MERC006
34m @ 1.12 % copper from 42m
MERC012
14m @ 0.99% copper from 46m
MERC017
26m @ 0.81 % copper from 0m
MERC018
28m @ 1.07 % copper from 0m
MERC019
6m @ 1.70 % copper from 12m
MERC027
24m @ 0.70 % copper from 8m
MERC033
22m @ 0.64 % copper from 0m
MERC035
64m @ 0.61% copper from 36m
page 1
Annual Report 2008
Dear Fellow Shareholder,
I am pleased to present the annual report of the Company for the year ending 30 June 2008.
Since listing on the ASX in August 2007 we have made very good progress towards achieving our stated objective of
discovering and/or acquiring commercially significant mineral deposits that can be readily brought into production.
In the 10 months since listing Genesis acquired an Option to purchase 100% of the Merceditas Oxide Copper Project in
northern Chile, set up an office and operating Company in Chile and importantly completed an initial drilling program at
the Merceditas Project.
Significant copper intersections were returned from surface in the first ever program of drilling targeting shallow oxide
copper mineralisation at the Merceditas Project. The results confirm the potential to delineate a substantial copper
resource at Merceditas. Having recently completed our second phase drilling program we anticipate releasing a JORC
code compliant resource in the last quarter of 2008.
You will be aware that we have been operating in an exceptionally difficult global financial environment for the past six to
twelve months. These circumstances have precluded us receiving full recognition of the value of our Merceditas project.
We will however continue to prudently employ our funds while operating as cost effectively as possible. Numerous
opportunities to acquire additional quality assets are now arising as a result of the financial turmoil and Genesis will
continue to evaluate and where appropriate, aggressively pursue these opportunities.
On behalf of the Board I would like to thank you for your continued support and I look forward to keeping you informed
of our progress during the year.
Michael Haynes
Chairman
page 2
Annual Report 2008
2008 Operations Summary
Merceditas Project - Chile
In January 2008 Genesis Minerals Limited reached agreement with Andes Pacific Development S.A., a private Chilean
company, to acquire a 100% interest in the 18km2 Merceditas copper-gold project in northern Chile. The Merceditas
Project is located 80km north of the city of Copiapó, approximately 1,000km north of Santiago, the capital of Chile.
The project is 60km from the Pacific Ocean, and 100km and 70km from the ports of Caldera and Chañaral respectively.
The Project is located in northern Chile’s Iron-Oxide-Copper-Gold ("IOCG") belt which is one of the most prospective
IOCG provinces in the world and hosts numerous deposits including Candelaria (470Mt @ 0.95% copper) and Manto
Verde (350Mt @ 0.75% copper). The Project is located at low altitude in the Atacama Desert and is easily accessible by
road. It is located in an area that is serviced by very good infrastructure.
The Merceditas Project comprises two main prospects, Paula and Lucy. Significant copper oxide mineralisation has
been defined at surface over a 5km by 3km area and is exposed in a number of trenches.
Previously Minera Mantos Blancos carried out exploration (geological mapping, trenching, drilling) at the Lucy Prospect
between 1992 and 1993. The entire Project area was explored from 1998 to 1999 by Minera Outokumpu Chile as part
of its regional exploration program in Chile. Minera Outokumpu Chile carried out geological mapping, trenching,
geochemical sampling, geophysical magnetic surveys and wide spaced drilling at both the Paula and Lucy Prospects.
Outokumpu terminated its exploration in Chile in late 1999. Andes Pacific acquired the Project shortly thereafter.
page 3
Annual Report 2008
2008 Operations Summary continued
Genesis Exploration
Genesis completed a 36 hole RC drilling program in May 2008 for 2,950 metres to follow-up the significant trench
results returned from Outokumpu sampling in 1998. The majority of this program comprised wide spaced drilling at the
Principal Zone in the south eastern corner of the Paula Prospect at the Merceditas Project. Limited drilling also targeted
the Capacho and Pupy Zones at the Paula Prospect. One hole was drilled into the north eastern side of the Lucy
Prospect.
Paula Prospect
Drilling at the Principal Zone SE intersected
copper mineralisation over 600 metres and
remains completely open along strike and at
depth. Results include 34m @ 1.12% copper
from 42 metres in MERC006 and 28m @ 1.07%
copper from 0 metres in MERC018.
Drilling at the Pupy Zone intersected significant
copper mineralisation over 400 metres of strike.
The potential of the Pupy Zone has been
confirmed by the intersection of 24m @ 0.7%
copper from 8 metres in MERC027, drilled 150
metres southwest of a historic drill hole which
returned 62m @ 0.58% copper from 8 metres.
At the Copacho Zone MERC033, drilled into the
western limit of the zone, returned 22m @ 0.64%
copper from 0 metres. Mineralisation remains
open at depth and along strike to the east.
Outcropping copper mineralisation has been
identified over 3,500 metres of strike at the Paula
Prospect, the majority of which remains untested
by drilling.
Copper mineralisation at the Paula Prospect is hosted within a sequence of variably altered and oxidised andesitic
rocks and is structurally controlled with mineralised zones typically having a high-grade core of chrysocolla (the
dominant copper oxide mineral) and semi-massive iron-oxide, surrounded by a lower grade stockwork of chrysocolla
veinlets.
Lucy Prospect
The Lucy prospect is a large low grade copper -
gold porphyry type system. Mineralisation is
oriented ENE and forms an oval shaped
hydrothermal alteration zone with a leached cap
that covers a surface area of 2 x 1 km. The
hydrothermal system is associated with two
porphyritic stocks surrounded by andesitic
volcanic rocks.
Minera Mantos Blancos (1992-1993) carried out
geological surveys, trenching and drilled twenty
four holes for approximately 3,850 metres.
Minera Outokumpu Chile carried out detailed
geological mapping and excavated twenty
trenches for a total of 4,420 metres with
approximately 1,500 samples collected.
page 4
2008 Operations Summary continued
Annual Report 2008
Nine RC holes were drilled for a total of 2,612 metres. Better results from previous drilling at the Lucy Prospect
included:
SRP-16
RC–16
RC–7
104m @ 0.36% Cu and 0.43g/t Au from 6 metres
44m @ 0.38% Cu and 0.25g/t Au from 52 metres
92m @ 0.37% Cu and 0.22 g/t Au from 26 metres
SRP-12 A
86m @ 0.54% Cu from 92 metres
SRP–17
SHP-4
96m @ 0.4% Cu from 20 metres
62m @ 0.37% Cu and 0.32g/t Au from 0 metres
As part of the initial drilling program in May 2008 at Merceditas one hole MERC035, drilled on the eastern limit of the
main drilled zone at the Lucy Prospect, returned 64m @ 0.61% copper and 0.1g/t gold from 36 metres to the of end of
hole. Mineralisation is open to the northeast from MERC035 along the interpreted trend of oxide copper mineralisation.
Significantly copper grades appear to be increasing towards the northeast. Mineralisation is hosted within a porphyry
body and is associated with a stockwork of chrysocolla veinlets.
Future Work
Further drilling was completed at Merceditas in September and October 2008 along with a program of detailed
mapping and interpretation of the host structures.
It is anticipated that a JORC code compliant resource will be calculated following completion of this drilling program
and receipt of results.
Trainor Joint Venture (Genesis RTE 75%) – Western Australia
The Trainor Project comprises four granted
tenements covering 759km² and is located
about 400km north east of Wiluna. Genesis
Minerals has the right to earn a 70% interest in
the tenements through expenditure of $2.5
million within 4 years of commencement of the
farm-in agreement.
The Project covers part of the under explored
Proterozoic Oldham Inlier a basement high
within the north western Officer Basin. The
combination of strong, widespread alteration
(barite-hematite-silica), carbonaceous siltstones
and shales in the Quadrio Formation, regional
scale structures and anomalous gold, zinc, lead,
barium, silver geochemistry returned from
previous sampling indicates the potential for the
formation of deposits containing gold, copper,
uranium, lead, or zinc. The Project has potential
to host both stratiform sediment hosted zinc-
lead-copper deposits and intrusion related gold
mineralisation related to the anomalous gravity
lows covered by the Project. The southern half
of the Project is prospective for magmatic
nickel-copper mineralisation.
page 5
Annual Report 2008
2008 Operations Summary continued
Two phases of geochemical sampling at the Oldham Range and Phenoclast Hill Prospects were completed at Trainor
during the year with a total of 3415 samples collected.
The sampling has confirmed the potential of the project to host both magmatic nickel – copper sulphide mineralisation
and stratiform sediment-hosted base-metal mineralisation in this highly prospective but grossly unexplored area.
Oldham Range Prospect
Sampling at the Oldham Range Prospect defined
three coincident copper-nickel-PGE-cobalt
anomalies which strike northwest. These
anomalies are associated with mafic intrusions
which strike west to northwest through the
prospect area. The strongest of these anomalies
(Anomaly B) is up to 1,600 metres long and is
associated with an embayment in a mafic
intrusion and has peak values of 740ppm copper
and 452ppm nickel. The southern anomaly
(Anomaly C) strikes northwest for over 3,000
metres and has maximum values of 634ppm
copper and 266ppm nickel. Significantly this
anomaly is associated with a small gossan which
has previously returned values of 899ppm
copper and 947ppm nickel.
The sampling also defined strong zinc anomalism
trending northwest over 7,000 metres through
the prospect area. On the western side of the
Oldham Range Prospect a strong zone of
anomalism at greater than 500ppm zinc is
defined over 1,600 metres. The zinc anomalism
is closely associated with an extensive vanadium
anomaly (maximum 0.28%) and is within
depositional regolith units.
Phenoclast Hill Prospect
Infill sampling completed at the Phenoclast Hill
Prospect defined a widespread zone of zinc and
lead geochemical anomalism. The lag defined
anomaly has a maximum lead value of 237ppm
and maximum zinc value of 498ppm and
appears to be coincident with the interpreted
Skates Hill Formation and Quadrio Formation
unconformity where it outcrops and trends
under sand and alluvial cover. Rock chip
sampling had previously returned zinc values of
1098ppm and 1413ppm in the area.
Planned Exploration
Exploration activities to be completed in the
second half of 2008 will include geological
mapping, prospecting and potentially a
geophysical survey.
page 6
The information in this report that relates to Exploration Results is based on information compiled by Michael Fowler, Genesis Minerals
Limited Managing Director, who is a Member of The Australasian Institute of Mining and Metallurgy. Michael Fowler is a permanent
employee of Genesis Minerals Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 JORC Code. Michael
Fowler consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
ABN 72 124 772 041
Annual Financial Report
for the year ended 30 June 2008
Annual Report 2008
Genesis Minerals Limited
Corporate Information
ABN 72 124 772 041
Directors
Michael Haynes (Non Executive Chairman)
Michael Fowler (Managing Director)
Graeme Smith (Non Executive Director)
Company Secretary
Graeme Smith
Registered Office
23 Altona Street
WEST PERTH WA 6005
Principal Place of Business
Level 3, 10 Outram Street
WEST PERTH WA 6005
Telephone: +61 8 9322 6178
Facsimile: +61 8 9481 2335
Postal Address
PO Box 437
WEST PERTH WA 6872
Solicitors
Wright Legal
Level 1, 103 Colin Street
WEST PERTH WA 6005
Share Register
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St George’s Terrace
PERTH WA 6000
Auditors
Bentleys
Level 1, 12 Kings Park Road
WEST PERTH WA 6005
Internet Address
www.genesisminerals.com.au
Email Address
info@genesisminerals.com.au
Securities Exchange Listing
Genesis Minerals Limited shares are listed on the Australian Securities Exchange (ASX code: GMD).
page 1
Contents
Directors' Report
Auditor’s Independence Declaration
Corporate Governance Statement
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Directors' Declaration
Independent Audit Report
ASX Additional Information
Genesis Minerals Limited
Annual Report 2008
3
8
9
13
14
15
16
17
36
37
39
page 2
Annual Report 2008
Genesis Minerals Limited
Directors’ Report
Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Genesis Minerals Limited
and the entities it controlled at the end of, or during, the year ended 30 June 2008.
DIRECTORS
The names and details of the Company's directors in office during the financial year and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Michael Haynes, (Non Executive Chairman, appointed 4 July 2007)
Michael Haynes has more than 15 years experience in the international mineral exploration industry. Mr. Haynes graduated from the
University of Western Australia with an honours degree in geology and geophysics and has explored for a wide variety of ore deposit
styles throughout Australia and extensively in North America, South East and Central Asia, Africa, South America and Europe.
Mr. Haynes has held technical positions with both BHP Minerals and Billiton plc. He ran his own successful consulting business for a
number of years providing professional geophysical and exploration services to both junior and major resource companies. He has
worked extensively on project generation and acquisition throughout his career.
Mr Haynes is the Managing Director of Black Range Minerals Limited, Chairman of Overland Resources Limited and a Director of
Bellamel Mining Limited. He was previously one of the founders and Executive Director of Iberian Resources Limited (resigned July
2007).
Michael Fowler, (Managing Director)
Michael Fowler is a geologist with 18 years industry experience. Mr Fowler graduated from Curtin University in 1988 with a Bachelor
of Applied Science degree majoring in geology and in 1999 received a Master of Science majoring in Ore Deposit Geology from the
University of Western Australia. On graduating he explored for gold and base metals for Dominion Mining in the Murchison, Gascoyne
and Eastern Goldfields Regions of Western Australia.
In 1996, Mr Fowler joined Croesus Mining NL and was made Exploration Manager in 1997. He oversaw all exploration for Croesus
until June 2004 and was then appointed Business Development Manager and then Managing Director in October 2005. Mr Fowler has
been responsible for the discovery and development of several significant gold deposits. He has been heavily involved in a number of
significant acquisitions and project reviews. Mr Fowler is currently working as Exploration Manager for Castle Minerals, and within the
last 3 years he was a Non Executive Director of Azure Minerals Limited (resigned September 2007).
Graeme Smith, (Non Executive Director)
Graeme Smith is a finance professional with over 20 years experience in accounting and company administration. He graduated from
Macquarie University with a Bachelor of Economics degree and has since received a Master of Business Administration and a Master of
Commercial Law. He is a Fellow of both the Australian Society of Certified Practicing Accountants and the Chartered Institute of
Secretaries and Administrators.
Mr Smith has held CFO and Company Secretary positions with other Australian mining and mining service companies. Mr Smith is a
director of Buxton Resources Limited. Mr Smith has not held any former directorships in the last 3 years.
COMPANY SECRETARY
Graeme Smith
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Genesis Minerals Limited were:
Michael Haynes
Michael Fowler
Graeme Smith
PRINCIPAL ACTIVITIES
Ordinary
Shares
660,000
2,000,000
60,000
Options over
Ordinary
Shares
1,000,000
5,000,000
500,000
The principal activities of the Group during the year were the acquisition of mining tenements, and the exploration of these tenements
with the objective of identifying economic mineral deposits.
DIVIDENDS
No dividends were paid or declared during the year. No recommendation for payment of dividends has been made.
page 3
Directors’ Report continued
Directors' Report continued
OPERATING AND FINANCIAL REVIEW
Genesis Minerals Limited
Annual Report 2008
Finance Review
The Group has recorded an operating loss after income tax for the year ended 30 June 2008 of $2,002,970 (2007: $25,803).
At 30 June 2008 cash assets available totalled $1,147,395.
Operating Results for the Year
Summarised operating results are as follows:
Geographic segments
Australia
Chile
Consolidation eliminations
Consolidated entity revenues and loss from ordinary activities before income tax expense
Shareholder Returns
Basic loss per share (cents)
2008
Revenues
$
Results
$
130,862
-
-
130,862
2008
(9.2)
(2,053,644)
(1,031,641)
1,082,315
(2,002,970)
2007
(0.5)
Risk Management
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with
the risks and opportunities identified by the board.
The company believes that it is crucial for all board members to be a part of this process, and as such the board has not established a
separate risk management committee.
The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks
identified by the board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders needs and manage business
risk.
Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
•
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Company raised $3 million through the issue of 15 million ordinary shares at initial public offer and was admitted to the official list
of Australian Securities Exchange Limited on 30 July 2007. Funds raised are being used to actively pursue the Company’s exploration
projects.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No matters or circumstances, besides those disclosed at note 24, have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in
future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group expects to maintain the present status and level of operations and hence there are no likely developments in the entity's
operations.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in
compliance with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for
the year under review.
page 4
Annual Report 2008
Directors' Report continued
REMUNERATION REPORT
Genesis Minerals Limited
Directors’ Report continued
The remuneration report is set out under the following main headings:
A
B
C
D
E
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
A
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The remuneration policy of Genesis Minerals Limited has been designed to align director and executive objectives with shareholder and
business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance
areas affecting the Company’s financial results. The board of Genesis Minerals Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Company.
The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Company is
as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the
board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The
board reviews executive packages annually by reference to the Company’s performance, executive performance and comparable
information from industry sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest
calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements.
The executive directors and executives receive a superannuation guarantee contribution required by the government, which is currently
9%, and do not receive any other retirement benefits.
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the
Black-Scholes methodology.
The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that
can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $300,000). Fees
for non-executive directors are not linked to the performance of the Company. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the company and are able to participate in the employee option plan.
Performance based remuneration
The company currently has no performance based remuneration component built into director and executive remuneration packages.
Company performance, shareholder wealth and directors' and executives' remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and
directors and executives performance. The Company plans to facilitate this process by directors and executives participating in future
option issues to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective in
increasing shareholder wealth. For details of directors and executives interests in options at year end, refer to note 17 of the financial
statements.
B
Details of the remuneration of the directors, the key management personnel of the Group (as defined in AASB 124 Related Party
Disclosures) and specified executives of Genesis Minerals Limited and the Genesis Minerals Group are set out in the following table.
Details of remuneration
The key management personnel of Genesis Minerals Limited include the directors and company secretary as per page 3 above.
Given the size and nature of operations of Genesis Minerals Limited, there are no other employees who are required to have their
remuneration disclosed in accordance with the Corporations Act 2001.
page 5
Directors’ Report continued
Directors' Report continued
Genesis Minerals Limited
Annual Report 2008
Key management personnel and other executives of Genesis Minerals Limited
Short-Term
Post Employment
Share-based
Payments
Total
Directors
Michael Haynes
2008
Michael Fowler
2008
2007
Graeme Smith
2008
2007
Salary
& Fees
$
49,958
146,667
-
27,500
-
Total key management personnel compensation
2008
2007
224,125
-
Non Monetary Superannuation
$
$
Retirement
benefits
$
$
$
1,798
1,798
-
1,798
-
5,394
-
-
14,667
-
2,475
-
17,142
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,756
163,132
-
31,773
-
246,661
-
Service agreements
C
On 25 June 2007 the Company entered into an Executive Service Agreement with Mr Michael Fowler.
Under the Agreement, Mr Michael Fowler is engaged by the Company to provide services to the Company in the capacity of Managing
Director and CEO.
Mr Fowler is to be paid a salary of $176,000, (inclusive of superannuation entitlement).
The Agreement is effective from the date the Company was admitted to the Official List (30 July 2007) and continues until terminated by
either Mr Fowler or the Company. Mr Fowler is entitled to a minimum notice period of three months from the Company and the
Company is entitled to a minimum notice period of three months from Mr Fowler.
Share-based compensation
D
There was no share-based compensation issued to key management personnel during the year.
Additional information
E
Performance income as a proportion of total compensation
No performance based bonuses have been paid to key management personnel during the financial year.
DIRECTORS' MEETINGS
During the year the Company held nine meetings of directors. The attendance of directors at meetings of the board were:
Michael Haynes
Michael Fowler
Graeme Smith
Directors Meetings
A
8
9
9
B
9
9
9
Notes
A – Number of meetings attended.
B – Number of meetings held during the time the director held office during the year.
SHARES UNDER OPTION
At the date of this report there are 9,750,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Share options issued during the year
Exercisable at 20 cents, on or before 28 February 2013
Total number of options outstanding as at 30 June 2008 and the date of this report
Number of options
9,250,000
500,000
9,750,000
page 6
Annual Report 2008
Directors' Report continued
Genesis Minerals Limited
Directors’ Report continued
The balance is comprised of the following:
Expiry date
28 February 2013
15 May 2012
Exercise price (cents)
20
20
Total number of options outstanding at the date of this report
Number of options
500,000
9,250,000
9,750,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of
any other body corporate.
INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the company has paid premiums insuring all the directors of Genesis Minerals Limited against costs
incurred in defending proceedings for conduct involving:
(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums paid is $5,393.
NON-AUDIT SERVICES
The following non-audit services were provided by the entity's auditor, Bentleys or associated entities. 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 satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:
(cid:1) All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the
auditor;
(cid:1) None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Bentleys received or are due to receive the following amounts for the provision of non-audit services:
2008
$
2007
$
Investigating accountants report
-
7,000
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to 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.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the
Corporations Act 2001.
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 page 8.
Signed in accordance with a resolution of the directors.
Michael Fowler
Managing Director
Perth, 30 September 2008
page 7
Annual Report 2008
Genesis Minerals Limited
Corporate Governance Statement
The Board of Directors
The company's constitution provides that the number of directors shall not be less than three and not more than nine. There is no
requirement for any share holding qualification.
As and if the company's activities increase in size, nature and scope the size of the board will be reviewed periodically, and as
circumstances demand. The optimum number of directors required to supervise adequately the company's constitution will be determined
within the limitations imposed by the constitution.
The membership of the board, its activities and composition, is subject to periodic review. The criteria for determining the identification
and appointment of a suitable candidate for the board shall include quality of the individual, background of experience and achievement,
compatibility with other board members, credibility within the company's scope of activities, intellectual ability to contribute to board's
duties and physical ability to undertake board's duties and responsibilities.
Directors are initially appointed by the full board subject to election by shareholders at the next general meeting. Under the company's
constitution the tenure of a director (other than managing director, and only one managing director where the position is jointly held) is
subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the
requirements of the Corporations Act 2001, the board does not subscribe to the principle of retirement age and there is no maximum
period of service as a director. A managing director may be appointed for any period and on any terms the directors think fit and, subject
to the terms of any agreement entered into, may revoke any appointment.
The board considers that the company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate
or special committees (other than an Audit Committee) at this time. The board as a whole is able to address the governance aspects of
the full scope of the company's activities and to ensure that it adheres to appropriate ethical standards.
Role of the Board
The board's primary role is the protection and enhancement of long-term shareholder value.
To fulfil this role, the board is responsible for oversight of management and the overall corporate governance of the company including
its strategic direction, establishing goals for management and monitoring the achievement of these goals.
Appointments to Other Boards
Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.
Independent Professional Advice
The board has determined that individual directors have the right in connection with their duties and responsibilities as directors, to seek
independent professional advice at the company's expense. With the exception of expenses for legal advice in relation to director's rights
and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.
Continuous Review of Corporate Governance
Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to
enable them to discharge their duties as directors of the company. Such information must be sufficient to enable the directors to
determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions.
The directors recognise that mining exploration is an inherently risky business and that operational strategies adopted should,
notwithstanding, be directed towards improving or maintaining the net worth of the company.
ASX Principles of Good Corporate Governance
The board has reviewed its current practices in light of the ASX Principles of Good Corporate Governance and Best Practice Guidelines
with a view to making amendments where applicable after considering the company's size and the resources it has available.
As the company's activities develop in size, nature and scope, the size of the board and the implementation of any additional formal
corporate governance committees will be given further consideration.
The following table sets out the company's present position with regard to adoption of these Principles.
page 9
Corporate Governance continued
Genesis Minerals Limited
Corporate Governance Statement continued
Annual Report 2008
ASX Principle
Status Reference/comment
Principle 1:
1.1
Lay solid foundations for
management and oversight
Formalise and disclose the functions
reserved to the board and those
delegated to management
Principle 2:
2.1
Structure the board to add value
A majority of board members should
be independent directors
2.2
2.3
2.4
2.5
Principle 3:
3.1
3.2
3.3
Principle 4:
4.1
4.2
The chairperson should be an
independent director
The roles of chairperson and chief
executive officer should not be
exercised by the same individual
The board should establish a
nomination committee
Provide the information indicated in
Guide to reporting on Principle 2
Promote ethical and responsible
decision-making
Establish a code of conduct to guide
the directors, the chief executive
officer (or equivalent), the chief
financial officer (or equivalent) and
any other key executives as to:
3.1.1 the practices necessary to
maintain confidence in the
company’s integrity
3.1.2 the responsibility and
accountability of individuals for
reporting or investigating reports
of unethical practices
Disclose the policy concerning trading
in company securities by directors,
officers and employees
Provide the information indicated in
Guide to Reporting on Principle 3
Safeguard integrity in financial
reporting
Require the chief executive officer (or
equivalent) and the chief financial
officer (or equivalent) to state in
writing to the board that the
company’s financial reports present a
true and fair view, in all material
respects, of the company’s financial
condition and operational results and
are in accordance with relevant
accounting standards
The board should establish an audit
committee
A = Adopted
N/A = Not adopted
Given the Company’s background, the nature and size of its business
and the current stage of its development, the board comprises three
directors, two of whom are non-executive. The board believes that
this is both appropriate and acceptable at this stage of the Company’s
development.
A
A
A
A
A
A
(in part)
The skills and experience of directors are set out in the company’s
Annual Report and on its website.
A
The company has formulated a Code of Conduct which can be
viewed on the company’s website.
The company has formulated a securities trading policy which can be
viewed on its website.
A
A
A
A
page 10
Annual Report 2008
Genesis Minerals Limited
Corporate Governance continued
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
Principle 4:
(continued)
4.3
4.4
4.5
Principle 5:
5.1
5.2
Principle 6:
6.1
6.2
Safeguard integrity in financial
reporting
Structure the audit committee so that it
consists of:
• Only non-executive directors
• A majority of independent
directors
• An independent chairperson who
is not the chairperson of the board
• At least three members
The audit committee should have a
formal charter
Provide the information indicated in
Guide to reporting on Principle 4
A
(in part)
A
A
A
N/A
A
A
Make timely and balanced
disclosure
Establish written policies and
procedures designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to ensure
accountability at a senior management
level for that compliance
Provide the information indicated in
Guide to Reporting on Principle 5
Respect the rights of shareholders
Design and disclose a communications
strategy to promote effective
communication with shareholders and
encourage effective participation at
general meetings
Request the external auditor to attend
the annual general meeting and be
available to answer shareholder
questions about the audit and the
preparation and content of the
auditor’s report
A
A
A
A
The company only has two non-executive directors.
In line with adherence to continuous disclosure requirements of ASX
all shareholders are kept informed of major developments affecting
the Company. This disclosure will be through regular shareholder
communications including the Annual Report, Quarterly Reports, the
Company website and the distribution of specific releases covering
major transactions or events.
Shareholders are encouraged to exercise their right to vote, either by
attending meetings, or by lodging a proxy. The Company’s auditors
attend all shareholders’ meetings.
Principle 7:
7.1
Recognise and manage risk
The board or appropriate board
committee should establish policies on
risk oversight and management
N/A While the Company does not have formalised policies on risk
management the board recognises its responsibility for identifying
areas of significant business risk and for ensuring that arrangements
are in place for adequately managing these risks. This issue is
regularly reviewed at board meetings and risk management culture is
encouraged amongst employees and contractors.
Determined areas of risk which are regularly considered include:
•
•
•
•
•
•
•
•
performance and funding of exploration activities
budget control and asset protection
status of mineral tenements
land access and native title considerations
compliance with government laws and regulations
safety and the environment
continuous disclosure obligations
sovereign risk
A = Adopted
N/A = Not adopted
page 11
Corporate Governance continued
Genesis Minerals Limited
Corporate Governance Statement continued
Annual Report 2008
ASX Principle
Status Reference/comment
Principle 7:
(continued)
7.2
Recognise and manage risk
The chief executive officer (or
equivalent) and the chief financial
officer (or equivalent) should state to
the Board in writing that:
7.2.1 the statement given in
accordance with best practice
recommendation 4.1 (the
integrity of financial statements)
is founded on a sound system of
risk management and internal
compliance and control which
implements the polices adopted
by the Board
7.2.2 the company’s risk management
and internal compliance and
control system is operating
efficiently and effectively in all
material respects
7.3
Provide information indicated in
Guide to Reporting on Principle 7
Principle 8:
8.1
Encourage enhanced Performance
Disclose the process for performance
evaluation of the board, its committees
and individual directors, and key
executives
Principle 9:
9.1
9.2
9.3
9.4
9.5
Remunerate fairly and responsibly
Provide disclosure in relation to the
company’s remuneration policies to
enable investors to understand (i) the
costs and benefits of those policies and
(ii) the link between remuneration paid
to directors and key executives and
corporate performance
The board should establish a
remuneration committee
Clearly distinguish the structure of
non-executive directors remuneration
from that of executives
Ensure that payment of equity-based
executive remuneration is made in
accordance with thresholds set in plans
approved by shareholders
Provide information indicated in ASX
Guide to Reporting on Principle 9
Principle 10: Recognise legitimate interests of
10.1
Stakeholders
Establish and disclose a code of
conduct to guide compliance with
legal and other obligations to
legitimate stakeholders
A = Adopted
N/A = Not adopted
A
A
A
A
A
A
A
A
(in part)
The remuneration of executive and non-executive directors is
reviewed by the board with the exclusion of the director concerned.
The remuneration of management and employees is reviewed by the
board and approved by the chairman.
The company discloses remuneration-related information in its
Annual Report to shareholders in accordance with the Corporations
Act 2001.
Remuneration levels are determined by the board on an individual
basis, the size of the Company making individual assessment more
appropriate than formal remuneration policies.
A
The company’s Code of Conduct is set out in the company’s website.
The board continues to review existing procedures over time to
ensure adequate processes are in place.
All directors, employees and contractors are expected to act with the
utmost integrity and objectivity in their dealings with other parties,
striving at all times to enhance the reputation and performance of the
company.
page 12
Annual Report 2008
Genesis Minerals Limited
Income Statement
YEAR ENDED 30 JUNE 2008
Notes
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
REVENUE FROM CONTINUING OPERATIONS
4
130,862
955
130,862
955
EXPENDITURE
Depreciation expense
Salaries and employee benefits expense
Exploration expenses
Impairment expense
Corporate expenses
Administration costs
Share based payments expense
LOSS BEFORE INCOME TAX
INCOME TAX BENEFIT / (EXPENSE)
(1,687)
(140,802)
(1,555,288)
(51,372)
(130,966)
(190,167)
(63,550)
(37)
-
(2,070)
-
(23,558)
(1,093)
-
(1,687)
(140,802)
(589,842)
(1,082,315)
(126,749)
(179,561)
(63,550)
(37)
-
(2,070)
-
(23,558)
(1,093)
-
(2,002,970)
(25,803)
(2,053,644)
(25,803)
-
-
-
-
5
27
6
LOSS FOR THE YEAR
(2,002,970)
(25,803)
(2,053,644)
(25,803)
Basic and diluted loss per share for loss attributable to
the ordinary equity holders of the company (cents per
share)
26
(9.2)
(0.5)
The above Income Statement should be read in conjunction with the Notes to the Financial Statements.
page 13
Balance Sheet
AT 30 JUNE 2008
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Other financial assets
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Genesis Minerals Limited
Annual Report 2008
Notes
Consolidated
Parent Entity
7
8
9
10
11
12
13
2008
$
1,147,395
10,515
-
1,157,910
-
-
7,665
7,665
2007
$
220,994
2,168
57,583
280,745
-
-
1,063
1,063
2008
$
1,057,595
8,733
-
1,066,328
-
-
7,665
7,665
2007
$
220,994
2,168
57,583
280,745
-
-
1,063
1,063
1,165,575
281,808
1,073,993
281,808
175,320
175,320
66,109
66,109
135,041
135,041
66,109
66,109
175,320
66,109
135,041
66,109
990,255
215,699
938,952
215,699
14
15(a)
15(b)
2,954,849
64,179
(2,028,773)
241,502
-
(25,803)
2,954,849
63,550
(2,079,447)
241,502
-
(25,803)
990,255
215,699
938,952
215,699
The above Balance Sheet should be read in conjunction with the Notes to the Financial Statements.
page 14
Annual Report 2008
Genesis Minerals Limited
Statement of Changes in Equity
YEAR ENDED 30 JUNE 2008
Notes
Consolidated
Parent Entity
TOTAL EQUITY AT THE BEGINNING OF THE YEAR
Exchange differences on translation of foreign
operations
NET INCOME RECOGNISED DIRECTLY IN EQUITY
LOSS FOR THE YEAR
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE
YEAR ATTRIBUTABLE TO MEMBERS OF GENESIS
MINERALS LIMITED
Transactions with equity holders in their capacity as
equity holders:
Shares issued during the year
Share issue transaction costs
Employee and contractor share options
15
15
14
14
15
2008
$
215,699
2007
$
2008
$
2007
$
-
215,699
-
629
629
(2,002,970)
-
-
(25,803)
-
-
(2,053,644)
-
-
(25,803)
(2,002,341)
(25,803)
(2,053,644)
(25,803)
3,000,000
(286,653)
63,550
2,776,897
241,502
-
-
241,502
3,000,000
(286,653)
63,550
2,776,897
241,502
-
-
241,502
TOTAL EQUITY AT THE END OF THE YEAR
990,255
215,699
938,952
215,699
The above Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.
page 15
Genesis Minerals Limited
Annual Report 2008
Cash Flow Statement
YEAR ENDED 30 JUNE 2008
Notes
Consolidated
Parent Entity
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Expenditure on mining interests
Interest received
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Loans to related party
Payment for subsidiary
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Payments of share issue costs
NET CASH INFLOW FROM FINANCING
ACTIVITIES
NET INCREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the
financial year
CASH AND CASH EQUIVALENTS AT THE END OF THE
YEAR
2008
$
2007
$
2008
$
2007
$
(433,488)
(1,491,007)
130,419
25
(1,794,076)
22
(8,289)
-
-
(8,289)
(4,944)
-
955
(3,989)
(1,100)
-
-
(417,392)
(518,524)
130,419
(805,497)
(8,289)
(478,379)
(600,000)
(1,100)
(1,086,668)
(4,944)
-
955
(3,989)
(1,100)
-
-
(1,100)
3,000,000
(271,234)
241,502
(15,419)
3,000,000
(271,234)
241,502
(15,419)
2,728,766
226,083
2,728,766
226,083
926,401
220,994
220,994
836,601
220,994
-
220,994
-
7
1,147,395
220,994
1,057,595
220,994
The above Cash Flow Statement should be read in conjunction with the Notes to the Financial Statements.
page 16
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements
30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for
Genesis Minerals Limited as an individual entity and the consolidated entity consisting of Genesis Minerals Limited and its subsidiaries.
The financial report is presented in the Australian currency. Genesis Minerals Limited is a no liability company, domiciled and
incorporated in Australia. The financial report was authorised for issue by the directors on 30 September 2008. The directors have the
power to amend and reissue the financial report.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance
with AIFRS ensures that the financial report of Genesis Minerals Limited complies with International Financial Reporting Standards
(IFRS).
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of
property, plant and equipment and investment property.
Going concern
The accounts have been prepared on the going concern basis, which contemplates continuity of normal business activities and the
realisation of assets and settlement of liabilities in the ordinary course of business. The Group incurred a loss from ordinary activities of
$2,002,970 for the year ended 30 June 2008 (2007: $25,803). Included within this loss was the write off of exploration expenditure of
$1,555,288 (2007: $2,070).
The net working capital position of the Group at 30 June 2008 was $982,590 (2007: $157,053) and the net increase in cash held during
the year was $926,401 (2007: increase of $220,994).
The ability of the Company and the Group to continue to pay its debts as and when they fall due is dependent upon the Company
successfully raising additional share capital and ultimately developing one of its mineral properties.
The Directors believe it is appropriate to prepare these accounts on a going concern basis because:
•
the Directors have an appropriate plan to raise additional funds as and when it is required. In light of the Group’s current exploration
projects, the Directors believe that the additional capital required can be raised in the market; and
the Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable.
•
Should the Company not be successful in its planned capital raisings, it may be necessary to sell some of its assets, farm out exploration
projects, reduce exploration expenditure by various methods including surrendering less prospective tenements. Although the Directors
believe that they will be successful in these measures, if they are not, the Company and the Group may be unable to continue as a going
concern and therefore may be unable to realise its assets and extinguish its liabilities in the normal course of business and at the amounts
stated in the financial report.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Genesis Minerals Limited (“Company”
or “parent entity”) as at 30 June 2008 and the results of all subsidiaries for the year then ended. Genesis Minerals Limited and its
subsidiaries together are referred to in this financial report as the Group or consolidated entity.
Subsidiaries are all of those entities (including special purpose entities) over which the Group has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another
entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
page 17
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to
minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests
result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of
identifiable net assets of the subsidiary.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet
respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Genesis Minerals Limited.
(c) Segment reporting
A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks
and returns that are different to those of other business segments. A geographical segment is identified when products or services are
provided within a particular economic environment subject to risks and returns that are different from those of segments operating in
other economic environments.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian
dollars, which is Genesis Minerals Limited's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when
they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net
investment in a foreign operation.
Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation
differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in
profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as
available-for-sale financial assets are included in the fair value reserve in equity.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
•
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates (unless that is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
•
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold or
any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the
income statement, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities
and translated at the closing rate.
(e) Revenue recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
page 18
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(f) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable
that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
(g) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-
term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the
income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and
the lease term.
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income
statement on a straight-line basis over the period of the lease.
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.
(i) Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the balance sheet.
(j) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful
debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
page 19
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(k) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the
investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets
classified as held-to-maturity, re-evaluates this designation at each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are
classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant
amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity
financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are
classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within 12 months of the balance sheet date. Investments are designated available-for-sale if they do not have
fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through
profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are
expensed to the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the
income statement as gains and losses from investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or
losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the
income statement within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair
value through profit or loss is recognised in the income statement as part of revenue from continuing operations when the Group’s right
to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed
between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the
security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in
carrying amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as
available-for-sale are recognised in equity.
Details on how the fair value of financial investments is determined are disclosed in note 2.
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired.
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its
cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment
losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income
statement.
page 20
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(l) Plant and equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to
the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the
reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method to allocate their cost, net of their residual values,
over their estimated useful lives. The rates vary between 20% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(h)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.
When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained
earnings.
(m) Exploration and evaluation costs
Exploration and evaluation costs are expensed as incurred.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid.
The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
(o) Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the
balance sheet date are recognised in other payables in respect of employees’ services up to the balance sheet date and are measured at the
amounts expected to be paid when the liabilities are settled.
(ii) Share-based payments
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby
employees render services in exchange for shares or rights over shares (‘equity-settled transactions’), refer to note 27.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are
granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting
date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This
opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a
replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original
award.
(p) Issued capital
Ordinary shares are classified as equity.
page 21
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
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. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in
the cost of the acquisition as part of the purchase consideration.
(q) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(r) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(s) Comparative figures
Genesis Minerals Limited was incorporated as a private company on 16 April 2007 and converted to a public company on 29 June 2007.
The comparative information included in these statements is for the period from incorporation to 30 June 2007.
(t) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods.
The Company’s assessment of the impact of these new standards and interpretations is set out below.
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8
AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a
significant change in the approach to segment reporting, as it requires adoption of a ‘management approach’ to reporting on financial
performance. The information being reported will be based on what the key decision makers use internally for evaluating segment
performance and deciding how to allocate resources to operating segments. The Group has not yet decided when to adopt AASB 8.
Adoption of AASB 8 may result in different segments, segment results and different types of information being reported in the segment
note of the financial report. However, at this stage, it is not expected to affect any of the amounts recognised in the financial statements.
(ii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian Accounting Standards arising
from AASB 101
A revised AASB 101 was issued in September 2007 and is applicable for annual reporting periods beginning on or after 1 January 2009.
It requires the presentation of a statement of comprehensive income and makes changes to the statement of changes in equity, but will
not affect any of the amounts recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified
items in the financial statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the
beginning of the comparative period. The Group intends to apply the revised standard from 1 July 2009.
(u) Critical accounting judgements, estimates and assumptions
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available
current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the Group.
page 22
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
2.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all board members to be
involved in this process. The Managing Director, with the assistance of senior management as required, has responsibility for identifying,
assessing, treating and monitoring risks and reporting to the board on risk management.
(a) Market risk
(i) Foreign exchange risk
The Group and the parent entity operate internationally and are exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the Chilean Peso.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is
not the entity’s functional currency and net investments in foreign operations. The Group has not formalised a foreign currency risk
management policy however, it monitors its foreign currency expenditure in light of exchange rate movements.
The Group’s and the parent entity’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Consolidated
Parent Entity
2008
CLP
44,236,455
26,184,251
(19,842,189)
2007
CLP
2008
CLP
2007
CLP
-
-
-
-
-
-
-
-
-
Sensitivity analysis
Due to the nature of the financial instruments held at 30 June 2008, had the Australian dollar weakened/strengthened by 10% against the
Chilean Peso with all other variables held constant, there would have been nil impact on the Group’s and the parent entity’s post-tax
losses for the year (2007 – Nil) and immaterial movements to the Group’s and parent entity’s equity for both years presented.
(ii) Price risk
Given the current level of operations, neither the Group nor the parent entity are exposed to price risk.
(iii) Interest rate risk
The Group and the parent entity are exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to
monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the
interest rate return. The entire balance of cash and cash equivalents for the Group $1,147,395 (2007: $220,994) and the parent entity
$1,057,595 (2007: $220,994) are subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum
of six months fluctuate during the year depending on current working capital requirements. The weighted average interest rate received
on cash and cash equivalents by the Group was 5.9% (2007: 0.9%) and by the parent entity 6.0% (2007: 0.9%).
Sensitivity analysis
At 30 June 2008, if interest rates had changed by -/+ 80 basis points from the weighted average rate for the year with all other variables
held constant, post-tax loss for both the Group and the parent entity would have been $17,500 lower/higher (2007 - $900 lower/higher)
as a result of lower/higher interest income from cash and cash equivalents.
(b) Credit risk
Neither the Group nor the parent entity have any significant concentrations of credit risk. The maximum exposure to credit risk at
balance date is the carrying amount (net of provision for impairment) of those assets as disclosed in the balance sheet and notes to the
financial statements.
As the Group does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal credit risk
management policy is not maintained.
page 23
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
2.
FINANCIAL RISK MANAGEMENT (cont’d)
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable
securities are available to meet the current and future commitments of the Group. Due to the nature of the Group’s activities, being
mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings.
The Board of Directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding
requirements, with a view to initiating appropriate capital raisings as required.
The financial liabilities of the Group and the parent entity are confined to trade and other payables as disclosed in the Balance Sheet. All
trade and other payables are non-interest bearing and due within 12 months of the balance sheet date.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
All financial assets and financial liabilities of the Group and the parent entity at the balance date are recorded at amounts approximating
their carrying amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market
price used for financial assets held by the Group is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature.
page 24
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
3.
SEGMENT INFORMATION
Description of segments
The Group's operations are in the mining industry. Geographically, the Group operates in two predominant segments, being Australia
and Chile. The head office and investment activities of the Group take place in Australia.
Primary reporting format – geographical segments
Segment revenue
Other revenue
Total segment revenue
Intersegment elimination
Consolidated revenue
Segment result
Segment result
Intersegment elimination
Loss before income tax
Income tax (expense)/benefit
Loss for the year
Segment assets and liabilities
Segment assets
Intersegment elimination
Total assets
Australia
Chile
Consolidated
2008
$
2007
$
2008
$
2007
$
2008
$
2007
$
130,862
130,862
955
955
-
-
-
-
130,862
130,862
-
130,862
955
955
-
955
(2,053,644)
(25,803)
(1,031,641)
-
(3,085,285)
(25,803)
1,082,315
(2,002,970)
-
(2,002,970)
-
(25,803)
-
(25,803)
1,073,993
281,808
239,279
-
1,313,272
281,808
(147,697)
1,165,575
-
281,808
Segment liabilities
(135,041)
66,109
(522,594)
-
(657,635)
66,109
Intersegment elimination
Total liabilities
Other segment information
Acquisitions of property, plant and
equipment, intangibles and other
non-current segment assets
Depreciation expense
Impairment expense
Intersegment elimination
Total impairment expense
4.
REVENUE
From continuing operations
Other revenue
Interest
page 25
8,289
1,687
1,082,315
1,100
37
-
-
-
51,372
482,315
(175,320)
-
66,109
-
-
-
8,289
1,687
1,133,687
(1,082,315)
51,372
1,100
37
-
-
-
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
130,862
955
130,862
955
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
5.
EXPENSES
Profit / (loss) before income tax includes the
following specific expenses:
Impairment expense - loans to related party
Impairment expense - investment in controlled entities
Impairment expense - trade and other receivables
6.
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
Loss from continuing operations before income tax
expense
Prima facie tax benefit at the Australian tax rate of 30%
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Share-based payments
Sundry items
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no
deferred tax asset has been recognised
Income tax expense
(c) Unrecognised temporary differences
Deferred Tax Assets (at 30%)
On Income Tax Account
Capital raising costs
Provisions for impairment
Carry forward tax losses
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
-
-
51,372
-
-
-
-
-
-
-
-
-
482,315
600,000
-
-
-
-
-
-
-
-
-
-
(2,002,970)
(25,803)
(2,053,644)
(25,803)
(600,891)
(7,741)
(616,093)
(7,741)
19,065
14
(581,812)
-
-
(7,741)
19,065
14
(597,014)
(1,788)
-
307,495
583,600
-
7,741
-
289,519
-
68,797
15,412
591,341
675,550
-
-
7,741
7,741
68,797
324,695
297,260
690,752
-
-
(7,741)
-
7,741
-
-
-
7,741
7,741
Deferred Tax Liabilities (at 30%)
-
-
-
-
7.
CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents as shown in the balance
sheet and the statement of cash flows
647,395
500,000
220,994
-
557,595
500,000
220,994
-
1,147,395
220,994
1,057,595
220,994
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of
the Group, and earn interest at the respective short-term deposit rates.
page 26
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
8.
CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Government taxes receivable
Provision for impairment (note (a))
Sundry receivables
(a) Impaired receivables
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
54,340
(51,372)
7,547
10,515
-
-
2,168
2,168
2,968
-
5,765
8,733
-
-
2,168
2,168
As at 30 June 2008 the GTS receivable from the Group’s operations in Chile (tax similar to Australia’s GST), with a nominal value of
$51,372 (2007: Nil), has been provided for in full. The GTS may only be recoverable once the Group’s operations are producing revenue
in Chile. There were no impaired receivables for the parent in 2008 or 2007.
Movements in the provision for impairment of receivables are as follows:
Balance at the beginning of the year
Provision for impairment recognised during the year
9.
CURRENT ASSETS - OTHER
Deferred capital raising costs
10. NON-CURRENT ASSETS – RECEIVABLES
Loans to subsidiary
Provision for impairment (note (a))
(a) Impaired receivables
Consolidated
2008
$
-
51,372
51,372
2007
$
-
-
-
Consolidated
Parent Entity
2008
$
-
-
-
-
2007
$
57,583
2008
$
2007
$
-
57,583
-
-
-
482,315
(482,315)
-
-
-
-
As at 30 June 2008 the parent entity’s loans to subsidiary with a nominal value of $482,315 (2007: Nil), had been provided for in full.
Refer to note 21 for further information on the loans to subsidiary.
Movements in the provision for impairment of receivables for the parent entity are as follows:
Balance at the beginning of the year
Provision for impairment recognised during the year
Parent Entity
2008
$
-
482,315
482,315
2007
$
-
-
-
page 27
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
Notes
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
11. NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS
Shares in subsidiary – at cost
Provision for impairment (note (a))
22
(a) Impaired investment
-
-
-
-
-
-
600,000
(600,000)
-
-
-
-
As at 30 June 2008 the investment in subsidiary carried at cost by the parent entity, with a nominal value of $600,000 (2007: Nil), has
been provided for in full. An impairment assessment is undertaken each financial year by examining the financial position of the
subsidiary and the market in which the subsidiary operates to determine whether there is objective evidence that the subsidiary is
impaired. When such objective evidence exists, the Company recognises an allowance for the impairment.
Movements in the provision for impairment of investment are as follows:
Balance at the beginning of the year
Provision for impairment recognised during the year
12. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Additions
Depreciation charge
Closing net book amount
13. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
14.
ISSUED CAPITAL
(a) Share capital
Ordinary shares fully paid
Total issued capital
Parent Entity
2008
$
-
600,000
600,000
2007
$
-
-
-
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
9,389
(1,724)
7,665
1,063
8,289
(1,687)
7,665
1,100
(37)
1,063
-
1,100
(37)
1,063
9,389
(1,724)
7,665
1,063
8,289
(1,687)
7,665
1,100
(37)
1,063
-
1,100
(37)
1,063
152,566
22,754
175,320
56,005
10,104
66,109
112,796
22,245
135,041
56,005
10,104
66,109
2008
2007
Notes
Number of
shares
$
Number of
shares
$
14(b), 14(d)
23,000,010
2,954,849
8,000,010
241,502
23,000,010
2,954,849
8,000,010
241,502
page 28
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
14.
ISSUED CAPITAL (cont’d)
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
(cid:1) Issued for cash at IPO at 20 cents per share
(cid:1) Issued for cash at incorporation at 20 cents per share
(cid:1) Issued for cash at 0.1 cent per share
(cid:1) Issued for cash at 1 cent per share
(cid:1) Issued for cash at 5 cents per share
(cid:1) Issued for cash at 10 cents per share
Less: Transaction costs
End of the financial year
(c) Movements in options on issue
Beginning of the financial year
Issued during the year:
(cid:1) Exercisable at 20 cents, on or before 28 Feb 2013
(cid:1) Exercisable at 20 cents, on or before 15 May 2012
End of the financial year
2008
2007
Number of
shares
$
Number of
shares
$
8,000,010
241,502
-
-
15,000,000
-
-
-
-
-
-
23,000,010
3,000,000
-
-
-
-
-
(286,653)
2,954,849
-
10
3,750,000
1,525,000
1,000,000
1,725,000
-
8,000,010
-
2
3,750
15,250
50,000
172,500
-
241,502
Number of options
2007
2008
9,250,000
-
500,000
-
9,750,000
-
9,250,000
9,250,000
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number
of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll
each share is entitled to one vote.
(e) Capital risk management
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going concern, so
that they may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the
primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working
capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is
to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital
raisings as required. The working capital position of the Group and the parent entity at 30 June 2008 and 30 June 2007 is as follows:
Consolidated
Parent Entity
2008
$
1,147,395
10,515
(175,320)
982,590
2007
$
220,994
2,168
(66,109)
157,053
2008
$
1,057,595
8,733
(135,041)
931,287
2007
$
220,994
2,168
(66,109)
157,053
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
page 29
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
15. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Foreign currency translation reserve
Share-based payments reserve
Movements:
Foreign currency translation reserve
Balance at beginning of year
Currency translation differences arising during the year
Balance at end of year
Share-based payments reserve
Balance at beginning of year
Options issued to employees and contractors
Balance at end of year
(b) Accumulated losses
Balance at beginning of year
Net loss for the year
Balance at end of year
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
629
63,550
64,179
-
629
629
-
63,550
63,550
-
-
-
-
-
-
-
-
-
-
63,550
63,550
-
-
-
-
63,550
63,550
-
-
-
-
-
-
-
-
-
(25,803)
(2,002,970)
(2,028,773)
-
(25,803)
(25,803)
(25,803)
(2,053,644)
(2,079,447)
-
(25,803)
(25,803)
(c) Nature and purpose of reserves
(i) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as
described in note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued.
30 JUNE 2008
16. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
17. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation
Short-term benefits
Post employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Consolidated
Parent Entity
2008
$
229,519
17,142
-
-
-
246,661
2007
$
-
-
-
-
-
-
2008
$
229,519
17,142
-
-
-
246,661
2007
$
-
-
-
-
-
-
The Company has taken advantage of the relief provided by AASB 2008-4 Amendments to Australian Accounting Standard – Key
Management Personnel Disclosures by Disclosing Entities and has transferred the detailed remuneration disclosures to the directors’
report. The relevant information can be found in sections A-C of the remuneration report on pages 5 and 6.
30
page 30
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
17. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
(b) Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the
options, can be found in section D of the remuneration report on page 6.
(ii) Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of Genesis Minerals Limited
and other key management personnel of the Group, including their personally related parties, are set out below:
2008
Balance at
start of the
year
Granted as
compensation Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable
Unvested
Directors of Genesis Minerals Limited
Michael Haynes
Michael Fowler
Graeme Smith
2007
-
5,000,000
500,000
Balance at
start of the
year
Directors of Genesis Minerals Limited
-
-
-
-
-
-
1,000,000
-
-
1,000,000
5,000,000
500,000
1,000,000
5,000,000
500,000
-
-
-
Granted as
compensation Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable
Unvested
Michael Fowler
Graeme Smith
-
-
-
-
-
-
5,000,000
500,000
5,000,000
500,000
5,000,000
500,000
-
-
All vested options are exercisable at the end of the year.
(iii) Share holdings
The numbers of shares in the company held during the financial year by each director of Genesis Minerals Limited and other key
management personnel of the Company, including their personally related parties, are set out below. There were no shares granted during
the reporting period as compensation.
2008
Directors of Genesis Minerals Limited
Ordinary shares
Michael Haynes
Michael Fowler
Graeme Smith
2007
Directors of Genesis Minerals Limited
Ordinary shares
Michael Fowler
Graeme Smith
(c) Loans to key management personnel
There were no loans to key management personnel during the year.
page 31
Received
during the
year on the
exercise of
options
Balance at
start of the
year
Other
changes
during the
year
Balance at
end of the
year
-
2,000,000
50,000
-
-
-
660,000
-
10,000
660,000
2,000,000
60,000
Received
during the
year on the
exercise of
options
Balance at
start of the
year
Other
changes
during the
year
Balance at
end of the
year
-
-
-
-
2,000,000
50,000
2,000,000
50,000
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
18. REMUNERATION OF AUDITORS
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
(a) Audit services
Bentleys - audit of financial reports
Non-Bentleys audit firm for the audit or review of
financial reports of any entity in the Group
Total remuneration for audit services
4,217
25,217
-
21,000
-
7,500
-
7,500
21,000
21,000
7,500
7,500
(b) Non-audit services
Bentleys – independent accountants report
Total remuneration for other services
19. CONTINGENCIES
-
-
7,000
7,000
-
-
7,000
7,000
There are no material contingent liabilities or contingent assets of the Company at balance date.
20. COMMITMENTS
(a) Exploration commitments
The Company has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest
in. Outstanding exploration commitments are as follows:
within one year
later than one year but not later than five years
376,000
489,000
865,000
125,000
-
125,000
376,000
489,000
865,000
125,000
-
125,000
(b) Remuneration commitments
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management personnel
referred to in section C of the remuneration report on page 6 that are not recognised as liabilities and are not included in the key
management personnel compensation.
within one year
later than one year but not later than five years
44,000
-
44,000
-
-
-
44,000
-
44,000
-
-
-
21. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Genesis Minerals Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 22.
(c) Key management personnel
Disclosures relating to key management personnel are set out in note 17.
page 32
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
21. RELATED PARTY TRANSACTIONS (cont’d)
(d) Loans to related parties
Loans to subsidiary
Beginning of the year
Loans advanced
Loan repayments received
Provision for impairment
End of year
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
-
-
-
-
-
-
-
-
-
-
-
482,315
-
(482,315)
-
-
-
-
-
-
Genesis Minerals Limited has provided an unsecured, interest free loan to its wholly owned subsidiary, Genesis Minerals (Chile) S.A..
An impairment assessment is undertaken each financial year by examining the financial position of the subsidiary and the market in
which the subsidiary operates to determine whether there is objective evidence that the subsidiary is impaired. When such objective
evidence exists, the Company recognises an allowance for the impairment loss.
22. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b):
Name
Country of Incorporation
Equity Holding(1)
Class of Shares
Genesis Minerals (Chile) S.A.(2)
Chile
Ordinary
(1) The proportion of ownership interest is equal to the proportion of voting power held.
2008
%
100
2007
%
-
(2) Genesis Minerals (Chile) S.A. was incorporated in Chile on 21 April 2008 with Genesis Minerals Limited the sole beneficial
shareholder. A total of $600,000 in equity has been contributed by the parent entity.
23.
INTERESTS IN JOINT VENTURES
Trainor Project
The Company and Quadiro Resources Pty Ltd, a subsidiary of Dominion Mining Limited, are parties to a farmin and joint venture letter
agreement dated 11 May 2007 whereby the Company may earn up to 70% interest in exploration licences 69/1699, 69/1930, 69/2058 and
69/2060 (“Trainor Tenements”). To earn 51% the Company must spend a total of $1,500,000 on the Trainor Tenements by 1 June 2009
whereupon a joint venture will be formed and Quadiro may elect to contribute in accordance with its 49% interest. If Quadiro does not
elect to contribute, the Company may spend a further $1,000,000 by 1 June 2011 to earn a further 19%.
24. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
On 17 September 2008, the Company raised $690,000 from the issue of 3,450,000 ordinary shares from sophisticated investors and
clients of Argonaut Securities Limited.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.
page 33
Notes to the Financial Statements continued
Genesis Minerals Limited
Notes to the Financial Statements continued
Annual Report 2008
30 JUNE 2008
25. CASH FLOW STATEMENT
Reconciliation of net loss after income tax to net cash
outflow from operating activities
Net loss for the year
Non-Cash Items
Depreciation of non-current assets
Share based payments expense
Net exchange differences
Impairment expense
Change in operating assets and liabilities, net of
effects from purchase of controlled entities
(Increase) in trade and other receivables
Increase in trade and other payables
Net cash outflow from operating activities
26. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating
loss per share
Loss attributable to the ordinary equity holders of the
Company used in calculating basic and diluted loss per
share
(b) Weighted average number of shares used as the
denominator
Weighted average number of ordinary shares used as
the denominator in calculating basic and diluted loss
per share
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
(2,002,970)
(25,803)
(2,053,644)
(25,803)
1,687
63,550
629
-
37
-
-
-
1,687
63,550
-
1,082,315
37
-
-
-
(8,347)
151,375
(1,794,076)
(2,168)
23,945
(3,989)
(6,565)
107,160
(805,497)
(2,168)
23,945
(3,989)
Consolidated
2008
$
2007
$
(2,002,970)
(25,803)
Number of
shares
Number of
shares
21,770,502
4,906,677
(c) Information on the classification of options
As the Group has made a loss for the year ended 30 June 2008, all options on issue are considered antidilutive and have not been
included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future.
page 34
Annual Report 2008
Genesis Minerals Limited
Notes to the Financial Statements continued
Notes to the Financial Statements continued
30 JUNE 2008
27. SHARE-BASED PAYMENTS
Employees and contractors options
The Group provides benefits to employees (including directors) and contractors of the Group in the form of share-based payment
transactions, whereby options to acquire ordinary shares are issued as an incentive to improve employee and shareholder goal
congruence. The exercise price of the options granted is 20 cents with an expiry date of 28 February 2013.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the Company
with full dividend and voting rights.
Set out below are summaries of the options granted:
Outstanding at the beginning of the year
Granted
Forfeited/cancelled
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
Consolidated and Parent Entity
2008
2007
Weighted
average
exercise price
cents
Number of
options
Weighted
average
exercise price
cents
-
20.0
-
-
-
20.0
20.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of
options
-
500,000
-
-
-
500,000
500,000
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 3.58 years (2007: N/A),
with an exercise price of 20 cents.
Expenses arising from share-based payment transactions
The weighted average fair value of the options granted during the year was 12.7 cents (2007: N/A). The price was calculated by using the
Black-Scholes European Option Pricing Model applying the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2008
20.0
4.05
24.0
50%
7%
2007
-
-
-
-
-
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future
trends, which may not eventuate.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from share-based payment transactions recognised during the year were as follows:
Options issued to employees and contractors
Consolidated
Parent Entity
2008
$
63,550
2007
$
2008
$
2007
$
-
63,550
-
page 35
Directors' Declaration
Genesis Minerals Limited
Annual Report 2008
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 13 to 35 are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the company’s financial position as at 30 June 2008 and of it’s performance for the
financial year ended on that date; and
(ii)
(b)
(c)
subject to the matter at note 1(a), there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable; and
the remuneration disclosures set out on pages 5 and 6 of the directors’ report comply with Accounting Standards AASB 124
Related Party Disclosures and the Corporations Regulations 2001.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Michael Fowler
Managing Director
Perth, 30 September 2008
page 36
page 37
page 38
Annual Report 2008
Genesis Minerals Limited
ASX Additional Information
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 25 September 2008.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of shareholders holding less than a marketable parcel of shares are:
Ordinary shares
Number of holders Number of shares
1
19
81
232
35
368
2
10
69,886
804,892
8,642,594
16,932,628
26,450,010
1,210
(b) Escrowed Securities (2 August 2009)
Ordinary fully paid shares - 4,725,000
Options – 9,250,000 ($0.20, expiry date 15May 2012)
(c) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
Mr Michael John Fowler & Mrs Fiona Lee Dixon Fowler
Merrill Lynch (Australia) Nominees Pty Ltd
Dgali Investments Pty Ltd
Argonaut Investment
Mr Henry Wieckecki
Geotech International Pty Ltd
Mr Bradley George Bolin
Mr Michael Ashforth
Bullseye Geoservices Pty Ltd (M Haynes)
10
Ms Natalie Garbutt-Wilkins
11 Wersman Nominees Pty Ltd
12
13
14
15
16
17
18
19
20
Matrix Nominees Pty Ltd
Mr David Harper
Mr Darren Gordon
M Ivey Pty Ltd
Mr Mark Paterniti
Mr Anthony Paterniti & Mrs Barbara Ann Paterniti
Halson Corporation Pty Ltd
Stateline Investments Pty Ltd
Blackview Pty Ltd
page 39
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
2,000,000
1,570,000
1,183,850
1,000,000
1,000,000
750,000
580,780
790,000
620,000
500,000
400,000
400,000
385,000
350,000
330,000
325,000
288,000
263,661
250,000
205,000
7.57%
5.94%
4.48%
3.78%
3.78%
2.84%
2.20%
2.99%
2.34%
1.89%
1.51%
1.51%
1.46%
1.32%
1.25%
1.23%
1.09%
1.00%
0.95%
0.78%
13,191,291
49.91%
ASX Additional Information continued
ASX Additional Information
Genesis Minerals Limited
Annual Report 2008
(d) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are:
Mr Michael John Fowler & Mrs Fiona Lee Dixon Fowler
Argonaut Limited
(e) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of Shares
2,000,000
1,175,000
(f) Schedule of interests in mining tenements
Location
Trainor, Western Australia
Trainor, Western Australia
Trainor, Western Australia
Trainor, Western Australia
Mundong Well, Western Australia
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Merceditas Project, Chile
Tenement
Percentage held / earning
E69/2060
E69/2058
E69/1930
E69/1699
E08/1690
La Manga One
La Manga Two
La Manga Three
La Manga Four
La Manga Five
La Manga Six
Chivato Eleven
San Manuel
Renacer
Escondida
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
page 40
LEVEL 3, 10 OUTRAM STREET, WEST PERTH WA 6005
TELE: +61 8 9322 6178 FAX: +61 8 9481 2335
WWW.GENESISMINERALS.COM.AU
ACN 124 772 041
ANNUAL REPORT 2008