Genesis Minerals Limited
and controlled entities
ABN 72 124 772 041
Annual Report
for the year ended 30 June 2010
Genesis Minerals Limited and controlled entities
Corporate Directory
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
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).
1
Genesis Minerals Limited and controlled entities
Contents
Chairman’s Letter
Operations Review
Directors' Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report to Members
ASX Additional Information
3
4
10
15
16
20
21
22
23
24
43
44
46
2
Genesis Minerals Limited and controlled entities
Dear Fellow Shareholder
I am pleased to present the Annual Report of the Company for the year ended 30 June 2010.
The majority of our focus during the past year involved reviewing numerous acquisition opportunities in South America. The strong
network that we have developed in Chile over the past 2 years is providing dividends, as we reviewed a steady stream of projects,
culminating in the acquisition of two new projects during 2010. We continue to review numerous acquisition opportunities.
During the year Genesis elected not to participate further in the Merceditas Project in Chile, as we considered our efforts and funds are
better deployed elsewhere.
In August 2010 Genesis entered into agreements to acquire a 100% interest in the Dinamarquesa Gold-Copper Project and a 100% interest
in the Cerro Verde Gold-Copper-Silver Project. Both projects are located in the Atacama Desert near the regional City of Copiapó in
northern Chile, in areas serviced by excellent infrastructure. We believe there is considerable potential to discover high grade gold and
copper mineralisation as well as disseminated porphyry hosted gold-copper mineralisation at both projects.
A concerted exploration effort has commenced to discover commercially significant mineralisation at these projects.
We will continue to simultaneously pursue the acquisition of other highly prospective, advanced copper and gold projects in Chile and
elsewhere in Latin America.
The Company has established an excellent team that is operating in highly prospective geological terranes. As such we are in a great
position to capitalise on the continued recovery of global metal prices, particularly copper and gold prices. With two highly prospective
projects and a dedicated, highly competent management team, the Company is well positioned to leverage from exploration success.
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 forthcoming year.
Mike Haynes
Chairman
3
Genesis Minerals Limited and controlled entities
Review of Operations
In August 2010 Genesis Minerals Limited entered into agreements with private Chilean companies to acquire 100% interests in the
Dinamarquesa Gold-Copper Project and the Cerro Verde Gold-Copper-Silver Project. Both Projects are located in the Atacama Desert
near the regional City of Copiapó in northern Chile, in areas serviced by excellent infrastructure.
DINAMARQUESA PROJECT BACKGROUND
Introduction
Genesis Minerals Limited has entered into an agreement with a private Chilean company to acquire a 100% interest in the Dinamarquesa
Gold – Copper Project in northern Chile. Limited previous wide spaced drilling has delineated a number of high grade structures that will
be followed-up by diamond and RC drilling. The Project occurs in the highly mineralised Inca de Oro gold-copper belt.
Location and Access
The Project is located in the Atacama Desert in an area serviced by excellent infrastructure about 850 km north of Santiago, 90 km north of
the city of Copiapó and 75km east of the Pacific Ocean. The Project lies 3 km southwest of the small town of Inca de Oro which is
connected by a sealed highway to Copiapó in the south and Diego de Almagro in the north. The altitude ranges from 1,600 to 2,100m,
with low relief. Exploration can be conducted all year round.
District Exploration History
Gold-copper mineralisation in the Inca de Oro district has been known since the time of the Incas. In “modern times” it is estimated that
over 500,000 ounces of gold have been mined from numerous high grade veins in the district. The grade of the veins ranged from 10 to
100g/t gold. The majority of production took place between 1930 and 1945.
Figure 1 Project Locations.
Figure 2 Dinamarquesa Simplified geology and Project location.
Recent exploration activity has mostly comprised evaluation of the potential of the porphyry systems in the area. Between 2005 and 2007
Codelco (Chilean State National Copper Corporation) defined an Indicated and Inferred sulphide Mineral Resource of 259 million tonnes
grading 0.46% copper and 0.13g/t gold at the Inca de Oro Copper
Gold Project (Pan Aust ASX Release 1 March 2010). At the Carmen
Project, located 4km south of the Company’s Dinamarquesa Project, resources of 41 million tonnes @ 0.6g/t gold and 0.4% copper have
been delineated.
‐
Project History
Exploration and mining company Santa Fe Pacific Chile explored the Project between 1994 and 1995 completing 820 metres of trenching
and nine shallow, widely-spaced RC drill holes for 1,607 metres. Samples were analysed for gold and copper.
4
Genesis Minerals Limited and controlled entities
Results from the wide spaced RC drilling completed by Santa Fe include:
Hole
Number
Northing Easting mRL
UTM
Az.
Dip
DM01
7,037,050
406,710 Nat. Surf
180
DM03
7,037,340
406,610 Nat. Surf
0
-60
-60
Hole
Depth
(m)
200
200
From To
Interval Au
(g/t )
Cu
(%)
156
157
51
53
134
135
DM04
7,037,340
406,610 Nat. Surf
180
-60
200
64
65
164
165
DM05
7,037,210
406,510 Nat. Surf
180
DM06
7,037,215
406,510 Nat. Surf
0
-60
-60
180
150
DM07
7,037,050
406,410 Nat. Surf
180
-60
165
DM08
7,037,190
406,410 Nat. Surf
0
-60
207
DM09
7,037,110
406,310 Nat. Surf
0
-60
200
8
14
75
20
30
0
17
56
89
91
93
167
172
186
195
205
17
94
119
147
157
188
68
15
76
21
31
36
18
57
90
92
95
168
174
190
200
206
56
95
120
150
158
191
1
2
1
1
1
0.78
0.19
32.02 1.23
2.59
0.2
1.12
0.08
1.21
0.53
60
0.19
0.3
1
1
1
1
0.75
0.27
1.86
0.13
2.55
0.18
0.96
0.29
36
0.2
0.28
1
1
1
1
2
1
2
4
5
1
0.66
0.21
29.9
0.01
1.35
0.08
1.01
0.04
3.22
0.02
10.9
1.45
19.9
0.53
0.94
0.24
12.8
0.22
2.01
0.07
39
0.1
0.32
1
1
3
1
3
0.92
0.32
1.68
0.32
10.7
1.17
6.75
0.02
2.07
0.23
Intercepts based on 1m RC samples completed by Santa Fe Mining Company in 1995. The approximate position of drill holes have been
validated in the field.
5
Genesis Minerals Limited and controlled entities
Figure 3 Panoramic view looking north from the Dinamarquesa Project.
Figure 4 Panoramic view of the Dinamarquesa Project looking to the southeast
Small scale mining has also taken place in parts of the Project to maximum depths of about 50m. The amount of ore extracted from the
Project is unknown.
No exploration has been undertaken at the Project since 1995, and systematic exploration has never been undertaken.
Geology and Mineralisation
The Project covers andesitic lava flows, breccias and tuffaceous rocks of the Jurassic Punta del Cobre Formation which has been intruded
by Cretaceous to Palaeocene dioritic, granodioritic to tonalitic intrusions. The north northeast trending Inca de Oro Fault system is the
main structure in the area. Two main styles of gold – copper mineralisation occur in the district; vein/stockwork mineralisation and
porphyry style mineralisation. Both styles are associated with potassic alteration. The depth of weathering varies from 20 to 40 metres.
The gold – copper mineralisation at Dinamarquesa is associated with veins and stockworks trending east to north northeast, hosted in
andesitic rocks intruded by a series of porphyries. The veins generally comprise quartz, pyrite, chalcopyrite, gold and occasionally calcite
and barite and are associated with potassic alteration.
Exploration Potential
Genesis considers there to be very good potential to locate and define numerous high grade gold and copper rich structures. If exploration
is successful the proximity to existing processing facilities presents potential for near term cash flow with low capital start up costs.
Potential also exists to define porphyry hosted gold-copper mineralisation at the Project. Drill hole DM 05 returned an intersection of 60m
@ 0.19g/t gold and 0.3% copper from 8m. Mineralisation in this hole was associated with the contact of a porphyry intrusion and
andesitic rocks. A number of the other holes intersected wide zones of low grade gold – copper mineralisation that are yet to be followed
up. The presence of good exploration pathfinders like A and B veinlets types associated with copper in granodiorite in the southern part of
the Project is considered positive.
Work Program
A work program comprising detailed geological mapping, historical data compilation and 3D modelling will be undertaken, prior to
commencing a drilling program in mid November 2010. Exploration will target both high grade vein/stockwork mineralisation and
porphyry hosted gold copper mineralisation.
Acquisition Terms
Genesis executed an Option Agreement with a private Chilean company providing it the exclusive right to acquire a 100% interest in the
Dinamarquesa Project. An initial payment of US$125,000 was made in September 2010 after completing due diligence. Staged payments
totalling US$4,300,000 are due over a 48 month period with a 2nd payment of US$125,000 due by June 30 2011.
6
Genesis Minerals Limited and controlled entities
Figure 5 Drill hole locations with intersections
Figure 6 Dinamarquesa SE Vein Target
7
Genesis Minerals Limited and controlled entities
CERRO VERDE PROJECT BACKGROUND
Introduction
Copper
Genesis entered into an agreement with a second private Chilean company to acquire a 100% interest in the Cerro Verde
Gold
Silver Project in northern Chile. Mining in the area dates back to the 1800s but only limited modern exploration has been
completed at the Project. Numerous high grade structures remain untested and the potential to discover new veins is considered high; as is
the potential to define a large porphyry system on the Project.
‐
‐
Location and Access
The Project is located in the Atacama Desert in an area serviced by very good infrastructure about 750 km north of Santiago, 80 km south
of the city of Copiapó and 75km east of the Pacific Ocean. The Project is easily accessed by a sealed road and well formed gravel roads
from Copiapó. The altitude ranges from 1,800 to 2,200m, with low to moderate relief. Exploration can be conducted all year round.
Geology and Mineralisation
parallel swarm of precious and base metal
The Project hosts a sub
caldera system that is elongated north
rhyolite flows, flow
stratigraphic column. Mineralised veins and structures strike north to north east with moderate to steep dips to the east and west.
bearing quartz specularite veins exposed along the western flank of a
south. The host rocks comprise a sequence of Paleocene andesitic volcaniclastics, dacite and
bearing veins cut the entire
like breccias, and dikes capped by a blanket of rhyolitic ignimbrites. Ore
domes, diatreme
‐
‐
‐
Project and Exploration History
‐
‐
‐
Historic mining in the area dates back to the 1800s with several high grade veins mined at depth. Only limited historic mining records are
currently available to Genesis. However, records indicate that in 1869 some 8,500 tonnes at ~17% copper were extracted from mines in
the area. Small scale mining and reclamation of old stockpiles continues at present.
Minor surface exploration was completed by Homestake between 1998 and 1999. Between 2004 and 2005, Hochschilds (MH Chile)
explored the area by surface mapping, sampling (334 surface samples) and limited diamond drilling (1,219m completed). The surface
rock chip sampling by Hochschilds highlighted significant gold, copper and silver surface mineralisation over a 4km by 2km area. Strong
arsenic, barium, bismuth, mercury, molybdenum, lead and stibnite anomalism is also present.
No other modern exploration is known to have been conducted at the Project.
Exploration Potential
Genesis considers there to be very good potential to locate and define numerous high grade gold
silver rich structures at the Cerro
Blanco Project. Both known and new structures are considered high priority targets. If exploration is successful the proximity to existing
processing facilities presents potential for near term cash flow with low capital start up cost.
copper
‐
‐
Potential also exists to define porphyry hosted gold
copper mineralisation at the Project.
Work Program
‐
Over the next four months a work program comprising detailed geological mapping, systematic geochemical sampling, geophysical
surveying, historical data compilation and 3D modelling will be undertaken, prior to commencing a drilling program in the first quarter of
2011. A priority of the work program will be to complete a detailed compilation of historical mining data. Exploration will target both
high
grade vein/stockwork mineralisation and porphyry hosted gold
copper mineralisation.
Acquisition Terms
‐
‐
Genesis executed an Option Agreement with a private Chilean company providing it the exclusive right to acquire a 100% interest in the
Cerro Verde Project. An initial payment of US$30,000 was made in September 2010 after successfully completing due diligence. Staged
payments totalling US$4,000,000 are due over a 60 month period with a 2nd payment of US$75,000 due in September 2011. In addition
Genesis will issue the private Chilean company US$25,000 worth of fully paid ordinary shares in Genesis Minerals Limited on satisfactory
completion of Due Diligence. On each 12 month anniversary of the Agreement Genesis will issue the vendor an additional US$20,000
worth of fully paid ordinary shares
8
Genesis Minerals Limited and controlled entities
.
Figure 7 Cerro Verde Historic Rock Chip Samples
9
Genesis Minerals Limited and controlled entities
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 2010.
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.
Information on Directors
Michael Haynes, (Non Executive Chairman)
Mr. Haynes has more than 18 years experience in the mining industry. Mr. Haynes graduated from the University of Western Australia
with an honours degree in geology and geophysics. Throughout his career he has been intimately involved in the exploration and
development of resource projects, targeting a wide variety of commodities, throughout Australia and extensively in Southeast and
Central Asia, Africa, North and South America, and Europe.
Mr. Haynes has held technical positions with both BHP Minerals Limited 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. Over the past five years he has been intimately involved
in the incorporation and initial public offerings of several resources companies, and in the ongoing financing and management of these
companies.
Mr. Haynes is a Director of Overland Resources Limited (appointed 9 May 2005) and Black Range Minerals Limited (appointed 27 June
2005). Mr Haynes was a Director of Iberian Resources Limited (appointed 21 October 2003, resigned 31 July 2007), Bellamel Mining
Limited (appointed 16 May 2007, resigned 31 December 2008) and Elk Petroleum Limited (appointed 19 January 2005, resigned 8 April
2005).
Michael Fowler, (Managing Director)
Michael Fowler is a geologist with 20 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
Ordinary
Shares
660,000
2,000,000
60,000
Options over
Ordinary
Shares
1,000,000
5,000,000
500,000
PRINCIPAL ACTIVITIES
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.
10
Genesis Minerals Limited and controlled entities
Directors' Report continued
OPERATING AND FINANCIAL REVIEW
Finance Review
The Group has recorded an operating loss after income tax for the year ended 30 June 2010 of $775,286 (2009: $1,434,649).
At 30 June 2010 cash assets available totalled $219,252 (2009: $286,034).
Operating Results for the Year
Summarised operating results are as follows:
Group revenues and loss from ordinary activities before income tax expense
Shareholder Returns
Basic loss per share (cents)
2010
Revenues
$
Results
$
11,106
(775,286)
2010
(2.5)
2009
(5.6)
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 Group 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 Group raised a total of $717,075 through the issue of 8,467,500 ordinary shares to institutional and sophisticated investors from two
separate placements in August 2009 and February 2010. Funds raised are being used to actively pursue the Group’s exploration projects.
AFTER BALANCE DATE EVENTS
No matters or circumstances, besides those disclosed at note 19, 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.
The directors have considered the recently enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which
introduces a single national reporting framework for the reporting and dissemination of information about greenhouse gas emissions,
greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors have
determined that the NGER Act will have no effect on the Group for the current, nor subsequent, financial year. The directors will
reassess this position as and when the need arises.
11
Genesis Minerals Limited and controlled entities
Directors' Report continued
REMUNERATION REPORT
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
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 Group’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 Group.
The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Group 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 Group’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 Group. 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.
Group 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 Group plans to facilitate this process by directors and executives participating in future option
issues to encourage the alignment of personal and shareholder interests. The Group 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 13 of the financial statements.
Details of remuneration
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.
The key management personnel of Genesis Minerals Limited include the directors and company secretary as per page 10 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.
12
Genesis Minerals Limited and controlled entities
Directors' Report continued
Key management personnel and other executives of Genesis Minerals Limited
Short-Term
Post Employment
Share-based
Payments
Total
Directors
Michael Haynes
2010
2009
Michael Fowler
2010
2009
Graeme Smith
2010
2009
Salary
& Fees
$
54,500
54,500
160,000
160,000
30,000
30,000
Total key management personnel compensation
2010
2009
244,500
244,500
Non Monetary Superannuation
$
$
Retirement
benefits
$
Options
$
$
-
-
-
-
-
-
-
-
-
-
16,000
16,000
2,700
1,350
18,700
17,350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,500
54,500
176,000
176,000
32,700
31,350
263,200
261,850
Service agreements
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 per annum, (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
There was no share-based compensation issued to key management personnel during the year.
DIRECTORS' MEETINGS
During the financial year five meetings of directors were held. Attendances by each director during the year were as follows:
Directors Meetings
Michael Haynes
Michael Fowler
Graeme Smith
A
5
5
5
B
5
5
5
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 14,400,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year
Issued, exercisable at 10 cents, on or before 30 June 2011
Issued, exercisable at 15 cents, on or before 23 August 2013
Issued, exercisable at 20 cents, on or before 23 August 2013
Total number of options outstanding as at 30 June 2010 and the date of this report
Number of options
9,750,000
4,500,000
75,000
75,000
14,400,000
13
Genesis Minerals Limited and controlled entities
Directors' Report continued
The balance is comprised of the following:
Expiry date
30 June 2011
23 August 2013
23 August 2013
28 February 2013
15 May 2012
Total number of options outstanding at the date of this report
Exercise price (cents)
10
15
20
20
20
Number of options
4,500,000
75,000
75,000
500,000
9,250,000
14,400,000
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 $8,904 (2009: $6,161).
NON-AUDIT SERVICES
There were no non-audit services provided by the entity's auditor, Bentleys, or associated entities.
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.
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
$775,286 for the year ended 30 June 2010 (2009: $1,434,649). Included within this loss was the write off of exploration expenditure of
$144,284 (2009: $937,594).
The net working capital position of the Group at 30 June 2010 was $156,455 (2009: $222,673) and the net decrease in cash held during
the year was $66,483 (2009: $877,286).
The ability of the Group to continue to pay its debts as and when they fall due is dependent upon the Group 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:
•
•
at the date of this report, the Company has completed a capital raising of $247,000 and also a fully underwritten Entitlements Issue
which will raise $1.1 million.
the Directors have an appropriate plan to contain certain operating and exploration expenditure if additional required funding is
unavailable.
Refer to note 1(a) for further details.
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 15.
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.
Michael Fowler
Managing Director
Perth, 30 September 2010
14
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the Corporations
Act 2001
This declaration is made in connection with our audit of the financial report of Genesis Minerals Limited
and Controlled Entities for the year ended 30 June 2010 and in accordance with the provisions of the
Corporations Act 2001.
We declare that, to the best of our knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
no contraventions of the Code of Professional Conduct of the Institute of Chartered Accountants in
Australia in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 30th day of September 2010
Genesis Minerals Limited and controlled entities
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 revised ASX Corporate Governance Principles and Recommendations 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 Board has adopted the revised Recommendations and the following table sets out the company's present position in relation to each
of the revised Principles.
16
Genesis Minerals Limited and controlled entities
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
Principle 1:
1.1
1.2
1.3
Lay solid foundations for
management and oversight
Companies should establish the
functions reserved to the board and
those delegated to senior executives
and disclose those functions
Companies should disclose the
process for evaluating the
performance of senior executives
A
A
Companies should provide the
information indicated in the Guide to
reporting on Principle 1
A
(in part)
Matters reserved for the Board are included on the Company website
in the Corporate Governance Section.
The remuneration of management and employees is reviewed by the
Managing Director and approved by the Board.
Acting in its ordinary capacity the Board from time to time carries out
the process of considering and determining performance issues.
Matters reserved for the Board can be viewed on the Company
website.
A
A
A
A
N/A
Given the Group’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 Group’s
development.
The position of Chairman and Managing Director are held by separate
persons.
The full Board is the Nomination Committee. Acting in its ordinary
capacity from time to time as required, the Board carries out the
process of determining the need for screening and appointing new
Directors. In view of the size and resources available to the Group it is
not considered that a separate Nomination Committee would add any
substance to this process.
Given the size and nature of the Group a formal process for
performance evaluation has not been developed.
A
(in part)
The skills and experience of the Directors are set out in the Group’s
Annual Report and on the website.
A
The Group has established a Code of Conduct which can be viewed on
its website.
Principle 2:
2.1
Structure the board to add value
A majority of the board should be
independent directors
2.2
2.3
2.4
2.5
2.6
Principle 3:
3.1
The chair should be an independent
director
The roles of chair and chief executive
officer should not be exercised by the
same individual
The board should establish a
nomination committee
Companies should disclose the
process for evaluating the
performance of the board, its
committees and individual directors
Companies should provide the
information indicated in the Guide to
reporting on Principle 2
Promote ethical and responsible
decision-making
Companies should establish a code of
conduct and disclose the code or a
summary of the code as to:
•
the practices necessary to
maintain confidence in the
company’s integrity
the practices necessary to take
into account their legal
obligations and the reasonable
expectations of their stakeholders
the responsibility and
accountability of individuals for
reporting and investigating
reports of unethical practices
•
•
A = Adopted
N/A = Not adopted
17
Genesis Minerals Limited and controlled entities
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
3.2
3.3
Companies should establish a policy
concerning trading in company
securities by directors, senior
executives and employees, and
disclose the policy or a summary of
that policy
Companies should provide the
information indicated in the Guide to
reporting on Principle 3
Principle 4:
4.1
4.2
4.3
4.4
•
Safeguard integrity in financial
reporting
The board should establish an audit
committee
The audit committee should be
structured so that it:
•
consists only of non-executive
directors
consists of a majority of
independent directors
is chaired by an independent
chair, who is not chair of the
board
•
has at least three members
The audit committee should have a
formal charter
Companies should provide the
information indicated in the Guide to
reporting on Principle 4
•
Principle 5:
5.1
5.2
Principle 6:
6.1
6.2
Make timely and balanced
disclosure
Companies should establish written
policies designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to ensure
accountability at a senior executive
level for that compliance and disclose
those policies or a summary of those
policies
Companies should provide the
information indicated in the Guide to
reporting on Principle 5
Respect the rights of shareholders
Companies should design a
communications policy for
promoting effective communication
with shareholders and encouraging
their participation at general meetings
and disclose their policy or a
summary of that policy
Companies should provide the
information indicated in the Guide to
reporting on Principle 6
A
The Group has formulated a securities trading policy, which can be
viewed on its website.
A
A
A
A
A
N/A
A
A
A
A
A
The Company only has two non-executive directors.
Directors must obtain the approval of the Chairman of the Board and
notify the Company Secretary before they buy or sell shares in the
Company, and it is subject to Board veto. Directors must provide the
information required by the Company to ensure Compliance with
Listing Rule 3.19A.
The Board receives monthly reports on the status of the Group’s
activities and any new proposed activities. Disclosure is reviewed as a
routine agenda item at each Board Meeting.
In line with adherence to continuous disclosure requirements of the
ASX all shareholders are kept informed of major developments
affecting the Group. This disclosure is through regular shareholder
communications including the Annual report, Quarterly Reports, the
Company Website and the distributions of specific releases covering
major transactions and events.
A
The Group has formulated a Communication Policy which is included
in its Corporate Governance Statement on the Company Website.
A = Adopted
N/A = Not adopted
18
Genesis Minerals Limited and controlled entities
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
Principle 7:
7.1
Recognise and manage risk
Companies should establish policies
for the oversight and management of
material business risks and disclose a
summary of those policies
7.2
7.3
7.4
Principle 8:
8.1
8.2
8.3
The board should require
management to design and
implement the risk management and
internal control system to manage the
company’s material business risks
and report to it on whether those risks
are being managed effectively. The
board should disclose that
management has reported to it as to
the effectiveness of the company’s
management of its material business
risks
The board should disclose whether it
has received assurance from the chief
executive officer (or equivalent) and
the chief financial officer (or
equivalent) that the declaration
provided in accordance with section
295A of the Corporations Act is
founded on a sound system of risk
management and internal control and
that the system is operating
effectively in all material respects in
relation to financial reporting risks
Companies should provide the
information indicated in the Guide to
reporting on Principle 7
Remunerate fairly and responsibly
The board should establish a
remuneration committee
Companies should clearly distinguish
the structure of non-executive
directors’ remuneration from that of
executive directors and senior
executives
Companies should provide the
information indicated in the Guide to
reporting on Principle 8
N/A While the Group 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
compliance with government laws and regulations
safety and the environment
continuous disclosure obligations
N/A While the Group does not have formalised risk management policies it
recognises its responsibility for identifying areas of significant
business risk and ensuring that arrangements are in place to
adequately manage these risks. This issue is regularly reviewed at
Board meetings and a risk management culture is encouraged amongst
employees and contractors.
A
Assurances received from CEO and CFO (or equivalent) each year.
A
A
A
A
Refer to the Annual Report and the Corporate Governance section of
the Company’s website.
A = Adopted
N/A = Not adopted
19
Genesis Minerals Limited and controlled entities
Consolidated Statement of Comprehensive Income
YEAR ENDED 30 JUNE 2010
REVENUE
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)
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Notes
4
22
5
6
2010
$
11,106
(3,501)
(363,826)
(144,284)
(12,045)
(104,603)
(125,208)
(32,925)
2009
$
32,497
(3,272)
(122,952)
(937,594)
(84,183)
(147,467)
(171,678)
-
(775,286)
(1,434,649)
-
-
(775,286)
(1,434,649)
6,257
6,257
23,895
23,895
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO
MEMBERS OF GENESIS MINERALS LIMITED
(769,029)
(1,410,754)
Basic loss per share (cents per share)
21
(2.5)
(5.6)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.
20
Genesis Minerals Limited and controlled entities
Consolidated Statement of Financial Position
AT 30 JUNE 2010
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT 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
Notes
7
8
9
10
2010
$
219,252
9,432
228,684
892
892
2009
$
286,034
4,662
290,696
4,393
4,393
229,576
295,089
72,229
72,229
72,229
68,023
68,023
68,023
157,347
227,066
11
12(a)
4,268,799
127,256
(4,238,708)
3,602,414
88,074
(3,463,422)
157,347
227,066
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements.
21
Genesis Minerals Limited and controlled entities
Consolidated Statement of Changes in Equity
YEAR ENDED 30 JUNE 2010
BALANCE AT 1 JULY 2008
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE INCOME
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
Notes
Ordinary Share
Capital
$
Options
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
2,954,849
-
63,550
-
629
-
(2,028,773)
(1,434,649)
990,255
(1,434,649)
12(a)
-
-
11
11
690,000
(42,435)
-
-
-
-
23,895
23,895
-
(1,434,649)
23,895
(1,410,754)
-
-
-
-
690,000
(42,435)
BALANCE AT 30 JUNE 2009
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE INCOME
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
Share based payments
12(a)
11
11
12(a)
3,602,414
63,550
24,524
(3,463,422)
227,066
-
-
-
-
-
-
-
(775,286)
(775,286)
6,257
6,257
-
(775,286)
6,257
(769,029)
717,075
(50,690)
-
-
-
32,925
-
-
-
-
-
-
717,075
(50,690)
32,925
BALANCE AT 30 JUNE 2010
4,268,799
96,475
30,781
(4,238,708)
157,347
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
22
Genesis Minerals Limited and controlled entities
Consolidated Statement of Cash Flows
YEAR ENDED 30 JUNE 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for exploration expenditure
Interest received
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Payments of share issue costs
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET DECREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Notes
20
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
7
2010
$
(589,024)
(154,950)
11,106
(732,868)
717,075
(50,690)
666,385
(66,483)
286,034
(299)
219,252
2009
$
(430,643)
(1,126,705)
32,497
(1,524,851)
690,000
(42,435)
647,565
(877,286)
1,147,395
15,925
286,034
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
23
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting of Genesis
Minerals Limited and its subsidiaries (“the Group”). The financial statements are presented in the Australian currency. Genesis Minerals
Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by
the directors on 30 September 2010. The directors have the power to amend and reissue the financial statements.
(a) Basis of preparation
These general purpose financial statements have 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
The consolidated financial statements of the Genesis Minerals Limited Group comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
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.
Financial statement presentation
The Group has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009. The
revised standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity. All
non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence, the Group had to
change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with
the revised standard.
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
$775,286 for the year ended 30 June 2010 (2009: $1,434,649). Included within this loss was the write off of exploration expenditure of
$144,284 (2009: $937,594).
The net working capital position of the Group at 30 June 2010 was $156,455 (2009: $222,673) and the net decrease in cash held during
the year was $66,483 (2009: $877,286).
The ability of the Group to continue to pay its debts as and when they fall due is dependent upon the Group 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. Refer to note 19 for details of a
successful capital placement after the reporting date; and
the Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable.
•
Should the Group 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 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 2010 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.
Subsidiaries are all 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 acquisition method of accounting is used to account for business combinations by the Group.
24
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
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.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and statement of financial position respectively.
Investments in subsidiaries are accounted for at cost in the separate financial statements of Genesis Minerals Limited.
(ii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Genesis
Minerals Limited.
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts
previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of
the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to
profit or loss.
If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where
appropriate.
(iii) Changes in accounting policy
The Group has changed its accounting policy for transactions with non-controlling interests and the accounting for loss of control, joint
control or significant influence from 1 July 2009 when a revised AASB 127 Consolidated and Separate Financial Statements became
operative. The revisions to AASB 127 contained consequential amendments to AASB 128 Investments in Associates and AASB 131
Interests in Joint Ventures.
Previously transactions with non-controlling interests were treated as transactions with parties external to the Group. Disposals therefore
resulted in gains or losses in profit or loss and purchases resulted in the recognition of goodwill. On disposal or partial disposal, a
proportionate interest in reserves attributable to the subsidiary was reclassified to profit or loss or directly to retained earnings.
Previously when the Group ceased to have control, joint control or significant influence over an entity, the carrying amount of the
investment at the date control, joint control or significant influence ceased became its cost for the purposes of subsequently accounting
for the retained interests as associates, jointly controlled entity of financial assets.
The Group has applied the new policy prospectively to transactions occurring on or after 1 July 2009. As a consequence, no adjustments
were necessary to any of the amounts previously recognised in the financial statements.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the full Board of Directors.
Change in accounting policy
The Group has adopted AASB 8 Operating Segments from 1 July 2009. AASB 8 replaces AASB 114 Segment Reporting. The new
standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal
reporting purposes. For management purposes, the Group has identified only one reportable segment as exploration activities undertaken
in Chile. This segment includes activities associated with the determination and assessment of the existence of commercial economic
reserves, from the Group’s mineral assets in this geographic location. This represents a decrease in the number of reportable segments
presented with comparatives for 2009 having been restated.
(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.
25
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(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 profit or loss, 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 statement of financial position presented are translated at the closing rate at the date of that statement
of financial position;
income and expenses for each statement of comprehensive income 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 other comprehensive income.
•
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 recognised in other comprehensive income. When a foreign
operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is
reclassified to profit or loss, 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.
(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 applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the Company’s subsidiaries and associated operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
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 nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting 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 is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
26
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(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 profit
or loss 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 profit or loss 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 impairment are reviewed for possible reversal of the
impairment at each reporting date.
(i) Cash and cash equivalents
For statement of cash flows 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 statement of financial position.
(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.
(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 reporting date which are classified
as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.
(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.
27
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(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 reporting 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.
Financial assets - reclassification
The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is
no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be
reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely
to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and
receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial
assets for the foreseeable future or until maturity at the date of reclassification.
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable,
and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for
financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further
increases in estimates of cash flows adjust effective interest rates prospectively.
Change in accounting policy
The Group has adopted the policy of reclassifying financial assets out of the held-for-trading category from 1 July 2009, following
amendments made to AASB 139 Financial Instruments: Recognition and Measurement in October 2009. Under the Group’s previous
policy reclassifications of financial assets were not permitted. The Group did not reclassify any financial assets in the current reporting
period. Therefore, the change in accounting policy had no impact on the Group’s financial statements.
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 statement of comprehensive income. 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
statement of comprehensive income 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
statement of comprehensive income 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 statement of comprehensive income 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 statement of comprehensive
income. Impairment losses recognised in the statement of comprehensive income on equity instruments classified as available-for-sale
are not reversed through the statement of comprehensive income.
If there is evidence of impairment for any of the Group’s financial assets carried at amortised cost, the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not
been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the
statement of comprehensive income.
28
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
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 any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance
are charged to the statement of comprehensive income 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 or revalued amounts, net of
their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment,
the shorter lease term. The rates vary between 20% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting 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 statement of
comprehensive income. 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
reporting date are recognised in other payables in respect of employees’ services up to the reporting 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 22.
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.
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.
29
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(q) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners 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 statement of financial position.
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) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010 reporting periods. The
Group’s assessment of the impact of these new standards and interpretations is set out below.
AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-Settled Share-based Payment Transactions [AASB 2]
(effective from 1 January 2010)
The amendments made by the AASB to AASB 2 confirm that an entity receiving goods or services in a Group share-based payment
arrangement must recognise or expense for those goods or services regardless of which entity in the Group settles the transaction or
whether the transaction is settled in shares or cash. They also clarify how the Group share-based payment arrangement should be
measured, that is, whether it is measured as an equity or a cash-settled transaction. The Group will apply these amendments
retrospectively for the financial reporting period commencing on 1 July 2010. There will be no impact on the Group’s financial
statements.
AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB 132] (effective from 1 February
2010)
In October 2009 the AASB issued an amendment to AASB 132 Financial Instruments: Presentation which addresses the accounting for
addresses for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain conditions
are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously,
these issues had to be accounted for as derivative liabilities. The amendment must be applied retrospectively in accordance with AASB
108 Accounting Policies, Changes in Accounting Estimates and Errors. The Group will apply the amended standard from 1 July 2010.
As the Group has not made any such rights issues, the amendment will not have any effect on the Group’s financial statements.
AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from
1 January 2013)
AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect the Group’s
accounting for its financial assets. The standard is not applicable until1 January 2013 but is available for early adoption. The group is yet
to assess its full impact. The Group has not yet decided when to adopt AASB 9.
Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards (effective from 1
January 2011)
In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on
or after 1 January 2011 and must be applied retrospectively. The amendment removes the requirement for government-related entities to
disclose details of all transactions with the government and other government-related entities and clarifies and simplifies the definition of
a related party. The Group will apply the amended standard from 1 July 2011. The amendments are not expected to have a significant
impact on the financial statements of the Group.
30
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
AASB Interpretation 19 Extinguishing financial liabilities with equity instruments and AASB 2009-13 Amendments to Australian
Accounting Standards arising from Interpretation 19 (effective from 1 July 2010)
AASB Interpretation 19 clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is
extinguished by the entity issuing its own equity instruments to the creditor (debt for equity swap). It requires a gain or loss to be
recognised in profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair value
of the equity instruments issued. The Group will apply the interpretation from 1 July 2010, with retrospective application required. The
Group has not yet determined the potential effect of the interpretation.
(t) Critical accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements are:
Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation,
and the directors understanding thereof. At the current stage of the Group’s development and its current environmental impact the
directors believe such treatment is reasonable and appropriate.
Taxation
Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best estimates of the directors.
These estimates take into account both the financial performance and position of the Group as they pertain to current income taxation
legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current
income tax position represents that directors’ best estimate, pending an assessment by the Australian Taxation Office.
Exploration expenditure
Exploration and evaluation costs are expensed as they are incurred.
Share based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model, using
the assumptions detailed in note 22. If any of these assumptions were to change, there may be an impact on the amounts reported.
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 operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the Chilean Peso (“CLP”).
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 exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
2010
CLP
2,534,184
4,262,057
(3,868,653)
2009
CLP
1,685,576
1,950,367
(2,121,372)
Sensitivity analysis
Based on the financial instruments held at 30 June 2010, 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 post-tax losses for the year (2009: Nil) and
immaterial movements to the Group’s equity for both years presented.
31
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
FINANCIAL RISK MANAGEMENT (cont’d)
2.
(ii) Price risk
Given the current level of operations, the Group is not exposed to price risk.
(iii) Interest rate risk
The Group is 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 $219,252 (2009: $286,034) is 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 3.3% (2009: 4.3%).
Sensitivity analysis
At 30 June 2010, 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 the Group would have been $2,500 lower/higher (2009: $6,000 lower/higher) as a result of lower/higher
interest income from cash and cash equivalents.
(b) Credit risk
The Group does not 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 statement of financial position 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.
Credit risk related to balances with banks by ensuring surplus funds are only invested with counterparties with a Standard & Poor’s rating
of atleast AA-.
(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 are confined to trade and other payables as disclosed in the Statement of financial position. All trade
and other payables are non-interest bearing and due within 12 months of the reporting 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 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.
3. OPERATING SEGMENTS
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief
operating decision makers) in assessing performance and determining the allocation of resources.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic
characteristics. For management purposes, the Group has identified only one reportable segment as exploration activities undertaken in
Chile. This segment includes activities associated with the determination and assessment of the existence of commercial economic
reserves, from the Group’s mineral assets in this geographic location.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments
are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the
Group.
32
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
SEGMENT INFORMATION (cont’d)
3.
Inter-segment transactions
An internally determined transfer price is set for all inter-entity sales. This price is re-set quarterly and is based on what would be
realised in the event the sale was made to an external party at arm’s-length. All such transactions are eliminated on consolidation for the
Group’s financial statements.
Inter-segment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If inter-segment
loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy
represents a departure from that applied to the statutory financial statements.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from
the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and intangible assets have not
been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment.
Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include
trade and other payables and certain direct borrowings.
Unallocated items
The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part of
the core operations of the segment:
•
Head office and other administration costs.
Comparative information
This is the first reporting period in which AASB 8 Operating Segments has been adopted. Comparative information has been restated to
conform to the requirements of the Standard.
Chile exploration segment
Segment revenue
Reconciliation of segment revenue to total revenue before tax:
Corporate interest revenue
Total revenue
Segment results
Reconciliation of segment result to net loss before tax:
Depreciation expense
Salaries and employee benefits expense
Share based payments expense
Other corporate and administration expenses
Net loss before tax
Segment operating assets
Reconciliation of segment operating assets to total assets:
Other corporate and administration assets
Total assets
Segment operating liabilities
Reconciliation of segment operating liabilities to total liabilities:
Inter-segment eliminations
Other corporate and administration liabilities
Total liabilities
33
2010
$
-
11,106
11,106
2009
$
-
32,497
32,497
(177,602)
(780,636)
(3,501)
(333,519)
(32,925)
(227,739)
(775,286)
(3,272)
(122,952)
-
(527,789)
(1,434,649)
15,040
8,691
214,536
229,576
286,398
295,089
1,295,502
1,196,444
(1,286,941)
63,668
72,229
(1,191,374)
62,953
68,023
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
4.
REVENUE
From continuing operations
Other revenue
Interest
5.
EXPENSES
Loss before income tax includes the following specific expenses:
Defined contribution superannuation expense
Impairment expense - trade and other receivables
6.
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
2010
$
2009
$
11,106
32,497
20,528
12,045
20,481
84,183
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax expense
(775,286)
(1,434,649)
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
Other
Carry forward tax losses
(232,586)
(430,395)
9,878
10
(222,698)
(22,373)
245,071
-
54,202
44,134
13,500
1,244,569
1,356,405
-
174
(430,221)
13,063
417,158
-
61,782
43,720
13,500
999,498
1,118,500
Deferred Tax Liabilities (at 30%)
-
-
CASH AND CASH EQUIVALENTS
7.
Cash at bank and in hand
Cash and cash equivalents
219,252
219,252
286,034
286,034
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
34
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
TRADE AND OTHER RECEIVABLES
8.
Government taxes receivable
Provision for impairment (note (a))
Other receivables
2010
$
147,113
(147,113)
9,432
9,432
2009
$
145,734
(145,734)
4,662
4,662
(a) Impaired receivables
As at 30 June 2010 the GTS receivable from the Group’s operations in Chile (tax similar to Australia’s GST), with a nominal value of
$147,113 (2009: $145,734), has been provided for in full. The GTS may only be recoverable once the Group’s operations are producing
revenue in Chile.
Movements in the provision for impairment of receivables are as follows:
Balance at the beginning of the year
Exchange differences
Provision for impairment recognised during the year
145,734
(10,666)
12,045
147,113
51,372
10,179
84,183
145,734
9.
PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Depreciation charge
Closing net book amount
10. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
11.
ISSUED CAPITAL
(a) Share capital
Ordinary shares fully paid
Total issued capital
9,389
(8,497)
892
4,393
(3,501)
892
22,484
49,745
72,229
9,389
(4,996)
4,393
7,665
(3,272)
4,393
31,377
36,646
68,023
2010
2009
Notes
11(b), 11(d)
Number of
shares
$
34,917,510
4,268,799
Number of
shares
26,450,010
$
3,602,414
34,917,510
4,268,799
26,450,010
3,602,414
35
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
11.
ISSUED CAPITAL (cont’d)
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
− Issued for cash at 8 cents per share
− Issued for cash at 9 cents per share
− Issued for cash at 20 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:
− Exercisable at 10 cents, on or before 30 Jun 2011
− Exercisable at 15 cents, on or before 23 Aug 2013
− Exercisable at 20 cents, on or before 23 Aug 2013
End of the financial year
2010
2009
Number of
shares
$
Number of
shares
$
26,450,010
3,602,414
23,000,010
2,954,849
4,500,000
3,967,500
-
-
34,917,510
360,000
357,075
-
(50,690)
4,268,799
-
-
3,450,000
-
26,450,010
-
-
690,000
(42,435)
3,602,414
Number of options
2009
2010
9,750,000
9,750,000
4,500,000
75,000
75,000
14,400,000
-
-
-
9,750,000
(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.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(e) Capital risk management
The Group’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 at 30 June 2010 and 30 June 2009 is as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
2010
$
219,252
9,432
(72,229)
156,455
2009
$
286,034
4,662
(68,023)
222,673
36
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
12. 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
2010
$
30,781
96,475
127,256
24,524
6,257
30,781
63,550
32,925
96,475
2009
$
24,524
63,550
88,074
629
23,895
24,524
63,550
-
63,550
(b) 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.
13. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation
Short-term benefits
Post employment benefits
Other long-term benefits
Termination benefits
Share-based payments
244,500
18,700
-
-
-
263,200
244,500
17,350
-
-
-
261,850
Detailed remuneration disclosures are provided in the remuneration report on pages 12 and 13.
37
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
13. 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 the remuneration report on page 13.
(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:
2010
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
1,000,000
Michael Fowler
5,000,000
Graeme Smith
500,000
-
-
-
-
-
-
-
-
-
1,000,000
5,000,000
500,000
1,000,000
5,000,000
500,000
-
-
-
2009
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
1,000,000
Michael Haynes
5,000,000
Michael Fowler
500,000
Graeme Smith
-
-
-
-
-
-
-
-
-
1,000,000
5,000,000
500,000
1,000,000
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 Group, including their personally related parties, are set out below. There were no shares granted during
the reporting period as compensation.
2010
Directors of Genesis Minerals Limited
Ordinary shares
Michael Haynes
Michael Fowler
Graeme Smith
2009
Directors of Genesis Minerals Limited
Ordinary shares
Michael Haynes
Michael Fowler
Graeme Smith
(c) Loans to key management personnel
There were no loans to key management personnel during the year.
38
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
660,000
2,000,000
60,000
-
-
-
-
-
-
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
660,000
2,000,000
60,000
-
-
-
-
-
-
660,000
2,000,000
60,000
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
2010
$
2009
$
14. REMUNERATION OF AUDITORS
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:
Audit services
Bentleys - audit of financial reports
Eduardo Barrientos - audit or review of financial reports of any entity in the
Group
Total remuneration for audit services
3,607
29,607
-
21,450
26,000
21,450
15. CONTINGENCIES
There are no contingent liabilities or contingent assets of the Group at balance date.
16. COMMITMENTS
(a) Exploration commitments
The Group 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
41,000
123,000
164,000
26,000
78,000
104,000
(b) Remuneration commitments
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management personnel
referred to in the remuneration report on page 13 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
17. 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 18.
(c) Key management personnel
Disclosures relating to key management personnel are set out in note 13.
(d) Loans to related parties
Genesis Minerals Limited has provided an unsecured, interest free loan to its wholly owned subsidiary, Genesis Minerals (Chile) S.A.,
totalling $1,286,941 (2009: $1,191,374) at 30 June 2010. 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.
39
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
18. 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.
Chile
Ordinary
(1) The proportion of ownership interest is equal to the proportion of voting power held.
2010
%
100
2009
%
100
19. EVENTS AFTER THE BALANCE SHEET DATE
Project Acquisitions
On 5 August 2010 Genesis announced it had entered into an agreement with a private Chilean company to acquire a 100% interest in the
Dinamarquesa Gold – Copper Project in northern Chile. An initial payment of US$125,000 is due within 21 working days of Genesis
completing due diligence and the signing of a formal Option Agreement. Staged payments totalling US$4,300,000 are then due over a 48
month period with a 2nd payment of US$125,000 due 9 months after signing the Option Agreement.
On 12 August 2010 Genesis announced it had entered into an agreement with a private Chilean company to acquire a 100% interest in
the Cerro Blanco Gold-Copper-Silver Project in northern Chile. An initial payment of US$30,000 is due within 28 working days of
Genesis completing due diligence and executing a formal Option Agreement, which is scheduled to be finalised by mid September 2010.
Staged payments totalling US$4,000,000 are then due over a 60 month period with a 2nd payment of US$75,000 due 12 months after
signing the Option Agreement. In addition Genesis will issue the private Chilean company US$20,000 worth of fully paid ordinary
shares in Genesis Minerals Limited on satisfactory completion of Due Diligence. On each 12 month anniversary of the Agreement
Genesis will issue the vendor an additional US$25,000 worth of fully paid ordinary shares in Genesis.
Capital Raisings
On 27 August 2010, Genesis announced a pro rata non-renounceable Entitlements Issue on the basis of 2 new shares for every 3 held on
the record date at an issue price of $0.05 each. The Entitlement Issue is underwritten and will raise approximately $1,163,917 (before
costs).
On 10 September 2010, Genesis announced the issue of 4,937,627 fully paid ordinary shares in a placement at an issue price of $0.05 per
share to raise $246,881 (before costs).
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 Group, the results of those operations, or the state of affairs of the Group in future financial years.
20. CASH FLOW INFORMATION
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
Change in operating assets and liabilities, net of effects from purchase of
controlled entities
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash outflow from operating activities
2010
$
2009
$
(775,286)
(1,434,649)
3,501
32,925
6,526
(5,115)
4,581
(732,868)
3,272
-
14,797
6,169
(114,440)
(1,524,851)
40
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
21. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners 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
22. SHARE-BASED PAYMENTS
2010
$
2009
$
(775,286)
(1,434,649)
Number of shares
Number of shares
31,556,421
25,703,298
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 ranges from 15 to 20 cents with expiry dates ranging from 28 February 2013 to 23
August 2013.
Included in the above are 150,000 options granted to an employee that vested in two equal tranches of 75,000 options each, with the first
tranche vesting on 20 August 2008 and the second tranche vesting on 20 August 2009. The expense should have been recognised over
the respective periods but was not. The effect is not considered material, hence the entire expense was recognised in this financial year.
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
2010
2009
Weighted
average
exercise price
cents
20.0
17.5
-
-
-
19.4
19.4
Weighted
average
exercise price
cents
20.0
-
-
-
-
20.0
20.0
Number of
options
500,000
-
-
-
-
500,000
500,000
Number of
options
500,000
150,000
-
-
-
650,000
650,000
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.78 years (2009: 2.58),
with exercise prices ranging from 15 to 20 cents.
Expenses arising from share-based payment transactions
The weighted average fair value of the options granted during the year was 21.7 cents (2009: N/A). The price was calculated by using the
Black-Scholes European Option Pricing Model applying the following inputs:
2010
2009
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
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.
20.0
6.0
25.0
109.5%
6.5%
-
-
-
-
-
41
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements continued
30 JUNE 2010
2010
$
2009
$
22. SHARE-BASED PAYMENTS (cont’d)
Total expenses arising from share-based payment transactions recognised during the year were as follows:
Options issued to employees and contractors
32,925
-
23. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Genesis Minerals Limited, at 30 June 2010. The information presented here has
been prepared using accounting policies consistent with those presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
213,644
892
214,536
63,668
63,668
4,268,799
96,475
(4,214,406)
150,868
(771,887)
(771,887)
282,005
4,393
286,398
62,953
62,953
3,602,414
63,550
(3,442,519)
223,445
(1,363,072)
(1,363,072)
42
Genesis Minerals Limited and controlled entities
Directors' Declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 20 to 42 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 Group’s financial position as at 30 June 2010 and of it’s performance for the financial
year ended on that date;
(ii)
(b)
(c)
subject to the matter at note 1(a), there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable; and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been
included in the notes to the financial statements.
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 2010
43
Independent Auditor's Report
To the Members of Genesis Minerals Limited
We have audited the accompanying financial report of Genesis Minerals Limited (“the Company”) and
Controlled Entities (“the Consolidated Entity”), which comprises the statement of financial position as at
30 June 2010, and the statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year ended on that date, a statement of accounting policies, other
selected explanatory notes and the directors’ declaration of the Consolidated Entity, comprising the
Company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors Responsibility for the Financial Report
The directors of Genesis Minerals Limited are responsible for the preparation and fair presentation of
the financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and
maintaining internal control relevant to the preparation and fair presentation of the financial report that is
free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In
Note 1, the directors also state, in accordance with Accounting Standards AASB 101: Presentation of
Financial Statements, that compliance with the Australian equivalents to International Financial
Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and
notes, complies with IFRS.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit
to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
Independence
In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements
and the Corporations Act 2001.
Auditor's Opinion
In our opinion:
a. The financial report of Genesis Minerals Limited and Controlled Entities is in accordance with the Corporations Act 2001,
including:
i.
ii.
giving a true and fair view of the Company and the Consolidated Entity’s financial position as at 30 June 2010 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Emphasis of Matter
Without qualifying our opinion, attention is drawn to the following matter. As a result of matters described in Note 1: Going
Concern to the financial report, uncertainty exists whether Genesis Minerals Limited and Controlled Entities will be able to
continue as a going concern and therefore whether it will be able to pay its debts as and when they fall due and realise its
assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The
financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to
the amounts and classification of liabilities that might be necessary should the Consolidated Entity not continue as a going
concern.
Report on the Remuneration Report
We have audited the Remuneration Report included within the report of the directors for the year ended 30 June 2010. The
directors of Genesis Minerals Limited are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Genesis Minerals Limited for the year ended 30 June 2010, complies with section
300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 30th day of September 2010
Genesis Minerals Limited and controlled entities
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 29 September 2010.
(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:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Argonaut Equity Partners Pty Limited
Lachlan Resource Investments Ltd
Mr Michael John Fowler & Mrs Fiona Lee Dixon Fowler
Merrill Lynch (Australia) Nominees Pty Ltd
Dgali Investments Pty Ltd
Mr Henry Wiechecki
Gecko Resources Pty Ltd
Mr Geoffrey Norman Barnesby-Johnson & Catherine Jane Halvorsen
Argonaut Investments
Scintilla Strategic Investments Limited
Mr Mark Paterniti & Mrs Karen Paterniti
Mr Darren Peter Gordon
Halson Corporation Pty Ltd
Stateline Investments Pty Ltd
Geotech International Pty Ltd
Mr Bradley George Bolin
Mr Michael Filan Ashforth
Bullseye Geoservices Pty Ltd
Mr Denis John Reynolds
Celtic Capital Pty Ltd
Ordinary shares
Number of holders Number of shares
1
15
82
211
70
379
20
10
55,536
782,977
7,903,474
31,113,140
39,855,137
78,268
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
2,825,000
2,487,627
2,000,000
1,877,000
1,700,000
1,150,000
865,000
845,000
750,000
725,000
667,862
625,000
600,000
600,000
583,334
580,780
540,000
500,000
500,000
409,175
20,830,778
7.09
6.24
5.02
4.71
4.27
2.89
2.17
2.12
1.88
1.82
1.68
1.57
1.51
1.51
1.51
1.46
1.46
1.35
1.25
1.17
52.68
46
Genesis Minerals Limited and controlled entities
ASX Additional Information continued
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are:
Argonaut Equity Partners Pty Limited
Lachlan Resource Investments Ltd
Mr Michael John Fowler & Mrs Fiona Lee Dixon Fowler
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of Shares
2,825,000
2,487,627
2,000,000
(e) Schedule of interests in mining tenements
Location
Mundong Well, Western Australia
Mundong Well, Western Australia
Tenement
E08/1690
E08/1787
Percentage held / earning
100%
100%
47