Genesis Minerals Limited
Annual Report 2013

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GENESIS MINERALS LIMITED ANNUAL FINANCIAL REPORT A.B.N. 72 124 772 041 FOR THE YEAR ENDED 30 JUNE 2013 TABLE OF CONTENTS FINANCIAL STATEMENTS CHAIRMAN'S MESSAGE REVIEW OF OPERATIONS CORPORATE GOVERNANCE STATEMENT DIRECTORS' REPORT AUDITORS' INDEPENDENCE DECLARATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS' DECLARATION INDEPENDENT AUDIT REPORT ASX ADDITIONAL INFORMATION PAGE 1 2 11 16 26 27 28 29 30 31 61 62 64 GENESIS MINERALS LIMITED CHAIRMAN’S MESSAGE Dear Fellow Shareholder I am pleased to present the Annual Report of the Company for the year ended 30 June 2013. During 2012 Genesis commenced exploration of the Las Opeñas Project in San Juan, Argentina with its first ever drilling program completed at the Project in November 2012. The program at Las Opeñas Project discovered wide zones of near surface gold mineralisation with silver, lead and zinc. We believe the results support Genesis’ belief that Las Opeñas has the potential to host a multi- million-ounce gold deposit in a large epithermal system. In February 2013 Teck Argentina Limited, a subsidiary of Canada’s largest diversified mining company Teck Resources Limited, elected to earn-back to 60% of the Project. We believe Teck’s decision to earn back into the Las Opeñas Project is extremely positive and validated our belief in the Project and its geological potential. Teck has a track record of exploration and development success at both 100 per cent-owned and joint venture projects in South America. We are delighted that Genesis’ shareholders stand to benefit from its involvement at Las Opeñas. Teck have recently commenced exploration at the Project and we look forward to the results from this work over the short term. Genesis also continued to explore the Poncha Project in San Juan during the year. We completed our second drilling program at Poncha during April 2013 following up on high-grade epithermal gold mineralisation returned in 2012. The wide spaced drilling completed at Poncha from the most recent drilling returned encouraging results. Exploration also continued at our Cerro Verde Project in northern Chile. Our exploration effort at Cerro Verde continues to highlight the potential for significant mineralisation to be discovered at the Project. The Company continues to operate as efficiently as possible with an excellent core group of employees and contractors. We continue to focus on under explored geological terranes that we consider to be highly prospective and have the potential for significant gold or copper deposits. Las Opeñas is an example of this strategy working for us and the faith that is place in our team by a leading mining and exploration house such as Teck. We also continue to seek highly prospective and transformational advanced copper and gold projects in Chile, Argentina and elsewhere in Latin America. As a board we are cognisant of the challenging times in the junior mining sector and our strategy to grow the value of the Company is strongly informed by what investors are looking for in a junior and the need to operate as efficiently as possible. 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. Richard Hill Chairman 1 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS During the year Genesis Minerals Limited (“Genesis”) continued exploration on the Poncha and Las Opeñas Gold Projects in San Juan, Argentina and its Cerro Verde Copper-Gold Project in northern Chile. Genesis discovered wide zones of gold mineralisation with associated silver, lead and zinc during its first drilling program at its Las Opeñas Project during November 2012. At Poncha a second drill program was completed during April 2013. Drilling targeted the Southern Epithermal Target following up high-grade gold mineralisation (Genesis ASX release dated July 30, 2012) intersected in 2012 and porphyry and epithermal style mineralisation at the Northern Porphyry Target. In Chile at the Cerro Verde Project Genesis completed further geochemical sampling programs, project wide geological mapping and a ground magnetic survey. Figure 1. Project locations Figure 2. Argentinean Project locations Poncha and Las Opeñas Projects, San Juan, Argentina Genesis has an agreement with Teck Argentina Ltd. (“Teck”), a wholly owned subsidiary of Teck Resources Limited, to acquire 100% of Teck’s right and interest in the Poncha Project subject to an earn-back right or royalty to Teck. At Las Opeñas Teck elected to exercise their right to earn-back in to a 60% interest in the Las Opeñas Project in February 2013. Teck must now incur expenditures equal to four times Genesis’ expenditures multiplied by the percentage interest Teck is earning back (60%), to a maximum of $1.2 million. Upon completion of the earn-back by Teck a Joint Venture Company shall be formed to explore and, if warranted, develop the Project with the parties’ Joint Venture interests being 60% Teck and 40% Genesis. The Poncha and Las Opeñas Projects are located 200km northwest of the regional capital San Juan and about 40km northwest of the town of Rodeo in the foothills of the Andes, at elevations of between 2,800m and 4,500m above sea level. Infrastructure in the area is good. Access to the Projects is gained via good paved and gravel roads from Rodeo. 2 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Las Opeñas Genesis completed its first drilling program at Las Opeñas in November 2012, intersecting a wide zone of gold mineralisation in drill hole 12 LODH 003, with analytical results including: o 115m @ 0.58g/t gold, 3.5g/t silver, 0.24% lead and 0.65% zinc from 18m to end of hole  including 47.1m @ 0.84g/t gold, 3.5g/t silver, 0.21% lead and 0.63% zinc from 80.4m Hole 12 LODH 011 located 340m to the northwest of 12 LODH 003 intersected: o 29.4m @ 0.57g/t gold, 9.9g/t silver, 0.29% lead and 1.1% zinc from 65m In addition to the results from holes 12 LODH 003 and 011, very encouraging results from near surface were returned from 10 of the other 12 holes drilled, including: o 12 LODH 005 - 8.15m @ 0.55 g/t gold, 4.78 g/t silver, 0.32% lead and 0.88% zinc o 12 LODH 007 - 1.50m @ 4.75 g/t gold, 14.8 g/t silver, 0.3% lead and 0.48% zinc o 12 LODH 009 - 59.6m @ 0.24 g/t gold, 2g/t silver, 0.1% lead and 0.27 % zinc Drill results are shown in Table 1. Figure 3. Las Opeñas drill hole locations and results. Very wide zones of strongly anomalous base metal mineralisation (see Figure 3) were returned from all holes targeting the breccias at Las Opeñas, including: o 12 LODH 005 - 87.9m @ 0.20% lead and 0.43% zinc o 12 LODH 007 - 104m @ 0.11% lead and 0.53% zinc o 12 LODH 008 - 97.9m @ 0.14% lead and 0.45% zinc Mineralisation intersected in 12 LODH 003 (see Figure 4) is hosted by a weakly to moderately argillic altered, polymictic breccia comprising clasts of dacite, granodiorite and fine-grained sediments. Pyrite, sphalerite and galena occur as disseminations within the clasts and matrix as well as within veinlets cutting both clasts and matrix. The mineralisation is open at depth and along strike and is interpreted to develop in an overall ENE orientation. 3 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Figure 4. Schematic cross section 12 LODH 003 Figure 5. Schematic cross section 12 LODH 011. Gold mineralisation in hole 12 LODH 011 (see Figure 5) is hosted within moderately silicified, strongly argillic altered polymictic breccias and fine grained sediments with pyrite, sphalerite and galena mineralisation being strongly disseminated and within later crosscutting veinlets. Only one hole tested this target. Figure 6. High-grade vein targets and breccia hosted mineralisation 4 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Teck commenced exploration at the Las Opeñas Project during the June 2013 quarter and to date has completed an Induced Polarisation (IP) and Resistivity survey over the areas initially drilled by Genesis, supplemented with a property-wide ground magnetic survey, detailed mapping and geochemical sampling. Table 1 Significant mineralisation > 0.1g/t gold – 12 LODH 001 to 12 LODH 014 Hole ID 12-LODH-001 East Posgar2 2,466,310 North Posgar2 6,705,426 3,321 12-LODH-002 2,466,310 6,705,425 3,319 12-LODH-003 2,466,239 6,705,395 3,335 mRL Depth Az Dip From To Interval 33.35 17.65 12-LODH-005 2,465,740 6,705,083 3,440 113 150 100 101 134 150 0 150 109 119 113 101 100 128 90 330 330 330 330 330 150 150 -60 -60 -60 inc. -60 inc. -60 -60 inc. -60 -60 -60 -60 -60 15.7 61.3 18.2 80.4 13.1 27.7 15.7 14.8 35 15.05 16.4 49 65 2.80 75.3 134 127.5 101 35.85 85.1 119 36.5 113 76 50 100.4 90.0 Au (ppm) 0.12 0.27 0.58 0.84 Ag (ppm) 0.9 6.6 3.5 3.6 0.55 4.8 0.1 4.75 0.24 2.93 0.57 1.7 14.8 1.8 2.01 21 9.9 2.2 Zn (%) 0.24 0.63 0.65 0.63 0.43 0.88 0.51 0.53 0.48 0.45 0.27 0.13 1.1 0.20 0.19 Pb (%) 0.1 0.15 0.24 0.21 0.20 0.32 0.05 0.11 0.3 0.14 0.07 0.29 14 115.8 47.1 87.9 8.15 69.4 104.2 1.5 97.95 59.6 1 29.4 87.20 26.80 12-LODH-006 2,465,946 6,705,357 3,482 12-LODH-007 2,465,910 6,705,337 3,456 12-LODH-008 2,465,863 6,705,313 3,455 12-LODH-009 12-LODH-010 12-LODH-011 12-LODH-013 12-LODH-014 2,465,817 2,466,622 2,465,992 2,466,141 6,705,066 6,705,545 6,705,612 6,705,269 3,433 3,273 3,391 3,352 53.20 80.0 2,466,381 6,705,205 -80 Fi na l a s s a y res ul ts from ½ HQ di a mond core 106.25 3,353 330   Ana l ys i s compl eted by ALS., Mendoza  Al l s a mpl es were a na l ys ed for gol d a nd s i l ver by fi re a s s a y, a nd copper, l ea d, a nd zi nc by ICP  Reference standards, duplica te a nd bl a nk s a mpl es were routi nel y s ubmi tted a nd were wi thi n a ccepta bl e l i mi ts ba s ed on current da ta . Dri l l hole collar positions s urveyed by GPS (+-3m) a nd down hole s urveys by a down hol e Refl ex EZ Tra ck i ns trument.  Poncha An eight-hole, 1,800m diamond drilling program was completed during April 2013. Drilling targeted the Southern Epithermal Target following up high-grade gold mineralisation (Genesis ASX release dated July 30, 2012) intersected in 2012 (Figure 8) and porphyry and epithermal style mineralisation at the Northern Porphyry Target (Figure 7). Drill results are shown in Table 2. Genesis is reviewing the significance of the results from the two drilling programs completed by Genesis prior to making a decision on further exploration at Poncha. Figure 7. Prospect location plan. 5 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Figure 8. Southern Epithermal Target Drill Hole Locations and Results. Six of the eight holes completed (Figure 8) were drilled at very wide spacings over one kilometre of strike at the Southern Epithermal Target targeting the extensions of mineralisation intersected in 12PODH003, along with a number of gold geochemical surface anomalies and concealed structural targets. Encouraging results (see Table 2) were returned from the wide spaced drilling including: o 13PODH009 17.5m @ 0.33g/t gold, 2.0g/t silver and 0.17% zinc from 141.5m including 1m @ 1.44g/t gold, 10.1 g/t silver and 0.45% zinc from 147m; and including 1m @ 1.63g/t gold, 5.9 g/t silver and 1.03% zinc from 157m    o 13PODH010 31m @ 0.21g/t gold from 211m including 5m @ 0.54g/t gold from 211m o 13PODH011 18m @ 0.25g/t gold, 2.8g/t silver and 0.12% copper o 13PODH012 5m @ 0.55g/t gold and 1.9g/t silver; and 8m @ 0.22g/t gold Mineralisation intersected in holes 13PODH009 to 13PODH012, along the interpreted north-south trending structural zone, was generally associated with moderate to intensely argillic altered, pyritic pyroclastic lapillistone to breccia units. Sulphide mineralisation ranging up to 10% is both disseminated and within veinlets. Two holes (13PODH014 and 015) were targeted at the large alteration system coincident with a 6 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS strong, induced polarisation chargeability anomaly at the Northern Porphyry target at Poncha. Results returned from the wide spaced drilling at the Northern Porphyry Target include: o 13PODH014 1.5m @ 0.03g/t gold and 19.8g/t silver o 13PODH015 87m @ 0.11g/t gold from 63.5m Mineralisation intersected in 13PODH014 was associated with a narrow vuggy quartz vein within a weakly altered andesite. Hole 13PODH015 intersected a dacitic lapilli unit which contained strong zones of sulphidic veinlets and stock works in parts on the margin of the porphyry intrusion. Quartz sulphide and magnetite veinlets increased towards the bottom of the hole. Figure 9. Northern Porphyry Target drill hole locations and results. Table 2 Results from Poncha Drilling 13 PODH 08 to 15 HoleID East North Posgar2 Posgar2 mRL Depth Az Dip From To 13PODH008 2,445,151 6,692,942 4,357 422.1 270 -50 13PODH009 2,445,323 6,693,120 4,239 200.15 270 -60 13PODH010 2,445,352 6,692,707 4,274 250 270 13PODH011 13PODH012 2,445,333 2,445,198 6,692,451 6,692,210 4,211 4,232 261.5 179 270 90 13PODH013 2,445,644 6,693,254 4,162 13PODH014 13PODH015 2,444,364 2,444,733 6,695,332 6,694,884 4,576 4,448 188 81.4 203 90 0 0 inc. inc. -50 -50 -50 -50 -50 -50 inc. inc. 2 0 338 126 141.5 147 157 211 211 201 136.5 163.5 15.5 14.4 63.5 63.5 82 8 54 340 128 159 148 158 242 216 219 141.5 171.5 41 15.9 150.5 74 88 Ag g/t 0.4 Cu % Pb (%) 0.04 2.0 10.1 5.9 0.11 0.11 0.20 0.10 0.12 2.8 1.9 19.8 Interva l 6 54 2 2 17.5 1 1 31 5 18 5 8 25.5 1.5 87.5 10.5 6 Au g/t 0.24 0.56 0.67 0.33 1.44 1.63 0.21 0.54 0.25 0.55 0.22 0.12 0.26 0.23 Zn (%) 0.24 0.18 0.19 0.17 0.45 1.03 0.13 0.17 0.28 7 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Cerro Verde and Dinamarquesa Projects, Chile Cerro Verde Genesis entered into an agreement in August 2010 with a private Chilean company to acquire a 100% interest in the Cerro Verde Gold-Copper-Silver Project in northern Chile (Figure 10). 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. The Project is located in the Atacama Desert in an area serviced by very good infrastructure about 800 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. The Project hosts a sub-parallel swarm of precious and base metal-bearing quartz specularite veins exposed along the western flank of a caldera system that is elongated north-south. The host rocks comprise a sequence of Palaeocene andesitic volcaniclastics, dacite and rhyolite flows, flow-domes, diatreme-like breccias, and dikes capped by a blanket of rhyolitic ignimbrites. Ore-bearing veins cut the entire stratigraphic column. Mineralised veins and structures strike north to north east with moderate to steep dips to the east and west. Exploration at Cerro Verde during the second half of 2012 delineated a new corridor of prospective veins, structures and stockwork zones to the east of the previously known mineralised zones and historic workings. This 4km long by 1km wide corridor defined by rock chip sampling and first pass mapping, is open to the north and south. Figure 10. Cerro Verde Location Map. 8 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Figure 11. Cerro Verde geological mapping and sampling During March and April 2013 a total of 450 talus fines samples were collected at 200 x 50m spacings over the mineralised corridor defined in 2012. During April 2013 a ground magnetic survey at 50m line spacings was completed over the south west corner of the project to map lithology, structure, alteration and to outline zones prospective for copper-gold mineralisation. A series of north northeast trending lineaments were outlined along with magnetic highs in the central and southern portions of the survey grid. A magnetic high over 1km in diameter is partly coincident with a plus one kilometre long, north north-east trending copper anomaly defined from talus fines sampling (Figure 12). The possible presence of intrusions at depth suggests that larger mineralised bodies may be present. First pass induced polarisation surveying is recommended to test for a potential large sulphide system. Third parties interested in the project have approached Genesis and are currently in the process of reviewing data and completing site visits. 9 GENESIS MINERALS LIMITED REVIEW OF OPERATIONS Figure 12. Cerro Verde coincident magnetic and geochemical anomaly. Dinamarquesa Genesis withdrew from the option agreement over the Dinamarquesa Project in September 2012. The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Michael Fowler, Genesis Minerals Limited’s Managing Director, who is a Member of The Australasian Institute of Mining and Metallurgy. Michael Fowler has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 JORC Code. Michael Fowler consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears. 10 GENESIS MINERALS LIMITED CORPORATE GOVERNANCE STATEMENT The Board of Directors The company's constitution provides that the number of directors shall not be less than three a nd not more tha n ni ne. There i s no requi rement for a ny s ha rehol di ng qua l i fi ca ti on. As a nd if the company's activities increase i n size, na ture a nd s cope the s i ze of the Boa rd wi l l be revi ewed peri odi ca l l y, a nd a s ci rcums tances demand. The optimum number of directors requi red to s upervi s e a dequa tel y the compa ny's cons ti tuti on wi l l be determi ned wi thi n the l i mi ta ti ons i mpos ed by the cons ti tuti on. The membership of the Boa rd, i ts a cti vi ti es a nd compos i ti on, i s s ubject to peri odi c revi ew. The cri teri a for determi ni ng the i dentification and appointment of a s uitable candidate for the Board s hall i nclude quality of the i ndividual, ba ckground of experi ence a nd a chievement, compatibility wi th other Board members, credibility wi thin the company's scope of activities, intel l ectua l a bi l i ty to contri bute to Boa rd's duti es a nd phys i ca l a bi l i ty to underta ke Boa rd's duti es a nd res pons i bi l i ti es . Di rectors are i nitially a ppointed by the full Board subject to election by s hareholders a t the next general meeting. Under the company's cons titution the tenure of a director (other than managing director, a nd only one managing director where the position i s jointl y hel d) i s s ubject to reappointment by s hareholders not later than the third anniversary following his or her last appoi ntment. Subject to the requi rements of the Corporations Act 2001, the Boa rd does not subscribe to the principle of retirement a ge a nd there i s no ma xi mum peri od of service a s a director. A ma naging director may be appointed for a ny peri od a nd on a ny terms the di rectors thi nk fi t a nd, s ubject to the terms of a ny a greement entered i nto, ma y revoke a ny a ppoi ntment. The Board considers that the company i s not currently of a s i ze, nor a re i ts a ffa i rs of s uch compl exi ty to jus ti fy the forma ti on of s eparate or special committees (other than an Audit Committee) at this time. The Board as a whole is able to a ddress the governa nce a s pects of the ful l s cope of the compa ny's a cti vi ti es a nd to ens ure tha t i t a dheres to a ppropri a te ethi ca l s ta nda rds . Role of the Board The Boa rd's pri ma ry rol e i s the protecti on a nd enha ncement of l ong-term s ha rehol der va l ue. To ful fil this role, the Board is responsible for oversight of management and the overall corporate governance of the company i ncluding i ts s tra tegi c di recti on, es ta bl i s hi ng goa l s for ma na gement a nd moni tori ng the a chi evement of thes e goa l s . Appointments to Other Boards Di rectors are required to ta ke into consideration any potential conflicts of interest when a ccepti ng a ppoi ntments to other boa rds . Independent Professional Advice The Board has determined that i ndividual directors have the ri ght in connection with their duties and responsibil i ti es a s di rectors , to s eek i ndependent professional advice at the company's expens e. Wi th the excepti on of expens es for l ega l a dvi ce i n rel a ti on to di rector's ri ghts and duties, the engagement of an outside adviser is subject to prior a pprova l of the Cha i rma n a nd thi s wi l l not be wi thhel d unrea s ona bl y. Continuous Review of Corporate Governance Di rectors consider, on a n ongoing basis, how management information is presented to them and whether such information is sufficient to ena ble them to discharge their duties as directors of the company. Such i nformation must be s ufficient to ena bl e the di rectors to determine a ppropriate operating and fi na nci a l s tra tegi es from ti me to ti me i n l i ght of cha ngi ng ci rcums ta nces a nd economi c condi tions. The directors recognise that mining exploration is a n inherently ri sky business a nd tha t opera ti ona l s tra tegi es a dopted s houl d, notwi ths ta ndi ng, be di rected towa rds i mprovi ng or ma i nta i ni ng the net worth of the compa ny. ASX Principles of Good Corporate Governance The Board has reviewed i ts current practices in light of the revised ASX Corporate Governance Pri nciples and Recommendations wi th a vi ew to ma ki ng a mendments where a ppl i ca bl e a fter cons i deri ng the compa ny's s i ze a nd the res ources i t ha s a va i l a bl e. As the company's activities develop i n size, nature a nd s cope, the s ize of the Board and the implementation of a ny a ddi ti ona l forma l corpora te governa nce commi ttees wi l l be gi ven further cons i dera ti on. The Board has a dopted the revised Recommendations a nd the following ta ble sets out the company's present pos i ti on i n rel a ti on to ea ch of the revi s ed Pri nci pl es . 11 GENESIS MINERALS LIMITED CORPORATE GOVERNANCE STATEMENT ASX Principle Status Reference/comment Principle 1: 1.1 1.2 1.3 Principle 2: 2.1 Lay solid foundations for management and oversight Compa nies s hould establish the functi ons reserved to the board and thos e delegated to senior executives a nd disclose those functions Compa nies s hould disclose the process for evaluating the performance of senior executives Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 1 Structure the board to add value A ma jority of the board should be i ndependent directors 2.2 2.3 2.4 2.5 2.6 Principle 3: 3.1 3.2 3.3 The cha ir should be a n i ndependent di rector The rol es of chair a nd chief executive offi cer s hould not be exercised by the s a me individual The board should establish a nomi nation committee Compa nies s hould disclose the process for evaluating the performance of the board, its commi ttees and i ndividual directors Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 2 Promote ethical and responsible decision-making Compa nies s hould establish a code of conduct a nd disclose the code Compa nies s hould establish a policy concerning diversity a nd disclose the pol icy or a s ummary of that policy. The policy s hould include requi rements for the Board to es tablish measurable objectives for a chi eving gender diversity a nd for the Boa rd to assess a nnually both the objectives a nd progress i n achieving them Compa nies s hould disclose in each a nnual report the measurable objectives for a chieving gender di versity s et by the Board i n a ccordance with the diversity policy a nd progress towards achieving them A = Adopted N/A = Not adopted A A A (in part) A A A A N/A Ma tters reserved for the Board a re included on the Company website i n the Corporate Governance Section. The remuneration of management and employees is reviewed by the Ma na ging Director a nd a pproved by the Board. Acti ng i n its ordinary ca pacity the Board from time to ti me ca rries out the process of considering a nd determining performance issues. Ma tters reserved for the Board ca n be vi ewed on the Company website. Gi ven the Group’s background, the nature and size of its business and the current stage of its development, the board comprises three di rectors, two of whom a re non-executive. The board believes that thi s is both appropriate a nd a cceptable at this stage of the Group’s development. The position of Chairman and Ma naging Director are held by separate pers ons. The full Board is the Nomination Committee. Acti ng in its ordinary ca pa city from time to time as required, the Board carries out the process of determining the need for screening a nd a ppointing new Di rectors. In vi ew of the size and resources available to the Group it is not cons idered that a separate Nomination Committee would add a ny s ubstance to this process. Gi ven the size and nature of the Group a formal process for performance evaluation has not been developed. A (in part) The s kills and experience of the Directors are s et out in the Group’s Annual Report a nd on the website. A N/A The Group has established a Code of Conduct which ca n be vi ewed on i ts website. The Company has established a Diversity Policy, however, the policy does not include requirements for the board to establish measurable objectives for a chieving gender diversity. Given the Company’s size a nd s tage of development as an exploration company, the board does not think i t is yet a ppropriate to include measurable objectives i n relation to gender. As the Company grows a nd requires more empl oyees, the Company wi ll review this policy a nd amend as a ppropriate. N/A The Company has established a Diversity Policy, however, the policy does not include requirements for the board to establish measurable objectives for a chieving gender diversity. Given the Company’s size a nd s tage of development as an exploration company, the board does not think i t is yet a ppropriate to include measurable objectives i n relation to gender. 12 GENESIS MINERALS LIMITED CORPORATE GOVERNANCE STATEMENT ASX Principle Status Reference/comment 3.4 3.5 Principle 4: 4.1 4.2 4.3 4.4 Compa nies s hould disclose in each a nnual report the proportion of women employees in the whole orga nisation, women i n s enior executive positions and women on the boa rd. Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 3 • Safeguard integrity in financial reporting The board should establish a n audit commi ttee The a udit committee should be s tructured so that it: • cons ists only of non-executive di rectors cons ists of a majority of i ndependent directors i s chaired by an independent cha i r, who is not chair of the boa rd • ha s at l east three members The a udit committee should have a forma l charter Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 4 • Principle 5: 5.1 5.2 Principle 6: 6.1 6.2 Make timely and balanced disclosure Compa nies s hould establish written pol icies designed to ensure compl iance with ASX Li sting Rule di s closure requirements a nd to ensure a ccountability a t a senior executive l evel for that compliance a nd disclose thos e policies or a s ummary of those pol icies Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 5 Respect the rights of shareholders Compa nies s hould design a communications policy for promoting effective communication with s ha reholders a nd encouraging their pa rti cipation a t general meetings and di s close their policy or a s ummary of tha t policy Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 6 A = Adopted N/A = Not adopted A The proportion of women employees in the whole organisation is 33% (excl uding directors). There a re currently no women in senior executive positions. There a re currently no women on the board. A A A A A N/A A A A A A The Company only has two non-executive directors. Di rectors must obtain the a pproval of the Chairman of the Board and noti fy the Company Secretary before they buy or s ell shares in the Compa ny, a nd i t is subject to Board veto. Directors must provi de the i nformation required by the Company to ensure Compliance with Li s ting Rule 3.19A. The Board receives monthly reports on the status of the Group’s a cti vi ties a nd a ny new proposed a ctivities. Disclosure is reviewed as a routi ne agenda i tem a t each Board Meeting. In l i ne with a dherence to continuous disclosure requirements of the ASX a l l shareholders are kept informed of ma jor developments a ffecting the Group. This disclosure i s through regular shareholder communications including the Annual report, Qua rterly Reports, the Compa ny Website a nd the distributions of s pecific releases covering ma jor tra nsactions a nd events. A The Group has formulated a Communication Policy which i s included i n i ts Corporate Governance Statement on the Company Website. 13 GENESIS MINERALS LIMITED CORPORATE GOVERNANCE STATEMENT ASX Principle Status Reference/comment Principle 7: 7.1 Recognise and manage risk Compa nies s hould establish policies for the oversight a nd management of ma terial business ri sks and disclose a s ummary of those policies 7.2 7.3 7.4 The board should require ma nagement to design a nd i mplement the ri sk management and i nternal control system to manage the compa ny’s ma terial business ri sks and report to i t on whether those risks are bei ng managed effectively. The board s hould disclose that management has reported to i t as to the effectiveness of the company’s management of its ma terial business ri sks The board should disclose whether i t ha s received assurance from the chief executive officer (or equivalent) and the chi ef financial officer (or equivalent) that the declaration provi ded in a ccordance with s ection 295A of the Corporations Act i s founded on a sound system of risk ma nagement and internal control a nd tha t the s ystem is operating effectively i n a ll ma terial respects in rel a tion to financial reporting ri sks Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 7 A = Adopted N/A = Not adopted N/A Whi le the Group does not have formalised policies on risk ma nagement the Board recognises i ts responsibility for i dentifying a reas of significant business risk and for ensuring that a rrangements a re i n place for a dequately ma naging these risks. This issue i s regul arly reviewed at Board meetings and risk management culture is encouraged amongst employees and contractors. Determined a reas of ri sk which are regularly considered include: • performance a nd funding of exploration activities budget control a nd a sset protection s ta tus of mineral tenements compl iance with government laws a nd regulations s a fety a nd the environment conti nuous disclosure obligations • • • • • N/A Whi le the Group does not have formalised ri sk management policies i t recognises i ts responsibility for i dentifying areas of significant bus iness risk and ensuring that a rrangements a re i n place to a dequately ma nage these risks. This issue is regularly revi ewed at Boa rd meetings and a ri sk management culture is encouraged a mongst employees a nd contractors. A As s urances received from CEO a nd CFO (or equivalent) each year. A 14 GENESIS MINERALS LIMITED CORPORATE GOVERNANCE STATEMENT ASX Principle Status Reference/comment Principle 8: 8.1 Remunerate fairly and responsibly The board should establish a remuneration committee The remuneration committee should be s tructured so that it: • cons ists of a majority of i ndependent directors A N/A 8.2 8.3 8.4 A = Adopted N/A = Not adopted • i s chaired by an independent di rector N/A • ha s at l east three members Compa nies s hould clearly distinguish the s tructure of non-executive di rectors’ remuneration from that of executive directors and senior executives Compa nies s hould provide the i nformation indicated in the Guide to reporti ng on Pri nciple 8 A A A The Group established a Remuneration Committee consisting of three non-executive directors, only one of whom is classified as i ndependent. As there is only one i ndependent director, it i s not pos sible to have a n independent chair that is not chair of the board. Sourci ng alternative directors to strictly comply with this Pri nciple is cons idered expensive with costs outweighing the potential benefits. The Group has established a Remuneration Committee consisting of three non-executive directors, only one of whom is classified as i ndependent. As there is only one i ndependent director, it i s not pos sible to have a n independent chair that is not chair of the board. Sourci ng alternative directors to strictly comply with this Pri nciple is cons idered expensive with costs outweighing the potential benefits. Refer to the Annual Report a nd the Corporate Governance s ection of the Company’s website. 15 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 Your Directors present their report, together with the financial statements of Genesis Minerals Limited and it's controlled entity, ("the Group") for the year ended 30 June 2013. Directors The names of the directors in office at any time during, or since the end of the year are: NAMES Michael Haynes Michael Fowler Damian Delaney Richard Hill POSITION APPOINTED/RETIRED Non-Executive Chairman resigned (12 February 2013) Managing Director Non-Executive Director Non-Executive Chairman appointed (12 February 2013) Directors have been in office since the start of the year to the date of this report unless otherwise stated. Information on directors The names, qualifications and experience of each person who has been a director during the year and to the date of this report are: Michael Haynes Non-Executive Chairman Qualifications Experience Other directorships in listed entities held in the previous three years (resigned 12 February 2013) BSc (Hons) Mr Haynes has more than 19 years' experience in the resources industry. He graduated from the University of Western Australia with an honours degree in geology and geophysics and has been intimately involved in the exploration and development of a wide variety of ore deposit styles throughout the world. Mr Haynes has held technical positions with both BHP Minerals and Billiton pk. 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 and has been instrumental in the incorporation, financing and ongoing management of numerous junior resources companies. Mr Haynes is a Non-executive Director of Black Range Minerals Limited (appointed 27 June 2005) and Birimian Gold Limited (appointed 24 May 2011 - resigned 31 January 2013) and Chairman of Overland Resources Limited (appointed 9 May 2005) and Coventry Resources Limited appointed 27 October 2009). 16 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 Michael Fowler Managing Director Qualifications Experience Interest in shares and options Other directorships in listed entities held in the previous three years BSc, MSc, MAusIMM Mr Fowler is a geologist with 23 years of experience in the resources industry. He 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 subsequently Managing Director in October 2005. Mr Fowler has overseen the discovery and development of several significant gold deposits. He has been intimately involved in a number of significant acquisitions and project reviews. He has recently worked as the Exploration Manager for Castle Minerals in Ghana. 3,730,730 fully paid ordinary shares, 1,500,000 options expiring 30 Nov 2013 exercisable at 31 cents; 2,000,000 options expiring 31 Dec 2014 exercisable at 22 cents; 27,084 options expiring 1 March 2014 exercisable at 15 cents; 27,084 options expiring 1 March 2015 exercisable at 20 cents Mr Fowler has not held any other directorships in the last 3 years. Damian Delaney Non-Executive Director Qualifications Experience Interest in shares and options Other directorships in listed entities held in the previous three years Chartered Accountant Mr Delaney is a Chartered Accountant with many years of experience working with international listed companies. Mr Delaney commenced his career in South Africa, qualifying with Coopers & Lybrand, before taking up a series of positions in the United Kingdom. He was until recently Managing Director of ASX listed Nimrodel Resources Ltd. He has worked in the resource sector for the past 7 years where he has been involved in numerous capital raisings. Mr Delaney is fully conversant with all regulatory requirements of the Australian markets and has significant experience managing all aspects of company financial and regulatory reporting. 1,300,000 fully paid ordinary shares; 4,000,000 options expiring 31 December 2014 exercisable at 22 cents; 115,001 options expiring 1 March 2014 exercisable at 15 cents; 115,001 options expiring 1 March 2015 exercisable at 20 cents Mr Delaney is also a director of Stirling Resources Ltd, Redbank Copper Ltd and Swan Gold Mining Ltd. 17 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 Richard Hill Non-Executive Chairman (appointed 12 Feburary 2013) B.Juris, LL.B, BSc (Hons), FFin Richard is a qualified solicitor and geologist with over 22 years experience in the Resource Industry. During this period Richard has performed roles as legal counsel, geologist and commercial manager for several major and mid cap Australian mining companies and more recently as founding director for a series of successful ASX-listed companies and Westoria Resources Investment venture fund. Richard was also co-founder of an investment vehicle, Braeside Australia Limited which was the catalyst for several ASX-listed companies and returned over 20 times the value of funds initially invested within a 3 to 4 year period. During his time in the resource industry Richard has gained a diversity of practical geological experience as a mine based and exploration geologist in a range of commodities and rock types. In his commercial and legal roles, he has been involved in project generation and evaluation, acquisition and joint venture negotiation, company secretarial functions, mining law and land access issues as well as local and overseas marketing and fund raising. 448,822 fully paid ordinary shares Mr Hill is also a director of Centaurus Metals Limited and YTC Resources Limited (appointed 28 April 2006 - resigned 11 July 2012). Qualifications Experience Interest in shares and options Other directorships in listed entities held in the previous three years Company secretary The following person held the position of Group Secretary at the end of the year and at the date of this report: Damian Delaney Mr Damian Delaney is a Chartered Accountant who commenced his career in South Africa, qualifying with Cooper & Lybrand, before taking up a series of finance positions in the United Kingdom, finally as Finance Director of London Stock Exchange listed Tarsus Group plc until 2004. Review of operations The loss of the Group after providing for income tax amounted to $ (2,952,294) (2012: $ (5,117,531)). A review of the operations of the Group during the financial year can be found on page 2 of the annual report. Significant changes in state of affairs No significant changes in the Group's state of affairs occurred during the financial year. 18 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 Principal activities and significant changes in nature of activities The principal activities of Genesis Minerals Limited during the year was the acquisition of mining tenements, and the exploration of these tenements with the objective of identifying economic mineral deposits. There were no significant changes in the nature of Genesis Minerals Limited's principal activities during the year. Meetings of directors During the year, 4 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows: Directors' Meetings Audit Committee Remuneration Committee Number Number Number eligible to Number eligible to Number eligible to Number attend attended attend attended attend attended Michael Haynes Michael Fowler Damian Delaney Richard Hill 1 3 3 2 1 3 3 2 - 1 1 1 - 1 1 1 - - - - - - - - Dividends paid or recommended No dividends have been paid or recommended during the year. Financial position The net assets of Genesis Minerals Limited have decreased by $843,330 from 30 June 2012 to $916,020 at 30 June 2013. This decrease is largely due to the following factors:    exploration of the Group's Chilean projects; raising $1,651,578 on 7 March 2013 via the placement of 33,031,560 ordinary shares at 5 cents each; and normal operational overheads incurred in running a listed enity with an overseas subsidiary for 12 months. Indemnification and insurance of officers and auditors Genesis Minerals Limited has agreed to indemnify all the directors of Genesis Minerals Limited for any liabilities to another person (other than Genesis Minerals Limited or related body corporate) that may arise from their position as directors of Genesis Minerals Limited and its controlled entity. 19 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 During the financial year Genesis Minerals Limited paid a premium of $12,210 (2012: 12,460) in respect of a contract insuring the directors and officers of Genesis Minerals Limited against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. Options At the date of this report, the unissued ordinary shares of Genesis Minerals Limited under option are as follows: GRANT DATE DATE OF EXPIRY EXERCISE PRICE NUMBER UNDER OPTION 14 November 2012 30 November 2013 20 November 2010 30 November 2013 11 April 2012 11 April 2012 11 April 2012 1 March 2014 31 December 2014 1 March 2015 $0.12 $0.31 $0.15 $0.22 $0.20 750,000 2,400,000 13,510,596 9,500,000 13,510,596 39,671,192 Option holders do not have any rights to participate in any issues of shares or other interests in the Group. For details of options issued to directors and other key management personnel as remuneration, refer to the remuneration report. During the year ended 30 June 2013, no ordinary shares in Genesis Minerals Limited were issued on the exercise of options granted. The following options lapsed during, or since the end of the year: EXPIRY DATE 30 September 2012 1 March 2013 28 February 2013 23 August 2013 23 August 2013 EXERCISE PRICE NUMBER OF OPTIONS LAPSED $ $ $ $ $ 0.10 0.12 0.20 0.15 0.20 600,000 13,510,596 500,000 75,000 75,000 14,760,596 No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of any other body corporate. Proceedings on behalf of company No person has applied for leave of court to bring proceedings on behalf of Genesis Minerals Limited or intervene in any proceedings to which Genesis Minerals Limited is a party for the purpose of taking responsibility on behalf of Genesis Minerals Limited for all or any part of those proceedings. Genesis Minerals Limited was not a party to any such proceedings during the year. 20 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 After balance date events No matters or circumstances have arisen since the end of the 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. Future developments The Directors have excluded from this report any further information on the likely developments in the operations of Genesis Minerals Limited and the expected results of those operations in future financial periods, as the Directors believe that it would be speculative and prejudicial to the interests of Genesis Minerals Limited to include any such information in this report. Environmental issues The Group's operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a state or territory of Australia. Auditors independence declaration The lead auditors independence declaration for the year ended 30 June 2013 has been received and can be found on page 26 of the financial report. Non-audit services Bentleys, Genesis Minerals Limited's auditors, did not provide any non-audit services during the year ended 30 June 2013. 21 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 REMUNERATION REPORT (AUDITED) The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. 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% (unless otherwise stated), and do not receive any other retirement benefits. All remuneration paid to directors and executives is valued at the cost to the Group 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 Group and are able to participate in the employee option plan. PERFORMANCE BASED REMUNERATION The Group currently has no performance based remuneration component built into Director and Executive remuneration packages. 22 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 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 Executive's 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. USE OF REMUNERATION CONSULTANTS The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2013. Voting and comment made on the Group's 2012 Annual General Meeting The Group received approximately 84% (prior year: 91%) of "yes" votes on its remuneration report for the financial year ended 30 June 2012. Employment details of members of key management personnel and other executives The following table provides employment details of persons who were, during the financial year, members of key management personnel of Genesis Minerals Limited. The table also illustrates the proportion of remuneration that was performance and non-performance based and the proportion of remuneration received in the form of options. NON PERFORMANCE RELATED SHARES OPTIONS/ RIGHTS % % % 100 100 100 100 - - - - - - - - Directors Michael Haynes Michael Fowler Position Non-Executive Chairman Managing Director Damian Delaney Non-Executive Director Richard Hill Service agreements Non-Executive Chairman On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of director. On 25 June 2007 the Group entered into an Executive Service Agreement with Mr Michael Fowler. Under the Agreement, Mr Michael Fowler is engaged by the Group to provide services to the Group in the capacity of Managing 23 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 Agreement was effective from the date the Group was admitted to the Official List (30 July 2007) and continues until terminated by either Mr Fowler or the Group. Mr Fowler is entitled to a minimum notice period of three months from Mr Fowler. Remuneration details for the year ended 30 June 2013 The following table of benefits and payment details, in respect to the year, the components of remuneration for each member of the key management personnel of Genesis Minerals Limited. Table of benefits and payments SHORT TERM POST EMPLOYMENT SHARE BASED PAYMENTS CASH SALARY NON PENSION AND OPTIONS AND SHARES AND FEES BONUS MONETARY SUPERANNUATION RIGHTS UNITS $ $ $ $ $ $ $ 42,522 275,000 60,000 18,167 395,689 - - - - - - - - - - - 25,000 - - 25,000 - - - - - - - - - - 42,522 300,000 60,000 18,167 420,689 2013 DIRECTORS Michael Haynes Michael Fowler Damian Delaney Richard Hill Mr Michael Haynes resigned on 12 February 2013; and Mr Richard Hill was appointed on 12 February 2013. SHORT TERM POST EMPLOYMENT SHARE BASED PAYMENTS CASH SALARY NON PENSION AND OPTIONS AND SHARES AND FEES BONUS MONETARY SUPERANNUATION RIGHTS UNITS $ $ $ $ $ $ $ 54,500 275,000 7,500 22,500 359,500 - - - - - - - - - - - 19,956 - 2,025 53,038 202,046 343,470 8,083 21,981 606,637 - - - - - 107,538 497,002 350,970 32,608 988,118 2012 DIRECTORS Michael Haynes Michael Fowler Damian Delaney Graham Smith Share based compensation Details of the options granted as remuneration to those key management personnel and executives during the year: 24 GENESIS MINERALS LIMITED DIRECTORS' REPORT 30 JUNE 2013 DIRECTORS Michael Haynes Michael Fowler Damian Delaney VALUE (CENTS) NUMBER OF OPTIONS EXPIRY DATE 8.60 8.60 8.60 500,000 31/12/2014 2,000,000 31/12/2014 4,000,000 31/12/2014 EXERCISE PRICE (CENTS) 22.00 22.00 22.00 % VESTED IN PERIOD - - - VESTING DATE 11/04/2012 11/04/2012 11/04/2012 There were no share based payments granted to key management personnel during the year ended 30 June 2013. Option values at grant date were determined using the Black-Scholes method. All options were issued by Genesis Minerals Limited and entitle the holder to ordinary shares in Genesis Minerals Limited for each option exercised. There have not been any alterations to the terms or conditions of any share based payment arrangements since grant date. All options vested in a prior period. END OF AUDITED SECTION Signed in accordance with a resolution of the Board of Directors: Director: ................................................................................................................................................ Michael Fowler Dated 26 September 2013 25 To The Board of Directors As lead audit director for the audit of the financial statements of Genesis Minerals Limited and Controlled Entities for the financial year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been no contraventions of: the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. Yours faithfully BENTLEYS Chartered Accountants DOUG BELL CA Director DATED at PERTH this 26th day of September 2013 26 GENESIS MINERALS LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 Income Employment expenses Corporate expenses Administrative expenses Exploration expenses Impairment expenses Depreciation expense Share based payments expenses Finance costs Loss before income taxes Income tax expense Loss from continuing operations Other comprehensive income Items that may be reclassified subsequent to profit or loss Exchange differences on translating foreign operations Items that may not be reclassified subsequent to profit or loss Total comprehensive income 2013 $ NOTE 2012 $ 39,907 48,057 (459,759) (440,658) (156,823) (177,715) (308,950) (204,651) (2,008,625) (3,297,467) (22,834) (151,084) (3,573) (4,142) 19 (31,637) (864,238) - (25,633) (2,952,294) (5,117,531) 2 - - (2,952,294) (5,117,531) 34,512 (2,517) - - (2,917,782) (5,120,048) Loss per share Basic and diluted loss per share (cents) 9 (2.17) (5.90) These financial statements should be read in conjunction with the accompanying notes. 27 GENESIS MINERALS LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013 CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY NOTE 2013 $ 2012 $ 3 4 5 6 1,109,319 2,040,132 4,477 18,549 1,113,796 2,058,681 9,333 9,333 12,906 12,906 1,123,129 2,071,587 128,344 53,347 181,691 25,418 25,418 267,483 44,754 312,237 - - 207,109 312,237 916,020 1,759,350 7 8 14,440,391 12,397,575 1,281,779 1,215,631 (14,806,150) (11,853,856) 916,020 1,759,350 These financial statements should be read in conjunction with the accompanying notes. 28 GENESIS MINERALS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013 ORDINARY SHARES ACCUMULATE D LOSSES FOREIGN CURRENCY TRANSLATION RESERVE $ $ $ OPTION RESERVE $ TOTAL $ Balance at 1 July 2012 12,397,575 (11,853,856) 76,556 1,139,075 1,759,350 Profit or loss attributable to members of the company Exchange differences on translation of foreign operations Total other comprehensive income for the year Transactions with owners in their capacity as owners Shares issued during the period Transaction costs Share based payments - - - (2,952,294) - - 34,512 (2,952,294) 34,512 2,201,292 (158,476) - - - - - - - - - - - - (2,952,294) 34,512 (2,917,782) 2,201,292 (158,476) 31,636 31,636 Sub-total 2,042,816 (2,952,294) 34,512 31,636 (843,330) Balance at 30 June 201331 December 2011 14,440,391 (14,806,150) 111,068 1,170,711 916,020 ORDINARY SHARES ACCUMULATE D LOSSES FOREIGN CURRENCY TRANSLATION RESERVE $ $ $ OPTION RESERVE $ TOTAL $ Balance at 1 July 20111 July 2012 7,849,148 (6,736,325) 79,073 274,837 1,466,733 Profit or loss attributable to members of the company Exchange differences on translation of foreign operations Total comprehensive income for the year Transactions with owners in their capacity as owners Shares issued during the period Transaction costs Share based payments Value of conversion rights on convertible notes - - - (5,117,531) - - (2,517) (5,117,531) (2,517) 4,597,257 (74,463) - 25,633 - - - - - - - - - - - - - (5,117,531) (2,517) (5,120,048) 4,597,257 (74,463) 864,238 864,238 - 25,633 Sub-total 4,548,427 (5,117,531) (2,517) 864,238 292,617 Balance at 30 June 201231 December 2010 12,397,575 (11,853,856) 76,556 1,139,075 1,759,350 These financial statements should be read in conjunction with the accompanying notes. 29 GENESIS MINERALS LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013 CASH FROM OPERATING ACTIVITIES: Interest received Payment to suppliers and employees Payments relating to exploration and evaluation of mineral assets Net cash used by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Payments for plant and equipment Net cash used by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issues of ordinary shares Payment of share issue costs Proceeds from borrowings Net cash provided by financing activities Effects of exchange rate changes on cash and cash equivalents Net cash used by other activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year NOTE 2013 $ 2012 $ 39,907 30,249 (957,980) (654,718) (1,984,626) (3,352,607) (2,902,699) (3,977,076) (21,216) (4,036) (21,216) (4,036) 7 2,151,578 4,041,157 (158,476) - (74,463) 500,000 1,993,102 4,466,694 - - (2,333) (2,333) (930,813) 483,249 2,040,132 1,556,883 1,109,319 2,040,132 These financial statements should be read in conjunction with the accompanying notes. 30 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 This financial report includes the financial statements and notes of Genesis Minerals Limited and Controlled Entities (the 'Group'). The financial statements were authorised for issue by the Board of Directors on 26 September 2013. Genesis Minerals Limited is a public Group limited by shares, incorporated in Australia. The Group is domiciled in Western Australia. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The Group’s financial report is presented in Australian dollars. (B) GOING CONCERN The financial statements have been prepared on the going concern basis that contemplates normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. The Group incurred a loss from ordinary activities of $ (2,952,294) (2012: $ (5,117,531))for the year ended 30 June 2013. Included within the this loss was exploration expenditure of $ 2,008,625 (2012: $ 3,297,467). The net working capital position of the Group at 30 June 2013 was $ 932,105 (2012: $ 1,746,444) and the cash outflows from operating activities was $ 2,902,699 (2012: $ 3,977,076). The Group has expenditure commitments relating to work programme obligations of their assets of $500,000 which potentially could fall due in the 12 months to 30 June 2014. These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Group to continue as a going concern. The ability of the Group to continue as a going concern is principally dependent upon the ability of the Company to secure funds by raising capital from equity markets and managing cashflow in line with available funds. The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. 31 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (B) GOING CONCERN (CONTINUED) Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate. In particular, given the Company’s history of raising capital to date, the directors are confident of the Company’s ability to raise additional funds as and when they are required. Should the Group be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that might result should the Group be unable to continue as a going concern and meet its debts as and when they fall due. (C) PRINCIPLES OF CONSOLIDATION The financial statements incorporate the assets, liabilities and results of entities controlled by Genesis Minerals Limited at the end of the reporting period. A controlled entity is any entity over which Genesis Minerals Limited has the power to govern the financial and operating policies so as to obtain benefits from its activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. A list of controlled entities is contained in Note 15 to the financial statements. As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the financial statements as well as their results for the year then ended. In preparing the financial statements, all inter-group balances and transactions between entities in Genesis Minerals Limited have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. (D) BUSINESS COMBINATIONS Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination, one of the combining entities must be identified as the acquirer (i.e. parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured. The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be 32 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (D) BUSINESS COMBINATIONS (CONTINUED) recognised in the acquiree where less than 100% ownership interest is held in the acquiree. The consideration transferred for a business combination shall form the cost of the investment in the separate financial statements. Such consideration is measured at fair value at acquisition date and consists of the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer. Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of comprehensive income, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income. (E) 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 peformance of the operting segments, has been identified as the Board of Directors. (F) FOREIGN CURRENCY TRANSACTIONS AND BALANCES The functional currency of each of Genesis Minerals Limited's entities is measured using the currency of the primary economic environment in which that entity operates. The financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency. Foreign currency transactions are recorded at the spot rate on the date of the transaction. At the end of the reporting period:    Foreign currency monetary items are translated using the closing rate; Non-monetary items that are measured at historical cost are translated using the exchange rate at the date of the transaction; and Non-monetary items that are measured at fair value are translated using the rate at the date when fair value was determined. 33 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (F) FOREIGN CURRENCY TRANSACTIONS AND BALANCES (CONTINUED) Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition or in prior reporting periods are recognised through profit or loss, except where they relate to an item of other comprehensive income or whether they are deferred in equity as qualifying hedges. The financial results and position of foreign operations whose functional currency is different from Genesis Minerals Limited's presentation currency are translated as follows:    assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; income and expenses are translated at average exchange rates for the period where the average rate approximates the rate at the date of the transaction; and retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to Genesis Minerals Limited's foreign currency translation reserve in the consolidated statement of financial position. These differences are recognised in the consolidated statement of profit or loss and other comprehensive income in the period in which the operation is disposed. (G) REVENUE AND OTHER INCOME Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. (H) INCOME TAX The income tax expense for the year comprises current income tax expense and deferred tax expense. Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date 34 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (H) INCOME TAX (CONTINUED) Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting year. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Current assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. (I) LEASES Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to the Group are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed 35 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (I) LEASES (CONTINUED) residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for that period. Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Group will obtain ownership of the asset or over the term of the lease. Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term. (J) IMPAIRMENT OF NON-FINANCIAL ASSETS At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use to the asset's carrying value. Value in use is calculated by discounting the estimated future cash flows of the asset or cash-generating unit (CGU) at a pre-tax discount rate reflecting the specific risks in the asset / CGU. Any excess of the asset's carrying value over its recoverable amount is expensed to the consolidated statement of profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where the future economic benefits of the asset are not primarily dependent upon the asset's ability to generate net cash inflows and when Genesis Minerals Limited would, if deprived of the asset, replace its remaining future economic benefits, value in use is determined as the depreciated replacement cost of an asset. Impairment losses recognised in respect of CGU's are allocated first to reduce the carrying amount of goodwill to nil and then to the other assets in the unit in proportion to their carrying amount. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Assets, other than goodwill that have an allocated impairment loss are reviewed for reversal indicators at the end of each reporting period. After recognition of an impairment loss, the amortisation charge for the asset is adjusted in future periods to allocate the asset's revised carrying amount on a systematic basis over its remaining useful life. Impairment losses are recognised as an expense immediately, unless the relevant asset is property, plant and equipment held at fair value (other than investment property carried at a revalued amount) in which case the impairment loss is treated as a revaluation decrease as described in the accounting policy for property, plant and equipment. Where an impairment loss on a revalued asset is identified, this is debited against the revaluation surplus in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the 36 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (J) IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED) revaluation surplus for that same class of asset. (K) CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less which are convertible to a known amount of cash and subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the consolidated statement of financial position. (L) FINANCIAL INSTRUMENTS INITIAL RECOGNITION AND MEASUREMENT Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is the equivalent to the date that the Group commits itself to either the purchase or sale of the asset. Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified 'at fair value through profit or loss' in which case transaction costs are expensed to profit or loss immediately. CLASSIFICATION AND SUBSEQUENT MEASUREMENT Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in arm's length transaction. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. The classification of financial instruments depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and at the end of each reporting period for held-to-maturity assets. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost . Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. SHARE CAPITAL Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options for immediate are recognised as a deduction from equity, net of any tax effects. 37 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (L) FINANCIAL INSTRUMENTS (CONTINUED) DERECOGNITION Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. (M) PROPERTY, PLANT AND EQUIPMENT Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. PLANT AND EQUIPMENT Plant and equipment are measured on the cost basis. Cost includes expenditure that is directly attributable to the asset. The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. DEPRECIATION The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over the asset's useful life to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. Land is not depreciated. The estimated useful lives used for each class of depreciable assets are: CLASS OF FIXED ASSET Plant and Equipment USEFUL LIFE (YEARS) 2 to 5 The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. (N) EXPLORATION AND DEVELOPMENT EXPENDITURE Exploration, evaluation costs are expensed as incurred. 38 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (O) TRADE AND OTHER PAYABLES Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Group during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. (P) PROVISIONS Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured at the present value of management's best estimate of the outflow required to settle the obligation at the end of the reporting period. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the unwinding of the discount is taken to finance costs in the consolidated statement of profit or loss and other comprehensive income. Provisions recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period. (Q) EMPLOYEE BENEFITS Provision is made for the Group's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows. EQUITY-SETTLED COMPENSATION The Group operates equity-settled share-based payment share, right and option schemes. The fair value of the equity to which personnel become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black-Scholes pricing model which incorporates all market vesting conditions. The amount to be expensed is determined by reference to the fair value of the options, rights or shares granted. This expense takes in account any market performance conditions and the impact of any non-vesting conditions but ignores the effect of any service and non-market performance vesting conditions. Non-market vesting conditions are taken into account when considering the number of options expected to vest. At the end of each reporting period, the Group revises its estimate of the number of options or rights which are 39 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (Q) EMPLOYEE BENEFITS (CONTINUED) EQUITY-SETTLED COMPENSATION (CONTINUED) expected to vest based on the non-market vesting conditions. Revisions to the prior period estimate are recognised in profit or loss and equity. (R) BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (S) EARNINGS PER SHARE Genesis Minerals Limited presents basic and diluted earnings per share information for its ordinary shares. Basic earnings per share is calculated by dividing the profit attributable to owners of the company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share adjusts the 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 additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (T) GOODS AND SERVICES TAX (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the consolidated statement of financial position are shown inclusive of GST. Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (U) CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. 40 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (U) CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED) KEY ESTIMATES - IMPAIRMENT The Group assesses impairment at the end of each reporting year by evaluating conditions specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. KEY ESTIMATES - SHARE BASED PAYMENTS The Group measures the cost of equity-settled transactions with personnel 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 external valuer using a Black and Scholes model in the case of options and, in the case of performance rights, a hybrid share option pricing model that simulates the share price as at the expiry date using a Monte-Carlo model. The valuation involves making key estimates such as volatility and expected exercise date. (V) ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS STANDARDS AND INTERPRETATIONS AFFECTING AMOUNTS REPORTED IN THE CURRENT PERIOD The following new and revised Standards and Interpretations have been adopted in the current year and have affected the amounts reported in these financial statements. STANDARDS AFFECTING PRESENTATION AND DISCLOSURE Amendments to AASB 101 ‘Presentation of Financial Statements’ The amendment (part of AASB 2011-9 ‘Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income’ introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income. The amendments to AASB 101 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income. STANDARDS AND INTERPRETATIONS AFFECTING THE REPORTED RESULTS OR FINANCIAL POSITION Amendments to AASB 112 The Company is not affected by the adoption of this standard as the Company does not hold investment property. 'Income Taxes’ 41 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (V) ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED) AT THE DATE OF AUTHORISATION OF THE FINANCIAL STATEMENTS, THE STANDARDS AND INTERPRETATIONS LISTED BELOW WERE IN ISSUE BUT NOT YET EFFECTIVE. The company does not anticipate the adoption of these standards will have a material effect on the financial report. AASB 9 ‘Financial Instruments’, and the relevant amending standards Standard Effective from Applied From 30 June 2016 1 January 2015 AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’ 1 January 2013 30 June 2014 AASB 11 ‘Joint Arrangements’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’ 1 January 2013 30 June 2014 AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’ 1 January 2013 30 June 2014 AASB 127 ‘Separate Financial Statements’ (2011) and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’ 1 January 2013 30 June 2014 AASB 128 ‘Investments in Associates and Joint Ventures’ (2011) and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’ 1 January 2013 30 June 2014 AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian Accounting Standards arising from AASB 13’ 1 January 2013 30 June 2014 AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to Australian Accounting Standards arising from AASB 119 (2011)’ 1 January 2013 30 June 2014 AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements’ 30 June 2014 1 July 2013 AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities’ 1 January 2013 30 June 2014 AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities’ 1 January 2014 30 June 2015 AASB 2012-5 ‘Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle’ 1 January 2013 30 June 2014 AASB 2012-10 ‘Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments’ 1 January 2013 30 June 2014 42 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 2 INCOME TAX EXPENSE (a) The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax expense as follows: Statement of comprehensive income Current income tax Deferred tax 2013 $ 2012 $ - - - - (b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2012: 30%) Add: Tax effect of: - share based payments - expenses incurred in deriving non- assessable non-exempt income - sundry - movements in unrecognised temporary differences Tax effect of current year losses for which no deferred tax asset has been recognised Income tax expense 2013 $ 2012 $ (885,688) (1,535,259) 17,205 252,056 602,238 626,141 1,276 7,695 23,540 1,327 (241,429) (648,040) 241,429 648,040 - - At 30 June 2013 Genesis Minerals Limited had unused tax losses for which no deferred tax asset has been recognised in the amount of approximately $2,690,317 (2012: $2,448,888). The availability of these losses is subject to satisfying Australian taxation legislation requirements. The deferred tax asset attributable to tax losses has not been brought to account in these financial statements because the Directors believe it is not presently appropriate to regard realisation of the future income tax benefits probable. 43 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 3 CASH AND CASH EQUIVALENTS The following table details the components of cash and cash equivalents as reported in the statement of financial position. Cash on hand Short-term bank deposits 4 TRADE AND OTHER RECEIVABLES 2013 $ 2012 $ 50,251 540,132 1,059,068 1,500,000 1,109,319 2,040,132 The following table details the major components of current trade and other receivables as reported in the statement of financial position. Government taxes receivable Other receivables 2013 $ 2012 $ - 638 4,477 17,911 4,477 18,549 The Group expects the above trade and other receivables to be recovered within 12 months of 30 June 2013 and therefore considers the amounts shown above at cost to be a close approximation of fair value. Trade and other receivables expose Genesis Minerals Limited to credit risk as potential for financial loss arises should a debtor fail to repay their debt in a timely manner. Disclosure on credit risk can be found at Note 11(a). 5 PLANT AND EQUIPMENT Plant and equipment At cost Accumulated depreciation 2013 $ 2012 $ 28,194 27,265 (18,861) (14,359) 9,333 12,906 44 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 5 PLANT AND EQUIPMENT (CONTINUED) MOVEMENTS IN CARRYING AMOUNTS Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial year: Balance at 30 June 2013 Balance at the beginning of year Depreciation expense Balance at 30 June 2013 Balance at 30 June 2012 Balance at the beginning of year Additions Depreciation expense Foreign exchange movements Balance at 30 June 2012 6 TRADE AND OTHER PAYABLES Trade payables Other payables PLANT AND EQUIPMENT $ TOTAL $ 12,906 (3,573) 12,906 (3,573) 9,333 9,333 13,196 4,036 (4,142) (184) 13,196 4,036 (4,142) (184) 12,906 12,906 2013 $ 2012 $ 78,177 50,167 169,697 97,786 128,344 267,483 45 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 7 ISSUED CAPITAL 165,657,799 (30 June 2012: 121,783,379) Ordinary shares Value of conversion rights - Convertible Notes Ordinary Share issue costs written off against issued capital MOVEMENT IN ORDINARY SHARES Balance at 1 July 2011 Issued at consideration for tenement acquisition Issued on conversion of convertible notes at 10 cents per share Issued for cash at 10 cents per share Issued for cash at 15 cents per share Less: transaction costs Balance at 30 June 2012 Share based payment 14 Nov 2012 Capital raising - 7 March 2013 Share Issue Issue to Teck Resources Ltd - 3 April 2013 Less share issued costs 2013 $ 2012 $ 15,243,924 13,042,632 25,633 25,633 (829,166) (670,690) 14,440,391 12,397,575 NO. $ 77,408,477 7,849,148 510,000 5,000,000 56,100 500,000 35,531,569 3,541,157 3,333,333 - 500,000 (74,463) 121,783,379 12,371,942 342,860 25,714 33,031,560 1,651,578 10,000,000 500,000 500,000 24,000 - (158,476) 165,657,799 14,414,758 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The amount shown for other equity securities is the value of the conversion rights relating to the convertible notes that were issued, and then converted, during prior reporting period. 46 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 7 ISSUED CAPITAL (CONTINUED) OPTIONS At the beginning of the year Movement during the year Exercisable at 12 cents, on or before 1 March 2013 Exercisable at 15 cents, on or before 1 March 2014 Exercisable at 20 cents, on or before 1 March 2015 Exercisable at 22 cents, on or before 31 December 2014 Expired on 15 May 2013, exercisable at 20 cents Exercisable at 12 cents, on or before 7 November 2012 Expired on 15 May 2013, exercisable at 20 cents Expired on 15 May 2013, exercisable at 20 cents Expired on 15 May 2013, exercisable at 20 cents At the end of the year CAPITAL MANAGEMENT 2013 NO. 2012 NO. 53,681,788 12,900,000 - - - - - 13,510,596 13,510,596 13,510,596 9,500,000 (9,250,000) 750,000 (600,000) (13,510,596) (500,000) - - - - 39,821,192 53,681,788 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 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 raising as required. The Group’s working capital position is $932,105 (2012: $1,746,444). There are no externally imposed capital requirements. 8 RESERVES (A) FOREIGN CURRENCY TRANSLATION RESERVE Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve. The reserve is recognised in the profit and loss when the net investment is diposed of. 47 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 8 RESERVES (CONTINUED) (B) SHARE BASED PAYMENT RESERVE This reserve records the cumulative value of services received for the issue of share options. When the options are exercised the amount in the share option reserve is transferred to share capital. 9 EARNINGS PER SHARE Earnings used to calculate overall earnings per share 2013 $ 2012 $ (2,952,294) (5,117,531) (a) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 10 COMMITMENTS (A) EXPLORATION EXPENDITURE COMMITMENTS Payable: - no later than 1 year 11 FINANCIAL RISK MANAGEMENT 2013 NO. 2012 NO. 135,675,986 86,601,519 2013 $ 2012 $ 500,000 2,200,000 500,000 2,200,000 The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects and ensure that net cash flows are sufficient to support the delivery of the Company's financial targets whilst protecting future financial security. The Group continually monitors and tests its forecasted financial position against these objectives. 48 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 11 FINANCIAL RISK MANAGEMENT (CONTINUED) The main risks Genesis Minerals Limited is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk, currency risk and commodity price risk. The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable and loans to subsidiaries. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Total financial assets Financial Liabilities Trade and other payables Total financial liabilities FINANCIAL RISK MANAGEMENT POLICIES 2013 $ 2012 $ 1,109,319 2,040,132 4,477 18,549 1,113,796 2,058,681 128,344 267,483 128,344 267,483 The Board of Directors has overall responsibility for the establishment of Genesis Minerals Limited’s financial risk management framework. This includes the development of policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and the use of derivatives. Mitigation strategies for specific risks faced are described below: The main risks Genesis Minerals Limited is exposed to through its financial instruments are credit risk, liquidity risk and market risk relating to interest rate risk, currency risk and commodity price risk. (A) CREDIT RISK Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to Genesis Minerals Limited and arises principally from Genesis Minerals Limited's receivables. The Group’s maximum exposure to credit risk at the reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the statement of financial position. Other than cash balances and term deposits held at bank the Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. 49 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 11 FINANCIAL RISK MANAGEMENT (CONTINUED) (A) CREDIT RISK (CONTINUED) The Group's policy for reducing credit risk is to ensure cash is only invested with counterparties with Standards and Poor rating of at least -AA. (B) LIQUIDITY RISK Liquidity risk arises from the possibility that Genesis Minerals Limited might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:      preparing forward-looking cash flow analysis in relation to its operational, investing and financial activities which are monitored on a monthly basis; monitoring the state of equity markets in conjuction with the Group's current and future funding requirements, with a view to appropriate capital raisings as required; managing credit risk related to financial assets; only investing surplus cash with major financial institutions; and comparing the maturity profile of current financial liabilities with the realisation profile of current financial assets. (C) MARKET RISK Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. i. Price risk Given the current level of operations, the Group is not exposed to price risk. 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 recognises assets and liabilities denominated in a currency that is not the Group'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. At 2013, the Group's Net CLP exposure was $1,541,672 (2012: (4,109,645)) which translated to $3,237 (2012: (8,092)) AUD. Had the AUD weakened/strengthened by 10% against the CLP, there would have been a nil (2012: nil) impact on the Group's post tax losses and an immaterial movement to the Group's equity for both years. 50 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 11 FINANCIAL RISK MANAGEMENT (CONTINUED) (C) MARKET RISK (CONTINUED) iii. Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period, whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. Interest rate risk is managed by maintaining cash in interest bearing accounts and having no interest bearing liabilities. ii. Sensitivity analysis The following sensitivity analysis is based on the interest rate risk exposures in existence at the end of the reporting period. An increase/(decrease) of 80 basis points during the period would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that other variables are held constant. 2013 2012 PROFIT EQUITY 80 BASIS POINTS INCREASE 80 BASIS POINTS DECREASE 80 BASIS POINTS INCREASE 80 BASIS POINTS DECREASE 9,500 8,850 (9,500) (8,850) 9,500 8,850 (9,500) (8,850) The net exposure at the end of the reporting period is representative of what Genesis Minerals Limited was and is expecting to be exposed to at the end of the next twelve months. The sensitivity analysis is performed on the same basis as in 2012. (D) FAIR VALUE ESTIMATION The fair values of financial assets and financial liabilities can be compared to their carrying values as presented in the consolidated statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. 12 OPERATING SEGMENTS For management purposes, the Group is organised into two main operating segments, the exploration of minerals in Chile and the corporate activities and administrative costs in Australia. The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of these financial statements. 51 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 12 OPERATING SEGMENTS (CONTINUED) BASIS OF ACCOUNTING FOR PURPOSES OF REPORTING BY OPERATING SEGMENTS (A) ACCOUNTING POLICIES ADOPTED Unless stated below, all amounts reported to the Board of Directors, being the chief operating 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 Genesis Minerals Limited. INTER-SEGMENT TRANSACTIONS An internally determined transfer price is set for all inter-entity sales. This price is reset 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 of Genesis Minerals Limited's financial statements. Inter-segment loans payable and receivable are initially recognised at the consideration received/to be 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. 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 Genesis Minerals Limited 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 any segment:  Head office and administration costs; 52 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 12 OPERATING SEGMENTS (CONTINUED) (B) SEGMENT PERFORMANCE REVENUE Corporate interest revenue Interest - investment Total segment revenue SEGMENT RESULTS Depreciation expense Employee benefits expense Share based payments Other expenses (C) SEGMENT ASSETS CHILE AUSTRALIA TOTAL 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $ - - - - - - 39,850 57 37,942 10,115 39,850 57 37,942 10,115 39,907 48,057 39,907 48,057 (690,244) (3,448,550) - - (690,244) (3,448,550) - - - - - - - - (2,241) (4,142) (2,241) (4,142) (459,759) (440,658) (459,759) (440,658) (31,636) (864,238) (31,636) (864,238) (1,808,321) (359,943) (1,808,321) (359,943) (690,244) (3,448,550) (2,262,050) (1,620,924) (2,952,294) (5,069,474) Segment operang assets 28,210 21,647 - - 28,210 21,647 Other assets - - 1,094,919 2,049,940 1,094,919 2,049,940 28,210 21,647 1,094,919 2,049,940 1,123,129 2,071,587 (D) SEGMENT LIABILITIES Segment operating liabilies Inter-segment elimintaons Other corporate and adminstrative liabilities Total segment liabilities CHILE AUSTRALIA TOTAL 2013 $ 2012 $ 2013 $ 2012 $ 2013 $ 2012 $ (4,237,890) (4,197,645) - - (4,237,890) (4,197,645) - - - - 4,201,499 4,167,906 4,201,499 4,167,906 (170,718) (282,498) (170,718) (282,498) (4,237,890) (4,197,645) 4,030,781 3,885,408 (207,109) (312,237) 53 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 13 INTERESTS OF KEY MANAGEMENT PERSONNEL The totals of remuneration paid to the key management personnel of Genesis Minerals Limited during the year are as follows: Short-term employee benefits Post-employment benefits Share-based payments 2013 $ 395,689 25,000 - 2012 $ 359,500 21,981 606,637 420,689 988,118 The Remuneration Report contained in the Directors' Report contains details of the remuneration paid or payable to each member of Genesis Minerals Limited's key management personnel for the year ended 30 June 2013. 54 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 13 INTERESTS OF KEY MANAGEMENT PERSONNEL (CONTINUED) KEY MANAGEMENT PERSONNEL OPTION HOLDINGS 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 within the Director's Report. BALANCE AT BEGINNING OF YEAR GRANTED AS REMUN- ERATION EXERCISED OTHER CHANGES BALANCE AT THE END OF VESTED DURING THE YEAR YEAR VESTED AND EXERCISABLE 30 JUNE 2013 Directors Michael Haynes Michael Fowler Damian Delaney Richard Hill 30 JUNE 2012 Directors Michael Haynes Michael Fowler Damian Delaney Graham Smith 1,000,000 3,581,252 4,345,003 - - 8,926,255 - - - - - - - - - - - - (1,000,000) - (27,084) 3,554,168 - - - 4,345,003 - - (1,027,084) 7,899,171 - - - - - - - 3,554,168 4,345,003 - - 7,899,171 BALANCE AT BEGINNING OF YEAR GRANTED AS REMUN- ERATION EXERCISED OTHER CHANGES BALANCE AT THE END OF VESTED DURING THE YEAR YEAR VESTED AND EXERCISABLE 1,500,000 500,000 6,500,000 2,000,000 - 4,000,000 900,000 - 8,900,000 6,500,000 - - - - - (1,000,000) 1,000,000 (4,918,748) 3,581,252 345,003 4,345,003 (900,000) - (6,473,745) 8,926,255 - - - - - 750,000 2,831,252 4,345,003 - 7,926,255 Graeme Smith resigned on 21 March 2012. 55 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 13 INTERESTS OF KEY MANAGEMENT PERSONNEL (CONTINUED) KEY MANAGEMENT PERSONNEL SHAREHOLDINGS The number of ordinary shares in Genesis Minerals Limited held by each key management person of Genesis Minerals Limited during the financial year is as follows: 30 June 2013 Michael Haynes Michael Fowler Damian Delaney Richard Hill 30 June 2012 Directors Michael Haynes Michael Fowler Damian Delaney Graeme Smith Graeme Smith resigned on 21 March 2012. BALANCE AT BEGINNING OF YEAR OTHER CHANGES ON EXERCISE OF OPTIONS DURING THE YEAR BALANCE AT END OF YEAR 993,334 3,247,917 345,000 - - 4,586,251 - - - - - - (993,334) - 182,813 3,430,730 755,000 1,100,000 448,822 448,822 - - 393,301 4,979,552 BALANCE AT BEGINNING OF YEAR OTHER CHANGES ON EXERCISE OF OPTIONS DURING THE YEAR BALANCE AT END OF YEAR 993,334 3,166,667 - 100,001 - 4,260,002 - - - - - - - 993,334 81,250 3,247,917 345,000 345,000 (100,001) - - - 326,249 4,586,251 56 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 14 AUDITORS' REMUNERATION Remuneration of the auditor of the Group, Bentleys, for: - auditing or reviewing the financial statements 15 CONTROLLED ENTITIES Subsidiaries: Genesis Minerals (Chile) S.A. * Percentage of voting power is in proportion to ownership 16 CONTINGENT LIABILITIES AND CONTINGENT ASSETS 2013 $ 2012 $ 27,500 26,100 COUNTRY OF INCORPORATION PERCENTAGE OWNED (%)* PERCENTAGE OWNED (%)* 2013 2012 Chile 100 100 In the opinion of the Directors, Genesis Minerals Limited did not have any contingencies at 30 June 2013 (30 June 2012: Nil). 17 RELATED PARTY TRANSACTIONS Key management personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of remuneration disclosures relating to key management personnel, refer to Note 13: Interests of Key Management Personnel (KMP) and the remuneration report in the Directors' Report. There were no other related party transactions during the year. 57 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 18 CASH FLOW INFORMATION Reconciliation of net income to net cash provided by operating activities: Net loss for the period Non-cash flows in profit: - share based payments - depreciation - accretion expense on convertible notes Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: - (increase)/decrease in trade and other receivables - increase/(decrease) in trade and other payables - increase in provisions Cashflow from operations 19 SHARE-BASED PAYMENTS 2013 $ 2012 $ (2,952,294) (5,117,531) 81,350 3,573 920,338 4,142 - 25,633 14,072 (11,112) (83,411) 201,454 34,011 - (2,902,699) (3,977,076) The Group established the Genesis Minerals Limited Option Plan on 15 May 2007. On 7 November 2012 the Group came to an agreement to grant 750,000 options to the Chilean Manager of the Group's South American asset base. The fair value fo the options granted is deemed to represent the value of the employee services received over the vesting period. The 750,000 options were issued in 3 tranches, each containing 250,000 options. Each tranche contained the following vesting conditions:    Tranche 1 - vest immeditately Tranche 2 - vest on 1 November 2013 Tranche 3 - vest on 1 November 2014 The expense arising from the options issued during year was $31,637. The value was calculated by using a Black- Scholes option pricing model applying the following inputs: 58 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 19 SHARE-BASED PAYMENTS (CONTINUED) Underlying share price (cents): Weighted average exercise price (cents): Weighted average life of the option (years): Expected share price volatility (%): Risk-free interest rate (%): 2013 2012 9.0 12 3 128.00 2.79 - - - - - Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future movements. Th life of the options is based on the historical exercise patterns, which may not eventuate in the future. In addition to the above share based payment, 342,860 fully paid ordinary shares were issued to the vendor of the Cerro Verde acquisition and in accordance with the agreement under which the acquisition was made. The shares were valued at grant date, 30 September 2012, using the closing price of 7.5 cents. On 3 April 2013, 500,000 ordinary shares were issued to a vendor at 5 cents. The expense recognised during the year was $49,714 and this amount is included within exploration expenses. Options outstanding at 1 July 2011 Granted Options oustanding at 30 June 2012 Granted Options oustanding at 30 June 2013 20 EVENTS AFTER THE END OF THE REPORTING PERIOD No of Options Weighted ave exercise price (cents) 3,650,000 9,500,000 13,150,000 750,000 13,900,000 25.5 22.0 23.0 12.0 23.7 No other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years. 59 GENESIS MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 21 PARENT ENTITY The following information has been extracted from the books and records of the parent, Genesis Minerals Limited and has been prepared in accordance with Australian Accounting Standards. The financial information for the parent entity, Genesis Minerals Limited has been prepared on the same basis as the consolidated financial statements. Statement of Financial Position Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities Equity Issued capital Accumulated losses Reserves Total Equity Statement of Comprehensive Income Total comprehensive income Total comprehensive income CONTINGENT LIABILITIES 2013 $ 2012 $ 1,094,382 2,037,034 535 2,777 1,094,917 2,039,811 (145,299) 282,498 (25,417) - (170,716) 282,498 14,440,391 12,397,575 (14,686,901) (11,779,337) 1,170,711 1,139,075 924,201 1,757,313 (2,871,464) (5,054,644) (2,871,464) (5,054,644) The parent entity did not have any contingent liabilities as at 30 June 2013 or 30 June 2012. CONTRACTUAL COMMITMENTS The parent entity did not have any commitments as at 30 June 2013 or 30 June 2012 other than those disclosed in note 10. 60 GENESIS MINERALS LIMITED DIRECTORS' DECLARATION The directors of the Group declare that: 1. The financial statements and notes, as set out on pages 27 to 60, are in accordance with the Corporations Act 2001 and: (a) comply with International Financial Reporting Standards and Corporations Regulations 2001; and (b) give a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the Group; 2. 3. 4. In the directors' opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. The remuneration disclosures included in the Directors' Report (as part of the audited Remuneration Report), for the year ended 30 June 2013, comply with Section 300A of the Corporations Act 2001, and the Directors have been given the declarations by the chief executive officer and chief financial officer pursuant to Section 295(5) of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors. Director .................................................................. Dated 61 26 September 2013 We have audited the accompanying financial report of Genesis Minerals Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”), which comprises the consolidated statement of financial position as at 30 June 2013, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, 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. The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standards AASB 101: Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. 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. 62 In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. In our opinion: a. The financial report of Genesis Minerals Limited and Controlled Entities is in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Consolidated Entity‘s financial position as at 30 June 2013 and of its performance for the year ended on that date; and ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the Consolidated Entity incurred a net loss of $2,952,294 during the year ended 30 June 2013. This condition, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2013. The directors of the Company 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. In our opinion, the Remuneration Report of Genesis Minerals Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001. BENTLEYS Chartered Accountants DOUG BELL CA Director DATED at PERTH this 26th day of September 2013 63 GENESIS MINERALS LIMITED  ASX ADDITIONAL INFORMATION  Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.  The information  is current as at 25 September 2013.   (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  INVESTMET LIMITED  MR DENIS JOHN REYNOLDS  WYLLIE GROUP PTY LTD  ARGONAUT EQUITY PARTNERS PTY LIMITED  MR MICHAEL GEORGE FOTIOS   WESTORIA RESOURCE INVESTMENTS LTD  ARGONAUT SECURITIES (NOMINEES) PTY LTD PERSHING AUSTRALIA NOMINEES PTY LTD   DELTA RESOURCE MANAGEMENT PTY LTD  MR MICHAEL JOHN FOWLER + MRS FIONA LEE FOWLER   ARGONAUT INVESTMENTS PTY LTD  PERTH SELECT SEAFOODS PTY LTD  STATELINE INVESTMENTS PTY LTD   MRS CAMILLE DIANNE BROOKS  SCINTILLA STRATEGIC INVESTMENTS LIMITED MR ADRIAN HILL   MR JASON LEONARD BOLADERAS  MR MICHAEL JOHN FOWLER + MRS FIONA LEE DIXON FOWLER CANNING VIEW  SUPER FUND A/C  MR ANDREW WILLIAM SPENCER  MONTANA REALTY PTY LTD  Ordinary shares  Number of holders  Number of shares  16  27  47  273  181  544  52  1,793  90,085  417,600  11,143,018  154,005,303  165,657,799  Listed ordinary shares  Number of shares  29,243,928  7,296,331  5,992,501  5,535,939  5,535,003  5,062,500  5,000,000  4,416,666  2,937,500  2,516,667  Percentage of  17.65 4.40 3.62  3.34  3.34  3.06 3.02 2.67  1.77  1.52  2,343,751  1,831,251  1,781,000  1,540,000  1,500,000  1,229,259  1,225,000  1,214,063  1,212,253  1,163,751  88,577,363  1.41 1.11  1.08  0.93  0.91 0.74 0.74  0.73  0.73 0.70 53.47 (c)  Substantial shareholders  The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:  Investmet Ltd  (d)  Voting rights  All ordinary shares (whether fully paid or not) carry one vote per share without restriction.  Number of Shares  29,243,928 64                                                                                          GENESIS MINERALS LIMITED  ASX ADDITIONAL INFORMATION  (e)  Options  As at September 2013, the Company has a total of unlisted options as follows:  Number of Options  Number of Holders  Exercise Price  2,400,000  9,500,000  13,510,596  13,510,596  750,000  39,671,192  3  5  207  207  1  423  $0.31  $0.22  $0.15  $0.20  $0.12  Unlisted Option holder holding greater than 20% of a class of unlisted options  Expiry Date  30/11/2013  31/12/2014  01/03/2014  01/03/2015  30/11/2015  Unlisted Options Exercisable at $0.31 expiring on 30/11/2013  No of Options Held  % Held  Mr M Fowler  Mr M Haynes  1,500,000 500,000  63%  21%  Unlisted options exercisable at $0.22 expiring on 31/12/2014  No of Options Held  % Held  Mr M Delaney  Mr M Fowler  Mr M Fotios  4,000,000 2,000,000  2,000,000  Unlisted Options exercisable at $0.15 expiring on 01/03/2014 No of Options Held Investment Pty Ltd  6,458,381  Unlisted Options exercisable at $0.20 expiring on 01/03/2015  No of Options Held  Investment Pty Ltd  6,458,381 Unlisted Options exercisable at $0.12 expiring on 30/11/2015  No of Options Held  Mr S Mandujano  750,000  42%  21%  21%  % Held  48%  % Held  48%  % Held  100%  65                  GENESIS MINERALS LIMITED  ASX ADDITIONAL INFORMATION  (f)  Schedule of interests in mining tenements  Project  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Cerro Verde  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Las Opeñas  Poncha  Poncha  Country  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Chile  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Argentina  Tenement ID  AGUA AMARILLA VISCACHA  LINDEROS  SERENA  COQUIMBANA SIERRALTA  MERCEDITAS SANTA FE  PIMIENTA 1 al 2 TIFUCA  VISCACHITA 2/7 VISCACHITA II MEJICANA  ESPINA DE UNA FLOR JORGE IGNACIO 1‐4 MARIA INES  NUEVA ESPERANZA NUEVA FARELLON 1‐3 SAN JOSE  BUENOS AIRES RINCON 3‐5  GUIAS  VIRGEN 7 1 ‐ 60  SARA I/II  CARMEN  CATALINA 1   1‐220 CATALINA 2   1‐278 CATALINA 3   1‐149 CATALINA 4   1‐60 CATALINA 5   1‐60 CATALINA 6   1‐40 CATALINA 7   1‐40 CATALINA 8   1‐15 CATALINA 9  CATALINA 10 CATALINA 11  CATALINA 12 CATALINA 13 CATALINA 14 CATALINA 15  CATALINA 16 Gladys Natalia San Antonio  Nancy Noemi San Judas Tadeo Lila  Patrocino  San Jose  Vega Redonda  Melinda  Colanguil  National Roll Number  032010397‐5 032011066‐1 032011094‐7 032011205‐2 032010394‐0 032011206‐0 032011546‐9 032011220‐6 032011474‐8 032010262‐6  032010248‐0 032012081‐0 032011780‐1 032010585‐4 032011113‐7 032011753‐4 032010524‐2 032011024‐6 032010459‐9 032010124‐7 032011760‐7 032010320‐7 032016975‐5  032030073‐8 032010935‐3 032017287‐K 032017289‐6 032017288‐8 032018779‐6 032018780‐K 032018781‐8 032018782‐6 032018783‐4 03201E263‐0 03201E264‐9 03201E265‐7  03201E266‐5 03201E267‐3 03201E268‐1 03201E269‐K  03201E284‐3 194.459‐A‐81 295.240‐E‐89 194.265‐H‐81 14‐BIS‐H‐46 184.171‐H‐82 306.498‐P‐88 306.499‐P‐88 1124.354‐H‐07  306.492‐H‐88 1249‐T‐05 1467‐M‐05 0483‐R‐95  Status  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Granted  Pending  Pending  Pending  Granted  Pending  Pending  Pending  Pending  Pending  Granted  Granted  Granted  Equity  RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100%  RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100%  RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100% RTE 100%  RTE 100% RTE 100% RTE 100% RTE 100%  RTE 100% 100% 100% 100% 100% 100% 100% 100% 100%  100% 100% RTE 100% RTE 100%  66       

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