2009 Annual Report
Greenland
Capital: Nuuk
Greenland (Kalaallisut: Kalaallit Nunaat, meaning
“Land of the Greenlanders”; Danish: Grønland)
is a self-governing Danish province
located
between the Arctic and Atlantic Oceans, east of
the Canadian Arctic Archipelago. Greenland is,
by area, the world’s largest island which is not a
Population (July 2008 est): 57,564.
continent in its own right.
Though ethnically an Arctic island nation and
responsibility for self-government of judicial affairs,
geographically a part of the continent of North
policing, and natural resources. Greenlanders were
America, politically and historically Greenland
recognised as a separate people under international
is associated with Europe, specifically Iceland,
law. Denmark maintains control of finances,
Norway, and Denmark. In 1978, Denmark granted
foreign affairs, and defense. It is a step towards
home rule to Greenland.
full independence from Danish rule. Greenlandic
A referendum on greater autonomy was approved
on 25 November 2008. Internationally, on 21 June
2009, Greenland assumed self-determination with
became the official language of Greenland at the
historic ceremony.
SECTION 1 | 1
CORPORATE DIRECTORY
DIRECTORS
Mr Michael Hutchinson
Mr Simon Cato
Mr Roderick McIllree
Mr Jeremy Whybrow
Mr Malcolm Mason
Mr Tony Ho
Dr. Hans Kristian (Hank) Schønwandt
COMPANY SECRETARY
Mr Bruce Acutt
BUSINESS OFFICE
First Floor
33 Colin Street
West Perth, Western Australia, 6005
Telephone: +61 8 9226 1100
Facsimile: +61 8 9226 2299
GREENLAND OFFICE
PO Box 156
Narsaq, Greenland, 392
Telephone: +299 661 494
Facsimile: +299 662 494
WEBSITE
www.ggg.gl
AUSTRALIAN SOLICITORS
Fairweather & Lemonis
Level 9
172 St Georges Terrace
Perth, Western Australia, 6000
GREENLAND SOLICITORS
Nuna Law
Qullilerfix 2, 6
Post Box 59
3900 Nuuk, Greenland
AUDITORS
Deloitte
Woodside Plaza
240 St Georges Terrace
Perth, Western Australia, 6000
SHARE REGISTRY
Advanced Share Registry Services
110 Stirling Highway
Nedlands, Western Australia, 6009
SECTION 1 | 2
CONTENTS
Section 1
Company Focus
Letter from the Chairman
Review of Operations
Rare Earths Market Overview
Section 2
Corporate Governance Statement
Directors Report
Audit Independence Declaration
Directors Declaration
Income Statement
Balance Sheets
Statement of Change in Equity
Statement of Cash Flows
Notes to the Financial Statements
ASX additional information
1 | 4
1 | 6
1 | 8
1 | 18
2 | 1
2 | 4
2 | 23
2 | 26
2 | 27
2 | 28
2 | 29
2 | 31
2 | 32
2 | 67
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 3
Company Focus
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and
Energy (“Greenland Minerals”
or the “Company”) is a
mineral exploration and
development Company active
in southern Greenland.
Scoping and feasibility
Resources
The first, and most critical aspect, in achieving recognition as a major,
world class mining project is the completion of a resource inventory to
international standards. We understand that at present Kvanefjeld is the
largest compliant (JORC) resource of rare earths in the world. In addition
Kvanefjeld contains substantial JORC compliant resources of Uranium, Zinc
and Sodium Fluoride.
Following on from metallurgical studies in 2008 and 2009 the Company is focused on mining and engineering
studies, for inclusion into a pre-feasibility study, initial results of which will be out late in 2009. This study
will be a critical milestone for the Company, with its main focus on developing a process route that can
extract the elements of interest in an economically viable and environmentally responsible manner. The
mining study is being conducted by Coffey Mining Pty Ltd and covers the mine design and ore scheduling,
geotechnical issues, hydrogeology and tailings management. The engineering study component is being
completed by GRD Minproc and includes, process design, engineering design and capital and operating costs
of a processing plant.
Environmental studies
Environmental studies have been ongoing for the past three years with Orbicon, a leading Danish based
environmental sciences group undertaking field work and base-line monitoring around the Kvanefjeld project
area. This work is conducted under the supervision of Coffey Natural Systems who are preparing a strategy for
the Environmental and Social Impact Assessment.
Community relations
The Company and its representatives have facilitated and participated in many community based information and
consultation meetings this year. The meetings have also been attended by representatives of the Government,
the local Municapality and the Bureau of Mines and Petroleum (BMP). The topics being discussed at these
meetings have widened considerably during that time and the debate no longer focuses solely on the issue of
uranium mining but now includes all the social and environmental impacts that a large mining project will have
on Greenland. The Company also supports local sporting and educational activities.
Rare Earths
Public awareness of the strategic importance of rare earths in the modern world increased dramatically this
year with fears of potential supply constraints and a growing recognition of the “very green” role they have in
reducing the impact of global warming and climate change. Given its importance Kvanefjeld, as the largest
JORC compliant rare earth project has naturally gained prominence. This is especially so as its magmatic source
means we have both light and heavy rare earths in our resource inventory.
Corporate
We are continuing to refine our plans for listing in a major overseas jurisdiction which were delayed due to the
global financial crisis. Given the relatively quick rebound in the demand for commodities and the exceptional
demand for rare earths the Company is reviewing the opportunity this new situation presents and we are pleased
to have advised shareholders on 18 September 2009 of the appointment of Evolution Securities Limited, a major
UK stockbroking firm, to handle potential capital raisings and other matters that may arise in the future.
SECTION 1 | 4
Status of Political and Community Relationships
In early June, 2009 an election took place in Greenland that resulted in a new government coming to
power. The IA party (Inuit Ataqatigiit) has formed a coalition government with the Demokraatit party.
This election preceded the handover date of June 21, where Greenland officially took the next step
to independence from Denmark with the transition from Home Rule to Self Rule. This was an event
attended by numerous heads of state and international dignitaries and put Greenland in the global
media spotlight. The transition to self-rule has implications for participants in Greenland’s exploration
and mining industry as Greenland can now assume 100% control of their mineral rights, whereas
previously the mineral rights were shared with Denmark. A new mining act is in the process of being
drafted and it is anticipated that this will be implemented in early 2010. A genuine recognition is
present throughout all political levels in Greenland that the development of a strong minerals industry
is of fundamental importance to the economy, and will create many new employment opportunities.
In southern Greenland, the global economic crisis has led to rising unemployment and difficulties
in traditional industries, including fishing and tourism, and new industry is required to build the
foundation of a prosperous independent future.
In early September, 2009, Company representatives participated in a meeting in Narsaq, south
Greenland, attended by the new Minister of Commerce and Raw Materials Ove Karl Berthelsen, along
with the Mayor and council members of the southern Greenland municipalities. This incorporates
the three main towns of southern Greenland - Qaqortoq , Nanortalik and Narsaq. Company
representatives presented an update on the status of the Kvanefjeld project to the above parties,
before general discussions and any issues were raised, and where the project is within the feasibility
frame work. A site visit to the Kvanefjeld plateau was conducted to ensure that the Minister and
Mayor had a good understanding of the geography of the project area.
Following the meeting with the council and Minister, a public meeting/debate was held in Narsaq that
was well-attended by community members. The meeting was headed by a panel that included the
Minister of Commerce and Raw Materials, the Mayor, Company representatives, and spokespersons
for groups opposed to mining. The aim of the meeting was to update the community on emerging
opportunities in southern Greenland, and specifically update the community on the status of the
Kvanefjeld project, as well as discussing issues pertaining to the mining of uranium-bearing ores.
Following presentations by panel members the community had the opportunity to ask specific
questions and provide their opinion and perspective. The public meeting provided an excellent
opportunity to clearly update key stakeholders on the status and significance of Kvanefjeld, and it
indicated the strong support from the community for the project to advance to a Definitive Feasibility
Study. The meeting was widely reported in the Greenland media.
Overall, the meetings presented a great opportunity for the Company to commence dialogue with
the new Greenland government and southern Greenland municipal council, and the outcomes were
considered positive by all parties.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 5
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Letter from
the Chairman
Dear Shareholder
On behalf of the Board of Greenland Minerals and Energy Limited I am pleased to present this Annual
Report for the period from the 1 July 2008 to 30 June 2009.
The Company has met
significant milestones
that has transformed it
from an explorer to a
company concentrating
on development.
When I joined the Company in November 2008 it was a time of great instability in
world financial markets, however, the prospects of our Company looked appealing
in the medium to long term. Progress since that time has confirmed my view.
As you will see in this report we have met significant milestones that have
transformed the Company’s focus from exploration to development.
Our resource upgrade, announced 18 June 2009, has shown that the Kvanefjeld
project is a world class resource of rare earths and uranium, and indeed our focus, and the worlds
focus, is increasingly on the strategic value of the rare earths.
We have now made the strategic decision to devote the majority of our funds to examine the technical
issues in bringing this great resource into production. The work conducted this year has therefore
focussed on drilling for metallurgical test samples and geotechnical drilling, (that is, testing for rock
stability), all important information which will complete our current
mine design work.
Progress on our pre-feasibility study has continued for the whole
period and this annual report and our quarterly reports for this year
detail our progress.
During 2008 and 2009 senior executives of the Company, principally
Rod McIllree, John Mair and Shaun Bunn have been able to present
our case to the government and people of Greenland. We believe,
as many people in Greenland also now believe, that the Kvanefjeld
project may well be a magnificent opportunity for Greenland to
move to greater economic self sufficiency. We are also keenly aware
of the importance of showing all stakeholders in Greenland that the
resource can be developed responsibly and for the benefit of all.
I would like to thank all the staff of Greenland Minerals and Energy Limited and our invaluable
contractor in Greenland, Greenland Mining Services A/S.
On behalf of the Directors, I thank you for your continuing support as a shareholder of the Company
as we develop the world class resource that is Kvanefjeld.
Mr Michael Hutchinson
Chairman
SECTION 1 | 6
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 7
Review of Operations by
the Managing Director
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
The Company has
achieved much in the past
two years, building the
foundations for a world
class mining operation at
our flagship Kvanefjeld
multi-element project in
southern Greenland.
Introduction
The Company is primarily focused on its license area over the northern
Ilimaussaq Intrusive Complex; a unique geological entity with extraordinary
resource potential. A large JORC-compliant multi-element resource (rare
earth elements, zinc, uranium and sodium fluoride) has been rapidly
defined at Kvanefjeld, which clearly highlights the world-class resource
potential of the Ilimaussaq Complex. A pre-feasibility study is currently
underway, with a focus on defining a process route to extract the elements
of interest from these unique multi-element ores in an economically viable
and environmentally responsible way.
The Company’s vision is one of the big picture; to be a significant producer of commodities of
fundamental strategic importance and value to tomorrows world. Rare earth elements (REE) are
now recognised as being critical to the global manufacturing base of many emerging consumer
items. China, however, has successfully monopolised global REE supply, raising serious concerns
to non-Chinese consumers over the long-term stability of REE supply and pricing. Electricity from
nuclear power continues to gain acceptance internationally as the clean base-load energy supply of
the future; owing to rapidly increasing power demands coupled with concerns over carbon-based
energy sources, greenhouse gas emissions and global warming. As the nuclear renaissance continues
to gain momentum, the strategic importance of uranium resources will continue to emerge.
The northern
Ilimaussaq Complex offers
the potential for multi-element resources of
unparalleled scale; resources that could restore
balance to the global supply of rare earth
elements, and help provide energy security to
Europe for many decades.
Exploration activities
Exploration activities in the 2008 exploration
season were extensively commented on in the
2008 Annual Report and resulted in the resource
upgrade discussed below.
In June 2009, the Company commenced a field
program in Greenland that was primarily focused
Kvanefjeld - Strategic location
on generating information that will be utilised in the various studies relating to the broader feasibility
process. This includes sterilisation drilling, geotechnical drilling, as well as drilling for metallurgical
samples. The metallurgical drill holes were designed to sample various ore-types across the resource.
This material will be used in ongoing metallurgical testwork.
In addition, data collection for environmental studies continues, and builds on data collected during
the previous two field seasons. Collectively, this data forms the basis of an Environmental Baseline
Study.
SECTION 1 | 8
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 9
Review of Operations by
the Managing Director
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Whilst actively operating in Greenland, the Company conducts meetings to update community
representatives on the current status of our activities in southern Greenland. These community
meetings provide an excellent forum for the community to raise any queries and concerns, which
can then be discussed by all stakeholders.
Updated Resource Statement
Late in the June quarter, the Company released an updated resource statement for the Kvanefjeld
multi-element project. Kvanefjeld is the first defined resource within the Company’s exploration
license area over the northern Ilimaussaq Complex in southern Greenland. The resource update
was based on geochemical assay data that was generated from the substantial diamond drill
program conducted during the 2008 field season in Greenland. The 2008 drill program had aimed
to improve the resource category, as well as to expand the overall resource base. In consideration
of these aims, the 2008 drill program and resulting resource upgrade can be regarded as extremely
successful. Following the extensive exercise of data validation for the large multi-element dataset,
a new resource estimate was generated by consultants Hellman and Schofield Pty Ltd. The updated
resource statement confirms the size and quality of the multi-element resource at Kvanefjeld, with
79% of all rare earth oxide (REO), uranium and zinc resources now in the ‘indicated’ category.
The new resource statement contains 4.79 Mt REO, 0.9 Mt zinc and 283 Mlbs U3O8. Significantly,
Kvanefjeld represents just a small portion of the Company’s exploration license that covers the highly-
prospective northern part of the Ilimaussaq Intrusive Complex.
Kvanefjeld Multi-Element Resource Statement, June, 2009
At U3O8%
cutoff grades1
Tonnes
(million)
U3O8%2 U
3O8 lb/t
TREO%3
Zn%
Resource
0.015
0.020
0.025
365
92
457
276
63
339
207
43
250
0.028
0.027
0.028
0.032
0.031
0.032
0.035
0.036
0.035
0.62
0.59
0.62
0.70
0.69
0.70
0.77
0.78
0.77
1.06
1.12
1.07
1.13
1.21
1.14
1.20
1.31
1.22
category
Indicated
Inferred
TOTAL
Indicated
Inferred
TOTAL
Indicated
Inferred
TOTAL
0.22
0.22
0.22
0.23
0.24
0.23
0.23
0.25
0.24
1. There is greater coverage of assays for uranium than other elements owing to historic spectral
assays. U3O8 has therefore been used to define the cutoff grades to maximise the confidence
in the resource calculations.
2. Additional decimal places do not imply an added level of precision.
3. Total Rare Earth Oxide (TREO) refers to the rare earth elements in the Lanthanide series plus
yttrium.
Note: Figures quoted may not sum due to rounding.
SECTION 1 | 10
Rare Earths at Kvanefjeld
The value of a rare earth element resource is not just dependant on the overall grade and tonnage
of the resource, but is greatly influenced by the proportion of individual rare earth elements. Light
rare earth elements nearly always occur in much greater abundance than heavy rare earth elements.
Owing to the relative scarcity of heavy rare earths, and the ever increasing applications for these
metals, their demand and value is soaring. Two dominant types of rare earth deposits include those
associated with carbonatites (Mountain Pass, Mt Weld, Hoidas Lake), and those associated with
peralkaline igneous complexes (Thor Lake, Strange Lake, Kvanefjeld). It is generally the deposits
that are associated with peralkaline complexes that are relatively enriched in the lucrative heavy
rare earth elements. The Ilimaussaq Complex, host to Kvanefjeld, is the world’s type example for
agpaitic nepheline syenites; an extreme form of peralkaline igneous rocks. Accordingly, the rare
earth element resource at Kvanefjeld is not just extremely large, but also contains a favourable mix
of rare earth elements, with a relative enrichment of the heavy rare earths. Kvanefjeld is also strongly
enriched in yttrium; an element that is not a lanthanide but it is included with rare earths owing to its
similar chemical properties to heavy rare earths. The heavy rare earth elements and yttrium combined
account for 14% of the rare earth resource at Kvanefjeld.
Kvanefjeld multi-element ore: Rare earth constituents plus yttrium by percent
La
Ce
Pr
Nd
27.5 42.0 4.2
12.9
Sm
1.6
Eu
0.1
Gd
1.1
Tb
0.2
Dy
1.1
Ho
0.2
Er
0.6
Tm
0.1
Yb
0.5
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Pie charts illustrating the relative abundance of individual rare earth elements within the resources at
Kvanefjeld, and two other well documented rare earth element deposits; Mountain Pass in California,
USA, and Mt Weld, in Western Australia. Kvanefjeld is hosted by peralkaline igneous rocks of the
Ilimaussaq Complex, and is relatively enriched in heavy rare earths in comparison to deposits hosted
by carbonatites, such as Mt Weld and Mountain Pass (soure: IMCOA, Company websites).
SECTION 1 | 11
Review of Operations by
the Managing Director
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Update on Geological Framework and Resource Potential
In the geological world alkaline magmatism is known to be associated with some of the world’s
most prolific mineral deposits. Alkaline intrusions host a variety of mineral deposit types that include
phosphate deposits, specialty metal deposits inclusive of REEs, niobium, tantalum, and titanium, and
some alkaline complexes are also associated with prolific copper and gold deposits.
The Ilimaussaq Intrusive Complex is the world’s type-example of a particularly unusual group of alkaline
rocks that are referred to as agpaitic nepheline syenites. Similar alkaline igneous complexes include the
Khibina Complex in Sweden that hosts the world’s largest apatite deposits (phosphate ores), and the
Lovozero Complex in Russia (Kola Peninsula) that hosts vast loparite deposits that are rich in niobium
and titanium. The Ilimaussaq Complex is unique, in that it contains almost purely agpaitic rocks.
For these reasons, it has been the subject of extensive studies from scientists worldwide. Henning
Sørensen, one of the world’s most highly regarded geoscientists, devoted a significant portion of his
career to understanding the Ilimaussaq Complex and its economic significance. In a paper published
in 1992 Sørensen theorised that agpaitic rocks could contain vast resources of rare elements that
could be exploited in a multi-element capacity. As the work programs of Greenland Minerals and
Energy progress, the results are starting to indicate that Sørensen’s theory is correct.
A JORC-compliant 457Mt resource has been defined at Kvanefjeld in a
lujavrite host. This lujavrite underlies naujaite throughout the majority
of the northern part of the complex, where regional resources are likely
located. The lujavrite is host to REE, uranium, zinc and sodium fluoride
mineralisation. The regional extent of the lujavrites can be seen in the
diagram on the facing page.
Ongoing geological studies by the Company have built on the existing
knowledge base to improve the understanding of ore-genesis within the
Ilimaussaq Intrusive Complex. The northern half of the complex preserves
the uppermost levels, which are the most prospective areas for bulk-
tonnage, multi-element resources. The southern half of the complex is
more deeply eroded, exposing basal units referred to as kakortokites that
contain the zirconium-rich mineral eudialyte. Black lujavrite, the dominant
Shipping samples from Narsaq.
host to REEs, uranium, zinc and sodium fluoride mineralisation at Kvanefjeld, is now known to
be widespread through the northern part of the complex. Whilst black lujavrites are mineralised
throughout, the grades of REEs, uranium and zinc are highest in the uppermost portions of the
black lujavrite where they have been concentrated by magmatic processes. The Company is working
to identify broad domal upwellings of black lujavrite where new bulk-tonnage ore zones are likely
to occur. As the geological understanding improves, the Company is increasingly confident of the
immense resource potential of the Ilimaussaq Complex. In this sense, Kvanefjeld can be considered
as the first multi-element resource defined within the broader Ilimaussaq mineral field.
SECTION 1 | 12
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Aerial photograph over the Company’s exploration license covering the northern Ilimaussaq
Complex. Black lujavrite is the main host unit to multi-element mineralisation, and outcrops most
extensively on Kvanefjeld Plateau. Whilst black lujavrite is limited in outcrop, it occurs through most
of the complex at shallow to moderate depths. There is genuine scope to define new significant
multi-element ore zones within the license area.
SECTION 1 | 13
Review of Operations by
the Managing Director
Update on the Pre-Feasibility Study
Following two highly successful exploration campaigns, conducted in 2007 and 2008, and the
subsequent rapid growth of the resource base, the Company commenced a pre-feasibility study on
the Kvanefjeld multi-element project in late 2008. The study, scheduled for completion in late 2009,
is a critical milestone for the Company and given the unique nature of the geology and the multi-
element ores its main focus is on developing a process route that can extract the elements of interest
in an economically viable and environmentally responsible manner. The recently upgraded resource
statement has confirmed the world class potential of Kvanefjeld, and emphasises the importance of
the pre-feasibility process to the evolution of the project.
The mining study component is being conducted by Coffey Mining Pty Ltd and covers mine design
and ore scheduling, geotechnical issues, hydrogeology and tailings management.
The engineering study component is being completed by GRD Minproc and includes the process
design, engineering design and capital and operating costs of a processing plant.
Environmental studies are also underway with Coffey Natural Systems preparing a strategy for the
Environmental and Social Impact Assessment and Orbicon, a Danish based environmental science
group, undertaking field work and base-line monitoring.
Previous work by the Danish Atomic Energy Agency (RISO) identified a viable
way to extract uranium. However, given the emerging economic and strategic
significance of specialty metals, such as rare earths, the Company is taking a
multi-element approach with other process routes being evaluated to maximise
specialty metal recoveries and the economic viability of the project.
The initial metallurgical development program has been completed. As part of
this testwork program the Company engaged Perth based SGS Lakefield Oretest
to carry out a fourth stage of testwork (T4), following on from the initial T1 and
T2 research programs conducted in 2008 at Amdel, in South Australia and the T3
research program completed early in 2009 by SGS Lakefield Oretest.
ANSTO (Australian Nuclear Services and Technology Organisation) were also
engaged to work on process development, specifically for REE metallurgical
behavior and recovery. The results of ANSTO’s current work program will feed
into the broader process development and plant design that is being conducted
by GRD Minproc.
During the 1970’s and early 1980’s the Danish government, through RISO and the Geological Survey
of Greenland, commissioned a series of high quality studies to assess the viability of Kvanefjeld
as a potential uranium resource. Their work included exploration and resource definition, detailed
environmental studies, socio-economic impact studies and infrastructure studies that included
investigations into hydro-electric power. Mine plans were established, which included the plant
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 14
location and potential sites for tailings disposal. A series of metallurgical programs were run to
identify a viable route to extract uranium. This culminated in the development of a pilot plant to test
high pressure carbonate leaching on bulk samples extracted from Kvanefjeld. Despite the extensive
studies and significant technical advances made, work on the project ceased in the early 1980’s due
to a change in the political sentiment toward nuclear energy that emerged globally.
Given the extensive and successful research program and pilot plant operation conducted by RISO
on the Kvanefjeld project Greenland Minerals strategy is to build on this knowledge and to use
this as the basis of its prefeasibility study. With this in mind the Company engaged Jorgen Jensen,
the former project manager of the Kvanefjeld project for RISO. Mr Jensen has contributed significantly
to the Company’s metallurgical studies, and has helped ensure that the results of all the previous test
work are incorporated into the current metallurgical program.
Metallurgical Testwork
The key results achieved from the extensive metallurgical testing to date show that:
• the rare earths can be beneficiated by froth flotation, and uranium to a lesser extent. The recovery
of U and REE to a flotation concentrate equated to over 70% and 90% respectively;
• a processing route using Flotation/Sulphation Roast/Water Leaching was unlikely to prove
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
economic due to the lower selectivity for uranium during
flotation and high reagent consumptions;
• Carbonate Pressure Leaching (CPL), based on the process
parameters developed by RISO during the 1983 Pre-
feasibility Study, was highly selective for uranium;
• REEs can be recovered from CPL residues in a float
concentrate. Further work is required to improve
selectivity and hence concentrate grades; and
• REEs can be recovered from CPL residues, with or
without a flotation stage, using a dilute acid leach. More
work is required to improve recovery and reduce acid
consumption; and
• at least one of the more valuable minerals, containing
uranium and heavy REE, is amenable to heavy liquid
separation techniques opening up the possibility of
beneficiating the ore prior to CPL.
Overall, the advances on REE metallurgy made to date are considered as extremely encouraging.
SECTION 1 | 15
Review of Operations by
the Managing Director
Flowsheet Development
Based on the testwork results to date, and the substantial piloting work carried out by RISO for their
1983 Study, the Company has developed a basic flowsheet which allows the uranium to be extracted
ahead of the REE refining stage using CPL technology. The CPL residues are then treated by froth
flotation, to concentrate the REEs prior to acid leach and subsequent refining into a REE carbonate
product. The flowsheet is detailed in the figure below.
2009 Field Activities in Greenland
The Company has just recently completed a field program in Greenland that included sterilisation
drilling, geotechnical drilling, and drilling for metallurgical samples. The metallurgical drill holes were
designed to sample various ore-types across the resource. This material will be used in ongoing
metallurgical testwork.
In addition, data collection for environmental studies was completed. This builds on data collected
during the previous two field seasons. Collectively, this forms the basis of an Environmental Baseline
Study.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 16
Review of Operations by
the Managing Director
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 17
Whilst actively operating in Greenland, the Company conducts community meetings to update
community representatives on the current status of the Company’s exploration activities in southern
Greenland. These community meetings provide an excellent forum for the community to raise any
queries and concerns, which can then be discussed by all stakeholders.
Mineralogical Studies and Ore-Type Classification
As part of the pre-feasibility study, the Company is undertaking a detailed mineralogical and
geochemical study of the Kvanefjeld ore body. This will enable ore types to be classified on the
basis of mineralogy and geochemistry. The various ore types will then be metallurgically tested at a
bench scale level, to ensure that the optimal process route is confirmed and that variations in ore
type are fully accounted for. During previous studies, variations in the ore body were not sufficiently
understood nor accurately mapped as there was no multi-element geochemical coverage. This
was essentially due to a lack of geochemical data as the drill core was only analysed spectrally
during that phase of the study carried out by RISO. Greenland Minerals now has a more complete
geochemical coverage of the deposit allowing ore types to be clearly identified and mapped in three
dimensions. The vast multi-element dataset has been investigated geostatistically, and modeled in
three dimensions with Leapfrog™ software. This has led to the development of a three-dimensional
geochemical and mineralogical model of the resource as it is currently defined.
Rare Earths Market Overview
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greek alchemists defined earths as materials that could not be changed by the sources of heat
available to them. This perception lasted for many centuries, so long in fact that until late in the 18th
century the oxides of metals such as calcium, aluminium and magnesium were known as earths.
In 1794, while investigating a rare Swedish mineral, a Finnish chemist named Johan Gaddin, discovered
a new ‘earth’ to which he gave the name ‘Ytterbia’, after Ytterby, the village where the mineral was
found – subsequently shortened to Yttria. Later, in 1803, from the same rare mineral a new earth
named Ceria was discovered and since Yttria and Ceria had been discovered in a rare mineral and
closely resembled one another, they were referred to as ‘rare earths’.
Today, the term rare earths refers to a series of 17 chemically similar metals, consisting of the 15
elements known as the lanthanides, plus yttrium and scandium. It is the rare earth metals and
oxides that are of particular interest to scientists and industrialists, due to their unique magnetic and
spectroscopic properties. The major applications for rare earths are given in Table 1.
SECTION 1 | 18
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
IMCOA
Industrial Minerals Company of Australia Pty Ltd
ABN 42 084 433 992
Rare Earths Market Overview
September 2009
DISCLAIMER
The statements in this Overview for Greenland Minerals & Energy Ltd (“GGG”) 2009 Annual Report
represent the considered views of the Industrial Minerals Company of Australia Pty Ltd (IMCOA). It
includes certain statements that may be deemed “forward-looking statements”. All statements in
this overview, other than statements of historical facts, that address future market developments,
government actions and events, are forward-looking statements. While IMCOA believes the outcomes
expressed in such forward-looking statements are based on reasonable assumptions, such statements
are not guarantees of future performance and actual results or developments may differ materially
from those in forward-looking statements. Factors that could cause actual results to differ materially
from those in forward-looking statements include rare earths applications, the development of
economic rare earths substitutes and general economic, market or business conditions.
While, IMCOA has made every reasonable effort to ensure the veracity of the information presented
it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions
contained herein. Accordingly, if data from the overview is to be quoted then the above Disclaimer
should be included.
Dudley J. Kingsnorth
Executive Director
Industrial Minerals Company of Australia Pty Ltd
19 SECTION 1 | 19
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Rare Earths Market Overview
Applications of Rare Earth
Yttrium
Cerium
Neodymium
Samarium
Gadolinium
Dysprosium
Erbium
Ytterbium
Lanthanum
Praseodymium
Promethium
Europium
Terbium
Holmium
Thulium
Lutetium
Y
39
La
57
Ce
58
Pr
59
Nd
60
Pm
61
Sm
62
Eu
63
Gd
64
Tb
65
Dy
66
Ho
67
Er
68
Tm
69
Yb
70
Lu
71
Phosphors
Glass
Magnets
Electronics
Energy
Ceramics
Catalysts
Metallurgy
Others
X-ray Screen Phosphor
Phosphors
Optical Glass
Colourising Decolourising
Optical Fibres
Permanent magnets
YIG
Magnetic Levitation
Condensers
Hydrogen Storage
Fuel Cells
Batteries
Nuclear Reactor Shieds
Nuclear Reactor Control Rods
Engine Parts
Oxygen Sensors
Machine Tools
Sintering Additives
Refractories
Petroleum Cracking
Exhaust Gas Control
Pyropher Metals
Heat Resistant Alloys
Steel Additives
Magnetostrictive Alloys
Crystal Glass
Abrasives
Artificial Jewels
X-ray Screen Phosphor
Lasers YAG, GGG
Salts
Metals
Oxides
significant quantities used
moderate quantities used
minor quantities used & research applications only
SECTION 1 | 20
Yttrium
Cerium
Neodymium
Samarium
Gadolinium
Dysprosium
Erbium
Ytterbium
Lanthanum
Praseodymium
Promethium
Europium
Terbium
Holmium
Thulium
Lutetium
Y
39
La
57
Ce
58
Pr
59
Nd
60
Pm
61
Sm
62
Eu
63
Gd
64
Tb
65
Dy
66
Ho
67
Er
68
Tm
69
Yb
70
Lu
71
Phosphors
Glass
Magnets
Electronics
Energy
Ceramics
Catalysts
Metallurgy
Others
Salts
Metals
Oxides
significant quantities used
moderate quantities used
minor quantities used & research applications only
X-ray Screen Phosphor
Phosphors
Optical Glass
Colourising Decolourising
Optical Fibres
Permanent magnets
YIG
Magnetic Levitation
Condensers
Hydrogen Storage
Fuel Cells
Batteries
Nuclear Reactor Shieds
Nuclear Reactor Control Rods
Engine Parts
Oxygen Sensors
Machine Tools
Sintering Additives
Refractories
Petroleum Cracking
Exhaust Gas Control
Pyropher Metals
Heat Resistant Alloys
Steel Additives
Magnetostrictive Alloys
Crystal Glass
Abrasives
Artificial Jewels
X-ray Screen Phosphor
Lasers YAG, GGG
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 21
Rare Earths Market Overview
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
1. Introduction
Throughout the industry rare earths are normally expressed in terms of rare earth oxides (REO) and
often classified into three groups: Light, Medium and Heavy. At other times the light and medium
rare earths are referred to as the ‘cerics’ and the heavy rare earths as the ‘yttrics’. The rare earths with
their atomic weights and symbols are detailed in Table 2.
Rare earths are a critical minor constituent of many advanced materials that are essential inputs to the
manufacture of items such as hybrid vehicles, mobile telephones, computers, televisions and energy
efficient lights. Although rare earths have a relatively high unit value, the impact of their cost has
little, if any, impact on the selling price of the final item. Furthermore, as they are generally present
in minute concentrations they are not recycled. It is for these reasons that rare earths are considered
strategic materials. In Japan rare earths are often referred to as the ‘seeds of high technology’.
Rare earth products are generally priced in terms of US$ per kg REO, regardless of the chemical form
in which they are sold.
Table 2: Rare Earths and their Atomic Weights
Element
Type
Atomic No.
Symbol
Atomic Weight
Lanthanum
Cerium
‘Light’
Praseodymium
or
Neodymium
‘Ceric’
Promethium*
Samarium
Europium
‘Medium’
Gadolinium
Terbium
Dysprosium
Holmium
‘Heavy’
Erbium
Thulium
Ytterbium
Lutetium
Yttrium
Scandium
Or
‘Yttric’
Note: ppm = parts per million
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
39
21
La
Ce
Pr
Nd
Pm
Sm
Eu
Gd
Tb
Dy
Ho
Er
Tm
Yb
Lu
Y
Sc
138.92
140.13
140.92
144.27
145.00
150.43
152.00
156.90
159.20
162.46
163.50
167.20
169.40
173.04
174.99
88.92
45.10
*Promethium does not occur naturally as a stable isotope, although it can be artificially
manufactured
SECTION 1 | 22
2. The Dimensions of the Global Rare Earths Market Today
• Forecast volume in 2008: 124,000t REO
• Value: Approximately US$1¼billion in 2008.
• Over the past decade market growth has been in the range of 8-11%pa, with the exception of
the correction in 2001/02 (due to the ‘technology crash); while the current global financial crisis
is anticipated to have reduced consumption in 2008 to 124,000t REO from mid-2008 estimates
of 135-145,000t REO.
• China supplies ~92% of global demand and consumes ~60% of the demand.
• To assist in generating manufacturing jobs for the millions of Chinese moving from the country
to the urban areas China has adopted policies that encourage rare earth producers to go
downstream and add value. To achieve this goal the following measures are now in place,
which effectively mean that China’s rare earth resources are primarily for China’s domestic
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
manufacturing industries :
o Export quotas.
o Export taxes.
o Production quotas.
o Foreign investment in rare earth resources/mines is prohibited.
Table 3: Global Rare Earths Demand in 2008 (t REO ±10%)
Application
China
Japan1
USA
Others
Total
Market
Catalysts
Glass
Polishing
7,000
8,000
8,000
Metal Alloys
16,000
Magnets
21,000
Phosphors
Ceramics
Other
Total
5,500
2,500
6,000
& SE Asia
Share
2,000
12,500
1,500
23,000
19%
2,000
4,500
4,500
3,500
2,500
2,500
2,000
1,000
1,000
1,250
750
500
1,250
250
1,500
1,500
1,000
1,000
500
750
250
12,500
15,000
22,500
26,500
9,000
7,000
8,500
10%
12%
18%
21%
7%
6%
7%
74,000
23,500
18,500
8,000
124,000
100%
Source: IMCOA, Roskill and CREIC
Note: 1. Large proportions of both the rare earth alloys for batteries and magnets are exported from
China to Japan for the manufacture of the NiMH batteries and the NdFeB magnets; which, if they
were included in the statistics as Japanese consumption would increase that country’s consumption
of rare earths to approximately 35,000t REO, or 40-45,000t in all forms as shown in Tables 19 & 20.
It is this dependence upon China as an effective sole source for many of these strategic materials that
is the driving force behind Japanese industry’s support for non-Chinese rare earths projects.
SECTION 1 | 23
Rare Earths Market Overview
The estimated gross value of the global rare earths market is given in Table 4 below:
Table 4: Estimated ‘Gross Value’ of Rare Earths Market in 2008 US$M (±15%)
Application
Average Value
Gross Value
Market Share
US$M
by Value
Catalysts
Glass
Polishing
Metal Alloys
Magnets
Phosphors
Ceramics
Other
Total
US$3/kg REO
US$2/kg REO
US$4/kg REO
US$8/kg REO
US$18/kg REO
US$45/kg REO
US$7½/kg REO
US$5/kg REO
11/kg REO avg
Source: metal pages©, Roskill, IMCOA
60
25
60
175
475
400
50
40
5%
2%
4%
14%
37%
31%
4%
3%
US$1200-1400M
100%
The average value of rare earths in mid-2008 would have been US$11-13/kg REO, while at the end
of the year it was closer to US$10/kg REO; a clear reflection of the current global financial crisis. It is
anticipated that prices will pick-up again in the latter half of 2009, with restoration to the levels in
mid 2008 in late 2010 when the impact of ongoing reductions in Chinese export quotas will start to
have an impact on availability.
3. Global Rare Earth Resources
Hard rock deposits of bastnasite and placer deposits of monazite and xenotime host most of the
world’s economic concentrations of rare earths. The majority of rare earth mining operations are
based on the exploitation of these minerals. Due to the relative concentration of the rare earth oxides
in these minerals, it is the light rare earths that predominate and account for the largest proportion
of rare earth oxides produced.
World production of light rare earths is dominated by the processing of bastnasite at Baotou in Inner
Mongolia, where it is a by-product of iron ore mining. Monazite and xenotime are usually extracted
as by-products of mineral sands and tin operations, often from placer deposits. The relative rare earth
contents of key world commercial resources are shown in Tables 5A to 5C below:
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 24
Table 5A: Rare Earths Content of Major Source Minerals (% total REO)
Rare
Earth
Oxidee
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O7
Dy2O3
Y2O3
Total
Bastnasite
Xenotime
Ion Adsorption
Clays
Bayun
Obo,
Mongolia,
China
23.0
50.0
6.2
18.5
0.8
0.2
0.7
0.1
0.1
trace
99.6
Mountain
Pass,
Lahat Guangdong, Xunwu,
Jiangxi,
China
Perak,
China
California, Malaysia
USA
33.2
49.1
4.3
12.0
0.8
0.1
0.2
trace
trace
0.1
99.8
1.2
3.1
0.5
1.6
1.1
trace
3.5
0.9
8.3
61.0
81.2
1.2
3.0
0.6
3.5
2.2
0.2
5.0
1.2
9.1
59.3
85.3
42.0
2.3
8.8
30.8
3.8
0.5
2.9
trace
trace
8.0
99.1
Lognan,
Jiangxi,
China
1.8
0.4
0.7
3.0
2.8
0.1
6.9
1.3
6.7
65.0
88.7
Source for Tables 5A, 5B and 5C is Roskill, USGS and company literature
Table 5B: Rare Earths Content of Major Source Minerals (%total REO)
Rare
Earth
Oxidee
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O 7
Dy2O3
Y2O3
Total
Monazite
Loparite
Bastnasite
& Parisite
Mt Weld,
Australia
India
Guandong,
Lovozersky,
Dong Pao
China
Russia
Vietnam
25.1
48.5
5.3
16.7
2.2
0.6
0.9
0.1
0.2
0.3
23.0
46.0
5.5
20.0
4.0
-
-
-
-
-
23.0
42.7
4.1
17.0
3.0
0.1
2.0
0.7
0.8
2.4
99.9
98.5
95.8
28.0
57.5
3.8
8.8
1.0
0.1
0.2
0.1
0.1
trace
99.6
32.4
50.4
4.0
10,7
0.9
-
-
-
-
0.7
99.1
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 25
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Rare Earths Market Overview
Table 5C: Rare Earths Content of Potential Source Minerals (%total REO)
Rare
Earth
Oxidee
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O7
Dy2O3
Y2O3
Total
Trachyte
Dubbo,
Australia
Apatite
Steenstrupine
Fergusonite
Nolans,
Hoidas Lake,
Kvanefjeld,
Thor Lake,
Australia
Canada
Greenland
Canada
19.5
36.7
4.0
14.1
2.5
0.1
2.1
0.3
2.0
15.8
97.1
18.5
47.8
6.1
21.4
2.4
0.5
1.2
0.1
0.3
1.5
19.8
45.6
5.8
21.9
2.9
0.6
1.3
0.1
0.4
1.3
27.4
41.2
4.2
12.9
1.6
0.1
1.1
0.2
1.1
7.7
99.8
99.7
97.5
0.3
4.4
1.7
15.6
10.4
1.6
14.3
1.8
9.9
29.0
89.0
The less abundant, but more valuable, yttrium and heavy rare earths are mainly sourced from ionic
absorption clays in southern China.
Current world reserves of rare earths, as assessed by the US Geological Survey, are estimated to
be about 88 million tonnes REO contained (see Table 6 below) which, based on their continued
availability and typical metallurgical recoveries, should theoretically be sufficient for the next 200
years. The largest proportion of these reserves lie in China (27 million tonnes) and are equivalent
to around 30% of the world’s reserves, while the USA accounts for another 13 million, Australia 5
million and India 2.3 million tonnes. World Mine Production, Reserves and Reserve Base, as defined
by the US Geological Survey are shown below.
Table 6: Estimated Mine Production, Reserves and Reserve Base 2007-08
Country
Mine Productione
Reserves
2007
2008
Reserve
Base
United States
Australia
Brazil
China
-
-
650
-
-
650
13,000,000
14,000,000
5,200,000
5,800,000
48,000
84,000
120,000
120,000
27,000,000
89,000,000
Former Soviet Union
India
Malaysia
Other Countries
n/a
2,700
380
n/a
n/a
2,700
380
n/a
19,000,000
21,000,000
1,100,000
1,300,000
30,000
35,000
22,000,000
23,000,000
World Total (rounded)
123,000
124,000
88,000,000
150,000,000
SECTION 1 | 26
Source: USGS, January 2009
It should be noted that the reserve figures in the table encompass a wide range of mineral qualities
and do not necessarily comply with the internationally recognised codes for the definition of resources
and reserves. Furthermore, the prospectivity of a resource is determined by several factors including
grade, cost of processing, impurities and the relative concentration of the rare earth elements in
greatest demand, which are not identified in the above table.
The most common minerals that are processed to recover the rare earths are listed in Table 7. Almost
all the light rare earths produced today are extracted from bastnasite and monazite, while most of
the heavy rare earths are extracted from xenotime and ionic (adsorption) clays. The processes used
to separate the rare earths from these minerals have changed little in the past 20 years. The route
chosen is based upon the economics of the processes available with particular reference to the local
costs of sulphuric acid, hydrochloric acid and caustic soda, the primary reagents used to extract rare
earths.
Table 7: Composition of Major Rare Earth Minerals
Mineral
Formula
Major Occurrences
REO max (%)
Bastnasite
LnFCO3
China, USA
Monazite
(Ln,Y,Th)PO4
China, Australia, Brazil, India,
Malaysia, Africa
Loparite
(Na,Ca,Ln,Y)(Nb,Ta,Ti)2O6
Former Soviet Union
Xenotime
YPO4
China, Australia, Malaysia,
Africa
Apatite
(Ca,Ln)5[(P2Si)O4]3
Former Soviet Union, Australia,
Ionic Clays Weathered Xenotime
and Apatite
Canada
China
75
65
32
62
12
n/a
A project in which the rare earths are a by-product to the major commodity could have a significant
advantage over a project solely dependent upon rare earths.
4. Global Rare Earths Demand
4.1 Demand in 2000
The first recorded commercial production of rare earths was in Treibach, Austria, in 1903 which took
the form of mischmetal for lighter flints. Fifty years later global production was of the order 1,000tpa
REO valued at approximately US$25 million. Over the past eight years rare earths production/
consumption has increased by 50%, from 80,000tpa REO to 120,000tpa REO (see Table 8 below).
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 27
Rare Earths Market Overview
Table 8: Global Rare Earths Demand in 2000 (t REO ±10%)
Application
China
Japan & SE Asia
Catalysts
Glass
Polishing
Metal Alloys
Magnets
Phosphors
Ceramics
Other
Total
2,000
2,000
2,000
5,500
3,500
1,000
750
3,250
1,750
6,500
4,000
2,750
3,500
2,500
1,250
500
USA
9,500
2,500
2,000
1,750
1,500
500
500
150
Others
Total
4,250
3,000
3,500
2,500
2,000
2,000
500
100
17,500
14,000
11,500
12,500
10,500
6,000
3,000
4,000
20,000
22,750
18,400
17,850
79,000
Source: Roskill, IMCOA and CREIC
4.2 Forecast Global Rare Earths Demand in 2014
In the view of IMCOA the impact of the current global financial crisis is to have set back longer term
consumption of rare earths by 2 years; in essence this means that the current forecast demand in
2014 is similar to the forecast demand in 2012 made 2-3 years ago. In forecasting demand in 2014
IMCOA makes the following comments:
• The following assumptions in estimating/forecasting global demand for rare earths have been
made:
2008: Estimated demand in 2006 was 110,000t REO, growing to 120,000t REO in 2007
with expectations in the middle of last year that demand could surge to 132,000t REO
(IMCOA) to 144,000t REO (CREIC) in 2008. The current estimate, given the shutdown of
many manufacturing operations in China during the Beijing Olympics and the rapid slowdown
in the global economy is 124,000t REO.
2009: As global growth remains subdued and consumers reduce their stocks to reduce
working capital rare earths demand this year is forecast to be 95,000t REO. Recent
conversations with producers and consumers indicate that there are early signs that demand
is picking up in 3Q2009.
2010: With a modest pick-up in the growth of global GDP, while stocks will continue to be
reduced to lessen working capital, global demand is forecast to return to 124,000t REO.
2011 to 2014: With a forecast return to global GDP growth rates of 3½-4½%pa the growth
in demand for rare earths is forecast to be 8-11%pa; which equates to global demand of
180,000t REO in 2014.
• IMCOA is of the view that demand will increase at a faster rate in China than the rest of the
world so that China’s share of global consumption will grow from 59% in 2007 to 65% in
2014.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 28
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
• Growth in demand by the various sectors under which the industry is generally classified is
forecast to be at the following rates in the period 2011 to 2014:
o Metal alloys @ 15-20% pa
o Magnets @ 10-15% pa
o Phosphors @ 7-10%
o Ceramics and other applications @ 7-9%
o Catalysts and Polishing @ 6-8%
o Glass at a negligible rate.
• The Copenhagen Climate Change Conference (December 2009) could have a significant
impact on the forecast.
Table 9: Forecast Global Rare Earths Demand in 2014 (t REO ±15%)
Application
China
Japan1 &
SE Asia
USA
Others
Total
Market
2,250
2,250
5,000
7,500
5,000
3,000
3,000
2,500
15,000
1,000
1,250
1,750
1,000
1,000
2,000
500
1,250
750
1,250
1,750
1,000
1,000
1,000
500
29,000
12,500
20,000
45,500
41,500
12,000
9,000
10,500
Share
16%
7%
11%
25%
23%
7%
5%
6%
117,500
30,500
23,500
8,500
180,000
100%
Catalysts
Glass
Polishing
10,500
8,500
12,500
Metal Alloys
34,500
Magnets
34,500
7,000
3,000
7,000
Phosphors
Ceramics
Other
Total
Source: IMCOA
Note: 1. Large proportions of both the rare earth alloys for batteries and magnets are exported from
China to Japan for the manufacture of the NiMH batteries and the NdFeB magnets; which, if they
were included in the statistics as Japanese consumption would increase that country’s consumption
of rare earths substantially. If these volumes were included in Japanese consumption In 2014 then
the country’s consumption could well be 40-45,000t REO, or 50-60,000t in all forms. As noted
above it is this dependence upon China as a virtual sole source for many strategic materials that is
the driving force behind Japanese industry’s support for non-Chinese rare earths projects.
5. Global Rare Earths Supply
The major ongoing issue for the rare earths industry is ‘balance’; due to the incongruity between
the ratio of the individual rare earths produced and consumed, there is always a situation in which
there is a shortfall of some rare earths while others are in surplus . On the basis of the known
analyses of the major resources it is considered that total production would probably have to be
approximately 205,000t REO in 2014 to meet projected demand of 180,000 t REO, (with any
shortfall to be drawn from stocks), as illustrated in the Table 10 below, where potential critical
shortages are shown in red.
SECTION 1 | 29
Rare Earths Market Overview
Table 10: Forecast Global Demand and Supply for Individual Rare Earths in 2014 (±15%)
Rare Earth
Oxide
Lanthanum
Cerium
Praseodymium
Neodymium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Erbium
Yttrium
Ho-Tm-Yb-Lu
Demand1
Supply/Production1,2
REO Tonnes
51,050
65,750
7,900
34,900
1,390
840
2,300
590
2,040
940
12,100
200
%
28.4%
36.5%
4.4%
19.4%
0.8%
0.5%
1.3%
0.3%
1.1%
0.5%
6.7%
0.1%
REO Tonnes
55,100
82,400
10,000
33,300
4,000
900
3,150
400
1,800
1,000
11,650
1,300
%
26.9%
40.2%
4.9%
16.3%
2.0%
0.4%
1.5%
0.2%
0.9%
0.5%
5.7%
0.5%
Total
180,000
100.0%
205,000
100.0%
Source: IMCOA estimates
From the above table it is evident that, terbium, dysprosium and yttrium (highlighted in red) will be
in short supply, even with total production exceeding total demand in an absolute sense by 15-20%.
As praseodymium can be substituted for neodymium in magnets in most cases it appears that a
shortage of these important rare earths for permanent magnets could be partially alleviated by the
increased production.
Forecast supply and demand from 2004 through to 2014 are shown/forecast below in Table 11.
Demand has been ‘adjusted’ to allow for the issue of balance. IMCOA is of the view that global
supply could fall short of the desired level of 205,000t REO by some 1,500t REO.
Table 11: Adjusted Demand and Supply
Suppy & Demand
2004
2005
2006
2007
2008
2009f
2010f
2011f
2012f
2013f
2014f
Global Demand
90,000
98,000
110,000
120,000
124,000
85,000
124,000
135,500
148,500
163,000
180,000
Adjusted Global Demand 90,000
100,000
113,000
125,000
131,000
90,000
135,000
146,000
162,000
182,000
205,000
China Demand
China Supply
ROW Supply
33,000
85,500
52,000
60,000
70,000
77,000
65,000
82,000
91,000
102,000
116,000
133,000
99,000
110,000
100,000
115,000
90,000
120,000
130,000
145.000
154,500
165,000
5,000
6,500
7,500
8,500
9,000
6,500
7,500
15,000
20,000
32,000
38,500
Global Supply
90,500
105,500
117,500
108,500
124,000
96,500
127,500
145,000
165,000
186,500
203,500
Surplus/Deficit
500
5,500
4,500
16,500
7,000
6,500
7,500
1,000
3,000
4,500
1,500
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 30
It should be noted that the Chinese authorities have indicated that production will be ‘managed’
to conserve resources. As mentioned above it is possible that the Copenhagen Climate Change
Conference (December 2009) could have a significant impact on rare earths demand highlighting
the potential for a shortfall in supply. However, it is also evident from recent presentations by
Chinese officials that the Chinese rare earths industry will not readily surrender effective control of
the industry; although it may have to concede its domination of the heavy rare earths sector if it is
unable to successfully address the environmental issues associated with the mining and processing
of the ionic clays in Southern China. Furthermore, if China continues to reduce its rare earths export
quotas (see Section 6 below) then this would put an artificial constraint on supply.
O
O
E
E
R
(cid:30)
a
p
t
d
n
a
m
e
D
250,000
250,000
200,000
200,000
150,000
100,000
50,000
0
China Supply
ROW Supply
Adjusted Global Demand
China Demand
Table 11: Adjusted Demand and Supply
Suppy & Demand
2004
2005
2006
2007
2008
2009f
2010f
2011f
2012f
2013f
2014f
Global Demand
90,000
98,000
110,000
120,000
124,000
85,000
124,000
135,500
148,500
163,000
180,000
Adjusted Global Demand 90,000
100,000
113,000
125,000
131,000
90,000
135,000
146,000
162,000
182,000
205,000
China Demand
China Supply
ROW Supply
33,000
85,500
52,000
60,000
70,000
77,000
65,000
82,000
91,000
102,000
116,000
133,000
99,000
110,000
100,000
115,000
90,000
120,000
130,000
145.000
154,500
165,000
5,000
6,500
7,500
8,500
9,000
6,500
7,500
15,000
20,000
32,000
38,500
Global Supply
90,500
105,500
117,500
108,500
124,000
96,500
127,500
145,000
165,000
186,500
203,500
Surplus/Deficit
500
5,500
4,500
16,500
7,000
6,500
7,500
1,000
3,000
4,500
1,500
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 31
Rare Earths Market Overview
6. China
The current dominance of China as the ‘major player’ in the rare earths industry is not in question as
it supplies 95% of global demand and consumes 60% of the demand. Hence as the major supplier
and consumer the country is able to have a significant influence on the future of the industry, with
clear indications that China is using this dominance to assist its own manufacturing industries.
6.1 Chinese Consumption of Rare Earths
The breakdown and growth in China’s rare earths consumption is illustrated by the following data
released by the Chinese Rare Earth Information Centre (CREIC) in November 2008. It should be
noted that the Chinese approach to the breakdown of rare earths applications is different from that
adopted by IMCOA and the data in Tables 13 & 14 is in absolute tonnes, not REO. CREIC estimate
that between 2005 and 2007 China’s growth in demand was 18%pa, compared with global growth
of 11% and Rest of the World (ROW) growth of 2%pa. (data for 2008 is not available, but the data
given below provides a picture of the increasing consumption in China, which did not slow down
until the latter half of 2008).
Table 12: Break down of Chinese Rare Earths Consumption in 2007 (REO, tonnes)
Application
Field
Consumption
Percentage
Five Advanced Materials
Permanent magnets
Polishing powder
Hydrogen storage materials
Fluorescent materials
Auto catalysts
Subtotal
Metallurgy
Petrochemical industry
Glass & ceramics
Others
Subtotal
Total
Others
Source: CREIC Nov. 2008
Volume
22,250
7,369
6,200
4,490
2,710
43,019
10,994
7,548
3,303
7,686
29,531
72,550
30.7%
10.2%
8.5%
6.2%
3.7%
59.3%
15.2%
10.4%
4.5%
10.6%
40.7%
100.0%
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 32
Table 13: Output of ‘Added Value’ Rare Earths Products in China, 2005-2007 (absolute
tonnes)
Advanced materials
2005
2006
2007
Average
Permanent magnets
Hydrogen storage materials
Fluorescent materials
Polishing powder
Auto emission purifier (,000 unit)
Source: CREIC Nov. 2008
35,200
13,000
5,650
4,457
8,400
41,350
15,000
5,870
6,092
50,800
18,600
8,480
7,523
10,000
10,850
growth rate
+20.1%
+19.6%
+22.5%
+29.9%
+13.8%
Table 14: Output of Rare Earths Phosphors in China, 2005-2007 (absolute tonnes)
Year
2005
2006
2007
Average
Trichromatic phosphor for lamps
Phosphor for CRT colour TV
Long afterglow phosphors
Other phosphors
Total
Source: CREIC Nov. 2008
2,500
1,650
1,500
-
5,650
3,200
1,300
1,195
175
5,870
growth rate
+60%
-22.2%
-22.5%
negligible
6,400
1,000
900
180
8,480
+22.5%
6.2 Chinese Taxes, Quotas and Constraints on Rare Earths Trade
Over the past 3-4 years China has made some fundamental changes to the taxes and quotas on
rare earth exports. The changes have caused Japanese, European and North American customers to
place greater emphasis on identifying and supporting alternative non-Chinese suppliers. The specific
developments in China, the aim of which is to promote ‘value adding’ industries, which appear to
be having the desired effect from recent export statistics, are outlined below:
Export Taxes on Rare Earth Exports from China
In late 2006 the Chinese Government introduced a tax on rare earth exports of 10%, which was
increased to 15% on selected rare earths in 2007. In December 2007 the authorities increased the
export taxes on all rare earth exports, with effect from 1st January 2008, to the following levels:
• Europium, terbium, dysprosium, yttrium as oxides, carbonates or chlorides – 25%
• All other rare earth oxides, carbonates and chlorides – 15%
• Neodymium metal – 15%
• All other rare earth metals– 25%
• Ferro rare earth alloys – 20%
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 33
Rare Earths Market Overview
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Refund of VAT on Rare Earth Exports from China
In 2007 China withdrew the refund of VAT (16%) on exports of unimproved rare earths, while
the refund on value added exports such as magnets and phosphors remains in place. The effect of
this decision, when considered with the export tax regime above, is that non-Chinese rare earth
processors such as cerium polishing powder producers and rare earth magnet producers pay 31%
more for their rare earth raw materials (plus transport and storage costs).
Chinese Rare Earth Export Quotas
The Chinese Ministry of Commerce has recently announced the rare earth export quotas for Chinese
rare earth enterprises for the second half of 2009; which amount to an effective 12% reduction in
quotas between 2008 and 2009. The size of the reduction in the annual rare earth export quotas is
the largest in the history of the quotas since they were introduced in 2004. The history of China rare
earth quotas is shown in Table 15.
Table 15: History of Chinese Rare Earth Export Quotas 2004-2009
Year
1st Allocation
2nd Allocation
Total
Domestic
Enterprises
Foreign
Enterprises
Domestic
Enterprises
Foreign
Enterprises
Domestic
Enterprises
Foreign
Enterprises
Grand Total
Per Cent
Change
2004
2005
2006
2007
2008
2009
Notes:
n/a
n/a
n/a
19,600t
22,780t
n/a
n/a
n/a
8,211t
8,211t1
n/a
n/a
n/a
23,974t
11,376t
n/a
n/a
n/a
8,289t
5,082t1
48,040t
48,040t
45,752t
43,574t
17,569t
17,569t
16,069t
16,069t
65,609t
65,609t
61,821t
59,643t
-
0%
-6%
-4%
57,000t
46,000t
50,000t
50,000t
Actual: 34,156t
Actual: 13,293t
Actual: 47,449t
-5.5%2
50,000t3
Adjusted:40,987t2
Adjusted:15,834t2
Adjusted:56,939t2
15,043t
6,685t
18,257t
10,160t
33,300t
16,845t
50,145t
-12%
35,000t3
1. In 2008 quotas were allocated for 10 months (second tranche was effectively for 4 months) so there was
alignment with a calendar year.
2. Adjusted for 12 month allocation for comparative purposes.
3. Estimated demand by Japan in 2008 and 2009 is >35,000tREO and >25,000tREO respectively
4. The Cumalative Average Reduction Rate (CARR) of export quotas from 2005 to 2009 is -6½% pa.
SECTION 1 | 34
The potential impact of the reduction in the export quotas may be put in context when it is recognised
that Japan’s estimated rare earths consumption in 2008 alone was greater that 40,000t rare earth
materials (i.e. not REO), which could well be more than the total export quota fin the near future.
Foreign companies such as Rhodia, Neo Material Technologies and Santoku receive separate quotas
as shown in Table 15.
Toll trading of rare earths
Toll trading of rare earths in China has been banned since November 2006, which effectively means
the toll treating of rare earths is also banned; one reason for Lynas moving the location of its
secondary processing facilities from China to Malaysia in 2007.
Resultant distortion of prices
For the non-Chinese rare earth consumers the impact of the above actions has not only been limited
access to rare earths, thereby imposing restrictions on their ability to expand their businesses, but it
has also had a significant impact on prices.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Year
1st Allocation
2nd Allocation
Total
Domestic
Enterprises
Foreign
Enterprises
Domestic
Enterprises
Foreign
Enterprises
Domestic
Enterprises
Foreign
Enterprises
Grand Total
Per Cent
Change
48,040t
48,040t
45,752t
43,574t
17,569t
17,569t
16,069t
16,069t
65,609t
65,609t
61,821t
59,643t
-
0%
-6%
-4%
Estimated
Rest of
World
Demand
57,000t
46,000t
50,000t
50,000t
2009
15,043t
6,685t
18,257t
10,160t
33,300t
16,845t
50,145t
-12%
35,000t3
Actual: 34,156t
Adjusted:40,987t2
Actual: 13,293t
Adjusted:15,834t2
Actual: 47,449t
Adjusted:56,939t2
-5.5%2
50,000t3
2004
2005
2006
2007
2008
n/a
n/a
n/a
19,600t
22,780t
n/a
n/a
n/a
8,211t
8,211t1
n/a
n/a
n/a
23,974t
11,376t
n/a
n/a
n/a
8,289t
5,082t1
SECTION 1 | 35
Rare Earths Market Overview
7. Japan
Whereas China consumes ~60% of the global demand for rare earths, Japan is the second largest
consumer with estimated demand equivalent to ~20% of global demand. If the significant volume
of rare earths sold to the US fcc catalyst producers is excluded then the Japanese share of rare earths
consumption is 50-60% of ROW demand. Furthermore, Japan purchases significant volumes of rare
earth magnet and battery alloys which are not classified as rare earths exports. Hence Japan is seen
as the major destination for rare earths produced by the potential non-Chinese projects.
The demand for rare earths in Japan is driven by the high growth in demand for ‘hi-tech’ products
such as HEVs,rare earth magnets and PDPs as shown in Table 16 below. There is every indication that
the high growth in demand for these items will continue, when the global financial crisis has past;
even though consumption has fallen that significantly during the crisis..
Table 16: Japanese Production of Items Containing Rare Earths, 2004-2007
End-product
Unit
2004
2005
2006
2007
2008
Small motors (under 70 W)
M units
HEVs (world sales)
000 units
339
168
340
299
354
383
363
432
353
463
Sintered rare earth magnets
tonnes
7,900
8,500
10,000
11,250
10,750
Sintered Nd-Fe-B Alloys
tonnes
n/a
14,000
16,500
18,750
18,000
Nickel-metal hydride batteries M units
306
303
327
305
326
Autocatalysts
Digital cameras
tonnes
14,690
15,959
15,644
15,688
15,614
000 units
29,200
28,880
37,150
46,760
36,270
Ceramic capacitors
M units
406,200 463,900 576,800 677,800 619,200
Fluorescent lamps
000 units
768,560 859,380 987,580 927,400 860,850
LCD Backlights
PDP televisions
LCD Televisions
000 units
403,750 498,170 620,110 607,080 581,610
000 units
1,720
2,900
5,020
5,160
6,590
000 units
2,670
4,350
5,970
7,310
n/a
Source: Roskill’s Letters from Japan , Iwatani and IMCOA
The demand for the items above is the driving force for the increasing demand for the rare earths as
shown in Table 18. The aggregate annual average increase in imports over the years 2002 to 2007
was 15% pa.; with a fall of approximately 10% in 2008.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 36
Table 17: Japanese Imports of Rare Earths Products, 2003-2008 (gross tonnes)
Rare Earth Product
Yttrium oxide
Cerium Oxide
Cerium compounds
Lanthanum oxide
Rare earth metals
Rare earth compounds
2003
1,235
4,241
6,609
2,241
6,119
2004
2005
2006
2007
1,377
1,226
1,603
1,805
4,178
6,147
11,489
11,013
6,381
7,216
9,069
8,015
1,915
1,801
2,141
3,310
6,379
8,387
9,450
9,320
2008
1,673
8,883
7,924
3,617
6,306
(incl. intermediate compounds)
4,802
6,230
5,738
7,664
6,621
5,927
Ferro-cerium
Total
458
298
592
548
840
997
25,705
26,758
31,106
41,964
40,564
35,327
Source: Roskill’s Letters from Japan, Iwatani and IMCOA
Table 18: Growth in Japanese Rare Earth Imports 2003-2008
Year
Volume
Value
% Change in price
Tonnes
% Growth
US$M
US$/kg
2003
25,705
2004
26,406
2005
30,495
2006
41,407
2007
40,084
2008
35,327
+14%
+3%
+15%
+36%
-3%
-13%
139.5
189.9
218.6
368.8
537.0
453.9
Source: Roskill’s Letters from Japan, Iwatani and IMCOA
5.43
7.19
7.17
8.91
13.40
12.87
-9%
+32%
Nil
+24%
+50%
-4%
A review of the above tables indicates an apparent discrepancy with the global estimates shown in
Table 3, which is due to the fact that the above table is in absolute tonnes and not REO. IMCOA is
of the view that the above tables could over-estimate the consumption of rare earths in Japan for
the following reasons:
• Japan exports finished rare earth products, which can lead to ‘double counting’.
• Stockpiling by the major Japanese consumers.
• The rare earth metals and the ferro-cerium are generally alloys, which ‘convert’ to lower REO
values.
The relatively limited fall in the volume and prices during the onset of the global financial crisis in
2008 is a reflection of the ubiquitous demand for rare earths.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 37
Rare Earths Market Overview
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
8. Rare Earth Prices
As a result of increasing demand through 2005 to 2008, the export quotas and taxes put in place by China, the increasing
enforcement of environmental standards in China and stockpiling by Japanese companies there was a steady increase
in prices over the period, but more importantly a distortion in prices. The distortion is caused by the price attached to
export quotas, which may be sold within China at US$1-2/kg REO. The natural tendency of rare earth processors is to
maximise their profit; hence, while the sale of terbium at US$650/kg may realise a profit of US$100-200/kg, the export
of cerium at US$3/kg, compared with
internal prices of US$1¼/kg has
limited appeal. As a result
the export sales price of cerium is currently US$4-6/kg.
Tables 19 & 20 show the steady increase in rare earth prices over the 2005 to 2008 period; a trend that is expected to
continue when global growth returns to the levels experienced before the global financial crisis.
Table 19: Comparison of Rare Earth Prices for 2005-09
Rare Earth Product
Rare Earth Price US$/kg FOB China1
2005
2006
2007
2008
YTD Aug 2009
Lanthanum Oxide
Cerium Oxide
Praseodymium Oxide
Neodymium Oxide
Samarium Oxide
Europium Oxide
Gadolinium Oxide
Terbium Oxide
Dysprosium Oxide
Yttrium Oxide
1.60
1.40
8.30
7.40
4.50
280
n/a
325
50
n/a
Source: metal pages©
Note: Figures have been rounded
1.80
1.50
13.60
14.80
4.50
240
n/a
460
70
4
3.10
2.50
28.00
29.00
4.50
300
10.50
555
85
7
7.75
4.35
27.00
27.00
4.50
475
9.75
650
110
15
6.20
4.30
14.25
14.25
4.50
455
6.80
355
100
15
Table 20: Japanese Prices of Rare Earth Metals, 2005-2009 (US$/kg cif Japan)
Rare Earth Metal
2005
2006
2007
2008
2009 Jan-Mar
Lanthanum
Cerium
Neodymium
Praseodymium
Samarium
Terbium
Dysprosium
4.10
6.20
11.40
13.30
12.20
426
61
4.80
6.50
22.30
21.50
12.80
624
99
6.50
7.40
40.10
39.00
14.10
743
119
12.90
10.00
37.20
35.30
21.80
878
153
12.70
9.50
18.00
17.50
21.00
600
141
SECTION 1 | 38
Section 2 | Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 1 | 39
Greenland Minerals and Energy Limited
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
CONTENTS
Contents
Corporate governance statement
Directors’ report
Auditors’ independence declaration
Independent auditor’s report
Director’s declaration
Income statement
Balance sheet
Statements of changes in equity
Cash flow statement
Notes to the financial statements
1 General information
2 Significant accounting policies
3 Critical accounting estimates and judgments
4 Segmented information
5 Revenue
6 Loss for year before tax
7
Income tax expense
8 Cash and equivalents
9 Trade and receivables
10 Other assets
11 Financial assets
12 Property plant and equipment
13 Capitalised exploration and evaluation expenditure
14 Trade and other payables
15 Provisions
16 Issued capital
17 Reserves
18 Dividends
19 Accumulated losses
20 Earnings per share
21 Prior period adjustments
22 Commitments for expenditure
23 Contingent liabilities
24 Jointly controlled operations
25 Subsidiaries
26 Acquisition of assets
27 Notes to cash flow statement
28 Share based payments
29 Financial instruments
30 Key management personnel compensation
31 Related party transactions
32 Key management personnel equity holdings
33 Remuneration of auditor
34 Subsequent events
Additional stock exchange information
Page
1
5
23
24
26
27
28
29
31
32
32
41
42
42
43
43
45
45
46
46
47
47
48
49
49
49
50
50
50
51
52
53
53
53
53
54
55
59
63
63
64
65
66
67
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Corporate Governance
Greenland Minerals and Energy Limited
Corporate Governance
CORPORATE GOVERNANCE
Principles of Best Practice Recommendations commentary
The Board of Directors is responsible for the overall strategy, governance and performance of Greenland
Minerals & Energy Limited. (hereafter GGG or the Company). The Company is an exploration Company
whose strategy is to add substantial shareholder value through the acquisition, exploration, development
and commercialisation of projects in Greenland with a focus on the Kvanefjeld project. The Board has
adopted a corporate governance framework which it considers to be suitable given the size, history and
strategy of the Company.
Principles of Best Practice Recommendations
In accordance with ASX Listing Rule 4.10, GGG is required to disclose the extent to which it has followed
the Principles of Best Practice Recommendations during the financial year. Where GGG has not followed
a recommendation, this has been identified and an explanation for the departure has been given.
Principle 1: Lay solid foundations for management and oversight
The Board has established a framework within the Group that:
· enables it to provide strategic guidance and effective supervision of management;
· clarifies the respective roles and responsibilities of Board members and senior executives;
· ensures a balance of authority so that no single individual has unfettered powers; and
·
identifies significant business risks and ensures that those risks are well managed.
The day-to-day management of the Group has been delegated to the Managing Director, Mr Roderick
McIllree.
The executives (whether or not a director) have clearly identified areas of responsibility and report directly
to an executive director or the Managing Director who monitors their role.
The Board has also adopted a Board Charter which details the functions and responsibilities of the Board
and those delegated to management. In addition, each executive director and senior executive has signed
an employment agreement
A copy of the Board Charter has been placed on the Company’s website.
Principle 2: Structure the Board to add value
The Board has been structured so that it has effective composition, size and commitment to adequately
discharge its responsibilities and duties. The names and qualifications of the Directors are stated in the
annual report along with the date of appointment. Each Director is entitled to receive independent
professional advice at the Company’s expense.
Mr Anthony Ho, Mr Michael Hutchinson, Mr Malcolm Mason and Mr Hank Schønwandt are independent
Directors who fulfill the independence criteria outlined in the guidelines. The majority of the board are
non-executive directors.
The Board believes that it is able to exercise independence and judgment and does possess the
necessary skills, expertise and experience required to effectively discharge their duties. The focus has
been on the ability of the Board to add value by effectively exercising independence and discharging their
duties, rather than on meeting the independence test in the guidelines.
The role of the Chairman was fulfilled by Mr Hank Schønwandt (to 25 November 2008), Mr Michael
Hutchinson (from 25 November 2008) and the Managing Director, Mr Rod McIllree filled the role of
Managing Director and Chief Executive Officer.
The board has convened an Audit and Risk Committee as well as a Remuneration Committee.
1
SECTION 2 | 1
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Corporate Governance
Greenland Minerals and Energy Limited
Corporate Governance
CORPORATE GOVERNANCE
The Board maintains the role of Nomination to itself as it considers the Company not appropriate in size to
justify this as a separate committee.
The executive director board members have full time, executive responsibility for the operations of the
Company.
The responsibilities are split into 3 sections:
· The Managing Directors role in allocating priorities and tasks to the executives of the Company,
leading the Company generally, raising capital as required and public relations at all levels.
· The exploration and development effort.
· Other corporate support.
The executive directors are responsible for exploration and development and other corporate support,
report on their activities to the Managing Director, who monitors their role and then reports to the board as
required. The board as a whole monitors the Managing Director’s performance.
Principle 3: Promote ethical and responsible decision-making
Ethical and responsible decision-making is promoted by the Board in a top-down approach.
The Board has adopted a Code of Conduct to guide the Directors, the Chairman, the Managing Director
and other key executives as to practices necessary to maintain confidence in the Company’s integrity and
to the responsibility and accountability of individuals for reporting and investigating reports of unethical
behaviour.
The Board recognises legal ethical and other obligations to all legitimate stakeholders and the requirement
to act in accordance with these obligations. The Company has formalised its policies accordingly.
The Board has also adopted a Securities Trading Policy, to guide investment decisions. The Company
has not adopted compliance standards and procedures to facilitate the implementation and assessment of
the Code of Conduct and Securities Trading Policy. Given the Company’s size, history and strategy it was
not considered appropriate to adopt these policies during the reporting period. The Company will largely
comply with these recommendations during future reporting periods.
The Company has formalised its policy accordingly.
A copy of the Copy of Conduct and Securities Trading Policy has been placed on the Company’s website.
Principle 4: Safeguard integrity in financial reporting
The integrity of the Company’s financial reporting is a critical aspect of GGG’s corporate governance and
structures have been implemented during the reporting period to verify and safeguard the integrity of the
Company’s financial reporting.
It is the policy of the Board that the Company’s financial statements be reviewed or audited, at a minimum,
each half year. The financial statements are reviewed by the Board which operates under formal terms of
reference. The Board Charter is placed on the website.
The Board has requested that the Managing director as the Chief Executive Officer and the Chief
Financial Officer state in writing that the financial statements present a true and fair view, in all material
respects, of the Company’s financial condition and operational results and that,
· The financial records have been properly maintained in accordance with s286 of the Corporations
Act 2001
· The financial statements are in accordance with the Corporations Act 2001, comply with relevant
Accounting Standards and Corporation Regulations 2001.
· The financial statements are founded on sound system of risk management, as outlined in
principle 7.
SECTION 2 | 2
2
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
Corporate Governance
CORPORATE GOVERNANCE
Principle 5: Make timely and balanced disclosure
The Board promotes timely and balanced disclosure of all material matters concerning the Company.
The Company has formalised its policy to promote a culture whereby all senior management understands
the processes in relation to the timely disclosure of information.
A copy of the Reporting Policy has been placed on the Company’s website.
Principle 6: Respect the rights of shareholders
The Board respects the rights of all shareholders and, to facilitate the effective exercise of those rights, the
Company is committed to effective communication with shareholders. This occurs by electronic ASX
releases to the market, through GGG e-list email communications (registration is available via the
Company’s website) and by the provision to shareholders of balanced and understandable information in
relation to corporate proposals.
Shareholders generally participate in shareholder meetings through the appointment of a proxy. The
Company’s external Auditor is invited to attend these meetings.
Principle 7: Recognise and manage risk
The Company recognises the importance of managing risk and has established systems to assess
monitor and manage risk based on the Company’s size, history and strategy. The exploration and
development of natural resources is a speculative activity that involves a high degree of financial risk.
The Company has formalised its policy to identify, monitor and manage risk. The Company as part of its
risk management, formally established an Audit and Risk Committee
The Company’s executives and senior management, through the Managing Director are responsible for
the identification of material risks to the business and the design and implementation of internal control
systems to manage the identified risks.
The Board has received from management, reports on the effectiveness of the company’s management of
its material business risks.
The Board has obtained a written confirmation from the Managing Director and the Chief Financial Officer
that the statement in relation to principle 4, that the financial reports are founded on a sound system of risk
management and internal compliance and control and the Company’s risk management and internal
compliance control systems are operating efficiently and effectively in all material respects.
The principle areas of risk for the company are in the areas of:
· Occupational health and safety and work related safety risks
· Environment risks
· Security of tenure over tenements
· Financial risk in the areas of maintaining sufficient funding for the continuation of operations and
risks related to fraud, misappropriation and errors.
The Company has implemented and maintains adequate policies to monitor these areas and to reduce
risk exposure.
Principle 8: Remunerate fairly and responsibly
The Board is committed to ensuring that the level and composition of remuneration is sufficient and
reasonable and that its relationship to corporate and individual performance is defined.
Executive Remuneration Policy
The Company remunerates its senior executives in a manner that is market competitive, consistent with
best practice and aligned to the interests of shareholders. Remuneration comprises a fixed salary,
determined from a market review, to reflect core performance requirements and expectations of the
relevant position and statutory superannuation where applicable.
SECTION 2 | 3
3
Director’s Report
Greenland Minerals and Energy Limited
Corporate Governance
CORPORATE GOVERNANCE
Non-Executive Remuneration Policy
Non-Executive Directors are paid a fixed fee out of the maximum aggregate amount which has been
approved by shareholders. Non-executive Directors are entitled to statutory superannuation where
applicable.
There are no schemes for retirement benefits, other than statutory superannuation, for any non-executive
Director.
A copy of the Code of Conduct has been placed on the Company’s website.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 2 | 4
4
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
The directors of Greenland Minerals and Energy Limited submit herewith the annual financial report for the
financial year ended 30 June 2009. In order to comply with the provisions of the Corporations Act 2001,
the directors report the following:
Directors
The names of directors in office at any time during or since the end of the year are:
Michael Hutchinson – appointed 25 November 2008
Roderick Claude McIllree
Simon Kenneth Cato
Anthony Ho
Malcolm Geoffrey Mason
Simon Alexander Stafford Michael – resigned 13 November 2008
Hans Kristian Vinding Schønwandt
Jeremy Sean Whybrow
Company Secretary
The following person held the position of Company secretary at the end of the financial year:
Mr Bruce Richard Acutt, B.Comm – Mr Acutt trained and worked as an accountant with major accounting
firms in the audit and resources sector. He has been associated with the mining and exploration sector for
over twenty years.
Principal Activities
The principal activity of the consolidated group during the financial year was mineral exploration and
project evaluation.
There were no significant changes in the nature of the consolidated group’s principal activities during the
financial year.
Operating Results
The net loss attributable to members of the consolidated group after providing for income tax amounted to
$4,008,712 (2008: loss $202,767,366)
Subsequent Events
The following subsequent events occurred after 30 June 2009;
(cid:1) Successful completion of a placement of 4 million shares at $0.25, raising $1,000,000,
less costs, as per the prospectus issued 31 July 2009.
(cid:1) The Company announced on 31 August 2009, it had finalised terms on the acquisition of
a 4% royalty applicable on net profits from the future production of metals on license
2005/28 in South Greenland. The Company currently holds a legal and beneficial interest
of 61%, in the joint venture with the right to move to 100%, when the Company deems it
most appropriate.
Acquisition of the 4% royalty will be subject to shareholders’ approval at an Extraordinary
Meeting, to be called in due course.
The Consideration will be payable in escrowed shares in the Company. This transaction
is a transaction that requires shareholder approval in accordance with listing rule 10.1 of
the Australian Securities Exchange Limited and section 611 of the Corporation Act 2001.
Share placements of 25 million shares at $0.20 completed on 15 May 2009 and of 4
million shares at $0.25 completed 31 July 2009, were initially made to fund the
acquisition. However, due to the consideration been settled in shares in the Company,
these funds will instead be used to fund the pre-feasibility study on Kvanefjeld.
5
SECTION 2 | 5
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
DIRECTORS’ REPORT
Subsequent Events (cont)
(cid:1) The Company has been served with writs by Westrip Holdings Limited (Westrip) and
Rimbal Pty Ltd, issued in the Supreme Court of Western Australia. The matter relates to
the dispute being taken by shareholders of Westrip as a derivative claim on behalf of
Westrip against the directors of Westrip.
The writs served on the Company, alleged breaches of confidentiality, misleading conduct
and breach of contract and were for unspecified damages and other relief. The Company,
through its solicitors, strongly denies the allegations and any wrongdoing and will
vigorously defend the action.
Future Developments
Disclosure of information regarding likely developments in the operations of the consolidated group in
future financial periods and the expected results of those operations is likely to result in unreasonable
prejudice to the consolidated group. Accordingly, this information has not been disclosed in this report.
Environmental Regulations
The consolidated group operates within the resources sector and conducts its business activities with
respect for the environment while continuing to meet the expectations of shareholders, customers,
employees and suppliers. The consolidated group’s exploration activities are currently regulated by
significant environmental regulation under laws of Greenland and the Commonwealth and states and
territories of Australia. The consolidated group aims to ensure that the highest standard of environmental
care is achieved, and that it complies with all relevant environmental legislation.
The directors are not aware of any particular or significant environmental issues, which have been raised
in relation to the consolidated group’s operations during the year covered by this report.
Dividends
In respect of the financial year ended 30 June 2009, no dividends have been paid or declared since the
start of the financial year and the directors do not recommend the payment of a dividend in respect of the
financial year.
Shares
During the year ended 30 June 2009, ordinary shares of Greenland Minerals and Energy Limited were
issued as detailed in Note 16 to the financial report.
The total number of ordinary shares on issue at 30 June 2009 was 218,508,543 (2008: 193,008,540).
The total number of shares issued during the current financial year was 25,500,003.
There is no other class of shares issued by the Company and the Company has no un-issued shares.
Details of shares issued during the year or since the end of the financial year as a result of exercised
options are:
Issuing entity
Greenland Minerals
and Energy limited
Number of
shares issued
Class of share
Amount paid for
shares
Amount unpaid
no shares
15
Ordinary shares
$0.20
-
SECTION 2 | 6
6
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
Options
During the year ended 30 June 2009 the options of Greenland Minerals and Energy Limited were issued
as detailed in Note 17 to the financial report.
Details of unissued shares or interests under options at the date of this report are:
Issuing entity
Greenland Minerals
and Energy Limited
Greenland Minerals
and Energy Limited
Greenland Minerals
and Energy Limited
Greenland Minerals
and Energy Limited
Greenland Minerals
and Energy Limited
Number of shares
under option
Class of shares
Exercise price of
option
Expiry date of
option
168,632,047
Ordinary shares
$0.20
30 June 2011
750,000
Ordinary shares
$0.10
30 June 2013
5,750,000
Ordinary shares
$0.50
30 June 2011
5,750,000
Ordinary shares
$1.00
30 June 2011
1,888,840
Ordinary shares
$1.50
30 June 2011
A total of 9,250,000 were granted during the current financial year.
The holders of these options do not have the right, by virtue of being holders, to participate in any share
issue or interest issue of the company or of any other body corporate.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 2 | 7
7
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
DIRECTORS’ REPORT
Review of Operations
The Company is a mineral exploration and development company actively exploring in southern
Greenland. The Company is primarily focused on exploring its license area over the northern Ilimaussaq
Intrusive Complex; a unique geological entity with extraordinary resource potential. A large JORC-
compliant multi-element resource (rare earth elements (REE), zinc, uranium and sodium fluoride) has
been rapidly defined at Kvanefjeld plateau, which clearly highlights the world-class resource potential of
the Ilimaussaq Complex. A pre-feasibility study is currently underway, with a focus on defining a process
route to extract the elements of interest from these unique multi-element ores in an economically viable
and environmentally responsible way.
The Company’s vision is one of the big picture, to be a significant producer of commodities of fundamental
strategic importance and value to tomorrows world. Rare earth elements are now recognised as being
critical to global manufacturing of many emerging consumer items. However, China has successfully
monopolised global REE supply, raising serious concerns to non-Chinese consumers over the long-term
stability of REE supply and pricing. Electricity from nuclear power continues to gain acceptance
internationally as a clean base-load energy supply of the future. This has been emphasised due to rapidly
increasing power demands, concerns over carbon-based energy sources, greenhouse gas emissions and
global warming. As the nuclear renaissance continues to gain momentum, the strategic importance of
uranium resources will continue to emerge.
The northern Ilimaussaq Complex offers the potential for multi-element resources of unparalleled scale;
resources that could restore balance to the global supply of rare earth elements, and provide energy
security to Europe for many decades.
Exploration activities
In June 2009, the Company commenced a field program in Greenland that was primarily focused on
generating information that will be utilised in the various studies relating to the broader feasibility process.
This includes sterilisation drilling, geotechnical drilling, as well as drilling for metallurgical samples. The
metallurgical drill holes are designed to sample various ore-types throughout the resource. This material
will be used in ongoing metallurgical testwork.
In addition, data collection for environmental studies continues, and builds on data collected during the
previous two field seasons. Collectively, this data forms the basis of an Environmental Baseline Study.
Whilst actively operating in Greenland, the Company conducts community meetings to update community
representatives on the current status of the Company’s exploration activities in southern Greenland.
These community meetings provide an excellent forum for the community to raise any queries and
concerns, which can then be discussed by all stakeholders.
Updated Resource Statement
Late in the June 2009 quarter, the Company released an updated resource statement for the Kvanefjeld
multi-element project. Kvanefjeld is the first defined resource within the Company’s exploration license
area over the northern Ilimaussaq Complex in southern Greenland. The resource update was based on
geochemical assay data that was generated from the substantial diamond drill program conducted during
the 2008 field season in Greenland. The 2008 drill program had aimed to improve the resource category,
as well as to expand the overall resource base. In consideration of these aims, the 2008 drill program and
resulting resource upgrade can be regarded as extremely successful. Following the extensive exercise of
data validation for the large multi-element dataset, a new resource estimate was generated by consultants
Hellman and Schofield Pty Ltd. The updated resource statement confirms the size and quality of the multi-
element resource at Kvanefjeld, with 79% of all rare earth oxide (REO), uranium and zinc resources now
in the ‘indicated’ category. The new resource statement contains 4.79 Mt REO, 0.9 Mt zinc and 283 Mlbs
U3O8. Significantly, Kvanefjeld represents just a small region within the Company’s exploration license that
covers the highly-prospective northern portion of the Ilimaussaq Intrusive Complex (Table. 1).
SECTION 2 | 8
8
Director’s Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
Table 1 - Kvanefjeld Multi-Element Resource Statement, June, 2009
At U3O8%
Cut-off grades1
Tonnes
(million)
U3O8%2
U3O8 lb/t
TREO%3
Zn%
0.015
0.020
0.025
365
92
457
276
63
339
207
43
250
0.028
0.027
0.028
0.032
0.031
0.032
0.035
0.036
0.035
0.62
0.59
0.62
0.70
0.69
0.70
0.77
0.78
0.77
1.06
1.12
1.07
1.13
1.21
1.14
1.20
1.31
1.22
0.22
0.22
0.22
0.23
0.24
0.23
0.23
0.25
0.24
Resource
category
Indicated
Inferred
TOTAL
Indicated
Inferred
TOTAL
Indicated
Inferred
TOTAL
1. There is greater coverage of assays for uranium than other elements owing to historic spectral
assays. U3O8 has therefore been used to define the cut-off grades to maximise the confidence in
the resource calculations.
2. Additional decimal places do not imply an added level of precision.
3. Total Rare Earth Oxide (TREO) refers to the rare earth elements in the Lanthanide series plus
yttrium.
Note: Figures quoted may not sum due to rounding.
Update on Geological Framework and Resource Potential
In the geological world alkaline magmatism is known to be associated with some of the world’s most
prolific mineral deposits. Alkaline intrusions host a variety of mineral deposit types that include phosphate
deposits, specialty metal deposits inclusive of REEs, niobium, tantalum, and titanium, and some alkaline
complexes are also associated with prolific copper and gold deposits.
The Ilimaussaq Intrusive Complex is the world’s type-example of a particularly unusual group of alkaline
rocks that are referred to as agpaitic1 nepheline2 syenites3. Similar alkaline igneous complexes include the
Khibina Complex in Sweden that hosts the world’s largest apatite deposits (phosphate ores), and the
Lovozero Complex in Russia (Kola Peninsula) that hosts vast loparite deposits that are rich in niobium and
titanium. The Ilimaussaq Complex is unique, in that it comprises almost purely agpaitic rocks. For these
reasons, it has been the subject of extensive studies by scientists worldwide. Henning Sørensen, one of
the world’s most highly regarded geoscientists, devoted a significant portion of his career to understanding
the Ilimaussaq Complex and its economic significance. In a paper published in 1992 Sørensen theorised
that agpaitic rocks could contain vast resources of rare elements that could be exploited in a multi-element
capacity. As the work programs of the Company progress, the results are encouraging and indicate that
Sørensen’s theory may be correct.
1 The term agpaitic is applied to nepheline syenites that contain unusual minerals such as eudialyte and rinkite, rather than the common zirconium- and titanium-
bearing minerals such as zircon, titanite and ilmenite. Agpaitic rocks are enriched in rare elements such as REEs, niobium, titanium, yttrium, tantalum, uranium,
beryllium and fluorine.
2 Nepheline, also called nephelite is a feldspathoid: a silica-undersaturated aluminosilicate, Na3KAl4Si4O16, that occurs in intrusive and volcanic rocks with low silica.
3 Syenite is a coarse-grained intrusive igneous rock which is relatively depleted in silica, and enriched in the alkali elements sodium and potassium. Igneous rocks are
those that formed by the crystallisation of magmas.
9
SECTION 2 | 9
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
Figure 1. Schematic geological map of the northern Ilimaussaq Intrusive Complex (after Anderson, 1964).
Black lujavrite is host to REE, uranium, zinc and sodium fluoride mineralisation. A JORC-compliant 457Mt
resource has been defined at Kvanefjeld (highlighted by stippled red line). Targets K2 to K8 were defined
on the basis of radiometric surveys, and geological mapping. Black lujavrite underlies naujaite through
much of the northern part of the complex.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Ongoing geological studies by the Company have built on the existing knowledge base to improve the
understanding of ore-genesis within the Ilimaussaq Intrusive Complex. The northern half of the complex
preserves the uppermost levels, which are the most prospective areas for bulk-tonnage, multi-element
resources. The southern half of the complex is more deeply eroded, exposing basal units referred to as
kakortokites that contain the zirconium-rich mineral eudialyte. Black lujavrite, the dominant host to REEs,
uranium, zinc and sodium fluoride mineralisation at Kvanefjeld, is now known to be widespread through
the northern part of the complex. Whilst black lujavrites are mineralised throughout, the grades of REEs,
uranium and zinc are highest in the uppermost portions of the black lujavrite where they have been
concentrated by magmatic processes. The Company is working to identify broad domal upwellings of
black lujavrite where new bulk-tonnage ore zones are likely to occur. As the geological understanding
improves, the Company is increasingly confident of the immense resource potential of Ilimaussaq
Complex. In this sense, Kvanefjeld can be considered as the first multi-element resource defined within
the broader Ilimaussaq ore field.
Update on the Pre-Feasibility Study
Following the two highly successful exploration campaigns and rapid resource growth, the Company launched
a pre-feasibility study on the Kvanefjeld multi-element project in late 2008. The study is scheduled for
completion in late 2009. The recently upgraded resource statement confirms the world class potential of
Kvanefjeld, and emphasises the importance of the pre-feasibility process to the evolution of the project. Given
the unique nature of the geology and the multi-element ores, it is a critical milestone for the Company to
develop a process route that can extract the elements of interest in an economically viable manner.
The mining study component is being conducted by Coffey Mining Pty Ltd and covers the mine design and ore
scheduling, geotechnical issues, hydrogeology and tailings management.
SECTION 2 | 10
10
Director’s Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
The engineering study component is being conducted by GRD Minproc and includes the process design,
engineering design and capital and operating costs of a milling and processing plant including a rare earth
refinery and uranium recovery plant. Environmental studies are also underway with Coffey Natural Systems
preparing a strategy for the Environmental and Social Impact Assessment. Orbicon, a Danish based
environmental sciences group, is undertaking field the work and base-line monitoring.
Previous work by the Danish Atomic Energy Agency (RISO) identified a viable way to extract uranium.
However, given the emerging economic and strategic significance of specialty metals, such as rare earths, the
Company is taking a multi-element approach with other process routes being evaluated to maximise specialty
metal recoveries and the economic viability of the project.
During the year, metallurgical testwork continued, and the work programs were implemented in Greenland to
generate data pertinent to the feasibility process. ANSTO (Australian Nuclear Services and Technology
Organisation) have commenced work on process development specifically for REE metallurgical behaviour
and recovery. The results of ANSTO’s current work program will feed into the broader process development
and plant design that is being conducted by GRD Minproc.
Changes in State of Affairs
The following significant changes in the state of affairs of the Company occurred during the financial year.
(i)
Completion of the sale of the Company’s Three Sisters project in Queensland. The sale was
completed on the 19 December 2008 for the consideration of $130,000 in cash proceeds and
1,200,000 shares in Riviera Minerals Limited (the purchaser).
Other than the above, there was no significant change in the state of affairs of the consolidated group.
Financial Position
The net assets of the consolidated group were $48,109,043 at year end.
The consolidated group was in a strong financial position at the end of the financial year with sufficient
financial resources to undertake its objectives. The consolidated group’s objective is to locate new mineral
discoveries that significantly upgrade the value of its projects and consider other opportunities in
Greenland’s resources sector.
The board adopted AASB-2 Share Based Payments on the accounting of the acquisition of Chahood
Capital Limited and the joint venture interest in the Kvanefjeld project, for the financial year ended 30 June
2008. The transactions were previously recorded pursuant to AASB-3 Business Combinations. The
required adjustments are summarised in Note 21 of the financial statements for the year ended 30 June
2009. The adjustments have no impact on cash flow.
Information on Directors
Michael Hutchinson
Appointed
Special responsibilities
-
-
-
Non-Executive Chairman
25 November 2008
Member of the Remuneration Committee (Chairman)
Member of the Audit Committee
Qualifications
- BSc
11
SECTION 2 | 11
Director’s Report
Michael Hutchinson (cont)
Experience
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
- Mr Hutchinson has more than 30 years experience in non-ferrous metal
trading. He is a long standing Director of LME Holdings Limited and The
London Metal Exchange Limited, the world’s largest market in options and
futures contracts on base and other metals.
He is currently non-Executive Chairman of RBS Sempra Metals Limited
('RBS Sempra'), having previously served as its Chairman and Chief
Executive Officer. RBS Sempra
the successor company of
Metallgesellschaft Limited, which became MG plc and floated on the
London Stock Exchange in September 1999. Mr Hutchinson is also
Chairman of Wogen plc a trader of off exchange metals that sources
metals worldwide for industrial end users.
is
Interest in shares & options
Directorships held in other listed
entities
- 4,000,000 unlisted options
- Non-executive Chairman of;
RBS Sempra Metals Limited – since January 2005
Wogen plc – since July 2008
Non-executive Director of;
LME Holdings Limited – since April 2005
Mecom Group plc – since May 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Roderick Claude McIllree
Appointed
Special responsibilities
Qualifications
Managing Director
23 March 2007
Member of the Remuneration Committee
-
-
-
- B.Sc. (Mineral Exploration and Mining Geology), G.Cert. (Mineral
Economics) MAusIMM.
Experience
Interest in shares & options
- Mr McIllree graduated from Curtin University of Technology in 1996 with a
Bachelor of Science degree (Mineral Exploration and Mining Geology) and
commenced a career in the mining industry where he worked for major
mining companies both domestically and
internationally, gaining
experience in mineral exploration and in all facets of mining.
Mr McIllree moved to the finance sector in 2000 and worked as an analyst
and advisor for broking houses active in capital markets. Mr McIllree has
experience
initiated several
successful mining companies with assets both domestically and overseas.
He was instrumental in sourcing the Kvanefjeld Project for the Company.
- 3,361,095 Ordinary Shares of Greenland Minerals and Energy Limited,
international capital raisings having
in
2,522,000 listed options and 6,600,000 unlisted unvested options.
Directorships held in other listed
entities
- Executive director of;
Convergent Minerals Limited – since July 2006
Simon Kenneth Cato
Appointed
Qualifications
Experience
Executive Director
21 February 2006
-
-
- B.A.
- Mr Cato has had over 25 years capital markets experience in broking,
regulatory roles and as director of listed companies. He initially was
employed by the ASX in Sydney and in Perth.
During the last 19 years he has been an executive director and/or
responsible executive of 3 stockbroking firms and in those roles he has
been involved in many aspects of broking including management issues
such as credit control and reporting to regulatory bodies in the securities
industry. As a broker he has also been involved in the underwriting of a
number of initial public offers and has been through the process of an
initial public offer listing in a dual role of broker and director. Currently he
holds a number of executive and non executive roles with listed
companies in Australia.
Interest in shares & options
- 920,100 Ordinary Shares in Greenland Minerals and Energy Limited,
800,100 options and 6,600,000 unvested unlisted options.
SECTION 2 | 12
12
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Simon Cato (cont)
Directorships held in other listed
entities
- Current Chairman of;
Convergent Minerals Limited - since July 2006.
Advanced Share Registry Limited - since August 2007.
Director of:
Bentley International Limited – since February 2004
Queste Communications Limited – since February 2008
Former directorships in other-
listed entities in the last 3 years
Sofcom Limited – January 2004 to March 2008
Scarborough Equities Limited – November 2004 to March 2009
Anthony Ho
Appointed
Special responsibilities
Qualifications
Experience
-
-
-
Non-Executive Director
9 August 2007
Member of the Audit Committee (Chairman)
Member of the Remuneration Committee
- B.Comm, CA, FAICD, FCIS
- Mr Ho is an experienced Company director having held executive
directorship and chief financial officer roles with a number of publicly listed
companies. Mr Ho was executive director of Arthur Yates & Co Limited,
retiring from that position in April 2002. His corporate and governance
experience include being chief financial officer/finance director of M.S.
McLeod Holdings Limited, Galore Group Limited, the Edward H O'Brien
group of companies and Volante Group Limited.
Prior to joining commerce, Mr Ho was a partner of Cox Johnston & Co,
Chartered Accountants, which has since merged with Ernst & Young.
Mr Ho holds a Bachelor of Commerce degree from the University of New
South Wales and is a member of the Institute of Chartered Accountants in
Australia and a fellow of both the Chartered Institute of Company
Secretaries Australia and the Australian Institute of Company Directors.
Interest in shares & options
Directorships held in other listed
entities
- 250,000 Ordinary Shares of Greenland Minerals and Energy Limited.
- Non-executive Chairman;
Esperance Minerals NL – since July 2008; member of Audit Committee
Director of;
Dolomatrix International Limited – since April 2007; Chairman of Audit
Committee.
Apollo Minerals Limited – since July 2009; Chairman of Audit Committee.
Former directorships in other-
listed entities in the last 3 years
- Brazin limited – September 1997 to January 2007
Malcolm Geoffrey Mason
Appointed
Special responsibilities
Qualifications
Non-Executive Director
9 August 2007
Member of the Audit Committee
-
-
-
- B.Sc. (Hons), MAus IMM
SECTION 2 | 13
13
Director’s Report
Malcolm Mason (cont)
Experience
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
Directors’ Report
DIRECTORS’ REPORT
from acquiring projects and prospects
- Mr Mason has had more than 40 years experience in the Australian and
international exploration and mining industries. His experience covers
gold, base metals and non-metallic minerals.
Since 1995 he has specialised in uranium. As a principal he has
investigated many known deposits in Australia and overseas. His depth of
through
experience extends
application or negotiation to mounting intensive and extensive exploration
into evaluation programmes and completing feasibility studies.
In 1996, Mr Mason formed Acclaim Uranium NL, which successfully listed
on the ASX. As Managing Director he implemented his “uranium only”
strategy and acquired an extensive portfolio of Australian uranium
projects. Among the projects were Millipede/Abercromby, Nowthanna and
Lake Maitland calcrete deposits.
In 1998, Mr Mason helped identify the Langer Heinrich deposit for Acclaim
Uranium NL which then drilled and completed a feasibility study.
In early 2005 he joined Redport Limited as Strategic Adviser, assisted the
Company to acquire the Lake Maitland uranium deposit, and was involved
in its exploration and evaluation.
Interest in shares & options
- 610,000 Ordinary Shares of Greenland Minerals and Energy Limited,
180,000 options and 3,500,000 unvested options.
Directorships held in other listed
entities
-
Nil
Hans Kristian Vinding
Schønwandt
Appointed
Qualifications
Experience
Non-Executive Director
9 August 2007
-
-
- PhD (Economic Geology)
- Dr Schønwandt has been involved in mineral exploration and geological
mapping in Greenland since 1963. He has contributed to the mining
society’s attention to Greenland’s mineral potential through numerous
international publications and presentations at mining conferences.
Interest in shares & options
- 1,500,000 Ordinary Shares of Greenland Minerals and Energy Limited and
1,000,000 listed options
Directorships held in other listed
entities
Directorships held in other listed
entities
- Nil
- Director of;
London Mining plc – since January 2006
Simon Alexander Stafford
Michael
Appointed
Qualifications
Experience
-
-
Non-Executive Director
9 August 2007 – resigned 13 November 2008
- LLB (Hons)
- Mr Stafford-Michael practised as a barrister in the United Kingdom from
1982 to 2005. He developed a commercial practice, with particular
emphasis on financial services, banking, tax, corporate and commercial
and insurance and reinsurance.
Mr Stafford-Michael had a substantial advisory practice in the United
Kingdom concerning regulation and compliance issues arising under the
Banking, Financial Services and Insurance (Companies) Acts and the
rules and regulations of the securities markets; compliance with the Money
Laundering Regulations; the conduct of fraud and money laundering
investigations; and the duties and liabilities of Company directors and their
professional advisers under the Companies and Insolvency Acts.
His corporate clients included a substantial number of major oil and mining
corporations, particularly in connection with insurance claims predicated
on environmental risks.
SECTION 2 | 14
14
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
Simon Stafford Michael (cont)
Interest in shares & options
Directorships held in other
entities
- 1,000,000 Ordinary Shares of Greenland Minerals and Energy Limited.
- Nil
DIRECTORS’ REPORT
Jeremy Sean Whybrow
Appointed
Qualifications
Exploration Director
21 February 2006
-
-
- B.Sc. (Mineral Exploration and Mining Geology), G.Cert(Minerals
Economics), M.Aus.I.M.M
Experience
- Mr Whybrow has had over 12 years experience in the mining industry both
domestically and internationally.
Mr Whybrow has worked for companies such as Sons of Gwalia Ltd,
PacMin Ltd, Teck Australia Ltd, Mount Edon Gold Mines Ltd and Croesus
Mining NL.
the operational
environment and includes significant exposure to exploration and mining
operations, project evaluation and feasibility studies.
Previously, Mr Whybrow has worked internationally in China, Africa and
the Philippines as well as numerous localities in Australia.
His experience has been mainly
in
Interest in shares & options
- 900,100 Ordinary Shares of Greenland Minerals and Energy Limited,
710,100 listed options and 6,600,000 unvested unlisted options.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Directorships held in other listed
entities
- Director of:
Convergent Minerals Limited. – since July 2006
Remuneration Report – Audited
This report details the nature and amount of remuneration for each director of Greenland Minerals and
Energy Limited and senior management receiving the highest remuneration.
Director and senior management details
The following persons acted as directors during or since the end of the financial year:
Roderick Claude McIllree, Managing Director
Simon Kenneth Cato, Executive Director
Jeremy Sean Whybrow, Exploration Director
Michael Hutchinson, Non-Executive Chairman – appointed 25 November 2008
Anthony Ho, Non-Executive Director
Malcolm Geoffrey Mason, Non-Executive Director
Simon Alexander Stafford Michael, Non-Executive Director – resigned 13 November 2008
Hans Kristian Vinding Schønwandt, Non-Executive Director (non-executive chairman to 25
November 2008)
The term ‘senior management’ is used in this remuneration report to refer to the following persons.
Except as noted, the named persons held their current position for the whole of the financial year and
since the end of the financial year:
Bruce Richard Acutt, Company Secretary
John Mair, General Manager – appointed 1 July 2008
Shaun Bunn, Project Manager – appointed 30 July 2008
SECTION 2 | 15
15
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Remuneration report – audit (cont)
DIRECTORS’ REPORT
Remuneration Policy
The remuneration policy of Greenland Minerals and Energy Limited has been designed to align director
and senior management 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 consolidated group’s financial results. The board of Greenland Minerals and Energy Limited
believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best
senior management and directors to run and manage the consolidated group, as well as create alignment
of interests between directors, senior management and shareholders.
The board’s policy for determining the nature and amount of remuneration for board members and senior
executives of the consolidated group is as follows:
All senior management receive a base salary (which is based on factors such as length of service and
experience) and superannuation.
The executive directors and senior management receive a superannuation guarantee contribution
required by the government, which is currently 9% and do not receive any other retirement benefits.
All remuneration paid to directors and senior management is valued at the cost to the Company and
expensed. Shares issued to directors and senior management at market price of those shares. Options
are valued using the Black-Scholes methodology.
The board policy is to remunerate non-executive directors with a base fee and, for special exertion, at
market rates for time, commitment and responsibilities. The board as a whole, fulfilling the role of the
remuneration committee determines payments to the non-executive directors and reviews their
remuneration annually, based on market practice, duties and accountability. 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. The current shareholder approved cap on these fees is $400,000. Fees for non-
executive directors are not linked to the performance of the Company. However, to align directors’
interests with shareholder interests, the directors are encouraged to hold shares in the Company.
Details of Remuneration
The remuneration for the directors and senior management of the entity receiving the highest
remuneration during the year was as follows:
2009
Executive Directors
Simon Kenneth Cato
Jeremy Sean Whybrow
Roderick Claude McIllree
Non-executive Directors
Simon Alexander Stafford-
Michael (i)
Anthony Ho
Hans Kristian Vinding
Schønwandt (ii)
Malcolm Geoffrey Mason
Michael Hutchinson
Senior Management
Bruce Acutt
John Mair
Shaun Bunn
Total
SECTION 2 | 16
Short-term
employee benefits
Share based payments
Post-
employment
Superannuation
Salary
$
Fees
$
Shares
$
Options
$
$
Total
$
75,000
160,000
162,000
40,000
50,000
50,000
-
-
-
-
-
70,000 (1,228,334)
-
65,000
-
-
-
-
-
119,006
150,375
-
-
210,000
299,026
1,175,407
40,000
40,000
37,453
-
22,000
961,667
-
-
-
-
784,885
629,800
-
-
414,453
-
(266,667)
190,893
1,605,578
10,350
18,900
20,700
125,350
228,900
232,700
- (1,158,334)
70,850
5,850
- 1,120,673
975,260
-
667,253
-
-
18,900
-
22,000
228,900
489,919
74,700 3,003,471
16
Director’s Report
Remuneration report – audit (cont)
DIRECTORS’ REPORT
Greenland Minerals and Energy Limited
Directors’ Report
Short-term
employee benefits
Share based payments
Post-
employment
Superannuation
Salary
$
Fees
$
Shares
$
Options
$
$
Total
$
64,052
197,600
199,990
40,000
-
-
8,420,171
8,420,171
8,420,171
7,650 8,531,873
9,450 8,627,221
10,350 8,630,511
-
-
33,980 3,600,834
-
40,678
-
-
- 3,634,814
44,339
3,661
171,500
157,527
40,000 3,600,834
40,000
-
3,122,465
- 3,812,334
- 3,319,992
-
790,669
26,000
-
220,658 7,201,668 28,382,978
-
-
26,000
31,111 36,627,084
2008
Executive Directors
Simon Kenneth Cato
Jeremy Sean Whybrow
Roderick Claude McIllree
Non-executive Directors
Simon Alexander Stafford-
Michael
Anthony Ho
Hans Kristian Vinding
Schønwandt
Malcolm Geoffrey Mason
Senior Management
Bruce Acutt
Total
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
(i)
(ii)
Simon Stafford-Michael resigned as a Director effective 13 November 2008. The reversal of share
based payments of $1,228,334 represents the amount recognised as remuneration in the prior
year for shares which had not vested as at the date of resignation and were therefore forfeited.
During the current financial year Mr Hans Kristian Schønwandt was issued 500,000 shares and
granted 1,500,000 options (vesting immediately) as approved at a shareholders’ meeting held on
25 November 2008. The purpose of the issue of the shares and options was for consideration for
the cancellation of all share milestones under a director service agreement entered into in the
prior year that could have potentially lead to the issue of up to 2,000,000 shares to Mr
Schønwandt subject to vesting conditions. At the date of alteration, Mr Hans Kristian Schønwandt
was entitled to 500,000 shares for each 12 months service (up to 1,500,000 shares) and
1,000,000 shares if the market captalisation of the Company reached $150 million and 1,000,000
shares if the market capitalisation of the Company reached $200 million. The total maximum
number of shares that could have been issued under the arrangement was 3,000,000. The
cancellation has been accounted for as an acceleration of the vesting conditions with an amount
of $962 thousand recognised in the current financial year. This amount represents the total
remaining fair value (including current year vesting expense) as determined at the original grant
date. The market price of ordinary shares of the Company on the date of alteration was $0.27 and
the market price of listed options was $0.15. The fair value of the original share based payment
arrangement immediately before alteration was $837,500. The total fair value of the replacement
share based payment arrangement was $295,000. In accordance with AASB 2 – Share Based
Payments, no additional amount has been brought to account for the replacement shares and
options as it has been determined that the fair value of these shares and options is less than the
net fair value of the cancelled equity instrument as determined at the date of cancellation.
No director or senior management person appointed during the period received a payment as part of his
or her consideration for agreeing to hold the position.
Key terms of employment contracts
Michael Hutchinson, Non Executive Chairman
(cid:1) Director fee excluding superannuation for the year ended 30 June 2009 of £50,000
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the performance
of his duties including relating to travel, entertainment, accommodation, meals and telephone.
(cid:1) No fixed term.
SECTION 2 | 17
17
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Remuneration report – audit (cont)
Roderick McIllree, Managing Director
DIRECTORS’ REPORT
(cid:1) Term and type of contract – service agreement subject to annual review.
(cid:1) Base salary of $162,000 per annum paid monthly in arrears.
(cid:1) Entitled to receive a separate director’s fee of $50,000 per annum.
(cid:1) Superannuation at 9% is payable on the base salary and directors fee.
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the performance
of their duties including relating to travel, entertainment, accommodation, meals and telephone.
(cid:1) Either the Company or the director may terminate their engagement without cause by giving the
other party three months written notice.
(cid:1) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties.
Jeremy Whybrow, Exploration Director
(cid:1) Term and type of contract – service agreement subject to annual review.
(cid:1) Base salary of $150,000 per annum paid monthly in arrears.
(cid:1) Entitled to receive a separate director’s fee of $50,000 per annum.
(cid:1) Superannuation at 9% is payable on the base salary and directors fee.
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the performance
of his duties including relating to travel, entertainment, accommodation, meals and telephone.
(cid:1) Either the Company or the director may terminate their engagement without cause by giving the
other party three months written notice.
(cid:1) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties.
Simon Cato, Executive Director
(cid:1) Term and type of contract – service agreement limited to a maximum of 80 hours per month
subject to annual review.
(cid:1) Base salary of $80,000 per annum paid monthly in arrears.
(cid:1) Entitled to receive a separate director’s fee of $40,000 per annum.
(cid:1) Superannuation at 9% is payable on the base salary and directors fee
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the performance
of his duties including relating to travel, entertainment, accommodation, meals and telephone.
(cid:1) Either the Company or the director may terminate their engagement without cause by giving the
other party three months written notice.
(cid:1) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties.
Anthony Ho, Non-Executive Director
(cid:1) No fixed term.
(cid:1) $40,000 per annum.
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the performance
of his duties including relating to travel, entertainment, accommodation, meals and telephone.
Malcolm Mason, Non-executive Director
(cid:1) No fixed term.
(cid:1) $40,000 per annum.
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the
performance of his duties including relating to travel, entertainment, accommodation, meals
and telephone.
Hank Schønwandt, Non-executive Director
(cid:1) No fixed term.
(cid:1) $40,000 per annum.
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the
performance of his duties including relating to travel, entertainment, accommodation, meals
and telephone.
(cid:1) The company issued 500,000 shares and 1,000,000 options with an exercise price of $0.20
and an expiry date of 30 June 2011 in satisfaction of outstanding obligations regarding
contract.
SECTION 2 | 18
18
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
Remuneration report – audit (cont)
DIRECTORS’ REPORT
Simon Stafford-Michael, Non Executive Director – Resigned 13 November 2008
(cid:1) Term of contract – service agreement for 3 years.
(cid:1) Director fee excluding superannuation for the year ended 30 June 2008 of $30,000.
(cid:1) Entitled to a living allowance and a daily rate for performing and part of their services outside
the country’s residence of £600 per day.
John Mair, General Manager
(cid:1) Term and type of contract – service agreement subject to annual review.
(cid:1) Base salary of $200,000 per annum paid monthly in arrears. Superannuation at 9% is payable
on the base salary.
(cid:1) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the
performance of his duties including relating to travel, entertainment, accommodation, meals
and telephone.
(cid:1) Either the Company or the director may terminate his engagement without cause by giving the
other party three months written notice.
(cid:1) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties.
Shaun Bunn, Project Manager
(cid:1) Term of contract – consultancy service agreement with Shaun Bunn & Associates Pty Limited,
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
engagement is for a minimum term of 36 months.
(cid:1) The Company may only terminate the agreement, during the minimum term period term upon
limited events akin to poor performance, misconduct or incapacity without cause giving Shaun
Bunn & Associates Pty Limited 12 months notice
(cid:1) Shaun Bunn & Associates Pty Limited will be paid fee of $30,000 per month
(cid:1) Shaun Bunn & Associates Pty Limited will be reimbursed for all out of pocket expenses
necessarily incurred in the performance of the services including reasonable expenses
relating to travel, entertainment, accommodation, meals and telephone.
(cid:1) The Company has issued 750,000 incentive options with an exercise price of 10 cents and an
expiry date of 30 June 2013. A second tranche of 750,000 options with an exercise price of 25
cents will be issued on commencement of a feasibility study in relation to the Kvanefjeld
project.
Share based payments granted as compensation for the current financial year
The Company issued 500,000 shares valued at $135 thousand, to Mr Hans Kristian Schønwandt which
was approved at a shareholders’ meeting held on 25 November 2008. The fair value of the shares issued
is based on the trading price of the company’s shares on the ASX, of $0.27 on the grant date of 25
November 2008. The issue of these shares represents consideration for the cancellation of a previous
equity instrument which was subject to vesting conditions.
There were no options exercised by directors or senior management during the financial year ended 30
June 2009. No options issued to directors or senior management lapsed during the year.
During the financial year, the following share-based payment arrangements were in existence
Options series
3
4
9
10
13
14
Grant date Expiry date
30/06/2011
30/06/2011
30/06/2011
30/06/2013
30/06/2011
30/06/2011
31/07/07
31/07/07
25/11/08
25/11/08
25/06/09
25/06/09
Grant date
fair value
25,260,513
3,827,350
240,000 (1)
190,893
371,200
258,600
Vesting date
(i)
(ii)
25/11/08
25/11/08
25/06/09
25/06/09
(1)
This amount includes $160 thousand representing the fair value of options granted to Mr Hans
Kristian Schønwandt as a replacement equity instrument upon cancellation of equity
instruments previously granted under a director service agreement. The fair value of the
replacement equity instrument has not been brought to account or included in Mr
Schønwandt’s remuneration for the year as it has been determined that the fair value is less
than the net fair value of the original cancelled equity instrument as determined at the date of
cancellation.
SECTION 2 | 19
19
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Remuneration report – audit (cont)
DIRECTORS’ REPORT
(i) The following vesting conditions are attached to the options issued.
Tranche Number of options
1
2,200,000
2
3
2,200,000
2,200,000
Vesting hurdle
The volume weighted average share price on the ASX of the
company’s fully paid shares is 50 cents or more for 20
consecutive trading days
The volume weighted average share price on the ASX of the
company’s fully paid shares is $1.00 or more for 20
consecutive trading days
The volume weighted average share price on the ASX of the
company’s fully paid shares is $1.50 or more for 20
consecutive trading days
(ii) The following vesting conditions were attached to the options issued.
Tranche Number of options
1
2,000,000
2
1,000,000
Vesting hurdle
Mr Mason continues to serve as a director of the company for
12 consecutive months and makes himself available to provide
technical geological, services including field services to the
company’s Kvanefjeld project.
Mr Mason continues to serve as a director of the company for
18 consecutive months and makes himself available to provide
technical geological, services including field services to the
company’s Kvanefjeld project.
The following grants of share-based payment compensation to directors and senior management relate to
the current financial year:
During the financial year
Option
series
9
9
10
13&14
No. granted
1,000,000
500,000
750,000
4,000,000
No.
vested
1,000,000
500,000
750,000
4,000,000
% of
grant
vested
100
100
100
100
% of
compensation for
the year
consisting of
options
% of
grant
forfeited
-%(1)
80.5%
38.9%
94.4%
Name
H. Schønwandt
M. Mason
S. Bunn
M. Hutchinson
(1)
The value of the options granted to H. Schønwandt have not been brought to account as they
represent a replacement equity instrument for a share based payment previously granted in
prior year. It has been determined that the fair value of the replacement equity instrument is
less than the net fair value of the cancelled equity instrument as determined at the date of
cancellation.
The following table summarises the value of options granted, exercised or lapsed during the current year
to directors and senior management:
Name
M Mason
H Schønwandt
S Bunn
M Hutchinson
Value of options at
grant date (i)
$
Value of options
exercised at the
exercise date
$
Value of options lapsed
at the date of lapse (ii)
$
80,000
160,000
190,893
629,800
-
-
-
-
(i)
The value of options granted during the period is recognised in compensation over the vesting
period of the grant, in accordance with Australian accounting standards.
(ii) The value of options lapsing during the period due to the failure to satisfy a vesting condition is
determined assuming the vesting condition had been satisfied.
SECTION 2 | 20
-
-
-
-
20
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
Remuneration report – audit (cont)
DIRECTORS’ REPORT
Company performance, shareholder wealth and director and senior management remuneration
The remuneration policy has been tailored to align the interests of shareholders, directors and senior
management. To achieve this aim, the entity may issue options to individual or all of senior management.
Any issue of options will be based on the performance of the Company and or individual and will be based
on the achievement of clearly defined bench marks and milestones. These bench marks and milestones
include:
(cid:1) Share price and or the market capitalisation of the Company exceeding pre-determined levels.
(cid:1) Completion specific projects or pre-determined stages of projects.
(cid:1) Periods of service with the Company.
(cid:1)
Improvements in shareholder value.
The Company notes that all directors are shareholders at present and the Company has no present
intention to issue further incentive shares or options to directors. There is no Board policy in relation to
limiting the recipient exposure to risk in relation to options issued to any individual.
The following table shows the gross revenue and profits for the period from incorporation date 26
February 2006 to 30 June 2009 for the listed entity, as well as the share price at the end of each financial
year.
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Remuneration Report
Revenue
Net loss before and after tax
Share price at beginning of year
Share price at end of year
Dividend
Basic loss per share
Diluted loss per share
2009
$1,279,120
2008
$1,334,337
$(4,008,712) $(202,767,366)
$1.75
$0.66
-
$1.25
$1.25
$0.66
$0.36
-
$0.02
$0.02
2007
2006
$228,241
$(199,700)
$0.26
$1.75
-
$0.62
$0.62
$21,272
$(324)
-
$0.26
-
$0.00
$0.00
Meetings of Directors
During the financial year, 7 meetings of directors were held. Attendances by each director during the year
were as follows:
Director
M Hutchinson
R McIllree
S K Cato
A Ho
M G Mason
S A S Michael
H K V Schønwandt
J S Whybrow
Directors Meetings
Number of meetings
eligible to attend
2
7
7
7
7
2
7
7
Number
attended
1
7
7
7
7
2
7
6
Audit Committee
The audit committee was formed at the Directors’ Board Meeting on the 22 April 2009. The audit
committee members are Anthony Ho (Chairman), Michael Hutchinson and Malcolm Mason. The audit
committee is to meet at least twice a year and must have a quorum of two members. There was 1 audit
committee meeting held between the date of formation and the end of the financial year, as follows:
Member
A Ho
M G Mason
M Hutchinson
Audit Committee Meetings
Number of meetings
eligible to attend
1
1
1
Number
Attended
1
1
-
SECTION 2 | 21
21
Director’s Report
Greenland Minerals and Energy Limited
Directors’ Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
DIRECTORS’ REPORT
Indemnifying Officers
During or since the end of the financial year the Company has given an indemnity or entered into an
agreement to indemnify, or paid or agreed to pay insurance premium to insure the directors against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their
conduct while acting in the capacity of the director of the Company, other than conduct involving a willful
breach of duty in relation to the Company.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
There were no non-audit services provided to the Company, by the auditor, during the financial year
ended 30 June 2009.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2009 has been received and is
included on page 23 the financial report.
Rounding off of amounts
The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998. In
accordance with that Class Order amounts in the directors’ report and the financial report are rounded off
to the nearest thousand dollars, unless otherwise indicated.
Signed in accordance with a resolution of directors, made pursuant to section 298(2) of the Corporations
Act 2001.
On behalf of the Directors.
SECTION 2 | 22
22
Director’s Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 2 | 23
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 2 | 24
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 2 | 25
Director’s Report
Directors’ declaration
Greenland Minerals and Energy Limited
Directors’ Declaration
The directors declare that:
(a)
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable;
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with
the Corporations Act 2001, including compliance with accounting standards and giving a true and
fair view of the financial position and performance of the Company and the consolidated entity; and
the directors have been given the declarations required by s.295A of the Corporations Act 2001.
(b)
(c)
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act
2001.
On behalf of the Directors
Simon Cato
Director
30 September 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
SECTION 2 | 26
26
Income Statement
for the year ended 30 June 2009
Income Statement
for the financial year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
Revenue
Expenditure
Directors’ fees and salary expense
Share based payments – directors
Share based payments – other
Occupancy expenses
Other expenses
Consolidated
2009
$' 000
2008
$' 000
Company
2009
$' 000
2008
$' 000
1,279
1,334
1,279
1,334
Note
5
(602)
(981)
-
(271)
(3,440)
(374)
(31,303)
(170,304)
(67)
(2,061)
(602)
(981)
-
(271)
(3,424)
(374)
(31,303)
(170,304)
(67)
(2,040)
Loss before tax
Income tax expense
6
7
(4,015)
-
(202,775)
-
(3,999)
-
(202,754)
-
Loss for the year
(4,015)
(202,775)
(3,999)
(202,754)
Attributable to:
Equity holders of the parent
Minority interest
(4,009)
(6)
(4,015)
(202,767)
(8)
(202,775)
(3,999)
-
(3,999)
(202,754)
-
(202,754)
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Loss per share
20
Basic loss per share – cents per share
Diluted loss per share – cents per share
2.00
2.00
125.00
125.00
Notes to the financial statements are included on pages 32 to 66
27
SECTION 2 | 27
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Balance Sheet
as at 30 June 2008
Balance sheet
as at 30 June 2009
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Financial assets
Property, plant and equipment
Capitalised exploration and evaluation
expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and Other Payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses
Equity attributable to equity holders of
the parent
Minority Interest
Total Equity
Greenland Minerals and Energy Limited
2009 Financial Report
Note
8
9
10
Consolidated
2009
$' 000
2008
$' 000
14,039
1,281
1,066
16,386
21,637
1,561
28
23,226
Company
2009
$' 000
2008
$' 000
13,585
1,281
1,066
15,932
21,631
1,469
28
23,128
9
11
12
13
14
15
16
17
19
-
98
506
-
-
405
5,207
4,410
506
4,838
4,311
405
33,694
34,298
22,355
22,760
24,611
34,734
13,273
22,827
50,684
45,986
50,666
45,955
2,538
37
2,575
259
-
259
2,531
37
2,568
249
-
249
2,575
48,109
259
45,727
2,568
48,098
249
45,706
98,519
93,666
98,519
93,666
156,538
154,994
156,532
154,994
(206,976)
(202,967)
(206,953)
(202,954)
48,081
28
48,109
45,693
34
45,727
48,098
-
48,098
45,706
-
45,706
Notes to the financial statements are included on pages 32 to 66
SECTION 2 | 28
28
Statement of Changes in Equity
for the financial year ended 30 June 2008
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Statement of changes in equity
for the financial year ended 30 June 2009
Consolidated
Fully
Paid
Ordinary Option
reserve
Share
Foreign
currency
translation Accumulated
reserve
losses
$' 000
Attributable
to equity
holders of
the parent
Minority
interest
$' 000
$' 000
Total
$' 000
$' 000
$' 000
$' 000
Balance at 1 July
2007
Net loss for the
period (recognised
income and
expenses) (i)
Contributions of
equity net of
transaction costs
Issue of shares
upon exercise of
options
Issue of shares for
acquisition of assets
Recognition of share
based payments (ii)
Minority interest
arising from
acquisition
Balance at 1 July
2008
Net loss for the
period (recognised
income and
expenses)
Contributions of
equity net of
transaction costs
Exchange
differences arising
on translation of
foreign operations
Recognition of share
based payments
Balance at 30 June
2009
5,238
141
-
(200)
5,179
-
5,179
-
-
-
(202,767 )
(202,767 )
(8)
(202,775)
35,044
-
-
- 35,044
-
35,044
514
-
-
-
514
-
514
6,150
-
-
-
6,150
-
6,150
46,720
154,853
-
-
201,573
-
201,573
93,666
154,994
-
(202,967)
45,693
34
45,727
-
42
42
-
4,718
-
-
-
-
135
1,538
98,519
156,532
-
(4,009)
(4,009)
(6)
(4,015)
-
6
-
6
-
-
-
4,718
4,718
6
1,673
-
-
6
1,673
(206,976)
48,081
28
48,109
(i) Net loss for the year ended 30 June 2008 has been restated as a result of a prior period
adjustment. The net loss for the year was increased by $164,421 thousand. Refer to Note 21 for
details of prior period adjustment.
(ii) Recognition of share based payments for the year ended 30 June 2008 has been restated as a
result of a prior period adjustment. The movement in the Option Reserve for the year was
increased by $120,300 thousand and the movement in Issued Capital decreased by $21,230
thousand. Refer to Note 21 for details of prior period adjustment.
Notes to the financial statements are included on pages 32 to 66
29
SECTION 2 | 29
Greenland Minerals and Energy Limited
2009 Financial Report
Statement of Changes in Equity
for the financial year ended 30 June 2008 (continued)
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Statement of changes in equity
For the financial year ended 30 June 2009
Company
Fully Paid
Ordinary
Shares
$' 000
Option
reserve
$' 000
Accumulated
losses
$' 000
Total
$' 000
5,238
141
(200)
5,179
-
-
( 202,754 )
(202,754)
35,044
-
-
35,044
514
-
-
514
6,150
-
-
6,150
46,720
154,853
-
201,573
Balance at 1 July 2007
Net loss for the period
(recognised income and
expenses) (i)
Contributions of equity net of
transaction costs
Issue of shares upon exercise
of options
Issue of shares for acquisition
of assets
Recognition of share based
payments (ii)
Balance at 1 July 2008
93,666
154,994
(202,954)
45,706
Net loss for the period
(recognised income and
expenses)
Contributions of equity net of
transaction costs
Recognition of share based
payments
Balance at 30 June 2009
-
4,718
-
-
( 3,999)
(3,999)
-
4,718
135
98,519
1,538
156,532
-
(206,953)
1,673
48,098
(i) Net loss for the year ended 30 June 2008 has been restated as a result of a prior period
adjustment. The net loss for the year was increased by $164,421 thousand. Refer to Note 21 for
details of prior period adjustment.
(ii) Recognition of share based payments for the year ended 30 June 2008 has been restated as a
result of a prior period adjustment. The movement in the Option Reserve for the year was
increased by $120,300 thousand and the movement in Issued Capital decreased by $21,230
thousand. Refer to Note 21 for details of prior period adjustment.
Notes to the financial statements are included on pages 32 to 66
SECTION 2 | 30
30
Greenland Minerals and Energy Limited
2009 Financial Report
Cash Flow Statement
for the financial year ended 30 June 2008
Cash flow statement
For financial year ended 30 June 2009
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
GST paid and refundable
Net cash used in operating activities
Cash flows from investing activities
Interest received
Interest paid
Proceeds from loan establishment fees
Proceeds from repayment of advances
made to other parties
Payments for property, plant and
equipment
Payments for exploration and evaluation
Payments for acquisition of subsidiary
Payments for set up of subsidiaries
Proceeds from sale of tenements
Application funds for equity securities
held in trust
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity securities
Payments for issue costs
Loans to related parties
Loans from related parties
Proceeds from application funds for
equity securities
Net cash from financing activities
Net (decrease)/increase in cash and
equivalents
Cash and equivalents at the beginning of
the financial year
Cash and equivalents at the beginning of
the financial year
Note
27
Consolidated
2009
$' 000
2008
$' 000
Company
2009
$' 000
2008
$' 000
83
(3,032)
(60)
(3,009)
15
(2,331)
-
(2,316)
83
(3,112)
(60)
(3,089)
15
(2,331)
-
(2,316)
1,337
(5)
100
1,023
-
-
1,337
(5)
100
1,023
-
-
51
-
51
-
26
(191)
(10,726)
-
-
130
(367)
(11,553)
(3,000)
(24)
-
(191)
(10,726)
130
(367)
(11,553)
(1,000)
(24)
-
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
(725)
(10,029)
-
(13,921)
(725)
(10,029)
-
(11,921)
5,000
(282)
(3)
-
38,922
(3,364)
(101)
6
5,000
(282)
(371)
-
38,922
(3,364)
(2,101)
-
725
5,440
-
35,463
725
5,072
-
33,457
(7,598)
19,226
(8,046)
19,220
21,637
2,411
21,631
2,411
8
14,039
21,637
13,585
21,631
Notes to the financial statements are included on pages 32 to 61
31
SECTION 2 | 31
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Notes to the accounts
1. General information
Greenland Minerals and Energy Limited is a public company listed on the Australian Securities
Exchange, incorporated in Australia and operating in Greenland with a head office in Perth.
Greenland Minerals and Energy Limited registered office and its principal place of business are
as follows:
Registered office
33 Colin Street West Perth, WA
Principal place of business
33 Colin Street West Perth, WA
The entity’s principal activities are mineral exploration and evaluation.
2. Significant accounting policies
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance
with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with
other requirements of the law.
The financial report includes the separate financial statements of the company and the
consolidated financial statements of the Group.
Accounting Standards include Australian equivalents to International Financial Reporting
Standards (‘A-IFRS’). Compliance with A-IFRS ensures that the financial statements and notes of
the company and the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the directors on 30 September 2009.
Basis of preparation
The financial report has been prepared on the basis of historical cost, except for the revaluation
of certain non-current assets and financial instruments. Cost is based on the fair values of the
consideration given in exchange for assets. All amounts are presented in Australian dollars,
unless otherwise noted.
The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July
1998, and in accordance with that Class Order amounts in the financial report are rounded off to
the nearest thousand dollars, unless otherwise indicated.
Critical accounting judgments and key sources of estimation uncertainty
In the application of the Group’s accounting policies, management is required to make judgments,
estimates and assumptions about carrying values of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods. Refer to note 3 for a discussion of critical judgements in applying
the entity’s accounting policies, and key sources of estimation uncertainty.
Adoption of new and revised Accounting Standards
In the current year, the Group has adopted no new and revised Standards and Interpretations
issued by the Australian Accounting Standards Board (the AASB) that are relevant to its
operations and effective for the current annual reporting period.
SECTION 2 | 32
32
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
2. Significant accounting policies (cont’d)
The following significant accounting policies have been adopted in the preparation and
presentation of the financial report:
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company (its subsidiaries) (referred to as ‘the Group’ in these
financial statements). Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or up to the effective
date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on
consolidation. In the separate financial statements of the Company, intra-group transactions
(‘common control transactions’) are generally accounted for by reference to the existing
(consolidated) book value of the items. Where the transaction value of common control
transactions differ from their consolidated book value, the difference is recognised as a
contribution by or distribution to equity participants by the transacting entities.
Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are
identified separately from the Group’s equity therein. Minority interests consist of the
amount of those interests at the date of the original business combination and the minority’s
share of changes in equity since the date of the combination. Losses applicable to the
minority in excess of the minority’s interest in the subsidiary’s equity are allocated against
the interests of the Group except to the extent that the minority has a binding obligation and
is able to make an additional investment to cover the losses.
(b)
Joint venture arrangements
Jointly controlled operations
Where the Group is a venturer and so has joint control in a jointly controlled operation, the
Group recognises the assets that it controls and the liabilities that is incurs, along with the
expenses that it incurs as a party to the joint venture.
(c) Foreign currency
The individual financial statements of each group entity are presented in its functional
currency being the currency of the primary economic environment in which the entity
operates. For the purpose of the consolidated financial statements, the results and financial
position of each entity are expressed in Australian dollars, which is the functional currency
of Greenland Minerals and Energy Limited and the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies
other than the entity’s functional currency are recorded at the rates of exchange prevailing
on the dates of the transactions. At each balance sheet date, monetary items denominated
in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-
monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was determined. Non-
monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
33
SECTION 2 | 33
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Notes to the Financial Statements
For the year ended 30 June 2009
2. Significant accounting policies (cont’d)
Greenland Minerals and Energy Limited
2009 Financial Report
Exchange differences are recognised in profit or loss in the period in which they arise
except for:
·
exchange differences on monetary items receivable from or payable to a foreign
operation for which settlement is neither planned or likely to occur, which form part
of the net investment in a foreign operation, and which are recognised in the foreign
currency translation reserve and recognised in profit or loss on disposal of the net
investment.
On consolidation, the assets and liabilities of the Group’s foreign operations are translated
into Australian dollars at exchange rates prevailing on the balance sheet date. Income and
expense items are translated at the average exchange rates for the period, unless
exchange rates fluctuated significantly during that period, in which case the exchange rates
at the dates of the transactions are used. Exchange differences arising, if any, are classified
as equity and transferred to the Group’s foreign currency translation reserve. Such
exchange differences are recognised in profit or loss in the period in which the foreign
operation is disposed.
(d) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services
tax (GST), except:
i.
where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an asset or as part of an item of
expense; or
for receivables and payables which are recognised inclusive of GST.
ii.
The net amount of GST recoverable from, or payable to, the taxation authority is included
as part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component
of cash flows arising from investing and financing activities which is recoverable from, or
payable to, the taxation authority is classified within operating cash flows.
(e) Revenue
Revenue is measured at the fair value of the consideration received or receivable.
Interest revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s net
carrying amount.
Rental income
Revenue from operating sub-leases is recognised in accordance with the Group’s
accounting policy.
(f) Share-based payments
Equity-settled share-based payments with employees and others providing similar services
are measured at the fair value of the equity instrument at the grant date. Fair value is
measured by use of a Black Scholes. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations. Further details on how the fair value
of equity-settled share-based transactions has been determined can be found in note 28.
The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
equity instruments that will eventually vest.
At each reporting date, the Group revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any, is recognised in
profit or loss over the remaining vesting period, with corresponding adjustment to the
equity-settled employee benefits reserve.
SECTION 2 | 34
34
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
(g)
2. Significant accounting policies (cont’d)
Equity-settled share-based payment transactions with other parties are measured at the fair
value of the goods and services received, except where the fair value cannot be estimated
reliably, in which case they are measured at the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty renders the service.
Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or
recoverable in respect of the taxable profit or tax loss for the period. It is calculated using
tax rates and tax laws that have been enacted or substantively enacted by reporting date.
Current tax for current and prior periods is recognised as a liability (or asset) to the extent
that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the balance sheet liability method. Temporary
differences are differences between the tax base of an asset or liability and its carrying
amount in the balance sheet. The tax base of an asset or liability is the amount attributed to
that asset or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable
amounts will be available against which deductible temporary differences or unused tax
losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise to them arise from the initial recognition
of assets and liabilities (other than as a result of a business combination) which affects
neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from the initial recognition of
goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and interests in joint ventures except where the Group is able to
control the reversal of the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with these investments and interests are only
recognised to the extent that it is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences and they are expected to reverse in
the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
to the period(s) when the asset and liability giving rise to them are realised or settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted by reporting
date. The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the
same taxation authority and the company/Group intends to settle its current tax assets and
liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income statement,
except when it relates to items credited or debited directly to equity, in which case the
deferred tax is also recognised directly in equity, or where it arises from the initial
accounting for a business combination, in which case it is taken into account in the
determination of goodwill or excess.
(h) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known amounts of cash, which are
subject to an insignificant risk of changes in value and have a maturity of three months or
less at the date of acquisition.
35
SECTION 2 | 35
Notes to the Financial Statements
For the year ended 30 June 2009
(i)
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
2. Significant accounting policies (cont’d)
Financial assets
Investments are recognised and derecognised on trade date where the purchase or sale of
an investment is under a contract whose terms require delivery of the investment within the
timeframe established by the market concerned, and are initially measured at fair value, net
of transaction costs except for those financial assets classified as at fair value through profit
or loss which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the
company financial statements.
Other financial assets are classified into the following specified categories: ‘available-for-
sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature
and purpose of the financial assets and is determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial
asset and of allocating interest income over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts (including all fees on points
paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the financial asset, or, where
appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than
those financial assets ‘at fair value through profit or loss’.
Available-for-sale financial assets
Certain shares held by the Group are classified as being available-for-sale and are stated at
fair value. Fair value is determined in the manner described in note 11. Gains and losses
arising from changes in fair value are recognised directly in the investments revaluation
reserve with the exception of impairment losses, interest calculated using the effective
interest method and foreign exchange gains and losses on monetary assets which are
recognised directly in profit or loss. Where the investment is disposed of or is determined to
be impaired, the cumulative gain or loss previously recognised in the investments
revaluation reserve is included in profit or loss for the period.
Dividends on available-for-sale equity instruments are recognised in profit and loss when
the Group’s right to receive the dividends is established.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments
that are not quoted in an active market are classified as ‘loans and receivables’. Loans and
receivables are measured at amortised cost using the effective interest method less
impairment.
Interest income is recognised by applying the effective interest rate.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence that as a result of one or
more events that occurred after the initial recognition of the financial asset the estimated
future cash flows of the investment have been impacted.
For financial assets carried at amortised cost, the amount of the impairment is the
difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate.
The carrying amount of financial assets including uncollectible trade receivables is reduced
by the impairment loss through the use of an allowance account. Subsequent recoveries of
amounts previously written off are credited against the allowance account. Changes in the
carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent the carrying amount of the investment at
the date the impairment is reversed does not exceed what the amortised cost would have
been had the impairment not been recognised.
SECTION 2 | 36
36
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
2. Significant accounting policies (cont’d)
In respect of available-for-sale equity instruments, any subsequent increase in fair value
after an impairment loss is recognised directly in equity.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows
from the asset expire, or it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Group continues to recognise the
financial asset and also recognises a collateralised borrowing for the proceeds received.
(j)
Property, plant and equipment
Plant and equipment and leasehold improvements are stated at cost less accumulated
depreciation and impairment. Cost includes expenditure that is directly attributable to the
acquisition of the item. In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting the amounts payable in the
future to their present value as at the date of acquisition.
Depreciation on plant and equipment is calculated on a diminishing value basis so as to
write off the net cost or other devalued amount of each asset over its expected useful life to
its estimated residual value. Leasehold improvements are depreciated over the period of
the lease or estimated useful life, whichever is the shorter, using the diminishing value
method. The estimated useful lives, residual values and depreciation method are reviewed
at the end of each annual reporting period, with the effect of any changes recognised on a
prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the
same basis as owned assets or, where shorter, the term of the relevant lease.
The gain or loss arising on disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
The following useful lives are used in the calculation of depreciation:
Leasehold improvements
Plant and equipment
10 – 15 years
4 – 10 years
(k) Leased assets
Leases are classified as finance leases when the terms of the lease transfer substantially all
the risks and rewards incidental to ownership of the leased asset to the lessee. All other
leases are classified as operating leases.
Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of
the relevant lease. However, contingent rentals arising under operating leases are
recognised as income in a manner consistent with the basis on which they are determined.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on a straight-line basis over the lease
term.
(l) Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries,
annual leave, long service leave, and sick leave when it is probable that settlement will be
required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled within 12
months, are measured at their nominal values using the remuneration rate expected to
apply at the time of settlement.
37
SECTION 2 | 37
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
2. Significant accounting policies (cont’d)
Liabilities recognised in respect of employee benefits which are not expected to be settled
within 12 months are measured as the present value of the estimated future cash outflows
to be made by the Group in respect of services provided by employees up to reporting date.
(m) Financial instruments issued by the company
(n)
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance
with the substance of the contractual arrangement. An equity instrument is any contract that
evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Group are recorded at the proceeds received, net of direct
issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit or
loss’ or other financial liabilities.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of
transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash payments through the expected
life of the financial liability, or, where appropriate, a shorter period.
Impairment of long-lived assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts of its assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Where a reasonable and
consistent basis of allocation can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use
are tested for impairment annually and whenever there is an indication that the asset may
be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in profit or loss, unless
the relevant asset is carried at re-valued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-
generating unit) is increased to the revised estimate of its recoverable amount, but only to
the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior years. A reversal of an impairment loss is recognised immediately
in profit or loss, unless the relevant asset is carried at fair value, in which case the reversal
of the impairment loss is treated as a revaluation increase.
SECTION 2 | 38
38
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
2: Significant accounting policies (cont’d)
(o) Capitalisation of exploration and evaluation expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of
each identifiable area of interest. These costs are only carried forward to the extent that
they are expected to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off to the income statement
in the year in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest will
be amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
Costs of site restoration at the current stage are expensed as they are incurred. Site
restoration costs include the dismantling and removal of mining plant, equipment and
building structures, waste removal, and rehabilitation of the site in accordance with clauses
of the mining or petroleum permits.
(p) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive)
as a result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the cashflows estimated to
settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the receivable can be measured
reliably.
(q) Standards and Interpretations issued not yet effective
At the date of authorisation of the financial report, the Standards and Interpretations listed
below were in issue but not yet effective.
Initial application of the following Standards will not affect any of the amounts recognised in the financial
report, but will change the disclosures presently made in relation to the Group and the Company’s financial
report:
Standard
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
· AASB 101 ‘Presentation of Financial Statements’
1 January 2009
30 June 2010
(revised September 2007), AASB 2007-8
‘Amendments to Australian Accounting Standards
arising from AASB 101’, AASB 2007-10 ‘Further
Amendments to Australian Accounting Standards
arising from AASB 101’
39
SECTION 2 | 39
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
2: Significant accounting policies (cont’d)
Standard
· AASB 8 ‘Operating Segments’, AASB 2007-3
‘Amendments to Australian Accounting Standards
arising from AASB 8’
· AASB 2009-2 ‘Amendments to Australian
Accounting Standards – Improving Disclosures
about Financial Instruments’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2009
30 June 2010
1 January 2009 (and
that ends on or after 30
April 2009)
30 June 2010
Initial application of the following Standards/Interpretations is not expected to have any material impact on
the financial report of the Group and the Company however the impact of the application is yet to be fully
evaluated:
Standard/Interpretation
· AASB 123 ‘Borrowing Costs’ (revised), AASB 2007-
6 ‘Amendments to Australian Accounting Standards
arising from AASB 123’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2009
30 June 2010
· AASB 3 ‘Business Combinations’ (revised), AASB
127 ‘Consolidated and Separate Financial
Statements’ (revised) and AASB 2008-3
‘Amendments to Australian Accounting Standards
arising from AASB 3 and AASB 127’
Business combinations
occurring after the
beginning of annual
reporting periods
beginning 1 July 2009
30 June 2010
· AASB 2008-1 ‘Amendments to Australian
Accounting Standard - Share-based Payments:
Vesting Conditions and Cancellations’
· AASB 2008-2 ‘Amendments to Australian
Accounting Standards - Puttable Financial
Instruments and Obligations arising on Liquidation’
· AASB 2008-5 ‘Amendments to Australian
Accounting Standards arising from the Annual
Improvements Project’
· AASB 2008-6 ‘Further Amendments to Australian
Accounting Standards arising from the Annual
Improvements Project’
1 January 2009
30 June 2010
1 January 2009
30 June 2010
1 January 2009
30 June 2010
1 July 2009
30 June 2010
· AASB 2008-7 ‘Amendments to Australian
1 January 2009
30 June 2010
Accounting Standards – Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or Associate
SECTION 2 | 40
40
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
2: Significant accounting policies (cont’d)
Standard/Interpretation
· AASB 2008-8 ‘Amendments to Australian
Accounting Standards – Eligible Hedged Items’
· AASB 2009-4 ‘Amendments to Australian
Accounting Standards arising from the Annual
Improvements Process’
· AASB 2009-5 ‘Further Amendments to Australian
Accounting Standards arising from the Annual
Improvements Process’
Greenland Minerals and Energy Limited
2009 Financial Report
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 July 2009
30 June 2010
1 July 2009
30 June 2010
1 January 2010
30 June 2011
· AASB 2009-6 “Amendments to Australian
1 January 2009 (i)
30 June 2010
Accounting Standards”
· AASB 2009-7 “Amendments to Australian
Accounting Standards”
· AASB 1 ‘First-time Adoption of Australian
Accounting Standards’
1 July 2009 (ii)
30 June 2010
1 July 2009
30 June 2010
· AASB 2009-8 “Group Cash Settled Share Based
1July 2009
1 January 2010
Payment Transactions”
· AASB Interpretation 15 ‘Agreements for the
1 January 2009
30 June 2010
Construction of Real Estate’
· AASB Interpretation 16 ‘Hedges of a Net Investment
1 October 2008
30 June 2010
in a Foreign Operation’
· AASB Interpretation 17 ‘Distributions of Non-cash
1 July 2009
30 June 2010
Assets to Owners’, AASB 2008-13 ‘Amendments to
Australian Accounting Standards arising from AASB
Interpretation 17 – Distributions of Non-cash Assets
to Owners’
AASB Interpretation 18 ‘Transfers of Assets from
Customers’
1 July 2009 (iii)
30 June 2010
(i)
(ii)
(iii)
Applicable to financial years beginning on or after 1 January 2010,except for the
amendments made to the guidance to AASB118 ‘Revenue’ that have no explicit
application date and are taken to be immediately effective.
Applicable to financial years beginning on or after 1 January 2009 that end on or after
30 June 2009.
AASB Interpretation 18 applies to transfers of assets from customers received on or
after 1 July 2009.
3: CRITICAL ACCOUNTING ESTIMATES & JUDGEMENTS
In preparing this Financial Report the Company has been required to make certain estimates and
assumptions concerning future occurrences. There is an inherent risk that the resulting
accounting estimates will not equate exactly with actual events and results.
41
SECTION 2 | 41
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
3: CRITICAL ACCOUNTING ESTIMATES & JUDGEMENTS (cont)
a)
b)
Significant accounting judgments
In the process of applying the Company's accounting policies, management has made the
following judgments, apart from those involving estimations, which have the most
significant effect on the amounts recognised in the financial statements:
Capitalisation of exploration and evaluation expenditure
The Company has capitalised significant exploration and evaluation expenditure on the
basis either that this is expected to be recouped through future successful development or
alternatively sale of the Areas of Interest. If ultimately the area of interest is abandoned or
is not successfully commercialised, the carry value of the capitalised exploration and
evaluation expenditure would need to be written down to its recoverable amount.
Deferred tax assets
The Company expects to have carried forward tax losses which have not been recognised
as deferred tax assets as it is not considered sufficiently probable at this point in time, that
these losses will be recouped by means of future profits taxable in the relevant
jurisdictions.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on
estimates and assumptions of future events. The key estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying amounts of certain assets
and liabilities within the next annual reporting period are:
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent
on a number of factors, including whether the Company decides to exploit the related lease
itself or, if not, whether it successfully recovers the related exploration and evaluation asset
through sale. Factors that could impact the future recoverability include the level of
reserves and resources, future technological changes, costs of drilling and production,
production rates, future legal and political changes, (including obtaining the right to mine
given the Greenlandic governments stance on uranium mining and development in
Greenland and changes to environmental restoration obligations) and changes to
commodity prices. As at 30 June 2009, the carrying value of capitalised exploration
expenditure is $33,693,900, refer to note 13.
Legal claims
A contingent liability has been disclosed, refer to note 23, relating to an estimate of the
liability that will be incurred by the Company in defending writs, issued to the Company by
Westrip Holdings Limited and Rimbal Pty Ltd. The liability is based on an estimation by
directors after obtaining legal opinions.
4: Segment Information
The company operates in one geographical segment, being Greenland and in one business,
being mineral exploration and evaluation.
5: Revenue
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
Interest - Bank deposits
1,113
1,325
1,113
1,325
Operating lease revenue - Sub lease
63
9
63
9
Other revenue
103
-
103
-
1,279
1,334
1,279
1,334
SECTION 2 | 42
42
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
6: Loss for the year before tax
(a) Gains and losses
Loss for the year have been arrived
at after crediting the following items:
Loss on disposal of tenement
(207)
Loss on disposal of leasehold assets
Changes in fair value of available for
sale investments
(3)
(142)
Gain on foreign currency exchange
88
-
-
-
-
(207)
(3)
(142)
88
-
-
-
-
(b) Other expenses
Loss for the year included the following
expenses:
Consulting expenses
Depreciation expense
Directors fees and salary expense
Employee benefits - salaries
Post employment benefits – defined
contribution plan
Share based payments - directors
Share based payments - other
Finance costs
Insurance
Legal costs
Marketing & PR consulting
Operating lease rental expenses
Occupancy expenses
Stock exchange fees
Travel expenses
Other expenses
7: Income tax expense
(a) Tax expense
Current tax
Deferred tax
(492)
(249)
(492)
(249)
(94)
(602)
(40)
(31)
(981)
-
(5)
(121)
(481)
(563)
(63)
(208)
(86)
(628)
(394)
(82)
(374)
(139)
(27)
(31,303)
(170,304)
-
(61)
(62)
(171)
(9)
(58)
(86)
(826)
(350)
(94)
(602)
(40)
(31)
(981)
-
(5)
(121)
(481)
(563)
(63)
(208)
(86)
(628)
(389)
(82)
(374)
(139)
(27)
(31,303)
(170,304)
-
(61)
(62)
(171)
(9)
(58)
(86)
(826)
(337)
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43
SECTION 2 | 43
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
7: Income tax expense (cont)
(b) The prima facie income tax expense
on pre-tax accounting loss from
operations reconciles to the income
tax expenses in the financial
statements as follows:
Prima facie tax benefit on loss at 30%
Add:
Tax effect of:
other non-allowable items
share based payments
provisions and accruals
accrued income
Unused tax losses not recognised as
deferred tax assets
Less:
Tax effect of:
exploration, evaluation and
development expenditure
provisions and accruals
capital expenditure write off
accrued income
(1,204)
(60,832)
(1,199)
(60,826)
479
-
144
67
3,105
3,795
123
60,482
-
-
2,456
63,061
479
144
67
3,100
3,790
123
60,482
-
-
2,450
63,055
(2,354)
-
(237)
-
(2,591)
(1,917)
(5)
(219)
(88)
(2,229)
(2,354)
-
(237)
-
(2,591)
(1,917)
(5)
(219)
(88)
(2,229)
Income tax expense
The applicable weighted tax rates are
as follows:
-
0%
-
0%
-
0%
-
0%
(c)
The following deferred tax balances
have not be recognised:
Deferred tax assets:
at 30%
Carry forward revenue losses
Capital raising costs
Less: offset against deferred tax
liability
6,478
696
7,174
3,373
843
4,216
6,473
696
7,169
3,373
843
4,216
(5,113)
2,061
(2,826)
1,390
(5,113)
2,056
(2,826)
1.390
The tax benefits of the above deferred tax assets will only be obtained if;
a) The company derives future assessable income of a nature and amount sufficient to
enable the benefits to be utilised,
b) The company continues to comply with the conditions of deductibility imposed by law,
and
c) No change in income tax legislation adversely affects the company’s ability to utilise the
benefits
SECTION 2 | 44
44
Notes to the Financial Statements
For the year ended 30 June 2009
7: Income tax expense (cont)
Deferred tax liabilities:
at 30%
Exploration, evaluation and
development expenditure
Accrued income
Less: offset of deferred tax asset
Greenland Minerals and Energy Limited
2009 Financial Report
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
5,090
23
5,113
(5,113)
-
2,736
90
2,826
(2,826)
-
5,090
23
5,113
(5,113)
-
2,736
90
2,826
(2,826)
-
The above deferred tax liabilities have not been recognised, as they have given rise to the carry
forward losses for which the deferred tax asset has not been recognised.
8: Cash and equivalents
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Cash on hand
Cash at bank and on deposit
9: Trade and other receivables
(a) Current
Trade debtors (i)
Other debtors (i)
Accrued interest
Loan to related parties
GST refundable
Funds held in trust (ii)
(b) Non-current
Loan to Chahood Capital Limited (iii)
Loan to Greenland Minerals & Energy
(Trading) A/S (iv)
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
12
14,027
14,039
1
21,636
21,637
12
13,573
13,585
1
21,630
21,631
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
34
-
77
3
127
1,040
1,281
-
142
301
51
67
1,000
1,561
34
-
77
3
127
1,040
1,281
-
50
301
51
67
1,000
1,469
-
-
-
-
-
-
4,838
4,838
369
5,207
-
4,838
(i)
Trade debtors and sundry debtors are non-interest bearing, unsecured and generally
on 30 day terms.
45
SECTION 2 | 45
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9: Trade and other receivables (cont)
(ii)
(iii)
(iv)
Funds held in trust consist of a deposit of $1,000,000 which is being held in trust by
Gravner Limited. The money is being held as a deposit whilst Gravner Limited
negotiates on behalf of the company for the purchase of the 4% royalty issued by
Westrip Holdings Ltd. The deposit will form part of the consideration if the purchase
is successful. In the event that the purchase transaction does not go ahead the
money will be refunded to the company. A further $40 thousand is being held by the
Group’s London based lawyers as a retainer in relation to funding the minority
shareholders of Westrip Holdings Limited
the major
shareholders.
The loan to Chahood Capital Limited (Chahood), are funds that were on lent by
Chahood to Greenland Minerals and Energy (Trading) A/S to acquire a 61% interest
in the Kvanefjeld project. This loan is unlikely to be called for repayment in the
foreseeable future and forms part of Greenland Minerals and Energy Limited net
investment in the subsidiaries. No interest is charged on this loan balance.
The loan to Greenland Minerals and Energy (Trading) A/S, is a funding arrangement
provided by the parent company. The funds are used by the subsidiary to pay for
exploration expenses incurred by the parent company. No interest is charged on this
loan balance.
their dispute with
in
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
10: Other assets
Deposit bonds
Prepayments
Funds held in trust for un-allotted shares
11: Financial assets
Investment in subsidiary (at cost)
Available for sale investments carried at fair
cost:
Shares in listed companies
Changes in fair value (i)
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
96
245
725
1,066
28
-
-
28
96
245
725
1,066
28
-
-
28
Consolidated
Parent
2009
$' 000
-
2008
$' 000
240
(142)
98
2009
$' 000
2008
$' 000
4,312
4,311
240
(142)
4,410
-
-
4,311
-
-
-
-
(i)
Movement in market value is based on the closing price on the Australian Securities
Exchange, of the shares held on 30 June 2009.
SECTION 2 | 46
46
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
12: Property, plant and equipment
Historical cost - Plant and Equipment
Accumulated depreciation
Historical cost - Leasehold improvements
Accumulated depreciation
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
607
(182)
85
(4)
506
500
(95)
-
-
405
607
(182)
85
(4)
506
500
(95)
-
-
405
(a) Movements in the carrying amounts
Movement in the carrying values for each class of property, plant and equipment between the
beginning and the end of the period.
Plant and Equipment
Carrying value at beginning of period
Acquisitions
Disposals
Depreciation expense
Carrying value at end of period
Leasehold improvements
Carrying value at beginning of period
Acquisitions
Depreciation expense
Carrying value at end of period
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
405
113
(3)
(90)
425
-
85
(4)
81
119
368
-
(82)
405
-
-
-
-
405
113
(3)
(90)
425
-
85
(4)
81
119
368
-
(82)
405
-
-
-
-
Total property, plant and equipment
carrying value at end of period
506
405
506
405
13: Capitalised exploration and evaluation expenditure
Balance at beginning of period
Acquisition costs
Exploration and/or evaluation phase in
current period:
Capitalised expenses (i)
Less:
Disposal of tenement (ii)
Balance at end of period
Consolidated
Parent
2009
$' 000
22,355
-
2008
$' 000
2,729
9,150
2009
$' 000
13,272
-
2008
$' 000
2,729
-
11,915
34,270
(576)
33,694
10,476
22,355
-
22,355
11,915
25,187
(576)
24,611
10,544
13,272
-
13,273
47
SECTION 2 | 47
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
13: Capitalised exploration and evaluation expenditure (cont)
(i)
(ii)
(iii)
On the 31 July 2007, Greenland Minerals and Energy Limited acquired a 61%
interest in the Kvanefjeld Project. As part of the acquisition, the company entered
into an un-incorporated joint venture with Westrip Holdings Limited (Westrip), a UK
based company to carry out the exploration and evaluation of Kvanefjeld. The
company holds a 61% interest in the joint venture with Westrip holding the balance.
Under the initial acquisition agreement, Greenland Minerals and Energy Limited, for
the first 2 years from the date of acquisition is required to fully fund the exploration
and evaluation expenditure, while maintaining the 61%-39% holding interest.
In September 2008 the Group sold the Three Sisters Project, disposal of tenement
amount, represents the carry cost of the tenement at the time of the sale.
The recoverability of the Group’s carrying value of the capitalised exploration and
evaluation expenditure relating to the Kvanefjeld Project is subject to the successful
development and exploitation of the exploration property, which includes among
other issues, obtaining the right to mine. Alternatively recoverability could result from
the sale of the tenement at an amount at least equal to the carrying amount.
The company is currently developing the Kvanefjeld Project, recognised as the
largest undeveloped multi-element occurrence of rare earth oxides (REO), zinc and
uranium in the world. The company is aware of and respects the Greenlandic
government’s present stance on uranium mining and development in Greenland.
This is currently a zero tolerance approach to the exploration and exploitation of
uranium however the Government has commenced a community consultation
process. The Company will continue to develop this project in a manner that is in
accord with both Greenlandic Government and local community expectations, and in
due course looks forward to being part of the community discussion on the social and
economic benefits associated with development of the Kvanefjeld project.
14: Trade and other payables
Accrued expenses (i)
Trade creditors (ii)
Sundry creditors (ii)
Amounts payable to related parties
Funds held in trust (iii)
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
512
1,292
9
-
725
2,538
50
199
4
6
-
259
512
1,292
2
-
725
2,531
50
199
-
-
-
249
(i)
(ii)
(iii)
Accrued expenses related to services and goods provided to the Group prior to 30
June 2009, but the Group was not charged or invoiced for these goods and services
by the supplier until after 30 June 2009. The amounts are generally payable and
paid within 30 Days and are non-interest bearing.
Trade and sundry creditors are non-interest bearing with the exception of amounts
owed on corporate credit cards and after 30 days interest is charged at rates ranging
between 14% and 16%. All trade and sundry creditors are generally payable on
terms of 30 days
Funds held in trust, relate to funds received as part of a capital raising but the raising
was not completed and shares issued until August 2009.
SECTION 2 | 48
48
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
14: Trade and other payables (cont)
(iv)
The financial risk related to trade and other payables is managed by ensuring
sufficient at call cash balances are maintained by the Company to enable the
settlement in full of all amounts as and when they become due for payment.
15: Provisions
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
Provision for annual leave
37
-
37
-
16: Issued capital
Changes to the then Corporations Law abolished the authorised capital and par value concept in
relation to share capital from 1 July 1998. Therefore, the company does not have a limited
amount of authorised capital and issued shares do not have a par value.
Fully paid ordinary shares carry one vote per share and carry the right to dividends
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Balance brought forward
Issue of ordinary shares through capital
raisings
Issue of ordinary shares for acquisition of
assets
Issue of ordinary shares for equity based
payments (refer to note 28)
Issue of ordinary shares as a result of
exercised options
Balance at end of financial year
17: Reserves
a) Option reserve
Balance brought forward
Issue of options to corporate advisors
Issue of options to directors (i)
Issue of options to senior management (i)
Issue of options to consultants (i)
Options exercised
Balance at end of financial year
(i) Refer to note 28
2009
2008
No
' 000
193,009
$' 000
93,666
No
' 000
$' 000
37,202
5,238
25,000
4,718
56,235
35,044
-
500
-
135
65,000
6,150
32,000
46,720
-
218,509
-
98,519
2,572
193,009
514
93,666
Consolidated
Parent
2009
$' 000
154,994
-
1,013
191
334
-
156,532
2008
$' 000
141
126,482
28,382
-
-
(11)
154,994
2009
$' 000
154,994
-
1,013
191
334
-
156,532
2008
$' 000
141
126,482
28,382
-
-
(11)
154,994
49
SECTION 2 | 49
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
17: Reserves (cont)
The option reserve arises from the accumulated proceeds received from the issuing of options
and accumulate the value of options issued in consideration for share based payments. Amounts
are transferred out of the reserve and into issued capital when the options are exercised. Further
information about share-based payments to directors and senior management is made in note 32
to the financial statements.
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
b) Foreign Currency translation reserve
Current year adjustment from currency
translation of foreign controlled entities (i)
(i)
6
6
The foreign currency translation reserve records the foreign currency differences
arising from the translation of the foreign subsidiary’s accounts from Danish Kroner,
the functioning currency of the Greenland Minerals and Energy (Trading) A/S, to
Australian dollars.
-
-
-
-
-
-
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
c) Total reserves
Option reserve
Foreign currency translation reserve
Consolidated
Parent
2009
$' 000
156,532
6
156,538
2008
$' 000
156,994
-
156,994
2009
$' 000
156,532
-
156,532
2008
$' 000
156,994
-
156,994
18: Dividends
No dividends have been proposed or paid during the year.
19: Accumulated losses
Balance at beginning of financial year
Loss attributable to members of parent
entity
Related income tax
Balance at end of financial year
20: Earnings per share
Consolidated
Parent
2009
$' 000
(202,967)
2008
$' 000
(200)
2009
$' 000
(202,954)
2008
$' 000
(200)
( 4,009)
(202,767)
(3,999)
(202,754)
(206,976)
(202,967)
(206,953)
(202,954)
Basic loss per share
From continuing operations
Diluted loss per share
From continuing operations
SECTION 2 | 50
Consolidated
2009
Cents
Per share
2008
Cents
Per share
2.00
125.00
2.00
125.00
50
Notes to the Financial Statements
For the year ended 30 June 2009
20: Earnings per share (cont)
Greenland Minerals and Energy Limited
2009 Financial Report
197,406
162,302
Weighted average number of shares used
in the calculation of basic and diluted loss
per share
(i)
There were 174,199,287 potential ordinary shares on issue at 30 June 2009 that are
not dilutive and are therefore excluded from the weighted average number of
ordinary shares and potential ordinary shares used in the calculation of diluted
earnings per share.
21: Prior period adjustments
a)
b)
c)
In the prior period the acquisition of Chahood Capital Limited and interest in the
Kvanefjeld Joint Venture were accounted for under AASB 3 – Business Combinations.
The application of this standard resulted in the shares issued as consideration being
valued at the market value on date of issue with the excess of the consideration over the
fair value of assets acquired capitalised, as part of capitalised exploration and evaluation
expenditure in the consolidation financial report.
Subsequently it was identified that the transactions did not meet the definition of a
business combination under AASB 3. The transactions should have been measured
under AASB 2 – Share Based Payments and the value of the shares issued by the
Company were based on the independent valuation of the joint venture assets at the time
of the acquisition. As a result, both the Capitalised exploration and evaluation
expenditure and Issued capital balances decreased by $65,350 thousand, refer to the
table below.
In the prior period the valuation of the directors’ options and shares did not appropriately
reflect the relevant grant date and vesting conditions. As a result, the option reserve
decreased by $7,277 thousand, issued capital increased by $320 thousand and equity
based payments decreased by $6,957 thousand, refer to the table below.
In the prior period the valuations of the options and shares issued to the Corporate
Advisor did not appropriately reflect the relevant grant date and vesting conditions and
were not recognised as equity based payments. As a result, the option reserve
increased by $127,587 thousand, issued capital increased by $43,800 thousand and
equity based payments increased by $171,378 thousand, refer to table below.
An adjustment has been applied to the comparative disclosures in the financial statements for the
period ended 30 June 2009.
The aggregate effect of this adjustment is as follows:
Previously stated
30 Jun 2008
$’000
Adjustment
$’000
Restated
30 June 2008
$’000
Capitalised exploration and evaluation
expenditure
Option Reserve
Issued Capital
Accumulated Losses
87,705
34,693
114,896
38,546
(65,350)
22,355
120,300
(21,230)
164,421
154,994
93,666
202,967
The impact on the basic and diluted loss per share for the period ended 30 June 2008 as a result
of the adjustment to the Loss for the period is as follows:
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
51
SECTION 2 | 51
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
21: Prior period adjustments (cont)
Basic loss per share (cents)
Diluted loss per share (cents)
22: Commitments for expenditure
Previously stated
30 Jun 2008
(0.24)
(0.24)
Restated
30 Jun 2008
(125.00)
(125.00)
Exploration Commitments: The Company has one exploration license for which it has exploration
commitments. EL 2005/28 is located in Greenland. The Bureau of Minerals and Petroleum of
Greenland have advised Greenland Minerals and Energy Limited that expenditure made in the
2008 year is sufficient to keep the license in good standing until December 2011.
Consolidated
Parent
2009
2008
2009
2008
Tenement commitments
Not longer than 1 year
Longer than 1 year but not longer than 5
years
Longer than 5 years
Operating leases
Not longer than 1 year
Longer than 1 year but not longer than 5
years
Longer than 5 years
Other contractual obligations (ii)
Not longer than 1 year
Longer than 1 year but not longer than 5
years
Longer than 5 years
500
500
121
550
671
250
250
500
500
500
121
671
792
250
250
500
500
500
121
550
671
250
250
500
500
500
121
671
792
250
250
500
(i)
(ii)
The only commitments for operating leases are lease rentals on the Company’s Perth
head office premises. The current lease expires on the 30 November 2013, with a 5
year renewal option. Lease payments are reviewed every two years with the first
review due 1 December 2010 and are based on movement in the consumer price
index.
Relates to ongoing contractual obligations with Gravner Limited for corporate
advisory services.
SECTION 2 | 52
52
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
23: Contingent liabilities and contingent assets
Payroll tax (i)
Legal related costs (ii)
Consolidated
2009
$' 000
2008
$' 000
1,500
500
2,000
1,100
-
1,100
Parent
2009
$' 000
2008
$' 000
1,500
500
2,000
1,100
-
1,100
(i)
(ii)
As a result of the requirements of the Western Australian Payroll Tax Assessment
Act 2002, the Company may have a contingent liability in respect of the granting of
the equity instruments of approximately $1,500,000. This liability will only become
payable upon the options vesting.
Costs associated with defending writs served on the Company by Westrip Holdings
Limited and Rimbal Pty Ltd. The contingent liability is based on an estimation by
directors after obtaining legal opinion.
24: Jointly controlled operations
The Group is a venturer in the following jointly controlled operations:
Name of venture
Kvanefjeld Project (i)
Principal activity
Mineral exploration and evaluation
Total interest
2009
%
61
2008
%
61
The joint venture is an un-incorporated joint venture between the Group and Westrip Holdings
Limited as described in Note 13.
(i)
(ii)
There are no assets employed separately in the joint venture or capital commitments
separate from the commitments brought to account by the Company.
There are no contingent liabilities in relation to the joint venture.
25: Subsidiaries
Name of subsidiary
Chahood Capital Limited
Greenland Minerals and Energy (Trading) A/S
These companies are not members of a tax-consolidated group.
Country
of incorporation
Isle of Man
Greenland
Ownership interest
2008
2009
%
%
100
100
61
61
26: Acquisition of assets
(a) On 31 July 2007, Greenland Minerals and Energy Limited acquired 100% of Chahood Capital
Limited. As the entity was non-trading and the only asset held was cash, this purchase
transaction was accounted for as an acquisition of and asset, not a business combination.
Purchase consideration
Consideration
Cash
Shares Issued – in Greenland Minerals and
Energy Limited (i)
Total consideration
Number
of shares
Fair
Value
per
security
$
-
-
35,000,000
0.0946
Fair value
$
1,000,000
3,311,538
4,311,538
53
SECTION 2 | 53
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
26: Acquisition of assets (cont)
(b) On 31 July 2007, Greenland Minerals and Energy acquired a 61% interest in Greenland
Minerals and Energy (Trading) A/S, through its subsidiary, Chahood Capital Limited. Greenland
Minerals and Energy (Trading) A/s holds the mineral exploration rights to the Kvanefjeld Project.
As the entity was non-trading and the only asset held was cash of $100,000, this purchase
transaction was accounted for as an acquisition of and asset, not a business combination.
Consideration
Cash
Shares Issued – in Greenland Minerals and
Energy Limited
Total consideration
Number
Fair Value
of shares
per
security
$
-
-
30,000,000
0.0946
Fair value
$
2,000,000
2,838,462
4,838,462
(i)
Determined with reference to the fair value of the interest in Kvanefjeld Project,
acquired through Greenland Minerals and Energy (Trading) A/S, which Chahood
Capital Limited acquired a 61% interest in on 31 July 2007.
27: Notes to the cash flow statement
Reconciliation of loss for the period to net cash flows from operating activities
Loss for the year
(Gain) loss on sale or disposal of non-
current assets
Impairment of fair value through profit and
loss of financial assets
Depreciation
Equity-settled share-based payments
Interest income received and receivable
Interest expense paid
(Increase)/decrease in assets
Trade and other receivables
Other assets
Increase (decrease) in liabilities
trade and other payables
in other liabilities
in provisions
Net cash used in operating activities
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
(4,015)
(202,775)
(3,999)
(202,754)
210
142
94
981
(1,337)
5
280
594
-
37
(3,009)
-
210
-
-
82
201,607
(1,023)
-
(280)
(25)
102
(4)
-
(2,316)
142
94
981
(1,337)
5
188
590
-
37
(3,089)
-
82
201,607
(1,023)
-
(296)
(25)
93
-
-
(2,316)
SECTION 2 | 54
54
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
27: Notes to the cash flow statement (cont)
Non-cash financing and investing activity
(i)
(ii)
The Company, as part consideration for the sale of its Three Sisters Tenement,
received 1,200,000 shares valued at $240 thousand in Riviera Minerals Limited, the
purchaser.
During the year the company capitalised share based payments made to directors,
senior management and corporate advisors totaling $692 thousand for services
provided which are directly related to the Kvanefjeld Project.
The Company has not entered into any other non-cash financing or investing activities.
28: Share based payments
a) The issue of shares for share based payments
The issue of 500,000 shares valued at $135 thousand, to Mr Hans Kristian Schønwandt was
approved at a shareholders’ meeting held on 25 November 2008. The fair value of the shares
issued was $0.27, based on the trading price of the company’s shares on the ASX, on the original
grant date. The purpose of the issue of the shares and options (refer to Note 28 (b) for details of
options granted) was for consideration for the cancellation of all share milestones under a director
service agreement that could have potentially lead to the issue of up to 2,000,000 shares to Mr
Schønwandt subject to vesting conditions. The cancellation has been accounted for as an
acceleration of the vesting conditions with an amount of $962 thousand recognised in the current
financial year. This amount represents the total remaining fair value (including current year
vesting expense) as determined at the original grant date. In accordance with AASB 2 – Share
Based Payments, no additional amount has been brought to account for the replacement shares
and options as it has been determined that the fair value of these shares and options is less than
the net fair value of the cancelled equity instrument as determined at the date of cancellation
During the year, shares previously granted to S Stafford-Michael were forfeited upon his
resignation as a director of the company. As a result, an amount of $1,228,334 recognised in the
share based payments reserve to 30 June 2008 was reversed to the income statement in the
current year. These shares were subject to vesting conditions that were not met at the date of
resignation.
(b) The issue of options for share based payments
The company granted 9,250,000 share options as shareholder approved share based payments
to directors, senior management and corporate advisors.
The following share-based payment arrangements, to directors, senior management and
corporate advisors were in existence during the current and comparative reporting periods:
Grant
Expiry
Exercise
No
Date
Date
Price
Value @
grant Date
$
Series
2008
3
4
5
6
19,800,000 31/07/2007
30/06/2011
3,000,000 31/07/2007
30/06/2011
75,000,000 31/07/2007
25,000,000
31/07/2007
122,800,000
30/06/2011
30/06/2011
$0.20
$0.20
25,260,513
3,827,350
$0.20
$0.20
95,683,756
31,894,585
156,666,204
55
SECTION 2 | 55
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
28: Share based payments (cont)
Grant
Expiry
Exercise
Series
No
Date
Date
Price
Value @
grant Date
$
2009
9
10
11
12
13
14
1,500,000
25/11/2008
30/06/2011
$0.20
240,000 (1)
750,000
25/11/2008
30/06/2013
1,500,000
11/03/2009
30/06/2011
1,500,000
11/03/2009
30/06/2011
2,000,000
25/06/2009
30/06/2011
2,000,000
25/06/2009
30/06/2011
$0.10
$0.50
$1.00
$0.50
$1.00
9,250,000
190,893
177,876
156,703
371,200
258,600
1,395,272
(1) This amount includes $160 thousand representing the fair value of options granted to
Mr Hans Kristian Schønwandt as a replacement equity instrument upon cancellation
of equity instruments previously granted under a director service agreement. As
noted at Note 28 (a), the fair value of the replacement equity instruments have not
been brought to account as it has been determined that the fair value is less than the
original cancelled equity instrument determined as at the date of acquisition.
Options were priced using the Black Scholes model. The expected life of the option is based on
the time between grant date of the option and the option expiry date. The expected volatility has
been calculated using the closing price on the ASX of the company’s fully paid shares over
varying time periods.
Input into
model
Grant date
share price
Exercise Price
Expected
volatility
Option life
(years)
Dividend yield
Risk free rate
of return
Series
3
Series
4
Series
9
Series
10
Series
11
Series
12
Series
13
Series
14
$1.42
$0.20
$1.42
$0.20
$0.27
$0.20
$0.27
$0.10
$0.16
$0.50
$0.16
$1.00
$0.37
$0.50
$0.37
$1.00
70%
70%
148%
148%
179%
179%
109%
109%
3.92
-
3.92
-
2.59
-
4.59
-
2.30
-
2.30
-
2.01
-
2.01
-
6.12%
6.12%
5.65%
5.65%
2.78%
2.78%
4.17%
4.17%
No options issued to directors and senior management were exercised during the financial year
ended 30 June 2009.
SECTION 2 | 56
56
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
28: Share based payments (cont)
Series 3
These director incentive options were granted equally to Messrs Cato, McIllree and Whybrow
subject to the following vesting hurdles:
Tranche Number of options
1
2,200,000
Vesting hurdle
The volume weighted average share price on the ASX of the
company’s fully paid shares is 50 cents or more for 20
consecutive trading days
The volume weighted average share price on the ASX of the
company’s fully paid shares is $1.00 or more for 20
consecutive trading days
The volume weighted average share price on the ASX of the
company’s fully paid shares is $1.50 or more for 20
consecutive trading days
2
3
2,200,000
2,200,000
Series 4
These director incentive options were granted to Mr Malcolm Mason subject to the following
vesting hurdles:
Tranche Number of options
1
2,000,000
Vesting hurdle
Mr Mason continues to serve as a director of the company for
12 consecutive months and makes himself available to provide
technical geological, services including field services to the
company’s Kvanefjeld project.
Mr Mason continues to serve as a director of the company for
18 consecutive months and makes himself available to provide
technical geological, services including field services to the
company’s Kvanefjeld project.
2
1,000,000
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Series 5 & 6
These series consist of 75,000,000 options and 25,000,000, both with an exercise price of $0.20,
granted Gravner Limited under a corporate advisor agreement that formed part of the Kvanefjeld
acquisition. These options are vested unrestricted options.
Series 9
These are director incentive options series consisting of 1,000,000 options issued to Mr H
Schønwandt and 500,000 options issued to Mr M Mason of 2,000,000. These were $0.20
exercise prices options and there were no further vesting conditions attached to these options.
Series 10
Senior management incentive options issued to Mr S Bunn, consisting of 750,000 options with a
$0.10 exercise price. There were no further vesting conditions attached to these options.
Series 11 & 12
These options were issued to consultants for services provided to the Company in securing
contracts for the drilling program at the Kvanefjeld project. The series consists of 1,500,000
options with an exercise price of $0.50 and 1,500,000 options with an exercise price of $1.00.
There were no further vesting conditions attached to theses options.
Series 13 & 14
Director options issued to Mr M Hutchinson, consisting of 2,000,000 options with a $0.50 exercise
price and 2,000,000 options with a $1.00 exercise price. There were no further vesting conditions
attached to theses options.
57
SECTION 2 | 57
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
28: Share based payments (cont)
Terms under which the options are issued are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Each Option entitles the holder to one Share
Until the Options are vested, the Options will be unlisted and will not be transferable
except with the approval of the Board. Once the Options are vested, the Company
will apply to have the Options listed and the Options will be freely transferable.
The Company will provide to each Options holder a notice that is to be completed
when exercising the Options (Notice of Exercise). Subject to these terms, the
Options may be exercised wholly or in part by completing the Notice of Exercise and
delivering it together with payment to the secretary of the Company to be received
any time prior to the Expiry Date. The Company will process all relevant documents
received at the end of every calendar month.
Upon the exercise of an Option and receipt of all relevant documents and payment,
the holder in accordance with paragraph (i) will be allotted and issued a Share
ranking pari passu with the then issued Shares.
There will be no participating rights or entitlements inherent in the Options and the
holders will not be entitled to participate in new issues of capital which may be
offered to Shareholders during the currency of the Options. However, the Company
will ensure that for the purposes of determining entitlements to any such issue, the
record date will be at least 7 business days after the issue is announced. This will
give Option holders the opportunity (where available) to exercise their Options prior
to the date for determining entitlements to participate in any such issue.
If there is a bonus issue (Bonus Issue) to Shareholders, the number of Shares over
which an Option is exercisable will be increased by the number of Shares which the
holder would have received if the Option had been exercised before the record date
for the Bonus Issue (Bonus Shares). The Bonus Shares must be paid up by the
Company out of profits or reserves (as the case may be) in the same manner as was
applied in the Bonus Issue, and upon issue will rank equally in all respects with the
other Shares on issue as at the date of issue of the Bonus Shares.
In the event of any reconstruction (including consolidation, sub-division, reduction or
return) of the issued capital of the Company prior to the Expiry Date, all rights of an
Option holder are to be changed in a manner consistent with the Listing Rules.
In the event that the Company makes a pro rata issue of securities, the exercise price
of the Options will be adjusted in accordance with the formula set out in Listing Rule
6.22.2.
The following reconciles the outstanding share options granted at the beginning and end of the
financial year.
Balance at beginning of the financial year
Granted during financial year
Forfeited during the financial year
Exercised during the financial year
Expired during the financial year
Exercisable at the end of the financial
year
2009
2008
Weighted
average
exercise
price
0.2
0.62
-
-
-
Number of
options
122,800,000
9,250,000
-
-
-
Number of
options
122,800,000
-
-
-
-
132,050,000
0.22
122,800,000
Weighted
average
exercise
price
0.2
0.2
-
-
-
0.2
SECTION 2 | 58
58
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
29: Financial instruments
(a) Capital risk management
The Group manages its capital in order to maintain sufficient funds are available provide the
shareholders with adequate returns and ensure that the Group can fund its exploration and
evaluation activities as a going concern.
The Group’s overall strategy remains unchanged from 30 June 2008.
The capital structure of the Group consists of fully paid shares and options as disclosed in notes
16 and 17 respectively.
None of the Group’s entities are subject to externally imposed capital requirements.
(b) Categories of financial instruments
Financial assets
Cash and equivalents
Loans and receivables - current
Available for sale financial asset
Financial liabilities
Amortised cost
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
14,039
1,281
98
21,637
1,561
-
13,585
6,488
4,410
21,631
6,307
4,311
2,538
259
2,531
249
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
(c) Financial risk management objectives
The Group’s principal financial instruments comprise cash and short term deposits. The main
purpose of the financial instruments is to earn the maximum amount of interest at a low risk to the
Group. For the period under review, it has been the Group’s policy not to trade in financial
instruments
The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and
liquidity risk. The board reviews and agrees policies for managing each of these risks and they
are summarised below:
(i)
(ii)
Interest Rate Risk
The Company is exposed to movements in market interest rates on short term
deposits. The policy is to monitor the interest rate yield curve out to 120 days to
ensure a balance is maintained between the liquidity of cash assets and the
interest rate return. The Company does not have short or long term debt, and
therefore this risk is minimal.
There has been no change in managing interest rate risk or the method of
measuring risk from the prior year.
Credit Risk
Credit risk refers to the risk that a counter party will default on its contractual
obligations resulting in financial loss to the Group. The Group has adopted the
policy of only dealing with credit worthy counterparties and obtaining sufficient
collateral or other security where appropriate, as a means of mitigating the risk of
financial loss from defaults.
The Group does not have any significant credit risk exposure to any single
counterparty or any Company of counterparties having similar characteristics.
The credit risk on liquid funds is limited because the counterparties are banks
with high credit – ratings assigned by external international rating agencies. The
carrying amount of financial assets recorded in the financial statements, net of
any provisions for losses, represents the Company’s maximum exposure to
credit risk
59
SECTION 2 | 59
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
29: Financial instruments (cont)
There has been no change in managing credit risk or the method of measuring
risk from the prior year.
(iii)
Liquidity Risk
Liquidity risk refers to maintaining sufficient cash and equivalents to meet on
going commitments, as and when they occur. The primary source of liquid funds
for the Group, are funds the Group holds on deposit with varying maturity dates.
The Group monitors its cash flow forecast and actual cash flow to ensure that
present and future commitments are provided for. As well as matching the
maturity date of funds invested with the timing of future commitments.
There has been no change in managing credit risk or the method of measuring
risk from the prior year.
The following table details the company’s and the Group’s expected maturity for its non-derivative
financial assets. The tables below have been drawn up based on the undiscounted contractual
maturities of the financial assets including interest that will be earned on those assets except
where the company/Group anticipates that the cash flow will occur in a different period.
Consolidated
Weighted
Average
Effective
interest
rate
< 6
Months
6 – 12
Months
%
$' 000
$' 000
2009
Cash and equivalents
3.2
6,114
7,925
1 - 5
Years
$' 000
> 5
Years
$' 000
-
-
Trade and receivables - current
Other financial assets
-
-
281
1,000
-
-
98
6,395
8,925 98
2008
Cash and equivalents
Trade and receivables - current
6.4
-
637
21,000
-
561
-
1,000
1,198
21,000 1,000
SECTION 2 | 60
-
-
-
-
60
Total
$' 000
-
14,039
1,281
98
15,418
21,637
1,561
23,198
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
29: Financial instruments (cont)
Company
Weighted
Average
Effective
interest
rate
< 6
Months
6 -12
Months
%
$' 000
$' 000
1 -5
Years
$' 000
> 5
Years
$' 000
Total
$' 000
2009
Cash and equivalents
3.2
5,660
7,925
Trade and receivables - current
Trade and receivables - Non- current
-
-
Other financial assets
281
1,000
369
-
-
-
-
-
-
-
-
13,585
1,281
4,838
5,207
98
4,312
4,410
6,310
8,925 98
9,150
24,483
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
2008
Cash and equivalents
Trade and receivables - current
Trade and receivables - Non- current
Other financial assets
6.4
-
631
21,000
-
469
-
-
-
-
-
1,000
-
-
-
21,631
1,469
-
-
4,838
4,838
4,311
4,311
1,100
21,000 1,000
9,149
32,249
The following tables detail the company’s and the Group’s remaining contractual maturity for its
non-derivative financial liabilities. The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the Group can be required to
pay. The table includes both interest and principal cash flows.
Consolidated
Weighted
Average
Effective
interest
rate
%
< 6
Months
$' 000
6 – 12
Months
$' 000
1 – 5
Years
$' 000
> 5
Years
$' 000
Total
$' 000
-
-
2,538
2,538
259
259
-
-
-
-
-
-
-
-
-
-
-
-
2,538
2,538
-
259
259
2009
Trade and other payables
2008
Trade and other payables
61
SECTION 2 | 61
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
29: Financial instruments (cont)
Company
2009
Financial liabilities
Trade and other payables
2008
Trade and other payables
Weighted
Average
Effective
interest
rate
%
< 6
Months
$' 000
6 -12
Months
$' 000
1 – 5
Years
$' 000
> 5
Years
$' 000
Total
$' 000
-
-
2,531
2,531
249
249
-
-
-
-
-
-
-
-
-
2,531
2,531
249
249
-
-
-
-
(d) Market risk
(i)
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial
instruments value will fluctuate as a result of changes in market interest rates
and the effective weighted average interest rates on those financial assets and
financial liabilities in as follows
The Group has performed sensitivity analysis relating to its exposure to interest
rate risk at balance date. This sensitivity analysis demonstrates the effect on the
current year results and equity post tax which could result from a change in these
risks. In the analysis a 1% or 100 basis points movement has been applied on
the assumption that interest rates are unlikely to move more than that, taking into
account the current interest rate levels and general state of the economy.
There has been no change in managing credit risk or the method of measuring
risk from the prior year.
Interest Rate Sensitivity Analysis
At 30 June 2009, the effect on profit and equity as a result of changes in the
interest rate, with all other variables remaining constant would be as follows:
Change in profit
Increase in interest rate by 1% (100 basis
points)
Decrease in interest rate by 1% (100 basis
points)
Consolidated
2009
$' 000
2008
$' 000
Parent
2009
$' 000
2008
$' 000
148
(148)
226
(226)
148
226
(148)
(226)
(i)
A 1% or 100 basis points variable has been applied to the interest rate sensitivity
analysis, after giving consideration to the current interest rate levels and general
state economy.
SECTION 2 | 62
62
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
29: Financial instruments (cont)
Fair value of financial instruments
The carrying value of all financial instruments is the approximate fair value of the instruments.
This is based on that all financial instruments have either a short term date of maturity or are
loans to subsidiaries.
30: Key management personnel compensation
The aggregate compensation made to key management personnel of the company and the
Group is set out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payment
Consolidated
2009
$
1,589,860
74,700
-
-
2008
$
1,011,327
31,111
-
-
1,338,911 35,584,646
3,003,471 36,627,084
Company
2009
$
1,589,860
74,700
-
-
2008
$
1,011,327
31,111
-
-
1,338,911 35,584,646
3,003,471 36,627,084
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
31: Transactions with other related parties
Missoni Investments Pty Ltd a Company of which Mr Malcolm Mason is a director was paid
directors and consultancy fees of $283,185 during the year (2008: $197,527). Of this amount,
$190,375 related to payments to Mr Mason for services provided by Mr Mason to the company
and this amount has been disclosed in the details of remuneration paid to Mr Mason. The
balance of the amount paid to Missoni Investments Pty Ltd, relates to services provided by other
staff of the company and for the payment of rent, charged by Missoni Investments Pty Ltd on
storage facilities, provided by the company.
Mineralhunt Services APL a company of which Mr Hans Kristian Schønwandt is a director, was
paid consultancy and director fees of $159,006 during the year (2008: $211,500). This amount
has been disclosed in the details of remuneration paid to Mr Schønwandt.
Shaun Bunn and Associates Pty Ltd is a company of which Mr Shaun Bunn is a director, was
paid consultancy fees of $299,026 during the year (2008: nil). This amount has been disclosed in
the details of remuneration paid to Mr Bunn.
63
SECTION 2 | 63
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
32: Key management personnel equity holdings
Fully paid ordinary shares of Greenland Minerals and Energy Limited
Balance
at
1 July
No.
Granted as
compensation
No.
Received
on
exercise of
options
No.
Net other
change
No.
Balance
at
30 June
No.
Balance held
nominally
No.
2009
M
Hutchinson
R McIllree
S Cato
A Ho
M Mason
H
Schønwandt
S Stafford-
Michael
J Whybrow
J Mair
S Bunn
2008
R McIllree
S Cato
A Ho
M Mason
H
Schønwandt
S Stafford-
Michael
J Whybrow
-
3,102,295
921,100
50,000
610,000
-
-
-
-
-
1,000,000
500,000
1,000,000
750,100
-
-
2,850,095
800,100
-
360,000
-
-
-
-
-
-
-
1,000,000
-
700,100
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
158,800
-
150,000
-
-
3,261,095
921,100
200,000
610,000
-
1,500,000
-
150,000
-
-
252,200
121,000
50,000
250,000
1,000,000
900,100
-
-
3,102,295
921,100
50,000
610,000
-
1,000,000
-
50,000
1,000,000
750,100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
SECTION 2 | 64
64
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
32: Key management personnel equity holdings (cont)
Share options of Greenland Minerals and Energy Limited
Balance
at
1 July
No.
Granted
as
compen-
sation
No.
-
4,000,000
8,922,000
7,400,100
-
-
-
-
3,180,000
500,000
-
-
7,310,000
-
-
1,000,000
-
-
750,000
1,935,000
6,600,000
800,100
6,600,000
-
-
180,000
3,000,000
-
-
-
-
700,000
6,600,000
2009
M Hutchinson
R McIllree
S Cato
A Ho
M Mason
H Schønwandt
S Stafford-Michael
J Whybrow
J Mair
S Bunn
2008
R McIllree
S Cato
A Ho
M Mason
H Schønwandt
S Stafford-Michael
J Whybrow
Exercised
No.
Net other
change (i)
No.
Bal at 30
June
No.
Bal
vested at
30 June
No.
Vested
and
exerci-
sable
No.
Options
vested
during
year
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
-
-
4,000,000
8,922,000
2,322,000
2,322,000
7,400,100
800,100
800,100
-
-
-
-
-
3,680,000
680,000
680,000
2,500,000
1,000,000
1,000,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
7,310,000
710,100
710,100
2,500,000
2,500,000
2,500,000
2,500,000
-
-
-
-
750,000
750,000
750,000
750,000
387,000
8,922,000
2,322,000
2,322,000
-
-
-
-
-
7,400,100
800,100
800,100
-
-
-
3,180,000
180,000
180,000
-
-
-
-
-
-
10,000
7,310,000
710,000
710,000
-
-
-
-
-
-
-
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
(i) Net other change relates to options purchased either on market through the ASX, or through
third party off market transactions.
All share options issued to key management personnel were made in accordance with the
provisions of the employee share option plan.
During the financial year, no options (2008 nil) were exercised by key management personnel
33. Remuneration of auditors
Auditor of the parent entity
Audit or review of the financial report
Preparation of the tax return
Other non-audit services
Consolidated
Company
2009
$
62,876
-
-
62,876
2008
$
31,050
4,200
-
35,250
2009
$
53,500
-
-
53,500
2008
$
31,050
4,200
-
35,250
The auditor of Greenland Minerals and Energy Limited is Deloitte Touche Tohmatsu, for the
period ended 30 June 2008 the auditor was Mack and Co.
65
SECTION 2 | 65
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Notes to the Financial Statements
For the year ended 30 June 2009
Greenland Minerals and Energy Limited
2009 Financial Report
34. Subsequent Events
The following subsequent events occurred after 30 June 2009;
(cid:1) Successful completion of a placement of 4 million shares at $0.25, raising
$1,000,000, less costs, as per the prospectus issued 31 July 2009.
(cid:1) The Company announced on 31 August 2009, it had finalised terms on the
acquisition of a 4% royalty applicable on net profits from the future production of
metals on license 2005/28 in South Greenland. The Company currently holds a
legal and beneficial interest of 61%, in the joint venture with the right to move to
100%, when the Company deems it most appropriate.
Acquisition of the 4% royalty will be subject to shareholders’ approval at an
Extraordinary Meeting, to be called in due course. The Consideration will be
payable in escrowed shares in the Company. This transaction is a transaction
that requires shareholder approval in accordance with listing rule 10.1 of the
Australian Securities Exchange Limited and section 611 of the Corporation Act
2001.
Share placements of 25 million shares at $0.20 completed on 15 May 2009 and
of 4 million shares at $0.25 completed 31 July 2009, were initially made to fund
the acquisition. However, as the consideration was shares in the company,
these funds will instead be used to fund the continuation of the work on the pre-
feasibility study on Kvanefjeld.
(cid:1) The Company has been served with writs by Westrip Holdings Limited (Westrip)
and Rimbal Pty Ltd, issued in the Supreme Court of Western Australia. The
matter relates to the dispute being taken by shareholders of Westrip as a
derivative claim on the behalf of Westrip against the directors of Westrip.
The writs served on the Company, alleged breaches of confidentiality, misleading
conduct and breach of contract and were for unspecified damages and other
relief. The Company, through its solicitors, strongly denies the allegations and
any wrongdoing and will vigorously defend the action.
SECTION 2 | 66
66
Notes to the Financial Statements
For the year ended 30 June 2009
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Greenland Minerals and Energy Limited
2009 Financial Report
Company secretary
Bruce Acutt
Registered office
1st Floor, 33 Colin Street, West Perth, Western
Australia, 6005
Principal administration office
1st Floor, 33 Colin Street, West Perth, Western
Australia, 6005
Share registry
Advanced Share Registry Services
110 Stirling Highway
Nedlands, Western Australia, 6009
Additional stock exchange information as at 3rd September 2009
Number of holders of equity securities
Ordinary share capital
222,508,555 fully paid ordinary shares are held by 1,576 individual shareholders.
Options
144,332,047 options are held by 617 individual optionholders.
Options do not carry a right to vote.
Substantial Shareholders
Shareholder
1. GCM Nominees Limited
2. Westrip Holdings Limited
3. ANZ Nominees Limited
4. Gravner Limited
5. HSBC Custody Nominees
6. Citicorp Nominees Pty Limited
Number
35,000,000
30,000,000
17,108,428
15,000,000
12,895,976
11,160,371
Percentage
15.730%
13.483%
7.689%
6.741%
5.796%
5.016%
67
SECTION 2 | 67
Distribution of holders of quoted sharesGreenland Minerals and Energy Limited
2009 Financial Report
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Distribution of holders of quoted shares
Share Spread
Holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
69
352
376
632
147
1,576
Units
43,367
1,044,867
3,307,186
23,949,121
194,164,014
222,508,555
Percentage
0.019%
0.471%
1.486%
10.763%
87.261%
100%
Twenty largest holders of quoted shares
Ordinary shareholders
1. GCM Nominees Limited
2. Westrip Holdings Limited
3. ANZ Nominees Limited
4. Gravner Limited
5. HSBC Custody Nominees
6. Citicorp Nominees Pty Limited
7. Rochford Limited
8. NGAI Hung Limited
9. South Asian Commodity Holdings Limited
10. Mr Roderick Claude McIllree
11. Merrill Lynch (Australia) Nominees Pty Limited
12. Falfaro Investments Limited
13. National Nominees Limited
14. UBS Nominees Pty Limited
15. NEFCO Nominees Pty Limited
16. Hans Kristian Schonwandt
17. Deck Chair Holdings Pty Limited
18. Mr Simon Stafford-Michael
19. RBC Dexia Investor Services Australia Nominees Pty
Limited
20. Mr Richard Homsany & Mrs Rosa Dianna Marsia Homsany
Fully paid ordinary shares
Number
35,000,000
30,000,000
17,108,428
15,000,000
12,895,976
11,160,371
7,000,000
5,450,000
5,073,712
3,331,095
3,237,255
3,000,000
2,676,233
2,500,000
2,438,000
1,500,000
1,050,000
1,000,000
Percentage
15.730%
13.483%
7.689%
6.741%
5.796%
5.016%
3.146%
2.449%
2.280%
1.497%
1.455%
1.348%
1.203%
1.124%
1.096%
0.674%
0.472%
0.449%
1,000,000
850,000
0.449%
0.382%
161,271,070
72.479%
SECTION 2 | 68
68
9
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
d
t
L
y
g
r
e
n
E
d
n
a
s
l
i
a
r
e
n
M
d
n
a
l
n
e
e
r
G
Distribution of holders of quoted options
Greenland Minerals and Energy Limited
2009 Financial Report
Distribution of holders of quoted options
Option Spread
Holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
12
87
144
287
87
617
Units
6,245
347,979
1,305,372
12,430,043
130,242,408
144,332,047
Percentage
0.004%
0.241%
0.904%
8.612%
90.238%
100%
Twenty largest holders of quoted options
Option Holders
1. Gravner Limited
2. South Asian Commodity Holdings Limited
3. Rochford Limited
4. NGAI Hung Limited
5. Excellent Corporation Limited
6. Mr Cameron French
7. Citicorp Nominees Pty Limited
8. Mr Roderick Claude McIllree
9. Mr John Lefroy Mair
10. Mr David Christopher Kemp
11. Mr Michael Bushell
12. Merrill Lynch (Australia) Nominees Limited
13. Mrs Jenny Lee Bushell
14. CIMB-GK Securities PTE Limited
15. NEFCO Nominees Pty Limited
16. AJ Payne Holdings Pty Limited
17. Tadea Pty Limited
18. Mr Richard Homsany & Mrs Rosa Dianna Marsia Homsany
19. Mr Stephen Frederick Schmedje & Mrs Cornelia Petra
Schmedje
20. Bond Street Custodians Limited
$0.20 Listed Options
Number
43,700,000
12,000,000
11,500,000
10,000,000
9,500,000
3,435,437
3,271,500
2,522,000
2,500,000
2,205,039
2,000,000
2,000,000
1,380,000
1,375,542
1,299,400
900,000
871,200
850,000
Percentage
30.277%
8.314%
7.968%
6.928%
6.582%
2.380%
2.267%
1.747%
1.732%
1.528%
1.386%
1.386%
0.956%
0.953%
0.900%
0.624%
0.604%
0.589%
800,000
765,000
0.554%
0.530%
112,875,118
78.205%
69
SECTION 2 | 69
Greenland Minerals and Energy Limited
ACN 85 118 463 004
BUSINESS OFFICE
First Floor
33 Colin Street
West Perth, Western Australia, 6005
Telephone: +61 8 9226 1100
Facsimile: +61 8 9226 2299
GREENLAND OFFICE
PO Box
Narsaq
Telephone: +299 661 494
Facsimile: +299 662 494
WEBSITE
www.ggg.gl