Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Corporate Directory
Directors
Michael Hutchinson
Roderick McIllree
Simon Cato
John Mair
Anthony Ho
Jeremy Whybrow
Company Secretary
Miles Guy
Non-executive Chairman
Managing Director
Executive Director
Executive Director
Non-executive Director
Non-executive Director
Registered and head office
Unit 6, 100 Railway Road
Subiaco WA 6008
Greenland
Nuugaarmiunt B-847
3921 Narsaq, Greenland
Home Stock Exchange
Australian Securities Exchange, Perth
Code: GGG
Auditors
Deloitte Touche Tohmatsu
Share Registry
Advanced Share Registry
150 Stirling Highway
Nedlands WA 6009
Company Website
www.ggg.gl
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Contents
Corporate governance statement
Directors’ report
Auditor’s independence declaration
Independent auditor’s report
Director’s declaration
Statement of comprehensive income
Statement of financial position
Statements of changes in equity
Statement of cash flows
Notes to the financial statements
1 General information
2 Significant accounting policies
3 Critical accounting estimates and judgments
4 Segmented information
5 Revenue
6 Expenditure
Income tax expense
7
8 Cash and equivalents
9 Trade and receivables
Issued capital
10 Other assets
11 Property plant and equipment
12 Capitalised exploration and evaluation expenditure
13 Trade and other payables
14 Provisions
15
16 Reserves
17 Dividends
18 Accumulated loss
19 Loss per share
20 Non-controlling interest
21 Commitments for expenditure
22 Subsidiaries
23 Notes to the statement of cash flows
24 Share based payments
25 Financial instruments
26 Key management personnel compensation
27 Related party transactions
28 Key management personnel equity holdings
29 Parent company information
30 Auditor remuneration
31 Subsequent events
Additional stock exchange information
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Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
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 GMEL 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, GMEL is required to disclose the extent to which it has
followed the Principles of Best Practice Recommendations during the financial period. Where GMEL
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:
clarifies the respective roles and responsibilities of Board members and senior executives;
(cid:120) enables it to provide strategic guidance and effective supervision of management;
(cid:120)
(cid:120) 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.
(cid:120)
The day-to-day management of the Consolidated 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. With the prior consultation with the
Chairman, each Director is entitled to receive independent professional advice at the Company’s
expense.
Mr Michael Hutchinson, Mr Anthony Ho and Mr Jeremy Whybrow are non-executive Directors, with Mr
Hutchinson and Mr Ho fulfilling the independence criteria outlined in the guidelines.
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 is fulfilled by Mr Michael Hutchinson and Mr Roderick McIllree fills the role of
Managing Director and Chief Executive Officer.
Page | 1
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
CORPORATE GOVERNANCE
The Board has convened an Audit and Risk Committee as well as a Remuneration Committee.
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:
(cid:120)
In Conjunction with the Chairman, the Managing Director’s roles include allocating priorities
and tasks to the executives of the Company, leading the Company generally, raising capital
as required and public relations at all levels.
(cid:120) Business and strategic development.
(cid:120) Other corporate support.
The executive directors are responsible for business strategic 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 Chairman’s and 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 behavior.
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.
The Board has adopted a Diversity Policy as part of the Company’s commitment to workplace
diversity and to ensure a diverse mix of skills and talent exists amongst its directors, senior
management and employees. Diversity includes, but is not limited to, diversity in gender, age,
ethnicity and cultural backgrounds.
No Measurable Objectives were specifically set by the Board during the year, other than the
recruitment of the most suitable candidate for a position, regardless of the individual’s gender or
background.
As a result of the developing nature of the project and associated works program, there has been a
reduction in staff numbers across the Consolidated group. Decisions regarding the retaining of staff
were based solely on the skills required for the project development and future work programs and
not on an individual’s age, gender or background.
Page | 2
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
CORPORATE GOVERNANCE
At 31 December 2012 there were 28 employees including directors in the Consolidated group and
32% of these employees were women. This compares to 31 December 2011, when there were 41
employees including directors, of which 34% were women.
The positions held by women in the Consolidated group at 31 December 2012 include one senior
corporate position and two senior positions within the project team. There are currently no women
holding board or senior management positions (as defined in the remuneration report).
A copy of the Code of Conduct, Securities Trading Policy and Diversity Policy have 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 GMEL’s corporate governance
and structures are in place to verify and safeguard the integrity of the Company’s financial reporting,
which is overseen by the Audit and Risk Committee.
The Company’s financial statements are reviewed or audited, 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 to 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,
(cid:120) The financial records have been properly maintained in accordance with s286 of the
Corporations Act 2001
(cid:120) The financial statements are in accordance with the Corporations Act 2001, comply with
relevant Accounting Standards and Corporation Regulations 2001.
(cid:120) The financial statements are founded on sound system of risk management, as outlined in
principle 7.
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 GMEL 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.
Page | 3
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
CORPORATE GOVERNANCE
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:
(cid:120) Occupational health and safety and work related safety risks
(cid:120) Environment risks
(cid:120) Security of tenure over tenements
(cid:120) 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, as well as stock options and
rights issues.
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.
Page | 4
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
The directors of Greenland Minerals and Energy Limited submit herewith the annual financial report
for the financial year ended 31 December 2012, 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 financial year are:
Michael Hutchinson, Non-Executive Chairman
Roderick Claude McIllree, Managing Director
Simon Kenneth Cato, Executive Director
John Mair, Executive Director
Anthony Ho, Non-Executive Director
Jeremy Sean Whybrow, Non-Executive Director
Company Secretary
The following person held the position of Company secretary at the end of the financial year:
Miles Simon Guy – M. Com(PA) is an accountant with 16 years’ experience in both public practice
and commercial environments. Mr Guy is also currently the Chief Financial Officer for Greenland
Minerals and Energy Limited.
Principal Activities
The principal activity of the Consolidated group during the financial year was mineral exploration and
project evaluation. Specifically the continued evaluation of the Consolidated group’s Kvanefjeld
project.
There were no significant changes in the nature of the Consolidated group’s principal activities during
the financial year.
Operating Results
The net loss after providing for income tax amounted to $17,344,249 (2011: loss $14,209,550)
Significant Changes in State of Affairs
During the financial year, there were no significant changes in the state of affairs of the Consolidated
group.
Subsequent Events
There has not been any matter or circumstance occurring subsequent to the financial period that has
significantly affected, or may significantly affect, the operations of the Consolidated group, the results
of those operations, or the state of affairs of the Consolidated group in future years.
Future Developments
Likely developments in, and expected results of the operations of the Consolidated Group in
subsequent years are referred to elsewhere in this report, particularly on pages 7 to 23. In the opinion
of the directors, further information on those matters could prejudice the interests of the company and
the Consolidated Group and has therefore not been included in this report.
Page | 5
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ 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 period covered by this report.
Dividends
In respect of the financial year ended 31 December 2012, 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. No dividends were paid in the comparative period ended 31 December
2011.
Shares
During the year ended 31 December 2012, the following ordinary shares of Greenland Minerals and
Energy Limited were issued, as detailed in Note 15 to the financial report.
The total number of ordinary shares on issue at 31 December 2012 was 567,937,409 (31 December
2010: 416,390,488).
The total number of shares issued during the current financial year was 151,546,921. .
There is no other class of shares issued by the Company and the Company has no un-issued shares,
other than those registered to options and performance rights which are disclosed in the next section.
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
Greenland Minerals
and Energy limited
Greenland Minerals
and Energy limited
Greenland Minerals
and Energy limited
Greenland Minerals
and Energy limited
Number of
shares
issued
Class of share
Amount paid for/
fair value of
shares
Amount unpaid
on shares
200,000
Ordinary shares
2,138,425
Ordinary shares
56,858,499
Ordinary shares
92,324,997
Ordinary shares
25,000
Ordinary shares
$0.37
$0.32
$0.30
$0.29
$0.26
-
-
-
-
-
Options and performance rights
During the year ended 31 December 2012 the number of options and performance rights of
Greenland Minerals and Energy Limited that were issued are detailed in Note 24 to the financial
report.
Page | 6
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Details of unissued shares or interests under option and performance rights at the date of this report
are:
Issuing entity
Greenland Minerals and
Energy Limited (i)
Greenland Minerals and
Energy Limited (i)
Greenland Minerals and
Energy Limited (ii)
Greenland Minerals and
Energy Limited (iii)
Greenland Minerals and
Energy Limited (iii)
Number of
shares
under
option
Number of
shares under
performance
rights
7,000,000
750,000
-
-
-
17,450,000
4,999,520
25,769,191
-
-
Class of
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Exercise
price of
option
Expiry date of
option
$1.75
31 August 2013
$0.25
31 March 2013
NA
15 May 2014
$0.75 15 October 2014
$0.60
5 October 2014
(i)
(ii)
(iii)
Options were issued during the previous financial year.
16,450,000 performance were issued in the previous financial year and 1,000,000
performance rights were issued in the current financial year
Options were issued in the current financial year.
The holders of these options and performance rights do not have the right, by virtue of being holders,
to participate in any share issue or interest issue of the Consolidated group or of any other body
corporate.
Review of operations
In 2012, against a backdrop of global economic uncertainty, greatly restricted capital markets, and
suppressed investor interest in the rare earth element and uranium sectors, Greenland Minerals and
Energy Limited achieved a number of major milestones that see the Kvanefjeld multi-element project
transition towards the development phase, and be well positioned to attract renewed market interest.
On the basis of continued technical advances Kvanefjeld is now
increasingly
recognised as a project of genuine global
significance. This reflects both the scale of the resource and the
clear potential to develop Kvanefjeld as a cost-competitive,
readily expandable source of rare earth metals and uranium.
While the Consolidated group has systematically advanced the
Kvanefjeld project, the profile of Greenland’s emerging minerals
industry continues to grow with increasing coverage in the
international press. In particular, media coverage has focussed
on growing interest in Greenland’s natural resources from South
Korean, Chinese and European groups, with the Greenland
government actively promoting
their
resource sector.
investment
foreign
in
On the basis of continued
technical advances
Kvanefjeld is now
increasingly recognised as a
project of genuine global
significance.
Key technical developments in 2012 included initial Joint Ore Reserve Committee (JORC) code
compliant mineral resource estimates for the Sørensen and Zone 3 REE-U deposits, finalisation of the
Kvanefjeld prefeasibility study, successful pilot plant operation of the Kvanefjeld concentrator
(beneficiation) circuit, and semi-continuous leach test work programs to optimise the atmospheric
leach conditions in the refining stage.
Page | 7
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Review of operations (cont’d)
These achievements have served to significantly de-risk Kvanefjeld’s technical development, and see
Kvanefjeld rank strongly against other emerging rare earth producers.
Important corporate developments were also achieved in 2012. The company executed the
agreement to acquire the outstanding 39% of the Kvanefjeld project, thereby moving to 100% project
ownership. With Kvanefjeld moving into definitive feasibility studies the move to full project ownership
was an important step as the Consolidated group looks to structure investment opportunities for
potential development partners. A $17M capital raising was also completed late in the year that sees
the Company well-funded for the immediate future. On the basis of continued advances across all
aspects of the Kvanefjeld project Bell Potter Securities, Australia’s largest independent stock broker,
commenced comprehensive research coverage on the Consolidated group in the third quarter of
2012.
Overview of the northern Ilimaussaq complex (‘Kvanefjeld project’). Mineral resource estimates
have now been established at Kvanefjeld, Sørensen, and Zone 3. Drilling at Steenstrupfjeld has
produced consistent REE-U intercepts, but a resource estimate is yet to be produced. Regional
drilling and geological mapping indicate that the lujavrite layer that hosts the deposits is present
throughout the northern Ilimaussaq complex. This highlights the potential for further discoveries
resource expansions.
In November during Greenland’s fall sitting of parliament a show of unanimous support was shown for
a fast-tracked review on the issues and implications of removing the zero-tolerance policy toward the
exploitation of uranium. The outcomes of the review are set to be discussed in Greenland’s spring
sitting of parliament that will follow shortly after a national election in Greenland set for March 12th
2013.
Page | 8
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Drilling on the Sørensen REE-U deposit during the 2011 summer.
for
the
resource base
Mineral Resources
During the first half of 2012 the Consolidated group finalised initial
mineral resource estimates for the Sørensen and Zone 3 REE-U
deposits. The resource estimates were independently produced by
SRK Consulting. In both cases the results exceeded expectations
and expanded
the overall project
substantially. Collectively, the Kvanefjeld, Sørensen and Zone 3
deposits contain a resource inventory of 575Mlbs U3O8 and 10.3 Mt
total rare earth oxide (TREO), including over 1.2 Mt of heavy REO’s
and yttrium oxide. This makes the overall Kvanefjeld project one of
the largest undeveloped resources of both rare earth elements and
uranium globally. All deposits are part of the same broader
geological system and feature the same style of mineralisation with
the mineral steenstrupine the dominant host to both REEs and
uranium. The bulk, mostly outcropping resources are conducive to
low-cost open pit mining, and feature a consistent ore type from
surface owing to recent glacial activity that has removed any oxide
material. Importantly, recent metallurgical breakthroughs have
demonstrated that the Kvanefjeld ore-type is highly favourable from
a processing perspective in that the ore can be simply beneficiated
to produce a high-grade REE and uranium rich mineral concentrate
that can then be treated with an atmospheric acid leach, as
opposed to requiring complex and costly acid bake and caustic
cracking processes.
Collectively, the
Kvanefjeld, Sørensen and
Zone 3 deposits that are
all hosted within the
northern Ilimaussaq
Complex contain a
resource inventory of 575
Mlbs U3O8 and 10.3 Mt total
rare earth oxide (TREO),
including over 1.2 Mt of
heavy REO’s and yttrium
oxide. This makes the
overall Kvanefjeld project
one of the largest
undeveloped resources of
both rare earth elements
and uranium globally.
Feasibility Studies and Process Development
Kvanefjeld Prefeasibility Study
On 4th May 2012, the Company announced the outcomes of a comprehensive prefeasibility study
(PFS) for the development of the Kvanefjeld Project (rare earth elements, uranium, zinc). The PFS
builds upon extensive drilling, research and test work programs conducted by the GMEL over the past
five years in association with internationally respected research institutions and accredited analytical
facilities.
Page | 9
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Long section through the geological model of the Sørensen deposit. The model is constrained by
both drill intersections and outcrop mapping of the lujavrite horizon. The deposit remains open to
the north (left of page), with the lujavrite horizon undulating for 6km to the northern contact of the
Ilimaussaq Complex where Kvanefjeld is located. The Sørensen deposit is characterised by
improving grades with proximity to surface. The model was generated using Leapfrog™
software. Big Ben, a well-known tall landmark, is shown at same scale to allow an appreciation of
the vertical dimensions of Sørensen. The initial resource estimate for Sørensen is an impressive
242 Mt.
The PFS also draws on extensive historical work conducted by Danish authorities and scientists in the
1970s and early 1980s, which culminated in an ‘historic’ prefeasibility study published by Risø
National Laboratory (Risø) in 1983. In contrast to the Risø studies that focused solely on the
exploitation of uranium, the Consolidated group has evaluated Kvanefjeld for the production of REEs
and uranium to access the inherently greater value of a multi commodity resource.
The PFS demonstrates the clear potential for Kvanefjeld to be developed as a long-life,
cost effective producer of heavy, light and mixed rare earth concentrates, uranium oxide
and zinc.
The production profile is of global significance in terms of output capacity, and low
production costs.
The high upgrade ratio achieved using flotation, the high extraction of uranium and heavy
REEs from mineral concentrates using a conventional atmospheric acid leach, and the
ability to produce multiple RE products represent key advantages of the Kvanefjeld
Project.
Page | 10
DIRECTORS’ REPORT
Review of operations (cont’d)
Through 2010 and 2011, focused research programs led to
important metallurgical breakthroughs. The identification of an
effective method to beneficiate the Kvanefjeld ore to generate a
low mass, REE-uranium-rich mineral concentrate opened the
opportunity to leach both REEs and uranium with conventional
acidic solutions under atmospheric conditions; a highly favourable
outcome by industry standards. Importantly, this eliminated the
need for a whole-of-ore alkaline pressure leach circuit that was
considered in the ‘Interim Prefeasibility Study’, released by the
Company in the first quarter of 2010.
to
leach REEs and uranium
The removal of reagent-consuming silicate minerals through
beneficiation allows for the effective use of conventional acidic
solutions
the mineral
concentrates. It also allows for significant downsizing of the leach
circuits. These key technical developments have led to a simpler
flowsheet with lower technical risk and improved capital and
operating costs over
Interim
those released
Prefeasibility Study.
the 2010
from
in
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
The identification of an
effective method to
beneficiate the Kvanefjeld
ore to generate a low
mass, REE-uranium-rich
mineral concentrate
opened the opportunity to
leach both REEs and
uranium with conventional
acidic solutions under
atmospheric conditions; a
highly favourable
outcome by industry
standards.
Increasing uranium and heavy REE output can be readily achieved through subsequent development
phases that future work programs are scoped to address.
The work commissioned by the Consolidated group has been carried out by internationally recognised
consulting firms covering a wide range of disciplines, and in particular:
(cid:120) Resource definition and mine plans
(cid:190) SRK Consulting, Coffey Mining
(cid:120) Metallurgy and process development
(cid:190) AMEC Minproc, ANSTO, SGS Oretest, CSIRO, ALS AMMTEC, Mintek
(cid:120) Environmental Impact Assessment and Social Impact Assessment
(cid:190) Coffey Environments, Orbicon (Denmark), Grontmij (Denmark)
(cid:120) Plant engineering design, infrastructure, capital development
(cid:190) AMEC Minproc, NIRAS (Denmark)
Key Prefeasibility Study Outcomes:
(cid:120) The Prefeasibility Study outlines an initial development scenario with an annual mine
throughput of 7.2 Mt, to generate four main products as well as a high-grade zinc sulfide
concentrate:
(cid:190) Uranium Oxide – 2.6 Mlbs pa U3O8
(cid:190) Heavy Rare Earth Hydroxide – 4,200 tpa TREO
(cid:190) Mixed Rare Earth Carbonate – 10,400 tpa TREO
(cid:190) Light Rare Earth Carbonate – 26,200 tpa TREO
Page | 11
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
The pilot plant scale Jameson Cell, ready for action.
Page | 12
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Scavenger rare earth flotation in pilot scale conventional cells isolates remaining REE-U rich
minerals, following the rougher flotation in the Jameson Cell. This concentrate is further treated
in a cleaning circuit to increase grade.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Unit costs of production are low; less than US$31/lb U3O8 and less than US$8/kg TREO (as
contained in the three combined rare earth products). This places the Kvanefjeld Project into
The bottom half of the cost curve for uranium producers and it will be one of the lowest cost
REE producers worldwide.
The Kvanefjeld Project generates a pre-tax, ungeared internal rate of return of 32% and a
cash payback period less than 4 years, based on long term prices of US$70/lb U3O8 and
US$41.60/kg TREO. The pre–tax NPV is US$4,631 M (at 10% discount rate).
Capital costs of an open cut mine, a mineral concentrator and a refining plant, capable of
treating 7.2 Mtpa, is estimated to cost US$1.53 Billion (inclusive of US$247 M contingency).
The Project has an initial mine life of over 33 years, based on the indicated mineral resources
established near surface at the Kvanefjeld deposit. Construction is scheduled to commence in
2014 and first production in 2016.
Page | 13
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Review of operations (cont’d)
(cid:120) Highly efficient process
flowsheet established drawing on conventional, proven
methodologies;
(cid:190) Beneficiation utilising froth flotation achieves high up-grade ratio with dominant REE-
uranium minerals concentrated into <15% of ore mass
(cid:120)
(cid:190) Atmospheric leaching of mineral concentrates using sulfuric acid results in >90%
extraction of heavy REEs and uranium, with slightly lower LREE extraction. High purity
concentrates recovered using solvent extraction.
(cid:190)
The Kvanefjeld Project global resource contains 956 Mt and is located 7 km from tidewater,
with deep fjords running directly to the North Atlantic Ocean. The resource is mostly
outcropping and within 300 m of ground surface. Local infrastructure is well established, with
the local town of Narsaq within 10kms of the mine and an international airport at Narsarsuaq
30 kms away.
(cid:120) Mining studies indicate a large open pit with a low waste strip ratio (1.1 tonne of waste for
each tonne of ore) in addition to the highest grade material occurring at surface. Total life of
mine production is 232.6 Mt at an average mine grade of 341 ppm U3O8 and 1.22% TREO.
Mining studies are based on only the resources in the Kvanefjeld deposit that are categorized
as ‘indicated’. There remains over 700 Mt of defined resources that are not yet factored into
the current mine schedule, which provide an obvious means to increase the mine life
substantially.
Prefeasibility Study Updates – Significant Project Enhancements
In early September, the Consolidated group released a technical
update that further strengthened the Kvanefjeld project metrics.
Process enhancements in the leach stage served to produce cleaner
separation between REEs and uranium. The cleaner product
separation allowed for further major circuit simplification that results
in improving overall product recovery and reducing costs. Outcomes
of the technical advances included:
(cid:120)
(cid:120)
Increased rare earth recovery by 27%
Increased uranium recovery by 4%.
(cid:120) Reduced capital costs to USD1.3B
(cid:120) Reduced rare earth oxide unit costs to USD $3/kg
Process enhancements in
the leach stage served to
produce cleaner
separation between REEs
and uranium. The cleaner
product separation
allowed for further major
circuit simplification that
results in improving
overall product recovery
and reducing costs.
These results are supported by extensive laboratory test work and
engineering trade off studies. Further details are provided in the following table. The project
enhancements result in substantial improvements to economic metrics of the Kvanefjeld project.
Page | 14
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Review of operations (cont’d)
Impact of the improvements to the Kvanefjeld hydrometallurgical flowsheet*.
Uranium Production (tpa U3O8)
Rare Earth Production (tpa REO)
Capex (US$M)
Unit cost (US$/kg REO after U Credit @ $70/lbs)#
Pre-Tax NPV (US$B)
IRR
Kvanefjeld PFS
(May 2012)
Updated PFS
metrics –
(August 2012)
1,185
40,780
1,534
$5.28
4.63
32%
1,230
51,900
1,297
$3.07
6.59
43%
Change
+4%
+27%
-15%
-42%
+42%
+34%
*Based on pricing assumptions outlined in the Kvanefjeld PFS (May 2012).
# Unit cost per kilogram of rare earth oxide produced as a mixed rare earth intermediate
product net of uranium by-product credits
Further Refinery (Leach Stage) Developments
Process development for the Kvanefjeld concentrate refinery continued through to late 2012 with
promising results. Semi-continuous leach testwork was performed on Kvanefjeld mineral concentrate
at ANSTO laboratories in Sydney. This testwork demonstrated that
leaching of impurities can be effectively controlled whilst achieving
high extractions of uranium and rare earth elements. The results
further confirm that the non-refractory nature of the Kvanefjeld value
containing minerals allows for the use of atmospheric leaching and its
associated advantages. This work program followed a test work
program conducted in August 2012 at SGS Minerals in Perth that
provided critical data in constraining the optimal leach conditions.
The results further
confirm that the non-
refractory nature of the
Kvanefjeld value
containing minerals
allows for the use of
atmospheric leaching and
its associated advantages.
An international application under the Patent Cooperation Treaty
(PCT) was filed for the Kvanefjeld Hydrometallurgical Refinery
Process on the 30th November 2012. This provides protection for all of
the leading edge metallurgical technology applied to produce a
metallurgical flowsheet which consists of simple equipment and
elegant chemistry. Potential off-take partners are now able to secure
both the concentrate and the technology to treat the concentrate
efficiently.
Final Pilot Plant Operation of Concentrator Circuit
Between the 19th and 22nd of November 2012, the Consolidated group continuously operated a
flotation pilot plant at the laboratory of SGS-Oretest in Perth, Western Australia. The pilot plant
produced over 300 kg of rare earth mineral concentrate (“Concentrate”) from 4 tonnes of Kvanefjeld
ore.
Successfully completing this continuous piloting campaign represents the final phase of process de-
risking for the concentrator circuit in the Kvanefjeld flow-sheet.
Page | 15
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
The Kvanefjeld process flowsheet; rigorously developed, extensively tested, and significantly de-
risked.
Page | 16
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Review of operations (cont’d)
The results obtained during the operation of the pilot plant exceeded the Company’s
expectations. Highlights of the campaign include:
(cid:120) Achieving a Concentrate grade of 15% REO, significantly exceeding both feasibility design
and results achieved in bench-scale laboratory test-work
(cid:120) Lower levels of impurities were present in the Concentrate in comparison to the results
achieved in bench-scale laboratory test-work
(cid:120) The successful use of Jameson Cells in a scalper/rougher duty to produce final grade
concentrate in a single step
(cid:120) Smooth operation of the pilot plant, a reflection of the overall simplicity of the concentrator
circuit.
These results will be incorporated in the process design which will form part of the final feasibility
study for the concentrator.
The significant increase in concentrate grade achieved in the pilot plant will lead to further
reductions in both operating and capital costs.
The Consolidated group has conclusively demonstrated that a high grade flotation concentrate can be
produced from Kvanefjeld ore. The results confirm that few REE ore-types, particularly those enriched
in heavy REEs, can be as effectively and simply upgraded as those from Kvanefjeld.
The Consolidated group has always considered that metallurgical success would be the key to
unlocking the value in the vast Kvanefjeld resource. The Consolidated group is very pleased that its
investment in metallurgical test-work and process design has provided the data upon which a
customized and technically robust process has been developed for the Kvanefjeld project.
Corporate Developments
Greenland Minerals and Energy Limited Assumes Full Ownership of Kvanefjeld
In early August 2012, the Company announced that it has finalised an agreement with Westrip
Holdings (“Westrip”) and Rimbal Pty Ltd (“Rimbal”) to complete the acquisition for the outstanding
39% of the exploration license (EL 2010/02) that contains the Kvanefjeld, Sorensen and Zone 3
deposits, with an equity-based transaction.
In order to complete the acquisition the Greenland Minerals and Energy limited was required to pay
$33.4M in cash to Westrip and Rimbal. However during the current year an amendment to the
acquisition agreement was made, which reduced the cash requirement to $5M, with the balance to be
paid through issuing ordinary shares and options in the Company.
Post-finalisation, the shares issued in order to complete the acquisition of 39% of the company’s core
asset in the Kvanefjeld project will represent approximately 15% of the Company’s issued capital (not
inclusive of the required $5M cash payment). The favourable equity terms agreed upon by all parties
reflect continued advances in the Kvanefjeld project including the inclusion of uranium on exploration
license EL 2010/02 in late-2011, major resource expansions, and strong outcomes of the Kvanefjeld
pre-feasibility study, released in May 2012.
The move to 100% ownership of Kvanefjeld was finalized on 16th October 2012 following shareholder
approval that took place on 8th October 2012.
Page | 17
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Overview of the pilot plant facilities with the Jameson Cell in the foreground.
$17M Capital Raising Completed
At the beginning of October 2012, the Company announced that it had successfully completed a
$15M capital raising. Funds were raised through issuing 50 million ordinary shares at $0.30 cents per
share and 25 million free attaching options to Australian and international institutions, existing
shareholders and sophisticated investor clients of Bell Potter Securities Limited. The options are
exercisable at $0.60 cents and expire in October 2014. The capital raising was conducted to finalise
the move to 100% ownership of Kvanefjeld, and to provide general working capital.
The Company also offered shareholders the opportunity to purchase shares at $0.30 cents through a
Shareholder Purchase Plan. An additional $2M was raised through this process, taking the total
amount raised to $17M.
Political Developments in Greenland
On Wednesday 21st November 2012 the position of Greenland in regard to uranium policy was
addressed in Greenland’s parliament. A show of unanimous support was given from all political
parties to fast-track an independent review to finalise the government-driven phase of information
gathering on uranium production undertaken over the last three years. Importantly this review
includes aspects that relate to Greenland’s foreign policy, which is managed by Denmark. The review
is aimed to be finalised in March 2013 prior to the sitting of Greenland parliament.
Page | 18
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Review of operations (cont’d)
The information campaign conducted by the Greenland Government has greatly expanded the
knowledge base required to evaluate and effectively manage potential uranium production in
Greenland. In addition to a compilation and dissemination of technical information, government and
key stakeholder representatives have conducted visits to Canada to learn more about the regulation
and operation of uranium production, and the effective management of environmental and social
impacts.
Parliamentary backing for a fast-tracked review follows a number of key licensing developments for
the Kvanefjeld project over the last two years. In Greenland uranium is regulated at the license level,
rather than under the Mining Act, and in late 2011 uranium was incorporated into the Consolidated
group’s exploration license for Kvanefjeld. This effectively provides the Consolidated group with the
right to apply for exploitation in accordance with Greenland’s broader mining regulatory framework.
A national election in Greenland has been called for March 12th 2013, and will take place prior to the
spring sitting of parliament.
GMEL Attends Trade Visit to South Korea with Government Delegation
In December 2012, company executives joined a delegation led by the Greenland government on a
visit to South Korea. The trip to Seoul followed an official visit by the South Korean President to
Greenland in September 2012, when agreements were signed on resource cooperation and
geological research. South Korea is renowned for its strong manufacturing industries yet is resource
poor, whereas Greenland is looking to expand its resources industry and is looking for foreign
investment and trade partners.
to
forums
industry
The December visit to Seoul aimed at promoting emerging opportunities
in Greenland’s resources sector. Presentations we made by members of
representatives of Greenland’s
the Greenland government and
resources
that were very well attended by
representatives of South Korean corporations; a number of which are
well known to GMEL and the Kvanefjeld project. The visit to Seoul
highlights the efforts of the Greenland Government to progressively build
a profile as an important new minerals region that is welcoming foreign
investment. Through the Bureau of Minerals and Petroleum (BMP), the
government actively promotes Greenland’s resource opportunities in
China, South Korean, Europe, Canada and Australia.
The visit to Seoul
highlights the efforts of
the Greenland
Government to
progressively build a
profile as an important
new minerals region that
is welcoming foreign
investment.
The visit to South Korea was a very positive exercise for all involved and
was covered extensively in the Greenlandic, Danish and South Korean
media.
Greenland Minerals and Energy Limited Participates in Danish Industry Forum
At the request of the Confederation of Danish Industry (DI), the premier lobbying organisation for
Danish businesses on national and international issues, and the Greenland Employers' Association,
Greenland's principal trade organisation, GMEL presented at a seminar held on January 8th 2013
discussing opportunities for Danish companies in Greenland.
Greenland is experiencing a rapidly growing international interest in searching for and extracting
mineral resources. Whilst the exploration for raw materials will only be interesting for a few Danish
companies, as the Greenland mining industry develops there are great opportunities for all types of
Danish companies that can provide services, equipment and know-how for the mining industry. This
can usefully be done in cooperation with Greenlandic companies, which through their local roots can
facilitate access to the market in Greenland.
Page | 19
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Review of operations (cont’d)
DI and Greenland Employers therefore invited Danish suppliers of services (e.g. logistics, catering,
cleaning, and security), equipment (e.g. pipes, pumps, arctic equipment) and know-how (design,
knowledge consultancy, contracting) to the seminar to learn about the possibilities that the Greenland
mining industry offers. The seminar had over 100 business participants who appreciated the
opportunity to hear from international mining companies operating in Greenland, about their
expectations for future investments in Greenland in the coming years.
The forum highlighted a growing understanding amongst Danish Industry of the great growth
opportunities that Greenland’s emerging resources sector can provide.
Current Focus and Aims for 2013
With a solid technical foundation in place, the Consolidated group is currently focused on firming up
the implementation strategy for Kvanefjeld, which includes establishing the optimal start up capacity.
Notably, the continued improvement in metal recoveries has increased the projected product output
substantially, such that it is logical to investigate a smaller start-up operation with a lower output. This
will serve to further reduce capital costs significantly.
With the continued improvement and de-risking of the concentrator circuit, the Consolidated group is
reviewing the option of shipping high-grade mineral concentrates out of Greenland with the aim of
establishing refining capacity elsewhere. This serves to reduce the ‘footprint’ of the Kvanefjeld project
in Greenland which reduces both environmental and social impacts.
With hydrometallurgical leaching conducted outside of Greenland, there would be no requirement for
acid plants and related infrastructure in Greenland. This ultimately reduces the complexity of
permitting the operation in Greenland, which would include a mine and concentrator (flotation) circuit.
Locations that have ready access to industrial infrastructure, skilled
labour, proximity to markets and with the regulatory capacity to manage
radioactive materials are the focus.
the start-up capacity,
Combined, downsizing
refinery
locations, and structuring a business model that creates an appealing
investment proposition for potential project partners, are major areas of
focus moving into 2013. The Consolidated group anticipates that
updates on the project implementation strategy will be released to the
market through the first half of the year.
reviewing
As results from last year’s extensive metallurgical work programs are
progressively finalised, updates to project enhancements will also be
released, serving to further de-risk the process development. In parallel,
further
is awaiting
the Consolidated group
parliamentary discussions on potential uranium exploitation. Further
clarity on clear political support will place the Company in a strong
position to finalise the feasibility study components that are critical to a
mining license application. Overall the Consolidated group is well placed
to gain from renewed market attention in 2013 on the basis of a highly
productive year in 2012. Kvanefjeld now has a very robust technical
foundation with increasingly strong project economic metrics, and is
100% owned by Greenland Minerals and Energy Limited.
the outcomes of
Overall the Consolidated
group is well placed to
gain from renewed
market attention in 2013
on the basis of a highly
productive year in 2012.
Kvanefjeld now has a
very robust technical
foundation with
increasingly strong
project economic
metrics, and is 100%
owned by Greenland
Minerals and Energy
Limited.
Financial Position
The net assets of the Consolidated group were $64,991,703 as at 31 December 2012 (2011:
$57,992,459).
Page | 20
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
The information in this report that relates to exploration targets, exploration results, geological
interpretations, appropriateness of cut-off grades, and reasonable expectation of potential viability
of quoted rare earth element, uranium, and zinc resources is based on information compiled by Mr
Jeremy Whybrow. Mr Whybrow is a director of the Company and a Member of the Australasian
Institute of Mining and Metallurgy (AusIMM). Mr Whybrow has sufficient experience relevant to the
style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined by the 2004 edition of the “Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Whybrow
consents to the reporting of this information in the form and context in which it appears.
The geological model and geostatistical estimation for the Kvanefjeld and Zone 2 deposits were
prepared by Robin Simpson of SRK Consulting. Mr Simpson is a Member of the Australian Institute of
Geoscientists (AIG), and has sufficient experience relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined by the 2004 edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Mr Simpson consents to the reporting of information relating
to the geological model and geostatistical estimation in the form and context in which it appears.
Page | 21
DIRECTORS’ REPORT
Review of operations (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
The Jameson Cell produces a rougher/scalper concentrate which contains 15% REO in a single
stage; an excellent outcome by industry standards, which emphasises the applicability of the
Jameson Cell technology to the Kvanefjeld ore.
Page | 22
Statement of Identified Mineral Resources, Kvanefjeld Multi-Element Project (Prepared by SRK Consulting)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Cut-off
(U3O8 ppm)1
Classification
M tonnes
Mt
Kvanefjeld - March 2011
Multi-Element Resources Classification, Tonnage and Grade
Contained Metal
TREO2
ppm
U3O8
ppm
LREO
ppm
HREO
ppm
REO
ppm
Y2O3
ppm
Zn
ppm
TREO
Mt
HREO
Mt
Y2O3
Mt
U3O8
M lbs
Zn
Mt
150
150
150
200
200
200
250
250
250
300
300
300
350
350
350
Sørensen - March 2012
150
200
250
300
350
Zone 3 - May 2012
150
200
250
300
350
Project Total
Cut-off
(U3O8 ppm)1
150
150
150
Indicated
Inferred
Grand Total
Indicated
Inferred
Grand Total
Indicated
Inferred
Grand Total
Indicated
Inferred
Grand Total
Indicated
Inferred
Grand Total
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
437
182
619
291
79
370
231
41
272
177
24
200
111
12
122
242
186
148
119
92
95
89
71
47
24
10929
9763
10585
11849
11086
11686
12429
12204
12395
13013
13120
13025
13735
13729
13735
11022
11554
11847
12068
12393
11609
11665
11907
12407
13048
274
216
257
325
275
314
352
324
347
374
362
373
404
403
404
304
344
375
400
422
300
310
330
358
392
Classification
Indicated
Inferred
Grand Total
M tonnes
Mt
437
520
956
TREO2
ppm
10929
10687
10798
U3O8
ppm
274
272
273
9626
8630
9333
10452
9932
10341
10950
10929
10947
11437
11763
11475
12040
12239
12059
9729
10223
10480
10671
10967
10242
10276
10471
10887
11392
LREO
ppm
9626
9437
9524
402
356
389
419
343
403
443
366
431
469
396
460
503
436
497
398
399
407
414
422
396
400
410
433
471
HREO
ppm
402
383
392
10029
8986
9721
10871
10275
10743
11389
11319
11378
11906
12158
11935
12543
12675
12556
10127
10622
10887
11084
11389
10638
10676
10882
11319
11864
REO
ppm
10029
9820
9915
900
776
864
978
811
942
1041
886
1017
1107
962
1090
1192
1054
1179
895
932
961
983
1004
971
989
1026
1087
1184
Y2O3
ppm
900
867
882
2212
2134
2189
2343
2478
2372
2363
2598
2398
2414
2671
2444
2487
2826
2519
2602
2802
2932
3023
3080
2768
2806
2902
3008
3043
Zn
ppm
2212
2468
2351
4.77
1.78
6.55
3.45
0.88
4.32
2.84
0.46
3.33
2.30
0.31
2.61
1.52
0.16
1.68
2.67
2.15
1.75
1.44
1.14
1.11
1.03
0.84
0.58
0.31
0.18
0.06
0.24
0.12
0.03
0.15
0.10
0.02
0.12
0.08
0.01
0.09
0.06
0.01
0.06
0.10
0.07
0.06
0.05
0.04
0.04
0.04
0.03
0.02
0.01
0.39
0.14
0.53
0.28
0.06
0.35
0.24
0.03
0.27
0.20
0.02
0.22
0.13
0.01
0.14
0.22
0.17
0.14
0.12
0.09
0.09
0.09
0.07
0.05
0.03
263
86
350
208
48
256
178
29
208
146
19
164
98
10
108
162
141
123
105
85
63
60
51
37
21
TREO
Mt
4.77
5.55
10.33
HREO
Mt
0.18
0.20
0.37
Y2O3
Mt
0.39
0.45
0.84
U3O8
M lbs
263
312
575
0.97
0.39
1.36
0.68
0.20
0.88
0.55
0.11
0.65
0.43
0.06
0.49
0.27
0.03
0.31
0.63
0.52
0.43
0.36
0.28
0.26
0.25
0.2
0.14
0.07
Zn
Mt
0.97
1.28
2.25
1There 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.
2Total 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.
Page | 23
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Information on Directors
Michael Hutchinson - Non-Executive Chairman – Appointed 25 November 2008
Special responsibilities
Member of the Remuneration Committee (Chairman)
Member of the Audit Committee
Qualifications
BSc (Hons) Geography
Experience
Mr Michael Hutchinson has had a distinguished career in resources and commodity trading, having
served as Director of the London Metal Exchange, the world's largest market in options and futures
contracts on base and other metals.
Mr Hutchinson also served as Chairman of RBS Sempra Metals Limited, and Wogen PLC; a trader of
off-exchange metals that sources metals worldwide for industrial end users. In addition, Mr
Hutchinson previously served as a director of MG PLC.
Interest in shares, options and performance rights
1,400,000 Unvested performance rights
Directorships held in other listed entities
Non-executive director - Mecom Plc – since April 2009
Former directorships in other- listed entities in the last 3 years
Wogen Plc – July 2009 to November 2009
Roderick McIllree - Managing Director – Appointed 23 March 2007
Qualifications
B.Sc. (Mineral Exploration and Mining Geology), G.Cert. (Mineral Economics) MAusIMM.
Experience
Mr McIllree is a corporate Geologist. A graduate of Curtin University School of Mines he has worked
extensively throughout the globe in the geological field from grassroots through to mine development.
After completing a Graduate Diploma in Mineral Economics, Roderick moved into the finance sector
and worked as a mining analyst and equities advisor. This broad based experience in terms of both
capital markets and the minerals business provided the platform necessary to be an active member of
the various teams that have established several successful mining ventures including Medusa Mining,
Anvil and Kingsrose Mining Ltd
Roderick was the founding Managing Director of Greenland Minerals and Energy Ltd, and identified,
planned and executed the push into Greenland and the subsequent acquisition of Kvanefjeld in 2007
being the result. Together with a team of professional’s he has guided the company through the
discovery delineation and onto the feasibility stage where the project is now de-risked and ready for
strategic investment.
Page | 24
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Information on Director (cont’d)
Roderick McIllree (cont’d)
Interest in shares, options and performance rights
12,111,456 Ordinary Shares
2,800,000 Unvested unlisted options
2,700,000 Unvested performance rights
Directorships held in other listed entities
Non-executive Director – Noricum Gold Limited – 11 April 2012
Other board positions held in the last 3 years
Convergent Minerals Limited – July 2006, Resigned 19 Dec 2011
Simon Cato - Executive Director – Appointed 21 February 2006
Qualifications
B.A. (USYD)
Experience
Mr Simon Cato has had over 30 years capital markets experience in broking, regulatory roles and as
director of listed companies. He initially was employed by the ASX in Sydney and then in Perth.
From 1991 until 2006 he was an executive director and/or responsible executive of three 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 was also involved in the underwriting of a number of IPO’s and has been through the process of
IPO listing in the 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 and performance rights
4,762,198 Ordinary shares
600,000 Unvested performance rights
Other board positions held
Chairman of:
Advanced Share Registry Limited - since August 2007.
Director of:
Bentley International Limited – since February 2004
Queste Communications Limited – since February 2008
Transaction Solutions International Limited – since February 2010
Positions held in the last 3 Years
Convergent Minerals Limited - July 2006 to 19 Dec 2011
Sofcom Limited – January 2004 to March 2008
Scarborough Equities Limited – November 2004 to March 2009
Page | 25
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Information on Directors (cont’d)
Dr John Mair – Executive Director – Appointed 7 October 2011
Qualifications
PhD (Geol), MAus IMM
Experience
Dr John Mair completed a Bachelor of Science with Honours, majoring in geology, at the University of
Western Australia, before commencing a career in the minerals sector, working in gold exploration
and mining in Western Australia's goldfields. He returned to the university system to undertake a PhD
study on the gold and base metal deposits of Canada's Yukon Territory and east-central Alaska. After
completing the PhD in 2004, John returned to the minerals industry working in exploration for
porphyry Cu-Au deposits in New South Wales, and gold deposits in China. In mid-2005 John took the
position of Post-Doctoral Research Fellow at the University of British Columbia, with a focus on the
metallogeny of southwest Alaska.
At completion of the project in 2006, John returned to the minerals industry as a project co-
coordinator for Vancouver-based exploration group Geoinformatics Exploration Inc., who in alliance
with Kennecott, were exploring for Cu-Mo-Au deposits in western North America from Mexico to
Alaska. During this period, John planned and implemented large-scale exploration programs through
remote northern British Columbia, as well as providing technical expertise to exploration programs in
Alaska and Mexico. In mid-2008 John returned to Australia to join Greenland Minerals and Energy
Limited as General Manager.
John has published several papers in leading international scientific journals on tectonics, structural
geology, mineral deposit geology, igneous petrology and mineralogy. He has also presented at
Masters short courses on ore deposit geology. Of particular relevance is his understanding of the
behavior of rare earth elements, and is experienced in separating pure rare earth elements from a
wide variety of rock types from start to finish. He is a member of the Society of Economic Geologists
and the Australian Institute of Mining and Metallurgy.
Since 2008, John has been instrumental in the technical development of the Kvanefjeld project, and
also in the corporate evolution of the company. He presents on the Company's behalf in commercial,
technical and political forums internationally.
Interest in shares, options and performance rights
5,110,000 Ordinary Shares
2,100,000 Unvested unlisted options
2,100,000 Unvested performance rights
Other board positions held
Nil
Page | 26
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Information on Directors (cont’d)
Anthony Ho - Non-Executive Director - Appointed 9 August 2007
Special responsibilities
Member of the Audit Committee (Chairman)
Member of the Remuneration Committee
Qualifications
B.Comm, CA, FAICD, FCIS
Experience
Mr Tony Ho is an experienced company director having held executive directors and chief financial
officer roles with a number of publicly listed companies. Tony 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.
Mr Ho was the past non-executive chairman of St. George Community Housing Limited (November
2002 to December 2009) where he was also a member of the Audit and Remuneration Committees.
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 and the Institute of Company Directors.
Interest in shares & options
350,000 Ordinary Shares
1,600,000 Unvested performance rights
Other board positions held
Non-executive Chairman – Metal Bank Limited, October 2011 and chairman of the Audit Committee
Chairman - Apollo Minerals Limited, July 2009 and chairman of the Audit Committee
Non-executive director - Hastings Rare Metals Limited, March 2011 and chairman of the Audit
Committee
Non-executive Chairman – Bioxyne Limited – November 2012
Board positions held in the last 3 years
Chairman Esperance Minerals Limited – July 2008 to March 2010
Non-executive director - DoloMatrix International Limited, April 2007 – August 2012
Page | 27
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Information on Directors (cont’d)
Jeremy Sean Whybrow – Non-executive director – Appointed 21 February 2006
Qualifications
B.Sc. (Mineral Exploration and Mining Geology), G.Cert(Minerals Economics), M.Aus.I.M.M
Experience
Mr Jeremy Whybrow graduated from Curtin University of Technology in 1996 with a Bachelor of
Science degree (Mineral Exploration and Mining Geology), and has had over 15 years experience in
the minerals industry both domestically and internationally.
Jeremy has worked for companies such as Sons of Gwalia Ltd, PacMin Ltd, Teck Australia Ltd, Mount
Edon Gold Mines Ltd and Croesus Mining NL. His experience has been mainly in the operational
environment and includes significant exposure to exploration and mining operations, project
evaluation and feasibility studies.
Jeremy also has extensive international exploration experience having worked in China, Africa and
the Philippines as well as numerous localities in Australia.
As a founding director of Greenland Minerals and Energy, Jeremy has been instrumental in
conducting the exploration programs that have seen the Kvanefjeld project emerge as the world's
largest resource of rare earth elements (as defined by internationally recognized reporting standards).
Drawing on his solid foundation of operational experience Jeremy put in place many of the systems
critical to generating the high-quality datasets that underpin the projects mineral resources.
Interest in Shares, options and performance rights
6,010,200 Ordinary shares
1,000,000 Unvested performance rights
Directorships held in other listed entities
Noricom Gold Limited – November 2010, Non-executive director
Positions held in the last 3 Years
Convergent Minerals Limited. – January 2006 to 19 December 2011
Remuneration Report – Audited
This remuneration report, which forms part of the directors’ report, details the nature and amount of
remuneration for each director of Greenland Minerals and Energy Limited and senior management,
for the financial year ended 31 December 2012.
Director and senior management details
The following persons acted as directors of the Company during or since the end of the financial year:
Michael Hutchinson, Chairman
Roderick Claude McIllree, Managing Director
John Mair, Executive Director
Simon Kenneth Cato, Executive Director
Anthony Ho, Non-Executive Director
Jeremy Sean Whybrow, Non-Executive Director
Page | 28
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
The term ‘senior management’ is used in this remuneration report to refer to the following persons.
Except as noted above, the named persons held their current position for the whole of the financial
year and since the end of the financial period:
Shaun Bunn, Chief Operations Officer
Miles Guy, Chief Financial Officer and Company Secretary
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
indicators 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 receives a market rate base salary (which is based on factors such as length
of service and experience) and superannuation.
The directors and senior management, where applicable 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 Consolidated
group and expensed. Options and rights granted to directors and senior management as part of
remuneration are valued at grant date using appropriate valuation techniques.
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 rates, their specific duties and responsibilities. Additional
consultancy fees may be payable where the non-executive director has had additional responsibilities
associated with specific tasks or responsibilities outside their normal duties.
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 per annum. Fees for non-executive directors are not linked to the
performance of the Consolidated group. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the Company.
Remuneration –Cash payment
Cash payments is the recognition of short term remuneration and the provision for long term
remuneration that has or will be settled in cash payments.
Remuneration – Share based payments
Share based payments is the recognition of long term remuneration that does not provide a present
value to the directors and senior management. The value of the long term remuneration will be
realised over future periods subject to the satisfying of vesting and other conditions. At 31 December
2012, all of the performance rights and options remained un-vested as the vesting conditions had not
been satisfied.
Page | 29
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
Details of Remuneration
The remuneration for the directors and senior management of the Company during the current
financial year was as follows:
Remuneration – Cash payments
Short term employee benefits
Post-employment
Salary/
consultancy
fees
Director fees
Super-
annuation
Long-term
Remuneration
Provision for
long service
leave
TOTAL CASH
PAYMENT
$
$
$
$
$
140,000
520,000
350,000
42,025
-
205,000
350,000
200,000
1,807,025
-
-
-
50,000
150,323
45,000
-
-
245,323
12,600
46,800
31,500
4,500
-
22,500
31,500
18,000
167,400
16,334
43,752
-
-
-
29,168
-
-
89,254
168,934
610,552
381,500
96,525
150,323
301,668
381,500
218,000
2,309,002
Year ended
31 Dec 2012
Executive Directors
Simon Cato
Roderick McIllree
John Mair
Non-executive Directors
Anthony Ho
Michael Hutchinson
Jeremy Whybrow
Senior Management
Shaun Bunn
Miles Guy
Total
Remuneration – Benefits and share based payments
Year ended
31 Dec 2012
Executive Directors
Simon Cato
Roderick McIllree
John Mair
Non-executive Directors
Anthony Ho
Michael Hutchinson
Jeremy Whybrow
Senior Management
Shaun Bunn
Miles Guy
Total
Share based payments
Fair Value
Rights (i)
Options (ii)
Total share
based
payments
TOTAL
REMUNER-
ATION
%
Consisting
of share
based
payments
$
$
$
94,422
-
825,210 487,409
641,830 366,695
94,422
1,312,619
1,008,525
263,356
1,923,171
1,390,025
402,417
241,429
171,323
-
-
-
402,417
241,429
171,323
498,942
391,752
472,991
641,830 366,695
-
3,077,930 1,220,799
59,469
1,008,525
59,469
4,298,729
1,390,025
277,469
6,607,731
36%
68%
72%
80%
62%
36%
72%
21%
65%
(i) All performance rights are Long Term Incentives that are subject to service period and share
price vesting conditions which are detailed further in note 24 to the financial statements and
can not be converted to fully paid shares unless the vesting conditions are satisfied.
(ii) All options are Long Term Incentives that are subject to service period and share price
vesting conditions which are detailed further in note 24 to the financial statements and can not
be converted to fully paid shares unless the vesting conditions are satisfied.
Page | 30
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
The remuneration for the directors and senior management of the Company during the prior financial
year was as follows:
Remuneration – Cash payments
Short term employee benefits
Post-employment
Salary/
consultancy
fees
Director fees
Super-
annuation
Long-term
Remuneration
Provision for
long service
leave
TOTAL CASH
PAYMENT
$
$
$
$
$
Year ended
31 Dec 2011
Executive Directors
Simon Cato
Roderick McIllree
John Mair (iii)
Non-executive Directors
Anthony Ho
Michael Hutchinson
Jeremy Whybrow
Senior Management
Shaun Bunn
Miles Guy
Total
140,000
408,000
312,500
67,500
-
152,500
345,000
199,444
1,624,944
-
-
-
50,000
207,069
45,000
-
-
302,069
12,600
36,720
28,125
4,500
-
17,775
23,626
17,950
141,296
Remuneration – Share based payments
Year ended
31 Dec 2011
Executive Directors
Simon Cato
Roderick McIllree
John Mair (iii)
Non-executive Directors
Anthony Ho
Michael Hutchinson
Jeremy Whybrow
Senior Management
Shaun Bunn
Miles Guy
Total
Share based payments
Fair Value
Rights (i)
Options (ii)
$
$
73,831
-
618,907 365,557
481,372 275,021
78,577
181,072
128,492
-
-
-
Total share
based
payments
TOTAL
REMUNER-
ATION
$
238,681
1,458,352
1,097,018
200,577
388,141
365,643
73,831
984,464
756,393
78,577
181,072
128,492
418,372 548,888
-
2,025,225 1,189,466
44,602
967,260
44,602
3,214,691
1,335,886
261,996
5,346,294
(i) All performance rights are Long Term Incentives that are subject to service period and share
price vesting conditions which are detailed further in note 24 to the financial statements and
can not be converted to fully paid shares unless the vesting conditions are satisfied.
(ii) All options are Long Term Incentives that are subject to service period and share price vesting
conditions which are detailed further in note 24 to the financial statements and can not be
converted to fully paid shares unless the vesting conditions are satisfied.
(iii) John Mair was appointed an Executive Director 7 October 2011, prior to this date Mr Mair
held a senior management position
Page | 31
164,850
473,888
340,625
122,000
207,069
237,151
368,626
217,394
2,131,603
12,250
29,168
-
-
-
21,876
-
-
63,294
%
Consisting
of share
based
payments
31%
67%
69%
39%
47%
35%
72%
17%
60%
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
No director or senior management person appointed during the current or prior period received a
payment as part of his consideration for agreeing to hold the position.
No cash bonuses were paid to any directors or senior management during the current or prior period.
Performance rights
On the 23 January 2012, shareholders approved the issue of 1,000,000 un-vested performance rights
to Anthony Ho. These rights were issued to Mr Ho in recognition of the work and his valuable input in
securing the settlement to acquire the remaining 39% interest in the Kvanefjeld project.
The performance rights will vest in three tranches based on the Company’s Volume Weighted
Average Share Price (“VWAP”) exceeding price hurdles for 10 consecutive trading days. In addition
Mr Ho must remain an employee of the Company until 30 June 2013. Upon satisfying the clearly pre-
determined vesting conditions, each right issued will be convertible into one fully paid ordinary share
of the Company.
Tranche
Tranche 1
Tranche 2
Tranche 3
10 Day VWAP share
price hurdle
$0.75
$1.00
$1.50
No amounts are paid or payable by the recipient on receipt of the performance right. The
performance rights carry neither rights to dividends nor voting rights and are non-transferrable.
The following un-vested performance rights were issued to Anthony Ho during the current financial
year.
Director/ senior
management
A Ho
Grant date
Number
Fair value @
grant date
$
Expiry
date
Vesting
date
Tranche 1
23/01/2012
500,000
Tranche 2
23/01/2012
250,000
Tranche 3
23/01/2012
250,000
242,000
114,500
103,500
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
(i)
1,000,000
Total
Fair value at grant date has been calculated using a binominal model (refer to note 24)
the value will be recognised in remuneration on a pro-rata basis over the service vesting
period in accordance with Australian Accounting Standards.
460,000
Employee performance rights plan
At the Company’s Annual General Meeting, on 12 May 2011, members approved the implementation
of an Employee Performance Rights Plan (“EPRP”). The plan is a result of a comprehensive
remuneration review the Company conducted. The aim of the plan is to assist in the retention of
existing staff and the recruitment of future employees.
Under the EPRP, the Company will issue incentive shares to employees as part of their total
remuneration package. The plan will result in a direct cash saving to the Company through a
reduction in the salary component payable in remuneration packages.
Upon satisfying clearly pre-determined vesting conditions, each right issued under the EPRP will be
convertible into one fully paid ordinary share of the Company. To meet the vesting criteria, the
employee must remain an employee of the Company for a minimum of two years (service period).
Page | 32
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
In addition the performance rights will vest in three tranches based on the Company’s Volume
Weighted Average Share Price (“VWAP”) exceeding price hurdles for 10 consecutive trading days.
Details of these hurdles are included in the following tables.
Tranche
Tranche 1
Tranche 2
Tranche 3
10 Day VWAP share
price hurdle
$1.50
$1.85
$2.50
No amounts are paid or payable by the recipient on receipt of the performance right. The
performance rights carry neither rights to dividends nor voting rights and are non-transferrable.
There were no performance rights issued under the EPRP during the financial year ended 31
December 2012.
The following un-vested performance rights were issued to directors and senior management during
the previous financial year.
Director/ senior
management
R McIllree
Grant date
Number
Fair value @
grant date
$
Expiry
date
Vesting
date
Tranche 1
15/05/2011
900,000
Tranche 2
15/05/2011
900,000
Tranche 3
15/05/2011
900,000
596,944
551,736
501,984
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
Total
2,700,000
1,650,664
S Cato
Tranche 1
15/05/2011
100,000
Tranche 2
15/05/2011
200,000
Tranche 3
15/05/2011
Total
J Mair
300,000
600,000
Tranche 1
15/05/2011
700,000
Tranche 2
15/05/2011
700,000
Tranche 3
15/05/2011
700,000
40,992
70,884
85,008
196,884
464,100
429,128
390,432
15/05/2014
15/05/2014
15/05/2014
Refer above
Refer above
Refer above
15/05/2014
15/05/2014
15/05/2014
Refer above
Refer above
Refer above
Total
2,100,000
1,283,660
A Ho
Tranche 1
15/05/2011
200,000
Tranche 2
15/05/2011
200,000
Tranche 3
15/05/2011
200,000
81,984
70,884
56,672
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
Total
600,000
209,540
M Hutchinson
Tranche 1
15/05/2011
400,000
Tranche 2
15/05/2011
500,000
Tranche 3
Total
15/05/2011
500,000
1,400,000
163,968
177,210
141,680
482,858
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
Page | 33
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
Director/ senior
management
J Whybrow
Grant date
Number
Fair value @
grant date
$
Expiry
date
Vesting
date
Tranche 1
15/05/2011
300,000
Tranche 2
15/05/2011
300,000
Tranche 3
Total
15/05/2011
400,000
1,000,000
S Bunn
Tranche 1
15/05/2011
700,000
Tranche 2
15/05/2011
700,000
Tranche 3
Total
15/05/2011
700,000
2,100,000
M Guy
122,976
106,326
113,344
342,646
464,100
429,128
390,432
1,283,660
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
Tranche 1
15/05/2011
100,000
Tranche 2
15/05/2011
100,000
Tranche 3
15/05/2011
150,000
40,992
35,442
42,504
15/05/2014
Refer above
15/05/2014
Refer above
15/05/2014
Refer above
Total
350,000
118,938
(i)
Fair value at grant date has been calculated using a binominal model (refer to note 24)
the value will be recognised in remuneration on a pro-rata basis over the service
vesting period in accordance with Australian Accounting Standards.
At 31 December 2012, all of the performance rights remained un-vested as the vesting conditions had
not been satisfied.
Performance options
At the Company’s Annual General Meeting on 12 May 2011, in addition to approving the EPRP,
members approved the issue of unvested performance options to certain directors and senior
management. The options have an exercise price of $1.75 and are subject to pre-determined vesting
conditions. To meet the vesting criteria, a two year service period from the grant date must be
satisfied and will vest in three tranches based on the Company’s Volume Weighted Average Share
Price (“VWAP”) exceeding price hurdles for 10 consecutive trading days. Details of the price hurdles
are included in the following tables.
Tranche
Tranche 1
Tranche 2
Tranche 3
10 Day VWAP share
price hurdle
$3.75
$5.00
$6.25
No amounts are paid or payable by the recipient on receipt of the options. The options are unvested
and unlisted, carry neither rights to dividends nor voting rights and are non-transferrable.
On satisfying the vesting conditions, the options can be excised by the payment of the $1.75 per
option exercise price. On exercising each option will be converted to one fully paid ordinary share in
Greenland Minerals and Energy limited.
There were no performance options issued to directors or employees during the year ended 31
December 2012.
Page | 34
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
As approved by shareholders, the following unvested performance options with an exercise price of
$1.75 were issued during the year ended 31 Dec 2011:
Director/ senior
management
R McIllree
Grant date
Number
Fair value @
grant date (i)
$
Expiry
date
Vesting
date
Tranche 1
15/05/2011
900,000
Tranche 2
15/05/2011
950,000
Tranche 3
15/05/2011
950,000
Total
2,800,000
J Mair
Tranche 1
15/05/2011
700,000
Tranche 2
15/05/2011
700,000
Tranche 3
15/05/2011
700,000
Total
2,100,000
S Bunn
Tranche 1
15/05/2011
700,000
Tranche 2
15/05/2011
700,000
Tranche 3
15/05/2011
700,000
Total
2,100,000
368,928
336,699
269,192
974,819
286,944
248,094
198,352
733,390
286,944
248,094
198,352
733,390
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
31/08/2013
Refer above
(i)
Fair value at grant date has been calculated using a binominal model (refer to note 24)
the value will be recognised in remuneration on a pro-rata basis over the service vesting
period in accordance with Australian Accounting Standards.
At 31 December 2012, all of the performance options remained un-vested as the vesting conditions
had not been satisfied.
Employee options
During the previous financial year, the employment contract with Shaun Bunn was re-negotiated with
Mr Bunn moving from a service contract arrangement to an employment contract. Due to the
completion of various project related milestones, whilst engaged under the service contract, Mr Bunn
was granted 750,000 options with an exercise price of $0.25. There were no vesting conditions
attached to these options and each option on exercise converts to one fully paid ordinary share of
Greenland Minerals and Energy Limited.
Details of $0.25 employee options issued during the current financial year:
senior
management
Grant date
Number
Fair value@
grant date
$
Expiry
date
S Bunn
21/10/2011
750,000
261,587
31/03/2013
(i)
Fair value at grant date has been calculated using a Black Scholes model (refer to note 24),
as there are no further vesting conditions attached to the options the full fair value has been
recognised in remuneration in the current financial year.
There were no options granted to directors or employees as remuneration during the financial year
ended 31 December 2012.
Page | 35
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
Options exercised
There were no options were exercised by directors of senior management during the year ended 31
December 2012.
The following options issued to directors and senior management, were exercised during the financial
year ended 31 December 2011. Each options converts into one ordinary share of Greenland Minerals
and Energy Limited:
Number
Exercised
(i)
Date
R McIllree
16/06/2011 4,400,000
Share
price @
exercise
date
Amount
Paid
$
Amount
unpaid
$
Option
value at
date of
exercise
$
$0.51
880,000
- 1,364,000
Exercise
Price
$0.20
S Cato
29/04/2011 1,550,100
07/06/2011 1,992,000
250,000
23/06/2011
$0.20
$0.20
$0.20
$0.81
$0.59
$0.69
310,200
398,400
50,000
-
-
-
945,561
776,880
122,500
J Whybrow
28/06/2011 4,400,000
$0.20
$0.68
880,000
- 2,112,000
J Mair
30/06/2011
250,000
$0.50
$0.71
125,000
S Bunn
02/02/2011
250,000
$0.50
$1.17
125,000
-
-
52,500
167,500
(i) The number of options exercised relates only to options exercised that were granted as
compensation and recognised in remuneration in prior years.
Lapsed options
During the current financial year no options issued to directors or senior management lapsed.
During the previous financial year the following options issued to directors and senior management
lapsed either as a result of vesting conditions not being satisfied or the exercise price of the option
being in excess of the company’s market share price.
Director/senior
management
R McIllree (i)
S Cato (i)
J Whybrow (i)
M Hutchinson (ii)
A Ho (ii)
A Ho (ii)
Number
Value @ grant
date
Lapse date
Value @ lapse
date
2,200,000
2,200,000
2,200,000
2,000,000
500,000
500,000
2,819,000
2,819,000
2,819,000
258,600
88,442
67,988
30/06/2011
30/06/2011
30/06/2011
30/06/2011
30/06/2011
30/06/2011
1,122,000
1,122,000
1,122,000
-
-
-
(i) Options lapsed as a result of not meeting vesting conditions prior to the option expiry date.
(ii) Options expired due to exercise price being in excess of the Company’s market share price.
Page | 36
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
During the financial year, the following share-based payment arrangements were applicable;
Options series
Performance rights
Performance options
19 – Employee options
Performance rights
Grant date Expiry date
15/05/2014
15/05/2011
31/08/2013
15/05/2011
30/06/2013
21/10/2011
15/05/2014
23/01/2012
Grant date
fair value
$
5,568,606
2,441,599
261,587
460,000
Vesting date
(i)
(ii)
21/10/2011
(iii)
(i)
The performance rights are subject to a 2 year service period vesting requirement and
Company share price hurdles. The performance rights will vest in 3 tranches subject to the
Company share price based on the volume weighted average (‘VWAP’) exceeding the following
prices:
Tranche 1
Tranche 2
Tranche 3
10 Day VWAP share
price hurdle
$1.50
$1.85
$2.50
(ii)
The performance options are subject to continued employment until 30 June 2013 and
Company share price hurdles. The performance options will vest in 3 tranches subject to the
Company Share price based on the volume weighted average (‘VWAP’) exceeding the
following prices:
Tranche
Tranche 1
Tranche 2
Tranche 3
10 Day VWAP share
price hurdle
$3.75
$5.00
$6.25
There are no further service or performance criteria that need to be met in relation to any of the above
option series.
(iii) The performance rights are subject to continued employment until 30 June 2013 and Company
share price hurdles.
The performance rights will vest in 3 tranches subject to the Company share price based on the
volume weighted average (‘VWAP’) exceeding the following prices:
Tranche
Tranche 1
Tranche 2
Tranche 3
10 Day VWAP share
price hurdle
$0.75
$1.00
$1.50
Page | 37
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
Consolidated group 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 directors and senior management.
Any issue of options is based on the performance of the Consolidated group and or individual and is
limited to the achievement of clearly defined bench marks and milestones. These bench marks and
milestones include:
(cid:131) Share price and or the market capitalisation of the Company exceeding pre-determined
levels.
(cid:131) Completion of specific projects or pre-determined stages of projects.
(cid:131) Periods of service with the Company.
(cid:131) Accretion of shareholder value.
The following table shows the gross revenue and profits for the period from 30 June 2009 to 31
December 2012 for the listed entity, as well as the share price at the end of each financial period.
Remuneration Report
Revenue
Net loss before and after tax
Share price at beginning of
period
Share price at end of period
Dividend
Basic loss per share
Diluted loss per share
12 Month
period ended
31 Dec
2011
12 Month
period ended
31 Dec
2012
$351,106 $1,116,879
12 Month
period ended
31 Dec
2010
$717,276
$(17,344,250) $(14,209,550) $(7,163,998)
6 Month
period ended
31 Dec
2009
$387,977
$(3,823,380)
12 month
period ended
30 Jun
2009
$1,279,120
$(4,014,473)
$0.46
$0.27
-
$0.04
$0.04
$1.20
$0.46
-
$0.04
$0.04
$0.58
$1.20
-
$0.03
$0.03
$0.36
$0.58
-
$0.02
$0.02
$0.66
$0.36
-
$0.02
$0.02
Key terms of employment contracts
Michael Hutchinson, Non-executive Chairman – Non-Executive Chairman from 6 December 2011
(previously Executive Chairman)
(cid:131)(cid:131) Director fee excluding superannuation for the period ended 31 December 2011 of £100,000
per annum.
(cid:131) 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:131) No fixed term.
Roderick McIllree, Managing Director
(cid:131) Term and type of contract – service agreement subject to annual review.
(cid:131) Base salary, for the period ended 31 December 2011 of $500,000 per annum and is paid
monthly two weeks in advance and two weeks in arrears.
(cid:131) Superannuation at 9% is payable on the base salary.
(cid:131) 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:131) Either the Company or the director may terminate their engagement without cause by
giving the other party twelve months written notice, there are no other specific payout
clauses.
(cid:131) Remuneration will be reviewed every 12 months or as otherwise agreed between the
parties.
Page | 38
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
Simon Cato, Executive Director
(cid:131)(cid:131) Term and type of contract – service agreement limited to a maximum of 80 hours per
month subject to annual review.
(cid:131) Base salary, for the period ended 31 December 2011 of $140,000 per annum and is paid
monthly two weeks in advance and two weeks in arrears.
(cid:131) Superannuation at 9% is payable on the base salary.
(cid:131) 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:131) Either the Company or the director may terminate their engagement without cause by
giving the other party twelve months written notice, there are no other specific payout
clauses.
(cid:131) Remuneration will be reviewed every 12 months or as otherwise agreed between the
parties.
John Mair, General Manager
(cid:131) Term and type of contract – service agreement subject to annual review.
(cid:131) Base salary, for the period ended 31 December 2011 of $350,000 per annum and is paid
monthly two weeks in advance and two weeks in arrears.
(cid:131) Superannuation at 9% is payable on the base salary.
(cid:131) 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:131) Either the Company or the employee may terminate his engagement without cause by
giving the other party twelve months written notice, there are no other specific payout
clauses.
(cid:131) Remuneration will be reviewed every 12 months or as otherwise agreed between the
parties.
Anthony Ho, Non-Executive Director
$50,000 per annum.
(cid:131) No fixed term.
(cid:131)
(cid:131) Superannuation at 9% is payable on the director’s fee
(cid:131) 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.
Jeremy Whybrow, Non-Executive Director
(cid:131) Term and type of contract – service agreement subject to annual review.
(cid:131) Director fees $45,000 per annum
(cid:131) Base salary, for the period ended 31 December 2011 of $205,000 per annum and is paid
monthly two weeks in advance and two weeks in arrears.
(cid:131) Superannuation at 9% is payable on the base salary.
(cid:131) 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:131) Either the Company or the employee may terminate his engagement without cause by
giving the other party twelve months written notice, there are no other specific payout
clauses.
(cid:131) Remuneration will be reviewed every 12 months or as otherwise agreed between the
parties.
Page | 39
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Report – Audited (cont’d)
Shaun Bunn, Chief Operations Officer
(cid:131)(cid:131) Term and type of contract – service agreement subject to annual review.
(cid:131) Base salary, for the period ended 31 December 2011 of $350,000 per annum and is paid
monthly two weeks in advance and two weeks in arrears.
(cid:131) Superannuation at 9% is payable on the base salary.
(cid:131) 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:131) Either the Company or the employee may terminate his engagement without cause by
giving the other party twelve months written notice, there are no other specific payout
clauses. (Notice period has been reduced to 3 months from 1 Feb 2013)
(cid:131) Remuneration will be reviewed every 12 months or as otherwise agreed between the
parties.
Miles Guy, Chief Financial Officer and Company Secretary
(cid:131) Term and type of contract – service agreement subject to annual review.
(cid:131) Base salary, for the period ended 31 December 2011 of $200,000 per annum and is paid
monthly two weeks in advance and two weeks in arrears.
(cid:131) Superannuation at 9% is payable on the base salary.
(cid:131) 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:131) Either the Company or the employee may terminate his engagement without cause by
giving the other party twelve months written notice, there are no other specific payout
clauses. (Notice period has been reduced to 3 months from 1 Feb 2013)
(cid:131) Remuneration will be reviewed every 12 months or as otherwise agreed between the
parties.
Meetings of Directors
During the financial year, 16 meetings of directors were held. Attendances by each director during the
year were as follows:
Directors Meetings
Director
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
Number of meetings
eligible to attend
14
14
14
14
14
14
Number
attended
14
13
14
14
14
12
Audit and Risk Committee
The audit and risk committee was convened at the Directors’ Board Meeting on the 22 April 2009.
The audit committee members are Anthony Ho (Chairman), Jeremy Whybrow (appointed 28
September 2010). The audit and risk committee is to meet at least twice a year and must have a
quorum of two members. There were 2 audit and risk committee meetings held during the current
financial year, as follows:
Member
A Ho
M Hutchinson
J Whybrow
Audit Committee Meetings
Number of meetings
eligible to attend
2
2
2
Number
Attended
2
2
2
Page | 40
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
DIRECTORS’ REPORT
Remuneration Committee
There were no remuneration committee meetings held during the year.
Indemnifying Officers
During or since the end of the financial period 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 Consolidated group, other than conduct
involving a willful breach of duty in relation to the Consolidated group.
Proceedings on Behalf of Consolidated group
No person has applied for leave of court to bring proceedings on behalf of the consolidated group or
intervene in any proceedings to which the Consolidated group is a party for the purpose of taking
responsibility on behalf of the consolidated group for all or any part of those proceedings.
The Consolidated group was not a party to any such proceedings during the period.
Non-audit Services
Details of amounts paid to the auditors of the Company, Deloitte Touche Tohmatsu and its related
practices for audit and any non audit services for the year, are set out in note 31.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 31 December 2012 has been received and
is included on page 42 the financial report.
Rounding off of amounts
The Consolidated group is a consolidated group 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.
Roderick McIllree
Managing Director
Page | 41
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 (8) 9365 7000
Fax: +61 (8) 9365 7001
www.deloitte.com.au
The Board of Directors
Greenland Minerals and Energy Limited
Ground Floor,
Unit 6, 100 Railway Road,
Subiaco WA 6008
21 March 2013
Dear Board Members
Greenland Minerals and Energy Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Greenland Minerals and Energy
Limited.
As lead audit partner for the audit of the financial statements of Greenland Minerals and Energy
Limited for the financial year ended 31 December 2012, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
Greenland Minerals and Energy Limited
Report on the Financial Report
We have audited the accompanying financial report of Greenland Minerals and Energy Limited, which
comprises the statement of financial position as at 31 December 2012, the statement of comprehensive
income, the statement of cash flows and the statement of changes in equity for the year ended on that
date, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the company and the
entities it controlled at the year’s end or from time to time during the financial year as set out on pages
45 to 89.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Page | 43
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Greenland Minerals and Energy Limited would be in the same
terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Greenland Minerals and Energy Limited is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December
2012 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with International Financial Reporting
Standards as disclosed in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 28 to 40 of the directors’ report for the
year ended 31 December 2012. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Greenland Minerals and Energy Limited for the year ended
31 December 2012, complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Perth, 21 March 2013
Page | 44
Directors’ declaration
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
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 Consolidated group;
the attached financial statements and notes thereto, are in compliance with International
Financial Reporting Standards as stated in note 2 of the financial statements; and
the directors have been given the declarations required by s.295A of the Corporations Act 2001.
(b)
(c)
(d)
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
Roderick McIllree
Managing Director
Subiaco, 21March 2013
Page | 45
Consolidated statement of comprehensive income
for the year ended 31 December 2012
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Revenue from continuing operations
Expenditure
Director and employee benefits
Professional fees
Occupancy expenses
Listing costs
Write-down of royalty acquisition
Other expenses
Loss before tax
Income tax expense
Loss for year
Other comprehensive income
Exchange difference arising on translation of foreign
operations
Income tax relating to components of
comprehensive income
Other comprehensive income for the year
Total comprehensive income for the year
Loss attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interest
Note
5
6(a)
6(b)
6(c)
6(d)
6(e)
6(f)
7
7
Dec
2012
$' 000
Dec
2011
$' 000
351
1,117
(9,205)
(1,224)
(409)
(217)
(5,075)
(1,565)
(17,344)
-
(17,344)
1,450
-
-
1,450
(15,894)
(16,675)
(669)
(17,344)
(15,247)
(647)
(15,894)
(8,208)
(2,957)
(467)
(223)
-
(3,400)
(14,210)
-
(14,210)
(9,879)
-
-
(9,879)
(24,089)
(12,954)
(1,256)
(14,210)
(18,981)
(5,108)
(24,089)
Basic loss per share – cents per share
Diluted loss per share – cents per share
19
3.72
3.72
3.50
3.50
Notes to the financial statements are included on pages 50 to 89
Page | 46
Consolidated statement of financial position
as at 31 December 2012
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Investments in associates
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
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses
Equity attributable to equity holders of the parent
Non-controlling interest
Total Equity
Notes to the financial statements are included on pages 50 to 89
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Note
8
9
10
Dec
2012
$' 000
Dec
2011
$' 000
10,801
10,866
326
311
11,438
238
348
11,452
11
12
13
14
14
15
16
18
20
31
1,540
53,642
55,213
62
1,734
46,808
48,604
66,651
60,056
1,240
331
1,571
1,584
417
2,001
89
89
63
63
1,660
64,991
2,064
57,992
334,399
291,826
(22,703)
2,603
(246,705)
64,991
-
64,991
(230,030)
64,399
(6,407)
57,992
Page | 47
Consolidated statement of changes in equity
for the year ended 31 December 2012
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Balance at 1 January
2011
153,754
118,157
(756)
$' 000
$' 000
$' 000
$’000
Issued
capital
Option
reserve
Non -
Controlling
interest
Foreign
currency
translation acquisition Accumulated
reserve
reserve
losses
$' 000
Attributable
to equity
holders of
the parent
Non-
controlling
interest
$' 000
$' 000
Total
$' 000
-
-
-
3,500
-
-
-
-
134,572
(108,085)
-
-
4,925
-
-
(6,027)
(6,027)
-
-
-
-
-
-
-
-
-
(5,611)
(217,076)
54,079
(1,299)
52,780
(12,954)
(12,954)
(1,256)
(14,210)
-
(6,027)
(3,852)
(9,879)
(12,954)
(18,981)
(5,108)
(24,089)
-
-
-
-
3,500
26,487
4,925
(5,611)
-
-
-
-
3,500
26,487
4,925
(5,611)
291,826
14,997
(6,783)
(5,611)
(230,030)
64,399
(6,407)
57,992
291,826
14,997
(6,783)
(5,611)
(230,030)
64,399
(6,407)
57,992
-
-
-
-
-
-
-
1,428
1,428
15,046
812
5,075
-
753
6,208
21,699
307
-
-
-
-
-
-
-
-
-
(34,061)
(16,675)
(16,675)
(669)
(17,344)
-
1,428
22
1,450
(16,675)
(15,247)
(647)
(15,894)
-
-
-
-
15,858
5,075
6,961
-
-
-
15,858
5,075
6,961
(12,055)
7,054
(5,001)
334,399
22,324
(5,355)
(39,672)
(246,705)
64,991
-
64,991
Net loss for the year
Other Comprehensive
income
Total comprehensive
for the year
Issue of shares
net of transaction costs
Issue of shares from
option exercise net of
transaction costs
Recognition of share
based payments
Recognition of deposit
paid to acquire non-
controlling interest
Balance at 31 December
2011
Balance at 1 January
2012
Net loss for the year
Other Comprehensive
income
Total comprehensive
for the year
Issue of shares
net of transaction costs
Issue of shares for royalty
acquisition
Issue of shares from
Recognition of share
based payments
Recognition acquisition of
non-controlling interest
Balance at 31 December
2012
Notes to the financial statements are included on pages 50 to 89
Page | 48
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Consolidated statement of cash flows
for the year ended 31 December 2012
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Net cash used in operating activities
Cash flows from investing activities
Interest received
Payments for property, plant and equipment
Payments for exploration and development
Payment related to acquisition of non-controlling interest
Payment for investments
Payment for investments in associates
Proceeds from sale of investments
Proceeds from sale of investments in associates
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares/options
Payment for shares/options issue costs
Net cash from financing activities
Net decrease in cash and equivalents
Cash and equivalents at the beginning of the financial year
Cash and equivalents at the end of the
Financial year
Note
23
31 Dec
2012
$' 000
31 Dec
2011
$' 000
114
(5,890)
(5,776)
403
(10,447)
(10,044)
283
(38)
(6,008)
(5,000)
(245)
-
133
50
(10,825)
17,058
(522)
16,536
(65)
10,866
744
(1,380)
(14,758)
(2,111)
-
(62)
404
-
(17,163)
26,854
(368)
26,486
(721)
11,587
8
10,801
10,866
Notes to the financial statements are included on pages 50 to 89
Page | 49
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
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 its head office in Perth.
Greenland Minerals and Energy Limited registered office and its principal place of business are as
follows:
Registered office
Unit 6, 100 Railway Road Subiaco WA
Principal place of business
Unit 6, 100 Railway Road Subiaco WA
The Company’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 consolidated financial statements of the group.
Accounting Standards
include Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Consolidated group
comply with International Financial Reporting Standards (‘IFRS’). The Consolidated group is a for-
profit entity for the purpose of preparing the financial statements.
The financial statements were authorised for issue by the directors on 21 March 2013.
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 Consolidated 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 period, the Consolidated group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to
its operations and effective for reporting periods beginning on 1 January 2012.
The following new and revised Standards and Interpretations have been adopted in the current
period:
(cid:120) AASB 1054 Australian Additional Disclosures and AASB 2011-1 Amendments to Australian
Accounting Standards arising from the Trans-Tasman Convergence Project
(cid:120) AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of
Financial Assets
Page | 50
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
(cid:120) AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of
Underlying Assets
The adoption of these standards and interpretations did not have any effect on the financial position
or performance of the Consolidated group.
The Consolidated group has not elected to early adopt any new standards or amendments.
At the date of authorisation of the financial report, a number of Standards and Interpretations were in
issue but not yet effective:
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2015
31 December 2015
Standard/Interpretation
AASB 9 ‘Financial Instruments’ (December 2009),
AASB 2009-11 ‘Amendments to Australian
Accounting Standards arising from AASB 9’ and
AASB 2012-6 ‘Amendments to Australian
Accounting Standards – Mandatory Effective Date
of AASB 9 and Transition Disclosures’
AASB 9 ‘Financial Instruments’ (December 2010)
and AASB 2010-7 ‘Amendments to Australian
Accounting Standards arising from AASB 9
(December 2010)’ and AASB 2012-6
‘Amendments to Australian Accounting Standards
– Mandatory Effective Date of AASB 9 and
Transition Disclosures’
AASB 10 ‘Consolidated Financial Statements’
1 January 2013
31 December 2013
AASB 11 ‘Joint Arrangements’
1 January 2013
31 December 2013
AASB 12 ‘Disclosure of Interests in Other Entities’ 1 January 2013
31 December 2013
AASB 127 ‘Separate Financial Statements’ (2011) 1 January 2013
31 December 2013
AASB 128 ‘Investments in Associates and Joint
Ventures’ (2011)
1 January 2013
31 December 2013
AASB 2011-7 ‘Amendments to Australian
Accounting Standards arising from the
Consolidation and Joint Arrangements Standards’
AASB 13 ‘Fair Value Measurement’ and AASB
2011-8 ‘Amendments to Australian Accounting
Standards arising from AASB 13’
1 January 2013
31 December 2013
1 January 2013
31 December 2013
Page | 51
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
Standard/Interpretation
AASB 119 ‘Employee Benefits’ (2011), AASB
2011-10 ‘Amendments to Australian Accounting
Standards arising from AASB 119 (2011)’
AASB 2011-4 ‘Amendments to Australian
Accounting Standards to Remove Individual Key
Management Personnel Disclosure Requirements’
AASB 2011-9 ‘Amendments to Australian
Accounting Standards – Presentation of Items of
Other Comprehensive Income’
AASB 2012-2 ‘Amendments to Australian
Accounting Standards – Disclosures – Offsetting
Financial Assets and Financial Liabilities
(Amendments to AASB 7)’
AASB 2012-3 ‘Amendments to Australian
Accounting Standards – Offsetting Financial
Assets and Financial Liabilities (Amendments to
AASB 132)’
AASB 2012-5 ‘Amendments to Australian
Accounting Standards arising from Annual
Improvements 2009–2011 Cycle’
AASB 2012-6 ‘Amendments to Australian
Accounting Standards – Mandatory Effective Date
of AASB 9 and Transition Disclosures’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2013
31 December 2013
1 July 2013
31 December 2014
1 July 2012
31 December 2013
1 January 2013
31 December 2013
1 January 2014
31 December 2014
1 January 2013
31 December 2013
1 January 2013
31 December 2013
At the date of authorisation of the financial statements the following IASB Standards and IFRIC
Interpretations were also in issue but not yet effective, although Australian equivalent Standards and
Interpretations have not yet been issued and have not been adopted by the Consolidated Entity for
the year ended 31 December 2012:
Standard/Interpretation
Consolidated Financial Statements, Joint
Arrangements and Disclosure of Interests in Other
Entities: Transition Guidance (Amendments to
IFRS 10, IFRS 11 and IFRS 12)
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2013
31 December 2013
Page | 52
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
The Directors note that the impact of the initial application of the Standards and Interpretations is not
yet known or is not reasonably estimable. These Standards and Interpretations will be first applied in
the financial report of the Consolidated Entity that relates to the annual reporting period beginning on
or after the effective date of each pronouncement.
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 (including special purpose entities) controlled by the Company (its subsidiaries). 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 statement of comprehensive income from the effective date of acquisition and 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 Consolidated group.
All intra-group transactions, balances, income and expenses are eliminated in full on
consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity
therein. The interests of non-controlling shareholders may be initially measured either at fair
value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s
identifiable net assets. The choice of measurement basis is made on an acquisition-by-
acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity. Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Consolidated group’s interests in subsidiaries that do not result in a loss of
control are accounted for as equity transactions. The carrying amounts of the Consolidated
group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by which the non-
controlling interests are adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to owners of the Company.
(b) Joint venture arrangements
Jointly controlled operations
Where the Consolidated group is a venturer and so has joint control in a jointly controlled
operation, the Consolidated group recognises the assets that it controls and the liabilities and
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.
Page | 53
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
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
(cid:120)
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 Consolidated 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 Consolidated 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 when 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 Consolidated 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 an appropriate valuation method. 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 are in note 24.
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 Consolidated group’s
estimate of equity instruments that will eventually vest.
At each reporting date, the Consolidated 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.
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.
Page | 54
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
(g)
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 Consolidated 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 Consolidated 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/Consolidated 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 in profit or loss, 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.
(i)
Financial assets
Financial assets are recognised and derecognised on trade date where the purchase or sale of
a financial asset is under a contract whose terms require delivery of the financial asset 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.
Financial assets are classified into the following specified categories: ‘Financial assets at fair
value through profit and loss (FVTPL)’, ‘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.
Page | 55
Notes to the accounts
2. Significant accounting policies (cont’d)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
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’.
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss where the
financial asset:
(cid:120)
(cid:120)
has been acquired principally for the purpose of selling in the near future;
is a part of an identified portfolio of financial instruments that the Consolidated group
manages together and has a recent actual pattern of short-term profit-taking; or
is a derivative that is not designated and effective as a hedging instrument.
(cid:120)
Financial assets at fair value through profit or loss are stated at fair value, with any resultant
gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any dividend or interest earned on the financial asset. Fair value is determined in
the manner described in note 10.
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 reporting 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 receivable at the date
the impairment is reversed does not exceed what the amortised cost would have been had the
impairment not been recognised.
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 Consolidated group de-recognises 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 Consolidated group neither
transfers nor retains substantially all the risks and rewards of ownership and continues to control
the transferred asset, the Consolidated group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the Consolidated group retains
substantially all the risks and rewards of ownership of a transferred financial asset, the
Consolidated group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Page | 56
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
(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
Buildings
10 – 15 years
4 – 10 years
20 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 short-term employee benefits, are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits, are measured as the present
value of the estimated future cash outflows to be made by the Consolidated group in respect of
services provided by employees up to reporting date.
(m) Financial instruments issued by the Consolidated group
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 Consolidated 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.
Page | 57
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
(n)
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 Consolidated 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 Consolidated 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.
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.
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.
(o) Capitalisation of exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are
recognised as an exploration and evaluation asset in the year in which they are incurred where
the following conditions are satisfied:
(i) the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploration of the area of interest, or alternatively, by its
sale; or
exploration and evaluation activities in the area of interest have not, at the reporting
date, reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, and active and significant operations
in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights
to explore, studies, exploratory drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortisation of assets used in exploration and evaluation
activities. General and administrative costs are only included in the measurement of exploration
and evaluation costs where they are related directly to operational activities in a particular area
of interest.
Page | 58
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
2. Significant accounting policies (cont’d)
Exploration and evaluation assets are assessed for impairment when facts and circumstances
suggest that the carrying amount of an exploration and evaluation asset may exceed its
recoverable amount. The recoverable amount of the exploration and evaluation asset (or the
cash-generating unit(s) to which it has been allocated, being no larger than the relevant area of
interest) is estimated to determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the asset 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 in previous years.
Where a decision is made to proceed with development in respect of a particular area of
interest, the relevant exploration and evaluation asset is tested for impairment and the balance
is then reclassified to development.
(p) Provisions
Provisions are recognised when the Consolidated group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Consolidated 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.
3: Critical accounting estimates and judgments
In preparing this Financial Report the Consolidated group 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.
a)
b)
Significant accounting judgments
In the process of applying the Consolidated group'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 Consolidated group 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 carrying value of the capitalised exploration and
evaluation expenditure would be written down to its recoverable amount.
Deferred tax assets
The Consolidated group 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:
Page | 59
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
3: Critical accounting estimates and judgments (cont’d)
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 Consolidated group 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 and changes to environmental
restoration obligations) and changes to commodity prices.
As at 31 December 2012, the carrying value of capitalised exploration expenditure is
$53,642,412 (2011: $46,808,574) refer to note 12.
4: Segment information
AASB8 Operating Segments requires operating segments to be identified on the basis of internal
reports about components of the entity that are regularly reviewed by the managing director (chief
operating decision maker) in order to allocate resources to the segment and assess performance.
The Consolidated group undertakes mineral exploration and evaluation in Greenland.
Given the Consolidated group has one reporting segment, operating results and financial information
are not separately disclosed in this note.
5: Revenue
Interest - Bank deposits
Operating lease revenue - Sub lease
Other revenue
6: Expenditure
(a) Director and employee benefits
Directors’ fees
Directors’ and employee salary and wage expense
Directors’ and employee post-employment benefits
Directors’ and employee share based payments
31 Dec
2012
$' 000
31 Dec
2011
$' 000
274
-
77
351
755
76
286
1,117
31 Dec
2012
$' 000
31 Dec
2011
$' 000
(245)
(2,594)
(158)
(6,208)
(9,205)
(302)
(2,916)
(137)
(4,925)
(8,280)
Page | 60
Notes to the accounts
6: Expenditure (cont’d)
(b) Professional fees:
Audit, accounting and taxation expense
Legal fess
Marketing and public relations
Consulting
(c) Occupancy expense:
Rent
Electricity
(d) Listing costs:
Stock exchange fees
Share registry fees
(e) Write-down of royalty acquisition
Write-down of royalty acquisition (i)
(f) Other expenses
Loss on disposal of investments
Changes in fair value of held for trading assets
Gain/(Loss) on foreign currency exchange
Depreciation expense
Insurance
Operating lease rental expenses
Travel expenses
Payroll tax
Printing, stationery and office costs
Telephone
Other expenses
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
31 Dec
2012
$' 000
31 Dec
2011
$' 000
(215)
(388)
(276)
(345)
(1,224)
(375)
(34)
(409)
(150)
(67)
(217)
(5,075)
(5,075)
(75)
(27)
1
(232)
(145)
(10)
(370)
(195)
(58)
(111)
(343)
(1,565)
(449)
(1,527)
(604)
(377)
(2,957)
(445)
(22)
(467)
(106)
(117)
(223)
-
-
(3)
(237)
(3)
(228)
(123)
(76)
(1,008)
(145)
(118)
(182)
(1,277)
(3,400)
(i)
In October 2012 The Company finalised the acquisition of a royalty over future production from
the Kvanefjeld project, through the issue of 17,500,000 shares, refer to note 15. The rights to
this royalty were previously held by an external party. Any future payments under the royalty
would have been a liability to the Consolidated group and recognised as an expense in the
relevant future period. The acquisition of the royalty has reduced the future potential costs to the
Consolidated group and hence satisfied the recognition criteria for intangible assets as per AASB
138 “Intangible assets”. The royalty has been assessed for recoverability at the date of
acquisition with a write-down recognised based on the present stage of the development of the
project. Therefore the value of the royalty acquisition has been recognised as an expense in the
year ended 31 December 2012.
Page | 61
Notes to the accounts
7: Income tax
(a) Tax expense
Current tax
Deferred tax
b) The prima facie income tax benefit on pre-tax accounting
loss from operations reconciles to the income tax expenses
in the financial statements as follows:
Loss for period
Prima facie tax benefit on loss at 30%
add:
Tax effect of:
other non-allowable items
provisions and accruals
accrued income
revenue loss not recognised
Less:
Tax effect of:
exploration, evaluation and development expenditure
provisions and accruals
capital expenditure write off
other deductions
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
31 Dec
2012
$' 000
31 Dec
2011
$' 000
-
-
-
-
-
-
-
-
(17,344)
(5,203)
(14,210)
(4,263)
3,475
177
11
4,283
7,946
(2,309)
(112)
(319)
(3)
(2,743)
1,481
568
8
7,396
9,453
(4,278)
(531)
(291)
(90)
(5,190)
Income tax expense
-
-
The following deferred tax balances have not been
recognised:
Deferred tax assets:
at 30%
Carry forward revenue losses
Capital expenditure costs
Less: offset against deferred tax liability
24,075
1,064
25,139
(10,849)
14,290
19,792
493
20,285
(8,537)
11,748
The above deferred tax assets will only be recognised if;
(i)
(ii)
(iii)
The Consolidated group derives future assessable income of a nature and amount sufficient
to enable the benefits to be utilised,
The Consolidated group continues to comply with the conditions of deductibility imposed by
law, and
No change in income tax legislation adversely affects the consolidated group’s ability to utilise
the benefits.
Page | 62
Notes to the accounts
7: Income tax (cont’d)
Deferred tax liabilities (not recognised):
at 30%
Exploration, evaluation and development expenditure
Accrued income
less offset against deferred tax assets
8: Cash and equivalents
Cash at bank
Cash on deposit at call
Cash on deposit
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
31 Dec
2012
$' 000
31 Dec
2011
$' 000
10,838
11
10,849
(10,849)
-
8,529
8
8,537
(8,537)
-
Dec
2012
$' 000
Dec
2011
$' 000
123
10,259
419
10,801
388
10,040
438
10,866
The Consolidated group’s financial risk management objectives and policies are discussed further at
note 25.
9: Trade and other receivables
(a) Current
Trade debtors (i)
Accrued interest
GST refundable
Payroll tax refund
Funds held in trust (ii)
Dec
2012
$' 000
Dec
2011
$' 000
-
29
280
17
-
326
6
37
165
-
30
238
(i) Trade debtors and sundry debtors are non-interest bearing, unsecured and generally on 30
day terms. As at 31 December 2012 and 31 December 2011 no amounts were past due but
not impaired. Additionally there was no allowance for doubtful debts at either 31 December
2012 or 31 December 2011.
(ii) Funds held in trust at 31 December 2011 consist of $30,381 being held by the Consolidated
group’s London based lawyers as a retainer.
Page | 63
Notes to the accounts
10: Other assets
Deposit bonds
Prepayments
Investments carried at fair value:
Shares in listed companies – fair value (i)
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Dec
2012
$' 000
Dec
2011
$' 000
103
193
15
311
-
291
57
348
(i)
Movement in market value is based on the closing price on the Australian Securities
Exchange, of the shares held on the reporting date.
11: Property, plant and equipment
Plant and Equipment (cost)
Accumulated depreciation
Leasehold improvements (cost)
Accumulated depreciation
Buildings
Accumulated depreciation
Dec
2012
$' 000
Dec
2011
$' 000
1,567
(734)
99
(26)
694
(60)
1,529
(544)
99
(19)
694
(25)
1,540
1,734
(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.
Page | 64
Notes to the accounts
11: Property, plant and equipment (cont’d)
Plant and Equipment
Carrying value at beginning of year
Acquisitions
Depreciation expense
Carrying value at end of year
Leasehold improvements
Carrying value at beginning of year
Acquisitions
Depreciation expense
Carrying value at end of year
Buildings
Acquisitions
Depreciation
Carrying value at end of year
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Dec
2012
$' 000
Dec
2011
$' 000
985
38
(190)
833
80
-
(7)
73
669
(35)
634
528
652
(195)
985
54
34
(8)
80
694
(25)
669
Total property, plant and equipment carrying value at end of
period
1,540
1,734
12: Capitalised exploration and evaluation expenditure
Balance at beginning of year
Exploration and/or evaluation phase in
current period:
Capitalised expenses (i)
Less:
Effects of currency translation (ii)
Balance at end of year
Dec
2012
$' 000
Dec
2011
$' 000
46,808
42,149
5,368
52,176
1,466
53,642
14,261
56,410
(9,602)
46,808
(i) 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 held a 61% interest in the joint
venture through Greenland Minerals and Energy (Trading) A/S, which holds the EL 2010/02,
the exploration license covering the Kvanefjeld Project, with Westrip holding the balance.
Under the joint venture agreement, from 17 August 2009 both joint venture parties were
required to contribute to the exploration expenditure, in proportion to their respective interests
in the joint venture. Greenland Minerals Energy Limited continued to fully fund the exploration
expenditure and the Company did not make a claim against Westrip Holdings Limited for its
share of the exploration expenditure post 17 August 2009. In October 2012 the Company
finalised the settlement to acquire the remaining 39% of Greenland Minerals and Energy
(Trading) A/S and move to 100% control of the subsidiary.
Page | 65
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
12: Capitalised exploration and evaluation expenditure (cont’d)
(ii)
(iii)
(iv)
(v)
During the prior year, the Company received revised legal advice indicating that legal and
beneficial ownership of the Kvanefjeld Project EL 2010/02 resided with Greenland Minerals
and Energy (Trading) A/S, the Greenlandic subsidiary and not the Company. As a result all
capitalised exploration and evaluation expenditure has been recognised in the Greenlandic
subsidiary and at reporting date has been translated at the closing Australian dollar/Danish
kroner exchange rate with the movement being recognised in the foreign currency translation
reserve.
During the year the Company directly held 100% interest in Greenland exploration licenses
EL 2011/23, EL 2011/26 and EL 2011/27.
The recoverability of the Consolidated Group’s carrying value of the capitalised exploration
and evaluation expenditure relating to the Kvanefjeld Project and EL 2011/26 and EL 2011/27
is subject to the successful development and exploitation of the exploration property. The
Consolidated Group will carry out a feasibility study including among other areas,
environmental and social impact studies, with the intention of applying for the right to mine.
Tenement EL 2011/23, on the east coast of Greenland, is presently in the early stages of
exploration and evaluation. Alternatively recoverability could result from the sale of the
tenement at an amount at least equal to the carrying amount.
In December 2011 the Company announced changes made by the Greenland Government to
include uranium in the exploration license EL 2010/02 held by the Consolidated group. This
inclusion of uranium to the license is in addition to the changes introduced by the Greenland
Government in September 2010 which allowed for the inclusion of radioactive elements as
exploitable minerals, for the purpose of thorough evaluation and reporting. The Greenland
Government currently has a zero tolerance approach to the exploration and exploitation of
uranium, this policy is currently under review. These developments have provided the
Consolidated group with a clear pathway to move towards making an application for an
exploitation license.
The Consolidated Group and the Greenland Government are currently in consultations with
stakeholders, regarding the social and environmental aspects of the project. Based on this
combined with the developments outlined above, the Consolidated Group has a positive
outlook regarding its ability to successfully develop the project, as a multi element project
including uranium. The Consolidated Group will continue to explore and evaluate the project,
with the view of moving to development, subject to approval to mine rare earth elements with
uranium. This will be done in a manner that is in accordance with both Greenland
Government and local community expectations.
13: Trade and other payables
Accrued expenses (i)
Trade creditors (ii)
Sundry creditors (ii)
Dec
2012
$' 000
Dec
2011
$' 000
329
703
208
1,240
67
1,176
341
1,584
(i)
Accrued expenses related to services and goods provided to the Consolidated group prior to
the period end, but the Consolidated group was not charged or invoiced for these goods and
services by the supplier at period end. The amounts are generally payable and paid within 30
days and are non-interest bearing.
Page | 66
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
13: Trade and other payables (cont’d)
(ii)
(iii)
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 15%
and 18%. All trade and sundry creditors are generally payable on terms of 30 days.
The financial risk related to trade and other payables is managed by ensuring sufficient at call
cash balances are maintained by the Consolidated group to enable the settlement in full of all
amounts as and when they become due for payment.
14: Provisions - Current
Provision for annual leave
Provision for payroll tax
Provisions – Non-Current
Provision for long service leave
Dec
2012
$' 000
Dec
2011
$' 000
331
-
331
396
21
417
Dec
2012
$' 000
Dec
2011
$' 000
89
63
15: 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 consolidated group 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.
Balance brought forward
Issue of ordinary shares through capital
raisings (i)
Issue of ordinary shares through share
purchase plan (ii)
Issue of ordinary shares as consideration
for acquisition of royalty (refer note 6f)
Issue of ordinary shares as consideration
for share based payments
Issue of ordinary shares in relation to the
acquisition of the non-controlling interest in
the Kvanefjeld project (refer to note 16)
Issue of ordinary shares as a result of
exercised options:
$0.20 exercise price options
$0.50 exercise price options
$1.00 exercise options
Less costs associated with shares issued
Balance at end of financial year
Dec 2012
Dec 2011
No
' 000
416,390
$' 000
291,826
No
' 000
288,672
$' 000
153,754
50,000
15,000
6,859
2,057
17,500
5,075
2,363
753
-
-
-
-
-
-
-
-
74,825
21,700
5,983
3,500
-
-
-
-
567,937
-
-
-
(2,012)
334,399
115,195
5,450
1,090
-
416,390
130,605
3,112
1,223
(368)
291,826
Page | 67
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
15: Issued capital (cont’d)
(i)
(ii)
In October 2012, the Company issued 50,000,000 at $0.30 per shares to raise a total of
$15,000,000. For every 2 shares the Company issued 1 free attached option, refer to note
16.
In October 2012, the Company completed a Share Purchase Plan (SPP) offer to existing
shareholders. Under the SPP, shareholders were entitled to apply for additional shares at
$0.30 per share. The Company issued 6,858,499 shares through the SPP raising
$2,057,549.
16: Reserves
a) Option reserve
Balance brought forward
Issue of options to directors (i)
Issue of options to senior management (i)
Issue of performance rights to directors (i)
Issue of performance rights to senior management (i)
Issue of performance rights to staff (i)
Issue of $0.75 exercise price options in relation to the acquisition
of the non-controlling interest in the Kvanefjeld project
Issue of $0.60 exercise price options on the basis of one option
for every two $0.30 shares issued
Options exercised – transferred to share capital:
$0.10 exercise price options
$0.20 exercise price options
$0.50 exercise price options
$1.00 exercise price options
Balance at end of financial year
(i) Refer to note 24 for further information.
Dec
2012
$' 000
Dec
2011
$' 000
14,997
854
367
2,381
701
1,905
307
812
-
-
-
-
22,324
118,157
641
536
1,526
526
1,696
-
-
-
(107,065)
(887)
(133)
14,997
The option reserve arises from the grant of share options and performance rights to executives,
employees and consultants. 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 25 to the financial statements.
b) Foreign currency translation reserve
Balance brought forward
Current period adjustment from currency translation of foreign
controlled entities
Balance at end of year
Dec
2012
$' 000
(6,783)
1,428
(5,355)
Dec
2011
$' 000
(756)
(6,027)
(6,783)
The foreign currency translation reserve records the foreign currency differences arising from the
translation of the foreign subsidiary’s accounts from Danish Kroner, the functional currency of
Greenland Minerals and Energy (Trading) A/S, to Australian dollars.
Page | 68
Notes to the accounts
16: Reserves (cont’d)
c) Non-controlling interest acquisition reserve
Balance brought forward
Settlement consideration – cash (i)
Settlement consideration – shares (i)
Settlement consideration – options (i)
Settlement deposit - cash (ii)
Settlement deposit – shares (iii)
Transfer non-controlling interest carrying value
Balance at end of year
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Dec
2012
$' 000
Dec
2011
$' 000
(5,611)
(5,000)
(21,700)
(307)
-
-
(7,054)
(39,672)
-
-
-
-
(2,111)
(3,500)
(5,611)
The non-controlling interest acquisition reserve records the acquisition of the non-controlling interests
in Greenland Minerals and Energy (Trading) A/S.
(i)
In October 2012, the Company finalised the settlement acquisition of the outstanding 39% of
the issued capital of Greenland Minerals and Energy (Trading) A/S and moved to 100%
ownership of the subsidiary. As consideration for settlement and in addition to the deposit
amounts recognised in the previous year, the Company paid $5,000,000, issued 74,824,997
shares and 4,999,520 options with an exercise price of $0.75.
(ii) Non-refundable cash deposits paid as part of the acquisition of the outstanding 39% of
Greenland Minerals and Energy (Trading) A/S.
(iii) The Consolidated group issued 5,982,345 shares with an issue price of $0.585 during the
year. The shares issued formed part of the deposit under the terms of the extension to
settlement deed in relation to the acquisition of the outstanding 39% of Greenland Minerals
and Energy (Trading) A/S.
d) Total reserves
Option reserve
Foreign currency translation reserve
Non-controlling interest acquisition reserve
Dec
2012
$' 000
22,324
(5,355)
(39,672)
(22,703)
Dec
2011
$' 000
14,997
(6,783)
(5,611)
2,603
17: Dividends
No dividends have been proposed or paid during the period or comparative period.
18: Accumulated losses
Balance at beginning of financial year
Loss attributable to members of parent entity
Related income tax
Balance at end of financial year
Dec
2012
$' 000
(230,030)
(16,675)
-
(246,705)
Dec
2011
$' 000
(217,076)
(12,954)
-
(230,030)
Page | 69
Notes to the accounts
19: Loss per share
Basic loss per share
From continuing operations
Diluted loss per share
From continuing operations
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Dec
2012
Cents
Per share
Dec
2011
Cents
Per share
3.72
3.72
3.50
3.50
Basic and diluted loss per share
The loss and weighted average number of ordinary shares used in the calculation of the basic and
diluted loss per share are as follows;
Loss for year ($)
Weighted average number of shares used
in the calculation of basic and diluted loss
per share (Number)
Dec
2012
Dec
2011
16,675,104
12,953,792
488,501,056
367,323,888
(i)
There were 55,968,711 potential ordinary shares on issue at 31 December 2012 (31
December 2011: 24,200,000) 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.
20: Non-controlling interest
Balance brought forward
Loss attributable to non-controlling interest
for the period
Currency translation movement attributable
to non-controlling interest
Transfer to non-controlling interest
acquisition reserve
Non-controlling interest at the end of
financial year
Greenland Minerals and
Energy (trading) A/S
Dec
Dec
2011
2012
(6,407)
(1,299)
(669)
(1,256)
22
(3,852)
7,054
-
(6,407)
(i)
In October 2012 the Company finalised settlement to acquire the outstanding 39% the
issued capital of Greenland Minerals and Energy (Trading) A/S and a result moved to
100% control of the subsidiary.
21: Commitments for expenditure
Exploration commitments: EL 2010/02 is located in Greenland. The tenement expenditure incurred
during the year ended 31 December 2012 and prior years was in excess of the minimum expenditure
required to maintain the tenement in good standing. The excess expenditure can be carried forward
for 5 years. The amount carried forward will be sufficient to meet the minimum expenditure
requirements over this period.
Page | 70
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
21: Commitments for expenditure (cont’d)
The Consolidated group has recognised sufficient estimated expenditure to keep explorations
licenses EL 2011/23, El 2011/26 and El2011/27 in good standing.
Dec
2012
$’000
Dec
2011
$’000
Tenement commitments
Not longer than 1 year
Longer than 1 year but not longer than 5 years
Longer than 5 years
Operating leases (i)
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
250
1,000
-
1,250
210
17
-
227
-
160
-
160
-
900
-
900
210
210
-
410
240
400
-
640
(i)
(ii)
The only commitments for operating leases are lease rentals on the Consolidated group’s
Perth head office premises. The current lease expires on the 14 February 2014, and is
non-cancelable, with a 3 year renewal option. No liabilities have been recognised in
relation to operating leases at 31 December 2012 or 31 December 2011.
Relates to ongoing contractual obligations with Gravner Limited for corporate advisory
services.
22: Subsidiaries
Name of subsidiary
Chahood Capital Limited
Greenland Minerals and Energy (Trading) A/S (i)
Country
of incorporation
Isle of Man
Greenland
Ownership interest
Dec
Dec
2011
2012
%
%
100
100
61
100
(i)
In October 2012 the Company finalised settlement to acquire the outstanding 39% the
issued capital of Greenland Minerals and Energy (Trading) A/S and a result moved to
100% control of the subsidiary, refer to note 16 for further information.
Page | 71
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
23: Notes to the statement of cash flows
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
(Gain) loss on revaluation of fair value through
profit and loss of financial assets
Depreciation
Equity-settled share-based payments
Royalty acquisition
Interest income received and receivable
(Increase)/decrease in assets
Trade and other receivables
Increase (decrease) in liabilities
trade and other payables
in provisions
Net cash used in operating activities
Year ended
31 Dec
2012
$' 000
Year ended
31 Dec
2011
$' 000
(17,344)
(14,210)
75
27
231
6,207
5,075
(274)
51
(4)
237
228
4,925
-
(755)
117
236
(60)
(5,776)
560
(1,142)
(10,044)
The Consolidated group has not entered into any other non-cash financing or investing activities.
24: Share based payments
In addition to the share based payments discussed elsewhere within this this note, the following
share-based payment arrangements were entered into in the year ended 31 December 2012:
Date
Number
Issue Price
Value
$0.37
$0.29
$0.32
$0.29
$0.26
15/08/2012 (i)
200,000
16/10/2012 (ii) 74,824,997
2,138,425
26/10/2012 (iii)
26/10/2012 (iv) 17,500,000
25,000
19/12/2012 (iii)
Shares were issued as part consideration for marketing services provided
Shares issued in relation to the acquisition of the non-controlling interest in the Kvanefjeld
project. Refer to note 16.
Shares were issued in lieu of capital raising fees
Shares were issued as consideration for the acquisition of the royalty as approved by
shareholders on 8 October 2012. Refer note 6(f).
No share based payments other than as discussed elsewhere within this note were entered
into during the prior year.
$73,000
21,699,249
$673,603
$5,075,000
$6,500
(i)
(ii)
(iii)
(iv)
(v)
Page | 72
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
In addition to the share based payments discussed elsewhere within this this note, the following
options were granted as share-based payment arrangements during the year ended 31 December
2012:
Option series
Grant date
Number
Fair value@
grant date
$
Expiry
date
$0.75 Exercise price (i)
08/10/2012
4,999,520
307,587
15/10/2014
$0.60 Exercise price (ii)
06/12/2012
25,769,191
812,889
05/10/2014
(i) Options granted in relation to the acquisition of the non-controlling interest in the Kvanefjeld
project. Refer to note 16.
(ii) Options granted as one free attached option for every two shares issued under the October
2012 capital raising.
Performance rights
On the 23 January 2012, shareholders approved the issue of 1,000,000 un-vested performance rights
to Anthony Ho. These rights were issued to Mr Ho in recognition of the work and his valuable input in
securing the agreement to acquire the remaining 39% interest in the Kvanefjeld project.
The performance rights will vest in three tranches based on the Company’s Volume Weighted
Average Share Price (“VWAP”) exceeding price hurdles for 10 consecutive trading days.
Tranche 1 - Will vest upon both the volume weighted average price of Shares being $0.75 or more
for 10 consecutive Trading Days and remain an employee of the Company until 30
June 2013.
Tranche 2 - Will vest upon both the volume weighted average price of Shares being $1.00 or more
for 10 consecutive Trading Days and remain an employee of the Company until 30
June 2013.
Tranche 3 - Will vest upon both the volume weighted average price of Shares being $1.50 or more
for 10 consecutive Trading Days and remain an employee of the Company until 30
June 2013.
No amounts are paid or payable by the recipient on receipt of the performance right. The
performance rights carry neither rights to dividends nor voting rights and are non-transferrable.
The value of the performance rights issued will be recognised as an expense over the expected
service vesting period. The fair value has been established using a binomial model based on the
following variables:
Grant date
Underlying share price at grant date
Maximum life
Expected future volatility
Risk free rate
Tranche1 share price hurdle
Tranche2 share price hurdle
Tranche3 share price hurdle
23/01/2012
$0.51
3 Years
100%
3.03%
$0.75
$1.00
$1.75
Page | 73
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
Employee performance rights plan
At the Company’s Annual General Meeting, on 12th May 2011, members approved the implementation
of an Employee Performance Rights Plan (“EPRP”). The plan is a result of a comprehensive
remuneration review the Company conducted, in consultation with independent consultants. The aim
of the plan is to assist in the retention of existing staff and the recruitment of future employees.
Under the EPRP, the Company will issue incentive shares to employees as part of their total
remuneration package. The plan will result in a direct cost saving to the Company through a
reduction in the salary component payable in remuneration packages.
Upon satisfying clearly pre-determined vesting conditions, each right issued under the EPRP will be
convertible into one fully paid ordinary share of the Company. To meet the vesting criteria, the
employee must remain an employee of the Company for a minimum of two years and will converted in
three tranches based on the Company’s Volume Weighted Average Share Price (“VWAP”) exceeding
price hurdles for 10 consecutive trading days.
Tranche 1 - Will vest upon both the volume weighted average price of Shares being $1.50 or more
for 10 consecutive Trading Days and 2 years continuous service for the Company
from 1 April 2011 save that this continuous service vesting hurdle will be deemed to
be satisfied in the event of a successful takeover bid where the bidder has
acceptances for greater than 50% of the Shares in the Company.
Tranche 2 - Will vest upon both the volume weighted average price of Shares being $1.85 or more
for 10 consecutive Trading Days and 2 years continuous service for the Company
from 1 April 2011 save that this continuous service vesting hurdle will be deemed to
be satisfied in the event of a successful takeover bid where the bidder has
acceptances for greater than 50% of the Shares in the Company.
Tranche 3 - Will vest upon both the volume weighted average price of Shares being $2.50 or more
for 10 consecutive Trading Days and 2 years continuous service for the Company
from 1 April 2011 save that this continuous service vesting hurdle will be deemed to
be satisfied in the event of a successful takeover bid where the bidder has
acceptances for greater than 50% of the Shares in the Company.
No amounts are paid or payable by the recipient on receipt of the performance right. The
performance rights carry neither rights to dividends nor voting rights and are non-transferrable.
The Company did not issue any performance rights under the EPRP during the year ended 31
December 2012.
The Company has issued 16,450,000 performance rights under the EPRP during the previous year
year ended 31 December 2011. During the current year 590,000 performance rights were cancelled
as a result of the employment of five employees being terminated prior to the service period vesting
condition being satisfied.
The value of the performance rights issued will be recognised as an expense over the expected 2
year service vesting period. The fair value has been established using a binomial model based on the
following variables:
Page | 74
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
Grant date
Underlying share price at grant date
Maximum life
Expected future volatility
Risk free rate
Tranche1 share price hurdle
Tranche2 share price hurdle
Tranche3 share price hurdle
12/05/2011
$0.97
3 Years
100%
5.03%
$1.50
$1.85
$2.50
Performance rights granted under the EPRP for the year ended 31 December 2012
Opening
balance
1 Jan 2012
5,000,000
5,325,000
6,125,000
16,450,000
Number
cancelled during
year ended
31 Dec 2012
145,000
155,000
290,000
590,000
Balance at
31 Dec 2012
4,855,000
5,170,000
5,835,000
15,860,000
Tranche
1
2
3
Pro-rata vesting
period value
recognised during
the year ended
31 Dec 2012
2,816,507
2,859,010
2,966,368
8,641,885
Performance rights granted under the EPRP for the year ended 31 December 2011
Tranche
Number
Grant date fair
value
$
Pro-rata vesting
period value
recognised during
the year ended
31 Dec 2011
1
2
3
5,000,000
5,325,000
6,125,000
16,450,000
3,315,000
3,264,438
3,416,280
9,995,718
1,243,125
1,224,164
1,281,105
3,748,394
10,850,000 performance rights were issued to directors and senior management, the 5,600,000
balance was issued to other employees.
Performance options
At the Company’s Annual General Meeting, in addition to approving the EPRP, members approved
the issue of unvested performance options to certain directors and senior management. The options
have an exercise price of $1.75 and are subject to pre-determined vesting conditions. To meet the
vesting criteria, a two year service period from the grant date must be satisfied and will vest in three
tranches based on the Company’s Volume Weighted Average Share Price (“VWAP”) exceeding price
hurdles for 10 consecutive trading days.
Tranche 1 – Will vest upon both the volume weighted average price of shares being $3.75 or more
for 10 consecutive Trading Days and 2 years continuous service for the Company
from 1 April 2011 save that this continuous service vesting hurdle will be deemed to
be satisfied in the event of a successful takeover bid where the bidder has
acceptances for greater than 50% of the Shares in the Company.
Tranche 2 – will vest upon both the volume weighted average price of shares being $5.00 or more
for 10 consecutive Trading Days and 2 years continuous service for the Company
from 1 April 2011 save that this continuous service vesting hurdle will be deemed to
be satisfied in the event of a successful takeover bid where the bidder has
acceptances for greater than 50% of the Shares in the Company.
Page | 75
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
Tranche 3 – will vest upon both the volume weighted average price of shares being $6.25 or more
for 10 consecutive Trading Days and 2 years continuous service for the Company
from 1 April 2011 save that this continuous service vesting hurdle will be deemed to
be satisfied in the event of a successful takeover bid where the bidder has
acceptances for greater than 50% of the Shares in the Company.
No amounts are paid or payable by the recipient on receipt of the options. The options are unvested
and unlisted, carry neither rights to dividends nor voting rights and are non-transferrable.
On satisfying the vesting conditions, the options can be exercised by the payment of $1.75 per option
exercise price and on exercising each option will be converted to one fully paid ordinary share in
Greenland Minerals and Energy Limited.
The Company did not issue any performance options during the year ended 31 December 2012.
As approved by shareholders, the following performance options were issued during the previous
year ended 31 Dec 2011:
Director/employee
R McIllree
J Mair
S Bunn
Tranche 1
Tranche 2
Tranche 3
Total
900,000
700,000
700,000
2,300,000
950,000
700,000
700,000
2,350,000
950,000
700,000
700,000
2,350,000
2,800,000
2,100,000
2,100,000
7,000,000
The value of the performance options issued will be recognised as an expense over the expected 2
year service vesting period. The fair value has been established using a binomial model based on the
following variables:
Grant date
Underlying share price at grant date
Exercise price
Expiry date
Expected future volatility
Risk free rate
Tranche1 share price hurdle
Tranche2 share price hurdle
Tranche3 share price hurdle
12/05/2011
$0.97
$1.75
31/08/2013
100%
4.91%
$3.75
$5.00
$6.25
Performance options granted
Tranche
Number
1
2
3
2,300,000
2,350,000
2,350,000
7,000,000
Employee options
Grant date fair
value
$
942,816
832,887
665,896
9,995,718
Pro-rata vesting
period value
recognised during
the year ended
31 Dec 2011
353,556
312,332
249,711
915,599
The Company did not issue any employee options during the year ended 31 December 2012.
Page | 76
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
During the previous year ended 31 December 2011, the employment contract with Shaun Bunn was
re-negotiated with Mr Bunn moving from a service contract arrangement to an employment contract.
Due to the completion of various project related milestones, whilst engaged under the service
contract, Mr Bunn was granted 750,000 options with an exercise price of $0.25. There were no
vesting conditions attached to these options and each option on exercise converts to one fully paid
ordinary share of Greenland Minerals and Energy Limited.
Details of $0.25 employee options issued during the previous financial year ended 31 December
2011:
senior
management
Grant date
Number
Fair value@
grant date
$
Expiry
date
S Bunn
21/10/2011
750,000
261,587
31/03/2013
(i) Fair value at grant date has been calculated using a Black Scholes model as there are no
further vesting conditions attached to the options the full fair value has been recognised in
remuneration in the year ended 31 December 2011.
Grant date
Underlying share price at grant date
Exercise price
Expiry Date
Expected future volatility
Risk free rate
21/10/2011
$0.54
$0.25
31/03/2013
94%
3.95%
The weighted average fair value of performance rights granted during the financial year is $0.46
(2011: $0.61).
The weighted average fair value of options granted during the financial year is nil (2011: $0.35).
Employee share option plan
Greenland Minerals and Energy Limited operates an ownership-based scheme
for senior
management and employees of the Consolidated group. In accordance with the provisions of the
plan, as approved by shareholders at the general meeting on the 25 June 2009, eligible employees
can be offered participation in the plan, at the discretion of the Board. The Board’s discretion will be
based on the consideration of, among other things, the seniority of the person, the length of service of
the eligible employee with the Consolidated group and the potential contribution of the eligible
employee to the growth of the Consolidated group.
On exercise, each employee share option converts into one ordinary share of Greenland Minerals and
Energy Limited. All options issued under this plan were exercised and converted into shares on or
before 30 June 2011 or expired if not exercised by this date.
Page | 77
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
The following options issued to directors and senior management, were exercised during the financial
year ended 31 December 2011:
R McIllree
S Cato
Date
16/06/2011
29/04/2011
07/06/2011
23/06/2011
Number
exercised (i)
4,400,000
Exercise
price
$0.20
Share price
@ exercise
date
Amount
Paid
$
$0.51
880,000
Amount
unpaid
$
1,550,100
1,992,000
250,000
$0.20
$0.20
$0.20
$0.81
$0.59
$0.69
310,200
398,400
50,000
J Whybrow
28/06/2011
4,400,000
$0.20
$0.68
880,000
J Mair
30/06/2011
250,000
$0.50
$0.71
125,000
-
-
-
-
-
-
S Bunn
-
$0.50
(ii) The number of options exercised relates only to options exercised that were granted as
02/02/2011
125,000
250,000
$1.17
compensation and recognised in remuneration in prior years.
The following are the terms of the Performance Rights:
1.
2.
The Performance Rights are non-transferable.
The rights under Performance Rights are personal and a Performance Right does not confer
any entitlement to attend or vote at meetings of the Company, to dividends, participation in
new issues of securities or entitlement to participate in any return of capital.
The Performance Rights vest upon the satisfaction of any performance hurdles specified at
the time of issue.
The Performance Rights lapse upon the Eligible Employee ceasing to be employed or on the
death, incapacity or disability of the Eligible Employee or on the failure to satisfy any
performance hurdles within a required time of the issue of the Performance Rights.
Upon vesting, one (1) Share will be issued for every one (1) Performance Right. The Shares
will rank equally in all respects with the existing Shares.
If the Company makes a bonus issue of Shares, then the holder of the Performance Right
upon vesting will be entitled to have issued to it the increased number of Shares that it would
have received if the Performance Right had vested and the holder acquired Shares in respect
of the Performance Right before the record date for the bonus issue.
In the event of any reconstruction (including consolidation, sub-division, reduction or return) of
the issued capital of the Company prior to the vesting date, the number of Performance
Rights will be reconstructed in a manner consistent with the ASX Listing Rules.
3.
4.
5.
6.
7.
3.
4.
5.
The following are the terms of the Performance Options:
Each Option entitles the holder to one Share.
1.
The Options are exercisable at any time prior to 5.00 pm Western Standard Time on 31
2.
August 2013 ("Expiry Date").
The exercise price of the Options is $1.75 per Option.
Upon vesting, the Options are freely transferable.
The Company will provide to each Option holder a notice that is to be completed when
exercising the Options ("Notice of Exercise"). Subject to vesting, 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.
Page | 78
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
6.
7.
8.
9.
10.
Upon the exercise of an Option and receipt of all relevant documents and payment, the holder
in accordance with paragraph 5 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 Optionholders the opportunity (where Options
have vested) 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 Optionholder 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 are the terms of the Employee Options:
1.
2.
Each Option entitles the holder to one Share.
The Options are exercisable at any time prior to 5.00 pm Western Standard Time on 31
March 2013 ("Expiry Date").
The exercise price of the Options is $0.25 per Option.
The Options are freely transferable.
The Company will provide to each Option holder a notice that is to be completed when
exercising the Options ("Notice of Exercise"). 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 5 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 Optionholders the opportunity 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 Optionholder are to
be changed in a manner consistent with the Listing Rules.
3.
4.
5.
6.
7.
8.
9.
Page | 79
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
24: Share based payments (cont’d)
10.
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 period.
Dec 2012
Dec 2011
Balance at beginning of the financial
period
Granted during financial period
Forfeited during the financial period
Exercised during the financial period
Expired during the financial period
Exercisable at the end of the financial
period
Weighted
average
exercise
price
Number of
options
Weighted
average
exercise
price
1.60
-
-
-
-
1.60
136,442,341
7,750,000
-
(121,735,419)
(14,706,922)
0.27
1.60
-
(0.22)
(0.69)
7,750,000
1.60
Number of
options
7,750,000
-
-
-
-
7,750,000
The average share price during the current period was $0.40 (2011: $0.83).
The share options outstanding at the end of the financial period had a weighted average exercise
price of $1.60 (December 2011: $1.60), and a weighted average remaining contractual life of 229
days (December 2011: 594 days).
25: Financial instruments
(a) Capital risk management
The Consolidated group manages its capital in order to maintain sufficient funds are available for the
Consolidated group to meet its obligations and that the Group can fund its exploration and evaluation
activities as a going concern.
The Consolidated group’s overall strategy remains unchanged from December 2011.
The capital structure of the consolidated group consists of fully paid shares and options as disclosed
in notes 15 and 16 respectively.
None of the Consolidated group’s entities are subject to externally imposed capital requirements.
(b) Categories of financial instruments
Financial assets
Cash and equivalents
Loans and receivables - current
Fair value through profit and loss – held for trading
Financial liabilities
Amortised cost
Dec
2012
$' 000
Dec
2011
$' 000
10,801
326
15
10,866
238
57
1,092
1,584
Page | 80
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
25: Financial instruments (cont’d)
(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 low risk to the
Consolidated group. For the period under review, it is the Consolidated group’s policy not to trade in
financial instruments
The main risks arising from the Consolidated 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)
(iii)
(iv)
Interest Rate Risk
The Consolidated group 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 Consolidated group does not have short or long term debt, and
therefore this risk is minimal.
There was 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 Consolidated group has no significant credit risk exposure to any single
counterparty or any consolidated group of counterparties having similar
characteristics. The credit risk on liquid funds is limited because the counterparties
are banks with high credit – ratings assigned by international rating agencies. The
carrying amount of financial assets recorded in the financial statements, net of any
provisions for losses, represents the Consolidated group’s maximum exposure to
credit risk.
There was no change in managing credit risk or the method of measuring risk from
the prior year.
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
Consolidated group, are funds the Consolidated group holds on deposit with varying
maturity dates.
The Consolidated 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 was no change in managing credit risk or the method of measuring risk from
the prior year.
Foreign Currency Risk
The Consolidated group’s risk from movements in foreign currency exchange rates,
relates to funds transferred by the Company to the Greenland subsidiary and the
funds are held in Danish Krone (DKK). This risk exposure is minimised by only
holding sufficient funds in DKK, to meet the immediate cash requirements of the
subsidiary. Once funds are converted to DKK they are only used to pay expenses in
DKK.
Page | 81
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
25: Financial instruments (cont’d)
(d) Liquidity risk
The following table details the Consolidated 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/Consolidated group anticipates that the cash flow will occur in a different period.
Weighted
Average
Effective
interest
rate
< 6
Months
6 – 12
Months
%
$' 000
$' 000
4.28
-
5.51
-
10,381
326
10,707
10,448
238
10,686
420
-
418
418
-
418
1 - 5
Years
$' 000
> 5
Years
$' 000
Total
$' 000
-
-
-
-
10,801
326
11,127
-
10,866
238
11,104
Dec 2012
Cash and equivalents
Trade and receivables - current
Dec 2011
Cash and equivalents
Trade and receivables - current
The following table details the Consolidated 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.
Weighted
Average
Effective
interest
rate
%
< 6
Months
$' 000
6 – 12
Months
$' 000
1 – 5
Years
$' 000
> 5
Years
$' 000
Total
$' 000
-
-
1,240
1,240
1,584
1,584
-
-
-
-
-
-
-
-
-
-
-
-
1,240
1,240
1,584
1,584
Dec 2012
Trade and other payables
Dec 2011
Trade and other payables
(e) Interest rate risk
The Consolidated group is exposed to interest rate risk because it places funds on deposit at variable
rates. The risk is managed by the Consolidated group by monitoring interest rates.
The Consolidated group’s exposures to interest rates on financial assets and financial liabilities are
detailed in the liquidity risk management section of this note.
Page | 82
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
25: Financial instruments (cont’d)
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 up more than that and
less likely to fall. This is 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 31 December 2012, 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)
Dec
2012
$' 000
Dec
2011
$' 000
80
(83)
81
(84)
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.
Fair value of financial instruments
The carrying value of all financial instruments is the approximate fair value of the instruments. This is
based on the fact that all financial instruments have either a short term date of maturity or are loans to
subsidiaries.
The only financial assets or liabilities carried at fair value are the investments held in listed entities as
disclosed in note 10. The fair value of these assets is based on quoted market prices at the reporting
date (being level 1 of the fair value hierarchy).
26: Key management personnel compensation
The aggregate compensation made to key management personnel of the Consolidated group is set
out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits – provision for
long service leave
Termination benefits
Share-based payment
Year ended
31 Dec
2012
$
2,052,348
167,400
89,254
-
4,298,729
6,607,731
Year ended
31 Dec
2011
$
1,927,013
141,296
63,294
-
3,214,691
5,346,294
Refer to the remuneration report included in pages 28 to 40 of the Directors report for more detailed
remuneration disclosures.
Page | 83
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
27: Transactions with related parties
Simon Cato is a Non-executive Director and Chairman of Advanced Share Registry Limited.
Advanced Share Registry Limited provides share registry services to Greenland Minerals and Energy
Limited. These services are supplied on normal commercial terms and Mr Cato does not receive any
remuneration from Advanced Share Registry Limited based on the supply of share registry services to
the Consolidated group. For the year ended 31 December 2012 $67,085 was paid to Advance Share
Registry Limited for services provided (Dec 2011: $117,290).
Shaun Bunn and Associates Pty Ltd is a company of which Mr Shaun Bunn is a director, was paid
consultancy fees of $82,500 during the prior year ended 31 December 2011. This amount has been
disclosed in the details of remuneration paid to Mr Bunn. There were no payments made to Shaun
Bunn and Associates during the current year ended 31 December 2012.
Pro Count Pty Ltd is a company of which Mr Miles Guy is a director, was paid or entitled to be paid
during the prior year ended 31 December 2011, fees for the provision of services by Mr Guy as Chief
Financial Officer (CFO) and other fees totalling $54,844. Of this amount $32,094 relates to services
provided to the Consolidated group by Mr Guy as CFO. There were no payments made to Pro Count
Pty Ltd during the current year ended 31 December 2012.
Page | 84
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
28: Key management personnel equity holdings
Fully paid ordinary shares of Greenland Minerals and Energy Limited
Dec 2012
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
S Bunn
M Guy
Dec 2011
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
S Bunn
M Guy
Balance
at beginning of year
Granted as
compensation
Received on
exercise of options
Net other change
(ii)
Balance
at end of year
Balance held nominally
No.
No.
No. (i)
No.
No.
No.
-
11,411,456
4,712,200
5,110,000
250,000
6,010,200
600,000
300,000
-
3,361,095
920,100
260,000
250,000
900,100
350,000
200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,373,018
3,792,100
5,250,000
-
5,110,100
350,000
100,000
-
700,000
50,000
-
100,000
-
(600,000)
25,000
-
1,677,343
-
(400,000)
-
-
-
-
12,111,456
4,762,200
5,110,000
350,000
6,010,200
-
325,000
-
11,411,456
4,712,200
5,110,000
250,000
6,010,200
600,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
The number of shares received on exercise of options relates to options exercised that were granted as compensation and recognised in
remuneration in prior years as well as listed options acquired by way of placement or options purchased either on market through the ASX, or
through third party off market transactions.
Net other change relates to shares purchased or sold either on market through the ASX, or through third party off market transactions.
Page | 85
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Notes to the accounts
28: Key management personnel equity holdings (cont’d)
Share options of Greenland Minerals and Energy Limited
Dec 2012
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
S Bunn
M Guy
Dec 2011
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
S Bunn
M Guy
Balance
at beginning
of year
No.
Granted as
compensation
No.
Exercised
No. (i)
Expired
No
Net other
change (ii)
No.
Balance at
end of year
No.
Balance vested
at end of year
No.
Vested and
exercisable
No.
Options
vested
during year
No.
-
2,800,000
2,100,000
2,850,000
-
-
9,372,000
7,400,100
5,600,000
1,000,000
7,310,100
500,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,800,000
-
2,100,000
-
-
2,850,000
-
-
(6,373,081)
(3,792,100)
(5,250,000)
-
(5,110,000)
(500,000)
(100,000)
(2,200,000)
(2,200,000)
(250,000)
(1,000,000)
(2,200,000)
-
-
-
-
-
-
-
-
50,000
-
(798,982)
-
(100,000)
-
-
-
-
-
2,800,000
-
2,100,000
-
-
2,850,000
50,000
-
2,800,000
-
2,100,000
-
-
2,850,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
-
-
-
-
-
-
-
750,000
-
-
4,400,000
4,400,000
-
-
4,400,000
-
-
(i)
(ii)
The number of options exercised relates to options exercised that were granted as compensation and recognised in remuneration in prior years as
well as listed options acquired by way of placement or options purchased either on market through the ASX, or through third party off market
transactions
Net other change relates to options purchased or sold 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.
Further details of the share option plan and of options granted during the current and prior period are contained in note 24.
Page | 86
Notes to the accounts
28: Key management personnel equity holdings (cont’d)
Performance rights of Greenland Minerals and Energy Limited
Balance
at beginning
of year
No.
Granted as
compensation
No.
Converted
No.
Expired
No
Net other
change (i)
No.
Balance at
end of year
No.
Balance vested
at end of year
No.
Vested and
convertible
No.
Rights
vested
during year
No.
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Dec 2012
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
S Bunn
M Guy
Dec 2011
M Hutchinson
R McIllree
S Cato
J Mair
A Ho
J Whybrow
S Bunn
M Guy
1,400,000
2,700,000
600,000
2,100,000
600,000
1,000,000
2,100,000
350,000
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
1,400,000
2,700,000
600,000
2,100,000
600,000
1,000,000
2,100,000
350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,400,000
2,700,000
600,000
2,100,000
1,600,000
1,000,000
2,100,000
350,000
1,400,000
2,700,000
600,000
2,100,000
600,000
1,000,000
2,100,000
350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
All performance rights issued to key management personnel were made in accordance with the provisions of the employee performance rights plan.
Further details of the employee performance rights plan and of options granted during the current and prior period are contained in note 24.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page | 87
Notes to the accounts
29: Parent Company information
Financial position
Total Current Assets
Total Non-Current Assets
Total Assets
Total Current Liabilities
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses
Total Equity
Financial Performance
Loss for the year
Total comprehensive income
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Parent
Dec
2012
$' 000
Dec
2011
$' 000
11,469
63,761
75,230
1,429
89
1,518
73,712
11,424
64,903
76,327
1,643
63
1,706
74,621
334,339
22,324
(282,951)
73,712
291,827
9,385
(226,591)
74,621
(56,360)
(56,360)
(11,278)
(11,278)
Contingent liabilities
The parent company has no contingent liabilities as at 31 December 2012 or 2011.
Guarantees
Greenland Minerals and Energy Limited has guaranteed the provision of funding and support to the
Company’s 100% held subsidiary, Greenland Minerals and Energy Limited (Trading) A/S (2011:
61%). This funding forms part of the Consolidated group’s approved budgeted expenditure.
Greenland Minerals and Energy Limited has place $220,000 and $169,905 into two separate deposit
accounts with the Company’s bank. These deposits are held by the bank as security over corporate
credit cards issued to the Company.
During the prior financial year, Greenland Minerals and Energy limited provided a guarantee to the
Greenland Government on the behalf of Arctic Energy Pty limited (“Arctic”). The guarantee relates to
the rectification of any potential environmental damage by Arctic in relation to an on-shore oil
exploration license held by Arctic. Under the guarantee Arctic is prevent from carrying out any activity
on the license without the expressed approval of Greenland Minerals and Energy limited. No such
approval has been granted to date.
Greenland Minerals and Energy limited currently holds a 24% interest in Arctic Energy Pty Limited.
Page | 88
Notes to the accounts
30: Remuneration of auditors
Auditor of the parent entity
Audit or review of the financial report
Non-audit services - taxation
Related practice of the parent entity auditor
Audit or review of the financial report
Non-audit services – taxation
Non-audit services – other
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Dec
2012
$
Dec
2011
$
88,830
3,465
92,295
118,191
137,485
266,676
Dec
2012
$
Dec
2011
$
44,698
9,693
6,691
61,074
56,282
8,907
10,608
75,797
The auditor of Greenland Minerals and Energy Limited is Deloitte Touche Tohmatsu.
31: Subsequent Events
There has not been any matter or circumstance occurring subsequent to the financial period that has
significantly affected, or may significantly affect, the operations of the consolidated group, the results
of those operations, or the state of affairs of the Consolidated group in future years.
Page | 89
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Additional stock exchange information as at 15th February 2013
Consolidated group secretary
Miles Guy
Registered office
Unit 6, 100 Railway Road, Subiaco
Western Australia, 6008
Principal administration office
Unit 6, 100 Railway Road, Subiaco
Western Australia, 6008
Share registry
Advanced Share Registry Services
150 Stirling Highway
Nedlands, Western Australia, 6009
Number of holders of equity securities
Ordinary share capital
567,937,409 fully paid ordinary shares are held by 3,718 individual shareholders.
Substantial Shareholders
Shareholder
1. Citicorp Nominees Pty Limited
1. Rimbal Pty Limited
2. Citicorp Nominees Pty Limited
3. JP Morgan Nominees Australia Limited
4. HSBC Custody Nominees (Australia) Limited
4. GCM Nominees Pty Limited
Number
69,894,390
76,212,075
74,695,374
69,106,580
52,489,391
35,000,000
Percentage
16.8%
13.5%
13.1%
12.2%
9.2%
6.1%
Page | 90
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Additional stock exchange information as at 15th February 2013
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
358
1,097
742
1,263
258
3,718
Units
221,712
3,321,336
6,178,442
42,868,935
515,346,984
567,937,409
Percentage
0.039%
0.585%
1.088%
7.548%
90.740%
100%
Twenty largest holders of quoted shares
Ordinary shareholders
1. Rimbal Pty Limited
2. Citicorp Nominees Pty Limited
3. JP Morgan Nominees Australia Limited
4. HSBC Custody Nominees (Australia) Limited
5. GCM Nominees Pty Limited
6. National Nominees Limited
7. Pure Steel Limited
8. Zero Nominees Pty Limited
9. Roderick Claude McIllree
10. Benoit Company Limited
11. Jeremy Sean Whybrow
12. Giacobbe, Dimitri and David Iesini
13. Christopher and Rita Read
14. John Mair
15. Mandarin Securities Limited
16. Simon Cato
17. Merrill Lynch (Australia) Nominees Pty Limited
18. Pre-emptive trading Pty Limited
19. Falfaro Investments Limited
20. ABN Amro Clearing Sydney Nominees Pty Limited
Fully paid ordinary shares
Number
76,212,075
74,695,374
69,106,580
52,489,391
35,000,000
28,332,620
16,160,000
12,860,627
12,111,456
12,200,000
5,820,200
5,431,505
5,431,505
5,110,000
5,000,000
4,712,200
3,697,556
3,260,000
3,000,000
2,734,755
433,365,844
Percentage
13.5%
13.1%
12.2%
9.2%
6.1%
4.9%
2.8%
2.3%
2.1%
2.1%
1.1%
1.0%
1.0%
0.9%
0.8%
0.8%
0.7%
0.6%
0.5%
0.5%
76.3%
Page | 91
Greenland Minerals and Energy Limited
And Controlled Entities
31 December 2012 Financial Report
Additional stock exchange information as at 15th February 2013
Distribution of holders of quoted options
Share Spread
Holders
Units
Percentage
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
0
3
7
78
38
126
0
13,213
57,670
3,443,507
22,254,801
25,769,191
0.000%
0.051%
0.224%
13.363%
86.362%
100%
Twenty largest holders of quoted options
Ordinary shareholders
1. Tracor Limited
2. Pre-Emptive Trading Pty Limited
3. JP Morgan Nominees Australia Limited
4. USB Nominees Pty Limited
5. Twofivetwo Pty Limited
6. Citicorp Nominees Pty Ltd
7. Merrill Lynch (Australia) nominees Pty Limited
8. David Patrick Webb
9. RAH (STC) Pty Limited
10. Yarandi Investments Pty Limited
11. Anthony Richard Bangor Ward and Adam & Company
(Nominees) Limited
12. KSL Corp Pty Limited
13. Ronan O’Murchu
14. Greatside Holdings Pty Limited
15. Berfen Global Opportunity Fund LP
16. RAH STC
17. Per Wimmer
18. Nicole Youngman
19. ABN Amro Clearing Sydney Nominees Pty Limited
20. National Nominees Pty Limited
Fully paid ordinary shares
Number
5,500,000
4,500,000
2,781,667
1,900,000
712,814
536,656
416,666
333,333
333,325
333,267
266,667
262,500
250,001
250,000
250,000
250,000
250,000
216,922
208,967
201,994
19,754,779
Percentage
21.3%
17.5%
10.8%
7.3%
2.7%
2.1%
1.7%
1.3%
1.3%
1.3%
1.0%
1.0%
0.9%
0.9%
0.9%
0.9%
0.9%
0.8%
0.8%
0.7%
76.7%
Page | 92