Graco
Annual Report 2013

Plain-text annual report

At the forefront of Greenland’s emerging minerals industry. 2013 AnnUAl RePORT Corporate Directory direcTors Michael Hutchinson non-executive Chairman Roderick McIllree Managing Director Simon Cato executive Director John Mair executive Director Anthony Ho non-executive Director Jeremy Whybrow non-executive Director CHIef fInAnCIAl OffICeR/ COMPAny SeCRetARy Miles Guy 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 GGGO audiTors Deloitte Touche Tohmatsu SHARe ReGIStRy Advanced Share Registry 150 Stirling Highway nedlands WA 6009 COMPAny WeBSIte www.ggg.gl Greenland Minerals and enerGy lTd - AnnUAl RePORT 2013 Contents Introduction Highlights of 2013 Review of Operations 1 2 4 The Historical Backdrop to the Repeal of the Zero-Tolerance Policy The Modern era The next Steps Project Developments in 2013 Advances to the Refinery Circuit 2013 Field Work in Greenland Background Radiation Monitoring Geotechnical Mapping Stakeholder engagement Program Update on the eURARe Project 2013 Summary Table of Identified Mineral Resources 6 7 8 9 10 11 12 12 12 14 14 16 17 Annual financial Report 18 Corporate Governance Statement 22 directors’ report 47 Auditor’s independence declaration 48 Independent auditor’s report 50 director’s declaration Statement of profit and loss and comprehensive income 51 52 Statement of financial position 53 Statements of changes in equity 54 Statement of cash flows 55 notes to the accounts 55 55 64 65 65 65 67 68 68 69 69 70 72 72 72 73 73 75 75 75 76 76 77 77 86 89 90 94 94 95 95 96 10 Other assets 11 Property plant and equipment 12 Capitalised exploration and evaluation expenditure 13 Trade and other payables 14 Other liabilities 15 Provisions 16 Issued capital 17 Reserves 18 Dividends 19 Accumulated loss 20 loss per share 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 Key management personnel equity holdings 28 Transactions with related parties 29 Parent company information 30 Remuneration of auditors 31 Subsequent events 1 General information 2 Significant accounting policies 3 Critical accounting estimates and judgments 4 Segmented information 5 Revenue 6 expenditure 7 Income tax expense 8 Cash and equivalents 9 Trade and receivables Additional stock exchange information 4 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Introduction Greenland Minerals and energy (“GMe”, or “the Company”) is positioned at the forefront of Greenland’s emerging minerals industry. the Company has been operating in southern Greenland since 2007, with a primary focus on the kvanefjeld rare earth - uranium project. the kvanefjeld project is unique; ideally located amongst the fjords of southern Greenland, the project area offers direct year-round shipping access, and has an international airport nearby. the mineral resources are world-class. drilling to date has established a 956Mt JORC-code compliant resource base that contains one of the world’s largest resources of both rare earth elements and uranium in near-surface, bulk ore bodies. Clear scope remains to expand this resource base several fold. feasibility studies on kvanefjeld are well-advanced, with an advantageous and highly effective metallurgical flow-sheet developed by a respected metallurgical team. A prefeasibility study on kvanefjeld (2012), highlighted that the project could be developed as a long-life, cost-competitive specialty metals project, with strong growth potential. Subsequent studies have reinforced the Company’s confidence in kvanefjeld, with multiple revenue streams standing to deliver a robust economic proposition. kvanefjeld is now recognised as a priority project by the Greenland government, and will be entering the permitting pipeline at the start of 2015. Greenland Minerals and enerGy lTd - AnnUAl RePORT 2013 1 2013 HIGHlIGHTS In late October Greenland’s parliament voted in favour of removing a long-standing zero- tolerance policy against the exploitation of radioactive materials. this landmark decision places Greenland on the path to uranium-producer status, and thereby opens up coincident resources of rare earth elements to exploitation. the parliamentary decision received broad coverage in the international press, and sent a strong message that Greenland is prepared to make the important and sometimes difficult decisions that are required to advance the quest of establishing a minerals industry. As announced in January 2014, Greenland and denmark are working to have a cooperation agreement in place in 2014 to map out the regulatory responsibilities associated with uranium production. Greenland is aiming to be positioned to issue a mining license for kvanefjeld in early 2016. this is in line the Company’s forward schedule and ongoing feasibility program. technical work programs continued to advance the kvanefjeld project through 2013, and served to progress the de-risking of the project, and build confidence in the advantageous process flow sheet. test work for the concentrator circuit was completed in late-2012, with the second of two highly successful pilot plant operations. An updated study was then released in March 2013 (the Mine and Concentrator Study), that captured the technical advances to the beneficiation circuit, and the initial 3Mtpa start-up capacity. An effective hydrometallurgical process route has been developed for the treatment of the rare earth- and uranium-rich mineral concentrates generated via froth flotation. the refinery circuit utilises simple equipment and elegant chemistry, with scaled-up test work in 2013 demonstrating the production of a high purity rare earth intermediate product. 2 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland’s world class mining opportunity. the Company has been conducting extensive environmental baseline studies in the kvanefjeld project area for several years, as a basis to evaluate the potential environmental impacts of a mining operation. the baseline studies provide an indication of the natural chemistry of the broader project area, and the background concentrations of many chemical elements in soil, water, dust and biological matter. Comprehensive background radiation monitoring was also undertaken in the broader project area along with the town of narsaq, and builds on data gathered over several years. In 2014, GME is focussed on finalising a mining (exploitation) license for the Kvanefjeld project; the next key milestone. In parallel, the Company is looking to progress relations with potential development partners. With continued de-risking of the world-class Kvanefjeld project, GMe remains focussed on delivering share-holder value. 3 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 20132014Review of Operations In 2013, much of the attention on Greenland Minerals and energy related to political events in Greenland, and the impact that these events would have on how the Company’s Kvanefjeld multi-element project would proceed. Specifically, in late October Greenland’s parliament voted in favour of removing a long-standing zero-tolerance policy against the exploitation of radioactive materials. This landmark decision places Greenland on the path to uranium-producer status, and thereby opens up coincident resources of rare earth elements to exploitation. The parliamentary decision received broad coverage in the international press, and sent a strong message that Greenland is prepared to make the important and sometimes difficult decisions that are required to advance the quest of establishing a minerals industry. revenues generated from mining operations to replace and exceed those from Danish block grants that have subsidised Greenland’s economic viability, and to complement revenues from the ailing fishing industry. This agenda has brought a number of key issues and decisions to the political fore as Greenland prepares the rules and regulations that are required to effectively interface with the international resources industry. Of the key issues, the long-standing zero-tolerance policy against the exploitation of radioactive minerals had been undoubtedly significant, and its repeal would mark another major step by Greenland in its committed quest to establishing quality mining projects, a viable economy, and greater independence. In many respects, Greenland’s removal of the political impedance that had otherwise hindered the development of one of the world’s most prolific resources of both rare earth elements and uranium punctuates 2013 as the most important year in GMel’s history. The internationally mining community’s strong endorsement of Greenland’s positive uranium vote was highlighted in December at europe’s largest mining conference, hosted in london, where Greenland received the 2013 Country Award under the Mining Journal’s ‘Outstanding Achievements Awards’. The parliamentary vote on zero-tolerance took place on October 24th, and represented the culmination of several years of discussion and debate in Greenland on whether such a significant step should be taken. As in many places, the viewpoints in Greenland on the exploitation of radioactive materials and nuclear power have been varied, with the topic generating emotive debate in both political and community forums. However, the positive vote represented the critical event that would see Greenland and Denmark progress in earnest to establish the regulatory framework required to responsibly manage the exploitation of radioactive minerals in Greenland. never before, in its multi-decade history, has the Kvanefjeld project had a clearer path to mine development. Greenland’s push for the development of mining projects accelerated in 2009, when it took the official step of assuming increased self- governance with the move from ‘Home Rule’ to ‘Self Rule’. This major political step provided Greenland with authority to preside over the exploitation of natural resources; an authority that had previously been managed jointly with Denmark. ‘Self Rule’ in Greenland has brought a strong focus on pushing toward a stronger economy, with the aim of establishing a new generation of mining operations to provide the cornerstone. In time, there is a desire for 4 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland - the gateway to the Arctic. figure 1. An overview of the Arctic region highlighting renowned major mining operations. It stands as an obvious anomaly that Greenland does not yet have a significant mining operation, particularly in consideration of Greenland’s prospective geology. However, with several large-scale projects now moving through the permitting process, this is expected to change in the coming years. The opening up of the Arctic shipping lanes provides increased access to the Asia-Pacific markets, enhancing Greenland’s appeal to Asian investors. 5 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Review of Operations (continued) the Historical Backdrop to the Repeal of the Zero-tolerance Policy The presence of significant quantities of uranium resources in southern Greenland has been known for several decades. The Danish government had conducted initial evaluations into extracting uranium from the unique rocks and minerals of the Ilimaussaq complex located near Greenland’s southern tip, between the 1960’s and early 1980’s, largely driven by the consideration of establishing civil nuclear power in Denmark. The pursuit of nuclear power fell out of political favour in Denmark in the early 1980s, and investigations into establishing a uranium mine in Greenland were halted. In 1988, the zero-tolerance policy concerning radioactive materials was introduced. However, the studies had highlighted the potential for vast resources. Internationally renowned geoscientist Henning Sørensen, who had played a key role in driving the investigations, had put forward geological resource estimations for well over a billion pounds of uranium oxide to be hosted within the northern portion of the Ilimaussaq complex; the potential for globally-significant resources was clear. When Denmark ceased the investigations into uranium mining in southern Greenland in the early 1980’s, scientific studies on the extraordinary rocks of the Ilimaussaq complex continued, largely driven by Sørensen and his colleagues. Continued studies led to the recognition that aside from uranium (and thorium), the unique minerals were also strongly enriched in a variety of specialty metals, in particular rare earth elements. This recognition led to the concept of multi-element exploitation; a thesis that has been the focus of the new era of investigations conducted by GMel since 2007. figure 2. Since 2007, drill programs conducted by Greenland Minerals and Energy have defined one of the largest resources of rare earth elements and ura- nium globally within the northern Ilimaussaq Complex. 6 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013the Modern era Initial drill programs conducted by GMEL in 2007 and 2008 confirmed that resources in the northern Ilimaussaq Complex were indeed polymetallic and were increasingly expansive, as scientists had previously forecast. Drill programs initially focussed on an area known as Kvanefjeld – a broad plateau near the headwaters of the narsaq valley that had been the focal point of historic investigations. The reinvigoration of mineral exploration at Kvanefjeld led to the zero-tolerance policy and its potential removal being raised for discussion in Greenland’s parliament in late 2008; approximately 25 years since previous evaluations of Kvanefjeld had ceased. As work programs continued to advance Kvanefjeld, new licensing requirements were necessary to effectively evaluate the project. In September 2010, the Greenland Government, led by the Inuit Ataqatigiit (IA) Party, introduced an amendment to the ‘Standard Terms for exploration licenses in Greenland’. This allowed for organizations to apply for approval from the Bureau of Minerals and Petroleum (BMP) to conduct feasibility studies on potential mining projects which contain elevated concentrations of radioactive elements. At the direction of the government, information briefs on uranium were produced by technical agencies and made available to the populous. A delegation of politicians and government officials then made study tour of Canada to learn more about the Canadian uranium mining industry and its governance. In november, 2011 the BMP then amended GMel’s exploration license over Kvanefjeld to include uranium. This move provided the Company with the right to apply to exploit uranium along with other economic minerals. This licensing development was important as it created a framework in which a mining application could be submitted for processing by regulators for a project that includes uranium. However, despite these developments, the zero-tolerance policy remained, shrouding Kvanefjeld in political uncertainty. In the 2012 autumn session of parliament, the Greenland Government initiated a series of reports to address the consequences of removing the zero-tolerance policy. These reports, conducted by independent experts, set out to address the regulatory roles of both Greenland and Denmark in managing uranium exploitation, identify all international conventions that would need to be adhered to, as well as investigating the potential environmental and health risks. The series of reports were completed through the course of 2013, and provided a solid information basis for Greenland to remove the zero-tolerance policy and map out a path to uranium producer status, in accordance with best international practice. In March, 2013, a national election in Greenland saw the Siumut Party return to power, with a clear intent to remove the zero-tolerance policy, and move to effectively regulate uranium production. The election took place just prior to the time window in which the ‘spring sitting’ of parliament would traditionally take place. With the election result bringing a change of government, the sitting of parliament was deferred until late in 2013, with matters that required parliamentary address being placed on hold until that point. The debate surrounding uranium exploitation in Greenland has largely been ideological. Interest in the topic has led to an increased awareness of the facts involved in uranium production, nuclear power, and the regulation of the nuclear fuel cycle. This understanding has led to a growing awareness that nuclear power offers the main base-load energy source that does not contribute to carbon-fuelled climate change. The Arctic regions are already feeling the environmental and societal changes that are presented by a changing climate. In this context, Kvanefjeld’s relevance is heightened, with uranium providing an efficient energy source free of carbon emissions, and rare earths being utilised in both efficient energy generation and usage. Whilst uranium has largely been the political focus on Kvanefjeld, the potential for Kvanefjeld to become a major new supplier of rare earth elements has driven much of the commercial interest. Revenues from uranium have the potential to cover a significant portion of Kvanefjeld’s operating costs, making for cost-competitive rare earth production; an attribute that differentiates Kvanefjeld from other emerging projects slated to have significant rare earth production. With a growing awareness that the northern Ilimaussaq Complex is host to one of the most significant resources of both rare earth elements and uranium globally, Greenland’s decision to repeal the zero-tolerance policy could ultimately influence the global supply of these important elements for many decades. 7 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Review of Operations (continued) the next Steps With the zero-tolerance policy removed, Green- land and Denmark are now progressing toward the establishment of a cooperation agreement to map out the responsibilities required to ef- fectively regulate uranium production. In early January, the Danish Prime Minister outlined that both parties were aiming to have the cooperation agreement in place in 2014. In early February, a delegation of Greenlandic officials conducted another fact-finding visit, this time to Australia where they visited Olympic Dam, the rehabili- tated uranium mine Mary Kathleen (Queens- land), and the Australian nuclear Science and Technology Organisation (AnSTO) in Sydney. While there remains further work to ensure all regulations are in place, Greenland has indicated a desire to be positioned to grant exploitation licenses for projects that include radioactive materials in 2016. These developments bring increased clarity to the forward timeline for the Kvanefjeld project, which has been otherwise hindered whilst the zero-tolerance policy remained. In parallel to the establishment of regulations, GMel can now work to finalise an exploitation license applica- tion. This involves finalising the development strategy in close consultation with Greenland stakeholders, with the key decision being wheth- er refining of mineral concentrates takes place in Greenland, or offshore. The Company will then work to complete the environmental and social impact assessments, which build on many years of extensive data generation for the base lines studies. Subject to financing, the Company is aiming to be in a position to lodge an exploitation license application in early 2015, and Greenland should be positioned to award an exploitation license in 2016. figure 3. GME has looked to support community initiatives in south Greenland, and has worked to ensure local participation and employment opportunities. 8 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Project developments in 2013 Technical work programs continued to advance the Kvanefjeld project through 2013, and served to progress the de-risking of the project, and build confidence in the advantageous process flow sheet. In May, 2012 GMEL released a prefeasibility study on the Kvanefjeld rare earth – uranium project. The prefeasibility study (PFS) was based upon substantial test work and technical studies, and involved a rigorous flow-sheet selection process to determine the optimal means of treating Kvanefjeld ores. The PFS outcomes indicated the clear potential for Kvanefjeld to be developed as a long-life, cost- competitive producer of rare earth concentrates and uranium oxide. Since the release of the Kvanefjeld PFS, further technical advances were made that served to improve the PFS outcomes significantly. A PFS update was released in August 2012 outlining simplifications to the proposed processing circuit that result in a reduction in capital costs, and a 27% increase in the output of rare earth concentrate. The substantial increase in rare earth recovery and output drove the Company to evaluate a smaller start-up capacity for Kvanefjeld than the 7.2 Mt capacity evaluated in the PFS. A reduction in the initial rare earth production capacity would reduce the market risk brought about by the material improvements in rare earth recovery, and also serves to significantly reduce the capital costs of project development. For these reasons, the Company looked to a staged development strategy with an initial mine- throughput of 3Mtpa, expanding to 6Mtpa. This provides a low-risk path to ultimately reach a large-scale production capacity. Test work for the concentrator circuit was completed in late-2012, with the second of two highly successful pilot plant operations. An updated study was then released in March 2013 (the Mine and Concentrator Study), that captured the technical advances to the beneficiation circuit, and the initial 3Mtpa start- up capacity. With a high degree of confidence in the ability to produce a low-mass, high-grade mineral concentrate, the Company commenced assessing the potential to export the mineral concentrate from Greenland, for processing offshore. There are many points to consider in the assessment of this scenario. Through 2013 workshops were held with representatives of Greenland’s government and regulatory bodies, the outcomes of which indicated a general position to see as much processing take place in Greenland as possible. Ultimately, the Company is looking to firm-up the best scenario over the longer term, and the optimal outcome for Greenland stakeholders. figure 4. Pilot plant operation of the Kvanefjeld concentrator circuit proved to be highly successful, and came as a precursor to the completion of the Mine and Concentrator Study, released in 2013. 9 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Review of Operations (continued) Advances to the Refinery Circuit An effective hydrometallurgical process route has been developed for the treatment of the rare earth- and uranium-rich mineral concentrates generated via froth flotation. The refinery circuit utilises simple equipment and elegant chemistry, with scaled-up test work in 2013 demonstrating the production of a high purity rare earth intermediate product. The refinery flow sheet utilises a sulphuric acid leach that achieves high extraction levels of both uranium and rare earth elements from the Re and uranium-rich minerals; in particular the heavy Rees. The uranium is stable in solution in the leach liquor, whereas the rare earths react to form solid Ree salts that remain with the leach residue. This creates a very effective break between the uranium recovery, and further treatment steps to generate a clean, high purity rare earth product. In Q3, 2013 a full flow sheet laboratory test run on the Kvanefjeld mineral concentrate produced 1.1 kg’s of a high-purity mixed rare earth carbonate. The rare earth intermediate product is a chemical precipitate formed by the addition of sodium carbonate to a purified rare earth chloride stream. This produces a mixed rare earth carbonate intermediate product. It is low in impurities and contains >95% rare earth oxide (ReO) after calcination. The rare earth carbonate product has a favourable ReO distribution with 14.75% of the contained rare earths being the more valuable heavy Re elements (see Table 1).The concentrate also contains a significant quantity of the major light RE magnet components in praseodymium and neodymium. low levels of calcium (1.26%), aluminium (0.12%) and silica (0.5%) were the most significant impurities. Very low levels of uranium (11 ppm), lead (1.4 ppm) and thorium (2.5 ppm) were measured in the sample by tests conducted by AnSTO, which reveals how well these radionuclides were controlled by the impurity removal processes. A subsequent program involved a 100 hour weak acid leach test on 20 kg’s of mineral concentrate. This aimed to ensure that silica could be effectively managed through the weak acid leach as the key ore minerals at Kvanefjeld are phospho-silicate minerals. The management of silica in the leach process remains a challenge for many proposed Ree producing operations that are dealing with silicate minerals; most of which involve significantly lower-grade minerals than steenstrupine; the dominant Ree and uranium bearing mineral at Kvanefjeld. Importantly, the 100 hour leach test has confirmed that silica can be effectively managed throughout the leach process on the Ree- uranium mineral concentrates from Kvanefjeld. The testwork program also demonstrated that high extractions of Rees and uranium can be readily achieved with the weak acid leaching stage only, owing to the non-refractory nature of the value minerals. A pregnant leach solution containing uranium can be produced which is free of solids providing a suitable feed to uranium solvent extraction. This is achieved using an optimised combination of flocculating chemicals and standard thickeners. The highly successful test work programs on the leach circuit through 2013 served to confirm the effectiveness of the Kvanefjeld refining process in producing a high quality product, with an excellent distribution of the important, or critical, Ree’s. All process steps in the refining stage have now been tested at small continuous scale. The process engineering for the refinery is well advanced with key process design documents completed. The unique non-refractory nature of the Kvanefjeld ore minerals allows for simple, atmospheric acid leach circuits, without the complex high-temperature acid bake or caustic cracking processes that are required in many Re operations. Kvanefjeld is now emerging from peer projects, on the basis of the systematic development of an effective process flowsheet. In contrast, numerous other companies that are pursuing Re production continue to reassess their processing options, which can be partly attributed to complex, highly-refractory styles of mineralisation. table 1. Distribution of rare earth elements in the intermediate rare earth carbonate produced from Greenland’s Kvanefjeld project. The product contains a favourable distribution of the important heavy REO’s (Eu – Y). element % ReO distribution la Ce Pr nd Sm eu Gd Tb Dy Ho er Tm Yb lu Y 27.19 37.15 4.57 13.42 2.92 0.20 1.76 0.31 1.36 0.23 0.60 0.07 0.30 0.02 9.89 14.75% HReO Distribution 10 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 20132013 field Work in Greenland GMel has been conducting extensive environmental baseline studies in the Kvanefjeld project area for several years, as a basis to evaluate the potential environmental impacts of a mining operation. The baseline studies provide an indication of the natural chemistry of the broader project area, and the background concentrations of many chemical elements in soil, water, dust and biological matter. The Ilimaussaq Alkaline Complex is the geological entity that hosts defined mineral resources, and is renowned for its unusual minerals and chemistry. Rocks of the Ilimaussaq Complex are actively eroded into the narsaq valley and surrounding areas, resulting in naturally elevated levels of many trace elements in the surrounding environment. Such an environment is therefore well-suited for mining and the establishment of processing infrastructure. The environmental baseline studies have been conducted in conjunction with Orbicon, GMel’s primary environmental consultant. In 2013 a botanical survey was completed and marine biota along the fjord at the base of the narsaq valley were sampled for analysis of ecotoxicological and radioactivate components. Freshwater and stream sediment sampling stations were revisited to build on data gathered in previous years, with samples also to be analysed for ecotoxicology and radioactivity. Terrestrial sampling stations were also revisited with samples of both soils and lichens collected. figure 5. An overview of the Narsaq Peninsula, south Greenland, and the broader Kvanefjeld project area. Infrastructure to support the proposed mining operation would mostly be located within the Narsaq valley. The Ilimaussaq Complex is comprised of extremely alkaline and unusual rock types that have been actively eroded into the surrounding environment. JORC-code compliant mineral resources have been established at Kvanefjeld, Sørensen and Zone 3. Mining is proposed to commence at the Kvanefjeld deposit which is conducive to simple open-pit mining methods. 11 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Review of Operations (continued) Background Radiation Monitoring Geotechnical Mapping Comprehensive background radiation monitoring was also undertaken in the broader project area along with the town of narsaq, and builds on data gathered over several years. Short term (several days) passive monitoring of radon and thoron was conducted and long term (three month) monitoring devices will be collected sequentially over the coming months. Water and soil samples were also collected for radionuclide analyses. High volume air samplers have recently been installed for the purpose of dust and air monitoring. A gamma radiation survey was also conducted to repeat the surveys carried out in previous years. new additional points in the narsaq valley were included to provide more detailed coverage from the town of narsaq to where ore material outcrops on the Kvanefjeld plateau. Geological and geotechnical mapping programs were undertaken in areas that are currently being investigated as potential infrastructure sites. These programs set out to assess foundation conditions including rock and soil types, as well as identifying potential geohazards and areas that require further geotechnical drilling. The outcomes provide important information to support the selection of infrastructure locations. Stakeholder engagement Program GMel has maintained an active stakeholder engagement program in relation to the Kvanefjeld project since 2008. This has primarily focussed on participating in community hall meetings in the main townships of south Greenland, which includes narsaq, Qaqortoq, and nanortalik. The aim of these meetings is to provide updates on the Kvanefjeld project and potential development scenarios, and importantly to identify the key areas of interest from the local populace. These forums provide the opportunity for local stakeholders to put forward questions, voice concerns and identify areas where they would like further information. large, outcropping ore bodies allow for simple, low cost, open pit mining. 12 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 In south Greenland, the majority of the populace live in the three major towns, however, a considerable proportion lives in settlements outside of these townships. GMel personnel undertook a tour of these regional settlements in August to present overviews of the Kvanefjeld project, and to provide a forum in which people could put forward questions. The settlement tour was aimed to ensure that all local stakeholders in south Greenland are included in the ongoing dialogue surrounding the potential development of the Kvanefjeld project. eight settlements were visited where presentations were made and followed by informal discussions. The presentations focussed on the potential development scenarios for the Kvanefjeld project, and the work programs involved in the environmental and social impact assessments. The meetings were all well attended, with the most frequently asked questions focussed on employment opportunities, and the environmental and social impacts. In early 2014, meetings were conducted with representatives of the key stakeholder groups including both the employees and employers unions, and the Mayor of South Greenland. figure 6. An overview of southern Greenland highlighting the three major towns of Qaqortoq, narsaq and nanortalik, and the communities visited on GMel’s settlement tour in August 2013. The Kvanefjeld project is located approximately 10km to the northeast of narsaq. The exercise represented an important part of the Company’s broader stakeholder engagement program, and ensures that efforts have been made to provide forums to discuss the Kvanefjeld project with the majority of the south Greenland populace. 13 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Review of Operations (continued) Update on the eURARe Project 2013 Summary The eURARe Project is an initiative backed by the european Union that aims to establish a rare earth element value creation chain in europe. The second round of eURARe meetings since the Projects commencement took place on June 17th and 18th in Copenhagen. As announced on July 25th, GMel has an important role in the eURARe Project through the provision of bulk sample material from Kvanefjeld, as well as managing a key work stream. The eURARe Project stands to be of great benefit and provides both direct and indirect funding, an excellent collective of technical expertise to collaborate with, and pilot plant facilities that will utilise Kvanfjeld sample material. A second meeting was held late in the year in leuven, Belgium. The program continues to offer a great forum in which a diverse collective of high-level expertise can exchange ideas on the processing of rare earth ores. figure 7. The collection of bulk sample material for ongoing metallurgical testwork on the Kvanefjeld project. Ore extracted from the historic adit provides excellent material for scaled-up testwork and pilot plant operations. To conclude, 2013 will always be viewed as historical year for both Greenland’s mining industry and GMel. Whilst the removal of the zero-tolerance policy against the exploitation of radioactive minerals was undoubtedly the headline development, the Company was able to continue to make significant advances to the Kvanefjeld project. These advances included important technical developments on the refinery circuit that clearly demonstrate the ability to achieve high extraction levels for both Rees and uranium, and importantly manage all impurities throughout the process to ensure, clean, high purity products. The composition of the Re carbonate is particularly pleasing with 14.75% heavy Re, which along with significant neodymium and praseodymium, makes for a mix that correlates well with market demand and volumes. Continued environmental baseline studies on the narsaq peninsula in the Kvanefjeld area ensure that a comprehensive baseline has been developed to effectively assess the impact of the proposed development scenarios. GMel will continue its commitment to keep Greenland stakeholders up-to-date and take on board input toward Kvanefjeld’s development through the active stakeholder engagement program. 14 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Finally, the Company would like to acknowledge shareholders that have made possible the progression of the Kvanefjeld project from a concept in 2007, to what is now recognised globally as quality emerging mining project of strategic significance. figure 8. Exploration licenses held by Greenland Minerals and Energy over the northern Ilmaussaq Complex, and surrounding areas. JORC-code compliant mineral resource estimates have been established at Kvanefjeld, Sørensen and Zone 3. figure 9. Exploration license 2010/02 covers the northern Ilimaussaq Complex that is host to REE-U resources. Drilling to date has only evaluated a small part of the prospective area. 15 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Table of Identified Mineral Resources Statement of Identified Mineral Resources, Kvanefjeld Multi-Element Project (Independently Prepared by SRK Consulting) Multi-Element Resources Classification, Tonnage and Grade Contained Metal Cut-off Classification (U3O8 ppm)1 Kvanefjeld - March 2011 150 150 150 200 200 200 250 250 250 300 300 300 350 350 350 Indicated Inferred Grand total Indicated Inferred Grand total Indicated Inferred Grand total Indicated Inferred Grand total Indicated Inferred Grand total Sørensen - March 2012 150 200 250 300 350 Inferred Inferred Inferred Inferred Inferred Zone 3 - May 2012 150 200 250 300 350 Project total Inferred Inferred Inferred Inferred Inferred M tonnes Treo2 u3o8 ppm ppm Mt lreo HReO reo ppm ppm ppm y2o3 ppm Zn ppm Treo HReO y2o3 Mt Mt Mt u3o8 M lbs Zn Mt 274 216 257 9626 8630 9333 402 10029 356 389 8986 9721 325 10452 419 10871 275 9932 343 10275 314 10341 403 10743 900 776 864 978 811 942 352 10950 443 11389 1041 324 10929 366 11319 886 347 10947 431 11378 1017 374 11437 469 11906 1107 362 11763 396 12158 962 373 11475 460 11935 1090 404 12040 503 12543 403 12239 436 12675 404 12059 497 12556 1192 1054 1179 304 9729 398 10127 344 10223 399 10622 375 10480 407 10887 400 10671 414 11084 895 932 961 983 422 10967 422 11389 1004 300 10242 396 10638 310 10276 400 10676 330 10471 410 10882 358 10887 433 11319 392 11392 471 11864 971 989 1026 1087 1184 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 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 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 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 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 M Cut-off Classification (U3O8 ppm)1 tonnes Treo2 u3o8 ppm ppm Mt lreo HReO reo ppm ppm ppm y2o3 ppm Zn ppm Treo HReO y2o3 Mt Mt Mt u3o8 M lbs Zn Mt 150 150 150 Indicated Inferred Grand total 437 520 956 10929 10687 10798 274 272 273 9626 9437 9524 402 10029 383 392 9820 9915 900 867 882 2212 2468 4.77 5.55 2351 10.33 0.18 0.20 0.37 0.39 0.45 0.84 263 312 575 0.97 1.28 2.25 1 There is greater coverage of assays for uranium than other elements owing to historic spectral assays. U3O8 has therefore been used to define the cut-off grades to maximise the confidence in the resource calculations. 2 Total Rare earth Oxide (TReO) refers to the rare earth elements in the lanthanide series plus yttrium. note: Figures quoted may not sum due to rounding. JORC Code Compliance – Consent of Competent Persons 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, Sorensen and Zone 3 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. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. 16 Greenland Minerals and enerGy liMiTed – AnnUAl RePORT 2013 ACn 118 463 004 ASX listed, Greenland-focussed mineral explorer and developer. 2013 Greenland Minerals and energy limited and Controlled entities – FInAnCIAl RePORT for the year ended 31 december 2013. 17 17 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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:31) enables it to provide strategic guidance and effective supervision of management; (cid:31) (cid:31) ensures a balance of authority so that no single individual has unfettered powers; and (cid:31) identifies significant business risks and ensures that those risks are well managed. 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, Jeremy Whybrow is not an independent non-executive director. 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. P a g e | 1 18 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 that the Company is not of a 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:31) In Conjunction with the Chairman, the Managing Director’s role includes 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:31) Business and strategic development. (cid:31) 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, the policy can be viewed on the Company’s website. 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. P a g e | 2 19 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report CORPORATE GOVERNANCE 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. At 31 December 2013 there were 18 employees including directors in the Consolidated Group and 28% of these employees were women. This compares to 31 December 2012, when there were 28 employees including directors, of which 32% were women. The positions held by women in the Consolidated Group at 31 December 2013 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). 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:31) The financial records have been properly maintained in accordance with s286 of the Corporations Act 2001 (cid:31) The financial statements are in accordance with the Corporations Act 2001, comply with relevant Accounting Standards and Corporation Regulations 2001. (cid:31) 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. 20 P a g e | 3 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report CORPORATE GOVERNANCE Shareholders generally participate in shareholder meetings, in person or through the appointment of a proxy. The Company’s external Auditor is invited to attend these meetings. Principle 7: Recognise and manage risk The Company recognises the importance of managing risk and has established systems to assess monitor and manage risk based on the Company’s size, history and strategy. The exploration and development of natural resources is a speculative activity that involves a high degree of financial risk. The Company has formalised its policy to identify, monitor and manage risk. The Company as part of its risk management, formally established an Audit and Risk Committee The Company’s executives and senior management, through the Managing Director are responsible for the identification of material risks to the business and the design and implementation of internal control systems to manage the identified risks. The Board has received from management, reports on the effectiveness of the Company’s management of its material business risks. The Board has obtained a written confirmation from the Managing Director and the Chief Financial Officer that the statement in relation to principle 4, that the financial reports are founded on a sound system of risk management and internal compliance and control and the Company’s risk management and internal compliance control systems are operating efficiently and effectively in all material respects. The principle areas of risk for the Company are in the areas of: (cid:31) Occupational health and safety and work related safety risks (cid:31) Environment risks (cid:31) Security of tenure over tenements (cid:31) 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. P a g e | 4 21 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 2013, pursuant to 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 Chief Financial Officer/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 17 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, located in Southern Greenland. 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 $8,768,670 (2012: loss $17,344,249) 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 In March 2014 the Consolidated Group entered a non-binding Memorandum of Understanding (“MoU”) with China Non-Ferrous Metal Industry’s Foreign Engineering and Construction Co Limited (“NFC”). The MoU sets out a framework for both parties to cooperate in aligning the rare earth concentrates from the Consolidated Group’s Kvanefjeld project, with NFC’s substantial rare earth separation experience and capacity. Please refer to the Company announcement released to the ASX on 24 March 2014. Other than the matter above, there have been no matters or circumstances 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. P a g e | 5 22 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Future Developments The Consolidated Group will continue to evaluate the Kvanefjeld project and the development alternatives for the project, as referred to elsewhere in this report, particularly in the Review of Operations on pages 7 to 9. 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 2013, 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 2012. Shares During the year ended 31 December 2013, the following ordinary shares of Greenland Minerals and Energy Limited were issued, as detailed in Note 16 to the financial report. The total number of ordinary shares on issue at 31 December 2013 was 574,572,911 (31 December 2012: 567,937,409). The total number of shares issued during the current financial year was 6,635,502. . 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 shares issued 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 3,287,854 Ordinary shares 750,000 Ordinary shares 744,833 Ordinary shares 897,344 Ordinary shares 955,471 Ordinary shares $0.39 $0.25 $0.29 $0.37 $0.28 - - - - - P a g e | 6 23 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Options and performance rights During the year ended 31 December 2013 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. 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 (ii) Number of shares under option Number of shares under performance/ employee rights - - 12,000,000 9,685,500 4,999,520 25,769,191 - - Class of shares Exercise price of option Expiry date of option Ordinary shares Ordinary shares Ordinary shares Ordinary shares NA 15 May 2014 NA 4 October 2016 $0.75 15 October 2014 $0.60 5 October 2014 (i) (ii) 12,000,000 employee rights were issued in the current year and 1,000,000 performance rights were issued in the previous financial year. In addition 4,860,000 performance rights issued in a previous financial year and were cancelled in the current year. Options were issued in a previous financial year and remain outstanding at 31 December 2013. 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 The Consolidated Group’s principal activity is a mineral exploration and project evaluation in southern Greenland. The Company is primarily focused on advancing the 100% owned Kvanefjeld multi-element project (both light and heavy rare earth elements, uranium, and zinc) through the feasibility and permitting phase and into mine development. The Kvanefjeld project is centred on the northern Ilimaussaq Intrusive Complex in southern Greenland. The project includes several large scale multi-element deposits including Kvanefjeld, Sørensen and Zone 3. The deposits are characterised by thick, persistent mineralisation hosted within sub-horizontal lenses that can exceed 100m in true thickness. Highest grades generally occur in the uppermost portions of deposits, with overall low waste-ore ratios. While the resources are extensive, a key advantage to the Kvanefjeld project is the unique rare earth and uranium-bearing minerals. These minerals can be effectively beneficiated into a low-mass, high value concentrate, then leached with conventional acidic solutions under atmospheric conditions to achieve particularly high extraction levels of both heavy rare earths and uranium. This contrasts to the highly refractory minerals that are common in many rare earth deposits. P a g e | 7 24 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Review of operations (cont’d) The Kvanefjeld project area is located adjacent to deep-water fjords that allow for shipping access directly to the project area, year round. An international airport is located 35km away, and a nearby lake system has been positively evaluated for hydroelectric power. The Consolidated Group released a feasibility-level study for the mine and concentrator circuit in 2013. Ongoing feasibility studies are focussed on the refinery circuit that has been evaluated up to stage of pilot plant operation. The study outcomes have been positive and reiterate the potential for Kvanefjeld to become one of the largest rare earth producing mines globally, occupying a dominant position at the low end of the future production cost-curve. A large heavy REE output and significant uranium output differentiate Kvanefjeld from many other emerging RE projects. Rare earth elements (REEs) are now recognised as being critical to the global manufacturing base of many emerging consumer items and green technologies. Uranium forms an important part of the global base-load energy supply, with demand set to grow in coming years as developing nations expand their energy capacity. A detailed report on the Consolidated Group’s activities and project achievements will included in the Annual Report. Key highlights for the Consolidated Group during the financial year included: (cid:31) In late October Greenland’s parliament voted in favour of removing a long-standing zero- tolerance policy against the exploitation of radioactive materials. This landmark decision places Greenland on the path to uranium-producer status, and thereby opens up coincident resources of rare earth elements to exploitation. The parliamentary decision received broad coverage in the international press, and sent a strong message that Greenland is prepared to make the important decisions that are required to advance the quest of establishing a minerals industry. (cid:31) Technical work programs continued to advance the Kvanefjeld project through 2013, and served to progress the de-risking of the project, and build confidence in the advantageous process flow sheet. (cid:31) Test work for the concentrator circuit was completed in late-2012, with the second of two highly successful pilot plant operations. An updated study was then released in March 2013 (the Mine and Concentrator Study), that captured the technical advances to the beneficiation circuit, and the initial 3Mtpa start-up capacity. With a high degree of confidence in the ability to produce a low- mass, high-grade mineral concentrate, the Consolidated Group commenced assessing the potential to export the mineral concentrate from Greenland, for processing offshore. (cid:31) An effective hydrometallurgical process route has been developed for the treatment of the rare earth- and uranium-rich mineral concentrates generated via froth flotation. The refinery circuit utilises simple equipment and elegant chemistry, with scaled-up test work in 2013 demonstrating the production of a high purity rare earth intermediate product. (cid:31) The Consolidated Group has been conducting extensive environmental baseline studies in the Kvanefjeld project area for several years, as a basis to evaluate the potential environmental impacts of a mining operation. The baseline studies provide an indication of the natural chemistry of the broader project area, and the background concentrations of many chemical elements in soil, water, dust and biological matter. P a g e | 8 25 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Review of operations (cont’d) (cid:31) Comprehensive background radiation monitoring was also undertaken in the broader project area along with the town of Narsaq, and builds on data gathered over several years. (cid:31) The Consolidated Group has maintained an active stakeholder engagement program in relation to the Kvanefjeld project since 2008. This has primarily focussed on participating in community hall meetings in the main townships of south Greenland, which includes Narsaq, Qaqortoq, and Nanortalik. The aim of these meetings is to provide updates on the Kvanefjeld project and potential development scenarios, and importantly to identify the key areas of interest from the local populace. These forums provide the opportunity for local stakeholders to put forward questions, voice concerns and identify areas where they would like further information. The Consolidated Group’s strategy for future financial years includes: (cid:31) The continued evaluation of development alternatives for the Kvanefjeld project, including the potential engagement of strategic partners. (cid:31) Continue to prudently control cash flow and implement operational and project cost reductions where possible. (cid:31) Retain key staff vital to the future development of the project. (cid:31) Maintain an open dialogue with the Greenland Government, communities and other stakeholder groups. (cid:31) Continue to evaluate the project to ensure the future development in carried out in a manner that will ensure the enhancement of value to shareholders and other stakeholders. Financial Position The net assets of the Consolidated Group were $71,230,107 as at 31 December 2013 (2012: $64,991,703). 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, Sorensen and Zone 3 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. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. P a g e | 9 26 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 was previously 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 210,638 Ordinary shares 1,400,000 Unvested performance rights Directorships held in other listed entities Non-executive chairman – Noricum Gold Limited – since November 2013 Non-executive director - Mecom Plc – since April 2009 Former directorships in other- listed entities in the last 3 years Nil 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 global experience from grassroots discovery through mine finance and production. This broad base of experience both in capital markets and the global minerals space provides the platform necessary to implement operations in remote and difficult locations. He was an active and early member of a number of successful mining ventures including Medusa Mining (Philippines), Anvil Mining (Congo) and Kingsrose Mining Ltd (Sumatra) where he was involved in the process of de-risking mining operations in frontier jurisdictions. Roderick was a founding Director of Greenland Minerals and Energy Ltd and identified and executed the Greenland opportunity with the acquisition of Kvanefjeld in 2007 being the result. P a g e | 10 27 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Information on Director (cont’d) Roderick McIllree (cont’d) Interest in shares, options and performance rights 13,346,956 Ordinary Shares 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 - Advanced Share Registry Limited - since August 2007. Positions held in the last 3 Years Queste Communications Limited – February 2008 to 3 April 2013 Transaction Solutions International Limited – February 2010 to 30 September 2013 Convergent Minerals Limited - July 2006 to 19 December 2011 28 P a g e | 11 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 5,564,166 Ordinary Shares 2,100,000 Unvested performance rights Other board positions held Nil P a g e | 12 29 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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, FGIA Experience Mr Tony Ho is an experienced company director having held executive directorships 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 the Institute of Chartered Secretaries, Governance Institute of Australia and the Australian Institute of Company Directors. Interest in shares & options 550,000 Ordinary Shares 1,600,000 Unvested performance rights Other board positions held 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 Non-executive Chairman – Metal Bank Limited, October 2011 to August 2013 Non-executive director - DoloMatrix International Limited, April 2007 – August 2012 30 P a g e | 13 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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, 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 2013. 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 Simon Kenneth Cato, Executive Director John Mair, Executive Director Anthony Ho, Non-Executive Director Jeremy Sean Whybrow, Non-Executive Director P a g e | 14 31 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 meeting service period requirements and share price vesting hurdles. It is the Board’s opinion that significant project advancements would be required for the share price vesting hurdles to be met and therefore increasing value to all stakeholders. The board of Greenland Minerals and Energy Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best senior management and directors to run and manage the Consolidated Group, as well as create alignment of interests between directors, senior management and shareholders. The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Consolidated Group is as follows: All senior management receive a 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 9.25% 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 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 shares that have been issued and are to be issued to directors and senior management as compensation for the directors and senior management agreeing to a reduction in salaries and other employment entitlements that would have otherwise been payable in cash. 32 P a g e | 15 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) The share based payments are also 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 has been realised over the service vesting period and are subject to the satisfying of vesting and other conditions. At 31 December 2013, all of the outstanding performance rights remained un-vested as the share price vesting conditions had not been satisfied. The performance options expired on 31 August 2013 being the expiry date of the options and as a result of the share price vesting conditions not being satisfied by the expiry date. Short term incentives The Consolidated Group does not have a short term incentive scheme that is in addition to the short term employee benefits. The Consolidated Group considers that short term incentive schemes would not be consistent with shareholder value at the Consolidated Group’s current stage of development. 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 Year ended 31 Dec 2013 Salary/ consultancy fees Director fees Allowances Post- employment Super- annuation Long-term Remuneration Provision for long service leave TOTAL REMUNERATION PAID OR PAYABLE IN CASH $ $ $ $ $ Executive Directors Roderick McIllree Simon Cato John Mair Non-executive Directors Anthony Ho Michael Hutchinson Jeremy Whybrow Senior Management Shaun Bunn Miles Guy TOTAL 238,750 52,916 235,417 - - 59,583 242,167 181,667 1,010,500 - - - 86,612(i) - - 11,812 4,866 21,469 (18,668) (ii) (11,084) (ii) - 318,506 46,698 256,886 50,000 139,317 45,000 - - 234,317 - - - 86,612 4,500 - 1,875 14,719 16,575 75,816 - - - - - (29,752) 54,500 139,317 106,458 256,886 198,242 1,377,493 (i) Allowance for the payment of expenses related to R McIllree relocating to the UK. (ii) A reduction in salaries has resulted in a lower salary base for the calculation of long service leave and other statutory entitlements. This has resulted in a reduction in the provision for long service leave recognised in prior years. P a g e | 16 33 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) Remuneration – Share based payments at fair value Shares in lieu of salary Long term remuneration Shares (i) Rights (ii) Options (iii) Total share based payments TOTAL REMUNER- ATION % Consisting of share based payments $ $ $ $ $ 453,044 - 198,703 - 123,228 - 609,578 217,444 1,601,997 206,302 24,610 160,457 188,545 60,357 42,831 249,182 65,567 997,851 121,852 - 91,674 - - - 781,198 24,610 450,834 188,545 183,585 42,831 1,099,704 71,308 707,720 243,045 322,902 149,289 91,674 - 305,200 950,434 283,011 2,905,048 1,207,320 481,253 4,282,541 71% 34% 64% 77% 57% 29% 79% 59% 68% Year ended 31 Dec 2013 Executive Directors Roderick McIllree Simon Cato John Mair Non-executive Directors Anthony Ho Michael Hutchinson Jeremy Whybrow Senior Management Shaun Bunn Miles Guy TOTAL (i) Shares were issued to directors and senior management as compensation for the directors and senior management agreeing to a reduction in salary and other employment entitlements that would have otherwise been payable in cash. The shares are to be issued in up to four tranches over a two year period, the values stated above represent the fair value of all four tranches granted in the current year. This includes the tranches where shares were issued in the current year as well as a proportion of the value of tranches that will vest during the year ended 31 December 2014. This vesting profile results in 79% of the total fair value of the four tranches being recognised in the current year. Refer to note 24 for further details. (ii) All 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. The rights do not vest into fully paid shares unless the vesting conditions are satisfied. At 31 December 2013 all rights remain unvested and as a result the rights represent no immediate monetary value to the holder of the rights, at this date, with a monetary benefit only arising if the vesting conditions are satisfied prior to the expiry date. The above share based payment values are for reporting purposes only. (iii) 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. The options expired in August 2013 due to failing to satisfy market based (share-price) vesting conditions consequently this will result in no monetary value being realised by the holders of the options. (iv) The value of the options and rights granted to management personnel as part of their remuneration is calculated on the grant date using an appropriate pricing model. The amounts disclosed as part of remuneration for the financial year have been determined by allocating the grant date value on a straight-line basis over the service vesting period. 34 P a g e | 17 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 Salary/ consultancy fees Director fees Allowances Post- employment Super- annuation Long-term Remuneration Provision for long service leave TOTAL REMUNERATION PAID OR PAYABLE IN CASH $ $ $ $ $ Year ended 31 Dec 2012 Executive Directors Roderick McIllree Simon Cato John Mair Non-executive Directors Anthony Ho Michael Hutchinson Jeremy Whybrow Senior Management Shaun Bunn Miles Guy TOTAL 520,000 140,000 350,000 42,025 - 205,000 350,000 200,000 1,807,025 - - - 50,000 150,323 45,000 - - 245,323 - - - - - - - 46,800 12,600 31,500 4,500 - 22,500 31,500 18,000 167,400 43,752 16,334 - - - 29,168 - - 89,254 Remuneration – Share based payments at fair value Shares in lieu of salary Long term remuneration Shares Rights (i) Options (ii) Total share based payments TOTAL REMUNER- ATION $ $ $ $ $ - - - 487,409 - 366,695 825,210 94,422 641,830 1,312,619 94,422 1,008,525 Year ended 31 Dec 2012 Executive Directors Roderick McIllree Simon Cato John Mair Non-executive Directors Anthony Ho Michael Hutchinson Jeremy Whybrow Senior Management Shaun Bunn Miles Guy TOTAL (i) All 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. The rights do not vest into fully paid shares unless the vesting conditions are satisfied. At 31 December 2012 all rights remain unvested and as a result the rights represent no immediate monetary value to the holder of the rights, at this date, with a monetary benefit only arising if the vesting conditions are satisfied prior to the expiry date. 366,695 - - - - 3,077,930 1,220,799 1,008,525 59,469 4,298,729 1,390,025 277,469 6,607,731 1,923,171 263,356 1,390,025 402,417 241,429 171,323 402,417 241,429 171,323 498,942 391,752 472,991 641,830 59,469 - - - - - - 68% 36% 72% 80% 62% 36% 72% 21% 65% (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. At 31 December 2012 all options remain unvested and as a result the options represent no immediate monetary value to the holder of the options, at this date, with a monetary benefit only arising if the vesting conditions are satisfied prior to the expiry date. P a g e | 18 35 610,552 168,934 381,500 96,525 150,323 301,668 381,500 218,000 2,309,002 % Consisting of share based payments Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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. Shares in lieu of salaries In February 2013 as part of a strategy to preserve cash reserves, directors, senior management and a number of other staff agreed to a reduction in salary and other employment entitlements that would have been payable by the Company in cash. As compensation for agreeing to these reductions, the Company agreed to issue shares to the individuals concerned. The number of shares to be issued was established by calculating the dollar value of foregone employment entitlements and issuing the equivalent value in shares based on a share price of $0.30. The shares are to vest four tranches over a two year period except for Michael Hutchinson who will be issued shares over three tranches. The shares that have been and are to be issued to directors were approved by shareholders at the Company’s Annual General Meeting on 15 May 2013. In accordance with AASB2, the value of the shares in lieu of salaries has been recognised as the fair value of the shares issued in the first two tranches during the year ended 31 December 2013 and a proportion of the fair value of the remaining two trances to be issued in the year ended 31 December 2014. All four tranches require continuous service through to the respective vesting date. As a result of this vesting profile, 79% of the total fair value of the four tranches has been recognised at 31 December 2013, with the balance to be recognised during the year ended 31 December 2015. The following shares were issued in the current year or will be issued in the year ended 31 December 2014 and have been issued in lieu of salaries and other employment entitlements. Director/ senior management R McIllree Grant date Number Fair value @ grant date $ Issue Date Share value @date of issue $ Tranche 1 15/05/2013 517,750 Tranche 2 15/05/2013 517,750 Tranche 3 15/05/2013 517,750 Tranche 4 15/05/2013 517,500 Total 2,071,000 J Mair Tranche 1 15/05/2013 227,083 Tranche 2 15/05/2013 227,083 Tranche 3 15/05/2013 227,083 Tranche 4 15/05/2013 227,083 150,147 145,022 145,073 145,177 585,419 65,854 63,609 63,637 63,665 908,333 256,765 M Hutchinson 15/05/2013 31/10/2013 30/04/2014 31/10/2014 15/05/2013 31/10/2013 30/04/2014 31/10/2014 Tranche 1 15/05/2013 210,638 Tranche 2 15/05/2013 210,637 Tranche 3 15/05/2013 210,633 59,003 59,028 59,053 31/10/2013 30/04/2014 31/10/2014 631,908 177,084 150,147 155,325 - - 305,472 65,854 68,125 - - 133,979 63,191 - - 63,191 P a g e | 19 36 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) Director/ senior management S Bunn Grant date Number Fair value @ grant date $ (i) Issue Date Share value @date of issue $ Tranche 1 25/02/2013 480,758 Tranche 2 25/02/2013 485,586 Tranche 3 25/02/2013 490,462 Tranche 4 25/02/2013 495,387 Total 1,952,193 M Guy Tranche 1 25/02/2013 171,492 Tranche 2 25/02/2013 173,214 Tranche 3 25/02/2013 174,954 Tranche 4 25/02/2013 176,711 185,092 182,192 184,070 185,968 737,322 66,024 64,990 65,660 66,337 696,371 263,011 25/02/2013 30/09/2013 31/03/2014 30/09/2014 25/02/2013 30/09/2013 31/03/2014 30/09/2014 185,092 121,396 - - 306,488 66,024 43,303 - - 109,327 (i) Fair value for shares issued or to be issued to directors has been based on the Company share price on 15 May 2013 and the Company shares price on 25 February 2013 for senior management, given that these tranches vested immediately on the grant date, with no future service conditions. The fair value has been established for the later tranches by applying a Black Scholes model and taking into account the future service period requirements (refer to note 24). Employee rights plan In September 2013 the Remuneration Committee and the Board approved the Employee Rights Plan (“ERP”) and approved the issue of Employee Rights under the plan. All employees of the Consolidated Group were invited to participate in the ERP. The number of rights being offered to employees was determined by the seniority of the employee, with three levels of seniority being established and a factor based on the seniority being applied to the employee’s base salary. The Employee Rights will convert to Ordinary fully paid shares on subject to a twelve month continuous service period vesting condition and in three tranches subject to share price vesting conditions. The Employee Rights were offered to assist in retaining and to further incentivise employees. In accepting the offer of the Employee Rights, employees agreed that the Employee Performance Rights issued in 2011 would be cancelled. At the time the Employee Performance Rights were cancelled the fair value of the cancelled rights had been fully expensed. The Employee Rights were not offer to directors and no directors participated in the Employee Rights Issue. The market based vesting hurdles are based on the Company’s share price based on a 5 day Volume Weighted Average Price (“VWAP”) as detailed in the following table. Tranche Tranche 1 Tranche 2 Tranche 3 5 Day VWAP share price hurdle $0.50 $0.75 $1.00 P a g e | 20 37 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) 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 senior management during the current financial year. Senior management S Bunn Grant date Number Fair value @ grant date $ Expiry date Vesting date Tranche 1 4/10/2013 700,000 Tranche 2 4/10/2013 700,000 Tranche 3 4/10/2013 700,000 Total 2,100,000 M Guy Tranche 1 4/10/2013 400,000 Tranche 2 4/10/2013 400,000 Tranche 3 4/10/2013 400,000 151,410 119,770 96,810 367,990 86,520 68,440 55,320 1,200,000 210,280 30/09/2016 Refer above 30/09/2016 Refer above 30/09/2016 Refer above 30/09/2016 Refer above 30/09/2016 Refer above 30/09/2016 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. 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 was required to 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. No Performance Rights were issued during the year ended 31 December 2013. 38 P a g e | 21 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) The following un-vested performance rights were issued to Anthony Ho during the previous 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 (ii) 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). 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 table. 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 2013 or the previous year ended 31 December 2012. At 31 December 2013, all of the Rights remained un-vested as the vesting conditions had not been satisfied. P a g e | 22 39 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) Options exercised The following options issued to directors and senior management, were exercised during the financial year ended 31 December 2013. Each options converts into one ordinary share of Greenland Minerals and Energy Limited: Number Exercised (i) Exercise Price Date Share price @ exercise date Amount Paid $ Amount unpaid $ Option value at date of exercise $ S Bunn 28/03/2013 750,000 $0.25 $0.30 187,500 - 225,000 (i) The number of options exercised relates only to options exercised that were granted as compensation and recognised in remuneration in prior years. There were no options were exercised by directors of senior management during the year ended 31 December 2012. Lapsed options During the current financial year the following options issued to directors and senior management lapsed as a result of vesting conditions not being satisfied. Director/senior management R McIllree (i) J Mair (i) S Bunn (i) Number 2,800,000 2,100,000 2,100,000 Value @ grant date 974,819 733,390 733,390 Lapse date 31/08/2013 31/08/2013 31/08/2013 Value @ lapse date (i) Options lapsed as a result of not meeting vesting conditions prior to the option expiry date. During the previous financial year no options issued to directors or senior management lapsed. Rights cancelled During the current financial year the following un-vested Employee Performance Rights were cancelled upon acceptance of participation in the Employee Rights Plan offered during the year. Senior management S Bunn (i) M Guy (i) Number 2,100,000 350,000 Value @ grant date 1,283,660 118,938 Cancellation date 04/10/2013 04/10/2013 Value @ Cancellation date - - - - - On the date the Employee performance Rights were cancelled, the service period vesting condition had been satisfied but the market price vesting conditions had not been met, therefore the rights were un-vested at the time of cancellation. The fair value of the cancelled rights had been fully expensed prior to the cancellation. 40 P a g e | 23 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 Employee options Performance rights Shares in lieu of salary (employees) Share in lieu of salary (directors) Employee 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 - 25/02/2013 - 15/05/2013 30/09/2016 04/10/2013 Grant date fair value $ 5,568,606 2,441,599 261,587 460,000 1,000,333 1,019,268 578,270 Vesting date (i) (ii) 21/10/2011 (iii) (iv) (iv) (v) (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 price (‘VWAP’) exceeding the following price hurdles: 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 price (‘VWAP’) exceeding the following price hurdles: 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 price (‘VWAP’) exceeding the following price hurdles: Tranche Tranche 1 Tranche 2 Tranche 3 10 Day VWAP share price hurdle $0.75 $1.00 $1.50 (iv) The shares issued in lieu of salary will be issued in four tranches (three tranches in the case of M Hutchinson), the issue of the shares is subject to continued employment at the date of the tranche issue. If the director or employee resigns or their employment is terminated with cause prior to a tranche date, there will not be any entitlement to un-issued/vested tranches. P a g e | 24 41 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) If the director or employee is terminated as a result of redundancy, all unissued tranches will be issued on the date of termination. (v) The employee rights are subject to a 1 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 price (‘VWAP’) exceeding the following price hurdles: Tranche Tranche 1 Tranche 2 Tranche 3 5 Day VWAP share price hurdle $0.50 $0.75 $1.00 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 may include: (cid:31) Share price and or the market capitalisation of the Company exceeding pre-determined levels. (cid:31) Completion of specific projects or pre-determined stages of projects. (cid:31) Periods of service with the Company. (cid:31) Accretion of shareholder value. The following table shows the gross revenue and profits for the period from 31 December to 31 December 2013 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 2013 12 Month period ended 31 Dec 2012 $351,106 $1,116,879 ($8,768,670) $(17,344,250) $(14,209,550) 12 Month period ended 31 Dec 2011 $297,067 12 Month period ended 31 Dec 2010 $717,276 $(7,163,998) 6 Month period ended 31 Dec 2009 $387,977 $(3,823,380) $0.27 $0.21 - $0.02 $0.02 $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 42 P a g e | 25 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) Key terms of employment contracts Directors Michael Hutchinson, Non-executive Chairman (cid:31) Director fee excluding superannuation of $100,000 per annum reduced from £100,000 per annum on 1 July 2013. (cid:31) Entitled to shares equal in value to the reduction in director fees based on a $0.30 share price. (cid:31) 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:31) No fixed term. Roderick McIllree, Managing Director (cid:31) Term and type of contract – service agreement subject to annual review. (cid:31) Base salary of $215,000 per annum per annum and is paid monthly two weeks in advance and two weeks in arrears, reduced from $500,000 per annum on 1 February 2013. (cid:31) Entitled to shares equal in value to the reduction in salary based on a $0.30 share price. (cid:31) Superannuation at 9% is payable on the base salary up to 30 June 2013, there is no entitlement to superannuation post this date. (cid:31) Rental expenses while residing in the UK. (cid:31) Entitled to be reimbursed for all out of pocket expenses necessarily incurred in the performance of their duties including relating to travel, entertainment, meals and telephone. (cid:31) 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:31) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties. Simon Cato, Executive Director (cid:31) Term and type of contract – service agreement limited to a maximum of 26 hours per month subject to annual review. (cid:31) Base salary, of $45,000 and is paid monthly two weeks in advance and two weeks in arrears. (cid:31) Superannuation at 9.25% is payable on the base salary. (cid:31) 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:31) 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:31) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties. John Mair, Executive Director (cid:31) Term and type of contract – service agreement subject to annual review. (cid:31) Base salary, of $225,000 per annum and is paid monthly two weeks in advance and two weeks in arrears, reduced from $350,000 on 1 February 2013. (cid:31) Entitled to shares equal in value to the reduction in salary based on a $0.30 share price (cid:31) Superannuation at 9.25% is payable on the base salary. (cid:31) 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. P a g e | 26 43 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) John Mair, Executive Director (cont’d) (cid:31) 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:31) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties. Anthony Ho, Non-Executive Director $50,000 per annum. (cid:31) No fixed term. (cid:31) (cid:31) Superannuation at 9.25% is payable on the director’s fee (cid:31) 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:31) Term and type of contract – service agreement subject to annual review. (cid:31) Director fees $45,000 per annum (cid:31) 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:31) 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:31) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties. Senior Management Shaun Bunn, Chief Operations Officer (cid:31) Term and type of contract – service agreement subject to annual review. (cid:31) Base salary, of $225,000 per annum and is paid monthly two weeks in advance and two weeks in arrears, reduced from $350,000 on 1 February 2013. (cid:31) Entitled to shares equal in value to the reduction in salary and notice period, based on a $0.30 share price. (cid:31) Superannuation at 9.25% is payable on the base salary. (cid:31) 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:31) Either the Company or the employee may terminate his engagement without cause by giving the other party three months written notice, there are no other specific payout clauses. (cid:31) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties. Miles Guy, Chief Financial Officer and Company Secretary (cid:31) Term and type of contract – service agreement subject to annual review. (cid:31) Base salary, of $180,000 per annum and is paid monthly two weeks in advance and two (cid:31) weeks in arrears, reduced from $200,000 per annum on 1 February 2013. Entitled to shares equal in value to the reduction in salary and notice period, based on a $0.30 share price. (cid:31) Superannuation at 9.25% is payable on the base salary. 44 P a g e | 27 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT Remuneration Report – Audited (cont’d) Miles Guy, Chief Financial Officer and Company Secretary (cont’d) (cid:31) 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:31) 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:31) Remuneration will be reviewed every 12 months or as otherwise agreed between the parties. Meetings of Directors During the financial year, 15 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 15 15 15 15 15 15 Number attended 15 15 15 15 15 15 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), Michael Hutchinson and Jeremy Whybrow. 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 1 2 Remuneration Committee The remuneration committee was convened at the Directors’ Board Meeting on the 22 April 2009. The audit committee members are Michael Hutchinson (Chairman), Anthony Ho and Jeremy Whybrow. The remuneration committee meeting must have a quorum of two members. There were 2 remuneration committee meetings held during the current financial year, as follows: Member M Hutchinson A Ho J Whybrow Audit Committee Meetings Number of meetings eligible to attend 2 2 2 Number Attended 2 2 2 P a g e | 28 45 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report DIRECTORS’ REPORT 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 30. Auditor’s Independence Declaration The auditor’s independence declaration for the year ended 31 December 2012 has been received and 47 is included on page 30 the financial report. 2013 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 46 P a g e | 29 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 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 (0) 9365 7007 www.deloitte.com.au The Board of Directors Greenland Minerals and Energy Limited Ground Floor, Unit 6, 100 Railway Road, Subiaco WA 6008 26 March 2014 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 2013, 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. 47 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013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 Independent Auditor’s Report to the members of Greenland Minerals and Energy Limited DX 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloitte.com.au 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 2013, the statement of profit or loss and other 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 33 to 78. 50 to 95 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited 48 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013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 2013 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 14 to 28 of the directors’ report for the year ended 31 December 2013. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. 31 to 45 Opinion In our opinion the Remuneration Report of Greenland Minerals and Energy Limited for the year ended 31 December 2013, complies with section 300A of the Corporations Act 2001. DELOITTE TOUCHE TOHMATSU David Newman Partner Chartered Accountants Perth, 26 March 2014 49 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013Directors’ declaration Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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, 26 March 2014 50 P a g e | 33 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2013 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 Items that may be reclassified subsequently to profit and loss 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 Basic loss per share – cents per share Diluted loss per share – cents per share Note 5 6(a) 6(b) 6(c) 6(d) 6(e) 6(f) 7 7 20 Dec 2013 $' 000 Dec 2012 $' 000 297 351 (5,923) (523) (405) (102) - (2,113) (8,769) - (8,769) (9,205) (1,224) (409) (217) (5,075) (1,565) (17,344) - (17,344) 9,893 1,450 - 9,893 1,124 - 1,450 (15,894) (8,769) - (8,769) 1,124 - 1,124 1.53 1.53 (16,675) (669) (17,344) (15,247) (647) (15,894) 3.72 3.72 Notes to the financial statements are included on pages 55 to 95. Notes to the financial statements are included on pages 38 to 78 P a g e | 34 51 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Note 8 9 10 Dec 2013 $' 000 Dec 2012 $' 000 5,343 10,801 49 275 5,667 326 311 11,438 11 12 13 14 15 15 16 17 19 41 1,505 64,859 66,405 31 1,540 53,642 55,213 72,072 66,651 543 125 144 812 1,240 - 331 1,571 30 30 89 89 842 71,230 1,660 64,991 336,950 334,399 (10,246) (22,703) (255,474) 71,230 (246,705) 64,991 Consolidated statement of financial position as at 31 December 2013 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 Other liabilities Provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity Notes to the financial statements are included on pages 55 to 95. Notes to the financial statements are included on pages 38 to 78 52 P a g e | 35 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Consolidated statement of changes in equity for the year ended 31 December 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report f o r C o n s o l i t h e Total y d e a a $' 000 t r e e d n 57,992 s d t e a t d e (17,344) 3 m 1 e D n t e 1,450 c o e f m c h (15,894) b a e n r g 2 e 15,858 0 s 1 3 i n 5,075 e q u i t 6,961 y (669) 22 (647) I s s u e d O p t i o n - - F o r e i g n - t r a n s l a t i o n c u r r e n c y o t e s t o t h e f i n a n c i a l s t a t e m e n t s a r e i n c l u d e d o n p a g e s 3 8 t o 7 8 P a g e | 3 6 i b R I a I Non - s s a c e s s q s c u u Controlling e u o e e d g s o o i n interest p t f f i i a o t s i y n o h m n a r e o e reserve n f s t s s f h r $’000 o a m r e s h a r e s f o r r o y (5,611) a l t y 7 5 3 6 , 2 0 8 5 , 0 7 5 - - - - - - t r a n s a c t i o n c o s t s 1 5 , 0 4 6 8 1 2 - - - (34,061) N 2 0 1 3 B a l a n c e a t 3 1 D e c e m b e r o p t i o n e x e r c s e i I s s u e o f s h a r e s b a s e d p a y m e n t s f r o m R e c o g n i t i o n o f s h a r e I s s u e o f s h a r e s f r o m f o r t h e y e a r T o t a l i n c o m e c o m p Issued r e capital h e n s $' 000 v e i 2 0 1 3 N e t l o s s f o Option r t h reserve e y e $' 000 a r O t h e r C o m p r e h e n s v e i B a l a n c e a t 1 J a n u a r y 14,997 i n reserve g n t e r e s t 3 1 D e $' 000 c e m (6,783) b e r i a c q u s i t i o n o f 2 n o 0 n 1 Foreign - 2 c o currency n t r o translation acquisition Accumulated R e c o g n i t i o n B a l a n c e a t t h e y e a r n c o m e I s s u e T o t a n e t f o r o f o f i l l l i O t h e r C o m p r e h e n s v e i l N e t 2 0 1 2 B a l a Attributable o n s c to equity s e f a o holders of t r 1 t h the parent J e a n u a r y $' 000 y e a r 64,399 Non- controlling interest $' 000 (6,407) s h a r e s c o m p r e losses h e n s $' 000 v e i (230,030) (16,675) Balance at 1 January 2012 4 4 9 2 , 8 2 5 Net loss for the year 3 3 Other Comprehensive 2 6 , , 1 9 income 5 0 0 2 Total comprehensive for the year 2 4 ( Issue of shares 2 , 8 6 8 1 net of transaction costs 8 ) Issue of shares for royalty acquisition Issue of shares from 4 Recognition of share , 5 based payments 3 8 Recognition acquisition of non-controlling interest Balance at 31 December 2012 ( 3 9 , 6 7 2 ) Balance at 1 January 2013 - - - - - ( 2 Net loss for the year 5 5 Other Comprehensive , 4 7 income 4 ) Total comprehensive for the year Issue of shares from 7 4 1 Recognition of share , , 9 1 2 based payments 2 8 3 7 8 0 Issue of shares from option exercise Balance at 31 December 2013 - 2 1 , 6 1,428 9 9 3 3 4 , 3 9 9 1,428 2 2 , 3 2 4 3 0 - 7 - - - - 291,826 - - - - - - 15,046 - - - 5,075 - 3 3 4 , 3 - 9 9 - 2 2 , 3 2 812 4 - 9 , 8 9 3 9 , 8 753 9 3 ( 5 , 3 5 6,208 5 ) - ( 5 , 3 5 5 ) 21,699 307 334,399 - - ( 3 22,324 9 , 6 7 2 ) - ( 8 , 7 6 9 ) ( 8 , 7 6 9 ) - - - - ( 2 - 4 6 , 7 0 - 5 ) - ( 2 4 6 , 7 0 5 ) 1 , 1 2 4 9 , 8 2,102 9 3 ( 8 , 7 6 9 ) 6 4 , 9 2,825 9 1 6 4 , 9 9 1 449 (261) 336,950 24,888 - - - - - - - (16,675) 2 9 1 , 8 1,428 2 6 $ ' 0 0 0 (15,247) 1 4 , 9 9 15,858 7 $ ' 0 0 0 5,075 $ ' 0 0 0 ( 6 , 7 8 6,961 3 ) (12,055) $ ’ 0 0 0 ( 64,991 5 , 6 1 1 ) $ ' 0 0 0 ( 2 (8,769) 3 0 , 0 3 9,893 0 ) 1,124 $ ' 0 0 0 6 4 , 3 4,927 9 9 188 $ ' 0 0 0 , ( 71,230 6 4 0 7 ) c a p i t a l r e s e r v e r e s e r v e r e s e r v e l o s s e s t h e p a r e n t i n t e r e s t $ ' 0 0 0 T o t a l 5 7 , 9 9 2 - - - - (16,675) - 1 , 4 2 8 - - - - - 1 , 4 - 2 8 - ( 1 6 , 6 7 5 ) (8,769) ( 1 5 , 2 4 7 ) 1 , 4 - 2 8 - (255,474) ( 6 4 7 ) 2 2 ( 1 5 , 8 9 4 ) 1 , 4 5 0 ( 1 6 , 6 7 5 ) ( 1 6 , 6 7 5 ) ( 6 6 9 ) ( 1 7 , 3 4 4 ) ( ( 3 3 (5,355) 9 4 , , 6 0 7 6 2 1 ) ) (39,672) (246,705) - - - - - - - (8,769) 9,893 - - - - - - - 9,893 ( 1 2 , 0 5 - 5 ) - 6 , 9 6 1 - - 5 , 0 7 5 1 5 , 8 5 8 , 4,538 7 0 5 4 - (39,672) - - - 7 1 , 2 3 0 4 , 1 , 9 , 6 4 , 6 4 , 6 , 5 , 1 5 , 9 Notes to the financial statements are included on pages 38 to 78 9 1 9 9 1 8 5 8 8 9 3 1 2 4 1 8 8 9 2 7 0 7 5 9 6 1 ( 5 , 0 0 1 ) ( 8 , 7 6 9 ) 334,399 22,324 (5,355) (39,672) (246,705) 64,991 i 7,054 C o n n t t e r - r o e s t l l i a c q u i s i t i o n n g - - - A - t t r i b u t a b - l e - - t o e q u i t y N o n - A c c u m u l a t e d l h o d e r s o f c o n t r o l l i n g (5,001) 64,991 N o n - 64,991 (8,769) 9,893 1,124 4,927 188 71,230 G r e e n l a n d M i n e r a l s a n d E n e r g y L i m i t e d A n d C o n t r o l l e d E n t i t i e s 3 1 D e c e m b e r 2 0 1 3 F n a n c i i a l R e p o r t Notes to the financial statements are included on pages 55 to 95. P a g e | 36 53 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Consolidated statement of cash flows for the year ended 31 December 2013 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 property, plant and equipment Proceeds from sale of investments Proceeds from sale of investments in associates Proceeds from government grants and rebates 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 2013 $' 000 31 Dec 2012 $' 000 24 (4,156) (4,132) 267 (9) (2,332) - - (10) 3 1 - 566 (1,514) 188 - 188 (5,458) 10,801 114 (5,890) (5,776) 283 (38) (6,008) (5,000) (245) - 133 50 (10,825) 17,058 (522) 16,536 (65) 10,866 8 5,343 10,801 Notes to the financial statements are included on pages 55 to 95. Notes to the financial statements are included on pages 38 to 78 54 P a g e | 37 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 26 March 2014. 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 The following Standards and Interpretations have been adopted in the current year: - - - - - - AASB 10 – Consolidated Financial Statements AASB 11 – Joint arrangements AASB 12 – Disclosure of interest in Other Entities AASB 127 – Separate Financial Statements (2011) AASB 128 – Investments in Associates and Joint Ventures (2011) AASB 13 – Fair value measurement and related AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 P a g e | 38 55 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts - - - - - AASB 119 – Employee benefits (2011), AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (2011) and AASB 2011-11 Amendments to AASB 119 (2011) AASB 2011-4 – Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangement Standards AASB 2011-9 – Amendments to Australian Accounting Standards - Presentation of other comprehensive income AASB 2012-2 – Amendments to Australian Accounting Standards - Disclosures - Offsetting financial assets and financial liabilities (Amendments to AASB 7) AASB 2012-5 – Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle The adoption of these standards did not result in changes in accounting policies or adjustments to the amounts recognised in the financial statements. The standards only affected disclosures in the notes to the financial statements. Impact of the application of AASB 10 AASB 10 changes the definition of control such that an investor has control over an investee when a) it has power of the investee b) it is exposed, or has rights, to variable returns from its involvement with the investee and c) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The application of AASB 10 has had no impact on the consolidated financial statements. Impact of the application of AASB 11 AASB 11 deals with how a joint arrangement of which two or more parties have joint control should be classified and accounted for. Under AASB 11, there are only two types of joint arrangements – joint operations and joint ventures. The classification of joint arrangements under AASB 11 is determined based on the rights and obligations of parties to the joint arrangements by considering the structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement, and when relevant, other facts and circumstances. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e joint venturers) have rights to the net assets of the arrangement. Previously, AASB 31 contemplated three types of joint arrangements – jointly controlled entities, jointly controlled operations and jointly controlled assets. The classification of joint arrangement under AASB 31 was primarily determined based on the legal form of the arrangement. The application of AASB 11 has had no impact on the consolidated financial statements. Impact of the application of AASB 12 AASB 12 is a new disclosure standard and is applicable to entities that have interest in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the application of AASB 12 has resulted in more extensive disclosures in the consolidated financial statements but this has not had a material impact on the current year consolidated financial statements. Impact of the application of AASB 13 The Consolidated Entity has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair value measurement and disclosures about fair value measurements. The scope of AASB 13 is broad, the fair value measurement requirements of AASB 13 apply to both financial instrument items and non-financial instrument items for which other AASB require or permit fair value measurements and disclosures about fair value measurements, except share-based payment transactions that are within the scope of AASB 2, leasing transactions within the scope of AASB 17 and measurements that have some similarities to fair value but are not fair value. 56 P a g e | 39 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation n technique. Also, AASB 13 includes extensive disclosure requirements. AASB 13 requires prospective application from 1 January 2013. The application of AASB 13 has not had any material impact on the amounts recognised in the consolidated financial statements. Impact of the application of AASB 119 In the current year, the Consolidated Entity has applied AASB 119 (as revised in 2011) ‘Employee Benefits’ and the related consequential amendments for the first time. AASB 119 (as revised in 2011) changes the accounting for defined benefit plans and termination benefits. The application of AASB 119 has had no impact on the consolidated financial statements. Impact of the application of AASB 2012-2 The Consolidated Entity has applied the amendments to AASB 7 “Disclosures – Offsetting Financial Assets and Financial Liabilities’ for the first time in the current year. The amendments to AASB 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement. As the Consolidated Entity does not have any offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in the consolidated financial statements. The Consolidated Entity 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 on issue but not yet effective: At the date of authorisation of the financial report, a number of Standards and interpretations were on issue but not yet effective: Standard/Interpretation Effective for annual reporting periods beginning on or after AASB 9 ‘Financial Instruments’(December 2009) and AASB a) 2009-11 ‘Amendments to Australian Accounting Standards arising from AASB 9’ b) – Mandatory Effective Date of AASB 8 and Transition Disclosure’ AASB 2013-9 ‘Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments’ AASB 2012-6 ‘Amendments to Australian Accounting Standards AASB 1031 ‘Materiality’ (2013) ASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements’ AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities’ AASB 2013-3 ‘Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets’ AASB 2013-4 ‘Amendments to Australian Accounting Standards - Novation of Derivatives and Continuation of Hedge Accounting’ AASB 2013-9 ‘Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments’ 1 January 2017 1 January 2014 1 July 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 P a g e | 40 57 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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. 58 P a g e | 41 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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: (cid:31) exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment. On consolidation, the assets and liabilities of the 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. P a g e | 42 59 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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. 60 P a g e | 43 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts 2. Significant accounting policies (cont’d) Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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:31) (cid:31) 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:31) 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. P a g e | 44 61 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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. 62 P a g e | 45 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 2. Significant accounting policies (cont’d) 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. (n) 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. P a g e | 46 63 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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: 64 P a g e | 47 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 2013, the carrying value of capitalised exploration expenditure is $64,859,287 (2012: $53,642,412) 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 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 2013 $' 000 31 Dec 2012 $' 000 256 41 297 274 77 351 31 Dec 2013 $' 000 31 Dec 2012 $' 000 (237) (1,218) (72) (4,396) (5,923) (245) (2,594) (158) (6,208) (9,205) P a g e | 48 65 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 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 Impairment of capitalised exploration and evaluation expenditure 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 2013 Financial Report 31 Dec 2013 $' 000 31 Dec 2012 $' 000 (203) (91) (166) (63) (523) (382) (23) (405) (65) (37) (102) - - (15) - 1 (871) (188) (129) (5) (171) (69) (27) (73) (566) (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) (i) (1,565) 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 16. 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 was 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. (2,113) 66 P a g e | 49 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 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 2013 Financial Report 31 Dec 2013 $' 000 31 Dec 2012 $' 000 - - - - - - - - (8,769) (2,631) (17,344) (5,203) 1,698 43 9 1,981 3,731 (818) (157) (120) (5) (1,100) 3,475 177 11 4,283 7,946 (2,309) (112) (319) (3) (2,743) 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 26,056 706 26,762 (11,665) 15,097 24,075 1,064 25,139 (10,849) 14,290 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. P a g e | 50 67 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 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 2013 Financial Report 31 Dec 2013 $' 000 31 Dec 2012 $' 000 11,656 9 11,665 (11,665) - 10,838 11 10,849 (10,849) - Dec 2013 $' 000 Dec 2012 $' 000 253 4,665 425 5,343 123 10,259 419 10,801 The Consolidated Group’s financial risk management objectives and policies are discussed further at note 25. 9: Trade and other receivables (a) Current Accrued interest GST refundable Payroll tax refund Dec 2013 $' 000 Dec 2012 $' 000 18 31 - 49 29 280 17 326 (i) Trade debtors and sundry debtors are non-interest bearing, unsecured and generally on 30 day terms. As at 31 December 2013 and 31 December 2012 no amounts were past due but not impaired. Additionally there was no allowance for doubtful debts at either 31 December 2013 or 31 December 2012. 68 P a g e | 51 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 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 2013 Financial Report Dec 2013 $' 000 Dec 2012 $' 000 96 179 - 275 103 193 15 311 (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 2013 $' 000 Dec 2012 $' 000 1,616 (906) 99 (33) 844 (115) 1,567 (734) 99 (26) 694 (60) 1,505 1,540 (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. P a g e | 52 69 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts 11: Property, plant and equipment (cont’d) Plant and Equipment Carrying value at beginning of year Acquisitions Disposals Effects of currency translation Depreciation expense Carrying value at end of year Leasehold improvements Carrying value at beginning of year Depreciation expense Carrying value at end of year Buildings Acquisitions Effects of currency translation Depreciation Carrying value at end of year Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Dec 2013 $' 000 Dec 2012 $' 000 833 9 (3) 15 (144) 710 73 (7) 66 634 132 (37) 729 985 38 - - (190) 833 80 (7) 73 669 - (35) 634 Total property, plant and equipment carrying value at end of period 1,505 1,540 12: Capitalised exploration and evaluation expenditure Balance at beginning of year Exploration and/or evaluation phase in current period: Capitalised expenses Effects of currency translation (i) Less: Impairment of capitalised expenditure (iii) Effects of currency translation (i) Balance at end of year Dec 2013 $' 000 Dec 2012 $' 000 53,642 46,808 2,728 9,360 65,730 (871) - 64,859 5,368 - 52,176 1,466 53,642 (i) The Kvanefjeld Project EL 2010/02 is held by Greenland Minerals and Energy (Trading) A/S, the 100% held Greenlandic subsidiary. 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. 70 P a g e | 53 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 12: Capitalised exploration and evaluation expenditure (cont’d) (ii) (iii) (iv) (v) During the year the Company directly held 100% interest in Greenland exploration licenses EL 2011/26 and EL 2011/27. EL 2011/23 was relinquished during the year and the capitalised costs impaired. This exploration license was on the east coast of Greenland and unrelated to the Kvanefjeld project. 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. 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. Table of exploration licenses Exploration Licence EL 2010/02 Location Southern Greenland EL 2011/26 Southern Greenland EL 2011/27 Southern Greenland EL 2013/05 (i) Western Greenland Ownership 100% held by Greenland Minerals and Energy (Trading) A/S 100% held by Greenland Minerals and Energy Limited 100% held by Greenland Minerals and Energy Limited 100% held by Greenland Minerals and Energy Limited (i) Unrelated exploration license to the Kvanefjeld project that at the year ended 31 December 2013, the Consolidated Group had incurred no expenditure on. P a g e | 54 71 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts 13: Trade and other payables Accrued expenses (i) Trade creditors (ii) Sundry creditors (ii) Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Dec 2013 $' 000 Dec 2012 $' 000 163 282 98 543 329 703 208 1,240 (i) (ii) (iii) 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. 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: Other liabilities EURARE grant advanced payment (i) Dec 2013 $' 000 125 125 Dec 2012 $' 000 - - (i) Greenland Minerals and Energy (Trading) A/S is a participant in the EURARE Project, a European Union initiated project to assess the development and exploitation of Europe’s rare earth deposits. As a participant in the EURARE Project Greenland Minerals and Energy (Trading) A/S has received an advanced grant payment, which is to be applied against approved EURARE Project expenses. The EURARE grant advance payment is the balance of the grant received as at 31 December 2013 that had not been applied to approved project expenses, but is expected to be applied against expenses incurred in the future period. 15: Provisions - Current Provision for annual leave Provisions – Non-Current Provision for long service leave 72 Dec 2013 $' 000 Dec 2013 $' 000 Dec 2012 $' 000 144 144 331 331 Dec 2012 $' 000 30 30 89 89 P a g e | 55 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 16: Issued capital Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the 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. Dec 2013 Dec 2012 No ' 000 567,937 $' 000 334,399 No ' 000 416,390 $' 000 291,826 - - - - - - 50,000 15,000 6,859 2,057 17,500 5,075 5,885 2,102 2,363 753 - - 74,825 21,700 750 - 574,572 449 336,950 - - 567,937 - (2,012) 334,399 Balance brought forward Issue of ordinary shares through capital raisings Issue of ordinary shares through share purchase plan 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: $0.25 exercise price options Less costs associated with shares issued Balance at end of financial year 17: 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 employee rights to senior management (i) Issue of employee 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 Recognition of shares issued in lieu of salary Transfer to share capital – shares issued in lieu of salary Options exercised – transferred to share capital: $0.25 exercise price options Balance at end of financial year (i) Refer to note 24 for further information. Dec 2013 $' 000 Dec 2012 $' 000 22,324 213 92 683 175 510 140 269 - - 1,912 (1,169) (261) 24,888 14,997 854 367 2,381 701 1,905 - - 307 812 - - - 22,324 P a g e | 56 73 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 17: Reserves (cont’d) 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 24 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 2013 $' 000 Dec 2012 $' 000 (5,355) (6,783) 9,893 4,538 1,428 (5,355) 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. c) Non-controlling interest acquisition reserve Balance brought forward Settlement consideration – cash (i) Settlement consideration – shares (i) Settlement consideration – options (i) Transfer non-controlling interest carrying value Balance at end of year Dec 2013 $' 000 (39,672) - - - - (39,672) Dec 2012 $' 000 (5,611) (5,000) (21,700) (307) (7,054) (39,672) 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. 74 P a g e | 57 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts 17: Reserves (cont’d) d) Total reserves Option reserve Foreign currency translation reserve Non-controlling interest acquisition reserve Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Dec 2013 $' 000 24,888 4,538 (39,672) (10,246) Dec 2012 $' 000 22,324 (5,355) (39,672) (22,703) 18: Dividends No dividends have been proposed or paid during the period or comparative period. 19: Accumulated losses Balance at beginning of financial year Loss attributable to members of parent entity Related income tax Balance at end of financial year 20: Loss per share Basic loss per share From continuing operations Diluted loss per share From continuing operations Dec 2013 $' 000 (246,705) (8,769) - (255,474) Dec 2012 $' 000 (230,030) (16,675) - (246,705) Dec 2013 Cents Per share Dec 2012 Cents Per share 1.53 1.53 3.72 3.72 Basic and diluted loss per share The loss and weighted average number of ordinary shares used in the calculation of the basic and diluted loss per share are as follows; Loss for year ($) Weighted average number of shares used in the calculation of basic and diluted loss per share (Number) Dec 2013 8,768,670 Dec 2012 16,675,104 572,142,187 488,501,056 (i) There were 52,454,211 potential ordinary shares on issue at 31 December 2013 (31 December 2012: 55,378,711) 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. P a g e | 58 75 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 21: Commitments for expenditure Exploration commitments: EL 2010/02 is located in Greenland. The tenement expenditure incurred during the year ended 31 December 2013 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. The Consolidated Group has recognised sufficient estimated expenditure to keep exploration licenses EL 2011/23, El 2011/26 and El2011/27 in good standing. 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 Dec 2013 $’000 Dec 2012 $’000 - 1,000 - 1,000 198 17 - 215 140 - - 140 250 1,000 - 1,250 210 17 - 227 - 160 - 160 (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 2015, and is non-cancelable, with a 2 year renewal option. No liabilities have been recognised in relation to operating leases at 31 December 2013 or 31 December 2012. 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 2012 2013 % % 100 100 100 100 76 P a g e | 59 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 Impairment of capitalised exploration and evaluation expenditure 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 2013 $' 000 Year ended 31 Dec 2012 $' 000 (8,769) (17,344) 15 - 188 4,806 - 871 (256) 287 75 27 231 6,207 5,075 - (274) 51 (1,028) (246) (4,132) 236 (60) (5,776) 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 2013: Date Issue Price Number 1,128,571 1,261,949 897,334 744,833 897,344 955,471 25/02/2013 (i) 25/02/2013 (ii) 25/02/2013 (iii) 15/05/2013 (iv) 01/10/2013 (iii) 01/11/2013 (iv) Shares issued to debtors. Shares issued to employee in lieu of salary and other employment entitlements. Shares issued to employees as termination payment. Shares issued in lieu of salary. No share based payments other than as discussed elsewhere within this note were entered into during the prior year. $0.39 $0.39 $0.39 $0.29 $0.37 $0.28 Value $440,143 $492,160 $349,960 $216,001 $335,575 $267,642 (i) (ii) (iii) (iv) (v) P a g e | 60 77 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) Shares in lieu of salaries In February 2013 as part of a strategy to preserve cash reserves, directors, senior management and a number of other staff agreed to a reduction in salary and other employment entitlements that would have been payable by the Company in cash. As compensation for agreeing to these reductions, the Company agreed to issue shares to the individuals concerned. The number of shares to be issued was established by calculating the dollar value of foregone employment entitlements and issuing the equivalent value in shares based on a share price of $0.30. The shares are to be issued in four tranches over a two year period except for Michael Hutchinson who will be issued shares over three tranches. The shares that have been and are to be issued to directors were approved by shareholders at the Company’s Annual General Meeting on 15 May 2013. In accordance with AASB2, the value of the shares in lieu of salaries has been recognised as the fair value of the shares issued in the first two tranches during the year ended 31 December 2013 and a proportion of the fair value of the remaining two trances to be issued in the year ended 31 December 2014. All four tranches require continuous service through to the respective vesting date. As a result of this vesting profile, 79% of the total fair value of the four tranches has been recognised at 31 December 2013, with the balance to be recognised during the year ended 31 December 2015. Shares issued to staff in lieu of salary and other employment entitlements during the year ended 31 December 2013 Tranche Number Grant date fair value $ Pro-rata vesting period value recognised during the year ended 31 Dec 2013 1 2 3 4 897,334 906,344 915,445 923,733 3,642,856 345,474 340,060 343,567 346,733 1,375,834 345,473 340,060 266,839 185,200 1,137,572 Shares issued to directors in lieu of salary during the year ended 31 December 2013 Tranche Number Grant date fair value $ Pro-rata vesting period value recognised during the year ended 31 Dec 2013 1 2 3 4 744,833 955,471 955,470 955,467 3,611,241 216,001 267,642 267,758 267,874 1,019,275 216,001 267,642 175,955 115,376 774,974 Employee Rights In September 2013 the Remuneration Committee and the Board approved the Employee Rights Plan (“ERP”) and approved the issue of Employee Rights under the plan. All employees of the Consolidated Group were invited to participate in the ERP. The number of rights being offered to employees was determined by the seniority of the employee, with three levels of seniority being established and a factor based on the seniority being applied to the employee’s base salary. 78 P a g e | 61 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) The Employee Rights will convert to Ordinary fully paid shares subject to a twelve month continuous service period vesting condition and in three tranches subject to share price vesting conditions. The Employee Rights were offered to assist in retaining and to further incentivise employees. In accepting the offer of the Employee Rights, employees agreed that the Employee Performance Rights issued in 2011 would be cancelled. At the time the Employee Performance Rights were cancelled, the fair value of the cancelled rights had been fully expensed. The Employee Rights were not offer to directors and no directors participated in the Employee Rights Issue. The Employee Rights will vest in three tranches based on the Company’s Volume Weighted Average Share Price (“VWAP”) exceeding price hurdles for 5 consecutive trading days. Tranche 1 - Will vest upon both the volume weighted average price of Shares being $0.50 or more for 5 consecutive Trading Days and the employee remaining an employee of the Company until 30 September 2014. Tranche 2 - Will vest upon both the volume weighted average price of Shares being $0.75 or more for 5 consecutive Trading Days and the employee remaining an employee of the Company until 30 September 2014. Tranche 3 - Will vest upon both the volume weighted average price of Shares being $1.00 or more for 5 consecutive Trading Days and the employee remaining an employee of the Company until 30 September 2014. 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 04/10/2013 $0.27 3 Years 100% 2.84% $0.50 $0.75 $1.00 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. P a g e | 62 79 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) 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 Company did not issue any performance rights during the year ended 31 December 2013. 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 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 convert 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 change of control of the Company of greater than 50% of the shares in the Company. 80 P a g e | 63 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) 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 change of control of the Company of 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 change of control of the Company of 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 years ended 31 December 2013 or 31 December 2012. During the current year 4,860,000 performance rights were cancelled, the rights were cancelled on employees accepting an offer to participate in the issue of employee rights. 590,000 performance rights were cancelled in the prior year as a result of 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: 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 2013 Tranche 1 2 3 Opening balance 1 Jan 2013 4,855,000 5,170,000 5,835,000 15,860,000 Number cancelled or lapsed during year ended 31 Dec 2013 1,455,000 1,520,000 1,885,000 4,860,000 Pro-rata vesting period value recognised during the year ended 31 Dec 2013 487,770 436,589 443,345 1,367,704 Balance at 31 Dec 2013 3,900,000 3,900,000 4,200,000 12,000,000 P a g e | 64 81 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) Performance rights granted under the EPRP for the year ended 31 December 2012 Tranche 1 2 3 Opening balance 1 Jan 2012 5,000,000 5,325,000 6,125,000 16,450,000 Number cancelled or lapsed during year ended 31 Dec 2012 145,000 155,000 290,000 590,000 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 Balance at 31 Dec 2012 4,855,000 5,170,000 5,835,000 15,860,000 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 change of control of the Company of 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 change of control of the Company of greater than 50% of the shares in the Company. 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 change of control of the Company of 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 years ended 31 December 2013 or 31 December 2012. 82 P a g e | 65 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) Performance options granted for the year ended 31 December 2013 Tranche 1 2 3 Opening balance 1 Jan 2013 2,300,000 2,350,000 2,350,000 7,000,000 Number cancelled or lapsed during year ended 31 Dec 2013 2,300,000 2,350,000 2,350,000 7,000,000 Balance at 31 Dec 2013 Pro-rata vesting period value recognised during the year ended 31 Dec 2013 117,852 104,111 83,237 305,200 - - - - Performance options granted for the year ended 31 December 2012 Number cancelled or lapsed during year ended 31 Dec 2012 Pro-rata vesting period value recognised during the year ended 31 Dec 2012 471,408 416,444 332,948 305,200 Balance at 31 Dec 2012 2,300,000 2,350,000 2,350,000 - - - - - Tranche 1 2 3 Opening balance 1 Jan 2012 2,300,000 2,350,000 2,350,000 7,000,000 Employee options The Company did not issue any employee options during the year ended 31 December 2012. The weighted average fair value of performance rights granted during the financial year is $0.46 (2011: $0.61). The following options issued to directors and senior management, were exercised during the financial year ended 31 December 2013: Date Number exercised (i) Exercise price Share price @ exercise date Amount Paid $ Amount unpaid $ S Bunn (i) 02/02/2011 - The number of options exercised relates only to options exercised that were granted as compensation and recognised in remuneration in prior years. 187,500 750,000 $0.25 $0.30 There were no options exercised by directors or senior management during the previous financial year ended 31 December 2012. P a g e | 66 83 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) Lapsed options During the current financial year ended 31 December 2013, the following options issued to directors and senior management lapsed as a result of market-based vesting conditions not being satisfied. Director/senior management R McIllree (i) J Mair (i) S Bunn (i) Number 2,800,000 2,100,000 2,100,000 Value @ grant date 974,819 733,390 733,390 Lapse date 31/08/2013 31/08/2013 31/08/2013 Value @ lapse date - - - (ii) Options lapsed as a result of not meeting vesting conditions prior to the option expiry date. During the previous financial year ended 31 December 2012, no options issued to directors or senior management lapsed. Rights cancelled During the current financial year ended 31 December 2013, the following un-vested Employee Performance Rights were cancelled upon acceptance of participation in the Employee Rights Plan offered during the year. The fair value of the cancelled rights had been fully expensed prior to the cancellation. Senior management S Bunn (i) M Guy (i) Number 2,100,000 350,000 Value @ grant date 1,283,660 118,938 Cancellation date 04/10/2013 04/10/2013 Value @ Cancellation date - - During the previous financial year ended 31 December 2012, no employee rights issued to directors or senior management were cancelled. The following are the terms of the Employee Rights: 1. 2. 3. The Employee Rights are non-transferable. The rights under Employee Rights are personal and an Employee 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 Employee Rights vest upon the satisfaction of any Employee hurdles specified at the time of issue. 4. The Employee Rights lapse upon the Eligible Employee ceasing to be employed or on the failure to satisfy any Employee hurdles within a required time of the issue of the Employee Rights. 5. Upon vesting, one (1) Share will be issued for every one (1) Employee Right. The Shares will rank equally in all respects with the existing Shares. 6. If the Company makes a bonus issue of Shares, then the holder of the Employee Right upon vesting will be entitled to have issued to it the increased number of Shares that it would have received if the Employee Right had vested and the holder acquired Shares in respect of the Employee Right before the record date for the bonus issue. 84 P a g e | 67 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) 7. 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 Employee Rights will be reconstructed in a manner consistent with the ASX Listing Rules. 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. 6. 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. 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. 8. 7. P a g e | 68 85 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 24: Share based payments (cont’d) 9. 10. 10. 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. 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 2013 Dec 2012 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 Number of options 7,750,000 - - (750,000) (7,000,000) Weighted average exercise price Number of options Weighted average exercise price 1.60 - - 0.25 1.75 7,750,000 - - - - - - 7,750,000 1.60 - - - - 1.60 The average share price during the current period was $0.69 (2012: $0.40). 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 2012. The capital structure of the Consolidated Group consists of fully paid shares and options as disclosed in notes 17 and 17 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 86 Dec 2013 $' 000 Dec 2012 $' 000 5,343 49 - 668 10,801 326 15 1,240 P a g e | 69 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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. P a g e | 70 87 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 2.72 - 4.28 - 4,922 49 4,971 10,381 326 10,707 421 - 421 420 - 420 1 - 5 Years $' 000 > 5 Years $' 000 Total $' 000 - - - - 5,343 49 5,392 - 10,801 326 11,438 Dec 2013 Cash and equivalents Trade and receivables - current Dec 2012 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 - - - 543 - 543 1,240 1,240 - 125 125 - - - - - - - - - - - - 543 125 668 1,240 1,240 Dec 2013 Trade and other payables Other liabilities Dec 2012 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. 88 P a g e | 71 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 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 2013, 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 2013 $' 000 Dec 2012 $' 000 81 (81) 80 (83) 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 2013 $ 1,331,429 75,816 Year ended 31 Dec 2012 $ 2,052,348 167,400 (29,752) 2,905,048 4,282,541 89,254 - 4,298,729 6,607,731 Refer to the remuneration report included in pages 31 to 45 of the Directors report for more detailed Refer to the remuneration report included in pages 22 to 36 of the Directors report for more detailed remuneration disclosures. remuneration disclosures. P a g e | 72 89 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts Notes to the accounts 27: Key management personnel equity holdings 27: Key management personnel equity holdings Fully paid ordinary shares of Greenland Minerals and Energy Limited Fully paid ordinary shares of Greenland Minerals and Energy Limited Dec 2013 M Hutchinson Dec 2013 R McIllree M Hutchinson S Cato R McIllree J Mair S Cato A Ho J Mair J Whybrow A Ho S Bunn J Whybrow M Guy S Bunn M Guy Dec 2012 M Hutchinson Dec 2012 R McIllree M Hutchinson S Cato R McIllree J Mair S Cato A Ho J Mair J Whybrow A Ho S Bunn J Whybrow M Guy S Bunn M Guy M G u y i J W h y b r o w M H u t c h n s o n Balance at beginning of year Balance S A J S D R at beginning of year e M B H C M c No. a u o a c 2 i n t I r o No. l 0 n l r 1 e - 2 e 12,111,456 - 4,762,200 12,111,456 5,110,000 4,762,200 350,000 5,110,000 6,010,200 350,000 - 6,010,200 325,000 - 325,000 6 , 0 1 0 2 0 0 , 2 5 0 , 0 0 0 3 0 0 , 6 0 0 , 0 0 0 0 0 0 , , - 11,411,456 - 1 4,712,200 11,411,456 5 4 1 , , , 1 7 4 5,110,000 4,712,200 1 1 1 1 0 2 250,000 5,110,000 4 0 2 0 0 5 6,010,200 250,000 6 0 0 600,000 6,010,200 300,000 600,000 300,000 , Short-term employee benefits Post-employment benefits Other long-term benefits – provision for long service leave Termination benefits Share-based payment Change in profit Increase in interest rate by 1% (100 basis points) Decrease in interest rate by 1% (100 basis points) 25: Financial instruments (cont’d) Notes to the accounts M G u y S B u n n 3 2 5 , 0 0 0 J W h y b r o w i J M a i r Granted as compensation Granted as A S R M D compensation e H C M H c No. o a u c 2 t I t o No. l c 0 l r h 1 e 210,638 3 n e s 1,035,500 210,638 o n - 1,035,500 454,166 - - 454,166 - - 961,516 - 342,984 961,516 342,984 6 , 0 1 0 2 0 0 , 3 5 0 , 0 0 0 5 , 1 1 0 0 0 0 , 4 , 7 6 2 2 0 0 , 1 2 , 1 1 1 4 5 6 , i a t b e g n n n g o f i y e a r B a l a n c e . - - - N - - o - - - - - - - - - - - i i l l y p a d s h a r e s o r d n a r y N o t e s t o t h e Received on exercise of options Received on F 2 7 u exercise of options : No. (i) K e No. (i) y - m a - - n a - - a g c e c - - m o u - - e n n t - t - s p 750,000 e - r s - 750,000 o n - n e l e q u i t y h o d n g s G r e e n a n d M n e r a s o f l i l i l - - - - - - - - - - - - - - - - - 700,000 - 50,000 700,000 - 50,000 100,000 - - 100,000 (600,000) - 25,000 (600,000) 25,000 i f - - - l i t i o s t o r o p e d o n s . e x e r c s e a n d E n e r g y L m The number of shares received on exercise of options relates to options exercised that were granted as compensation and recognised in e 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 d 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. 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. Net other change relates to shares purchased or sold either on market through the ASX, or through third party off market transactions. 1 0 3 5 5 0 0 c o m p e n s a t i o n a c q u i r e d G r a n t e d a s s o d r e a 9 6 1 5 1 6 9 8 4 3 4 2 2 1 0 6 3 8 4 5 4 1 6 6 o n s o n s o p b y e s N o e t i i t i t - - - - - - - - - - - , , t , , , , l i l . 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. 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. Interest Rate Sensitivity Analysis At 31 December 2013, 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: 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). There has been no change in managing credit risk or the method of measuring risk from the prior year. Refer to the remuneration report included in pages 22 to 36 of the Directors report for more detailed remuneration disclosures. 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. The aggregate compensation made to key management personnel of the Consolidated Group is set out below: Greenland Minerals and Energy Limited And Controlled Entities Year ended 31 Dec 2013 $ Year ended 31 Dec 2012 $ 26: Key management personnel compensation 89,254 - 4,298,729 6,607,731 31 December 2013 Financial Report Dec 2013 $' 000 Dec 2012 $' 000 2,905,048 4,282,541 1,331,429 75,816 2,052,348 167,400 (29,752) P a g e (81) (83) | 72 81 80 Greenland Minerals and Energy Limited Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report And Controlled Entities 31 December 2013 Financial Report Net other change (ii) Net other change (ii) No. No. Balance at end of year Balance at end of year No. No. Balance held nominally Balance held nominally No. No. - 200,000 - - 200,000 - - 200,000 - - 200,000 - - (200,000) - (200,000) 210,638 13,346,956 210,638 13,346,956 4,762,200 5,564,166 4,762,200 5,564,166 550,000 6,010,200 550,000 1,711,516 6,010,200 1,711,516 467,894 467,894 - 12,111,456 - 12,111,456 4,762,200 5,110,000 4,762,200 5,110,000 350,000 6,010,200 350,000 6,010,200 - 325,000 - 325,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - P a g e | 73 P a g e | 73 - - - - - - - - - 7 5 0 , 0 0 0 - - - - - - ( 6 0 0 , 0 0 0 ) 2 5 , 0 0 0 1 0 0 , 0 0 0 - 7 0 0 , 0 0 0 5 0 , 0 0 0 - - ( 2 0 0 , 0 0 0 ) 2 0 0 , 0 0 0 2 0 0 , 0 0 0 - - - - - N o . ( i ) e x e r c i s e o f o p t i o n s N o . ( i i ) R e c e i v e d o n N e t o t h e r c h a n g e 6 , 0 1 0 , 2 0 0 3 5 0 , 0 0 0 5 , 1 1 0 , 0 0 0 4 , 7 6 2 , 2 0 0 1 2 , 1 1 1 , 4 5 6 3 2 5 , 0 0 0 - - 1 , 7 1 1 , 5 1 6 6 , 0 1 0 , 2 0 0 5 5 0 , 0 0 0 5 , 5 6 4 , 1 6 6 4 , 7 6 2 , 2 0 0 4 6 7 , 8 9 4 1 3 , 3 4 6 , 9 5 6 2 1 0 , 6 3 8 N o . N o . o r i n - - - - - - - - - - - - - - a t e n d o f y e a r B a l a n c e l l B a a n c e h e d n o m n a l l y i G r e e n l a n d M n e r a l s i a n d E n e r g y L m i i t e d A n d C o n t r o l l e d E n t i t i e s 3 1 D e c e m b e r i 2 0 1 3 F n a n c i a l R e p o r t ( i i ) N e t o t h e r c h a n g e l r e a t e s t o s h a r e s p u r c h a s e d h e r o n m a r k e t t h r o u g h t h e A S X , o r t h r o u g h t h i r d p a r t y o f f m a r k e t t r a n s a c t i o n s . ( i ) T h e n u m b e r o f s h a r e s r e c e v e d i o n t h r o u g h t h i r d p a r t y o f f m a r k e t t r a n s a c t i r e m u n e r a t i o n i n p r i o r y e a r s a s w e l l a s w a y o f l p a c e m e n t o r o p t i o n s p u r c h a s e d e i t h e r o n m a r k e t t h r o u g h t h e A S X , t o o p t i o n s e x e r c s e d i t h a t w e r e g r a n t e d a s c o m p e n s a t i o n a n d r e c o g n s e d i (i) (i) (ii) (ii) P a g e | 7 3 90 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report And Controlled Entities 31 December 2013 Financial Report Balance at end of year Balance at No. end of year No. Balance vested at end of year Balance vested at end of year No. Vested and exercisable Vested and exercisable No. No. No. Options vested Options during year vested during year No. No. - - - - - - - - - - - - - - 50,000 50,000 - - 2,800,000 2,800,000 - - 2,100,000 2,100,000 - - - - 2,850,000 2,850,000 50,000 50,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2 7 : S Net other h a change (ii) r Net other e No. change (ii) o p No. t i o n s N o t e s t o t h - e a - - c c - - o u - - n t - - s - - - - - - - K e y m a n a g e m e n t p e r s o n n e l e q u i t y h o d n g s i l - - - - - - - - - ( - - c o - - n t ’ - 50,000 d ) 50,000 o f l G r e e n a n d M n e r a s i l a n d E n e r g y L m i i t e d B a l a n c e Notes to the accounts Notes to the accounts 27: Key management personnel equity holdings (cont’d) 27: Key management personnel equity holdings (cont’d) Share options of Greenland Minerals and Energy Limited Share options of Greenland Minerals and Energy Limited Dec 2013 M Hutchinson Dec 2013 M Hutchinson R McIllree R McIllree S Cato S Cato J Mair J Mair A Ho A Ho J Whybrow J Whybrow S Bunn S Bunn M Guy M Guy Dec 2012 M Hutchinson Dec 2012 M Hutchinson R McIllree R McIllree S Cato S Cato J Mair J Mair A Ho A Ho J Whybrow J Whybrow S Bunn S Bunn M Guy M Guy Balance M S J at beginning W Balance B G u h of year u at beginning n y y n b No. of year r o w No. - - 2,800,000 2,800,000 - - 2,100,000 2,100,000 - - - - 2,850,000 2,850,000 50,000 2 50,000 , 8 5 0 , 0 0 0 - - 2,800,000 2,800,000 2,100,000 2,100,000 - - - - 2,850,000 2,850,000 - - ( i i ) N e t o t h e r c h a n g e l r e a t e s t o o p t i o n s p u r c h a s e d o r s o d l t r a n s a c t i o n s w e l l a s l i s t e d o p t i o n s a c q u i r e d b y w a y o f l p a c e m e n t F u r t h e r d e t a i l s o f t h e s h a r e o p t i o n l p a n a n d o f o p t i o n s g r a n e d t d u r i n g t A l l s h a r e o p t i o n s i s s u e d t o k e y m a n a g e m e n t p e r s o n n e l w e r e m a d e a c c o r d a n c e w S C a t o A J R D Granted as e M H M c a o c compensation Granted as 2 i I r l 0 l No. r compensation 1 e 2 e No. M H u t c h n s o n i S C a t o A H o M S J J W M B G a u h Exercised u i n y r y n b No. (i) Exercised r o w No. (i) R M c I l l r e e M D e H c u Expired 2 t c 0 No Expired h 1 3 n No s o n i 2 , 1 0 0 , 0 0 0 2 , 8 0 0 , 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (750,000) (750,000) - 2 2 - , , 8 1 5 0 0 0 , , - 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - 5 0 , 0 0 0 - (2,800,000) (2,800,000) - - (2,100,000) (2,100,000) - - - - (2,100,000) (2,100,000) - - 2 , 8 0 0 , 0 0 0 a t b e g n n n g y e a r N o o f - i i . - - - - N o . N o . ( i ) - - - G - - r a n - - t e d - - a s - - - - - c o m p e n s a t i o n E x e r c i s e d E x p i r e d ( 2 , 1 0 0 , 0 0 0 ) ( 2 , 8 0 0 , 0 0 0 ) ( 7 5 0 , 0 0 0 ) ( 2 , 1 0 0 , 0 0 0 ) ( i ) T h e n u m b e r o f o p t i o n s e x e r c s e d i l r e a e s t t o o p t i o n s e x e r c s e d i w e r e t e d a s c o m p e n s a t i o n a n d r e c o g n s e d i i n r e m u n e r a t i o n i n p r i o r y e a r s a s p u r c h a s e d e i t h e r o n m a r k e t t h r o u g h t h e A S X , o r t h r o u g h t h i r d p a r t y o f f m a r k e t h e r o n m a r k e h r o u g h t h e A S X , o r t h r o u g h t h i r d p a r t y o f f m a r k e t t r a n s a c t i o n s . p r i o r h e i p r o v s o n s i o f t h e l e m p o y e e s h a r e o p t i o n l p a n . p e r i o d a r e c o n t i a n e d i n n o t e 2 4 . P a g e | 7 4 2 , 8 5 0 , 0 0 0 5 0 , 0 0 0 - - 2 , 1 0 0 , 0 0 0 - 2 , 8 0 0 , 0 0 0 - 5 0 , 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - N o . e n d o f y e a r B a l a n c e a t a t e n d o f y e a r B a l a n c e v e s t e d e x e r c i s a b e l V e s t e d a n d N o . N o . N o . d u r i n g y e a r v e s t e d O p t i o n s G r e e n l a n d M n e r a l s i a n d E n e r g y L m i i t e d A n d C o n t r o l l e d E n t i t i e s 3 1 D e c e m b e r i 2 0 1 3 F n a n c i a l R e p o r t 91 (i) (i) (ii) (ii) i t i t n e o r The number of options exercised relates to options exercised that were granted as compensation and recognised in remuneration in prior years as 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 h well as listed options acquired by way of placement or options purchased either on market through the ASX, or through third party off market e transactions c transactions u Net other change relates to options purchased or sold either on market through the ASX, or through third party off market transactions. r r N Net other change relates to options purchased or sold either on market through the ASX, or through third party off market transactions. e o n o n s h a o p t i t t - - - - - - - - - - - - - - - All share options issued to key management personnel were made in accordance with the provisions of the employee share option plan. 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. Further details of the share option plan and of options granted during the current and prior period are contained in note 24. g r a n a n d h i t t t t - - - - - - - - - - - 5 0 , 0 0 0 - - - - - - - - - - - - - - - ( i i ) c h a n g e N o . N e t o t h e r P a g e | 74 P a g e | 74 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts Notes to the accounts Notes to the accounts 27: Key management personnel equity holdings (cont’d) 27: Key management personnel equity holdings (cont’d) 27: Key management personnel equity holdings (cont’d) Performance rights of Greenland Minerals and Energy Limited Performance rights of Greenland Minerals and Energy Limited Performance rights of Greenland Minerals and Energy Limited A H o A l l Dec 2013 M Hutchinson Dec 2013 R McIllree M Hutchinson Dec 2013 S Cato R McIllree M Hutchinson J Mair S Cato R McIllree A Ho J Mair S Cato J Whybrow A Ho J Mair S Bunn J Whybrow A Ho M Guy S Bunn J Whybrow M Guy S Bunn Dec 2012 M Guy M Hutchinson Dec 2012 R McIllree M Hutchinson Dec 2012 S Cato R McIllree M Hutchinson J Mair S Cato R McIllree A Ho J Mair S Cato J Whybrow A Ho J Mair S Bunn J Whybrow A Ho M Guy S Bunn J Whybrow M Guy S Bunn M Guy J M a i r Balance at beginning Balance M S A J of year W at beginning B H G Balance u o h No. u of year n at beginning y y n b No. r of year o w 1,400,000 No. 2,700,000 1,400,000 600,000 2,700,000 1,400,000 2,100,000 600,000 2,700,000 1,600,000 2,100,000 600,000 1,000,000 1,600,000 2,100,000 2,100,000 1,000,000 1,600,000 350,000 2,100,000 1,000,000 350,000 2,100,000 2 1 2 350,000 , , , 3 1 0 1 5 0 0 0 1,400,000 0 0 0 0 , , , , 0 0 0 0 2,700,000 1,400,000 0 0 0 0 0 0 0 0 600,000 2,700,000 1,400,000 2,100,000 600,000 2,700,000 600,000 2,100,000 600,000 1,000,000 600,000 2,100,000 2,100,000 1,000,000 600,000 350,000 2,100,000 1,000,000 350,000 2,100,000 350,000 1 , 0 0 0 , 0 0 0 6 0 0 , 0 0 0 - - - - i Granted as S R M D M compensation e Granted as C M H G c a No. c u u compensation 2 t Granted as I t y o l c 0 l r No. h 1 e compensation 2 e n - s No. o - n - - - - - - - - - - - - - - - - - - - - - - 3 5 - 0 , 0 - - 0 0 - - - - - - 1,000,000 - - - 1,000,000 - - - 1,000,000 - - - - - - 1 , 4 0 0 , 0 0 0 2 , 7 0 0 , 0 0 0 6 0 0 , 0 0 0 - - - - S B u n n 2 , 1 0 0 , 0 0 0 - S C a t o J J R Converted W M M a h No. c Converted i y I r l b l r No. r e Converted o e w - No. - - - - - - - - - - - - - - - - - - - - - - 2 - , 7 0 - 0 , 0 - - 0 0 - - - - - - - - - - - - - - - - - - - - - 1 , 6 0 0 , 0 0 0 2 , 1 0 0 , 0 0 0 1 , 0 0 0 , 0 0 0 6 0 0 , 0 0 0 - - - - - M H u t c h n s o n i 1 , 4 0 0 , 0 0 0 - D e c 2 0 1 3 Expired No Expired No Expired No N o . o f y e a r a t b e g n n n g i i B a l a n c e N o . c o m p e n s a t i o n G r a n t e d a s Greenland Minerals and Energy Limited Greenland Minerals and Energy Limited And Controlled Entities Greenland Minerals and Energy Limited 31 December 2013 Financial Report And Controlled Entities 31 December 2013 Financial Report And Controlled Entities 31 December 2013 Financial Report Balance at end of year Balance at No. end of year Balance at No. end of year No. 1,400,000 2,700,000 1,400,000 600,000 2,700,000 1,400,000 2,100,000 600,000 2,700,000 1,600,000 2,100,000 600,000 1,000,000 1,600,000 2,100,000 - 1,000,000 1,600,000 - - 1,000,000 - - - 1,400,000 2,700,000 1,400,000 600,000 2,700,000 1,400,000 2,100,000 600,000 2,700,000 1,600,000 2,100,000 600,000 1,000,000 1,600,000 2,100,000 2,100,000 1,000,000 1,600,000 350,000 2,100,000 1,000,000 350,000 2,100,000 350,000 Balance vested at end of year Balance vested at end of year Balance vested at end of year No. No. No. Vested and convertible Vested and No. convertible Vested and convertible No. No. Rights vested Rights during year vested Rights during year vested No. during year No. No. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - P e r f o r m a n c e r i g h t s Net other 2 N 7 change (i) o Net other : t No. e K change (i) Net other s e No. y t change (i) o m - No. t h a - - e n a a - - - g c e c - - - m o u e - - - n n t t s - - - p e (2,100,000) - - r s (350,000) o (2,100,000) - n n (350,000) (2,100,000) e l (350,000) e q - u i - - t y - - - h o - - - d - - n - g - - - s - - - - - - - - - ( c o n t ’ d ) l i - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - o f l G r e e n a n d M n e r a s i l a n d E n e r g y i L m i t e d t i o n s (i) Performance rights cancelled when employees accepted an offer to participate in the October 2013 Employee Rights issue (i) Performance rights cancelled when employees accepted an offer to participate in the October 2013 Employee Rights issue (i) Performance rights cancelled when employees accepted an offer to participate in the October 2013 Employee Rights issue All performance rights issued to key management personnel were made in accordance with the provisions of the employee performance rights plan. 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. 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. Further details of the employee performance rights plan and of options granted during the current and prior period are contained in note 24. g r a n a n o e r N o f f o n t t - - - - - - - - - - - - - - - - i . N o C o n v e r t e d E x p i r e d - - - - - - - - - - - - - - ( 2 , 1 0 0 , 0 0 0 ) ( 3 5 0 , 0 0 0 ) - - - - - - - - - - - - - - 2 , 1 0 0 , 0 0 0 1 , 0 0 0 , 0 0 0 1 , 6 0 0 , 0 0 0 2 , 1 0 0 , 0 0 0 2 , 7 0 0 , 0 0 0 1 , 4 0 0 , 0 0 0 6 0 0 , 0 0 0 3 5 0 , 0 0 0 1 , 0 0 0 , 0 0 0 1 , 6 0 0 , 0 0 0 2 , 1 0 0 , 0 0 0 6 0 0 , 0 0 0 2 , 7 0 0 , 0 0 0 1 , 4 0 0 , 0 0 0 - - i s s u e - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - t h e c u r r e n t a n d p r i o r p e r i o d a r e c o n t a n e d i i n n o t e 2 4 . P a g e | 7 5 92 P a g e | 75 P a g e | 75 P a g e | 75 N o . c h a n g e ( i ) N e t o t h e r N o . e n d o f y e a r B a l a n c e a t a t e n d o f y e a r B a l a n c e v e s t e d c o n v e r t i b e l V e s t e d a n d N o . N o . N o . d u r i n g y e a r v e s t e d i R g h t s G r e e n l a n d M n e r a l s i a n d E n e r g y L m i i t e d A n d C o n t r o l l e d E n t i t i e s 3 1 D e c e m b e r i 2 0 1 3 F n a n c i a l R e p o r t ( i ) P e r f o r m a n c e r i g h t s c a n c e l l e d w h e n l e m p o y e e s a c c e p t e d p a r t i c p a i t e i n t h e O c t o b e r l 2 0 1 3 E m p o y e e R g h t s i F u r t h e r d e t a i l s o f t h e l e m p o y e e p e r f o r m a n c e r i g h t s p a n l a n d o f o p e d d u r i n g p e r f o r m a n c e r i g h t s i s s u e d t o k e y m a n a g e m e n t p e r s o n n e l w e r e m a d e a c c o r d a n c e w i t h t h e i p r o v s o n s i o f t h e l e m p o y e e p e r f o r m a n c e r i g h t s l p a n . Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 All performance rights issued to key management personnel were made in accordance with the provisions of the employee performance rights plan. c o Further details of the employee performance rights plan and of options granted during the current and prior period are contained in note 24. G m r All performance rights issued to key management personnel were made in accordance with the provisions of the employee performance rights plan. a p n e t Further details of the employee performance rights plan and of options granted during the current and prior period are contained in note 24. n e s d a a t i s o n 2 , 1 0 0 , 0 0 0 1 , 2 0 0 , 0 0 0 r i g h N o l t - - - - - - . Notes to the accounts Notes to the accounts 27: Key management personnel equity holdings (cont’d) 27: Key management personnel equity holdings (cont’d) Employee Rights of Greenland Minerals and Energy Limited Employee Rights of Greenland Minerals and Energy Limited Dec 2013 M Hutchinson Dec 2013 R McIllree M Hutchinson S Cato R McIllree J Mair S Cato A Ho J Mair J Whybrow A Ho S Bunn J Whybrow M Guy S Bunn M Guy A l l Balance at beginning F u Balance of year r p t h at beginning No. e e r f of year r o r No. m a n c e r i g h t s d e t a t h e o f s i l S C a t o Granted as M S A J J W M B H compensation G a u o h u Granted as No. i n y r y n b compensation r o w No. - - - - - - - - - - - 2,100,000 - 1,200,000 2,100,000 1,200,000 i R M D e Converted M H c c u 2 No. I t l c 0 l r h Converted 1 e 3 e n No. s - o n - - - - - - - - - - - - - - - o f . - - - - - - - - a t b e g n n n g i i N o y e a r l E m Expired p No o y Expired e No e R g h t s i o f l G r e e n a n d M n e r a s i l B a l a n c e - - - - - - - - - - - - - - - - 2 7 : K e y m a - n a g - e - m - - e - n t - - p e - - r s - o - n - n e - l e q u i t y h o d n g s i ( c o n t ’ d ) a n d E n e r g y L m i i t e d l e m p o y e e p e r f o r m a n c e l t s p a n a n d o i s s u e d t o k e y m a n a g e m e n p e r s o n n e f o p t i o n s g r a n t e d d u r i n g t h e c u r r e n t a n d p r i o r p e r i o d a r e c o n t a n e d i i n n o t e 2 4 . P a g e | 7 6 l w e r e m a d e i n a c c o r d a n c e w i t h t h e i p r o v s o n s i o f t h e l e m p o y e e p e r f o r m a n c e r i g h t s l p a n . N o . C o n v e r t e d N o E x p i r e d N o . c h a n g e ( i ) N e t o t h e r N o . N o . N o . e n d o f y e a r B a l a n c e a t a t e n d o f y e a r B a l a n c e v e s t e d c o n v e r t i b e l V e s t e d a n d N o . d u r i n g y e a r v e s t e d i R g h t s - - - - - - - - - - - - - - - - - - - - - - - 1 , 2 0 0 , 0 0 0 2 , 1 0 0 , 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Greenland Minerals and Energy Limited And Controlled Entities Greenland Minerals and Energy Limited 31 December 2013 Financial Report And Controlled Entities 31 December 2013 Financial Report Net other N o change (i) t e Net other No. s change (i) t o No. t h e a c c o u n t s Balance at end of year Balance at No. end of year No. - - - - - - - - - - - 2,100,000 - 1,200,000 2,100,000 1,200,000 - - - - - - - - - - - - - - - - Balance vested at end of year Balance vested at end of year No. No. Vested and convertible Vested and No. convertible No. Rights vested during year Rights vested No. during year No. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - P a g e | 76 P a g e | 76 G r e e n l a n d M n e r a l s i a n d E n e r g y L m i i t e d A n d C o n t r o l l e d E n t i t i e s 3 1 D e c e m b e r i 2 0 1 3 F n a n c i a l R e p o r t 93 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Notes to the accounts 28: 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 2013 $36,867 was paid to Advance Share Registry Limited for services provided (Dec 2012: $67,085). 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 Profit (Loss) for the year Total comprehensive income Parent Dec 2013 $' 000 Dec 2012 $' 000 5,592 74,231 79,823 586 30 616 79,207 11,469 63,761 75,230 1,429 89 1,518 73,712 336,950 24,888 (282,631) 79,207 334,339 22,324 (282,951) 73,712 320 320 (56,360) (56,360) Contingent liabilities The parent company has no contingent liabilities as at 31 December 2013 or 2012. 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). This funding forms part of the Consolidated Group’s approved budgeted expenditure. Greenland Minerals and Energy Limited has placed $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 financial year ended 31 December 2011, 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. P a g e | 77 94 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Notes to the accounts 30: Remuneration of auditors Auditor of the parent entity Audit or review of the financial report Other assurance services 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 2013 Financial Report Dec 2013 $ 87,536 8,500 14,700 110,736 Dec 2013 $ 26,661 1,838 2,942 31,441 Dec 2012 $ 88,830 - 3,465 92,295 Dec 2012 $ 44,698 9,693 6,691 61,074 The auditor of Greenland Minerals and Energy Limited is Deloitte Touche Tohmatsu. 31: Subsequent Events In March 2014 the Consolidated Group entered a non-binding Memorandum of Understanding (“MoU”) with China Non-Ferrous Metal Industry’s Foreign Engineering and Construction Co Limited (“NFC”). The MoU sets out a framework for both parties to cooperate in aligning the rare earth concentrates from the Consolidated Group’s Kvanefjeld project, with NFC’s substantial rare earth separation experience and capacity. Please refer to the Company announcement released to the ASX on 24 March 2014. Other than the matter above, there have been no matters or circumstances 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. P a g e | 78 95 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Additional stock exchange information as at 21st February 2014 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 574,572,911 fully paid ordinary shares are held by 3,690 individual shareholders. Substantial Shareholders Shareholder 1. Citicorp Nominees Pty Limited 1. JP Morgan Nominees Australia Limited 2. HSBC Custody Nominees (Australia) Limited 3. Rimbal Pty Ltd 4. GCM Nominees Pty Limited Number 100,690,410 83,056,904 76,972,260 55,304,175 35,000,000 Percentage 17.5% 14.5% 13.4% 9.6% 6.1% 96 P a g e | 79 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Additional stock exchange information as at 21st February 2014 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 364 1,077 692 1,285 272 3,690 Units 190,676 3,285,248 5,789,537 45,017,032 520,290,418 574,572,911 Percentage 0.033% 0.572% 1.008% 7.835% 90.553% 100% Twenty largest holders of quoted shares Ordinary shareholders 1. Citicorp Nominees Pty Limited 2. JP Morgan Nominees Australia Limited 3. HSBC Custody Nominees (Australia) Limited 4. Rimbal Pty Limited 5. GCM Nominees Pty Limited 6. Roderick McIllree Benoit Company Limited 7. 8. Pure Steel Limited 9. Cameron John French 10. Jeremy Sean Whybrow 11. Giacobbe, Dimitri and David Iesini 12. Merrill Lynch (Australia) Nominees Pty Limited 13. John Mair 14. Simon Cato 15. Christopher and Rita Read 16. National Nominees Limited 17. Peter Harry Hatch 18. Falfaro Investments Limited 19. ABN Amro Clearing Sydney Nominees Pty Limited 20. BNP Paribas Pty Limited Fully paid ordinary shares Number 100,690,410 83,056,904 76,972,260 55,304,175 35,000,000 13,346,956 12,200,000 11,087,008 10,152,112 6,010,200 5,431,505 5,348,669 5,564,166 4,762,200 4,572,048 4,490,461 3,100,000 3,000,000 2,639,283 2,430,092 445,158,449 Percentage 17.5% 14.5% 13.4% 9.6% 6.1% 2.3% 2.1% 1.9% 1.7% 1.5% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.5% 0.5% 0.4% 0.4% 77.5% P a g e | 80 97 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013 Greenland Minerals and Energy Limited And Controlled Entities 31 December 2013 Financial Report Additional stock exchange information as at 21st February 2014 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 1 4 6 57 19 87 421 15,213 48,166 2,281,731 23,423,660 25,769,191 0.002% 0.059% 0.187% 8.854% 90.898% 100% Twenty largest holders of quoted options Ordinary shareholders Pre-Emptive Trading Pty Limited 1. Tracor Limited 2. Zero nominees Pty Limited 3. JP Morgan Nominees Australia Limited 4. 5. Twofivetwo Pty Limited 6. USB Nominees Pty Limited 7. Citicorp Nominees Pty Ltd 8. National Nominees Pty Limited 9. Nicole Yougman 10. HSBC Custody nominees (Australia) Limited 11. ABN Amro Clearing Sydney Nominees Pty Limited 12. Greatside Holdings Pty limited 13. William Jay Goodair 14. Cameron John French 15. John Tilney 16. Michael Bushell 17. Floyd Bruce Garrett 18. Nicholas Timothy Allan 19. Jason Dalziell 20. James Alexander Hanson Fully paid ordinary shares Number 6,020,000 5,500,000 4,774,235 2,448,333 712,814 650,000 494,000 450,000 437,080 350,661 333,334 250,000 244,922 178,475 167,500 166,600 139,706 125,000 100,000 100,000 23,642,660 Percentage 23.4% 21.3% 18.5% 9.5% 2.7% 2.5% 1.9% 1.7% 1.7% 1.4% 1.3% 1.0% 1.0% 0.7% 0.6% 0.6% 0.5% 0.5% 0.4% 0.4% 91.6% 98 P a g e | 81 Greenland Minerals and enerGy liMited – AnnuAl RepoRt 2013  The Kvanefjeld project area is ideally located near an international airport and existing towns that are expected to provide general labour and services. Greenland Minerals and enerGy liMiTed – AnnUAl RePORT 2013 99 100 Greenland Minerals and enerGy liMiTed – AnnUAl RePORT 2013  The fjord system in south Greenland provides direct shipping access to the project area, year round. u a . m o c . y t i c n g s e d i Greenland Minerals and enerGy liMiTed Registered Office & Principal Place of Business Unit 6, 100 Railway Road, Subiaco, Western Australia, 6008 Postal Address PO Box 2006, Subiaco, Western Australia, 6904 Tel: +61 8 9382 2322 Fax: +61 8 9382 2788 www.ggg.gl 

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