A B N 5 3 1 2 3 6 3 1 4 7 0 A N N U A L R E P O R T 2 0 1 2 CORPORATE DIRECTORY REVIEW OF EXPLORATION ACTIVITIES DIRECTORS’ REPORT CORPORATE GOVERNANCE STATEMENT STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT ADDITIONAL INFORMATION 1 2 9 20 26 27 28 29 30 61 62 63 65 a3 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D C O R P O R AT E D I R E C T O RY DIRECTORS AUDITOR Jordan Ashton Luckett (Chairman / Managing Director) Bentleys Frank Cannavo (Non-executive Director) Level 1, 12 Kings Park Road Craig Donald Mathieson (Non-executive Director) West Perth Western Australia 6005 SOLICITORS Kings Park Corporate Lawyers Suite 8, 8 Clive Street West Perth Western Australia 6005 STOCK EXCHANGE The Company’s shares are listed by the Australian Securities Exchange Limited The home exchange is Perth ASX Code - Fully paid shares GTE - Listed options GTEOA COMPANY SECRETARY Kelvin Frederick Edwards REGISTERED AND PRINCIPAL OFFICE 185 Hay Street Subiaco Western Australia 6008 Telephone: (08) 6489 0101 Facsimile: (08) 6489 0100 SHARE REGISTRY Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St Georges Terrace Perth Western Australia 6000 Telephone: 1300 787 272 Facsimile: (08) 9323 2033 WEBSITE www.greatwesternexploration.com.au A N N U A L R E P O R T 2 0 1 2 1 R E V I E W O F E X P L O R AT I O N A C T I V I T I E S INTRODUCTION Great Western Exploration Limited (GTE or the Company) manages its 50% interest in the Spasskaya Project covering 12,500km2 of central Kazakhstan (Figure 1) and its 100% interest in four key exploration projects covering ~4,500km2 of Western Australia (Figure 2). The Company also hold a minority 49% joint venture interest in the Mt Gibb Project where Western Areas NL (ASX:WSA) is actively exploring to earn up to 70%. In March 2012, the Company secured a Joint Venture agreement to earn 50% of the Spasskaya Copper Project. GTE commenced fieldwork in Kazakhstan in June 2012 and trench sampling has provided highly encouraging high-grade (>2%) copper results at several prospects. The company intends to focus initially on diamond drilling at several key, Soviet-era prospects. During 2011-12, GTE made significant regional exploration progress in Western Australia with soil sampling and mapping projects at Doolgunna, Millrose and Bullseye. RC drilling, proposed to explore the Bullseye high-grade gold target, remains subject to formalising a heritage agreement with the Tjiwarl claim group, completing a heritage survey and receiving a work permit from DMP in the second half of 2012. Maiden diamond drilling by WSA at the Mt Gibb JV Project from November 2011 intersected narrow veins of high-grade nickel sulphides up to 1.1m @ 2.6% Ni. The discovery supports the Company’s strategy of expanding its interests in the Forrestania Belt via eight new exploration licenses along strike of known nickel deposits. New licenses were granted in April 2012 and regional geophysical work will commence in the second half of 2012. Doolgunna Millrose Bullseye Forrestania South Mt Gibb WSA JV Ravensthorpe North Spasskaya TKS JV FIGURE 1: Location of GTE’s Projects in Central Kazakhstan FIGURE 2: Location of GTE’s Projects in Western Australia SPASSKAYA COPPER PROJECT The Spasskaya Project covers 12,500km2 (Figure 3) and lies 150km southeast of Astana near Karaganda, a major regional centre with excellent supporting infrastructure including grid power and rail. Khazakmys, a global-top-ten copper producer, operates two major copper mines in the region (Nurkazgan and Abyz) with total resources of 1.35Bt @ 0.5% Cu, 0.16g/t Au, 1.7 g/t Ag for >6.5Mt contained copper (source - 2010 Company Annual Report). In March 2012, GTE entered into a 50:50 operating joint venture for exploration and development of the Spasskaya Copper Project (“SPJV”) with Tauken Samruk (“TKS”). TKS is a wholly-owned government enterprise that controls investment for all existing State-owned or new resource projects in KZ and is currently the only company eligible to apply for sub-surface soil rights for developing minerals. The company’s JV partner is currently in the process of securing the Sub-Soil Rights contract with the Ministry of Industry and Technology (“MINT” is the governing agency for all resource projects within KZ). This process requires submitting work programmes and budgets, Occupational Health & Safety (“OH&S”) and Environmental procedures (collectively referred to as the 2 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D REVIEW OF EXPLORATION ACTIVITIES FIGURE 3: Spasskaya Copper Belt and JV Project Area Work Proposal) for approval by several committees that represent the Department of Health and Safety, Department of Ecology and MINT. The approval process does require a period of local community and Local Government consultation similar to the approval process in Australia. Once final approval is given then the JV will be able to carry out evaluation work up to trial mining on each of the projects listed in the JV with mining approval subject to further submissions. The Spasskaya Project area comprises over 120 individual “Projects” or prospects where historical exploration identified significant copper and base metal mineralisation that has been recommended for further work and placed on MINT’s Project Registry as possible future ore bodies. These “Projects” are similar to Western Australia’s MINDEX register where historical resources or significant mineralisation are recorded into the State’s geological database. The majority of prospects at Spasskaya comprise copper mineralisation exposed at surface with limited trenching or vertical diamond drilling conducted in 1960’s-80’s to determine the size and scope of the mineralisation. During the permitting phase, GTE has compiled all available historical and regional geology data for Spasskaya and inspected four, high-grade prospects in the field to site drill targets. The amount of historical work, the nature of the mineralisation and location of deposits indicate strong potential for copper resources that could be put into production early with low capital costs. The company has engaged Major Drilling in Kazakhstan to provide a diamond drill rig for initial test work commencing in the second half of 2012. HADZHIKONGAN AND ALTYNTOBE PROSPECTS The Hadzhikongan and Altyntobe prospects are located 65km east from the regional city of Karaganda and 5km apart from each other. Both prospects feature replacement-style copper mineralisation with supergene secondary copper visible at surface. The mineralisation at both prospects appears to be fault-controlled within carbonate-rich sedimentary and/or volcanic rocks. Given this style of deposit comprises both disseminated and massive sulphide mineralisation along planar structures, the company believes the application of modern geophysical methods may identify further high grade deposits along strike or nearby within interconnected faults. At Hadzhikongan approximately 34 vertical diamond holes were completed in the 1970s. The drilling technology at the time only allowed for vertical drilling which is not considered ideal for evaluating the high-grade resource potential associated with steep faults. The zone of surface mineralisation can be traced for 300m and the fault can be traced over a distance of approximately 1.0 km. A N N U A L R E P O R T 2 0 1 2 3 REVIEW OF EXPLORATION ACTIVITIES Altyntobe features abundant malachite (copper oxide) mineralisation at surface trending along an east-west fault zone for approximately 2.5 km and 62 diamond holes on fourteen sections at 100m to 200m spacing to depths approaching 500m. Historic drilling indicates a higher-grade shoot along the main fault structure with >1% copper values that has been subject to small-scale mining since the Bronze Age (Figure 4). SHAITANDY PROSPECT The Shaitandinsky or “Shaitandy” prospect is located 125km east of Karaganda (60km further east of the FIGURE 4: Dioptase (Secondary Copper) Mineralisation at Altyntobe Hadzhikongan-Altyntobe prospects). Shaitandy features abundant malachite mineralisation at surface exposed in over 50 separate trenches. In July 2012, GTE sampled five trenches at Shaitandy and submitted samples to Kazakhstan’s National Centre for Standards, GeoAnalytica, in Almaty for conventional copper analysis using acid digest coupled with AAS finish. Four out of five trenches produced significant widths of oxide copper mineralisation including: 14m @ 6.59% Cu, 14m @ 6.51% Cu, 12m @ 4.52% Cu and 18m @ 4.05% Cu (Figure 5). The Company intends to continue trench and surface sampling at Shaitandy in order to fully delineate the strike extent of copper mineralisation along the subvertical, east-west structures which coincide with valley depressions. FIGURE 5: July 2012 Trench Sampling at Shaitandy 4 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D REVIEW OF EXPLORATION ACTIVITIES BURNAK PROSPECT The Burnak prospect is located 80km southwest of Karaganda and also features oxide copper mineralisation at surface hosted by volcanic rocks. At least six short vertical holes were completed at Burnak in the 1970’s and one of these six holes intersected significant mineralisation. DOOLGUNNA COPPER PROJECT Following the initial discovery of the DeGrussa copper-gold deposit in mid- 2009, GTE initiated an intensive search for analogous geological settings prospective for base metals and gold. FIGURE 6: Malachite (Oxide Copper) Mineralisation at Burnak GTE applied for ten new licenses covering a total area of ~1,750km2 at Doolgunna, located approximately 140km NE of Meekatharra and 25km SE of DeGrussa (Figure 7). Prior to GTE’s involvement, the only historical drilling recorded was 22 shallow RAB holes and a single diamond hole. The company has since collected a total of 2,318 soil samples, including duplicates, across 70% of the Doolgunna Project area. By mid-2011, the company had completed 36 RC drill holes for a total of 4,214m targeting strong, regional copper-in-soils and EM anomalism along the eastern half of GTE’s landholding. The best result recorded is an encouraging 16m @ 1,351 ppm zinc recorded from 32m in DGRC006 within a flat-lying, sulphide-rich, shale unit in contact with an intrusive dolerite sill. The company’s current focus involves completion of geological mapping and soil sampling along the western side of the Doolgunna property where NE-trending structural controls linked to the Thaduna-Green Dragon copper mines appear evident from GTE’s geophysical work. Also of interest is growing evidence for major north-northwest trends indicated by regional gravity and soil geochemical data that align with the Archaean Wiluna-Norseman gold-nickel belt extending underneath the younger Proterozoic Yerrida basin sequence. The company believes that anomalism may relate to the re-activation of a major, underlying Archaean fault zone. FIGURE 7: GTE’s Doolgunna Project A N N U A L R E P O R T 2 0 1 2 5 REVIEW OF EXPLORATION ACTIVITIES FIGURE 8: Banded Iron Formation discovered at GTE’s Millrose Project MILLROSE GOLD PROJECT In March 2012, GTE consolidated its land position at Millrose with a third application (E53/1666). GTE now has complete coverage (350km2) of magnetic anomalism surrounding a late intrusion which GTE believes may represent one of the few remaining, unexplored greenstone belts in Australia. The Millrose project represents a significant exploration opportunity to identify new Archaean lode gold deposits in the northern Kalgoorlie Superterrane of the Eastern Goldfields Province. In late 2011, the company completed a detailed airborne magnetic survey at Millrose together with reconnaissance mapping and sampling. Mapping has confirmed the existence of greenstone lithologies at Millrose including banded iron (Figure 8) and initial sampling indicates low-level gold-arsenic-bismuth anomalism associated with these magnetic units. Infill soil sampling is planned for the second half of 2012 in order to focus inaugural drill testing in 2013. BULLSEYE GOLD PROJECT In 2011-2012, the Company applied for three exploration licenses (E53/1621, 1646, 1708) totalling 315km2 over an area of structural complexity situated between the Yeelirrie Uranium deposit and the Mt Keith - Honeymoon Well nickel belt and along strike of the Agnew gold camp. The presence of NS shearing in the western half of the tenement (~30km strike) and a prominent circular magnetic low to the east corresponding to a monzonite body is of immediate exploration interest to the company. Previous RAB drilling by Julia Mines NL in 1994 at the Gidgee Well prospect within the Bullseye Project intersected 8m @ 61.7g/t Au (GWP 2, 32m-40m) and 8m @ 25.1 g/t Au (GWP 31, 1m-9m) in two adjoining holes with insufficient follow-up (Figure 9). FIGURE 9: Bullseye Cross Section Showing Historic RAB Drilling 6 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D REVIEW OF EXPLORATION ACTIVITIES FORRESTANIA NICKEL PROJECT The Forrestania Nickel Project comprises of a total of 300km2 surrounding Western Areas NL (ASX : WSA) Nickel Operations and eight Exploration Licenses totalling ~1,450km2 extending along strike further to the south (Figure 10). In October 2009, the company entered the Mt Gibb Joint Venture Agreement with Western Areas NL to explore the company’s tenements surrounding WSA’s Flying Fox nickel mine. Western Areas holds an impressive discovery record since they commenced nickel exploration in the Forrestania region including the Spotted Quoll and Diggers South nickel deposits. By January 2012, WSA had completed the first stage of its earn-in (51%) and can earn up to 70% interest in the Project by spending a total of $2.5 million. During 2011-2012, WSA completed a total of 15 holes for 4,112m of diamond drilling at Mt Gibb. Encouragingly, two of the holes intersected narrow, massive sulphide veins containing high-grade nickel approximately 20km SE of Diggers Rocks (50km SE of Flying Fox). MGD002 intersected 1.1m at 2.6% Ni from 133.9m depth and HCD001 intersected 0.2m at 1.8% Ni from 250.9m depth with nickel mineralisation associated with small sulphide veins. WSA are applying their proven strategy of using down-hole EM surveys as a guide to ongoing drill targeting. There has been little concerted modern exploration for nickel sulphides or gold mineralisation in the Forrestania region despite the recent recognition of a suite of flat-lying faults/pegmatite dykes that offset and obscure steeply-dipping host rocks at the Flying Fox - Spotted Quoll - Cosmic Boy - Diggers Rocks high-grade nickel deposits. The Company intends to conduct a major, detailed airborne magnetic survey over the new Forrestania and Ravensthorpe project areas (Figure 10) in the second half of 2012 with a view to mapping and sampling in early 2013. FIGURE 10: Location of Mt Gibb JV with WSA (red) and new EL applications at Forrestania (white) A N N U A L R E P O R T 2 0 1 2 7 REVIEW OF EXPLORATION ACTIVITIES TENEMENT SCHEDULE DISTRICT PROJECT NAME TENEMENT NO STATUS OWNERSHIP Mt Gibb JV Forrestania Doolgunna Bullseye Millrose Mt Gibb South Mt Gibb North Hatters North Hatters Hill Hatters Hill Hatters Hill Hatters Hill North Iron Cap North Iron Cap North Iron Cap North Iron Cap North Iron Cap North Iron Cap North Iron Cap North Iron Cap Ravensthorpe North Ravensthorpe North Ravensthorpe North Forrestania South Forrestania South Forrestania South Forrestania South Forrestania South Doolgunna Doolgunna Doolgunna Doolgunna Doolgunna Doolgunna Doolgunna Doolgunna Doolgunna Doolgunna Bullseye Bullseye Bullseye Millrose Millrose Millrose E74/305 E74/313 E74/320 P74/251 P74/322 E74/368 E74/428 E74/445 E74/446 E77/1537 E77/1545 E77/1546 E77/1547 E77/1590 E77/1677 E70/4108 E74/509 E74/510 E74/511 E74/512 E74/513 E74/514 E74/515 E 51/1320 E 51/1321 E 51/1322 E 51/1323 E 51/1324 E 51/1330 E 51/1331 E 51/1332 E 51/1333 E 51/1355 E53/1621 E53/1646 E53/1708 E53/1619 E53/1620 E53/1666 Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Pending Pending Live Live Pending 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 90% 100% 100% 100% 100% 100% 100% COMPETENT PERSON STATEMENT The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Jordan Luckett who is a member of the Australian Institute of Mining and Metallurgy. Mr Luckett has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Luckett consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 8 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D D I R E C T O R S ’ R E P O R T DIRECTORS The names and details of the Company’s directors in office during the financial year and up to the date of this report are as follows. Directors were in office for the entire year unless otherwise stated. • • • • • J A Luckett F Cannavo C D Mathieson J Arulampalam (Resigned 31 January 2012) K C Somes (Resigned 15 June 2012) INFORMATION ON DIRECTORS: MR JORDAN ASHTON LUCKETT Chairman / Managing Director Experience and expertise During his career, Mr Luckett has been a member of a number of successful exploration teams that have made discoveries in Western Australia, Queensland, Canada and Africa. For the previous seven years he has held senior management positions in both mining and exploration companies. Mr Luckett has a Bachelor of Science degree and is a member of the Australasian Institute of Mining and Metallurgy. Mr Luckett has 18 years’ of experience in both exploration and mining geology, having worked throughout Australia, North America and Africa. He has a broad experience that includes grass roots exploration, project generation, resource definition, underground mining and geological management. Other current directorships None. Former directorships in last three years None. MR FRANK CANNAVO Non-executive Experience and expertise Mr Frank Cannavo is an experienced public company director with significant business and investment experience with many exploration companies in the mining industry. With a high level contact base in the public company sector, Mr Cannavo boasts a proven track record of success and experience in creating solid, workable business strategies, capital raisings, investment, acquisitions and IPO’s. Other current directorships None Former directorships in last three years Fortis Mining Limited (2010 – 2011) Motopia Limited (2007 – 2011) ATOS Wellness Limited (2009 – 2011) A N N U A L R E P O R T 2 0 1 2 9 DIRECTORS’ REPORT INFORMATION ON DIRECTORS (continued): MR CRAIG DOUGLAS MATHIESON – Appointed 9th December 2011 Experience and expertise After completing a Bachelor of Business (Banking & Finance), Mr Mathieson spent 10 years in commercial banking, principally in commercial property finance. In 2001, he returned to the family business, DMS Glass, as Managing Director until its sale to CSR Ltd in 2007. Mr Mathieson is currently CEO of the Mathieson Group, a large family group with diverse investments, including property, business and rural interests. Mr Mathieson has extensive commercial experience and he is currently a Non- executive Director of Funtastic Ltd. Other current directorships Funtastic Ltd Former directorships in last three years None. MR KEVIN CLARENCE SOMES FCA – Resigned 15 June 2012 Non-executive Experience and expertise Mr Somes is a fellow of the Institute of Chartered Accountants and has been a partner of Somes & Cooke Chartered Accountants for 25 years. The firm specialises in tax and accounting services and auditing. Mr Somes has extensive experience in the management of exploration companies, with Somes & Cooke being the auditors of a number of ASX listed mining Other current directorships None. Former directorships in last three years None. companies. MR JITTO ARULAMPALAM – Resigned 31 January 2012 Non-executive Chairman Experience and expertise Mr Jitto Arulampalam has extensive corporate restructuring skills gained in several turnaround situations. Having spent more than 8 years with Westpac Banking Corporation in several key operational and strategic roles. He was hired by Newsnet Ltd as its CEO in 2005 to assist in the successful restructuring of the Company and to position it for an IPO. He successfully repositioned Newsnet as a leading innovator in the messaging/telco space, to be recognised by the Australian Financial Review MIS magazine as one of the “Top 25 global rising stars” in 2006. Mr Arulampalam is a charter member of The Indus Entrepreneur (TIE), the largest entrepreneurial network in the world and is a member of the Australian Institute of Company Directors. Mr Arulampalam has solid commercial experience and has extensive experience as a board member of a number of successful companies. Other current directorships None Former directorships in last three years ATOS Wellness Limited (2009 – 2011) Fortis Mining Limited (2010 – 2012) Motopia Limited (2009 – 2011) 10 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D DIRECTORS’ REPORT COMPANY SECRETARY The Company Secretary is Mr K F Edwards, CA. Mr Edwards is a Chartered Accountant, with over 25 years experience in the management and administration of ASX listed public companies. PRINCIPAL ACTIVITIES The principal activity during the year to 30 June 2012 was mineral exploration for copper, gold and nickel. OPERATING AND FINANCIAL REVIEW REVIEW The principal activity of the Group is mineral exploration. The objective of the Group, in the event of the discovery of a mineral resource, would be the successful exploration and development of the resource. Details of the Group’s exploration projects are included in the Review of Exploration Activities on page 2. FINANCIAL POSITION At the end of the financial year the Group had cash reserves of $2,946,426 (2011: $3,238,312). The Group incurred expenditure on exploration and evaluation of $2,039,066 (2011: $1,724,380) before write offs. RESULTS OF OPERATIONS The operating loss for the year, after providing for income tax, was $3,145,356 (2011: $1,773,914). RISKS AND RISK MANAGEMENT The Group attempts to mitigate risks that may affect its future performance through a systematic process of identifying, assessing, reporting and managing risks of corporate significance. Key operational risks and their management are recurring items for discussion at Board meetings. The following discusses the Group’s most significant business risks. a) Exploration Whilst considered highly prospective, the Company’s tenements are early stage exploration tenements with limited exploration undertaken on them to date. Exploration is a high risk undertaking. The Company’s joint venture projects for copper, nickel and gold prospects in Australia and Kazakhstan are in the preliminary stages of exploration and no assurance is given that exploration of its current projects or any future projects will result in the delineation or discovery of a significant mineral resource. Even if a significant mineral resource is identified, there can be no guarantee that it can be economically exploited. b) Investment in Kazakhstan The Spasskaya Project is located in Kazakhstan and the Company is subject to the risks associated with operating in that country. Government and bureaucratic procedures for obtaining permits for access, construction, environmental etc. in Kazakhstan are often slow which can hold up exploration. Further, climatic and weather conditions affect when drilling can be undertaken. Investing in an emerging market carries inherent risks, including but not limited to economic, social or political instability, uncertainty, or change, extreme fluctuations in currency exchange rates, high rates of inflation, labour unrest, expropriation and nationalisation, renegotiation or nullification of existing concessions, licences, permits and contracts, illegal mining, changes in taxation policies, restrictions on foreign exchange and repatriation hyperinflation, currency non-convertibility or instability and changes of law affecting foreign ownership. A N N U A L R E P O R T 2 0 1 2 11 DIRECTORS’ REPORT RISKS AND RISK MANAGEMENT (continued) c) Commodity prices As an explorer for copper, gold, nickel and potentially other minerals, any successes of the Company are expected to be closely related to the price of those and other commodities. Fluctuating prices in those commodities make market prices for securities in the Company more volatile than for other investments. Commodities prices are affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for commodities, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activities, together with the ability to fund those plans and activities. d) Environmental The Company’s projects are subject to rules and regulations regarding environmental matters and the discharge of hazardous wastes and materials. As with all mineral projects, the Company’s projects are expected to have a variety of environmental impacts should development proceed. Development of any of the Company’s projects will be dependent on the Company satisfying environmental guidelines and, where required, being approved by government authorities. The Company intends to conduct its activities in an environmentally responsible manner and in accordance with all applicable laws, but may still be subject to accidents or other unforeseen events which ma compromise its environmental performance and which may have adverse financial implications. e) Future capital needs. The Company’s ability to raise further capital (equity or debt) within an acceptable time of a sufficient amount and on terms acceptable to the Company will vary according to a number of factors, including prospectivity of projects (existing and future), the results of exploration, subsequent feasibility studies, development and mining, stock market and industry conditions and the price of relevant commodities and exchange rates. No assurance can be given that future funding will be available to the Company on favourable terms (or at all). If adequate funds are not available on acceptable terms, the Company may not be able to further develop its projects and it may impact on the Company’s ability to continue as a going concern. DIVIDENDS No dividends have been recommended by the Directors. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There has been no significant change in the state of affairs of the Group during the financial year other than: • • In December 2011, a placement of 10,028,333 ordinary shares at $0.30 each to raise additional working capital of $3,008,500. In November 2011, the Group entered into a Joint Venture Agreement with TKS Samruk whereby it could earn a 50% interest in the Spasskaya Copper Project in Kazakhstan. 12 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D DIRECTORS’ REPORT MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the operations, the results of those operations, or the state of affairs of the Group in future financial years other than: • • Shareholders approval in August 2012 for the issue of up to 26,503,277 options exercisable at $0.30 at an issue price of $0.01 to raise additional working capital of approximately $250,000 after issue costs. Shareholders approval in August 2012 for approval of a placement of up to 25,000,000 ordinary fully paid shares at an issue price of 80% of the average market price of the shares calculated over 5 days before the date of the placement. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Directors are not aware of any developments that might have a significant effect on the operations of the Group in subsequent financial years not already disclosed in this report. ENVIRONMENTAL REGULATIONS Great Western Exploration Limited conducts its exploration activities in an environmentally sensitive manner, and believes it has adequate systems in place for the management of environmental requirements. The Group is not aware of any breach of statutory conditions or obligations. The Directors have considered the enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the Directors have determined that the NGER Act will have no effect on the Group for the current, nor subsequent, financial year. The Directors will reassess this position as and when the need arises. SHARE OPTIONS The details of unissued ordinary shares under option at the date of this report are as follows: GRANT DATE NUMBER UNDER OPTION EXERCISE PRICE EXPIRY DATE Listed Unlisted Unlisted 10 September 2012 9 August 2011 2 September 2011 26,503,277 4,000,000 350,000 30 cents 60 cents 40 cents 28 February 2013 30 May 2016 30 June 2015 Option holders do not have any right, by virtue of the option, to participate in any share issue of the Group or any related body corporate. DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY The particulars of Directors’ interest in shares and options are as at the date of this report. J A Luckett F Cannavo C D Mathieson ORDINARY SHARES OPTIONS EXPIRING OPTIONS EXPIRING 28 FEBRUARY 2013 30 MAY 2016 3,675,000 3,900,000 3,700,123 1,394,822 - - 1,000,000 2,100,000 - A N N U A L R E P O R T 2 0 1 2 13 DIRECTORS’ REPORT MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company’s Directors held during the financial year ended 30 June 2012 and the numbers of meetings attended by each Director. J A Luckett F Cannavo C D Mathieson K C Somes J Arulampalam NUMBER HELD WHILST IN OFFICE NUMBER ATTENDED 15 15 8 14 8 15 15 8 14 7 DIRECTORS AND OFFICERS INSURANCE The Company has made an agreement to indemnify all the Directors and Officers against all indemnifiable losses or liabilities incurred by each Director and Officer in their capacities as Directors and Officers of the Company to the extent permitted by the Corporations Act 2001. The Company has taken out an insurance policy at a premium of $18,426 in relation to Directors and Officers indemnity. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. NON-AUDIT SERVICES Bentleys did not receive fees for non-audit services during the financial year. The Directors are satisfied that the provision of non- audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Details of the amounts paid or payable to the auditor for audit and other services paid during the year are set out in Note 27. AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration, as required under section 307C of the Corporations Act 2001, is set out on page 62. 14 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) REMUNERATION POLICY This Remuneration Report outlines the director and executive remuneration arrangements of the Company in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company, and includes the five executives in the Company receiving the highest remuneration. For the purposes of this report, the term “executive” encompasses the Chief Executive, senior executives, general managers and secretaries of the Company. i) Directors J Arulampalam Chairman (Non-executive) (Resigned 31 January 2012) J A Luckett Executive Director K C Somes Director (Non-executive) (Resigned 15 June 2012) F Cannavo Director (Non-executive) C D Mathieson Director (Non-executive) (Appointed 9 December 2011) ii) Executives K F Edwards Company Secretary There were no other changes of key management personnel after reporting date and before the financial report was authorised for issue. The Company has not established a Remuneration Committee, the role of the Committee is assumed by the Board, as a whole, which is responsible for determining and reviewing the remuneration arrangements of the directors and executives. The Board assesses the appropriateness of the nature and amount of emoluments of such Directors and executives on an annual basis by reference to market and industry conditions. In order for the Company to prosper, thereby creating shareholder value, the Company must be able to attract and retain the highest calibre executives. Executive and non-executive directors, other key management personnel and other senior employees have been granted options over ordinary shares under the Company’s Employee Share Option Plan. The recipients of options are responsible for growing the Company and increasing shareholder value. If they achieve this goal the value of the options granted to them will also increase. Therefore the options provide an incentive to the recipients to remain with the Company and to continue to work to enhance the Company’s value. Due to the nature of the Company’s operations the current remuneration policy is not linked to the performance of the Company. NON-EXECUTIVE DIRECTORS REMUNERATION The Board seeks to set remuneration levels that provide the Company with the ability to attract and retain the highest calibre professionals. Fees and payments to non-executive Directors reflect the demands that are made on and the responsibilities of the Directors from time to time. Directors’ fees are determined by the Board within the aggregate Directors fee limit approved by shareholders. The maximum currently approved by the Constitution stands at $150,000. A N N U A L R E P O R T 2 0 1 2 15 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) Remuneration in the form of share options issued under the Company’s Employee Share Option Plan is designed to reward Directors and executives in a manner aligned to the creation of shareholder wealth. Subject to shareholders approval non- executive directors may participate in the Company’s Employee Share Option Plan. While Corporate Governance Principles recommend that non-executive directors not participate in such plans the Board considers the grant of options to be reasonable given the necessity to attract and retain the highest calibre professionals to the Company. Non-executive Directors receive superannuation benefits in accordance with the Superannuation Guarantee Legislation. Non-executive directors are permitted to salary sacrifice all or part of their fees. Due to the nature of the Company’s operation i.e. mineral exploration and development, the remuneration of directors and executives, at present, does not include performance-based incentives. EXECUTIVE REMUNERATION (INCLUDING EXECUTIVE DIRECTORS) The Board aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities to align the interests of executives with those of shareholders and to ensure that remuneration is market competitive. Remuneration consists of: • • Fixed Remuneration. Being base salary, non-monetary benefits and superannuation. Fixed remuneration is reviewed annually. Variable remuneration – Long term incentives. being share options issued under the Company’s Employee Share Option Plan. The options do not have any vesting conditions other than service conditions. Remuneration issued in the form of share options issued under the Company’s Employee Share Option Plan is designed to reward directors and executives in a manner aligned to the creation of shareholder wealth. Due to the nature of the Company’s operation i.e. mineral exploration and development, the remuneration of directors and executives, at present, does not include performance-based incentives. The Company has entered into contracts of employment with the Managing Director, and standard contracts with other executives, the details of which are set out on page 19. 16 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D DIRECTORS’ REPORT % E C N A M R O F R E P T N E M Y A P G N O L I E C V R E S I E V T N E C N I T N E M E R T E R I - R E P U S Y R A T E N O M H S A C - N O N D E T A L E R L A T O T S N O T P O I E V A E L S N A L P I S T F E N E B I N O T A U N N A R E H T O I S T F E N E B S U N O B $ $ $ $ $ $ $ $ $ - - - - - - - - - - - - - - - 5 8 2 , 8 1 4 5 0 , 4 4 - - 5 2 8 , 5 7 3 0 0 9 , 2 4 3 3 8 0 , 4 6 0 , 1 0 0 7 , 8 2 0 , 1 7 4 2 , 2 0 5 , 1 0 0 6 , 1 7 3 , 1 8 1 0 , 6 4 2 0 4 7 , 3 9 - - 5 0 0 , 4 2 8 , 1 0 0 6 , 1 7 3 , 1 0 0 7 , 2 3 0 5 7 , 8 6 3 8 5 , 4 0 0 5 , 2 3 3 5 , 8 0 1 4 8 5 , 7 2 2 4 8 5 , 7 2 2 5 1 4 , 0 7 2 3 5 , 6 0 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5 2 9 2 , 0 1 5 1 , 7 3 6 3 , 0 0 3 3 , 2 7 3 1 1 , 8 1 7 1 2 , - 0 9 0 3 3 , - - 0 0 7 2 , 0 0 0 0 5 , 0 0 7 2 5 , 4 8 3 7 1 , 4 8 3 7 1 , - 4 8 0 0 7 , - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Y R A L A S S E E F & $ 0 0 0 , 0 3 5 7 7 , 6 1 7 1 4 , 0 4 3 8 0 , 2 3 5 7 2 , 9 1 1 0 0 3 , 4 2 2 0 4 7 , 3 9 5 1 3 , 7 3 4 0 0 0 , 0 3 0 5 7 , 8 1 3 8 5 , 4 0 0 5 , 2 3 3 8 , 5 5 0 0 2 , 0 1 2 0 0 2 , 0 1 2 5 1 4 , 0 7 8 4 4 , 6 3 3 s r o t c e r i d e v i t u c e x e - n o N 2 1 0 2 E N U J 0 3 i n o s e h t a M D C o v a n n a C F s e m o S C K l m a a p m a u r A J l l e n n o s r e p t n e m e g a n a m y e k r e h t O s r o t c e r i d e v i t u c e x E t t e k c u L A J s r o t c e r i d e v i t u c e x e - n o N n a m r e n n a B B T s e m o S C K s d r a w d E F K l a t o T 1 1 0 2 E N U J 0 3 l m a a p m a u r A J l s r o t c e r i d e v i t u c e x E t t e k c u L A J o v a n n a C F l e n n o s r e p t n e m e g a n a m y e k r e h t O s d r a w d E F K l a t o T 17 A N N U A L R E P O R T 2 0 1 2 D E S A B E R A H S M R E T G N O L T N E M Y O L P M E T S O P M R E T T R O H S L E N N O S R E P T N E M E G A N A M Y E K F O N O T A R E N U M E R I DIRECTORS’ REPORT COMPENSATION OPTIONS: GRANTED AND VESTED DURING THE YEAR 30 June 2012 DIRECTORS J Arulampalam Grant Date NO. OF OPTIONS 3,000,000 9 August 2011 Fair Value per Option $0.3429 Exercise Price per Option $0.60 Expiry Date 30 May 2016 First Exercise Date 9 August 2011 Last Exercise Date 30 May 2016 Vested No. Vested % F Cannavo Grant Date 3,000,000 100 9 August 2011 Fair Value per Option $0.3429 Exercise Price per Option $0.60 Expiry Date 30 May 2016 First Exercise Date 9 August 2011 Last Exercise Date 30 May 2016 Vested No. Vested % 1,000,000 100 1,000,000 4,000,000 30 June 2011 No options were granted and vested during the year ended 30 June 2011. OPTIONS GRANTED AS PART OF REMUNERATION 30 June 2012 VALUE OF OPTIONS GRANTED VALUE OF OPTIONS EXERCISED VALUE OF OPTIONS LAPSED % REMUNERATION CONSISTING OF OPTIONS DURING THE YEAR DURING THE YEAR DURING THE YEAR FOR THE YEAR J Arulampalam F Cannavo 1,028,700 342,900 - - - - 98.67 91.24 For details on the valuation of options, including models and assumptions used, refer to Note 22. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. 30 June 2011 No options were granted as part of remuneration during the year ended 30 June 2011. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. 18 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D DIRECTORS’ REPORT SHARES ISSUED ON EXERCISE OF COMPENSATION OPTIONS 30 June 2012 Directors Executives 30 June 2011 Directors Executives SERVICE AGREEMENTS SHARE ISSUE NO. PAID PER SHARE UNPAID PER SHARE - - - - - - - - - - - - Remuneration and other terms of employment for the Managing Director, Mr J A Luckett, are formalised in a service agreement, details of which are set out below. • • • • Base annual salary of $150,000, plus superannuation, reviewed annually. The Company may terminate, other than for gross misconduct, with 1 months notice or payment in lieu of an amount of $13,625 on the grounds of inadequate performance or prolonged illness, or 3 months notice or payment of an amount of $40,875 for redundancy or the Company being taken over. Any unissued options on resignation or termination will be forfeited. Termination payments are not payable on resignation or under circumstances of unsatisfactory performance. This Report of Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Directors. Dated this 28th day of September 2012 J A Luckett Managing Director A N N U A L R E P O R T 2 0 1 2 19 C O R P O R AT E G O V E R N A N C E S TAT E M E N T FOR THE YEAR ENDED 30 JUNE 2012 The Board of Directors of Great Western Exploration Limited is responsible for Corporate Governance of the company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. Due to the size and nature of the Company’s activities, the Board as a whole is involved in matters where larger Boards would ordinarily operate through sub-committees. Some of the best practices recommended are not cost effective for adoption in a small company environment. The Board is committed to the standards of Corporate Governance as set out in the ASX Corporate Governance Council’s Principles and Recommendations. STRUCTURE OF THE BOARD The skills, experience and expertise relevant to the position of Director held by each director in office at the date of the Annual Report is set out in the Directors’ Report. Directors of Great Western Exploration Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement. The following directors were considered to be independent during the year: • • • Mr K C Somes (Resigned 15 June 2012). Mr J Arulampalam (Resigned 31 January 2012) Mr C D Mathieson (Appointed 9 December 2011) There are procedures in place to enable Directors to seek independent professional advice, at the expense of the Company, on issues arising in the course of their duties as Directors. Set out below is the term in office held by each Director at the date of this report: Mr J Arulampalam Non-executive Chairman Appointed 30 May 2011 Resigned 31 January 2012 Mr K C Somes Mr J A Luckett Mr F Cannavo Non-executive Director Appointed 25 January 2007 Resigned 15 June 2012 Managing Director Appointed 22 January 2008 Non-executive Director Appointed 30 May 2011 Mr C D Mathieson Non-executive Director Appointed 9 December 2011 NOMINATION COMMITTEE The function of establishing the criteria for Board membership, nomination of Directors and review of Board membership, is performed by the Board as a whole, until such time as the Company is of a sufficient size to warrant the establishment of a separate Nomination Committee. The composition of the Board is determined ensuring that there is an appropriate combination of corporate and operational expertise and qualifications. PERFORMANCE An evaluation of Directors is conducted by the Board on an annual basis. The Managing Director is responsible for the review of key executives. REMUNERATION The Board as a whole is responsible for determining and reviewing the arrangements for Directors and Executive management. The Board assesses the appropriateness of the nature and amount of emoluments of such Officers on an annual basis by reference to market and industry conditions and taking into account the Company’s operational and financial performance. Details of remuneration received by Directors and executives are included in the Remuneration Report contained within the Directors’ Report. 20 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D CORPORATE GOVERNANCE STATEMENT CODE OF CONDUCT The Company has established its Code of Conduct to ensure that directors and senior executives are provided with clear principles setting out the expectations of their conduct. It is expected that directors and senior executives will actively promote the highest standards of ethics, honesty and integrity in carrying out their roles and responsibilities for the Company. In dealings with the Company’s suppliers, competitors, customers and other organisations with which they have contact, they will exercise fairness and integrity, and will observe the form and substance of the regulatory environment in which the Company operates. Directors and senior executives must, at all times, act in the interests of the Company and will ensure compliance with the laws and regulations in relation to the jurisdictions in which the Company operates. Directors and senior executives have a role in ensuring compliance with this code of conduct, and therefore should be vigilant and report any breach of this code of conduct. For further information on the Company’s Code of Conduct refer to our website. DIVERSITY POLICY Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company is committed to workplace diversity and recognises the benefits arising from employee and board diversity including a broader pool of high quality employees, improving employee retention, accessing different perspectives and ideas and benefiting from all available talent. The Board is responsible for developing measurable objectives and strategies to meet the objectives and the monitoring of the progress of the objectives. At present due to the Company’s present scale of operations and number of staff has not yet set measurable objectives for achieving gender diversity. The Board will review progress against any objectives identified on an annual basis. Details of women employed within the Company are as follows: Women on the Board Women in senior management roles Women employees in the Company TRADING POLICY NO. - 1 4 % - 33 36 Under the Company’s Securities Trading Policy Directors and Key Management Personnel must not trade in any securities of the Company at any time when they are in possession of information which is not generally available to the market and, if it were generally available to the market, would be likely to have a material effect on the price or value of the Company’s securities. Directors and Key Management Personnel are permitted to deal in the securities of the Company throughout the year except during the following periods: • • • In the two weeks prior to, and 24 hours after the release of the Company’s Annual Financial Report: In the two weeks prior to, and 24 hours after the release of the Interim Financial Report of the Company: In the two weeks prior to, and 24 hours after the release of the Company’s Quarterly Reports (together the Block Out Period) Any Director wishing to deal in the Company’s securities must obtain the prior written approval of the Chairman or the Board before doing so. If the Chairman wishes to deal in the Company’s securities the Chairman must obtain the prior approval of the Board before doing so. A N N U A L R E P O R T 2 0 1 2 21 CORPORATE GOVERNANCE STATEMENT TRADING POLICY (continued) Any Key Management Personnel wishing to deal in the Company’s securities must obtain the prior written approval of the Managing Director before doing so. ASX Listing Rules require the Company to notify ASX within 5 business days after any dealing in the securities of the Company The Securities Trading Policy can be found on the company’s website. AUDIT COMMITTEE The Board has not established an Audit Committee. The role of the Audit Committee in the establishment of effective internal control framework to safeguard the Company’s assets, maintain proper accounting records and ensure the reliability of financial information was performed by the Board as a whole during the financial year. The Board as a whole deals directly with and receives reports from the Company’s external auditors in relation to the Annual financial reports and other statutory requirements. RISK MANAGEMENT The Board as a whole carries out the role of Risk Management. The Board evaluates and monitors areas of operational and financial risk. The Board determines the Company’s risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. The effectiveness of controls is monitored and reviewed regularly. The Chief Executive Officer and Chief Financial Officer, or equivalent, have provided a written statement to the Board that in their view the Company’s financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board and that the company’s risk management and internal compliance and control system is operating effectively in all material respects. COMPLIANCE WITH DISCLOSURE REQUIREMENTS The Company is committed to meeting its disclosure obligations and to the promotion of investor confidence in its securities. It has in place written policies and procedures to ensure compliance with ASX Listing Rule 3.1. The Company will immediately notify the market by announcement to the ASX of any information concerning the business of Great Western Exploration Limited that a reasonable person would expect to have a material effect on the price or value of the Company’s securities. SHAREHOLDERS The Board endeavours to ensure that shareholders are fully informed of all activities affecting the Company. Information is conveyed to shareholders via the Annual Report, Quarterly Reports and other announcements. This information is available on the Company’s website, www.greatwesternexploration.com.au, and in hard copy upon request. The Board encourages attendance and participation of shareholders at the Annual General and other General Meetings of the Company. The Company’s external auditor is requested to attend the Annual General Meeting and be available to take questions about the conduct of the audit and the content of the Auditors’ Report. 22 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D CORPORATE GOVERNANCE STATEMENT COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS The Board sets out below its “if not why not” report in relation to those matters of corporate governance where the Company’s practices depart from the Recommendations. RECOMMENDATION GREAT WESTERN EXPLORATION LIMITED CURRENT PRACTICE 1.1 Companies should establish the functions reserved for the Satisfied. board and those delegated to senior executives and Board Charter is available at disclose those functions. www.greatwesternexploration.com.au in the Corporate Governance Statement. 1.2 Companies should disclose the process for evaluating Satisfied. the performance of senior executives. Performance Evaluation Policy is available at www.greatwesternexploration.com.au in the Corporate Governance Statement. 2.1 A majority of the board should be independent directors. Not satisfied. At present, due to the size and nature of the Company’s operations, the Directors believe the current structure and make up of the Board which provides an appropriate combination of corporate and operational expertise to be in the best interests of shareholders This position is to be reviewed annually. 2.2 The chair should be an independent director. Not satisfied. The Company had an independent chair during the year for the period 1 July 11 to 15 June 2012. On the resignation of the chair in June 12 the role of Chair was assumed by the Managing Director while the Board considered a replacement. 2.3 The roles of chair and Chief Executive Officer should not Not Satisfied. be exercised by the same individual. Refer 2.2 above the Role of Chair and CEO were exercised by the same person for the reasons outlined. 2.4 The board should establish a nomination committee. Not satisfied. The Board has not established a Nomination Committee. The Board considers that given the current size, this function is efficiently achieved with full Board participation, until such time as the Company is of sufficient size to warrant the establishment of the Committee. 2.5 Companies should disclose the process for evaluating Satisfied. the performance of the board, its committees and Performance Evaluation Policy is available at individual directors. www.greatwesternexploration.com.au in the Corporate Governance Statement. A N N U A L R E P O R T 2 0 1 2 23 CORPORATE GOVERNANCE STATEMENT COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS (continued) RECOMMENDATION GREAT WESTERN EXPLORATION LIMITED CURRENT PRACTICE 3.1 Companies should disclose a code of conduct and disclose Satisfied. the code or a summary of the code as to: The Code of conduct is available at • The practices necessary to maintain confidence www.greatwesternexploration.com.au in the company’s integrity in the Corporate Governance Statement. • The practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders • The responsibility and accountability of individuals for reporting and investigating reports of unethical practices. 3.2 Companies should establish a policy concerning diversity Satisfied. and disclose the policy or a summary of that policy. The Diversity Policy is available at The policy should include requirements for the board to www.greatwesternexploration.com.au establish measurable objectives for achieving gender in the Corporate Governance Statement diversity for the board to assess annually both the objectives and progress in achieving them. 3.3 Companies should disclose in each annual report the Not satisfied. measurable objectives for achieving gender diversity set At present due to the Company’s present scale of by the board in accordance with the diversity policy and operations and number of staff it has not yet set progress towards them. measurable objectives for achieving gender diversity. The Board will review on an annual basis progress against any objectives identified. 3.4 Companies should disclose in each annual report the Satisfied proportion of women employees in the whole organisation, women in senior management and women on the board. 4.1 The board should establish an audit committee. Not satisfied. The Board has not established an Audit Committee. The Board as a whole carries out the role of the Audit Committee due to the current size and nature of the Company’s operations and size of the Board. 4.2 The audit committee should be structured so that it: Not satisfied. • Consists only of non-executive directors Refer to comment 4.1. • Consists of a majority of independent directors • Is chaired by an independent chair, who is not chair of the board. Has at least three members. 4.3 The audit committee should have a formal charter. Not satisfied. Refer to comment 4.1. 5.1 Companies should establish written policies designed Satisfied. to ensure compliance with ASX Listing Rule disclosure Continuous disclosure policy is available at requirements and to ensure accountability at senior www.greatwesternexploration.com.au executive level for that compliance and disclose those in the Corporate Governance statement. policies or a summary of those policies. 24 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D CORPORATE GOVERNANCE STATEMENT COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS (continued) RECOMMENDATION GREAT WESTERN EXPLORATION LIMITED CURRENT PRACTICE 6.1 Companies should design a communications policy for Satisfied. promoting effective communication with shareholders and Shareholders communication policy is available at encouraging their participation at general meetings and www.greatwesternexploration.com.au disclose their policy or a summary of their policy. in the Corporate Governance statement. 7.1 Companies should establish policies for the oversight and Satisfied. management of material business risks and disclose a Risk management program is available at summary of those policies. www.greatwesternexploration.com.au in the Corporate Governance statement. 7.2 The board should require management to design and Satisfied. implement the risk management and internal control The management and implementation of risk system to manage the company’s material business risks management and internal control systems to and report to it on whether those risks are being managed manage the Company’s material business risks effectively. The board should disclose that management has is routinely considered by the Board. reported to it as to the effectiveness of the company’s management of its material business risks. 7.3 The board should disclose whether it has received Satisfied. assurance from the chief executive officer (or equivalent) The Board has received a section 295A declaration and the chief financial officer (or equivalent) that the pursuant to the 2012 financial year. declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. 8.1 The board should establish a remuneration committee. Not Satisfied. The Board has not established a remuneration committee. The Board considers that given the current size this function is efficiently achieved with full Board participation, until such time as the Company is of sufficient size to warrant the establishment of the committee. 8.2 Companies should clearly distinguish the structure of The structure of Directors’ remuneration is non-executive directors’ remuneration from that of disclosed in the remuneration report of the annual executive directors and senior executives. report. For further information on the corporate governance policies adopted by Great Western Exploration Limited refer to our website: www.greatwesternexploration.com.au A N N U A L R E P O R T 2 0 1 2 25 C O N S O L I D AT E D S TAT E M E N T O F F I N A N C I A L P O S I T I O N AS AT 30 JUNE 2012 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other financial assets Other assets TOTAL CURRENT ASSETS NON CURRENT ASSETS Property, plant and equipment Mineral exploration expenditure Other financial assets TOTAL NON CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY NOTE 8 9 10 11 12 13,14 10 15 16 17 18 CONSOLIDATED COMPANY 2012 $ 2011 $ 2,946,426 19,564 7,600 33,828 3,238,312 102,161 35,000 19,744 3,007,418 3,395,217 123,519 5,636,335 70,874 5,830,728 8,838,146 254,008 12,794 266,802 266,802 42,363 3,894,011 58,723 3,995,097 7,390,314 137,404 - 137,404 137,404 8,571,344 7,252,910 13,964,484 2,239,594 (7,632,734) 8,571,344 10,989,441 744,269 (4,480,800) 7,252,910 The above statement of financial position should be read in conjunction with the accompanying notes. 26 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012 Interest received Net ( loss) / gain on revaluation of financial assets Employee benefit expense Administration expenses Directors’ fees Depreciation Compliance and regulatory expenses Mineral exploration written off Loss before income tax Income tax expense Loss for the year Other comprehensive income (net of tax) Total comprehensive income for the year Basic loss per share (cents per share) NOTE 5 5 13 6 7 CONSOLIDATED COMPANY 2012 $ 115,758 (27,400) (2,050,300) (619,623) (149,275) (17,441) (100,333) (296,742) 2011 $ 139,503 3,000 (267,189) (484,538) (78,750) (10,921) (93,480) (981,539) (3,145,356) (1,773,914) - - (3,145,356) (1,773,914) (6,578) (3,151,934) 3.36 - (1,773,914) 2.18 The above statement of comprehensive income should be read in conjunction with the accompanying notes. A N N U A L R E P O R T 2 0 1 2 27 C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y FOR THE YEAR ENDED 30 JUNE 2012 ISSUED CAPITAL $ SHARE OPTION RESERVE $ ACCUMULATED LOSSES $ TOTAL EQUITY $ 30 JUNE 2012 Balance At 1 July 2011 Loss for the year Other comprehensive income Total comprehensive income for the year Share based payments Shares issued during the year net of transaction costs Balance at 30 June 2012 30 JUNE 2011 Balance At 1 July 2010 Loss for the year Other comprehensive income Total comprehensive income for the year Shares issued during the year net of transaction costs Balance at 30 June 2011 10,989,441 744,269 2,239,594 (7,632,734) 7,764,319 744,269 - - - 1,495,325 - - - - - (4,480,800) (3,145,356) (6,578) 7,252,910 (3,145,356) (6,578) (3,151,934) (3,151,934) 1,495,325 2,975,043 8,571,344 (2,706,886) (1,773,914) - 5,801,702 (1,773,914) - (1,773,914) (1,773,914) - - - 744,269 (4,480,800) 3,225,122 7,252,910 - - - - 2,975,043 13,964,484 - - - 3,225,122 10,989,441 The above statement of changes in equity should be read in conjunction with the accompanying notes. 28 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S FOR THE YEAR ENDED 30 JUNE 2012 NOTE CONSOLIDATED COMPANY 2012 $ 2011 $ Cash flows from operating activities Cash payments to suppliers and employees Payments for exploration and evaluation expenditure Interest received Net cash used in operating activities 19 Cash flows from investing activities Payments for acquisition of mineral tenements Payments for property, plant and equipment Payments for security deposits Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares and options Share issue costs Net cash provided by financing activities Net increase in cash held Cash at the beginning of the financial year Cash at the end of the financial year 8 (1,257,969) (915,566) 155,431 (2,018,104) (1,003,077) (98,597) (12,151) (1,113,825) 3,025,066 (185,023) 2,840,043 (291,886) 3,238,312 2,946,426 (937,046) (1,727,652) 178,966 (2,485,732) (83,994) (7,635) (58,723) (150,352) 3,389,414 (174,292) 3,215,122 579,038 2,659,274 3,238,312 The above statement of cash flows should be read in conjunction with the accompanying notes. A N N U A L R E P O R T 2 0 1 2 29 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2012 These consolidated financial statements and notes represent those of Great Western Exploration Limited and Controlled Entities (the “consolidated group” or “group”). The separate financial statements of the parent entity, Great Western Exploration Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. The financial statements were authorised for issue on 28th September 2012 by the Directors of the Company. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. Except for cash flow information, the financial statements have been prepared on an accurate basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. a) Going Concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity, and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group incurred a loss for the year of $3,145,356. The Group has a working capital surplus of $2,740,616 at 30 June 2012. The Group has ongoing expenditures in respect of administration costs, exploration and evaluation expenditure on its Australian exploration projects, together with planned expenditure in Kazakhstan over the coming financial years. Although the Kazakhstan expenditure is not due the Directors are conscious of the fact that they will need to raise additional capital. In addition to the traditional methods of capital raising through private equity placements and rights issues to shareholders, the Directors also believe, that given its current share price and the work programmes scheduled between now and the end of Quarter 1, 2012, the Group is well placed to see the exercise of a significant proportion of the 26.5 million options currently on issue which are exercisable at $0.30 and expire 28 February 2013, the subject of the Prospectus dated 13 August 2012. The Directors believe that at the date of signing of the financial statements there are reasonable grounds to believe that, having regard to the matters set out above, the Group will be able to raise sufficient funds to meet its obligations as and when they fall due and continue to proceed with the Group’s objectives beyond the currently committed expenditure for the 12-month period from the date of signing this financial report. In arriving at this conclusion, the Directors are comfortable that, as and when required, they will be able to raise equity to provide sufficient working capital. Should the Directors not achieve the matters as set out above, there is material uncertainty whether the Group will continue as a going concern and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report. 30 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 1. a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Going Concern (continued) The financials do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary, should the Group not continue as a going concern and meet its debts as and when they fall due. b) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Great Western Exploration Limited at the end of the reporting period. A controlled entity is any entity over which Great Western Exploration Limited has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 24 to the financial statements. In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full on consolidation. Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the consolidated statement of financial position and statement of comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date. Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. Goodwill (i) (ii) The consideration transferred; Any non-controlling interest, and (iii) The acquisition date fair value of any previously held equity interest over the acquisition date fair value of net identifiable assets acquired. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. A N N U A L R E P O R T 2 0 1 2 31 NOTES TO THE FINANCIAL STATEMENTS 1. b) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Principles of Consolidation (continued) Goodwill (continued) The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100% interest will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most circumstances to measure the non-controlling interest in the acquire either at fair value (full goodwill method) or at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets (proportionate interest method). In such circumstances, the Group determines which method to adopt for each acquisition and this is stated in the respective notes to these financial statements disclosing the business combination. Under the full goodwill method, the fair value of the non-controlling interests is determined using valuation techniques which make the maximum use of market information where available. Under this method, goodwill attributable to the non- controlling interests is recognised in the consolidated financial statements. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units or groups of cash- generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of. c) New Accounting Standards for Application in Future Periods The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of the new and amended pronouncements. The Group’s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below: • AASB 9: Financial Instruments (December 2010) and AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applicable for annual reporting periods commencing on or after 1 January 2013). These Standards are applicable retrospectively and include revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The key changes made to accounting requirements include: ~ simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair ~ ~ ~ value; simplifying the requirements for embedded derivatives; removing the tainting rules associated with held-to-maturity assets; removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; ~ allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; ~ requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and 32 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 1. c) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) New Accounting Standards for Application in Future Periods (continued) ~ requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss. The Group has not yet been able to reasonably estimate the impact of these pronouncements on its financial statements. • AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012). This Standard makes amendments to AASB 112: Income Taxes and incorporates Interpretation 121: Income Taxes – Recovery of Revalued Non-Depreciable Assets into AASB 112. Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The amendments are not expected to significantly impact the Group. • AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of Interests in Other Entities, AASB 127: Separate Financial Statements (August 2011), AASB 128: Investments in Associates and Joint Ventures (August 2011) and AASB 2011–7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009–11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] (applicable for annual reporting periods commencing on or after 1 January 2013). AASB 10 replaces parts of AASB 127: Consolidated and Separate Financial Statements (March 2008, as amended) and Interpretation 112: Consolidation – Special Purpose Entities. AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. The Group has not yet been able to reasonably estimate the impact of this Standard on its financial statements. AASB 11 replaces AASB 131: Interests in Joint Ventures (July 2004, as amended). AASB 11 requires joint arrangements to be classified as either “joint operations” (where the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities) or “joint ventures” (where the parties that have joint control of the arrangement have rights to the net assets of the arrangement). Joint ventures are required to adopt the equity method of accounting (proportionate consolidation is no longer allowed). AASB 12 contains the disclosure requirements applicable to entities that hold an interest in a subsidiary, joint venture, joint operation or associate. AASB 12 also introduces the concept of a “structured entity”, replacing the “special purpose entity” concept currently used in Interpretation 112, and requires specific disclosures in respect of any investments in unconsolidated structured entities. This Standard will affect disclosures only and is not expected to significantly impact the Group. To facilitate the application of AASBs 10, 11 and 12, revised versions of AASB 127 and AASB 128 have also been issued. These Standards are not expected to significantly impact the Group. A N N U A L R E P O R T 2 0 1 2 33 NOTES TO THE FINANCIAL STATEMENTS 1. c) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) New Accounting Standards for Application in Future Periods (continued) • AASB 13: Fair Value Measurement and AASB 2011–8: Amendments to Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 7, 9, 2009–11, 2010–7, 101, 102, 108, 110, 116, 117, 118, 119, 120, 121, 128, 131, 132, 133, 134, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and Interpretations 2, 4, 12, 13, 14, 17, 19, 131 & 132] (applicable for annual reporting periods commencing on or after 1 January 2013). AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair value, and requires disclosures about fair value measurement. AASB 13 requires: ~ ~ inputs to all fair value measurements to be categorised in accordance with a fair value hierarchy; and enhanced disclosures regarding all assets and liabilities (including, but not limited to, financial assets and financial liabilities) to be measured at fair value. These Standards are not expected to significantly impact the Group. • AASB 2011–9: Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049] (applicable for annual reporting periods commencing on or after 1 July 2012). The main change arising from this Standard is the requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently. This Standard affects presentation only and is therefore not expected to significantly impact the Group. • AASB 119: Employee Benefits (September 2011) and AASB 2011–10: Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) [AASB 1, AASB 8, AASB 101, AASB 124, AASB 134, AASB 1049 & AASB 2011–8 and Interpretation 14] (applicable for annual reporting periods commencing on or after 1 January 2013). These Standards introduce a number of changes to accounting and presentation of defined benefit plans. The Group does not have any defined benefit plans and so is not impacted by the amendment. AASB 119 (September 2011) also includes changes to the accounting for termination benefits that require an entity to recognise an obligation for such benefits at the earlier of: (i) for an offer that may be withdrawn – when the employee accepts; (ii) for an offer that cannot be withdrawn – when the offer is communicated to affected employees; and (iii) where the termination is associated with a restructuring of activities under AASB 137: Provisions, Contingent Liabilities and Contingent Assets, and if earlier than the first two conditions – when the related restructuring costs are recognised. The Group has not yet been able to reasonably estimate the impact of these changes to AASB 119. d) Cash and Cash Equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of six months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. e) Trade and Other Receivables Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the receivable. 34 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) f) Investments and Other Financial Assets Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the year established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred. (i) Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in the profit or loss and the related assets are classified as current assets in the Statement of Financial Position. (ii) Loans and receivables Loans and receivables including loan notes and loans to key management personnel are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. These are included in current assets except for those maturities greater than 12 months after balance date, which are classified as non-current. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets. (iv) Available-for-Sale Investments Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the balance sheet date. Investments with no active market, and whose fair values cannot be reliably measured, shall be measured at cost. At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the Statement of Comprehensive Income. A N N U A L R E P O R T 2 0 1 2 35 NOTES TO THE FINANCIAL STATEMENTS 1. g) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property, Plant and Equipment Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and Equipment – over 6 to 15 years Motor Vehicles Computer Equipment – – over 4 years over 3 years The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. h) Exploration and Evaluation Expenditure Exploration and evaluation costs are capitalised as exploration and evaluation assets on a project by project basis pending determination of the technical feasibility and commercial viability of the project. The capitalised costs are presented as either tangible or intangible exploration and evaluation assets according to the nature of the assets acquired. When a licence is relinquished or a project abandoned, the related costs are recognised in the Statement of Comprehensive Income immediately. Exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount an impairment loss is recognised in the Statement of Comprehensive Income. i) Interests in Joint Ventures The Group’s shares of the assets, liabilities, revenue and expenses of jointly controlled operations have been included in the appropriate line items of the consolidated financial statements. Details of the Group’s interests are provided in Note 14. j) Impairment of Assets Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds it recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are Group at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or Group of assets (cash –generating units). Non- financial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. k) Trade and other Payables Trade and other payables are carried at amortised cost, due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. 36 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) l) Provisions and Employee Leave Benefits Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of the provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. Employee Leave Benefits (i) Wages, salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised and measured as the present level of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. m) Share Based Payment Transactions (i) Equity settled transaction: The Group provides benefits to its employees (including key management personnel) in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The Group has in place the Great Western Exploration Limited Employee Share Option Plan to provide benefits to directors and senior executives. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a binomial model. In valuing equity-settled transactions, no account is taken of any vesting conditions other than conditions linked to price of the shares of the Group (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). A N N U A L R E P O R T 2 0 1 2 37 NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) m) Share Based Payment Transactions (continued) (i) Equity settled transaction (continued): At each subsequent reporting date until vesting the cumulative charge to the Statement of Comprehensive Income is the produce of: (i) the grant date fair value of the award; (ii) the current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and (iii) the expired portion of the vesting period. The charge to the Statement of Comprehensive Income for the year is the cumulative amount as calculated above less the amounts already charged in previous years. There is a corresponding credit to equity. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. n) Issued Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. o) Revenue Recognition Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. (i) Interest Income Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant year using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. p) Income Tax and other Taxes Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current year’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. 38 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 1. p) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Tax and other Taxes (continued) Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in the transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Other Taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows. A N N U A L R E P O R T 2 0 1 2 39 NOTES TO THE FINANCIAL STATEMENTS 1. p) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Tax and other Taxes (continued) Other Taxes (continued) Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. q) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: • • • costs of servicing equity (other than dividends); the after tax effect of dividends and interest associated with dilutive potential ordinary shares; and other non-discretionary changes in revenues or expenses during the year that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. r) Comparatives Great Western Exploration Limited became a consolidated entity on 2 December 2011 and this is the Group’s first financial report since consolidation. As a result, the 30 June 2011 comparatives with respect to the financial statements represent Great Western Exploration Limited as a single entity. Further details of the consolidated entities are described in Note 24. 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Equally, the Group continually employs judgement in the application of its accounting policies. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions. Those which may materially affect the carrying amounts of assets and liabilities reported in future years are discussed below. (a) Significant accounting estimates and judgements (i) Impairment of non-financial assets The Group assesses impairment on all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. These include technology and economic environments. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves value-in-use calculations, which incorporate a number of key estimates and assumptions. (ii) Share-based payment transactions The Group measures the cost of equity settled transactions with directors and employees by reference to the fair value of the equity instruments at the date at which they are granted. Equity settled transactions comprise only options. Their fair value is determined using the Binomial Options Pricing model. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting year but my impact expenses and equity. 40 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued) (a) Significant accounting estimates and judgements (continued) (iii) Estimation of useful lives of assets The estimation of useful lives of assets has been based on historical experience. Adjustments to useful lives are made when considered necessary. Depreciation and amortisation charges as well as estimated useful lives are included in Note 1(g). (iv) Exploration and evaluation costs Acquisition, exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area that has not at balance sheet 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 relating to, the area of interest are continuing. (v) Environmental issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the Directors understanding thereof. At the current stage of the Group’s development and its current environmental impact, the Directors believe such treatment is reasonable and appropriate. (vi) Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates of Directors. These estimates take into account both the financial performance and position of the Group as they pertain to current income taxation legislation, and the Directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that Directors best estimate, pending an assessment by the Australian Taxation Office. A N N U A L R E P O R T 2 0 1 2 41 NOTES TO THE FINANCIAL STATEMENTS 3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: NOTE CONSOLIDATED COMPANY 2012 $ 2011 $ Financial Assets Cash and cash equivalents Receivables Other financial assets- Cash on deposit Financial assets at fair value through profit or loss - Held for trading Financial Liabilities Trade and payables 8 9 10 10 15 2,946,426 19,564 70,874 7,600 3,044,646 254,008 254,008 3,238,312 102,161 58,723 35,000 3,434,196 137,404 137,404 Financial Risk Management Policies The Group attempts to mitigate risks that may affect its future performance through a systematic process of identifying, assessing, reporting and managing risks of corporate significance. The management and the Board discuss the principal risks of our businesses, particularly during the strategic planning and budgeting processes. The board sets policies for the implementation of systems to manage and monitor identifiable risks. The Board Risk Committee is responsible for the oversight of risk management. The Group’s principal financial instruments comprise cash and short term deposits. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The main purpose of these financial assets and liabilities is to raise finance for the Group’s operations. It is, and has been throughout the entire year under review, the Group’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group’s financial instruments are cash flow interest rate risk. Other minor risks are either summarised below or disclosed in Note 9 in the case of credit risk and Note 17 in the case of capital risk management. The Board reviews and agrees policies for managing each of these risks. (a) CREDIT RISK The Group minimises credit risk by undertaking a review of its potential customers’ financial position and the viability of the underlying project prior to entering into material contracts. Financial instruments other than receivables that potentially subject the Group to concentrations of credit risk consist principally of cash deposits. The Group places its cash deposits with high credit-quality financial institutions, being in Australia only the major Australian (big four) banks. Cash holdings in other countries are generally not significant. The Group’s cash deposits all mature within twelve months and attract a rate of interest at normal short-term money market rates. The maximum amount of credit risk the Group considers it would be exposed to would be $3,044,464 (2011: $3,434,196) being the total of its cash and cash equivalents and financial assets. 42 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (b) CASH FLOW INTEREST RATE RISK The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s short term deposits with a floating interest rate. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The Group does not engage in any hedging or derivative transactions to manage interest rate risk. The following table sets out the Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of these financial instruments. FLOATING INTEREST NON-INTEREST TOTAL CARRYING RATE BEARING AMOUNT CONSOLIDATED COMPANY CONSOLIDATED COMPANY CONSOLIDATED COMPANY NOTE 2012 $ 2011 $ 2012 $ 2011 $ 2012 $ 2011 $ Financial Assets Cash and cash equivalents 8 2,946,426 3,238,312 19,564 102,161 2,965,990 3,340,473 Weighted average interest rate 4.5 6.1 The effect on profit and equity, after tax, if interest rates at that date had been 10% higher or 10% lower with all other variables held constant as a sensitivity analysis. Would be a +/- change to profit and equity of $11,575 (2011: $13,950). A sensitivity of 10% has been selected as this is considered by management to be reasonable in the current environment. The Group constantly analyses its interest rate exposure to ensure the appropriate mix of fixed and variable rates. The Group has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the Group continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable interest rates. (c) PRICE RISK The Group is not exposed to equity securities price risk. There is no active market for available for sale investments. (d) LIQUIDITY RISK The Group’s objective is to match the terms of its funding sources to the terms of the assets or operations being financed. The Group uses a combination of trade payables and operating leases to provide its necessary debt funding. The Group aims to hold sufficient reserves of cash or cash equivalents to help manage the fluctuations in working capital requirements and provide the flexibility for investment into long-term assets without the need to raise debt. Contracted maturities of payables at balance date Payable - - - Less than 6 months 6 to 12 months 1 to 5 years CONSOLIDATED COMPANY 2012 $ 2011 $ 254,008 137,404 - - - - 254,008 137,404 A N N U A L R E P O R T 2 0 1 2 43 NOTES TO THE FINANCIAL STATEMENTS 3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (e) COMMODITY PRICE RISK Due to the early stage of the Group’s operations its exposure is considered minimal. Risk arises as its operations are involved in exploration and development of mineral commodities, changes in the price of commodities for which the Group is exploring and developing may result in changes to the Group’s market price. The Group entity does not hedge any of its exposures. (f) FOREIGN CURRENCY EXCHANGE RATE A risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency other than the Group’s functional currency. At present, the Group is not considered to be exposed to foreign currency risk. (g) NET FAIR VALUES The Group has no financial assets or liabilities where the carrying value amount exceeds fair value at balance date. The Group’s financial assets at fair value through profit or loss are listed investments (Note 10) and are categorised as Level 1. 4. OPERATING SEGMENTS SEGMENT INFORMATION Identification of reportable segments The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Group’s principal activities are mineral exploration and are managed primarily on a project by project basis. Operating segments are therefore determined on the same basis. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics. Types of products and services by segment The Group’s exploration projects consist of: • • Nickel and Gold Base metals Basis of accounting for purposes of reporting by operating segments Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. Segment assets Segment assets are clearly identifiable on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and intangible assets have not been allocated to operating segments. Segment liabilities Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilities include trade and other payables and certain direct borrowings. Unallocated items Items of revenue, expense, assets and liabilities are not allocated to operating segments if they are not considered part of the core operations of any segment. 44 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 4. OPERATING SEGMENTS (continued) SEGMENT INFORMATION (continued) (i) Segment performance DOOLGUNNA KAZAKHSTAN FORRESTANIA BULLSEYE BASE METALS NICKEL & MILLROSE COPPER GOLD NICKEL & GOLD OTHER $ - - - $ - - - $ - - - $ - - - $ - - - 30 JUNE 2012 External sales Total segment revenue Segment net profit/(loss) before tax Reconciliation of segment result to net profit/(loss) before tax: (i) Amount not included in segment result but reviewed by the Board: • • • • • • • • Interest received Net loss on revaluation of financial asset Employee benefit expense Directors fees Compliance Depreciation Other expenses Mineral exploration written off Net profit/(loss) before tax from continuing operations DOOLGUNNA KAZAKHSTAN FORRESTANIA BULLSEYE BASE METALS NICKEL & MILLROSE COPPER GOLD GOLD OTHER $ - - - $ - - - $ - - - $ - - - 30 JUNE 2011 External sales Total segment revenue Segment net profit/(loss) before tax Reconciliation of segment result to net profit/(loss) before tax: (i) Amounts not included in segment result but reviewed by the Board: • • • • • • Interest received Net gain on revaluation of financial asset Employee benefits expense Directors fees Compliance costs Depreciation • Other expenses • Mineral exploration written off Net profit/(loss) before tax from continuing operations A N N U A L R E P O R T 2 0 1 2 $ - - (897,518) (897,518) 139,503 3,000 (267,189) (78,750) (93,480) (10,921) (484,538) (84,021) (1,773,914) 45 TOTAL $ - - - 115,758 (27,400) (2,050,300) (149,275) (100,333) (17,441) (619,623) (296,742) (3,145,356) TOTAL $ - - NOTES TO THE FINANCIAL STATEMENTS 4. OPERATING SEGMENTS (continued) SEGMENT INFORMATION (continued) (ii) Segment assets DOOLGUNNA KAZAKHSTAN FORRESTANIA BULLSEYE BASE METALS $ NICKEL & MILLROSE COPPER $ GOLD $ GOLD $ OTHER $ TOTAL $ 30 JUNE 2012 Segment assets 1,943,214 1,047,165 2,419,980 225,977 - 5,636,335 Segment asset increases for the year: • • Capital expenditure Acquisitions 293,723 159,888 324,289 722,876 41,609 196,948 44,420 - 2,991 - 900,989 885,755 453,611 1,047,165 41,609 199,939 44,420 1,786,744 Reconciliation of segment assets to total assets: Unallocated assets: • • • • • Cash and cash equivalents Receivables Property plant and equipment Other assets Other financial assets Total assets from continuing operations 2,946,426 19,564 123,519 33,828 78,474 8,838,146 DOOLGUNNA PINE CREEK FORRESTANIA BULLSEYE BASE METALS $ GOLD & URANIUM $ NICKEL & MILLROSE GOLD $ GOLD $ OTHER $ TOTAL $ 30 JUNE 2011 Segment assets 1,489,602 - 2,378,371 26,038 - 3,894,011 Segment asset increases for the year: • • Capital expenditure 1,118,963 369,300 Acquisitions 10,000 - 1,128,963 369,300 33,787 62,188 95,975 4,231 21,807 26,038 20,082 1,546,363 - 93,995 20,082 1,640,358 Reconciliation of segment assets to total assets: Unallocated assets: • • • • • Cash and cash equivalents Receivables Other assets Property plant and equipment Other financial assets Total assets from continuing operations 3,238,312 102,161 19,744 42,363 93,723 7,390,314 46 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 4. OPERATING SEGMENTS (continued) SEGMENT INFORMATION (continued) (iii) Segment liabilities DOOLGUNNA KAZAKHSTAN FORRESTANIA BULLSEYE BASE METALS $ - NICKEL & MILLROSE COPPER GOLD GOLD OTHER $ - $ - $ - $ - 30 JUNE 2012 Segment liabilities Reconciliation of segment liabilities to total liabilities: Unallocated liabilities: • Other liabilities Total liabilities from continuing operations TOTAL $ - 254,008 254,008 9,091 - - 4,231 - 13,322 30 JUNE 2011 Segment liabilities Reconciliation of segment liabilities to total liabilities: Unallocated liabilities: • Other liabilities Total liabilities from continuing operations REVENUE BY GEOGRAPHICAL REGION The Group’s revenue is received from sources within Australia. (iv) Assets by geographical region The location of segment assets is disclosed below by geographical location of the assets: 124,082 137,404 Australia Kazakhstan (v) Major customers CONSOLIDATED BALANCE COMPANY BALANCE AS AT 30.6.2012 AS AT 30.6.2011 $ $ 4,589,170 1,047,165 5,636,335 3,894,011 - 3,894,011 Due to the nature of its current operations, the Group does not provide products and services. A N N U A L R E P O R T 2 0 1 2 47 NOTES TO THE FINANCIAL STATEMENTS 5. EXPENSES Employee benefits Salaries Superannuation Share-based payments Provision for employee leave Administration Accounting Printing and postages Legal Consultants Insurance Other CONSOLIDATED COMPANY 2012 $ 2011 $ 479,363 62,818 1,495,325 12,794 2,050,300 103,635 17,040 65,283 36,800 27,735 369,130 619,623 2012 $ 195,188 72,001 - - 267,189 72,465 11,857 11,003 187,920 14,943 186,350 484,538 2011 $ 6. a) INCOME TAX The prima facie tax on profit/(loss) from ordinary activities before income tax is reconciled to the income tax expense as follows: Accounting loss before income tax Income tax benefit at the statutory income tax rate of 30% (2011: 30%) Expenditure not allowable for income tax purposes Benefit of tax losses not brought to account as an asset Income Tax expense reported in the Statement of Comprehensive Income (3,145,356) (943,607) 303,437 640,170 - (1,773,914) (532,174) 301,421 230,753 - b) As at 30 June 2012, the Group has estimated tax losses of approximately $10,266,208 (2011: $8,163,965), which may be available to be offset against deferred tax liabilities and taxable income in future years. The availability of these losses is subject to satisfying Australian taxation legislative requirements. The deferred tax asset attributable to tax losses has not been brought to account in these financial statements as the Directors believe it is not presently appropriate to regard realisation of the future income tax benefits as probable. c) Deferred Tax Liability With regard to Mineral Exploration Expenditure of $5,636,335 (2011: $3,894,011) the tax liability in respect of the book value has not been brought to account as it is offset by the tax losses set out in 6(b) above. 48 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS CONSOLIDATED COMPANY 2012 $ 2011 $ 7. EARNINGS PER SHARE Loss used in the calculation of basic EPS (3,151,934) (1,773,914) Weighted average number of ordinary shares used in calculation of basic earnings per share 93,568,702 81,194,686 143,150 2,803,276 2,946,426 58,249 3,180,063 3,238,312 16,611 2,953 19,564 61,461 40,700 102,161 8. CASH AND CASH EQUIVALENTS Cash at bank Cash on deposit The effective interest rate on short term bank deposits on average was 4.5% (2011 6%), with an average maturity of 6 months. 9. TRADE AND OTHER RECEIVABLES Current GST receivable Other Sundry debtors are non-interest bearing and receivable within 30 days. Allowance for impairment loss Trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due. Fair value and credit risk Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value. Given the nature of the receivables the Group’s exposure to risk is not considered material. 10. OTHER FINANCIAL ASSETS Current Financial assets at fair value through profit or loss Held for trading Australian listed shares 7,600 35,000 Changes in fair value are included in the statement of comprehensive income. Non-current Cash on deposit 70,874 58,723 Cash on deposit as security for bank guarantees in respect of rental premises and mineral exploration tenements. A N N U A L R E P O R T 2 0 1 2 49 NOTES TO THE FINANCIAL STATEMENTS 11. OTHER ASSETS Current Prepayments 12. PROPERTY, PLANT AND EQUIPMENT Plant and Equipment – at cost Less: accumulated depreciation Reconciliation of the carrying amount of property, plant and equipment Carrying amount at beginning of year Additions Disposals Depreciation for the year Carrying amount at end of financial year 13. MINERAL EXPLORATION EXPENDITURE Balance at beginning of the year Deferred exploration expenditure Disposals Impairment Mineral expenditure written off Balance at end of financial year CONSOLIDATED COMPANY 2012 $ 2011 $ 33,828 19,744 161,114 (37,595) 123,519 42,363 98,597 - (17,441) 123,519 3,894,011 2,039,066 - - (296,742) 5,636,335 70,132 (27,769) 42,363 48,273 5,011 - (10,921) 42,363 3,151,170 1,724,380 - - (981,539) 3,894,011 The value of the Group’s interest in exploration expenditure is dependent upon: • • • the continuance of the Group’s rights to tenure of the areas of interest; the results of future exploration; and The recoupment of costs through successful development and exploitation of the areas of interest or, alternatively, by their sale. 14. JOINT VENTURE The Group has entered into a Joint Venture Agreement with TKS Samruk, Kazakhstan’s National Mining Company, for the exploration and development of the Spasskaya Copper Project in Kazakhstan. The Group has agreed to fund the project through to Bankable Feasibility Study to earn a 50% interest. With the Group to act as Operating Managers of the JV and the project, responsible for all budgets, exploration planning and execution. Upon grant, the Sub Soil Licences will be transferred into a company incorporated in Kazakhstan, of which the Group will hold a 50% interest. The Group may withdraw from the JV, without penalty, prior to committing to the following year’s exploration budget, in that event its interest in the JV company will be transferred to its JV partner for no consideration. 50 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS CONSOLIDATED COMPANY 2012 $ 2011 $ 111,020 142,988 - 254,008 60,421 76,983 - 137,404 15. TRADE AND OTHER PAYABLES Current Trade payables Sundry payables and accruals Amounts payable to: - Key management personnel related entities Due to the short-term nature of these payables, their carrying value is assumed to approximate fair value. Trade payables are non-interest bearing and are generally settled within 30 days. 16. PROVISIONS Current Long-term Employee benefits 12,794 - 17. ISSUED CAPITAL Ordinary Shares MOVEMENTS Ordinary Shares Balance 1 July 13,964,484 10,989,441 NUMBER CONSOLIDATED COMPANY 2012 2011 2012 $ 2011 $ 87,791,533 76,262,532 10,989,441 7,764,319 Issue for acquisition of mineral tenement 500,000 100,000 135,000 10,000 Placement - December 2011 10,028,333 - 3,008,500 - October 2010 - February 2011 - - Options exercised during year 55,221 1,964,286 9,446,831 17,884 - - 16,566 - 550,000 2,834,049 5,365 Issue costs At 30 June 98,375,087 87,791,533 14,149,507 11,163,733 - - (185,023) (174,292) 98,375,087 87,791,533 13,964,484 10,989,441 The Company has issued share capital amounting to 98,375,087 ordinary shares with no par value. Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. A N N U A L R E P O R T 2 0 1 2 51 NOTES TO THE FINANCIAL STATEMENTS 17. ISSUED CAPITAL (continued) At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. Capital Risk Management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Group at 30 June 2012 and 30 June 2011 are as follows: Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position 18. RESERVES MOVEMENTS Options Listed - Expiring 30 June 2012 Exercisable at $0.30 At 1 July Issues during the year At 30 June Unlisted - Expiring 30 June 2012 Exercisable at $0.30 At 1 July Issues during the year Exercised during the year CONSOLIDATED COMPANY 2012 $ 2,946,426 19,564 (254,008) 2,711,982 2011 $ 3,238,312 102,161 (137,404) 3,203,069 NUMBER CONSOLIDATED COMPANY CONSOLIDATED COMPANY 2012 2011 2012 $ 2011 $ 26,558,498 26,576,382 7,919 7,919 - - - - - 26,558,498 7,919 7,919 6,000,000 6,000,000 692,350 692,350 - - - - - - - - - - - Exercised during the year (55,221) (17,884) Expired during the year (26,503,277) - - - Expired during the year (6,000,000) At 30 June - 6,000,000 692,350 692,350 52 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 18. RESERVES (continued) MOVEMENTS Options Unlisted - Expiring 30 June 2012 Exercisable at $0.40 At 1 July Issues during the year Exercised during the year At 30 June Unlisted - Expiring 30 May 2016 Exercisable at $0.60 At 1 July Issues during the year Exercised during the year At 30 June Unlisted - Expiring 30 June 2015 Exercisable at $0.40 At 1 July Issues during the year Exercised during the year At 30 June Total - - - - 4.000.000 - 4,000,000 - 350,000 - 350,000 Expired during the year (2,000,000) NUMBER CONSOLIDATED COMPANY CONSOLIDATED COMPANY 2012 2011 2012 $ 2011 $ 2,000,000 2,000,000 44,000 44,000 - - - - - - - - - 2,000,000 44,000 44,000 - - - - - - - - - 1,371,600 - 1,371,600 - - - 123,725 2,239,594 - - - - - - - - 744,269 4,350,000 34,558,498 The share based payments reserve is used to record the value of share based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 22 for further details of these plans. The Group operates an Employee Share Option Plan under which Options to subscribe for the Company’s shares have been granted to directors, senior executives and employees. A N N U A L R E P O R T 2 0 1 2 53 NOTES TO THE FINANCIAL STATEMENTS 19. CASH FLOW STATEMENT RECONCILIATION a) Reconciliation of net loss after tax to net cash flows from operations Loss for the year Depreciation Share based payments Mineral exploration expenditure written off Provisions Changes in assets and liabilities (Increase)/Decrease in trade and other receivables (Increase)/Decrease in other assets Increase/(Decrease) in trade and other payables (Increase)/Decrease in exploration expenditure b) Non-cash Financing and Investing Activities i) Acquisition of Exploration prospect CONSOLIDATED COMPANY 2012 $ 2011 $ (3,145,356) 17,441 1,495,325 296,742 12,794 53,996 36,232 130,288 (915,566) (2,018,104) (1,773,914) 10,921 - 981,539 - 9,841 (18,577) 32,110 (1,727,652) (2,485,732) During the year the Group paid $135,000 for the acquisition of a 90% interest in a tenement at Doolgunna, which was satisfied by the issue of 500,000 ordinary fully paid shares at an issue price of $0.27 each. 20. RELATED PARTY DISCLOSURE a) KEY MANAGEMENT PERSONNEL Details relating to key management personnel are set out in Note 21. b) TRANSACTIONS WITH DIRECTORS AND DIRECTORS RELATED ENTITIES During the year the Group paid $9,895 (2011: $2,050) to Somes & Cooke, an accounting practice of which Mr K C Somes, a former Director, is a partner, for accounting and taxation services. During the year, the Group paid $Nil (2011: $45,833) to Fleubaix Pty Ltd, an entity of which Mr T B Bannerman is a Director and Shareholder, for office rental. The above transactions were entered into on normal commercial terms and conditions. 54 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS CONSOLIDATED COMPANY 2012 $ 2011 $ 21. KEY MANAGEMENT PERSONNEL (a) COMPENSATION FOR KEY MANAGEMENT PERSONNEL Short term employee benefits Post employment benefits Other long term benefits Termination benefits Share based payments 437,315 33,090 - - 1,371,600 1,842,005 b) OPTION HOLDING OF KEY MANAGEMENT PERSONNEL BALANCE GRANTED OPTIONS NET 1 JULY AS EXERCISED/ CHANGE BALANCE 30 JUNE 336,448 70,084 - - - 406,532 NOT 2011 REMUNERATION CANCELLED OTHER 2012 EXERCISABLE EXERCISABLE 30 JUNE 2012 Directors J Arulampalam* F Cannavo K C Somes** J A Luckett C D Mathieson*** Executives K F Edwards - - 3,000,000 1,000,000 - - 1,385,478 1,750,000 - 1,140,848 - - - - 1,385,478 1,750,000 1,100,000 1,100,000 1,140,848 - - - - - 3,000,000 3,000,000 1,000,000 1,000,000 - - - - - - - - - - - - - - - 4,276,326 4,000,000 5,376,326 1,100,000 4,000,000 4,000,000 * J Arulampalam resigned as a director 31 January 2012. ** K C Somes resigned as a director 15 June 2012. *** C D Mathieson was appointed as a director 9 December 2011. 30 JUNE 2011 Directors J Arulampalam** F Cannavo** T B Bannerman* K C Somes J A Luckett Executives K F Edwards BALANCE GRANTED OPTIONS NET 1 JULY AS EXERCISED/ CHANGE BALANCE 30 JUNE NOT 2010 REMUNERATION CANCELLED OTHER 2011 EXERCISABLE EXERCISABLE - - 4,000,000 1,385,478 1,750,000 1,140,848 8,276,326 - - - - - - - - - - - - - - - - - - - - (1,000,000) 3,000,000 3,000,000 - - - 1,385,478 1,385,478 1,750,000 1,750,000 1,140,848 1,140,848 (1,000,000) 7,276,326 7,276,326 - - - - - - - * ** T B Bannerman resigned as a director on 30 May 2011. J Arulampalam and F Cannavo were appointed Directors on 30 May 2011. A N N U A L R E P O R T 2 0 1 2 55 NOTES TO THE FINANCIAL STATEMENTS 21. KEY MANAGEMENT PERSONNEL (continued) c) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL 30 JUNE 2012 Directors J Arulampalam* F Cannavo K C Somes** J A Luckett C D Mathieson*** Executives K F Edwards BALANCE GRANTED AS ON EXERCISE NET CHANGE BALANCE 1 JULY 2011 REMUNERATION OF OPTIONS OTHER 30 JUNE 2012 - 3,650,977 770,955 3,475,000 - 54,464 7,951,396 - - - - - - - - - - - - - - - - 249,023 3,900,000 - 770,955 200,000 3,675,000 3,700,123 3,700,123 - 54,464 4,149,146 12,100,542 * ** J Arulampalam resigned as a director on 31 January 2012. KC Somes resigned as a director on 15 June 2012. *** C D Mathieson was appointed as a director on 9 December 2011. 30 JUNE 2011 Directors J Arulampalam* F Cannavo* T B Bannerman** K C Somes J A Luckett Executives K F Edwards BALANCE GRANTED AS ON EXERCISE NET CHANGE BALANCE 1 JULY 2010 REMUNERATION OF OPTIONS OTHER 30 JUNE 2011 - - 4,000,000 770,955 3,475,000 54,464 8,300,419 - - - - - - - - - - - - - - - - 3,650,977 3,650,977 - - - - 4,000,000 770,955 3,475,000 54,464 3,650,977 11,951,396 * J Arulampalam and F Cannavo were appointed Directors on 30 May 2011. ** T B Bannerman resigned as a Director on 30 May 2011 22. SHARE BASED PAYMENTS a) RECOGNISED SHARE BASED PAYMENT EXPENSES The share based payment expense recognised for employee services received during the year is shown in the table below: CONSOLIDATED COMPANY Expense arising from equity settled share-based payment transactions 1,495,325 Expense arising from cash settled share-based payment transactions Total expense arising from share-based payment transactions - 1,495,325 2012 $ 2011 $ - - - 56 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 22. SHARE BASED PAYMENTS (continued) a) RECOGNISED SHARE BASED PAYMENT EXPENSES (continued) The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2012 and 2011. b) TYPES OF SHARE BASED PAYMENT PLANS Great Western Exploration Limited, Employee Share Option Plan Share options are granted to senior executives and designed to provide executives an incentive and participate along with shareholders by increasing the value of the Company’s shares. The options are issued by the Board having regard, in each case to: (i) (ii) the contribution to the Group which has been made by the Participant; the period of employment of the Participant with the Group, including (but not limited to) the years of service by that Participant; (iii) the potential contribution of the Participant to the Group; and (iv) any other matters which the Board considers in its absolute discretion, to be relevant. The options are issued to participants at a price the Board considers appropriate, but in any event, no more than nominal consideration. Details of options expiry date and exercise price are set out in Note 22(c) below. c) SUMMARY OF OPTIONS GRANTED UNDER EMPLOYEE SHARE OPTION PLAN Outstanding at beginning of financial year 6,000,000 30 cents 6,000,000 30 cents 2012 2011 NO. EXERCISE PRICE NO. EXERCISE PRICE Granted during the year - - expiring 30 May 2016 expiring 30 June 2015 Forfeited during the year Exercised during the year Outstanding at end of financial year 4,000,000 350,000 (6,000,000) - 4,350,000 60 cents 40 cents - - - - - - - 6,000,000 - - - - - Options granted under Employee Share Option Plan 6,000,000 options are exercisable at $0.30 cents and expiring at 30 June 2012. 4,000,000 options are exercisable at $0.60 cents and expiring 30 May 2016. 350,000 options are exercisable at $0.40 cents and expiring 30 June 2015. The total number of options exercisable at year end was 4,350,000. No options were exercised during the year. A N N U A L R E P O R T 2 0 1 2 57 NOTES TO THE FINANCIAL STATEMENTS 22. SHARE BASED PAYMENTS (continued) d) OPTION PRICING MODEL Equity-settled transactions The fair value of the equity-settled share options granted under the Employee Share Option Plan is estimated as at the date of the grant using a Binomial Model Pricing Model taking into account the terms and conditions upon which the options were granted. Dividend yield (%) Expected volatility (%)* Risk free interest rate (%) Expected life of options (yrs) Option exercise price ($) Weighted average share price at measurement date ($) 9 AUGUST 2011 2 SEPTEMBER 2011 0 135 4.04 4.8 0.60 0.405 0 135 3.83 3.8 0.40 0.425 * Volatility has been derived from the standard deviation of Great western Exploration Limited’s share price over a 12 month period prior to the grant of the options. 23. PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. STATEMENT OF FINANCIAL POSITION ASSETS Current Assets Non-current assets TOTAL ASSETS LIABILITIES Current liabilities Non-current liabilities TOTAL LIABILITIES EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 2012 $ 2011 $ 2,936,731 5,881,399 8,818,130 240,207 - 240,207 13,964,484 2,239,594 (7,626,155) 8,571,923 3,395,217 3,995,097 7,390,314 137,404 - 137,404 10,989,441 744,269 (4,480,800) 7,252,910 STATEMENT OF COMPREHENSIVE INCOME Total loss Total comprehensive income (3,145,355) (3,145,355) (1,773,914) (1,773,914) 58 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D NOTES TO THE FINANCIAL STATEMENTS 23. PARENT INFORMATION (continued) Guarantees Great Western Exploration Limited has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries. Contingent Liabilities At 30 June 2012, there were no contingent liabilities in relation to the subsidiaries. Contractual commitments At 30 June 2012, Great Western Exploration Limited had not entered into any contractual commitments for the acquisition of property, plant and equipment (2011: Nil). 24. CONTROLLED ENTITIES Interests are held in the following: NAME PRINCIPAL ACTIVITIES COUNTRY OF INCORPORATION SHARES OWNERSHIP INTEREST GTE Holdings Pte Ltd Investment Singapore Ordinary GTE KZ LLP Mineral Exploration Kazakhstan Ordinary 2012 % 100 100 2011 % - - CARRYING AMOUNT OF INVESTMENT 2012 2011 $ 1 1 $ - - On 2 December 2011 the 100% interest in GTE Holdings Pte Ltd was acquired for a consideration of $1. On 27 February 2012 the 100% interest in GTE KZ LLP was acquired for a consideration of $1. CONSOLIDATED COMPANY 2012 $ 2011 $ 25. COMMITMENTS AND CONTINGENCIES COMMITMENTS a) Exploration Tenement Leases In order to maintain current rights of tenure to exploration tenements, the Group is required to outlay lease rentals and to meet the minimum expenditure requirements of the Western Australian Department of Minerals & Petroleum. Within one year b) Operating Lease Commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable – minimum lease payments • • • not later than 12 months between 12 months and 5 years greater than 5 years 1,672,720 931,720 68,291 - - 91,274 68,291 - The property lease is a non-cancellable lease with a one-year term, with rent payable monthly in advance. A N N U A L R E P O R T 2 0 1 2 59 NOTES TO THE FINANCIAL STATEMENTS 25. COMMITMENTS AND CONTINGENCIES (continued) c) Joint Venture Expenditure commitments arising from interest in joint venture • • • not later than 12 months between 12 months and 5 years greater than 5 years Refer to Note 14. CONTINGENCIES There were no contingencies at the end of the financial year. 26. EVENTS AFTER BALANCE DATE CONSOLIDATED COMPANY 2012 $ 2011 $ 2,500,000 3,000,000 - - - - There are no events subsequent to the end of the financial year that would have a material effect on these financial statements other than: • • Shareholders approval in August 2012 for the issue of up to 26,503,277 options exercisable at $0.30 at an issue price of $0.01 to raise additional working capital of approximately $250,000 after issue costs. Shareholders approval in August 2012 for the placement of up to 25,000,000 ordinary fully paid shares at an issue price of 80% of the average market price of the shares calculated over 5 days before the date of the placement. 27. AUDITORS REMUNERATION The Auditor of Great Western Exploration Limited is Bentleys Amounts received or due and receivable for • • an audit or review of the financial report of the Group other services in relation to the Group – other services CONSOLIDATED COMPANY 2012 $ 2011 $ 29,350 - 29,350 24,165 - 24,165 60 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D D I R E C T O R S ’ D E C L A R AT I O N In accordance with a resolution of the directors of Great Western Exploration Limited, the Directors of the Company declare that: 1. the financial statements and notes, as set out on pages 26 to 60, are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position as at 30 June 2012 and of the performance for the year ended on that date of the Consolidated Group; 2. in the Directors’ opinion, subject to the matters mentioned in Note 1(a) to the financial statements, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and 3. the Directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer. J A Luckett Managing Director Dated this 28th day of September 2012 A N N U A L R E P O R T 2 0 1 2 61 A U D I T O R ’ S I N D E P E N D E N C E D E C L A R AT I O N 62 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D I N D E P E N D E N T A U D I T O R ’ S R E P O R T A N N U A L R E P O R T 2 0 1 2 63 INDEPENDENT AUDITOR’S REPORT 64 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D A D D I T I O N A L I N F O R M AT I O N 1. SHAREHOLDER INFORMATION 1.1 VOTING RIGHTS In accordance with the Company’s constitution, on a show of hands every member present in person or by proxy or attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share held. 1.2 DISTRIBUTION OF HOLDERS AS AT 26 SEPTEMBER 2012 Number of Holders Distribution is: 1 – 1000 1001 – 5,000 5001 – 10,000 10,001 – 100,000 100,001 – and over Holding less than a marketable parcel FULLY PAID ORDINARY SHARES 1,499 225 209 213 700 152 1,499 294 OPTIONS EXPIRING 28 FEBRUARY 2013 123 - 6 16 49 52 123 25 A N N U A L R E P O R T 2 0 1 2 65 ADDITIONAL INFORMATION 1. SHAREHOLDER INFORMATION (continued) 1.3 TOP TWENTY HOLDERS (a) Ordinary Shares The names of the twenty largest ordinary fully paid shareholders as at 26 September 2012 are as follows: NAME Frank Cannavo Investments Pty Ltd Holdrey Pty Ltd Mr J A Luckett BAM NR 1 Pty Ltd Soria Nominees Pty Ltd Minsk Pty Ltd A & A Cannavo Nominees Pty Ltd F & E Cannavo Pty Ltd Fleubaix Pty Ltd Pellicano Pty Ltd Rogue Investments Pty Ltd 1 2 3 4 5 6 7 8 9 10 11 12 Mr E J Godfrey 13 14 15 16 Venture More Pty Ltd Forty Traders Limited Lymeridge Pty Ltd Sayers Investments (ACT) Pty Ltd 17 Mr K Punch 18 19 20 Bond Street Custodians Limited KCS Superannuation Fund Pty Ltd Sunden Pty Ltd % 3.96 3.76 3.73 3.67 3.05 2.82 2.82 2.58 1.73 1.69 1.47 1.32 1.27 1.27 1.09 1.08 1.04 0.91 0.76 0.73 NO. OF SHARES 3,900,000 3,700,123 3,675,000 3,607,378 3,000,294 2,774,278 2,773,121 2,535,660 1,700.000 1,666,667 1,450,000 1,300,000 1,250,000 1,247,337 1,073,513 1,066,667 1,020,022 900,000 750,000 713,766 40.15 40,103,826 66 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D ADDITIONAL INFORMATION 1. SHAREHOLDER INFORMATION (continued) (b) Options expiring 28 February 2013 The names of the twenty largest optionholders as at 26 September 2012 are as follows: NAME Mr B G & Mrs A Moffatt Holdrey Pty Ltd Faulkner Capital Group Pty Ltd Mr J A Luckett KCS Superannuation Fund Pty Ltd Fleubaix Pty Ltd Mrs L E Hanna Tretheway Pty Ltd Mr R Falcone 1 2 3 4 5 6 7 8 9 10 Mrs V H Southwell 11 Mr K Punch 12 Mr N G Nahlous 13 14 Soria Nominees Pty Ltd CCK Pty Ltd 15 Mr R & Mrs S Bertolini 16 Mr E J Godfrey 17 JRB Plumbing Services Pty Ltd 18 Mr A Zeaiter 19 Mr J Y & Mrs M Kim 20 Halifax Pty Ltd 1.4 UNQUOTED SECURITIES On issue No of holders % 9.69 7.92 7.55 5.26 5.19 3.77 2.98 2.74 2.68 2.08 1.94 1.89 1.89 1.86 1.82 1.51 1.51 1.39 1.36 1.35 NO. OF OPTIONS 2,567,499 2,100,000 2,000,000 1,394,822 1,375,000 1,000,000 788,770 726,473 710,000 550,000 500,000 500,000 500,000 492,316 482,045 400,000 400,000 367,184 361,473 358,592 66.36 17,588,244 EMPLOYEE SHARE OPTION PLAN 4,350,000 3 OPTIONS OTHER - - 2. SCHEDULE OF MINERAL TENEMENTS Details of Mineral Tenements are disclosed in the Review of Exploration Activities. A N N U A L R E P O R T 2 0 1 2 67 THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY 68 G R E A T W E S T E R N E X P L O R A T I O N L I M I T E D