Great Western Mining Corporation PLC
Annual Report 2011

Plain-text annual report

ANNUAL REPORT 2011 GREAT WESTERN MINING Annual Report 2011 Great Western Mining Corporation Plc Annual Report and Financial Statements for the year ended 31 December 2011 Registered number: 392620 Contents Page Directors and other information ..............................................................2 Chairman's Statement and Review of Activities ....................................3 - 4 Chief Executive's Statement..................................................................5 - 6 Directors' Report .................................................................................7 - 12 Independent Auditors' Report ............................................................13 - 15 Statement of Accounting Policies........................................................15 - 21 Consolidated Statement of Comprehensive Income................................22 Consolidated Statement of Changes in Equity ........................................23 Company Statement of Changes in Equity .............................................24 Consolidated Statement of Financial Position .........................................25 Company Statement of Financial Position...............................................26 Consolidated Statement of Cash Flows ..................................................27 Company Statement of Cash Flows........................................................28 Notes to the Financial Statements.......................................................29 - 40 page 1 GREAT WESTERN MINING Annual Report 2011 Directors and other information Solicitors John O'Connor Solicitors, 168 Pembroke Road, Ballsbridge, Dublin 4. Geological Consultant W.T. Cohan & Associates AIM Nominated Adviser & Broker Registrar Incorporated, Grand Junction, Colorado, U.S.A. Shore Capital Bond Street House 14 Clifford Street London W1S 4JU England. Computershare Investor Services (Ireland) Limited Heron House, Corrig Road, Sandyford, Dublin 18. Registered Number 392620, Republic of Ireland. Date of Incorporation 20 October 2004. Website www.greatwesternmining.com Directors Emmett O'Connell (Executive Chairman) Melvyn Quiller (U.K.) (Chief Executive Officer) Robert O'Connell (Operations Director) Nial Ring FCCA (Non - Executive Director) Christopher Hall (UK) (Non-Executive Director) Appointed 15 June 2011 Liam McGrattan (Non - Executive Director) Resigned 27 May 2011 Registered Office & Business Address 6 Northbrook Road, Dublin 6. Secretary Emmett O'Connell Auditors Bankers LHM Casey McGrath, Chartered Certified Accountants & Registered Auditors, 6 Northbrook Road, Dublin 6. HSBC Bank 60 Queen Victoria Street London EC4N 4TR England Bank of Ireland Taghmon Co. Wexford Country Bank, 200 42nd Street, New York, U.S.A. page 2 GREAT WESTERN MINING Annual Report 2011 Chairman's Statement & Review of Activities 2011 was a year of Corporate and Exploration development. Your Company’s area under claim rose from 435 individual 20-acre claims to 896 claims, all 100% working interest. This makes Great Western Mining Corporation, our wholly owned and Nevada incorporated subsidiary, one of the largest prospective land holders in the Marietta area, with about 73 sq km. In the third quarter of 2011, following a Placing to raise £1,000,000, the Company’s application for admission to the AIM Market of the London Stock Exchange was approved and trading in the Company’s shares began on 18th August. Given the Company’s historical links with Ireland and the high percentage of Irish shareholders, on 18th October, the Company’s shares were admitted to trading on the Enterprise Securities Market (ESM) of the Irish Stock Exchange. Determined to maintain our exploration programme despite a tight budget, horizontal trench sampling and geological testing were undertaken in early 2012 on the area known as the “Double Prospect” or “A4” in place of shallow core hole drilling. This represented the most efficient use of funds in terms of geological information retrieved. The analysis of samples taken was very encouraging and may be viewed on the Company’s website. Some market comment has been made regards the values of copper in the horizontal trenching campaign relative to reported “grab samples” recorded in earlier surface samples. This is discussed more fully in the Chief Executive Officer's report. Suffice to say here that the two sampling methods are not directly comparable given the different methodology employed. Emboldened by the results on Phase One, the Company’s team of Directors and specialist contractors turned to the adjoining Prospect (“M2”) to determine if the geological mineralisation was similar. This phase is still underway as we go to press, but early indications are encouraging. Geological sampling and mapping give indications of near surface copper oxide mineralisation running 1,200 metres in length and 120 metres wide running down the spine of the prospect. In addition to possible shallow oxide copper deposits, it is intended to test for deeper sulphide copper values, which have been highlighted by the Induced Polarisation survey, in due course. No further work has been carried out on our already reported uranium discovery covered extensively in previous years. It is being held as an asset by the Company. The Company also holds a number of attractive precious metal prospects in its registered claim holdings. Your Directors have however, concentrated the Company's financial resources on its copper and copper/silver prospects as the most likely to yield early production, joint venture, or cash flow potential. The Road Ahead A Competent Person’s Report is being currently drafted which will update the work carried out up to June 2012. Last year's (June 2011) CPR gave the following: Potential Target Models Model Disseminated Silver Mass Tons 25 Million Grade 102.9 g/t Ag Disseminated Oxide Copper 25 million 0.6 % Cu Epithermal Silver Vein 3 Million 514.3 g/t Ag page 3 GREAT WESTERN MINING Annual Report 2011 The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource, but your management and consultants are working on this. Of the seven specific targets itemised by our early JPL-NASA Satellite Imagery, Aero & Surface Magnetic Studies, and Induced Polarity Program, only two have been ground tested and explored in the past year. Your Board of Directors believe that a joint venture business plan may be the most effective development strategy for a non-revenue generating exploration company. By adopting such a plan, the Company accepts a certain dilution in an exploration property rather than dilution to our existing shareholders in all our prospects. GWM holds 100% working interest in all seven existing prospects, any one of which may hold an attraction to another mining company willing to pay for development expenses to discovery or abandonment in return for part interest. A mineral discovery on any prospect in our portfolio even at a 50% participation level, will translate meaningfully into shareholder value through tighter shareholder structure in remaining prospects. Although early days yet, studies are underway examining the efficacy of installing a heap leach copper recovery system in the area of the Company’s interest. This would be a medium term development in terms of funding and timing. It is important therefore, to keep in mind that 100% of Great Western Mining Corporation’s efforts and mining assets are located in the mining friendly and politically secure environment of Nevada, U.S.A., just 10 miles or so from the California border with access to modern highway systems and rail connections to Pacific Ocean Ports. It is worth remembering that one customer, China, takes 40% of world copper production outside China. Think Big. Emmett O'Connell Chairman Chief Geo (77yrs old) checking claimstake maps page 4 GREAT WESTERN MINING Annual Report 2011 Chief Executive's Statement Great Western has made solid and encouraging progress during 2011, providing definitive evidence of the extent of mineralisation occurring over the staked claims of the Company. Results from geological field work have continually reinforced expectations that the Great Western claims could harbour significant amounts of commercially recoverable copper. 2011 saw the Company prepare to move from PLUS Markets to AIM; this involved the small management team in much preparatory work right up to the start of AIM trading in August. Even so, 2011 saw your Company extend its claims under licence from 412 up to 896, covering approximately 73 square kilometres, and conduct extensive geological surveying. Besides further prospecting and sampling, the methods used included; ASTER imaging interpretation and low level aero magnetic data interpretation together with infrared spectral imaging. Following these interpretations Zonge Geosciences were retained to run two IP-Resistivity Grids covering selected targets from the previously identified total of seven. The independent report, compiled by Chris Luwig, Consulting Geophysicist, reiterated that buried IP anomalies were identified below each target and are of such a character as to warrant further priority geological study and a drilling programme on targets M2 and 4, before moving on to the other five targets. Target M2 closely correlates with a buried source magnetic high and a copper skarn environment is certainly a plausible explanation. Target 4 has a buried IP anomaly suggestive of sulphide mineralisation which could host precious metals although a copper porphyry system cannot be ruled out. (The full report can be found on the Great Western Mining website). These interpretations and reports have greatly encouraged the Great Western team and based upon the recommendations the 2012 field campaign was devised. The Company had previously considered a very limited drilling campaign on one target but upon reconsideration decided to conduct some trenching, geological mapping and soil surveys as the means to gather further relevant data in the most economical manner. This will move us significantly forward from the visually selected grab sampling conducted in widespread locations over the 896 claims. This grab sampling was to identify possible mineralisation and generally returned high grades. The soil, trench and outcrop sampling require the geologists to plan a grid over the target area and take the specific material that they find at the precise grid locations irrespective of their visual evaluation. These processes are specifically designed to assist in identification of the geological structures in the effort to determine the extent and precise locations of the mineralisation. This naturally leads to a wide variation in results compared with the grab sampling. Post year end has seen the completion of the target 4 preliminary geological mapping by independent geologist, Donald Strachan. His report confirms the findings of Bill Cohan and in some respects can be considered more encouraging. He has recommended extending the Company’s area under licence by staking a further 67 claims to cover a previously unidentified extension of the anomaly westwards underground. He is now in the process of completing his preliminary geological survey of M2, soil survey and the outcrop mapping of Target 4. The Company also commissioned further ground geophysics on target 4 to be performed by Zonge Geosciences. On completion of the report, which will identify the optimum drilling locations and angles, a planning application will be prepared and submitted. The drilling campaign is likely to comprise 1500 metres of core drilling on Target 4 subject to availability of funding. page 5 GREAT WESTERN MINING Annual Report 2011 The prospects for Great Western Mining as a result of previous and continued successful exploration are extremely promising. Evidence of copper, silver and gold mineralisation is very strong and this has certainly proved encouraging as we move forward in 2012 and the Company continues to shore up resources and stake new claims. A post year end report has been produced by Donald Strachan, which reaffirms the findings as displayed in the Competent Person’s Report of June 2011. With studies now underway to evaluate the concept of creating a heap leach copper operation in the immediate vicinity of the Company’s claims, 2012 will see Great Western progress to new levels on its exploration and mining journey. As at the start of June 2012, the Company had cash deposits of approximately £280,000. In the coming six months we hope to have published the preliminary study on M2; soil sampling results and outcrop mapping on A4 with application planning for pilot drilling. Moreover, provided that new funds are raised, drilling will commence on A4. Sincerely, Melvyn Quiller Chief Executive Date: 26 June 2012 Miners cabin with wind generator (old washing machine and 50gal drum) to vent the adits and shafts. page 6 GREAT WESTERN MINING Annual Report 2011 Directors' Report for the year ended 31 December 2011 The Directors present their Annual Report and audited consolidated financial statements for the year ended 31 December 2011 for Great Western Mining Corporation Plc ("the Company") and its subsidiary (collectively "the Group"). Principal Activity The Group's main activity is the exploration and mining for copper, silver, gold and other minerals in Nevada, U.S.A. The Directors have reviewed the financial position of the Group and are satisfied that the Group will continue to operate at its projected level of activity for the foreseeable future. Review of Business and Future Developments A detailed review of activities for the year and future prospects of the Group is contained in the Chairman's and Chief Executive's Statements. Principal Risks and Uncertainties The Group's activities are carried out principally in North America and in the Republic of Ireland. Accordingly the principal risks and uncertainties are considered to be the following: Exploration Risk Exploration and development activities may be delayed or adversely affected by factors outside the Group's control, in particular: climatic conditions, existence of commercial deposits of copper, silver, gold and other minerals, unknown geological conditions; remoteness of location; actions of host governments or other regulatory authorities (relating to, inter alia, the grant, maintenance or renewal of any required authorisations, environmental regulations or changes in law). Commodity Price Risk The demand for, and price of, copper, silver, gold and other minerals is dependent on global and local supply and demand, actions of governments or cartels and general global economic and political developments. Political Risk As a consequence of activities in different parts of the world, the Group may be subject to political, economic and other uncertainties, including but not limited to terrorism, military repression, war or unrest, changes in national laws and energy policies. Share Price The share price movement in the year ranged from a low of Stg £0.0775 to a high of Stg £0.135 (2010: Stg £0.1175 to Stg £0.185). The share price at the year end was Stg £0.0812 (2010: Stg £0.1175). Results And Dividends The loss for the year after providing for depreciation and taxation amounted to €793,151 (2010 : € 327,258 ). All exploration and development costs to date have been deferred, no transfers to distributable reserves or dividends are recommended. page 7 GREAT WESTERN MINING Annual Report 2011 Directors and Secretary and their Interests In accordance with the Articles of Association, Emmett O'Connell and Nial Ring retire from the Board by rotation and being eligible offers themselves for re-election. The Directors and secretary who held office at the year end had no interest, either direct or beneficial, other than those shown below, in the shares of the Company. Directors Emmett O'Connell (Director & Secretary) Emmett O'Connell (Pension Fund) Melvyn Quiller Nial Ring Robert O'Connell Robert O'Connell (Pension Fund) Christopher Hall 26 Jun '12 5,802,818 1,650,000 1,847,813 850,000 5,201,365 250,000 - 31 Dec '11 5,802,818 1,650,000 1,847,813 850,000 5,201,365 250,000 - 31 Dec '10 4,901,000 1,650,000 1,700,995 850,000 4,900,001 250,000 - Share options in Great Western Mining Corporation Plc - Ordinary Shares At 31 December 2011 there were no share options granted. It is intended that in 2012 the following share options will be granted to the directors: Emmett O'Connell Melvyn Quiller Nial Ring Robert O'Connell Christopher Hall No. of options Nil 1,500,000 450,000 450,000 450,000 Transactions Involving Directors There have been no contracts or arrangements of significance during the year in which Directors of the Company were interested other than as disclosed in Notes 15 and 16 to the financial statements. Significant Shareholders The Company has been informed that, in addition to the interests of the Directors, at 31 December 2011 and the date of this report, the following shareholders own 3% or more of the issued share capital of the Company: Pershing International Nominees Ltd Vidacos Nominees Ltd Fitel Nominees Ltd Raven Nominees Ltd Redmayne (Nominees) Ltd Winterflood Securities Ltd Ashdale Investment Trust Services Percentage of Issued share capital 26 Jun '12 8.25% 3.39% 3.03% 3.57% 4.03% 2.81% 7.79% 31 Dec '11 11.84% 3.35% 3.08% 4.86% 4.15% 3.17% 4.44% The Directors are not aware of any other holding of 3% or more of the share capital of the Company. page 8 GREAT WESTERN MINING Annual Report 2011 Group undertakings Details of the Company's subsidiary are set out in Note 9 to the financial statements. Political donations The Company did not make any political donations during the year (2010 : €Nil). Going Concern The future of the Group is dependent on the successful future outcome of its exploration interests. The Directors have carried out a review of budgets and cash flows for the twelve months after the date of this report and on the basis of that review, consider that the Group and the Company, based on current exploration activity, will have adequate financial resources to continue in operation for the foreseeable future. As exploration activity is expanded, further funding will be required. The Directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. On this basis, they consider that it is appropriate to prepare the financial statements on the going concern basis. Corporate governance The Directors are committed to maintaining the highest standards of corporate governance commensurate with the size, stage of development and financial status of the Group. Chinese demand for Chile’s copper holds strong PAV JORDAN The Globe and Mail Monday, Jun. 25 2012 Narrow gauge line for ore carts 60+ degree decline page 9 GREAT WESTERN MINING Annual Report 2011 The Board The Board is responsible for the supervision and control of the Company and is accountable to the shareholders. The Board has reserved decision-making on a variety of matters, including determining strategy for the Group, reviewing and monitoring executive management performance and monitoring risks and controls. The Board currently has five Directors, comprising three executive Directors and two non-executive Directors. The Board met formally on fourteen occasions during the year ended 31 December 2011. An agenda and supporting documentation was circulated in advance of each meeting. All the Directors bring independent judgement to bear on issues affecting the Group and all have full and timely access to information necessary to enable them to discharge their duties. The Directors have a wide and varying array of experiences in the industry. Audit and Remuneration Committees The Audit Committee comprises Nial Ring (Chairman) and Christopher Hall. It may examine any matters relating to the financial affairs of the Group and the Group's audits. This includes reviews of the annual financial statements and announcements, internal control procedures, accounting procedures, accounting policies, the appointment, independence, objectivity, terms of reference and fees of external auditors and such other related functions as the Board my require. The Remuneration Committee comprises Christopher Hall (Chairman) and Nial Ring. It determines the terms and conditions of employment and annual remuneration of the executive directors. It consults with the Chief Executive Officer, takes into consideration external data and comparative third part remuneration and has access to professional advice outside the Company. The key policy objectives of the Remuneration Committee in respect of the Company's executive directors are: - - to ensure that individuals are fairly rewarded for their personal contributions to the Company's overall performance; and to act as the independent committee ensuring that due regard is given to the interest of the Company's shareholders and to financial and commercial health of the Company. Directors' Remuneration, including employer's PRSI, during the year ended 31 December 2011 was as follows: Remuneration and other emoluments - Executive Directors Remuneration and other emoluments - Non-Executive Directors 2011 Total € 2010 Total € 192,629 8,620 _________ 201,249 _________ 123,870 21,075 _________ 144,945 _________ Nomination Committee At present, as the Board of Directors is small, no formal nomination committee has been established. The authority to nominate new Directors for appointment vests in the Board of Directors. All Directors co-opted to the Board during any financial period are subject to election by shareholders at the first opportunity following their appointment. Consideration to setting up a nomination committee is under continuous review. page 10 GREAT WESTERN MINING Annual Report 2011 Statement of Directors' Responsibilities The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with applicable Irish law and regulations. Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. As permitted by company law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU (EU IFRS) and have elected to prepare the Company financial statements in accordance with EU IFRS, as applied in accordance with the provisions of the Companies Acts, 1963 to 2009. The Group and Company financial statements are required by law and EU IFRS to present fairly the position and performance of the Group; the Companies Acts provide, in relation to such financial statements, that references in the relevant part of the Acts to financial statements giving a true and fair view are references to their achieving a fair presentation. In preparing each of the Group and Company financial statements, the Directors are required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - disclose and explain any material departures from applicable accounting standards; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company, and the Group as a whole, will continue in business. Copper demand outstrips supply www.asiaminer.com page 11 GREAT WESTERN MINING Annual Report 2011 The directors confirm that they have complied with the above requirements in preparing the financial statements. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and Group and which enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland, and comply with the Companies Acts, 1963 to 2009, the European Communities (Companies: Group Accounts) Regulations 1992 and all regulations to be construed as one with those Acts. They are responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Accounting records The measures taken by the Directors to ensure compliance with the requirements of Section 202, Companies Act 1990, regarding proper books of account are the implementation of necessary policies and procedures for recording transactions, the employment of competent accounting personnel with appropriate expertise and the provision of adequate resources to the financial function. The books of account of the Company are maintained at Raheenduff House, Foulksmills, Co. Wexford. Auditors The auditors, LHM Casey McGrath, have indicated their willingness to continue in office in accordance with the provisions of Section 160(2) of the Companies Act, 1963. On behalf of the board _______________ Emmett O'Connell Date: 26 June 2012 ______________ Melvyn Quiller Gold is a store of value virtually independent of economic conditions. ... gold will always retain value. Gold is recognized and valued everywhere in the world. Goldprice.org page 12 GREAT WESTERN MINING Annual Report 2011 Independent Auditors' Report to the Shareholders of Great Western Mining Corporation Plc We have audited the Group and Company financial statements (the "financial statements") of Great Western Mining Corporation Plc for the year ended 31 December 2011 which comprise of the Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Cash Flows, Company Statement of Cash Flows, and notes thereon. These financial statements have been prepared under the accounting policies set out on pages 14 - 19. This report is made solely to the Company's members as a body in accordance with Section 193 of the Companies Act, 1990. Our audit work has been undertaken so that we might state to the Company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company or the Company's members as a body for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditors The Directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and International Financial Reporting Standards as adopted by the European Union ("IFRS") are set out in the Statement of Directors' Responsibilities on page 10. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the Group financial statements give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and have been properly prepared in accordance with the Companies Acts 1963 to 2009. We also report to you to whether, in our opinion; proper books of account have been kept by the Company; whether at the Statement of Financial Position date, there exists a financial situation requiring the convening of an extraordinary general meeting of the Company; and whether the information given in the Directors' Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the Company's financial position is in agreement with the books of account. We report to the shareholders if, in our opinion, any information specified by law or the listing rules of AIM regarding Directors' remuneration and Directors' transactions is not given and, where practicable, include such information in our report. We read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Chief Executive's Statement and the Chairman's Statement and Review of Activities. We consider the implications for our audit report if we become aware of any apparent misstatement or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and whether the accounting policies are appropriate to the Group's and Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered page 13 GREAT WESTERN MINING Annual Report 2011 necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion: - of the Group's affairs as at 31 December 2011 and of its loss for the year then ended; the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state the Company financial statements give a true and fair view, in accordance with IFRSs as adopted by the applied in accordance with the provisions of the Companies Acts, 1963 to 2009, of the EU and as state of the Company's affairs as at 31 December 2011 ; and the financial statements have been properly prepared in accordance with the Companies Acts, 1963 to 2009. - - We have obtained all the information and explanations we consider necessary for the purposes of our audit. In our opinion proper books of account have been kept by the Company. The Company Statement of Financial Position is in agreement with the books of account. In our opinion the information given in the Directors' Report on pages 7 - 11 is consistent with the financial statements. The net assets of the Company, as at the financial position date, are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 2011 a financial situation which under Section 40(1) of the Companies (Amendment) Act 1983 may require the convening of an extraordinary general meeting of the Company. Emphasis of Matter - Deferred Exploration In forming our opinion, we considered the adequacy of disclosures made in Note 8 to the financial statements in relation to the Directors' assessment of the carrying value of the Group's deferred exploration costs amounting to €1,231,607. The realisation of the intangible assets is dependent on the successful development or disposal of copper, silver, gold and other minerals in the Group's licence area. Such successful development is dependent on several variables including the existence of commercial deposits of copper, silver, gold and other minerals, availability of finance and the price of copper, silver, gold and other minerals. Our opinion is not qualified in this respect. Copper, nickle up on industrial demand, global cues WWW.ECONOMICTIMES.COM page 14 GREAT WESTERN MINING Annual Report 2011 Emphasis of Matter - Going Concern In forming our opinion, we have considered the adequacy of the disclosures made in the financial statements as detailed in Note 1 on page 29 concerning the preparation of the financial statements on the going concern basis for the period under review. In view of the significance of this matter we feel that this should be brought to your attention. Our opinion is not qualified in this respect. ____________________ Fergal McGrath For and on behalf of LHM Casey McGrath Chartered Certified Accountants & Registered Auditors, 6 Northbrook Road, Dublin 6. Date: 26 June 2012 Statement of Accounting Policies for the year ended 31 December 2011 Great Western Mining Corporation Plc ("the Company") is a company incorporated in Ireland. The Group financial statements consolidate those of the Company and its subsidiary (together referred to as the "Group"). The Group and Company financial statements were authorised for issue by the Directors on 26 June 2012. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. Basis of Preparation The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS's) as adopted by the EU. The financial statements have been prepared on the historical cost basis. The accounting policies have been applied consistently by Group entities. Statement of Compliance As permitted by the European Union, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and their interpretations issued by the International Accounting Standards Board (IASB) as adopted by the EU (IFRS). The individual financial statements of the Company ("Company financial statements") have been prepared in accordance with the IFRSs as adopted by the EU and as applied in accordance with the Companies Acts, 1963 to 2009 which permits a company that publishes its Company and Group financial statements together, to take advantage of the exemption in Section 148(8) of the Companies Act, 1963, from presenting to its members its Company Statement of Comprehensive Income and related notes that form part of the approved Company financial statements. The IFRSs adopted by the EU as applied by the Company and the Group in the preparation of these financial statements are those that were effective on or before 31 December 2011. Standards and amendments to existing standards effective 1 January 2011 The following standards, amendments and interpretations which became effective in 2011 are of relevance to the Group: page 15 GREAT WESTERN MINING Annual Report 2011 Standard on/after IAS 24 IAS 34 Content Related party disclosures Interim Financial Reporting Applicable for years beginning 1 January 2011 1 January 2011 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group Standard/ Interpretation on/after Content Applicable for years beginning IFRS 9 IFRS1* IFRIC 14 * IFRIC 19 * IFRS 7 IFRS 3 * IAS 27 * Financial Instruments: Classification and measurement Amendment: Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters Amendment: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Extinguishing financial liabilities with equity instruments Amendment: Disclosures - Transfer of financial assets Business Combinations Consolidated and separate financial statements 1 January 2013 1 July 2010 1 January 2011 1 July 2010 1 July 2011 1 July 2010 1 July 2010 * Not expected to be relevant to the Group, and therefore not to have a material impact on the Group financial statements. IFRS 9 'Financial instruments: Classification and measurement' In November 2009, the IASB issued the first part of IFRS 9 relating to the classification and measurement of financial IFRS 9 will ultimately replace IAS 29. The standard requires an entity to classify its financial assets on the assets. basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, an subsequently measures the financial assets as either at amortised cost or fair value. The new standard is mandatory for annual periods beginning on or after 1 January 2013. Improvements for IFRS (issued in 2011, March 2012 and May 2012) The improvements project contains numerous amendments to IFRS that the IASB considers non-urgent but necessary. 'Improvements to IFRS' comprise amendments that result in accounting changes for presentation, recognition or measurement purposes, as well as terminology or editorial amendments related to a variety of individual IFRS standards. Most of the amendments are effective for annual periods beginning on or after 1 January 2013 or 1 January 2014 respectively, with earlier application permitted. No material changes to accounting policies are expected as a result of these amendments. In 2011, the Group did not early adopt any new or amended standards and do not plan to early adopt any of the standards issued but not yet effective. page 16 GREAT WESTERN MINING Annual Report 2011 Functional and Presentation Currency The consolidated financial statements are presented in Euro (€), which is the Company's functional currency. Use of Estimates and Judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. In particular, significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are in the following areas: Note 8 - Intangible asset; measurement of impairment Note 6 - Deferred Tax; utilisation of tax losses Revenue Recognition - Interest revenue Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount. Basis of Consolidation The consolidated financial statements comprise the financial statements of Great Western Mining Corporation Plc and its subsidiary undertaking for the year ended 31 December 2011. Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing The words for "silver" and "money" are the same in at least 14 languages Goldprice.org page 17 GREAT WESTERN MINING Annual Report 2011 control, potential voting rights that are currently exercisable or convertible are taken into account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intragroup balances and any unrealised gains or losses or income or expenses arising from intragroup transactions are eliminated in preparing the Group financial statements. In the Company's own balance sheet, investments in subsidiaries are stated at cost less provisions for any permanent diminution in value. Intangible Assets (Deferred Exploration Costs) In accordance with International Financial Reporting Standard 6 - Exploration for and Evaluation of Mineral Resources, the Group uses the cost method of recognition. Exploration costs include licence costs, survey, geophysical and geological analysis and evaluation costs, costs of drilling and project-related overheads. Exploration expenditure in respect of properties and licences not in production is capitalised and is carried forward in the balance sheet under intangible assets in respect of each area of interest where:- (i) the operations are ongoing in the area of interest and exploration or evaluation activities have not reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves; or (ii) such costs are expected to be recouped through successful development and exploration of the area of interest or alternatively by its realisation. When the Directors decide that no further expenditure on an area of interest is worthwhile, the related expenditure is written off or down to an amount which it is considered represents the residual value of the Group's interest therein. Impairment The carrying amounts of the Group's non-financial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets' recoverable amount is estimated. For intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that is expected to generate cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the Statement of Comprehensive Income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. page 18 GREAT WESTERN MINING Annual Report 2011 Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit and loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or equity respectively. Current corporation tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Rock samples being prepared for analysis. page 19 GREAT WESTERN MINING Annual Report 2011 Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividends is recognised. Foreign Currencies Monetary assets and liabilities denominated in a foreign currency are translated into Euro at the exchange rate ruling at the balance sheet date, unless specifically covered by foreign exchange contracts whereupon the contract rate is used. Revenues, costs and non monetary assets are translated at the exchange rates ruling at the dates of the transactions. All exchange differences are dealt with through the Statement of Comprehensive Income. On consolidation, the assets and liabilities of overseas subsidiaries are translated into Euro at the rates of exchange prevailing at the balance sheet date. Exchange differences arising from the restatement of the opening balance sheets of these subsidiary Companies are dealt with through reserves. The operating results of overseas subsidiary Companies are translated into Euro at the average rates applicable during the year. Share capital Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a reduction in equity. Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Share based payments For such grants of share options, the fair value as at the date of grant is calculated, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that are likely to vest, except where forfeiture is only due to market-based conditions not achieving the threshold for vesting Financial Instruments 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 three months or less. Bank overdrafts that are repayable on demand and form part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of Statement of Cash Flows. Trade and Other Receivables / Payables Trade and other receivables and payables are stated at cost less impairment, which approximates fair value given the short dated nature of these assets and liabilities. Finance Income Finance income comprises interest income on funds invested and foreign currency gains. Interest income is recognised as the interest accrues (using the effective interest rate method) to the net carrying amount of the financial asset. page 20 GREAT WESTERN MINING Annual Report 2011 Segmental Information In accordance with IFRS 8: Operating Segments, the Group has one principle reportable segment, ie: Nevada, USA, which represents the exploration for and development of copper, silver, gold and other minerals in Nevada, USA. Other operations 'Corporate' includes cash resources held by the Group, interest income earned and other operational expenditure incurred by the Group. These areas are not within the definition of an operating segment. Financial Assets - Investment in Subsidiaries Investments in subsidiaries are stated at cost and are reviewed for impairment if there are indications that the carrying value may not be recoverable. Provisions Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event and 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 this obligation. Where the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement in virtually certain. The expense relating to any provision is presented in the Consolidated Statement of Comprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events or where the amount of the obligation cannot be measured with reasonable reliability. Contingent assets are not recognised, but are disclosed where an inflow of economic benefit is probable. Comparatives The comparative figures have been regrouped and restated where necessary on the same basis as those for the current period. page 21 GREAT WESTERN MINING Annual Report 2011 Consolidated Statement of Comprehensive Income for the year ended 31 December 2011 Continuing Operations Administrative expenses Finance costs Loss for the year before tax Income tax expense Total Comprehensive Loss for the year Loss attributable to: Equity holders of the Company Total Comprehensive Loss attributable to: Equity holders of the Company Earnings per share from continuing operations Basic and Diluted loss per share (cent) Notes 4 6 7 2011 € (787,342) (5,809) _________ 2010 € (325,723) - _________ (793,151) (325,723) - _________ (793,151) _________ (793,151) _________ (793,151) _________ (793,151) _________ (793,151) _________ (1,535) _________ (327,258) _________ (327,258) _________ (327,258) _________ (327,258) _________ (327,258) _________ (1.98) _________ (1.16) _________ All activities derived from continuing operations. All losses and total comprehensive losses for the period are attributable to the owners of the Company. The Company has no recognised gains or losses other than those dealt with in the statement of comprehensive income. The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 26 June 2012 and signed on its behalf by: ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 22 GREAT WESTERN MINING Annual Report 2011 Consolidated Statement of Changes in Equity for the year ended 31 December 2011 Balance at 1 January 2010 Total comprehensive income for the year Loss for the year Total comprehensive income for the year Balance at 31 December 2010 Balance at 1 January 2011 Total comprehensive income for the year Loss for the year Share options granted in the year Total comprehensive income for the year Transactions with owners, recorded directly in equity Shares issued Total transactions with owners Balance at 31 December 2011 Share Capital € Share Premium € Retained Losses € Total € 282,536 _________ 1,602,234 (1,147,104) _________ _________ 737,666 _________ - _________ - _________ - _________ - _________ (327,258) _________ (327,258) _________ (327,258) _________ (327,258) _________ 282,536 _________ 1,602,234 (1,474,362) _________ _________ 410,408 _________ 282,536 _________ 1,602,234 (1,474,362) _________ _________ 410,408 _________ - - _________ - _________ - - _________ - _________ (793,151) - _________ (793,151) _________ (793,151) - _________ (793,151) _________ 182,368 _________ 182,368 _________ 1,888,023 _________ 1,888,023 _________ - _________ - _________ 2,070,391 _________ 2,070,391 _________ 464,904 _________ 3,490,257 (2,267,513) _________ _________ 1,687,648 _________ Net equity is attributable to the holders of the ordinary shares in the Group. The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the board of Directors on 26 June 2012 and signed on its behalf by ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 23 GREAT WESTERN MINING Annual Report 2011 Company Statement of Changes in Equity for the year ended 31 December 2011 Balance at 1 January 2010 Total comprehensive income for the year Loss for the year Total comprehensive income for the year Balance at 31 December 2010 Balance at 1 January 2011 Total comprehensive income for the year Loss for the year Total comprehensive income for the year Transactions with owners, recorded directly in equity Shares issued Total transactions with owners Balance at 31 December 2011 Share Capital € Share Premium € Retained Losses € Total € 282,536 _________ 1,602,234 (1,139,860) _________ _________ 744,910 _________ - _________ - _________ - _________ - _________ (327,262) _________ (327,262) _________ (327,262) _________ (327,262) _________ 282,536 _________ 1,602,234 (1,467,122) _________ _________ 417,648 _________ 282,536 _________ 1,602,234 (1,467,122) _________ _________ 417,648 _________ - _________ - _________ - _________ - _________ (820,560) _________ (820,560) _________ (820,560) _________ (820,560) _________ 182,368 _________ 182,368 _________ 1,888,023 _________ 1,888,023 _________ - _________ - _________ 2,070,391 _________ 2,070,391 _________ 464,904 _________ 3,490,257 (2,287,682) _________ _________ 1,667,479 _________ Net equity is attributable to the holders of the ordinary shares in the Company. The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the board of directors on 26 June 2012 and signed on its behalf by ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 24 GREAT WESTERN MINING Annual Report 2011 Consolidated Statement of Financial Position for the year ended 31 December 2011 Notes 2011 € 2010 € Assets Non-Current Assets Intangible assets Total Non-Current Assets Current Assets Cash and cash equivalents Total Current Assets Total Assets Equity Capital and Reserves Share capital Share premium Retained loss Attributable to owners of the Company Total Equity Liabilities Current Liabilities Trade and other payables Total Liabilities Total Equity and Liabilities 8 11 13 13 14 12 1,231,607 _________ 1,231,607 656,057 _________ 656,057 _________ 1,887,664 _________ 464,904 3,490,257 (2,267,513) _________ 1,687,648 _________ 1,687,648 _________ 200,016 _________ 200,016 _________ 1,887,664 _________ 797,657 _________ 797,657 6,361 _________ 6,361 _________ 804,018 _________ 282,536 1,602,234 (1,474,362) _________ 410,408 _________ 410,408 _________ 393,610 _________ 393,610 _________ 804,018 _________ The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 26 June 2012 and signed on its behalf by ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 25 GREAT WESTERN MINING Annual Report 2011 Company Statement of Financial Position for the year ended 31 December 2011 Notes 2011 € 2010 € Assets Non-Current Assets Investment in Subsidiaries Total Non-Current Assets Current Assets Trade and other receivables Cash and cash equivalents Total Current Assets Total Assets Equity Capital and Reserves Share capital Share premium Retained loss Equity Attributable to equity shareholders Total Equity Liabilities Current Liabilities Trade and other payables Total Liabilities Total Equity and Liabilities 9 10 11 13 13 14 12 500,000 _________ 500,000 _________ 738,684 628,734 _________ 1,367,418 _________ 1,867,418 _________ 464,904 3,490,257 (2,287,682) _________ 1,667,479 _________ 1,667,479 _________ 500,000 _________ 500,000 _________ 290,660 3,686 _________ 294,346 _________ 794,346 _________ 282,536 1,602,234 (1,467,122) _________ 417,648 _________ 417,648 _________ 199,939 _________ 199,939 _________ 1,867,418 _________ 376,698 _________ 376,698 _________ 794,346 _________ The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 26 June 2012 and signed on its behalf by ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 26 GREAT WESTERN MINING Annual Report 2011 Consolidated Statement of Cash Flows for the year ended 31 December 2011 Cash flows from operating activities Loss for the year (787,342) (327,258) Notes 2011 € 2010 € Adjustments for: Income tax expense recognised in profit and loss Cash from operations before changes in working capital Movement in trade and other receivables Movement in trade and other payables Cash generated from operations Income tax received Cash flows from operating activities Cash flows from investing activities Expenditure on intangible assets Interest paid Cash flow from investing activities Cash flows from financing activities Proceeds from the issue of new shares Net cash used in financing activities - _________ (787,342) - (193,594) _________ (980,936) - _________ (980,936) _________ (433,950) (5,809) _________ (439,759) _________ 2,070,391 _________ 2,070,391 _________ 1,535 _________ (325,723) 35 360,407 _________ 34,719 4,051 _________ 38,770 _________ (91,761) - _________ (91,761) _________ - _________ - _________ Movement in cash and cash equivalents 649,696 (52,991) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 11 11 6,361 _________ 656,057 _________ 59,352 _________ 6,361 _________ The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 26 June 2012 and signed on its behalf by ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 27 GREAT WESTERN MINING Annual Report 2011 Company Statement of Cash Flows for the year ended 31 December 2011 Cash flows from operating activities Notes 2011 € 2010 € Loss for the year (848,177) (342,700) Adjustments for: Income tax expense recognised in profit and loss Cash from operations before changes in working capital Movement in trade and other receivables Movement in trade and other payables Finance costs Cash generated from operations - _________ (848,177) (448,024) (176,759) 27,617 _________ (1,445,343) 1,535 _________ (341,165) (81,164) 369,302 - _________ (53,027) Income tax received - 4,051 Cash flows from operating activities Cash flows from investing activities Interest paid Cash flows from financing activities Proceeds from the issue of new shares Net cash used in financing activities _________ (1,445,343) _________ (5,809) _________ 5,809 _________ 2,070,391 _________ 2,070,391 _________ _________ (48,976) _________ - _________ - _________ - _________ - _________ Movement in cash and cash equivalents in the year 625,048 (48,976) Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year 11 11 3,686 _________ 628,734 _________ 52,662 _________ 3,686 _________ The accompanying notes on pages 29 - 39 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 26 June 2012 and signed on its behalf by ______________________ Emmett O'Connell Director ______________________ Melvyn Quiller Director page 28 GREAT WESTERN MINING Annual Report 2011 Notes to the Financial Statements for the year ended 31 December 2011 1. Going concern The financial statements have been prepared on the going concern basis, which assumes that Great Western Mining Corporation Plc will continue in operational existence for the foreseeable future. The validity of this assumption depends on the following: The Directors intend to raise additional finance during 2012. This additional funding will be used to continue the exploration programme and to fund the administrative expenses of the Company and the Group. The financial statements do not include any adjustments that would result if the additional capital is not raised. Whilst taking into consideration the uncertainties described above, the Directors believe that it is appropriate for the financial statements to be prepared on a going concern basis. 2. Segment Information In the opinion of the Directors the operations of the group comprise one class of business, being the exploration and mining for copper, silver, gold and other minerals. The group's main operations are located within Nevada, USA. The information reported to the Group's chief operating decision maker for the purposes of resource allocation and assessment of segment is specifically focussed on the exploration areas in Nevada. In the opinion of the Directors the Group has only one reportable segment under IFRS 8 'Operating Segments,' which is exploration carried out in Nevada. Information regarding the Group's reportable segments is presented below. Segment Revenues and Results The following is an analysis of the Group's revenue and results from continuing operations by reportable segment. Exploration - Nevada Total for continuing operations Investment income Loss before tax (continuing operations) Income tax expense Loss after tax Segment Revenue 2010 2011 € € - - _________ _________ - - Segment Loss 2011 € (793,151) _________ (793,151) _________ - _________ (793,151) _________ - _________ (793,151) _________ 2010 € (325,723) _________ (325,723) _________ - _________ (325,723) _________ (1,535) _________ (327,258) _________ page 29 GREAT WESTERN MINING Annual Report 2011 Segment assets and liabilities Segment Assets Exploration - Nevada Consolidated assets Segment Liabilities Exploration - Nevada Consolidated liabilities Other segment information Exploration - Nevada 2011 € 1,887,664 _________ 1,887,664 _________ 2010 € 804,018 _________ 804,018 _________ 200,016 _________ 200,016 _________ 393,610 _________ 393,610 _________ Depreciation and amortisation 2010 € - _________ 2011 € - _________ Additions to non-current assets 2010 2011 € € 91,761 433,950 _________ _________ Revenue from major products and services The Group did not receive any revenue in the current or prior year. Geographical information The Group operates in two principal geographical areas - Republic of Ireland (country of residence of Great Western Mining Corporation PLC) and Nevada, U.S.A. (country of residence of Great Western Mining Corporation, a wholly owned subsidiary of Great Western Mining Corporation PLC). The Group does not have revenue from external sources. Information about its non-current assets by geographical location are detailed below: Ireland Nevada 2011 € - 1,231,607 _________ 1,231,607 _________ 2010 € - 797,657 _________ 797,657 _________ page 30 GREAT WESTERN MINING Annual Report 2011 3. Loss on ordinary activities before taxation Group This is arrived at after charging: Directors' fees Auditors' remuneration Auditors' remuneration from non-audit work and after crediting: Profit on foreign currencies Company This is arrived at after charging: Auditors' remuneration 2011 € 2010 € 201,249 23,689 56,271 _________ 144,945 24,101 30,250 _________ 62,712 _________ 11,335 _________ 2010 € 2009 € 23,689 _________ 24,101 _________ As permitted by Section 148 (8) of the Companies Act 1963, the Company Statement of Comprehensive Income has not been separately disclosed in these financial statements. 4. Interest payable and similar charges On loans from Directors 5. Employees Number of employees The average monthly numbers of employees (including the Directors) (for Company & Group) during the year were: Directors 2011 € 2010 € 5,809 _________ - _________ 5,809 _________ - _________ 2011 Number 2010 Number 4 _________ 4 _________ 4 _________ 4 _________ page 31 GREAT WESTERN MINING Annual Report 2011 5.1.Directors' emoluments Remuneration and other emoluments 6. Income Tax relating to continuing operations 2011 € 2010 € 201,249 _________ 144,945 _________ 201,249 _________ 144,945 _________ 2011 € 2010 € Current tax Current tax expense in respect of the current year Adjustments recognised in the current year in relation to the current tax of prior years - - _________ - 1,535 _________ Total tax expense - _________ 1,535 _________ The income tax expense for the year can be reconciled to the accounting loss as follows: Loss from continuing operations Income tax expense calculated at 12.5% (2010: 12.5%) Effects of: Unused tax losses not recognised as deferred tax assets (793,151) _________ (99,144) (327,258) _________ (40,907) 99,144 _________ - - _________ 40,907 _________ - 1,535 _________ Adjustments recognised in the current year in relation to the current tax of prior years Income tax expense recognised - _________ 1,535 _________ The tax rate used for the year end reconciliations above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under tax law in the jurisdiction of Ireland. At the statement of financial position date the Group had unused tax losses of €2,227,571 (31 December 2010 €1,434,420) available for offset against future profits which equates to a deferred tax asset of €278,446 (31 December 2010: €179,303). No deferred tax asset has been recognised due to the unpredictability of future profit streams. Unused tax losses may be carried forward indefinitely. page 32 GREAT WESTERN MINING Annual Report 2011 7. Loss per share Basic earnings per share The basic and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: (Loss) for the period attributable to equity holders of the parent Number of ordinary shares in issue - start of year Effect of shares issued during the year Weighted average number of ordinary shares for the purposes of basic earning per share Basic (loss) per ordinary share (cent) 2010 2011 € € (327,258) (793,151) _________ _________ 28,253,628 28,253,628 11,817,878 _________ - _________ 40,071,506 28,253,628 _________ _________ (1.16) (1.98) _________ _________ Diluted earnings per share There were no potential ordinary shares that would dilute the basic earnings per share. 8. Intangible assets - Group Cost Accumulated amortisation and impairment Cost At 1 January 2011 Additions At 31 December 2011 2011 € 1,231,607 - _________ 1,231,607 _________ 2010 € 797,657 - _________ 797,657 _________ Exploration and Evaluation Assets € Total € 797,657 433,950 _________ 1,231,607 _________ 797,657 433,950 _________ 1,231,607 _________ The Directors have considered expenditure on exploration and evaluation activities which have been capitalised at cost. No amortisation has been charged in the period. The Directors have reviewed the carrying value of the exploration and evaluation assets and consider it to be fairly stated and not impaired at 31 December 2011. The recoverability of the intangible assets is dependent on the future realisation or disposal of the copper, silver, gold and other mineral resources. page 33 GREAT WESTERN MINING Annual Report 2011 9. Financial assets - Company Group undertakings - unlisted: Shares at cost 2011 € 2010 € 500,000 _________ 500,000 _________ In the opinion of the Directors' the carrying value of the investment is appropriate. At 31 December 2011 the Company had the following subsidiary undertaking: Name Great Western Mining Corporation Incorporated in Main Activity Nevada, U.S.A. Mineral Exploration Proportion of holding 100% The aggregate amount of capital and reserves and the results of these undertakings for the last relevant financial year were as follows: Great Western Mining Corporation 10.Trade and other receivables Amounts falling due within one year: Amounts owed by Group undertaking Capital and reserves € (61,046) _________ Loss for the year € (6,910) _________ Group 2011 € Group 2010 € Company 2011 € Company 2010 € - _________ - _________ 738,684 _________ 290,660 _________ - _________ - _________ 738,684 _________ 290,660 _________ All receivables are current and there have been no impairment losses during the year (2010: Nil). 11.Cash and Cash Equivalents For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents include cash in hand and in banks, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the consolidated statement of cash flows can be reconciled to the related items in the Consolidated Statement of Financial Position as follows: Cash at bank Group 2011 € Group 2010 € Company 2011 € Company 2010 € 656,057 _________ 6,361 _________ 628,734 _________ 3,686 _________ 656,057 _________ 6,361 _________ 628,734 _________ 3,686 _________ page 34 GREAT WESTERN MINING Annual Report 2011 12.Trade and other payables Amounts falling due within one year Trade payables Convertible debt Other taxes and social welfare costs Directors' accounts Other payables Accruals and deferred income Group 2011 € Group 2010 € Company 2011 € Company 2010 € 432 100,000 13,560 21,243 21,356 43,425 _________ 200,016 _________ 4,869 100,000 49,123 79,415 25,903 134,300 _________ 393,610 _________ 432 100,000 13,560 21,243 21,356 43,348 _________ 199,939 _________ 4,575 100,000 49,123 68,131 25,903 128,966 _________ 376,698 _________ The Group has financial risk management policies in place to ensure that payables are paid within the pre- agreed credit terms. 13.Share capital Authorised equity 100,000,000 Ordinary shares of €0.01 each 2011 € 2010 € 1,000,000 1,000,000 _____________________ 1,000,000 1,000,000 _____________________ Issued, called up and fully paid: No. of issued Shares Share Capital € Share Premium € Total Capital € 28,523,628 At 1 January 2010 Total comprehensive income for the year Loss for the year - Transactions with shareholders, recorded directly in equity - Shares issued _________ 28,253,628 _________ At 1 January 2011 Total comprehensive income for the year Loss for the year - Transactions with shareholders, recorded directly in equity 18,236,847 Shares issued for cash 282,536 1,602,234 1,884,770 - - - - _________ 282,536 _________ - _________ 1,602,234 _________ - _________ 1,884,770 _________ - - - 182,368 1,888,023 2,070,391 As at 31 December 2011 _________ 46,490,475 _________ _________ 464,904 _________ _________ 3,490,257 _________ _________ 3,955,161 _________ page 35 GREAT WESTERN MINING Annual Report 2011 The issued share capital of the company at 31 December 2011 comprised of 46,490,475 ordinary shares of €0.01 each issued and fully paid (31 December 2010 28,253,628 issued and fully paid) The holders of Ordinary Shares are entitled to receive dividends as declared from time to time. The shareholders have all voting powers and full voting rights as permitted under the applicable company laws. 14.Retained Losses Group 2011 € Group 2010 € Company 2011 € Company 2010 € Loss at beginning of year Loss for the year (1,474,362) (793,151) (1,147,104) (327,258) (1,467,122) (820,560) (1,139,860) (327,262) Loss at end of year _________ _________ _________ (2,267,513) (1,474,362) (2,287,682) (1,467,122) _________ _________ _________ _________ _________ In accordance with the provisions of the Companies (Amendment) Act 1986, the Company has not presented an Income Statement. A loss for the year of €820,560 (2010 - loss of €327,262) has been dealt with in the Statement of Comprehensive Income of the Company. 15.Related party transactions Details of subsidiary undertakings are shown in Note 9. In accordance with International Accounting Standard 24 - Related Party Disclosures, transactions between group entities that have been eliminated on consolidation are not disclosed. Melvyn Quiller, Company director and shareholder, is a relative of Lloyd Quiller whose company LQ Accounting Solutions provided accounting services to the Company in the year. At 1 January 2011 Great Western Mining Corporation Plc owed €Nil to LQ Accounting Solutions. During the year, Great Western Mining Corporation Plc purchased and paid for services from LQ Accounting Solutions to the value of €8,602. At 31 December 2011 Great Western Mining Corporation Plc owed €NIL to LQ Accounting Solutions. page 36 GREAT WESTERN MINING Annual Report 2011 16.Transactions with Directors Loans from directors The directors have advanced loans to the Group. The movements in these loans are as follows: Name of director Rate of interest Repayment date Amount due to director as at 1 January 2011 Advanced by director in year Repaid to director in the year Amount due to director as at 31 December 2011 Maximum outstanding in the year 17.Convertible debt Redeemable loan Emmett O'Connell 0% on call Robert Melvyn Quiller O'Connell 0% on call on call (72,508) (12,516) 69,626 _________ (6,511) (1,911) 3,241 _________ (396) (268) - _________ (15,398) _________ (5,181) _________ (664) _________ (72,508) _________ (7,279) _________ (664) _________ 2011 € 2010 € 100,000 _________ 100,000 _________ 100,000 _________ 100,000 _________ On 22 June 2010, director Emmet O'Connell advanced an interest-bearing redeemable convertible loan to the company in the amount of €100,000. The loan is convertible into the Company's ordinary shares of €0.01 each at the lowest mid-market share price between the advance date and the conversion date or repayable upon the demand of the director. Until either conversion or repayment, interest on the loan value will accrue at 3.8% or at the variable lending rate charged by the Bank of Ireland whichever is higher. 18.Post Balance Sheet events There were no significant post balance sheet events page 37 GREAT WESTERN MINING Annual Report 2011 19.Financial Instruments and Financial Risk Management The Group and Company’s principal financial instruments comprise cash and cash equivalents. The main purpose of these financial instruments is to provide finance for the Group and Company’s operations. The Group has various other financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and has been throughout 2011 and 2010 the Group and Company’s policy that no trading in derivatives be undertaken. The main risks arising from the Group and Company’s financial instruments are foreign currency risk, credit risk, liquidity risk, interest rate risk and capital risk. The board reviews and agrees policies for managing each of these risks which are summarised below. Foreign currency risk The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward exchange contracts where appropriate. At the years ended 31 December 2011 and 31 December 2010, the Group had no outstanding forward exchange contracts. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As the Group does not, as yet, have any sales to third parties, this risk is limited. The Group and Company’s financial assets comprise receivables and cash and cash equivalents. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Group and Company’s exposure to credit risk arise from default of its counterparty, with a maximum exposure equal to the carrying amount of cash and cash equivalents in its consolidated balance sheet. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected entities. Liquidity risk management Liquidity risk is the risk that the Group will not have sufficient funds to meet liabilities. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group and Company’s short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Cash forecasts are regularly produced to identify the liquidity requirements of the Group. To date, the Group has relied on shareholder funding to finance its operations. The Group had no borrowing facilities at 31 December 2011. The Group and Company's financial liabilities as at 31 December 2011 and 31 December 2010 were all payable on demand, except an interest-bearing redeemable convertible loan advanced from one of the directors of the company in the year, which is either convertible to ordinary shares or payable on demand page 38 GREAT WESTERN MINING Annual Report 2011 The expected maturity of the Group and Company’s financial assets (excluding prepayments) as at 31 December 2011 and 31 December 2010 was less than one month. The Group expects to meet its other obligations from operating cash flows with an appropriate mix of funds and equity instruments. The Group further mitigates liquidity risk by maintaining an insurance programme to minimise exposure to insurable losses. The group had no derivative financial instruments as at 31 December 2011 and 31 December 2010. Interest rate risk The Group and Company’s exposure to the risk of changes in market interest rates relates primarily to the Group and Company’s holdings of cash and short term deposits. It is the Group and Company’s policy as part of its disciplined management of the budgetary process to place surplus funds on short term deposit in order to maximise interest earned. Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust its capital structure, the Group may adjust or issue new shares or raise debt. No changes were made in the objectives, policies or processes during the years ended 31 December 2011 and 31 December 2010. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses as disclosed in the consolidated statement of changes in equity. Fair values The carrying amount of the Group and Company’s financial assets and financial liabilities is a reasonable approximation of the fair value. Hedging At the year ended 31 December 2011 and 31 December 2010, the Group had no outstanding contracts designated as hedges. 20.Approval of financial statements The financial statements were approved by the board on 26 June 2012. page 39 GREAT WESTERN MINING Annual Report 2011 NOTES page 40 i e i . t n i r p d n a n g s e d e v i t a e r c . w w w y b d e c u d o r p & d e n g s e D i www.greatwesternmining.com 

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