ABN 51 128 698 108
Level 6, 30 Currie Street
Adelaide SA 5000
T: (08) 8214 4400
F: (08) 8214 4440
E: admin@ironroadlimited.com.au
www.ironroadlimited.com.au
Annual Report
2012
Corporate Directory
Glossary
Share Registry
GLOSSARY
Aeromag survey
Short for aeromagnetic survey, an aeromag survey is a common type of geophysical method carried out using a magnetometer
aboard or towed behind an aircraft. The aircraft typically flies in a grid like pattern with height and line spacing determining
the resolution of the data. As the aircraft flies, the magnetometer records tiny variations in the intensity of the ambient
magnetic field and spatial variations in the Earth’s magnetic field. By subtracting the solar and regional effects, the resulting
aeromagnetic map shows the spatial distribution and relative abundance of magnetic minerals (most commonly magnetite)
in the upper levels of the crust.
Comminution Circuit
Facilities which reduce rock to small pieces or particles into controlled size ranges; performed through the ore treatment
process, after rock fragmentation by blasting, by selected crushing and milling machines, in combination with size
classification devices.
EDS
Engineering and Design Service describes the provision of skilled personnel by technical Consultants or Contractors
who prepare and deliver reports, reviews or drawings which contribute to Feasibility Studies, Approval Submissions, Cost
Estimates or Facility Configurations.
Hematite
Hematite is a mineral, coloured black to steel or silver-gray, brown to reddish brown or red. Hematite is a form of Iron (III)
oxide (Fe2O3), one of several iron oxides.
Magnetite
Magnetite is a form of iron ore, one of several iron oxides and a ferrimagnetic mineral with chemical formula Fe3O4 and a
member of the spinel group. It is metallic or dull black and a valuable source of iron ore. Magnetite is the most magnetic
of all the naturally occurring minerals on Earth, and these magnetic properties allow it to be readily refined into an iron ore
concentrate.
NQ2
The bit size used to produce 50.6mm diameter diamond core.
770 Canning Highway
Applecross WA 6153
(08) 9315 2333
Telephone:
(08) 9315 2233
Facsimile:
Email: registrar@securitytransfer.com.au
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone:
Facsimile:
(08) 6382 4600
(08) 6382 4601
ASX Code
IRD
Website
www.ironroadlimited.com.au
Email
admin@ironroadlimited.com.au
ABN
51 128 698 108
Directors
Julian Gosse
Chairman
Ian Hume
Non Executive Director
Matthew J Keegan
Non Executive Director
Jerry Ellis
Non Executive Director
Andrew J Stocks
Managing Director
Company Secretary
Graham D Anderson
Registered Office
14 Emerald Terrace
West Perth WA 6005
Head Office
Iron Road House
Level 6, 30 Currie Street
Adelaide SA 5000
Telephone: (08) 8214 4400
(08) 8214 4440
Facsimile:
Postal Address
GPO Box 1164
Adelaide SA 5001
| Iron Road Limited Annual Report 2012
Iron Road Limited Annual Report 2012 | 77
Contents
Corporate Directory
Chairman’s Letter
Managing Director’s Report
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Glossary
2
3
24
34
35
38
39
40
41
42
72
73
75
77
Iron Road Limited Annual Report 2012 | 1
Chairman's Letter
“ We are on trajectory for an annual production of 20 million tonnes, fuelled by the rapidly
increasing mineral resources at CEIP.”
Mr Julian Gosse, Chairman Iron Road Limited
Dear Shareholder,
On behalf of the Board of Iron Road, it is with pleasure I present to you the Annual Report for the year ended 30 June 2012.
This year has been a time of intense change for Iron Road, as we take the necessary steps to transform into a significant
iron ore project developer, with the Central Eyre Iron Project (CEIP) moving ever closer to final investment, construction and
ultimately production. We are now closer to the end than the beginning of this process, with our final phase Definitive Feasibility
Study (DFS) launched during the year, based on the excellent launch pad formed by the completed Prefeasibility Study (PFS).
The PFS outlined a viable project with annual production of 12.4 million tonnes of iron concentrate, based on the then
known resources. Now of course, we are on trajectory for an annual production of 20 million tonnes, fuelled by the rapidly
increasing mineral resources at CEIP.
Our transformation has continued internally, with a significant team of experts now established in our Adelaide head office, in
order to drive the DFS to conclusion. The CEIP is a significant project for the State of South Australia, representing one of the
largest resource projects currently under active consideration in the State. As such our commitment to base the majority of
our employees, and our head office, in that State is appropriate. We look forward to continuing our productive relationships,
both at the local community level and with Government as we seek to progress our project through the approvals process.
I would also like to acknowledge the strong ongoing support of our shareholders to continue this transformation. Post the
end of financial year we successfully raised $40 million to continue our development activities. This built on the previous two
placements in fiscal 2012, which raised $33.5 million. There is no doubt that CEIP will be a significant, large scale project and
the funds required to progress the development are in line with the magnitude and scale of the project.
Our ultimate goal with respect to the final investment decision and financing of CEIP is to bring on a significant partner
or group of partners to invest in the project. To this end our discussions with a range of industrial end users, alongside
interested parties such as infrastructure investors continued. These discussions will continue to evolve alongside the DFS.
During the year we also saw our Gawler Iron Project (GIP) emerge from the shadow of the CEIP. Early stage exploration
results and metallurgical test work has been very promising, which has prompted the Board to authorise a scoping study for
the GIP. The GIP offers the opportunity for a more modest scale development that can potentially be brought into production
for less cost and in a faster timeframe than the CEIP, hence the Board’s interest in further developing the GIP alongside the
much larger CEIP.
Many of our shareholders would have noted the decline in iron ore spot prices in the latter half of calendar year 2012 and the
associated impact on our iron ore peers. Iron Road itself was not immune to this impact, with a degree of confidence and
share prices declining across a range of emerging and low to mid-tier iron producers. We have planned conservatively with
respect to our iron ore price forecasts and will continue to do so. Rest assured that the viability of CEIP is predicated on a
project with a life spanning at least 30 years, not a quarter or two of iron ore spot prices. We are confident in the long term
viability of CEIP under a range of iron ore pricing assumptions and intend to continue to instil this confidence in the market.
The year ahead will see Iron Road reach the truly formative stages of our transformation. We can look forward to substantive
progress on the DFS, with many key elements such as preferred export route, port location and final processing methods
being locked in place, alongside mineral resource increases and continued partnership negotiations.
The Board collectively holds the firm belief that Iron Road will successfully complete the transition from project developer to
producer in the coming years, and I again invite you to continue to share that vision for the journey ahead.
Mr Julian Gosse, Chairman
2 | Iron Road Limited Annual Report 2012
Managing Director's Report
“The year ahead should again see significant progress on Iron Road’s journey to production.”
Mr Andrew Stocks, Managing Director Iron Road Limited
Iron Road’s operations were focussed throughout the year on the ongoing transformation from an exploration and early
scoping stage company to a fully fledged iron ore project developer, and ultimately producer.
This transformative year has seen the company, based on the springboard of the Prefeasibility Study (PFS) completed in
2011, launch into the Definitive Feasibility Study (DFS) for the flagship Central Eyre Iron Project (CEIP) in South Australia.
The most significant transformation has been the increase in production scale contemplated for the CEIP, transitioning
from 12.4 million tonnes of concentrate production per annum under the PFS to a contemplated 20 million tonnes per
annum under the DFS.
This increase in scope has been mirrored within the company, with 2012 seeing significant increases in the project delivery
capacity of Iron Road, with over 25 full time staff across a wide range of disciplines now directly employed in the Adelaide
head office. The study owner’s team is working alongside and overseeing the many specialist engineering and consulting
firms contributing to the DFS.
Alongside the DFS technical studies, the company has identified the necessary increases in mineral resources to fuel the
larger production profile, lifting the mineral resource base at CEIP to over 2 billion tonnes . More is expected on this front,
with a mineral resource of between 2.8 billion and 3.2 billion tonnes at an estimated grade of 16-18% iron expected early
next year. In the context of the broader project and work completed to date, we now believe that the ultimate mineral
resource is likely to be closer to the upper end of the exploration target (of 2.8-5.8Bt at a grade of 18-25% iron) originally
reported in 2009. In this scenario the project could ultimately deliver around one billion tonnes of high quality concentrates.
The CEIP is shaping up to be a significant large scale iron ore project with the potential to sustain the development of the
necessary infrastructure, including a large tonnage, bulk material port that may be integrated into the national rail system
with strategic benefit for the long term development of South Australia.
In addition to the extensive works underway for the CEIP, Iron Road has initiated a scoping level study for the Gawler Iron
Project (GIP), which offers the potential for an earlier start up, with a smaller scale, less expensive project.
The year ahead should again see significant progress on Iron Road’s journey to production. Significant milestones will be
reached including port and export route selection, resource upgrades and conclusion of major elements of the DFS.
Iron Road Limited Annual Report 2012 | 3
Managing Director’s Report
Highlights
Central Eyre Iron Project
• Definitive Feasibility Study (DFS) activities continued to advance engineering for the mine, process plant,
tailings storage and major infrastructure facilities. Proposals for study services have been received for
utilities, support and ancillary facilities.
• Sinter characterisation test work in Japan demonstrated significant benefits for steel mills with
consequential positive implications for obtaining a pricing premium for CEIP product.
• Dynamic simulation of ore treatment and concentrate handling has advanced to select or confirm sizes of
major equipment to deliver 20Mtpa of concentrate.
• Project value shown to increase dramatically with the combination of potential product pricing premium
and increasing Mineral Resource size.
• Completion of Stage VI drilling programme at Murphy South with resultant global mineral resource at the
CEIP increasing from 1.33Bt to 2.10Bt, with 1.11Bt in the indicated category1.
• Stage VII Phase 1 and 2 drilling programme at ‘Rob Roy’ completed, confirming strike continuity of the
orebody to the east with the Stage VII Phase 3 drilling programme imminent.
• Exploration target for Stage VII ‘Rob Roy’ drilling programme re-estimated and increased from 400-700Mt
to 700-900Mt magnetite gneiss with a grade of 16-18% iron estimated.
• Successful completion of 10 geotechnical boreholes and 6 geotechnical trenches over the expected mine area.
• Exploration target for the Hambidge prospect estimated to be 800-1,000 million tonnes magnetite gneiss
with a grade of 15-18% iron.
• Community Meetings were held in Warramboo, Wudinna and Lock, and Focus Groups were formed to
discuss key aspects of the project.
• Sponsorship of over 30 community events was given to the local communities of Warramboo, Wudinna, Kyancutta
and Lock.
1 Refer to Mineral Resource Estimates at page 20
4 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Gawler Iron Project
• Stage II diamond drilling programme completed, with significant intersections of iron at four prospects.
• Scoping study initiated.
• Core samples selected for petrological studies to define ore types and host rock mineralisation to facilitate
final design of metallurgical studies.
Corporate
• Adelaide head office fully established, with all CEIP DFS works and accounting functions overseen and
managed in the state of South Australia.
• Key project personnel appointed with the owner’s team now comprising more than 25 full-time staff.
• Long term financing and potential partnering opportunities review continued.
• Secured over $50 million to continue development of the CEIP.
• Secured 90% of the iron rights of Kingsgate Consolidated Ltd (Dominion Gold Operations Pty Ltd) tenements
at Gawler with final cash payment of $1.15M.
Iron Road Limited Annual Report 2012 | 5
Managing Director’s Report
Central Eyre Iron Project (CEIP)
(Exploration Licence 4849, Iron Road 100%)
The Central Eyre Iron Project (663km2) is located on the Eyre Peninsula of South Australia, approximately 30km southeast
of the regional centre of Wudinna, within a grain farming district (Figure 1).
Figure 1. Location of the CEIP on Eyre Peninsula, South Australia.
The tenement consists of three distinct project areas – Warramboo, Kopi and Hambidge. Current studies are focussed on
the Boo-Loo, Murphy South and Rob Roy prospects situated within the Warramboo project area. Following a 2011 drilling
programme, a large exploration target has also been defined at Hambidge (Figure 2). The studies envisage production
of approximately 20 million tonnes of high quality iron concentrates per annum from the Warramboo project area. The
concentrates will be marketed as a high quality blending feedstock for sinter plants, which feed the majority of blast
furnaces around the world. Community relationships and support for the project are very good with strong interest shown
in possible development scenarios.
6 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Figure 2. CEIP tenement (EL4849) plan with project areas and prospects indicated.
Definitive Feasibility Study (DFS)
Current mineral resources at the CEIP exceed 2.1 billion tonnes magnetite gneiss2 , with the potential for mineral resource
expansion to between 2.8 billion and 3.2 billion tonnes of magnetite gneiss grading 16-18% iron expected early next year.
This will be achieved through the extension of the Murphy South and Rob Roy orebody, by diamond drilling, both along
strike and down dip.
A large scale magnetite mine is being studied with a predicted life of at least 30 years. Ore treatment and tailings storage
facilities, as well as concentrate stockyards, will be constructed to produce a high quality concentrate grading approximately
67% iron at a relatively coarse size distribution of -106 micron (p80).
It is envisaged that the concentrate will be transported by way of a yet to be constructed standard gauge railway to a
proposed port on the south-east coast of the Eyre Peninsula. Ideally the same corridor will be used to provide the necessary
power and water to the mine site. Stockyards, reclaim, jetty and load-out systems are being investigated to load ships of
various sizes up to Cape class (up to 220,000 DWT).
2 Refer to Mineral Resource Estimates at page 20
Iron Road Limited Annual Report 2012 | 7
Managing Director’s Report
Environmental studies are progressing across each of the project areas (mine, infrastructure corridor, potential port) to
support the project and regulatory approvals.
Mine, Processing Plant and Associated Infrastructure
The company’s principal infrastructure design consultants, Sinclair Knight Merz (SKM), have prepared preliminary designs
of critical facilities contained within major infrastructure packages during the early Engineering Phase of the DFS. These
include the mine, processing plant, port stockyards, railway corridor and potential port maritime facilities. Dynamic
simulation of train movements has been conducted and loading/unloading arrangements has reached preliminary design
phase based on results of the concentrate handling tests undertaken by a leading specialist in bulk solids handling.
Studies and investigations which relate to planning approvals, environmental requirements and mine lease applications
will continue through 2012 and 2013.
A preliminary utilities corridor was identified and surveys completed. Railway, pipeline and power transmission, together
with an access road, will preferably be routed along a common easement from the port to the mine site.
Geotechnical investigations were undertaken at a potential port location and near the proposed tailings storage facility.
Further drilling and seismic work will be conducted over the coming months across project areas (mine, infrastructure
corridor, potential port), depending on land access arrangements and the progress of permits.
Proposals for Water Supply and Treatment were technically and commercially evaluated and a preferred EDS provider
selected. This work will examine the delivery of process water to the beneficiation plant and the production of potable water
to suit the needs of the operation.
A preliminary design report of the tailing storage facility has been evaluated by Iron Road. Finalisation of tailings deposition
and impoundment arrangements will depend on geotechnical results (Figure 3) and the development of mine plans
and schedules.
Figure 3. Geotechnical drilling in a road reserve at the CEIP.
8 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Long term water monitoring bore holes will be drilled within public road reserves. Regulatory and Council approvals have
been received. Pumping tests will assist in understanding potential influences of mining activity on regional ground water.
The initial mining bench height analysis is complete for the current mineral resource and optimisation of the pit shells is
underway. Conclusion of mine design and scheduling of ore deliveries will occur on completion of the resource expansion
drilling and estimation of the entire Murphy South – Rob Roy area mineral resource.
Tenova Projects (formerly Bateman Engineering) have prepared process design information and drafted a plant layout.
Major equipment types were selected based on the simulation of the comminution circuits and vendor discussion. Study of
process plant and associated facilities will now progress through discipline engineering.
Iron Road’s engagement with South Australia’s principal transmission network service provider, ElectraNet, continued
towards a Regulatory Investment Test for Transmission (RIT-T). The preferred option for power transmission to the CEIP
and the necessary upgrading of the existing power network on Eyre Peninsula, will depend on the outcome of this process
and the national regulator.
Geological reconnaissance of existing and potential quarry locations was undertaken. Potential sources of rock for
railway ballast and construction aggregate were observed and samples submitted for appropriate strength and quality
tests. Planning for field investigations for sources of saline ground water suitable for construction purposes continued at
potential locations across nominated project areas.
Metallurgical Test Work
AMDEL - Bureau Veritas is conducting a metallurgical investigation of core intersections from mineralised domains, which
have advanced through batch crushing tests. Laboratory investigations have included advanced comminution testing,
which are a precursor to large-scale batch ore breakage tests, as well as assessment of magnetic separation at industrial
settings for low intensity magnetic separation (LIMS). Blending and preparation of representative bulk samples for high
pressure roller crusher (HPRC) pilot runs is complete. The HPRC tests will confirm the relationship between energy input
and mineral release for crushed ore and are currently in progress with Polysius and Koeppern in Perth.
Portions of representative types of mineralisation are being progressively submitted for quantitative mineralogy (Figure 4)
which will support process simulation and aid understanding of the petrology off the deposit.
Figure 4. Very coarse
irregular
magnetite grain (light grey) 2mm in
size. The red circle with a diameter
indicative
106µm
of
concentrate size.
represents
Iron Road Limited Annual Report 2012 | 9
Managing Director’s Report
Standardisation of the QEMSCAN (Quantitative Evaluation of Minerals by SCANning electron microscopy) procedures
with mineral species from the CEIP was completed. These initial scans have revealed a wide spatial range of magnetite
distribution and also detected traces of hematite in the primary rock samples examined to date (Figure 5).
Detailed data of mineral release has been used to undertake process simulation for prediction of circuit performance
and potential enhancement of magnetite recovery. Opportunities to enhance iron recovery by gravity techniques will be
analysed through process modelling and circuit simulation. Potential improvement of grinding process efficiency will also
be investigated, since ore milling will be the largest power consumer at CEIP. Based on these predictions, additional test
work to confirm flow sheet enhancements and improved project economics may be initiated later in 2012 using available
core samples.
Figure 5. QEMSCAN image indicating mineral composition from the CEIP magnetite gneiss.
Sinter Test Work
Iron Road confirmed positive results from sinter test work undertaken in November 2011 on the iron concentrate to be
produced at the CEIP in South Australia.
HN-Minerals developed a micro-testing technique to provide the basic information by which broad conclusions may be
drawn regarding the likely performance of an ore in a sinter pot testing campaign and therefore in sinter plants (used at the
majority of blast furnaces around the world). The HN-Minerals test work was undertaken by arrangement at the Nippon
Steel Testing and Research (NSTR) facility in Japan. Dr Y. Hida and Mr N. Nosaka are recognised leaders in their field and
are responsible for the development of the micro-testing technique.
The test work results indicated that:
• The CEIP product will be suitable for use in sinter plants as sinter feedstock and will not require additional processing
into pellets before use.
10 | Iron Road Limited Annual Report 2012
Managing Director’s Report
o The available market for CEIP product is therefore significantly larger than many other proposed magnetite
projects as the majority of blast furnace based steel mills have associated sinter plants.
o As pelletising of CEIP product is unnecessary, possible future constraints in pellet plant capacity will not affect
production.
o Iron Road is now in a position to capture a premium price for CEIP product, without incurring the added
expense of further processing into pellets.
• A premium above the standard Pilbara fines prices will be achieved for the proposed CEIP concentrate, thus
reinforcing a higher project value for CEIP and enhance Iron Road’s position in its partnership discussions.
The test work concluded that CEIP concentrate is suitable for use in conventional sintering plants without the need
for pelletising. Chinese mills use considerably higher percentages of magnetite concentrate than Japanese mills and
therefore test outcomes based on Chinese conditions are considered likely to be even more positive.
With the encouraging results received from the sinter test work, Iron Road is now confident that the premium above
Pilbara fines prices will be achieved. Moreover, sensitivity analysis of pricing fines indicates that project returns increase
dramatically when pricing is linked to the expected value in use for the CEIP product.
Figure 6. Scanning Electron Microscope image of CEIP 0.063-0.045mm particles.
Mineral Resource Estimate
Iron Road delivered a cumulative upgrade to the Mineral Resource in December 2011. Stage VI expansion drilling added
770Mt to the existing 1.01Bt Mineral Resource estimate3 (compiled in accordance with the JORC Code) report for Murphy
South for a total of 1.78 billion tonnes. This increased the global Mineral Resources at the Central Eyre Iron Project from
1.33Bt to 2.10Bt with 1.11Bt in the indicated category. The upgrade was delivered as part of the ongoing mineral resource
expansion drilling programme at Murphy South and Rob Roy.
The Stage VII drilling programme at Rob Roy (Murphy South eastern extension) currently in progress has an exploration
target across the 13 traverses of 700-900Mt magnetite gneiss with a grade of 16-18% iron estimated4.
3 Refer to Mineral Resource Estimates at page 20
4 It is common practice for a company to comment on and discuss its exploration in terms of target size, grade and type. The potential quantity and
grade of an exploration target is conceptual in nature since there has been insufficient work completed to define the prospects as anything beyond
exploration target. It is uncertain if further exploration will result in the determination of a Mineral Resource, in cases other than the Boo-Loo
and Murphy South prospect.
Iron Road Limited Annual Report 2012 | 11
Managing Director’s Report
At the Hambidge prospect an exploration target of 800Mt-1,000Mt magnetite gneiss with a grade of 15-18% iron has been
estimated4.
Coffey Mining has previously established an exploration target of 2.80 to 5.70Bt of magnetite gneiss with a grade of 18-25%
iron at the project4.
CEIP Global Mineral Resource
Location
Classification
Murphy South
Boo-Loo
Total
Indicated
Inferred
Inferred
Tonnes
(Mt)
1,108
668
328
2,104
Fe
(%)
16.0
16.4
17.3
16.2
SiO2
(%)
53.2
52.7
52.4
52.9
Al2O3
(%)
12.9
12.8
11.5
12.7
P
(%)
0.08
0.08
0.09
0.08
LOI
(%)
0.4
1.3
2.1
1.0
The mineral resource estimates were carried out following the guidelines of the JORC Code (2004) by Coffey Mining Ltd.
The Mineral Resource estimate was calculated by Coffey Mining and is summarised in the table below. Full details can be
found at page 20.
Murphy South Mineral Resource Estimate
Resource
Classification
Oxidation
Inferred
Fresh
Transitional
Oxide
Tonnes
(Mt)
550
32
87
Total Inferred
Indicated
Total Indicated
Fresh
668
1,108
1,108
Fe
(%)
16.4
16.3
16.4
16.6
16.0
16.0
Total Murphy South
1,776
16.1
SiO2
(%)
53.2
50.7
50.5
52.7
53.2
53.2
53.0
Al2O3
(%)
12.5
14.0
14.4
12.8
12.9
12.9
12.8
P
(%)
0.09
0.05
0.05
0.08
0.08
0.08
0.08
LOI
(%)
0.4
5.5
5.8
1.3
0.4
0.4
0.8
The Murphy South mineral resource estimate was carried out following the guidelines of the JORC Code (2004) by Coffey Mining
Ltd (refer attachment 2).
The establishment of over two billion tonnes in Mineral Resources at CEIP continues to demonstrate the necessary size
and scale of resource to underpin the capital required for a potential long term 20Mtpa high grade iron concentrate export
operation and the development of associated export infrastructure.
Prefeasibility test work has demonstrated that a high quality concentrate grading 67% iron may be produced at Murphy
South using a coarse grind size of -106μm. This product is suited as a high grade blast furnace sinter feed with
low impurities.
4 It is common practice for a company to comment on and discuss its exploration in terms of target size, grade and type. The potential quantity and
grade of an exploration target is conceptual in nature since there has been insufficient work completed to define the prospects as anything beyond
exploration target. It is uncertain if further exploration will result in the determination of a Mineral Resource, in cases other than the Boo-Loo
and Murphy South prospect.
12 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Warramboo Mineral Resource Expansion Drilling
The Stage VII Rob Roy drilling programme followed on from the success of the two preceding drilling programmes (Stage
V and VI) and targeted the eastern strike extent of the Murphy South orebody colloquially known as ‘Rob Roy’ (Figure 7).
Figure 7. Orebody solids model of Boo-Loo, Dolphin, Murphy South and Rob Roy prospects
The purpose of the Stage VII Rob Roy drilling programme was to delineate and evaluate the eastern extension of the
Murphy South orebody, both along strike and down dip, by means of thirteen evenly spaced drilling traverses. The Stage
VII drilling programme comprises three parts, with the now complete Phase 1 and 2 drilling comprising 65 drill holes for
24,326m. Phase 3 is currently under application with DMITRE. Formal approval is imminent and comprises 53 drill holes
for an estimated 24,000m (Figure 8).
Figure 8. Rob Roy prospect showing actual (orange) and projected (green) orebody solids model
Iron Road Limited Annual Report 2012 | 13
Managing Director’s Report
Individual NQ2 diamond holes range from 100m to 700m in down hole depth, drilled on a standard 200m x 100m grid
pattern. The stage VII drilling programme evaluated an area 1,000m wide x 2,600m long.
The completion of Phase 1 and 2 of the Stage VII drilling programme has allowed for a re-estimation of the exploration
target at the Rob Roy prospect. This has increased, with a high level of confidence, from 400-700Mt to 700-900Mt magnetite
gneiss with an estimated grade of 16-18% iron5. A current mineral resource estimate of 2.1Bt suggests that a combined
mineral resource estimate of 2.8 to 3.0Bt with a predicted grade of 16-18% iron5 is achievable for the Warramboo (northern)
project area.
Figure 9. Orientation of drill core at Stage VII – Rob Roy
Hambidge Exploratory Drilling
During November 2011 Iron Road announced the completion of the Stage IV drilling programme at the CEIP. Stage IV
investigated the Hambidge magnetic anomaly with four traverses totalling 12 holes for 5,412m. All drill holes intersected
continuous magnetite gneiss of up to 200m apparent thickness leading to the estimation of an exploration target with a
high level of confidence.
5 It is common practice for a company to comment on and discuss its exploration in terms of target size, grade and type. The potential quantity and
grade of an exploration target is conceptual in nature since there has been insufficient work completed to define the prospects as anything beyond
exploration target. It is uncertain if further exploration will result in the determination of a Mineral Resource, in cases other than the Boo-Loo
and Murphy South prospect.
14 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Figure 10. Plan view of Stage IV drilling programme at the Hambidge prospect.
The geology intersected in all traverses was consistent with interpretations from geophysical modelling of high resolution
aeromagnetic surveys. Using extrapolation of the magnetite gneiss down dip and along strike and with guidance from
assays received, an exploration target for the Hambidge prospect of 800-1,000 million tonnes magnetite gneiss with a
grade of 15-18% iron6 was estimated.
6 It is common practice for a company to comment on and discuss its exploration in terms of target size, grade and type. The potential quantity and
grade of an exploration target is conceptual in nature since there has been insufficient work completed to define the prospects as anything beyond
exploration target. It is uncertain if further exploration will result in the determination of a Mineral Resource, in cases other than the Boo-Loo
and Murphy South prospect.
Iron Road Limited Annual Report 2012 | 15
Managing Director’s Report
Figure 11. Cross-section B with extrapolation of magnetite gneiss down dip (area indicated includes extrapolated area).
Research Sponsorship
Iron Road has co-sponsored, with the Geological Survey of South Australia, DMITRE, a University of Adelaide PhD Project
entitled Influence of crustal architecture and tectonic reworking on the Warramboo magnetite gneiss iron ore deposit, southern
Gawler Craton. The sponsorship is over three years focussing on the magnetite gneiss at the CEIP.
The research work complements metallurgical studies currently underway by Iron Road as part of the DFS and supports
mine planning, ore beneficiation and future exploration target generation. The project will also greatly enhance knowledge
of the geology of the southern Gawler Craton in a highly prospective region that is poorly understood.
The project will be undertaken by Kathleen Lane under the guidance of Professor Martin Hand. Ms Lane has previously
worked for Iron Road on the CEIP as a vacation student and is familiar with the geology. Professor Hand is the project
leader and primary supervisor and is a lead researcher in the Centre for Tectonics, Resources and Exploration (TRaX) at
the University of Adelaide.
TRaX is supported by the Institute for Mineral and Energy Resources whose aim is to shed light on the evolving Earth and
its resource potential. South Australia’s unique geological characteristics offer insights for global mineral and resource
sectors. Project co-supervision is provided by Dr Anthony Reid and Dr Rian Dutch of the Geological Survey of South
Australia, DMITRE.
16 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Iron Road is pleased to support the strong local scientific expertise available at the University of Adelaide and the Geological
Survey of South Australia. The Company has benefited in developing the CEIP through the readily available local scientific
talent, precompetitive mineral exploration data and State Government initiatives and the State Core Library. As such the
Company is pleased to contribute to the pool of geological knowledge covering South Australia and so continuing to build
the number of highly skilled geoscientists available in the state.
Gawler Iron Project
(Iron Road 90% of iron rights)
Iron Road finalised arrangements to secure a 90% interest in the iron rights at the Gawler Iron Project. This project consists
of a number of tenements, with the majority of work being undertaken on Exploration Licence 4014. The earn-in was
reached following the completion of the Stage II exploration, evaluation programme and final cash payment of $1.15M to
the tenement holder Kingsgate Consolidated Ltd.
Preliminary test work indicates that a simple, possibly dry process may produce a high quality product at a grind of -106
micron (p80). The Stage II drilling programme will provide the necessary material for test work to determine the ideal
beneficiation process and potential product specifications.
Figure 12. Microphotograph of a magnetite crystal from Stage II diamond drilling
Iron Road Limited Annual Report 2012 | 17
Managing Director’s Report
Western Australia – Windarling
The Windarling project is located approximately 85km north of Koolyanobbing, Western Australia and consists of three
granted exploration licenses and four prospecting licences. The Company entered into an agreement with Convergent
Minerals Limited (Convergent) during September 2011 whereby Convergent may earn up to a 75% interest in the project by
meeting certain expenditure and management criteria.
Corporate
Community
Iron Road is committed to taking its place as a member of the communities in which we operate. We are particularly
devoted to increasing knowledge about the communities and the predominant issues.
Community engagement initiatives have increased significantly over the past year. Regular contact with all stakeholders
has included three public meetings and the establishment of six Focus Groups. The Focus Groups enabled a great number
of community members to share information and knowledge and to identify matters of both benefit and concern, all of
which have assisted Iron Road towards the development of the Central Eyre Iron Project.
A dedicated, full time Community Engagement Advisor has been appointed and additional expert resources have also been
used to ensure that Iron Road continues to implement best practice in community engagement.
Mechanisms for direct contact by any interested person have been established, including a toll free community information
line, dedicated community email address and the establishment of an office in Wudinna. Regular works and project updates
are also published monthly in a local newsletter circulating on the central Eyre Peninsula.
Iron Road undertakes all activities responsibly. A well planned and managed mining operation, which brings economic and
infrastructure benefits to local people will represent a win for both Iron Road and the communities around the CEIP.
Sponsorships and donations provided to local communities and groups have included:
• Men’s Health Awareness event
• Women’s Health Forum event
• Ronald McDonald House – Fundraising dinner
• “Warramboobs” Breast Awareness Event
• Wudinna Area School – International Pedal Prix
• Lock Cup, Picnic Races
• Wudinna Bowling Club Tournament
• Wudinna Hospital Fundraiser
• Wudinna Medical Centre
• Wudinna Agricultural Show
• Young Driver Awareness Day
• Wudinna Team Yarders
• Wudinna Football, Netball & Tennis Clubs
• Central Eyre Football & Netball Clubs
• Eastern Ranges Football & Netball Clubs
• Eyre Peninsula Cricket & Football Clubs
• Kyancutta Ramblers Golf Club
• Lock Bowling Club
• Lock Community Park
• Lock Football & Netball Clubs
• Lock Kindergym
• Port Adelaide Cricket Club –visit to Port Lincoln
• Warramboo Xmas Party for children
18 | Iron Road Limited Annual Report 2012
Managing Director’s Report
Gawler
Iron Road elected to move to holding 90% of the iron rights at Gawler following two stages of exploration drilling on the
project and final cash payment of $1.15M to tenement holder Kingsgate Consolidated Ltd (Dominion Gold Operations Pty
Ltd). The Company believes that the project hosts potential for a small to medium scale iron ore development, potentially
producing a high grade iron product through simple beneficiation. The project area is adjacent to the Trans-Australian
railway.
Iron Road has initiated a scoping study to investigate the potential for a smaller scale, fast start up project with more
modest production levels than the CEIP, but far lighter capital requirements, potentially delivering early cash flow.
Capital Raising
Post the end of the financial year, Iron Road completed a fully underwritten rights issue, raising $40 million (before costs).
Continued support was forthcoming from major shareholders including The Sentient Group, an Australian superannuation
fund and a sovereign wealth fund. The funds raised will be used to continue the CEIP Definitive Feasibility Study underway,
as well as the Gawler Iron Project scoping study. This followed an earlier $11.5 million placement in April 2012, which also
contributed to the ongoing DFS.
Mr Andrew Stocks
Managing Director
Figure 13 Geology Manager, Mr Milo Res, explains diamond drilling at the Iron Road display at the Wudinna Show
Iron Road Limited Annual Report 2012 | 19
Mineral Resource Estimates
Murphy South Mineral Resource Estimate
Resource
Classification
Oxidation
Tonnes
(Mt)
Inferred
Fresh
Transitional
Oxide
Total Inferred
Indicated
Total Indicated
Fresh
Total Murphy South
550
32
87
668
1,108
1,108
1,776
Fe
(%)
16.4
16.3
16.4
16.6
16.0
16.0
16.1
SiO2
(%)
53.2
50.7
50.5
52.7
53.2
53.2
53.0
Al2O3
(%)
12.5
14.0
14.4
12.8
12.9
12.9
12.8
P
(%)
0.09
0.05
0.05
0.08
0.08
0.08
0.08
LOI
(%)
0.4
5.5
5.8
1.3
0.4
0.4
0.8
The Murphy South mineral resource estimates were carried out following the guidelines of the JORC Code (2004) by Coffey
Mining Ltd.
Boo-Loo Mineral Resource Estimate
Resource
Classification
Oxidation
Inferred
Total
Fresh
Transitional
Oxide
Tonnes
(Mt)
277
13
38
328
Fe
(%)
17.3
17.0
17.2
17.3
SiO2
(%)
52.5
52.4
52.1
52.4
Al2O3
(%)
11.5
11.6
11.6
11.5
P
(%)
0.01
0.09
0.09
0.09
LOI
(%)
0.5
10.7
10.8
2.1
The mineral resource estimates were carried out following the guidelines of the JORC Code (2004) by Coffey Mining Ltd.
CEIP Global Mineral Resource
Location
Oxidation
Murphy South
Boo-Loo
Total
Indicated
Inferred
Inferred
Tonnes
(Mt)
1,108
668
328
2,104
Fe
(%)
16.0
16.4
17.3
16.2
SiO2
(%)
53.2
52.7
52.4
52.9
Al2O3
(%)
12.9
12.8
11.5
12.7
P
(%)
0.08
0.08
0.09
0.08
LOI
(%)
0.4
1.3
2.1
1.0
The mineral resource estimates were carried out following the guidelines of the JORC Code (2004) by Coffey Mining Ltd.
20 | Iron Road Limited Annual Report 2012
Competent Person's Statement
The information in this report that relates to Exploration
Results and the exploration target at Murphy South is
based on and accurately reflects information compiled by
Mr Larry Ingle, who is a fulltime employee of Iron Road
Limited and a Member of the Australasian Institute of
Mining and Metallurgy. Mr Ingle has sufficient experience
relevant to the style of mineralisation and the type of
deposits 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 Ingle consents to the inclusion in the
report of the matters based on his information in the form
and context in which it appears.
The information in this report that relates to Mineral
Resources is based on and accurately reflects information
compiled by Mr Iain Macfarlane, Coffey Mining, who is a
consultant and advisor to Iron Road Limited and a Member
of the Australasian Institute of Mining and Metallurgy.
Mr Macfarlane has sufficient experience relevant to the
style of mineralisation and the type of deposits 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 Macfarlane consents to the inclusion in the report of
the matters based on his information in the form and
context in which it appears.
The information in this report that relates to exploration
targets is based on and accurately reflects information
compiled by Mr Albert Thamm, Coffey Mining, who is a
consultant and advisor to Iron Road Limited and a Fellow
of the Australasian Institute of Mining and Metallurgy. Mr
Thamm has sufficient experience relevant to the style of
mineralisation and the type of deposits 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 Thamm
consents to the inclusion in the report of the matters
based on his information in the form and context in which
it appears on 31 August, 2009 in West Perth. The potential
quantity and grade of an exploration target is conceptual
in nature since there has been insufficient work completed
to define the prospects as anything beyond exploration
target. It is uncertain if further exploration will result in
the determination of a Mineral Resource, in cases other
than the Boo-Loo and Murphy South prospect.
Figure 14. Diamond drilling at the Hambidge prospect
Iron Road Limited Annual Report 2012 | 21
Directors' Report
Your directors submit their report on the Consolidated entity (referred to hereafter as the Group) consisting of Iron Road
Limited and the entities it controlled at the end of or during the financial year ended 30 June 2012.
DIRECTORS and MANAGEMENT
The names and details of the Group’s directors and management in office during the financial year and until the date of
this report are as follows:
Julian Gosse
Chairman
Mr Gosse has extensive experience in banking and broking both in Australia and overseas. He has previously worked in
London for Rowe & Pitman, in the United States for Janney Montgomery & Scott and in Canada for Wood Gundy. He has
also been involved in the establishment, operation and ownership of several small businesses.
In the three years immediately before the end of the financial year, Mr Gosse served as a director of the following
listed companies:
• ITL Limited*
• Clime Capital Limited*
* denotes current directorships
• WAM Research Limited*
• Australian Leaders Fund*
Jerry Ellis
Director
Mr Ellis has had a long and distinguished career in business, particularly in the resources sector. Mr Ellis’ career included
three decades at BHP Ltd, Chairing the company from 1997 to 1999. He also served on the boards of a number of listed
companies and governing bodies including Newcrest Mining, Aurora Gold, the International Copper Association, Australia and
New Zealand Banking Group, the International Council on Metals and the Environment and the American Mining Congress.
Mr Ellis is a former Chancellor of Monash University, former President of the Minerals Council of Australia and former
Chairman of the Australia-Japan Foundation and the Australian National Occupational Health and Safety Commission.
He is also a member of the Sentient Advisory Council and is on the Advisory Board of Anglo Coal Australia.
In the 3 years immediately before the end of the financial year, Mr Ellis served as a director of the following companies:
• Landcare Australia*
• Earth Resources Development Council
• Australia and New Zealand Banking Group Limited • Future Directions International
* denotes current directorships
• MBD Energy Limited*
• Pacific Road Corporate Finance Pty Limited
22 | Iron Road Limited Annual Report 2012
Directors’ Report
Ian Hume
Director
Mr Ian Hume’s career in the resources industry stretches back several decades, primarily in the fields of managed fund
investments, capital raising and project development. Mr Hume was a Founding Partner of The Sentient Group, a manager
of closed end private equity funds specialising in global investments in the natural resource industries.
He remains an independent advisor to The Sentient Group, following his retirement from the fund in 2009. Prior to the
founding of The Sentient Group, Mr Hume was a consultant to AMP’s Private Capital Division.
In the 3 years immediately before the end of the financial year, Mr Hume served as a director of the following companies:
• Golden Minerals*
• Silver City Minerals*
* denotes current directorships
• Norsemont Mining*
• Andean Resources
Matthew J Keegan
Director
Mr Keegan gained extensive experience as a mine geologist working for companies such as Rio Tinto and Barrick across a
range of commodities including iron ore, nickel, and gold. Mr Keegan is an advisor at The Sentient Group. Prior to joining
Sentient, Mr Keegan worked as a mining analyst with a major research house, culminating in the publication of several
mining industry cost studies.
No other directorships of listed companies were held in the last 3 years.
Andrew J Stocks
Managing Director
Mr Stocks is a Mining Engineer with over twenty years’ experience in the resources sector, primarily in mining operations
and corporate roles. He has been particularly active in the areas of business optimisation, cost and production efficiency
improvements, project evaluation and development of mining projects in Australia and overseas.
Mr Stocks was previously Managing Director and Chief Executive Officer of Siberia Mining Corporation until its merger with Monarch
Gold. Prior to Siberia, he was Vice President, Operations of Crew Gold Corporation, a London based mining and exploration company.
No other directorships of listed companies were held in the last 3 years.
Iron Road Limited Annual Report 2012 | 23
Directors’ Report
Graham D Anderson
Company Secretary
Mr Anderson is a graduate of Curtin University and has over 25 years’ commercial experience as a Chartered Accountant.
He operates his own specialist accounting and management consultancy practice, providing a range of corporate advisory
services to both public and private companies. From 1990 to 1997 he was an audit partner at Duesburys and from 1997 to
1999 he was an audit partner at Horwath Perth.
He is currently a Director of Echo Resources Limited, Mako Hydrocarbons Limited, Oakajee Corporation Limited, Pegasus
Metals Limited and Tangiers Petroleum Limited.
Larry J Ingle
General Manager
Mr Ingle is a geologist, having graduated with a BSc (Hons) & MSc in Geology from the University of Witwatersrand,
Johannesburg and an MBA from the Graduate School of Business, Curtin University of Technology, Perth. He has 25 years’
experience in a variety of mining, tunnelling, exploration, project development and business improvement roles in Australia
and southern Africa. Mr Ingle has held senior positions with various global companies such as Barrick and Rio Tinto.
Lex Graefe
Chief Financial Officer (commenced December 2011)
Mr Graefe has extensive management and commercial experience working in the mining industry for the last 30 years in
Australia, Africa and Asia. His experience includes leadership roles in project studies, engagements with governments and
stakeholders, various CFO roles and extensive experience in the iron ore industry. Mr Graefe worked for Rio Tinto for some
22 years up until 2004, where his later roles were as President Director of Rio Tinto Indonesia, following a term as General
Manager Finance with Rio Tinto India.
24 | Iron Road Limited Annual Report 2012
Directors’ Report
Peter Bartsch
Study Manager (commenced November 2011)
Mr Bartsch graduated as a Metallurgist in South Australia and has over 34 years’ experience in metal extraction and
minerals processing industries. His capability covers most traded commodity metals and includes hematite and magnetite
ores. Mr Bartsch has contributed to evaluations for many large and small resource organisations through management
of investigations and designs, which included technology leadership across feasibility studies and project delivery. He has
also coordinated international missions for the International Atomic Energy Agency and has published technical articles in
a range of metallurgical process fields.
Milo Res
Geology Manager
Mr Res is a geologist, with approximately 30 years mining industry experience in Australia and southern Africa. He
graduated with a BSc (Hons) in Geology from the University of Pretoria and MSc in Geology from Potchefstroom University,
South Africa. Mr Res has been involved in a wide range of mining and exploration activities including gold, nickel and iron
ore. He was a key member of the Fortescue Metals Group team developing the Cloudbreak iron ore mining project in the
Pilbara and more recently in the Jack Hills magnetite/hematite mining and development project for Crosslands Resources
in the mid-west region of Western Australia.
Laura Johnston
Regulation and Approvals Manager
Ms Johnston began her career with the Department of Mines and Energy, South Australia (now DMITRE) over
20 years ago and specialised in providing advice and assistance to landowners, the resources sector and other stakeholders
on the mining legislation. A former Mining Registrar and Principal Advisor, she left Government and consulted to
numerous ASX listed resources companies, including Iron Road Limited for four years before joining Iron Road full time in
September 2011.
Iron Road Limited Annual Report 2012 | 25
Directors’ Report
1.
PRINCIPAL ACTIVITIY
The principal activity of the Group during the year was the exploration and evaluation of the Group’s iron ore ground
holdings.
2.
INTERESTS IN SHARES AND OPTIONS
As at the date of this report, the interests of the directors in the shares and options of Iron Road Limited were:
Julian Gosse
Ian Hume
Matthew J Keegan
Andrew J Stocks
Jerry Ellis
3.
DIVIDENDS
Ordinary
shares
591,000
5,151,203
2,200,000
2,915,938
80,000
Options over
Ordinary Shares
2,500,000
-
3,780,000
9,420,000
500,000
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
4.
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
The operating loss after income tax of the Group for the year ended 30 June 2012 was $2,542,228 (2011: $1,042,222*).
Shareholder Returns
Basic and diluted loss per share (cents)
2012
(1.80)
2011
(1.03)*
* Restated. Refer to Note 3 of the Financial Statements for further details.
Risk Management
The board is responsible for ensuring that risks and also opportunities are identified on a timely basis and that activities
are aligned with the risks and opportunities identified by the board.
The Group believes that it is crucial for all board members to be a part of this process, and as such the board has not
established a separate risk management committee.
The board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with
the risks identified by the board. These include the following:
• Strategic planning, which encompasses strategy statements designed to meet stakeholders needs and manage business
risk; and
• Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
5.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Apart from the above or as noted elsewhere in this report no significant changes in the state of affairs of the Company
occurred during the financial period.
26 | Iron Road Limited Annual Report 2012
Directors’ Report
6. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 2 August 2012, the Group announced a fully underwritten 31-for-40 accelerated non-renounceable entitlement offer of
new Iron Road shares at an offer price of $0.32 per new share to raise approximately $40 million (before costs).
Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial years.
7.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Likely developments in the operations of the Group and the expected results of those operations in future financial years
have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to
the Group.
8.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s operations are subject to environmental regulation in respect to its mineral tenements relating to exploration
activities on those tenements. No breaches of any environmental restrictions were recorded during the financial year.
The Group has not yet fully reviewed the reporting requirements under the Energy Efficient Opportunities Act 2006 or the
National Greenhouse and Energy Reporting Act 2007, but believes it has adequate systems in place to ensure compliance
with these Acts having regard to the scale and nature of current operations.
9.
REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the following main headings:
A
B
C
D
E
Principles used to determine the nature and amount of remuneration;
Details of remuneration;
Service agreements;
Share-based compensation; and
Additional information
The information provided in this remuneration report has been audited as required under Section 308 (3C) of the
Corporations Act 2001.
A
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The remuneration policy of Iron Road Limited has been designed to align director and executive objectives with shareholder
and business objectives by providing a fixed remuneration component and offering specific long term incentives based on
key performance areas affecting the Group’s financial results. The board of Iron Road Limited believes the remuneration
policy should now be reviewed to ensure that it remains appropriate and effective in its ability to attract and retain high
calibre executives and directors to run and manage the Group.
The board’s policy for determining the nature and amount of remuneration for board members and senior executives of
the Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was
developed by the board. All executives receive a base salary (which is based on factors such as length of service and
experience) and superannuation. The board reviews executive packages annually by reference to the Group’s performance,
executive performance and comparable information from industry sectors and other listed companies in similar industries.
Iron Road Limited Annual Report 2012 | 27
Directors’ Report
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to
attract and retain the highest calibre of executives and reward them for performance that results in long-term growth in
shareholder wealth. Executives are also entitled to participate in the employee share and option arrangements.
The executive directors and other senior executives receive a superannuation guarantee contribution required by the
government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, may
choose to sacrifice part of their salary to increase payments towards superannuation.
The current policy is to remunerate non executive directors at market rates for comparable companies for time, commitment
and responsibilities. The board determines payments to the non executive directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when required. The
maximum aggregate amount of fees that can be paid to non executive directors is currently $200,000 which was approved
through a General Meeting held on 22 January 2008. Fees for non executive directors are not linked to the performance of
the Group. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in
the Group and are able to participate in employee option plans.
Use of Remuneration Consultants
The Company has not used a remuneration consultant during the year.
Voting and comments made at the Company’s 2011 Annual General Meeting
The Company received more than 90% of “yes” votes on its remuneration report for the 2011 financial year. The Company
did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Performance based remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and directors and
executives. Currently, this is facilitated through the issue of options to executives to encourage the alignment of personal
and shareholder interests. The Group believes this policy will be effective in increasing shareholder wealth. For details of
directors and executives interests in options at year end, refer note 16 to the financial statements.
There are non-market performance related vesting conditions on some of the options granted during the year. These
conditions link to the Company completing the Definitive Feasibility Study in relation to the Central Eyre Iron Project. For
those options that do not have performance related vesting conditions, these have vested immediately. The Company has
not attached performance conditions to these options as these were issued as a reward for past service as opposed to
future goal alignment.
Company performance, shareholder wealth and directors’ and executives’ remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment
objectives and directors and executives’ performance. Currently, this is facilitated through the issue of options to executives
to encourage the alignment of personal and shareholder interests.
Details of remuneration
B
Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party
Disclosures) of Iron Road Limited are set out in the following table.
The key management personnel of Iron Road Limited include the directors and company secretary and the following
executive officer who has authority and responsibility for planning, directing and controlling the activities of the Group:
• Larry Ingle – General Manager
Given the size and nature of operations of Iron Road Limited there are no other specified executives who are required to
have their remuneration disclosed in accordance with the Corporations Act 2001.
28 | Iron Road Limited Annual Report 2012
Directors’ Report
Key management personnel and other executives of Iron Road Limited
Post Employment
Superannuation
Options
Share-based Payments
$
$
Short-Term
Salary
& Fees
$
50,000
50,000
50,000
50,000
50,000
27,083
-
-
290,000
266,667
106,300
55,500
4,500
13,987(1)
4,500
4,500
4,500
2,437
-
-
26,100
24,000
-
-
-
-
-
-
352,450
-
-
-
11,064
(2,214)
-
-
-
-
290,000
266,667
26,100
24,000
839,250
715,917
65,700
68,924
363,514
(2,214)
Remuneration
consisting options
%
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,500
63,987
54,500
54,500
406,950
29,520
-
-
327,164
288,453
106,300
55,500
316,100
290,667
1,268,464
782,627
Directors
Julian Gosse
2012
2011
Ian Hume
2012
2011
Jerry Ellis
2012
2011
Matthew Keegan(2)
2012
2011
Andrew Stocks
2012
2011
Company Secretary
Graham Anderson
2012
2011
Other key
management
personnel
Larry Ingle
2012
2011
Total key
management
personnel
compensation
2012
2011
(1)
(2)
This includes payments for superannuation not received in 2009 and 2010.
It was deemed at year end 30 June 2012 and 30 June 2011 that no fee is payable to Matthew Keegan during his
appointment as a Director of Iron Road Limited.
There are no cash bonuses or non-monetary benefits relating to any of the Directors and Key Management Personnel
during the year.
Iron Road Limited Annual Report 2012 | 29
Directors’ Report
Service agreements
C
The details of service agreements of the key management personnel of Iron Road Limited are as follows:
Julian Gosse, Chairman
•
Initial chairman’s fee of $50,000 per annum plus statutory superannuation, to be reviewed annually by the
Remuneration Committee of the Board. No termination benefits are payable.
Ian Hume, Non-Executive Director
•
Initial director’s fee of $50,000 per annum plus statutory superannuation, to be reviewed annually by the Remuneration
Committee of the Board. No termination benefits are payable.
Jerry Ellis, Non-Executive Director
•
Initial director’s fee of $50,000 per annum plus statutory superannuation, to be reviewed annually by the Remuneration
Committee of the Board. No termination benefits are payable.
Matthew Keegan, Non-Executive Director
•
Initial director’s fee of $50,000 per annum plus statutory superannuation, to be reviewed annually by the Remuneration
Committee of the Board. No termination benefits are payable. Fee waived by Mr Keegan.
Graham D Anderson, Company Secretary
•
GDA Corporate Pty Ltd to provide Company Secretary and Accounting Services at $5,500 per month and $3,850 per
month respectively.
•
No fixed term agreement. A three month notice period is required in the event of termination.
Andrew J Stocks, Managing Director
•
Annual base salary of $290,000, plus statutory superannuation, to be reviewed annually by the Remuneration
Committee of the Board.
•
No fixed term agreement. Payment of termination benefit on early termination by the employer, other than for gross
misconduct, includes any accrued long service leave and annual entitlements, superannuation, retiring allowance,
superannuation gratuity to the value of which does not exceed the maximum amount ascertained in accordance with
the formula set out in section 200G of the Corporations Act 2001.
Larry Ingle, General Manager – appointed 1 July 2009
•
Annual base salary of $290,000, plus statutory superannuation, to be reviewed annually by the Remuneration
Committee of the Board.
•
No fixed term agreement. Payment of termination benefit on early termination by the employer, other than for gross
misconduct, includes any accrued long service leave and annual entitlements, superannuation, retiring allowance,
superannuation gratuity to the value of which does not exceed the maximum amount ascertained in accordance with
the formula set out in section 200G of the Corporations Act 2001.
Lex Graefe, Chief Financial Officer – appointed 12 December 2011
•
•
Daily rate of $1,400, plus statutory superannuation, to be reviewed annually by the Remuneration Committee of the Board.
No fixed term agreement. No termination benefits are payable.
30 | Iron Road Limited Annual Report 2012
Directors’ Report
Share-based compensation
D
Options are issued to directors and executives as part of their remuneration. The options are not issued based on
performance criteria, but are issued to the majority of directors and executives of Iron Road Limited to increase goal
congruence between executives, directors and shareholders. The options as detailed below were granted to or vested with
key management personnel during the period:
Grant
Date
Granted Number of
Number
options
vested
during the
period
Expiry
Date
Exercise
Price
(cents)
Andrew J Stocks
Jerry Ellis
23/01/08
25/07/11
6,000,000
500,000
- (1)
500,000
23/01/13
25/07/16
$0.35
$1.00
Fair
value
per option
at grant
date
(cents)*
6.10
7.05
Exercised Maximum
Number
total
value
of grant
yet to
vest
16,825
-
-
-
(1) The estimated date of fulfilment of vesting conditions of the remaining 1,500,000 options was revised during the year to
30 June 2013. During the year ended 30 June 2012, no additional options had vested as tranche 4 of the vesting conditions
had not been met by the reporting date.
* The maximum value of the options yet to vest has been determined as the amount of the grant date fair value of the
options that is yet to be expensed.
Tranche Amount
1
2
3
4
1,500,000
1,500,000
1,500,000
1,500,000
Vesting Conditions
Admission to the official list of the ASX
The Company’s share price remaining at or above 50 cents per share for 30 consecutive days
The Company publishing a JORC compliant Resource of at least 100M tonnes
Upon completion of a definitive feasibility study
The total number of options vested as at 30 June 2012 is 4,500,000.
Additional information
E
No market based performance bonuses have been paid to key management personnel during the financial year.
The table below sets out information about the Company’s earnings and movements in shareholder wealth of the periods
since listing:
Revenue
Net Profit /(Loss) before tax
Share price at year-end
30 June 2012
$
457,306
(3,239,233)
0.305
30 June 2011
$
116,133
(2,076,551)*
0.840
30 June 2010
$
95,402
(11,299,132)
0.590
30 June 2009
$
199,355
(4,604,591)
0.175
30 June 2008
$
30,022
(380,874)
0.349
* Restated. Refer to Note 3 in the Financial Statements for further details.
This is the end of the audited remuneration report.
Iron Road Limited Annual Report 2012 | 31
Directors’ Report
10. DIRECTORS’ MEETINGS
During the financial year the Company held three meetings of directors. The attendance of directors at meetings of the
board was:
Directors’ Meetings
Julian Gosse
Ian Hume
Matthew Keegan
Jerry Ellis
Andrew Stocks
A
3
3
3
3
3
B
3
3
3
3
3
Notes
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the period
11. SHARES UNDER OPTION
At the date of this report there are 22,925,000 unlisted options outstanding.
The balance is comprised of the following:
Issue date
27 May 2008
27 May 2008
27 May 2008
29 Oct 2008
23 Dec 2009
23 Dec 2009
23 Dec 2009
23 Dec 2009
30 Aug 2011
30 Aug 2011
30 Aug 2011
30 Aug 2011
Expiry date
22 Jan 2013
22 Jan 2013
10 Mar 2013
6 Aug 2013
15 Dec 2014
15 Dec 2014
15 Dec 2014
15 Dec 2014
25 July 2016
24 August 2016
24 August 2016
24 August 2016
Exercise price (cents)
20
35
20
35
20
25
30
35
100
100
125
150
Number of options
7,125,000
7,500,000
2,000,000
3,000,000
625,000
625,000
625,000
625,000
500,000
100,000
100,000
100,000
Total number of options outstanding at the date of this report
22,925,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any
share issue of any other body corporate.
Shares issued on exercise of options
The following ordinary shares of the Company were issued to directors during the year ended 30 June 2012 on the exercise
of options:
Name
Date of
exercise
of options
Number of ordinary shares
issued on exercise of
options during the year
Value
at exercise date*
Directors of Iron Road Limited
Ian Hume
8 July 2011
2,500,000
$1,562,500
*The value at the exercise date of options exercised during the year has been determined as the intrinsic value of the
options at that date.
32 | Iron Road Limited Annual Report 2012
Directors’ Report
12. PROCEEDINGS ON BEHALF OF COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on
behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the
Corporations Act 2001.
13.
INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the Company has paid premiums insuring all the directors of Iron Road Limited against
costs incurred in defending proceedings for conduct involving:
a)
b)
a wilful breach of duty; or
a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the
Corporations Act 2001.
The total amount of insurance contract premiums paid is confidential under the terms of the insurance policy.
The Company has entered into a Deed of Indemnity, Insurance and Access with each Director. In summary the Deed
provides for:
•
•
•
Access to corporate records for each Director for a period after ceasing to hold office in the Company;
The provision of Directors and Officers Liability Insurance; and
Indemnity for legal costs incurred by Directors in carrying out the business affairs of the Company.
14. NON AUDIT SERVICES
Taxation advice was provided to the Group by BDO Audit (WA) Pty Ltd during the period. Refer to Note 17(b) for details on
fees paid or payable for non-audit services provided by related entities of BDO (WA) Pty Ltd.
15. 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 34.
Signed in accordance with a resolution of the directors, and on behalf of the board by
Andrew Stocks
Managing Director
26 September 2012
Iron Road Limited Annual Report 2012 | 33
Auditor's Independence Declaration
26 September 2012
The Directors
Iron Road Limited
Level 6, Currie Street
ADELAIDE, WA 5000
Dear Sirs,
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF IRON ROAD LIMITED
As lead auditor of Iron Road Limited for the year ended 30 June 2012, I declare that, to the best of my knowledge and belief,
there have been no contraventions of:
•
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Iron Road Limited and the entities it controlled during the period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, Western Australia
34 | Iron Road Limited Annual Report 2012
Corporate Governance Statement
Corporate Governance Statement
The Company has adopted comprehensive systems of control and accountability as the basis for the administration
of corporate governance. The Board is committed to administering the policies and procedures with openness and
integrity and pursuing the true spirit of corporate governance commensurate with the Company’s needs. To the extent
they are applicable, the Company has adopted the Eight Essential Corporate Governance Principles and Best Practice
Recommendations (“Recommendations”) as published by ASX Corporate Governance Council.
As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional
corporate governance structures will be given further consideration.
The Board sets out below its “if not, why not” report in relation to those matters of corporate governance where the
Company’s practises depart from the recommendations.
Principle 1 Recommendation 1.1
Notification of Departure
The Company has not formally disclosed the functions reserved to the Board and those delegated to management.
Explanation for Departure:
The Board recognises the importance of distinguishing between the respective roles and responsibilities of the Board
and management. The Board has established a framework for the management of the Company and the roles and
responsibilities of the Board and management.
Previously due to the small size of the Board and of the Company, the Board did not think that is was necessary to formally
document the roles of the Board and management as these roles were clearly understood by all members of the Board and
management. The Board is responsible for the strategic direction of the Company, establishing goals for management and
monitoring the achievement of these goals, monitoring the overall corporate governance of the Company and ensuring that
shareholder value is increased.
Principle 2 Recommendation 2.1
Notification of Departure:
The Board does not have a majority of independent Directors.
Explanation for Departure:
The Board has been structured such that its composition and size will enable it to effectively discharge its responsibilities
and duties. Each Director has the relevant industry experience and specific expertise relevant to the Company’s business
and level of operations.
The Board considers that its structure is, and will continue to be, appropriate in the context of the Company’s recent
history. The Company considers that the non-independent Directors possess the skills and experience suitable for building
the Company. Furthermore, the Board considers that in the current phase of the Company’s growth, the Company’s
shareholders are better served by Directors who have a vested interest in the Company. The Board intends to reconsider
its composition as the Company’s operations evolve, and may appoint independent Directors as it deems appropriate.
Principle 2 Recommendation 2.4
Notification of Departure:
The full Board carries out the role of a remuneration and nomination committee in the Remuneration and Nomination
Committee Charter formalised on 14 February 2009. The Board has not adopted a charter relevant to the specific functions
of a remuneration and nomination committee.
Iron Road Limited Annual Report 2012 | 35
Corporate Governance Statement
Explanation for Departure:
The Board considers that no efficiencies or other benefits would be gained by establishing a separate remuneration and
nomination committee, in particular at this early stage of the Company’s operation, where the Company’s focus is on the
retention of Directors and senior executives.
Principle 3 Recommendations 3.1, 3.2, 3.3, 3.4
The Company is committed to an inclusive workplace that embraces and promotes diversity, while respecting International,
Sovereign and Australian laws.
The Company recognises the value of a diverse workforce and believes that diversity supports all employees reaching their
full potential, improves business decisions, business results, increases stakeholder satisfaction and promotes realisation
of the Company vision.
Diversity may result from a range of factors including, but not limited to, gender, age ethnicity and cultural backgrounds.
This adds to the collective skills and experience of the Company.
Company and Individual Expectations
•
•
Ensure diversity is incorporated into the behaviours and practises of the Company;
Facilitate equal employment opportunities based on job requirements only using recruitment and selection processes
which ensures selection from a diverse pool;
Engage professional search and recruitment firms when needed to enhance selection pool;
Help to build a safe work environment by acting with care and respect at all times, ensuring there is no discrimination,
harassment, bullying, victimisation, vilification or exploitation of individuals or groups;
Develop flexible work practices to meet the differing needs of employees and potential employees;
Attract and retain a skilled and diverse workforce as an employer of choice;
Enhance reputation through a workforce that respects and reflects the diversity of our stakeholders and communities
in which the Company operates;
Make a contribution to the economic, social and educational well being of all of the communities the Company
operates in;
Meet the relevant requirements of domestic and international legislation appropriate to the Company’s operations;
Create an inclusive workplace culture; and
Establish measurable diversity objectives and monitor and report on the achievement of those objectives annually.
•
•
•
•
•
•
•
•
•
It is the responsibility of all directors, officers, employees and contractors to comply with the Company’s Diversity Policy
and report violations or suspected violations in accordance with this Policy.
Gender Diversity
The Board is responsible for establishing and monitoring on an annual basis the achievement against gender diversity
objectives and strategies, including the representation of women at all levels of the organisation.
The proportion of women within the whole organisation as at the date of this report are as follows:
Women employees in the whole organisation
Women in Senior Executive positions
Women on the Board of Directors
53%
-
-
36 | Iron Road Limited Annual Report 2012
Corporate Govern-
ance Statement
Corporate Governance Statement
The Board acknowledges the absence of female participation on the Board of Directors. However, as noted above, the Board
has determined that the composition of the current Board represents the best mix of Directors that have an appropriate
range of qualifications and expertise, can understand and competently deal with current and emerging business issues and
can effectively review and challenge the performance of management.
Principle 4 Recommendation 4.2, 4.3, 4.4
Notification of Departure:
There is no separate Audit Committee.
Explanation for Departure:
The Company’s financial statements are prepared by the Company Secretary and reviewed in detail by the full Board. The
audit committee consists of the current full Board. The Board considers that no efficiencies or other benefits would be
gained by establishing a separate audit committee, in particular at this early stage of the Company’s operation.
Principle 7 Recommendation 7.1
Notification of Departure:
The Company has an informal risk oversight and management policy and internal compliance and control system.
Explanation for Departure:
The Board is aware of the various risks that affect the Company and its particular business and reviews these risks on a
regular basis. As the Company develops, the Board will further develop appropriate procedures to deal with risk oversight
and management and internal compliance, taking into account the size of the Company and the stage of development of
its projects.
Principle 8 Recommendation 8.1
Notification of Departure:
The Company does not have in place a formal process for evaluation of the Board, its committees, individual Directors and
key executives.
Explanation for Departure:
Due to the size and structure of the Board a formal evaluation process is not conducted.
Iron Road Limited Annual Report 2012 | 37
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
YEAR ENDED 30 JUNE 2012
Notes
2012
REVENUE
General expenses
Depreciation
Impairment of exploration expenses
Employee expenses
Superannuation
Consulting
Marketing
Travel and accommodation
Share based payment
Loss before income tax
Income tax benefit
LOSS FOR THE YEAR
5
6
6
$
457,306
(1,002,846)
(67,033)
(691,489)
(662,781)
(160,628)
(41,026)
(379,995)
(216,413)
(474,328)
2011
(Restated*)
$
116,133
(783,031)
(26,328)
(390,341)
(758,709)
(74,130)
(15,000)
(66,471)
(80,888)
2,214
(3,239,233)
(2,076,551)
7
697,005
1,034,329
(2,542,228)
(1,042,222)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year
(2,542,228)
(1,042,222)
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE
TO MEMBERS OF IRON ROAD LIMITED
24
(2,542,228)
(1,042,222)
Loss per share for loss attributable to ordinary equity
holders of the Company:
Basic and diluted loss per share (cents per share)
24
cents
(1.80)
cents
(1.03)
* Restated. Refer to Note 3 for further details.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the
Financial Statements.
38 | Iron Road Limited Annual Report 2012
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
Notes
30 June 2012
$
6,499,620
779,812
7,279,432
56,170
1,580,868
47,852,396
49,489,434
30 June 2011
(Restated*)
$
1 July 2010
(Restated*)
$
125,603
561,289
686,892
1,700
117,446
24,939,230
25,058,376
3,071,470
431,268
3,502,738
400
39,590
9,032,712
9,072,702
56,768,866
25,745,268
12,575,440
2,727,796
100,000
2,827,796
3,253,926
-
3,253,926
1,739,197
-
1,739,197
2,827,796
3,253,926
1,739,197
53,941,070
22,491,342
10,836,243
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Other assets
Property, plant and equipment
Exploration and evaluation expenditure
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
8
9
10
11(a)
11(b)
12
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Accumulated losses
TOTAL EQUITY
13
14(a)
14(b)
60,659,503
4,773,127
(11,491,560)
53,941,070
27,141,875
4,298,799
(8,949,332)
22,491,342
14,442,340
4,301,013
(7,907,110)
10,836,243
* Restated. Refer to Note 3 for further details.
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the
Financial Statements.
Iron Road Limited Annual Report 2012 | 39
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Share
Capital
Ordinary
$
Accumulated
Losses
$
Share-based
Payments
Reserve
$
Option Issue
Reserve
Total
Equity
$
14,442,340
(7,907,110)
4,027,763
273,250
10,836,243
BALANCE AT 1 JULY 2010
(Restated*)
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
-
-
(1,042,222)
(1,042,222)
Contributions to equity
net of transactions costs
Share based payments
TRANSACTIONS WITH
OWNERS IN THEIR
CAPACITY AS OWNERS
12,699,535
-
12,699,535
-
-
-
-
-
-
(2,214)
(2,214)
-
-
-
-
-
(1,042,222)
(1,042,222)
12,699,535
(2,214)
12,697,321
BALANCE AT 30
JUNE 2011 (Restated*)
27,141,875
(8,949,332)
4,025,549
273,250
22,491,342
Share
Capital
Ordinary
$
Accumulated
Losses
(Related*)
$
Share-based
Payments
Reserve
$
Option Issue
Reserve
Total
Equity
$
BALANCE AT 1 JULY 2011
27,141,875
(8,949,332)
4,025,549
273,250
22,491,342
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
-
-
(2,542,228)
(2,542,228)
Contributions to equity
net of transactions costs
Share based payments
TRANSACTIONS WITH
OWNERS IN THEIR
CAPACITY AS OWNERS
33,517,628
-
33,517,628
-
-
-
-
-
-
474,328
474,328
-
-
-
-
-
(2,542,228)
(2,542,228)
33,517,628
474,328
33,991,956
BALANCE AT 30
JUNE 2012
60,659,503
(11,491,560)
4,499,877
273,250
53,941,070
* Refer to Note 3 for further details.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the
Financial Statements.
40 | Iron Road Limited Annual Report 2012
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
YEAR ENDED 30 JUNE 2012
Notes
2012
$
697,006
(3,516,567)
429,366
(166,423)
(2,556,618)
(1,530,455)
(22,913,165)
(24,443,620)
33,838,578
(464,323)
33,374,255
6,374,017
125,603
2011
(Restated*)
$
1,034,329
(2,016,807)
123,627
(143,148)
(1,001,999)
(104,185)
(15,987,318)
(16,091,503)
13,213,813
(289,608)
12,924,205
(2,945,867)
3,071,470
8
6,499,620
125,603
CASH FLOWS FROM OPERATING ACTIVITIES
Research and development tax refund
Payments to suppliers and employees
Interest received
Other
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES
23
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Payments for exploration expenditure
NET CASH (OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares/options
Payment of share issue costs
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET(DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
CASH AND CASH EQUIVALENTS
AT THE END OF THE YEAR
* Refer to Note 3 for further details.
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.
Iron Road Limited Annual Report 2012 | 41
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of the financial information included in this report have been
set out below.
Basis of preparation of historical financial information
(a)
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting Standards Boards, Australian Accounting Interpretations
and the Corporations Act 2001.These financial statements have been prepared on a historical cost basis.
Compliance with Australian Equivalents to International Financial Reporting Standards (AIFRS) ensures that the financial
statements, comprising the notes thereto, comply with International Financial Reporting Standards. Australian Accounting
Standards include AIFRS. These financial statements are presented in Australian Dollars, which is the Group’s functional
and presentation currency.
Going Concern
The directors have prepared the financial statements on the basis of going concern, which contemplates continuity
of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business.
Although the Company incurred a net loss of $2,542,228 for the year (2011: $1,042,222*) and incurred, cash outflows from
operating and investing activities of $27,000,238 (2011:$17,093,502*) subsequent to year end the Company was successful
in raising additional capital to fund its ongoing exploration and feasibility studies as detailed in Note 22.
* Restated. See Note 3 for further details.
Principles of consolidation
(b)
The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Iron Road Limited as at
30 June 2012 and the results of all subsidiaries for the year then ended. Iron Road Limited and its subsidiaries together are
referred to in this report as the Group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial
and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive
income, statement of changes in equity and statement of financial position respectively.
Revenue Recognition
(c)
Sale of Goods and Services
Revenue from sale of goods or services is recognised when the significant risks and rewards of ownership have passed
to the buyer and can be reliably measured. Risks and rewards are considered passed to buyer when goods have been
delivered to the customer.
42 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Interest
Revenue is recognised as interest accrues using the effective interest method. The effective interest method uses the
effective interest rate which is the rate that exactly discounts the estimated future cash receipt over the expected life of the
financial asset.
Income tax
(d)
The income tax expense for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to
unused tax losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the
assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each
jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability
if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax loses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances relating to amounts recognised directly in equity are also recognised directly in equity.
On 19 March 2012, the Australian Government passed through the Senate, the Minerals Resource Rent Tax Act 2012, with
application to certain profits arising from the iron ore and coal extracted in Australia. In broad terms, the tax is imposed on
a project-by-project basis.
This tax applies to upstream mining operations only, and the effective rate of Minerals Resource Rent Tax is 22.5%.
This tax is considered to be an “income tax” for the purposes of AASB 112.
Certain transition measures are contained in the legislation which can give rise to deductions in future years, for Minerals
Resource Rent Tax purposes.
Any modelling and/or valuations performed on behalf of the Group may give rise to an increase in the balance of deferred
tax assets at 30 June 2012. However, given the nature of the Group’s operations (i.e. primarily exploration) and the infancy
of the Group’s Iron Ore project the Group has not recognised such amounts as at 30 June 2012 under Deferred Tax Assets
(refer to Note (7): Income Tax Expense).
Impairment of Assets
(e)
At each reporting date the Group assesses whether there is any indication that individual assets are impaired. Where
impairment indicators exist, recoverable amount is determined and impairment losses are recognised in the statement of
comprehensive income where the asset’s carrying value exceeds its recoverable amount. Recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use.
For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset.
Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the
cash-generating unit to which the asset belongs.
Iron Road Limited Annual Report 2012 | 43
Notes to the Consolidated Financial Statements
Cash and Cash Equivalents
(f)
“Cash and cash equivalents” includes cash on hand, deposits held at call with financial institutions, other short-term highly
liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement
of financial position.
Investments and Other Financial Assets
(g)
All investments and other financial assets are initially stated at cost, being the fair value of consideration given plus
acquisition costs. Purchases and sales of investments are recognised on trade date which is the date on which the Group
commits to purchase or sell the asset. Accounting policies for each category of investments and other financial assets
subsequent to initial recognition are set out below.
Loans and receivables
Non-current loans and receivables include loans due from related parties repayable no earlier than 365 days of statement
of financial position date. As these are non-interest bearing, fair value at initial recognition requires an adjustment to
discount these loans using a market-rate of interest for a similar instrument with a similar credit rating. The discount is
credited to the statement of comprehensive income immediately and amortised using the effective interest method. Loans
and receivables are carried at amortised costs using the effective interest rate method.
Fair value estimation
(h)
Fair values may be used for financial asset and liability measurement and well as for sundry disclosures.
Fair values for financial instruments traded in active markets are based on quoted market prices at statement of financial
position date. The quoted market price for financial assets is the current bid price and the quoted market price for financial
liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market are determined using valuation techniques.
Assumptions used are based on observable market prices and rates at reporting date. The fair value of long-term debt
instruments is determined using quoted market prices for similar instruments. Estimated discounted cash flows are used
to determine fair value of the remaining financial instruments.
The fair value of trade receivables and payables is their normal value less estimated credit adjustments due to their short
term nature.
Trade and other payables
(i)
Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and which
are unpaid. These amounts are unsecured and have 30-60 day payment terms. They are recognised initially at fair value
and subsequently at amortised cost.
Employee benefits
(j)
Wages and 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 statement of financial position date are recognised in respect of employees’ services
rendered up statement of financial position date and measured at amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates
paid or payable. Liabilities for wages and salaries are included as part of other payables and liabilities for annual and sick
leave are included as part of employee benefits provisions.
Long Service Leave
Liabilities for long service leave are recognised as part of the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services provided by employees to the statement of financial
position date using the projected future projected unit credit method. Consideration is given to expected future salaries and
wages levels, experience of employee departures and periods of service. Expected future payments are discounted using
44 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
national government bond rates at statement of financial position date with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
Retirement Benefit Obligations
The Group has a defined contribution superannuation fund. Contributions are recognised as expenses as they become
payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments
is available.
Exploration and evaluation expenditure
(k)
Exploration and evaluation expenditure encompasses expenditures incurred by the Group in connection with the exploration
for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral
resource are demonstrable.
For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised, classified as tangible
or intangible, and recognised as an exploration and evaluation asset. Exploration and evaluation assets are measured at
cost at recognition. Exploration and evaluation expenditure incurred by the Group subsequent to acquisition of the rights to
explore is impaired, with the exception of expenditure where a JORC compliance (or JORC equivalent) Resource has been
identified, which is carried forward as an asset.
A provision for unsuccessful exploration and evaluation is created against each area of interest by means of a charge to the
statement of comprehensive income.
The recoverable amount of each area of interest is determined on a bi-annual basis and the provision recorded in respect of
that area adjusted so that the net carrying amount does not exceed the recoverable amount. For areas of interest that are
not considered to have any commercial value, or where exploration rights are no longer current, the capitalised amounts
are written off against the provision and any remaining amounts are charged to profit and loss.
Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective areas of interest.
Contributed Equity
(l)
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.
(m) Goods and Services Tax
Revenues, expenses and assets are recognised net of GST except where 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.
Receivables and payables 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 financial activities, which are recoverable from, or payable to, the taxation authority, are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Leases
(n)
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are
classified as operating leases. Payments made under operating leases (net of any incentive received from the lessor) are
charged to profit or loss on a straight-line basis over the period of the lease.
Iron Road Limited Annual Report 2012 | 45
Notes to the Consolidated Financial Statements
Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the
lease term. The respective leased assets are included in the statement of financial position based on their nature.
Provisions
(o)
Provisions for legal claims are recognised when the Group has a legal or constructive obligation as a result of past events.
It is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect
to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as interest expense.
Share based payments
(p)
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions,
whereby employees render services in exchange for shares or options over shares (“equity-settled transactions”).
The fair value of options is recognised as an expense with a corresponding increase in equity (share-based payments
reserve). The fair value is measured at grant date and recognised over the period during which the holder becomes
unconditionally entitled to the options. Fair value is determined by an independent valuer using a Black-Scholes option
pricing model. In determining fair value, no account is taken of any performance conditions other than those related to the
share price of Iron Road (“market conditions”).
The cumulative expense recognised between grant date and vesting date is adjusted to reflect the director’s best estimate
of the number of options that will ultimately vest because of internal conditions of the options, such as the employees
having to remain with the Group until vesting date, or such that employees are required to meet internal sales targets. No
expense is recognised for options that do not ultimately vest because a market condition was not met.
Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the
terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase
in fair value of the transaction as a result of the change.
Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses are
taken immediately to the statement of comprehensive income. However, if new options are substituted for the cancelled
options and designated as a replacement on grant date, the combined impact of the cancellation and replacement options
are treated as if they were a modification.
Property, Plant and Equipment
(q)
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when
replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are
incurred.
Depreciation is calculated on the straight line basis to write off the net cost of each item over its expected useful life.
46 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Depreciation rate for computer equipment is 33%. The assets’ residual values and useful lives are reviewed, and adjusted
if appropriate, at the end of each reporting period.
As asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (note 1(d)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit
or loss. When revalued assets are sold, it is Group policy to transfer any amounts included in other reserves in respect of
those assets to retained earnings.
(r)
(i)
(ii)
Earnings per Share
Basic Earnings per Share
Basic earnings per share is determined by dividing the operating loss after income tax by the weighted average
number of ordinary shares outstanding during the financial year.
Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the
exercise of partly paid shares or options outstanding during the financial year.
Segment Reporting
(s)
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker, which has been identified by the Group as the Managing Director and other members of the Board of
Directors.
Adoption of new and revised standards
(t)
The following new/amended accounting standards and interpretations have been issued, but are not mandatory for financial
years ended 30 June 2012. They have not been adopted in preparing the financial statements for the year ended 30 June
2012 and are expected to impact the Group in the period of initial application. In all cases the Group intends to apply these
standards from application date as indicated in the table below.
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
Financial
Instruments
AASB 9
(issued
December
2009 and
amended
December
2010)
Amends the requirements for
classification and measurement of
financial assets. The available-for-sale
and held-to-maturity categories of
financial assets in AASB 139 have been
eliminated. Under AASB 9, there are
three categories of financial assets:
Amortised cost
Fair value through profit or loss
Fair value through other comprehensive
income
Periods
beginning
on or after
1 January
2015
Adoption of AASB 9 is only
mandatory for the year
ending 30 June 2016. The
entity has not yet made an
assessment of the impact
of these amendments
Iron Road Limited Annual Report 2012 | 47
Notes to the Consolidated Financial Statements
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
Financial
Instruments
AASB 9
(issued
December
2009 and
amended
December
2010) (cont)
Periods
beginning
on or after
1 January
2015
The following requirements have
generally been carried forward
unchanged from AASB 139 Financial
Instruments: Recognition and
Measurement into AASB 9. These
include the requirements relating to:
Classification and measurement of
financial liabilities; and
Derecognition requirements for financial
assets and liabilities.
However, AASB 9 requires that gains or
losses on financial liabilities measured
at fair value are recognised in profit or
loss, except that the effects of changes in
the liability’s credit risk are recognised in
other comprehensive income.
Changes in the available-
for-sale reserve will be
reclassified into retained
earnings and subsequent
fair value changes will
be recognised in profit
or loss. These changes
apply prospectively so
comparatives do not need
to be restated. The entity
does not have any financial
liabilities measured at fair
value through profit or
oss. There will therefore
be no impact on the
financial statements
when these amendments
to AASB 9
are first adopted.
AASB 10
(issued
August
2011)
Consolidated
Financial
Statements
Introduces a single ‘control model’ for
all entities, including special purpose
entities (SPEs), whereby all of the
following conditions must be present:
Power over investee (whether or not
power used in practice)
Exposure, or rights, to variable returns
from investee
Ability to use power over investee to
affect the entity’s returns from investee.
Annual
reporting
periods
commencing
on or after
1 January
2013
When this standard is
first adopted for the year
ended 30 June 2014,
there will be no impact on
transactions and balances
recognised in the financial
statements because the
entity does not have any
special purpose entities.
48 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
Fair Value
Measurement
AASB 13
(issued
September
2011)
Currently, fair value measurement
requirements are included in several
Accounting Standards. AASB 13
establishes a single framework for
measuring fair value of financial and
non-financial items recognised at fair
value in the statement of financial
position or disclosed in the notes in
the financial statements.
Annual
reporting
periods
commencing
on or after
1 January
2013
Additional disclosures required for items
measured at fair value in the statement of
financial position, as well as items merely
disclosed at fair value in the notes to the
financial statements. Extensive additional
disclosure requirements for items
measured at fair value that are ‘level 3’
valuations in the fair value hierarchy that
are not financial instruments, e.g. land
and buildings, investment properties etc.
AASB 2011-
9 (issued
September
2011)
Amendments
to Australian
Accounting
Standards -
Presentation
of Items
of Other
Comprehensive
Income
Amendments to align the presentation
of items of other comprehensive income
(OCI) with US GAAP. Various name changes
of statements in AASB 101 as follows:
Annual
periods
commencing
on or after
1 July 2012
1. Statement of comprehensive income –
to be referred to as ‘statement of profit or
loss and other comprehensive income’
2. Statements – to be referred to as
‘statement of profit or loss’ and ‘statement
of comprehensive income’. OCI items
must be grouped together into two
sections: those that could subsequently
be reclassified into profit or loss and those
that cannot.
The entity has yet to conduct
a detailed analysis of the
differences between the
current fair valuation
methodologies used and
those required by AASB 13.
However, when this standard
is adopted for the first time
for the year ended 30 June
2014, there will be no impact
on the financial statements
because the revised fair
value measurement
requirements apply
prospectively from
1 July 2013.
When this standard is
adopted for the first time for
the year ended 30 June 2014,
additional disclosures will be
required about fair values
When this standard is
first adopted for the year
ended 30 June 2013,
there will be no impact
on amounts recognised
for transactions and
balances for 30 June
2013 (and comparatives).
However, the statement
of comprehensive income
will include name changes
and include subtotals
for items of OCI that
can subsequently be
reclassified to profit or
loss in future (e.g. foreign
currency translation
reserves) and those that
cannot subsequently be
reclassified (e.g. fixed
asset revaluation
surpluses).
Iron Road Limited Annual Report 2012 | 49
Notes to the Consolidated Financial Statements
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
Employee
Benefits
AASB 119
(reissued
September
2011)
Annual
periods
commencing
on or after
1 January
2013
Main changes include: Elimination of the
‘corridor’ approach for deferring gains/
losses for defined benefit plans.
Actuarial gains/losses on remeasuring
the defined benefit plan obligation/asset
to be recognised in OCI rather than in
profit or loss, and cannot be reclassified in
subsequent periods. Subtle amendments
to timing for recognition of liabilities for
termination benefits.
The entity currently
calculates its liability for
annual leave employee
benefits on the basis that
it is due to be settled
within 12 months of the
end of the reporting period
because employees are
entitled to use this leave
at any time. The
amendments to AASB 119
require that such liabilities
be calculated on the
basis of when the leave is
expected to be taken, i.e.
expected settlement.
Employee
Benefits
AASB 119
(reissued
September
2011) (cont)
Annual
periods
commencing
on or after
1 January
2013
When this standard is
first adopted for 30 June
2014 year end, it will have
minimal impact on annual
leave liabilities in the
financial statements.
Employee benefits expected to be
settled (as opposed to due to settled
under current standard) wholly within
12 months after the end of the reporting
period are short-term benefits, and
therefore not discounted when
calculating leave liabilities. Annual leave
not expected to be used wholly within
12 months of end of reporting period
will in future be discounted when
calculating leave liability.
AASB 12
(issued
August
2011)
Disclosure of
Interests in
Other Entities
Combines existing disclosures from AASB
127 Consolidated and Separate Financial
Statements, AASB 128 Investments in
Associates and AASB 131 Interests in
Joint Ventures. Introduces new disclosure
requirements for interests in associates
and joint arrangements, as well as
new requirements for unconsolidated
structured entities.
Annual
reporting
periods
commencing
on or after
1 January
2013
As this is a disclosure
standard only, there will
be no impact on amounts
recognised in the financial
statements. However,
additional disclosures will
be required for interests
in associates and joint
arrangements, as well
as for unconsolidated
structured entities.
50 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
Entities are no longer required to restate
comparatives on first time adoption.
Instead, additional disclosures on the
effects of transition are required.
IFRS
(issued
December
2011)
IFRS (issued
December
2011)
Mandatory
Effective Date
of IFRS 9 and
Transition
Disclosures
Annual
reporting
periods
commencing
on or after
1 January
2015
As comparatives are no
longer required to be
restated, there will be
no impact on amounts
recognised in the financial
statements. However,
additional disclosures will
be required on transition,
including the quantitative
effects of reclassifying
financial assets on
transition.
Iron Road Limited Annual Report 2012 | 51
Notes to the Consolidated Financial Statements
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
Periods
commencing
on or after
1 January
2013
There will be no impact
when this amendment
is first adopted as the
entity only includes
comparatives for the
preceding period.
IAS 1
Presentation
of Financial
Statements
Minimum comparative information
Clarifies the requirements for comparative
information as follows:
Only one year’s comparative information
(i.e. for the preceding period)
Two of each financial statement
Narrative information provided in preceding
period’s financial statements that continues
to be relevant in current period.
Comparative information that exceeds
minimum requirements can be provided
as long as it complies with IFRSs. Separate
components of financial statements can
be provided without including the whole set,
for example, including a third statement
of comprehensive income only.
However, where an additional statement
of comprehensive income is included, full
comparative information relating to this
additional statement of comprehensive
income must be provided.
Comparative information where there has been
a change in accounting policy, retrospective
restatement or reclassification
Clarifies the requirements for comparative
information as follows:
Additional statement of financial position
required at beginning of preceding period
(rather than at beginning of earliest
comparative period). This means that a
maximum of three statements of financial
position are required
Related notes for third statement of
financial position only need to include
those relating to the change in accounting
policy, retrospective restatement or
reclassification.
52 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Affected
Standard
Title of Affected
Standard
Nature of Change
Application
Date
Impact on Initial
Application
IAS 16
Property, Plant
and Equipment
Clarifies that items such as spare
parts, stand-by or servicing equipment
are required to be classified as property,
plant and equipment (PPE) when
they meet the definition of PPE.
Otherwise they are required to be
classified as inventory.
Periods
commencing
on or after
1 January
2013
There will be no impact
when this amendment is
first adopted because the
entity has minimal items
that are required to be
classified as PPE under
this standard.
IAS 32
Financial
Instruments:
Presentation
Clarifies that the following are required
to be accounted for under IAS 12
Income Taxes:
Income tax relating to distributions to
holders of equity instruments
Income tax relating to transaction costs
of an equity instrument.
This means that depending on the
circumstances, income tax might
be recognised in either profit or loss
or equity.
Periods
commencing
on or after
1 January
2013
There will be no impact
when this amendment is
first adopted because the
entity does not hold
a material holding in
spare parts.
Iron Road Limited Annual Report 2012 | 53
Notes to the Consolidated Financial Statements
Critical Accounting Estimates and Judgements
(u)
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts and liabilities within the next financial year are discussed below.
Income Taxes
The Group is subject to income taxes in Australia and jurisdictions where it had foreign operations. Significant judgement
is required in determining the worldwide provision for income taxes. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group
recognises liabilities for anticipated tax audit issues based on the Group’s current understanding of the tax law. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact
the current and deferred tax provisions in the period in which such determination is made.
Fair value of share options and assumptions
Where no market-based vesting conditions are present, the fair value of services received in return for share options
granted to Directors and employees is measured by reference to the fair value of options granted. The estimate of the fair
value of the services is measured based on Black-Scholes options valuation methodology.
Where market-based vesting conditions are present, a Monte Carlo simulation has been used to value these options. The
Monte Carlo simulates the predicted future share price of the Company and the probability of it remaining above a certain
value for a set period of time.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related
exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological
changes, costs of drilling and production, production rates, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
2.
FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from its use of financial instruments:
•
•
•
credit risk;
liquidity risk; and
market risk.
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and processes
for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of
the risks, to minimise potential adverse effects on the financial performance and position of the Group.
54 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and cash and cash equivalents.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
2012
$
6,499,620
779,812
7,279,432
2011
$
125,603
561,289
686,892
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates.
Financial assets that are neither past due nor impaired are as follows:
Financial assets – counterparties without external credit rating
Financial assets with no default in the past
Cash at bank and short-term bank deposits
AA-
A
2012
$
2011
$
779,812
561,289
6,497,100
2,520
6,499,620
79,836
45,767
125,603
Impairment Losses
None of the Group’s other receivables are past due. There is no impairment loss recognised in 2012.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual
cash flows.
There were no undrawn borrowing facilities in place during the current or prior year.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding
the impact of netting agreements:
Iron Road Limited Annual Report 2012 | 55
Notes to the Consolidated Financial Statements
2012
Trade and
other payables
2011
Trade and
other payables
Carrying
amount
Total
Contractual
cash flows
6 months
or less
6 - 12
months
6 - 12
years
2 - 5
years
2,727,926
2,727,796
2,727,926
2,727,796
2,727,926
2,727,796
-
-
-
-
-
-
Carrying
amount
Total
Contractual
cash flows
6 months
or less
6 - 12
months
6 - 12
years
2 - 5
years
3,253,926
3,253,926
3,253,926
3,253,926
3,253,926
3,253,926
-
-
-
-
-
-
More
than
5 years
-
-
More
than
5 years
-
-
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency Risk
The Group operates only in Australia and therefore is not exposed to any currency risk.
Interest rate risk
Exposure arises predominantly from assets and liabilities bearing variable interest rates as the Group intends to hold fixed
rate assets and liabilities to maturity. Interest rate risk is considered unlikely to be material.
Sensitivity Analysis
If the interest rates had weakened/strengthen by 1% at 30 June 2012, there would be no material impact on the statement
of comprehensive income. A 1% range is used as it is felt that, based on past experience; this is the most likely range
that interest rates would move by. There would be no effect on the equity reserves other that those directly related to the
statement of comprehensive income movements (2011: nil).
Fair Values
All financial assets and liabilities have been recognised at the reporting date at amounts approximating their carrying value
due to their short term nature.
Capital risk management
Consistently with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated
as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital
is calculated as ‘equity’ as shown in the statement of financial position plus net debt. As the Group has no borrowings the
gearing ratio calculation has not been shown.
There were no changes in the Group’s approach to capital management during the year. Risk management policies
and procedures are established with regular monitoring and reporting. The Group is not subject to externally imposed
capital requirements.
56 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
3.
VOLUNTARY CHANGE OF ACCOUNTING POLICY
The consolidated financial statements have been prepared on the basis of a retrospective application of a voluntary change
in accounting policy relating to exploration and evaluation expenditure.
The new exploration and evaluation expenditure accounting policy is to capitalise and carry forward exploration and
evaluation expenditure where a JORC compliant (or JORC equivalent) Resource has been identified. Expenditure incurred
prior to the identification of a JORC compliant (or JORC equivalent) Resource is capitalised and subsequently impaired.
The previous accounting policy was that expenditure on exploration and evaluation activities in relation to areas of interest
which had not reached a stage which permitted reasonable assessment of the existence or otherwise of economically
recoverable reserves were expensed as incurred.
The new accounting policy was adopted on 30 June 2012 and has been applied retrospectively. The Directors believe that
the change in accounting policy will provide more relevant information and no less reliable information to users of the
consolidated financial statements. Capitalisation of exploration and evaluation expenditure is considered to be appropriate
upon the identification of a JORC compliant Resource as it appropriately recognises that these projects are in the advanced
exploration, evaluation or feasibility phases. Both the previous and the new accounting policy are compliant with AASB 6
Exploration for Evaluation of Mineral Resources.
The impact of the change in accounting policy on the Consolidated Statement of Comprehensive Income, Consolidated
Balance Sheet and Consolidated Statement of Cash Flows is included in the tables on the following page.
Iron Road Limited Annual Report 2012 | 57
Notes to the Consolidated Financial Statements
This voluntary change involves restating the following balances:
30 June
2012
Previous
Policy
Increase/
(Decrease)
30 June
2012
(Restated)
30 June
2011
Previous
Policy
Increase /
(Decrease)
30 June
2011
(Restated)
30 June
2010
Previous
Policy
Increase/
(Decrease)
1 July
2010
(Restated)
Consolidated balance sheet (extract)
Capitalised
tenement
acquisition
costs
Net assets
Accumulated
losses
Total equity
2,267,143 45,585,252
8,355,818 45,585,252
47,852,395
53,941,070
1,117,143 23,822,087 24,939,230
(1,330,745) 23,822,087 22,491,342
655,225 8,377,487
9,032,712
2,458,759 8,377,487 10,836,246
(57,073,371) 45,585,252
8,355,818 45,585,252
(11,491,560)
53,941,070
(32,771,419) 23,822,087
(1,330,745) 23,822,087 22,491,342
(8,949,332) (16,284,597) 8,377,487
(7,907,110)
2,458,759 8,377,487 10,836,246
Consolidated income statement (extract)
Exploration
expenses
Loss before
income tax
Income tax
benefit
Loss for
the year
22,454,655 21,763,165
(691,489)
(15,834,941) 15,444,600
(390,341)
(25,002,398) 21,763,165
(3,239,233) (17,521,151) 15,444,600 (2,076,551)
697,005
-
697,005
1,034,329
-
1,034,329
(24,305,392)
21,763,165
(2,542,228)
(16,486,822)
15,444,600
(1,042,222)
Consolidated statement of cash flows
(extract)
Payments for
exploration
and evaluation
expenditure
Net cash
generated
from operating
activities
Payments for
exploration and
evaluation
expenditure
capitalised
Net cash used
in investing
activities
(22,913,165) 22,913,165
(25,469,783) 22,913,165
-
(15,987,318) 15,987,318
-
(2,556,618) (16,989,317) 15,987,318 (1,001,999)
-
(22,913,165)
(22,913,165)
- (15,987,318) (15,987,318)
(1,530,455) (22,913,165) (24,443,620)
(104,185) (15,987,318) (16,091,503)
Basic and diluted loss per share for the prior year has also been restated.
58 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
4. SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the board of directors that are used
to make strategic decisions. The entity does not have any operating segments with discrete financial information. The Group
does not have any customers, and all the Group’s assets and liabilities are located within Australia.
The Board of Directors review internal management reports on a monthly basis that is consistent with the information
provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a result
no reconciliation is required because the information as presented is what is used by the Board to make strategic decisions.
REVENUE
5.
From continuing operations
Other revenue
Interest income
EXPENSES
6.
Loss before income tax includes the following specific expenses:
Rent
Directors’ fees
Other expenses
Total general expenses
Exploration expenses includes the following specific expenses:
Exploration expenditure written off during the year***
Tenement acquisition costs written off during the year**
* Restated. Refer to Note 3 for further details.
** Acquisition costs for surrendered tenements written off during the year.
*** Exploration expenditure relating to Gawler and Windarling projects.
7.
INCOME TAX
2012
$
2011
(Restated*)
$
457,306
457,306
116,133
116,133
70,049
150,000
782,797
1,002,846
(691,489)
-
(691,489)
60,383
136,987
585,661
783,031
(309,541)
(80,800)
(390,341)
2012
$
2011
(Restated*)
$
(a) Income tax expense/(benefit)
(b) Loss from continuing operations before income tax benefit
697,005
(3,239,233)
1,034,329
(2,076,551)
Tax at the Australian tax rate of 30%
(971,770)
(622,965)
Non-deductible expenses
Effect of current year tax losses not recognised
Movement in unrecognised temporary differences
Tax deductible equity raising costs
Research and development tax offset
Income tax loss and related benefit
Amounts recognised directly in Equity
Relating to equity raising costs
* Restated. Refer to Note 3 for further details.
172,332
857,861
15,347
(73,770)
697,005
697,005
(150)
679,639
2,869
(59,391)
1,034,329
1,034,329
-
-
Iron Road Limited Annual Report 2012 | 59
Notes to the Consolidated Financial Statements
(c) Deferred tax assets and liabilities not recognised relate to the following:
INCOME TAX (continued)
7.
Deferred tax assets
Deductible temporary differences
Black hole deduction
Accrued expenses
Non deductible accruals
Tax losses
Deferred tax liabilities
Accrued Income
Exploration expenditure
2012
$
2011
(Restated*)
$
162,168
51,755
-
8,506,573
8,270,496
8,599
14,355,719
14,364,318
163,925
20,426
4,800
5,081,207
5,270,358
217
7,481,769
7,481,986
Net deferred tax assets have not been brought to account as it is not probable within the immediate future that taxable profits
will be available against which deductible temporary differences and tax losses can be utilised.
CURRENT ASSETS - CASH AND CASH EQUIVALENTS
8.
Cash and cash equivalents as shown in the statement of
financial position and statement of cash flows
2012
$
2011
$
6,499,620
125,603
Cash and cash equivalents balance includes a two hundred and fifty thousand dollar security deposit against the corporate
credit cards.
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Deposits at calls are made for varying periods of between one day and three months, depending on the immediate cash
requirements of the Group. Information about the Group’s exposure to interest rate risk is disclosed in Note 2.
CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
9.
Tax receivable
Other receivables
2012
$
726,987
52,825
779,812
2011
$
560,564
725
561,289
Tax receivable comprises Goods and Services Tax refund receivable for the June 2012 quarter. As of 30 June 2012, trade
receivables that were past due or impaired were nil (2011: nil).
Refer to note 2 for the Group’s risk management policy.
10. NON-CURRENT ASSETS - OTHER ASSETS
Formation costs
Prepayments
2012
$
-
56,170
56,170
2011
$
200
1,500
1,700
60 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
11. NON-CURRENT ASSETS
PROPERTY PLANT AND EQUIPMENT
(a) Property, plant and equipment
(i)
Cost
Accumulated depreciation
Land and buildings
(ii) Plant and equipment
Cost
Accumulated depreciation
(iii) Computer equipment
Cost
Accumulated depreciation
(iv) Office equipment
Cost
Accumulated depreciation
(v) Motor vehicles
Cost
Accumulated depreciation
Reconciliations of the carrying amounts of plant and equipment
Balance at 30 June 2010
Additions
Land and buildings
Plant and equipment
Computer equipment
Office equipment
Motor vehicles
Depreciation expense
Balance at 30 June 2011
Additions
Land and buildings
Plant and equipment
Computer equipment
Office equipment
Motor vehicles
Depreciation expense
Balance at 30 June 2012
2012
$
2011
$
1,221,544
-
1,221,544
170,245
(38,003)
132,242
182,677
(41,969)
140,709
59,886
(20,102)
39,784
60,105
(13,515)
46,590
22,000
-
22,000
69,463
(11,653)
57,810
26,350
(10,526)
15,824
21,449
(17,087)
4,362
24,742
(7,294)
17,448
39,590
22,000
63,050
13,693
3,426
2,015
(26,328)
117,446
1,199,544
100,782
156,327
38,437
35,365
(67,033)
1,580,868
Iron Road Limited Annual Report 2012 | 61
Notes to the Consolidated Financial Statements
(b) Exploration and evaluation expenditure
Opening net book amount
Tenement acquisition during the year
Tenement acquisition costs written off during the year**
Additions during the period
Impairment of exploration expenses
Closing net book amount
* Restated. Refer to Note 3 for further details.
** Acquisition costs for surrendered tenements written off during the year.
Recoverability of the carrying amount of the exploration and evaluation
assets is dependent on successful development and commercial exploitation,
or alternatively, sale of the respective areas of interest.
12. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables
Accruals
Payroll liabilities
Other
2012
$
24,939,230
1,150,000
-
22,454,345
(691,489)
47,852,396
2011
(Restated*)
$
9,032,712*
542,718
(80,800)
15,834,941
(390,341)
24,939,230
1,453,313
987,914
232,670
53,899
2,727,796
3,118,655
16,000
102,351
16,920
3,253,926
Refer to Note 2 for the Group’s risk management policy.
13.
(a)
ISSUED CAPITAL
Share capital
Ordinary shares fully paid
Cost of capital raising
Total contributed equity
2012
2011
Notes Number of shares
13(b)
161,207,273
-
161,207,273
$
60,980,453
(320,950)
60,659,503
Number of shares
113,695,564
-
113,695,564
$
27,656,153
(514,278)
27,141,875
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
−
−
−
Less cost of capital raising
End of the financial year
Issue of 15,019,579 ordinary shares at $0.55 each
Exercise of 24,761,512 listed options at $0.20 each
Adjustment to receipt of share monies from issue prior period
2011
Number of shares
73,914,473
$
14,442,340
15,019,579
-
4,952,302
-
113,695,564
24,761,512
8,260,768
743
(514,278)
27,141,875
62 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
Beginning of the financial year
Issued during the year:
−
−
−
−
−
−
Less cost of capital raising
End of the financial year
Exercise of 625,000 unlisted options at $0.20 each
Exercise of 625,000 unlisted options at $0.25 each
Exercise of 625,000 unlisted options at $0.30 each
Exercise of 625,000 unlisted options at $0.35 each
Issue of 23,984,674 ordinary shares at $0.90 each
Issue of 21,027,036 ordinary shares at $0.55 each
(c) Movements in options on issue
Beginning of the financial year
Issued/(lapsed) during the year:
−
−
−
End of the financial year
Exercise of listed options at 20 cents
Lapsing of listed options at 20 cents
Forfeiture of unlisted options at 75 cents
Beginning of the financial year
Issued/(lapsed) during the year:
−
−
−
−
−
−
−
−
End of the financial year
Exercise of 625,000 unlisted options at $0.20 each
Exercise of 625,000 unlisted options at $0.25 each
Exercise of 625,000 unlisted options at $0.30 each
Exercise of 625,000 unlisted options at $0.35 each
Issue of 500,000 unlisted options at $1.00 each
Issue of 100,000 unlisted options at $1.00 each
Issue of 100,000 unlisted options at $1.25 each
Issue of 100,000 unlisted options at $1.50 each
2012
Number of shares
113,695,564
$
27,141,875
625,000
625,000
625,000
625,000
23,984,674
21,027,035
-
161,207,273
125,000
156,250
187,500
218,750
21,586,209
11,564,869
(320,950)
60,659,503
Number of options
2011
50,806,473
(24,761,512)
(1,119,961)
(300,000)
24,625,000
2012
24,625,000
(625,000)
(625,000)
(625,000)
(625,000)
500,000
100,000
100,000
22,925,000
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon
a poll each share is entitled to one vote
Iron Road Limited Annual Report 2012 | 63
Notes to the Consolidated Financial Statements
Reserves
14. RESERVES AND ACCUMULATED LOSSES
(a)
Share-based payments reserve
Balance at beginning of year
Directors and Employee share options
Balance at end of year
Option issue reserve
Balance at beginning of year
Movement during the year
Balance at end of year
Total reserves
(b) Accumulated losses
Balance at beginning of year
Net loss for the year
Balance at end of year
* Refer to Note 3 for further details.
2012
$
2011
$
4,025,549
474,328
4,499,877
273,250
-
273,250
4,027,763
(2,214)
4,025,549
273,250
-
273,250
4,773,127
4,298,799
2012
$
(8,949,332)
(2,542,228)
(11,491,560)
2011
(Restated*)
$
(7,907,110)
(1,042,222)
(8,949,332)
(c) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued.
Option issue reserve
The option issue reserve is used to recognise the proceeds from the issue of options.
15. DIVIDENDS
There was no dividend paid during the current or prior years.
16. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation
Short-term benefits
Post employment benefits
Share-based payments
Detailed remuneration disclosures are provided in the remuneration report.
2012
$
846,930
65,700
363,514
1,276,144
2011
$
715,917
68,924
(2,214)
782,627
64 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
(b) Option holdings
The numbers of options over ordinary shares in the Group held during the financial year by each director of Iron Road Limited
and other key management personnel of the Group, including their personally related parties, are set out below:
2012
Balance at
start of
the year
Granted as Exercised
compensation
Other
changes
Directors of Iron Road Limited
Julian Gosse
2,500,000
Ian Hume
2,500,000
-
Jerry Ellis
Matthew J Keegan 3,780,000
Andrew J Stocks 9,420,000
-
-
500,000
-
-
-
2,500,000
-
-
-
Other Key Management Personnel of the Company
Graham Anderson 1,425,000
3,000,000
Larry Ingle
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of
the year
2,500,000
-
500,000
3,780,000
9,420,000
Vested and
exercisable
Unvested
2,500,000
-
500,000
3,780,000
7,920,000
-
-
-
-
1,500,000
1,425,000
3,000,000
1,425,000
3,000,000
-
-
2011
Balance at
start of
the year
Granted as Exercised
compensation
Other
changes
Balance at
end of
the year
Vested and
exercisable
Unvested
Directors of Iron Road Limited
3,238,703
Julian Gosse
3,401,203
Ian Hume
Jerry Ellis -
-
Matthew J Keegan 4,658,000
Andrew J Stocks 10,575,313
-
-
-
-
-
738,703
901,203
-
700,000
605,313
-
-
-
178,000
550,000
2,500,000
2,500,000
-
3,780,000
9,420,000
2,500,000
2,500,000
-
3,780,000
7,920,000
-
-
-
1,500,000
Other Key Management Personnel of the Company
Graham Anderson 2,692,716
3,000,000
Larry Ingle
-
-
737,716
-
530,000
-
1,425,000
3,000,000
1,425,000
3,000,000
-
-
(c) Share holdings
The numbers of shares in the Company held during the financial year by each director of Iron Road Limited and other key
management personnel of the Company, including their personally related parties, are set out below. There were no shares
granted during the reporting period as compensation.
Iron Road Limited Annual Report 2012 | 65
Notes to the Consolidated Financial Statements
2012
Directors of Iron Road Limited
Julian Gosse
Ian Hume
Jerry Ellis
Matthew J Keegan
Andrew J Stocks
Other Key Management Personnel of the Company
Graham Anderson
Larry Ingle
2011
Directors of Iron Road Limited
Julian Gosse
Ian Hume
Jerry Ellis
Matthew J Keegan
Andrew J Stocks
John McKee
Balance at
start of
the period
Received
during the
year on
the exercise
of options
Other changes
during the
period
Balance at
end of
the period
2,338,703
2,651,203
80,000
2,200,000
2,915,938
-
2,500,000
-
-
-
(1,747,703)
-
-
-
-
591,000
5,151,203
80,000
2,200,000
2,915,938
1,822,716
-
Balance at
start of
the period
-
-
-
-
1,822,716
-
Other changes
during the
period
Balance at
end of
the period
Received
during the
year on
the exercise
of options
1,600,000
1,750,000
-
1,600,010
2,310,625
738,703
901,203
-
700,000
605,313
-
-
80,000
(100,010)
-
2,338,703
2,651,203
80,000
2,200,000
2,915,938
Other Key Management Personnel of the Company
Graham Anderson
Larry Ingle
1,085,000
-
737,716
-
-
-
1,822,716
-
There are no shares held nominally as at the year ended 30 June 2012.
(d) Other transactions with key management personnel of the Company
Refer to Note 20 for transactions with Key Management Personnel.
17. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the Company, its related
practices and non-related audit firms:
(a) Audit services
BDO Audit (WA) Pty Ltd
Audit and review of financial reports under the Corporations Act 2011
(b) Non-audit services
Related entities of BDO (WA) Pty Ltd
Taxation advice
66 | Iron Road Limited Annual Report 2012
2012
$
2011
$
42,216
25,979
29,694
71,910
-
25,979
Notes to the Consolidated Financial Statements
18. CONTINGENCIES
There are no material contingent liabilities or contingent assets of the Group at reporting date.
19. COMMITMENTS
(a) Exploration commitments
All of the Company’s tenements are situated in the states of Western Australia and South Australia.
In order to maintain an interest in the mining and exploration tenements in which the Company is involved, the Company
is committed to meet the conditions under which the tenements were granted and the obligations of any joint venture
agreements. The timing and amount of exploration expenditure commitments and obligations of the Company are subject
to the minimum expenditure commitments required as per the Mining Act, as amended, and may vary significantly from the
forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest.
These obligations are not provided for in the financial report and are payable.
Outstanding exploration commitments are as follows (no estimate has been given of expenditure commitments beyond 12
months as this is dependent on the directors’ ongoing assessment of operations and, in certain circumstances, Native Title
negotiations):
Within one year
(b) Capital commitments
Within one year
(c) Lease commitments: Company as lessee
Within one year
Later than one year but not later than five years
Later than five years
20. RELATED PARTY TRANSACTIONS
2012
$
851,000
2011
$
1,400,000
1,536,373
445,198
360,162
881,413
1,686,773
-
-
-
-
-
During the year, Iron Road Limited paid $106,300 (excluding GST) to GDA Corporate Pty Ltd for accounting and administrative
services. Mr Graham Anderson is a Director of GDA Corporate Pty Ltd. (2011: $37,332). All payments were on normal
commercial terms. There was $nil outstanding as at 30 June 2012.
There were no other related party transactions during the year ended 30 June 2012.
Iron Road Limited Annual Report 2012 | 67
Notes to the Consolidated Financial Statements
21.
INVESTMENT IN CONTROLLED ENTITIES
Name of Entity
Equity Holding
Cost of Parent Entity’s Investment
2012
%
2011
%
2012
$
2011
$
Parent Entity
Iron Road Limited
Controlled Entities
Eyre Properties Pty Ltd
IRD (Central Eyre) Pty Ltd
IRD (Windarling) Pty Ltd
IRD (Gawler) Pty Ltd
IRD (Port) Pty Ltd
IRD (Desalination) Pty Ltd
IRD (Admin) Pty Ltd
IRD (Railway) Pty Ltd
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
10
100
100
100
100
100
100
100
10
-
-
-
-
-
-
-
Eyre Properties Pty Ltd was incorporated on 24 December 2010.
IRD Central Eyre, Windarling, Gawler, Port, Desalination, Admin and Railway were all incorporated on 14 December 2011.
Iron Road Limited and all of its subsidiaries are located and incorporated in Australia.
22. EVENTS OCCURRING AFTER THE REPORTING DATE
On 2 August 2012, the Group announced a fully underwritten 31-for-40 accelerated non-renounceable entitlement offer of
new Iron Road shares at an offer price of $0.32 per new share to raise approximately $40 million.
Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly affected
or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in
future financial years.
23. RECONCILIATION OF NET LOSS AFTER INCOME TAX
2012
$
2011
(Restated*)
$
(2,542,228)
(1,042,222)
474,328
200
691,489
67,033
(2,214)
200
390,341
26,328
(218,523
(1,128,917)
100,000
(2,556,618)
151,697
(526,129)
-
(1,001,999)
Reconciliation of net loss after income tax to net cash
outflow from operating activities
Net loss for the year
Non cash items
Share based payments
Formation costs
Exploration costs written off
Depreciation
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in other provisions
Net cash outflow from operating activities
* Refer to Note 3 for further details.
68 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
24. LOSS PER SHARE
(a) Reconciliation of loss used in calculating loss per share
Loss attributable to the members of the Group used in calculating
basic and diluted loss per share
Basic loss per share
Diluted loss per share
* Refer to Note 3 for further details.
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic and diluted loss per share
2012
$
2011
(Restated*)
$
(2,542,228)
(1,042,222)
(1.80)
(1.80)
(1.03)
(1.03)
Number of shares
2012
2011
140,980,038
101,268,453
Information on the classification of options
(c)
As the Company has made a loss for the year ended 30 June 2012, all options on issue are considered anti dilutive and have
not been included in the calculation of diluted loss per share. These options could potentially dilute basic loss per share in the
future.
Iron Road Limited Annual Report 2012 | 69
Notes to the Consolidated Financial Statements
25. SHARE BASED PAYMENTS
The establishment of Iron Road Limited’s Employee Option Plan was approved by shareholders at the General Meeting on 25
July 2011. The Employee Option Plan is designed to provide long-term incentives for senior managers and above (including
executive directors) to deliver long-term shareholder returns. Under the plan, participants are granted options which only
vest if certain performance standards are met. Participation in the plan is at the Board’s discretion and no individual has a
contractual right to participate in the plan or to receive any guaranteed benefits.
500,000 options issued under the plan during the year vested immediately. The other 300,000 options have performance-
related vesting conditions, with vesting conditions of the first tranche vesting during the year.
Set out below is a summary of options granted under the plan:
30 June 2012
Grant Date
Expiry Exercise Granted Vesting
Date
Price
Date
During
the Year
Fair
Value at Price on Volatility
Grant
Date
Share Expected Option Expected Risk-
free
Interest
Rate
Life Dividends
Grant
Date of
Options
Director Options
25/07/11
25/07/16
Employee Options
24/08/11
24/08/11
24/08/11
24/08/16
24/08/16
24/08/16
$1.00
500,000 25/07/11
352,450
$0.93
-
5 years
$1.00
$1.25
$1.50
100,000 12/12/11
100,000 30/06/13
100,000 30/06/13
59,090
56,679
54,609
$0.85
$0.85
$0.85
100%
100%
100%
5 years
5 years
5 years
30 June 2011
Grant Date
25/07/11
24/08/11
24/08/11
24/08/11
Price
and
Expiry Exercise Balance Granted
During
Date
the
Year
500,000
100,000
100,000
100,000
800,000
at
1 July
2011
-
-
-
-
-
25/07/16
24/08/16
24/08/16
24/08/16
$1.00
$1.00
$1.25
$1.50
Exercised
During
the
Year
-
-
-
-
-
Forfeited
During
the
Year
-
-
-
-
-
Balance
at
30 June
2012
500,000
100,000
100,000
100,000
800,000
-
-
-
-
4.75%
4.75%
4.75%
4.75%
Vested
Exercisable at
30 June 2012
500,000
100,000
-
-
600,000
There were no options issued during the reporting period ended 30 June 2011.
Total expenses arising from share-based payment transactions recognised during the year were as follows:
Options issued to directors and employees as part of:
Share based payments
2012
$
2011
$
474,328
(2,214)
The weighted average exercise price of the options held at the end of the year is 30.81 cents (2011 – 28.62 cents).
The weighted average remaining contractual life of share options outstanding at the end of the year is 0.98 years (2011 –
3.70 years).
70 | Iron Road Limited Annual Report 2012
Notes to the Consolidated Financial Statements
26.
IRON ROAD LIMITED PARENT COMPANY INFORMATION
Company
2012
$
8,537,536
48,235,472
56,773,008
2011
(Restated*)
$
686,882
25,058,396
25,745,278
2,828,496
2,828,496
3,253,936
3,253,936
60,659,503
(11,488,118)
4,773,127
53,944,512
27,141,875
(8,949,332)
4,298,799
22,491,342
(2,538,786)
-
(2,538,786)
(1,042,222)
-
(1,042,222)
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL EQUITY
FINANCIAL PERFORMANCE
Loss for the year
Other comprehensive income
Total comprehensive loss
CONTINGENT LIABILITIES
As at 30 June 2012 and 2011, the Company had no contingent liabilities.
CONTRACTUAL COMMITMENTS
As at 30 June 2012 and 2011, the Company had no contractual commitments
other than those disclosed in Note 19.
GUARANTEES ENTERED INTO BY PARENT ENTITY
As at 30 June 2012, the Company has not provided any financial guarantees.
* Refer to Note 3 for further details.
Iron Road Limited Annual Report 2012 | 71
Directors' Declaration
Directors’ Declaration
The Directors of the Group declare that:
1. The consolidated financial statements, comprising the consolidated statement of comprehensive income, consolidated
statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and
accompanying notes, are in accordance with the Corporations Act 2001 and:
a)
b)
comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
give a true and fair view of the Group’s financial position as at 30 June 2012 and of the performance for the year
ended on that date.
2. In the Director’s opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
3. The remuneration disclosures included in the Directors’ report (as part of audited Remuneration Report), for the year
ended 30 June 2012, comply with section 300A of the Corporations Act 2001.
4. The Directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A.
5. The Group has included in the notes to the financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards (IFRS).
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
Andrew J Stocks
Managing Director
26 September 2012
72 | Iron Road Limited Annual Report 2012
Independent Auditor's Report
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF IRON ROAD LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Iron Road Limited, which comprises the consolidated statement of
financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to
audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Iron Road Limited Annual Report 2012 | 73
Independent Auditor’s Report
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm
that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Iron Road
Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of Iron Road Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of their
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2012. The directors
of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Iron Road Limited for the year ended 30 June 2012 complies with section 300A
of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth, Western Australia
DateD this 26th Day of september 2012
74 | Iron Road Limited Annual Report 2012
ASX Additional Information
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 27 September 2012.
Distribution of equity securities
(a)
Analysis of numbers of equity security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
No. of holders
224
493
301
680
140
1,838
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Listed ordinary shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SENTIENT EXECUTIVE GP IV LTD
SENTIENT EXECUTIVE GP II LTD
SENTIENT GLOBAL RESOURCES FUND
HSBC CUSTODY NOMINEES
NATIONAL NOMINEES LIMITED
SENTIENT EXECUTIVE GP III LTD
GOTHIC CORPORATION
DEVIPO PTY LTD
UBS WEALTH MANAGEMENT
KEEGAN MATTHEW JOSEPH
STONECOT PTY LIMITED
THE DUKE ENDOWMENT
JP MORGAN NOMINEES AUSTRALIA
CEDAROSE PTY LTD
STOCKS CLAIRE MARGARET
STOCKS ANDREW JAMES
ANDERSON GRAHAM DOUGLAS
SEISUN CAP PL
ANDERSON C M + S M
PAUL GEOFFREY JOHN
Number of
shares
108,924,500
27,131,005
17,963,973
14,952,173
11,933,276
11,558,593
5,352,367
5,151,203
2,893,409
2,200,000
2,005,000
1,891,820
1,787,115
1,628,968
1,442,657
1,442,656
1,350,000
1,331,250
1,250,000
860,000
223,049,965
Percentage of
ordinary shares
38.07%
9.48%
6.28%
5.23%
4.17%
4.04%
1.87%
1.80%
1.01%
0.77%
0.70%
0.66%
0.62%
0.57%
0.50%
0.50%
0.47%
0.47%
0.44%
0.30%
77.95%
Iron Road Limited Annual Report 2012 | 75
ASX Additional Information
(c) Substantial shareholder
These substantial shareholders have notified the Company in accordance with section 671B of the Corporations Act 2001:
Sentient Executive GP II, Limited
No. of holders
165,578,071
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e) Schedule of interests in mining tenements
Location
South Australia
- Warramboo
- Gawler
Western Australia
- Windarling
Tenement
Percentage held / earning
EL4849
EL4014
100%
90% Iron Ore rights earned
EL77/1236
EL77/1237
EL77/1245
PL77/3508
100%
100%
100%
Elected to purchase 100%
76 | Iron Road Limited Annual Report 2012
Corporate Directory
Glossary
Share Registry
GLOSSARY
770 Canning Highway
Applecross WA 6153
Telephone: (08) 9315 2333
(08) 9315 2233
Facsimile:
Email: registrar@securitytransfer.com.au
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone: (08) 6382 4600
(08) 6382 4601
Facsimile:
ASX Code
IRD
Website
Aeromag survey
Short for aeromagnetic survey, an aeromag survey is a common type of geophysical method carried out using a magnetometer
aboard or towed behind an aircraft. The aircraft typically flies in a grid like pattern with height and line spacing determining
the resolution of the data. As the aircraft flies, the magnetometer records tiny variations in the intensity of the ambient
magnetic field and spatial variations in the Earth’s magnetic field. By subtracting the solar and regional effects, the resulting
aeromagnetic map shows the spatial distribution and relative abundance of magnetic minerals (most commonly magnetite)
in the upper levels of the crust.
Comminution Circuit
Facilities which reduce rock to small pieces or particles into controlled size ranges; performed through the ore treatment
process, after rock fragmentation by blasting, by selected crushing and milling machines, in combination with size
classification devices.
EDS
Engineering and Design Service describes the provision of skilled personnel by technical Consultants or Contractors
who prepare and deliver reports, reviews or drawings which contribute to Feasibility Studies, Approval Submissions, Cost
Estimates or Facility Configurations.
Hematite
Hematite is a mineral, coloured black to steel or silver-gray, brown to reddish brown or red. Hematite is a form of Iron (III)
oxide (Fe2O3), one of several iron oxides.
Magnetite
Magnetite is a form of iron ore, one of several iron oxides and a ferrimagnetic mineral with chemical formula Fe3O4 and a
member of the spinel group. It is metallic or dull black and a valuable source of iron ore. Magnetite is the most magnetic
of all the naturally occurring minerals on Earth, and these magnetic properties allow it to be readily refined into an iron ore
concentrate.
www.ironroadlimited.com.au
NQ2
The bit size used to produce 50.6mm diameter diamond core.
Email
admin@ironroadlimited.com.au
ABN
51 128 698 108
Directors
Julian Gosse
Chairman
Ian Hume
Non Executive Director
Matthew J Keegan
Non Executive Director
Jerry Ellis
Non Executive Director
Andrew J Stocks
Managing Director
Company Secretary
Graham D Anderson
Registered Office
14 Emerald Terrace
West Perth WA 6005
Head Office
Iron Road House
Level 6, 30 Currie Street
Adelaide SA 5000
Postal Address
GPO Box 1164
Adelaide SA 5001
| Iron Road Limited Annual Report 2012
Iron Road Limited Annual Report 2012 | 77
ABN 51 128 698 108
Level 6, 30 Currie Street
Adelaide SA 5000
T: (08) 8214 4400
F: (08) 8214 4440
E: admin@ironroadlimited.com.au
www.ironroadlimited.com.au
Annual Report
2012