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2013
ANNUAL
REPORT
For the year ended 30 June 2013
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
Corporate Directory
ASX Code
IRD
Website
www.ironroadlimited.com.au
Email
ABN
admin@ironroadlimited.com.au
51 128 698 108
Share Registry
Security Transfer Registrars
770 Canning Highway
Applecross WA 6153
Telephone 08 9315 2333
Email registrar@securitytransfer.com.au
Auditors
PricewaterhouseCoopers
Level 14, 91 King William Street
Adelaide SA 5001
Telephone 08 8218 7000
Directors
Peter Cassidy - Chairman
Andrew Stocks - Managing Director
Jerry Ellis - Non-Executive Director
Leigh Hall AM - Non-Executive Director
Julian Gosse - Non-Executive Director
Ian Hume – Non-Executive Director
General Manager
Larry Ingle
Company Secretary
Graham Anderson
Registered Office
14 Emerald Terrace
West Perth WA 6005
Corporate Office
Iron Road House
Level 6, 30 Currie Street
Adelaide SA 5000
Telephone 08 8214 4400
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 Directors’ Report
Highlights
South Australia – Central Eyre Iron Project
Iron Ore Marketing
Community Engagement
South Australia – Gawler Iron Project
Corporate
Appendix 1 – Mineral Resource Estimates
Appendix 2 – Competent Persons Statement
Appendix 3 – Gawler Stage III Significant Intercepts
Directors’ Report
Operating and Financial Review
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
4
5
6
15
17
19
22
23
24
25
26
42
44
46
47
48
49
50
79
80
82
84
The financial statements are the consolidated financial statements of the
consolidated entity Iron Road Limited and its subsidiaries. The financial
statements are presented in Australian dollars.
The financial statements were authorised for issue by the directors on 25
September 2013. The directors have the power to amend and reissue the
financial statements.
Iron Road Limited is a company limited by shares, incorporated and domiciled
in Australia. Its registered office is 14 Emerald Terrace, West Perth WA and
principal place of business is 30 Currie Street, Adelaide SA.
Through the use of the internet, we have ensured that our corporate
reporting is timely and complete. All press releases, financial reports and
other information are available at our Shareholder’s centre on our website:
www.ironroadlimited.com.au
A description of the nature of Iron Road Limited’s operations and its principal
activities are included in the review of operations and activities on pages 42
to 43 and in the directors’ report on pages 26 to 40 both of which are not part
of the financial statements.
| 1
Chairman's Letter
Dear Shareholder,
It is with pleasure I present to you the Annual Report for the year ended 30 June 2013, on behalf of the Board of Iron Road Limited. The past year has seen a
series of important milestones reached by the company, as we move towards bringing our flagship Central Eyre Iron Project (or CEIP) into production on the
South Australian Eyre Peninsula. Notably, we have also made a number of advances in the expected life of the project, together with enhancements in the
processing route which are expected to decrease our production costs and increase the attractiveness of our product. This will have positive implications
for CEIP’s position financially, when compared to other iron ore producers. In all, CEIP is now a larger, longer life project than contemplated under our initial
prefeasibility just two years ago.
In one of the most noteworthy decisions of the year and after careful consideration of the available options on the Eyre Peninsula, Iron Road moved to
acquire sufficient land at Cape Hardy to support a deep water, 30 million tonnes per annum (Mtpa) bulk export facility, in order to provide a necessary
export solution for the CEIP. Principally, by advancing our own Port development, with room for potential third parties, we are ensuring that the timely
development of one of the key components for a successful CEIP is in our hands.
This decision was vindicated with another port proponent on the Eyre Peninsula recently announcing their project would take at least a further one to two
years to develop to the same stage CEIP reached in mid-2011. Coupled with the port at Cape Hardy will be an infrastructure corridor, by which the mine and
port will be linked by a modern heavy haul rail system, alongside other necessary infrastructure.
Most significantly, the integrated infrastructure component of the CEIP, namely the port, rail line and associated pipeline and power line have now been
declared a Major Development by the South Australian State Government. This declaration is meaningful, as it both recognises the importance of our
project to the State of South Australia and ensures that approvals for the project will be considered through one centralised process, rather than across
various local governments or state departments. We look forward to working with the State Government, local community and other key stakeholders to
progress the important approvals process in a timely manner.
In seeking approval for the CEIP, we must acknowledge both the benefits and the interruptions our project will bring to the local communities on the Eyre
Peninsula. We predict that the project will employ on a long term basis around 650 employees during operations over the project life. Equally, during
construction our project will have an impact on the communities, including some directly affected land holders. Iron Road is working to minimise these
impacts and maximise the benefits the project can bring, whilst seeking to have open and accountable relationships.
During the year we also saw further increases to the resources at CEIP, which now stand at 3.7 billion tonnes of magnetite gneiss, at an average grade of
16% iron. This now places our project as the largest Measured + Indicated magnetite resource in Australia and one of the top 20 projects globally.
Crucially, our magnetite mineralisation is one of the easiest to process in the country, with significantly less grinding required than other large scale
projects in Australia. A lower grinding requirement equates to less power usage and lower operating costs.
We do not expect our resources to end there. Further review of the CEIP ore body, coupled with the knowledge gained from over 110,000 metres of drilling
during the past five years, has lead us to conclude that the exploration potential at CEIP now lies between 8 billion to 17 billion tonnes (at 14-20% iron) over
and above the 3.7 Bt already in Resources. By any measure this is a prodigious potential and gives us the confidence to comfortably declare that the CEIP
should be in production for well over 30 years, and potentially much more.
On the engineering front we saw some significant innovation through the introduction of a gravity separation circuit to our proposed processing method for
CEIP. This simple one stage addition of ‘off the shelf’ technology should see our power costs reduced, whilst also improving the quality of the final product
produced.
All of these events build towards one current overriding objective for the company – the completion of our Definitive Feasibility Study (DFS) for the CEIP.
Significant progress on the study has been made and we expect to have the final estimates complete at the end of 2013. The work of over 300 professional
contributors is now drawing to a close. This will be a very significant milestone in the development of our company, and we look forward to it with
anticipation.
We expect our operating costs coming from the DFS to fall around the middle of the world cost curve, especially when taking into account our pricing
advantage in comparison to other Australian producers with lesser quality products.
Completion of the DFS will also flow into the culmination of our discussions with potential partners for the Project. As the largest active resources
development in the State of South Australia and a significant global iron ore project in its own right, our prospective partners for CEIP demand a high
degree of thoroughness and accuracy in our project planning, studies and assumptions. This is, as you would expect, from parties entering into a potential
multi-billion dollar development partnership. The DFS has been designed from the beginning to deliver this necessary level of rigour for our prospective
global partners.
I am also pleased to have seen the iron ore price during the year maintain a relatively consistent level, well in excess of our long term pricing assumptions
for iron ore. The continuing robust outlook for iron ore demand, particularly as the world economy continues to recover from the 2008 global recession,
will strengthen the economics of our project. A high quality product such as that envisaged from the CEIP will only become more attractive as the average
quality of iron ore reduces over time as current high grade sources of world production deplete. CEIP product will retain the same high quality throughout
its life.
To sustain our drive towards conclusion of the DFS we have conducted two capital raisings since the year ended 30 June 2012 – Rights Issues to raise
$38.5 million and $50.7 million (after costs). These funds have mostly been invested into the completion of our DFS, acquisition of strategic property and
associated resource drilling. The DFS is a very significant endeavour, and we are now fully funded to its successful conclusion.
Alongside our efforts on the CEIP, we also invested in a drilling programme and a scoping stage study at our smaller Gawler Iron Project. Gawler has the
potential to establish shorter term production and sustaining cash flows for Iron Road, with lower capital outlay.
Since joining the Board in October 2012, I can say it has been a time of significant progress for Iron Road towards our vision of becoming a trusted and
reliable supplier of premium iron concentrates to the Asian marketplace. Joining me on the Board this year was also Mr Leigh Hall AM, whilst one of our
founding directors, Mr Mathew Keegan, departed with our warm wishes.
On behalf of the Board of Iron Road, I thank our dedicated staff, partners and service providers for their efforts during the year as well as our loyal
shareholders for their support. I look forward to a significant year ahead as we continue to move ever closer to achieving our vision.
Peter Cassidy
Non-Executive Chairman
| 3
Managing Director’s Report
“Iron Road Limited has made significant steps on its path to
advance from project developer to an iron ore producer
and exporter of high quality concentrates.”
Mr Andrew Stocks,
Managing Director Iron Road Limited
This year has seen significant progress at both our flagship Central Iron Project (CEIP) and the smaller Gawler Iron Project (GIP).
At CEIP, located on the Eyre Peninsula of South Australia, the Definitive Feasibility Study (DFS) has progressed to within sight of completion.
The DFS is progressing at an accelerated pace as a result of funding obtained through an entitlement offer of $50.7 million (after costs) in July 2013.
Of these funds, $31 million has been allocated to further studies in the areas of ore processing, environmental studies, regulations and approvals and
infrastructure. This has facilitated the need for additional staff and the Adelaide office now employs 30 staff working alongside 40 specialist engineering
consultants.
Coupled with further studies has been substantial drilling activity in the Warramboo area of the CEIP. In May 2013, the company announced an upgrade of
the Mineral Resource, increasing to 3.7 billion tonnes at 16% iron1. Importantly, the Measured and highest confidence level part of the resource makes up
2.2 billion tonnes or 60% of the overall mineral resource. The CEIP now has the largest Measured + Indicated magnetite resource in Australia and ranks in
the top 20 of magnetite projects globally.
Iron Road also displayed its commitment to the CEIP and the Eyre Peninsula region with the purchase of approximately 1,100 hectares of land at Cape
Hardy. This location for a port offers sheltered deep water with no dredging or breakwater required and will be the first Capesize port in South Australia.
With the CEIP DFS progressing on schedule, Iron Road has also committed to further scoping activities and studies at the Gawler Iron Project (GIP), 200
kilometres south west of Coober Pedy. GIP is of much smaller scale and is nearby to existing infrastructure. This year further drilling and scoping activities
have been undertaken with pleasing progress being accomplished.
The year ahead should see the finalisation of the CEIP DFS with significant findings in ore processing, preferred rail and infrastructure corridors, and
concentrate export facilities. With a successful outcome on securing a partner, 2014 is likely to see Iron Road move from an iron ore explorer to the
developer of Australia’s largest magnetite resource.
1 Refer to Mineral Resource Estimates table at Appendix 1 and Competent Persons Statement at Appendix 2.
4 | A n n u a l R e p o r t 2 0 1 3
Highlights
Central Eyre Iron Project (CEIP)
Gawler Iron Project (GIP)
• Significant global Mineral Resource increase for CEIP, increasing by 71%
to 3.7Bt magnetite gneiss at a grade of 16% iron2. Additional project
potential also increased to between 8 - 17 billion tonnes magnetite gneiss
at a grade of 14-20% iron3.
• The Stage III drilling programme of 21 holes was completed and assays
received.
• Scoping study underway evaluating the feasibility of an iron ore operation
producing 1-2 million tonnes of high quality iron concentrates per annum.
• CEIP is the largest Measured + Indicated magnetite resource in Australia
and ranks within the top 20 magnetite projects globally by tonnage.
Corporate
• Definitive Feasibility Study (DFS) continues to progress well and on
schedule in all areas – including mine site, infrastructure and port.
• The Iron Road Board and executive team was strengthened in preparation
for the next stages of development. Mr Peter Cassidy was appointed to be
the Chair of the Board and Mr Leigh Hall AM as a Non-Executive Director.
• DFS studies identified that the addition of a gravity beneficiation circuit
following the grinding stage in the process plant design is expected
to result in lower power use, potentially smaller ball mills and a more
attractive concentrate product.
• Test work confirms positive attributes during both mineral processing and
steel making, with positive implications for both costs and concentrate
pricing.
• Community Engagement
initiatives
established across the project scope.
intensified pace and are well
• Major Development Status declared by the South Australian Government
infrastructure component of CEIP, comprising the port and
for the
infrastructure corridor.
• Two fully underwritten capital raisings were completed. Funds are being
used to complete the CEIP definitive feasibility and infrastructure studies,
as well as enabling Iron Road to continue strategic acquisitions of
property. GIP has also been provided funding beyond completion of the
current scoping study.
2 Refer to Mineral Resource Estimates table at Appendix 1 and Competent Persons
Statement at Appendix 2.
3 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/Rob Roy prospect.
Figure 2: Location of CEIP, highlighting mine site, infrastructure corridor and proposed port precinct
| 5
Managing Director’s Report
South Australia – Central Eyre Iron Project
The Central Eyre Iron Project (CEIP) is located on the Eyre Peninsula of South
Australia approximately 30 kilometres southeast of the regional centre of
Wudinna (Figure 2). Project studies incorporate mining and ore processing,
as well as rail and concentrate export facilities. Concentrate is being
marketed as a 67% iron, high quality blending feedstock to the international
sinter market, which feeds the majority of blast furnaces.
Iron Road Limited has made significant steps on its path to advance from
project developer to an iron ore producer and exporter of high quality
concentrates. The CEIP is being studied for an operating life of 20 years,
with potential well beyond 30 years. The defined Mineral Resources at
Warramboo contain continuous and consistent mineralisation over more
than 6 kilometres of strike and are amenable to large scale, conventional
open pit extraction methods.
The Measured and highest confidence level portion of the resource now
makes up 2.2 billion tonnes or 60% of the overall Mineral Resource estimate.
Drill holes used in the mineral resource estimate are shown in Figure 4 and
the resulting solids model in Figures 4 and 5.
Mineral Resource highlights
The Global Mineral Resource for CEIP increased by 71% to 3.7Bt at a grade of
16% iron at Warramboo (Table 1). The Mineral Resource contains 2.7Bt in the
Measured and Indicated categories at a grade of 15.7% iron, which is eligible
for conversion to a Mining Reserve (Table 1 and Figure 6).
CEIP has the largest Measured + Indicated magnetite resource in Australia –
whilst test work also indicates the project is one of the easiest to process
with significantly less grinding required than other large scale projects.
The Murphy South - Rob Roy prospect area at Warramboo was remodelled
incorporating new drilling results and global Mineral Resources at the CEIP
were upgraded to 3.7 billion tonnes magnetite gneiss at 16% iron4.
Globally, the project now ranks in the top 20 of magnetite projects alongside
producing projects from Russia and the Ukraine, together with advanced
development projects in Canada.
CEIP Resource Expansion
The Mineral Resources were expanded considerably at the CEIP, increasing
from 2.1 billion tonnes to 3.7 billion tonnes at a grade of 16% iron1. The
global mineral resource of 3.7 billion tonnes includes the Murphy South, Rob
Roy and Boo-Loo prospects, collectively known as the Warramboo Project
Area (Figure 3).
The upgrade demonstrates the potential for a long mine life that is expected
to
impact positively on discussions with development and financing
partners, whilst also enhancing the potential returns from the associated
rail and port infrastructure.
4Refer to Mineral Resource Estimates table at Appendix 1 and Competent Persons
Statement at Appendix 2.
Figure 3: CEIP tenement highlighting the Murphy South, Rob Roy and Boo-Loo prospects of the Warramboo Project Area
6 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Figure 4: Drill hole locations at Warramboo, Central Eyre Iron Project superimposed on the solids model
Figure 5: Cross section through Murphy South-Rob Roy and Boo-Loo-Dolphin solids model of the CEIP
| 7
Managing Director’s Report
Table 1
CEIP Global Mineral Resource
Location
Classification
Measured
Indicated
Murphy
South/Rob Roy Inferred
Boo-Loo
Inferred
Tonnes
(Mt)
2,222
474
667
328
3,691
Fe
(%)
15.69
15.6
16
17
16
SiO2
(%)
53.70
53.7
53
52
53
Al 2O3
(%)
12.84
12.8
12
12
13
P
(%)
0.08
0.08
0.08
0.09
0.08
CEIP Indicative Concentrate Specification – 106 micron (p80)
Silica (SiO2)
3.3%
Alumina (Al2O3)
Phosphorous (P)
Loss on ignition (LOI)
1.9%
0.005%
-2.4%
Total
Iron (Fe)
67%
The updated Mineral Resource estimate for the Murphy South – Rob Roy prospect was completed by Heather Pearce following the guidelines of the JORC Code
(2004) and peer reviewed by Xstract personnel including Dr Isobel Clark, Kevin Lowe and Michelle Smith. The Mineral Resource Estimate for Boo-Loo was carried out
following the guidelines of the JORC Code (2004) by Coffey Mining Ltd
Figure 6: Australian Magnetite Resources detailing categories. Source: Public company reports
8 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Results from drilling at Stage VIII Murphy South suggest flattening of the
mineralisation, presenting opportunity for future resource expansion at
Murphy South (Figure 7).
and coarse tailings will be distributed into a storage facility at the mine
site via conventional slurry spigotting and beaching and into bulk storage
respectively.
In addition to the increase in resources, Iron Road also released the results
of a review of the potential in areas beyond the existing resource base for
iron mineralisation at CEIP. The review identified a conceptual exploration
potential of 8 to 17 billion tonnes of magnetite gneiss in the range of 14% to
20% iron5. This is in addition to the existing mineral resource estimate of 3.7
Billion tonnes at 16% iron6.
Definitive Feasibility Study (DFS)
The DFS is studying the viability of establishing an integrated iron concentrate
export business on the Eyre Peninsula of South Australia. Major components
include large scale open pit mining, ore beneficiation on site, standard gauge
heavy haul rail, a deep-water port and ancillary works.
Open pit optimisation and mine planning is progressing well following the
completion of the upgraded Mineral Resource estimate. Ore treatment by
conventional crushing, milling and magnetic separation is being planned
to deliver high quality concentrate containing 67% iron at a relatively
coarse size distribution of -106µm, or 150 mesh (80% passing; P80). Fine
Planning is underway to construct a heavy haul, standard gauge rail line
between the mine and port sites. The rail line may potentially be expanded
to connect with the existing national standard gauge rail network, extending
port access for the
large Capesize vessels to approximately 25% of
Australia’s land mass.
Iron Road acquired 1,100 hectares of land at Cape Hardy for a Capesize port
facility as part of its integrated export solution for the CEIP iron concentrate.
The port is planned to have an initial capacity of 30Mtpa, with 10Mtpa of
the capacity potentially available to third parties. The site has relatively
benign weather all year round, with no seasonal cyclonic activity to hinder
operations.
Studies are continuing for the delivery of power and water to the sites. A
water treatment and storage facility at the mine site is being investigated
to supply fresh water for concentrate washing as well as potable water for
construction and operational uses. The majority of water used in the project
will be untreated seawater.
Figure 7: Cross section through the Murphy South - Rob Roy area of the Warramboo Resource block model
5The information in this report relating to exploration targets should not be misconstrued as an estimate of Mineral Resources of Ore Reserves. Hence the terms
Resource(s) or Reserve(s) have not been used in this context. 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/Rob Roy prospects.
6Refer to Mineral Resource Estimates table at Appendix 1 and Competent Persons Statement at Appendix 2.
| 9
Managing Director’s Report
Figure 8: Iron Road’s core preparation facility at Kyancutta
Environmental impact and benefit assessments are progressing well in
the areas of air (including dust), water (ground, surface and marine), flora
and fauna. Preparations are underway for studies in the areas of social,
transport, noise and tailings assessments, as these will be a focus in the first
quarter of the new financial year.
Mine, Processing Plant and Associated Infrastructure
Coffey Mining is conducting the open pit optimisation and mine planning
following the close-out of the Murphy South – Rob Roy drilling programme
and upgraded mineral resource estimate. This planning exercise results in pit
designs for the Murphy South and Boo-Loo resources, generating indicative
life of mine production schedules, together with improved confidence in
site layouts and infrastructure configuration. Progressive mine production
schedules, generated during the course of feasibility studies, will be used to
refine mining cost models and mining equipment requirements.
Pit optimisation and planning utilises recent open pit geotechnical analysis
and assessment. The geotechnical database is extensive, totalling 338
diamond core holes that have been geotechnically assessed, including 295
angled holes that provide defect orientation data. In addition to the primary
acquisition of rock defect data, geotechnical investigations over recent
months include compressive and shear strength test work, rock-fall analysis
and rock-mass and structural stability analysis.
SKM commenced the second phase of hydrogeological investigation and
assessment, building on findings from the initial investigations completed
in 2012.
installation of eight
Earlier investigations considered the broader characterisation of the ground
water regime, along with a conceptual understanding of potential influences
of likely mining activities on the groundwater system. The first programme
long-term monitoring bores suitable for
included
detecting changes to groundwater levels and quality as the CEIP progresses
from exploration through to operation. The second phase of investigation
includes additional test bores and pumping test work. Hydrogeological
studies will specifically quantify the likely dewatering requirements and
consider dewatering infrastructure associated with open pit mining and
other activities and assessment of potential influences on the groundwater
in the vicinity of the open pit.
A preliminary study into the tailings storage facility (TSF) was completed
in 2012 and has subsequently been the subject of intense internal and
external review. The final stage of the tailings study commenced in June
2013 and is being conducted ATC Williams Pty Ltd, an Australian engineering
10 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Figure 9: Area of proposed mine footprint, at August 2013
consultancy with international experience in the areas of mine tailings
storage and management. Investigations are analysing and assessing TSF
design proposals, providing robust and safe disposal of tailings over the life
of mine, a suitable closure time-frame and long-term arrangements for site
rehabilitation.
Infrastructure studies are well advanced and design and engineering has
ramped-up smoothly. Investigations and study of concentrate delivery
facilities also continued, with the basis of design established for the
following facilities.
• Port marine – design development of tug harbour, wharf and
arrangements and module offloading facilities (Figure 10),
confirmation of the general arrangement of facilities.
jetty
including
• Port infrastructure – optimisation of cut and fill, building layout and
configuration, drainage design and improved alignment of access roads.
• Materials handling – design development
including confirmation of
stockyard machines and length of stockpile, conveyors alignment and
profiles, rail car dumper and dust controls.
• Rail system – simulation of the network was completed based on steady
state production of concentrate.
Studies of seawater supply to the ore processing facilities, treatment of sea
water to provide desalinated water for concentrate washing, as well as for
the construction camp and operations village have commenced.
Tenova Projects has made significant progress through the preliminary
engineering of the process plant and associated facilities. Sizing and budget
costing of all major equipment in the current layout has been completed and
costs estimates are well underway.
Recently completed modelling, based on data derived from microscopic
analysis of the ore body, has indicated that potential benefits may be gained
from a gravity circuit in the milling area scalping off a high grade, coarser
concentrate. This is expected to yield further early rejection of tailings with
an overall saving in milling power and reduction in the number of operating
units required in the screening and cleaner magnetic separation circuits,
as less material is required to pass through. The overall outcome is a
reduction in consumed power as well as a potential reduction in both capital
and operating costs. The gravity test work campaign is due for completion
in the December 2013 quarter and will quantify the benefits and provide
information for the design basis of the circuit.
| 11
Managing Director’s Report
Figure 10: Current port layout at Cape Hardy including tug harbour and module offloading facilities (MOF).
Metallurgical Test Work
leading mineral
testing service provider,
AMDEL-BV, a
is conducting
metallurgical investigation of core intersections from mineralised zones likely
to be mined early in the mine life. Testing has advanced to completion of the
pilot milling campaign on a bulk sample, generating a ‘rougher’ concentrate
sample that in turn underwent further confirmatory classification test work
in the USA. The products of this screening investigation are being used for
the gravity recovery test work and a cleaner magnetic separation pilot trial.
This definitive test work programme will confirm process design criteria
for improved iron recovery and product coarseness as well as generate
additional concentrate for marketing purposes.
the MDTR and GDTR recoveries (R2 = 0.95, Figure 11). This outcome permits
the GDTR tests results to be applied to the prediction of metallurgical
recovery of mineralisation across the mining zones, enabling Iron Road to
avoid the costly requirement to run additional MDTR tests.
The Davis tube recovery test apparatus containing a CEIP magnetite sample
during testing is shown in Figure 12. The black accumulation in the glass
tube in the middle of the image is the magnetite concentrate being held in
the Davis tube magnetic field while the gangue minerals are washed clear
through to the discharge stream.
A programme of metallurgical Davis tube recovery tests (MDTR), at the target
grind size of the process plant (106µm), were conducted in parallel with
geological Davis tube recovery tests (GDTR) on the same core intervals. The
GDTR tests are conducted at a finer grind size, and provide a much swifter
procedure for magnetite recovery determination compared to conventional
metallurgical test work. More than 5000 GDTR tests have been conducted to
date across the CEIP. The results from both DTR test data sets were analysed
statistically and demonstrated a strong, positive, linear relationship between
Bulk composite material, obtained from large diameter PQ cores, was
subjected to high pressure rolls crushing (HPRC) and wet screening to the
target rougher magnetic separation (RMS) feed size. RMS testing of the bulk
sample was conducted in wet conditions to reflect plant operation and an
expected small increase in the efficiency of fine particle separation was
realised. A 100 kilogram portion of the RMS concentrate was subsequently
milled and put through cleaner magnetic separation (CMS) to generate final
concentrate and tailings samples for further test work to confirm tailings
12 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Figure 11: The strong linear relationship between geological and metallurgical DTR iron recoveries is clear.
properties and mass recovery in this section of the flowsheet. Figure 13
shows the CMS concentrate and tailings (unfiltered). The pilot milling circuit
used for the test work is shown at Figure 14.
Ancillary works
Construction Aggregates.
investigations
Preliminary
into the supply of construction aggregates,
including concrete aggregate, rail ballast and foundation stone have been
completed. These investigations included a broad assessment of external
quarry sites along with the suitability of rock expected to be generated
during early mining and construction activities. Preliminary aggregate
test work, on drilling cores from both the Cape Hardy port site and from
the CEIP mine site has been conducted with encouraging results. Sourcing
of aggregate materials from early CEIP activities offers attractive project
synergies and further investigations into aggregate supply will prioritise the
suitability and availability of internally sourced materials.
Construction Camp
Following on from work completed by GHD, Iron Road is currently preparing
enquiries to be issued to accommodation camp providers/operators to
obtain costings. Final sizing of camp accommodation will be determined
during the current phase of engineering after confirmation of construction
manning and schedule with completion of the project execution plan.
Operations Village
Consultation with Wudinna District Council continued with respect to
community impacts and opportunities in relation to the size and location of
operational accommodation in the town of Wudinna. Iron Road is currently
preparing enquiries to be issued to accommodation camp provider/operators
to obtain DFS costing. Final sizing of the operations village will be determined
during the current phase of the DFS engineering after confirmation of
operational manning with completion of the project operational readiness
report.
| 13
Managing Director’s Report
Airport Upgrade
Iron Road is providing funding to Wudinna District Council for the purpose
of preparing the study for the upgrade of Wudinna airport to service the
construction and operational requirements of the CEIP.
Construction Water
Studies are continuing into the supply of water prior to commissioning of the
seawater pipeline for the construction phase of the project. Water demand
for each project area is being collated to determine the total construction
water requirement. Sources of potable and non-potable water have been
identified and are currently under investigation.
Fuel Supply
Figure 12: Davis Tube Recovery Test apparatus. Magnetite concentrate
is suspended between the two magnetic poles.
Figure 13: Final concentrate (left) and cleaner magnetic separation
tails (right)
(BP) has provided costings
British Petroleum
the supply and
transportation of fuel to Cape Hardy (rail operations) and Warramboo (mine
operations). Detailed drawings of the tank farm and fuel handling equipment
are complete.
for
Modularisation
The process plant design and layout together with favourable transport
corridors and options has enabled the opportunity to consider and include
the benefits of modularisation in the project delivery of the CEIP. Initial
reviews of transportation options and routes have been carried out and the
proposed module envelope will be defined in the near future.
Discussions have been held with engineering design service providers
regarding the modularisation of plant and infrastructure components. The
design parameters will maximise modularisation benefits for the CEIP. Global
heavy lifting engineering company Sarens NV of Autoweg, Belgium has
completed a feasibility route study confirming the viability of transporting
pre-assembled modules from the Cape Hardy port to the Warramboo mine
site.
NMA Maritime & Offshore Contractors BV and COSCO Heavy Transport
of Rotterdam, the Netherlands have reviewed the design of the module
unloading facility and their recommendations have been incorporated into
the Cape Hardy port design.
The modularisation study within the current phase of engineering includes:
• Review and selection of pre-assembly yards in Asia;
• Enquiries with and review of heavy lift shipping companies;
• Determination of size , mass and number of pre-assembled modules;
• Determination of land transport and heavy lift requirements; and
• Determination of DAFF Bio-Security and Customs requirements
for
importation of pre-assembled modules.
Operational Readiness and Project Execution
Figure 14: Pilot milling circuit in operation at Amdel. The mill is located
within the yellow guarding in centre right of the picture.
Development of the Operational Readiness plan and the Project Execution
plan for the CEIP has commenced.
14 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Iron Ore Marketing
Testing Overview
Iron Road marketing and senior staff continue to visit the Chinese steel
market and receive strong expressions of interest in the CEIP as a future
provider of iron concentrate. The possibility of Iron Road providing the
market with earlier iron concentrate from the Gawler Iron Project (GIP) has
also been well received.
Iron Road has significantly increased marketing related visits to Chinese
steel mills as it approaches completion of its DFS.
The China Iron & Steel Research Institute Group (CISRI), based in Beijing
(Figure 15), completed an extensive suite of test work on an 840 kilogram
bulk sample of typical CEIP iron concentrate. The test work programme
was designed to establish the sintering performance of the concentrate
across potential uses
industry and to test the
pelletising characteristics of the concentrate in a typical Chinese pelletising
environment. Exceptional results from the test programme verify that the
CEIP concentrate performs well in both sintering and pelletising applications.
in the Chinese steel
Sintering tests confirm that CEIP concentrate may be readily substituted
for Brazilian and Pilbara fines as well as Chinese domestic concentrates. In
replacing Pilbara fines, CEIP concentrate lowers the fuel level required for
sintering, contributing to cost savings in the sintering process. Pelletising
test results show that CEIP concentrate was an amenable substitute for
domestic Chinese concentrates in forming pellets, demonstrating added
product versatility. In all, the results further endorse the attractiveness of
CEIP concentrate to the Chinese steel industry and will enhance ongoing
marketing and partnership initiatives as the CEIP definitive feasibility study
continues.
The test work commissioned by Iron Road was designed to first and foremost
examine the performance of the expected 67% iron (-106 micron p80) CEIP
magnetite concentrate as a substitute for either Brazilian or Pilbara fines
in typical sinter plant blends for coastal and southern Chinese plants.
Additional tests where CEIP concentrate was substituted for high grade
Chinese domestic concentrates in blends commonly used at inland and
northern Chinese sinter plants were also performed. An alternate testing
stream examined the viability of CEIP concentrate in pellet plants in ratios
ranging from 10-100%, without further grinding.
Positive results were achieved in each series of tests, validating the use of
CEIP concentrate as a value enhancing feedstock in sinter plants or as an
amenable substitute in pellet plants. Results were particularly encouraging
when replacing Pilbara fines in typical blends used in coastal and southern
Chinese operations, with the higher iron content and low impurities of CEIP
concentrate leading to lower solid fuel use and improved plant productivity
for steel mills.
The positive outcomes, for both sintering and pelletising, are seen by Iron
Road as verification of the ready acceptance that CEIP concentrate should
receive, particularly in the Chinese market and the likelihood of realising a
predicted quality differential averaging approximately 14% over Pilbara fines
reference pricing.
Importantly these tests, which replicate commercial scale sintering and
pelletising, were conducted in China by a well-recognised steel institute,
according to national Chinese standards and with familiarity of the latest
steel making operating practices.
| 15
Managing Director’s Report
Sintering Results
CISRI tests on the sintering plant characteristics of CEIP concentrate
examined three broad scenarios:
All results pointed to CEIP concentrate having beneficial characteristics
compared to competitive iron products, with particular advantages when
substituting for Pilbara fines products.
• Replacing Brazilian fines in varying amounts for a typical sinter plant
feed mix for a southern or coastal Chinese mill;
Pelletising Results
• Replacing Pilbara fines in varying amounts for a typical sinter plant feed
mix for a southern or coastal Chinese mill; and
• Replacing high grade domestic Chinese concentrate in varying amounts
for a typical sinter plant feed mix for a northern or inland Chinese mill.
Whilst the CEIP concentrate product has been expressly designed and
targeted for use in sinter plants, Iron Road also commissioned CISRI to
examine the performance of the concentrate as pellet plant feedstock.
Each scenario returned overall positive results for the use of CEIP concentrate
in typical Chinese mill feeds. When replacing Brazilian fines, results show a
decrease in the solid fuel requirement for sintering and similar productivity
for mill operations. Softening and melting properties of the resulting sinter
were improved with the use of CEIP concentrate.
CISRI examined:
• Substituting between 10% to 30% of the usual high quality Chinese
magnetite concentrate for CEIP concentrate; and
• Creating a pellet product completely from CEIP concentrate (ie. 100%
CEIP).
Results when replacing Pilbara fines showed the best returns for potential
Chinese customers with reduced solid fuel use per tonne of sinter produced.
Moreover, greater productivity is achievable as a result of being able to load
more feed into the same sintering pellet. Softening and melting properties
of the resulting sinter were again improved with the use of CEIP concentrate.
Results when replacing high grade domestic Chinese concentrate were
consistent, with sintering performance of the CEIP concentrate being nearly
identical to high grade Chinese concentrate, demonstrating the similarity of
the two products.
When substituting CEIP concentrate
for between 10-30% of Chinese
concentrate, pellets were readily produced with similar performance
characteristics and firing temperatures to pellets produced using 100%
Chinese product. When using 100% CEIP concentrate for pellet feedstock,
resulting pellets more than satisfied all minimum criteria, producing a
competent pellet with a mildly increased firing temperature and an increase
in the usage of bentonite (binder).
Figure 15: China Iron & Steel Research Institute Group (CISRI), Beijing
16 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Summary
Community Engagement
The flexibility of the CEIP concentrate to be readily usable as a feedstock
in either sintering or pellet plant operations is expected to increase the
attractiveness of the product to the larger Chinese steel makers, which
operate both sintering and pellet plant facilities.
Unlike most Australian magnetite operations, Iron Road has chosen to target
the much larger sinter feed market, rather than relying on the requirement
for pellet plants. This strategy is possible due to the unusual nature of the
iron gneiss at the CEIP, with a coarse grained concentrate readily able to be
produced, similar to the high grade domestic Chinese concentrates.
Iron Road representatives have continued to undertake regular marketing
visits to North Asia with a view to developing the basis of future product
off-take arrangements.
Community and stakeholder engagement has continued as a focus for
Iron Road during the year. The community team was further strengthened
with the appointment of Tim Scholz as Principal Advisor – Stakeholder
Engagement. Mr Scholz is a farmer and former Chairperson of the Wudinna
District Council. His appointment to the team also results in a permanent
presence for the company on the Eyre Peninsula, making it simpler for
interested people to make contact with the company.
Continuing community activities included the sponsorship of the Wudinna
Area School, Girls U16 Pedal Prix Team, being the third year that Iron Road
has sponsored Wudinna Area School’s participation in the Pedal Prix.
Figure 16: Wudinna Area School, Girls U16 Pedal Prix Team
| 17
Managing Director’s Report
Warramboo/Wudinna area – proposed mine site
Tumby Bay/Port Neill – proposed port and infrastructure corridor
Numerous community
information sessions and workshops were held
during the year, particularly relating to the development of a Community
Consultative Committee (CCC) for the proposed mine at Warramboo. An
Independent Chairperson nominated by the community and endorsed by Iron
Road has been appointed to assist the CCC.
Public meetings were held in both Port Neill and Tumby Bay in March 2013
for interested community members to hear about the proposed port at Cape
Hardy. Iron Road has since also presented an overview of the CEIP, with a
particular focus on the proposed infrastructure corridor, to stakeholders and
other interested parties.
General community meetings were held in both Warramboo and Wudinna
during August 2013, providing attendees with a comprehensive update on
the CEIP and a first look at the recently proposed mining lease boundary.
Figure 17: Warramboo Community Meeting in August 2013
18 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
South Australia – Gawler Iron Project
The Gawler Iron Project (GIP) is located approximately 25 kilometres north
of the standard gauge Trans-Australian Railway that connects to the Central
Australia Railway at Tarcoola and ultimately a number of ports (Figure 18).
The project hosts potential for a small to medium scale iron ore development
with the potential to produce 1-2Mtpa of a high quality concentrate through
simple beneficiation, with similar characteristics to that proposed for the
larger CEIP. A scoping study to further define that potential is currently
underway.
Exploration by Iron Road at the GIP commenced during July 2009. This work
included the Stage I regional RC drilling programme (6,101 metres) and
follow-up Stage II diamond drilling programme (1,433 metres). The results
from Stage I and II drilling identified the Boomer prospect as a potentially
significant iron deposit situated below 25m of unconsolidated sand. The
iron mineralisation has a thin cap of hematite mineralisation and occurs in
an approximate 110m wide zone of moderately to steeply dipping folded and
faulted coarse-grained, magnetite-rich ironstone.
The ironstone has been mapped along strike for at least 1,000m and is open
at depth. Drill samples from the Boomer prospect returned an average grade
of 25% iron with high grade zones containing over 40% iron. During June
2012, Iron Road secured 90% ownership of the iron ore rights at the GIP.
Shortly afterward a scoping study was initiated to review the economic
viability of potential mining and beneficiation operations.
As part of the scoping study, the Stage III drilling programme commenced
during March 2013 at the Boomer prospect and concluded at the end of May
2013. The programme comprised two large diameter PQ diamond drill holes
totalling 669m and 21 RC (reverse circulation) holes totalling 3,795 metres,
for an overall total of 4,464m (Figure 20).
All 21 RC drill holes were drilled on a northwesterly azimuth of 300° and
dip at –60°, and drilled to depths varying from 108m to 319m, across eight
drill-sections.
When combined, the metallurgical and resource definition drilling spanned
1,000m, comprising nine sections in total. All are perpendicular to the strike
of the mineralisation (Figures 20 and 21).
Figure 18: Project location map
| 19
Managing Director’s Report
Figure 19: Magnetic anomaly and interpreted geology at the Boomer prospect showing Stage III drilling traverses
Geological and assay data is being used to create a mineral resource model
and estimate. Work is also being undertaken in the areas of:
• Concentrate transport, including rail and port facilities;
• Haul road construction from the ore treatment facility to the (existing) rail
siding;
• Provision of road haulage services for concentrate transport;
• Water supply and treatment; and
• Transportation of modularised ore treatment plant to site.
The similarities of the GIP concentrate with the expected Central Eyre Iron
Project (CEIP) product is likely to lead to synergies when marketing GIP off-
take. The GIP iron concentrate should serve as an excellent starting product
in the market, particularly when combined with the opportunity to take
substantially larger amounts of CEIP product in the longer term.
The larger diameter PQ holes were drilled to provide a four tonne bulk
sample for dispatch to Europe for beneficiation test work. This programme
will provide the data necessary for optimisation of a modular ore processing
facility. A separate metallurgical test work programme is expected to be
completed shortly and together with marketing insight will determine an
ideal grind size for the magnetite concentrate. Previous test work indicates
that a simple, possibly dry process may produce a high grade product at
a grind size of -106µ m (p80) to produce a coarse magnetite concentrate
of between 67-70%
iron recovery of
approximately 75-95%.
impurities and an
iron with
low
Eighteen of the 21 RC drill holes intersected magnetite-rich ironstone with
significant downhole intervals shown at Appendix 3. All samples were
assayed by XRF methods and RC chips were sampled using 2m composites.
Drilling results indicate that iron mineralisation at the Boomer prospect
extends over at least 600m along strike in a northeasterly direction with
an apparent thickness of intercepts varying from 6 metres to 260 metres
(Figure 22). Two drill holes were terminated within mineralisation due
to technical problems; mineralisation intercepts in these drill holes are
therefore unknown.
20 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Figure 20: Magnetic anomaly and interpreted geology showing Stage III drilling traverses
Figure 21: Cross-section looking northeast, section B0425, Stage III drilling, Boomer prospect
| 21
Managing Director’s Report
Figure 22: Typical mineralised PQ core from metallurgical drill hole GWL082
Corporate
Two new members of the Board were appointed during the year in preparation for the next stages of development.
Mr Peter Cassidy joined Iron Road as Chairman, with Mr Julian Gosse continuing as a Non-Executive Director. Mr Cassidy is a co-founder
and Chairman of resources investment fund The Sentient Group, Iron Road’s majority shareholder. He is also Chairman of Enirgi Group
Corporation and a Director of Yunnan Xinli Nonferrous Metals Co Ltd. Prior to establishing The Sentient Group, Mr Cassidy established AMP
Life’s private equity division.
Mr Leigh Hall AM also joined the Board of Directors as an independent Non-Executive Director. Mr Hall is a highly experienced company
director, with a strong background in finance and investment from a career spanning senior executive positions at AMP, membership of
a range of investment oversight boards, board positions at securities industry organisations, and significant participation in government
advisory boards related to the securities, corporate law, managed funds and superannuation sectors.
Iron Road completed two fully underwritten non-renounceable entitlement offers. The funds raised are being utilised to complete the
Direct Feasibility Study (DFS), as well as enabling Iron Road to continue strategic acquisitions of property to support the combined mining,
processing, rail and port operation. The smaller scale Gawler Iron Project received a portion of the funds to investigate the potential for
shorter term production with lower capital outlay.
Andrew Stocks
Managing Director
22 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Appendix 1 – MinerAl resource estiMAtes
ceip Global Mineral Resource
locAtion
clAssificAtion
Measured
IndIcated
Inferred
Inferred
Murphy
south/rob roy
boo-Loo
totAl
tonnes
(Mt)
2,222
474
667
328
3,691
fe
(%)
15.69
15.6
16
17
16
sio2
(%)
Al
2o3
(%)
p
(%)
53.70
53.7
53
52
53
12.84
12.8
12
12
13
0.08
0.08
0.08
0.09
0.08
loi
(%)
4.5
4.5
4.3
2.1
4.3
The Murphy South/Rob Roy mineral resource estimate was carried out following the guidelines of the JORC Code (2004) by Iron Road Limited and peer reviewed by
Xstract Mining Consultants (Rob Roy). The Boo-Loo mineral resource estimate was carried out following the guidelines of the JORC Code (2004) by Coffey Mining Ltd.
CEIP Indicative Concentrate Specification – 106 micron (p80)
Iron (Fe)
67%
Silica (SiO2)
Alumina (Al2O3)
Phosphorous (P)
Loss on ignition (LOI)
3.3%
1.9%
0.005%
-2.4%
Murphy South - Rob Roy Mineral Resource Estimate
Resource Classification
Oxidation
(Mt)
Tonnes
(%)
Measured
Indicated
Fresh
Fresh
Inferred
Fresh
Transitional
Oxide
2,222
474
548
32
87
Total
Murphy South/Rob Roy
3,363
Fe
(%)
15.69
15.6
16
16
16
16
SiO2
(%)
53.70
53.7
53
51
51
53
Al 2O3
(%)
12.84
12.8
12
14
14
13
P
(%)
0.08
0.08
0.09
0.05
0.05
0.08
LOI
4.5
4.5
4.0
5.5
5.8
4.5
The Murphy South/Rob Roy mineral resource estimate was carried out following the guidelines of the JORC Code (2004) by Iron Road Limited and peer reviewed by
Xstract Mining Consultants (Rob Roy) – refer Attachment 2.
Resource
Classification
Oxidation
Fresh
Transitional
Oxide
Inferred
Total
Boo-Loo Mineral Resource Estimate
Tonnes
(Mt)
277
13
38
328
Fe
(%)
17
17
17
17
SiO2
(%)
52
52
52
52
Al 2O3
(%)
12
12
12
12
P
(%)
0.01
0.09
0.09
0.09
LOI
(%)
0.5
10.7
10.8
2.1
The Boo-Loo mineral resource estimate was carried out following the guidelines of the JORC Code (2004) by Coffey Mining Ltd.
| 23
Managing Director’s Report
Appendix 2 – Competent Persons Statement
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/Rob Roy prospect.
The information in this report that relates to exploration potential at the
Central Eyre Iron Project is based on and accurately reflects information
compiled by Mr Milo Res, who is a full time employee of Iron Road Limited
and a Member of the Australasian Institute of Mining and Metallurgy. Mr Res
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 Res 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 Resources estimated for
Boo-Loo is based on and accurately reflects information compiled by Mr
Ian MacFarlane, Coffey Mining, who is a consultant and advisor to Iron
Road Limited and a Fellow 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”. Coffey Mining 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 Resources estimated for Murphy
South/Rob Roy is based on and accurately reflects information compiled by
Ms Heather Pearce, who is a full time employee of Iron Road Limited. This
estimation was peer review by Dr Isobel Clark of Xstract Mining Consultants.
Dr Clark has sufficient experience relevant to the style of mineralisation and
the type of deposits under consideration and to the activity which she 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”. Xstract Mining Consultants consents to the
inclusion in the report of the matters based on the information in the form
and context in which it appears.
24 | A n n u a l R e p o r t 2 0 1 3
Managing Director’s Report
Appendix 3 – Gawler Stage III Significant Intercepts
Drillhole
GWL083
GWL084
GWL085
GWL086
GWL087
GWL088
GWL089
GWL091
GWL092
GWL095
GWL097
GWL098
GWL099
GWL100
GWL101
GWL102
GWL103
GWL104
Gawler III - Table of Significant Intercepts
Depth from
Depth to
Average %Fe
Metre interval
6
10
136
120
150
188
256
108
26
44
74
120
32
118
152
190
250
158
188
184
266
280
304
118
148
186
208
154
176
222
280
52
8
68
26
134
24
83
12
22
266
132
182
224
262
126
38
90
108
126
38
134
186
244
331
178
212
232
276
300
320
140
180
204
234
172
216
270
292
70
60
112
52
148
79
115
17
16
27
33
23
23
19
18
17
17
29
25
22
22
28
22
25
24
37
24
20
31
24
28
22
26
38
24
28
24
25
30
23
27
22
18
31
25
6
12
130
12
32
36
6
18
12
46
34
6
6
16
34
54
81
20
24
48
10
20
16
22
32
18
26
18
40
48
12
18
52
44
26
14
55
32
| 25
Your Directors present
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 2013.
Directors’ Report
Directors
The following persons were directors of Iron Road Limited during the financial year and until the date of this report:
Mr Peter Cassidy
Mr Andrew Stocks
Mr Jerry Ellis AO
Mr Leigh Hall AM
Mr Julian Gosse
Mr Ian Hume
Mr Peter Cassidy and Mr Leigh Hall were appointed as directors on 11 October 2012 and 31 October 2012 respectively
and continue in office at the date of this report. Mr Matthew Keegan was a director from the beginning of the
financial year until his resignation on 11 October 2012.
Peter Cassidy
Chairman
Mr Cassidy is co-founder and Chairman of The Sentient Group, Chairman of Enirgi Group Corporation and a Director
of Xinli Titanium. Prior to co-founding Sentient in 2000, Mr Cassidy established AMP Life’s private equity division,
worked with the Ford Motor Company and was involved with industry development on behalf of Australian State and
Commonwealth governments.
Mr Cassidy holds a degree in geology and a first class honours degree in chemistry from the University of Tasmania
and a PhD in coal science from Monash University.
No other directorships of listed companies have been held in the last three years.
Ian Hume
Non-executive 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.
On 13 September 2013, Mr Hume was appointed as a non-executive director of African Energy Resources Limited.
In the 3 years immediately before the end of the financial year, Mr Hume served as a director of the following listed
companies:
• Golden Minerals Company*
• Norsemont Mining Inc.
• Silver City Minerals Limited*
• Andean Resources Limited
• Marengo Mining Limited*
• African Energy Resources Limited*
* denotes current directorships
No other directorships of listed companies have been held in the last three years.
26 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
Jerry Ellis AO
Non-executive 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 2012 Mr Ellis was elected Chairman of Alzheimer Australia NSW and in the 3 years immediately before the end of
the financial year, Mr Ellis also served as a director of the Australia and New Zealand Banking Group Limited.
Mr Ellis is an Officer of the Order of Australia.
Leigh Hall AM
Non-executive Director
Mr Hall is a highly experienced company director, with a strong background in finance and investment from a career
spanning senior executive positions at AMP, membership of a range of investment oversight boards, board positions
at securities industry organisations, and significant participation in government advisory boards related to the
securities, corporate law, managed funds and superannuation sectors.
Mr Hall is a Member of the Order of Australia, with a citation for service to business and commerce, in particular to
the improvement of ethical and professional standards and the efficiency of the Australian securities markets. Mr
Hall is also a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Australian Institute of
Company Directors.
In the 3 years immediately before the end of the financial year, Mr Hall served as a director of the following listed
companies:
• Prime Infrastructure Holdings Limited
•
• Natural Resources USA Corporation.
Ivernia Inc.
Julian Gosse
Non-executive Director
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 3 years immediately before the end of the financial year, Julian Gosse served as a director of the following
listed companies:
ITL Limited*
•
• WAM Research Limited*
• Clime Capital Limited*
* denotes current directorships
| 27
Directors’ Report
Andrew Stocks
Managing Director
Mr Stocks is a Mining Engineer with over twenty five 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.
Key Management Personnel
The following persons were key management personnel of Iron Road Limited during the financial year and until
the date of this report:
Mr Larry Ingle
Mr Lex Graefe
Larry Ingle
General Manager
Mr Ingle is a Geologist with over 25 years’ experience in a variety of mining, tunnelling, exploration, project
development and business improvement roles in Australia and southern Africa. He has held senior positions
with various global companies such as LHPC (JV), Barrick and Rio Tinto. Mr Ingle 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. Mr Ingle’s strong expertise in mining geology and experience
in project development is of immense value to Iron Road, particularly as the Company develops the Central Eyre
Iron Project (CEIP) in South Australia.
Lex Graefe
Chief Financial Officer
Mr Graefe has over 30 years of extensive management and commercial experience in the mining industry in
Australia, Africa and Asia. This 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 22 years until 2004, where he was the President Director of Rio Tinto Indonesia
following a term as General Manager Finance with Rio Tinto India and some 16 years with Rio Tinto’s iron ore
subsidiary Hamersley Iron.
28 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
Company Secretary
Graham 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 Director and Company Secretary of a number of ASX listed companies.
Key Area Managers
The following persons were key area managers of Iron Road Limited until the date of this report.
Peter Bartsch
Study Manager
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.
Aaron Deans
Project Manager
Mr Aaron Deans was appointed as Project Manager on 7 January 2013 and continues in office at the date of this
report.
Mr Deans is a Project & Construction Manager with over 25 years’ experience in all facets of the Mining and
Construction industry. Mr Deans’ most recent roles include Onshore Construction Manager of BHP Billiton’s $1.6
billion Macedon Gas Project, Mine Construction Lead (Definitive Phase Study) for the FAST joint venture at BHP
Billiton’s $4 billion RGP 6 mine project and Construction Manager (Owner’s team) for Worley Parsons on behalf of
Fortescue Metals Group’s $7 billion Heng Shan Expansion.
Previous experience spans Leighton Contractors, Rio Tinto and BHP Billiton including the nickel, iron ore and the
power generation sectors.
| 29
Directors’ Report
Milo Res
Geology Manager
Mr Res is a geologist, with approximately 30 years mining industry experience in Australia and Africa. He graduated
with a BSc (Hons) Geology degree from University of Pretoria and MSc Geology degree from Potchefstroom University
in South Africa.
During his career Mr Res has been involved in wide range of mining and exploration activities including gold, nickel
and iron ore. He was a key member of the Fortescue Metals Group Ltd team developing the Cloudbreak iron ore
mining project in the Pilbara and more recently actively participated in the Jack Hills magnetite/hematite mining and
development project for Crosslands Resources in mid-west region of Western Australia.
Laura Johnston
Regulations and Approvals Manager
Ms Johnston began her career with the Department of Mines and Energy in South Australia over 20 years ago and
specialised in providing advice and assistance to land owners, the resource sector and various stakeholders on
mining legislation.
A former Mining Registrar and Principal Advisor, Ms Johnston later consulted to numerous ASX listed resource
companies including Iron Road Limited for four years before joining as a full time employee in 2011.
30 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
Notes to the Consolidated Financial Statements
1.
Principal activity
The principal activity of the Group during the year was the exploration and evaluation of the Group’s Iron Ore holdings at both the Central Eyre Iron Project
(CEIP) and the Gawler Iron Project (GIP).
During the year, Iron Road Limited continued to advance its objective of becoming a premium supplier of iron concentrates to the market place. Significant
progress has been achieved at both the (CEIP) and (GIP).
The significant achievements of the group during the year were:
• Global mineral resource for CEIP was increased by 71% to 3.7Bt at a grade of 16% iron, of which 2.7Bt is in the Measured and Indicated category at a
grade of 15.7%. This places CEIP as the largest Measured and Indicated magnetite resource in Australia and the top 20 magnetite projects globally (by
tonnage).
• The Definitive Feasibility Study (DFS) continues to progress on schedule in all areas including mine site, infrastructure and port.
• Particular emphasis has been given to the evaluation of the Gawler Iron Project (GIP), with drilling finalised and further study on transportation, water
supply and treatment and export facilities well underway.
• A fully underwritten capital raising was launched in June 2013 and completed in July 2013 to raise $50.7 million (after costs) to complete the DFS and
fund the GIP beyond its current scoping study.
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:
Peter Cassidy (appointed 11th October 2012)
Andrew Stocks
Jerry Ellis
Leigh Hall (appointed 31st October 2012)
Julian Gosse
Ian Hume
Matthew Keegan (ceased to be a director 11th October 2012)
3.
Dividends
Ordinary shares
Options over
ordinary shares
7,568,686
2,915,938
284,000
400,000
591,000
5,151,203
3,600,036
-
-
500,000
-
2,500,000
-
-
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
4.
Operating and financial review
Information on the operations and financial position of the Group and its business strategies and prospects is set out in the review of operations and
activities on pages 42 to 43 of this Annual Report.
| 31
Directors’ Report
5.
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the financial year were as follows:
Contributed equity increased by $39,447,451 (from $60,659,503 to $100,106,954) as the result of a fully underwritten entitlement offer issued on 2 August
2012 and the exercise of options granted under the Iron Road Limited Employee Option Plan. Details of the changes in contributed equity are disclosed in
note 12 to the financial statements.
The net cash received from the increase in contributed equity was used principally to fund the continuation of the CEIP DFS, purchase land at the proposed
port site and undertake a scoping study for the GIP.
6.
Matters subsequent to the end of financial year
Iron Road Limited announced a fully underwritten non-renounceable entitlement offer on 13 June 2013 to provide $50,700,000 (after costs) to fund the
completion of the CEIP DFS and continue the scoping study for the GIP. The entitlement offer opened on 25 June 2013 and closed on 16 July 2013 with
173,044,538 new shares issued totalling $31,148,017.
The entitlement offer was fully underwritten by two of Iron Road Limited’s major shareholders, Sentient Global Resources Fund III,L.P and Sentient
Global Resources Fund IV,L.P. The shortfall of 117,923,914 new shares totalling $21,226,305 was issued to the underwriters subject to the underwriting
arrangements.
As a result of this entitlement offer, a total of 290,968,452 fully paid ordinary shares were issued by Iron Road Limited, increasing the total number of fully
paid ordinary shares on issue to 581,936,904.
7.
Likely developments on expected results
Likely developments in the operations of the Group and the expected results of those operations in future financial years have been included in the
Operating and Financial review.
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 reviewed its energy consumption and greenhouse gas
emissions for the reporting year, with both found to be below the reporting threshold as specified within the Energy Efficiency Opportunities Act 2006 and
the National Greenhouse and Energy Reporting Act 2007. The Group remains committed to reducing the energy consumption and greenhouse gas footprint
of its activities through the implementation of appropriate technologies wherever practicable.
9.
Remuneration report
The remuneration report sets out remuneration information for Iron Road Limited’s directors and key management personnel.
This report contains the following sections:
A. Directors and key management personnel disclosed in this report
B. Principles used to determine the nature and amount of remuneration
C. Use of Remuneration consultants
D. Details of remuneration
E. Service agreements
F. Share-based compensation
G. Additional information
The information provided in this remuneration report has been audited as required under section 308 (3C) of the Corporations Act 2001.
32 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
A. Directors and key management personnel disclosed in this report
Non-executive and executive directors
Peter Cassidy (appointed on 11th October 2012)
Andrew Stocks
Jerry Ellis AO
Leigh Hall AM (appointed 31st October 2012)
Julian Gosse
Ian Hume
Matthew Keegan (resigned 11th October 2012)
Other key management personnel
Name
Larry Ingle
Lex Graefe
Position
General Manager
Chief Financial Officer
B. 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 where deemed appropriate. The board of Iron Road Limited believes
the remuneration policy is 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 directors and other senior executives, was developed by the board. All executives (with the
exception of the Chief Financial Officer who is on a daily rate) 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 executive performance and comparable information from industry
sectors and other listed companies in similar industries.
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.
The executive directors and other senior executives receive a superannuation guarantee contribution required by the government, which is currently 9.25%
(from 1 July 2013) 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 board 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
$400,000 which was approved through the general meeting of shareholders held on 23 November 2012. 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.
Long term incentives
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 directors and executives to encourage the alignment of personal and shareholder interests. Where options are granted
they may have performance related vesting conditions (share price) or milestone related vesting conditions such as the completion of the DFS for the CEIP,
which must be met in order for the options to be exercised. Once vested, the options must be exercised prior to their expiry date (five years from issue).
Options are granted under the plan for no consideration and there are no participating rights or entitlements inherent in the options.
For details of directors and executives interests in options at year end, refer to note 15 in the financial statements. No market based performance
remuneration has been paid in the current year.
Share trading policy
The trading of shares issued to participants under the company’s option share plan is subject to and conditional upon compliance with the company’s
employee share trading policy. Executives are prohibited from entering into any hedging arrangements over unvested options under the company’s
employee option plan. The company would consider a breach of this policy as gross misconduct which may lead to disciplinary action.
| 33
Directors’ Report
Voting and comments made at the Group’s 2012 Annual General Meeting
Iron Road Limited received more than 97% of “yes” votes on its remuneration report for the 2012 financial year.
C. Use of remuneration consultants
The board seeks independent advice on remuneration matters for the key management personnel and non-executive directors. Such advisors are
appointed and directly engaged by the Chairman.
During the year the board engaged CRHR Consulting, a strategic human resources advisory business, to provide advice on the remuneration structure
for key management personnel, including amendment to the long term incentive plan. Under this engagement CRHR Consulting provided remuneration
recommendations as defined in section 9B of the Corporations Act 2001 and was paid $8,680 for these services. CRHR Consulting was also engaged to
provide support on a range of other remuneration and human resources related matters for fees totalling $13,720.
The following arrangements were made to ensure that the remuneration recommendations were free from undue influence:
• CRHR Consulting was engaged by and reported directly to the Chairman. The agreement for the provision of remuneration consulting services was
executed by the Chairman.
• The report containing the remuneration recommendations was provided by CRHR Consulting directly to the Chairman.
• CRHR Consulting was permitted to speak to management throughout the engagement to understand processes, practices and other business issues
and obtain management perspectives. However, CRHR Consulting was not permitted to provide any member of management with a copy of their draft
or final report that contained remuneration recommendations.
As a consequence, the board is satisfied that the recommendations were made free from undue influence from any member of the key management
personnel to whom the recommendations related and that all decisions were made by the board.
D. Details of remuneration
The following tables show details of the remuneration received by the directors and the key management personnel of the group for the current and
previous financial year.
There are no other executives who are required to have their remuneration disclosed in accordance with the Corporations Act 2001.
Short term employee benefits
Post
employment
benefits
Long term Share based
payments
benefits
Cash salary Non-monetary
and fees
$
benefits
$
Allowances
$
Superannuation
$
Long service
leave
$
Options**
$
Total
$
50,000
39,494
290,000
50,000
33,333
50,000
19,444
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,100
4,500
3,000
4,500
-
-
60,812
-
-
-
-
-
( 74,683)
-
-
-
50,000
39,494
302,229
54,500
36,333
54,500
1,750
-
-
21,194
290,000
320,067
39,520
48,333
-
-
26,100
25,657
42,955
-
-
-
446,908
345,724
2013
Directors
Julian Gosse
Peter Cassidy (appointed 11th October 2012)
Andrew Stocks
Jerry Ellis
Leigh Hall (appointed 31st October 2012)
Ian Hume
Matthew J Keegan (ceased to be a director
11th October 2012)
Other key management personnel
Larry Ingle*
Lex Graefe
Total compensation
1,142,338
39,520
48,333
91,607
103,767
( 74,683)
1,350,882
* In accordance with Iron Road Limited’s policy on employee relocation, Mr Ingle was paid an allowance for his relocation from Perth to Adelaide in August 2012.
** Remuneration in the form of options includes negative amounts for unvested options that expired during the year.
34 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
Short term employee benefits
Post
employment Share based
payments
benefits
2012
Directors
Andrew J Stocks
Jerry Ellis
Julian Gosse
Ian Hume
Matthew J Keegan
Other key management personnel
Larry Ingle
Lex Graefe (appointed 12 December 2011)
Cash salary Non-monetary
and fees
$
benefits
$
290,000
50,000
50,000
50,000
-
-
-
-
-
-
290,000
129,850
32,502
-
Allowances Superannuation Options**
$
$
$
Total
$
-
-
-
-
-
-
-
26,100
4,500
4,500
4,500
-
26,100
10,994
-
352,450
-
-
-
316,100
406,950
54,500
54,500
-
-
-
348,602
140,844
Total compensation
859,850
32,502
-
76,694
352,450
1,321,496
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed remuneration
2013
At risk - LTI*
2013
2012
2012
Directors
Julian Gosse
Peter Cassidy (appointed 11th October 2012)
Andrew Stocks
Jerry Ellis
Leigh Hall (appointed 31st October 2012)
Ian Hume
Matthew J Keegan (ceased to be a director 11th October 2012)
Other key management personnel
Larry Ingle
Lex Graefe (appointed 12 December 2011)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
96%
12%
-
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
4%
88%
-
-
-
-
-
* Since long term incentives are provided exclusively by way of options, the percentage disclosed also reflects the value of remuneration consisting of options,
based on the value of options expensed during the year. Where applicable, the expenses include negative amounts for expenses reversed during the year due to
failure to satisfy a vesting condition.
There were no cash bonuses relating to directors or key management personnel during the year.
| 35
Directors’ Report
E. Service agreements
The details of service agreements of the key management personnel of Iron
Road Limited are as follows:
Peter Cassidy, Chairman
• A chairman’s fee of $50,000 per annum plus GST, to be reviewed
annually by the board. No termination benefits are payable.
Andrew Stocks, Managing Director
• Annual base salary of $290,000, plus statutory superannuation, to be
reviewed annually by the board.
• No fixed term agreement. Payment of termination benefit by the
employer, other than for gross misconduct, includes any accrued
leave entitlements and superannuation which does not exceed the
maximum amount ascertained in accordance with the formula set out
in section 200G of the Corporations Act 2001.
Jerry Ellis, Non-executive Director
• Director’s fee of $50,000 per annum plus statutory superannuation,
to be reviewed annually by the board. No termination benefits are
payable.
Leigh Hall AM, Non-executive Director
• Director’s fee of $50,000 per annum plus statutory superannuation,
to be reviewed annually by the Board. No termination benefits are
payable.
Julian Gosse, Non-executive Director
• Director’s fee of $50,000 per annum plus GST, to be reviewed
annually by the board. No termination benefits are payable.
Ian Hume, Non-executive Director
• Director’s fee of $50,000 per annum plus statutory superannuation,
to be reviewed annually by the board. No termination benefits are
payable.
Larry Ingle, General Manager
• Annual base salary of $307,000 plus statutory superannuation, to be
reviewed annually by the board.
• No fixed term agreement. Payment of termination benefit by the
employer, other than for gross misconduct, includes any accrued
leave entitlements and superannuation 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
• Daily rate of $1,480 plus statutory superannuation to be reviewed
annually by the board.
• No fixed term agreement, no termination benefits payable.
36 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
F. Share-based compensation
Options are issued to directors and executives of Iron Road Limited as part of their remuneration to increase goal congruence between executives,
directors and shareholders.
Options exercised and expired during the year are as follows:
Share based compensation benefits (options)
Grant
date
Vesting
date
Number of
options
%
$
Number of
options
%
$
Number of
options
Exercised
Expired
Expiry/exercise
date
2008
2008
2008
2008
3,780,000
9,420,000
37 269,647
-
-
1,400,036
-
63
100
153,639
602,664
2,379,964
9,420,000
23/01/13
23/01/13
2013
Directors
Matthew Keegan
Andrew Stocks
When exercisable, each option is convertible into one ordinary share.
There were no options issued during the year, with 6,000,000 options vested as at 30 June 2013. The assessed fair value at grant date of options granted
to the individuals is allocated equally over the period from grant date to vesting date and the amount is included in the share based payment information in
note 24. Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield
and the risk-free interest rate for the term of the option.
Unissued ordinary shares of Iron Road Limited under option for directors and executives as at 30 June 2013 are as follows:
Date options granted
Expiry date
Vesting date
Exercise price
5th August 2008
23rd December 2009
23rd December 2009
23rd December 2009
23rd December 2009
25th July 2011
6th August 2013
15th December 2014
15th December 2014
15th December 2014
15th December 2014
25th July 2016
On issue
On issue
On issue
On issue
On issue
On issue
$
$
$
$
$
$
0.3426
0.1926
0.2426
0.2926
0.3426
0.9926
Number under
option
Vested and
exercisable
3,000,000
625,000
625,000
625,000
625,000
500,000
6,000,000
3
3
3
3
3
3
There are a further 300,000 unissued ordinary shares of Iron Road Limited under option held by non-key management personnel.
Options granted under the plan carry no dividend or voting rights. No option holder has any right under the options to participate in any other share issue
of Iron Road Limited.
| 37
Directors’ Report
The amounts paid per ordinary share by each director and other key management personnel on the exercise of options at the date of exercise were as
follows:
Exercise date
Number of ordinary shares
issued on exercise of options
Value at
exercise date
Value Paid
Amount paid
per share
23 January 2013
1,400,036
$ 96,882
$ 269,647
$ 0.1926
No amounts are unpaid on any shares issued on the exercise of options.
G. Additional information
No market based performance bonuses have been paid to key management personnel during the financial year. As detailed within Section F: Share-
based compensation, options can be issued to directors and executives as part of their remuneration to align their interest to that of Iron Road Limited’s
shareholders.
The table below sets out information about the Group’s earnings and movements in shareholder wealth over the last 5 years:
30-Jun-13
$
30-Jun-12
$
30-Jun-11
$
30-Jun-10
$
30-Jun-09
$
794,279
(5,469,066)
0.170
457,306
( 3,239,233)
0.305
116,133
( 2,076,551)
0.840
95,402
( 11,299,132)
0.590
199,355
( 4,604,591)
0.175
Revenue
Loss before tax
Share price at 30 June
This is the end of the audited remuneration report.
38 | A n n u a l R e p o r t 2 0 1 3
Directors’ Report
10.
Directors meetings
The number of meetings of the company’s board of directors held during the year ended 30 June 2013 and the numbers of meeting attended by each
director were:
Directors
Peter Cassidy
Julian Gosse
Ian Hume
Jerry Ellis
Leigh Hall
Matthew Keegan
Andrew Stocks
Director meetings
A
6
8
7
9
4
3
9
B
6
9
9
9
4
3
9
A = Number of meetings attended B = Number of meetings held during the time the director held office
11.
Shares under option
At the date of this report, there were 3,300,000 unissued ordinary shares of Iron Road Limited under option.
Date options granted
Expiry date
Exercise price
Number under
option
Vested and
exercisable
23rd December 2009
23rd December 2009
23rd December 2009
23rd December 2009
25th July 2011
24th August 2011
24th August 2011
24th August 2011
15th December 2014
15th December 2014
15th December 2014
15th December 2014
25th July 2016
24th August 2016
24th August 2016
24th August 2016
$0.1926
$0.2426
$0.2926
$0.3426
$0.9926
$0.9926
$1.2426
$1.4926
625,000
625,000
625,000
625,000
500,000
100,000
100,000
100,000
3,300,000
3
3
3
3
3
3
6
6
Movement in shares under option during the reporting period:
Balance at the beginning of the year
Movement of share options during the financial year
Exercise of unlisted options at $0.1926
Forfeiture of unlisted options at $0.3426
Forfeiture of unlisted options at $0.1926
Total number of options outstanding at 30 June 2013
Movement since the end of financial year
Forfeiture of unlisted options at $0.3426
Total number of options outstanding as at the date of this report
Number of options
22,925,000
(4,825,036)
(4,920,000)
(6,879,964)
6,300,000
(3,000,000)
3,300,000
| 39
Directors’ Report
Shares issued on exercise of options
The following ordinary shares of Iron Road Limited were issued to directors and key management personnel during the year ended 30 June 2013 on the
exercise of options. No further shares have been issued since that date. No amounts are unpaid on any shares.
2013
Exercise date
Number of ordinary shares issued
on exercise of options
Value at
exercise date
Value Paid
Amount paid
per share
Matthew Keegan
23 January 2013
1,400,036
$96,882
$269,647
$0.1926
* The value at exercise date has been determined as the intrinsic value at that date
No options were granted to directors or any of the five highest remunerated officers of the Group during or since the end of the financial year.
12.
Proceedings on behalf of the 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 the financial year, Iron Road Limited paid an insurance premium to insure the directors and officers of the Group and its controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their
capacity as officers of entities in the group and any other payments arising from liabilities incurred by the officers in connection with such proceedings.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their
position or of information to gain advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
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
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience
with the Group are important. The board of directors is satisfied that the provision of non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001 and none of the services undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers (Australia)) for audit and non-audit services provided during the year are
set out in note 16.
15.
Auditors 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 41.
Signed in accordance with a resolution of the directors, and on behalf of the board by:
Andrew Stocks
Managing Director
25 September 2013
40 | A n n u a l R e p o r t 2 0 1 3
| 41
Operating and Financial Review
Company Strategy and Operating Activities
Iron Road Limited was established in 2008 to capitalise on the growing global demand and resulting higher prices for iron ore. The global seaborne trade in
iron ore grew from 444 million tonnes in the year 2000 to 832 million tonnes in 2008 when the company was formed and has continued growing since then
reaching 1,113 million tonnes in 2012. Over the same period Australian Fines iron ore prices have moved from US$18 per tonne in 2000 to US$80 per tonne in
2008 and are now above US$120 per tonne on a Free On Board (FOB) basis. This six-fold increase in prices in just over 10 years, coupled with the consistently
growing demand has made iron ore deposits historically considered uneconomic, worthy of reassessment in the light of the changed market conditions.
Following an initial broader review of opportunities, the company narrowed its principal focus to the large magnetite-gneiss deposits on the Central Eyre
Peninsula, now known as the Central Eyre Iron Project (CEIP) approximately 30 kilometres south east of the regional centre Wudinna.
There are a number of key advantages associated with the CEIP. The project will produce a concentrate product at around 67% Fe to be used as a blended
feed with Direct Shipped Ore (DSO) fines products (generally hematite) into steelmakers sintering plants to produce sinter for steelmaking. With the increased
production volumes and increasing age of existing DSO mines from the traditional producers and the lower grades from the new DSO entrants we are
expecting to see a continuation of the gradual but sustained decline in the overall average iron grade of DSO fines products. This has a deleterious effect on
the productivity and costs for the steelmakers. The addition of higher graded concentrates such as the CEIP 67% Fe product can offset those negative effects
for the steelmakers and so such products are expected to be increasingly sought after over time. As such, the CEIP product should be seen as complementary
and value adding to the traditional DSO fines ores rather than being in direct competition with them. Being a processed ore, the CEIP concentrate will maintain
its grade throughout the project life and will not be subject to grades reducing over time.
Further, the nature of the magnetite-gneiss ore at CEIP is different to most Australian banded iron formation (bif) magnetites. The physical characteristics
of the ore in the CEIP deposit means that it separates fairly readily at a grind size of around 106 microns compared to the usual 30 to 40 microns for most
bif magnetites. This gives rise to two key advantages. Firstly, the production process for magnetite-gneiss is less energy intensive than for bif magnetites,
giving rise to lower production and capital costs for the producer. However, more importantly, magnetite-gneiss concentrates can be used directly in the
sinter plant, whereas bif magnetites must be pelletised before they can be used by the steelmaker, adding significantly to costs. So both in production and
in use by the steelmaker, the CEIP concentrates enjoy strong competitive advantage over the bif magnetites produced or being developed by most other
Australian magnetite producers.
Another major advantage of the CEIP is that the size of the deposit allows for the establishment of a large scale long life project which supports the
investment in the supporting infrastructure as well as providing a sustained return to investors in the project. The initial exploration target of 2.8–5.7 billion
tonnes has already yielded 3.7 billion tonnes of resources with 2.7 billion tonnes in the Measured and Indicated categories making it the largest Measured +
Indicated magnetite resource in Australia. The remaining exploration target (above the 3.7 billion tonnes) has now been re-assessed as 8-17 billion tonnes
grading from 14% to 20% Fe.
Finally, while no suitable infrastructure currently exists in the area, the situation and conditions are relatively favourable for establishing such infrastructure.
The mine site is approximately 150 kilometres from a suitable port location at Cape Hardy where 220,000 dead weight tonnes (DWT) cape size vessels can be
berthed only 1,200 metres from shore in the protected waters of the Spencer Gulf. The rail route is much shorter than the rail routes of the major Australian
and Brazilian producers and the area does not suffer from periodic cyclonic conditions in the way that the Pilbara region does.
A prefeasibility study completed in 2011 demonstrated the viability of a mining and beneficiation operation of premium iron ore concentrate for export and
a DFS was commenced late that year.
The DFS has progressed well in the current financial year, with studies incorporating mining, ore processing, rail and concentrate export facilities. May 2013
saw a resource upgrade to 3.7 billion tonnes, 2.7 billion of which is in the Measured and Indicated categories. This supports a potential operating life of the
mine in excess of thirty years.
The development of the CEIP will be a significant undertaking, incorporating a major mining and processing operation, a 150 kilometres railway and the deep
water port, as well as power, water, accommodation and other infrastructure to support the operations and workforce. The company will need to align itself
with strong industrial partners and off-takers in order to secure the necessary financing for such a substantial project and substantial efforts from the board
and senior management are now being directed to those objectives.
While the Company remains confident of the underlying robustness of the CEIP and its ultimate successful development, the volatile capital and debt markets
currently being experienced means that the timing of any such development remains subject to some uncertainty until funding is fully secured.
42 | A n n u a l R e p o r t 2 0 1 3
Operating and Financial Review
Bearing that in mind the Company has also begun work on assessing the much smaller Gawler Iron Project (GIP), located further to the north in South Australia,
200 kilometres west of Coober Pedy. At GIP, Iron Road is evaluating the feasibility of a small scale 1-2 mtpa iron ore concentrate operation, located in close
proximity to existing transport infrastructure linked to a number of export ports. The Stage III drilling program was carried out during the second quarter
and results of the scoping study are expected to be available during the fourth quarter of 2013. If viable, GIP may provide the Group with a much lower cost
development option, which would then provide it with sufficient ongoing working capital to continue its day to day activities without drawing on further
funding from shareholders.
Desktop studies are also being carried out to examine alternative fall-back options in the event that GIP does not meet current expectations.
Operating results for the year
Currently, Iron Road Limited’s principal activities are exploration and evaluation which are funded by equity raised on Australian capital markets. The Company
generated no income from operating activities, however interest income of $794,279 was generated in 2013 ($457,306 in 2012) from equity contributions
being held in interest bearing deposits until required to fund activities. This increase is attributable to the successful outcome of the $40 million (before
costs) entitlement offer announced in August 2012.
The operating loss after income tax of the group for the year ended 30 June 2013 increased by 90% to $4,829,389 ($2,542,228 in 2012). Underpinning the
increase in expenses was the impairment of exploration expenses in relation to the GIP. Iron Road’s accounting policy is to capitalise but impair these
expenses until a JORC compliant resource is established. These expenses increased from $691,489 in 2012 to $1,700,787 in 2013 as a result of increase drilling
and scoping activities performed on the GIP. Rent and employee expenses also increased in 2013 as Iron Road Limited’s presence in Adelaide (South Australia)
expanded following the opening of the office at 30 Currie Street in early 2012.
Shareholder returns per share were consistent with prior year (2013: -1.82 cents, 2012: -1.80 cents) as losses increased in line with the weighted average
number of shares on issue. Refer note 23.
Changes in financial position
The company’s net assets increased by 64%, compared with the previous year which is largely attributable to the current years capitalisation of $28,015,880
of exploration and evaluation expenditure on the CEIP. Capital purchases increased by 484% compared with the prior year, due largely to the acquisition of
approximately 1,100 hectares of land at Cape Hardy on the east coast of the Eyre Peninsula for a proposed deep water port facility. There was a doubling of
trade and other payables due to higher ongoing activity levels and late receipt of invoices at year end.
Risk management
Mining project development contains elements of significant risk. The successful development of Iron Road’s projects will depend in part upon satisfactory
world economic conditions and the flow on impacts on the consumption of steel throughout the world, but most directly in China and the other developing
nations in Asia. This will in turn impact the levels of demand for iron ore and the prices that will be realised. Prices will also be impacted by other
macroeconomic factors such as expectations regarding inflation, interest rates, exchange rates and general global economic conditions.
Successful development of the CEIP or GIP will also require a successful conclusion to the current studies, in conjunction with obtaining all the necessary
regulatory approvals for implementation.
Once Iron Road has successfully completed the feasibility studies, it will still be required to raise significant amounts of additional capital and to seek suitable
development partners to help fund the development of the CEIP and or the GIP. Prevailing economic conditions can impact on the availability of debt and
equity funding that may be required to support the business. Iron Road’s development may be affected by availability of funding which would impact on its
ability to commence operations in the expected time frame and/or at its current levels.
The board is responsible for ensuring that risks and opportunities are identified on a timely basis and that activities are aligned with such risks and
opportunities. The Company 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 address the risks identified by the board. These
include the ongoing assessment of corporate strategy through regular board meeting discussions to ensure that company plans remain on track and
appropriately focused to ensure that risks to the achievement of corporate objectives are being properly addressed and the implementation of board
approved operating plans and budgets and board monitoring of progress against these budgets.
| 43
Corporate Governance Statement
The Group 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 practices 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.
Due to the small size of the board and of the company, the board does not think that it is necessary to formally document the roles of the board and
management as these roles are 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 & 2.2
Notification of Departure:
The board does not have a majority of independent directors, nor is the chairman an independent director.
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. On 22 February 2013 the board adopted a formal charter relevant to the
specific functions of a remuneration and nomination committee.
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.
44 | A n n u a l R e p o r t 2 0 1 3
Corporate Governance Statement
Principle 2 Recommendation 2.5
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.
Principle 3 Recommendation 3.4 & 3.5
Notification of Departure:
There are as yet no measurable objectives or reporting systems in place in respect of the diversity policy that has been adopted.
Explanation for Departure:
In light of the very small number of employees currently engaged by the company, it is considered that no discernible benefits would be gained by establishing
such measures, in particular at this early stage of the company’s development.
Principle 4 Recommendation 4.1, 4.2, 4.3
Notification of Departure:
There is no separate audit committee.
Explanation for Departure:
The company’s financial statements are prepared by the chief financial officer 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 development.
Principle 7 Recommendation 7.1 & 7.2
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 & 8.2
Notification of Departure:
The full board carries out the role of a remuneration and nomination committee. On 22 February 2013 the board adopted a formal charter relevant to the
specific functions of a remuneration and nomination committee.
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.
| 45
Consolidated Statement of Comprehensive Income
For the year ending 30 June 2013
Revenue from continuing operations
Expenses
Depreciation
Employee benefits expense
Impairment of exploration expenses
General expenses
Professional fees
Travel and accommodation
Marketing
Rent
Administration costs
Loss before income tax
Income tax benefit
Loss for the year
Other comprehensive loss for the year
Notes
2013
$
2012
$
4
5
5
5
794,279
457,306
( 137,059)
( 67,033)
( 1,885,284)
( 1,551,107)
( 1,700,787)
( 691,489)
( 303,343)
( 798,532)
( 246,165)
( 502,381)
( 459,968)
( 229,826)
( 69,628)
( 555,265)
( 216,413)
( 406,412)
( 70,049)
( 69,145)
( 5,469,066)
( 3,239,233)
6
639,677
697,005
( 4,829,389)
( 2,542,228)
-
-
Total comprehensive income for the year attributable to owners of Iron Road Limited
( 4,829,389)
( 2,542,228)
Loss per share for loss attributable to the ordinary equity holders of the company:
Basic loss per share (cents)
Diluted loss per share (cents)
23(a)
23(a)
Cents
( 1.82)
( 1.82)
Cents
( 1.80)
( 1.80)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Financial Statements.
46 | A n n u a l R e p o r t 2 0 1 3
Consolidated Statement of Financial Position
As at 30 June 2013
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation expenditure
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
Notes
2013
$
2012
$
7
8
9
9
10
10
11
12
13
13
6,909,986
6,499,620
2,372,132
9,282,118
835,982
7,335,602
9,225,120
1,580,868
75,868,276
47,852,396
85,093,396
49,433,264
94,375,514
56,768,866
5,320,513
2,584,279
320,355
5,640,868
243,517
2,827,796
202,745
-
5,843,613
2,827,796
88,531,901
53,941,070
100,106,954
60,659,503
4,745,896
4,773,127
(16,320,949)
(11,491,560)
88,531,901
53,941,070
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.
| 47
Consolidated Statement of Changes in Equity
For the year ending 30 June 2013
Attributable to owners of Iron Road Limited
Contributed
Equity
Accumulated
losses
Reserves
Total Equity
Note
$
$
$
$
Balance at 1 July 2011
27,141,875
( 8,949,332)
4,298,799
22,491,342
Loss for the year as reported in the 2012 financial statements
Total Comprehensive Income for the year
Transactions with owners in their capacity as owners:
Contributions to equity net of transaction costs
Share based payments
-
-
( 2,542,228)
( 2,542,228)
-
-
( 2,542,228)
( 2,542,228)
33,517,628
13
-
33,517,628
-
-
-
-
33,517,628
474,328
474,328
474,328
33,991,956
Balance at 30 June 2012
12
60,659,503
( 11,491,560)
4,773,127
53,941,070
Loss for the year
Total Comprehensive Income for the year
-
-
( 4,829,389)
( 4,829,389)
-
-
( 4,829,389)
( 4,829,389)
Transactions with owners in their capacity as owners:
Contributions to equity net of transaction costs
Share based payments
12
13
39,447,451
-
39,447,451
-
-
-
-
39,447,451
( 27,231)
( 27,231)
(27,231)
39,420,220
Balance at 30 June 2013
12,13
100,106,954
( 16,320,949)
4,745,896
88,531,901
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.
48 | A n n u a l R e p o r t 2 0 1 3
Consolidated Statement of Cash Flows
For the year ending 30 June 2013
Cash flows from operating activities
Research and development tax refund
Payments to suppliers and employees (inclusive of GST)
Interest received
Other
Notes
2013
$
2012
$
-
697,006
(4,453,446)
(3,516,567)
795,214
-
429,366
(166,423)
Net cash outflow from operating activites
22
(3,658,232)
(2,556,618)
Cash flows from investing activities
Payments for exploration and evaluation
Payments for property and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares/options
Share issue transaction costs
Net cash inflow from financing activities
Net 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
(27,288,688)
(22,913,165)
(7,781,310)
(1,530,455)
(35,069,998)
(24,443,620)
40,908,867
33,838,578
(1,770,271)
(464,323)
39,138,596
33,374,255
410,366
6,374,017
6,499,620
125,603
7
6,909,986
6,499,620
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.
| 49
Notes to the Consolidated Financial Statements
For the year ending 30 June 2013
1. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Iron Road
Limited and its subsidiaries.
(a) Basis of preparation of historical financial information
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board and the Corporations Act 2001. Iron Road Limited is a for-profit entity for the purpose of preparing the financial
statements.
(i) Compliance with IFRS
The consolidated financial statements of Iron Road Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012 affected any of
the amounts recognised in the current period or any prior period and is not likely to affect future periods.
(iii) Historical cost convention
These financial statements have been prepared under the historical cost convention.
(iv) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in
the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statement are disclosed in note 1(t).
(v) Changes to presentation – classification of general expenses
Having regard to AASB 101 Presentation of Financial Statements, general expenses have been reclassified in 2013 such that each material class of items of
a similar nature or function are presented separately. The comparative financial information for 2012 has been amended to be consistent with the current
year disclosure.
(vi) Going concern
The directors have prepared the financial statements on a going concern basis which contemplates continuity of normal business activities and the realisation
of assets and settlement of liabilities in the normal course of business. Whilst the Group incurred a net loss of $4,829,389 for the year (2012: $2,542,228), it
had cash and cash equivalents of $6,909,986 (2012: $6,499,620) at balance date and had commenced a capital raising (in June 2013 and finalised in July 2013)
to raise a further amount of $50,700,000 (as detailed in note 21). Management and the directors believe this level of cash reserves will be sufficient to cover
expected expenditure in the next twelve months.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Iron Road Limited as at 30 June 2013 and the results of all
subsidiaries for the year then ended. Iron Road Limited and its subsidiaries together are referred to in this financial 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.
The acquisition method of accounting is used to account for business combinations by the group.
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.
50 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating
decision maker is responsible for allocating resources and assessing performance of the operating segment.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the
entity operates (‘the functional currency’).The consolidated financial statements are presented in Australian dollars, which is Iron Road Limited’s functional
and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss.
(e) Revenue recognition
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable
amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as
interest income.
(f) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries
where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition
of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax
balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Iron Road Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities
are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case, tax is also recognised in other comprehensive income or directly in equity.
(g) Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
| 51
Notes to the Consolidated Financial Statements
(h) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, 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.
(i) Investments and other financial assets
(i) Classification
The group classifies its financial assets as loans and receivables. Management determines the classification of its investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included
in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets. Loans and
receivables are included in trade and other receivables (note 8) in the balance sheet.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has
transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the group measures a financial asset at its fair value plus, transaction costs that are directly attributable to the acquisition of the
financial asset.
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Impairment
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result
of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate,
the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group
may measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised, the reversal of the previously recognised impairment loss is recognised in profit or loss. Impairment testing of trade receivables
is described in note 1(g).
(j) Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within
12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest
method.
(k) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months after
the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period
and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised
in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees
render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made
52 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields
at the end of the reporting period on government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least
twelve months after the reporting date, regardless of when the actual settlement is expected to occur.
(iii) Share-based payments
Share-based compensation benefits are provided to employees through the Iron Road Limited Employee Option Plan. Information relating to this scheme is
set out in the share based payments note 24.
The fair value of options granted under the Iron Road Limited Employee Option Plan is recognised as a share based payments expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance
conditions and the impact of any non-market vesting conditions.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of
each period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises
the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(l) Exploration and evaluation expenditure
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.
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 phase. Expenditure incurred prior to the identification of a JORC
compliant resource is capitalised and subsequently impaired.
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.
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.
(m) Contributed equity
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.
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares, and
the weighted average number of ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
•
•
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
| 53
Notes to the Consolidated Financial Statements
(n) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority.
In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or
payable to the taxation authority, are presented as operating cash flows.
(o) Leases
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.
(p) Provisions
Provisions including make good obligations are recognised when the group has a present 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’s best estimate of the expenditure required to settle the present obligation at the end of the
reporting period. The discount rate used to determine the present value is a pre-tax rate that 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.
(q) Property, plant and equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable
to the acquisition of the items.
Subsequent costs are included in the assets 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 derecognised when replaced. All repairs and maintenance are charged to profit and loss during the reporting period in which they
are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives as follows:
• Computer equipment 3-4 years
• Office equipment 3-20 years
• Plant and equipment 3-20 years
• Motor vehicles 5-10 years
In the case of leasehold improvements, the allocation of cost is over the term of the lease. The assets’ residual values and useful lives are reviewed and
adjusted if appropriate at the end of each reporting period.
An 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(g)).
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.
54 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
(r) Parent entity financial information
The financial information for the parent entity, Iron Road Limited, disclosed in note 25 has been prepared on the same basis as the consolidated financial
statements, except as set out below.
(i) Investments in subsidiaries, associates and joint ventures.
Investments in subsidiaries are accounted for at cost in the financial statements of Iron Road Limited.
(ii) Tax consolidation
Iron Road Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Iron Road Limited,
and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each
entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Iron Road
Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
(s) Adoption of new and revised accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2013 reporting periods and have not been early
adopted by the group. The group’s assessment of the impact of these new standards and interpretations is set out below.
(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7 Amendments to Australian
Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of
AASB 9 and Transition Disclosures (effective from 1 January 2015)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not
applicable until 1 January 2015 but is available for early adoption. There will be no impact on the group’s accounting for financial liabilities, as the new
requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the group does not have any such
liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed.
The group has not yet decided when to adopt AASB 9.
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate
Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from
the Consolidation and Joint Arrangements Standards and AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other
Amendments (effective 1 January 2013)
In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated financial
statements and associated disclosures.
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12
Consolidation – Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic
entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities.
It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly
influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its
returns. There is also new guidance on participating and protective rights and on agent/principal relationships. The Group does not expect the new standard
to have an impact on accounting for its subsidiaries.
AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements,
but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint
arrangement will be classified as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to
proportionately consolidate will no longer be permitted. Parties to a joint operation will account for their share of revenues, expenses, assets and liabilities
in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share
joint control. There are no joint venture arrangements in place at 30 June 2013 and the impact of the standard shall be assessed should a joint venture
arrangement eventuate.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements
currently found in AASB 127 and AASB 128. Application of this standard by the Group will not affect any of the amounts recognised in the financial statements,
but will impact the type of information disclosed in relation to the Group’s investments.
| 55
Notes to the Consolidated Financial Statements
Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of
ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a “partial disposal” concept. The Group
is still assessing the impact of these amendments. The Group will adopt the new standards from their operative date. They will therefore be applied in the
financial statements for the annual reporting period ending 30 June 2014.
(iii) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)
AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The group has yet to determine
which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any,
of the new rules on any of the amounts recognised in the financial statements. However, application of the new standard will impact the type of information
disclosed in the notes to the financial statements. The group will adopt the new standard from its operative date, which means that it will be applied in the
annual reporting period ending 30 June 2014.
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods
and on foreseeable future transactions.
(t) Critical accounting estimates and judgements
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 of assets and liabilities within
the next financial year are discussed below.
Recoverability of exploration and evaluation assets
The group’s accounting policy requires management to make certain assumptions as to future events and circumstances. Exploration and evaluation costs
are carried forward based on the accounting policy set out in note 1(l). Should development not be possible, or the existence of revenues does not allow for
economic development, amounts recorded may require impairment in future periods.
Income taxes
The group is subject to income taxes in Australia. Significant judgement is required in determining the 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 estimates its tax
liabilities based on the group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
2. Financial risk management
Overview
The Group’s activities expose it to a variety of financial and market risks (including interest rate risk and price risk), credit risk and liquidity risk. The Group’s
overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group.
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.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial asset fails to meet its contractual obligations and arises
principally from the Groups receivables from customers and cash and cash equivalents.
56 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. There are no significant concentrations of credit risks, whether
through exposure to individual customers or specific industry sectors. The group’s maximum exposure to credit risk at the reporting date was:
Financial assets
Cash and cash equivalents
Trade and other receivables
2013
$
2012
$
6,909,986
6,499,620
2,372,132
835,982
9,282,118
7,335,602
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:
Counterparties without external credit rating:
Financial assets with no default in the past
Cash at bank and short term deposits
AA-
A
2013
$
2012
$
2,372,132
835,982
6,909,223
6,497,100
763
2,520
6,909,986
6,499,620
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.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of
financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
There were no borrowing facilities in place during the current or prior year.
| 57
Notes to the Consolidated Financial Statements
The following are the contractual maturities of undiscounted financial liabilities, including estimated interest payments and excluding the impact of netting
agreements:
Contractural maturities of financial liabilities
Less than
6 months
6-12
months
Between 1
Between 2
and 2 years and 5 years
Over 5
years
Total
contractual
cash flows
Carrying
amount
At 30 June 2013
Trade and other payables
Total non-derivatives
At 30 June 2012
Trade and other payables
Total non-derivatives
There are no derivative financial instruments.
5,320,513
5,320,513
2,584,279
2,584,279
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,320,513
5,320,513
5,320,513
5,320,513
2,584,279
2,584,279
2,584,279
2,584,279
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and 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. The following market risk exposures have been assessed:
(i) Currency risk
The Group operates in Australian dollars with few and low value transactions in other currencies. Such transactions present immaterial currency risk.
(ii) Interest rate risk
Exposure arises from assets bearing variable interest rates. The Group intends to hold fixed rate assets to maturity, hence interest rate risk is considered
unlikely to be material.
Sensitivity Analysis
If the interest rates had weakened/strengthened by 1% at 30 June 2013, there would be no material impact on the statement of comprehensive income. There
would be no effect on the equity reserves other that those directly related to the statement of comprehensive income movements (2012- nil).
(iii) Price Risk
Changes in commodity prices may impact the Group’s projected cash flows in future years, and may impact the assessment of the carrying value of its assets.
However, given the company is not yet in production, changes in commodity prices do not currently impact the Group’s profit or loss or its cash flows.
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.
3. Segment information
The Group does not have any customers, and all the Group’s assets and liabilities are located within Australia. The Group does not have any operating
segments with discrete financial information.
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.
58 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
4. Revenue
Revenue from continuing operations
Interest income
5. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Computer equipment
Office equipment
Motor vehicles
Total depreciation
Employee benefits expense
Defined contribution superannuation expense
Share based payments expense
Directors fees
Salaries and wages
Other employee benefits expense
Total employee benefits expense
Impairment of exploration expenses
Exploration expenditure written off during the year*
* Exploration expenditure relating to Gawler and Windarling projects
2013
$
2012
$
794,279
794,279
457,306
457,306
2013
$
37,999
58,800
28,170
12,090
137,059
133,913
(27,231)
242,271
1,383,040
153,292
2012
$
26,351
31,444
3,016
6,222
67,033
160,628
474,328
150,000
635,348
130,803
1,885,284
1,551,107
1,700,787
691,489
| 59
Notes to the Consolidated Financial Statements
6. Income tax
(a) Income tax benefit
Current tax benefit
Deferred tax expense
(b) Reconciliation of income tax benefit to prima facie tax
Loss from continuing operations before income tax benefit
Tax at the Australian tax rate of 30% (2012: 30%)
Tax effect of amounts which are not deductible in calculating taxable income:
Share based payments
Sundry
Research and development tax credit
Prior year adjustment
Current year tax losses not recognised
Income tax benefit
(c) Tax expense recognised in equity
Deferred tax credited directly to equity
(d) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30%
2013
$
2012*
$
(1,172,268)
(697,005)
532,591
(639,677)
-
(697,005)
2013
$
2012*
$
(5,469,066)
(3,239,233)
(1,640,720)
(971,770)
(8,169)
1,640
(6,529)
(1,172,268)
94,098
2,085,742
(639,677)
2013
$
532,591
2013
$
7,398,675
2,219,603
142,298
30
142,328
(697,005)
695,580
133,862
(697,005)
2012*
$
-
2012*
$
446,203
133,861
60 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
(e) Deferred tax assets and liabilities
The balance of deferred tax assets comprises temporary differences attributable to:
Tax losses
Business related costs
Accrued expenses
Total deferred tax assets
The balance of deferred tax liabilities comprises temporary differences attributable to:
Accrued income
Exploration expenditure
Total deferred tax liabilities
Net deferred tax assets
Deferred tax assets not recognised
Net deferred tax assets
2013
$
2012*
$
24,149,237
14,181,305
575,483
163,413
162,050
81,755
24,888,133
14,425,110
2013
$
2012*
$
8,319
8,599
22,660,212
14,282,650
22,668,531
14,291,249
2,219,603
(2,219,603)
-
133,861
(133,861)
-
* 2012 Income tax disclosures have been restated to align with the 2012 tax return. An adjustment of $21,377,295 was made to 2012 carried forward tax losses to reflect
additional deductible exploration expenditure. As no deferred tax asset was recognised, the above adjustment has not impacted tax expense or deferred tax assets
or liabilities recorded in the prior year.
A net deferred tax asset of $2,219,603 (2012: $133,861) has not been recognised 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.
| 61
Notes to the Consolidated Financial Statements
7. Current assets - Cash and cash equivalents
Cash and cash equivalents
Cash at bank and in hand
Fixed term deposits
2013
$
2012
$
2,637,578
2,622,812
4,272,408
3,876,808
6,909,986
6,499,620
The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows:
Balance per consolidated statement of cashflows
6,909,986
6,499,620
Cash at bank earns a floating interest rate based on the at call daily rate. Fixed term deposits are held from one to six months depending on the cash
requirements of the business. As at 30 June 2013, $2,000,000 was held on deposit for 30 days and $2,000,000 was held on deposit for 3 months.
A term deposit for $272,408 is also held as security for the corporate credit card facility.
Risk exposure
The Groups exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the end of the reporting period is the carrying amount
of each class of cash and cash equivalent mentioned above.
8.
Current assets - Trade and other receivables
Research and development tax refund
GST receivable
Interest receivable
Prepayments
Other receivables
2013
$
2012*
$
1,172,268
1,079,972
27,729
54,727
37,436
-
726,988
28,664
56,170
24,160
2,372,132
835,982
* The comparative financial information for 30 June 2012 has been amended to be consistent with the current year disclosure.
As at 30 June 2013, other receivables that were past due or impaired were nil (2012: nil).
Risk exposure
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. Refer to note 2
for more information on the risk management policy of the Group and the credit quality of the Group’s trade receivables.
62 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
9.
Non-current assets
Property plant and equipment
Reconciliations of the carrying amounts of plant and equipment:
At 30 June 2011
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2012
Opening net book value
Additions
Depreciation charged
Balance at 30 June 2012
At 30 June 2012
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2013
Opening net book value
Additions
Depreciation charged
Balance at 30 June 2013
At 30 June 2013
Cost
Accumulated depreciation
Net book value
Plant and
Land and
buildings equipment
Computer
equipment
Office
equipment
Motor
vehicles
Total
22,000
69,463
26,350
21,449
24,742
164,004
-
(11,653)
(10,526)
(17,087)
(7,294)
(46,560)
22,000
57,810
15,824
4,362
17,448
117,444
22,000
57,810
15,824
4,362
17,448
117,444
1,199,545
100,782
156,329
38,438
35,364
1,530,458
-
(26,351)
(31,444)
(3,016)
(6,222)
(67,033)
1,221,545
132,241
140,709
39,784
46,590
1,580,868
1,221,545
170,244
182,678
59,886
60,105
1,694,457
-
(38,003)
(41,969)
(20,102)
(13,515)
(113,589)
1,221,545
132,241
140,709
39,784
46,590
1,580,868
1,221,545
132,241
140,709
39,784
46,590
1,580,868
7,201,079
132,724
248,576
194,197
4,734
7,781,310
-
(37,999)
(58,800)
(28,170)
(12,090)
(137,059)
8,422,624
226,966
330,485
205,810
39,234
9,225,120
8,422,624
302,968
431,254
254,083
64,839
9,475,768
-
(76,002)
(100,769)
(48,272)
(25,605)
(250,648)
8,422,624
226,966
330,485
205,811
39,234
9,225,120
| 63
Notes to the Consolidated Financial Statements
Exploration and evaluation expenditure
Opening balance
Tenement acquisitions during the period
Additions during the period
Impairment of exploration expenses
Closing balance
2013
$
2012
$
47,852,396
24,939,230
-
1,150,000
29,716,667
22,454,655
(1,700,787)
(691,489)
75,868,276
47,852,396
Recoverability of the carrying amount of the exploration and evaluation asset is dependent on successful development and commercial exploitation or sale
of the CEIP and GIP areas of interest.
10. Current liabilities
Trade and other payables
Trade payables
Accruals
Other payables
Total trade and other payables
Provisions
Employee benefits
Drilling program compensation provision
Total provisions
2013
$
2012
$
3,265,547
1,595,754
2,054,134
987,914
832
611
5,320,513
2,584,279
2013
$
2012
$
220,691
99,664
320,355
143,517
100,000
243,517
Drilling program compensation provision
Iron Road Limited has committed to providing financial compensation to land holders in the event of crop disturbance in relation to drilling activities. The
Group anticipates compensation to be settled within 12 months and no additional provision are expected to be raised as resource drilling activities for the
DFS have been finalised.
64 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
Movements in provisions
Movements in each class of provision during the financial year are set out below:
2013
Annual leave
provision
Drilling compensation
provision
Total
Carrying amount at the start of the year
143,517
100,000
243,517
Charged/(credited) to profit or loss
- additional provision recognised
Amounts used during the year
Carrying amount at the end of the year
177,629
(100,455)
220,691
110,309
(110,645)
99,664
287,938
(211,100)
320,355
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes accrued annual leave. The entire amount of the provision is presented as current, since the group does
not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the group does not expect all employees
to take the full amount of accrued leave or require payment within the next 12 months. It is estimated that 40% of the carrying value will be carried beyond
12 months.
11. Non-current liabilities
Provisions
Employee benefits - long service leave
Other liabilities
Total provisions
12. Contributed equity
(a) Share capital
2013
$
2012
$
155,523
47,222
202,745
-
-
-
Note
2013
Shares
2012
Shares
2013
$
2012
$
Ordinary shares - fully paid
12(b)
290,968,452
161,207,273
101,568,371
60,980,453
Deferred tax expense recognised in equity
Cost of capital raising
-
-
-
-
532,591
-
(1,994,008)
(320,950)
290,968,452
161,207,273
100,106,954
60,659,503
| 65
Notes to the Consolidated Financial Statements
(b) Movements in ordinary share capital
Date
Details
Note
Number of
shares issued*
Issue price
$
1 July 2011
8 July 2011
8 July 2011
8 July 2011
8 July 2011
29 July 2011
4 August 2011
24 August 2011
25 August 2011
16 April 2012
13 June 2012
30 June 2012
30 June 2012
16 August 2012
Opening balance
Exercise of options
Exercise of options
Exercise of options
Exercise of options
Issue of ordinary shares
Issue of ordinary shares
Issue of ordinary shares
Issue of ordinary shares
Issue of ordinary shares
Issue of ordinary shares
Cost of capital raising
Balance
Issue of ordinary shares
11 September 2012
Issue of ordinary shares
23 January 2013
Exercise of unlisted options
113,695,564
-
27,141,875
625,000
625,000
625,000
625,000
6,395,373
9,637,643
7,926,658
25,000
15,783,047
5,243,988
-
161,207,273
19,425,851
105,510,292
2,825,036
2,000,000
-
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
0.20
0.25
0.30
0.35
0.90
0.90
0.90
0.90
0.55
0.55
125,000
156,250
187,500
218,750
5,755,836
8,673,880
7,133,993
22,500
8,680,676
2,884,193
-
(320,950)
60,659,503
6,216,272
33,763,293
544,102
385,200
(1,994,008)
532,591
0.32
0.32
0.19
0.19
-
-
12(e)
12(e)
8 March 2013
30 June 2013
30 June 2013
30 June 2013
Exercise of unlisted options
Cost of capital raising
Deferred tax expense recognised in equity
Balance
290,968,452
100,106,954
* All shares have been authorised for issue and are fully paid
(c) 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 shares held.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
66 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
(d) Movements in unlisted options on issue
Date
Details
1 July 2011
8 July 2011
8 July 2011
8 July 2011
8 July 2011
25 July 2011
24 August 2011
25 August 2011
26 August 2011
30 June 2012
23 January 2013
23 January 2013
23 January 2013
23 January 2013
23 January 2013
8 March 2013
30 June 2013
Opening balance
Exercise of unlisted options
Exercise of unlisted options
Exercise of unlisted options
Exercise of unlisted options
Issue of unlisted options
Issue of unlisted options
Issue of unlisted options
Issue of unlisted options
Balance
Forfeiture of unlisted options
Forfeiture of unlisted options
Exercise of unlisted options
Forfeiture of unlisted options
Forfeiture of unlisted options
Exercise of unlisted options
Balance
Number of
shares
Issue price
24,625,000
-
(625,000)
(625,000)
(625,000)
(625,000)
500,000
100,000
100,000
100,000
22,925,000
(3,420,000)
(6,000,000)
(2,825,036)
(879,964)
(1,500,000)
(2,000,000)
6,300,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
0.20
0.25
0.30
0.35
1.00
1.00
1.25
1.50
0.34
0.19
0.19
0.19
0.34
0.19
Additional information relating to the Iron Road Limited Employee Option Plan is set out in note 15 and note 24.
(e) Capital raising
On 2 August 2012, the company announced a fully underwritten 31 for 40 accelerated non-renounceable entitlement offer of new Iron Road Limited shares at
an offer price of $0.32 per new share. 124,936,143 new shares were issued which rank equally with existing shares in Iron Road Limited.
(f) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern.
There were no changes to 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.
| 67
Notes to the Consolidated Financial Statements
13. Other reserves and retained earnings
(a) Reserves
Share based payments reserve
Date
Details
1 July 2011
Opening balance
Directors and employee share options
30 June 2012
Balance
Unvested options expired
Options expensed
Transfer from options issue reserve
30 June 2013
Balance
$
4,025,549
474,328
4,499,877
(74,683)
47,452
273,250
4,745,896
The share based payment reserve is used to recognise the value of options issued. Options that are vested on issue are fully expensed on issue whereas
options with vesting conditions that are yet to be satisfied are expensed throughout the vesting period.
Options issue reserve
Date
Details
1 July 2011
Opening balance
30 June 2012
Movement
Balance
30 June 2013
Balance
Transfer to share based payment reserve
Total Reserves
The options issue reserve is used to recognise the proceeds from the issue of options.
(b) Accumulated losses
Date
Details
1 July 2011
Opening balance
Net loss for the year
1 July 2012
Balance
Net loss for the year
30 June 2013
Balance
68 | A n n u a l R e p o r t 2 0 1 3
$
273,250
-
273,250
(273,250)
-
4,745,896
$
(8,949,332)
(2,542,228)
(11,491,560)
(4,829,389)
(16,320,949)
Notes to the Consolidated Financial Statements
14. Dividends
Due to a net loss position, there have been no dividends paid during the current year or prior years.
15. Key management personnel disclosures
(a) Key management personnel compensation
Short term employee benefits
Long term employee benefits
Post employment benefits
Share based payments
2013
$
2012
$
1,230,191
892,352
103,767
91,607
(74,683)
-
76,694
352,450
1,350,882
1,321,496
(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:
2013
Balance at the
start of period
Granted as
compensation
Exercised
Expired
Balance at the Vested and
exercisable
end of year
Unvested
Directors of Iron Road Limited
Andrew Stocks
Jeremy Ellis
Julian Gosse
Matthew Keegan
Other key management personnel of the Group
Larry Ingle
Lex Graefe
9,420,000
500,000
2,500,000
3,780,000
-
-
-
-
-
-
- (1,400,036)
(9,420,000)
-
-
(2,379,964)
-
500,000
2,500,000
-
-
500,000
2,500,000
-
3,000,000
-
-
-
-
-
-
-
3,000,000
-
3,000,000
-
-
-
-
-
-
-
2012
Balance at the
start of period
Granted as
compensation
Exercised
Expired
Balance at the Vested and
exercisable
end of year
Unvested
Directors of Iron Road Limited
Andrew Stocks
Jeremy Ellis
Julian Gosse
Ian Hume
Matthew J Keegan
Other key management personnel of the Group
Larry Ingle
Lex Graefe
9,420,000
-
2,500,000
2,500,000
3,780,000
-
-
-
500,000
-
-
- (2,500,000)
-
-
-
-
-
-
-
9,420,000
500,000
2,500,000
-
3,780,000
7,920,000
500,000
2,500,000
-
3,780,000
1,500,000
-
-
-
-
3,000,000
-
-
-
-
-
-
-
3,000,000
-
3,000,000
-
-
-
| 69
Notes to the Consolidated Financial Statements
(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.
2013
Balance at the
start of period
Received during the year
on exercise of options
Other changes
during the year
Balance at the
end of period
Directors of Iron Road Limited
Peter Cassidy
Andrew Stocks
Jerry Ellis
Leigh Hall AM
Julian Gosse
Ian Hume
Matthew Keegan
Other Key Management Personnel of the Group
Larry Ingle
Lex Graefe
-
2,915,938
80,000
-
591,000
5,151,203
2,200,000
-
-
-
-
62,000
-
-
-
1,400,036
-
-
3,784,343
-
-
200,000
-
-
-
-
-
3,784,343
2,915,938
142,000
200,000
591,000
5,151,203
3,600,036
-
-
2012
Balance at the
start of period
Received during the year
on exercise of options
Other changes
during the year
Balance at the
end of period
Directors of Iron Road Limited
Andrew Stocks
Jerry Ellis
Julian Gosse
Ian Hume
Matthew Keegan
Other Key Management Personnel of the Group
Larry Ingle
Lex Graefe
2,915,938
80,000
2,338,703
2,651,203
2,200,000
-
-
-
-
-
2,500,000
-
-
-
-
-
(1,747,703)
-
-
-
-
2,915,938
80,000
591,000
5,151,203
2,200,000
-
-
(d) Other transactions with key management personnel
The Group leases a property in Adelaide, South Australia for use by the General Manager, Larry Ingle and the Managing Director, Andrew Stocks when visiting
Adelaide. The rental obligation is paid for by Iron Road Limited, totalling $39,520 in 2013 (2012: $32,502) which is recognised as an expense.
70 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
16. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices:
PricewaterhouseCoopers (Australia)
(a) Audit and other assurance services
Audit and review of financial reports under the Corporations Act 2001
(b) Non audit services
Taxation compliance services
Total remuneration of PricewaterhouseCoopers (Australia)
BDO Audit (WA) Pty Ltd
(a) Audit and other assurance services
2013
$
2012
$
51,465
8,500
59,965
-
-
-
Audit and review of financial reports under the Corporations Act 2001
15,456
42,216
(b) Non audit services
Taxation compliance services
Total remuneration of BDO Audit (WA) Pty Ltd
Total auditors remuneration
-
15,456
29,694
71,910
75,421
71,910
It is Group policy to employ PricewaterhouseCoopers (PwC) on assignments additional to their statutory audit duties where PwC expertise and experience is
important. These assignments are principally taxation advice.
17. Contingencies
There are no material contingent liabilities or contingent assets of the Group at reporting date.
| 71
Notes to the Consolidated Financial Statements
18. 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 farm-in 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 1971, 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
ongoing assessment of operations).
Within one year
(b) Capital commitments
The Group has a contractual commitment to finalise land purchases at Cape Hardy in South Australia.
Within one year
Later than one year but no later than two years
2013
$
2012
$
1,135,000
851,000
2013
$
2012
$
1,536,373
-
-
1,536,373
1,536,373
1,536,373
(c) Lease commitments: Company as lessee
The Group leases various offices, expiring within one to four years. The leases have varying terms and renewal rights. On renewal, the terms of the leases
are renegotiated.
Commitments for minimum lease payments in relation to operating leases are payable as follows:
Within one year
Later than one year but no later than five years
Later than five years
2013
$
2012
$
330,022
942,951
-
445,198
360,162
881,413
1,272,973
1,686,773
72 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
19. Related party transactions
(a) Parent entities
The parent entity within the Group is Iron Road Limited. The ultimate parent entity and ultimate controlling party is The Sentient Group (incorporated in the
Cayman Islands) which at 30 June 2013 owns 57.87% (2012 35.04%) of the issued ordinary shares of Iron Road Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 20.
(c) Key management personnel
Disclosures relating to key management personnel are set out in note 15.
(d) Transactions with other related parties
The following transactions occurred with The Sentient Group:
Reimbursement of travel related expenditure
Reimbursement of legal fees
Directors fees
Capital raising costs
Other reimbursements
2013
$
2012
$
26,411
-
39,494
80,356
52,625
25,418
257,879
-
98,346
-
198,886
381,643
The following balances are outstanding at the end of the reporting period and are disclosed within trade and other payables in relation to transactions with
The Sentient Group:
Reimbursement of travel related expenditure
Directors fees
Capital raising costs
Other reimbursements
2013
$
2012
$
16,512
13,625
80,356
52,625
163,118
-
-
-
-
-
There were no other related party transactions during the year.
(e) Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates. Outstanding balances are unsecured and are repayable in cash.
| 73
Notes to the Consolidated Financial Statements
20.
Investment in controlled entities
Name of entity
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
Equity holding
Cost of parent entities investment
2013
%
2012
%
2013
$
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
10
100
100
100
100
100
100
100
2012
$
10
100
100
100
100
100
100
100
Iron Road Limited and all of its subsidiaries are located and incorporated in Australia.
21. Events occurring after the reporting period
Iron Road Limited announced a fully underwritten non-renounceable entitlement offer on 13 June 2013 to raise $50,700,000 (after costs) to fund the completion
of the CEIP DFS and continue the scoping and study of the GIP.
As a result of this entitlement offer, 290,968,452 fully paid ordinary shares were issued by Iron Road Limited, increasing the total number of fully paid ordinary
shares on issue to 581,936,904 on 30 July 2013.
22. Reconciliation of net loss after income tax
2013
$
2012
$
(4,829,389)
(2,542,228)
137,059
(27,231)
47,222
532,591
67,033
474,328
-
-
-
200
1,700,787
691,489
(1,536,150)
(218,523)
84,182
232,697
(1,128,917)
100,000
(3,658,232)
(2,556,618)
Net loss for the period
Depreciation
Share based payments
Non cash - rent incentive
Non cash - tax expense on capital raising costs
Formation costs
Impairment of exploration expenses
Change in operating assets and liabilities
(Increase) in trade and other receivables
Increase/(Decrease) in trade payables
Increase in other provisions
Net cash outflow from operating activities
74 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
23. Loss per share
(a) Basic and diluted earnings per share
Total basic loss per share attributable to the ordinary equity owners of the company
Total diluted loss per share attributable to the ordinary equity owners of the company
Loss attributable to the members of the group used in calculating basic earnings per share:
from continuting operations
(b) Weighted average number of shares used as the denominator
2013
cents
(1.82)
(1.82)
2012
cents
(1.80)
(1.80)
(4,829,389)
(2,542,228)
Number of shares
2012
2013
Weighted average number of shares used as the denominator in calculating basic and diluted loss per share
264,663,198
140,980,038
(c) Information concerning the classification of options
As Iron Road Limited made a loss during the year, 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 the loss per share in the future.
| 75
Notes to the Consolidated Financial Statements
24. Share based payments
As detailed in both the 2008 and 2009 Notices of Annual General Meeting and Explanatory Statements, the Board of Directors approved an employee share
option plan for Directors. This was further broadened to include Iron Road Limited’s employees, as approved by shareholders at the General Meeting on 25
July 2011.
The Employee Option Plan is designed to provide long-term incentives for directors and senior executives to deliver long-term shareholder returns. Under the
plan, participants are granted options some of which vest on issue and others only vest if certain market and non-market conditions are met. Once vested,
the options remain exercisable for a period of five years. Options are granted under the plan for no consideration and carry no dividend or voting rights. When
exercisable, each option is convertible into one ordinary share.
A participant 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.
Set out below is a summary of options under the plan:
Grant date
Expiry date
Exercise
price
Balance at
start of
period
Granted
during
the year
Exercised
during the
year
Expired
during the
year
Balance at
end of
period
Vested and
exercisable at
end of period
30 June 2013
Director options
23/01/08
23/01/08
23/01/08
23/01/08
23/01/08
27/05/08
23/12/09
23/12/09
23/12/09
23/12/09
25/07/11
Employee Options
07/08/08
24/08/11
24/08/11
24/08/11
23/01/13
23/01/13
23/01/13
23/01/13
23/01/13
10/03/13
15/12/14
15/12/14
15/12/14
15/12/14
25/07/16
06/08/13
24/08/16
24/08/16
24/08/16
$ 0.3426
$ 0.1926
3,420,000
6,000,000
$ 0.1926
$ 0.1926
$ 0.3426
$ 0.1926
$ 0.1926
$ 0.2426
$ 0.2293
$ 0.3426
$ 0.9926
$ 0.3426
$ 0.9926
$ 1.2426
$ 1.4926
1,425,000
2,280,000
1,500,000
2,000,000
625,000
625,000
625,000
625,000
500,000
3,000,000
100,000
100,000
100,000
Total
Weighted average exercise price
22,925,000
$0.2821
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,420,000)
(6,000,000)
(1,425,000)
(1,400,036)
-
(2,000,000)
-
-
-
-
-
-
(879,964)
(1,500,000)
-
-
-
-
-
-
-
-
-
-
-
-
625,000
625,000
625,000
625,000
500,000
-
-
-
-
-
-
625,000
625,000
625,000
625,000
500,000
-
-
-
-
-
-
-
-
3,000,000
100,000
100,000
100,000
3,000,000
100,000
-
-
(4,825,036)
$0.1926
(11,799,964)
$0.2551
6,300,000
$0.4010
6,100,000
$0.3693
76 | A n n u a l R e p o r t 2 0 1 3
Notes to the Consolidated Financial Statements
Grant date
Expiry date
Exercise
price
Balance at
start of
period
Granted
during
the year
Exercised
during the
year
Expired
during the
year
Balance at
end of
period
Vested and
exercisable at
end of period
30 June 2012
Director options
23/01/08
23/01/08
23/01/08
23/01/08
23/01/08
27/05/08
23/12/09
23/12/09
23/12/09
23/12/09
23/12/09
23/12/09
23/12/09
23/12/09
25/07/11
Employee Options
07/08/08
24/08/11
24/08/11
24/08/11
23/01/13
23/01/13
23/01/13
23/01/13
23/01/13
10/03/13
15/12/14
15/12/14
15/12/14
15/12/14
15/12/14
15/12/14
15/12/14
15/12/14
25/07/16
06/08/13
24/08/16
24/08/16
24/08/16
$ 0.35
$ 0.20
3,420,000
6,000,000
$ 0.20
$ 0.20
$ 0.35
$ 0.20
$ 0.20
$ 0.25
$ 0.30
$ 0.35
$ 0.20
$ 0.25
$ 0.30
$ 0.35
$ 1.00
$ 0.35
$ 1.00
$ 1.25
$ 1.50
1,425,000
2,280,000
1,500,000
2,000,000
625,000
625,000
625,000
625,000
625,000
625,000
625,000
625,000
-
3,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
100,000
100,000
100,000
-
-
-
-
-
-
-
-
-
-
(625,000)
(625,000)
(625,000)
(625,000)
-
-
-
-
-
Total
Weighted average exercise price
24,625,000
$0.2635
800,000
$1.0938
(2,500,000)
$0.2750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,420,000
6,000,000
1,425,000
2,280,000
1,500,000
2,000,000
625,000
625,000
625,000
625,000
-
-
-
-
500,000
3,000,000
100,000
100,000
100,000
-
-
1,425,000
2,280,000
1,500,000
-
625,000
625,000
625,000
625,000
-
500,000
3,000,000
100,000
-
-
22,925,000
$0.2821
11,305,000
$0.3188
There were no options issued, with 11,799,964 options expiring and 4,825,036 exercised during the reporting period 30 June 2013. There were 800,000
options granted and 2,500,000 options exercised during the reporting period 30 June 2012. The weighted average share price at the date of exercise of
options exercised during the year ended 30 June 2013 was $0.30. The weighted average remaining contractual life of options outstanding at 30 June 2013 is
1.02 years (2012: 0.98 years).
Total expenses arising from share based payment transactions recognised during the year were as follows:
Options expensed
Unvested options expired
2013
$
2012
$
47,452
474,328
(74,683)
(27,231)
-
474,328
| 77
Notes to the Consolidated Financial Statements
25. Iron Road Limited parent company information
(a) Summary financial information
The individual financial statements for the parent entity show the following amounts:
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
2013
$
2012
$
18,178,656
8,537,536
76,215,364
48,235,472
94,394,020
56,773,008
5,640,868
2,828,496
202,745
-
5,843,613
2,828,496
88,550,407
53,944,512
100,106,954
60,659,503
4,745,896
4,773,127
(16,302,443)
(11,488,118)
88,550,407
53,944,512
Total comprehensive loss for the year
(4,814,325)
(2,538,786)
(b) Guarantees entered into by the parent entity
The company has not provided any financial guarantees as at 30 June 2013.
(c) Contingent liabilities of the parent entity
The company had no contingent liabilities as at 30 June 2013.
(d) Contractual commitments
The company had no contractual commitments other than exploration and commitments disclosed in note 18 as at 30 June 2013.
78 | A n n u a l R e p o r t 2 0 1 3
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) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
b) give a true and fair view of the Group’s financial position as at 30 June 2013 and of its performance for the financial year ended on that date.
2. In the Directors’ opinion, there are reasonable grounds to believe that the Group 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 2013, 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 of the Corporations Act
2001.
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) as issued by the International Accounting Standards Board.
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 Stocks.
Andrew Stocks
Managing Director
25 September 2013
| 79
ASX Additional Information
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is shown below. All information is
current as at 24 September 2013.
a) Distribution of equity securities
Analysis of holders of fully paid ordinary shares by size of holding:
Spread of holding
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total holdings on register
Number of
holders
205
458
279
657
142
1,741
Percentage of
ordinary fully
paid shares
0.02%
0.23%
0.39%
3.47%
95.89%
Shares held
107,967
1,316,024
2,297,878
20,198,442
558,016,593
100.00%
581,936,904
b) Twenty largest shareholders
The twenty largest holders of fully paid ordinary shares are:
Holder name
Shares held
Sentient Executive GP IV Limited
Sentient Executive GP III Limited
National Nominees Limited
Sentient Executive GP II Limited
HSBC Custody Nominees Australia Limited
SANBA II Inv Company
Gothic Corporation
DEVIPO Pty Ltd
JP Morgan Nominees Australia Limited
Cedarose Pty Ltd
SEISUN Capital Pty Ltd
Anderson, Graham Douglas
UBS Wealth Management Australia Nominees
Anderson, CM & SM
Paul, Geoffrey John
Duke Endowment
Stonecot Pty Ltd
Leadville Investments Pty Ltd
Stocks, Claire Margaret
Stocks, Andrew James
343,259,453
51,558,593
33,109,178
29,131,005
15,619,565
9,861,112
6,091,844
5,151,203
4,252,616
4,082,061
3,486,625
3,296,716
2,507,375
2,500,000
2,200,000
2,196,772
2,005,000
1,500,000
1,442,657
1,442,656
524,694,431
Percentage of
ordinary fully
paid shares
58.99%
8.86%
5.69%
5.01%
2.68%
1.69%
1.05%
0.89%
0.73%
0.70%
0.60%
0.57%
0.43%
0.43%
0.38%
0.38%
0.34%
0.26%
0.25%
0.25%
90.16%
82 | A n n u a l R e p o r t 2 0 1 3
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
Sentient Executive GP III, Limited
Sentient Executive GP IV, Limited
Total holding
d) Voting rights
All ordinary shares are fully paid and carry one vote per share without restriction.
e) Interests in mining tenements
Iron Road Limited holds interests in the following mining tenements:
Shares held
29,131,005
51,558,593
343,259,453
423,949,051
Location
Tenement
Percentage held
South Australia
Warramboo
Gawler
Western Australia
Windarling
EL4849
EL5298 (replaced EL4014)
100%
90% Iron Ore rights
EL77/1236
EL77/1237
EL77/1245
PL77/3508
Expired 18 September 2013
100%
100%
Expired 30 September 2013
| 83
Glossary
Aeromagnetic survey (Aeromag) -
Bentonite -
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.
an absorbent type of clay which increases its volume several times when in contact with water. Fine bentonite is mixed
with iron ore fines and water and rolled in balling drums to create spherical balls or pellets. Once the bentonite absorbs the
water, the sticky bentonite particles bind the iron ore particles together. The iron pellets may be used directly in a blast
furnace or direct reduction steel-making plant.
Cleaner Magnetic Separation (CMS) –
a process whereby an already partially upgraded ore containing minerals which respond to a magnetic field is passed over
a rolling drum with a magnetic field applied. The magnetic minerals attach to the roll and are scraped off into a high grade
concentrate. The non-magnetic material passes straight over the roll and is rejected to tailings. It is generally performed
wet on material which has been milled to a fine grind size.
Downhole intervals -
depth interval along the drill hole. Not necessarily a true depth below surface.
Davis Tube Recovery (DTR) –
Gravity survey -
Hematite -
Loss on Ignition (LOI) –
Magnetite -
Martite -
Mineralisation -
Specularite -
Spigotting -
a test used to separate ferromagnetic and non-magnetic fractions in small samples of approximately 20g at a time.
The test is suited to establishing the recoveries likely from a magnetic separation process. This can assist mineral body
assessment for magnetite, hematite or combinations thereof.
a geophysical method undertaken from the surface or from the air which identifies variations in the density of the earth
from surface to depth. It is used to directly measure the density of the subsurface, effectively the rate of change of rock
properties. From this information a picture of subsurface anomalies may be built up to more accurately target mineral
deposits. For iron exploration gravity surveys are commonly overlain on magnetic surveys to help identify and target fresh
and oxidised iron ore (ie. magnetite and hematite).
a mineral, coloured black to steel or silver-grey, brown to reddish brown or red. Hematite is a form of Iron (III) oxide
(Fe2O3), one of several iron oxides.
a test where a small weighed sample is heated at a controlled rate under controlled conditions to measure the volatile
components of the sample (water from hydrates, carbon dioxide from carbonates, etc). The loss is reported as a
percentage of the original weight. For iron ore, hematite usually returns a positive result, magnetite returns a negative
result. Hematite ores report positive LOI readings mostly due to the presence of goethite which contains water in the
lattice. When magnetite is heated it gains weight as it starts to convert to hematite. The gain in mass is reported as a
negative LOI. The value of the LOI may be important in sales contracts where this has a direct bearing on the performance
of the ore in smelting.
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.
the name given for Hematite pseudomorphs after Magnetite. More simply put primary magnetite that has been totally
replaced by secondary hematite through oxidation.
refers to the distribution and characteristics (including chemical formula, crystal structure, interaction with other minerals)
of the various minerals contained with a mineral deposit.
a black or grey variety of hematite with brilliant metallic lustre, occurring in micaceous / foliated masses or in tabular or
disk-like crystals. Also known as specular iron.
a spigot is a device that controls the flow of liquid from a device or pipe. For tailings deposition, a spigot is the outlet
point on the tailings pipeline via which the tailings are deposited into the dam. Spigotting refers to the configuration of the
spigots in a particular tailings storage facility design.
X-Ray Fluorescence spectroscopy (XRF) - used for the qualitative and quantitative elemental analysis of geological and other samples. It provides a fairly uniform
detection limit across a large portion of the periodic table and is applicable to a wide range of concentrations, from 100%
to a few parts per million (ppm).
84 | A n n u a l R e p o r t 2 0 1 3
Corporate Directory
ASX Code
IRD
Website
www.ironroadlimited.com.au
Email
ABN
admin@ironroadlimited.com.au
51 128 698 108
Share Registry
Security Transfer Registrars
770 Canning Highway
Applecross WA 6153
Telephone 08 9315 2333
Email registrar@securitytransfer.com.au
Auditors
PricewaterhouseCoopers
Level 14, 91 King William Street
Adelaide SA 5001
Telephone 08 8218 7000
Directors
Peter Cassidy - Chairman
Andrew Stocks - Managing Director
Jerry Ellis - Non-Executive Director
Leigh Hall AM - Non-Executive Director
Julian Gosse - Non-Executive Director
Ian Hume – Non-Executive Director
General Manager
Larry Ingle
Company Secretary
Graham Anderson
Registered Office
14 Emerald Terrace
West Perth WA 6005
Corporate Office
Iron Road House
Level 6, 30 Currie Street
Adelaide SA 5000
Telephone 08 8214 4400
Postal Address
GPO Box 1164
Adelaide SA 5001
| Iron Road Limited Annual Report 2012
Iron Road Limited Annual Report 2012 | 77
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ANNUAL
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For the year ended 30 June 2013
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