2014 ANNUAL REPORT
For the year ended 30 June 2014
ABN 51 128 698 108
CORPORATE DIRECTORY
Directors
Peter Cassidy
Chairman
Andrew Stocks
Managing Director
Jerry Ellis AO
Non-Executive Director
Leigh Hall AM
Non-Executive Director
Julian Gosse
Non-Executive Director
Ian Hume
Non-Executive Director
General Manager
Larry Ingle
Chief Financial Officer
Howard Rae
Company Secretary
Graham Anderson
Registered Office
Share Registry
Security Transfer Registrars
770 Canning Highway
Applecross WA 6153
Telephone 08 9315 2333
registrar@securitytransfer.com.au
Auditors
PricewaterhouseCoopers
Level 11, 70 Franklin Street
Adelaide SA 5001
Telephone 08 8218 7000
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
ASX Code IRD
www.ironroadlimited.com.au
admin@ironroadlimited.com.au
ABN 51 128 698 108
Contents
Corporate Directory
Chairman’s Letter
Managing Director’s Report
4
5
7
Highlights
DFS Key Outcomes
Central Eyre Iron Project
16 Gawler Iron Project
16 Corporate
Appendix 1 – Global Mineral Resource and Ore Reserves Statement
Appendix 2 – Competent Persons Statement
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 Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
2
4
18
19
20
36
38
40
41
42
43
44
71
72
74
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 the Investor Centre on our website: www.ironroadlimited.com.au
ChAIRmAn’s letteR
On behalf of the Board of Iron Road Limited,
it is with pleasure I present to you the Annual
Report for the year ended 30 June 2014.
Dear Shareholder,
The year saw us finalise what is without doubt the
most significant milestone in our company to date – the
completion of a Definitive Feasibility Study (DFS) that
clearly showed our flagship Central Eyre Iron Project
(CEIP) is a technically robust and highly profitable project,
which will deliver a high-grade and low impurity iron ore
concentrate, providing a competitive and clean blending
solution for the Asian market.
The importance of this milestone cannot be understated.
Iron Road has now conclusively shown it can produce
21.5 million tonnes of high grade, low impurity concentrate
each year, for 25 years and do so profitably and with
strong economic returns. This is the culmination of several
years’ work, and over $100 million invested into the project
to date. This now firmly sets us on the path towards
production at the CEIP and will inform discussions with
future partners in the year ahead, as we work to complete
the finance and construction plan for the CEIP.
More than just a mine, CEIP embodies a complete
infrastructure solution, with a Capesize port at Cape
Hardy and a heavy haul rail line to link mine to port.
The infrastructure will serve more than just Iron Road’s
requirements and to that end the Company has signed
a Memorandum of Understanding with a global grain
handling organisation for both parties to jointly investigate
the export of grain through the Cape Hardy facility.
The completion of the DFS also saw the company
announce its first Ore Reserve, with two billion tonnes
of ore (15.5% iron) at the CEIP. Importantly, the majority,
some 1.8 billion tonnes, lies within the higher confidence
“Proved” category, giving us great confidence in the
consistency of our deposit, and ability to conform to
expected mining and processing plans.
Further detail on the DFS is found within this report and I
encourage you to review this achievement of our Company.
Importantly, the significance of our project has been
recognised at both the State and Federal Government
levels in Australia. In the State of South Australia, we
were pleased for the infrastructure components of CEIP
“Our product is highly desirable
given its high iron content and
low levels of impurities that
allows steel makers to make the
same amount of steel with less
power and pollution – a win-win
outcome for all.”
Peter Cassidy
Chairman
2 IRon RoAD AnnuAl RepoRt 2014
to be declared a Major Development by the South
Australian Deputy Premier, the Hon. John Rau MP in
his capacity of Minister for Planning. The declaration
ensures that required infrastructure approvals will occur
in a co-ordinated and timely fashion across all State
Government departments.
At the Commonwealth level, the Australian Government
has granted Major Project Facilitation status which allows
for a coordinated approach to Federal Government
approval processes and a single point of contact within
the Federal Government to allow for prompt resolution
of issues. The CEIP is the only project in South Australia
and one of only two iron ore projects nationwide to
currently be awarded this status.
Our product is highly desirable given its high iron content
and low levels of impurities that allows steel makers to
make the same amount of steel with less power and
pollution – a win-win outcome for all. Steel makers pay a
premium for this very high value in use, which we expect
will only increase as the countries of Asia collectively
tackle both power use intensity and pollution concerns.
The DFS has confirmed our position in the lower half of
the global 2018 price adjusted cost curve and further
work post the DFS has cemented that view. More
importantly, our project has been assessed to fall within
the lowest cost quartile of all producers of high quality,
low environmental impact ores that are emerging as the
“must have” ores for managing pollution. Our highly
competitive industry position will buffer the project from
the volatility of daily market variations in the iron ore
price. Consequently we believe our project will play an
important role in the future supply of iron ore, despite
some current negative commentary with respect to
prices and supply. The Company of course has not
been content to rest since the DFS completion and
is continuing to work to further enhance your project.
Principally this has taken the form of looking for process
efficiencies, which is likely to result in an expanded
production rate. We are currently modelling a scaled up
production of 24 million tonnes per annum of production.
Early in the new financial year we commenced a drilling
program with the objective of establishing the resource
base that will support a 25+ year mine life at an annual
output of 24 million tonnes per annum at the CEIP. This
work will underpin mining plan optimisations that are
anticipated to contribute additional efficiencies. Further
improvements such as this will be pursued over the
year ahead.
We have invested heavily in the development of a robust
technical model under-pinning the DFS that provides
the basis of the inputs into the detailed financial model.
These models and the detailed data room stand us
in good stead for the coming year when we expect
to begin detailed discussions with potential off-take,
finance and construction partners.
None of this of course would be possible without
support of the communities in which we work. Iron Road
has worked diligently to keep communities and wider
stakeholders collectively informed of developments
and our activities. I would like to acknowledge the
continued time and effort made by members of the
various consultative committees and reference groups
that we deal with on a regular basis. All are community
formed and led and meet regularly to discuss various
components of the project. Stakeholder engagement is a
core value to which we play close attention.
On behalf of the Iron Road Board, I’d like to again take this
opportunity to thank our committed staff, partners and
service providers for their contributions over the year and
commend the significant achievement in delivering the
DFS for our flagship project. I look forward to the decisive
year ahead as we move ever closer to production.
Peter Cassidy
Chairman
IRon RoAD AnnuAl RepoRt 2014 3
mAnAgIng
DIReCtoR’s RepoRt
hIghlIghts
1
2
3
4
5
6
Definitive Feasibility Study for Central Eyre Iron Project
(CEIP) completed, following over $100M of investment
in project studies and drilling
Base case development model delivers nameplate
EBITDA of US$1.36B per annum, a post-tax project
NPV(12.5%) of US$2.69B and post-tax ungeared IRR
of 21% (IRR 25.6% with assumed gearing of 60%)
Capital cost estimate of US$3.98B, including port and
rail equates to a highly competitive capital intensity of
US$185 per annual tonne of iron concentrate production
CEIP declared a Major Development by
South Australian State Government
CEIP granted Major Project Facilitation status by
Australian Federal Government
Marketing studies indicate that high quality, low
impurity CEIP concentrate will assist steel mills
improve operating efficiencies and meet tightening
environmental requirements
Further details are provided in the Project Snapshot table and following sections.
4 IRon RoAD AnnuAl RepoRt 2014
“We have demonstrated with a
great level of detail that our
world class project is an attractive
investment opportunity.”
andreW stOCKs
manaGinG direCtOr
DFs Key outComes
Capital Cost
Operating Cost (FOB) /t
us$3.98B
us$44.33
EBITDA (pa)
us$1.36B
Capital Intensity
us$185
(per Annual Tonne)
Mine Life
+
25yeARs
NPV (12.5%)
us$2.69B
Ungeared, post-tax
Project IRR
21%
Ungeared, post-tax
IRon RoAD AnnuAl RepoRt 2014 5
mAnAgIng DIReCtoR’s RepoRt continued
The completion of the Definitive Feasibility Study for
the Central Eyre Iron Project (CEIP) is the culmination
of a vision conceived in 2007 and marks a significant
milestone in the life of Iron Road. We have demonstrated
with a great level of detail, that our world class project is
an attractive investment opportunity able to withstand
price fluctuations, offering a strong rate of return and
long production life.
The end result is built on the hard work and dedication
by hundreds of people, with over $100 million dollars
invested in studies and exploratory drilling.
Iron Road believes that the premium quality iron
concentrate we plan to produce at the CEIP has
compelling qualities for steel mills, with its high quality
and low impurities. Our product unlocks substantial
value in use benefits for steel mills, including reduced
power usage in the steel making process and lower
pollution outcomes. Most importantly it will deliver the
same quality product over the entire life of the project,
which we expect to be in excess of the current 25 years.
Iron Road has demonstrated that the CEIP compares
favourably against the wider iron ore market. Analysis
by respected market consultants presents our project
within the mid-range of 2020 adjusted costs and in
the lowest quartile of premium concentrate producers.
These costs take into account the pricing premium
higher quality products receive and the cost penalty
suffered by lower quality products.
e
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2
6
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o
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e
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f
a
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/
$
S
U
t
s
o
C
R
F
C
200
180
160
140
120
100
80
60
40
20
0
-20
-40
-60
Premiums for grade, lump and pellets
relative to 62% Fe fines applied as credits
against costs. Lower-grade price
discounts applied as cost penalties
I
P
E
C
PRICE CREDITS
(below axis) subtracted from cost (includes lump,pellet and grade premiums)
0
100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400
CULMULATIVE MT
(wet basis)
CEIP
China
Australia
Brazil
India
South Africa
Other
Price Penalty
Normalised CFR Costs* of China’s Forecast Iron Ore Supply in 2020
*Dollar amounts are in real 2014 terms. Costs normalised to 62% Fe equivalent by applying product price credits & penalties
6 IRon RoAD AnnuAl RepoRt 2014
CentRAl eyRe IRon pRojeCt (CeIp)
The CEIP is located on the Eyre Peninsula, South Australia. The proposed mine site at Warramboo is located 28
kilometres southeast of the regional centre of Wudinna, and the proposed port is seven kilometres south of Port Neill
at Cape Hardy. The mine and the port will be linked by an infrastructure corridor containing rail, water and power.
Location of the CEIP, showing mine, infrastructure corridor and port.
heavy haul, standard gauge rail line between the mine and
port. This rail system may in future be expanded to connect
with the existing national rail network, extending port
access to the greater southern Australia. The proposed
port location experiences relatively benign weather with no
seasonal cyclonic activity to hinder operations.
DeFInItIve FeAsIBIlIty stuDy (DFs)
Details of the DFS estimate were released to the ASX on
26 February 2014. Key study outcomes and extracts from
the ASX release are given below. A more detailed account
of the study, mineral resource estimate and assumptions
made are available in the ASX and Media announcement
dated 26 February 2014, available on both the Iron Road
Limited and ASX websites.
Project studies undertaken for the DFS incorporate
mining and ore processing, as well as rail, concentrate
export facilities, water and power supply. The CEIP
offers an operating life in excess of 25 years. The
defined mineral resource at Warramboo contains
continuous and consistent mineralisation over more than
six kilometres of strike and is amenable to large scale,
open pit extraction methods.
Ore treatment by conventional crushing, milling and
magnetic/gravity separation is planned to deliver
premium iron concentrates at a coarse size distribution.
The iron concentrate is being marketed primarily as a
high quality blending feedstock for sinter plants, which
feeds the majority of blast furnaces internationally.
Iron Road has acquired 1,100 hectares of land at
Cape Hardy for a Capesize-capable port facility as
part of its integrated export solution for the CEIP iron
concentrates. The deep water port is planned to have
an initial capacity of 70 million tonnes per annum (Mtpa),
with approximately 45Mtpa capacity potentially available
to third parties. The DFS encompasses construction of a
IRon RoAD AnnuAl RepoRt 2014 7
mAnAgIng DIReCtoR’s RepoRt continued
pRojeCt snApshot
Key opeRAtIng pARAmeteRs (BAse CAse)
mInIng
Ore Mined
3.57 billion tonnes
(life of mine)
Mine Stripping Ratio
1.22 (waste:ore)
pRoCessIng
Product Size
Greater than 130 microns (p80)
Power demand
260 megawatts
Water demand
14 gigalitres
per annum
8 IRon RoAD AnnuAl RepoRt 2014
InDICAtIve ConCentRAte
speCIFICAtIons
Fe
Iron grade
>66.5%
sio2
Silica
AI2o3
Alumina
<4.0%
<2.0%
p
s
Phosphorous 0.005%
Sulphur
0.002%
steADy stAte AnnuAl
pRoDuCtIon
21.5 million tonnes
per annum
mIne lIFe
25 years
25
Key FInAnCIAl AssumptIons (ReAl 2013 teRms)
Capital cost estimate (incl. contingencies)
us$3.98 BIllIon
Received 67% CEIP CFR China price
us$130.00/Dmt
Pre-stripping and preparatory mining works
us$0.48 BIllIon
Capesize freight rate – Cape Hardy
to North Asia
us$17.73/Dmt
Capital intensity
us$185 peR AnnuAl tonne
Long term AUD/USD
0.85
FOB operating cost (ex-state royalty)
us$44.33/Dmt (dry metric tonne)
Nominal post-tax discount rate
12.5%
62% Fe CFR China Index price
us$112.00/Dmt
+ standard grade differential / premium
US$3.00/dmt per 1% Fe above 62%
+ additional CEIP high quality premium
US$3.00/dmt
CPI
2.5% p.A.
Corporate tax rate
30%
Further information on the Mineral Resources and Ore Reserves is set out in Appendices 1 and 2.
IRon RoAD AnnuAl RepoRt 2014 9
mAnAgIng DIReCtoR’s RepoRt continued
CompARAtIve ADvAntAges
pRemIum pRoDuCt
• Consistent high quality iron concentrate providing a
competitive and clean blending solution for steel mills
CApItAl BuIlD
• Competitive US$185 per annual tonne of capacity
• Effective modularisation design mitigates cost and
• Bulk testing has confirmed value in use benefits
schedule risk
for steel mills
• Established long mine life underpins infrastructure
• Increasing desirability over time expected due
to declining average iron ore grades alongside
tightening energy and environmental requirements
• Coarse product has improved transport and handling
characteristics over finer concentrates
investment
• Potential for additional returns through third party
access and mine life extensions
mARKet
• Meets requirements for wider sinter market, not only
opeRAtIonAl metRICs
• 21.5 million tonnes of concentrate production
smaller pellet feed market
• Readily substitutes for Pilbara fines, Brazilian fines
and high grade Chinese domestic concentrates,
with lower solid fuel requirements lifting operating
efficiencies
• Expected quality differential of US$18 per tonne
forecast over the long term iron ore price
per annum
• 500+ employees
• Forecast second quartile positioning on 2018 price
adjusted CFR China cost curve - competitive with
recent large-scale Pilbara developments such as
FMG Solomon
• Annual gross revenues of US$2.80 billion post ramp up
• EBITDA of US$1.36 billion per annum post ramp up
10 IRon RoAD AnnuAl RepoRt 2014
Ore treatment facilities - process line general arrangement
DesIgn hIghlIghts
smARt moDulAR DesIgn
• Processing plant design utilises high density modules
• Wet commissioning of process trains at fabrication site
prior to delivery - minimises schedule and cost risk
• Based on size envelope established by laser survey
tAIlIngs hAnDlIng
• Filtered tailings and waste handling method reduces
both water use and tailings footprint
• Reduced environmental impacts - no tailings dam
• Coarse nature of tailings mitigates handling issues or
of transport route
• Designed for long term outcomes, permanently
embedding lower operating costs
plant downtime
In pIt CRushIng AnD
ConveyIng (IpCC)
• Mine to be designed for IPCC from day one,
not retrofitted
• Orebody characteristics ideally suited to IPCC
• Realises significantly improved safety outcomes
• Savings in trucking fleet, diesel use and manning
• Benefits sustained over life of mine
RAIl AnD poRt DesIgn
• Standard gauge, heavy haulage rail system
• Covered wagons, with secure bottom dump system
• Shiploader capacity of 70Mtpa (at 80% utilisation) -
rapid turnaround of Capesize vessels
• Provision for potential third parties in port footprint
and loading capacity
pRoCessIng plAnt
• Three discrete recovery trains provides high levels of
plant availability and minimises operational downtime
• Gravity circuit reduces power demand
• Cost effective semi-autogenous (SAG) and ball
milling circuit
IRon RoAD AnnuAl RepoRt 2014 11
mAnAgIng DIReCtoR’s RepoRt continued
FInAnCIAl AnAlysIs
Financial modelling of the CEIP demonstrates an attractive IRR of 21.0% over a 25 year operating period and
an NPV(12.5%) of US$2.69 billion. The project has strong economic resilience as demonstrated in the sensitivity
analysis for all key parameters (refer ASX announcement dated 26 February 2014).
Returns from the project may be enhanced by expanding production at an appropriate time, once the construction
and commissioning phase has been successfully completed and operating systems and processes are well
established and stable.
A leverage analysis based upon recent transactions in the Australian resources sector was conducted using a
gearing ratio of 60% with parameters reflecting current market conditions. This exercise demonstrated the positive
impact of gearing, lifting the IRR from 21.0% to 25.6%.
IRon oRe pRICIng
Iron ore pricing for the study was established through the advice of the independent consulting firm, Metalytics Pty
Ltd with long term prices for 62% iron fines CFR China being set at US$112/dmt in real terms (2013). An additional
quality premium of US$18/dmt was established for Iron Road’s >66.5% iron concentrate. Real terms Capesize
freight was assessed by Metalytics at US$17.73/dmt ex Cape Hardy to North Asia.
CApItAl Costs
Capital costs for the CEIP plant, facilities and infrastructure have been established at US$3.98 billion, including a
9.4% contingency as per the table below. Pre-operating mining development costs which will be incurred through
the mining contractor are estimated to add a further US$0.48 billion before production commences. Ongoing
sustaining capital expenditure and ultimately closure costs have also been included in the financial modelling.
area
Ore Treatment Facilities
Mine Site Facilities
Rail System
Port & Marine
Transport Infrastructure & Other Off Site Facilities
Indirects (including 9.4% contingency)
TOTAL
Pre-Operating Mine Development
CApItAl IntensIty
Us$B (2013)
1.07
0.25
0.79
0.49
0.21
1.17
3.98
0.48
In a highly concentrated seaborne supply industry, the iron ore majors deliver brownfield production growth on the
most efficient unit capital basis. However, limited opportunities exist for greenfield and even brownfield developments
below US$150 per annual tonne of capacity.
Benchmarking global projects through capital intensity measures is complicated by differences in the stage of study
reached (scoping through pre-feasibility and finally to DFS). Typically, early stage cost estimation and capital expenditure
tends to increase, as projects pass through more detailed study and development phases. Therefore, capital intensity
comparisons are only relevant where similar levels of confidence in the project estimates have been attained.
CEIP’s projected capital intensity of US$185/t (excluding US$22/t for pre-strip and mining preparation works) is
expected to be highly industry competitive, comparing favourably with projects that are broadly representative. This
includes Rio Tinto’s brownfield IOC expansion (US$213/t), Essar Steel’s Minnesota project (US$243/t), Chile’s CAP
projects ($183/t weighted average) and various Russian and Chinese projects.
12 IRon RoAD AnnuAl RepoRt 2014
opeRAtIng Costs
Total average FOB operating costs over the life of the project are expected to be US$44.33/dry metric tonne (real
$2013), excluding state royalties. South Australian State Government royalties are set at 5% of the value of the
minerals ex-mine gate and upon application to the Minister, a reduced rate of 2% of the value of the minerals
ex-mine gate may be levied for the first five years.
Following improvements to the processing layout and the adoption of the In Pit Crushing and Conveying (IPCC)
approach, energy costs across the operations have declined to now represent 30% of total costs. Other
consumables used in operations comprise a further 27% of total costs.
Wages and salaries, including the mining contractor’s employees, have been based on similar mining operations in
South Australia and represent 15% of the total costs. Operations will continue 24 hours per day, 7 days per week
and maintenance is to be carried out principally on a day work basis with 24 hour coverage for critical breakdowns.
Reduced maintenance workloads in the plant area following layout improvements have delivered reductions in both
labour costs and replacement spares.
otheR Key AssumptIons
item
AUD / USD FX rate
Corporate tax rate
Nominal post-tax discount rate
CPI
assumption
0.85
30%
12.5%
2.5% p.a.
DeBt AnD pRojeCt FInAnCIng
Project debt scenarios have been assessed using a gearing ratio of 60%. Financing assumptions used were based
on recent transactions in the resources sector in Australia and therefore reflect current market conditions. Given that
the project meets typical bank debt service cover ratios and reserve tail requirements under those assumptions, the
Company expects that the project will be able to secure the necessary debt funding on suitable terms to enable
successful financial closure in due course. As is to be expected, gearing to 60% increases the project IRR, lifting it
from 21.0% to 25.6% for the base case with a similar uplift for other alternate scenarios.
For more detailed analysis the reader is referred to the ASX and Media announcement dated 26 February 2014 and
available on both the Iron Road Limited and ASX websites.
IRon RoAD AnnuAl RepoRt 2014 13
mAnAgIng DIReCtoR’s RepoRt continued
CeIp - post DFs ACtIvItIes
Following the completion of the DFS, Iron Road has sought to further optimise elements of the project, as well as
seek independent third party critique and feedback.
A central element of the optimisation work focussed on the In-Pit Crushing and Conveying methodology, with
optimisation underway to scale-up planned nameplate production to 24Mtpa (dry) delivering blended 110-130
micron (p80) concentrate grading ≥66.5% iron and ≤3.5% silica.
To support the potential increase in production rate, a drilling programme was initiated, Stage IX (Gap/Boo-Loo
East). This drilling programme has the objective of building a 25+ year mine life at optimised annual output of
24Mtpa. This will be supported by an optimised pit shell design to refine the IPCC mine plan.
The financial modelling and assumptions used have also been subject to independent review and updated where
relevant – for example, increasing production scenarios, forward exchange rates, industry expert price forecasts,
and quality premiums.
Another concentrate bulk sample (1,080 kilograms) was airfreighted to China for further sintering feed evaluation
at the China Iron & Steel Research Institute (CISRI) Group’s New Metallurgy Hi-Tech Group Co. Ltd. The work is
part of the Company’s continuing work to understand the benefits that CEIP concentrate may bring to potential
customers’ operations. This work is expected to reinforce the previous very positive sintering results as determined
by CISRI in early 2013 and provide additional pellet feed evaluation.
A sufficient quantity of concentrate has been reserved for prospective customers who may wish to conduct their
own internal test work.
pRojeCt AppRovAls
Iron Road submitted the infrastructure Development Application to the South Australian Government under section
46 of the Development Act 1993 (SA) on 16 June 2014. The application includes all infrastructure to be located
outside of the proposed Mining Lease required to support the mining and export of CEIP concentrate.
CEIP was granted Major Project Facilitation (MPF) status by the Australian Federal Government. Deputy Prime
Minister the Hon. Warren Truss, in his capacity of Federal Minister for Infrastructure and Regional Development
granted the MPF status, after Iron Road demonstrated that the CEIP meets the eligibility criteria and is of strategic
significance to Australia, with respect to economic growth, exports, employment and infrastructure development.
The MPF status, which is valid until 31 December 2016:
• Recognises at a national level that the CEIP has strategic significance to Australia;
• Allows for a coordinated approach to Federal Government and State Government approval processes;
• Provides for a single point of contact in the Federal Government to allow for prompt resolution of issues;
• Assists in identifying and accessing relevant government programmes, as appropriate; and
• Is the only project in South Australia to enjoy Federal Government MPF status.
The infrastructure components of the CEIP were declared a Major Development by the Hon. John Rau,
South Australian Minister for Planning in August 2013.
The declaration includes:
• The deep sea port and export facility at Cape Hardy;
• A village to house mine operation staff adjacent to Wudinna; and
• An infrastructure corridor comprising a railway line, power transmission line, water pipeline and bore field.
Government agencies are currently considering appropriate matters to be addressed after which the Development
Assessment Commission (DAC) will set the level of assessment and provide Iron Road with Guidelines. Iron Road
expects the level of assessment to be an Environmental Impact Statement (EIS).
14 IRon RoAD AnnuAl RepoRt 2014
The Mining Lease itself will be subject of an application under the Mining Act, 1971.
A referral under the Environmental Protection and Biodiversity Conservation Act 1999 (Cwlth) in relation to the CEIP
infrastructure has been submitted to the Department of the Environment in Canberra to determine whether the
project will become a controlled action under the Act. The referral relating to the proposed mine will be submitted in
the coming months.
A range of environmental impact and benefit assessments are continuing in relation to all aspects of the CEIP,
including social, economic, dust, groundwater, closure and noise, with all impact assessment documents scheduled
to be completed by the end of the year.
stAKeholDeR engAgement
The beginning of the calendar year 2013 saw the community lead CEIP Community Consultative Committee (CEIP
CCC) established in relation to the proposed mine at Warramboo. An Independent Chairperson was appointed by
the CEIP CCC and Terms of Reference developed. Iron Road has also been working with other community formed
and led consultative groups in the region such as the Port Neill Community Reference Group and the Tumby Bay &
Districts Community Reference Group.
Throughout the year, Iron Road organised and hosted various community and public events across the Eyre
Peninsula, with a series of public meetings and ‘open house’ drop-in sessions held at Warramboo, Wudinna, Cleve,
Port Neill and Tumby Bay. The purpose of these events is to advise community members and interested parties
on all elements of the CEIP including the proposed mine, rail and deep sea port and to provide information on the
results of the DFS. These forums were well attended and gave people numerous opportunities to ask questions of
the Iron Road team and provide feedback and suggestions.
Iron Road continued to meet with other stakeholders such as District Councils, State and Commonwealth
Government agencies, Whyalla 1st and the Eyre Peninsula Natural Resources Management Board.
Community feedback and input is an important component towards establishing a strong and sustainable
project strategy.
IRon RoAD AnnuAl RepoRt 2014 15
mAnAgIng DIReCtoR’s RepoRt continued
gAwleR IRon pRojeCt (gIp)
The GIP is located approximately 25 kilometres north of the standard gauge Trans-Australian Railway that connects
to the Central Australia Railway at Tarcoola.
The project hosts mineralisation anticipated to support a small to medium scale magnetite iron ore mining operation
with the potential to produce a quality magnetite concentrate using a simple beneficiation process.
During June 2012 Iron Road Limited secured 90% ownership of the iron ore rights at Gawler. Shortly afterward
a scoping study was initiated to review the economic viability of potential mining and beneficiation operations.
As part of this study, the Stage III drilling programme commenced during March 2013 at the Boomer prospect.
This programme has provided additional samples for metallurgical test work and sufficient information to allow for
resource modelling of the prospect. The work remains in progress, however it is of lower priority than the CEIP.
CoRpoRAte
In July 2013, Iron Road successfully concluded a fully underwritten non-renounceable entitlement offer of new Iron
Road shares to raise approximately $50.7 million (after costs). The entitlement offer provided funding to complete
the CEIP Definitive Feasibility Study, as well as enabling Iron Road to continue strategic acquisitions of property to
support the combined mining, processing, rail and port operations. Iron Road’s smaller scale Gawler Iron Project
also received a portion of the funds to establish, by means of a scoping study, the potential for shorter term
production with lower capital outlay.
Post the end of the financial year, the Group appointed Mr Howard Rae to replace Mr Lex Graefe as Chief Financial
Officer, following Mr Graefe’s retirement. Mr Rae has comprehensive mining industry experience having served most
recently as the Chief Financial Officer of Rio Tinto subsidiary Argyle Diamonds Ltd, executing a highly successful
business improvement program as part of its transition to a new US$2 billion underground operation. Prior to that,
Mr Rae was the Chief Financial Officer at Aquila Resources Ltd, structuring and negotiating a number of significant
corporate and project funding transactions relating to its large scale mine, rail and port developments.
The year ahead will prove pivotal in our efforts to bring on-board project partners, as we look to move toward the
financing and ultimately construction stages for the project. To this end a data room has been established and
management continues to meet with potential parties across the southeast Asian and Indian subcontinent regions.
I wish to thank all who have put in a significant amount of work and effort into achieving our DFS outcome and look
forward to the year ahead with the anticipation that Iron Road will emerge as one of Australia’s leading iron ore producers.
Andrew Stocks
Managing Director
16 IRon RoAD AnnuAl RepoRt 2014
IRon RoAD AnnuAl RepoRt 2014 17
AppenDIx 1
gloBAl mIneRAl ResouRCe AnD oRe ReseRves stAtement
CeiP Global mineral resource
Location
Classification
Murphy South/Rob Roy
Boo-Loo
Total
Measured
Indicated
Inferred
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
al2O3
(%)
12.84
12.8
12
12
12
P
(%)
0.08
0.08
0.08
0.09
0.08
LOi
(%)
4.5
4.5
4
2.1
4.3
This information was first disclosed under JORC 2004. It has not been updated since to comply with JORC 2012 on the basis
that the information has not materially changed since it was last reported and there have not been any material changes from the
previous twelve months.
Location
Classification
Murphy South/Rob Roy
Proved
Probable
Total
CeiP Ore reserve
tonnes
(mt)
1,871
200
2,071
Fe
(%)
15.6
15.1
15.5
siO2
(%)
53.9
58.5
54.3
al2O3
(%)
12.8
13.8
12.9
P
(%)
0.08
0.08
0.08
LOi
(%)
4.5
5.6
4.6
IRD identified a conceptual exploration target of 2.4 to 5.5 Billion tonnes of magnetite gneiss in the range of 14% to
20% iron*. This is in addition to the existing mineral resource estimate of 3.7 Billion tonnes at 16% iron.
* The potential quantity and grade is conventional in nature since there is insufficient work completed to define the prospects as
anything beyond an exploration target. It is uncertain if further exploration will result in the determination of a Mineral Resource, in
cases other than the Boo-Loo East and the Gap targets. There have not been any material changes in Iron Road Limited’s mineral
resources from the previous year.
goveRnAnCe ARRAngements AnD InteRnAl ContRols
The Group has ensured that the ore reserves and mineral resources estimates quoted are subject to governance
arrangements and internal controls. The mineral resource estimate is audited by an external peer review. The ore
reserve estimate was produced by an external service provider and was subject to the provider’s internal auditing
system. The ore reserve and mineral resource estimate were signed off by competent persons independent of Iron
Road Limited.
Ore reserve and mineral resources have been reported as a combination of JORC 2012 and 2004 compliant
estimations. The ore reserve estimate was reported to JORC 2012 standard and identified in the ASX release dated
26 February 2014. This release contains JORC Table 1 through 4 and details the assumptions and methodology for
the mineral resource estimation and the parameters and assumptions used for the preparation of the ore reserve
estimation. The ore reserve is wholly contained within the measured and indicated mineral resource categories.
The mineral resource estimate was reported compliant with the JORC 2004 standard in the ASX release 28 May
2013. This release contains the competent persons authorisation and qualifying notes. It is envisaged that the
mineral resource estimate will be upgraded to JORC 2012 when a material change occurs.
18 IRon RoAD AnnuAl RepoRt 2014
AppenDIx 2
Competent peRsons stAtement
The information in this report that relates to the Exploration Target within EL4849 is based on and fairly represents
information and supporting documentation compiled by Mr Milo Res, a Competent Person who is a Member of
the Australasian Institute of Mining and Metallurgy. Mr Res has sufficient experience that is relevant to the style of
mineralisation and the type of deposits under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Mr Res at the release date of the Exploration Target was a full time employee
of Iron Road Limited and consents to the inclusion in the report of the matters based on this information in the form
and context in which it appears.
The information in this report that relates to Mineral Resources estimated for the Boo-Loo prospect is based on
and fairly represents information and supporting documentation compiled by Mr Ian MacFarlane, who is a Fellow of
the Australasian Institute of Mining and Metallurgy and at the release date of the Mineral Resource statement was a
full time employee of Coffey Mining. Mr MacFarlane has sufficient experience relevant to the style of mineralisation
and the type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”. Mr MacFarlane consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
The information in this report that relates to Mineral Resources estimated for the Murphy South / Rob Roy (MSRR)
prospect is based on and fairly represents information and supporting documentation compiled by Ms Heather
Pearce, who is a member of the Australasian Institute of Mining and Metallurgy, and at the time of issue was a full
time employee of Iron Road Limited. This estimation was peer reviewed by Dr Isobel Clark, who is a Fellow of the
Australasian Institute of Mining and Metallurgy and at the release date of the Resource Statement was contracted
by 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”. Dr Clark consents to the inclusion in the report of the matters based on the information in the form
and context in which it appears.
The information in this report that relates to Mine Reserves estimated for Murphy South / Rob Roy (MSRR) is based
on and fairly represents information and supporting documentation compiled by Mr Harry Warries, a Fellow of the
Australasian Institute of Mining and Metallurgy, and at the release date of the Reserve Statement was a full time
employee of Coffey Mining. Mr Warries 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves”. Mr Warries consents to the inclusion in the report of the matters based on his information in the form
and context in which it appears.
IRon RoAD AnnuAl RepoRt 2014 19
DIReCtoRs’ RepoRt
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 2014.
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
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 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.
Andrew Stocks
Managing Director
Mr Stocks is a Mining Engineer with over 25 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 has led Iron Road as Managing Director from its inception, in 2008. Since
then, Mr Stocks has overseen tremendous growth through to the delivery of a $100
million Definitive Feasibility Study which confirmed the commercial viability of the CEIP
and has positioned Iron Road in its current development-ready phase.
Mr Stocks is an elected councillor on the South Australian Chamber of Mines and
Energy (SACOME) Council.
No other directorships of listed companies have been held in the last three years.
20 IRon RoAD AnnuAl RepoRt 2014
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 Chairman of Alzheimers Australia (NSW), a former Chancellor of Monash
University, former President of the Minerals Council of Australia and former Chairman
of the Australia-Japan Foundation and the Australian National Occupational Health and
Safety Commission. He is also a member of the Sentient Advisory Council and is on the
Advisory Board of Anglo Coal Australia.
In the three years immediately before the end of the financial year, Mr Ellis served as a
director of the following companies:
• Landcare Australia
• MBD Energy Limited*
• Alzheimers Australia (NSW)*
• Earth Resources Development Council
• Pacific Road Corporate Finance Pty Limited
• Australia and New Zealand Banking Group Limited
* denotes current directorships
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 three years immediately before the end of the financial year, Mr Hall served as a
director of the following companies:
• Funds SA*
• Enirgi Group Corp*
• Compliance Committee, Lazard Asset Management Pacific* (Chairman)
• Policy & Compliant Committees, Gresham Private Equity Co-investment Fund*
(Member)
* denotes current directorships
IRon RoAD AnnuAl RepoRt 2014 21
DIReCtoRs’ RepoRt continued
Julian Gosse
Non-executive Director
Mr Gosse has served as a Professional Director for the last 20 years on various Public
Listed Company Boards. Prior to this he was involved in the Stockbroking, Merchant
Banking and Venture Capital Industries.
In the three years immediately before the end of the financial year, Julian Gosse served
as a director of the following companies:
• ITL Limited
• WAM Research Limited*
• Clime Capital Limited*
• Australian Leaders Fund*
* denotes current directorships
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.
In the three years immediately before the end of the financial year, Mr Hume served as a
director of the following companies:
• Golden Minerals Company*
• Norsemont Mining Inc.
• Silver City Minerals Limited*
• Marengo Mining Limited*
• African Energy Resources Limited*
* denotes current directorships
CompAny seCRetARy
Graham Anderson
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.
Mr Anderson is currently the Chairman of Kangaroo Resources Limited, Oakajee
Corporation Limited and Gulf Minerals Corporation Limited
In the three years immediately before the end of the financial year, Graham Anderson
served as a director of the following companies:
• APA Financial Services*
• Pegasus Metals Limited*
• Mako Hydrocarbons Limited*
• Echo Resources Limited
• Tangiers Petroleum Limited
* denotes current directorships
22 IRon RoAD AnnuAl RepoRt 2014
Key mAnAgement peRsonnel
The following persons were key management personnel of Iron Road Limited during the financial year.
Mr Larry Ingle
Mr Lex Graefe – retired 30 June 2014
Larry Ingle
General Manager
Mr Ingle is a geologist, having graduated with a BSc (Hons) and MSc in geology from the
University of the Witwatersrand, Johannesburg, and a MBA from the Graduate School of
Business, Curtin University of Technology, Perth.
Mr Ingle has over 25 years’ experience in the resources industry in southern Africa
and Australia, encompassing mining, tunnelling, exploration, project development and
business improvement. He has held senior positions with various global companies such
as LHPC (JV), Barrick Gold Corporation and Rio Tinto.
Lex Graefe
Chief Financial Officer, retired 30 June 2014
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.
Howard Rae
Chief Financial Officer, appointed 14 July 2014
Subsequent to the end of the financial year Mr Howard Rae was appointed to the
position of Chief Financial Officer.
Mr Rae is a Chartered Accountant with more than 20 years’ experience across the
resources industry in Australia, Asia and Africa and has expertise in the areas of
commercial management, corporate business development, project evaluation and debt
and equity financing.
He has previously held the role of Chief Financial Officer with Argyle Diamonds Limited,
executing a highly successful operational improvement program as part of its transition
to a new US $2 billion underground mine and also with Aquila Resources Limited,
structuring and negotiating a number of significant funding transactions relating to the
development of its US$7 billion West Pilbara mine, rail and port facilities.
IRon RoAD AnnuAl RepoRt 2014 23
DIReCtoRs’ RepoRt continued
Principal activity
1.
The principal activity of the Group during the year was the exploration and evaluation of the Groups’ iron ore
mineral interests at both the Central Eyre Iron Project (CEIP) and the Gawler Iron Project (GIP).
A significant milestone was achieved during the year with the completion of the CEIP Definitive Feasibility Study
(DFS), confirming the technical and financial viability of developing a new integrated mining, rail and port
operation on the Central Eyre Peninsula in South Australia. The construction of the CEIP will require an
investment of US$4 billion to produce up to 24Mtpa of premium high grade iron ore concentrate for export.
Interests in shares and options
2.
As at the date of this report, the interests of the Directors in the shares and options of Iron Road Limited were:
Peter Cassidy
Andrew Stocks
Jerry Ellis
Leigh Hall
Julian Gosse
Ian Hume
Ordinary shares
7,568,686
2,915,938
284,000
400,000
591,000
5,151,203
Options over
ordinary shares
-
-
500,000
-
2,500,000
-
Dividends
3.
No dividends were paid or declared during the financial year and no recommendation for payment of dividends
has been made.
Operating and financial review
4.
Information on the operations and financial position of the Group and its business strategies and prospects is
set out in the Operating and Financial Review on page 36 of this annual report.
Significant changes in the state of affairs
5.
Significant changes in the state of affairs of the Group during the financial year were as follows:
Contributed equity increased by $51,569,891 to $151,676,845 on successful completion of a fully underwritten
entitlement offer announced on 13 June 2013 and completed in July 2013.
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.
The net cash received from the increase in contributed equity has been used principally to fund the completion
of the CEIP DFS and to continue to progress government approvals.
6. Matters subsequent to the end of financial year
During July 2014, the Department for State Development of South Australia approved the Exploration Work
Approval (EWA) application for Iron Road Limited to drill a further 15 holes at the CEIP. The objective of the
stage IX drilling program is to build a 25+ year mine life with annual output of 24Mtpa and to initiate an
optimised pit shell design to refine the in-pit crushing and conveying mine plan.
25
24 IRon RoAD AnnuAl RepoRt 2014
Drilling activities commenced on 27 July 2014 and are expected to continue through to October 2014.
No other matters or circumstances have arisen since 30 June 2014 that has significantly affected the Groups
operations, results or state of affairs.
Likely developments on expected results
7.
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.
Environmental regulation and performance
8.
The Groups’ operations are subject to environmental regulation in respect to mineral tenements relating to
exploration activities on those tenements. No breaches of any environmental requirements 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 (EEO) and the National Greenhouse and Energy Reporting Act 2007 (NGER). The Group
notes that the EEO legislation, together with most elements of the Clean Energy Legislative Package, is likely to
be repealed by the incumbent government, however the Group remains committed to reducing the energy and
greenhouse gas footprint of its operations through the implementation of appropriate design improvements
and technologies wherever this is determined to be feasible.
Remuneration report
9.
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.
G. Additional information
Share-based compensation
The information provided in this remuneration report has been audited as required under section 308 (3C) of
the Corporations Act 2001.
A Directors and key management personnel disclosed in this report
Non-executive and executive directors
Peter Cassidy
Andrew Stocks
Jerry Ellis AO
Leigh Hall AM
Julian Gosse
Ian Hume
26
IRon RoAD AnnuAl RepoRt 2014 25
DIReCtoRs’ RepoRt continued
Other key management personnel
Position
Name
General Manager
Larry Ingle
Chief Financial Officer, retired on 30 June 2014
Lex Graefe
Chief Financial Officer, appointed on 14 July 2014
Howard Rae
Principles used to determine the nature and amount of remuneration
B
Remuneration Policy
The remuneration policy of Iron Road Limited has been designed to align individual objectives with those of the
business and its shareholders, 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 manage the
Group and execute its strategy.
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 former Chief Financial Officer who was on a
daily rate) receive a base salary (which is determined by factors such as role responsibilities and experience) and
superannuation. The Board reviews executive packages annually by reference to individual 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 and do not receive any other retirement benefits. Some individuals, however, may choose
to sacrifice part of their base salary to increase payments towards superannuation.
The Board’s policy is to remunerate non-executive directors at market rates for comparable companies on the
basis of their time commitment and respective 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 align the long term objectives between the Group, its directors
and executives by encouraging sustained exceptional performance in the realisation of the Groups’ growth
strategy and the enhancement of shareholder value. To date, this has been facilitated through the issue of
share options which may be granted for no consideration, but contain performance related vesting conditions
(share price) or milestone related vesting conditions (completion of the DFS) which must be satisfied within
defined timeframes in order for the options to be exercised. Once vested, the options must be exercised prior
to their expiry date. Options are granted under the plan for no consideration and there are no participating
rights or entitlements inherent in the options. No share options were granted during the year.
27
26 IRon RoAD AnnuAl RepoRt 2014
The Board continues to consider new long term incentive schemes as part of its review of the Group’s
remuneration policies for the coming year.
For details of directors and executives interests in options at year end, refer to section D of the Remuneration
Report.
Share trading policy
The trading of shares held by directors and employees is subject to and conditional upon compliance with the
Groups’ employee share trading policy. Directors and employees are prohibited from entering into any hedging
arrangements over unvested options under the company’s employee option plan. The Group would consider a
breach of this policy as gross misconduct which may lead to disciplinary action.
Voting and comments made at the Group’s 2013 Annual General Meeting
Iron Road Limited received more than 99% of “yes” votes on its remuneration report for the 2013 financial year.
The Group did not receive any specific feedback at the AGM or throughout the year on its remuneration
practices.
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 market remuneration rates for key management personnel. Under this engagement CRHR Consulting
provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 and was paid
$5,000 for these services. CRHR Consulting has confirmed that the above recommendations have been made
free from undue influence by members of the Groups key management personnel.
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 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.
28
IRon RoAD AnnuAl RepoRt 2014 27
DIReCtoRs’ RepoRt continued
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.
a) Key management personnel compensation
Short term employee benefits
Non-monetary
benefits
$
Cash salary
and fees
$
Allowances Superannuation
Long term
benefits*
Annual & long
service leave
$
Share based
payments
Options
$
Post
employment
benefits
$
$
2014
Directors
Peter Cassidy
Andrew Stocks
Jerry Ellis
Leigh Hall
Julian Gosse
Ian Hume
Other key management personnel
Larry Ingle
Lex Graefe (retired effective 30 June 2014)
Total compensation
*Long term benefits represent a non-cash movement in annual leave and long service leave during the year.
54,500
415,908
50,000
50,000
50,000
50,000
-
25,000
4,625
4,625
-
4,625
-
77,769
-
-
-
-
320,233
234,373
1,225,014
25,897
-
103,666
35,576
-
35,576
24,540
21,664
85,079
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
54,500
518,677
54,625
54,625
50,000
54,625
406,246
256,037
1,449,335
Post
employment
benefits
Short term employee benefits
Non-monetary
benefits
$
Cash salary
and fees
$
$
Allowances Superannuation
2013
Directors
Peter Cassidy (appointed 11 October 2012)
Andrew Stocks
Jerry Ellis
Leigh Hall (appointed 31 October 2012)
Julian Gosse
Ian Hume
Matthew Keegan (ceased to be a director 11
October 2012)
Other key management personnel
Larry Ingle*
Lex Graefe
39,494
290,000
50,000
33,333
50,000
50,000
19,444
290,000
320,067
1,142,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39,520
-
39,520
48,333
-
48,333
Long term
benefits
Long service
leave
$
Share based
payments
Options**
$
Total
$
-
60,812
-
-
-
-
-
( 74,683)
-
-
-
-
39,494
302,229
54,500
36,333
50,000
54,500
-
-
21,194
42,955
-
103,767
-
-
446,908
345,724
( 74,683) 1,350,882
$
-
26,100
4,500
3,000
-
4,500
1,750
26,100
25,657
91,607
*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.
29
28 IRon RoAD AnnuAl RepoRt 2014
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed remuneration
2014
2013
At risk - LTI
2014
2013
Directors
Peter Cassidy (appointed 11 October 2012)
Andrew Stocks
Jerry Ellis
Leigh Hall (appointed 31 October 2012)
Julian Gosse
Ian Hume
Matthew Keegan (ceased to be a director 11 October 2012)
Other key management personnel
Larry Ingle
Lex Graefe (retired effective 30 June 2014)
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
There were no cash bonuses awarded to directors or key management personnel during the year.
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:
Balance at the
start of period
2014
Directors of Iron Road Limited
500,000
Jeremy Ellis
2,500,000
Julian Gosse
Other key management personnel of the Group
3,000,000
Larry Ingle
Granted as
compensation
Exercised
Expired
Balance at the
end of year
Vested and
exercisable Unvested
-
-
-
-
-
-
-
-
500,000
2,500,000
500,000
2,500,000
(3,000,000)
-
-
-
-
-
Balance at the
start of period
2013
Directors of Iron Road Limited
9,420,000
Andrew Stocks
500,000
Jeremy Ellis
2,500,000
Julian Gosse
Matthew Keegan
3,780,000
Other key management personnel of the Group
3,000,000
Larry Ingle
Lex Graefe
-
Granted as
compensation
Exercised
Expired
Balance at the
end of year
Vested and
exercisable Unvested
-
-
-
-
-
-
-
-
-
(9,420,000)
-
-
-
500,000
2,500,000
(1,400,036)
(2,379,964)
-
-
500,000
2,500,000
-
-
-
-
-
3,000,000
3,000,000
-
-
-
-
-
-
-
-
30
IRon RoAD AnnuAl RepoRt 2014 29
DIReCtoRs’ RepoRt continued
c) Share holdings
The numbers of shares in the Group 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.
2014
Directors of Iron Road Limited
Peter Cassidy
Andrew Stocks
Jerry Ellis
Leigh Hall
Julian Gosse
Ian Hume
Other Key Management Personnel of the Group
Larry Ingle
Lex Graefe
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
3,784,343
2,915,938
142,000
200,000
591,000
5,151,203
-
-
-
-
-
-
-
-
-
-
3,784,343
-
142,000
200,000
-
-
-
-
7,568,686
2,915,938
284,000
400,000
591,000
5,151,203
-
-
2013
Directors of Iron Road Limited
Peter Cassidy
Andrew Stocks
Jerry Ellis
Leigh Hall
Julian Gosse
Ian Hume
Matthew Keegan
Other Key Management Personnel of the Group
Larry Ingle
Lex Graefe
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
-
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
-
-
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 and utilities are paid for by Iron
Road Limited, totalling $35,576 in 2014 (2013: $39,520) which is recognised as an expense.
Service agreements
E
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 $54,500 per annum plus GST, to be reviewed annually by the board. No termination
benefits are payable.
31
30 IRon RoAD AnnuAl RepoRt 2014
Andrew Stocks, Managing Director
Annual base salary of $400,000, including 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 $335,400 including 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, retired 30 June 2014
Daily rate of $1,480 plus statutory superannuation to be reviewed annually by the board.
No fixed term agreement, no termination benefits payable.
Share-based compensation
F
Share options expired during the year are as follows:
Share based compensation benefits (options)
2014
Key Management Personnel
Larry Ingle
Grant date
Vesting
date
Number of
options
%
2008
2008
3,000,000
-
$
-
Exercised
Expired
Number of
options
%
$
Number of
options
Expiry/exercise
date
-
100
1,027,800
3,000,000
6 August 2013
32
IRon RoAD AnnuAl RepoRt 2014 31
DIReCtoRs’ RepoRt continued
There were no options issued during the year, with 3,000,000 options vested as at 30 June 2014. The assessed
fair value at grant date of options awarded to individuals is allocated equally over the period from grant date to
the expected vesting date and the resulting amount is included in the share based payment information in note
22. 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 the 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 2014 are
as follows:
Expiry date
Grant Date
4102 rebmeceD 519002 rebmeceD 32
4102 rebmeceD 519002 rebmeceD 32
4102 rebmeceD 519002 rebmeceD 32
4102 rebmeceD 519002 rebmeceD 32
1102 yluJ 52
6102 yluJ 52
Vesting date
tnarg nopu
tnarg nopu
tnarg nopu
tnarg nopu
tnarg nopu
Exercise
price
6291.0
6242.0
6292.0
6243.0
6299.0
$
$
$
$
$
Value per
option at
grant date
7205.0
$
2194.0
$
9084.0
$
5174.0
$
9407.0
$
Number
under
option
000,526
000,526
000,526
000,526
000,005
000,000,3
Vested and
exercisable
Share options granted under the plan do not have dividend or voting rights and no option holder has any right
under the options to participate in any other share issue of Iron Road Limited.
Additional information
G
No cash bonuses have been awarded to key management personnel during the financial year. As detailed within
Section F: Share-based compensation, share options may be issued from time to time to ensure a strong
alignment between the long term objectives of the Group, its directors and executives by encouraging sustained
exceptional performance in the realisation of the Groups’ growth strategy and the enhancement of shareholder
value.
The table below sets out information about the Groups’ earnings and movements in shareholder wealth over
the last 5 years:
30 June 2011 30 June 2010
$
116,133
$
95,402
( 2,076,551) ( 11,299,132)
0.590
0.840
Revenue
Loss before tax
Share price at 30 June
30 June 2014
$
1,232,188
( 4,207,036)
0.300
30 June 2013
$
794,279
( 5,469,066)
0.170
30 June 2012
$
457,306
( 3,239,233)
0.305
This is the end of the audited remuneration report.
33
32 IRon RoAD AnnuAl RepoRt 2014
10. Directors meetings
The number of meetings of the company's board of directors held during the year ended 30 June 2014 and the
numbers of meeting attended by each director were:
Directors
Peter Cassidy
Andrew Stocks
Jerry Ellis
Leigh Hall
Julian Gosse
Ian Hume
A = Number of meetings attended
Director Meetings
A
B
4
4
4
4
4
2
4
4
4
3
4
3
B = Number of meetings held during the time the director held office
Shares under option
11.
At the date of this report, there were 3,000,000 unissued ordinary shares of Iron Road Limited under option.
Date options granted
23 December 2009
23 December 2009
23 December 2009
23 December 2009
25 July 2011
Expiry date
15 December 2014
15 December 2014
15 December 2014
15 December 2014
25 July 2016
Exercise
price
0.1926
0.2426
0.2926
0.3426
0.9926
$
$
$
$
$
Number under
option
625,000
625,000
625,000
625,000
500,000
3,000,000
Vested and
exercisable
Share options granted under the plan do not have dividend or voting rights. No option holder has any right
under the options to participate in any other share issue of Iron Road Limited.
Movement in shares under option during the reporting period:
Balance at the beginning of the year
Movement of share options during the financial year:
Forfeiture of unlisted options at $0.3426
Forfeiture of unlisted options at $0.9926
Forfeiture of unlisted options at $1.4926
Forfeiture of unlisted options at $1.2426
Total number of options outstanding at 30 June 2014
Movement since the end of financial year
Total number of options as at the date of this report
Number of options
6,300,000
( 3,000,000)
( 100,000)
( 100,000)
( 100,000)
3,000,000
-
3,000,000
Shares issued on exercise of options
No share 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.
34
IRon RoAD AnnuAl RepoRt 2014 33
DIReCtoRs’ RepoRt continued
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.
Insurance of directors and officers
13.
During the financial year, Iron Road Limited paid an insurance premium to insure the directors and officers of
the Group and its controlled entities.
No details of the nature of the liabilities covered and the amount of premium paid in respect of the directors
and officers liability insurance policy have been disclosed as such disclosure is prohibited under the terms of the
policy.
The Company has also 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 Group 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 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 14.
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 35.
Signed in accordance with a resolution of the directors, and on behalf of the board by:
Andrew Stocks
Managing Director
26 September 2014
35
34 IRon RoAD AnnuAl RepoRt 2014
IRon RoAD AnnuAl RepoRt 2014 35
operating and Financial Review
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 in excess
of 1,200 million tonnes in 2013. Over the same period Australian Fines Free On Board iron ore prices have
increased from US$18 per tonne in 2000 to approximately US$95 per tonne at present. The consistently
growing demand throughout Asia for low impurity, high grade magnetite products provides the opportunity for
the development of a new generation of iron ore projects to satisfy demand from steel mills in the region for
more efficient iron ore feedstock.
Following an initial review of regional iron ore opportunities, the company identified the opportunity for the
potential development of the large magnetite-gneiss deposits situated on the Central Eyre Peninsula, now
known as the Central Eyre Iron Project (CEIP) approximately 30km south east of the regional centre Wudinna.
Over the last six years, Iron Road Limited has invested over $100 million in the exploration and evaluation of the
CEIP, achieving a significant milestone during 2014 with the successful completion of its Definitive Feasibility
Study (DFS).
The DFS confirms the financial and technical feasibility of developing a new generation iron ore operation that is
capable of producing up to 24 million tonnes per annum, of premium, high grade iron ore concentrate for
export to Asia over 25+ years, with the potential to extend the mine life as further exploration is undertaken.
The CEIP will include a new 150km rail system on the Eyre Peninsula and a new cape-size port facility at Cape
Hardy.
Over its expected life, the proposed project will create extensive employment and training opportunities in the
region, requiring up to 2,000 employees during construction and approximately 700 personnel during
operations.
Requiring a construction investment of US$4 billion, the CEIP will deliver benefits regionally and nationally in
the form of employment, new infrastructure, community investment, state royalties and federal taxation.
The on-going support of both State and Federal Governments has been of great benefit to the project, which
includes:
Major Development Status granted by the State Government in August 2013; and
Major Project Facilitation Status granted by the Federal Government in April 2014.
This status recognises at a government level, the potential contribution of the CEIP to the state and national
economies and allows for a coordinated approach to progressing regulatory approvals. The CEIP is the only
project in South Australia to be currently granted such status.
Operating results for the year
The principal activities of the Group during the year were the exploration and evaluation of its iron ore
interests, including completion of the Definitive Feasibility Study relating to the Central Eyre Iron Project. All
activities are currently funded by equity capital raised via the Australian Securities Exchange.
As a result of these activities, the Group incurred an operating loss after income tax for the year ended 30 June
2014 of $4,680,363 (2013: $4,829,389). The operating result includes an impairment of $466,839 (2013:
$1,700,787) relating to the Gawler Iron Project which is in accordance with the Groups’ accounting policy to
capitalise, but impair such exploration expenses until a JORC compliant resource is established.
36 IRon RoAD AnnuAl RepoRt 2014
19
operating and Financial Review
Interest income of $1,232,188 (2013: $794,279) was generated from equity contributions being held in interest
bearing deposits until required to fund activities, with the increase attributable to the successful capital raising
completed in July 2013.
Changes in financial position
The Group’s net assets increased by 53% during the year to $135,433,542, primarily as a result of the
capitalisation of exploration and evaluation expenditure relating to the Central Eyre Iron Project, which
amounted to $28,702,095 (2013: $28,015,880).
Completion of the land acquisitions at the proposed port location of Cape Hardy in the current period also
resulted in a 14% increase in property, plant and equipment assets held by Group, compared to the prior year
end.
Liabilities were significantly reduced during the period, with an 80% decrease in trade and other payables at
year end, following the completion of Definitive Feasibility Study consultant and contractor programs.
As a consequence of the above changes and the successful July 2013 capital raising, overall net working capital
increased to $20,637,935 (2013: $3,641,250) providing the Group with substantial cash resources for
optimisation and funding activities over the forthcoming year.
Risk management
Effective risk management is a critical component of the successful execution of the Groups’ growth strategy.
The Board monitors key risk issues and ensures that management develops plans for appropriate risk
management arrangements.
Operational, financial and regulatory risks are considered and addressed by management, with specific areas of
significant risk referred by management to the Board.
In order to prudently manage the Groups’ risk exposures and protect shareholder interests, the Board has
adopted a governance system of oversight that includes:
a budgeting process with an annual budget, together with any periodic revisions to budgets, being
reviewed and approved by the Board;
monthly, half-yearly and annual financial reporting of operating and financial results against budgets
and forecasts;
external auditor review and audit of half-yearly and annual financial reports respectively, including
consideration of the Groups’ internal control and approvals environment necessary for supporting its
risk profile;
cash flow projections to enable accurate monitoring of operational progress and future activity plans
against available cash resources; and
monitoring of capital market conditions to ensure the Group has adequate plans for the sourcing of
funds with which to execute its programs and activities.
The Board is responsible for ensuring that risks and opportunities are identified on a timely basis and that
activities take cognisance of such factors to enable effective risk management. The Board considers that at this
stage of the Groups’ project development operations, it is important for all Board members to be a part of this
process and as such the Board has not established a separate risk management committee.
20
IRon RoAD AnnuAl RepoRt 2014 37
Corporate governance statement
Corporate Governance Statement
This statement provides a summary of the Groups’ key corporate governance practices during the year, which
unless otherwise stated, comply with the recommendations of the Australian Securities Exchange Corporate
Governance Council (ASX Council).
Iron Road Limited and the Board are committed to achieving and demonstrating the highest standards of
corporate governance. The Board continues to review the framework and practices to ensure they meet the
interest of shareholders. As the Groups’ 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
company and its controlled entities together are referred to as the Group in this statement.
Board
The Board is responsible for the corporate governance of the Group. It is committed to ensuring that the Group
adopts control systems that effectively support and promote strong corporate governance practices throughout
the organisation in order to protect the interests of all stakeholders.
Directors are elected by and are accountable to the shareholders, with the primary duties of the Board being to:
appoint and remove the Managing Director;
assess the performance of the Managing Director and executives;
determine the strategic direction for the Group;
monitor the implementation of strategic plans; and
report to shareholders.
The Board has delegated responsibility for the management of the Groups’ activities to the Managing Director,
who is accountable to the Board and supported by the executive management team. The Chair is responsible
for the evaluation of the performance of directors, including the Managing Director and for providing
information on the outcome of these processes for consideration by the Board.
An assessment of the performance of executives is conducted by the Managing Director and key
recommendations on executive roles, responsibilities and remuneration are discussed with the Board.
Meetings of the directors are held throughout the year, to consider business plans, budgets, operational
reports, financial performance and other matters as relevant to the Group’s activities. Executives, external
advisors and auditors are invited to attend Board meetings as appropriate.
Directors have the right to access all relevant information held by Group in order to effectively fulfil their
responsibilities to shareholders and may also obtain independent professional advice on corporate governance
matters. Provided the director obtains the approval of the Chair before incurring such expense, then the Group
will pay the reasonable costs associated with procuring the advice.
Company Secretary
The Company Secretary is responsible for coordinating Board meetings, ensuring accurate minutes are
recorded, advising directors and executives on corporate governance matters and liaising with the ASX.
Independence
The Board is constituted by directors with a diversity of skills and experience, particularly in the areas of
mineral project development, corporate finance and business management. Contrary to ASX Council
recommendations 2.1 and 2.2, a majority of the Board and the Chair are not considered independent because
the Group is of the opinion that during the current stage of its operations, shareholders’ interests are best
served by directors with a strong interest in the achievement of the Groups’ strategic objectives.
38 IRon RoAD AnnuAl RepoRt 2014
37
Corporate governance statement
The Board periodically reviews its composition to ensure that it has the appropriate blend of capabilities to
effectively achieve its corporate objectives and may appoint additional independent directors in the future.
Nomination committee
The full Board undertakes the function of a nomination committee in accordance with its charter, although
contrary to ASX Council recommendation 2.4, it has not established a separate nomination committee because
the Group does not currently have the scale or operational complexity to benefit from the formation of a
separate Board committee.
As part of conducting such functions, the Board periodically reviews its performance, together with the
performance of the Managing Director in discharging the responsibilities delegated to that role, against the
Groups’ strategic objectives and targets contained in annual business plans.
Diversity
The Group is committed to ensuring it is able to attract and retain persons across all levels of the organisation,
including its directors, with the skills and experience necessary to effectively implement its growth strategy
and achieve its corporate objectives. In particular, the recently completed Definitive Feasibility Study for the
proposed Central Eyre Iron Project sets out the Groups’ human resources strategy to successfully achieve the
future growth of the organisation.
Currently there are 11 female employees in the Group, comprising 41% of all employees, with personnel across
the Group reflecting a diverse range of cultural origins. Although there are presently no female persons who
are in executive or director roles, the small size of the Group enables every employee to have close day-to-day
interaction with the executives and directors. As a result, the Group, through its Board and Managing Director,
seeks to foster an environment in which all employees are encouraged to assume a high degree of personal
accountability for contributing to corporate strategic objectives in a team focussed culture, where exceptional
performance is recognised and career development is closely managed.
Contrary to ASX Council recommendations 3.2 and 3.3, there is not a formal diversity policy with measurable
objectives because the size and nature of the Groups’ current activities require it to identify, recruit and retain
persons with very specific skills and experience in project development, regardless of gender or other diversity
criteria. The Board will continue to monitor the relative merits of adopting a formal diversity policy as the
Groups’ size and nature of operations evolve.
Audit committee
The full Board undertakes the function of an audit committee, including inviting the external auditors to attend
Board meetings when the directors are considering half-yearly and annual reports, or other related financial
governance and control matters.
Contrary to ASX Council recommendation 4.1, it has not established a separate audit committee because the
Group does not currently have the scale or operational complexity to benefit from the formation of a separate
Board committee, although it will continue to monitor whether to do so as its operations expand in the future.
Remuneration committee
The duties ordinarily conducted by a remuneration committee are carried out by the full Board in accordance
with its charter, which includes taking external advice on the prevailing market quantum and structure of
comparable director, Managing Director and executive remuneration.
Contrary to ASX Council recommendation 8.1, it has not established a separate remuneration committee
because the Group does not currently have the scale or operational complexity to benefit from the formation
of a separate Board committee, although it will continue to monitor whether to do so as its operations expand
in the future.
IRon RoAD AnnuAl RepoRt 2014 39
38
Consolidated statement of
Consolidated statement of
Comprehensive Income
Comprehensive Income
For the year ending 30 June 2014
For the year ending 30 June 2014
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
For the year ending 30 June 2014
For the year ending 30 June 2014
Revenue from continuing operations
Revenue from continuing operations
Expenses
Expenses
Depreciation
Depreciation
Employee benefits expense
Employee benefits expense
Impairment of exploration expenses
Impairment of exploration expenses
General expenses
General expenses
Professional fees
Professional fees
Travel and accommodation
Travel and accommodation
Marketing
Marketing
Rent
Rent
Administration costs
Administration costs
Loss before income tax
Loss before income tax
Income tax (expense)/benefit
Income tax (expense)/benefit
Loss for the year
Loss for the year
Other comprehensive loss for the year
Other comprehensive loss for the year
Total comprehensive loss for the year attributable to owners of
Total comprehensive loss for the year attributable to owners of
Iron Road Limited
Iron Road Limited
Note
Note
4
4
2014
2014
$
$
1,232,188
1,232,188
2013
2013
$
$
794,279
794,279
5
5
5
5
5
5
6
6
( 280,944)
( 280,944)
( 2,059,353)
( 2,059,353)
( 466,839)
( 466,839)
( 400,954)
( 400,954)
( 755,083)
( 755,083)
( 334,292)
( 334,292)
( 409,742)
( 409,742)
( 467,797)
( 467,797)
( 264,220)
( 264,220)
( 4,207,036)
( 4,207,036)
( 473,327)
( 473,327)
( 4,680,363)
( 4,680,363)
-
-
( 137,059)
( 137,059)
( 1,885,284)
( 1,885,284)
( 1,700,787)
( 1,700,787)
( 303,343)
( 303,343)
( 798,532)
( 798,532)
( 246,165)
( 246,165)
( 502,381)
( 502,381)
( 459,968)
( 459,968)
( 229,826)
( 229,826)
( 5,469,066)
( 5,469,066)
639,677
639,677
( 4,829,389)
( 4,829,389)
-
-
( 4,680,363)
( 4,680,363)
( 4,829,389)
( 4,829,389)
Loss per share for loss attributable to the ordinary equity holders
Loss per share for loss attributable to the ordinary equity holders
of the company:
of the company:
Basic loss per share (cents)
Basic loss per share (cents)
Diluted loss per share (cents)
Diluted loss per share (cents)
21
21
21
21
Cents
Cents
( 0.83)
( 0.83)
( 0.83)
( 0.83)
Cents
Cents
( 1.82)
( 1.82)
( 1.82)
( 1.82)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to
the Consolidated Financial Statements.
the Consolidated Financial Statements.
40 IRon RoAD AnnuAl RepoRt 2014
39
39
Consolidated statement of
Financial position
As at 30 June 2014
Consolidated Statement of Financial Position
As at 30 June 2014
ASSETS
Current assets
Cash and cash equivalents
Bank term deposits
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
Note
2014
$
2013
$
7a
7b
7c
8a
8b
9a
9b
10
9,965,260
11,372,408
491,418
21,829,086
6,909,986
-
2,372,132
9,282,118
10,519,273
104,570,371
115,089,644
136,918,730
9,225,120
75,868,276
85,093,396
94,375,514
927,251
263,900
1,191,151
5,320,513
320,355
5,640,868
294,037
1,485,188
135,433,542
202,745
5,843,613
88,531,901
11
12a
12b
151,676,845
4,758,009
(21,001,312)
135,433,542
100,106,954
4,745,896
(16,320,949)
88,531,901
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the
Consolidated Financial Statements.
40
IRon RoAD AnnuAl RepoRt 2014 41
Consolidated statement of
Changes in equity
For the year ending 30 June 2014
Consolidated Statement of Changes in Equity
For the year ending 30 June 2014
Balance at 1 July 2012
Loss for the year
Total Comprehensive Income for the year
Attributable to owners of Iron Road Limited
Contributed
Accumulated
losses
Equity
$
$
Reserves
$
Note
Total Equity
$
60,659,503 ( 11,491,560)
( 4,829,389)
( 4,829,389)
-
-
4,773,127
-
-
53,941,070
( 4,829,389)
( 4,829,389)
Transactions with owners in their capacity as owners:
Contributions to equity net of transaction costs
11
Share based payments
39,447,451
-
Balance at 30 June 2013
39,447,451
100,106,954 ( 16,320,949)
-
-
-
-
( 27,231)
(27,231)
4,745,896
39,447,451
( 27,231)
39,420,220
88,531,901
Loss for the year
Total Comprehensive Income for the year
-
-
( 4,680,363)
( 4,680,363)
-
-
( 4,680,363)
( 4,680,363)
Transactions with owners in their capacity as owners:
11
Contributions to equity net of transaction costs
12
Share based payments
Balance at 30 June 2014
51,569,891
-
51,569,891
151,676,845
-
-
-
(21,001,312)
-
12,113
12,113
51,569,891
12,113
51,582,004
4,758,009 135,433,542
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the
Consolidated Financial Statements.
42 IRon RoAD AnnuAl RepoRt 2014
41
Consolidated statement of
Cash Flows
For the year ending 30 June 2014
Consolidated Statement of Cash flows
For the year ending 30 June 2014
Cash flows from operating activities
Research and development tax refund
Payments to suppliers and employees (inclusive of GST)
Interest received
Net cash outflow from operating activites
Cash flows from investing activities
Payments for term deposits
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
Note
2014
$
2013
$
1,172,267
(3,798,008)
1,165,970
(1,459,771)
-
(4,453,446)
795,214
(3,658,232)
(11,372,408)
(33,331,232)
(1,572,847)
(46,276,487)
-
(27,288,688)
(7,781,310)
(35,069,998)
52,374,322
(1,582,790)
50,791,532
40,908,867
(1,770,271)
39,138,596
3,055,274
6,909,986
9,965,260
410,366
6,499,620
6,909,986
20
11
7
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the
Consolidated Financial Statements.
42
IRon RoAD AnnuAl RepoRt 2014 43
notes to the Financial statements
For the year ending 30 June 2014
Notes to the consolidated financial statements
For the year ending 30 June 2014
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 controlled
entities. The financial statements were authorised for issue by the directors on 26 September 2014. The
directors have the power to amend and reissue the financial statements.
(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. Iron Road
Limited is a company limited by shares, incorporated and domiciled in Australia. The financial statements are
presented in Australian Dollars.
(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) Historical cost convention
These financial statements have been prepared under the historical cost convention.
(iii) 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).
(iv) 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. The Group incurred a net loss of $4,680,363 for the year (2013: $4,829,389) and although it had cash
reserves as at 30 June 2014 of $21,337,668, current forecasts indicate that additional funding will be required
toward the end of the 2015 financial year. Management are confident that this additional funding will be
obtained from its shareholders when required to enable the Group to continue to meet its obligations as and
when they fall due. Accordingly, the directors believe that the going concern assumption is appropriate.
(v) New and amended standards adopted by the Group
The Group has applied the following standards and amendments for first time for their annual reporting period
commencing 1 July 2013:
AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of
Interests in Other Entities, AASB 128 Investments in Associates and Joint Ventures, AASB 127 Separate
Financial Statements and AASB 2011-7 Amendments to Australian Accounting Standards arising from
the Consolidation and Joint Arrangements Standards.
AASB 10 Consolidated Financial Statements was issued in August 2011 and replaces guidance on control
and consolidation in AASB 127 Consolidated and Separate Financial Statements and in Interpretation
112 Consolidation – Special Purpose Entities. The Group has reviewed its investments in other entities
43
44 IRon RoAD AnnuAl RepoRt 2014
notes to the Financial statements
For the year ending 30 June 2014
to assess whether the conclusion to consolidate is different under AASB 10 than under AASB 127. No
differences were found and therefore no adjustments to any of the carrying amounts in the financial
statements are required. Under AASB 11, investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights and obligations each investor has,
rather than the legal structure of the joint arrangement. Iron Road Limited has no joint arrangements in
place at 30 June 2014.
AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian
Accounting Standards arising from AASB 119 (September 2011).
The adoption of the revised AASB 119 Employee Benefits has changed the accounting for the Groups’
annual leave obligations. As the Group does not expect all annual leave to be taken within 12 months of
the respective service being provided, annual leave obligations are now classified as long term
employee benefits in their entirety. The entire obligation is now measured on a discounted basis
however the impact of this change was immaterial since the majority of the leave is still expected to be
taken within a short period.
(vi) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2014 reporting periods and have not been early adopted by the Group. The Groups’ assessment of the impact
of these new standards and interpretations is set out below:
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 2017).
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets
and financial liabilities. The standard is not applicable until 1 January 2017 but is available for early adoption.
There will be no impact on the Groups’ accounting for financial assets, as the new requirements only affect the
accounting for financial assets that are designated at fair value through profit or loss and the Group does not
have any such assets. The derecognition rules have been transferred from AASB 139 Financial Instruments:
Recognition and Measurement and have not been changed.
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.
(b) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all controlled entities of Iron Road
Limited as at 30 June 2014 and the results of all controlled entities for the year then ended. Iron Road Limited
and its controlled entities together are referred to in this financial report as the Group.
Controlled entities are all entities (including special purpose entities) over which the Group has control. The
Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Controlled entities 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.
44
IRon RoAD AnnuAl RepoRt 2014 45
notes to the Financial statements
For the year ending 30 June 2014
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 controlled entities have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(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. The Board of Iron Road Limited has been identified as being
the chief operating decision maker.
(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 on bank term deposits is calculated on the term of the deposit and the bank interest rate at
lodgement date and accrued in revenue from continuing operations.
(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.
46 IRon RoAD AnnuAl RepoRt 2014
45
notes to the Financial statements
For the year ending 30 June 2014
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).
(h) Cash and cash equivalents
For the purpose and presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions and fixed term investments with original maturities of
three months or less that are readily convertible to known amounts of cash and are subject to an insignificant
risk of change in value.
Funds held in a term deposit facility for greater than 3 months have been reclassified to bank term deposits in
the consolidated statement of financial position per AASB 107.
(i)
(i)
Investments and other financial assets
Classification
The Group classifies its financial assets as loans and receivables. Management determines the classification of
its investments at initial recognition.
(ii)
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 7) in the balance sheet.
(iii)
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.
46
IRon RoAD AnnuAl RepoRt 2014 47
notes to the Financial statements
For the year ending 30 June 2014
(iv)
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.
(v)
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 and accumulating sick leave that are
expected to be settled wholly 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. All other short-term employee
benefit obligations are presented as payables.
(ii)
Other long term employee benefit obligations
The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service. They are therefore recognised in
the provision for employee benefits and measured as the present value of expected future payments to be
made in respect of services provided by employees 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.
48 IRon RoAD AnnuAl RepoRt 2014
47
notes to the Financial statements
For the year ending 30 June 2014
Not withstanding the classification of annual leave as a long term employee benefit, the related obligations are
presented as current liabilities in the balance sheet if the Group does not have an unconditional right to defer
settlement for at least twelve months after the reporting date, regardless of when 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 22. 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 every six months 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.
(n) 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.
48
IRon RoAD AnnuAl RepoRt 2014 49
notes to the Financial statements
For the year ending 30 June 2014
(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.
(o) 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.
(p) 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.
(q) 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.
(r) 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
50 IRon RoAD AnnuAl RepoRt 2014
49
notes to the Financial statements
For the year ending 30 June 2014
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
Motor vehicles 5 - 10 years
Plant and equipment 3 - 20 years
Buildings & improvements 4 - 40 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 the 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.
(s) Parent entity financial information
The financial information for the parent entity, Iron Road Limited, disclosed in note 23 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.
(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.
50
IRon RoAD AnnuAl RepoRt 2014 51
notes to the Financial statements
For the year ending 30 June 2014
(i)
Recoverability of exploration and evaluation assets
The Groups’ 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 reserves does not allow for economic
development, amounts recorded may require impairment in future periods.
(ii)
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 Groups’ 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.
a) 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, cash and cash equivalents and
bank term deposits.
b) 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:
Cash and cash equivalents
Term deposits with term to maturity greater than 3 months from inception
Trade and other receivables
Total financial assets
2014
$
9,965,260
11,372,408
491,418
21,829,086
2013
$
6,909,986
-
2,372,132
9,282,118
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.
52 IRon RoAD AnnuAl RepoRt 2014
51
notes to the Financial statements
For the year ending 30 June 2014
Financial assets that are neither past due nor impaired are as follows:
Counterparties without an external credit rating
Financial assets with no default in the past
Cash at bank and fixed term deposits
AA-
A
c)
Liquidity risk
2014
$
2013
$
491,418
2,372,132
15,910,433
27,235
16,429,086
6,909,223
763
6,909,986
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Groups’ 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 Groups’ reputation.
The Group manages liquidity risk by maintaining adequate reserves and 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 years.
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
At 30 June 2014
Trade and other payables
Total non-derivatives
At 30 June 2013
Trade and other payables
Total non-derivatives
Less that 6
months
6-12 months
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
927,251
927,251
5,320,513
5,320,513
-
-
-
-
-
-
-
-
-
-
-
-
Total
contractual
cash flows
Carrying
amount
-
-
-
-
927,251
927,251
927,251
927,251
5,320,513
5,320,513
5,320,513
5,320,513
There are no derivative financial instruments.
d) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates which
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
returns. The following market risk exposures have been assessed:
(i)
Currency risk
The Group operates in Australian dollars with infrequent and low value transactions in other currencies. Such
transactions present immaterial currency risk.
52
IRon RoAD AnnuAl RepoRt 2014 53
notes to the Financial statements
For the year ending 30 June 2014
(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 2014, 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 (2013: nil).
(iii)
Price Risk
Changes in commodity prices may impact the Groups’ 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 Groups’ profit or loss or its cash flows.
e) 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 of the Groups’ 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 that are 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.
4. Revenue
Revenue from continuing operations
Interest income
5. Expenses
Loss before income tax includes the following specific expenses:
a) Depreciation
Plant and equipment
Computer equipment
Building Improvements
Office equipment
Motor vehicles
Total depreciation
2014
$
1,232,188
1,232,188
2013
$
794,279
794,279
2014
$
41,583
130,381
84,455
12,065
12,460
280,944
2013
$
37,999
58,800
-
28,170
12,090
137,059
54 IRon RoAD AnnuAl RepoRt 2014
53
notes to the Financial statements
For the year ending 30 June 2014
b) Employee benefits expense
Defined contribution superannuation expense
Share based payments expense
Directors fees
Salaries and wages
Other employee benefits expense
Total employee benefits expense
c)
Impairment of exploration expenses
Exploration expenditure written off during the year*
2014
$
128,659
12,113
254,500
1,570,406
93,675
2,059,353
2013
$
133,913
(27,231)
242,271
1,383,040
153,292
1,885,284
2014
$
466,839
2013
$
1,700,787
*Exploration expenditure relating to the Gawler Project per the Groups accounting policy as disclosed in note 1(l)
6. Income tax
(a) Income tax expense/(benefit)
Current tax benefit
Deferred tax expense
Income tax expense/(benefit)
(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% (2013: 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 expense/(benefit)
2014
$
2013
$
-
473,327
473,327
(1,172,268)
532,591
(639,677)
2014
$
2013
$
(4,207,036)
(1,262,111)
(5,469,066)
(1,640,720)
3,634
1,798
5,432
-
-
1,730,005
473,327
(8,169)
1,640
(6,529)
(1,172,268)
94,098
2,085,742
(639,677)
IRon RoAD AnnuAl RepoRt 2014 55
54
notes to the Financial statements
For the year ending 30 June 2014
(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%
(e) Deferred tax assets and liabilities
2014
$
473,327
2013
$
532,591
2014
$
2013
$
13,159,300
3,947,790
7,398,675
2,219,603
2014
$
2013
$
The balance of deferred tax assets comprises temporary differences attributable to:
33,756,333
Tax losses
792,283
Business related costs
152,215
Accrued expenses
34,700,830
Total deferred tax assets
24,149,237
575,483
163,413
24,888,133
The balance of deferred tax liabilities comprises temporary differences attributable to:
Accrued income
Exploration expenditure
Total deferred tax liabilities
28,184
30,724,856
30,753,040
8,319
22,660,212
22,668,531
Net deferred tax assets
Deferred tax assets not recognised
Net deferred tax assets
3,947,790
2,219,603
(3,947,790)
(2,219,603)
-
-
A net deferred tax asset of $3,947,790 (2013: $2,219,603) 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.
7. Current assets
a) Cash and cash equivalents
Cash at bank and in hand
Term deposits with term to maturity of less than 3 months from inception
Total cash and cash equivalents
2014
$
3,765,260
6,200,000
9,965,260
2013
$
2,637,578
4,272,408
6,909,986
56 IRon RoAD AnnuAl RepoRt 2014
55
notes to the Financial statements
For the year ending 30 June 2014
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
2014
$
9,965,260
2013
$
6,909,986
Cash at bank earns a floating interest rate based on the at call daily rate. Term deposits are presented as cash
equivalents if they have a maturity of three months or less from the date of lodgement. Fixed term deposits are
held from one to six months depending on the cash requirements of the business.
b) Bank term deposits
As at 30 June 2014, the Group held $11,372,408 on deposit for greater than three months duration.
Term deposit with term to maturity of 4 months from inception
Term deposit with term to maturity of 5 months from inception
Term deposit with term to maturity of 6 months from inception
Total bank term deposits
2014
$
5,400,000
5,700,000
272,408
11,372,408
2013
$
-
-
-
-
Interest rate 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 and bank term deposit
mentioned above.
c) Trade and other receivables
Research and development tax refund
GST receivable
Interest receivable
Prepayments
Other receivables
Total trade and other receivables
2014
$
-
285,307
93,948
77,349
34,814
491,418
2013
$
1,172,268
1,079,972
27,729
54,727
37,436
2,372,132
As at 30 June 2014, other receivables that were past due or impaired were nil (2013: nil). Due to the short term
nature of the current receivables, their carrying amount is assumed to approximate fair value.
Credit 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 Groups’ trade receivables.
56
IRon RoAD AnnuAl RepoRt 2014 57
notes to the Financial statements
For the year ending 30 June 2014
8. Non-current assets
a) Property plant and equipment
In November 2013, the Group purchased the final parcel of land at the proposed deep water port facility at
Cape Hardy, South Australia.
As land is not depreciated, the Group has split the land and buildings category disclosed in 2013 into two
separate accounts going forward. In the case of leasehold improvements, these have been reclassified to
buildings & improvements and depreciated over the term of the lease.
Reconciliation of the carrying amounts of property, plant and equipment:
Land &
Buildings
Buildings &
Improvements
Land
Plant &
Equipment
Equipment
Computer
Equipment
Office
Motor
Vehicles Total
At 30 June 2012
Cost or fair value
Accumulated Depreciation
Net book amount
1,221,545
-
1,221,545
Year ended 30 June 2013
Opening net book value
Transfer In/Out
Additions
Depreciation charge
Closing net book amount
At 30 June 2013
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2014
Opening net book value
Transfer In/Out
Additions
Depreciation charge
Closing net book amount
At 30 June 2014
Cost or fair value
Accumulated depreciation
Net book amount
1,221,545
7,201,079
-
8,422,624
8,422,624
-
8,422,624
8,422,624
(8,422,624)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,577,356
1,401,062
-
8,978,418
8,978,418
-
8,978,418
58 IRon RoAD AnnuAl RepoRt 2014
-
-
-
-
-
-
-
-
-
-
170,244
(38,003)
132,241
182,678
(41,969)
140,709
59,886
(20,102)
39,784
60,105
(13,515)
46,590
1,694,458
(113,589)
1,580,869
132,241
-
132,724
(37,999)
226,966
140,709
-
248,576
(58,800)
330,485
39,784
-
194,197
(28,170)
205,811
46,590
-
4,734
(12,090)
39,234
1,580,869
-
7,781,310
(137,059)
9,225,120
302,968 431,254 254,083 64,839 9,475,768
(250,648)
9,225,120
(100,769)
330,485
(76,002)
226,966
(48,272)
205,811
(25,605)
39,234
-
977,742
2,250
(84,455)
895,537
226,966
-
14,597
(41,583)
199,980
330,485
-
140,263
(130,381)
340,367
205,811
(132,474)
16,925
(12,065)
78,197
39,234
-
-
(12,460)
26,774
9,225,120
-
1,575,097
(280,944)
10,519,273
317,565 571,517 120,098 64,839 11,050,865
(531,592)
10,519,273
(231,150)
340,367
(117,585)
199,980
(38,065)
26,774
(41,901)
78,197
998,428
(102,891)
895,537
57
notes to the Financial statements
For the year ending 30 June 2014
b) Exploration and evaluation expenditure
Opening balance
Tenement acquisitions during the period
Additions during the period
Impairment of exploration expenses
Closing balance
2014
$
2013
$
75,868,276
47,852,396
-
29,168,934
(466,839)
104,570,371
-
29,716,667
(1,700,787)
75,868,276
Following the February 2014 release of the Definitive Feasibility Study, the carrying amount of exploration asset
for the CEIP has been assessed for impairment indicators per AASB 6 Exploration for and Evaluation of Mineral
Resources. Whilst commercial viability is demonstrable, active operations are continuing with optimisation
studies and an additional drilling programme underway to allow for optimised pit shell design and to confirm
the eastern extension of the Boo-Loo prospect.
Exploration expenditure on the GIP has continued to be impaired per the Group’s accounting policy as outlined
in note 1(l).
9. Current liabilities
a) Trade and other payables
Trade payables
Accruals
Other payables
Total trade and other payables
2014
$
174,118
752,117
1,016
927,251
2013
$
3,265,547
2,054,134
832
5,320,513
The carrying amount of trade and other payables are assumed to approximate their fair values, due to their
short term nature.
b) Provisions
Employee benefits
Drilling program compensation provision
Total provisions
2014
$
263,900
-
263,900
2013
$
220,691
99,664
320,355
c) 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. At 30 June 2014, there were no drilling programs in place and all
compensation provided for had been paid in full.
58
IRon RoAD AnnuAl RepoRt 2014 59
notes to the Financial statements
For the year ending 30 June 2014
d) Movements in provisions
Movements in each class of provision during the financial year are set out below:
2014
Carrying amount at the start of the year
Charged/(credited) to profit or loss
- additional provision recognised
- unused amounts reversed
Amounts used during the year
Carrying amount at the end of the year
Employee
benefits
Drilling
compensation
provision
220,691
99,664
148,311
-
(105,102)
263,900
-
(73,715)
(25,949)
-
Total
320,355
74,596
(131,051)
263,900
e) 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. 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 60% of the carrying value will be carried
beyond 12 months.
10. Non-current liabilities
Non-current liabilities - Provisions
Employee benefits - long service leave
Other liabilities
Total provisions
11. Contributed equity
a) Share capital
Ordinary shares - fully paid
Deferred tax expense recognised in equity
Cost of capital raising
2014
$
213,482
80,555
294,037
2013
$
155,523
47,222
202,745
Note
11(b)
2014
Shares
581,936,904
2013
Shares
290,968,452
-
-
-
-
581,936,904
290,968,452
2014
$
152,481,276
473,327
(1,277,758)
151,676,845
2013
$
101,568,371
532,591
(1,994,008)
100,106,954
60 IRon RoAD AnnuAl RepoRt 2014
59
notes to the Financial statements
For the year ending 30 June 2014
b) Movements in ordinary share capital
Details
Date
Opening balance
1 July 2012
Issue of ordinary shares
16 August 2012
11 September 2012 Issue of ordinary shares
23 January 2013
8 March 2013
30 June 2013
30 June 2013
30 June 2013
23 July 2013
30 July 2013
30 June 2014
30 June 2014
30 June 2014
Exercise of unlisted options
Exercise of unlisted options
Cost of capital raising
Deferred tax expense recognised in equity
Balance
Issue of ordinary shares
Issue of ordinary shares
Cost of capital raising
Deferred tax expense recognised in equity
Balance
Note
Number of
shares issued*
161,207,273
19,425,851
105,510,292
2,825,036
2,000,000
-
-
11(e)
11(e)
290,968,452
173,044,538
117,923,914
-
-
581,936,904
Issue price
$
0.32
$
0.32
$
0.19
$
$
0.19
$
-
$
-
0.18
$
0.18
$
-
$
$
-
60,659,503
6,216,272
33,763,293
544,102
385,200
(1,994,008)
532,591
100,106,954
31,148,017
21,226,305
(1,277,758)
473,327
151,676,845
* 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.
d) Movements in unlisted options on issue
Date
1 July 2013
23 January 2013
23 January 2013
23 January 2013
23 January 2013
23 January 2013
8 March 2013
30 June 2013
6 August 2013
31 March 2014
31 March 2014
31 March 2014
30 June 2014
Details
Opening 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
Forfeiture of unlisted options
Forfeiture of unlisted options
Forfeiture of unlisted options
Forfeiture of unlisted options
Balance
Number of
shares
22,925,000
(3,420,000)
(6,000,000)
(2,825,036)
(879,964)
(1,500,000)
(2,000,000)
6,300,000
(3,000,000)
(100,000)
(100,000)
(100,000)
3,000,000
Issue price
$
$
$
$
$
$
0.34
0.19
0.19
0.19
0.34
0.19
$
$
$
$
0.3426
0.9926
1.2426
1.4926
Additional information relating to the Iron Road Limited Employee Option Plan is set out in note 22.
60
IRon RoAD AnnuAl RepoRt 2014 61
notes to the Financial statements
For the year ending 30 June 2014
e) Capital raising
On 13 June 2013, the Group announced a fully underwritten one for one non-renounceable entitlement offer of
new Iron Road Limited shares at an offer price of $0.18 per new share. 290,968,452 shares were issued in July
2013 which rank equally with existing shares in Iron Road Limited.
f) Capital risk management
The Groups’ objectives when managing capital are to safeguard their ability to continue as a going concern.
There were no changes to the Groups’ 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.
12. Other reserves and retained earnings
a) Reserves
Share based payments reserve
Date
1 July 2012
Details
Opening balance
Unvested options expired
Options expensed
Transfer from options issue reserve
Balance
Options expensed
Balance
30 June 2013
30 June 2014
$
4,499,877
(74,683)
47,452
273,250
4,745,896
12,113
4,758,009
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
1 July 2012
30 June 2013
30 June 2014
Details
Opening balance
Transfer to share based payment reserve
Balance
Balance
$
273,250
(273,250)
-
-
The options issue reserve has been transferred to the share based payments reserve and is shown for
comparison purposes only.
b) Accumulated losses
Date
1 July 2012
1 July 2013
30 June 2014
Details
Opening balance
Net loss for the year
Balance
Net loss for the year
Balance
62 IRon RoAD AnnuAl RepoRt 2014
61
$
(11,491,560)
(4,829,389)
(16,320,949)
(4,680,363)
(21,001,312)
notes to the Financial statements
For the year ending 30 June 2014
13. Dividends
There have been no dividends paid during the current year or prior years (2013: nil).
14. 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
Audit and review of financial reports under the Corporations Act 2001
(b) Non audit services
Taxation compliance services
Total remuneration of BDO Audit (WA) Pty Ltd
Total auditors remuneration
2014
$
2013
$
62,000
46,050
108,050
51,465
8,500
59,965
2014
$
2013
$
-
-
-
108,050
15,456
-
15,456
75,421
Contingencies
15.
There are no material contingent liabilities or contingent assets of the Group at reporting date.
16.
Commitments
a) Exploration commitments
All of the company’s tenements are situated in the 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, as follows:
Within one year
2014
$
2013
$
1,060,000
1,135,000
62
IRon RoAD AnnuAl RepoRt 2014 63
notes to the Financial statements
For the year ending 30 June 2014
No estimate has been given of expenditure commitments beyond 12 months as this is dependent on the
ongoing assessment of operations.
b) Capital commitments
During the year the Group finalised a contractual commitment to purchase land at Cape Hardy in South
Australia and has no outstanding capital commitments.
Within one year
Later than one year but no later than two years
Total capital commitments
c)
Lease commitments: Company as lessee
2014
$
-
-
-
2013
$
1,536,373
-
1,536,373
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
Total lease commitments
17. Related party transactions
a) Parent entities
2014
$
405,424
640,148
-
1,045,573
2013
$
330,022
942,951
-
1,272,973
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 2014 owned 72.85% (2013:
57.87%) of the issued ordinary shares of Iron Road Limited.
b) Subsidiaries
Interests in subsidiaries are set out in note 18.
c) Key management personnel
Short term employee benefits
Long term employee benefits
Post employment benefits
Share based payments
Total compensation
2014
$
1,260,590
103,666
85,079
-
1,449,335
2013
$
1,230,191
103,767
91,607
(74,683)
1,350,882
Detailed remuneration disclosures are provided in the Remuneration Report on page 25.
64 IRon RoAD AnnuAl RepoRt 2014
63
notes to the Financial statements
For the year ending 30 June 2014
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
2014
$
26,329
88,793
54,500
1,047,486
69,292
1,286,400
2013
$
26,411
-
39,494
80,356
52,625
198,886
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
There were no other related party transactions during the year.
2014
$
2013
$
-
13,625
-
-
13,625
16,512
13,625
80,356
52,625
163,118
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.
64
IRon RoAD AnnuAl RepoRt 2014 65
notes to the Financial statements
For the year ending 30 June 2014
18. Investment in controlled entities
Name of entity
Parent entity
Iron Road Limited
Controlled entities
IRD Corporate Services Pty Ltd
IRD Group Finance Pty Ltd
IRD Port Assets Midco Pty Ltd
IRD Port Assets Holdings Pty Ltd
IRD Rail Assets Holdings Pty Ltd
IRD Port Assets Pty Ltd
IRD (Central Eyre) Pty Ltd
IRD (Gawler) Pty Ltd
IRD Train Operations Pty Ltd
IRD Track Services Pty Ltd
IRD Marine Operations Pty Ltd
IRD Cargo Services Pty Ltd
IRD Mining Operations Pty Ltd
Equity holding
2014
%
2013
%
Cost of parent entities
investment
2014
$
2013
$
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
100
100
100
100
100
10
100
100
100
100
100
100
100
100
100
100
100
100
10
100
100
-
-
-
-
-
Iron Road Limited and all of its subsidiaries are located and incorporated in Australia.
19. Events occurring after the reporting period
During July 2014, the Department for State Development of South Australia approved the Exploration Work
Approval (EWA) application for Iron Road Limited to drill a further 15 holes at the CEIP. The objective of this
stage IX drilling program is to build a 25+ year mine life with annual output of 24Mtpa and to initiate an
optimised pit shell design to refine the in-pit crushing and conveying mine plan.
Drilling activities commenced on 27 July 2014 and are expected to continue through to October 2014.
65
66 IRon RoAD AnnuAl RepoRt 2014
notes to the Financial statements
For the year ending 30 June 2014
20. Reconciliation of net loss after income tax
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
21. 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
2014
$
2013
$
(4,680,363)
280,944
12,113
(4,829,389)
137,059
(27,231)
33,333 47,222
473,327
532,591
(1,987)
466,839
-
1,700,787
1,882,576
(27,721)
101,168
(1,459,771)
(1,536,150)
84,182
232,697
(3,658,232)
2014
cents
2013
cents
(0.83)
(0.83)
(1.82)
(1.82)
(4,680,363)
(4,829,389)
Number of shares
2014
2013
Weighted average number of shares used as the denominator in
calculating basic and diluted loss per share
562,137,525
264,663,198
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.
22. 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 broadened to include Iron
Road Limited’s employees, as approved by shareholders at the General Meeting on 25 July 2011.
66
IRon RoAD AnnuAl RepoRt 2014 67
notes to the Financial statements
For the year ending 30 June 2014
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 that 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/forfeited
during the year
Balance at
end of
period
Vested and
exercisable at
end of period
-
-
-
-
-
(3,000,000)
(100,000)
(100,000)
(100,000)
625,000
625,000
625,000
625,000
500,000
-
-
-
-
-
625,000
625,000
625,000
625,000
500,000
-
-
-
-
-
(3,300,000) 3,000,000
3,000,000
$ 0.3752 $ 0.3752
$
0.4244
0.19
0.24
0.23
0.34
0.99
$
$
$
$
$
30 June 2014
Director options
23/12/2009 15/12/2014
23/12/2009 15/12/2014
23/12/2009 15/12/2014
23/12/2009 15/12/2014
25/07/2011 25/07/2016
Employee Options
7/08/2008 6/08/2013
24/08/2011 24/08/2016
24/08/2011 24/08/2016
24/08/2011 24/08/2016
Total
Weighted average exercise price
0.3426
0.9926
1.2426
1.4926
$
$
$
$
625,000
625,000
625,000
625,000
500,000
3,000,000
100,000
100,000
100,000
6,300,000
$ 0.4010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68 IRon RoAD AnnuAl RepoRt 2014
67
notes to the Financial statements
For the year ending 30 June 2014
Exercise
price
Balance at
start of
period
Granted
during
the year
Exercised
during the
year
Expired/forfeited
during the year
Balance at
end of
period
Vested and
exercisable at
end of period
Grant date Expiry date
30 June 2013
Director options
23/01/2008 23/01/2013
23/01/2008 23/01/2013
$
$
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
23/01/2008 23/01/2013
23/01/2008 23/01/2013
23/01/2008 23/01/2013
27/05/2008 10/03/2013
23/12/2009 15/12/2014
23/12/2009 15/12/2014
23/12/2009 15/12/2014
23/12/2009 15/12/2014
25/07/2011 25/07/2016
Employee Options
7/08/2008 6/08/2013
24/08/2011 24/08/2016
24/08/2011 24/08/2016
24/08/2011 24/08/2016
Total
Weighted average exercise price
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
22,925,000
$ 0.2821
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,425,000)
(1,400,036)
-
(2,000,000)
-
-
-
-
-
-
-
-
-
(4,825,036)
$
0.1926
(3,420,000)
(6,000,000)
-
(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
3,000,000
100,000 100,000
100,000
100,000
6,300,000 6,100,000
$ 0.2551 $ 0.4010 $ 0.3693
(11,799,964)
-
-
There were no options granted or exercised during the reporting period ended 30 June 2014.
The weighted average remaining contractual life of options outstanding at 30 June 2014 is 0.731 years (2013:
1.02 years).
Total expenses arising from share based payment transactions recognised during the year were as follows:
Options expensed
Unvested options expired
Total share based payment expense
2014
$
12,113
-
12,113
2013
$
47,452
(74,683)
(27,231)
68
IRon RoAD AnnuAl RepoRt 2014 69
notes to the Financial statements
For the year ending 30 June 2014
23. 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
Loss for the year
Total comprehensive loss for the year
2014
$
2013
$
32,584,816
104,433,384
137,018,200
18,178,656
76,215,364
94,394,020
1,191,151
294,037
1,485,188
135,533,012
5,640,868
202,745
5,843,613
88,550,407
151,676,845
4,758,009
(20,901,842)
135,533,012
100,106,954
4,745,896
(16,302,443)
88,550,407
(4,599,399)
(4,599,399)
(4,814,325)
(4,814,325)
b) Guarantees entered into by the parent entity
The company has not provided any financial guarantees as at 30 June 2014.
c) Contingent liabilities of the parent entity
The company had no contingent liabilities as at 30 June 2014.
d) Contractual commitments
The company had no contractual commitments other than those disclosed in note 16 as at 30 June 2014.
70 IRon RoAD AnnuAl RepoRt 2014
69
Directors’ Declaration
Directors’ Declaration
The directors’ of the Group declare that:
1. The consolidated financial statements, comprising the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes in equity, consolidated
statement of cash flows 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 2014 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 2014, 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
26 September 2014
70
IRon RoAD AnnuAl RepoRt 2014 71
72 IRon RoAD AnnuAl RepoRt 2014
IRon RoAD AnnuAl RepoRt 2014 73
Asx Additional Information
For the year ending 30 June 2014
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 19 September 2014.
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
192
477
279
618
135
1,701
Shares held
96,262
1,380,170
2,293,278
19,387,768
558,779,426
581,936,904
b) Twenty largest shareholders
The twenty largest holders of fully paid ordinary shares are:
SANBA II Inv Company
Sentient Executive GP II Limited
Holder name
Sentient Executive GP IV Limited
Sentient Executive GP III Limited
JP Morgan Nominees Australia Limited
SEISUN Capital Pty Ltd
1
2
3 National Nominees Limited
4
5 HSBC Custody Nominees Australia Limited
6
7 DEVIPO Pty Ltd
8
9
10 Cedarose Pty Ltd
11 Anderson, Graham Douglas
12 Anderson, CM & SM
13 Paul, Geoffrey John
14 UBS Wealth Management Australia Nominees
15 BNP Baribas Nominees Pty Ltd
16 Stonecot Pty Ltd
17 Citicorp Nominees Pty Ltd
18 Leadville Investments Pty Ltd
19 Stocks, Claire Margaret
20 Stocks, Andrew James
Shares held
343,259,453
51,558,593
43,040,321
29,131,005
15,230,765
9,861,112
5,151,203
4,704,047
3,486,625
3,257,936
2,824,000
2,500,000
2,200,000
2,150,500
2,034,196
2,005,000
1,891,696
1,500,000
1,442,657
1,442,656
528,671,765
Percentage of
ordinary fully
paid shares
0.02%
0.24%
0.39%
3.33%
96.02%
100.00%
Percentage of
ordinary fully
paid shares
58.99%
8.86%
7.40%
5.01%
2.62%
1.69%
0.89%
0.81%
0.60%
0.56%
0.49%
0.43%
0.38%
0.37%
0.35%
0.34%
0.33%
0.26%
0.25%
0.25%
90.88%
74 IRon RoAD AnnuAl RepoRt 2014
74
Asx Additional Information (cont.)
For the year ending 30 June 2014
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
Shares held
29,131,005
51,558,593
343,259,453
423,949,051
d) Voting rights
All ordinary shares are fully paid and carry one vote per share without restriction.
Interests in mining tenements
e)
Iron Road Limited holds interests in the following mining tenements:
Location
South Australia
Warramboo
Gawler
Western Australia
Windarling
Tenement
Percentage held
EL4849
EL5298 (replaced EL4014)
100%
90% Iron Ore rights
EL77/1236
EL77/1237
EL77/1245
PL77/3508
Expired 18 September 2013
Expired 6th June 2014
Expired 6th June 2014
Expired 30 September 2013
74
IRon RoAD AnnuAl RepoRt 2014 75
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IRon RoAD AnnuAl RepoRt 2014 77
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78 IRon RoAD AnnuAl RepoRt 2014
Iron Road House
Level 6, 30 Currie Street
Adelaide SA 5000
Telephone 08 8214 4400
ASX Code IRD
ABN 51 128 698 108
www.ironroadlimited.com.au