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2023 Report15 October 2009 The Manager Company Announcements Office Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam 2009 Annual Report Please find attached for release to the market the 2009 Annual Report for Maximus Resources Limited. The 2009 Annual Report will also be sent by post to those shareholders who have previously elected to receive a hard copy Annual Report. An electronic copy of the 2009 Annual Report is available on the Company’s website at: www.maximusresources.com/corporate/reports/2009/mxr_ar2009.pdf. Yours faithfully D W Godfrey Company Secretary AnnuAl RepoRt 2009 CORPORATE DIRECTORY MAxIMuS ReSouRCeS LIMIteD ABN 74 111 977 354 Directors Robert Michael Kennedy (Chairman) Simon Andrew Booth (Managing Director) Ewan John Vickery (Non-executive Director) Nicholas John Smart (Alternate for Mr Vickery) Company Secretary and Chief Financial Officer David Wayne Godfrey Registered and Principal Office 62 Beulah Road Norwood, South Australia 5067 Telephone +61 8 8132 7950 Facsimile +61 8 8132 7999 Solicitor DMAW Lawyers Level 3, 80 King William Street Adelaide, South Australia 5000 Telephone +61 8 8210 2222 Facsimile +61 8 8210 2233 Share Registry Computershare Investor Services Level 5, 115 Grenfell Street Adelaide, South Australia 5000 Telephone +61 8 8236 2300 Facsimile +61 8 8236 2305 Auditor Grant Thornton 67 Greenhill Road Wayville, South Australia 5034 Banker National Australia Bank Kent Town, South Australia 5067 Stock Exchange Listing Australia Securities Exchange (Adelaide) Maximus Resources Limited shares are listed on the Australian Securities Exchange ASX code – MXR Website www .maximusresources .com The website includes information about the Company, its strategies, projects, reports and ASX announcements . CONTENTS HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 CHAIRMAN’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 MANAGING DIRECTOR’S REPORT . . . . . . . . . . . . . . . . . . 4 EXPLORATION AND DEVELOPMENT REPORT . . . . . . . . . 6 TENEMENT SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . 25 FINANCIAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 DIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . 30 AUDITOR’S INDEPENDENCE DECLARATION . . . . . . . 36 INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 37 BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . 39 CASH FLOW STATEMENT . . . . . . . . . . . . . . . . . . . . . . 40 NOTES TO THE FINANCIAL STATEMENTS . . . . . . . . . 41 DIRECTORS’ DECLARATION . . . . . . . . . . . . . . . . . . . . 61 INDEPENDENT AUDIT REPORT . . . . . . . . . . . . . . . . . 62 CORPORATE GOVERNANCE STATEMENT . . . . . . . . . 65 ASX ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . 69 COMPLIANCE STATEMENTS Disclaimer This Annual Report contains forward looking statements that are subject to risk factors associated with the exploration and mining industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables which could cause actual results or trends to differ materially. Exploration Targets Exploration Targets are reported according to Clause 18 of the JORC Code, 2004. This means that the potential quantity and grade is conceptual in nature and that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. Competent Person The information in this report relates to Exploration Results, Mineral Resources and Ore Reserves is based on information compiled by Mr S A Booth who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Booth is an employee of Maximus Resources Limited. He has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration and consents to the inclusion of the information in this report in the form and context in which it appears. Mr Booth qualifies as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). HIGHLIGHTS GOLD RESOURCES • Equity share of total gold mineral resources 322,000 ounces. SELLHEIM • Inferred alluvial gold resource of approximately 12,500 ounces. • Project review concluded that additional, infill sampling required prior to committing to commercial production. Sampling programme is in progress. ADELAIDE HILLS • Bird in Hand Inferred resource now 589,000 tonnes at 12.3 grams per tonne, containing 237,000 ounces of gold. • Planned drill programme at Deloraine gold prospect, largest historic gold mine in the Adelaide Hills Gold Province. • Exploration aspiration to locate at least one million ounces of gold in the Adelaide Hills. IRONSTONE WELL • Equity share of Flushing Meadows gold deposit totalling 73,000 ounces. BASE METALS NARNDEE • Major airborne EM (REPTEM) survey has located numerous conductive targets prospective for nickel and copper–zinc mineralisation. URANIUM WINDIMURRA • Inferred Resource of 19 million tonnes at 180 parts per million U3O8, containing 3,400 tonnes or 7.5 million pounds of U3O8. CORPORATE • Subsequent to 30 June 2009, the Company announced the appointment Mr Simon Booth as Managing Director. CAPITAL • Maximus raised $1.88 million cash and issued a further $450,000 in securities for tenements and services during the 2008–09 financial year. • Maximus divested its Canegrass project in Western Australia to Flinders Mines Limited (FMS) for $0.2 million cash and 16.92 million FMS shares, for a total notional value of $1.3 million. • Subsequent to year end, Maximus raised $1.70 million from an oversubscribed Share Purchase Plan and an additional $0.36 million from a private placement to professional and sophisticated investors through Australian stockbroking firm, StoneBridge Group. SHAREHOLDERS • Total number of shareholders as at 30 June 2009 was 2,438. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 1 CHAIRMAN’S REPORT Dear Fellow Shareholders The past year has been challenging. The turmoil and fallout from the global financial crisis resulted in a very difficult operating environment for fundraising. Maximus was not alone in being confronted with a rapidly tightening equity market. All exploration companies have been similarly confronted. Although recently we have seen a potential easing in world financial markets with many commentators referring to “green shoots of recovery”, we have had to take some difficult decisions and divest our Canegrass project in order to raise working capital. We have also had to downsize to meet the realities and restrict our exploration operations. 2 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 CHAIRMAN’S REPORT For a junior exploration company, Maximus has an enviable Subsequent to 30 June 2009, Maximus announced the asset base currently totalling approximately 322,000 ounces of gold and 7.5 million pounds of U3O8 – two valuable assets which now provide development opportunities. We have continued to progress our Sellheim alluvial gold project in North Queensland, although slower than hoped. Trial mining commenced in October 2008 and concluded in March 2009. The plant was returned to the hire company and the operation placed on care and maintenance pending a strategic review of the project, funding options and a decision on final plant configuration. We are presently undertaking an infill sampling programme to better appointment of a new Managing Director, Mr Simon Booth. The Company’s Board has elected to reconfigure the management skill sets within Maximus to achieve our current, if somewhat diversified objectives, so that we emerge as a more tightly focused minerals explorer with the likelihood of nearer-term project outcomes. Within managing this process, we want to ensure we equip Maximus for new acquisitions and Mr Booth brings the experience and management mix able to deliver this multi-tasked outcome within what remains a demanding environment for junior explorers. understand the distribution of gold within the alluvial systems Mr Booth replaced Dr Kevin Wills who has stepped aside and elevate the Inferred category resources to Indicated to focus on his role as Managing Director of Flinders Mines category. This information is required to complete the most and who also resigned from the Board of Maximus on cost effective mine plan and the design of a commercial 30 September 2009. Dr Wills was a foundation member of production plant. Your Board remains confident that Sellheim the Board. On behalf of the Board and shareholders, I wish in full production will provide a modest free cash flow, to thank and acknowledge Kevin for his vision and untiring sufficient to fund ongoing corporate expenditure in addition efforts in the formation and evolution of Maximus Resources. to further alluvial and hardrock exploration on the Sellheim The Company’s success in proving the Adelaide Hills Gold tenements. Maximus’ other principal gold assets are the Bird in Hand deposit and Deloraine prospect in the Adelaide Hills. These Province has been driven by Kevin’s faith and enthusiasm and the Company is now well positioned for exploration success and growth during 2009–2010. are the two largest historical hardrock producers in the Hills We have also seen the retirement of another of our region. Maximus has demonstrated that significant potential foundation directors, Mr Gary Maddocks. The Board wishes remains below the zone previously mined at Bird in Hand to acknowledge and sincerely thank Mr Maddocks for his by outlining an Inferred Resource of 598,000 tonnes at tremendous efforts and achievements in the establishment 12.3 grams per tonne of gold. This makes Bird in Hand one of Maximus and the continued development of the Company of the highest grade undeveloped gold deposits in Australia. throughout the past four years. We are excited with the prospect of drilling Deloraine and hope to match our success at Bird in Hand. At the time of writing, the world appears to be making tentative steps towards recovery with an easing in capital Our search for base metal deposits of nickel and copper– markets. We have raised $2 million from a Share Purchase zinc commenced with the flying of a high tech REPTEM Plan and a small placement which will enable us to survey over the whole of the Windimurra–Narndee Complex. progress our exploration efforts at the Deloraine prospect A number of interesting conductive anomalies have been in the Adelaide Hills and also our Narndee base metals located which require further exploration. Several companies project in Western Australia. The SPP was oversubscribed have expressed an interest in entering a joint venture with which indicates strong Maximus covering the base metal targets and preliminary endorsement of the discussions have commenced. We have defined a uranium resource at Windimurra, which contains 7.5 million pounds of U3O8 which is open in several directions, and hence is likely to expand. It is also able to be upgraded by selective mining. Discussions are being held with interested parties for the potential divestment of Windimurra to enable Maximus to focus on its core strategic assets: Adelaide Hills and Narndee. Not only is our industry a price taker, it also has to accept the financial situation of the times. We have to ride the cycle and have the strategies in place to emerge better positioned to take advantage of the next upswing. renewed focus of Maximus and I look forward to your continued support during the coming year. Bob Kennedy Chairman MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 3 MANAGING DIRECTOR’S REPORT In line with most other junior exploration companies, indeed, the market as a whole, Maximus had to draw a deep breath in the face of the financial turmoil of the world markets. Consequently, we were unable to maintain the momentum from last year. However, that previous period of momentum has enabled Maximus to establish an enviable resource base which should enable us to strategically position the Company going forward. Maximus’ equity share of total contained gold in Inferred Resources at Sellheim, Bird in Hand and Yandal is now 322,000 ounces. At the Windimurra Uranium Prospect in Western Australia, there are 7.5 million pounds of U3O8 in the 19 million tonnes of Inferred Resource. Additionally, we commenced gold pre-production activities at our Sellheim gold project in north Queensland. Ironstone Well Gold Sellheim Gold Yilgarn Craton Eromanga Basin Gawler Craton Narndee‒Windimurra Complex Multi-commodity Bird in Hand Deloraine Gold Location of Maximus’ resource projects. 4 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 MANAGING DIRECTOR’S REPORT At Sellheim in North Queensland, the project has progressed Maximus’ immediate plans are initially to establish Sellheim from exploration to development status and, in the year as a profitable gold producer. There is a potentially under review, from July to September 2008, activities much larger alluvial gold target which could provide the advanced to pre-production bulk sampling when much resources for a medium sized gold operation, and additional larger samples were treated. The Company has moved exploration to outline the position of this resource is rapidly from October 2006 when Maximus entered an option necessary. Also in gold, Maximus would like to continue with to purchase agreement over Sellheim. The pre-production its exploration and development activities in the Adelaide bulk sampling also gave encouraging results, leading Hills with the aim of becoming a significant underground gold to the commencement of trial mining and production miner. Our Deloraine prospect is a key focus for us in the on 1 October 2008. Unfortunately, poor reliability of the coming year. We hope to repeat the success we have had at hired equipment being used, together with inclement Bird in Hand. In Western Australia, our exploration focus is north Queensland wet season weather, resulted in mining on the Windimurra–Narndee Complex for economic deposits often being interrupted with consequential higher and of copper, zinc, nickel and platinum group metals. unacceptable operating costs. It was therefore resolved to conclude the trial production in late March 2009. The plant was returned to the hire company and the operation placed on care and maintenance pending a strategic review of the project, funding options and a decision on final plant configuration. In order for these decisions to be made, a Maximus has had to re-assess its strategy in light of the current market uncertainty. Since my appointment, my immediate goals have been to: • Review the production parameters for the Sellheim gold project. programme of additional infill sampling has been initiated • Secure a stronger financial base for the Company. in order to better understand the distribution of gold within the alluvial systems. This information is required to complete the most cost effective mine plan and the design of a commercial production plant. It is hoped that subject to the impact of this year’s wet season, this programme should be • Re-assess all assets of the Company and determine which are core to the Company going forward. • Assess new mineral project opportunities for joint venture or acquisition. completed by late December 2009 with a decision on the Our shareholders have shown strong endorsement for future operating parameters during the March 2010 Quarter. the renewed focus of the Company with the recent Share In the Adelaide Hills, Maximus’ objective is to be able to undertake gold mining at a significant production level. Total recorded historical production is about 300,000 ounces of mostly alluvial and some hardrock gold. Since listing, Maximus has located nearly as much gold as the total historical production. Maximus’ exploration strategy is simply to drill down plunge of the largest previous gold mines in Purchase Plan being oversubscribed. It is important we position ourselves to emerge stronger and able to take advantage of the next upswing. The combined efforts of Dr Wills and Mr Maddocks have established a valuable portfolio of mineral assets which could become the basis for an established mining company and I wish to acknowledge their individual contributions. the Adelaide Hills. Initial work at Bird in Hand has located Maximus is now prepared for the future. We have sufficient an Inferred resource of some 237,000 ounces, which is funding to achieve our immediate objectives and commit to likely to be increased as the deposit remains open at depth. our business oath: Maximus’ main target for this coming year is the historical Deloraine Mine, which was the largest previous gold producer in the Hills, with production of about 50,000 tonnes at 20 grams per tonne for about 30,000 ounces of gold. Maximus anticipates a down plunge extension at Deloraine as at Bird in Hand and has recognised an Exploration Target* of between 0.8 and 1.1 million tonnes containing 15 to 20 grams of gold per tonne. Gold identified at Bird in Hand and targeted at Deloraine have led to Maximus’ aspirational aim of locating one million ounces of gold in the Adelaide Hills. Focus. Discipline. Delivery. SIMON BOOTH Managing Director * Exploration Targets are reported according to Clause 18 of the JORC Code. This means that they are partly conceptual in nature and that considerable further exploration, particularly drilling, is necessary before any Identified Mineral Resource can be reported. It is uncertain if further exploration will lead to a larger, smaller or any mineral resource. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 5 ExPLORATION AND DEvELOPMENT REPORT Review of exploration and development activities WOOLANGA COPPER GOLD SELLHEIM GOLD IRONSTONE WELL GOLD RANKIN BASE METALS Eromanga Basin URANIUM Eromanga Basin WINDIMURRA URANIUM Yilgarn Craton NARNDEE NICKEL COPPER PLATINUM GOLD BASE METALS Figure 1 Location of activities. Gawler Craton BILLA KALINA URANIUM COPPER GOLD ADELAIDE HILLS GOLD BIRD IN HAND DELORAINE GOLD 6 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT (cid:25) (cid:26) (cid:27) (cid:28) (cid:29) (cid:12) (cid:14) (cid:30) (cid:26)(cid:7)(cid:21)(cid:15)(cid:19)(cid:27)(cid:24)(cid:19)(cid:22)(cid:26)(cid:6)(cid:30)(cid:5)(cid:24)(cid:19)(cid:22) (cid:31)(cid:22)(cid:19)(cid:21)(cid:19)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:30)(cid:28) (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:20)(cid:19)(cid:18)(cid:17)(cid:21)(cid:27) (cid:31)(cid:22)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:10) (cid:9)(cid:30)(cid:16)(cid:29)(cid:8)(cid:13)(cid:20) (cid:17)(cid:13)(cid:24)(cid:29)(cid:30) (cid:25) (cid:26) (cid:26) (cid:28) (cid:29) (cid:13) (cid:14) (cid:30) (cid:4)(cid:15)(cid:3)(cid:24)(cid:28)(cid:22)(cid:5)(cid:30)(cid:30)(cid:8) (cid:31)(cid:18)(cid:21)(cid:22)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:31)(cid:26)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25) (cid:12)(cid:15)(cid:11)(cid:18)(cid:28)(cid:17)(cid:30) (cid:16)(cid:24)(cid:19)(cid:15)(cid:26)(cid:14)(cid:15)(cid:28)(cid:13)(cid:23) (cid:17)(cid:28)(cid:16)(cid:15)(cid:14)(cid:26)(cid:13)(cid:15)(cid:12)(cid:11)(cid:10)(cid:9)(cid:28)(cid:8)(cid:7)(cid:6)(cid:5)(cid:15)(cid:26)(cid:4)(cid:15)(cid:10)(cid:3)(cid:2) (cid:31)(cid:18)(cid:21)(cid:1)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:12) (cid:18) (cid:21) (cid:22) (cid:18) (cid:11) (cid:22) (cid:29) (cid:17) (cid:13) (cid:24) (cid:29) (cid:30) (cid:31)(cid:30)(cid:29)(cid:28)(cid:26)(cid:26)(cid:25) (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25) (cid:31)(cid:30)(cid:29)(cid:29)(cid:28)(cid:30)(cid:27)(cid:26) (cid:25)(cid:24)(cid:23)(cid:22)(cid:30)(cid:21)(cid:20)(cid:19)(cid:18)(cid:24)(cid:30)(cid:18) (cid:15)(cid:29)(cid:23)(cid:23)(cid:14)(cid:29)(cid:13)(cid:21) (cid:17)(cid:13)(cid:24)(cid:29)(cid:30) (cid:31)(cid:30)(cid:29) (cid:28) (cid:27)(cid:30)(cid:26) (cid:25)(cid:29)(cid:24)(cid:29)(cid:23)(cid:27)(cid:22)(cid:21)(cid:29)(cid:20)(cid:19)(cid:18)(cid:23) (cid:17)(cid:27)(cid:18)(cid:16) (cid:9)(cid:15)(cid:28)(cid:8)(cid:15)(cid:28) (cid:31)(cid:20)(cid:21)(cid:19)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:7)(cid:30)(cid:30)(cid:10)(cid:30)(cid:28) (cid:31)(cid:20)(cid:21)(cid:18)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:26) (cid:15) (cid:30)(cid:26) (cid:30)(cid:15) (cid:31)(cid:26) (cid:31)(cid:15) (cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:19)(cid:18)(cid:17)(cid:19)(cid:16) (cid:6)(cid:5)(cid:18)(cid:28)(cid:26)(cid:2)(cid:18)(cid:10)(cid:10)(cid:22) (cid:31)(cid:20)(cid:21)(cid:18)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) (cid:25)(cid:30)(cid:28)(cid:24)(cid:26)(cid:1)(cid:18)(cid:22)(cid:27)(cid:24)(cid:19) (cid:31)(cid:20)(cid:21)(cid:22)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) Figure 2 Regional geological setting in the Northern Drummond Basin. QUEENSLAND SELLHEIM GOLD PROJECT 100% Maximus The Sellheim project tenure covers 78 square kilometres and comprises three granted mining leases enclosed within two exploration permits, located 190 km south–southeast of Townsville (Figure 2). A contiguous application for an additional two exploration permits covering 108 square kilometres extends northwards (Figure 3). The immediate district is an active and historic alluvial gold mining centre, called Middle Camp, dating back to 1867, and the underlying geology is considered prospective for the discovery of hard rock gold and copper mineralisation. (cid:20)(cid:18)(cid:19)(cid:19)(cid:15)(cid:10)(cid:18)(cid:24) (cid:31)(cid:22)(cid:21)(cid:22)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23) Regionally, Sellheim is in the highly fertile north Queensland gold belt which has past production plus resources of nearly 30 million ounces gold. Maximus acquired the Sellheim gold project in mid-2008 after a period of exploration under an option to purchase agreement which commenced in October 2006. Following 100% acquisition of the Sellheim project, Maximus commenced bulk sampling, focusing on the Jacks Patch area utilising a hired processing plant. Maximus completed test pit sampling of the alluvial gold potential and then progressed to a trial production phase from early October 2008. The trial production was concluded in late March 2009 and the operation placed on care and maintenance pending a strategic review of the project, funding options and a decision on final plant configuration. Townsville º 8 4 1 0 5km Ayr EPMA17573 EPMA18021 EPM15778 -20º Charters Towers Bowen Lake Dalrymple Burdekin Falls Dam Collinsville (See inset) SELLHEIM 0 25km Mt Coolon Figure 3 Regional location of Sellheim and inset of tenure. ML10269 ML10270 S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh ellh eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim eim River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River River ML10328 EPM13499 Mackay MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 7 ExPLORATION AND DEvELOPMENT REPORT Trial production During August and September 2008, Maximus carried out a phase of pre-production bulk sampling to confirm exploration grades from small test trenches. This achieved encouraging bulk grade and nugget contents and consequently a programme of trial production designed to evaluate alternative mining and treatment methods commenced from October and continued until the operation closed for the year on 21 December 2008. Trial mining and production during this period, mainly from the rich lower ‘A’ horizon at Jacks Patch (Figure 4), averaged 1.5 grams per bcm, a very high grade for an alluvial operation. This production included gold nuggets which represent approximately 30% of the gold recovered, some of specimen quality. Maximus undertook selling of selected nuggets via its website. Response to this initiative was positive, although it has not yet been decided whether to continue when the operation is in full commercial production. The trial production operated with a mobile plant to reduce the cost of trucking ore. Ore was moved from mined trench to the plant by front end loader. During treatment, the scrubber-trommel plant has proved to better disaggregate the ore. This has been factored into future plant designs. Since trial production commenced on 1 October, gravel ore from some 48 trial trenches has been mined. Total ore treated was 8,558 bank cubic metres (bcm) with the recovery of 7,654 grams of gold concentrate for approximately 226 fine oz gold. Trench grades varied between a minimum of 0.18 g/bcm and a maximum of 2.54 g/bcm with an average grade of 0.92 g/bcm. However, the poor reliability of the hired equipment being used, together with inclement north Queensland wet season weather, resulted in mining often being interrupted with consequential higher and unacceptable operating costs. It was therefore resolved to conclude the trial production in late March 2009 despite a three-year Plan of Operations commencing 1 December 2008 to permit full production having been approved by the Queensland EPA. The plant was returned to the hire company and the operation placed on care and maintenance pending a strategic review of the project, funding options and a decision on final plant configuration. Resource estimation During the reporting period the Company upgraded the resource information for the Sellheim project through geological consultant, Peter Hancock of Hancock Consultants. Results were issued in ASX release on 31 March 2009 and are summarised in Table 1. The most significant change in the new resource estimate to that previously reported (1,000,000 bcm @ 0.52 g/bcm for 16,000 ounces gold) has been the removal from the Inferred resource of all ‘B’ horizon resource which is now considered uneconomic and added into the overburden. The effect of this change is a modest reduction in total ounces, but with a significant increase (+65%) in grade. Table 1 Estimate of Indicated and Inferred Resources for ML 10328, Sellheim Project, Queensland, as at 3 December 2008. Field Area Estimated volume Estimated grade Estimated ounces gold Overburden Category Jack’s Patch Golden Triangle Boulder Run Totals ROUNDED Notes m2 68,281 215,177 123,356 407,000 bcm 60,251 199,396 192,208 452,000 Au g/bcm 1.23 0.90 0.71 0.86 2,376 5,778 4,356 12,500 bcm 135,365 Indicated Inferred Inferred 210,044 217,105 563,000 1. bcm = bank cubic metres 2. Estimate excludes recovered floor nuggets. 3. Volumes adjusted to weighted average of vertical intervals of recorded/measurements of vertical thicknesses in test pits. Overburden includes B Horizon. 4. Estimated grades derived by cutting all test pit grades to maximum of 2.30g/bcm following review of results from trial mining. 5. Grams and ounces are unrefined and not 999/1000 fine gold. Estimated Ounces, resource volumes and grades are now only for A Horizon. Overlying B Horizon is excluded from mine plan and considered part of overburden. 6. Trial mining since 3/12/08 to conclusion on 31/03/09 has further reduced the above Jacks Patch Indicated Resource and total resource by 4,031 bcm to rounded 56,000 bcm (56,220 bcm) and 448,000 bcm (447,854 bcm) respectively as at 31/3/09. 7. Golden Triangle and Boulder Run are only Inferred Resources. Closer bulk sampling by test pitting or similar required to raise to ‘Indicated’ status. 8 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT EPM13499 -20º56' ' 6 1 º 7 4 1 ML10328 Trial Plant wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Mt Richardson Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Jacks Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Patch Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Golden Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Triangle Water supply lake Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder Boulder RunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRunRun ' 7 1 º 7 4 1 r e v i R m i e h l l e S -20º57' ML10269 0 250m Trench with slot samples Exploration test pits Inferred Mineral Resource Areas Additional Exploration Target Areas Figure 4 Location of sampling, Inferred Mineral Resources and Exploration Target* areas. Sampling plant with scrubber-trommel. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 9 ExPLORATION AND DEvELOPMENT REPORT Alluvial exploration programme Maximus has conducted an initial assessment of the alluvial gold potential of its Sellheim tenements with a view to outlining sufficient additional alluvial gold resources to support a longer life operation. Towards this end a mapping project to outline potential was carried out in November 2008 by consultant geomorphologist Dr Richard Russell. The work was based on an interpretation of colour aerial photographs followed by field checking and discussions with prospectors who have worked in the area. The mapped area (Figure 5) covers the mid-reaches of the Percy Douglas Creek and the Sellheim River. Relatively intense erosion is taking place in the east while areas of alluvial and colluvial areas, 1 to 3 south of the current mining areas have known gold and from limited recent pitting, Dr Russell has been able to estimate a total Exploration Target* of 0.7 to 1.2 million bcm at an estimated grade of 0.3 to 0.5 g/bcm. Further to Dr Russell’s work, Maximus has estimated from the total area of regional targets outlined, and the average gold content per square kilometre in known Inferred resources and Exploration Targets* that a separate additional Exploration Target* for the 12 other areas (Targets 4 to 15 in Table 2) totalling 5.9 square kilometres is from 9 to 12 million bcm of gold bearing alluvial gravels at a grade of between 0.3 and 0.5 g/bcm. As soon as the commercial plant is established and profitably operating, Maximus will commence outlining this additional gold, which is expected to sustain longer term accretion become progressively more common towards the alluvial gold production from the Sellheim project. west. This has resulted in the formation of terraces along the river alignments and high level abandoned profiles on the flanks of valleys. The potential gold deposits occur where the erosional parts of the system are changing to an accretional regime. The primary source of the gold mineralisation appears to be auriferous quartz veins intruding the Devonian sediments associated with emplacement of granitoids at depth. Fifteen Exploration Targets* have been outlined on Maximus’ tenements. Thirteen of these are shown on Figure 5 and all are listed in Table 2. Three of the Table 2 Regional alluvial targets, Sellheim area. Target No Target name Area Priority Golden Triangle Extended Forbidden Terrace Peters Creek Fans SOG’s Retreat Alan’s Advance Palaeochannel Wyatt Valley AuCu Patch Nuts Lease Sellheim River Terraces Richardson Ridge Southeast Dump Zones Richardson Ridge Southwest Percy Douglas Creek Northeast Boulder Run: Sellheim River Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15 km2 0.20 0.25 0.70 0.15 0.50 0.75 1.40 0.70 1.00 0.25 0.10 0.10 0.10 0.10 0.75 7.05 1 2 3 4 5 6 7 9 8 1 3 4 6 5 2 Sellheim hardrock gold and copper potential Limited investigation of the bedrock gold and copper potential at Sellheim has been undertaken to date as the focus has been on the evaluation of the alluvial gold potential. Compilation of previous exploration indicates widespread metal occurrences of gold, copper, lead and silver in the tenure held. Geological mapping has demonstrated that structural controls are important in the distribution of these metal occurrences, which may represent the upper levels of a larger and deeper magmatic mineralised system. Further evaluation of the hardrock potential will be undertaken once the alluvial plant is in commercial operation. Sellheim infill sampling programme and future development Sellheim is expected to play a strategic role for Maximus over the next one to three years. The expectation is that Sellheim will provide a modest free cash flow, sufficient to fund ongoing corporate expenditure (administration, tenement rentals, listing fees, insurances etc) in addition to further alluvial and hard rock exploration on the Sellheim tenements. This support should enable Maximus to implement a concentrated campaign towards our Adelaide Hills gold project in South Australia and the Narndee base metals project in Western Australia, where the Company and shareholders could gain the greatest short term benefit from exploration success. * See page 5 for an explanation of Exploration Target. 10 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT EPM15778 ' 4 1 º 7 4 1 D o u glas Percy -20º56' 5 6 Creek 7 7 7 4 7 7 7 7 ' 6 1 º 7 4 1 Area 8 - 2.6km Area 9 - 5.8km Maximus additional Exploration Targets 4-15 combined 9-12 million bcm at average recovered grade of 0.3 to 0.5 gm/bcm gold 7 EPM13499 Mt Richardson ML10328 Boulder Run Trial Plant 10 Jacks Patch 1 11 Golden Triangle ML10269 12 River 13 2 15 3 Sellheim 14 0 1000m R.Russell's Exploration Targets 1-3 of 0.7 to 1.2 million bcm at average recovered grade of 0.3 to 0.5 gm/bcm gold ML10270 -20º58' Inferred Mineral Resource Areas Additional Exploration Target Areas Additional Exploration Target Areas identified from photo interpretation and field mapping Figure 5 Location of regional Exploration Targets*. In order to achieve this goal, a tactical review was trommel undersize and feeds to a Knelson concentrator undertaken of the Sellheim project. This review determined which removes the lighter fraction. The concentrate from that the resource as currently known, is too small to support the Knelson concentrator is then further concentrated a capital intensive operation previously envisaged and that over a Gemini table. It is expected that the infill sampling additional infill sampling was required in order to better programme should be completed late 2009, subject to understand the distribution of gold within the alluvial systems the commencement and intensity of the forthcoming wet within ML 10328 and elevate the Inferred category resources season. The sampling programme will infill the previous to Indicated category, or better. This information is required exploration test trenches on an approximate 40 m x 40 m to complete the most cost effective mine plan and the design grid. Each sample should produce approximately 8 bcm with of a commercial production plant. 3 to 4 samples being processed per day. Procurement and fabrication of a new test sampling plant Following completion of the infill sampling programme and was completed during the September Quarter 2009 at evaluation of results, the sampling plant will be operated a cost of approximately $85,000 and the infill trenching in a low capacity production phase whilst the commercial programme has commenced utilising the existing mobile production plant is fabricated and commissioned. Once the equipment. The sampling plant comprises a scrubber- commercial plant is in full production, the sampling plant trommel with metal detector on the oversize discharge will be re-directed to evaluation of the previously described conveyor to recover nuggets. A gravel pump takes the alluvial gold targets on the Sellheim tenements. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 11 ExPLORATION AND DEvELOPMENT REPORT SOUTH AUSTRALIA ADELAIDE HILLS GOLD AND BASE METAL PROJECTS 100% Maximus The Adelaide Hills project, located immediately east of Adelaide, comprises some 3,212 square kilometres of contiguous exploration licences (eight) and applications (three) covering numerous gold and base metal occurrences (Figure 6). The Maximus tenure covers eight of the twelve known goldfields that form the Adelaide Hills Gold Province (AHGP) and all of the significant historic gold producing hard rock mines. Based on a recent review of all available data, Maximus is of the opinion that further exploration within the AHGP is likely to provide more discoveries similar to that made at Bird in Hand. Discovery of an additional resource of similar tenor to Bird in Hand may significantly enhance the value of the Bird in Hand prospect by allowing Maximus to spread the capital costs required to bring both projects into production across a greater resource base. The new Maximus AHGP strategy will focus upon exploration drilling of targets relating to known goldfields in the AHGP, commencing with the historic Deloraine and Eureka gold mines, to locate other gold resources of similar or greater tenor to that discovered at Bird in Hand. ' 0 3 º 9 3 1 Maximus has an aspirational aim of locating over one million ounces of recoverable gold in the Adelaide Hills. This strategy is based upon Maximus’ belief that a total Exploration Target* of some 1,900,000 to 2,400,000 tonnes of gold mineralisation averaging 10 to 15 grams of gold per tonne can be discovered within the AHGP (Figure 7). This target includes the resource already defined at Bird in Hand. It is emphasised that this Exploration Target* is partly conceptual in nature and there is no certainty that further exploration will lead to the estimation of further mineral resources within the AHGP. However, the discovery of such a target could lead to the delineation of several gold resources that, when totalled, would serve as a basis for significant future gold production for at least 10 years. ' 0 3 º 8 3 1 0 10 km -34º30' º 9 3 1 Tarlee Kapunda Nuriootpa Barossa Goldfield Deloraine Goldfield Birdwood Goldfield -35º Woodside Goldfield Woodside ADELAIDE Echunga Goldfield Bird in Hand Kanmantoo Cu Project (Hillgrove) McLaren Vale Strathalbyn Angas Zn Project (Terramin) Goldfield Gold occurrence Base metal occurrence Maximus tenement area Copper Range Kapunda JV Figure 6 Location of Maximus’ exploration tenure and Kapunda JV in the Adelaide Hills Gold Province. * See page 5 for an explanation of Exploration Target. 12 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT BIRD IN HAND DEPOSIT Exploration and resource drilling at Bird in Hand was suspended at the beginning of the December Quarter 2008, pending completion of ground water testing programmes which would form part of pre-feasibility investigations aimed at assessing the viability of a new underground mine at BIH. These tests include re-injection of groundwater under a Managed Aquifer Recharge (MAR) process which is further discussed under ‘Water Studies’ below. Negotiations for access to complete drilling at other historic mine sites within the Bird in Hand mineral claim area were progressed through the year, but are yet to be finalised. Mineral resource The Identified Mineral Resource for the Bird in Hand gold deposit is presented in Table 3. There has been no new drilling or studies since this estimate was prepared by the Company’s project geologist, Dr Graeme McDonald in consultation with the Company’s independent consultant, Maximus deferred commencement of the pre-feasibility study Mr Douglas McLean and reported in ASX release on for the Bird in Hand deposit. This decision resulted from the 8 August 2008. Drillhole locations are shown in Figure 8 and strategic review which highlighted the need for exploration the gold lode shown in the projection in Figure 9. A cross- drilling of targets relating to known goldfields in the district, sectional view is shown in Figure 10. commencing with the historic Deloraine gold mine near Kersbrook and Eureka gold mine less than two kilometres northwest of Bird in Hand. 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approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t approx 4m@ 1.5 to 15g/t Maximus Core Shed Maximus Core Shed Maximus Core Shed Woodside Woodside Woodside Blackbird Mine Blackbird Mine Blackbird Mine E E E E Two In The Bush Mine Two In The Bush Mine Two In The Bush Mine E E 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t Bird In Hand Mine Ridge Mine 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 1 hole 1934 ( Bird In Hand Mine E ( ( Bird In Hand Mine 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t E 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t 6m@ 14g/t E ( Ridge Mine ( ( Ridge Mine E E E m 0 0 0 1 m 0 0 m 0 0 1 0 0 1 Mineral Claim Application Mineral Claim Application Mineral Claim Application Drillhole E Drillhole Drillhole Historic minesite E ( Historic minesite Historic minesite > 1000oz production ( > 1000oz production > 1000oz production Water bores sampled Water bores sampled Water bores sampled 9 3 0 _ D 9 R 3 B 0 _ - D t u R o y B a - L I I t u o y a L E ( 9 3 0 _ D R B - I t u o y a L Nest Egg Mine Nest Egg Mine Nest Egg Mine E E E 500m 500m 500m Figure 7 Bird in Hand deposit loction and proximal targets. Table 3 Estimated Mineral Resources, 100 to 430 metres vertical depth, Bird in Hand gold deposit, Woodside, South Australia. As at 1 August 2008. Zone Resource category Bulk density1 Average width2 Tonnes Main Reef Main Reef White Reef3 Total Mineral Resource4 Indicated Inferred Inferred 2.78 2.78 2.78 metres 6.65 7.48 2.44 160,000 406,000 32,000 598,000 Grade g/t gold 13.6 11.7 13.6 12.3 Contained gold ounces 70,000 153,000 14,000 237,000 1 Density value is based on average measurements of the mineralised zone. 2 Horizon width based on lode dipping approximately 50 degrees to east. 3 Resource limited to 125 to 220 metres below surface. 4 Totals rounded to nearest thousand (tonnage/contained ounces) or first decimal place (grade). MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 13 BH36 BH22 BH33 BH19 BH10 BH12 BH32 BH37 BH09 BH17 BH16 BH02 BH20 BH18 BH21 BH41 Historic Underground Workings BH35 BH34 6,129,600 mN Drillhole collar and trace 0 25 m E m 0 0 0 , 9 0 3 E m 0 0 2 , 9 0 3 BH39 BH40 BH23 BH38 BH30 BH29 BH28w BH24 BH26 BH42 BH27 BH28 BH43 BH25 BH31 Figure 8 Bird in Hand deposit. Surface plan of drillhole locations. SE 100m 200m 300m BH44 Historic workings NW BH35 1.3m@5.3g/t 4.2m@10.8g/t BH34 5m@12.3g/t BH9 9m@31.2g/t BH17 BH18 NSA BH21 20.4m@18.6g/t White BH36 2.5m@1.2g/t 2.4m@11.5g/t BH33 5m@15.6g/t BH32 BH12 9m@10.3g/t BH22 NSA BH19 8.5m@14.4g/t BH37 9.5m@7.7g/t BH40 4m@7.2g/t BH20 6.8m@20.3g/t BH16 5.5m@3.6g/t Reef ef e R 9m@8.0g/t BH41 6.2m@7.4g/t BH29 598,000 tonnes @ 12.3g/t (237,000ozs) BH23 3.8m@1.1g/t BH39 NSA BH46 0.6m@1.14g/t (Hole abandoned prior to target depth due to drilling difficulties) BH27 3m@27.0g/t 2m@4.0g/t BH31 BH25 NSA BH30 5m@31.7g/t BH24 11m@6.3g/t 4m@13.5g/t BH26 ain M BH28 9m@7.1g/t BH43 9.4m@15.1g/t 400m 14.2m@15.5g/t BH42 25m BH44 7.8m@5.3g/t Indicated Resource Inferred Resource Drillhole (Main Reef intersections only) No Significant Assay NSA Figure 9 Bird in Hand deposit. Longitudinal projection showing resource status and drillholes. 14 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT t f a h S n a M d O i l BH34 BH09 BH12 BH32 BH16 BH46 BH29 BH43 BH24 BH42 BH44 BH28 t f a h S a i r o t c i V C ox S a n A q dsto n e uifer U nits W h it e R Tarc (h a o n gin wie Siltsto g w n e all) T a ple y Hill F ot or (fo w all) m atio n e e f M a i n R e e f NW Brig hto n Li m e sto n e Siltstone Sand Limestone Sandstone Monitor Bore 0 100 metres Figure 10 Bird in Hand schematic cross-section. SE - 100m - 200m - 300m - 400m - 500m Water studies A possible solution to some concerns within the community about depressurising the aquifer in the mine area involves injecting groundwater under a Managed Aquifer Recharge (MAR) process. A water pumping test has been proposed to test depressurisation and recharge of the aquifer by the MAR process. The MAR test would re-inject water pumped from the mine area into the aquifer around the mine, thereby returning all water to the aquifer. If these tests demonstrate the groundwater aquifer can be depressurised with minimal impact on its water quality and quantity, then Maximus is of the opinion that a ‘water neutral’ mining operation will be possible. • The provision of a suitable risk assessment. • Approval from the Environment Protection Authority to inject the water from the test pumping into the aquifer. • Agreement by the Company to reimburse the Department of Water, Land and Biodiversity Conservation (DWLBC) for the cost to vary the Notice of Prohibition which is expected to be in the order of $30,000. Upon satisfying the above criteria, the Minister’s Office would then move to final consideration of approval or otherwise of the pump test application. It is the opinion of Maximus and its hydrogeological consultants, Aquaterra, that each of the above conditions is both reasonable and achievable. In November 2008, Maximus made application to the Community consultation relevant government authorities to undertake the water Maximus suspended its independently-chaired public pumping and managed aquifer recharge test to determine meetings from November 2008 until such time as the a base model for any future dewatering of the immediate government authorities determine the outcome of the Bird in Hand area that would precede underground mining. pumping test application. Following resolution of this The Minister for Environment and Conservation subsequently outcome, the Company will then be in a position to advised the Company that he was prepared to consider re-commence the formal consultation meetings and granting of approval for the pumping and injection test, provide interested stakeholders with additional meaningful subject to three criteria being satisfied: information. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 15 ExPLORATION AND DEvELOPMENT REPORT DELORAINE GOLD MINE The historic Deloraine Gold Mine is located some 35 km northeast of Adelaide and 5 km northeast of Kersbrook (Figure 11). Maximus has studied the geology and mining history of the Deloraine mine, which was the largest historical gold producer in the Adelaide Hills. Previous production of about 50,000 tonnes at 20 grams per tonne of gold for about 30,000 ounces was recorded from the old underground Williamstown SOUTH PARA RESERVOIR E Deloraine Mine workings which extended to about 180 metres below surface. Kersbrook In the Company’s June 2008 Quarterly Report and an ASX release on 5 September 2008, Maximus outlined an estimated Exploration Target* at Deloraine based on the assumption that similar mineralisation to that already mined may extend to about 500 metres below the old workings. At average true widths of 3 to 4 metres, this Target would amount to 0.8 to 1.1 million tonnes at a grade of 15 to 20 grams per tonne of gold (Figure 12). MILLBROOK RESERVOIR Birdwood 2 km Mount Torrens Figure 11 Deloraine Mine location. NORTH 1909 to 1941 production 30,500 ozs from 48,700 tonnes at 20 g/t Au SOUTH Main Shaft No. 7 Shaft 115m Target Mineralisation 50m 145m 175m Mineralisation Target Deloraine Exploration Target* tpvm Depth x width x density 300 x 4 x 2.7 = 3240tpvm at 15 g/t 1620oz pvm to 308metres 500,000ozs 60m Target Mineralisation Stoped areas Proposed drillholes *Target is partly conceptual and further exploration may or may not define a Mineral Resource Figure 12 Longitudinal projection showing Deloraine historic workings and proposed drilling. * See page 5 for an explanation of Exploration Target. 16 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT A ground magnetic survey has been undertaken and structural interpretation completed in preparation for drilling EUREKA MINE The Eureka mine is reported to have produced 4,500 ounces of gold at a grade of 16.8 grams gold per tonne from underground workings that extended to approximately 55 metres depth (Figure 7). Maximus has developed an Exploration Target* of 160,000 to 240,000 tonnes at grades of 10 to 15 grams gold per tonne. An access agreement has been reached with the landholder for initial drill testing beneath old workings at this prospect, which is located less than two kilometres northwest of Bird in Hand. This drilling programme will be combined with the proposed programme at Deloraine as a combined contract. OTHER GOLD PROSPECTS IN ADELAIDE HILLS GOLD PROVINCE KAPUNDA JOINT VENTURE Maximus diluting to 25% subject to the Kapunda Joint Venture Agreement The Kapunda Joint Venture covers the historic Kapunda copper mine and surrounding areas in the western part of EL 3064 where Joint Venture manager, Copper Range Ltd, initially has a right to earn 51% equity in metalliferous minerals rights through expenditure of $500,000 over five Joint Venture manager, Copper Range Limited, has advised that assay results were received from drilling completed in the September 2008 Quarter at Kapunda South and Stevens Mine. At the former, copper oxides were intersected in two of the holes including 4 m at 2.4% copper from 4 m in drill hole SKO2. Additional intersections in SKO2 included 22 m at 0.6% copper (from 4 m) and 32 m at 0.2% copper (from 54 m). Abundant pyrite (up to 30%) readily explains the geophysical anomalies being investigated. One RC drill hole (120 m), designed to test an IP anomaly in the vicinity of the former Stephens Mine located 1.6 km to the east of the Kapunda open-cut, intersected minor pyrite associated with quartz veining but visually lacking significant copper mineralisation with assay results all below 1% copper. Copper Range Ltd is reviewing all project data. (Figure 13). A Warden’s Court decision in July 2008 gave Maximus approval to commence drill testing at the Deloraine Mine site, subject to certain conditions being met and compensation payments being made to residents living near the old mine area. Maximus remains committed to drilling beneath the historic mine workings at Deloraine despite being unable to complete the programme of work previously approved by the Warden within the timeframe set. It is anticipated that a further application will be made to the Warden’s Court for the approval of a new timeframe in which to complete the programme now that, since late 2008, the availability and choice of drilling rigs has significantly improved. EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE E m 0 0 2 , 7 0 3 E m 0 0 8 , 6 0 3 6,153,400 mN 6,153,000 mN 0 100 m Deloraine Mine EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE 6,152,600 mN EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Deloraine Central Mine 6,152,200 mN EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Historic Gold Occurrences Possible Fault Interpreted line of lode Figure 13 Deloraine magnetics and interpreted structure. EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Deloraine Queen Mine years. * See page 5 for an explanation of Exploration Target. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 17 -25º º 5 1 1 DeGrussa Prospect (Sandfire Resources) Jundee Flushing Meadows Bronzewing º 8 1 1 Completed Airborne EM survey lines ' 0 3 º 8 1 1 Airborne EM infill areas fffffffffffffffffffffffffffffffffffffffffffffffff Airborne EM Target º 5 2 1 Mount Magnet PbZn Wondinong PGM Au fffffffffffffffffffffffffffffffffffffffffffffffff Au Au fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff Windimurra Uranium Prospect Au -28º Au fffffffffffffffffffffffffffffffffffffffffffffffff Au Mullewa Geraldton Mount Magnet Windimurra Uranium Narndee Anomaly 5 Golden Grove -30º Kalgoorlie -28º30' 0 100 km PERTH º 0 2 1 Figure 14 Narndee–Windimurra and Flushing Meadows (Ironstone Well) project locations. WESTERN AUSTRALIA NARNDEE PROJECT Maximus 90% to 100% E Windimurra Vanadium Deposit (non MXR) fffffffffffffffffffffffffffffffffffffffffffffffff PGM PGM fffffffffffffffffffffffffffffffffffffffffffffffff Corner Well Muleryon Hill Milgoo CuZn Ni PGM Milgoo Nickel/PGM Prospect fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff CuZn Ni PGM Au fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff Maximus has acquired a comprehensive package of tenements covering a total area of 4,990 square kilometres over the Windimurra and Narndee intrusive complexes in Western Australia (Figure 14). The tenure includes 34 granted -29º CuZn 0 20 km exploration licences, 25 applications for exploration licences, Maximus Tenement Area Windimurra-Narndee Complex 22 prescribed prospecting licences, and 42 applications for prescribed prospecting licences (see Figure 15 and the tenement schedule on page 25 for details). Significant mineral occurrences identified in the project area to date, and shown in Figure 15, include: Figure 15 Narndee–Windimurra tenure and prospects. conductive zones of potential interest, designated the Central and NW conductors (Figure 16). Drilling of the two EM conductor zones confirmed the presence of nickeliferous • Nickel, copper and platinum group metals (PGM) in the sulphide mineralisation and anomalous copper with a best layered mafic intrusive bodies forming both the Narndee intersection of 3 metres from 99 metres down hole averaging and Windimurra complexes. 0.4% nickel and 0.5% copper. (Figure 16). • Copper, lead and zinc in both felsic volcanic and structural settings within the basement geology. • Gold in structures within the mafic complexes and in peripheral contact zones of the complexes. • Calcrete-hosted uranium mineralisation in Windimurra, Wondinong and other palaeochannels overlying the older basement geology. MILGOO PROSPECT NICKEL, COPPER, PLATINUM GROUP METALS As part of a regional airborne EM survey (described more fully below), closer spaced (200 m or 100 m) lines were flown over the Milgoo area (Figure 15). Preliminary interpretation of Milgoo data has already confirmed the presence of at least 16 pronounced anomalies, including the two previous ground EM anomalies confirmed by drilling to be due to nickel and copper anomalous sulphides. Many of the newly detected anomalies are associated with linear magnetic anomalies near the margins of what is believed to be an olivine and pyroxene rich (partly ultramafic) lobe of the Narndee Complex. Regional gravity data confirm The Milgoo area near Narndee Homestead has been the presence of a pronounced gravity anomaly over this previously explored for nickel, copper and platinum group interpreted lobe, which is mostly covered by thin alluvium metals (PGM), but Maximus has been the first company or colluvium. Ground validation of most of these anomalies to test the area with modern high resolution airborne is yet to be undertaken, but these results have substantially electromagnetic (EM) surveys. A ground survey over upgraded the exploration potential of the Milgoo area for part of the Milgoo area was successful in detecting two mafic intrusive associated polymetallic deposits. 18 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT ' 5 0 º 8 1 1 -28º50' fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff ' 0 1 º 8 1 1 ffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff fffffffffffffffffffffffffffffffffffffffffffffffff (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) (8m@0.5% Ni) MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 MNRC19 fffffffffffffffffffffffffffffffffffffffffffffffff MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 MNRC26 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MNRC02 MNRC02 MNRC02 MNRC02 MNRC02 MNRC02 MNRC02 MNRC02 MNRC02 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC30 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC28 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC03 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 MNRC29 fffffffffffffffffffffffffffffffffffffffffffffffff (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) (3m@0.43% Ni and 0.48% Cu) Central conductor Central conductor Central conductor Central conductor Central conductor Central conductor Central conductor Central conductor Central conductor Central conductor Central 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completed a major helicopter-borne EM survey of the total Narndee Project tenement area during 2008. Prior to undertaking the survey, the instrumentation was successfully trialled over the previously located ground EM anomalies at Milgoo and the Freddies Well zinc–copper deposit at nearby Youanmi with the permission of current owners, Metals Australia Limited. The Narndee airborne high resolution EM survey (REPTEM) was flown on 400 metre spaced east-west lines for a total of 14,110 line kilometres of data covering both the extensive Narndee and Windimurra layered mafic complexes and the intervening metamorphic rocks and shear structures. Processed data have been received and ten strong anomalies other than those in the Milgoo area have already been identified from initial interpretation. Four time slices of the REPTEM data are presented in Figure 17 showing early (0.527 msec) to late (12.17 msec) and illustrate the detailed information now produced from these surveys. More detailed processing and interpretation is ongoing and is likely to result in many more anomalies that could lead to the 0 1 km identification of significant nickel and/or copper–zinc massive sulphide mineralisation. Initial results from more detailed assessment of the data from the Milgoo area, as outlined Maximus RC drillhole Historic drillhole fffffffffffffffffffffffffffffffffffffffffffffffff Airborne EM Targets above, are particularly encouraging in this regard. Figure 16 Milgoo area prospects and EM targets. 0.527msec 2.957msec 6.602msec 12.17msec REPTEM time slices (early to late) Figure 17 Narndee REPTEM data. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 19 Wondinong (Lake Austin) ' 0 3 º 8 1 1 0 10 km Wondinong Palaeochannel -28º Windimurra Palaeochannel Windimurra Uranium Prospect (drilled area) (((((((((((((((((((( (((((((( (((((((( ((((( (((((((( (((((((((( (((((( (((((( (((((((((( (((( (((((((((( (((((( (((( (((( (((((((( ( ((((( ((((( ((((((((( ((( ((((( (((((((((((( ((( (( ( ( ((((((( (((((((((( (((((((((( ((( ((((((((((( ( (((((((( ( (((((((((((( (((((((((((((((((( ((( (((((((((((((( ((((((((( ((( ((((((((( ( ( ( ( (((((((((((((((( ( ((((((( ((((((((((( ((((((((( ( ( ( ((((((((((( ((((((((( ((((((( ( ((((((( ( ( (((((((((((( ( (( (( ( ( ((((( ((((( ((((( ((((((((((( ((( ( ( ( E58/273 Windimurra Vanadium Mine EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Anketell U Channel response High Low Figure 18 Location of Windimurra uranium deposit showing radiometrics, MXR tenure and other uranium occurrences. of the existing resources. Maximus has undertaken heritage clearances to ensure it has the right to extend its drilling at the Windimurra uranium prospect, and in the Wondinong Palaeochannel to the north where 100% Maximus tenure contains part of the radiometric anomaly that comprises the Wondinong uranium project owned by Aura Energy Limited (Figure 18). Recently acquired regional airborne electro-magnetic data has complemented existing radiometric imagery to aid future drill targeting. Deeper palaeochannels, which have not been tested by drilling to date, and with trends sub-parallel to those previously detected by radiometrics, are indicated. In September 2008, the incoming Government clarified the situation on uranium mining such that Maximus could recommence evaluation of the Windimurra resource and the surrounding area. However, the onset of the global financial crisis halted most exploration activities, including work on Windimurra. Maximus is currently considering its approach to ongoing uranium exploration work, which may include continued independent exploration or a new joint venture arrangement. Table 4 Estimated Inferred Mineral Resource of uranium oxide, Windimurra uranium prospect, Western Australia. Cut-off grade 100 ppm U3O8 Tonnes U3O8 x 106 19 ppm 180 Contained U3O8 tonnes x 103 Contained U3O8 pounds x 106 3.4 7.5 REPTEM system in operation. During the year Maximus combined with the Geological Survey of Western Australia (GSWA) to fund improved gravity coverage of the entire Narndee project area through a helicopter supported survey at a station spacing of 1.8 km. Final data was released in November and has provided valuable information on the structure and composition of the complex, as for example in the Milgoo area outlined above. Western Australia WINDIMURRA URANIUM PROSPECT The Windimurra uranium deposit is located about 70 km to the east–southeast of Mount Magnet, Western Australia (Figures 14, 15). In December 2007, Maximus announced an Inferred Mineral Resource at the Windimurra Uranium deposit of 19 million tonnes at an average grade of 180 parts per million U3O8 (Table 4). The estimate used a cut-off grade of 100 ppm U3O8 for a U3O8 content of 3,400 tonnes (7.5 million pounds). This resource is located between the surface and a depth of 6.5 metres. The main palaeochannel hosting the Windimurra uranium resource extends further than the area that was accessible for aircore drilling through heritage clearances (Figure 18). Mineralisation exceeding 100 ppm U3O8 is generally open in several lateral directions allowing for the likely extension 20 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT WESTERN AUSTRALIA IRONSTONE WELL GOLD PROJECT 90% Maximus The Ironstone Well project area comprises a tenement package situated 50 kilometres southeast of Wiluna and well positioned within the highly prospective Yandal Greenstone Belt, approximately halfway between Newmont Mining’s Jundee Mine and Navigator Resources’ Bronzewing operation (Figure 14). The tenement package comprises two granted exploration licences and 13 granted prospecting licences, covering 270 square kilometres. The project area includes three zones of known gold mineralisation and at least two other significant prospects (Figure 19). Joint venture partner Nemex Pty Ltd retains a 10% interest in the project area carried to the ‘decision to mine’. Due to commitments elsewhere, and despite interesting gold occurrences at the Quarter Moon and Oblique prospects (Figure 19), Maximus has not undertaken any additional drilling in the Ironstone Well project area. The Flushing Meadows resource is 81,000 ounces of contained gold in both Indicated and Inferred categories (Table 5). Maximus owns 90% or 73,000 ounces of the gold in this resource. During the year Maximus engaged Runge Limited to re-optimise the Flushing Meadows gold deposit using 2009 cost estimates and a gold price sensitivity of A$1,000 per ounce to A$1,500 per ounce. Two processing scenarios were examined in the optimisation, toll processing and on-site processing. The optimisation considered both Indicated and Inferred resource categories. The maximum resource inventory for Option 34 (on-site processing), Shell 17 was approximately 0.7 Mt of mill feed at 1.63 g/t for 36,730 oz of recovered Au and a potential operating surplus of $15.6 million. This increase in resource inventory is a direct result of the increase in gold price, with the increase in mining related costs only having a small effect. Table 5 Flushing Meadows Indentified Mineral Resource, as at October 2007. Undiluted Mineral Resource (1 g/t Au cut-off) Class Tonnes Grade Measured Indicated Inferred Total 815,000 734,000 1,549,000 g/t 1.7 1.5 1.6 Au ounces 45,000 36,000 81,000 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 21 ExPLORATION AND DEvELOPMENT REPORT Plan and longitudinal section views of the optimisation of Flushing Meadows deposit for higher cost toll processing (Option 9, Shell 17) are presented in Figures 20 and 21, respectively. The results of this preliminary optimisation, are encouraging, however Maximus has decided to pursue farming out of the Ironstone Well project area to interested parties. Further assessment of the Ironstone Well gold occurrences will continue after a suitable agreement can be negotiated. -26º40' M o i l e r s 0 2 km Atlanta E T h r u s t Oblique E Granitoids Porphyry Felsic volcanics Sediments Hornfelsed mafic Mafic volcanics/dolerite Chert Schist E Fault Prospect Granted Tenement Tenement Application -26º50' ' 0 4 º 0 2 1 E Quarter Moon E Flushing Meadows 81,000oz Au E Flinders Park ' 0 5 º 0 2 1 Note: Grade range Blue (0.32–2.5 g/t), Green (2.5–5.0 g/t) and Red (+5.0 g/t) Grid: 100 m by 100 m Contours: 5 m vertical. Figure 19 Location of the Ironstone Well Project prospects in the Yandal Greenstone Belt, Western Australia. Figure 20 Plan view, Option 9, Shell 17 (MCS). From Runge Ltd report, June 2009. Figure 21 Longitudinal section view, Option 9, Shell 17 (MCS). From Runge Ltd report, June 2009. 22 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ExPLORATION AND DEvELOPMENT REPORT JOINT VENTURE PROJECTS SOUTH AUSTRALIA BILLA KALINA Maximus diluting to 50% subject to Billa Kalina JV Agreement The Billa Kalina project comprises three exploration licences located approximately 70 km northwest of the Olympic Dam copper–uranium–gold mine and 45 km east of the Prominent Hill copper–gold deposit. The project is subject to a 50:50 joint venture with Eromanga Uranium Limited (ERO), which manages the project. The project is considered to be prospective for iron oxide–copper–gold–uranium (IOCGU) and sandstone-hosted uranium mineralisation. Following completion of an airborne EM survey and targeted follow-up drilling the joint venture partners have relinquished title over two of the original five exploration licences. Exploration during the year has been limited to data review while the JV partners continue to negotiate with the Defence Department over exploration access to test gravity anomalies within the southern-most tenements located in the Woomera Prohibited Area. EROMANGA BASIN Maximus diluting to 30% subject to Eromanga JV Agreement The Eromanga Basin project is comprised of three major project areas extending around the southern margins of the Eromanga Basin in South Australia. The tenure is considered to be prospective for sandstone-hosted uranium mineralisation. All tenements are subject to a 30:70 joint venture with ERO which manages the joint venture. Exploration across the tenement portfolio comprising the Eromanga Basin joint venture has been restricted to ongoing review of the very large databases generated from exploration in 2006–08. On the basis of this review the tenure held under the Joint Venture has been substantially reduced. This tenement rationalisation has allowed the joint venture to significantly reduce holding costs whilst maintaining title over the key tenements retaining the greatest prospectivity. It is anticipated that field based exploration will re-commence in the first half of calendar 2010, subject to economic conditions. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 23 ExPLORATION AND DEvELOPMENT REPORT NORTHERN TERRITORY WOOLANGA GOLD AND BASE METALS PROJECT Maximus diluting to 51% The Woolanga project area, comprising five exploration licences and one Authority covering 1,739 square kilometres, located 100 km northeast of Alice Springs (Figure 1). Maximus completed an agreement with Flinders Mines Limited (formerly Flinders Diamonds Limited) for the right to RANKIN BASE METALS PROJECT Maximus 95% The Rankin base metal project area (Figure 1) comprises exploration licences EL9529 and EL22759, which enclose the Rankin and Gecko massive sulphide base metal prospects. The tenements cover 63 square kilometres of terrain contiguous with Maximus’ Woolanga project area. Tanami Exploration NL retains a 5% interest carried to the point of ‘decision to mine’ in the exploration licences. all non-diamond minerals within the tenement package prior Following Minotaur’s decision to withdraw from the to listing on the Australian Stock Exchange in October 2005. Woolanga–Rankin Agreement, the Rankin tenement package has been returned to Maximus. Tanami Exploration NL continues to hold a 5% free carried interest in these tenements. Maximus will pursue sale of the project or a new farminee to continue exploration of the tenement package’s base metal prospectivity. The Woolanga tenement package includes the Johnnies Reward ironstone hosted copper–gold prospect and vermiculite occurrences of potential commercial grade. Under the Woolanga–Rankin Agreement, Minotaur was exploring exploration licences 23592 and 26440 for gold and copper. Minotaur advised that, after evaluation of ground EM and gravity data and historical drilling records, a two-hole pre-collared core drilling programme at Johnnies Reward was proposed to examine the continuity of significant gold mineralisation recorded from historical drillhole Alcoa DDH2 (50 metres at 1.8 g/t Au, 76–126 metres). However, Minotaur were unsuccessful in obtaining any Northern Territory Government support for the proposed drilling programme at Johnnies Reward. Subsequently, Minotaur advised of its withdrawal from the Woolanga–Rankin Agreement on 29 June 2009. Maximus will now offer this portion of the Woolanga tenement package to other companies interested in the gold and base metal prospectivity of the Johnnies Reward and Laughlen exploration licences. Under the Strangway Agreement, NuPower has advised that final reprocessed images from the 2008 AEM survey of the interpreted basement for the joint venture area indicate that an extensive deep structural trough, forming part of the southern margin of the Ti Tree Basin, underlies the northern parts of the area. Also, stream sediment geochemistry now available from the late 2008 sampling programme has identified clusters of significant multi-element U, Th, base metal and rare earth element anomalies warranting follow up exploration. 24 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 TENEMENT SCHEDuLE FOR THE yEAR ENDED 30 JuNE 2008 Tenement number Tenement name Date granted / applied for Expiry date Area (sq km) Registered holder / applicant Related agreement Western Australia NARNDEE PROJECT E57/729 E58/237 E58/240 E58/244 Youanmi Downs 4/4/2008 3/4/2013 Naluthanna Hill Windimurra Paynesville E1 22/3/2002 21/3/2011 11/3/2002 10/3/2010 17/9/2008 18/9/2013 75.0 50.0 50.0 3.0 E58/254 Sand Hill Well 18/9/2008 17/9/2013 108.0 E58/257 Yarrie Bore 18/9/2008 17/9/2013 183.0 E58/270 E58/273 E58/274 E58/281 E58/294 E58/295 E58/300 E58/309 E59/908 E59/1078 E59/1081 E59/1083 E59/1084 E59/1085 E59/1087 E59/1088 E59/1111 E59/1173 E59/1174 E59/1206 E59/1230 E59/1231 E59/1237 E59/1238 E59/1252 E59/1335 P58/1199 P58/1201 P58/1333 P58/1379 Wondinong Hill 28/10/2005 27/10/2010 Wagoo Hills Paynesville Boundary Well Wondinong Windsor 4/5/2007 5/3/2003 3/5/2012 4/3/2010 28/6/2006 27/6/2011 7/6/2006 7/6/2006 6/6/2011 6/6/2011 Kundingguari Hill 1/12/2006 30/11/2011 Brailia South Narndee Tandy Bore 22/1/2007 21/1/2012 8/9/2000 7/9/2009 14/11/2002 13/11/2009 Dromedary Well 14/11/2002 13/11/2009 Narndee West 14/11/2002 13/11/2009 Moolyawarda Hill 14/11/2002 13/11/2009 Budnee Bricky Bore Dunns Tank 14/11/2002 13/11/2009 6/6/2007 5/6/2012 24/10/2006 23/10/2011 Tootawarra Well 28/10/2005 27/10/2010 Narndee Homestead 23/11/2006 22/11/2011 Mulermurra Well 23/11/2006 22/11/2011 Tootawarra East Dromedary Hills Boodanoo Yalanga Tank Carwoola Dam Boodanoo Well 4 Corner Bore 29/11/2006 28/11/2011 8/2/2007 8/2/2007 7/2/2012 7/2/2012 25/1/2007 24/1/2012 22/1/2007 21/1/2012 21/6/2007 20/6/2012 17/4/2008 16/4/2013 3/4/2007 3/4/2007 2/4/2011 2/4/2011 Brailia Southeast 18/9/2006 17/9/2010 Milgoo E1 13/11/2007 12/11/2011 P58/1380 Milgoo E2 13/11/2007 12/11/2011 P58/1381 Mingyngura Hill 13/11/2007 12/11/2011 P58/1382 Nulyercarnyer Hill 13/11/2007 12/11/2011 P59/1616 P59/1619 P59/1757 3/4/2007 3/4/2007 2/4/2011 2/4/2011 Warnambar Soak 22/1/2007 21/1/2011 96.0 196.0 98.0 42.0 87.0 6.0 42.0 17.0 48.0 59.0 54.0 53.0 54.0 54.0 196.0 196.0 24.0 60.0 20.0 14.0 200.0 200.0 43.0 20.0 48.0 50.0 0.7 0.2 1.3 0.9 1.2 2.0 2.0 1.3 0.4 0.4 Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Christopher Richard Elkington (25%), Peter William Youngs (50%), Darian Sampey (25%) Meeline Option Agreement Alan Hunter Younger (25%), Christopher Richard Elkington (25%), Peter William Youngs (25%), Roger Townend (25%) Meeline Option Agreement Raimunda Silva Townend (25%), Alan Hunter Younger (25%), Christopher Richard Elkington (25%), Peter William Youngs (25%) Meeline Option Agreement Maximus Resources Ltd Apex Minerals NL (80) Mark Gareth Creasy (20) Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Henning Otto Hintze Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Apex Minerals NL(80) Mark Gareth Creasy (20) Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd CRC Group Sale Agreement CRC Group Sale Agreement CRC Group Sale Agreement CRC Group Sale Agreement Peter William Youngs (50%), Imtraud Margarete Ursula Lachmund (50%) Peter William Youngs (50%), Imtraud Margarete Ursula Lachmund (50%) Meeline Option Agreement Meeline Option Agreement Christopher Richard Elkington (25%), Peter William Youngs (50%), Darian Sampey (25%) Meeline Option Agreement Peter William Youngs (50%), Imtraud Margarete Ursula Lachmund (50%) Meeline Option Agreement Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 25 TENEMENT SCHEDuLE FOR THE yEAR ENDED 30 JuNE 2008 Tenement number Tenement name Date granted / applied for Expiry date Area (sq km) Registered holder / applicant Related agreement P59/1811 P59/1812 P59/1813 P59/1856 E57/728 E57/771 E58/356 E58/360 E58/371 E58/372 E58/373 E59/1365 E59/1366 E59/1367 E59/1368 E59/1370 E59/1381 E59/1383 E59/1384 E59/1413 E59/1414 E59/1415 E59/1416 E59/1417 E59/1418 E59/1419 E59/1561 P58/1418 P58/1419 P58/1420 P58/1421 P58/1422 P58/1423 P58/1424 P58/1441 P58/1442 P58/1443 P58/1444 P58/1449 P58/1450 P58/1453 P58/1454 P58/1455 P58/1456 P58/1457 P58/1458 P59/1867 Corner Bore 1 Corner Bore 2 Corner Bore 3 Joes Gap Watson Well Hastys Grave Mount Ford Kyle Kyle Well Mica Well Daves Folly 28/12/2007 27/12/2011 28/12/2007 27/12/2011 28/12/2007 27/12/2011 9/7/2008 8/7/2012 22/5/2007 5/8/2008 27/7/2007 27/7/2007 7/8/2008 7/8/2008 1.5 1.0 1.0 0.7 200.0 154.0 212.0 211.0 91.0 43.0 Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Joseph Paul Legendre (50) Brian Anthony Melville (50) Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Kantie Murdana Hill 30/10/2008 212.0 Maximus Resources Ltd Kurrajong Bore Doodhoowooroo Rockhole Wydgee B Minjin Bore Warramboo Redhead Dam Yardiacco Hill Muleryon Hill Pickleby Rockhole Pindarie Well Milgoo Well Tootawarra East Yarrambee Dam Thotowawardy Well Pindabunna Corner Well 1/5/2007 1/5/2007 1/5/2007 1/5/2007 1/5/2007 22/5/2007 22/5/2007 22/5/2007 27/7/2007 27/7/2007 27/7/2007 27/7/2007 27/7/2007 27/7/2007 27/7/2007 6.0 49.0 9.0 3.0 3.0 21.0 200.0 192.0 211.0 123.0 27.0 18.0 Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd 210.0 Maximus Resources Ltd 3.0 99.0 Maximus Resources Ltd Maximus Resources Ltd 12/12/2008 211.0 Maximus Resources Ltd 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 15/10/2007 10/6/2008 10/6/2008 12/8/2008 12/8/2008 12/8/2008 12/8/2008 12/8/2008 12/8/2008 21/9/2007 1.7 0.2 0.8 0.2 0.2 1.7 0.2 2.0 1.7 1.8 0.2 0.5 1.2 0.8 0.2 0.2 0.2 0.5 0.2 2.0 Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd 26 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 TENEMENT SCHEDuLE FOR THE yEAR ENDED 30 JuNE 2008 Tenement number Tenement name Date granted / applied for Expiry date Area (sq km) Registered holder / applicant Related agreement P59/1868 P59/1869 P59/1870 P59/1871 P59/1872 P59/1873 P59/1900 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 21/9/2007 10/6/2008 IRONSTONE WELL PROJECT E53/1223 E53/1224 P53/1209 P53/1308 P53/1309 P53/1310 P53/1311 P53/1312 Ironstone Well 25/1/2007 24/1/2012 Flushing Meadows 25/1/2007 24/1/2012 Barwidgee Outcamp Well 1 Outcamp Well 2 Outcamp Well 3 Outcamp Well 4 Outcamp Well 5 8/8/2005 7/8/2009 12/6/2008 11/6/2012 12/6/2008 11/6/2012 12/6/2008 11/6/2012 12/6/2008 11/6/2012 4/12/2008 3/12/2012 P53/1313 Outcamp Well 6 21/11/2008 20/11/2012 P53/1314 Outcamp Well 7 21/11/2008 20/11/2012 P53/1315 P53/1316 P53/1317 P53/1318 P53/1319 P53/1320 P53/1321 P53/1322 P53/1323 Outcamp Well 8 Outcamp Well 9 12/6/2008 11/6/2012 12/6/2008 11/6/2012 Outcamp Well 10 12/6/2008 11/6/2012 Outcamp Well 11 12/6/2008 11/6/2012 Outcamp Well 12 12/6/2008 11/6/2012 Outcamp Well 13 12/6/2008 11/6/2012 Outcamp Well 14 12/6/2008 11/6/2012 Outcamp Well 15 12/6/2008 11/6/2012 Outcamp Well 16 12/6/2008 11/6/2012 South Australia ADELAIDE HILLS PROJECT EL 3215 / ELA 111/09 Lobethal 24/6/2004 23/06/2009 / Repl 22/04/09 MC 4113 Bird in Hand 11/11/2008 11/11/2009 EL 3425 EL 3534 EL 4091 Echunga Mt Pleasant Mt Barker 19/10/2005 18/10/2009 30/3/2006 29/3/2010 25/2/2008 24/02/2009 Extn 20/01/09 1.2 0.2 0.5 0.7 0.9 1.0 0.2 188.0 56.0 1.7 1.8 1.8 1.4 1.0 1.8 1.2 1.1 1.9 1.8 1.8 1.9 1.7 1.6 1.9 1.4 0.3 Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Limited (90) Nemex Pty Ltd (10) Nemex Agreement Maximus Resources Limited (90) Nemex Pty Ltd (10) Nemex Agreement Maximus Resources Limited (90) Nemex Pty Ltd (10) Nemex Agreement Mark Gareth Creasy (30) Newmont Yandal Operations P/L (70) Nemex Agreement Mark Gareth Creasy (30) Newmont Yandal Operations P/L (70) Nemex Agreement Mark Gareth Creasy (30) Newmont Yandal Operations P/L (70) Nemex Agreement Mark Gareth Creasy (30) Newmont Yandal Operations P/L (70) Nemex Agreement Australian Metals Corporation P/L (20) Eagle Mining P/L (51) Hunter Resources P/L (29) Nemex Agreement Australian Metals Corporation P/L (20) Eagle Mining P/L (51) Hunter Resources P/L (29) Nemex Agreement Australian Metals Corporation P/L (20) Eagle Mining P/L (51) Hunter Resources P/L (29) Nemex Agreement Eagle Mining P/L (71) Hunter Resources P/L (29) Nemex Agreement Eagle Mining P/L (71) Hunter Resources P/L (29) Nemex Agreement Eagle Mining P/L (71) Hunter Resources P/L (29) Nemex Agreement Eagle Mining P/L (71) Hunter Resources P/L (29) Nemex Agreement Newmont Yandal Operations P/L Newmont Yandal Operations P/L Newmont Yandal Operations P/L Newmont Yandal Operations P/L Newmont Yandal Operations P/L Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement 341 Flinders Mines Limited Flinders Agreement 2 253 719 162 Maximus Resources Limited Flinders Mines Limited Flinders Mines Limited Flinders Mines Limited EL 4131 Kapunda 28/4/2008 27/4/2010 721 Flinders Mines Limited EL 4227 EL 3239 EL 4193 EL 4194 EL 4222 EL 3920 Brukunga Tarlee 25/2/2009 24/2/2010 10/9/2004 09/09/2009 Repl 9/7/09 Mount Monster 27/10/2008 26/10/2009 Williamstown 27/10/2008 26/10/2009 Tepko Mount Rufus 11/2/2009 10/2/2010 3/9/2007 2/9/2009 176 105 504 31 121 77 Flinders Mines Limited Flinders Mines Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Flinders Agreement Flinders Agreement Flinders Agreement Flinders and Copper Range Agreements Flinders Agreement Flinders Agreement MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 27 TENEMENT SCHEDuLE FOR THE yEAR ENDED 30 JuNE 2008 Tenement number Tenement name Date granted / applied for Expiry date Area (sq km) Registered holder / applicant Related agreement BILLA KALINA PROJECT EL 3526 Francis 23/2/2006 EL 3525 Margaret 23/2/2006 ELA475/08(EL 3170) Billa Kalina 25/2/2004 EL 3337 Welcome Creek 19/5/2005 22/02/2008 Extn (2) 22/02/2008 Extn (2) 24/02/2009 Repl 22/12/08 18/05/2009 Extn 14/5/09 734 Flinders Mines Limited 771 Flinders Mines Limited 1,435 Flinders Mines Limited 373 Flinders Mines Limited EL 3338 Millers Creek 19/5/2005 18/5/2010 771 Flinders Mines Limited EROMANGA PROJECT EL 3579 EL 3601 Calcutta 21/6/2006 20/6/2010 Warrataddy Hill 17/7/2006 984 963 Maximus Resources Limited Maximus Resources Limited Flinders and Eromanga Agreements Flinders and Eromanga Agreements Flinders and Eromanga Agreements Flinders and Eromanga Agreements Flinders and Eromanga Agreements Eromanga Agreement Eromanga Agreement 16/07/2009 Extn 15/6/09 16/07/2009 Extn 15/6/09 20/06/2009 Extn 20/05/09 20/06/2009 Extn 20/05/09 21/06/2009 Extn 20/05/09 21/06/2009 Extn 20/05/09 14/08/2009 Extn 14/07/09 EL 3602 Mt Anthony 17/7/2006 EL 3576 Whymlet 21/6/2006 EL 3573 Haggard Hill 21/6/2006 EL 3590 Bon Bon 22/6/2006 EL 3591 McDouall Peak 22/6/2006 EL 3613 Phar Lap 15/8/2006 Northern Territory WOOLANGA PROJECT 966 Maximus Resources Limited Eromanga Agreement 973 Maximus Resources Limited Eromanga Agreement 859 Maximus Resources Limited Eromanga Agreement 667 Maximus Resources Limited Eromanga Agreement 980 Maximus Resources Limited Eromanga Agreement 581 Maximus Resources Limited Eromanga Agreement Flinders Agreement Flinders Agreement Flinders and NuPower Agreements Flinders and NuPower Agreements Maximus Resources Ltd (95%) Tanami Exploration NL (5%) Tanami Agreement Maximus Resources Ltd (95%) Tanami Exploration NL (5%) Tanami Agreement Maximus Resources Limited EL23592 A23714 SEL25055 SEL25056 EL26440 Rankin Project EL9529 EL22759 MCS38 Johnnies Reward 12/2/2003 11/2/2011 Mud Tank Reserve 11/11/2004 10/11/2010 48.0 27.9 Flinders Mines Limited Flinders Mines Limited Strangways 13/6/2006 12/6/2010 1118.0 Flinders Mines Limited Mud Tank-Alcoota 13/6/2006 12/6/2010 Laughlen 14/4/2008 13/4/2014 Rankin Gecko 14/5/2002 13/5/2010 2/4/2002 1/4/2010 Little Gecko 22/3/1984 31/12/2009 520.0 25.0 47.0 16.0 0.3 Flinders Mines Limited Maximus Resources Limited Queensland SELLHEIM PROJECT ML10269 Slim Chance 13/11/2003 ML10270 Next Chance 13/11/2003 30/11/2008 Extn 30/11/2008 Extn ML10328 Sellheim 1/12/2006 30/11/2026 EPM13499 Mount Richardson 1/3/2004 28/02/2009 Extn EPM15778 Sellheim River 19/12/2007 18/12/2012 EPM17573 Douglas Creek EPM18021 Mount Wyatt 21/4/2008 2/3/2009 0.13 Maximus Resources Limited 0.50 Maximus Resources Limited 3.27 11.00 63.00 39.00 69.00 Maximus Resources Limited Peter Harvey Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited 28 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 MaxiMus ResouRces LiMited ABN 74 111 977 354 Financial RepoRt For the year ended 30 June 2009 Table of ConTenTs DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION INCOME STATEMENT BALANCE SHEET STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT CORPORATE GOVERNANCE STATEMENT 30 36 37 38 39 40 41 61 62 65 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 29 DiRectoRs’ RepoRt Your directors present their report on the consolidated entity, Branch of the AusIMM and the Exploration Committee at the consisting of Maximus Resources Limited and its controlled South Australian Chamber of Mines and Energy. entities for the financial year ended 30 June 2009. DireCTors The names of the directors in office at any time during or since the end of the year are: Robert Michael Kennedy Kevin John Anson Wills Ewan John Vickery Gary Eric Maddocks (resigned 30 June 2009) Simon Andrew Booth (since 13 July 2009) Roseanne Celeste Healy (Alternate for K J A Wills) since 12 March 2009 Nicholas John Smart (Alternate for E J Vickery) The directors have been in office since the start of the financial year to the date of this report unless otherwise stated. informaTion on DireCTors Robert Michael Kennedy Non-executive Chairman – ASAIT, Grad Dip (Systems Analysis), FCA, ACIS, Life Member AIM, FAICD A Chartered Accountant and a consultant to Kennedy & Co, Chartered Accountants, a firm he founded. Mr Kennedy has been a director since incorporation 17 December 2004. Mr Kennedy is the Chairman of Beach Petroleum Limited (Director since 1991, Chairman since 1995), Eromanga Uranium Limited (since 2006), Flinders Mines Limited (since 2001), Marmota Energy Limited (since 2007), Monax Mining Limited (since 2004) and Ramelius Resources Limited (since 2004). Ewan John Vickery Non-executive Director – LLB A director since incorporation 17 December 2004. Mr Vickery is a corporate and business lawyer with over 30 years experience in private practice in Adelaide. He has acted as an advisor to companies on a variety of corporate and business issues including capital and corporate restructuring, native title and land access issues, and as lead native title advisor and negotiator for numerous mining and petroleum companies. Mr Vickery is a Non-executive Director of Flinders Mines Limited (since 2001) and Eromanga Uranium Limited (since 2006). He is a member of the Exploration Committee of the South Australian Chamber of Mines and Energy Inc, the International Bar Association Energy and Resources Law Section, the Australian Institute of Company Directors and is a past national president of Australian Mining and Petroleum Law Association (AMPLA Limited). Mr Vickery is the Chairman of the Audit Committee. Gary Eric Maddocks Exploration Director (Executive) – MSc and AppSc (Geology), DipAppChem, FAusIMM (CP) A director since incorporation 17 December 2004. Mr Maddocks has 38 years of experience in mineral exploration for gold, copper, lead/zinc, nickel and tin throughout Australia. He has been involved with exploration activities for gold and copper in India, Indonesia and New Zealand. He is principal of GEM Exploration Management Services, a Chartered Professional (Geology) and Fellow of the Australian Institute of Mining and Mr Kennedy brings to the Board his expertise in finance and Metallurgy. Mr Maddocks resigned on 30 June 2009. management consultancy and extensive experience as chairman and non-executive director of a range of listed public companies. Mr Kennedy is a member of the Audit Committee. Kevin John Anson Wills Non-executive Director – ARSM, PhD, FAusIMM A director since incorporation 17 December 2004, Dr Wills is a geologist with 34 years experience in multi-commodity mineral exploration including uranium exploration, feasibility studies and mine operations in Australasia. Dr Wills spent seven years with CRA Exploration Pty Ltd, the highlight of which was involvement with the location and evaluation of the Argyle Diamond Deposit. Later, with Penarroya Australia Pty Ltd, his work led to an expansion of reserves at Thalanga and the discovery of the Waterloo base metals deposit. In the late 1980s, Dr Wills was exploration manager with Metana Minerals NL. He built up a successful exploration team which extended known gold ore bodies and made new discoveries. In the early 1990s Dr Wills was regional exploration manager with Dominion Mining Limited, based in Adelaide. His work on the Gawler Craton led to the development of a calcrete sampling technique which, later on, was instrumental in the Challenger gold discovery. Dr Wills is Managing Director of Flinders Mines Limited (since 2000) and a Non-executive Director of Eromanga Uranium Limited (since 2006). He is a past chairman of the Adelaide Simon Andrew Booth Managing Director – BA (Hons) (Econ Geol & Min Econ), MAusIMM, MAICD Managing Director since 13 July 2009. Mr Booth has over 30 years experience in gold and base metals resources including mine operations, exploration, mine management and strategic planning. He has held executive management positions with Crew Gold Corporation (Executive Vice President and Chief Operating Officer), Normandy Mining Limited Group and Newmont Australia Limited Group. Mr Booth has extensive experience in gold and base metals mining through the management and operation of mines in Australia and internationally. He is a Member of the Australasian Institute of Mining and Metallurgy and a former Vice President of the Northern Territory Minerals Council. Mr Booth has previously been a director of several Australian and foreign companies. Roseanne Celeste Healy Alternate Director for K J A Wills (Non-executive) – BA (Econ), MBA, MAICD An alternate Director since 12 March 2009. Ms Healy is an experienced company director and Chair of Government, industry, not-for-profit and private sector boards in the areas of resources and energy, research and development, agribusiness and wine, racing and general practice. Ms Healy regularly 30 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 DiRectoRs’ RepoRt advised boards and executive management on strategy, DiviDenDs corporate governance and social responsibility and business management. Ms Healy is currently a director of Tidewater Funds Management Limited, Cheviot Kirribilly Vineyard Property Group and Rural Industries Research and Development Corporation and an alternate director of Marmota Energy Limited. Nicholas John Smart Alternate Director for E J Vickery (Non-executive) An alternate Director since 9 May 2005. Mr Smart has held positions as a General Manager in France and Australia in the wool, textile, leather and meat industries. Responsibilities included human resources, factory operations, currency movements and commodity trading. He was a full Associate Member of the Sydney Futures Exchange, then became Managing Director of D&D-Tolhurst Ltd (Sharebrokers) as a client advisor and in the corporate area including capital raising. He has been involved in start up companies in technology development such as the laser shearing of sheep skins, commercialisation of the Synroc process for safe storage of high level nuclear waste and controlled temperature and atmosphere transport systems. Mr Smart currently consults to various public companies and is a director of GTL Energy Limited. Company seCreTary The following persons held the position of company secretary during or since the end of the year: Richard Walter Cumming Willson, resigned 11 November 2008 BAc, CPA, GAICD There were no dividends declared or paid during the year. review of operaTions The 2008–09 financial year provided significant challenges for Maximus Resources Limited (Maximus). We were not immune from the effects of the Global Financial Crisis and we took the necessary steps to ensure the continued health and operation of the Company and to set it on a path of renewed focus and discipline. At the start of the year Maximus’ focus was on multi-commodity mineral exploration adding resources to its three gold and one uranium resource projects. However, the impact of the Global Financial Crisis on Maximus created severe difficulties in raising risk capital to fund exploration activities. Maximus therefore decided to restructure the company by cutting expenditure on all projects, reducing staff, not remunerating directors and minimising payments to a few key personnel charged with restructuring the company. Maximus restricted its attention to assessment of gold production alternatives at its Sellheim Project. Maximus’ most valuable asset is its Adelaide Hills Gold Project containing the Bird in Hand gold deposit. By mid–2008, total Indicated and Inferred Resources at Bird in Hand had increased to 237,000 contained ounces of gold (Indicated, 70,000 ozs; Inferred, 167,000 ozs) with high probabilities for lateral and down dip extensions. In the December quarter of 2008, Maximus was to have commenced the prefeasibility stage of exploration at Bird in Hand and an application for a water pumping test was submitted to the Government. Due to the shortage of funds, Mr Willson has more than 15 years experience. He has worked Maximus had to curtail its activities in the Adelaide Hills and, as in public practice and in various financial management and company secretarial roles within Provimi Australia Group, BHP part of its capital raising plans, sought expressions of interest for all or part of its Adelaide Hills Gold Project. Although there was a Billiton and the Jumbuck Pastoral Group. He was Chief Financial high level of interest, Maximus was able to reconsider its position Officer and Company Secretary of the Company until resigning following the sale of its Canegrass magnetite iron–vanadium on 11 November 2008. David Wayne Godfrey, since 11 November 2008 BCom (Fin), GradDipAcc, ASA, SAFin, CFTP (Snr), MAICD Mr Godfrey has more than 24 years experience in the resources and finance industries and is a member of Australian Society of CPAs, Financial Services Institute, Chartered Secretaries Australia and Australian Institute of Company Directors. He has previously held senior finance roles in major corporations and for the Treasury of New Zealand and has served as secretary of numerous publicly listed and subsidiary companies for the Normandy Mining Limited Group, Newmont Australia Limited Group and Uranium Exploration Australia Limited. Mr Godfrey has been the Company Secretary and Chief Financial Officer since 11 November 2008 and to the date of this report. prinCipal aCTiviTies The principal activity of the Company during the financial year was mineral exploration. operaTing resulTs project in Western Australia. At Sellheim, located about 140 kilometres southeast of Charters Towers in north Queensland, successful pre-production in the September 2008 Quarter led to a period of trial production between October 2008 and March 2009. Although predicted grades were achieved, the throughput possible with the exploration plant available, and difficulties experienced during the wet season, did not allow long term profitable production. It was evident that a larger plant with higher throughput would be necessary, the configuration of which was still to be finalised. Consequently, the operation was put on care and maintenance. During the period of trial production, it was also concluded that further test pit sampling was required to provide higher confidence to the resource, particularly in respect of grade variation, and also to extend the resource boundaries. During the trial production period Maximus did produce a number of attractive gold nuggets which were advertised for sale on the Company’s website and were sold at a premium to the prevailing gold price. The Company’s projects in Western Australia were also strongly The consolidated net result of operations for the financial year impacted by the Global Financial Crisis. In the Windimurra was a loss of $13,388,668 (2008: $1,120,511). Narndee Project, located near Mount Magnet in Western MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 31 DiRectoRs’ RepoRt Australia, the Company established a strong groundholding over the entire layered mafic complex which is highly prospective for iron, vanadium, nickel, platinum, copper and zinc. During fuTure DevelopmenTs, prospeCTs anD business sTraTegies During the coming year, Maximus intends to maintain its the first half of calendar 2008, Maximus established a large renewed focus on the Adelaide Hills Gold Project. At Bird in magnetite iron ore exploration target at the Canegrass Project, Hand, we have already delineated a mineral resource of nearly part of Windimurra–Narndee. Early in the financial year, Maximus a quarter of a million ounces at an impressive grade of just over flew a new state-of-the-art helicopter borne electromagnetic 12 g/t gold. That makes it one of the highest grade undeveloped survey over the entire complex. This survey located a number of gold resources in Australia. We’ve proven the integrity of the first order conductive anomalies which remain to be evaluated. Adelaide Hills Gold Province and our efforts in the coming year Several companies are reviewing the data with a view to enter will be to expand our resource inventory. into a joint venture to fund ongoing exploration of this exciting but grass roots project. We intend to extend our exploration efforts in the Adelaide Hills through drill testing the historic high grade Deloraine In the March quarter Maximus sought expressions of interest for gold mine about 25 kilometres north of Bird in Hand. The individual components of the Windimurra–Narndee. Most interest Deloraine and Deloraine Queen mines operated in the early was received for the Canegrass magnetite iron–vanadium to mid 1900s and produced around 30,000 ounces gold at a project, which, after being reviewed by 37 companies, was grade of approximately 20 g/t Au. Maximus has established an divested to Flinders Mines Limited for a combination of cash and shares. This decision was made by the independent directors of both companies. Maximus realised a total consideration of Exploration Target for Deloraine of 800,000 to 1,100,000 tonnes at grades of 15 to 20 g/t Au1. If the Exploration Target can be realised, Maximus may be in a position to develop these historic $1.17 million after sale of the shares. Together with the proceeds gold mines. of a rights issue in late 2008, and a share placement in February 2009 – this raised a total of $1.08 million, and brought Maximus’ income for the year to $2.25 million. At the end of the 2008–09 year, Maximus’ cash position was $0.89 million with valuable assets held at Sellheim in Queensland, the Adelaide Hills in South Australia and the Windimurra–Narndee project in Western Australia. finanCial posiTion The proposed drilling programme for Deloraine will focus on drilling beneath the historic mine workings, similar to the approach used at our nearby Bird in Hand deposit. The Company was unable to complete the previously approved programme of work for Deloraine within the timeframe set, therefore it is anticipated that discussions will take place with landowners to finalise a new timeframe to complete an expedited drilling programme. The net assets of the consolidated group have decreased by At our Sellheim gold project in north Queensland, we have $10,902,614 during the financial year from $41,046,119 at stepped back and are undertaking additional sampling. This fully 30 June 2008 to $30,143,505 at 30 June 2009. The group funded work programme should be completed early Q3, subject has been actively undertaking exploration activities and has to this year’s wet season. A commitment to full production will capitalised $6,637,419 in exploration expenditure during the be made when we are confident that we can deliver on our current financial year. The Directors believe the Company is in a suitable financial position to continue its exploration and operational activities. signifiCanT Changes in sTaTe of affairs During the year the Board decided on a change of focus from multi-commodity mineral exploration to restructuring the company by concentrating its attention on gold production alternatives and seeking expressions of interest in some individual assets. production forecasts. Additionally, we will continue to evaluate additional alluvial resources within our tenements. We are encouraged by the potential held within our tenement package. We will also progress the hard-rock gold and base metal exploration at Sellheim. environmenTal issues The consolidated group’s operations are subject to significant environmental regulation under both Commonwealth and relevant State legislation in relation to discharge of hazardous waste and materials arising from any exploration or mining evenTs subsequenT To balanCe DaTe activities and development conducted by the consolidated group On 13 July 2009, Dr Kevin Wills resigned as Managing Director on any of its tenements. The consolidated group believes it is and was replaced in that role by Mr Simon Booth. Dr Wills not in breach of any environmental obligation. remains as a Non-executive Director to the date of this report. Other than the matter discussed above there has not, in the CorporaTe governanCe In recognising the need for good practice in respect of corporate interval since the end of the financial year and the date of this behaviour and accountability, the Directors support and have report, any item, transaction or event of material and unusual adhered to the principals of good corporate governance. nature likely, in the opinion of the Directors, to affect significantly Maximus’ corporate governance statement follows the financial the operations of the consolidated group, the results of those report. operations, or the state of affairs of the consolidated group in future financial years. 32 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 1 ASX Release 5/9/2008 and Amended Announcement 11/11/2008. Exploration Targets are reported according to Clause 18 of the JORC Code. This means that they are partly conceptual in nature and that considerable further exploration, particularly drilling, is necessary before any Identified Mineral Resource can be reported. It is uncertain if further exploration will lead to a larger, smaller or any mineral resource. DiRectoRs’ RepoRt inDemnifiCaTion anD insuranCe of offiCers Indemnification proCeeDings on behalf of Company No person has applied for leave of Court under section 237 The Company is required to indemnify the Directors and other of the Corporations Act 2001 to bring proceedings on behalf officers of the company against any liabilities incurred by the of the Company or intervene in any proceedings to which the Directors and officers that may arise from their position as Company is a party for the purpose of taking responsibility on Directors and officers of the Company. No costs were incurred behalf of the Company for all or any part of those proceedings. during the year pursuant to this indemnity. The Company was not a party to any such proceedings during The Company has entered into deeds of indemnity with each the financial year. Director whereby, to the extent permitted by the Corporations Act 2001, the Company agreed to indemnify each Director against all loss and liability incurred as an officer of the Company, including all liability in defending any relevant proceedings. Insurance premiums Since the end of the previous year the Company has paid insurance premiums of $16,500 to insure the Directors and non-auDiT serviCes The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision on non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence Officers in respect of Directors and Officers’ liability and legal for the following reasons: expenses insurance contracts. Meetings of Directors During the financial year, 19 meetings of directors (including y All non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; committees of directors) were held. Attendances by each and director during the year were as follows: Directors meetings Audit Committee meeting Number eligible to attend Number attended Number eligible to attend Number attended 18 18 18 18 3 2 17 17 18 18 3 2 2 - 2 - - - 2 - 2 - - - R M Kennedy K J a Wills e J Vickery G e Maddocks R c Healy n J smart opTions No ordinary shares have been issued by the Company since the end of the financial year as a result of the exercise of options. At the date of this report, the unissued ordinary shares of Maximus Resources Limited under option are as follows: Grant date Date of expiry Exercise price Number under option 21 october 2005 20 april 2010 2 July 2007 2 July 2010 10 april 2007 20 March 2012 2 July 2007 2 July 2012 10 July 2007 2 July 2012 17 March 2008 17 March 2013 4 February 2009 3 February 2014 $0.20 $0.50 $0.14 $0.50 $0.50 $0.18 $0.04 1,000,000 2,000,000 770,000 2,000,000 1,000,000 890,000 2,005,000 9,665,000 No person entitled to exercise an option had or has any right by virtue of the option to participate in any share issue of any other body corporate. y The nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. There were no fees for non-audit services paid/payable to the external auditors during the year ended 30 June 2009. remuneraTion reporT - auDiTeD Remuneration of Directors and key management personnel a) Principles used to determine the nature and amount of remuneration The Company’s policy for determining the nature and amounts of emoluments of board members and senior executive officers of the Company is as follows: The Company’s Constitution specifies that the total amount of remuneration of Non-executive Directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of Non-executive Directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the Non-executive Directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as Directors. The remuneration of the Managing Director is determined by the Non-executive Directors on the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of other executive officers and employees is determined by the Managing Director subject to the approval of the Board. Non-executive Director remuneration is by way of fees and statutory superannuation contributions. Non-executive Directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 33 DiRectoRs’ RepoRt The Company’s remuneration structure is based on a number of factors including Name Mr R M Kennedy Position Chairman – Non-executive the particular experience and performance Mr E J Vickery Director – Non-executive of the individual in meeting key objectives Dr K J A Wills Managing Director – Executive of the Company. The Board is responsible Mr G E Maddocks Exploration Director – Executive for assessing relevant employment market (resigned 30 June 2009) conditions and achieving the overall, long term Mr K J Lines Managing Director – Eromanga Uranium Limited objective of maximising shareholder benefits, Mr D W Godfrey Chief Financial Officer and Company Secretary through the retention of high quality personnel. (since 11 November 2008) The Company also has an Employee Share Dr K J a Wills** 48,624 64,893 The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of the Company given the nature of the Company’s business as a recently listed mineral exploration entity and the current status of its activities. However the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board. Option Plan approved by shareholders that enables the Board to offer eligible employees options to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, options for ordinary fully paid shares may be offered to the Company’s eligible employees at no cost unless otherwise determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as an incentive to achieve greater success and profitability for the Company and to maximise the long term Mr R M Kennedy performance of the Company. The employment conditions of the Managing Director, Dr Wills, are formalised in a contract of employment. The base salary as set out in the employment contract is reviewed annually. The Managing Director’s contract may be terminated at any time by mutual agreement. The Company may terminate these contracts without notice in serious instances of misconduct. b) Details of remuneration This report details the nature and amount of remuneration for each key management person of the Group and for the executives receiving the highest remuneration. The names and positions held by Directors and key management personnel of the Group during the financial year are: 34 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 Mr R W C Willson Chief Financial Officer and Company Secretary (resigned 11 November 2008) Ms R C Healy Alternate Director (since 12 March 2009) Mr N J Smart Alternate Director 2009 Primary benefits – consolidated group Directors Directors fees Salary Cash bonus Non cash items Super contri- butions Options Total $ $ $ $ $ $ $ Mr R M Kennedy 121,526 Mr e J Vickery* 72,500 - - Mr G e Maddocks*** Mr K J lines Mr D W Godfrey**** Mr R W c Willson Ms R c Healy Mr n J smart - - - - - - 57,422 253,293 104,975 95,520 - - 242,650 576,103 - - - - - - - - - - - - - - - - - - - - 9,299 - 7,687 - 22,707 9,358 6,865 - - - - - - - 130,825 72,500 121,204 57,422 276,000 1,769 116,102 - - - 102,385 - - 55,916 1,769 876,438 2009 Primary benefits – parent entity Directors Directors fees Salary Cash bonus Non cash items Super contri- butions Options Total $ $ $ $ $ $ $ Mr e J Vickery* Dr K J a Wills** Mr G e Maddocks*** Mr D W Godfrey**** Mr R W c Willson Ms R c Healy Mr n J smart 37,362 22,500 - - - - - - - - 62,614 57,422 104,975 95,520 - - 59,862 320,531 - - - - - - - - - - - - - - - - - - 3,363 - 5,590 - 9,358 6,865 - - - - - - 40,725 22,500 68,204 57,422 1,769 116,102 - - - 102,385 - - 25,176 1,769 407,338 Share-based payments Date granted Number of options Value per option Total value % of remun- eration Expiry date Exercise price $ $ $ Mr D W Godfrey 4/02/2009 53,334 0.0332 1,769 1.52 3/02/2014 0.04 1,769 2008 Primary benefits – consolidated group on a per diem rate for a fixed number of days per annum, with no fixed term. Mr Barratt was engaged DiRectoRs’ RepoRt Options Total on an employment contract with no fixed term and Directors Directors fees Salary Cash bonus Non cash items Super contri- butions $ $ $ $ $ $ $ Mr R M Kennedy 155,962 Mr e J Vickery* 100,000 - - Dr K J a Wills** 45,872 124,231 Mr G e Maddocks*** Mr K J lines Mr R W c Willson Mr n J smart - 250,222 - 248,462 - 197,432 - - 301,834 820,347 - - - - - - - - - - - - - - - - 14,038 - 14,449 - 20,642 - - - - - 170,000 100,000 184,552 250,222 269,104 16,325 8,659 222,416 - - - 65,454 8,659 1,196,294 2008 Primary benefits – parent entity Directors Directors fees Salary Cash bonus Non cash items Super contri- butions $ $ $ $ $ $ $ Mr R M Kennedy Mr e J Vickery* Dr K J a Wills** Mr G e Maddocks*** Mr R W c Willson Mr n J smart 77,982 50,000 - - - 124,231 - 250,222 - 197,432 - - 127,982 571,885 - - - - - - - - - - - - - - 7,018 - 10,321 - - - - - 85,000 50,000 134,552 250,222 16,325 8,659 222,416 - - - 33,664 8,659 742,190 * Director’s fees for Mr Vickery are paid to a related entity of the Director ** Dr Wills’ remuneration was paid to a related entity of the Director *** Director’s fees for Mr Maddocks are paid to a related entity of the Director **** Mr Godfrey is employed by FME Exploration Services Pty Ltd. His services are provided as part of the services agreement in place between FME Exploration Services Pty Ltd and Maximus Resources Ltd. The management fees paid by Maximus Resources Limited are outlined in Note 25. This agreement was formalised 3 August 2006. The Directors conclude that there are no executives requiring one month’s notice by either party. All directors voluntarily agreed not to receive emoluments for the period from October 2008 to reporting date. There were no post employment retirement benefits approved by members of the Company in a general meeting, nor were any paid to Directors of the Company. There were no post employment retirement benefits paid or payable to other key management personnel. d) Share-based compensation Employee Share Option Plan The Company has an Employee Share Option Plan approved by shareholders that enables the Board to offer eligible employees options to acquire ordinary of the Plan, options to acquire ordinary fully paid shares may be offered to the Company’s eligible employees at no cost unless otherwise determined by the Board in accordance with the terms and conditions of the Plan. During the year 2,005,000 options with a fair value of $66,512 were issued to employees at no cost. The issue was not based on any performance criteria. No employee share options were issued to the Directors during the year. Options granted as remuneration Apart from the options granted under the Company’s Employee Share Option Plan as detailed above, no other options were granted to Directors or key management personnel of the Company during the financial year. Shares issued on exercise of remuneration options No shares were issued to Directors as a result of the exercise of remuneration options during the financial Options Total fully paid shares in the Company. Under the terms disclosure other than those listed. year. c) Service agreements During the financial year, the Company reviewed the employment agreement of Dr Wills in respect of his services as Managing Directors’ interests in shares and options Directors’ relevant interests in shares and options of the Company are disclosed in Note 5 to the Director. An agreement with no fixed term was agreed with a salary accounts. set at $138,000 per annum inclusive of superannuation guarantee contributions to be reviewed periodically. Dr Wills was also Managing Director of Flinders Mines Limited for the financial year and up to 13 July 2009. Subsequent to reporting date, Dr Wills resigned as Managing Director and was replaced by Mr Simon Booth. The Board negotiated a contract with Mr Booth with no fixed term at a salary of $250,000 per annum inclusive of superannuation guarantee contributions to be reviewed annually and with termination on one month’s notice. Mr Booth was also granted a sign-on bonus of the issue of 3 million options exercisable at 5 cents within 3 years. Messrs Kennedy and Vickery are engaged as directors without formal employment agreements. Mr Maddocks was engaged as a consultant auDiTor’s inDepenDenCe DeClaraTion The lead auditor’s independence declaration for the year ended 30 June 2009 has been received and can be found on page 36 of the Directors’ Report. Dated at Adelaide this 28 day of September 2009 and signed in accordance with a resolution of the Directors. RobeRt M Kennedy Director MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 35 auDitoR’s inDepenDence DeclaRation 36 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 incoMe stateMent For the year ended 30 June 2009 Note Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 2 2 3 3 3 3 339,783 344,677 - 1,007,504 339,783 86,138 902,749 295,285 1,851,834 4,671 - 283,469 966,874 1,914 902,749 168,241 1,004,584 3,513 11,503,828 632,912 3,487,273 - 161,986 - 703 6,386,286 161,100 - 359,540 - 234,897 628,133 1,540 459,172 - - (14,035,893) (878,368) (11,687,825) (964,202) 4 (647,225) 242,143 (2,376,291) 269,137 (13,388,668) (1,120,511) (9,311,534) (1,233,339) sales other revenues from ordinary activities Mine operating expenses Marketing expense administrative expense Finance costs exploration expenses impairment of financial assets loss on disposal of assets profit/(loss) before income tax income tax expense/(benefit) profit/(loss) for the year (profit)/loss attributable to outside equity interest 5,439,108 (55,483) - - profit/(loss) attributable to members of the parent company (7,949,560) (1,175,994) (9,311,534) (1,223,339) Basic earnings/(loss) per share (cents) Diluted earnings/(loss) per share (cents) 7 7 (7.94) (7.91) (0.970) (0.970) The accompanying notes form part of these financial statements. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 37 Balance sHeet As at 30 June 2009 CurrenT asseTs cash and cash equivalents trade and other receivables other current assets Total current assets non-CurrenT asseTs property, plant and equipment exploration and evaluation expenditure Development assets/mining leases available-for-sale financial assets investments accounted for using the equity method Total non-current assets Total assets CurrenT liabiliTies trade and other payables short-term provisions Total current liabilities non-CurrenT liabiliTies Deferred tax liability loans and borrowings Total non-current liabilities Total liabilities Net assets equiTy issued capital Reserves Retained earnings parent interest outside equity interest Total equity Note Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 8 9 15 16 12 10 17 18 1,650,254 10,732,827 946,342 116,591 1,089,747 38,500 892,070 459,964 98,841 4,193,772 620,484 38,500 2,713,187 11,861,074 1,450,875 4,852,756 1,733,064 1,346,717 912,763 948,790 24,793,046 29,477,822 21,015,582 20,960,076 1,346,026 - 2 - - 2 - - 1,508,143 3,992,643 1 1 27,872,138 30,824,541 23,436,489 25,901,510 30,585,325 42,685,615 24,887,364 30,854,266 403,609 38,211 441,820 1,591,539 253,826 1,076,721 47,957 4,014 23,764 1,639,496 257,840 1,100,485 - - - - - - - - - 887,979 - 887,979 441,820 1,639,496 257,840 1,988,464 30,143,505 41,046,119 24,629,524 28,765,802 19 29,341,900 27,046,405 29,341,900 27,046,405 1,368,875 1,208,755 123,851 (2,755,910) (10,494,895) (2,545,827) (4,836,227) 4,475,307 20,215,880 25,709,333 24,629,524 28,765,802 9,927,625 15,336,786 - - 30,143,505 41,046,119 24,629,524 28,765,802 The accompanying notes form part of these financial statements. 38 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 stateMent oF cHanGes in equity For the year ended 30 June 2009 Issued capital Option reserve Available-for- sale reserves Retained earnings Outside equity interest $ $ $ $ $ Total $ 10,133,983 156,408 ConsoliDaTeD group Balance at 1 July 2007 profit/(loss) for the period profit/(loss) attributed to outside equity interest shares issued during the period 17,477,423 options issued during the period outside equity interest in options reserve - - transaction costs (net of tax) (565,001) - - - 1,052,347 - - Balance at 30 June 2008 27,046,405 1,208,755 profit/(loss) for the period profit/(loss) attributed to outside equity interest - - shares issued during the period 2,332,943 options issued during the period Movements in outside equity interest shares issued to outside equity interest outside equity interest in options reserve - - - - transaction costs (net of tax) (37,448) - - - 160,718 (598) - - - Balance at 30 June 2009 29,341,900 1,368,875 parenT enTiTy Balance at 1 July 2007 profit/(loss) for the period 10,133,983 140,397 shares issued during the period 17,477,423 Decline in value of available-for-sale financial assets options issued during the period - - - - - 1,014,493 - - - - - - - - - - - - - - - - - - - - - - - (3,910,800) - - (1,369,832) 15,212,106 24,132,665 (1,175,995) - (1,175,995) - - - - - 55,482 55,482 - - 17,477,423 1,052,347 69,198 69,198 - (565,001) (2,545,827) 15,336,786 41,046,119 (7,949,560) - (7,949,560) - - - 492 - - - (5,439,108) (5,439,108) - - 2,332,943 160,718 106 7,373 22,468 - 7,373 22,468 - (37,448) (10,494,895) 9,927,625 30,143,505 5,708,646 (1,233,339) - - - - transaction costs (net of tax) (565,001) - Balance at 30 June 2008 27,046,405 1,154,890 (3,910,800) 4,475,307 profit/(loss) for the period shares issued during the period - 2,332,943 Decline in value of available-for-sale financial assets impairment to income statement options issued during the period - - - transaction costs (net of tax) (37,448) - - - - 148,511 - - - (1,739,300) 4,470,550 - - (9,311,534) - - - - - Balance at 30 June 2009 29,341,900 1,303,401 (1,179,550) (4,836,227) The accompanying notes form part of these financial statements. - - - - - - - - - - - - - - 15,983,026 (1,233,339) 17,477,423 (3,910,800) 1,014,493 (565,001) 28,765,802 (9,311,534) 2,332,943 (1,739,300) 4,470,550 148,511 (37,448) 24,629,524 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 39 casH FloW stateMent For the year ended 30 June 2009 Cash flows from operaTing aCTiviTies interest received Receipts from operating activities payments to suppliers and employees Net cash provided by (used in) operating Note Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 442,374 1,177,742 339,783 - 86,138 339,783 347,854 - (3,499,703) (500,641) (2,383,178) (288,241) activities 22 (2,717,546) 677,101 (1,957,257) 59,374 Cash flows from invesTing aCTiviTies purchase of plant and equipment (270,084) (792,355) (252,663) (698,753) proceeds from sale of plant and equipment proceeds from sale of tenements proceeds from sale of financial assets payment for exploration activities payment for subsidiaries net of cash acquired loans to related entities payment of security bonds Net cash provided by (used in) investing activities Cash flows from finanCing aCTiviTies 101,509 200,000 973,326 - 135,000 - 101,509 200,000 973,326 - 135,000 - 14 25 (7,225,929) (15,067,089) (4,760,722) (9,137,191) (2,645,328) - - - 275,000 (264,620) 175,000 (132,310) (60,341) (2,500) (60,341) (2,500) (8,651,847) (15,991,564) (3,623,891) (9,871,754) proceeds from issue of shares (net of tax) 2,286,820 13,692,779 2,279,446 13,962,779 Net cash provided by (used in) financing activities net increase/(decrease) in cash held cash at beginning of financial year 2,286,820 13,692,779 2,279,446 13,962,779 (9,082,573) (1,621,684) (3,301,702) 3,880,399 10,732,827 12,354,511 4,193,772 313,373 Cash at end of financial year 8(a) 1,650,254 10,732,827 892,070 4,193,772 The accompanying notes form part of these financial statements. 40 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents For the year ended 30 June 2009 noTe 1 sTaTemenT of signifiCanT aCCounTing poliCies The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented unless otherwise stated. The financial report includes separate financial statements for Maximus Resources Limited as an individual entity and the consolidated entity consisting of Maximus Resources Limited and its subsidiaries. Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group interpretations and the Corporations Act 2001. Compliance with IFRS Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report of Maximus Resources Limited complies with International Financial Reporting Standards (IFRS). Historical cost convention The financial report has been prepared on an accruals basis and is based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. Accounting policies a) Principles of consolidation A controlled entity is any entity of which Maximus Resources Limited has the power to control the financial and operating policies, so as to obtain benefits from its activities. A list of controlled entities is contained in Note 13 to the financial statements. All controlled entities have a June financial year-end. The purchase method requires an acquirer of the business to be identified and for the cost of the acquisition and fair values of identifiable assets, liabilities and contingent liabilities to be determined as at acquisition date, being the date that control is obtained. Cost is determined as the aggregate of fair values of assets given, equity issued and liabilities assumed in exchange for control together with costs directly attributable to the business combination. Any deferred consideration payable is discounted to present value using the entity’s incremental borrowing rate. Goodwill is recognised initially at the excess of cost over the acquirer’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities recognised. If the fair value of the acquirer’s interest is greater than cost, the surplus is immediately recognised in profit or loss. c) Income tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset or deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the All inter-company balances and transactions between entities financial statements. Deferred tax assets also result where in the consolidated group, including any unrealised profits or amounts have been fully expensed but future tax deductions losses, have been eliminated on consolidation. Accounting are available. No deferred income tax will be recognised policies of subsidiaries have been changed where necessary from the initial recognition of an asset or liability, excluding a to ensure consistencies with those policies applied by the business combination, where there is no effect on accounting parent entity. or taxable profit or loss. Where controlled entities have entered or left the consolidated group during the year, their operating results have been included/excluded from the date control was obtained or until the date of control ceased. b) Business combinations Business combinations occur where control over another business is obtained and results in the consolidation of its assets and liabilities. All business combinations, including Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply for the period when the asset is realised or the liability is settled, based on tax rates enacted or substantially enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and those involving entities under common control, are accounted unused tax losses are recognised only to the extent that it for by applying the purchase method. is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 41 notes to tHe Financial stateMents Where temporary differences exist in relation to investments are included in the income statement. When re-valued assets in subsidiaries, branches, associates and joint ventures, are sold, amounts included in the revaluation reserve relating deferred tax assets and liabilities are not recognised where to that asset are transferred to retained earnings. the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. d) Plant and equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. e) Exploration expenditure Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area of interest are written off in full against profit in the year in which the decision to abandon the area of interest is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include The carrying amount of plant and equipment is reviewed the dismantling and removal of mining plant, equipment annually by directors to ensure it is not in excess of the and building structures, waste removal and rehabilitation of recoverable amount. The recoverable amount is assessed on the site in accordance with clauses of the mining permits. the basis of the expected net cash flows that will be received Such costs have been determined using estimates of future from the assets’ employment and subsequent disposal. costs, current legal requirements and technology on an The expected net cash flows have been discounted to their undiscounted basis. present values in determining recoverable amounts. Any changes in the estimates for the costs are accounted Subsequent costs are included in the assets’ carrying on a prospective basis. In determining the costs of site amount or recognised as separate assets as appropriate, restoration, there is uncertainty regarding the nature and only when it is probable that future economic benefits extend of the restoration due to community expectations associated with the item will flow to the group and the cost and future legislation. Accordingly, the costs have been can be measure reliably. All other repairs and maintenance determined on the basis that the restoration will be are charged to the income statement during the financial completed within one year of abandoning the site. period in which they are incurred. Depreciation f) Financial instruments Recognition and initial measurement The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. The depreciation rates used for plant & equipment are from 12.5 to 40%. Financial instruments, incorporating financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for the financial assets that are delivered within timeframes established by marketplace The assets’ residual values and useful lives are reviewed, and convention. adjusted if appropriate, at each balance sheet date. Financial instruments are initially measured at fair value plus An asset’s carrying amount is written down immediately to its transaction costs where the instrument is not classified as at recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined in comparing proceeds with the carrying amount. These gains and losses fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. 42 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents Derecognition g) Impairment of assets Financial assets are derecognised where the contractual At each reporting date, the group reviews the carrying values rights to receipt of flows expires or the asset is transferred to of its tangible and intangible assets to determine whether another party whereby the entity no longer has any significant there is any indication that those assets have been impaired. continuing involvement in the risks and benefits associated If such an indication exists, the recoverable amount of the with the asset. Financial liabilities are derecognised where the asset, being the higher of the asset’s fair value less costs to related obligations are either discharged, cancelled or expire. sell and value in use, is compared to the asset’s carting value. The difference between the carrying value of the financial Any excess of the asset’s carrying value over its recoverable liability extinguished or transferred to another party and the amount is expensed to the income statement. fair value of consideration paid, including the transfer of non- cash assets or liabilities assumed, is recognised in profit or loss. Classification and subsequent measurement i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. ii) Available-for-sale financial assets Available-for-sale financial assets, comprising principally marketable equity securities are non-derivative financial assets that are either designated as such or that are not classified in any other category. They are included in non- current assets unless management intends to dispose of the investment within 12 months of the reporting date. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed determinable payments. Available-for-sale financial assets are measured at fair value at the reporting date, with changes in value going through equity. iii) Financial liabilities Non-derivative financial liabilities are recognised at amortised costs, comprising original debt less principal payments and amortisation. Fair value Fair value is determined based upon current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which it belongs. h) Investments in associates Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognises the group’s share of post-acquisition reserves of its associates. i) Interests in joint ventures The consolidated group’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in appropriate items of the consolidated financial statements. Details of the consolidated group’s interests are shown at Note 11. The consolidated group’s interests in joint venture entities are brought to account using the equity method accounting in the consolidated financial statements. The parent entity’s interests in joint venture entities are brought to account using the cost method. j) Employee benefits Provision is made for the group’s liability for employee benefits arising from services rendered by employees to balance date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been discounted using the government bond rate closest to expiry date. Equity-settled compensation The cost of equity-settled transactions is measured by the fair value at the date at which the equity instruments are granted. The fair value is determined using the Black-Scholes pricing model. The cost is recognised as an expense in the income statement with a corresponding increase in the share option reserve or issued capital when the options or shares are issued. k) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 43 notes to tHe Financial stateMents l) Revenue i) Interest revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. ii) Revenue from sale of goods Revenue from sale of refined gold production and internet sales of gold nuggets. Recognition is at point of sale of the product, when the risks and rewards of ownership are transferred. m) Goods and Services Tax (GST) 107, 112, 114, 116, 121, 128, 131, 132, 133, 134, 136, 137, 138 & 139 and Interpretations 9 & 107] (applicable for annual reporting periods commencing from 1 July 2009) and AASB 2008-7: Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate [AASB 1, AASB 118, AASB 121, AASB 127 & AASB 136] (applicable for annual reporting periods commencing from 1 January 2009). These standards are applicable prospectively and so will only affect relevant transactions and consolidations occurring from the date of application. In this regard, its impact on the Group will be unable to be determined. The following changes to Revenues, expenses and assets are recognised net of the accounting requirements are included: amount of GST, except where the amount of GST incurred is – acquisition costs incurred in a business combination will not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the balance sheet are shown inclusive of GST. no longer be recognised in goodwill but will be expensed unless the cost relates to issuing debt or equity securities; – contingent consideration will be measured at fair value at the acquisition date and may only be provisionally accounted for during a period of 12 months after Cash flows are presented in the cash flow statement on a acquisition; gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. n) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. o) Trade and other payables – a gain or loss of control will require the previous ownership interests to be remeasured to their fair value; – there shall be no gain or loss from transactions affecting a parent’s ownership interest of a subsidiary with all transactions required to be accounted for through equity (this will not represent a change to the Company’s policy); – dividends declared out of pre-acquisition profits will not be deducted from the cost of an investment but will be These amounts represent liabilities for goods and services recognised as income; provided to the Group prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. p) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and – impairment of investments in subsidiaries, joint ventures and associates shall be considered when a dividend is paid by the respective investee; and – where there is, in substance, no change to Group interests, parent entities inserted above existing groups shall measure the cost of its investments at the carrying amount of its share of the equity items shown in the preference share dividends, divided by the weighted average balance sheet of the original parent at the date of number of ordinary shares, adjusted for any bonus element. reorganisation. Diluted earnings per share is calculated as net profit attributable to members of the parent divided by the The Group will need to determine whether to maintain its present accounting policy of calculating goodwill acquired weighted average number of ordinary shares and dilutive based on the parent entity’s share of net assets acquired or potential ordinary shares. change its policy so goodwill recognised also reflects that of q) New accounting standards for application in future periods the non-controlling interest. The AASB has issued new, revised and amended standards and interpretations that have mandatory application dates for future reporting periods. The Company has decided against early adoption of these standards. A discussion of those future requirements and their impact on the Group follows. AASB 3: Business Combinations, AASB 127: Consolidated and Separate Financial Statements, AASB 2008-3: Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 [AASBs 1, 2, 4, 5, 7, 101, AASB 8: Operating Segments and AASB 2007-3: Amendments to Australian Accounting Standards arising from AASB 8 [AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038] (applicable for annual reporting periods commencing from 1 January 2009). AASB 8 replaces AASB 114 and requires identification of operating segments on the basis of internal reports that are regularly reviewed by the Group’s Board for the purposes of decision making. While the impact of this standard cannot be assessed at this stage, 44 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents there is the potential for more segments to be identified. Amendments to Australian Accounting Standards arising Given the lower economic levels at which segments may be from the Annual Improvements Project (July 2008) defined, and the fact that cash generating units cannot be (AASB 2008-6) detail numerous non-urgent but necessary bigger than operating segments, impairment calculations changes to accounting standards arising from the IASB’s may be affected. Management does not presently believe annual improvements project. No changes are expected to impairment will result however. materially affect the Group. AASB 101: Presentation of Financial Statements, AASB AASB 2008-13: Amendments to Australian Accounting 2007-8: Amendments to Australian Accounting Standards Standards arising from AASB Interpretation 17 – Distributions arising from AASB 101, and AASB 2007-10: Further of Non-cash Assets to Owners [AASB 5 & AASB 110] Amendments to Australian Accounting Standards arising (applicable for annual reporting periods commencing from from AASB 101 (all applicable to annual reporting periods 1 July 2009). This amendment requires that non-current commencing from 1 January 2009). The revised AASB 101 assets held for distribution to owners to be measured at the and amendments supersede the previous AASB 101 and lower of carrying value and fair value less costs to distribute. redefines the composition of financial statements including the inclusion of a statement of comprehensive income. There will be no measurement or recognition impact on the Group. If an entity has made a prior period adjustment or reclassification, a third balance sheet as at the beginning of the comparative period will be required. AASB Interpretation 17: Distributions of Non-cash Assets to Owners (applicable for annual reporting periods commencing from 1 July 2009). This guidance applies prospectively only and clarifies that non-cash dividends payable should be measured at the fair value of the net assets to be distributed where the difference between the fair value and carrying value AASB 123: Borrowing Costs and AASB 2007-6: of the assets is recognised in profit or loss. Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12] (applicable for annual reporting periods commencing from 1 January 2009). The revised AASB 123 has removed the option to expense all borrowing costs and will therefore require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. Management has determined that there will be no effect on the Group as a policy of capitalising qualifying borrowing costs has been maintained by the Group. AASB 2008-1: Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and Cancellations [AASB 2] (applicable for annual reporting The Group does not anticipate early adoption of any of the above reporting requirements and does not expect these requirements to have any material effect on the Group’s financial statements. Critical accounting estimates and judgments The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Key estimates Impairment periods commencing from 1 January 2009). This amendment The group assesses impairment at each reporting date by to AASB 2 clarifies that vesting conditions consist of service evaluating conditions specific to the group that may lead to and performance conditions only. Other elements of a share- impairment of assets. Where an impairment trigger exists, the based payment transaction should therefore be considered recoverable amount of the asset is determined. Value-in-use for the purposes of determining fair value. Cancellations calculations performed in assessing recoverable amounts are also required to be treated in the same manner whether incorporate a number of key estimates. cancelled by the entity or by another party. Exploration and evaluation AASB 2008-2: Amendments to Australian Accounting Standards – Putable Financial Instruments and Obligations Arising on Liquidation [AASB 7, AASB 101, AASB 132 & AASB 139 & Interpretation 2] (applicable for annual reporting periods commencing from 1 January 2009). These amendments introduce an exception to the definition of a financial liability to classify as equity instruments certain putable financial instruments and certain other financial instruments that impose an obligation to deliver a pro-rata share of net assets only upon liquidation. The Company’s policy for exploration and evaluation is discussed in Note 1(e). The application of this policy requires management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploration, then the relevant capitalised amount will be written off through the income statement. AASB 2008-5: Amendments to Australian Accounting The financial report was authorised for issue by the Directors on Standards arising from the Annual Improvements Project 28 September 2009. (July 2008) (AASB 2008-5) and AASB 2008-6: Further MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 45 notes to tHe Financial stateMents noTe 2 revenue Operating activities Gold sales interest received from other persons Total noTe 3 expenses Mine operating expenses Marketing company promotion public relations subscriptions conferences other Total Administration accounting asX fees audit fees Depreciation legal fees Management services employee benefits share registry other Total Exploration Expenses General exploration expenditure written off loss on disposal of tenement expenditure capitalised exploration expenditure impaired Total Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008$ 339,783 344,677 684,460 - 1,007,504 1,007,504 339,783 86,138 425,921 - 359,540 359,540 Consolidated group Parent entity 2009 $ 902,749 44,807 28,282 44,576 40,144 137,476 295,285 103,326 92,536 47,750 35,798 53,445 505,902 403,015 121,219 488,843 1,851,834 669,683 787,095 10,047,050 11,503,828 2008 $ 2009 $ 2008 $ - 902,749 - 14,758 9,782 12,358 36,425 210,145 283,469 5,164 62,234 44,500 12,402 7,184 298,825 273,902 148,835 113,828 966,874 632,912 - - 34,042 23,693 3,400 29,630 77,476 168,241 59,274 56,836 26,750 33,497 51,775 270,208 230,420 94,717 181,107 1,004,584 243,021 787,095 2,457,157 12,775 9,266 2,009 30,310 180,536 234,897 3,394 54,756 23,500 11,705 7,184 191,517 159,281 116,326 60,470 628,133 459,172 - - 632,912 3,487,273 459,172 46 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 noTe 4 inCome Tax expense a) The components of tax expense comprise: current tax Deferred tax under provision in respect of prior years notes to tHe Financial stateMents Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 16,050 242,143 16,050 - (663,275) (647,225) - - (2,058,517) (333,824) 242,143 (2,376,291) 242,143 (254,712) 281,706 269,137 b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: prima facie tax payable on profit from ordinary activities before income tax at 30% (2008: 30%) – consolidated group – parent entity Add: tax effect of: – non-allowable items – share options expensed during year – share placement issue costs – Deferred tax asset not brought to account Income tax attributable to entity Less: tax effect of: – Recognition of timing differences not previously brought to account – under/(over) provision in respect of prior years Income tax attributable to the group c) Deferred tax liability the balance of deferred tax liabilities comprises temporary differences attributable to: Deferred capital gain on sale of subsidiary capitalised exploration expenditure other carried forward tax losses provisions Deferred tax liability (4,210,768) (263,510) (3,506,348) (289,261) 2,053 30,356 16,050 4,178,359 16,050 - 663,275 (647,225) - - - - - - 13,855 65,144 242,143 184,511 242,143 2,053 19,954 16,050 1,568,453 (1,899,838) 1,520 33,028 242,143 281,707 269,137 - - - - - - - - - 142,629 333,824 - - (2,376,291) 269,137 - - - - - - 984,943 6,234,214 (77,261) (6,246,788) (7,129) 887,979 Deferred tax assets on the timing differences have not been recognised as they do not meet the recognition criteria as outlined in Note 1(b) in the financial statements. Deferred Tax Asset (DTA) arising from tax losses of a controlled entity is not recognised at reporting date as realisation of the benefit is not regarded as probable: y y timing differences at 30% tax losses at 30% The Company has deferred tax assets arising in Australia of $7,673,809 (2008: $6,018,843) that are available indefinitely for offset against future taxable profits of the companies in which the losses arise. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 47 notes to tHe Financial stateMents noTe 5 Key managemenT personnel a) Key management personnel remuneration: short-term employee benefits post-employment benefits share-based payments Consolidated group Parent entity 2009 $ 818,753 55,916 1,769 876,438 2008 $ 1,122,181 65,454 8,659 1,196,294 2009 $ 384,175 21,394 1,769 407,338 2008 $ 735,521 36,874 39,584 811,979 Detailed remuneration disclosures are provided in sections (a) to (c) of the Remuneration Report. b) Equity instruments relating to key management personnel Options and Rights holdings Number of options held by key management personnel: 2009 Balance at 1/7/2008 Issued as remuneration (Exercised/ expired) / purchased Acquired during the year Vested during the year Vested and exercisable at 30/6/2009 R M Kennedy* K J a Wills e J Vickery* G e Maddocks D W Godfrey K J lines 690,001 650,001 79,934 510,001 - - R W c Willson#* 186,400 R c Healy n J smart - - - - - - 53,334 - - - - (3,901,251) 3,211,250 3,211,250 (1,462,502) (477,163) (1,147,501) - - (16,400) - - 812,501 397,229 637,500 - - - - - 812,501 397,229 637,500 53,334 - - - - - - - - 53,334 - 170,000 - - 2,116,337 53,334 (7,004,817) 5,058,480 5,111,814 223,334 During the year 53,334 options were granted as compensation to key management, other than directors, from the Maximus Resources Limited Employee Share Option Plan with a fair value of $1,769. 2008 Balance at 1/7/2007 Issued as remuneration (Exercised/ expired) / purchased Acquired during the year Vested during the year Vested and exercisable at 30/6/2008 R M Kennedy* K J a Wills e J Vickery* G e Maddocks n J smart K J lines R W c Willson#* - - - 1 512,500 - 100,000 612,501 - - - - - - 70,000 70,000 - - - - (512,500) - - 690,001 650,001 79,934 510,000 - - 690,001 650,001 79,934 510,000 - - 690,001 650,001 79,934 510,001 - - 16,400 86,400 186,400 (512,500) 1,946,336 2,016,336 2,116,337 48 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents Share holdings Number of shares held by key management personnel. 2009 Balance 1/7/2008 Received as compensation Exercise of options Acquired/ (disposed) Balance 30/6/2009 R M Kennedy* K J a Wills e J Vickery* G e Maddocks D W Godfrey K J lines R c Healy n J smart R W c Willson#* 4,945,000 3,250,001 529,639 2,550,001 - - - - 82,000 11,356,641 - - - - - - - - - - - - - - - - - - - 1,975,000 428,277 264,819 - - - - - - 6,920,000 3,678,278 794,458 2,550,001 - - - - 82,000 2,668,096 14,024,737 2008 Balance 1/7/2007 Received as compensation Exercise of options Acquired/ (disposed) Balance 30/6/2008 R M Kennedy* K J a Wills e J Vickery* G e Maddocks n J smart K J lines R W c Willson#* 262,501 412,501 60,000 12,501 - - 57,000 804,503 - - - - - - - - - - - - - - - - 4,682,499 2,837,500 469,639 2,537,500 - - 4,945,000 3,250,001 529,639 2,550,001 - - 25,000 82,000 10,552,138 11,356,641 * Held by Directors and entities in which Directors have a relevant interest. # Mr Willson ceased as a key management person on 11 November 2008. noTe 6 auDiTor’s remuneraTion Remuneration of the auditor of the company for: – auditing and reviewing the financial report noTe 7 earnings per share (eps) earnings used to calculate basic and dilutive eps Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 47,750 47,750 44,500 44,500 26,750 26,750 23,500 23,500 2009 2008 (3,693,903) (1,175,994) Weighted average number of ordinary shares outstanding during the year used to calculate basic eps 168,566,316 121,177,911 Weighted average number of options outstanding during the year used to calculate diluted eps 795,000 - Weighted average number of ordinary shares outstanding during the year used to calculate diluted eps 169,361,316 121,177,911 The number of options on issue at 30 June 2009 was 9,665,000 (2008: 35,206,032). These have a dilutive effect and a weighted average number of 795,000 has been included in the calculation of diluted earnings per share. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 49 notes to tHe Financial stateMents noTe 8 Cash anD Cash equivalenTs cash at bank and in hand short-term bank deposits Consolidated group Parent entity 2009 $ 1,400,254 250,000 2008 $ 1,582,827 9,150,000 1,650,254 10,732,827 2009 $ 842,070 50,000 892,070 2008 $ 1,143,772 3,050,000 4,193,772 The effective interest rate on short-term bank deposits was 3.1% (2008: 7.9%). These deposits have an average maturity of 30 days. a) Reconciliation of cash Cash at the end of the financial year as shown in the cash flow statement is reconciled to items in the balance sheet as follows: Cash and cash equivalents 1,650,254 10,732,827 892,070 4,193,772 b) Risk exposure The Group’s and parent entity’s exposure to interest rate risk is discussed at Note 27. noTe 9 TraDe anD oTher reCeivables Current interest receivable Receivable from FMe exploration services pty ltd* trade and other receivables Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 312 109,720 - 11,712 225,000 721,030 946,342 500,000 480,027 1,089,747 75,000 384,964 459,964 250,000 358,772 620,484 * The entity advanced this amount to assist in the funding of working capital. The entity provides support to the associated company to ensure it can pay its debts as and when they fall due and payable. a) Past due, not impaired There are no material trade and other receivables that are considered to be past due and impaired. b) Associated company receivable This receivable from the associated company is repayable at call and interest at market rates can be charged at the discretion of the Directors of Maximus. The parent entity will not seek repayment where such repayments would prejudice the associated company’s ability to meet any obligations as and when they fall due. noTe 10 invesTmenTs aCCounTeD for using The equiTy meThoD Interests are held in the following associated companies. Name Principal activities Country of incorporation Shares Ownership interest Carrying amount of investment 2009 % 2008 % 2009 $ 2008 $ unlisted: FMe exploration services pty ltd administration services australia ord 66.6 66.6 2 2 50 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents a) Summarised presentation of aggregate assets, liabilities and performance of associate. current assets non current assets total assets current liabilities total liabilities net assets share of associate’s profit after tax 2009 $ 386,586 428,969 815,555 815,552 815,552 3 - 2008 $ 366,430 478,183 844,613 844,610 844,610 3 - The Group’s share of contingent liabilities of FME Exploration Services Pty Ltd amounts to $166,668. noTe 11 JoinT venTures The Company has the following interests in unincorporated joint ventures: State Agreement Name Parties Summary Wa nemex agreement sa & nt eromanga Basin JV eromanga uranium ltd (eRo) and Maximus Resources ltd (MXR) Maximus Resources ltd (MXR) and nemex pty ltd MXR purchased a 90% interest in the nemex ironstone Well project tenements. sa Billa Kalina JV eRo and MXR sa Kapunda Joint Venture Flinders Mines limited and MXR and copper Range (sa) pty ltd (cRJ) Wa Meeline option to purchase MXR and christopher Richard elkington and peter William youngs and Darian sampey and allen Hunter younger and Roger townend and Raimunda silva townend and Henning otto Hintze nt nt Rankin/Gecko agreement MXR and tanami Gold nl (tGl) Woolanga–Rankin agreement MXR and Minotaur exploration ltd (Minotaur) nt strangway agreement MXR and nupower Resources ltd (nupower) sa Wa option agreement Ml5023 MXR and christopher Wells narndee – corporate Group agreement MXR and corporate Resource consultants pty ltd and Bruce legendre and t e Johnston and associates pty ltd eRo can earn a 70% interest in MXR’s eromanga Basin project tenements in sa and the nt by spending $7m on the tenements within 6 years. eRo can earn a 50% interest in the non-diamond mineral rights of MXR’s Billa Kalina project tenements by spending $3m on the tenements within 6 years. cRJ can earn a 51% interest in MXR’s rights to base and precious metals in el3064 by spending $500k over 5 years with an option to earn a 75% interest by further expenditure of $500k. MXR has a two year option to purchase a 100% interest in all the tenements in this agreement for $500k. tGl has transferred a 95% interest in the project tenements for $1 plus the undertaking that MXR will meet future exploration and tenement expenditure while the tenements remain in force. Minotaur to spend a minimum of $200k on exploration within the first 12 months. if Minotaur elects to proceed with a JV agreement it may earn 51% by expenditure of $1m over 3 years and 75% by expenditure of a further $1m over 2 years. nupower to expend a minimum of $200k in the first 12 months. nupower may then earn 51% interest in ‘energy minerals’ by expenditure of $3m from commencement over 4 years and 70% by expenditure of a further $2m over 2 years. MXR has purchased the rights to explore the property for a 2 year period and has an option to purchase during that period. MXR has purchased a 90% interest in an exploration licence package in the narndee–Windimurra region. Any commitments relating to joint ventures have been considered within commitments for expenditure in Note 21. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 51 notes to tHe Financial stateMents noTe 12 available-for-sale finanCial asseTs available-for-sale financial assets available-for-sale financial assets comprise: listed investments at fair value: – shares in listed companies total available-for-sale financial assets Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ - - - - - - 1,508,143 3,992,643 1,508,143 3,992,643 1,508,143 3,992,643 Maximus Resources Limited holds 44,357,143 shares in Eromanga Uranium Limited. These are held as available-for-sale and the value marked-to-market at financial year-end. noTe 13 ConTrolleD enTiTies Controlled entities consolidated Country of incorporation Percentage owned (%) 2009 2008 Parent entity Maximus Resources limited Subsidiaries of Maximus Resources Limited eromanga uranium limited australia australia 35.29 35.36 Maximus Resources Limited holds 35.29% of the Issued Capital of Eromanga Uranium Limited. A slight dilution occurred during the year due to an issue of shares on conversion of options in Eromanga Uranium Limited. Additionally, three of the Directors of Maximus Resources Limited are also Directors of Eromanga Uranium Limited (a Board currently consisting of four Directors). As a result, Eromanga Uranium has been consolidated with Maximus Resources Limited for the purposes of this financial report. noTe 14 business CombinaTion a) Summary of acquisition On 10 June 2009 ERO Metals Pty Ltd, a wholly-owned subsidiary of Eromanga Uranium Limited, acquired 100% of the issued capital of Douglas Resources Pty Ltd. Consideration for the acquisition was $2,650,001 and included mining leases and the associated development assets, stationary and mobile plant and equipment, workshop and accommodation. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date: purchase consideration (refer note (b) below) Fair value of net identifiable assets acquired (refer note (c) below) b) Purchase consideration outflow of cash to acquire subsidiary (net of cash acquired) cash consideration less: cash balances acquired cash outflow $ 2,650,001 2,650,001 $ 2,650,001 (4,673) 2,645,328 52 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 c) Assets and liabilities acquired cash trade receivables plant and equipment Development assets Mining leases epM deposit noTe 15 planT anD equipmenT plant and equipment at cost accumulated depreciation Total plant and equipment Movements in carrying amounts: notes to tHe Financial stateMents $ 4,673 3,892 465,710 1,346,026 811,950 17,750 2,650,001 Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 2,116,023 1,516,220 1,162,779 1,046,109 (382,959) (169,503) 1,733,064 1,346,717 (250,016) 912,763 (97,318) 948,790 Movements in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial year. Consolidated group Parent entity Plant and equipment Total Plant and equipment Balance at 1 July 2008 additions acquired through business combination Disposals Depreciation 1,346,717 1,346,717 271,516 465,710 (137,424) (213,455) 737,226 - (137,424) (213,455) Balance at 30 June 2009 1,733,064 1,733,064 noTe 16 CapiTaliseD exploraTion anD evaluaTion expenDiTure 948,790 252,662 - (135,992) (152,697) 912,763 Total 948,790 252,662 - (135,992) (152,697) 912,763 Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ exploration and evaluation – 100% owned 13,517,511 12,791,471 12,705,561 12,791,471 exploration and evaluation phases – Joint Ventures 11,275,535 16,686,351 8,310,021 8,168,605 Total exploration and evaluation expenditure 24,793,046 29,477,822 21,015,582 20,960,076 Movements in carrying amounts: Exploration and evaluation Balance at the beginning of the year Disposal of tenement assets amounts capitalised during the year acquired through business combination Reductions through impairment 29,477,822 11,085,151 20,960,076 8,499,156 (2,087,095) - (2,087,095) - 6,637,419 18,565,289 4,599,758 12,633,538 811,950 - - - (10,047,050) (172,618) (2,457,157) (172,618) Carrying amount at the end of year 24,793,046 29,477,822 21,015,582 20,960,076 The ultimate recoupment of costs carried forward for exploration phase is dependent on the successful development and commercial exploitation or sale of the respective areas. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 53 notes to tHe Financial stateMents noTe 17 TraDe anD oTher payables Unsecured trade payables sundry payables and accrued expenses amounts payable to associated companies for management services noTe 18 shorT-Term provisions employee entitlements opening balance at 1 July 2008 additional provisions amounts used Balance at 30 June 2009 Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 184,622 218,987 - 1,528,414 63,125 - 79,702 174,125 - 1,028,596 48,125 - 403,609 1,591,539 253,827 1,076,721 Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 38,211 47,957 4,014 23,764 47,957 46,658 (56,404) 38,211 18,377 97,640 (68,060) 47,957 23,764 14,673 (34,423) 4,014 6,019 40,130 (22,385) 23,764 54 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents noTe 19 issueD CapiTal Consolidated Group Parent Entity 2009 $ 2008 $ 2009 $ 2008 $ 184,882,136 (2008: 143,840,792) fully paid ordinary shares 29,327,061 27,046,406 29,341,900 27,046,405 a) Ordinary shares At the beginning of the reporting period 143,840,792 74,792,087 143,840,792 74,792,087 shares issued during the year 69,048,705 69,048,705 Number Number Number Number – 2 July 2008 – 4 July 2008 – 5 July 2008 – 10 July 2008 – 18 July 2008 – 14 august 2008 – 27 august 2008 – 23 september 2008 – 7 november 2008 – 5 December 2008 – 21 January 2009 – 21 January 2009 – 19 February 2009 – 19 February 2009 – 20 February 2009 – 11 May 2009 – 29 May 2009 – 29 May 2009 – 29 May 2009 – 22 June 2009 75,000 8,156,869 13,832 1,000,000 524,456 46,928 15,188 1,316 57,375 15,828,122 5,550,000 2,500 25,000 1,500 9,666,666 14,232 9,800 1,935 50,000 625 75,000 8,156,869 13,832 1,000,000 524,456 46,928 15,188 1,316 57,375 15,828,122 5,550,000 2,500 25,000 1,500 9,666,666 14,232 9,800 1,935 50,000 625 At reporting date 184,882,136 143,840,792 184,882,136 143,840,792 On 2 July 2008 75,000 shares were issued at 20 cents to the vendors for the acquisition of Qld tenements On 4 July 2008 8,156,869 shares were issued at 20 cents as a result of the exercise of options On 5 July 2008 13,832 shares were issued at 20 cents as a result of the exercise of options On 10 July 2008 1,000,000 shares were issued at 18.5 cents to the vendors for the acquisition of WA tenements On 18 July 2008 524,456 shares were issued at 20 cents as a result of the exercise of options On 14 August 2008 46,928 shares were issued at 20 cents as a result of the exercise of options On 27 August 2008 15,188 shares were issued at 20 cents as a result of the exercise of options On 23 September 2008 1,316 shares were issued at 20 cents as a result of the exercise of options On 7 November 2008 57,375 shares were issued at 20 cents as a result of the exercise of options On 5 December 2008 15,828,122 shares were issued at 5 cents as a result of a rights issue On 21 January 2009 5,550,000 shares were issued at 5 cents as a result of shortfall of rights issue On 21 January 2009 2,500 shares were issued at 10 cents as a result of the exercise of options On 19 February 2009 25,000 shares were issued at 5 cents as a result of shortfall of rights issue On 19 February 2009 1,500 shares were issued at 10 cents as a result of the exercise of options On 20 February 2009 9,666,666 shares were issued at 3 cents as a result of a placement On 11 May 2009 14,232 shares were issued at 10 cents as a result of the exercise of options On 29 May 2009 9,800 shares were issued at 10 cents as a result of the exercise of options On 29 May 2009 1,935 shares were issued at 20 cents as a result of the exercise of options On 29 May 2009 50,000 shares were issued at 10 cents as a result of the exercise of options On 22 June 2009 625 shares were issued at 20 cents as a result of the exercise of options Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 55 notes to tHe Financial stateMents b) Options For information relating to the Maximus Resources Limited Employee Share Option Plan including details of options issued and exercised during the financial year and the options outstanding at year end refer to Note 23 Share Based Payments. Options Consolidated group Parent entity 2009 Number 2008 Number 2009 Number 2008 Number outstanding at the beginning of the year 35,206,035 35,084,583 35,206,035 35,084,583 Granted exercised expired 62,713,423 33,456,230 62,713,423 33,456,230 (739,687) (10,634,200) (739,687) (10,634,200) (87,514,771) (22,700,578) (87,514,771) (22,700,578) outstanding at the end of the year 9,665,000 35,206,035 9,665,000 35,206,035 exercisable at year end 9,665,000 35,206,035 9,665,000 35,206,035 c) Capital management The group has no debt capital. There are no externally imposed capital requirements. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. This strategy is to ensure that the group has no debt. noTe 20 reserves a) Share option reserve The share option reserve records items recognised as expenses on valuation of employee options and options issued to external parties in consideration for goods and services rendered. b) Available-for-sale reserve Changes in the fair value of instruments, such as equities, classified as available-for-sale financial assets, revaluation reserve, as described in Note 1(f)(ii). Amounts are recognised in the income statement when the associated assets are sold or impaired. noTe 21 CommiTmenTs for exploraTion anD JoinT venTure expenDiTure In order to maintain current rights of tenure to exploration tenements the group will be required to outlay in the year ending 30 June 2010 amounts of approximately $2,478,000 in respect of tenement lease rentals and to meet minimum expenditure requirements pursuant to various joint venture requirements. 56 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 noTe 22 Cash flow informaTion profit/(loss) after tax Non-cash flows in profit Depreciation issue of options to employees General exploration expenditure written off exploration and evaluation expenditure written off impairment of financial assets - gross impairment of financial assets – tax effect impairment of capitalised exploration expenditure loss on disposal of tenement loss on disposal of assets tax effect on transaction costs Changes in operating assets and liabilities (increase)/decrease in trade and other receivables increase/(decrease) in trade and other payables increase/(decrease) in Deferred tax liability increase/(decrease) in provisions notes to tHe Financial stateMents Consolidated group Parent entity 2009 $ 2008 $ 2009 $ 2008 $ (13,388,668) (1,120,511) (9,311,534) (1,233,339) 213,455 101,187 669,683 - - - 10,047,050 787,095 161,987 16,048 (131,597) (1,184,040) - 120,081 179,290 459,172 - - - - - 242,143 (192,117) 959,463 - (9,746) 29,580 152,697 66,512 243,021 2,457,157 6,386,286 (1,915,886) - 787,095 161,100 16,048 (14,481) (822,895) (142,627) (19,750) 64,172 110,093 459,172 - - - - - 269,137 (280,905) 653,299 - 17,745 59,374 Net cash provided by operating activities (2,717,546) 677,101 (1,957,257) noTe 23 share-baseD paymenTs The following share-based payment arrangements existed at 30 June 2009. The Maximus Resources Limited Employee Share Option Plan enables the Board, at its discretion, to issue options to employees of the Company or its associated companies. Each option will have a life of five years and be exercisable at a price determined by the Board. This price will not be below the market price of a share at the time of issue. All options are un-listed and non-transferable. On 10 April 2007 930,000 options were issued to employees under the Company’s Employee Share Option Plan. The options are exercisable at 14 cents on or before 20 March 2012. The options hold no voting or dividend rights. On 17 March 2008 890,000 options were issued to employees under the Company’s Employee Share Option Plan. The options are exercisable at 18 cents on or before 17 March 2013. The options hold no voting or dividend rights. On 4 February 2009 2,005,000 options were issued to employees under the Company’s Employee Share Option Plan. The options are exercisable at 2.8 cents on or before 3 February 2014. The options hold no voting or dividend rights. Balance outstanding at 1 July 2007 Granted exercised expired Outstanding at 30 June 2008 Exercisable at 30 June 2008 Granted exercised expired Outstanding at 30 June 2009 Exercisable at year end Consolidated group Parent entity Number of options Weighted average Number of options Weighted average exercise price $ exercise price $ 35,084,583 33,456,230 (10,634,240) (22,700,581) 35,206,032 35,206,032 62,713,423 (739,687) (87,514,768) 9,665,000 9,665,000 0.198 0.235 0.199 0.200 0.232 0.232 0.166 0.189 0.176 0.315 0.315 35,084,583 33,456,230 (10,634,200) (22,700,581) 35,206,032 35,206,032 62,713,423 (739,687) (87,514,768) 9,665,000 9,665,000 0.198 0.235 0.199 0.200 0.232 0.232 0.166 0.189 0.176 0.315 0.315 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 57 notes to tHe Financial stateMents The options outstanding at 30 June 2009 had a weighted average exercise price of $0.315 and a weighted average remaining contractual life of 34 months. Exercise prices range from $0.04 to $0.50 in respect of options outstanding at 30 June 2009. The weighted average fair value of the options granted during the year was $0.033. This price was calculated by using a Black-Scholes option pricing model applying the following inputs: Weighted average exercise price Weighted average life of the options Underlying share price Expected share price volatility Risk free interest rate $0.04 5 years $0.047 83.3% 3.58% Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future trends, which may not eventuate. The life of the options is based on the historical exercise patterns, which may not eventuate in the future. Included under “Administrative Expense” in the income statement is $66,512 (2008: $107,052) which relates to share-based payments in accordance with the Company Employee Share Option Plan. noTe 24 evenTs subsequenT To balanCe DaTe No circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in future financial years. noTe 25 relaTeD parTy TransaCTions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Associated companies y Administrative services were provided by FME Exploration Services Pty Ltd to Maximus Resources Limited for $270,208. y FME Exploration Services Pty Ltd repaid $175,000 of the working capital loan from Maximus Resources Limited. The total receivable from FME Exploration Services Pty Ltd at year end is $75,000. y Flinders Mines Limited acquired mineral tenements from Maximus Resources Limited for $1,300,000. y Maximus Resources Limited sold two vehicles to Flinders Mines Limited for $62,800. y Flinders Mines Limited took up its entitlement under the Maximus Resources Limited Rights Issue in November 2008 for a total of $262,500. noTe 26 segmenT informaTion The entity operates predominately in the mining industry in Australia and as such has no material reportable segments. noTe 27 finanCial insTrumenTs a) Financial risk management The group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, and loans to subsidiaries. i) Treasury risk management The senior executives of the group regularly analyse interest rate risk exposure and evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. ii) Financial risks The main risk the group is exposed to through its financial instruments is liquidity risk. iii) Liquidity risk The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funds are available to meet the cash demands. 58 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 notes to tHe Financial stateMents b) Financial instruments i) Interest rate risk The consolidated group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted interest rates on classes of financial assets and financial liabilities, is as follows: 2009 Financial assets: cash and cash equivalents Receivables total financial assets Financial liabilities: payables total financial liabilities Net financial assets 2008 Financial assets: cash and cash equivalents Receivables total financial assets Financial liabilities: payables total financial liabilities Net financial assets Floating interest rate Non-interest bearing Total Weighted average effective interest rate $ $ $ 3.1% 1,650,254 - 1,650,254 - 1,650,254 300,819 300,819 300,819 1,951,073 - - - 518,061 518,061 518,061 518,061 (217,242) 1,433,012 7.9% 10,732,827 - 10,732,827 - 1,089,747 - 10,732,827 1,089,747 10,732,827 - - 1,591,539 1,591,539 - - 10,732,827 (501,792) 10,732,827 Interest rate risk is managed by the Group with the use of rolling short-term deposits. ii) Net fair values The group’s financial assets and liabilities are included in the balance sheet at amounts that approximate net fair value. iii) Sensitivity analysis Interest rate risk The group has performed a sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 59 notes to tHe Financial stateMents Interest rate sensitivity analysis At 30 June 2009, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows: change in profit increase in interest rate by 2% Decrease in interest rate by 2% change in equity increase in interest rate by 2% Decrease in interest rate by 2% Price risk Consolidated entity Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 33,005 (33,005) 33,005 (33,005) 214,656 (214,656) 214,656 (214,656) 17,841 (17,841) 17,841 (17,841) 83,875 (83,875) 83,875 (83,875) Price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors. Price risk sensitivity analysis At 30 June, the effect on equity as a result of changes in the value of investments, with all other variables remaining constant would be as follows: change in equity increase in price by 10% Decrease in price by 10% Consolidated entity Parent entity 2009 $ 2008 $ 2009 $ 2008 $ 150,814 (150,814) 399,264 (399,264) 150,814 (150,814) 399,264 (399,264) noTe 28 going ConCern basis of aCCounTing The financial report has been prepared on the basis of going concern. The projections of the Company evidence that the Company will require capital for continued operations. The Company and Consolidated Entity will be seeking to raise equity to fund operations, including exploration and working capital. The Company’s and Consolidated Entity’s ability to continue as a going concern is contingent upon successfully raising additional capital. If additional funds are not raised, the going concern basis may not be appropriate, with the result that the Company and Consolidated Entity may have to realise their assets and extinguish their liabilities, other than in the ordinary course of business and in amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report. noTe 29 Company DeTails The principal place of business and registered office is: Maximus Resources Limited 62 Beulah Road Norwood South Australia 5067 60 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 DiRectoRs’ DeclaRation The directors of the Company declare that: 1) the financial statements and notes, as set out on pages 37 to 60 are in accordance with the Corporations Act 2001 and a) comply with Accounting Standards and the Corporations Regulations 2001; and b) give a true and fair view of the financial position as at 30 June 2009 and of the performance for the year ended on that date of the company and the consolidated group; 2) the Managing Director and Chief Finance Officer have each declared that: a) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b) the financial statements and notes for the financial year comply with the Accounting Standards; and c) the financial statements and notes for the financial year give a true and fair view; 3) in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. RobeRt M Kennedy Director Dated this 28 day of September 2009 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 61 inDepenDent auDit RepoRt 62 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 inDepenDent auDit RepoRt MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 63 inDepenDent auDit RepoRt 64 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 coRpoRate GoVeRnance stateMent The Board of Directors of Maximus Resources Limited are fulfilling its responsibilities, the Board is supported by an Audit committed to improving and achieving good standards Committee to deal with internal control, ethical standards and of corporate governance and has established corporate financial reporting. government policies and procedures, where appropriate and practicable, consistent with the revised Corporate Governance Principles and Recommendations – 2nd Edition issued by the ASX Corporate Governance Council (“ASX Recommendations”). The Board appoints a Managing Director responsible for the day to day management of the Company including management of financial, physical and human resources, development and implementation of risk management, internal control and The following statement sets out a summary of the Company’s regulatory compliance policies and procedures, recommending corporate governance practices that were in place during the strategic direction and planning for the operations of the financial year and how those practices relate to the revised business and the provision of relevant information to the Board. ASX Recommendations. The Company elected to undergo an early transition to the revised ASX Recommendations and as such has reported against these for the financial year ending 30 June 2008 and 30 June 2009. These recommendations are not intended to be prescriptions to be followed by all ASX listed companies, but rather guidelines designed to produce an effective, quality and integrity outcome. The Corporate Governance Council has recognised that a “one size fits all” approach to Corporate Governance is not required. Instead, it states aspirations of good practice for optimising corporate performance and accountability in the interests of shareholders and the broader economy. A company may consider that a recommendation is inappropriate to its particular circumstances and has flexibility not to adopt it and explain why. In ensuring highest good standard of ethical behaviour and accountability, the Board has included in its corporate governance policies those matters contained in the ASX Recommendations where applicable. However, the Board also recognises that full adoption of the ASX Recommendations may not be practical nor provide the optimal result given the particular circumstances and structure of the Company. The Board is, nevertheless, committed to ensuring that appropriate Corporate The board has not adopted a formal statement of matters reserved to them or a formal board charter that details their functions and responsibilities nor a formal statement of the areas of authority delegated to senior executives. Recommendation 1.2 – Recommendation followed The Board takes responsibility for monitoring the composition of the Board and reviewing the performance and compensation of the Company’s Executive Directors and senior management with the overall objective of motivating and appropriately rewarding performance. The Board considers the Company’s present circumstances and goals ensure maximum shareholder benefits from the attraction and retention of a high quality Board and senior management team. The Board on a regular basis reviews the performance of and remuneration for Executive Director’s and senior management including any equity participation by such Executive Directors and senior management. The Board evaluates the performance of the Managing Director and Company Secretary on a regular basis and encourages continuing professional development. Recommendation 1.3 – Recommendation followed Governance practices are in place for the proper direction and During the period the Board undertook an informal performance management of the Company. This statement outlines the main evaluation of the Managing Director, Company Secretary and Corporate Governance practices of the Company disclosed senior management. The evaluation was in accordance with the under the ASX Recommendations, including those that comply Company’s process for evaluation of senior executives. with good practice and which unless otherwise disclosed, were in place during the whole of the financial year ended 30 June 2009. Principle 1 – Lay solid foundations for management and oversight Recommendation 1.1 – Recommendation followed The Board is governed by the Corporations Act 2001, ASX Listing Rules and a formal constitution adopted by the company in 2006. Principle 2 – Structure the board to add value Recommendation 2.1 – Recommendation followed The composition of the Board consists of four directors of whom three, including the Chairman, are Independent Directors. The Audit Committee currently consists of two Independent Directors. Recommendation 2.2 – Recommendation followed The Chairman, Mr Kennedy is an Independent Director The role of the Board is to provide leadership and direction to management and to agree with management the aims, Recommendation 2.3 – Recommendation followed Mr Kennedy’s role as Chairman of the Board is separate from strategies and policies of the Company for the protection and that of the Managing Director, Mr Booth who is responsible enhancement of long-term shareholder value. The Board takes responsibility for the overall Corporate Governance of the Company including its strategic direction, management goal setting and monitoring, internal control, risk management and financial reporting. for the day to day management of the Company and is in compliance with the ASX Recommendation that these roles not be exercised by the same individual. Recommendation 2.4 – Recommendation not followed The Board believes that given the size of the Company and the The Board has an established framework for the management stage of the entity’s life as a publicly listed junior exploration of the entity including a system of internal control, a business company that the cost of establishing a nomination committee risk management process and appropriate ethical standards. In in line with ASX Recommendation 2.4 and establishing a formal MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 65 coRpoRate GoVeRnance stateMent charter as recommended by ASX Recommendation 2.4 cannot y act in good faith and in the best interests of the Company; be justified by the perceived benefits of doing so. As such, the whole Board currently carries out this function. It is anticipated that a formal charter will be developed in the coming year, as the Company develops further. Recommendation 2.5 – Recommendation not followed The Board recognises that as a result of the Company’s size and the stage of the entity’s life as a publicly listed junior exploration company, the assessment of the Board’s overall performance and its own succession plan is conducted on an ad hoc basis. Whilst this is at variance with the ASX Recommendation 2.5, the Directors consider that at the date of this report an appropriate and adequate process for the evaluation of Directors is in place. y exercise care and diligence that a reasonable person in that role would exercise; y exercise their powers in good faith for a proper purpose and in the best interests of the Company; y not improperly use their position or information obtained through their position to gain a personal advantage or for the advantage of another person to the detriment of the Company; y disclose material personal interests and avoid actual or potential conflicts of interests; y keep themselves informed of relevant Company matters; A more formal process of Board assessment will be considered y keep confidential the business of all directors meetings; and in the future as the Company develops. y observe and support the Board’s Corporate Governance Recommendation 2.6 – Recommendation followed practices and procedures. The names of the directors of the Company and terms in Directors also required to provide the Company with details office at the date of this Statement together with their skills, of all securities registered in the director’s name or an entity in experience, expertise and financial interests in the Company are which the director has a relevant interest within the meaning set out in the Directors’ Report section of this report. of Section 9 of the Corporations Act 2001 and details of all Messrs Kennedy, Vickery and Wills are considered to be independent. The Company has no relationships with any of the independent directors which the company believes would compromise the independence of these directors. All directors are entitled to take such legal advice as they require at any time and from time to time on any matter concerning or in relation to their rights, duties and obligations as directors in relation to the affairs of the Company at the expense of the Company. The Company’s constitution specifies the number of directors must be at least three and at most ten. The Board may at any time appoint a director to fill a casual vacancy. Directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors (other than the Managing Director) are subject to re-election at least every three years. The tenure for executive directors is linked to their holding of executive office. As the board does not have a nominations Committee, the functions of this Committee in its absence are deal with by the Board as a whole. An assessment of the Board’s overall performance and its own succession plan is conducted on an ad hoc basis and was done so during the year by the Chairman. Principle 3 – Companies should actively promote ethical and responsible decision making Recommendation 3.1 – Recommendation not followed While the Company does not have a formal code of conduct, as the Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing and managing a formal code of conduct cannot be justified, the Company requires all its directors and employees to abide by good standards of behaviour, business ethics and in accordance with the law. In discharging their duties, Directors of the Company are required to: contracts, other than contracts to which the Company is a party to which the director is a party or under which the director is entitled to a benefit, and that confer a right to call for or deliver shares in the Company and the nature of the Director’s interest under the contract. Directors are required to disclose to the Board any material contract in which they may have an interest. In accordance with Section 195 of the Corporations Act 2001, a director having a material personal interest in any matter to be dealt with by the Board, will not be present when that matter is considered by the Board and will not vote on that matter. Recommendation 3.2 – Recommendation followed Directors, officers and employees are not permitted to trade in securities of the Company at any time whilst in possession of price sensitive information not readily available to the market. Section 1043A of the Corporations Act 2001 also prohibits the acquisition and disposal of securities where a person possess information that is not generally available and which may reasonably be expected to have a material effect on the price of the securities if the information was generally available. A securities trading policy has been established and all employees and Directors are obliged to comply. All directors have signed agreements with the Company which require them to provide the Company with details of all securities registered in the director’s name or an entity in which the director has a relevant interest within the meaning of Section 9 of the Corporations Act 2001 and details of all contracts, other than contracts to which the Company is a party to which the director is a party or under which the director is entitled to a benefit, and that confer a right to call for or deliver shares in the Company and the nature of the director’s interest under the contract. Directors are required to disclose to the Board any material contract in which they may have an interest. In accordance with Section 195 of the Corporations Act 2001, a director having a material personal interest in any matter to be dealt with by the Board, will not be present when that matter is considered by the Board and will not vote on that matter. 66 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 coRpoRate GoVeRnance stateMent Recommendation 3.3 - Recommendation followed Principle 5 – Make timely and balanced disclosure A summary of the Company’s trading policy can be found at Recommendation 5.1 & 5.2 – Recommendations not followed www.maximusresources.com/governance. Principle 4 – Safeguard integrity in financial reporting Recommendation 4.1 – Recommendation followed The Company has established an Audit Committee to oversee corporate governance over internal controls, ethical standards, financial reporting, and external accounting and compliance procedures. Also, the Board as a whole addresses the governance aspects of the full scope of Maximus’ activities to ensure that it adheres to appropriate ethical standards. The main responsibilities of the Audit and Corporate Governance Committee include; y reviewing, assessing and making recommendations to the Board on the annual and half year financial reports released to the market by the Company; y overseeing establishment, maintenance and reviewing the effectiveness of the Company’s internal control and ensuring efficacy and efficiency of operations, reliability of financial The Company operates under the continuous disclosure requirements of the ASX Listing Rules and ensures that all information which may be expected to affect the value of the Company’s securities or influence investment decisions is released to the market in order that all investors have equal and timely access to material information concerning the Company. The information is made publicly available on the Company’s website following release to the ASX. Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, the Board does not believe a formal policy for continuous disclosure is required. However, a summary describing how the Company will ensure its compliance with continuous disclosure requirements is posted on the Company’s website, www.maximusresources.com/governance. Principle 6 – Respect the rights of shareholders Recommendation 6.1 & 6.2 – Recommendations not followed reporting and compliance with applicable Accounting The Board aims to ensure that shareholders are informed of all Standards and ASX Listing Rules; y y liaising with and reviewing reports of the external auditor; and reviewing performance and independence of the external auditor and where necessary making recommendations for appointment and removal of the Company’s auditor. Recommendation 4.2 – Recommendation not followed The Audit Committee consists of two non-executive, independent Board directors, Messrs Vickery and Kennedy, and is chaired by Mr Vickery. The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing an audit committee with at least three members in line with ASX Recommendation 4.2 cannot be justified by the perceived benefits of doing so. The existing composition of the Audit Committee is such that review and authorisation of the integrity of the Company’s financial reporting and the independence of the external auditor is via the major developments affecting the Company’s state of affairs. In accordance with the ASX Recommendations, information is communicated to shareholders as follows: y the annual financial report which includes relevant information about the operations of the Company during the year, changes in the state of affairs of the entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001; y the half yearly financial report lodged with the Australian Stock Exchange and Australian Securities and Investments Commission and sent to all shareholders who request it; y notifications relating to any proposed major changes in the Company which may impact on share ownership rights that are submitted to a vote of shareholders; y notices of all meetings of shareholders; y publicly released documents including full text of notices of meetings and explanatory material made available on the exercise of independent and informed judgment. Company’s website; and Recommendation 4.3 – Recommendation not followed The Board believes that given the current size of the Company and the stage of the entity’s life as a publicly listed junior y disclosure of the Company’s Corporate Governance practices and communications strategy on the entity’s website. exploration company that the cost of establishing a formal audit The Board encourages full participation of shareholders at the committee charter in line with ASX Recommendation 4.3 cannot Annual General Meeting to ensure a high level of accountability be justified by the perceived benefits of doing so, however it is and identification with the Company’s strategy and goals. anticipated that an audit committee charter will be established in Important issues are presented to the shareholders as single the coming year as the Company develops further. resolutions. The external auditor of the Company is also invited Recommendation 4.4 – Recommendation followed Mr Kennedy is a qualified Chartered Accountant. Details of the Audit Committee member’s qualifications and attendance at meetings are set out in the Directors’ Report section of this report. The Committee meets at least twice per annum and reports to the Board. The Managing Director, Company Secretary and external auditor may by invitation attend meetings at the discretion of the Committee. to the Annual General Meeting of shareholders and is available to answer any questions concerning the conduct, preparation and content of the auditor’s report. Pursuant to Section 249K of the Corporations Act 2001 the external auditor is provided with a copy of the notice of meeting and related communications received by shareholders. Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, the Board does MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 67 coRpoRate GoVeRnance stateMent not believe a formal policy for shareholder communication is $300,000 per annum. Directors may apportion any amount up to required. However, a summary describing how the Company will this maximum amount amongst the non executive directors as communicate with its shareholders is posted on the Company’s they determine. Directors are also entitled to be paid reasonable website, www.maximusresources.com/governance. travelling, accommodation and other expenses incurred in Principle 7 – Recognise and manage risk Recommendation 7.1, 7.2 & 7.4 – Recommendations not followed The Board recognises that there are inherent risks associated with the Company’s operations including mineral exploration and mining, environmental, title and native title, legal and other operational risks. The Board endeavours to mitigate such risks by continually reviewing the activities of the Company in order to identify key business and operational risks and ensuring that they are appropriately assessed and managed. No formal report in relation to the Company’s management of its material business risk is presented to the Board. Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, and the inherent risks associated with the industry it operates in, the Board does not believe formal policies for oversight and management of risk is required nor a mechanism for formal review be established. A summary describing how the Company manages risk by procedures established at Board and performing their duties as directors. Non-executive director remuneration is by way of fees and statutory superannuation contributions. Non-executive directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation. The remuneration of the Managing Director is determined by the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of employees is determined by the Managing Director subject to the approval of the Board. The Company’s remuneration structure is based on a number of factors including the particular experience and performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel. executive level can be found posted on the Company’s website, The Company does not presently emphasise payment for www.maximusresources.com/governance. Recommendation 7.3 – Recommendation followed In accordance with ASX Recommendation 7.3 the Chief Executive Officer and Chief Financial Officer have provided assurances that the written declarations under s295A of the Corporations Act are founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Both the Chief Executive Officer and Chief Financial Officer provided said assurances at the time the s295A declarations were provided to the Board. results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of the Company given the nature of the Company’s business as a recently listed mineral exploration entity and the current status of its activities. However the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board. The Company also has an Employee Share Option Plan approved by shareholders that enables the Board to offer eligible employees options to ordinary fully paid shares in the Company. Under the terms of the Plan, options to ordinary fully paid shares Principle 8 – Remunerate fairly and responsibly may be offered to the Company’s eligible employees at no cost Recommendation 8.1 – Recommendation not followed in accordance with the terms and conditions of the Plan. The The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing a formal remuneration committee in line with ASX Recommendation 8.1 cannot be justified by the perceived benefits of doing so. The Board takes responsibility for monitoring the composition of the Board and reviewing the compensation of the Company’s Executive Directors and senior management with the overall objective of motivating and appropriately rewarding performance. Recommendation 8.2 & 8.3 – Recommendations followed In accordance with ASX Recommendation 8.2 the Company’s remuneration practices are set out as follows. The Company’s Constitution specifies that the total amount of remuneration of non executive directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of non executive directors has been set at objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as an incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company. The non-executive directors are not eligible to participate in the Plan. The employment conditions of the Managing Director are formalised in a contract of employment. The Managing Director’s contract may be terminated at any time by mutual agreement or without notice in serious instances of misconduct. Further details of director’s remuneration, superannuation and retirement payments are set out in the Remuneration Report section of the Directors’ Report. The Company’s corporate governance policies can be found at www.maximusresources.com/governance 68 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 ASX ADDITIOnAl InfORmATIOn Additional information required by the Australian Securities tWenty LARgeSt ShARehoLDeRS Exchange and not shown elsewhere in this report is as follows . The information is current as at 7 October 2009 . DIStRIbutIon of equIty SeCuRItIeS Ordinary share capital Fully paid ordinary shares are held by 2,491 individual shareholders . There are no unquoted ordinary shares . All issued shares carry one vote per share . Options Options are held by 44 individual option holders . All options are unquoted . The number of shareholders, by size of holding, are: Fully paid ordinary shares Options 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Holdings of less than a marketable parcel* 106 320 372 1,254 439 2,491 1,056 - 2 1 20 21 44 N/A Fully paid ordinary shares Number 1 2 3 4 5 6 7 8 9 Flinders Mines Limited Yandal Investments Pty Ltd Triple Eight Gold Pty Ltd Geosolutions Pty Ltd Miss Tamara Kate Lim Mr Vafa Vojdani KJ Exploration Pty Ltd Chaffey Consulting Pty Ltd Kesli Consulting Pty Ltd 16,305,555 8,611,161 6,050,555 5,000,000 3,703,703 3,703,703 3,100,000 3,066,951 3,024,319 10 Mr Gary E Maddocks and Ms Paula Maddocks 2,550,000 11 12 13 Apex Minerals NL RMK Super Pty Ltd Campbelltown Trading Co Pty Ltd 14 Mr Damian Connelly 15 Kesli Chemicals Pty Ltd 16 Mr Nicholas Kenos and Mrs Pauline Kenos 17 Leet Investments Pty Ltd 18 Mr Nicholas Baradakis 19 Mr Biagio Galipo and Mrs Giuseppina Galipo 20 Teckcorp Pty Ltd 2,000,000 1,980,555 1,851,852 1,787,664 1,655,555 1,575,555 1,555,555 1,502,805 1,500,000 1,500,000 % 6.24 3.30 2.32 1.91 1.42 1.42 1.19 1.17 1.16 0.98 0.77 0.76 0.71 0.68 0.63 0.60 0.60 0.58 0.57 0.57 * At a share price of 3.0 cents, an unmarketable parcel is 16,667 shares. 72,025,488 27.57 SubStAntIAL ShARehoLDeRS Fully paid ordinary shares Number Flinders Mines Limited 16,305,555 % 6.24 tWenty LARgeSt optIonhoLDeRS Options Mr Simon Booth Apex Minerals NL Number % 3,000,000 23.69 2,000,000 15.80 Corporate Resource Consultants Pty Ltd 1,200,000 1 2 3 4 5 6 7 8 9 Mr Mark Creasy Mr Richard Barratt Mr Bruce Legendre Legend Resources Pty Ltd Mr Brian Melville Mr Peter Harvey 10 Mr Grahame Kennedy 11 Mr Dave Humphrey 12 13 T E Johnston & Associates Pty Ltd Red Dog #1 Pty Ltd 14 Ms Jennifer Langford 15 Mr Doug Smith 16 Mr Scott Duncombe 17 Mr Graeme McDonald 18 Mr Grant Webster 19 Mr Karl Flis 20 Mr Ray Young 9.47 7.07 5.37 4.74 3.95 3.95 3.55 3.51 1.66 1.58 1.34 1.26 1.18 1.11 1.03 0.95 0.83 0.76 895,000 680,000 600,000 500,000 500,000 450,000 445,000 210,000 200,000 170,000 160,000 150,000 140,000 130,000 120,000 105,000 95,834 11,750,834 92.79 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2009 69
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