ABN 51 127 297 170
Metal Bank Limited
and its controlled entity
Annual Financial Report
For the year ended
30 June 2011
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
CONTENTS
Corporate Directory
Letter from the Chairman
Review of Operations
Corporate Governance
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report to the Members of Metal Bank Limited
Additional Information for Listed Companies
1
2
3 – 8
9 ‐ 14
15 – 21
22
23
24
25
26
27 – 51
52
53 – 54
55 – 57
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
CORPORATE DIRECTORY
DIRECTORS
Vincent John Paul Fayed (Non‐Executive Chairman)
Benjamin Heath Cooper (Executive Director)
Michael Sutherland (Non‐Executive Director)
COMPANY SECRETARY
Guy Robertson
REGISTERED OFFICE
Level 2, 2 Bligh Street
SYDNEY NSW 2000
Ph: (02) 8223 2800
Fax: (02) 9235 0163
SHARE REGISTRY
Advanced Share Registry Services
150 Stirling Highway,
NEDLANDS WA 6009
Ph: (08) 9389 8033
Fax: (08) 9389 7871
www.advancedshare.com.au
SOLICITORS
Mills Oakley
AUDITORS
Bentleys
Level 1, 12 Kings Park Road
WEST PERTH WA 6005
BANKERS
Westpac
WEBSITE
www.metalbank.com.au
1
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
LETTER FROM THE CHAIRMAN
LETTER FROM THE CHAIRMAN
Dear Shareholder,
On behalf of the directors of Metal Bank Limited (“Metal Bank” or the "Company"), it gives me great pleasure to
submit to you the first annual report of Metal Bank since its successful listing for the financial year ended 30 June
2011.
Metal Bank is a company with a diversified asset portfolio. As shareholders will be aware, much has happened
since the Prospectus lodged on the 2 December 2010. In particular:
the Company continued its investments in a range of quality and diversified mining assets across multiple
regions and minerals. These included key Joint Ventures with Orion Metals Ltd in the Killi Killi South
project (50%); and
the acquisition of the Spinifex Ridge East project (80%).
In addition to the above, Metal Bank continues to develop a number of potential resource projects.
As at the date of this report the Spinifex Ridge East Copper/Molybdenum/Iron and the Killi Killi Rare Earth/Gold
Projects in Western Australia stand out as key assets for the Company. The Spinifex Ridge East project lies in a
region rich in Molybdenum and Iron Ore and has been known to host multi‐million ounce gold mines. The Killi Killi
South Project is located in a region highly prospective for its Rare Earth and Gold mineralisations.
The above assets represent projects of merit that warrant further exploration. The Spinifex Ridge East project is
situated adjacent to the Moly Mines Ltd world class Molybdenum ore reserves and Iron Ore producing mines. The
Killi Killi South project is located close to Orion Metals highly prospective Rare Earth/Gold/Uranium tenements in
the Killi Killi Hills region. Both projects have the potential to develop into operating mines if our exploration is
successful.
The Company’s other principal assets, the Mount MacKenzie and 10 Mile Creek Copper/Gold/Molybdenum
tenements located in the Bowen Basin, will continue to be assessed by the Company with a view to maximising
return for Shareholders.
The Board is currently reviewing its position in the Jillewarra joint venture gold project in which it holds a 26%
interest and further developments are expected to be announced shortly.
During the year, Metal Bank undertook a number of share issues raising approximately $3.6 million, net of
transaction costs with the major part of the capital raised being under the Prospectus.
In addition to the above, we have seen a change in two Board members, Kent Hunter and Ashley Hood, as well as
the replacement of the Company Secretary, Elizabeth Harahan. The appointment of Michael Sutherland as a Non
Executive Director and myself to the Board as well as Guy Robertson as Company Secretary, I believe has
enhanced Metal Bank’s corporate and technical experience. On behalf of the Board of Directors I would like to
thank Ashley Hood and Kent Hunter and Elizabeth Harahan, for their contribution to the Company, particularly
during the listing phase.
I believe that the Company is well positioned to capitalise on future opportunities and I look forward to an exciting
2012 financial year.
Finally, I would like to sincerely thank all shareholders for their ongoing support.
Vincent J P Fayad
Non‐Executive Chairman
21 September 2011
2
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
The operations of the consolidated entity during the year are as described below:
Figure 1: Metal Bank’s portfolio of Projects across multiple regions and metals
SPINIFEX RIDGE EAST PROJECT
Metal Bank’s Spinifex Ridge East Project consists of 2 granted exploration leases (45/2596, E45/3099) – adjacent
to Moly Mines Ltd (ASX: MOL) Spinifex Ridge Iron Ore Mine and world class Molybdenum project. Metal Bank has
acquired an 80% interest in the Project. The Project is located some 50 km north‐east of Marble Bar in the East
Pilbara region of Western Australia. The tenement borders the existing Spinifex Ridge Iron Ore Mine & Moly
Mines’ Molybdenum‐ Copper Resource.
Figure 2: Prospect Locations E45/2596, E45/3099
MOL is currently shipping DSO Hematite Iron Ore at a budgeted production rate of 850,000 tons per annum from
the mine to Port Hedland in Western Australia. The Project acquired by Metal Bank has demonstrated iron and
base metal mineralisation from previous exploration work including rock chip samples.
3
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
REVIEW OF OPERATIONS
Importantly, the tenement is adjacent to the world class Spinifex Ridge molybdenum‐copper project owned by
MOL. A JORC compliant resource of 500 million tonnes @ 0.06% Mo and 0.09% Cu has been recently published by
Moly Mines Ltd for the Spinifex Ridge deposit. A total of 187Mt has been classified as measured, 282Mt as
indicated and 31Mt as an inferred resource ranking Spinifex Ridge presently as one of the largest undeveloped
molybdenum deposits in the world.
Analysis of all historical data was revisited in the financial year, and field work commenced in June 2011 Metal
Bank’s Exploration Manager visited the area in June 2011 to coordinate field activities and inspect selected
targets. Follow up and infill soil and rock chip sampling was employed as well as first pass mapping and
reconnaissance on iron ore, Molybdenum, copper and gold targets generated from previous work.
Project managers have been contracted to facilitate the programs with technical input from Metal Bank staff. The
program was completed over a 2‐3 week duration and results are due in the 3rd quarter 2011.
Figure 3: Spinifex Ridge East prospects
4
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
REVIEW OF OPERATIONS
KILLI KILLI SOUTH
In March 2011, Metal Bank entered
into an agreement to sell a 50%
interest in the Company’s Killi Killi
South Rare Earths/Gold Project to
Orion Metals (ASX: ORM). The project
is located just south of ORM’s Killi
Killi Hills project area,
in
the
Kimberley
region
of Western
Australia.
ORM’s regional studies have shown
that
the project area hosts a
concealed
granite
intrusion
surrounded
by
an
extensive
alteration halo that could be the
hydrothermal
engine
driving
REE/U/gold mineralisation in the Killi Killi district.
Figure 4: Killi Killi South residual Gravity Image
The tenement (E80/4212) is considered to be highly
prospective for significant REE/gold occurrences due
the unconformity acting as a conduit for hydrothermal
fluids. These fluids were most likely expelled from a
crystallizing igneous complex, and the regional faults
may have provided a pathway for fluids
The area is also a proven gold region, with Tanami
Gold’s (ASX: TAM) 350,000 tonnes per annum capacity
Coyote Gold Mine located immediately south of the
Killi Killi project area. The Killi Killi prospects and the
granite lie in the major north‐west trending structural
zone, known as the Trans‐Tanami Structural Corridor,
and appear to be at the intersection of a north‐north‐
east fracture system.
ORM engaged a drilling contractor to drill selected
targets in June 2011, at its Killi Killi Hills project in the
Tanami region, of which Metal Bank Ltd tenement
E80/4212 features prominently.
Figure 5: Metal Bank JV tenement E80/4212 and Orion
Metals Ltd Killi Killi Hills tenements.
5
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
REVIEW OF OPERATIONS
MBK’s tenement E80/4212 is in close proximity to ORM’s Killi K illi East and West tenements, of which encouraging
gold and rare earth (REE) mineralisation was intersected in 2010 drilling. Of particular interest is the investigation
of a coincident gold (Au)/barium (Ba) and strontium (Sr) anomaly in the north east corner of E80/4212. This was
generated from previous shallow vacuum drilling undertaken by Barrick Australia Ltd in 2004. This anomaly has
had no previous deeper drilling than 10 vertical metres and an average of 5 metres. Other identified geophysical
targets within E80/4212 will also be drilled.
A site visit to the anomaly site by both ORM and MBK geologists carried out earlier in May 2011 has confirmed
that the original drilling sites exist. Target generation and drill program design has been finalized.
Figure 6: Location of Killi Killi Hills region (Courtesy of Orion Metals)
Figure 7: Orion Metals drilling plan 2011 for Killi Killi West ‐ E80/4029 (Courtesy of Orion Metals)
6
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
REVIEW OF OPERATIONS
BOWEN BASIN
Mount MacKenzie
EPM 15668 was granted to King Eagle Resources Pty
Limited (KER), a subsidiary of Golden Cross Resources
Ltd (GCR) on 28th Of September 2007 for a period of 5
years.. Metal Bank Ltd now owns the tenements
outright after the sale from GCR in March 2011. The
tenement is in the Bowen‐Collinsville district of North
Queensland, and approximately 30 km west
‐
southwest of the township of Bowen.
Principal exploration targets are high tonnage low‐
grade porphyry‐related Cu‐Mo±Au systems and high‐
grade mesothermal precious and/or base metal
mineralisation.
Ten Mile Creek
EPM 15742 was granted to KER on 31st Of October
2007 for a period of 5 years. The tenement is in the
Bowen‐Collinsville district of North Queensland and
approximately 110 kilometres southwest of the
township of Bowen. Metal Bank Ltd now owns the
tenements outright after sale from GCR in March
2011.
Exploration targets are low sulphidation epithermal
Au‐Ag deposits and Mt Carlton‐style high
sulphidation Au‐Ag‐Cu deposits. Potential also exists
for porphyry related Cu‐Mo±Au systems and high
grade mesothermal mineralisation.
Work to date has included reconnaissance rock
chip, stream sediment sampling and localised soils
on a number of differing prospects over a period of
over 30 years from different companies.
Figure 9: Regional geology map of Mt McKenzie project
Figure 10: Regional geology map of 10 Mile Creek project
7
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
REVIEW OF OPERATIONS
Jillewarra Project
This project is currently under review.
Schedule of Tenements
Mining Tenements
EL51/1091
EL51/1114
PLA51/2565
EPM15668
EPM15742
E80/4212
E45/3099
E45/2596
Location
Jillewarra
Jillewarra
Jillewarra
Mount McKenzie
Ten Mile Creek
Coyote
Spinifex Ridge East
Spinifex Ridge East
EL – Exploration Licence; ELA – Exploration Licence Application
Percentage Interest
26%
26%
26%
100%
100%
50%
80%
80%
Vincent J P Fayad
Non‐Executive Chairman
Sydney 21 September 2011
Competent Persons Statement
The information in this report which relates to Exploration Results, Mineral Resources or Ore Reserves is based on
information compiled by Mr Allen Maynard, who is a Member of the Australian Institute of Geosciences (“AIG”), a
Corporate Member of the Australasian Institute of Mining & Metallurgy (“AusIMM”) and independent consultant
to the Company. Mr Maynard is the Director and principal geologist of Al Maynard & Associates Pty Ltd and has
over 30 years of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has
sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to
the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the
“Australasian Code for reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore
Reserves”.(JORC Code). Mr Maynard consents to inclusion in the report of the matters based on this information in
the form and context in which it appears.
8
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
The Metal Bank Limited group (“Metal Bank”), through its Board and executives, recognises the need to establish
and maintain corporate governance policies and practices that reflect the requirements of the market regulators
and participants, and the expectations of members and others who deal with Metal Bank. These policies and
practices remain under constant review as the corporate governance environment and good practices evolve. The
Company was listed on the Australian Securities Exchange on 25 February 2011.
ASX Corporate Governance Principles and Recommendations
It should be noted that Metal Bank is currently a small cap listed company and that where its processes do not fit
the model of the 8 principles, the Board believes that there are good reasons for the different approach being
adopted.
Reporting against the 8 Principles, we advise as follows:
Principle 1: Lay solid foundations for management and oversight
1.1
Companies should establish the functions reserved to the board and those delegated to senior executives
and disclose those functions.
The primary responsibilities of Metal Bank’s Board include:
(i)
(ii)
the establishment of long term goals of the company and strategic plans to achieve those goals;
the review and adoption of the annual business plan for the financial performance of the company
and monitoring the results on a monthly basis;
(iii) the appointment of a General Manager;
(iv) ensuring that the company has implemented adequate systems of internal control together with
appropriate monitoring of compliance activities; and
the approval of the annual and half‐yearly statutory accounts and reports.
(v)
The Board meets on a regular basis, normally every two months, to review the performance of the
company against its goals both financial and non‐financial. In normal circumstances, prior to the
scheduled monthly Board meetings, each Board member is provided with a formal board package
containing appropriate management and financial reports.
The responsibilities of senior management are contained in letters of appointment and job descriptions
given to each appointee on appointment and updated at least annually or as required.
The primary responsibilities of senior management are:
achieve Metal Bank’s objectives as established by the Board from time to time;
(i)
(ii) operate the business within the cost budget set by the Board;
(iii) ensure that Metal Bank’s appointees work with an appropriate Code of Conduct and Ethics.
(iv) ensure that Metal Bank appointees are supported, developed and rewarded to the appropriate
professional standards
1.2
Companies should disclose the process for evaluating the performance of senior executives and
appointees.
The performance of all senior executives and appointees is reviewed at least once a year. The
performance of the General Manager (when appointed) and other senior executives will be reviewed by
the Chairman on an annual basis in conjunction with the Board’s Remuneration and Nominations
Committee. They are assessed against personal and Company Key Performance Indicators established
from time to time as appropriate for Metal Bank.
1.3
Companies should provide the information indicated in the Guide to reporting on Principle 1.
A performance evaluation for each senior executive has taken place in the reporting period in line with
the process disclosed.
A statement covering the primary responsibilities of the Board is set out in 1.1 above.
A statement covering the primary responsibilities of the senior executives is set out in 1.1 above.
The Metal Bank Corporate Governance Charter is available on the Metal Bank web site, and includes
sections that provide a Board charter. The Metal Bank Board reviews its charter when it considers
changes are required.
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METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Principle 2: Structure the board to add value
2.1
A majority of the Board should be independent directors.
During the reporting period, the Metal Bank Board consisted of three directors, one executive, Benjamin
Cooper, and two non‐executive directors, Mr Fayad and Mr Sutherland both of which were considered to
be independent directors.
2.2
The Chairperson should be independent.
Vincent Fayad, the non‐executive chairman and is independent.
2.3
Chief Executive Officer should not be the same as Chairman.
For part of the year the Executive Chairman has also been the Chief Executive Officer. This position has
recently changed with the appointment of a non‐executive chairman.
2.4
A nomination committee should be established.
The Board has established a nominations committee which meets twice per annum.
2.5
Companies should disclose the process for evaluating the performance of the board, its committees and
individual directors.
2.6
The Metal Bank Board has three board members, who are in regular contact with each other as they deal
with matters relating to Metal Bank’s business. The Board uses a personal evaluation process to review
the performance of directors, and at appropriate times the Chairman takes the opportunity to discuss
Board performance with individual directors and to give them his own personal assessment. The
Chairman also welcomes advice from Directors relating to his own personal performance. The
Remuneration Committee determines whether any external advice or training is required. The Board
believes that this approach is most appropriate for a company of the size and market cap of Metal Bank.
Companies should provide the information indicated in the Guide to reporting on Principle 2
A description of the skills and experience of each director is contained in the 2011 Directors Report.
Vincent Fayad and Michael Sutherland (both appointed 20 May 2011) are considered to be independent
non executive directors. Benjamin Cooper is currently an executive director and is not considered to be
independent.
Directors are able to take independent professional advice at the expense of the company, with the prior
agreement of the Chairman.
The nomination responsibilities are handled by the nomination committee.
An evaluation of the Board of directors took place during the reporting period and was in accordance with
the process described in 2.5 above.
New directors are selected after consultation of all Board members and their appointment voted on by
the Board. Each year, in addition to any Board members appointed to fill casual vacancies during the
year, one third of directors retire by rotation and are subject to re‐election by shareholders at the Annual
General Meeting.
There is no current Board charter for nominations.
10
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Principle 3: Promote ethical and responsible decision‐making
3.1
Companies should establish a code of conduct and disclose the code or a summary of the code as to:
the practices necessary to maintain confidence in the company's integrity;
the practices necessary to take into account their legal obligations and the reasonable expectations of
their stakeholders; and
the responsibility and accountability of individuals for reporting and investigating reports of unethical
practices.
Metal Bank’s policies contain a formal code of conduct that applies to all directors and employees, who
are expected to maintain a high standard of conduct and work performance, and observe standards of
equity and fairness in dealing with others. The detailed policies and procedures encapsulate the
company’s ethical standards. The code of conduct is contained in the Metal Bank Corporate Governance
Charter.
3.2
Companies should establish a policy concerning diversity and disclose the policy or a summary of that
policy. The policy should include requirements for the board to establish measurable objectives for
achieving gender diversity for the board to assess annually both the objectives and progress in achieving
them.
As a company with a small market capitalisation, the company has a small Board. The company has no
established policy at present but is aware of the principle and will be alert for opportunities when Board
changes are contemplated.
3.3
Companies should disclose in each annual report the measurable objectives for achieving gender diversity
set by the board in accordance with the diversity policy and progress towards achieving them.
The company has, as yet, no established policy in relation to gender diversity. The company has a small
number of employees and as a consequence the opportunity for creating a meaningful gender diversity
policy are limited.
3.4
Companies should disclose in each annual report the proportion of women employees in the whole
organisation, women in senior executive positions and women on the board.
Given the small size of the company and the limited number of employees this is not a meaningful
statistic at this time.
Principle 4: Safeguard integrity in financial reporting
4.1
Establish an Audit Committee.
The company has an Audit Committee.
4.2
Audit Committee composition.
The Audit committee is comprised of Vincent Fayad (Audit Committee Chairman) and Benjamin Cooper.
As Metal Bank is a company with a small market capitalisation, the Board considers that two members
rather than three are appropriate for the Audit Committee.
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METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
4.3
A formal charter should be established for the audit committee.
The company has adopted an Audit Committee charter. It is publicly available on the Metal Bank web‐
site.
4.4
Companies should provide the information indicated in the Guide to reporting on Principle 4.
The Audit Committee met once during the course of the year.
The Audit Committee provides a forum for the effective communication between the Board and external
auditors. The committee reviews:
the annual and half‐year financial reports and accounts prior to their approval by the Board;
the effectiveness of management information systems and systems of internal control; and
the efficiency and effectiveness of the external audit functions.
The committee meets with and receives regular reports from the external auditors concerning any
matters that arise in connection with the performance of their role, including the adequacy of internal
controls.
In conjunction with the auditors the Audit Committee monitors the term of the external audit
engagement partner and ensures that the regulatory limit for such term is not exceeded. At the
completion of the term, or earlier in some circumstances, the auditor nominates a replacement
engagement partner.
The committee interviews the nominee to assess relevant prior experience, potential conflicts of interest
and general suitability for the role. If the nominee is deemed suitable, the committee reports to the Board
on its recommendation.
The Audit Committee also reviews the Metal Bank Corporate Governance and Risk Management
processes to ensure that they are effective enough for a listed public company that is currently small cap.
Principle 5: Make timely and balanced disclosure
5.1
Companies should establish written policies designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose those policies or a summary of those policies.
The Metal Bank Board and senior management are conscious of the ASX Listing Rule Continuous
Disclosure requirements, which are supported by the law, and take steps to ensure compliance. The
company has a policy, which can be summarised as follows:
the Board, with appropriate advice, is to determine whether an announcement is required under the
Continuous Disclosure principles;
all announcements are monitored by the Company Secretary; and
all media comment is managed by the Non‐Executive Chairman.
Metal Bank believes that the internet is the best way to communicate with shareholders, so Metal Bank
provides detailed announcements to the Australian Securities Exchange on a regular basis to ensure that
shareholders are kept well informed on Metal Bank’s activities.
5.2
Companies should provide the information indicated in the Guide to reporting on Principle 5.
Metal Bank’s disclosure policy to shareholders is set out as part of the Metal Bank Corporate Governance
charter, which
is publicly available on the Metal Bank web‐site, as are Metal Bank’s recent
announcements.
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METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Principle 6: Respect the rights of shareholders
6.1
Companies should design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or a
summary of that policy.
Metal Bank provides information to its shareholders through the formal communications processes (e.g.
ASX releases, general meetings, annual report, and occasional shareholder letters). This material is also
available on the Metal Bank website (www.metalbank.com.au).
Shareholders are encouraged to participate in general meetings and time is set aside for formal and
informal questioning of the Board, senior management and the auditors. The external audit partner
attends the annual general meeting to be available to answer any shareholder questions about the
conduct of the audit and the preparation and content of the audit report.
6.2
Companies should provide the information indicated in the Guide to reporting on Principle 6.
The company’s communications policy is described in 5.1 and 5.2, and 6.1 above.
Principle 7: Recognise and manage risk
7.1 Companies should establish a sound system for the oversight and management of material business risks.
The company has established policies for the oversight and management of material business risks.
The Board monitors the risks and internal controls of Metal Bank through the Audit Committee. That
committee looks to the executive management to ensure that an adequate system is in place to identify and,
where possible, on a cost effective basis appropriate for a small cap company, to manage risks inherent in the
business, and to have appropriate internal controls.
As part of the process, Metal Bank’s management formally identifies and assesses the risks to the business,
and these assessments are noted by the Audit Committee and the Board.
7.2 The board should require management to design and implement the risk management and internal control
system to manage the company’s material business risks and report to it on whether those risks are being
managed effectively. The board should disclose that management has reported to it as to the effectiveness of
the company’s management of its material business risks.
The Board has required management to design and implement the risk management and internal control
system appropriate to a small market capitalised company of the size of Metal Bank to manage the
company's material business risks and report to it on whether those risks are being managed effectively.
Management has reported to the Board as to the effectiveness of the company's management of its material
business risks.
7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent)
and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of
the Corporations Act is founded on a system of risk management and internal control and that the system is
operating effectively in all material respects in relation to financial reporting risks.
The Board has received assurance from the Executive Director and the Chief Financial Officer (or its
equivalent) that the declaration provided in accordance with section 295A of the Corporations Act 2001 is
founded on a sound system of risk management and internal control appropriate for a company with a small
market capitalisation the size of Metal Bank, and that the system is operating effectively in all material
respects in relation to financial reporting risks.
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METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
7.4 Companies should provide information in the Guide to reporting on Principle 7.
The Board has received the report from management under Recommendation 7.2; and the Board has
received the assurances referred to under Recommendation 7.3. The company’s policies on risk oversight
and management of material business risks for a small cap company the size of Metal Bank are not publicly
available.
Principle 8: Remunerate fairly and responsibly
8.1 Establish a remuneration committee.
Metal Bank has established a remuneration committee of two directors being Vincent Fayad and Michael
Sutherland. Those responsibilities are handled by the full Board under the guidance of the Chairman.
8.2
The remuneration committee should be structured so that it:
consists of a majority of independent directors
is chaired by an independent chair
has at least three members
‐
‐
‐
As it is a small cap company, Metal Bank has not established a remuneration committee. Those
responsibilities are handled by the full Board under the guidance of the Chairman.
8.3 Companies should clearly distinguish the structure of non‐executive directors' remuneration from that of
executive directors and senior executives.
The remuneration details of non executive directors, executive directors and senior management are set out
in the Remuneration Report that forms part of the Directors’ report.
Senior executives remuneration packages are reviewed by reference to Metal Bank’s performance, the
executive director’s or senior executive’s performance, as well as comparable information from industry
sectors and other listed companies in similar industries, which is obtained from external remuneration
sources. This ensures that base remuneration is set to reflect the market for a comparable role.
The performance of the executive director and senior executives is measured against criteria agreed annually
and bonuses and incentives are linked to predetermined performance criteria and may, with shareholder
approval, include the issue of shares and / or options.
There are no schemes for retirement benefits, other than statutory superannuation for non‐executive
directors. A copy of the Remuneration committee charter is publicly available on the Metal Bank web site
www.metalbank.com.au
8.4 Companies should provide the information indicated in the Guide to reporting on Principle 8.
The information is as outlined above.
14
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Your directors present their report on Metal Bank Limited and its subsidiary (Consolidated Entity or the Group) for
the year ended 30 June 2011.
DIRECTORS
The names of directors in office at any time during or since the end of the year are:
Current Directors
VINCENT JOHN PAUL
FAYAD – NON EXECTIVE
CHAIRMAN
BENJAMIN HEATH
COOPER – EXECUTIVE
DIRECTOR
Dip Fin, ASIC RG 146
MICHAEL SUTHERLAND
Vincent (“Vince”) is a Chartered Accountant with some 30 years of
experience in the areas of accounting, auditing and corporate advisory.
Vince was a senior partner of mid tier accounting firm, PKF Chartered
Accountants & Business Advisers (East Coast) Partnership, where the last 15
years, prior to his leaving the firm were spent as the head of the corporate
advisory division. Vince has advised a number of transaction, including a
number of mining and exploration transactions both in Australia and around
the world. He also has significant experience in advising companies on
funding and strategy as well as corporate secretarial matters. Vince is also a
registered tax agent and auditor.
Appointed as a Non‐Executive Director on 20 May 2011.
Directorships of listed companies held in the last three years: NIL
Mr Cooper, appointed a director on 29 August 2007, is the founding
Chairman and Executive Director of Metal Bank Limited, is Chairman of
Mining investment company Esperanza Resources Pty Ltd, and is Executive
Director of Industrial Minerals International Limited, a public unlisted
company developing a $30m Kaolin mine in Tanzania. Benjamin has worked
extensively in the finance and mining industry over the past 10 years as a
Licensed and Qualified Investment Manager and a Company Director. Mr
Cooper is especially experienced in providing corporate advisory and capital
finance requirements to emerging mining companies, and has an extensive
contact base throughout Asia.
Mr Cooper is the principal of Sydney ‐ based Corporate Advisory Firm
Cooper Capital.
Directorships of listed companies held within the last 3 years:
Global Nickel Investments NL
Mr Sutherland has 25 years’ experience in the mineral exploration industry.
As the owner of a Project Management and Minerals Exploration firm, he
consults to several ASX listed companies on exploration and drilling
activities. His experience includes assisting in the exploration and mining
activities in the West Pilbara project between 2002‐2005.
Mr Sutherland was Operations Manager for the exploration of oil, gas, and
minerals in the horn of Africa between 2005‐2007, and Operations Manager
for the exploration of Uranium in Peru between 2007‐2009.
Directorships of listed companies held in the last three years:
Greenland Resources Limited.
Appointed as a Non‐Executive Director on 20 May 2011.
15
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Former Directors
ASHLEY HOOD
Appointed 1 February 2010, resigned 20 May 2011.
KENT HUNTER
Appointed 1 February 2010, resigned 20 May 2011.
SIEW HONG KOH
Appointed 16 June 2010, resigned 16 August 2010.
Directors have been in office since the start of the financial period to the date of this report unless otherwise
stated.
Secretary
GUY ROBERTSON
(Company Secretary)
B Com (Hons.) CA
Guy Robertson was appointed Company Secretary on 2 June 2011.
Guy has over 25 years experience as a Chief Financial Officer and Company
Secretary of both private and ASX listed companies in both Australia and Hong
Kong.
Interest in the shares and options of the Company
As at the date of this report, the interests of the directors in the shares and options of Metal Bank Limited were:
Vincent John Paul
Benjamin Heath Cooper
Michael Sutherland
Ordinary Shares
Options
62,500
600,001
‐
‐
‐
‐
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than as outlined in the Executive Chairman’s report, there were no significant changes in the state of affairs
of the Company during the year.
PRINCIPAL ACTIVITIES
The principal activity of the Company during the financial year was mineral exploration. There have been no
significant changes in the nature of the Company’s principal activities during the financial year.
SIGNIFICANT AFTER BALANCE SHEET DATE EVENTS
The following significant matters have occurred after balance date:
Spinifex Ridge East
At an Extraordinary General Meeting held on 13 September 2011 to, amongst other matters, ratify the purchase of
an 80 % interest in Spinifex Ridge East – see note 22. The following resolutions relating to Spinifex Ridge East were
passed:
‐
‐
‐
that the shareholders ratify the issue of 2,800,000 shares to the vendors, and approve the issue of a
further 6,200,000 shares to the vendors
that the shareholders approve the issue of 15,000,000 options to the vendors, which have an exercise
price of 20 cents per share and an expiry date of 30 June 2014; and
that the shareholders approve the issue of 2,500,000 shares to the vendor’s advisor.
16
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Listed Investments
The Company has sold all but $9,500 of its listed investments for the sum of $265,478. This has resulted in a loss of
approximately $14,000, which is in addition to that already provided for in the financial statements as at 30 June
2011.
Other than as outlined above, there are currently no matters or circumstances that have arisen since the end of
the financial period that have significantly affected or may significantly affect the operations of the consolidated
entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.
LIKELY FUTURE DEVELOPMENTS AND EXPECTED RESULTS
Metal Bank is an exploration company focused on precious metals, particularly copper and gold. The Board
intends to explore its current tenements in Western Australia directly and through its joint venture partners. The
Company will look to invest directly and indirectly in mineral resources projects including iron ore, base metals,
gold and energy‐related minerals both in Australia and overseas.
PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION
The consolidated entity will comply with its obligations in relation to environmental regulation on its Western
Australia projects when it undertakes exploration in the future. The Directors are not aware of any breaches of any
environmental regulations during the period covered by this report.
FINANCIAL POSITION
The net assets of the consolidated group have increased from negative $218,353 as at 30 June 2010 to
$664,512 as at 30 June 2011. This increase is largely due to the following factors:
–
–
–
–
the raising of seed investor capital of $0.6 million.
an Initial Public Offering in February 2011 which raised approximately $2.3 million net of costs
the issue of an additional approximately $700,000 in shares for tenements acquired
the above equity raisings being partly offset by a trading loss of approximately $1.3 million and a
write down of exploration expenditure and impairment of exploration asset of approximately
$1.7 million.
OPERATING RESULTS
The loss of the consolidated entity after providing for income tax amounted to $3,048,725 (2010: loss of $47,349).
The loss was impacted by:
‐
‐
‐
impairment of exploration asset for non cash component associated with the Spinifex Ridge East Project.
Exploration expenditure written off $460,345
general operating and administrative costs.
In forming the view that there was an impairment associated with the Spinifex Ridge East Project, the Board
considered a number of factors, including a recent transaction for the asset. The Board considers that this asset
has a long term strategic value, but are not in a position as at the date of this report to quantify what this may be.
17
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a
dividend to the date of this report.
REMUNERATION REPORT
Remuneration Policy
The remuneration policy of Metal Bank has been designed to align director objectives with shareholder and
business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with
market rates. The Board of Metal Bank believes the remuneration policy to be appropriate and effective in its
ability to attract and retain the best directors to run and manage the company, as well as create goal congruence
between directors and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members is as follows:
the remuneration policy, setting the terms and conditions (where appropriate) for the executive directors and
other senior staff members, was developed by the Chairman and Company Secretary and approved by the
Board;
in determining competitive remuneration rates, the Board may seek independent advice on local and
international trends among comparative companies and industry generally. It examines terms and conditions
for employee incentive schemes, benefit plans and share plans. Independent advice may be obtained to
confirm that executive remuneration is in line with market practice and is reasonable in the context of
Australian executive reward practices;
the Company is a mineral exploration company, and therefore speculative in terms of performance.
Consistent with attracting and retaining talented executives, directors and senior executives, such personnel
are paid market rates associated with individuals in similar positions within the same industry. Options and
performance incentives may be issued particularly if the Company moves from exploration to a producing
entity and key performance indicators such as profit and production can be used as measurements for
assessing executive performance.
all remuneration paid to directors is valued at the cost to the Company and expensed. Where appropriate,
shares given to directors and executives are valued as the difference between the market price of those
shares and the amount paid by the director or executive. Options are valued using the Black‐Scholes
methodology. Given the early stages in the Company’s development no options or long term incentives have
been issued and no key performance indicators have yet been developed for executives.
the Board policy is to remunerate non‐executive directors at market rates for comparable companies for time,
commitment and responsibilities. The Chairman in consultation with independent advisors determines
payments to the non‐executive directors and reviews their remuneration annually, based on market practice,
duties and accountability.
COMPANY SHARE PERFORMANCE & SHAREHOLDER WEALTH
During the financial year the Company’s share price traded between a low of $0.10 and a high of $0.40. In order to
keep all investors fully‐informed and minimize market fluctuations the Board will maintain promotional activity
amongst the investor community so as to increase awareness of the Company.
DIRECTORS' AND EXECUTIVE OFFICERS’ EMOLUMENTS
(a) Details of Directors and Key Management Personnel
(i)
Current Directors
Vincent John Paul Fayad – Non‐Executive Chairman (appointed 20 May 2011)
Benjamin Heath Cooper – Executive Director
Michael Sutherland – Non Executive Director (appointed 20 May 2011)
18
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
Former Directors
Kent Hunter (appointed 1 February 2010, resigned 20 May 2011)
Ashley Hood (appointed 12 August 2010, resigned 20 May 2011)
Siew Hong Koh (appointed 16 June 2010, resigned 16 August 2010)
(ii)
Company Secretary
Guy Robertson (appointed 2 June 2011)
Elizabeth Hunt (appointed 1 September 2010, resigned 2 June 2011)
(ii)
Key Management Personnel
Adam Elliston – Exploration Manager (appointed 18 March 2011, resigned 2 July 2011)
Other than the directors, company secretary and exploration manager as stated above, the Company had
no Key Management Personnel for the financial year ended 30 June 2011.
Directors’ remuneration and other terms of employment are reviewed annually by the Board having regard to
performance against goals set at the start of the year, relative comparative information and independent expert
advice.
Except as detailed in Notes (a) – (c) to the Remuneration Report, no director or officer has received or become
entitled to receive, during or since the financial year, a benefit because of a contract made by the Company or a
related body corporate with a director, a firm of which a director is a member or an entity in which a director has a
substantial financial interest. This statement excludes a benefit included in the aggregate amount of emoluments
received or due and receivable by directors and shown in Notes (a) – (c) to the Remuneration Report, prepared in
accordance with the Corporations Regulations, or the fixed salary of a full time employee of the Company.
(b) Remuneration of Directors and Key Management Personnel
Remuneration Policy
The Board of Directors is responsible for determining and reviewing compensation arrangements. The Board will
assess the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality Board and executive team. Remuneration of Directors of the Group is
set out below.
Given the early stages in the Company’s development no performance remuneration has been granted.
Parent & Group Key Management Personnel
2011
2010
Base Salary
and Fees
Superannuation
Total
Base Salary
and Fees
Superannuation
Total
B. Cooper¹
V. Fayad
M. Sutherland
K. Hunter
A. Hood
S. Hong Koh
E. Hunt²
G. Robertson³
88,333
6,750
95,083
3,333
‐
3,333
3,333
13,333
10,000
‐
53,500
5,000
‐
1,200
900
‐
‐
‐
3,333
14,533
10,900
‐
53,500
5,000
‐
‐
‐
‐
‐
‐
‐
‐
Totals
176,832
8,850
185,682
‐
19
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
¹ Of this amount $13,333 was paid to SeeSees Pty Limited a company in which the director has an interest. The executive
director has a 3 year contract commencing on 9 November 2010. The executive director’s remuneration is $180,000 per
annum. In addition the executive director may receive a performance bonus based on achieving set objectives. The
company is able to terminate the executive without cause on the payment of 6 months salary.
² Fees paid to Mining Corporate Pty Limited, including company secretarial and accounting fees, which engaged the
company secretary as an employee/consultant.
³ Fees paid to Alexander Cable Pty Limited, including company secretarial and accounting fees, which engaged the company
secretary as an employee/consultant.
There are no other employment benefits, either short term, post employment or long term, non monetary or
otherwise other than those outlined above.
(c) Employee Related Share‐based compensation
To ensure that the Company has appropriate mechanisms to continue to attract and retain the services of
Directors and Employees of a high calibre, the Company has a policy of issuing options that are exercisable in
future at a certain fixed price.
No options were issued to Directors and Employees during the year and there are no options outstanding as at 30
June 2011.
OPTIONS ISSUED AS PART OF REMUNERATION FOR THE PERIOD ENDED 30 JUNE 2011
No options have been issued to directors and executives as part of their remuneration for the year ended 30 June
2011.
OPTIONS
There are no unissued ordinary shares of Metal Bank under option as at the date of this report.
MEETINGS OF DIRECTORS
The number of directors' meetings (including committees) held during the financial period each director held
office during the financial period and the number of meetings attended by each director are:
Director
B. Cooper
V. Fayad
M. Sutherland
K. Hunter
A. Hood
S. Hong Koh
Directors Meetings
Audit Committee Meetings*
Meetings Attended
Number Eligible to
Attend
Meetings Attended
Number Eligible to
Attend
7
1
2
5
5
‐
7
2
2
5
5
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
In addition to the board meetings there were 20 circular resolutions by the board.
* The approval of the accounts for the year ended 30 June 2010 and the half year ended 31 December 2010 was
dealt with by circular resolution of the full board.
INDEMNIFYING OFFICERS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every officer or
agent of the Company shall be indemnified out of the property of the Company against any liability incurred by
him or her in his or her capacity as officer or agent of the Company or any related corporation in respect of any act
or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal.
The Company paid insurance premiums of $12,677 in August 2011 in respect of directors’ and officers’ liability.
The insurance premiums relate to:
Costs and expenses incurred by the relevant officers in defending legal proceedings, whether civil or criminal
and whatever their outcome;
Other liabilities that may arise from their position, with the exception of conduct involving wilful breach of
duty or improper use of information to gain a personal advantage.
20
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS REPORT
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceeding to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings. The Company was not a party to any such proceedings during the year.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration under Section 307C in relation to auditor’s independence for the year
ended 30 June 2011 has been received and can be found on the following page.
NON‐AUDIT SERVICES
The Board of Directors advises that non‐audit services were provided by the Company’s auditors during the year.
Details of the amounts paid or payable to the auditor for non‐audit services provided during the year are set out
below:
Remuneration for Investigating Accountant Report
Bentleys
$
8,250
The Board of Directors is satisfied that the provision of non‐audit services performed during the year by the
entity’s auditors 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 because the nature of the services provided do not compromise the general
principles relating to auditors independence as set out in APES 110 Code of Ethics for Professional Accountants.
This report is made in accordance with a resolution of the directors.
Vincent J P Fayad
Sydney, 21 September 2011
21
To The Board of Directors
This declaration is made in connection with our audit of the financial report of Metal Bank
Limited and Controlled Entities for the year ended 30 June 2011 and in accordance with
the provisions of the Corporations Act 2001.
We declare that, to the best of our knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit;
no contraventions of the Code of Professional Conduct of the Institute of Chartered
Accountants in Australia in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 21st day of September 2011
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
Revenue
Administration expenses
Personnel costs
Compliance and regulatory expenses
Legal fees
Occupancy costs
Marketing
Directors fees
Management and exploration consulting fees
Travel expenses
Provision for diminution of investment
Exploration expenditure written off
Impairment of exploration asset
Loss on sale of investments
Depreciation
(LOSS) BEFORE INCOME TAX
Income tax expense
(LOSS) FOR THE YEAR
Note
2
2011
$
25,253
(62,452)
(115,721)
(23,317)
(90,604)
(57,899)
(107,920)
(127,183)
(609,370)
(59,785)
(98,654)
(460,345)
(1,247,998)
(9,593)
(3,137)
2010
$
‐
(24,807)
‐
‐
‐
‐
‐
‐
‐
‐
‐
(22,542)
‐
‐
‐
3
4
(3,048,725)
(47,349)
‐
‐
(3,048,725)
(47,349)
(LOSS) ATTRIBUTABLE TO MEMBERS OF
METAL BANK LIMITED
(3,048,725)
(47,349)
OTHER COMPREHENSIVE INCOME
‐
‐
TOTAL COMPREHENSIVE INCOME
(3,048,725)
(47,349)
Loss for the year is attributable to:
Owners of Metal Bank Limited
Non controlling interest
Total Comprehensive income for the year is
attributable to:
Owners of Metal Bank Limited
Non controlling interest
Earnings per share
Basic and diluted loss per share
(cents per share)
(3,048,725)
‐
(3,048,725)
(3,048,725)
‐
(3,048,725)
(47,349)
‐
(47,349)
(47,349)
‐
(47,349)
19
(15.7)
‐
The Consolidated Statements of Comprehensive Income are to be read in conjunction with the attached notes
23
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2010
Note
2011
$
2010
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
TOTAL CURRENT ASSETS
NON‐CURRENT ASSETS
Plant and equipment
Exploration and evaluation expenditure
TOTAL NON‐CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Liability for deferred consideration
Financial liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Accumulated losses
Non controlling interest
TOTAL EQUITY
5
6
7
8
10
11
22
12
13
1,442,289
141,029
295,234
1,878,552
6,323
403,264
409,587
11,467
7,953
‐
19,420
‐
60,000
60,000
2,288,139
79,420
775,627
828,000
20,000
1,623,627
68,414
‐
229,359
297,773
1,623,627
297,773
664,512
(218,353)
3,931,591
(3,267,079)
664,512
‐
1
(218,354)
(218,353)
‐
664,512
(218,353)
The Consolidated Statements of Financial Position are to be read in conjunction with the attached notes.
24
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
Balance as at 1 July 2010
Loss for the year
Other comprehensive income for
the year
Total comprehensive income for the
year
Transactions with owners, in their
capacity as owners
Issue of share capital
Cost of share capital issued
Balance as at 30 June 2011
Balance as at 1 July 2009
Loss for the year
Other comprehensive income for
the year
Total comprehensive income for the
year
Balance as at 30 June 2010
Issued
Capital
$
1
‐
‐
4,342,175
(410,585)
3,931,591
1
‐
‐
‐
1
Accumulated
Losses
$
(218,354)
(3,048,725)
‐
(3,048,725)
‐
‐
(3,267,079)
(171,005)
(47,349)
‐
(47,349)
(218,354)
Non‐controlling
interest
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Total
$
(218,353)
(3,048,725)
‐
(3,048,725)
4,342,175
(410,585)
664,512
(171,004)
(47,349)
‐
(47,349)
(218,353)
The Consolidated Statements of Changes in Equity are to be read in conjunction with the attached notes.
25
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEAR ENDED 30 JUNE 2011
21
22(c)
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees general
Payment for exploration and evaluation
Interest received
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for Plant and equipment
Payment for acquisition of subsidiary, net of cash
acquired
Purchase of financial assets
Loan to unrelated entity
Loan repaid by unrelated entity
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Costs of issue of shares
Proceeds from borrowing
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET INCREASE IN CASH HELD
Cash at the beginning of the financial year
CASH AT THE END OF THE FINANCIAL YEAR
2011
$
(897,864)
(343,609)
24,053
(1,217,420)
(9,460)
(140,000)
(393,888)
(500,000)
500,000
(543,348)
2010
$
(12,739)
‐
(12,739)
‐
‐
‐
‐
‐
‐
3,602,175
(410,585)
‐
3,191,590
‐
‐
24,200
24,200
1,430,822
11,461
11,467
1,442,289
6
11,467
The Consolidated Statements of Cash Flow are to be read in conjunction with the attached notes
26
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
This financial report includes the consolidated financial statements and notes of Metal Bank Limited and its
controlled entity (Consolidated Group or Group), and a separate note on the accounts of Metal Bank Limited
as the parent entity (‘Parent’).
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards. Material accounting policies adopted in the preparation of
this financial report are presented below and have been consistently applied unless otherwise stated.
This financial report is presented in Australian Dollars.
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.
The financial report covers the Group of Metal Bank Limited and controlled entity. Metal Bank Limited is a
public listed company, incorporated and domiciled in Australia.
a.
Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by
Metal Bank Limited at the end of the reporting period. A controlled entity is any entity over which Metal Bank
Limited has the ability and right to govern the financial and operating policies so as to obtain benefits from the
entity’s activities.
Where controlled entities have entered or left the Group during the year, the financial performance of those
entities is included only for the period of the year that they were controlled. A list of controlled entities is
contained in Note 9 to the financial statements.
In preparing the consolidated financial statements, all inter‐group balances and transactions between entities
in the consolidated group have been eliminated in full on consolidation.
Non‐controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are
reported separately within the equity section of the consolidated statement of financial position and statement
of comprehensive income. The non‐controlling interests in the net assets comprise their interests at the date
of the original business combination and their share of changes in equity since that date.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination
involving entities or businesses under common control. The business combination will be accounted for from
the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities
(including contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from
a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair
value, recognising any change to fair value in profit or loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of
comprehensive income.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
27
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
b. Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and liabilities in the normal course of business.
As disclosed in the financial statements, the consolidated entity recorded operating losses of $3,048,725,
and had net cash outflows from operating activities of $1,217,420 for the year ended 30 June 2011.
These factors indicate significant uncertainty as to whether the company and consolidated entity will
continue as going concerns and therefore whether they will realise their assets and extinguish their
liabilities in the normal course of business and at the amounts stated in the financial report.
The Directors acknowledge that to continue the exploration and development of the company and
consolidated entity’s mineral exploration projects, the budgeted cash outflows from operating and
investing activities for the 30 June 2011 financial year, will necessitate further capital raisings.
The Directors believe after consideration of the following matters, there are reasonable grounds to
believe that the company and consolidated entity will be able to pay their debts as and when they
become due and payable and are going concerns because of the following factors:
The company has sufficient cash reserves to maintain its activities, including the undertaking of its
planned exploration program for at least the next twelve months.
The ability of the company and consolidated entity to further scale back certain parts of their activities
that are non essential so as to conserve cash; and
The company and consolidated entity retain the ability, if required, to wholly or in part dispose of
interests in mineral exploration and development assets.
Accordingly, the Directors believe that the company and consolidated entity will be able to continue as
going concerns and that it is appropriate to adopt that basis of accounting in the preparation of the
financial report.
c. Adoption of New and Revised Accounting Standards
Changes in accounting policies on initial application of Accounting Standards
In the year ended 30 June 2011, the Group has reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to its operations and effective for the current annual
reporting period.
It has been determined by the Group that there is no impact, material or otherwise, of the new and
revised Standards and Interpretations on its business and, therefore, no change is necessary to Group
accounting policies.
The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet
effective for the year ended 30 June 2011. As a result of this review the Directors have determined that
there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its
business and, therefore, no change necessary to Group accounting policies.
The following Australian Accounting Standards have been issued or amended and are applicable to the
Company but are not yet effective.
The Group does not anticipate the early adoption of any of the following Australian Accounting
Standards:
28
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Reference
Title
Summary
AASB 9,
2010‐7
AASB 124,
2010‐4
2010‐5
2010‐6
2011‐1
2011‐4
Financial
Instruments (and
related
amendments to
other standards).
Related Party
Disclosures (and
related
amendments to
other standards
and
interpretations).
Further
Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project
Amendments to
Australian
Accounting
Standards
Amendments to
Australian
Accounting
Standards –
Disclosures on
Transfers of
Financial Assets
Amendments to
Australian
Accounting
Standards arising
fro‐‐‐m the Trans‐
Tasman
Convergence
Project
Amendments to
Australian
Accounting
Standards to
Remove Individual
Key Management
Personnel
Disclosure
Requirements
Application
date (financial
years
beginning)
January
1
2013
Expected Impact
Disclosure
changes may be
no
required,
significant
implications
expected.
January
1
2011
Disclosure
changes only.
Replaces the requirements of AASB
139 for the classification and
measurement of financial assets.
This is the result of the first part of
Phase 1 of the IASB’s project to
replace IAS 39.
Revised standard. The definition of a
related party is simplified to clarify
its intended meaning and eliminate
inconsistencies from the application
of the definition
Amends AASB 1, AASB 7, AASB 101
& AASB 134 and Interpretation 13 as
a result of the annual improvements
project.
January
1
2011
No
significant
impact expected.
Amends AASB 1, 3, 4, 5, 101, 107,
112, 118, 119, 121, 132, 133, 134,
137, 139, 140, 1023 & 1038 and
Interpretations 112, 115, 127, 132 &
1042 for editorial corrections
This Standard adds and amends
about
disclosure
transfers
assets,
including in respect of the nature of
the financial assets
involved and the risks associated
with them.
requirements
financial
of
128,
Amends AASB 1, 5, 101, 107, 108,
121,
and
132,
Interpretations 2,112 & 113) as a
result
Trans‐Tasman
the
of
Convergence Project.
134
January
1
2011
No
significant
impact expected.
1 July 2011
significant
No
impact expected.
1 July 2011
significant
No
impact expected.
This Standard makes amendments
to Australian Accounting Standard
AASB 124 Related Party Disclosures.
1 July 2013
Disclosure
changes only.
29
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
d.
Income Taxes
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 and deferred tax liability balances
during the year as well 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
financial statements. Deferred tax assets also result where amounts have been fully expensed but future
tax deductions are available. No deferred income tax will be recognised from the initial recognition of an
asset or liability, excluding a business combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates enacted or substantively 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 unused tax losses are recognised only to the extent that it is probable that future taxable
profit will be available against which the benefits of the deferred tax asset can be utilised. Where
temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where 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.
e.
Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation is calculated on a straight‐line basis over the estimated useful life of the assets as follows:
Plant and equipment – over 5 years
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each balance date, with
recoverable amount being estimated when events or changes in circumstances indicate that the
carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in
use.
An impairment exists when the carrying value of an asset exceeds its estimated recoverable amount.
The asset is then written down to its recoverable amount.
30
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
For plant and equipment, impairment losses are recognised in the statement of comprehensive income.
An annual transfer from the asset revaluation reserve to retained earnings is made for the difference
between depreciation based on the re‐valued carrying amounts of the assets and depreciation based on
the assets' original costs.
Additionally, any accumulated depreciation as at the revaluation date is eliminated against the gross
carrying amounts of the assets and the net amounts are restated to the re‐valued amounts of the
assets.
Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to
retained earnings.
Independent valuations are performed with sufficient regularity to ensure that the carrying amounts do
not differ materially from the assets' fair values at the balance date.
(ii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the statement of comprehensive income in the year the asset is derecognised.
f.
Exploration and Evaluation Costs
Exploration, evaluation and development 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 are written off in full against profit in the
year in which the decision to abandon the area 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 dismantling and removal of mining plant, equipment and building structures, waste
removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have
been determined using estimates of future costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs
of site restoration, there is uncertainty regarding the nature and extent of the restoration due to
community expectations and future legislation. Accordingly the costs have been determined on the basis
that the restoration will be completed within one year of abandoning the site.
g.
Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the company commits
itself to either the purchase or sale of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed
to profit or loss immediately.
Classification and subsequent measurement
Finance instruments are subsequently measured at fair value, amortised cost using the effective interest
rate method, or cost.
31
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Amortised cost is the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative
amortisation of the difference between that initial amount and the maturity amount calculated using the
effective interest method.
Fair value is determined based on 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.
The effective interest method is used to allocate interest income or interest expense over the relevant
period and is equivalent to the rate that discounts estimated future cash payments or receipts (including
fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot
be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the
financial asset or financial liability. Revisions to expected future net cash flows will necessitate an
adjustment to the carrying value with a consequential recognition of an income or expense item in profit
or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being
subject to the requirements of Accounting Standards specifically applicable to financial instruments.
(i) Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the
purpose of short‐term profit taking, derivatives not held for hedging purposes, or when they are
designated as such to avoid an accounting mismatch or to enable performance evaluation where a Group
of financial assets is managed by key management personnel on a fair value basis in accordance with a
documented risk management or investment strategy. Such assets are subsequently measured at fair
value with changes in carrying value being included in profit or loss.
(ii) Loans and receivables
Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are
not quoted in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12
months after the end of the reporting period.
(iii) Held‐to‐maturity investments
Held‐to‐maturity investments are included in non‐current assets where they are expected to mature
within 12 months after the end of the reporting period. All other investments are classified as current
assets.
(iv) Available‐for‐sale financial assets
Available‐for‐sale financial assets are non‐derivative financial assets that are either not suitable to be
classified into other categories of financial assets due to their nature, or they are designated as such by
management. They comprise investments in the equity of other entities where there is neither a fixed
maturity nor fixed or determinable payments.
They are subsequently measured at fair value with changes in such fair value (ie gains or losses)
recognised in other comprehensive income (except for impairment losses and foreign exchange gains and
losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset
previously recognised in other comprehensive income is reclassified into profit or loss.
Available‐for‐sale financial assets are included in non‐current assets where they are expected to be sold
within 12 months after the end of the reporting period. All other financial assets are classified as current
assets.
(v) Financial liabilities
Non‐derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost.
32
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Derivative instruments
The Group designates certain derivatives as either:
i. hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
ii.hedges of highly probable forecast transactions (cash flow hedges).
At the inception of the transaction the relationship between hedging instruments and hedged items, as
well as the Group’s risk management objective and strategy for undertaking various hedge transactions,
is documented.
Assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used
in hedging transactions have been and will continue to be highly effective in offsetting changes in fair
values or cash flows of hedged items, are also documented.
(i) Fair value hedge
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are
recorded in the statement of comprehensive income, together with any changes in the fair value of
hedged assets or liabilities that are attributable to the hedged risk.
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is deferred to a hedge reserve in equity. The gain or loss relating to the ineffective
portion is recognised immediately in the statement of comprehensive income.
Amounts accumulated in the hedge reserve in equity are transferred to the statement of comprehensive
income in the periods when the hedged item will affect profit or loss.
Impairment
At the end of each reporting period, 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 profit or loss. Also, any cumulative decline in fair value
previously recognised in other comprehensive income is reclassified to profit or loss at this point.
Financial guarantees
Where material, financial guarantees issued that require the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due are
recognised as a financial liability at fair value on initial recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the
amount initially recognised less, when appropriate, cumulative amortisation in accordance with
AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised
under AASB 118.
The fair value of financial guarantee contracts has been assessed using a probability‐weighted discounted
cash flow approach. The probability has been based on:
‐
‐
‐
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed
party defaulting; and
the maximum loss exposed if the guaranteed party were to default.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset
is transferred to another party whereby the entity no longer has any significant continuing involvement
in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related
obligations are discharged, cancelled or expired. The difference between the carrying value of the
financial liability extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non‐cash assets or liabilities assumed, is recognised in profit or loss.
33
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
h.
Impairment of Assets
At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and
value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its
recoverable amount is expensed to the income statement. Impairment testing is performed annually for
goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash‐generating unit to which the asset belongs. In the case of
available‐for‐sale financial instruments, a prolonged decline in the value of the instrument is considered
to determine whether impairment has arisen.
i.
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 3 months or less, and bank overdrafts. Bank overdrafts are
shown within short‐term borrowings in current liabilities on the statement of financial performance.
j.
Revenue Recognition
Interest revenue is recognised using the effective interest method. It includes the amortisation of any
discount or premium.
k. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax 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 the expense. Receivables
and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented
in the statement of cash flows on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
l.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
m. Significant judgements and key assumptions
The directors evaluate estimates and judgements 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 Company.
n. Key judgements and estimates
Key Judgment Exploration Expenditure
The Company capitalises expenditure relating to exploration and evaluation where it is considered likely
to be recoverable or where the activities have not reached a stage which permits a reasonable
assessment of the existence of reserves. While there are certain areas of interest from which no reserves
have been extracted, the directors are of the continued belief that such expenditure should not be
written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is
carried at reporting date at $403,264.
34
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Key Judgment Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or
enacted environmental legislation, and the directors understanding thereof. At the current stage of the
company’s development and its current environmental impact the directors believe such treatment is
reasonable and appropriate.
Key Estimate Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation, and are based
on the best estimates of directors. These estimates take into account both the financial performance and
position of the company as they pertain to current income taxation legislation, and the directors
understanding thereof. No adjustment has been made for pending or future taxation legislation. The
current income tax position represents that directors’ best estimate, pending an assessment by the
Australian Taxation Office.
Key Estimates Share based payment transactions
The Company measures the cost of equity‐settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by reference to the
market price. Refer note 25.
Key Estimate Business Combination
In determine the value of the acquisition of Spinifex Ridge East Pty Limited, the Directors determine the
fair value of the shares consideration by reference to the market price. Detail information refer to note
22.
2. REVENUE AND OTHER INCOME
Interest received
3. LOSS FOR THE YEAR
Loss for the year is after charging:
Interest expense
Superannuation
2011
$
25,253
25,253
2010
$
‐
‐
2011
$
2010
$
14
10,717
‐
‐
35
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
4. INCOME TAX EXPENSE
(a) No income tax is payable by the parent or consolidated entity as they recorded losses for income tax
purposes for the period.
(b) Reconciliation between income tax expense and prima facie tax on accounting profit (loss)
Accounting profit (loss)
Tax at 30%
Tax effect of non‐deductible expenses
Deferred tax asset not recognised
Income tax expense
(c) Deferred tax assets
Revenue tax losses
Provisions
Deferred tax assets not recognised
Set off deferred tax liabilities
Income tax expense
(c) Deferred tax liabilities
Exploration expenditure
Set off deferred tax assets
(c) Tax losses
2011
$
2010
$
(3,048,725)
(914,618)
377,679
536,939
‐
584,822
55,200
(536,939)
(103,083)
‐
103,083
(103,083)
‐
(47,348)
(14,204)
2,310
11,894
‐
11,894
‐
(11,894)
‐
‐
‐
‐
‐
Unused tax losses for which no deferred tax asset has
been recognised
1,789,797
131,349
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not
been brought to account at 30 June 2011 because the directors do not believe it is appropriate to regard
realisation of the deferred tax assets as probable at this point in time. These benefits will only be obtained if:
‐ the company derives future assessable income of a nature and of an amount sufficient to enable the benefit
from the deductions for the loss and exploration expenditure to be realised;
‐ the company continues to comply with conditions for deductibility imposed by law; and
‐ no changes in tax legislation adversely affect the company in realising the benefit from the deductions for the
loss and exploration expenditure.
The applicable tax rate is the national tax rate in Australia for companies, which is 30% at the reporting date.
36
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
1,442,289
11,467
2011
$
2010
$
6. TRADE AND OTHER RECEIVABLES
CURRENT
Other receivables
Related party receivable¹
¹ Non interest bearing, to be settled within four months.
7. FINANCIAL ASSETS
Level 1 (see note 14)
CURRENT
ASX Listed Shares
Financial assets at fair value through profit and loss
Less provision for diminution in value
8. PLANT AND EQUIPMENT
Office equipment
At Cost
Accumulated depreciation
Office equipment
Opening balance
Purchases
Depreciation
Closing balance
37
2011
$
98,389
42,640
141,029
2010
$
7,953
‐
7,953
2011
$
2010
$
393,888
(98,654)
295,234
2011
$
2010
$
9,460
(3,137)
6,323
‐
9,460
(3,137)
6,323
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
9. CONTROLLED ENTITY
Parent Entity:
Metal Bank Limited
Subsidiary:
Spinifex Ridge East Pty Limited
Country of
Incorporation
Ownership %
2011
Ownership %
2010
Australia
Australia
‐
80
‐
‐
10. EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation expenditure
403,264
60,000
2011
$
2010
$
Reconciliation of carrying amount
Balance at beginning of financial year
Acquisition of tenements
Expenditure in current year
Exploration expenditure written off
Balance at end of financial period
11. TRADE AND OTHER PAYABLES
CURRENT
Unsecured liabilities:
Trade payables
Sundry payables and accrued expenses
12. FINANCIAL LIABILITIES
CURRENT
Unsecured loans payable to related party
Unsecured loans payable to unrelated party¹
Unsecured loans payable to director
¹ The loan is interest free and has no fixed term.
13. SHARE CAPITAL
36,985,001 (2010 – 1) fully paid
ordinary shares
38
60,000
460,000
343,609
(460,345)
403,264
‐
‐
82,542
(22,542)
60,000
2011
$
2010
$
150,427
625,200
775,627
714
67,700
68,414
2011
$
‐
20,000
‐
20,000
2010
$
57,389
20,000
151,970
229,359
2011
$
2010
$
3,931,591
1
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
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.
Reconciliation of movements in share capital during the year:
2011
No. Shares
2010
No. Shares
2011
$
2010
$
Opening balance – start of
reporting period
Share Issue – 2 September 2010
Share Issue – 7 September 2010
Share Issue – 24 September 2010
Share Issue – 26 October 2010
Share Issue – 29 October 2010
Share issue – 3 November 2010
Share Issue – 8 November 2010
Share Issue – 8 February 2011
Share Issue – 9 February 2011
Share Issue – 9 June 2011
Share Issue – 9 June 2011
Cost of raising capital
1
10,250,000
300,000
2,150,000
1,835,000
925,000
1,600,000
25,000
1,600,000
13,500,000
2,800,000
2,000,000
36,985,001
1
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1
1
10,250
30,000
215,000
183,500
925
160,000
2,500
320,000
2,700,000
420,000
300,000
(410,585)
3,931,591
1
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1
Of the issued shares 15,730,000 are subject to escrow for varying periods expiring between September
2011 and February 2013.
The Company has authorised share capital amounting to 36,985,001 shares with no par value.
Capital Management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so
that it may continue to provide returns for shareholders and benefits for other stakeholders.
The Company’s capital includes ordinary share capital and financial liabilities, supported by financial assets.
Due to the nature of the Company’s activities, being mineral exploration, it does not have ready access to
credit facilities, with the primary source of funding being equity raisings. Accordingly, the objective of the
Company’s capital risk management is to balance the current working capital position against the requirements
of the Company to meet exploration programmes and corporate overheads. This is achieved by maintaining
appropriate liquidity to meet anticipated operating requirements, with a view to initiating appropriate capital
raisings as required.
Cash and cash equivalents
Trade and other receivables
Financial assets
Trade and other payables
Working capital position
2011
$
1,442,289
141,029
295,234
2010
$
11,467
7,953
‐
(775,627)
(68,414)
1,102,925
(48,994)
39
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
14. FINANCIAL RISK MANAGEMENT
The group’s principal financial instruments comprise mainly of deposits with banks and shares in listed
companies shown as financial assets at fair value through profit and loss. The main purpose of the financial
instruments is to earn the maximum amount of interest at a low risk to the group. The group also has other
financial instruments such as trade debtors and creditors which arise directly from its operations.
The consolidated entity holds the following financial instruments at the end of the reporting period:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value
through profit and loss
Financial liabilities
Trade and other payables
Financial liabilities
2011
$
2010
$
1,442,289
141,029
295,234
1,878,552
775,627
20,000
795,627
11,467
7,953
‐
19,420
68,414
229,359
297,773
The main risks arising from the Company’s financial instruments are market risk, credit risk and liquidity risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below:
a. Market risk
Cash flow and fair value interest rate risk
The group’s main interest rate risk arises from cash deposits to be applied to exploration and
development areas of interest. It is the group’s policy to invest cash in short term deposits to minimise
the group’s exposure to interest rate fluctuations. The group’s deposits were denominated in
Australian dollars throughout the year. The group did not enter into any interest rate swap contracts
during the year ended 30 June 2011. Neither the group nor the parent has any short or long term
debt, and therefore this risk is minimal.
b. Credit Risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in
financial loss to the group. The group has adopted the policy of only dealing with credit worthy
counterparties and obtaining sufficient collateral or other security where appropriate, as a means of
mitigating the risk of financial loss from defaults. The cash transactions of the group are limited to
high credit quality financial institutions.
The group does not have any significant credit risk exposure to any single counterparty or any group
of counterparties having similar characteristics. The carrying amount of financial assets recorded in
the financial statements, net of any provisions for losses, represents the group’s maximum exposure
to credit risk.
All cash holdings within the Group are currently held with AA rated financial institutions.
c. Liquidity Risk
The group manages liquidity risk by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities. Surplus funds when available are
generally only invested in high credit quality financial institutions in highly liquid markets.
40
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Financial Instrument composition and maturity analysis
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed
period of maturity, as well as management’s expectations of the settlement period for all other financial
instruments. As such, the amounts may not reconcile to the statement of financial position.
Consolidated Group
Within 1 year
1 to 5 years
Over 5 years
Total
2011
2010
2011
2010
2011
2010
2011
2010
Financial liabilities ‐
due for payment:
Trade and other
payables
Total contractual
outflows
Financial assets –
cash flows realisable
Cash and cash
equivalents
Trade and other
receivables
Financial assets
Total anticipated
inflows
Net (outflow)/
inflow on financial
instruments
795,627
297,773
795,627
297,773
1,442,289
11,467
141,029
295,234
7,953
‐
1,878,552
19,420
1,082,925
(278,353)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
795,627
297,773
795,627
297,773
1,442,289
11,467
141,029
295,234
7,953
‐
1,878,552
19,420
‐
1,082,425
(278,353)
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity
and profit or loss by the amounts shown below.
30 June 2011
Cash and cash equivalents
30 June 2010
Cash and cash equivalents
Change in profit
Change in equity
Carrying
Value
100bp
Increase
100bp
decrease
100bp
increase
100bp
decrease
$
$
$
$
$
1,442,289
14,308
(14,308)
14,308
(14,308)
11,467
‐
‐
‐
‐
Maturity of financial assets and liabilities
The note below summarises the maturity of the group’s financial assets and liabilities as per the director’s
expectations. The amounts disclosed are the contractual undiscounted cash flows. There are no derivatives.
30 June 2011
Trade and other receivables
Trade and other payables
30 June 2010
Trade and other receivables
Trade and other payables
< 6 months
$
141,029
775,627
7,953
297,773
6 – 12
months
$
1‐ 5 years
>5 years
Total
$
$
$
‐
‐
‐
‐
41
‐
‐
‐
‐
‐
‐
‐
‐
141,029
775,627
7,953
297,773
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Fair value of financial assets and financial liabilities
There is no difference between the fair values and the carrying amounts of the group’s financial instruments.
The Group has no unrecognised financial instruments at balance date.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the statement of financial position have been analysed and
classified using a fair value hierarchy reflecting the significance of the inputs used in making the
measurements. The fair value hierarchy consists of the following levels:
–
–
–
quoted prices in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
Sensitivity analysis on changes in market rates
A change of 20% in equity prices at the reporting date would increase/(decrease) equity and profit or loss as
shown below:
30 June 2011
Financial assets at fair value through
the profit and loss:
ASX listed investments
15. COMMITMENTS
Not later than 12 months
Between 12 months and 5 years
Greater than 5 years
Carrying
Value
$
Change in profit
20%
increase
$
20%
decrease
$
Change in equity
20%
20%
decrease
increase
$
$
295,234
59,047
(59,047)
59,047
(59,047)
2011
$
2010
$
410,000
317,734
‐
727,734
‐
‐
‐
‐
The tenement commitment has been shown for a period of two years. The Group reviews its tenement
obligations on an ongoing basis and will continue to hold existing tenements beyond the two year period based
on their prospectivity.
The group has a further commitment to pay a retainer fee under outsourced consultancy and management
agreements for the provision of geological and service personnel. These agreements can be cancelled with
varying notice periods up to 12 months.
Not later than 12 months
Between 12 months and 5 years
Greater than 5 years
42
2011
$
2010
$
144,000
‐
‐
144,000
‐
‐
‐
‐
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
16. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There are no contingent liabilities or assets in existence at balance sheet date other than as outlined below.
On the 22 March 2011 the Company entered into an agreement to sell a 50% interest in the Killi Killi tenement
E80/4212 to Orion Metals Limited. The consideration of $100,000 and 1,000,000 shares in Orion Metals
Limited (ASX Code:ORM) is to be received on 30 August 2011 (the completion date) (subsequently deferred by
agreement to 30 September 2011). Completion is subject to certain conditions and as a consequence the
consideration has not been accounted for as at 30 June 2011.
17. RELATED PARTY DISCLOSURES
Refer to the Remuneration Report contained in the Directors Report for details of the remuneration paid or
payable to each member of the Group’s key management personnel for the year ended 30 June 2011. Other
than the Directors and secretary, the Company had no key management personnel for the financial period
ended 30 June 2011.
The total remuneration paid to key management personnel of the company and the group during the year are
as follows:
2011
$
176,832
8,850
185,682
2010
$
‐
‐
‐
Short term employee benefits
Post employment benefits
DIRECTORS' AND EXECUTIVE OFFICERS’ EMOLUMENTS
(a) Details of Directors and Key Management Personnel
(i) Directors
Vincent John Paul Fayad – Non‐Executive Chairman
Benjamin Heath Cooper – Executive Director
Michael Sutherland – Non‐Executive Director
(ii) Company secretary
Guy Robertson – Company Secretary
(iii) Directors’ remuneration
Directors’ remuneration and other terms of employment are reviewed annually by the Board having regard to
performance against goals set at the start of the year, relative comparative information and, where applicable,
independent expert advice.
Except as detailed in Notes (a) – (c) to the Remuneration Report in the Director’s Report, no director has
received or become entitled to receive, during or since the financial period, a benefit because of a contract
made by the Company or a related body corporate with a director, a firm of which a director is a member or an
entity in which a director has a substantial financial interest. This statement excludes a benefit included in the
aggregate amount of emoluments received or due and receivable by directors and shown in Notes (a) – (c) to
the Remuneration Report, prepared in accordance with the Corporations regulations, or the fixed salary of a
full time employee of the Company.
(b) Key Management Personnel
Other than the Directors and secretary, the Company had no key management personnel for the financial
period ended 30 June 2011.
43
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
(c) Remuneration Options: Granted and vested during the financial year ended 30 June 2011
There were no remuneration options granted during the financial year ended 30 June 2011.
(d) Share and Option holdings
All equity dealings with directors have been entered into with terms and conditions no more favourable than
those that the entity would have adopted if dealing at arm’s length.
Shares held by Directors and Officers
Period from 1 July 2010 to 30 June 2011
Balance at
beginning
of period
Received as
Remuneration
Purchased
Net Change
Other
Balance at
end of year
B.Cooper¹
V. Fayad²
M. Sutherland
K. Hunter³
A. Hood³
S. Hong Koh⁴
1
‐
‐
‐
‐
‐
1
‐
‐
‐
‐
‐
‐
600,000
62,500
‐
‐
600,001
62,500
‐
‐
1,020,000
‐
250,000
‐
‐
N/A
N/A
‐
1,932,500
‐
‐
N/A
662,501
¹
²
600,000 shares held indirectly by Cooper Corporate and Consulting Pty Limited.
Held indirectly by Kafta Enterprises Pty Ltd a company in which the director has an interest.
³ Resigned as a director on 20 May 2011
⁴ Resigned as a director on 16 August 2010
(e) Related Party Transactions
Advance to Cooper Corporate and Consulting Pty Ltd¹
Payments to:
Keystone Minerals Australia Pty Limited²
SeeSees Pty Limited³
Mining Corporate Pty Limited⁴
2011
$
2010
$
42,640
45,560
13,333
53,500
‐
‐
‐
‐
¹ The advance was made to a company associated with a director Benjamin Cooper. The amount has been
partly repaid.
² This amount was paid to a company in which a director, Michael Sutherland, has a relevant interest. These
consulting fees were paid in the normal course of business on an arms length basis.
³ This amount was paid as directors fees to a company in which a director, Benjamin Cooper, has a relevant
interest.
⁴ This amount was paid to a company in which a director, Kent Hunter, has a relevant interest. These fees
were paid for secretarial services provided by Elizabeth Hunt.
44
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
18. SEGMENT INFORMATION
The group’s operations are in one business segment being the resources sector. The group operates in one
geographical segment being Australia. All subsidiaries in the group operate within the same segment.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with
respect to operating segments are determined in accordance with accounting policies that are consistent to
those adopted in the annual financial statements of the Company.
Inter-segment transactions
Inter‐segment loans payable and receivable are initially recognised at the consideration received net of
transaction costs. If inter‐segment loans receivable and payable are not on commercial terms, these are not
adjusted to fair value based on market interest rates. This policy represents a departure from that applied to
the statutory financial statements
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the
majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable
on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and
intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the
operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Company as
a whole and are not allocated. Segment liabilities include trade and other payables and certain direct
borrowings.
Unallocated items
Administration and other operating expenses are not allocated to operating segments as they are not
considered part of the core operations of any segment.
19. EARNINGS PER SHARE
Reconciliation of earnings per share
Basic and diluted earnings per share
2011
Cents
2010*
Cents
(15.7)
Profit/(loss) used in the calculation of the basic
earnings per share
(3,048,725)
‐
‐
Weighted average number of ordinary shares:
Used in calculating basic earnings per ordinary share
Dilutive potential ordinary shares
Used in calculating diluted earnings per share
* There was only one share on issue in 2010.
No. of shares
No. of shares
19,376,974
‐
19,376,974
‐
‐
‐
45
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
20. AUDITORS REMUNERATION
Auditor of parent entity
Audit or review of financial reports, parent
entity and Group
Non‐audit services
2011
$
2010
$
16,900
8,250
25,150
6,300
‐
6,300
21. CASH FLOW INFORMATION
Reconciliation of net cash used in operating activities with profit after income tax
Profit/(loss) after income tax
(3,048,725)
(47,349)
2011
$
2010
$
Non‐cash flows in profit:
Impairment of investments
Exploration written off
Exploration asset impaired
Depreciation
Changes in assets and liabilities during the financial
period:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in exploration
Net cash (outflow) from operating activities
Non‐cash Financing and Investing Activities
Share issue
98,654
460,345
1,247,998
3,137
(133,074)
497,854
(343,609)
(1,217,420)
‐
22,452
‐
(2,133)
96,743
(82,452)
(12,739)
During the year 1,600,000 ordinary shares and 2,800,000 ordinary shares were issued respectively as
consideration for tenements acquired and the acquisition of Spinifex Ridge East Pty Limited. Refer note 25.
46
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
22. ACQUISITION OF BUSINESS
Acquisition of Spinifex Ridge East Pty Limited
On 22 June 2011 Metal Bank Limited acquired 80% of Spinifex Ridge East Pty Limited, which in turn
provided it with a controlling interest in tenement numbers E45/3099 and E45/2596.
Completion of the payment for this acquisition will occurred on the 13 September 2011 ‐ refer to note 24.
The total cost of the acquisition is $1.4 million and is comprised of an issue of equity and cash. At the date
of the acquisition, the Company paid $140,000 in cash and issued 2,800,000 ordinary shares with a fair
value of 15 cents per share based on the quoted price of the shares of Metal Bank at the date of exchange
and a share placement made by the Company on that same date. A further $270,000 will be paid in cash
and a further 6,200,000 shares will be issued to the vendor following receipt of shareholder approval – see
notes 22 (d) and 24. The value of the remaining equity consideration is based on a share price of 9 cents
per share, being the last traded price on 2 September 2011.
The Company has, following shareholder approval gained at the Extraordinary General Meeting held on 13
September 2011, a liability of a further $0.8 million in respect of the project acquired, comprised of
6,200,000 shares based on a fair value of 9 cents per share at the date of approval and a cash payment of
$270,000.
An advisor fee of a further 2,500,000 ordinary shares was also approved at the above meeting, and has been
accrued as at 30 June 2011 reflecting the fact that services were rendered prior to 30 June 2011.
(a) Purchase consideration
Purchase consideration
Shares (2,800,000 shares¹ at 15 cents per share ‐ issued)
Shares (6,200,000 shares at 9 cents per share – not issued)
Cash²
Total purchase consideration
Fair value of net identifiable assets acquired (refer to (b) below)
Exploration asset
Note – the exploration asset arising on acquisition has been impaired.
¹ Of the consideration 6,200,000 shares have yet to be issued – see note 24.
² Of the cash, $270,000 is yet to be paid – see note 24.
Liability for deferred consideration is comprised as follows:
6,200,000 shares at 9 cents per share
Deferred cash consideration
(b) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
420,000
558,000
410,000
1,388,000
140,002
1,247,998
558,000
270,000
828,000
Other receivables
Capitalised exploration costs
Net identifiable assets acquired
47
Acquiree’s
carrying amount
$
2
140,000
140,002
Fair value
$
2
140,000
140,002
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
(c) Cash consideration
Outflow of cash to acquire business, net of cash acquired
Cash consideration
Less: Balances acquired
Cash and cash equivalents
Less consideration deferred
Outflow of cash
23. PARENT ENTITY DISCLOSURES
Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total Current Assets
Non‐current Assets
Financial assets
Plant and equipment
Evaluation and exploration expenditure
Total Non‐current assets
Total Assets
Current Liabilities
Trade and other payables
Liability for deferred consideration
Financial liabilities
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Accumulated losses
2011
$
410,000
‐
(270,000)
140,000
2011
$
1,442,289
141,027
295,234
1,878,550
140,002
6,323
263,264
409,589
2,288,139
775,629
828,000
20,000
1,623,629
2010
$
11,467
7,953
19,420
‐
‐
60,000
60,000
79,420
68,414
‐
229,359
297,773
1,623,629
297,773
664,510
(218,353)
3,931,591
(3,267,081)
1
(218,354)
TOTAL EQUITY
664,510
(218,353)
i. Financial Performance
The subsidiary acquired did not trade from the date of acquisition with the result that the result of the Group
equates to the result of the parent for the year.
48
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
ii. Contingent liabilities and contingent assets
The parent entity is responsible for the contingent liabilities and contingent assets are outlined in note 16.
iii. Commitments
The parent entity is responsible for the commitments outlined in note 15.
iv. Related parties
An interest in subsidiary is set out in note 9.
Disclosures relating to key management personnel are set out in note 17.
24. SIGNIFICANT AFTER BALANCE DATE EVENTS
The following significant events have occurred since balance date:
(a) Acquisition of Spinifex Ridge East
At the Extraordinary General Meeting of the Company on 13 September 2011 shareholders ratified the
purchase of an 80 % interest in Spinifex Ridge East – see note 22. The resolutions relating to Spinifex Ridge
East are as follows:
‐
‐
‐
that the shareholders ratify the issue of 2,800,000 shares to the vendors, and approve the issue of a
further 6,200,000 shares to the vendors.
that the shareholders approve the issue of 15,000,000 options to the vendors, which have an exercise
price of 20 cents per share and an expiry date of 30 June 2014.
that the shareholders approve the issue of 2,500,000 shares to the vendor’s advisor.
A pro forma statement of financial position showing the impact of the above as at 30 June 2011 is outlined
below.
49
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Pro forma consolidated statement of financial position on completion of
acquisition
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
TOTAL CURRENT ASSETS
NON‐CURRENT ASSETS
Plant and equipment
Exploration and evaluation expenditure
TOTAL NON‐CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Financial liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Accumulated losses
Non‐controlling interest
TOTAL EQUITY
30 June 2011
$
1,172,289
141,029
295,234
1,608,552
6,323
403,264
409,587
2,018,139
775,627
20,000
795,627
795,627
1,222,512
4,489,591
(3,267,079)
1,222,512
‐
1,222,512
The above proforma statement of financial position has been prepared using the following assumptions:
6,200,000 ordinary shares are issued at 9 cents each, being the approximate market value of Metal
Bank securities as at the date of this report.
a cash consideration of $270,000 is paid; and
fees paid to the vendor’s advisor are accrued but not paid.
(b)
Sale of investments
The Company has sold all but $9,500 of its listed investments for the sum of $265,478. This has
resulted in a loss of $14,000, which is in addition to that already provided for in the financial
statements as at 30 June 2011.
Other than as described above, there are currently no matters or circumstances that have arisen since the end
of the financial period that have significantly affected or may significantly affect the operations of the
consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future
financial years.
50
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
25. SHARE BASED PAYMENTS
Goods or services received or acquired in a share‐based payment transaction are recognised as an increase in
equity if the goods or services were received in an equity‐settled share‐based payment transaction or as a
liability if the goods and services were acquired in a cash settled share‐based payment transaction.
For equity‐settled share‐based transactions, goods or services received are measured directly at the fair value
of the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made
the value of the goods or services is determined indirectly by reference to the fair value of the equity
instrument granted.
Transactions with employees and others providing similar services are measured by reference to the fair value
at grant date of the equity instrument granted.
The following share based payments were made during the year:
Ordinary shares
(a) On 8 February 2011, 1,600,000 ordinary shares
were issued to vendors as consideration for
exploration assets acquired.
(b) On 9 June 2011, 2,800,000 ordinary shares were
issued to vendors as part consideration for
acquisition of Spinifex Ridge East Pty Limited –
refer note 22.
Fair value of shares issued during the year:
2011
$
2010
$
320,000
420,000
‐
‐
(a) The ordinary shares were deemed to have fair value of $0.20 per share, determined by reference to
market price.
(b) The ordinary shares were deemed to have fair value of $0.15 per share, determined by reference to
market price.
51
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
DIRECTORS DECLARATION
The directors of the company declare that:
1.
the financial statements and notes, as set out on pages 23 to 51, are in accordance with the
Corporations Act 2001 and:
a. comply with Accounting Standards which stated in accounting policy note 1 to the financial
statements; constitutes explicit and unreserved compliance with International Financial
Reporting (IFRS); and
b. give a true and fair view of the financial position as at 30 June 2011 and of the performance for
the year ended on that date of the company and consolidated group;
2.
the Chief Executive Officer and Chief Financial Officer have each declared that:
a.
b.
the financial records of the company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
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 and
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.
Vincent J P Fayad
Non‐Executive Chairman
Sydney, 21 September 2011
52
We have audited the accompanying financial report of Metal Bank Limited, which
comprises the consolidated statement of financial position as at 30 June 2011, and the
consolidated statement of comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies and other explanatory information, and the
directors’ declaration of the Company and the Consolidated Entity, comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.
The directors of the Company are responsible for the preparation and fair presentation of
the financial report in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standards AASB 101: Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
In our opinion:
a. The financial report of Metal Bank Limited is in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2011 and of its
performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2011. The
directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
In our opinion, the Remuneration Report of Metal Bank Limited for the year ended 30 June 2011, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 21st day of September 2011
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
ADDITIONAL INFORMATION FOR LISTED COMPANIES
AS AT 9 SEPTEMBER 2011
The following additional information is required by the Australian Securities Exchange pursuant to Listing Rule
4.10.
a. Distribution of Shareholders
Number of
Number held
share holders
Number of shares
% of number of
shares
1 – 1,000
1,001 ‐ 5,000
5,001 ‐ 10,000
10,001 ‐ 100,000
100,001+
Total
1
12
82
140
70
313
1
44,585
879,100
6,265,902
29,795,815
36,985,001
0.00%
0.12%
2.19%
16.90%
80.79%
100.00%
b. The number of shareholders who hold less than a marketable parcel is 13.
c. Substantial shareholders
The names of the substantial shareholders in the Company, the number of equity securities to which
each substantial shareholder and substantial holder’s associates have a relevant interest, as disclosed
in substantial holding notices given to the Company are:
Australian Royalty Corporation Pty Limited
Gurney Capital Pty Limited
MFCM Nominee Services Pty Limited
No of shares
2,800,000
2,000,000
2,000,000
%
7.57%
5.41%
5.41%
d. Twenty largest holders of each class of quoted equity security
Name
Australian Royalties Corporation Pty Limited
MFCM Nominee Services Pty Limited
Gurney capital Nominees Pty Limited
Alpha Securities Pty Limited
Belloc Pty Limited
Kouta Bay Pty Limited
Black Swan Global Pty Limited
Kanwara Sreechum
Sphere Investments Pty Limited
Pitt Street Absolute Return Fund Pty Limited
Suburban Holdings Pty Limited
Cooper Corporate and Consulting Pty Limited
1.
2.
3.
4.
5
6.
7.
8.
9.
10.
11.
12.
13. Mulato Nominees Pty Limited
14.
15.
16.
17.
18.
19.
20. Wilman Investments
Australian Global Capital Pty Limited
BBY Nominees Pty Limited
Red Emperor NL
Cazaly Resources Limited
Oracle Equity Group Pty Limited
GlobalNickel Investments NL
55
No of
Ordinary
Shares
2,800,000
2,000,000
2,000,000
1,500,000
1,275,000
1,020,000
1,015,000
1,010,000
750,000
666,667
610,000
600,000
500,000
500,000
500,000
500,000
500,000
470,000
450,000
425,000
19,333,334
%
7.57
5.41
5.41
4.06
3.45
2.76
2.74
2.73
2.03
1.80
1.65
1.62
1.35
1.35
1.35
1.35
1.35
1.35
1.22
1.15
51.70
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
ADDITIONAL INFORMATION FOR LISTED COMPANIES
AS AT 9 SEPTEMBER 2011
e. Restricted Securities
There are 15,730,000 restricted ordinary shares as follows:
Escrow Period
12 mths from issue
12 mths from issue
12 mths from issue
12 mths from issue
12 mths from issue
12 mths from issue
24 mths from listing
Number
150,000
1,075,000
742,500
800,000
12,500
1,600,000
11,350,000
15,730,000
Release Date
07/09/11
24/09/11
26/10/11
03/11/11
08/11/11
28/01/12
02/03/13
f. Unquoted equity securities
The Company has no unquoted equity securities.
56
METAL BANK LIMITED AND ITS CONTROLLED ENTITY
ADDITIONAL INFORMATION FOR LISTED COMPANIES
AS AT 9 SEPTEMBER 2011
1.
Company Secretary
The name of the company secretary is Mr Guy Robertson.
2. Address and telephone details of entity’s registered and administrative office
The address and telephone details of the registered and administrative office in Australia is:
Level 2, 2 Bligh Street
Sydney, New South Wales 2000
Telephone: +(612) 8223 2800
Facsimile: +(612) 9235 0163
3. Address and telephone details of the office at which the register of securities is kept
The address and telephone of the office at which a register of securities is kept:
Advanced Share Registry
4.
Stock exchange on which the Company’s securities are quoted
The Company’s listed equity securities are quoted on the Australian Securities Exchange
5.
Review of Operations
A review of operations is contained in the Review of Operations report.
6. On market buy‐back
There is currently no on‐market buy‐back.
57