ANNUAL
REPORT
2013
appendix 4e
Appendix 4E
Preliminary final report
Period ending 30 June 2013
Name of entity
MEDUSA MINING LIMITED
ABN or equivalent company
reference
Half yearly
(tick)
Preliminary
final (tick)
Half year/ financial ended (“current period”)
60 099 377 849
√
30 June 2013
Results for announcement to the market
Revenues and profits:
US$’000
US$’000
Revenues from ordinary activities
up 24%
81,188
to 100,680
Profit from ordinary activities after tax attributable to members
up 2%
49,184
to
50,181
Net profit for the period attributable to members
up 2%
49,184
to
50,181
(All comparisons to the previous period ended 30 June 2012)
Dividends:
Interim dividend
Final dividend
Total dividend paid for the year
Amount per security
Franked amount per security
Nil
Nil
Nil
N/A
N/A
N/A
Dividend paid for period ended 30 June 2012 was A0.07 per share.
Net tangible assets per share:
The net tangible assets per share as at 30 June 2013 was US$1.893 (30 June 2012: US$1.672)
Change in control of entities:
There has been no change in control, either gained or loss during the current period.
Associates and Joint Venture entities:
The Consolidated Group did not have a holding in any associates or joint venture entities during the
current period.
Other information:
This report is based on accounts which have been audited.
Except for matters noted above, all disclosure requirements pursuant to ASX Listing Rule 4.3A are
contained within the Company’s consolidated financial statements for the year ended 30 June 2013
which accompany this report.
medusa mining limited
CORpORaTe diReCTORY
DIRECTORS
Geoffrey John Davis
Non-Executive Chairman
Peter Gordon Hepburn-Brown
Managing Director
Raul Conde Villanueva
Executive Director
Dr Robert Maurice Weinberg
Non-Executive Director
Andrew Boon San Teo
Non-Executive Director
Ciceron Angeles
Non-Executive Director
Gary Raymond Powell
Non-Executive Director
COMPANY SECRETARY
Peter Stanley Alphonso
EXECUTIVE MANAGEMENT
Peter Gordon Hepburn-Brown
Chief Executive Officer
Roy Philip Daniel
Chief Financial Officer
Peter Stanley Alphonso
Company Secretary
AUSTRALIAN BUSINESS NUMBER (ABN)
60 099 377 849
PRINCIPAL & REGISTERED OFFICE
Suite 7, 11 Preston Street
Como WA 6152
Postal address:
PO Box 860
Canning Bridge WA 6153
Telephone:
Facsimile:
Email:
Website:
+ 618 9367 0601
+ 618 9367 0602
admin@medusamining.com.au
www.medusamining.com.au
AUDITORS
Australia:
Grant Thornton Audit Pty Ltd
Level 1
10 Kings Park Road
West Perth WA 6005
Philippines:
RSB & Associates
18 Floor Cityland Condominium 10 - Tower 1
Makati City Philippines 1200
002
SOLICITORS
Australia:
Ashurst Australia
Level 32, Exchange Plaza
2 the Esplanade
Perth WA 6000
Philippines:
BMD Law Offices
18 Floor Cityland Condominium 10 - Tower 1
Makati City Philippines 1200
United Kingdom:
K&L Gates LLP
One New Change
London EC4M 9AF
United Kingdom
FINANCIAL ADVISOR & BROKER (UK)
S.P. Angel Corporate Finance LLP
35 Berkeley Square
Mayfair, London W1J 5BF
United Kingdom
BANKERS
Commonwealth Bank
150 St George’s Terrace
Perth WA 6000
STOCK EXCHANGE LISTINGS
• Australian Stock Exchange Limited (ASX)
(Home Exchange)
• London Stock Exchange (LSE)
Trading Code on ASX & LSE: MML
SHARE REGISTRIES
Shareholders who require information about their shareholdings,
dividend payments or related administrative matters should
contact the Company’s share registry:
Computershare Investor Services
Australia:
Level 2, Reserve Bank Building
45 St George’s Terrace
Perth WA 6000
Telephone:
Facsimile:
Investor enquiries: 1300 557 010
+ 618 9323 2000
+ 618 9323 2033
United Kingdom:
PO Box 82
The Pavilions
Bridgewater Road
Bristol BS99 7NH United Kingdom
Telephone:
Facsimile:
+ 44 (0)870 702 0003
+ 44 (0)870 703 6116
2013 annual report
HiGHLiGHTS OF FinanCiaL YeaR
FINANCIALS
• Earnings before interest, tax, depreciation and amortisation
(“EBITDA”) of US$63.2M (US$58.0M the previous year)
• Earnings per share (“EPS”) of US$0.266 on a weighted average
basis, based on net profit after tax (“NPAT”) of US$50.2M
(2012: EPS of US$0.261 based on NPAT of US$49.2M)
• Revenues of US$100.7M compared to US$81.2M. Medusa
Item
30 Jun 2013
30 Jun 2012
Variance
Revenues
US$100.7M
US$81.2M
24%
EBITDA
US$63.2M
US$58.0M
NPAT
US$50.2M
US$49.2M
EPS (basic)
US$0.266
US$0.261
9%
2%
2%
-
is an un-hedged gold producer and received an average gold
Dividend paid
Nil
A$0.07
price of US$1,610 per ounce from the sale of 77,488 ounces
of gold for the year.
• The Company had total cash and cash equivalent in
gold on metal account US$7.45M at year end (2012:
• No dividends were declared nor paid during the year.
US$51.8M).
Revenues
(US$ millions)
$160.00
$140.00
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$0.00
$16.9M
$16.2M
$42.8M
$94.6M
$149.6M
$81.2M
$100.7M
2007
2008
2009
2010
2011
2012
2013
OPERATIONS
Description
Tonnes mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Unit
WMT
DMT
gpt
%
ounces
US$/oz
30 June 2013
30 June 2012
364,257
309,648
7.02
90%
62,243
$313
274,185
253,138
8.10
92%
60,595
$261
(1) Net of development costs and includes royalties and local business taxes but no by-product credits
• The Company produced 62,243 ounces of gold for the year, compared to the previous year’s gold production of 60,595 ounces,
at an average recovered grade of 7.02 g/t gold (2012: 8.10 g/t gold);
Production
(ounces)
Production guidance
2012/13: between 100,000
to 120,000 ounces at cash
costs circa US$210 per ounce
• The average cash cost for the year of US$313 per ounce, was higher than the previous year’s average cash costs of US$261
120,000
per ounce due primarily to the treatment of lower grade development ore, higher power costs and operating inefficiencies
110,000
100,000
associated with increasing on-going maintenance associated with the old mill.
90,000
19,009
47,869
89,679
101,474
60,595
2008
2009
2010
2011
2012
2013 (Guidance)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Resources
(ounces)
3,500,000
3,250,000
3,000,000
2,750,000
2,500,000
2,250,000
2,000,000
1,750,000
1,500,000
1,250,000
1,000,000
750,000
500,000
250,000
0
Exploration
(US$ millions)
$40.0
$35.0
$30.0
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
Production
(ounces)
$30.000
$25.000
$20.000
$15.000
$10.000
$5.000
$0.0
650K
777K
603K
650K
898K
603K
351K
386K
470K
392K
650K
1,100K
1,136K
1,375K
1,344K
1,304K
616K
715K
820K
Jun 2007
Jun 2008
Jun 2009
Jun 2010
Jun 2011
Jun 2012
Jun 2013
Co-O Indicated Resources
Co-O Inferred Resources
Bananghilig Indicated and Inferred Resources
$6.5M
$15.0M
$18.9M
$26.7M
$35.1M
$24.0M
$15.0M
2008
2009
2010
2011
2012
2013
2014 (Budget)
Cost per oz
(US$)
$200
$195
$190
$185
$180
$175
$194
$191
$187
$185
25,004
26,123
25,114
25,233
Sept 10 Qtr
Dec 10 Qtr
Mar 11 Qtr
Jun 11 Qtr
Quarters/Years
medusa mining limited Revenues
(US$ millions)
HiGHLiGHTS OF FinanCiaL YeaR
$160.00
$140.00
$120.00
$100.00
PRODUCTION GUIDANCE FOR SEPTEMBER AND
DECEMBER 2013 QUARTERS
The production guidance for the September and December 2013 quarters is approximately 17,000 ounces and 35,000 ounces
$80.00
$60.00
respectively. Full year guidance for 2014 will be available once the new Co-O mill is fully commissioned and further development
$40.00
has been completed on Level 8.
$20.00
$16.9M
$16.2M
$42.8M
$94.6M
$149.6M
$81.2M
$100.7M
$0.00
NEW Co-O MILL AND MINE EXPANSION
In November 2010, the Board approved a major expansion of the Co-O Mine and the construction of a new Mill with capacity to
2007
2009
2008
2011
2013
2010
2012
produce 200,000 ounces of gold per year based on processing up to 750,000 tonnes per year. The approved Capital Expenditure
was estimated at approximately US$70M for the mine expansion and new mill.
The Environmental Clearance Certificate for 2,500 tonnes per day for the new mill has been granted.
The current status of activities is:
• L8 Shaft (formerly Saga Shaft) operational;
• Commissioning of New Mill nearing completion; and
• New electrical supply systems to the mine and mill operational.
RESERVES AND RESOURCES
Co-O Reserves
Production
Probable reserves *
(ounces)
Co-O Resources
120,000
110,000
Indicated resources
100,000
Inferred resources
90,000
Jun 2013
Jun 2012
Variance
570,000
568,000
2,000
Jun 2013
Jun 2012
Variance
820,000
715,000
105,000
1,375,000
1,304,000
71,000
Bananghilig Resources
80,000
Jun 2013
Jun 2012
Variance
70,000
60,000
Indicated &
Inferred resources
Saugon Resources
50,000
40,000
1,136,000
Jun 2013
1,100,000
Jun 2012
36,000
Variance
Production guidance
2012/13: between 100,000
to 120,000 ounces at cash
costs circa US$210 per ounce
• Gold reserves at Co-O increased marginally to 570,000
ounces (after depletion);
• Co-O’s gold resources comprised of 820,000 indicated
and 1,375,000 inferred resource ounces, representing
increases of 105,000 and 71,000 ounces within the
indicated and
respectively and
inferred categories
excludes mining depletion for the year;
• Bananghilig’s total resources increased by 36,000 ounces
to 1,136,000 ounces;
• The initial indicated and inferred resources for Saugon are
15,700 ounces.
30,000
Indicated &
Inferred resources
20,000
19,009
15,700
47,869
0
89,679
15,700
101,474
• (*) “as per JORC 2004”
60,595
10,000
0
Resources
(ounces)
3,500,000
3,250,000
3,000,000
2,750,000
2,500,000
2,250,000
2,000,000
1,750,000
1,500,000
1,250,000
1,000,000
750,000
500,000
250,000
0
2008
2009
2010
2011
2012
2013 (Guidance)
650K
777K
603K
650K
898K
603K
351K
386K
470K
392K
650K
1,100K
1,136K
1,375K
1,344K
1,304K
616K
715K
820K
Jun 2007
Jun 2008
Jun 2009
Jun 2010
Jun 2011
Jun 2012
Jun 2013
Co-O Indicated Resources
Co-O Inferred Resources
Bananghilig Indicated and Inferred Resources
004
Exploration
(US$ millions)
$40.0
$35.0
$30.0
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
Production
(ounces)
$30.000
$25.000
$20.000
$15.000
$10.000
$5.000
$0.0
$6.5M
$15.0M
$18.9M
$26.7M
$35.1M
$24.0M
$15.0M
2008
2009
2010
2011
2012
2013
2014 (Budget)
Cost per oz
(US$)
$200
$195
$190
$185
$180
$175
$194
$191
$187
$185
25,004
26,123
25,114
25,233
Sept 10 Qtr
Dec 10 Qtr
Mar 11 Qtr
Jun 11 Qtr
Quarters/Years
2013 annual report Revenues
(US$ millions)
$160.00
$140.00
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$0.00
Production
(ounces)
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
$16.9M
$16.2M
$42.8M
$94.6M
$149.6M
$81.2M
$100.7M
2007
2008
2009
2010
2011
2012
2013
Production guidance
2012/13: between 100,000
to 120,000 ounces at cash
costs circa US$210 per ounce
19,009
47,869
89,679
101,474
60,595
2008
2009
2010
2011
2012
2013 (Guidance)
Resources
(ounces)
EXPLORATION
3,500,000
1,000,000
750,000
500,000
250,000
0
3,250,000
• Contiguous tenement package maintained at >800km2;
3,000,000
2,750,000
• The Company wrote off US$6.8 million in exploration expenditures primarily due to the relinquishment of the Anoling gold project;
2,500,000
2,250,000
• Budgeted exploration for fiscal year 2014 of US$15.0 million (2013 actual: US$24.0 million);
2,000,000
1,750,000
• Exploration highlights at Co-O include:
1,500,000
1,136K
1,100K
650K
650K
650K
1,375K
1,250,000
- the global resources pass 2.1 million ounces and are still open at depth, to the east, north and to the west;
1,304K
- underground drilling continues to extend mineralisation; and
351K
470K
777K
898K
1,344K
- the Conceptual Exploration Target ** for the Co-O Mine of between 3 and 7 million ounces of gold continues to be validated
820K
715K
603K
386K
616K
603K
392K
with global resources and mined ounces now totalling in excess of 2.7 million ounces;
Jun 2007
Jun 2008
Jun 2009
Jun 2010
Jun 2011
Jun 2012
Jun 2013
** The potential target size and grade of the Co-O Mine is conceptual in nature and there has been insufficient exploration to define a mineral resource. It is also uncertain if further exploration
will result in the target being defined as a mineral resource.
Co-O Indicated Resources
Co-O Inferred Resources
Bananghilig Indicated and Inferred Resources
Exploration
(US$ millions)
$40.0
$35.0
$30.0
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
$6.5M
$15.0M
$18.9M
$26.7M
$35.1M
$24.0M
$15.0M
2008
2009
2010
2011
2012
2013
2014 (Budget)
• At the Bananghilig disseminated gold deposit, drilling has converted 766,000 ounces to the Indicated category and 370,000
ounces are in the Inferred category. During the year, the Company announced the discovery of a new zone of gold mineralisation,
B2, proximal to the current Bananghilig gold deposit. There is potential for defining a new resource at B2 from continued drilling;
Cost per oz
(US$)
$30.000
• At Saugon, Cube Consulting Pty Ltd completed a resource for the Saugon deposit. A cut-off of 2 g/t was used resulting in an
Indicated Resource of 47,000 tonnes at 6.99 g/t gold containing 10,700 ounces and an Inferred Resource of 34,000 tonnes at
4.55 g/t gold containing 5,000 ounces; and
$194
Production
(ounces)
$25.000
$20.000
• Induced Polarisation, Resitivity and Ground Magnetics geophysical programme have been completed over Saugon and Lingig
$191
and in progress for the Co-O area.
$15.000
$187
$185
$10.000
$5.000
$0.0
25,004
26,123
25,114
25,233
Sept 10 Qtr
Dec 10 Qtr
Mar 11 Qtr
Jun 11 Qtr
Quarters/Years
$200
$195
$190
$185
$180
$175
medusa mining limited HiGHLiGHTS OF FinanCiaL YeaR
CORPORATE
DiviDEND:
No dividends were declared nor paid during the year.
FuNDiNg:
With the current subdued gold price and the delay to the commissioning of the new Co-O Mill caused by the situation with Arccon,
Medusa has been reviewing the efficiency of its operations and also its costs. As a result of this review, the Company has deemed
it prudent to arrange funding facilities with two Philippine banks.
The overdraft facilities available to the Group total Php600 million (approximately US$14 million) and as reported in the announcement
on Quarterly Activities dated 31 July 2013, the Company has drawn down Php120 million (approximately US$3 million).
006
2013 annual report ManaGinG diReCTORS ReVieW
Dear Shareholders,
This has been a difficult year as we strived to complete the new mill and the L8 Shaft (formerly Saga Shaft) whilst endeavouring
to keep gold production on target. The old mill is 25 years old and its availability during the year has contributed to reduced gold
production as breakdowns occurred more frequently and for longer periods.
The construction of the new mill was scheduled to be completed in July 2013, but due to the ECPM contractor, Arccon going in to
administration, the commissioning of the new mill has been delayed.
A new contractor has been appointed and the new mill is now being commissioned. The ramp up to full production of 2,500 tpd
will commence shortly. The power upgrade and tailings dams have been completed, together with the upgrading/replacement of
existing infrastructure including new administration and accommodation buildings, new surface fleet maintenance workshops, new
core farm, accommodation at the mine site and communications.
The L8 Shaft was completed in the March quarter and it is now completely operational, hauling development ore and waste
from Level 8. Development ore along Level 8 has been hampered due to narrow veins and faulting around the L8 Shaft, but as
the development has moved away from the shaft, the veins widths and grades have improved. Development and stoping is still
occurring on Levels 1 to 6 and will continue for a number of years.
The Safety, Environmental and Community activities throughout the year have been very positive, with only one lost time accident
during the year, no environmental breaches and a local community that is very supportive of our operations.
Exploration at the Co-O Mine and at Bananghilig has continued to be successful. The Resources at Co-O and Bananghilig has
been increased again this year and at Bananghilig exploration has discovered a new area, called B2, proximal to the Bananghilig
resource where drilling is continuing to delineate this deposit.
The Company is now positioned to move forward with increased gold production and to rebuild its cash balance.
The decision to suspend dividends was unfortunately necessary due to the cash being required for construction of the new plant
as well as for working capital. We expect that once the milling rate has been achieved (2,500 tpd) and the cash balance has been
sufficiently built up, the Company will be in a position to re-introduce dividend payments.
In closing, I wish to thank my fellow Directors, Perth office staff and the dedicated Filipino team who have strived to achieve
our objectives under difficult circumstances during the year. We also very much appreciate the continued support of the local
communities and the relevant Philippine government agencies which enable us to expand our activities and thereby provide
benefits to an increasing number of people.
Yours sincerely,
Peter Hepburn-Brown
Managing Director
medusa mining limited ReVieW OF OpeRaTiOnS
Contents of Review of Operations
Page number
Highlights
Executive Order on Mining in the Philippines
Co-O Project
- Co-O Gold Production
- Co-O Mill And Mine Expansion
- Co-O Mining Operations
- Co-O Mine Resources
- Co-O Mine Reserves
- Co-O Exploration
Tambis Region
- Bananghilig Gold Deposit
- B2 Prospect
- Tambis Regional
Lingig Copper Prospect
Saugon
Anoling
Apical
Corplex
Sursur Project
Usa Porphyry Copper-Gold Target
Tenements
Drill Hole Sampling and Assaying Procedures
- Co-O
- Bananghilig
Sustainability
- Health and Safety
- Environmental Management and Monitoring
- Workforce
- Community Participation, Programmes and Benefits
JORC Compliance - Consent of Competent Persons
08
11
16
17
17
18
19
21
21
22
26
27
29
30
30
31
32
32
32
32
32
33
34
34
34
36
36
37
39
39
43
2013 annual report HIGHLIGHTS
“ The Company is nearing the completion of its expansion program as the L8
Shaft has been operating since the first quarter of CY 2013 and the mill is
currently undergoing commissioning.
The Company’s resource base continued to increase with the addition of
approximately 200,000 ounces, bringing the total resource ounces to over
3.3 million.”
MINERAL RESOURCES AND RESERVES:
Table 1. Mineral Resources and Ore Reserves as at 30 June 2013 (2004 JORC Code)
CATEGORY
TONNES
GRADE
G/T GOLD
OUNCES
GOLD
2,100,000
4,780,000
6,880,000
16,060,000
8,460,000
24,520,000
47,500
34,000
81,500
31,481,500
18,207,500
13,274,000
DEPOSIT
RESOURCES
Co-O Resources
Indicated
Inferred
Total Co-O Resources
Indicated & Inferred
Bananghilig Resources
Indicated
Inferred
Total Bananghilig Resources Indicated & Inferred
Saugon Resources
Indicated
Inferred
Total Saugon Resources
Indicated & Inferred
TOTAL RESOURCES
Indicated & Inferred
Total Indicated Resources
Total Inferred Resources
RESERVES
Co-O Reserves
NOTE: Resources include reserves
RESOURCES:
- a lower cut-off of 3.0 g/t gold has been applied at Co-O
- various upper cut-off gold grades up to 300 g/t gold have been applied to different veins at Co
- a lower cut-off of 0.8 g/t gold has been applied at Bananghilig and various upper cuts
- a lower cut-off of 2.0 g/t gold has been applied at Saugon
- rounding to the nearest 1,000 may result in some slight discrepancies in totals
RESERvES:
- Reserves are a subset of Resources
- a cut-off grade of 4.0 g/t gold has been applied to developed ore
- a cut-off grade of 4.7 g/t gold has been applied to un-developed ore
- a gold price of US$1,200 has been applied
Probable
1,650,000
12.1
9.0
9.9
1.48
1.36
1.44
6.99
4.55
5.97
3.31
2.73
4.10
10.7
820,000
1,375,000
2,195,000
766,000
370,000
1,136,000
10,700
5,000
15,700
3,346,700
1,596,700
1,750,000
570,000
medusa mining limited ReVieW OF OpeRaTiOnS
THE Co-O OPERATIONS:
• Produced 62,243 ounces of gold for the year at cash costs of US$313 per ounce;
• Increased the Indicated Resources by 14% to 820,000 ounces at an average grade of 12.1 g/t gold;
• Completed the L8 Shaft in the March 2013 Quarter. The shaft is operational and currently hauling ore and waste from the Level
8 loading pocket. 350m of development has been completed on Level 8;
• Deepened the Baguio Shaft from Level 3 to Level 5 which will be operational from Level 5 at the end of August 2013; and
• The New Primary Crusher and Sag Mill were commissioned during August 2013.
TAMBIS REGION - BANANGHILIG GOLD DEPOSIT:
• Drilling achieved the objective of increasing the total resources to 1,136,000 ounces of gold comprising Indicated Resources of
766,000 ounces and Inferred Resources of 370,000 ounces;
• At Bananghilig an additional 14 infill holes for resources were completed in April 2013;
• Sterilisation drilling to delineate areas for a proposed plant site, tailings and waste storage facilities is nearing completion, as is
geotechnical drilling for tailings and waste storage facilities, open pit walls and mill plant areas;
• Extension drilling of the newly discovered B2 mineralisation is in progress with two drill rigs.
ON THE EXPLORATION FRONT:
DRiLLiNg STATiSTiCS
PROJECT
Co-O Mine
Co-O Mine
Co-O Mine
Sub-total Co-O Mine
Bananghilig/Canugas/Supon
Bananghilig
Bananghilig
Bananghilig
Canugas
Supon
Sub-total Bananghilig/Canugas/Supon
GRAND TOTAL
PURPOSE
NUMBER OF HOLES
METERAGE
Surface
Underground
Resource In-fill
B2
Sterilisation
Surface
Surface
67
62
129
42
12
12
14
4
84
213
45,578
13,749
59,327
8,174
4,126
3,409
7,483
1,235
24,427
83,753
010
2013 annual report SuMMARY OF SuRFACE EXPLORATiON PROJECT ACTiviTiES
Co-O MINE
• Surface exploration drilling was put on-hold, with the last completed hole being EXP237 in April 2013, while underground drilling
is continuing;
• Evaluation of South Agsao vein system is continuing through surface work; and
• Surface and underground drilling results are being continuously reviewed.
BANANGHILIG
• Infill drilling completed in April 2013 to upgrade resources from Inferred to Indicated Category of the Bananghilig Deposit;
• Preliminary Scoping Study demonstrates favourable economics for development of the Bananghilig Deposit;
• Sterilisation and geotechnical drilling in progress; and
• Extension drilling of the newly discovered B2 mineralisation in progress.
Co-O REGIONAL
• Induced Polarization, Resistivity and Ground Magnetics surveys are in progress;
• Regional mapping and sampling programmes are continuing; and
The Company has maintained its exploration
area of more than 800 square kilometres.
medusa mining limited ReVieW OF OpeRaTiOnS
Figure 1: Locations diagram of the Company’s tenement areas and prominent East-West structures
012
2013 annual report Figure 2: Tenement location map showing the mines and prospects (Note: excised areas east of Co-O mine and mill are small scale mining reservations).
medusa mining limited ReVieW OF OpeRaTiOnS
EXECUTIVE ORDER ON MINING IN THE PHILIPPINES
The President of the Philippines on 9 July 2012 released Executive Order No.79 (“EO”) designed to improve the alignment of the
Philippines’ national and regional interests with those of the mining industry through the updating of key policies, including but not
limited to:
• Improving transparency of the mining industry;
• Improving the fiscal return to the government from all future projects, primarily through increased royalty payments. The fiscal
settings of current operations will be honoured.
• Improving the return and timing of financial benefits to local governments;
• Tightening controls on illegal mining such as banning the use of mercury and restricting legitimate small scale mining activities
to gold, silver and chromite;
• Ensuring that mining is not allowed on designated key tourist areas and prime agriculture lands; and
• Enforcement of strict environmental controls.
The EO requires the issuing of new implementing rules and regulations within 60 days of the EO publication after which the granting
of exploration tenements will re-commence. The granting of construction permits for new projects will commence only after the new
fiscal regime has been legislated. The fiscal settings of all existing contracts will be honoured.
iMPLiCATiONS OF ThE EXECuTivE ORDER ON MiNiNg
Co-O Operations
The EO will have no effect on the Co-O operations and the status quo will be maintained for this existing operation as it is linked to
an existing mining agreement.
There will be no change in the existing tax structure until such time as Congress amends and approves new mining taxes and
royalties within the existing Mining Act.
Bananghilig Project
The EO will have no immediate impact on the project as the Company can continue to explore, conduct feasibility studies
and planning.
However, should the feasibility study be positive and the Company commits to constructing the project, timely issuance of the
relevant permits to commence construction maybe subject to new law on mining taxes and royalties being passed by Congress.
Updates will be provided as information becomes available.
014
2013 annual report Co-O PROJECT
Co-O gOLD PRODuCTiON
The Co-O Mine produced 62,243 ounces of gold during the year
Table II. Gold production statistics for financial years ended 30 June 2012 and 2013
Period
Tonnes mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Gold sold
Average gold price received
Unit
wet tonnes
dry tonnes
gpt
%
ounces
US$
ounces
US$
Year ended
30 June 2013
346,257
309,648
7.02
90%
62,243
$313
77,488
$1,610
Year ended
30 June 2012
274,185
253,138
8.10
92%
60,595
$261
55,446
$1,658
(1) Net of development costs and includes royalties and local business taxes but no by-product credits
The Co-O Mine produced 62,243 ounces of gold for the year compared to the previous year’s gold production of 60,595 at a
recovered grade of 7.02 g/t gold (2012: 60,595 ounces at recovered grade of 8.10 g/t gold).
The average cash cost for the year of US$313 per ounce, was higher than the previous year’s average cash costs of US$261 per
ounce due primarily to the treatment of lower grade development ore, higher power costs and operating in-efficiencies associated
with increasing on-going maintenance associated with the old mill.
The production guidance for the September and December 2013 quarters is approximately 17,000 ounces and 35,000 ounces
respectively. Full year guidance for 2014 will be available once the new Co-O mill is fully commissioned and further development
has been completed on Level 8.
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Co-O MILL AND MINE EXPANSION
In November 2010, the Board approved a major expansion of the Co-O Mine and the construction of a new Mill with capacity to
produce 200,000 ounces of gold per year based on processing up to 750,000 tonnes per year. The approved Capital Expenditure
was estimated at approximately US$70M for the new mill and mine expansion.
Photo 1: Crushed ore being loaded into Sag Mill
The Environmental Clearance Certificate for 2,500 tonnes per day for the new mill has been granted.
The current status of activities is:
• L8 Shaft (formerly Saga Shaft) operational;
• Commissioning of New Mill nearing completion; and
• New Electrical supply systems to the mine and mill operational.
016
2013 annual report Photo 2: L8 Shaft
Co-O MINING OPERATIONS
MiNE OPERATiON AND DEvELOPMENT
The Co-O Mine is a rail or tracked mine utilising battery driven electric locomotives and 1.2 to 1.5 tonne mine cars. The mine
operates using two adits, four inclined 60º internal shafts (Sabor, 8E, 10W and 3W shafts), two vertical external shafts (ventilation
and L8 shafts) and two inclined external shafts (Agsao and Baguio shafts ) as marked on Figure 3 & 4. The combination of small
surface and underground shafts has been upgraded to haul approximately 1,000 tonnes per day and the L8 Shaft can haul 1,500
tonnes per day, giving a total of 2,500 tonnes per day.
Conventional airleg or jackleg mining is used for level development and in narrow vein shrink stopes (which are backfilled with waste
where possible to mitigate hauling waste to the surface).
Photo 3: Mucking Don Pedro Ore
Photo 4: L8 Shaft
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Development continued on Levels 1 to 6 and development commenced on Level 8 from the L8 Shaft. The Baguio Shaft was
deepened from Level 3 to level 5 during the year.
The level development target advance rates have been achieved of 1,500 metres per month resulting in a high percentage of
development ore in the current mill feed. This accelerated development program has been essential to prepare the mine for the
increased production rates required under the expansion plans. Development ore from level development (which converts Inferred
Resources to Indicated Resources which are then used to estimate the Probable Reserves) provided the majority of the mill feed
during the year. The same rate of development will continue for the future.
Photo 5: Loading ore into loading pocket 8L
018
2013 annual report Co-O MINE RESOURCES
“ Since 30 June 2012, the Co-O Mine indicated resources have increased
by 14% to 820,000 ounces and the global resources have increased by
8% to 2,195,000 ounces (after allowing for production depletion).
Re-estimation of the Co-O Mine resources as announced on 8 August 2013 returned the following:
Table III. Co-O Mine Resources as at 30 June 2013
Category
Indicated resources
Inferred resources
TOTAL
tonnes
2,100,000
4,780,000
6,880,000
≥ 3 g/t gold
g/t gold
12.1
9.0
9.9
ounces
820,000
1,375,000
2,195,000
Note:
- a lower cut-off of 3 g/t gold has been applied
- various upper cut-off gold grades up to 300 g/t gold have been applied to different veins at Co-O
- rounding to the nearest 1,000 may result in some slight discrepancies in totals
vEiN MODELLiNg
Cube Consulting Pty Ltd of Perth, Western Australia, was contracted to undertake the resource estimate. A wireframe model
of the vein system and the mine depletions were based on all available information as at 30 June 2013. A Specific Gravity value
of 2.62 was used in the estimations. A 2D longitudinal modelling approach was used and is based on an accumulation variable
incorporating mineralised vein horizontal width and intercept grade. variography was used to analyse the spatial continuity of the
horizontal width and accumulation variables within the mineralised veins and to determine appropriate estimation inputs to the
interpolation process. The accumulation variables were interpolated into blocks using Ordinary Kriging. High grade limits were
applied to gold prior to the calculation of the accumulation variable.
The Co-O Mineral Resources have been reported in accordance with The 2004 Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code).
Co-O MINE RESERVES
“ Since 30 June 2012, the Co-O Mine reserve has been maintained
at 570,000 ounces.”
The Probable Reserve as at 30 June 2013 is 570,000 ounces contained in 1,650,000 tonnes at 10.7 g/t gold.
Carras Mining Pty Ltd of Perth, Western Australia was contracted to complete the reserve estimation based on the resource
wireframe model provided by Cube Consulting Pty Ltd.
The Probable Reserve was estimated from an Indicated Resource of 2,100,000 tonnes at 12.1 g/t gold containing 820,000
ounces of gold. The estimate was based on a gold price of US$1200 per ounce, a minimum stope width of 1.2 metre, a
horizontal development width of 2 metres, with cut-off grades of 4.0 g/t gold applied to developed ore and 4.7 g/t gold to
un-developed ore.
Compared to the information available at the time of the previous reserve estimate at 30 June 2012, the reserve grade has
increased slightly and the tonnes decreased slightly.
medusa mining limited ReVieW OF OpeRaTiOnS
Co-O EXPLORATION
“ Exploration drilling continues to expand the Co-O Vein system along a
strike length to more than 2,000 metres, with a new focus on extensions
of the vein system to the west of the Tinago Fault and at depth to the
west of the Oriental Fault.”
RESOuRCE DRiLLiNg
A total of 59,327 metres of diamond core drilling in 129 surface and underground holes were completed.
Currently there are four diamond drill rigs operating, two on contract and two owned by the Company on Levels 3 and 8.
Announcements dated 09 July 2012, 14 August 2012 and 21 February 2013, and the March 2013 and June 2013 quarterly
reports contain details of the drill hole intersections achieved during the year.
A composite vein plan derived from the 3D model projected to Level 6 is shown in Figures 3 & 4. Plan projection of recent surface
and underground exploration drillholes are shown respectively.
Figure 3: Co-O Mine Level 6 composite vein plan showing diatreme and recent surface exploration drillhole projection
020
2013 annual report Figure 4: Co-O Mine Level 6 composite vein plan showing diatreme and recent underground exploration drillhole projection
IP Survey
A ground geophysics Induced Polarisation (“IP”)/ Resistivity (“RES”) survey continues within the Co-O tenements including the Co-O
mine environs. Up to the end of the June quarter, approximately 25 line kilometres of the survey was completed. It is anticipated
that the balance of the IP survey (~230 line kilometres) will be completed during the March 2014 quarter, with interpretation being
carried out during the March/June 2014 quarters.
Reconnaissance Programmes
Reconnaissance mapping and sampling programmes are ongoing.
Co-O MiNE LOCAL gEOLOgY AND MiNERALiSATiON
Detailed discussions and interpretations of the Co-O Mine geology and mineralisation were announced on 14 August 2012 and are
also contained, with plans and sections in the 2012 Annual Report. These interpretations are summarised below:
• The Co-O Mine area is underlain by gently north-dipping basaltic andesitic to andesitic volcanic flows and minor volcaniclastics
(Fig. 5) which have been intruded by andesitic to dioritic stocks and cut by north-trending faults.
• There are three large outcropping intrusives, namely the Nangka, Road 17 and Pinayungan Intrusives, located east and
southwest of the Co-O vein system, and several smaller ones in the vicinity. The Nangka and Pinayungan Stocks are in place
while the rest are “floating” in the Co-O Diatreme including the large Road 17 Mega Block.
• Porphyry-related copper-gold mineralization is hosted only in the Nangka Stock and the surrounding volcanics. Generally grades
range from 0.11 to a maximum of 0.31 % Cu and 0.11 to 0.24 g/t Au with a Cu:Au ratio of about 1:1 to 1:2.
• After a period of substantial uplift and erosion, a diatreme/maar complex explosively intruded all the above rock types. Although
the diatreme is pre-mineralization, it does not substantially host the veins due to lithological (or rheological) contrast where the
veins are preferentially emplaced in the competent pre-mienralization non-diatreme rocks. Its presence explains the general
absence of near surface epithermal veins east of the Oriental Fault instead of invoking a large down thrown movement of the
zone as the veins are masked by the flare of the diatreme.
medusa mining limited ReVieW OF OpeRaTiOnS
• The Co-O Diatreme is upward flaring in all directions towards the surface, measuring about 1.5 kilometres in diameter, and
narrows down at depth like a funnel of unknown dimensions. Its root is probably located at the southern part of the Road 17
Intrusive. It is inferred that the diatreme may easily reach 1 kilometre or more in depth as indicated by its surface dimension
wherein the vertical extent is more than its lateral extent. The maar volcanics, which are the extrusive equivalent of the diatreme
were deposited during the explosive activity of the diatreme emplacement.
• After the emplacement of the diatreme/maar complex, mineralised hydrothermal breccias followed by epithermal gold veins were
formed, overprinting the older porphyry-related copper-gold mineralisation. The veins generally strike west-northwest to due
west and dip 55 to 75° to the north for all veins except the Central vein which is vertically dipping.
• After another episode of uplift and erosion, a thin veneer of polymictic conglomerate to a maximum thickness of about 30
metres, was deposited on top of the diatreme/maar complex.
Figure 5: Co-O Mine area interpreted geological map
Implications
On the eastern side of the Oriental Fault, now that the diatreme breccia pipe has been defined, the outcropping of northern veins
such as the Royal vein set and the non-outcrop of others is readily explained as the outcropping ones are not masked by the
diatreme complex. Some of the non-outcropping veins are hidden below the flare of the diatreme and below Maar volcanics.
This new interpretation also negates the need to invoke a substantial vertical displacement on the Oriental Fault. The consequence
is that there is now no geological reason why the vein system on the west side of the Oriental Fault should not continue to similar
depths to those on the eastern side of the fault.
022
2013 annual report Research
Detailed studies of the Co-O Mine and surrounds have continued through 2012-13 with the Centre for Exploration Targeting at the
University of Western Australia. This work is still in progress involving primarily fluid inclusion, alteration and detailed vein texture
studies on a large suite of samples collected from throughout the Co-O veins to assist in determining the extent and nature of the
hydrothermal system.
Co-O EXTENSIONAL DRILLING
The philosophy of exploring for additional extensional and new mineralisation by stepping outwards from current mine infrastructure
is continuing during the 2012-13 financial year.
Figure 6 shows the updated regional vein map around the Co-O Mine including the projection to Level 6 of the veins in the 2013
resource model and the northwestern edge of diatreme.
Figure 7 is a composite longitudinal projection of the Co-O Mine showing recent drillhole intercepts.
Figure 6: Co-O Mine area showing the Co-O veins and diatreme at Level 6 and regional vein targets.
medusa mining limited ReVieW OF OpeRaTiOnS
Figure 7: Co-O Mine composite longitudinal projection showing recent drill hole intercepts.
TAMBIS REGION
The Tambis project comprising the Bananghilig Gold Deposit (Fig. 2 & 10) is operated under a Mining Agreement with Philex Gold
Philippines Inc. over Mineral Production Sharing Agreement (“MPSA”) 344-2010-XIII, which covers 6,262 hectares.
The Executive Order on Mining (EO79) signed on 6 July 2012, by the President of the Philippines, will have no immediate impact on
the Bananghilig Project as the Company can continue to explore, conduct feasibility studies and planning.
BANANghiLig gOLD DEPOSiT
The announcement of 12 September 2011 summarises the Tambis regional geological setting, local geological setting, deposit
description and mineralisation. Additional information is contained in the September 2011 quarterly report dated 24 October 2011,
drilling updates on 17 January 2012, 08 August 2012, 21 November 2012 and 02 April 2013, operations update on 08 July 2013
and resource estimation updates on 29 January 2013 and 08 August 2013.
Resource Drilling
Since 30 June 2012, a total of 8,173.5 metres of core drilling in 42 holes have been completed, including a 14 hole infill drilling
programme (Fig. 8), within the Bananghilig resource area, which were all used in the recent resource estimation update.
Indicated & Inferred Mineral Resource Estimation
On 29 January 2013, the Company announced the results of resource estimation undertaken by Cube Consulting Pty Ltd of Perth,
Western Australia. The Indicated Mineral Resource estimate for the Bananghilig Deposit, comprises 608,000 ounces of gold at 1.59
g/t gold in 11,900,000 tonnes and an Inferred Mineral Resource of 472,000 ounces of gold at 1.62 g/t gold in 9,000,000 tonnes
using a cut-off grade of 0.8 g/t gold. The 29 January 2013 announcement comprises a summary of the parameters utilised in the
resource estimation.
024
2013 annual report On 08 August 2013, a mineral resource update was announced utilising all drilling data up to 30 June 2013. Using a 0.8 g/t gold
lower cut-off applied to the resource estimate, a total combined Indicated and Inferred Resources of 24,520,000 tonnes was
reported, containing 1,136,000 ounces at a grade of 1.44 g/t gold (compared to 1,080,000 ounces in 20,900,000 tonnes at 1.60
g/t gold as reported on 29th January 2013). The Indicated Resource ounces have increased by 26% to 766,000 ounces at 1.48
g/t gold (from 608,000 ounces at 1.59 g/t gold).
Resource modelling
The 08 August 2013 announcement comprises a summary of the parameters utilised in the resource estimation, viz:
Cube Consulting Pty Ltd of Perth, Western Australia, was contracted to undertake the resource estimate. The Bananghilig Mineral
Resource estimate is based on a number of factors and assumptions, some of which are listed below:
• all available drilling data as at 30 June 2013 was used for the Mineral Resource estimate;
• wire-frames were generated on plan and cross sectional interpretations based on available geology and assay data available. A
lower cut off of approximately 0.3 g/t Au was used to define a single mineralised domain;
• all wireframes were corrected for artisanal miners’ depletion;
• upper cut of 40 g/t was applied to the 2 metre composites prior to grade estimation;
• the bulk densities used range from 1.8 to 2.76 t/mᶟ depending on the modelled lithology. A total of 4,000 bulk density
measurements have been completed;
• the Resource has been estimated using Ordinary Block Kriging and Uniform Conditioning (UC). UC is a mathematical method that
allows the discrimination of ore and waste at an assumed selective mining unit size within an estimated panel of significantly larger
size. In theory, this provides a more correct prediction of estimated resource grade and tonnes above a cut off than an Ordinary
block Kriging alone. The method draws information from the composite data variogram model and Krige’s Relationship; and
• the application of the (UC) technique at Bananghilig is based on the premise that mining would be by open pit extraction. A
Selective Mining Unit (“SMU”) of 5 metres by 5 metres by 2 metres was evaluated within Ordinary Kriged panels Y = 25 metres;
X = 25 metres and Z = 5 metres for the purposes of reporting recoverable resources.
The Bananghilig Mineral Resources have been reported in accordance with The 2004 Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code).
Bananghilig Scoping Study
On 09 April 2013, the Company published the results of a first pass Scoping Study1 of the Bananghilig Gold Deposit. The Scoping
Study was conducted to ± 25% accuracy and the results considered positive, warranting the commencement of a Feasibility
Study to be undertaken by external consultants. The Scoping Study parameters and discussion on other parameters, including
metallurgy, mining and operations is included in the 09 April 2013 and 12 April 2013 announcements.
1 The Scoping Study referred to in this report is based on low-level technical and economic assessments of Indicated and Inferred Mineral Resources, and is insufficient to support estimation of
Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.
B2 PROSPECT
B2 Discovery Area
On 02 April 2013, the Company announced the discovery of a new zone of gold mineralisation (now known as the B2 area) proximal
to the current Bananghilig gold deposit (Fig. 8). The results of recent drilling are believed by the Company to have implications for
the development of the current Bananghilig resource. There is potential for increasing the resource base in both tonnes and gold
grades, such that the currently ongoing Bananghilig feasibility study will be reviewed and possibly re-scoped.
A total of 4,126 metres of core drilling in 12 holes have now been completed in the B2 area.
medusa mining limited ReVieW OF OpeRaTiOnS
Figure 8: Bananghilig area geology showing the position of the new B2 mineralisation discovery, relative to the Bananghilig resource, beneath the limestone cover.
026
2013 annual report B2 Drilling Results
Drilling at B2 is continuing with two diamond rigs drilling on a 150 metre x 150 metre grid pattern. Results of the initial drilling at
B2 were announced on 02 April 2012, 08 July 2013 and the March 2013 Quarterly Report. A summary of significant results from
drilling at the B2 area, including those not previously announced, are included in Table Iv below.
Table IV: Bananghilig - B2 Discovery Area drill hole results ≥1 g/t gold.
Results not previously reported are marked †
Hole
Number
East4
North4
Depth
(Metres)
TDH279
613838
944891
647.10
Dip
(O)
130
Azimuth
(O)
-60
TDH280
613555
944594
317.60
130
-60
TDH283
613668
944503
308.60
130
-60
TDH284
613605
945083
309.30
130
-60
TDH285
613727
944982
308.10
130
-60
TDH286
613939
944798
323.60
130
-60
TDH303
613502
945189
321.60
-60
130
From
(Metres)
Width2
(Metres)
Gold Grade1,3
(g/t Gold)
125.40
137.85
143.05
198.30
288.55
325.40
422.70
466.10
526.15
554.10
572.85
599.70
617.60
247.40
251.40
252.70
253.45
264.10
147.90
229.10
281.10
117.65
129.70
138.75
173.45
178.45
195.50
289.50
117.65
150.80
175.10
206.10
228.60
260.30
298.20
273.80
306.25
318.70
155.10
190.85
207.30
229.90
309.00
6.05
1.20
4.00
7.70
5.60
1.70
12.40
6.90
6.50
6.00
1.20
1.00
8.00
12.70
1.30
0.75
1.00
8.85
7.00
5.00
2.00
6.45
5.00
31.60
1.00
13.05
43.70
13.30
6.45
10.85
12.00
2.00
4.00
1.30
6.40
8.10
5.40
2.00
21.55
7.45
13.90
10.70
2.10
1.03
5.15
1.47
1.15
2.11
10.89
7.69
1.35
1.03†
2.03
4.22
5.85
3.16
7.00
25.84
15.27
23.40
1.54
1.06
1.17
7.19
2.11†
1.03
7.33
9.64
2.24
2.48
2.20
2.11
1.87
5.47
2.80
2.74
5.49
1.18
1.73
20.64
3.51
0.94
1.51
5.15
19.28
3.28†
Notes:
1. Composited intercepts’ ‘weighted average grades’ calculated by using the following parameters:
(i) no upper gold grade cut-off applied,
(ii) lower cut-off grade of 0.5 g/t gold,
(iii) ≥ 5 metres down hole intercept width at ≥ 1.0 g/t gold, or
(iv) ≤ 5 metres down hole intercept width at ≥ 5 gram metres, and
(v) maximum of 3 metres of downhole internal dilution at ≤ 0.5 g/t gold;
2. Intersection widths are downhole drill widths not true widths;
3. Assays are by Intertek McPhar Mineral Services Inc. in Manila; and
4. Grid coordinates based on the Philippine Reference System 92.
Geotechnical and Sterilisation Drilling Programmes
A geotechnical investigation drilling programme commenced in July 2013 to investigate sites suitable for infrastructure associated
with the development of the Bananghilig Deposit, including plant site, waste, tailings and process water storage facilities. A
sterilisation drilling programme is also being conducted. As at 30 June 2013, twelve sterilisation drill holes have been completed
for 3,409 metres and to date, no significant results have been received for these areas.
Both programmes are anticipated to be completed during the September 2013 quarter.
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TAMBIS REGIONAL
KAMARANgAN - SuPON
Four diamond drill holes have been completed for a total of 1,234.60 metres. Drilling to date has not encountered
significant mineralisation
The northern segment of the NNW-trending Barobo Fault structural corridor abuts both the Supon and Kamarangan copper-gold
prospects on its eastern side, and bound the southwest portion of the Bananghilig hydrothermal system. A NNW-trending zone
encompassing an area 1 kilometre long and 500 metres wide, located at the eastern edge of the Kamarangan prospect has been
identified for further work.
CANugAS
A scout drilling program was completed in the Canugas area, with fourteen diamond drill holes totalling 7,482.70 meters. Drilling at
the Tagabaca target and Canugas milled breccia target failed to encounter significant mineralization.
LINGIG COPPER PROSPECT
The Lingig copper discovery is located within the Das-Agan Project consisting of Mineral Production Sharing Agreement (“MPSA”)
343-2010-XIII and situated in Surigao del Sur province in east Mindanao (Figs. 2 & 10). The MPSA covers approximately 80 km²
(8,019 hectares) in one block.
gEOLOgiCAL SETTiNg
Drilling has intersected copper mineralisation in two settings. Additional information and maps are contained in the announcements
dated 9 October 2009 and 7 May 2010.
There are two known copper mineralization in Lingig, namely Zone 1 (Au-bearing porphyry related Cu), and Zones 2 & 3
(porphyry-related Cu with related magmatic-hydrothermal breccias-hosted Cu)
Basalt-hosted mineralisation
The porphyry-related Cu mineralization at Zone 1 is gold-bearing, and is hosted mainly in basalt. Mineralization consists predominantly
of chalcopyrite-pyrite fracture fills and disseminations and minor occurrences of thin (≤1 cm) ±quartz±calcite±sulphide veins and
veinlets. It is interpreted that the bottom of this mineralisation may be truncated by an underlying thrust fault and potentially the rest of
the mineralised zone is yet to be located. The diorite porphyry and the barren hornblende quartz diorite beneath the thrust fault are all
propylitic. One of the hisotrical drill holes (LIN002) is well mineralized, starting at 2 metres below surface and containing 267.3 metres
at 0.52% Cu and 0.06 g/t Au to the intersection with the thrust zone.
Breccia-hosted mineralisation
Magmatic-hydrothermal breccia pipes have been recognized at Zones 2 and 3. They consists of angular to subrounded, pebble to
boulder-sized basalt clasts in a quartz diorite plutonic matrix. The basalt clasts sometimes have quartz-sulphide veinlets and are cut
again by later veinlets. The mineralization consists of pyrite±chalcopyrite fracture fills, quartz-sulphide veinlets and/or breccia fills up
to 2 cm wide. Copper grades are generally 0.1 to 0.3% Cu with negligible Au. Both the host quartz diorite and the breccias pipes
are variably altered. The breccia body is tabular and open to the south with copper mineralisation in intensely altered hydrothermal
breccias with the most recent intersections of 154.7 metres at 0.19 % copper in hole LIN 37 and 86.0 metres of 0.12% copper in
hole LIN 40.
A geophysics Induced Polarisation, Resistivity and ground magnetics surveys have been completed. Data processing and
interpretations have recently been completed by an independent geophysical consultant. Two IP high chargeability zones have
been identified, with the smaller anomalies coincident with the known mineralisation described above. The larger of the two IP
anomalies will be the focus for additional drilling with the aim of delineating additional mineralisation.
Three Mineralized Zones (Zones 1, 2 & 3) identified to date are located along a NE-trending structure associated with (i) a moderate
to high IP chargeability anomaly and (ii) the eastern boundary of the NE-trending high resistivity anomaly centred on the quartz
diorite stock (Angeles, 2013).
028
2013 annual report There is a coincident Cu-Mo soil anomaly, 1 x >1km in size, at the mineralized Zones 1 and 2 and still open to the north. This
strengthens the hope that there is still higher-grade porphyry-related copper mineralization to the north (Angeles, 2013).
Test pitting, soil sampling and re-mapping are in progress, to complement the recent geochemistry and geophysics surveys and
will be utilised to assist in target definition for future drilling programmes.
SAUGON
FiRST hiT vEiN
Background
The Saugon prospect is situated approximately 10 kilometres south of the Co-O Gold Mine and 28 kilometres by road from the Co-O
Plant. Work commenced in early 2003 on the First Hit vein which has been followed intermittently at the surface over 600 metres and
which has been explored underground via a 40 metre deep winze, level development and drilling of 31 diamond drill holes.
Figure 9: Saugon regional geology map
medusa mining limited ReVieW OF OpeRaTiOnS
Regional Setting
Subsequent to the drilling in 2004, an aeromagnetic survey was completed which showed the First Hit vein (“FHv”) set is on the
northern edge of a large, northeast-trending demagnetised zone over 2,000 metres wide and approximately 8,000 metres long,
part of which is shown on Figure 9. A number of features within this zone were interpreted to be suggestive of intrusive bodies,
possibly porphyry copper–related. Field work has established that outcropping areas of the northern side of this zone show intense
silica–barite and clay-pyrite alteration, particularly in the Paradise area.
The eastern sections of the demagnetised zone are covered by younger sediments comprising grits and mudstones capped by
white, semi-massive to massive limestone. These sediments appear to be remnants of the same younger sequence that occurs
elsewhere to the north in the Company’s tenements.
Surface indications of FHv extensions and alteration are evident to extend towards the SW, with a potential strike length of 1.5km.
This area is coincident with a broad to moderate chargeability anomaly extending from surface to depth.
Mineral Resources
Cube Consulting Pty Ltd was contracted to complete a preliminary resource estimate for the FHv (refer to the March 2013 quarterly
report). A cut-off of 2 g/t gold was used resulting in an Indicated Resource of 47,000 tonnes at 6.99 g/t gold containing 10,700
ounces and an Inferred Resource of 34,000 tonnes at 4.55 g/t gold containing 5,000 ounces.
ANOLING
Following a review of all exploration and drilling results, the Mines Operating Agreement with Alcorn Gold Resources Inc. covering
MPSA application 039-XIII was terminated due to unfavourable economics for the project, and the Anoling tenements handed back
to the vendors.
APICAL (MEDuSA EARNiNg 70%)
A Joint venture Agreement (“JvA”) with MRL Gold Phils, Inc. (“MRL”) and an underlying claim owner covers MPSA application
number 0028-XIII situated in the provinces of Agusan del Sur and Surigao del Sur in east Mindanao to the north of the Co-O Mine
and Plant. The MPSA comprises approximately 20.84 km² (2084 hectares) in the Tambis area. MRL is the Philippine operating
company of Mindoro Resources Ltd, a public company listed on the TSX venture Exchange in Canada and the ASX in Australia.
The tenement is being progressed towards granting.
CORPLEX
The Company through Philsaga has Memorandum of Agreement (“MOA”) with Corplex Resources Incorporated (“CRI”) on four
tenement applications, being an application for Mineral Production Sharing Agreement (“APSA”) 000054-XIII covering approximately
2118 hectares, APSA 000056-XIII covering 162 hectares and APSA 000077-XIII covering approximately 810 hectares (including
the Usa copper prospect described above), and Exploration Permit (“EPA”) application 0000186-XIII covering 7,111 hectares.
The tenements are being progressed towards granting.
SURSUR PROJECT
A Mines Operating Agreement (“MOA”) was signed between Philsaga Mining Corporation (“Philsaga”) and Sursur Mining Corporation
(“Sursur”) for Exploration Permit applications XIII - 00176, 000180 and 000181, with a total combined area of 15,825 hectares.
Sursur will receive a 3% gross royalty and Philsaga is responsible for all tenement processing and expenditures.
The tenements are being progressed towards granting.
USA PORPHYRY COPPER- GOLD TARGET
The Usa prospect located within Mineral Production Sharing Agreement application (“APSA”) XIII-00077. The Company has a
Memorandum of Agreement with Corplex Resources Inc (“Corplex”). Further details regarding the agreement are contained in the
2011 Annual Report.
There are indications that the prospect extends eastwards into APSA XIII-00098 that is held by Mindanao Philcord Mining
Corporation, which will receive a 1% Net Profits Interest from any production.
Detailed information regarding the prospect is contained in the 2011 Annual Report.
The tenement application is still in progress.
030
2013 annual report TENEMENTS
Figure 10 shows the locations of the Company’s granted tenements. During the year, the tenement applications in process have
been stalled due to the introduction of EO 79, and the review currently being undertaken by the government to determine the new
legislation on mining taxes and royalties for submission to Congress.
Figure 10: Map showing granted tenements and tenement applications.
DRILL HOLE SAMPLING AND ASSAYING PROCEDURES
Co-O
Drilling is carried out predominantly by SBF using wireline diamond coring techniques, with the core being mainly HQ triple-tube
(HQ3) diameter (OD 61 mm). If difficult drilling conditions are encountered, then the drill bit is changed to NQ3 (core OD 45 mm) and
the hole continued until the planned depth or bad ground conditions prevent further drilling, whichever occurs first.
The selected sample intervals are halved by diamond saw and half the core is bagged, numbered and sent to the Company
laboratory. In a small number of cases to confirm the geological logging, the selected interval was re-split and ¼ core re-submitted
for assay.
The Company has very recently acquired two portable underground diamond drilling rigs capable of obtaining TT46 (OD 36.5 mm)
sized drill core to depths up to 90 metres. Due to the smaller diameter of the drill core, whole core samples from these holes will
be submitted to the Company laboratory for analysis.
medusa mining limited ReVieW OF OpeRaTiOnS
Initial sample preparation and assaying is undertaken at the Company’s on–site laboratory. Samples are dried at 105ºC for 6 to 16
hours, crushed to less than 1.25 cm by jaw crusher, re-crushed to less than 50 mm using a secondary crusher followed by ring
grinding of 1kilogram of sample to nominal particle size of less than 200 mesh. Barren rock wash is used after every five samples in
the preparation equipment. The samples are assayed by fire assay with Atomic Absorption Spectrometer (AAS) finish on a 30 gram
sample. All assays over 5 g/t gold are re-assayed using gravimetric fire assay techniques on a 30 gram sample. Duplicate samples
are inserted every 10 samples and standard samples are included in every sample batch.
Check assaying of samples used in the yearly resource estimates is undertaken by Intertek McPhar Mineral Services (“Intertek”), a
NATA and ISO 9001/2000 accredited laboratory in Manila. The pulps are airfreighted to intertek who fire assay 30 grams of samples
using AAS finish and a selected number of samples are checked using gravimetric fire assay techniques. Duplicate samples and
standards are included in each batch of check samples. When reporting results, where available, the assays of Intertek as an
independent laboratory have been given priority over the Company laboratory’s results.
BANANGHILIG
Drilling Procedures
Drilling, sampling and analytical methodologies are of internationally acceptable standards. Drilling and analyses are carried
out by independent contractors, SBF Philippines Drilling Resources Corp. (“SBF”) and Intertek McPhar Mineral Services Inc.
(“Intertek”) respectively.
Drilling is carried out by SBF using wireline diamond coring techniques, with the core being predominantly HQ triple-tube (HQ3)
diameter (OD 61 mm). The holes are initially collared using PQ drill bits (OD 123 mm) to recover PQ3 core (OD 83 mm) until the drill
bit encounters competent ground, then the coring bit is reduced to HQ3 for the remainder of the drill hole. If difficult conditions are
encountered, then the drill bit is changed to NQ3 (core OD 45 mm) and the hole continued until the planned depth or bad ground
conditions prevent further drilling, whichever occurs first. Core recovery is generally better than 95% and is considered to be good.
Drill Core Sampling
Drill core is recovered from the inner tube and handled carefully to preserve the integrity of the drill core. Structural measurements
are taken including Rock Quality Determinations (“RQD”) and Fracture Densities. The core is then placed in plastic core trays,
aligned, photographed and marked up for sampling.
The drill core is then cut in half by diamond core saw and sampled at one metre intervals or at lithological boundaries. The samples
are placed in individually labelled plastic sample bags, a sample number ticket included, and then sealed for despatch to Intertek’s
sample preparation laboratory in Surigao City. The integrity of the core samples are supervised at all times by the geologist until
despatch to the laboratory where they are accompanied by Company personnel until receipt by Intertek.
One Certified Reference Material (“CRM”), one Blank and if possible, one Duplicate is included within each successive group of
twenty samples that are submitted to the laboratory. QA/QC monitoring is maintained for the drilling program and the results.
Analytical Procedures
Sample preparation is undertaken by Intertek at their Surigao City laboratory, where each sample is registered, dried at 105ºC for
6 to 8 hours and crushed to 95% passing 2 mm by jaw crusher, before a 1kg split is taken for fine pulverising, using a riffle splitter
or rotary sample divider. Pulverised sample is nominally pulverised to 95% passing 75μm (200 mesh).
Quality control procedures include a 1 in 15 re-split after crushing for partial preparation and after pulverising for total preparation.
These re-splits are also analysed and included in the analysis report. Sizing tests are carried out on 1 in 20 assay pulps at 75μm
(200 mesh) to monitor the pulverising stage. Four 250 gram splits are obtained, one for sample analyses and the remaining three
for storage for future reference.
Standard laboratory procedure is to clean the crusher and pulveriser after each sample treatment with barren material and/or bowl
wash, to minimise carry-over contamination.
Pulverised samples are analysed by classical fire assay techniques on a 50 gram charge with Atomic Absorption Spectrometer
(“AAS”) finish. All assays over 5 g/t gold and other selected samples are re-assayed using gravimetric fire assay techniques on a
50 gram sample.
032
2013 annual report SUSTAINABILITY
The Company believes its business should be founded on four key components which encompass our commitment to all
stakeholders. Continual improvements are being made to organisational coherence, internal procedures, checks and balances,
performance and efficiencies. The four key components are:
• Health and Safety;
• Environmental Management and Monitoring;
• Workforce; and
• Community Participation, Programmes and Benefits
HEALTH AND SAFETY
During the year the following practices were undertaken:
• a comprehensive Safety Review was undertaken of the Company’s operations by an external consultant (this is the third audit
completed and is done annually);
• continued comprehensive health checks for all employees;
• expanded training activities for all underground personnel;
• first aid training for all mine employees for use at work and in the home;
• mine rescue and fire fighting teams and equipment have been upgraded with the teams participating in annual national
competitions; and
• regular safety meetings that emphasise workforce participation in ensuring safety and hazard minimisation.
The 12 month Lost Time Accident Frequency Rate to 30 June 2012 was 1.04, and to 30 June 2013 was 0.10, which is better than
industry standards for manually intensive, narrow vein, underground mines and shows the continuing progress achieved in Safety
during the year.
The Company hospital has been operating as a fully staffed and functional hospital during the year with services available for
Company personnel and their families, and other local residents.
Photo 6: Rope Rescue Exercise
medusa mining limited ReVieW OF OpeRaTiOnS
Photo 7: vegetation
ENVIRONMENTAL MANAGEMENT AND MONITORING
The Company is committed to its environmental performance and to complying with all applicable statutory and regulatory
environmental obligations.
Code of Conduct
Environmental responsibility forms an important part of the Company’s Code of Conduct. The Code of Conduct outlines the
Company’s commitment to appropriate and ethical corporate practices and describes how the Company expects its Directors and
employees to behave in the conduct of the Company’s business activities.
In accordance with the Code of Conduct, the Company:
• is fully aware of its obligations to comply with relevant statutory and regulatory requirements with respect to the environment; and
• monitors appropriately its environmental performance and is committed to ensuring proper rehabilitation is carried out on the
sites where the Company has been conducting its exploration or operational activities.
Safety, Health and Environment Committee
On 27 August 2010, as part of its commitment to environmental performance, the Board approved the establishment of a Safety,
Health and Environment Committee. The role and responsibility of the Safety, Health and Environment Committee is set out in a
formal charter adopted by the Board, which is summarised in the Corporate Governance Statement of this Annual Report.
The charter reflects the Company’s commitment to achieving continuous improvement in targeting high environmental performance
and best practice.
Co-O Gold Project Environmental Conditions
The Company’s flagship Co-O Gold Project has established processing facilities which are subject to regular inspections by the
various authorities and which have achieved a high level of recognition for adherence to statutory requirements.
The Company’s mining operations are underground resulting in very small surface footprints for each operation. Rehabilitation
of any disturbed areas around new operations is part of the Company’s normal operating procedure. Water samples are taken
on a monthly basis to monitor water quality in and around the Company’s facilities and during the year over 1,600 samples were
collected, and analysed with the results submitted to the relevant authorities.
The Company has also adopted the Mining Forest, Green Philippines and Tree for Life Programmes as prescribed by the Philippines
Government. The Company has its own nursery which produces local tree species (mahogany and madre de caco) for reforestation
034
2013 annual report projects as well as the coconut and rubber tree seedlings required for the establishment of the rubber and coconut plantations. At
the end of the financial year, the nursery held over 50,000 seedlings.
The Co-O Gold Project operates under the terms of an Environmental Compliance Certificate (“ECC”) which was renewed by the
Philippines Environmental Management Bureau (“EMB”) on 15 July 2009. The conditions of the ECC require the Company to:
• institute a number of commitments, mitigating measures and monitoring requirements to minimise any adverse impact of the
project to the environment throughout its implementation, including:
- observing good vegetative practices, proper land use and sound soil management;
- conducting an effective information, education and communication programme to inform and educate all stakeholders,
especially local residents, on the project’s mitigating measures;
- rehabilitating roads with minimal land and ecological disturbance; and
- establishing a reforestation and carbon sink programme to mitigate greenhouse gas emissions of the project;
• ensure that its mining and milling processing operations conform with the provisions of R.A. No, 6969 (Toxic Substances and
Hazardous and Nuclear Wastes Control Act of 1990), R.A. No. 9003 (Ecological Solid Waste Management Act of 2000), R.A.
No. 9275 (Philippine Clean Water Act of 2004), and R.A. No. 8749 (Philippine Clean Air Act of 1999);
• comply with the environmental management and protection requirements of the Philippine Mining Act of 1995 (RA. No. 7942)
and its Revised Implementing Rules and Regulations (D A, O No, 96-40, as amended), as well as the pertinent provisions of
the Memorandum of Agreement between the EMB and Mines and Geosciences Bureau (“MGB”) executed on 16 April 1998,
which include:
- submitting an Environmental Protection and Enhancement Programme with the Final Mine Rehabilitation and/or Decommissioning
Plan integrated thereto, to the MGB, for approval;
- setting up a Contingent Liability and Rehabilitation Fund and Environmental Trust Fund;
- maintaining the existing Mine Environmental Protection and Enhancement Office to competently handle the environmental
aspects of the project;
- establishing a Mine Rehabilitation Fund Committee and Multipartite Monitoring Team;
- submitting a Social Development and Management Programme; and
- designating a Community Relations Officer;
• ensure that the Company’s contractors and subcontractors properly comply with the relevant conditions of the ECC; and
• protect the headwaters and natural springs/wells within the project site that are being utilised as sources of potable water by
the community.
Photo 8: Sampling Water
Photo 9: Revegetation on Slopes
medusa mining limited ReVieW OF OpeRaTiOnS
The Co-O Gold Project remains in compliance with all material environmental laws and regulations. The operations are subject to
regular inspections and monitoring by the MGB to ensure compliance. No material failures to comply with the above requirements,
or material issues, were identified by the inspections that occurred during the financial year.
Climate Change
It is a condition of the ECC for operation of the Co-O Mine that it establishes a reforestation and carbon sink programme to mitigate
greenhouse gas emissions of the project. The Company has complied with this condition, and all other conditions imposed on it
under the ECC.
The Company uses grid hydro power at both the Co-O Mine and Mill as its primary power source ensuring carbon dioxide
emissions are minimised.
Photo 9: Revegetation (Hills refer to number of trees)
WORKFORCE
The Company is an equal opportunity employer that aims to provide a safe and healthy, hazard free work environment. As at 30
June 2013 the Company employed 4,800 people in the Philippines.
The Company enhances employee skills and productivity through the attendance at training programmes and provision of on-
site training by consultants. Departmental organisational structures ensure that career advancement pathways are available for
conscientious and productive employees.
COMMUNITY PARTICIPATION, PROGRAMMES AND BENEFITS
COMMITMENT
Philsaga since 2001, in conjunction with the Mindanao Philsaga Foundation Inc., (“MPFI”) has established an enviable record in the
local communities in which it operates. This record is acknowledged by municipal and regional governments, and at a national level.
The vision of MPFI is:
“ To see the Filipino people improve their quality of life by addressing the unmet basic needs of the people at the provincial and
village levels with special emphasis on the youth and the environment, by providing scholarship to the poor and deserving
students, by assisting them in their livelihood and for uplifting their social and economic needs”.
It is the Company’s objective to build on this record and strengthen reciprocal relationships between the Company, Philsaga, MPFI
and other organisations and the communities in which it operates.
036
2013 annual report EDuCATiON
“ Through all our education initiatives, it is pleasing to report that over 5,500
students are enrolled at the schools supported by the Company.”
Scholarships
The Company support for two scholarship programmes, which commenced in 2003, has continued strongly during the year:
• Full education scholarships currently support 76 students;
• Educational assistance currently supports 41 students; and
• Twenty-seven students graduated with college degrees through the scholarship programme.
Company schools and Adopt-a- School programme
During the year, the Company through MPFI managed the Philsaga High School at the mill, supported the Upper Co-O Elementary
School at the Co-O Mine and continued its “adopt–a-school” programme in which 21 schools participated. Corporate sponsorship
also assisted in achieving its aims.
The following were achieved:
• Supported 39 teacher’s salaries and support for training seminars for teachers to upgrade their teaching skills, as well as
provision of instructional materials;
• Since commencement of the Adopt-a-School programme 24 classrooms have been constructed. During the year, two class
rooms have been added to the Philsaga High School and six class rooms at the Upper Co-O Elementary School;
• In conjunction with its partner agencies, provided school supplies for students; and
• Provided two daily return bus services for high school students from remote areas to attend high school.
LivELihOOD PROJECTS
Rice production financing
This project has continued through the year aimed at progressively developing debt free farming communities through the provision
of financing arrangements by MPFI to qualified farmers. The programme is in its sixth cropping season and is extending assistance
to another 100 beneficiaries covering 100 hectares of rice farms.
Organic fertiliser production
The Company through MPFI has continued its organic fertiliser production programme and demonstration cropping plots. The aim
is to address the issue of increasing acidification of rice fields and other crop growing areas caused by the continued use of artificial
fertilisers and to provide fertiliser to the rubber and fruit tree plantations.
Rubber tree plantation re-afforestation
The Company provides interest free loans in the form of rubber tree seedlings and other inputs to indigenous landowners for the
establishment of rubber plantations which provide income for 50-60 years from around year seven. This year approximately 70
hectares were planted and so far approximately 200 hectares have been planted comprising over 100,000 seedlings which were
generated in the Company’s nurseries.
Water Monitoring
Regular water testing and in-house testing of cyanide is conducted in conjunction with 24 hour monitoring of Tailings Dams. This
year, two water treatment plants were installed, one at the mine site and one at the mill site.
medusa mining limited ReVieW OF OpeRaTiOnS
Photo 10: Rubber tree seedlings
COMMuNiTY DEvELOPMENT AND ASSiSTANCE PROgRAMMES
The Company through MPFI continued to provide assistance with a number for community-based projects.
Teacher training
The Company continued to support teacher salaries for volunteer teachers as well as teacher training to improve teacher knowledge
and skills in conjunction with the Department of Education for the fifth year.
Day care centres
Support was provided for 12 day care centres which cater for children below six years old. MPFI provides teacher and staff salaries,
school supplies and instructional materials.
Community health
The Company provides general health and dental services to its employees and dependants and undertakes minor surgical and
dental missions to nearby villages within its sphere of operation.
In addition to the 16 bed hospital at the Co-O Mine site, the Company provides a clinic at the mill site for employees and local residents.
Organic fruit tree programmes
The adoption of four sitios (or small villages) aims to provide a sustainable livelihood by planting of fruit trees suitable in the area and
by encouraging the use of organic fertilizer over that of inorganic. The programs have the technical support of the Department of
Agriculture and the Department of Trade and Industry conducts various financial seminars.
During the year the Company’s nursery produced over 10,000 fruit trees for distribution.
038
2013 annual report Institutional partnering
MPFI frequently partners various local government departments such as Department of Social Work and Development, Department
of Trade and Industry, Department of Agriculture and Department of Education to achieve common goals.
In addition MPFI partners Local Government Units and Indigenous Peoples’ groups in various projects.
Non-government organisation partnering
MPFI is partnering three non-government organisations involved in community assistance
• A home for abandoned or orphaned children of local indigenous people;
• An orphanage for 26 boys aged 6 to 17 years where support is provided for the boys to develop small business skills; and
• Care for the Elderly Foundation Inc. which provides comfort for 38 residents and 5 staff.
These Foundations care for the abandoned or sick senior members of the community, orphaned or neglected children, children of
indigenous people who have been deserted by their families and a group of talented and skilled handicapped associates.
EMPLOYMENT, LOCAL SuPPLiERS & PAYMENT OF LOCAL TAXES & WAgES
The Company is one of the largest tax payers in the district and the province of Agusan del Sur and also pays a 1% gross royalty
on gold production to indigenous groups.
The Company has a strong policy of “buy and manufacture locally” whenever possible for the provision of goods and services to
the project to maximise the multiplier effect locally.
References
Angeles, C.A., 2013. Feb and Mar 2013 Progress Report for Philsaga Mining Corporation. Internal Reports.
Ruelo, H.B, 2013. Jun and Jul 2013 Progress Report for Philsaga Mining Corporation. Internal Reports.
medusa mining limited ReVieW OF OpeRaTiOnS
JORC COMPLIANCE - CONSENT OF COMPETENT PERSONS
MEDuSA MiNiNg LiMiTED
Information in this report relating to Exploration Results has been reviewed and is based on information compiled by Messrs
Geoffrey Davis and Gary Powell who are members of The Australian Institute of Geoscientists. Mr Davis is the Non-Executive
Chairman of Medusa Mining Limited and Mr Powell is a Non-Executive Director and both have sufficient experience which is
relevant to the style of mineralisation and type of deposits under consideration and to the activity which they are undertaking to
qualify as a “Competent Person” as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Messrs Davis and Powell consent to the inclusion in the report of the matters based on their
information in the form and context in which it appears.
CuBE CONSuLTiNg PTY LTD
Information in this report relating to Mineral Resources has been estimated and compiled by Mr Mark Zammit of Cube Consulting
Pty Ltd of Perth, Western Australia. Mr Zammit is a member of The Australasian Institute of Geoscientists and has sufficient
experience that 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, Mineral Resources and Ore Reserves”. Mr Zammit consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
CARRAS MiNiNg PTY LTD
Information in this report relating to Ore Reserves is based on information compiled by Dr Spero Carras of Carras Mining Pty Ltd.
Dr Carras is a Fellow of the Australasian Institute of Mining & Metallurgy and has 30 years of 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, Mineral Resources and Ore
Reserves”. Dr Carras consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears.
DiSCLAiMER
This report contains certain forward-looking statements. The words ‘anticipate’, ‘believe’, ‘expect’, ‘project’, ‘forecast’, ‘estimate’,
‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘target’, ‘plan’ and other similar expressions are intended to identify forward-looking
statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking
statements.
Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties
and other factors, many of which are beyond the control of Medusa, and its officers, employees, agents and associates, that may
cause actual results to differ materially from those expressed or implied in such statements.
Actual results, performance or outcomes may differ materially from any projections and forward-looking statements and the
assumptions on which those assumptions are based.
You should not place undue reliance on forward-looking statements and neither Medusa nor any of its directors, employees,
servants or agents assume any obligation to update such information.
040
2013 annual report CORpORaTe GOVeRnanCe STaTeMenT
Medusa Mining Limited (“Medusa” or “the Company”), as a listed entity, must comply with the Corporations Act 2001 (Cth)
(“Corporations Act”), the Australian Securities Exchange (“ASX”) Listing Rules (“ASX Listing Rules”) and other Australian and
international legal, regulatory and governance requirements.
The Board of Directors of the Company (“Board”) is committed to achieving and maintaining high standards of corporate
governance. The Board operates in accordance with a set of corporate governance principles that take into account relevant
practice recommendations, having regard to the particular circumstances of the Company’s business, operations and the interests
of its shareholders and other stakeholders. These include the ASX Corporate Governance Council’s (“ASXCGC”) second edition
of the Corporate Governance Principles and Recommendations with 2010 Amendments (“ASXCGC Recommendations”).
The Company’s practices are largely consistent with the ASXCGC Recommendations and, except as disclosed below, the Company
believes it complied with each of those recommendations throughout the financial year ended 30 June 2013 and to the date of this
report. Details of the Company’s compliance with the ASXCGC Recommendations are set out below, including details of specific
disclosures required by the ASXCGC Recommendations.
Further information on the Company’s corporate governance policies and practices is publicly available on the Corporate
Governance page of the Company’s website at www.medusamining.com.au.
1. BOARD OF DIRECTORS
ROLE AND RESPONSiBiLiTiES OF ThE BOARD
ASXCGC ReCommendAtionS 1.1, 1.3
The Board has adopted a Board Charter that sets out, amongst other things, its specific powers, duties and responsibilities,
as well as matters delegated to the Managing Director and those specifically reserved for the Board.
The Board’s primary role is to guide and monitor the business and affairs of the Group on behalf of the shareholders by whom
the Board is elected and to whom it is accountable.
In addition to matters required by law to be approved by the Board, the following key duties and responsibilities are reserved
for the Board under the Board Charter:
• oversight of the Company, including its control and accountability systems;
• appointing and removing the Chief Executive Officer or Managing Director (as applicable) in respect of his or her executive role;
• ratifying the appointment and removal of the Company Secretary;
• providing input into and final approval of the Company’s corporate strategy;
• providing input into and final approval of the annual operating and capital budget of the Company;
• approving and monitoring the progress of acquisitions and divestments (as applicable);
• monitoring compliance with the Company’s legal and regulatory obligations;
• reviewing and ratifying systems of risk management and internal compliance and controls, codes of conduct, continuous
disclosure, legal compliance and other significant corporate policies;
• monitoring senior management’s performance and implementation of strategy and policies, and ensuring appropriate
resources are available to senior management; and
• approving and monitoring financial and other reporting to the market, shareholders, employees and other stakeholders.
The Board has delegated responsibilities for the day to day operational, corporate, financial and administrative activities of the
Group to the Managing Director and the Chief Financial Officer.
A copy of the Company’s Board Charter is available on the Corporate Governance page of the Company’s website at
www.medusamining.com.au.
medusa mining limited CORpORaTe GOVeRnanCe STaTeMenT
Composition of the Board
The Board is comprised of five Non-Executive Directors and two Executive Directors (including the Managing Director).
ASXCGC ReCommendAtion 2.6
Details of the skills, experience and expertise relevant to the position of each Director who is in office at the date of this report,
and the period of office held by each Director, are included in the Directors’ Report on pages 53 to 55.
In assessing the composition of the Board, the Directors have regard to the following principles:
• the Chairperson should be an independent Non-Executive Director;
• the role of the Chairperson and the Managing Director should not be exercised by the same person;
• the Board should comprise of at least three Directors, increasing where additional expertise is considered desirable in
certain areas, when an outstanding candidate is identified, or to ensure a smooth transition between outgoing and incoming
Non-Executive Directors;
• the majority of the Board should comprise of independent Non-Executive Directors who satisfy the criteria for independence
(see below for the criteria for determining when a Director is considered to be independent); and
• the Board should comprise of Directors with an appropriate range of skills, qualifications, expertise and experience.
For the time being, the Board has determined that the number of Directors on the Board should be seven, comprised of
five Non-Executive Directors and two Executive Directors (including the Managing Director). The Board reviews its size and
composition annually to ensure that it has the appropriate balance of skills, qualifications, expertise and experience. When a
vacancy exists, or where the Board considers that it would benefit from the services of a new Director with particular skills,
qualifications, expertise and experience, the Board will endeavour to select and appoint appropriate candidates with the
relevant skills, qualifications, expertise and experience.
Section 3 of this Corporate Governance Statement provides further information on the mix of skills and diversity the Board
seeks to achieve in membership of the Board.
Directors appointed by the Board are subject to election by shareholders at the next annual general meeting following their
appointment. With the exception of the Managing Director, all Directors are subject to re-election in accordance with the
Company’s constitution.
ASXCGC ReCommendAtionS 2.1, 2.2, 2.6
The Board has determined (according to the criteria below) that Robert Weinberg, Andrew Teo, Ciceron Angeles and Gary
Powell are independent Non-Executive Directors. The Board is, therefore, comprised of a majority of independent Directors.
When determining whether a Director is independent, the Board considers all relevant facts and circumstances. The Board
considers that a Director will be independent if he or she is a person who:
• is not a substantial shareholder of the Company, or an officer of, or otherwise associated directly with, a substantial
shareholder of the Company;
• has not, within the last three years, been employed in an executive capacity by the Company;
• has not, within the last three years, been a principal of a material professional adviser or a material consultant to the
Company, or an employee materially associated with the service provided;
• is not a material supplier or customer of the Company, or an officer of or otherwise associated directly or indirectly with a
material supplier or customer;
• has no material contractual relationship with the Company, other than as a Director; and
• is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the best interest of the Company.
042
2013 annual report The Board does not consider the following Directors to be independent:
• Geoffrey Davis (the Non-Executive Chairperson of the Company) because he was employed in an executive capacity by
Medusa as its Managing Director up until 9 June 2011;
• Peter Hepburn Brown because he is currently employed in an executive capacity by Medusa as its Managing Director; and
• Raul villanueva because he is currently employed in an executive capacity by Medusa as an Executive Director.
As the Company’s Non-Executive Chairperson is not considered to be independent due to his previous role as Managing
Director, the Chairperson of the Company is not an independent Director as recommended by ASXCGC Recommendation
2.2. The Board nevertheless considers that Geoffrey Davis’ position as Non-Executive Chairperson is appropriate given his
demonstrated ability to provide leadership to the Board and his in-depth knowledge and understanding of the Company’s
operations in the Philippines and the industry in which the Company operates.
The test of whether a relationship or business is material is based on the nature of the relationship or business and the
circumstances and activities of the Director. Materiality is considered from the perspective of the Company, the persons or
organisations with which the Director has an affiliation and from the perspective of the Director. To assist in assessing the
materiality of a supplier or customer the Board has adopted the following materiality thresholds:
• a material customer is a customer of the Company that accounts for more than 5% of the Group’s consolidated gross
revenue; and
• a supplier is material if the Company accounts for more than 5% of the supplier’s consolidated gross revenue.
Chairperson and Managing Director
ASXCGC ReCommendAtion 2.3
The roles of Chairperson and Managing Director are separate roles and held by different individuals.
As mentioned above, the Company’s Non-Executive Chairperson had the previous role as the Company’s Managing Director
prior to the current Managing Director’s appointment and is not considered to be an independent Director. The Board
nevertheless considers that Geoffrey Davis’ position as Non-Executive Chairperson is appropriate given his demonstrated
ability to provide leadership to the Board and his in-depth knowledge and understanding of the Company’s operations in the
Philippines and the industry in which the Company operates.
The Chairperson is responsible for, amongst other things, leadership and effective performance of the Board and overseeing
the provision of information by management to the Board and ensuring the adequacy of that information. The Managing
Director is responsible for the day-to-day management of the Company.
The Chairperson’s and Managing Director’s responsibilities are set out in more detail in the Board Charter, which is available on
the Corporate Governance page of the Company’s website at www.medusamining.com.au.
Performance evaluation
ASXCGC ReCommendAtionS 1.2, 1.3, 2.5, 2.6
The Company’s Nomination Committee Charter requires the Nomination Committee to establish evaluation methods of rating
the performance of the Directors and to conduct assessments of Directors as to whether they have devoted sufficient time in
fulfilling their duties as Directors.
The Director evaluation methods established by the Company’s Nomination Committee included a review of the performance
of the Board and each of its Committees against the requirements of their respective charters and the individual performances
of the Non-Executive Chairperson and each Director.
During the reporting period, the Nomination Committee met on 2 occasions to evaluate the performance of the Board, its
Committees and individual Directors in accordance with the above evaluation process.
Details of the process for evaluating the performance of Senior Executives and Executive Directors, and the conduct of that
process in the reporting period, are included in the Remuneration Report, which forms part of the Directors’ Report on pages
58 to 66.
Details of Directors’ attendance at Board meetings are set out in the Directors’ Report on page 56.
medusa mining limited CORpORaTe GOVeRnanCe STaTeMenT
Board access to independent advice
ASXCGC ReCommendAtion 2.6
Each Director is entitled to seek such independent professional advice as they consider necessary in the furtherance of his or
her duties as a Director at the Company’s expense. Any Director seeking independent advice must first discuss the request
with the Chairperson, who will facilitate obtaining such advice.
2. BOARD COMMITTEES
Nomination Committee
ASXCGC ReCommendAtionS 2.4, 2.6
The Board has established a Nomination Committee, which operates under a Nomination Committee Charter approved by the
Board. A copy of the Nomination Committee Charter is available on the Corporate Governance page of the Company’s website
at www.medusamining.com.au, and includes details of, amongst other things, the role and responsibilities, composition and
structure of the Nomination Committee.
The role of the Nomination Committee Charter is to assist the Board in fulfilling its corporate governance obligations and
responsibilities by:
• monitoring the size and composition of the Board, including giving due consideration to the value of diversity of backgrounds
and experiences among the members of the Board;
• recommending individuals for nomination as members of the Board and Committees; and
• reviewing the performance of the Board to ensure that its members remain committed and are adequately discharging their
duties and responsibilities.
The Nomination Committee consists of Ciceron Angeles (as Chairperson of the Nomination Committee), Peter Hepburn-Brown
and Andrew Teo. The Nomination Committee is, therefore, comprised of a majority of independent Directors and is chaired
by an independent chair. 2 meetings of the Nomination Committee were held during the reporting period and details of the
members attendance at these meetings are included in the Directors Report on page 56.
Remuneration Committee
ASXCGC ReCommendAtionS 8.1, 8.2, 8.3, 8.4
The Board has established a Remuneration Committee, which operates under a Remuneration Committee Charter approved
by the Board. A copy of the Remuneration Committee Charter is available on the Corporate Governance page of the Company’s
website at www.medusamining.com.au, and includes details of, amongst other things, the role and responsibilities, composition
and structure of the Remuneration Committee.
The role of the Remuneration Committee is to assist the Board in fulfilling its corporate governance responsibilities with respect
to remuneration by reviewing and making appropriate recommendations on:
• the remuneration packages of Executive Directors, Non-Executive Directors and Senior Executives;
• employee incentive plans and benefit programs, including the appropriateness of performance hurdles and total
payments proposed;
• remuneration, recruitment, retention and termination policies and procedures;
• superannuation arrangements;
• employee equity based plans and schemes; and
• remuneration by gender.
The members of the Remuneration Committee who are all Non-Executive Directors, consists of Robert Weinberg (as
Chairperson of the Remuneration Committee), Andrew Teo and Geoffrey Davis. The Remuneration Committee is, therefore,
comprised of a majority of independent Directors and is chaired by an independent chair as recommended by ASXCGC
044
2013 annual report Recommendation 8.2. 2 meetings of the Remuneration Committee were held during the reporting period and details of the
members’ attendance at these meetings are included in the Directors’ Report on page 56.
The Board’s policy is that reviews of remuneration packages and policies applicable to Executive Directors, Non-Executive
Directors and Senior Executives be conducted on an annual basis by the Remuneration Committee.
Details on the Company’s remuneration policies, including how the structure of the remuneration of Non-Executive Directors
is distinguished from that of Executive Directors and Senior Executives, are included in the Remuneration Report, which forms
part of the Directors’ Report on page 60.
No schemes for the provision of retirement benefits, other than the provision of superannuation, are provided by the Company
for the benefit of Non-Executive Directors.
Consistent with section 206J of the Corporations Act, it is the Company’s policy to prohibit Directors and Senior Executives
from dealing in financial products issued or created over or in respect of the Company’s securities (eg hedges or derivatives),
which have the effect of reducing or eliminating the risk associated with any equity incentives that the Company may offer
from time to time. This is further detailed in the Directors’ Report on page 63. A copy of the Company’s Share Trading Policy is
available on the Corporate Governance page of the Company’s website at www.medusamining.com.au.
Audit Committee
ASXCGC ReCommendAtionS 4.1, 4.2, 4.3, 4.4
The Board has established an Audit Committee, which operates under an Audit Committee Charter approved by the
Board. A copy of the Audit Committee Charter is available on the Corporate Governance page of the Company’s website at
www.medusamining.com.au, and includes details of, amongst other things, the role and responsibilities, composition and
structure of the Audit Committee.
The role of the Audit Committee is to assist the Board to meet its oversight responsibilities in relation to the Company’s financial
reporting, compliance with legal and regulatory requirements, internal control framework and audit functions.
The Audit Committee’s role also includes assessing the performance of the external auditor and, as appropriate, making
recommendations to the Board on the appointment, re-appointment or replacement of the external auditor. Information on
the Company’s procedures for the selection and appointment of the external auditor and for the rotation of external audit
engagement directors or partners is set out in the Company’s External Auditor Selection and Rotation Policy, which is available
on the Corporate Governance page of the Company’s website at www.medusamining.com.au.
The members of the Audit Committee who are all Non-Executive Directors, consists of Andrew Teo (as Chairperson of the Audit
Committee), Robert Weinberg and Geoffrey Davis. The Audit Committee is, therefore, comprised of a majority of independent
Directors and is chaired by an independent chair as recommended by ASXCGC Recommendation 4.2.
Details of the qualifications of each member of the Audit Committee are included in the Directors’ Report on pages 53 to 55.
2 meetings of the Audit Committee were held during the reporting period and details of the members’ attendance at these
meetings are included in the Directors’ Report on page 56.
Safety, Health and Environmental Committee
The Board has established a Safety, Health and Environmental Committee, which operates under a Safety, Health and
Environmental Committee Charter approved by the Board.
A copy of the Safety, Health and Environmental Committee Charter is available on the Corporate Governance page of the
Company’s website at www.medusamining.com.au.
The role of the Safety, Health and Environmental Committee is to provide oversight of the Company’s policies and systems
relating to safety, health and the environment, as well as target high safety, health and environmental performance and best
practices. The Safety, Health and Environmental Committee is mandated by the Board to:
• facilitate company-wide communication of a high performance safety, health and environmental culture and an awareness
of seeking best practice and measurable goals;
medusa mining limited CORpORaTe GOVeRnanCe STaTeMenT
• ensure adequate resources are available to management to implement appropriate safety, health and environment systems;
• oversee management implementation of a safety, health and environment performance measurement system that can
determine safety, health and environment performance and whether there is continuous improvement;
• use safety, health and environment performance measures to monitor compliance with legal requirements and internal
targets, as well as to communicate Medusa’s safety, health and environmental commitment to shareholders, stakeholders
and employees;
• oversee management implementation of a safety, health and environment compliance audit programme, including evaluation
of risk exposures and control actions and also receive regular reports of the impact of proposed regulatory changes,
material claims and ways to achieve continuous improvement in the areas of safety, health and environment;
• receive quarterly safety, health and environment performance reports from management that include environmental, health
and safety issues of a material nature, details of accidents and incidents and statistics concerning relative performance and
continuous improvement; and
• provide feedback to management of safety, health and environment goals, policies, practices and systems.
The Safety, Health and Environmental Committee consist of Peter Hepburn-Brown (as Chairperson of the Safety, Health and
Environmental Committee), Geoffrey Davis, Robert Weinberg and Andrew Teo.
2 meetings of the Safety, Health and Environmental Committee were held during the reporting period and ddetails of the
members’ attendance at these meetings are included in the Directors’ Report on page 56.
3. PROMOTING ETHICAL AND RESPONSIBLE DECISION MAKING
Code of Conduct
ASXCGC ReCommendAtion 3.1
The Company has a formal Code of Conduct, which outlines the Company’s commitment to appropriate ethical and responsible
decision making and corporate practices.
The Code of Conduct describes how the Company expects its Directors and employees to behave in the conduct of the
Company’s business activities. The Code of Conduct covers matters including:
• general principles;
• compliance with laws and regulations;
• political contributions;
• unacceptable payments;
• giving or receiving gifts;
• protection of Company assets;
• proper accounting;
• dealing with auditors;
• unauthorised public statements;
• conflict of interest;
• the use of inside information;
• trading of the Company’s shares;
• alcohol and drug abuse;
• equal opportunity and employee discrimination,
• environmental responsibilities;
• occupational health and safety; and
• economy and efficiency.
046
2013 annual report All employees are required to comply with the Code of Conduct. Any breach of applicable laws, prevailing business ethics
or other aspects of the Code of Conduct will result in disciplinary action, which may include, depending on the severity of
the breach, termination of employment. Under the Code of Conduct, all employees are requested to report immediately any
circumstances which may involve deviation from the Code of Conduct to the Managing Director or Company Secretary of the
Company, who are responsible for investigating and reporting any unethical practices to the Board.
A copy of the Code of Conduct is available on the Corporate Governance page of the Company’s website at www.
medusamining.com.au.
Diversity Policy
ASXCGC ReCommendAtionS 3.2, 3.3, 3.4, 3.5
ASXCGC Recommendation 3.2 provides that a company should establish a policy concerning diversity and disclose that
policy or a summary of it. Such a policy is to include requirements for the board to establish measurable objectives for
achieving gender diversity for the board to assess annually in respect of both the objectives and progress in achieving them.
The Board is committed to engaging directors, management and employees with the highest qualifications, skills and experience
to develop a cohesive team that is best placed to achieve business success regardless of age, nationality, race, gender, religious
beliefs, sexuality, physical ability or cultural background. The Board has not adopted a formal diversity policy as recommended by
ASXCGC Recommendation 3.2 as it believes its current processes and policies for recruitment and appointment are appropriate
and adequately take into account diversity amongst a number of factors considered by the Company in ensuring its Directors and
workforce have an appropriate mix of qualifications, experience and expertise. The Board does, however, recognise that diversity
makes an important contribution to corporate success and the Company considers diversity as one of a number of factors when
seeking to appoint Directors, filing Senior Management roles and positions and reviewing recruitment, retention and management
practices, notwithstanding the absence of a formal diversity policy.
ASXCGC Recommendation 3.3 provides that a company should disclose in its annual report the measurable objectives for
achieving gender diversity set by the board in accordance with the diversity policy and its progress towards achieving them.
The Board has not at this stage adopted a formal diversity policy for the reasons set out above and, consequently, has not
set measurable objectives under such a policy. The Board considers that it is not necessary to set measurable objectives for
achieving gender diversity as recommended by the ASXCGC Recommendations. While the Company considers diversity
is important, the priority for the Company when recruiting is ensuring an appropriate mix of qualifications, experience and
expertise regardless of age, nationality, race, gender, religious beliefs, sexuality, physical ability or cultural background. The
Company does, however, generally make it clear when seeking to appoint additional Directors, senior management and
employees that women are encouraged to apply for roles and that the Company is an equal opportunity employer.
In accordance with ASXCGC Recommendation 3.4, the Medusa workforce gender profile is set out in the following table:
Role type
Technical
Supervisory / professional
Middle management
Senior Management
Total
Board members
Female
Female %
Male
Male%
17
29
-
4
50
-
53%
35%
-
22%
34%
-
15
54
14
14
97
7
47%
65%
100%
78%
66%
100%
medusa mining limited CORpORaTe GOVeRnanCe STaTeMenT
Share Trading Policy
Whilst the Board encourages its Directors and employees to own securities in the Company, it is also mindful of the responsibility
of the Company, its Directors and employees not to contravene the Corporation Act’s “insider trading” provisions.
The Board has approved a Share Trading Policy that applies to all Directors and all employees of the Company.
In summary, the policy prohibits Directors and employees from trading in the Company’s securities:
• when aware of non-public price sensitive information, until such time as that information has become generally available; and
• as part of active trading with a view to deriving profit related income.
The Share Trading Policy is subject to the overriding application of the insider trading laws.
As the Company is also listed on the Main Market of the London Stock Exchange, Directors and applicable employees are
subject to the rules of that Exchange. These rules currently provide that Directors and applicable employees do not deal in the
Company’s shares during a close period.
A Director or employee wishing to deal in the Company’s shares must first notify the Managing Director and confirm that the
employee is not aware of any non-public price sensitive information.
A copy of the Share Trading Policy is available on the Corporate Governance page of the Company’s website at
www.medusamining.com.au.
4. RISK MANAGEMENT
ASXCGC ReCommendAtionS 7.1, 7.2
The Board recognises that risk oversight is a core function of the Board that serves in protecting and enhancing
shareholder wealth.
The Board has approved a Risk Management Policy that outlines the Company’s policies for the oversight and management
of material business risks and the design, implementation and monitoring of an internal compliance and control framework.
A copy of the Risk Management Policy is available on the Corporate Governance page of the Company’s website at
www.medusamining.com.au.
The Board is ultimately responsible for the oversight and management of material business risks. However, the design and
implementation of the risk management policy and the day to day management of risk is the responsibility of the Managing
Director, with the assistance of Senior Management.
The Managing Director is responsible for reporting directly to the Board on all matters associated with risk management and
in fulfilling his duties, the Managing Director has unrestricted access to all Company employees, contractors and records and
may obtain independent expert advice on any matters he deems appropriate.
Whilst the Board acknowledges that it is responsible for the overall internal control framework, it is also cognisant that no cost-
effective internal control system will preclude all errors and irregularities.
The Company’s main business risks are determined by the nature of its business activities and assets. There are numerous
factors (both external and internal) that could influence the risk profile of the Company.
External risk factors that could influence the risk profile of the Company include:
• exposure to gold price;
• exchange rate fluctuations;
• geographical location;
• political issues;
• nature of operations; and
• environmental management.
048
2013 annual report Internal risk factors that could influence the risk profile of the Company include:
• operational performance;
• compliance;
• commercial dealings and relationships;
• financial control;
• information systems and technology;
• people and skills; and
• quality of management.
The Company’s risk management system is continuously developing and will evolve with the evolution and growth of the
Company’s activities.
Managing Director and Chief Financial Officer assurance
ASXCGC ReCommendAtionS 7.2, 7.3, 7.4
Before the adoption by the Board of the of the Company’s financial statements for the year ended 30 June 2013, the Board
received written declarations from the Managing Director and Chief Financial Officer, in accordance with section 295A of the
Corporations Act, that the financial records of the Company have been properly maintained in accordance with section 286
of the Corporations Act and that the Company’s financial statements and notes comply with the accounting standards and
present a true and fair view of the consolidated entity’s financial position and performance for the financial period.
The Managing Director and the Chief Financial Officer have also stated in writing to the Board that the above declaration is
founded on a sound system of risk management and internal control and that the system is operating effectively in all material
respects in relation to financial reporting risks. In addition, during the reporting period the Managing Director and the Chief
Financial Officer have reported to the Board as to the effectiveness of the Company’s management of its material business risks.
5. CONTINUOUS DISCLOSURE
ASXCGC ReCommendAtionS 5.1, 5.2
The Company is subject to continuous disclosure obligations under the ASX Listing Rules and the Corporations Act. Subject
to limited exceptions, the Company must immediately notify the market, through ASX, of any information that a reasonable
person would expect to have a material effect on the price or value of its securities. The Board has approved a Continuous
Disclosure Policy to reinforce the Company’s commitment to complying with its continuous disclosure obligations and outline
management’s accountabilities and the processes to be followed for ensuring compliance. A copy of the Continuous Disclosure
Policy is available on the Corporate Governance page of the Company’s website at www.medusamining.com.au.
The Managing Director and Company Secretary are responsible for ensuring that the Continuous Disclosure Policy is
implemented and enforced, and that the Company complies with its continuous disclosure obligations.
medusa mining limited CORpORaTe GOVeRnanCe STaTeMenT
6. SHAREHOLDER COMMUNICATION
ASXCGC ReCommendAtionS 6.1, 6.2
The Board has approved a Shareholder Communications Policy to promote effective communications with its shareholders
and encourage effective participation at general meetings. In accordance with this policy the Company maintains a website at
www.medusamining.com.au on which the Company provides, amongst other things, the following information:
• company announcements released to ASX for disclosure and related information (including presentations and briefings to
analysts and media);
• notices of meetings and explanatory materials;
• quarterly reports, containing details of the Company’s activities and consolidated statements of cash flows;
• half-yearly reports, containing consolidated financial information and a brief overview of the Company’s activities; and
• annual reports, which include a review of the Company’s operations and financial results for the year.
Annual reports are distributed in hard copy to shareholders who have registered their election with the Company’s share
registry to receive the annual report in hard copy.
The Board encourages participation of shareholders at general meetings of the Company. The Company’s external auditor
attends the Company’s annual general meeting to answer shareholder questions about the conduct of the audit, the preparation
and content of the audit report, the accounting policies adopted by the Company and the independence of the auditor in
relation to the conduct of the audit.
A copy of the Shareholder Communications Policy is available on the Corporate Governance page of the Company’s website
at www.medusamining.com.au.
050
2013 annual report diReCTORS’ RepORT
1. DIRECTORS
The names of Directors in office at any time during or since the end of the financial year are:
Name of Director
Non-Executive Directors:
Mr Geoffrey John Davis (Chairman)
Dr Robert Maurice Weinberg
Mr Andrew Boon San Teo
Mr Ciceron Angeles
Mr Gary Raymond Powell
Executive Directors:
Mr Peter Gordon Hepburn-Brown (Managing Director)
Mr Raul Conde villanueva
Period of Directorship
since 5 February 2002
since 1 July 2006
since 15 February 2010
since 28 June 2011
appointed 24 January 2013
since 15 September 2009
appointed 24 January 2013
Each of the Directors, unless otherwise stated above, has been in office since the start of the financial year to the date
of this report.
2. DIRECTORS’ INFORMATION
MR gEOFFREY JOhN DAviS
M.Sc., Mining and Exploration Geology, B. Sc (Hons), Geology,
Member, Australian Institute of Geoscientists.
Non-Executive Chairman
Mr Geoff Davis worked initially with BHP for 10 years following his graduation in 1972, before becoming a consultant in 1980
to BHP until late 1981 and subsequently to numerous mining and exploration companies in Australia, Asia and South America.
This work specialised in epithermal precious metal and porphyry copper-gold opportunities, and included project acquisition,
assessment and exploration.
Since 1990, most of his work has been with junior explorers and he has been Exploration Manager to a number of these
companies. From the mid 1990’s, he has also held Directorships and senior executive positions in a number of listed and unlisted
Australian, Asian and London based exploration and mining companies. Mr Davis has been involved with the Philippines for
32 years and has developed a network of contacts in the mining, exploration, legal and tenement management sectors of the
industry which are valuable in developing the Company’s business interests in the Philippines.
Mr Davis was Managing Director of Medusa since its inception on 5 February 2002 until he stood down and was appointed
Non-Executive Chairman on 9 June 2011. Mr Davis is also a member of the Audit Committee, the Remuneration Committee
and the Safety, Health & Environment Committee.
DR ROBERT MAuRiCE WEiNBERg
BA (Hons) Geology, MA, DPhil, FGS, FIMMM
Independent Non-Executive Director
London based Dr Robert Weinberg gained his doctorate in geology from Oxford University and has nearly 40 years’ experience
in the international mining industry. He is an independent mining analyst and consultant, a Fellow of the Geological Society of
London and also a Fellow of the Institute of Materials, Minerals and Mining.
Dr Weinberg brings a wealth of gold marketing and investment banking experience to the Company having held executive
positions that include being Managing Director, Institutional Investments at the World Gold Council, Director of the Investment
Banking & Equities division at Deutsche Bank in London, Head of the Global Mining Research team at SG Warburg Securities.
Robert has also held senior positions within Société Générale and was head of the mining team at James Capel & Co. He was
formerly marketing manager of the gold and uranium division of Anglo American Corporation of South Africa Ltd.
Dr Weinberg is currently an independent Non-Executive Director of Solomon Gold plc (appointed 22 November 2005), a
company listed on the Alternative Investment Market, London, Kasbah Resources Ltd (appointed 15 November 2006), an ASX
listed entity and Chaarat Gold Holdings Ltd (appointed 10 January 2011) also listed on AIM.
Dr Weinberg is Chairman of the Remuneration Committee and is also a member of the Audit Committee and Safety, Health &
Environment Committee.
medusa mining limited diReCTORS’ RepORT
MR ANDREW BOON SAN TEO
B.Com, UWA, (CPA)
Independent Non-Executive Director
Mr Teo is an accountant with 35 years of extensive and diversified experience in accounting, treasury, corporate, legal and
business administration across several industries, including the mining industry. He is currently the CFO/Executive Director of
BGC (Australia) Pty Ltd, one of Australia’s largest privately owned companies, with annual turnover in excess of $2 billion and
7,000 plus staff (including sub-contractors).
Mr Teo is Chairman of the Audit Committee and a member of the Remuneration Committee, Safety, Health & Environment
Committee and the Nomination Committee.
MR CiCERON ANgELES
B.Sc (Geology), MAppSc (Mineral Exploration), FAusIMM (CP), FSEG.
Independent Non Executive Director
Philippines based, Mr Angeles is a geologist with over 35 years of experience in gold and base metal exploration in Asia, mainly
Philippines, Indonesia, China, Malaysia and Iran. His specialisations include epithermal gold-silver, porphyry copper-gold and
Carlin styles of mineralisation.
Mr Angeles obtained his MAppSc in Mineral Exploration from the University of New South Wales, Australia in 1985 and is
a Fellow and accredited Chartered Professional (CP) in the discipline of geology of the Australasian Institute of Mining and
Metallurgy (AusIMM) and a Fellow of the Society of Economic Geologists. He was also the Asia Exploration Manager for
Newcrest Mining during which time Newcrest brought the Gosowong Gold Mine into production.
Mr Angeles was the Technical Director of GGG Resources plc, a company listed on the ASX in Australia and AIM in London,
from 3 September 2009 until his resignation on 15 March 2012.
Mr Angeles is Chairman of the Nomination Committee.
MR gARY RAYMOND POWELL
B.App.Sc. (Geology)
Member, Australian Institute of Geoscientists
Member, Australasian Institute of Mining & Metallurgy
Independent Non-Executive Director
(appointed 24 January 2013)
Mr Gary Powell was appointed Non-executive Director on 24 January 2013 and brings Philippines operating experience to the
Board. Mr Powell is a geologist with over 30 years of experience working in West Australia, Central Asia and importantly, since
1997, in the Philippines.
Mr Powell has worked for major and junior companies as an employee and on a consulting basis. He was a founding and
Managing Director of ASX listed Egerton Gold NL from 1993 to 2000, and more recently a founding, Non-Executive and
then Executive Director from 2004 to 2009 of Metals Exploration plc listed on the Alternative Investment Market in the United
Kingdom. In his role with Metals Exploration plc, Mr Powell managed the progressing of the Runruno Deposit in the Philippines
to the drilled up resource stage (and which is now moving towards construction).
Mr Powell has been overseeing the resource drilling at the Company’s Bananghilig Project and continues to consult to the
Company as required.
052
2013 annual report MR PETER gORDON hEPBuRN-BROWN
BAppSc-Mining Engineering (1980), Grad Dip Human Resources (1996), Member of Inst of Engineers, Australia
Managing Director
Mr Peter Hepburn-Brown who was appointed Managing Director on 9 June 2011, joined the Board of Medusa on 15 September
2009, and was the Company’s Executive Director - Operations since 27 July 2010. He is a mining engineer with 35 years of
experience in a wide range of mining situations, commodities and overseas jurisdictions. He has held senior management
positions such as Executive Director Operations for Harmony Gold Australia, General Manager Operations for Great Central
Mines, as well as other executive, operational and consulting positions.
Mr Hepburn-Brown’s experience includes hands-on shaft sinking and airleg mining in narrow vein mines, experience that is
well suited to the Company’s current operations in the Philippines, as well as mining large open pit, disseminated ore bodies.
Mr Hepburn-Brown has a proven track record and his skills and experience complement those of his fellow Board members.
Mr Hepburn-Brown was a Non-Executive Director of Alloy Resources Limited, an ASX listed entity, from 2 June 2004 to 30
November 2010. During the past three years, Mr Hepburn-Brown also served as a Non-executive Director of Morning Star
Gold NL, an entity listed on the ASX from 18 February 2010 to 1 February 2011.
Mr Hepburn-Brown is also a member of the Health & Safety and Nomination Committees.
MR RAuL CONDE viLLANuEvA
LL.B., Attorney and Counselor-at-Law
Executive Director
(appointed 24 January 2013)
Mr Raul villanueva was appointed an Executive Director of Medusa on 24 January 2013 following his recent appointment
as President of the Company’s Philippines operating company, Philsaga Mining Corporation (“Philsaga”) in December 2012.
Attorney villanueva who has been the Executive vice President of Philsaga since November 2011 was appointed President
of Philsaga.
Mr villanueva who has Bachelor degrees in Economics, Military Science & Tactics, and Law has been a member of the Integrated
Bar of the Philippines and an Attorney and Counselor-at-Law since 1994. He brings a focused approach to improving the
operating systems and professionalism of the Company, based on his education and several years of experience in law as well
as managing companies and will further align the objectives of the Medusa Group of Companies.
3. COMPANY SECRETARY
MR PETER ALPhONSO
B.Com, UWA (CPA)
Mr Peter Alphonso was appointed Company Secretary on 11 December 2007.
Mr Alphonso’s 35 years of experience has included associations with the auditing, engineering and communications industries,
with the majority of his experience centred on the gold and nickel sectors of the mining industry. Mr Alphonso’s experience has
included associations with Coopers and Lybrand, Western Mining Corporation, Great Central Mines and Tiwest Joint venture
and he has also consulted to government departments on research projects.
As Company Secretary, Peter is responsible for the corporate secretarial functions of the Company and his responsibility
extends to assisting the Chief Financial Officer with all financial and statutory reporting of the Company as well as the directing
and monitoring of all financial aspects of the Company’s overseas operations.
Mr Peter Alphonso was appointed Chief Financial Officer on 1 July 2013.
medusa mining limited diReCTORS’ RepORT
4. MEETINGS OF DIRECTORS
The number of meetings held during the financial year by Company Directors and the number of those meetings attended by
each Director was:
Board of
Directors
Meetings
Audit
Remuneration
Nomination
Committee
Committee
SHE Committee
Committee
Name of Director
Number of
meetings(1)
Number
attended
Number of
meetings (1)
Number
attended
Number of
meetings (1)
Number
attended
Number of
meetings (1)
Number
attended
Number of
meetings (1)
Number
attended
Geoffrey Davis
Robert Weinberg
Andrew Teo
Ciceron Angeles
Gary Powell
Peter Hepburn-Brown
Raul villanueva
6
6
6
6
2
6
2
6
3
6
5
2
6
2
2
2
2
-
-
-
-
2
1
2
-
-
-
-
(1)
Number of meetings held during the time the Director held office during the year
2
2
2
-
-
-
-
2
2
2
-
-
-
-
2
2
2
-
-
2
-
2
2
2
-
-
2
-
-
-
2
2
-
2
-
-
-
2
2
-
2
-
5. PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the financial year were mineral exploration, evaluation, development
and mining/production of gold. There were no significant changes in the nature of the activities of the Group during the year.
6. OPERATING RESULTS
The net consolidated profit for the financial year attributable to members of Medusa Mining Limited after provision of income
tax was US$50.2 million [2012: US$49.2 million].
Key financial results:
Key Results
Revenues
EBITDA
NPAT
EPS (basic)
Dividend per share
30 June 2013
30 June 2012
US$100.7M
US$63.2M
US$50.2M
US$0.266
Nil
US$81.2M
US$58.0M
US$49.2M
US$0.261
A$0.07
Variance
US$19.5M
US$5.2M
US$1.0M
US$0.005
(A$0.07)
(%)
24%
9%
2%
2%
N/A
Medusa recorded a net profit after tax (“NPAT”) of US$50.2 million and earnings before interest, tax depreciation and
amortisation (“EBITDA”) of US$63.2 million for the full year to 30 June 2013, compared to US$49.2 million and US$58.0 million
respectively in the previous year.
The Company recorded Revenues of US$100.7 million compared to US$81.2 million for the previous year. Medusa is an un-
hedged gold producer and received an average price of US$1,610 per ounce from the sale of 77,488 ounces of gold for the
year (previous year: 55,446 ounces at US$1,658 per ounce).
As at year end, the Company, had total cash and cash equivalent in gold on metal account of approximately US$7.45 million
(2012: US$51.8 million).
During the year:
• The Co-O Mine produced 62,243 ounces of gold for the year, at an average recovered grade of 7.02 g/t gold (2012: 60,595
ounces at average recovered grade of 8.10 g/t gold)
• The average cash cost for the year of US$313 per ounce was higher than the previous year’s average cash cost of US$261
per ounce primarily due to the treatment of lower grade development ore, higher power costs and operating in-efficiencies
associated with increasing on-going maintenance associated with the old mill.
054
2013 annual report • Depreciation and amortisation of fixed assets, capitalised mine development and capitalised mine exploration was US$13.1
million (2012: US$9.9 million);
• US$24 million was spent on exploration expenditure (2012:US$35.1 million);
• Capitalised mine development (including shaft sinking) costs totalled US$34.5 million for the year (2012: US$28.9 million);
• US$44.2 million was incurred on capital works associated with the new mill construction and infrastructure, mine expansion
and sustaining capital at the mine and mill (2012: US$28 million);
• The production guidance for the September and December quarters is approximately 17,000 ounces and 35,000 ounces
respectively. Full year guidance for 2014 will be available once the new Co-O mill is fully commissioned and further
development has been completed on Level 8.
7. REVIEW OF OPERATIONS
A review of and information about the Group’s operations and exploration activities for the financial year and the results of those
operations are set out in the Managing Director’s Review and Review of Operations commencing on page 9, which form part
of this Directors’ Report.
8. DIVIDENDS
The Directors on 29 August 2012 declared a final un-franked dividend payment of A$0.02 per share (2011: A$0.05 per
share) payable to shareholders on 4 October 2012. The record date of the final dividend was 14 September 2012. No foreign
conduit income was attributable to the dividend and the total amount of dividend paid inclusive of associated costs was
A$3.783 million.
No further dividends were paid.
9. SIGNIFICANT CHANGE IN STATE OF AFFAIRS
Significant changes in the state of affairs of the Group during the financial year were as follows:
• On 6 July 2012, Philippine President Benigno Aquino III signed Executive Order No. 79 relating to reforms in the Philippine
mining sector. New Philippine legislation relating to mining taxes and royalties was subsequently proposed which currently
remains subject to deliberation prior to approval by Congress.
• Following the appointment on 20 June 2013 of administrators of Arccon (WA) Pty Ltd who managed the Co-O Mill
expansion, the Company appointed CPC Engineering to manage the construction of the new mill.
• On 24 January 2013 Mr Raul villanueva and Mr Gary Powell were appointed as Executive and Non-Executive directors to
the Board of Medusa.
In the opinion of the Directors, there were no other significant changes in the state of the affairs of the Group that occurred
during the financial year.
10. EVENTS SUBSEQUENT TO BALANCE DATE
On 1 July 2013 Mr Roy Daniel retired as Chief Financial Officer of the Company. Mr Peter Alphonso currently Company
Secretary was appointed as his replacement.
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material and/or unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the
operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.
11. FUTURE DEVELOPMENTS, BUSINESS STRATEGIES AND PROSPECTS
The Group will continue its policy of organic growth within its land-holdings in the Philippines and test attractive mineral
properties with a view to developing properties capable of economic mineral production. In general terms, the Managing
medusa mining limited diReCTORS’ RepORT
Director’s Review and Review of Operations commencing on page 9 give an indication of likely developments and the
expected results of operations.
In the opinion of the Directors, disclosure of any further information about likely developments in the Group’s operations in
future financial years and the expected results of those operations, and the Group’s business strategies and prospects for
future years, would be likely to result in unreasonable prejudice to the Group.
12. DIRECTORS’ INTEREST
The relevant interest of each Director in the share capital of the Company at the date of this report is as follows:
Name of Director
No. of fully paid
No. of options over
No. of performance rights
ordinary shares
ordinary shares
over ordinary shares
Geoffrey Davis
Robert Weinberg
Andrew Teo
Ciceron Angeles
Gary Powell
Peter Hepburn-Brown
Raul villanueva
4,102,750
62,675
75,000
-
-
22,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13. REMUNERATION REPORT
(a) Details of Directors and Executive Officers (including Key Management Personnel)
Other than the Managing Director and Executive Officers listed below, no other person is concerned in, or takes part in, the
management of the Group; or has authority or responsibility for planning, directing and controlling the activities of the Group.
As such, during the financial year, the Group did not have any person, other than the Directors and Executive Officers,
within the meaning of “Key Management Personnel” for the purposes of AASB124 or “Company Executive” or “Relevant
Group Executive” for the purposes of section 300A of the Corporations Act 2001 (“Corporations Act”).
Remuneration details of the Company Secretary are disclosed as section 300A (1B) (a) of the Corporations Act defines a
“Company Executive” to specifically include a Secretary of the Group.
There were no loans to Key Management Personnel during the period and there were no transactions or balances with
Key Management Personnel other than those disclosed in this Report.
DirecTors
Non-Executive Directors:
Geoffrey Davis - Chairman
Robert Weinberg
Andrew Teo
Ciceron Angeles
Gary Powell
Executive Directors:
Peter Hepburn-Brown - Managing Director
Raul villanueva
execuTive oFFicers
Peter Alphonso - Company Secretary
Roy Daniel - Chief Financial Officer
Samuel Afdal - President, Philsaga Mining Corporation (resigned 10 December 2012)
056
2013 annual report )
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medusa mining limited
diReCTORS’ RepORT
(c) Remuneration options and equity based instruments
No options or other equity based instruments or rights over any of them, were granted by the Company or any entity
controlled by the Company as remuneration during or since the end of the financial year.
(d) Shares issued on exercise of options granted as remuneration
During the financial year, no fully paid ordinary shares were issued on the exercise of options previously granted as
remuneration to Directors and Executives.
(e) Option/rights holdings
The movement during the year in the number of options/rights over ordinary shares in Medusa Mining Limited held directly,
indirectly or beneficially, by each Director and Executive, including their personally related entities is as follows:
Options/
rights
granted as
remuneration
Balance held
01/07/12
Options/
rights
exercised
Options/ rights
not exercised
& lapsed
Balance held
30/06/13
Vested &
exercisable
30/06/13 (1)
Total not
exercisable
30/06/13 (2)
Name
DIRECTORS
Geoffrey Davis
Robert Weinberg
Andrew Teo
Ciceron Angeles
Gary Powell
-
-
-
-
-
Peter Hepburn-Brown
250,000
Raul villanueva
300,000
ExECuTIVES
Peter Alphonso
Roy Daniel
Samuel Afdal
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(250,000)
-
-
-
-
-
-
-
-
-
-
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
-
-
-
(1) Options vested and exercisable are all the options vested at the reporting date;
(2) Options that are not exercisable have not vested at the reporting date
(f) Remuneration policies
remuneraTion commiTTee
The Remuneration Committee of the Board of Directors is responsible for determining, reviewing and making recommendations
to the Board on compensation arrangements for the Non-Executive Directors, Managing Director and Executive Officers.
The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers
on an annual basis by reference to relevant market conditions. It is empowered to engage the assistance of external
consultants specialising in remuneration of executives and personnel in the mining industry to provide analysis and advice
to ensure executive remuneration packages reflect relevant international employment market conditions. During the financial
year, the Board did not obtain any independent advice from external consultants.
remuneraTion PhilosoPhy
The main objective is the retention of a high quality Board and executive team, to maximise value of the shareholders’
investment. Remuneration levels are therefore competitively set to attract, retain and motivate appropriately qualified and
experienced Directors and Executives.
In determining the level and make up of remuneration levels for Executives of the Group, the remuneration policy has been
structured to increase goal congruence between shareholders and Executives and includes the payment of bonuses based
on achievement of specific goals related to the performance of the Group and also the issue of incentive options or equity
based instruments to encourage alignment of personal and shareholder interests.
058
2013 annual report (f) Remuneration policies (continued)
non-execuTive DirecTors remuneraTion:
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain
Non-Executive Directors of the highest calibre.
Non-Executive Directors’ fees are paid within the aggregate amount approved by shareholders from time to time. Total
remuneration for all Non-Executive Directors, last approved by shareholders on 18 November 2009, is not to exceed
A$400,000 per annum. The amount of aggregate remuneration sought to be approved by shareholders and the manner in
which it is apportioned amongst Directors is reviewed annually.
The Board considers the amount of Director fees being paid by comparable international resource companies with similar
responsibilities, and the experience of each Non-Executive Director when undertaking the review process.
Directors’ fees cover all main Board activities and membership of Board Committees. No retirement benefits are provided
for any Non-Executive Director’s retirement or termination and Non-Executive Directors do not receive performance related
compensation remuneration.
Director fees currently paid to Non-Executive Directors are as follows:
• Geoffrey Davis (Non-Executive Chairman): A$100,000 per annum;
• Dr Robert Weinberg (Non-Executive Director): A$75,000 per annum;
• Andrew Boon San Teo (Non-Executive Director): A$75,000 per annum;
• Ciceron Angeles (Non-Executive Director): A$75,000 per annum
• Gary Powell (Non-Executive Director) A$75,000 per annum
execuTive remuneraTion:
Objective:
The Company’s aim is to ensure Executives perform at a high level by incentivising them with the level and mix of
remuneration commensurate with their position and responsibilities. These incentives include,
• to reward Executives for individual performances; and
• ensure total remuneration is competitive by international market standards.
Remuneration is made up of a fixed component as well as a variable component which is performance linked and only
granted when considered appropriate by the Board.
The remuneration of Executives, including the Managing Director, is reviewed annually by the Remuneration Committee,
with the review taking into consideration the contribution of the individuals commensurate with the performance of the
business unit within their responsibility, the overall performance of the Company and comparable employment market
conditions internationally.
Fixed Remuneration:
Fixed remuneration consists of base salary, any non-monetary benefits and employer contributions to superannuation funds.
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position
and is competitive in the market. Fixed remuneration is reviewed annually by the Remuneration Committee.
When appropriate, external remuneration consultants provide analysis and independent advice to ensure that Executives’
remuneration levels are competitive in the international market place. During the financial year, the Board did not obtain any
independent advice from external consultants.
variable remuneration:
variable remuneration is performance linked and includes both short-term and long-term incentives and is designed
to reward key management personnel for meeting or exceeding their financial and personal objectives. The short-term
incentive is an ‘at risk’ bonus provided in the form of cash whilst the long-term incentive is provided as options over ordinary
shares or performance rights to acquire fully paid ordinary shares in the Company.
medusa mining limited diReCTORS’ RepORT
(f) Remuneration policies (continued)
• Short-term incentives (“STI”)
Each year, the Board sets key performance indicators (“KPIs”) for key management personnel. The KPIs generally
include measures relating to the Group, the relevant segment, and the individual, and include financial, people, strategy
and risk measures. The measures are chosen as they directly align the individual’s reward to the KPIs of the Group and
to its strategy and performance.
During the financial year, the Board set the following KPIs that applied to each member of Key Management Personnel:
The Group meeting or exceeding annual production targets set by the Board based on a combination of physical
parameters that include development meterage achieved, total ore mined and milled and ounces produced during
the financial year. This KPI was chosen as the Board considers it to be the most significant Group controlled factor
directly impacting the profitability of the Group;
The Group’s exploration drilling rates based on drilling targets set by the Board. This KPI was chosen as the Board
considers exploration rates to be a key factor supporting the identification and development of the Group’s growth
projects and sustaining the Group’s production into the future;
The Group’s level of compliance with its sustainability policy as outlined in the Review of Operations. This includes
compliance with environmental obligations and health and safety regulations and guidelines and is assessed by
reference to the level of non-compliance (if any) by the Group with its obligations. This KPI was chosen as the
Company is committed to its environmental performance and considers health and safety to be a leading indicator
of management and operational performance.
At the end of the financial year the Board assesses the actual performance of the Group, the relevant segment and
individual against the KPIs set at the beginning of the financial year. Should the Group achieve the set KPIs, the Board
may reward the Key Management Personnel with a bonus during the salary review. Any bonus payable must fall within
0.5% of net profit after tax of the Group and not exceed 50% of an individual’s fixed remuneration. The Board retains
absolute discretion over payment of these bonuses and can adjust payments (within the above caps) to take into
account the overall performance of the Group, personal performance and prevailing market conditions.
This method of assessment was chosen as it provides the Board with an objective assessment of the Group’s performance
against identifiable factors that relate to the group’s profitability and the sustainability of the Group’s operations.
No STIs were granted to any key management personnel in the subsequent period since the end of the financial year
ended 30 June 2013.
• Long-term incentive (“LTI”)
Historically, LTIs granted to key management personnel have been in the form of options over ordinary shares. The
Board is currently considering whether to adopt other LTI measures, including a performance rights plan in which key
management personnel can participate.
The primary objective of Medusa’s LTI based remuneration, is and will continue to be, to reward key management
personnel in a manner which aligns this element of remuneration with the creation of shareholder wealth. The Board
takes into account and will continue to take into account, appropriate measures of shareholder wealth, including
those outlined in section 13(g) below and Company performance in setting the performance criteria applicable to its LTI
based remuneration.
The Managing Director, Peter Hepburn-Brown was granted 250,000 performance rights, following approval by the
shareholders at the Company’s Annual General Meeting held on 10 November 2011. At 30 June 2013 the rights lapsed
due to performance criteria not being met. No LTIs were granted to any key management personnel during the financial
year ending 30 June 2013.
060
2013 annual report (g) Company performance
In considering the Company’s performance and benefits for shareholder wealth, the Remuneration Committee take into
account the following indices in respect of the current financial year and the previous four financial years.
Year ended 30 June
Note
2009
2010
2011
2012
2013
Basic earnings per share (EPS)
(1)
US$0.187
US$0.378
US$0.587
US$0.261
US$0.266
Share price at 30 June
Share price increase
Total shareholder returns (TSR)
A$2.20
A$0.96
77.4%
A$3.90
A$1.70
77.3%
A$6.59
A$2.69
69.0%
A$4.83
(A$1.76)
(26.7%)
A$1.55
(A$3.28)
(67.5%)
(2)
(3)
(1) Basic EPS is calculated as net profit after tax divided by the weighted average number of ordinary shares;
(2) Share price movement during the financial year;
(3) TSR is defined as the growth/decline (in percentage terms) in the share price, taking into account dividends paid over the previous financial year ending 30 June. Only a final dividend
of A$0.02 (Dividends totalling A$0.10 were paid in the 2011 and 2012 financial years) was paid during the current financial year. No dividends were paid or capital returned in the
previous respective years from 2008 to 2010.
(h) Board policy in relation to limiting exposure to risk in securities
Under the Company’s Securities Trading Policy, Directors and Executives are prohibited from dealing in financial products
issued or created over or in respect of Medusa securities (eg hedges or derivatives) which have the effect of reducing or
eliminating the risk associated with any equity incentives that Medusa may offer from time to time (for example, a person
may be granted an equity incentive award that vests at a time in the future subject to achieving certain performance goals;
certain financial institutions offer products which act as an insurance policy if the performance goals are not met, thereby
reducing the “at-risk” element of the person’s incentive arrangements).
medusa mining limited diReCTORS’ RepORT
(i) Employment contracts
execuTive DirecTors
Peter Hepburn-Brown (Managing Director)
Contract description: Employment contract between the Company and Peter Hepburn-Brown (“Employee”).
Term:
An initial term ending on 8 June 2016 (subject to earlier termination) (“Initial Term”). If not terminated
on or prior to 8 June 2016, the agreement will continue until terminated.
Services:
The Employee is employed as Managing Director of the Company and will be responsible for the
overall management of the Company (subject to the direction of the Board); and its operations and
strategic development.
Remuneration:
Fixed remuneration:
A$725,000 per annum plus a superannuation contribution of A$25,000 per annum, subject to
annual review by the Board. During the review, the Board will consider the progress of the Company
and comparable industry standard.
variable remuneration - Short term incentive:
The Employee maybe entitled to an annual bonus at the discretion of the Board. In determining
eligibility, the Board will consider without limitation, the performance of the Company, the Employee’s
performance and prevailing market conditions. The quantum of any bonus paid must fall within 0.5%
of NPAT and not to exceed 50% of an individual’s fixed remuneration.
variable remuneration - Long term incentive:
On 10 November 2011 shareholders approved the issue of 250,000 performance right subject to
specific terms and conditions. Due to performance criteria not being met the Performance Rights
lapsed on 30 June 2013.
Termination:
Termination by the Company:
During the Initial Term (other than as set out below in relation to a “Material Diminution” or default by
the Employee), the Company may terminate the agreement by notice or payment in lieu of notice of
a notice period equal to: (a) the number of months remaining in the Initial Term; or (b) 12 months, if
the number of months remaining in the Initial Term is less than 12.
The Company may immediately terminate the agreement in certain circumstances, including if
the Employee is in default of its obligations and does not remedy that default in addition to other
standard default situations.
Termination by the Employee:
The Employee may terminate the agreement at any time by giving 3 months’ written notice or
immediately in certain circumstances, including if the Company is in default of its obligations and
does not remedy that default and in certain other standard default situations, in which case the
Consultant will be entitled to payment in lieu of notice.
Termination by reason of Material Diminution:
A “Material Diminution” is a change in the Employee’s status as Managing Director of the Company,
including a material change in his authority in respect of the business of the Company or any member
of the Company’s group; or a change in his reporting relationship with the Board.
If a Material Diminution occurs, within 3 months of this occurring, the Employee may give the
Company 2 weeks’ written notice of termination of this agreement. Subject to the Corporations Act,
the Company must make a payment in lieu of a notice period equal to: (a) the number of months
remaining in the Initial Term; or (b) 12 months, if the number of months remaining in the Initial Term
is less than 12. After expiration of the Initial Term, the Company must make a payment to the
Employee in lieu of a notice period equal to 12 months.
Protection of the
The Employee’s contract also contains provisions for the protection of the Company’s interest in
Company’s interests: such areas as confidentiality, conflict of interests and business dealings.
062
2013 annual report
(i) Employment contracts (continued)
Roy Daniel (Chief Financial Officer)
Contract description: Employment contract between the Company and Roy Daniel (“Employee”).
Term:
An initial term ending on 30 September 2011 (subject to earlier termination) (“Initial Term”). If not
terminated on or prior to 30 September 2011, the agreement will continue until terminated.
Role:
The Employee is initially employed in the role of Finance Director and may subsequently be employed
in other comparable roles as determined by the Employer. The Employee will be responsible for the
day to day management of all financial, administrative and corporate functions of the Company.
Remuneration:
Fixed remuneration:
A$600,000 per annum (inclusive of superannuation), subject to annual review by the Board. During
the review, the Board will consider the progress of the Company and comparable industry standard.
variable remuneration - Short term incentive:
The Employee maybe entitled to an annual bonus at the discretion of the Board. In determining
eligibility, the Board will consider without limitation, the performance of the Company, the Employee’s
performance and prevailing market conditions. The quantum of any bonus paid must fall within 0.5%
of NPAT and not to exceed 50% of an individual’s fixed remuneration.
Termination:
Termination by the Company:
During the Initial Term (other than as set out below in relation to a “Material Diminution” or default by
the Employee), the Company may terminate the agreement by notice or payment in lieu of notice of
a notice period equal to: (a) the number of months remaining in the Initial Term; or (b) 12 months, if
the number of months remaining in the Initial Term is less than 12.
The Company may immediately terminate the agreement in certain circumstances, including if
the Employee is in default of its obligations and does not remedy that default in addition to other
standard default situations.
Termination by the Employee:
The Employee may terminate the agreement at any time by giving 3 months’ written notice or
immediately in certain circumstances, including if the Company is in default of its obligations and
does not remedy that default and in certain other standard default situations, in which case the
Consultant will be entitled to payment in lieu of notice.
Termination by reason of Material Diminution:
A “Material Diminution” is a change in the Employee’s status as Finance Director of the Company,
including a material change in his authority in respect of the business of the Company or any member
of the Company’s group; or a change in his reporting relationship with the Board.
If a Material Diminution occurs, within 3 months of this occurring, the Employee may give the
Company 2 weeks’ written notice of termination of this agreement. Subject to the Corporations Act,
the Company must make a payment in lieu of a notice period equal to: (a) the number of months
remaining in the Initial Term; or (b) 12 months, if the number of months remaining in the Initial Term
is less than 12. After expiration of the Initial Term, the Company must make a payment to the
Employee in lieu of a notice period equal to 12 months.
Protection of the
The Employee’s contract also contains provisions for the protection of the Company’s interest in
Company’s interests: such areas as confidentiality, conflict of interests and business dealings.
Event subsequent:
Roy Daniel retired as Chief Financial Officer on 1 July 2013.
medusa mining limited
diReCTORS’ RepORT
Samuel Afdal (President, Philsaga Mining Corporation)
On 1 January 2010, Philsaga executed a management consultancy agreement with Samuel G Afdal.
Under the terms of the management consultancy agreement, Philsaga has engaged Mr Afdal to provide Philsaga or the
Group with management and advisory services on milling, administration and industrial relations matters for the Co-O Mine
and any other mining activities in the Philippines together with other required complementary services.
The engagement of Mr Afdal by Philsaga is for a term of 2 year and is renewable thereafter for 1 year periods by mutual
agreement between the parties. During the initial term, Philsaga may only terminate the agreement upon limited events akin
to misconduct and incapacity. The management consultancy agreement does not provide for specified periods of notice
to terminate the agreement and does not provide for termination payments.
Philsaga will pay Mr Afdal the sum of US$35,000 per calendar month. Philsaga will additionally reimburse Mr Afdal for
all reasonable expenses incurred in the performance of his services including relating to entertainment, accommodation,
meals, telephone and travelling.
Mr Afdal resigned on 10 December 2012.
Peter Alphonso (Company Secretary, Medusa Mining Limited)
Mr Peter Alphonso executed an employment agreement with Medusa on 30 June 2009.
Under the terms of the employment agreement, which has no fixed term, the remuneration of Mr Alphonso is reviewed
annually and maintained at a level that reflects the progress of the Company as well as the maintenance of industry
standards for similar positions and responsibilities. The annual review will also take into consideration the payment of
bonuses.
Mr Alphonso’s current salary package is A$300,000 per annum.
Under the terms of the employment contract, Mr Alphonso may be terminated by:
(1) Mr Alphonso, at anytime on giving 3 months notice;
(2) Medusa, at anytime on giving 3 months notice; or
(3) Medusa, immediately in the event of misconduct.
In circumstances where Mr Alphonso’s employment is terminated by the Company due to redundancy, the Company will
pay Mr Alphonso, by way of redundancy payment, the greater of 6 months pay or 4 weeks pay for each completed year
of service.
Alternatively, if there is a change in Mr Alphonso’s status as Company Secretary, including without limitation:
(a) a material change in Mr Alphonso’s authority in respect of the business of the Company; or
(b) a change in Mr Alphonso’s reporting relationship with the Chief Financial Officer,
then within a period not greater than three months after that change, Mr Alphonso may give notice to terminate his
employment, in which event the Company will be liable to pay him, by way of redundancy payment, the greater of 6 months
pay or 4 weeks pay for each completed year of service.
Mr Alphonso’s employment contract also contains provisions for the protection of the Company’s interest in such areas
such as confidential information and business dealings.
Event Subsequent:
On 1 July 2013 Peter Alphonso was appointed as Chief Financial Officer.
064
2013 annual report 14. OPTIONS
Un-issued shares under options/rights
At the date of this report, details of un-issued ordinary shares of the Company under option are as follows:
Expiry date
Employee options
18 November 2013
3 July 2014
3 January 2015
Exercise price
No. of options/rights
options/rights exercised
No. of shares issued if
A$4.40
A$8.10
A$5.10
140,000
575,000
1,000,000
140,000
575,000
1,000,000
Shares issued on exercise of options/rights
During or since the end of the financial year no options were exercised.
15. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Indemnification
The Company has agreed to indemnify the following current Directors of the Company, Messrs Davis, Hepburn-Brown, Teo,
Angeles, Dr Weinberg, villanueva and Powell and the following former Directors Messrs Cato, Mein, Tomlinson, Jones, Daniel
and Dr Schiller against all liabilities to another person (other than the Company or a related body corporate) that may arise
from their position as Directors of the Company and its controlled entities, except where the liability arises out of conduct
involving a wilful breach of duty or improper use of information to gain a personal advantage.
No amount has been paid under any of these indemnities during the financial year under review.
Insurance premiums
During the year, the Company paid an insurance premium for Directors’ and Officers’ Liability Insurance policy, which cover
all Directors, Company Secretaries and other Officers of the Company and its related entities. Details of the nature of the
liabilities covered and the amount of premium paid in respect of the Directors’ and Officers’ Liability Insurance policies are
not disclosed, as such disclosure is prohibited under the terms of the policy.
16. INDEMNIFICATION OF AUDITORS
The Company’s auditor is Grant Thornton Audit Pty Ltd (“Grant Thornton”). The Company has agreed with Grant Thornton,
as part of its terms of engagement, to indemnify Grant Thornton against certain liabilities to third parties arising from a breach
by the Group under the terms of engagement or as a result of reliance on information provided by the Group that is false,
misleading or incomplete. The indemnity does not extend to any liability resulting from [a negligent, wrongful or wilful act or
omission] of Grant Thornton.
During the financial year, the Company has not paid any premium in respect to any insurance for Grant Thornton or a body
corporate related to Grant Thornton and there were no officers of the Company who were former partners or directors of
Grant Thornton, whilst Grant Thornton conducted audits of the Group.
17. ENVIRONMENTAL REGULATIONS
The Group’s operations are subject to a number of environmental regulations in relation to its exploration, mining and
processing activities in the Philippines. Details of these regulations are set out in the Review of Operations, under the section
titled Environmental Management and Monitoring commencing on page 36.
The Directors are not aware of any significant breaches of environmental regulations during the financial year.
medusa mining limited diReCTORS’ RepORT
18. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings
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 financial year.
19. NON-AUDIT SERVICES
During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory duties.
The Board has considered and is satisfied that the provision of non-audit services during the year by the auditor is compatible
with and did not compromise, the auditor independence requirements of the Corporations Act for the following reasons:
a) all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely
affect the integrity and objectivity of the auditor;
b) the nature of the non-audit services provided do not compromise the general principles relating to auditor independence
as set out in APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical
Standards Board;
c) Grant Thornton’s services have not involved reviewing or auditing Grant Thornton’s own work or acting in a managerial or
decision-making capacity within the Group; and
d) There is no reason to question the veracity of Grant Thornton’s Independence Declaration.
The following fees were paid or payable to Grant Thornton for non-audit services provided during the year ended
30 June 2013.
Taxation services
Financial reporting advice
Total non-audit services
2013
(US$)
14,600
19,406
34,006
2012
(US$)
13,858
7,918
21,776
20. AUDITOR’S INDEPENDENCE DECLARATION
The Lead Auditor’s Independence Declaration for the year ended 30 June 2013 has been received and can be found on
page 70 of the Financial Report.
21. ROUNDING OFF AMOUNTS (ASIC Class Order 98/100)
The Company is an Entity to which ASIC Class Order 98/100 applies and accordingly, amounts in the Financial Statements
and Directors’ Report have been rounded to the nearest thousand dollars, unless otherwise stated.
Signed in accordance with a resolution of the Board of Directors
Peter Hepburn-Brown
Managing Director
Dated at Perth this 27th day of August 2013
066
2013 annual report aUdiTORS independenCe deCLaRaTiOn
medusa mining limited STaTeMenT OF pROFiT OR LOSS and OTHeR
COMpReHenSiVe inCOMe for the year ended 30 June 2013
CONSOLIDATED
Revenue
Cost of sales
Exploration & evaluation expenses
Administration expenses
Other expenses
Profit before income tax expense
Income tax (expense)/benefit
Profit attributable to members of the Group
Other comprehensive income, net of income tax:
Exchange differences on translation of foreign operations and other
comprehensive income for the year
Total comprehensive income for the year
Overall operations:
Basic earnings per share (US$ per share)
Diluted earnings per share (US$ per share)
The accompanying notes form part of these financial statements
NOTE
2
3
5
6,23
6
6
2013
US$000
100,680
(33,551)
(6,849)
(8,508)
(1,587)
50,185
(4)
50,181
(6,381)
43,800
0.266
0.263
2012
US$000
81,188
(20,793)
-
(10,750)
(1,569)
48,076
1,108
49,184
6,830
56,014
0.261
0.260
068
2013 annual report STaTeMenT OF FinanCiaL pOSiTiOn
for the year ended 30 June 2013
CONSOLIDATED
CURRENT ASSETS
Cash & cash equivalents
Trade & other receivables
Inventories
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Trade & other receivables
Property, plant & equipment
Exploration, evaluation & development expenditure
Deferred tax assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade & other payables
Borrowings
Employee benefits
Total Current Liabilities
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liability
Employee benefits
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits
TOTAL EQUITY
The accompanying notes form part of these financial statements
NOTE
24
7
8
9
10
11
12
15
13
14
13
15
14
17
18
23
2013
US$000
4,698
29,617
18,339
662
53,316
2,600
101,549
219,962
1,603
325,714
379,030
18,616
1,725
1,017
21,358
528
141
753
1,422
22,780
356,250
73,070
18,087
265,093
356,250
2012
US$000
12,468
55,964
14,643
707
83,782
-
63,929
182,897
1,632
248,458
332,240
14,876
-
920
15,796
-
257
520
777
16,573
315,667
73,070
23,760
218,837
315,667
medusa mining limited STaTeMenT OF CHanGeS in eQUiTY
for the year ended 30 June 2013
SHARE
CAPITAL
ORDINARY
US$000
RETAINED
PROFITS
US$000
OPTION AND
PERFORMANCE
RIGHTS
US$000
NOTE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
US$000
TOTAL
US$000
71,990
189,020
1,689
13,190
275,889
-
-
-
-
2,342
(291)
3,740
-
3,740
-
-
-
-
708
-
4,448
-
4,448
-
6,830
6,830
-
-
-
20,020
-
20,020
-
(6,381)
(6,381)
-
-
-
49,184
6,830
56,014
789
2,342
-
335,034
(19,367)
315,667
50,181
(6,381)
43,800
-
708
-
13,639
360,175
-
(3,925)
13,639
356,250
CONSOLIDATED
Balance at 30 June 2011
comprehensive income
Net profit after tax
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, in their
capacity as owners, and other transfers
Shares issued during the period
Share options issued during the period
in accordance with AASB 2 - share
based payment
Transfer from Option Reserve
to Share Capital
17
19
Sub-total
Dividends paid
Balance at 30 June 2012
comprehensive income
Net profit after tax
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, in their
capacity as owners, and other transfers
Shares issued during the period
Share options issued during the period
in accordance with AASB 2 - share
based payment
Transfer from Option Reserve
to Share Capital
17
19
73,070
238,204
4
-
(19,367)
73,070
218,837
-
-
-
789
-
291
49,184
-
49,184
-
-
-
-
-
-
-
-
-
50,181
-
50,181
-
-
-
Sub-total
Dividends paid
73,070
269,018
4
-
(3,925)
Balance at 30 June 2013
73,070
265,093
The accompanying notes form part of these financial statements
070
2013 annual report STaTeMenT OF CaSH FLOWS
for the year ended 30 June 2013
NOTE
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers & employees
Interest received
Net cash provided by operating activities
24
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant & equipment
Payments for exploration & evaluation activities
Payment for development activities
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments for dividends
Proceeds from bank loans
Net cash (used in) financing activities
Net (decrease) in cash and cash equivalents held
Cash & cash equivalents at the beginning of the financial year
Exchange rate adjustment
Cash & cash equivalents at the end of the financial year
24
The accompanying notes form part of these financial statements
CONSOLIDATED
2013
US$000
125,687
(30,911)
26
94,802
(43,405)
(10,350)
(45,682)
(99,437)
-
(3,925)
2,253
(1,672)
(6,307)
12,468
(1,463)
4,698
2012
US$000
92,545
(30,354)
370
62,561
(26,353)
(14,345)
(46,986)
(87,684)
1,079
(19,367)
-
(18,288)
(43,411)
62,431
(6,552)
12,468
medusa mining limited
nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
CONTENTS OF NOTES TO THE FINANCIAL STATEMENTS
PAGE NUMBER
1.
2.
3.
4.
5.
6.
7.
8.
9.
Statement of significant accounting policies
Revenue
Expenses
Dividends
Taxation
Earnings per share
Current receivables
Inventories
Other current assets
10.
Non-current receivables
11.
Property, plant and equipment
12.
Exploration, evaluation and development expenditure
13.
Borrowings
14.
Employee benefits
15.
Deferred tax
16.
Auditors’ remuneration
17.
Issued capital
18.
Reserves
19.
Share based payments
20.
Investments in subsidiaries
21.
Key management personnel remuneration
22.
Related parties
23.
Retained profits
24.
Notes to the statement of cash flows
25.
Financial risk management
26.
Commitments
27.
Events subsequent to reporting date
28.
Segment information
29.
Parent company information
30.
New standards and interpretations not yet adopted
31.
Franking account
32.
Company details
072
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110
110
2013 annual report nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board (AASB) 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 to which they apply. Medusa Mining
Limited is a for profit entity for the purpose of preparing the financial statements. Compliance with Australian Accounting
Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards
(IFRS). Material accounting policies adopted in the preparation of this financial report are presented below. They have been
consistently applied unless otherwise stated.
The financial report covers the Group of Medusa Mining Limited (“Medusa”) and controlled entities. Medusa is a listed public
company, incorporated and domiciled in Australia.
The separate financial statements of the parent entity, Medusa Mining Limited, have not been presented within this financial
report as permitted by the Corporations Act 2001.
The financial statements were authorised by the Directors on 27 August 2013.
BASiS OF PREPARATiON
RepoRtinG BASiS And ConventionS
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.
(a) Principles of consolidation
A controlled entity is any entity over which Medusa has the power to govern the financial and operating policies so as
to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and
potential voting rights are considered.
A list of controlled entities during the year ended 30 June 2013 is presented in note 20.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial
statements as well as their results for the year then ended. Where controlled entities have entered/ (left) the consolidated
group during the year, their operating results have been included/ (excluded) from the date control was obtained/ (ceased).
All intra-group balances and transactions between entities in the consolidated group, including any unrealised profits or
losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with those adopted by the parent entity.
(b) Comparative figures
Where required by Accounting Standards, comparative figures have been adjusted to conform with changes in presentation
for the current financial year.
(c) Change in accounting policy
The Group has adopted the following revisions and amendments to AASB’s issued by the Australian Accounting Standards
Board which are relevant to and effective for the Group’s financial statements for the annual period beginning 1 July 2013.
AASB 2010-8 Amendments to Australian Accounting Standard - Deferred Tax:
Recovery of Underlying Assets (Applies to annual reporting periods beginning on or after 1 January 2012)
AASB 2010-8 provides clarification on the determination of deferred tax assets and deferred tax liabilities when investment
property is measured using the fair value model in AASB 140 Investment Property. It introduces a rebuttable presumption
that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is
held within a business model where the objective is to consume substantially all of the economic benefits embodied in the
investment property over time, rather than through sale.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
AASB 2010-8 also includes the requirement that the measurement of deferred tax assets and deferred tax liabilities on
non-depreciable assets measured using the revaluation model in AASB 116 Property, Plant and Equipment should always
be based on recovery through sale. These amendments have had no impact on the Group.
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income
(Applies annual reporting periods beginning on or after 1 July 2012)
AASB 2011-9 requires entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether
they are potentially reclassifiable to profit or loss subsequently, and changes the title of ‘Statement of Profit or Loss and
other Comprehensive Income’ to ‘statement of profit or loss and other comprehensive income’.
The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on
the Group’s accounting policies or the amounts reported during the current half-year period. The adoption of AASB 2011-9
has resulted in changes to the Group’s presentation of its financial statements.
(d) Revenue recognition
Revenue from the sale of goods is recognised in the relevant reporting period when there has been a significant transfer
of risks and rewards to the customer and no further processing is required by the Group’s operations. In addition, the
quality and quantity of the goods must be determined with reasonable accuracy, the price is known or determinable and
collectability is probable. The point, at which risk passes, for the Group’s sales, is for the majority of the time, upon receipt
of the bill of lading or equivalent when the commodity is actually delivered for shipment.
Revenue is measured at the fair value of the consideration received or receivable.
Gold and silver sales
Revenue from the production of gold and silver is recognised when the group had a significant transfer of risk and rewards
to the buyer.
Bill and hold sales,
Bill and hold sales in which delivery is delayed at the buyer’s request but the buyer takes title and accepts billing revenue is
recognised when the buyer takes title, provided:
a) It is probable that delivery will be made
b) The item on hand, identified and ready for delivery to the buyer at the time the sale is recognised
c) The buyer specifically acknowledges the deferred delivery instructions and
d) The usual payment terms apply.
Interest Revenue
Interest revenue is recognised using the effective interest rate method, which for floating rate financial assets, is the rate
inherent in the instrument.
(e) Income tax
The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantively 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 as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
074
2013 annual report 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 the 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.
(f) Property, Plant and Equipment
Each class of Property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and
impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the profit or loss in the Statement of Profit or Loss and
other Comprehensive Income during the financial period in which they are incurred.
Depreciation
Plant and equipment (excluding the Co-O mine and milling equipment) is depreciated applying the straight line method over
their estimated useful lives, commencing from the time the asset is held ready for use.
Co-O mine and milling equipment ‘s useful life is estimated to approximate the expected life of the mine, the depreciation
rate is based on a charge proportional to the depletion of estimated recoverable gold ounces contained in indicated and
inferred resources.
Depreciation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are
reflected prospectively in current and future periods only.
The depreciation rates used for each class of depreciable assets are:
Class of fixed asset
Depreciation method
Depreciation rate (%)
Plant and equipment (excluding Co-O mine & milling equipment)
Office furniture and fittings
Straight line
Straight line
20% to 33%
7.5% to 20%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are included in profit or loss in the Statement of Profit or Loss and other Comprehensive Income.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
(g) Impairment of non-financial assets
At each reporting date, the Group 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 i.e. discounted cash flows, is compared
to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed in the
Statement of Profit or Loss and other Comprehensive Income.
Impairment testing is performed annually for intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
(h) Operating leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
straight line over the length of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of
the lease term.
(i) Payables
Payables are initially recognised at fair value and due to their short term nature they are measured at amortised cost and
not discounted.
(j) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective
interest rate method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an on-going basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the
trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
(k) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of
interest. Such expenditure comprises direct costs and does not include general overheads or administrative expenditure
not having a specific nexus with a particular area of interest.
Exploration expenditure for each area of interest is carried forward as an asset provided the rights to tenure of the area of
interest are current and one of the following conditions is met:
• The exploration and evaluation expenditures are expected to be recouped through successful development and
exploitation of the area of interest, or alternatively, by its sale; and
• Exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration expenditure is written off when it fails to meet at least one of the conditions outlined above or an area of interest
is abandoned.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances
076
2013 annual report suggest that the carrying amount exceeds the recoverable amount the impairment loss will be measured and disclosed in
accordance with AASB 136 Impairment of Assets.
When a decision is made to develop an area of interest, all carried forward exploration expenditure in relation to the area of
interest is transferred to development expenditure.
(l) Development expenditure
Development expenditure represents the accumulated exploration, evaluation, land and development expenditure incurred
by or on behalf of the Group in relation to areas of interest in which mining of a mineral resource has commenced.
When further development expenditure is incurred in respect of a mine property after commencement of production, such
expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby
established, otherwise such expenditure is classified as part of the cost of production. All horizontal development drives
which include permanent rail and associated infrastructure are capitalised.
Amortisation of costs is provided on the unit-of-production method with separate calculations being made -for each mineral
resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of the estimated
recoverable reserves. In some circumstances, where conversion of resources into reserves is expected, some elements of
resources may be included. Where the life of the assets are shorter than the mine life their costs are amortised based on
the useful life of the assets.
The estimated recoverable reserves and life of the mine and the remaining useful life of each class of asset is reassessed at
least annually. Where there is a change in the reserves/resources amortisation rates are correspondingly adjusted.
(m) Rehabilitation costs
Rehabilitation costs that are expected to be incurred are provided for as part of the cost of the exploration, evaluation,
development, construction or production phases that give rise to the need for restoration. Accordingly, these costs are
recognised gradually over the life of the facility as these phases occur. The costs include obligations relating to reclamation,
waste site closure, plant closure and other costs associated with the rehabilitation of the site.
These estimates of the rehabilitation obligation are based on anticipated technology and legal requirements and future
costs, which have been discounted to their present value. Any changes in the estimates are adjusted on a progressive
basis. In determining the rehabilitation obligations, the entity has assumed no significant changes will occur in the relevant
Federal, State or foreign legislation in relation to rehabilitation of such minerals projects in the future. At the reporting date,
the group does not consider it has any significant unsatisfied obligations in respect to rehabilitation costs.
(n) Employee benefits
Provision is made for the Group liability for employee benefits arising from services rendered by employees to reporting
date. Employee benefits expected to be settled within 12 months together with entitlements arising from wages, salaries
and annual leave which will be settled after 12 months, have been measured at the amounts expected to be paid when the
liability is settled plus related on-costs.
Other employee benefits payable later than 12 months have been measured at the present value of the estimated future
cash outflows to be made for those benefits.
Contributions are made by the Group to several employee superannuation funds and are charged as expenses
when incurred.
In respect of defined benefit plans, the cost of providing the benefits is determined using the projected unit credit method.
Actuarial valuations are conducted every three years, with valuations performed on an annual basis. Consideration is given
to any event that could impact the funds up to the end of the reporting period where the interim valuation is performed at
an earlier date.
The amount recognised in the Statement of Financial Position represents the present value of the defined benefit obligations
adjusted for any unrecognised actuarial gains and losses and unrecognised past service costs less the fair value of the
plan’s assets. Any asset recognised is limited to unrecognised actuarial losses, plus the present value of available refunds
and reductions in future contributions to the plan.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
Actuarial gains and losses are amortised over the expected average remaining working lives of the participating employees
in the plan. Gains or losses on the curtailment or settlement of a defined benefit plan are recognised in the profit or loss
in the Statement of Profit or Loss and other Comprehensive Income when the Group demonstrates commitment to the
curtailment or settlement.
Past service costs are recognised when incurred to the extent that benefits are vested, and are otherwise amortised on a
straight-line basis over the vesting period.
(o) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the
amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). 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 are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the Statement of Financial Position. Cash flows are included
in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing
activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(p) Operating Segments
Operating Segments are identified on the basis of internal management reports that are regularly reviewed by the entity’s
chief operating decision maker, for the purposes of allocating resources and assessing performance.
Segment revenues and expenses are those directly attributable to the segments. Segment assets consist principally of
cash, receivables, other financial assets, property, plant and equipment, net of allowances and accumulated depreciation
and mineral properties. Segment liabilities consist principally of accounts payable and provisions.
(q) Earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the net profit or loss attributable to members of the Company
for the reporting period, after excluding any costs of servicing equity (other than ordinary shares and converting preference
shares classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of
the Company, adjusted for any bonus issue.
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated
with potential ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with
potential ordinary shares, by the weighted average number of ordinary shares and potential ordinary shares adjusted for
any bonus issue.
(r) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is the currency of the primary economic environment in which that
entity operates. Though the Company’s functional currency is Australian dollars the presentation currency for the Group is
US dollars. The reason for using US dollars as the presentation currency is US dollars is the primary currency used in the
global gold market.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit before income tax in the
Statement of Profit or Loss and other Comprehensive Income.
078
2013 annual report Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
- income and expenses are translated at average exchange rates for the period where this approximates rate at the
transaction date; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve in the Statement of Financial Position. These differences are
reclassified from equity to profit or loss (as a reclassification adjustment) in the period in which the operation is disposed.
The functional currency of the parent entity, Medusa Mining Limited is Australian dollars, Mindanao Mineral Processing and
Refining Corporation is United States dollars and the remaining entities are Philippine pesos. The reason for using USD as
the presentation currency is USD is the primary currency used in the global gold markets.
(s) Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents include:
- cash on hand and at call deposits with bank or financial institutions, net of bank overdrafts; and
- investments in money market instruments with less than 30 days to maturity.
These amounts are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
(t) Financial instruments
Initial recognition and 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 (i.e. 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 either of fair value or amortised cost using the effective interest
rate method. Fair value represents the amount for which an asset could be exchanged or a liability settled, between
knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other
circumstances, valuation techniques are adopted.
amortised cost is calculated as:
(a) the amount at which the financial asset or financial liability is measured at initial recognition;
(b) less principal repayments;
(c) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the
maturity amount calculated using the effective interest method; and
(d) less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that exactly 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 in profit or loss.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit and loss
through the amortisation process and when the financial asset is derecognised.
(ii) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Gains or losses are recognised in profit and loss through the amortisation process and when the financial liability
is derecognised.
Fair value
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.
Impairment
The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial
asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or
obligor; a breach of contract such as a default or delinquency in payments; the lender granting to a borrower concessions
due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter
bankruptcy or other financial reorganization; the disappearance of an active market for the financial asset; or observable
data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for financial assets carried at cost is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the current market rate of return for similar
financial assets.
De-recognition
Financial assets are de-recognised where the contractual rights to receipt of cash flows expires 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 de-recognised where the related obligations are either 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.
(u) Inventories
Raw materials and stores, ore stockpiles and work in progress and finished gold stocks are physically measured or
estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell is assessed
annually based on the amount estimated to be obtained from sale of the item of inventory in the normal course of business,
less any anticipated costs to be incurred prior to its sale.
Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure
and depreciation and amortisation relating to mining activities, the latter being allocated on the basis of normal operating
capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value
is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
costs necessary to make the sale.
Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted
average cost, which includes the cost of purchase as well as transportation and statutory charges, or net realisable value.
Any provision for obsolescence is determined by reference to specific stock items identified.
Gold Inventory is comprised of gold in circuit and gold dore held at site where risk and reward has not passed to the customer.
During the exploration and development phase, where the cost of extracting the ore exceeds the likely recoverable amount,
work in progress inventory is written down to net realisable value.
080
2013 annual report (v) Share based payments
The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense
over the vesting period, with a corresponding increase to an equity account.
The fair value of options is ascertained using a Black-Scholes pricing model. The number of shares and options expected to
vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration
for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
(w) Defined Benefit Fund
The Company has a funded non-contributory retirement plan for it’s employees in the Philippines. The cost of providing
benefits is determined using the Projected Unit Credit Method which reflects services rendered by employees to the date
of valuation and incorporates assumptions concerning employees’ projected salaries.
The retirement benefit obligation recognised in the Statement of Financial Position represents the present value of the
defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of plan assets.
The funding policy is to contribute an amount based on the actuarial valuation report which is carried out at regular intervals.
(x) Critical accounting estimates and judgments
The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group.
Key estimates - Impairment of non-financial assets
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to
impairment of non-financial assets (refer note 1(g)). Where an impairment trigger exists, the recoverable amount of the
asset is determined. value-in-use calculations performed in assessing recoverable amounts incorporate a number of key
estimates. Refer to details of key elements and carrying values of non-financial assets at note 11.
Key estimates - Recoverability of long lived assets
Certain assumptions are required to be made in order to assess the recoverability of capitalised development expenditure
(refer to note 12). Key assumptions include the future price of gold, future cash flows, an estimated discount rate and
estimates of ore reserves. In addition, cash flows are projected over the life of mine, which is based on proved and
probable ore reserves. Estimates of ore reserves in themselves are dependent on various assumptions, in addition to those
described above, including cut-off grades. Changes in these estimates could materially impact on ore reserves, and could
therefore affect estimates of future cash flows used in the assessment of recoverable amount.
Key estimates - Determination of ore reserves and remaining mine life
The Company estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as
defined in accordance with the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
as revised December 2004 (the JORC code)). Reserves determined in this way are taken into account in the calculation of
depreciation of mining plant and equipment (refer to note 11), amortisation of capitalised development expenditure (refer to
note 12), and impairment relating to these assets.
In estimating the remaining life of the mine for the purpose of amortisation and depreciation calculations, due regard is
given, not only to the amount of remaining recoverable gold ounces contained in proved and probable ore reserves, but
also to limitations which could arise from the potential for changes in technology, demand, and other issues which are
inherently difficult to estimate over a lengthy time frame.
Where a change in estimated recoverable gold ounces contained in proved and probable ore reserves is made, depreciation
and amortisation is accounted for prospectively,
The determination of ore reserves and remaining mine life affects the carrying value of a number of the consolidated entity’s
assets and liabilities including deferred mining costs and the provision for rehabilitation.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
Key estimates - Exploration and evaluation expenditure
The consolidated entity’s accounting policy for exploration and evaluation expenditure (refer to note 12) results in certain
items of expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future
exploitation or sale where the activities have not reached a stage which permits a reasonable assessment of the existence
of reserves. This policy requires management to make certain estimates and assumptions as to future events and
circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates
and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the
policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off
to the profit and loss in the Statement of Profit or Loss and other Comprehensive Income.
Key estimates - Development expenditure
Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied
by management in determining when a project is economically viable. In exercising this judgment, management is required
to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation
expenditure. Any such estimates and assumptions may change as new information becomes available. If, after having
commenced the development activity, a judgement is made that a development asset is impaired, the appropriate amount
will be written off to the Statement of Profit or Loss and other Comprehensive Income.
Key estimates - Share based payments
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity. (Refer to note 19).
Key estimates - vAT
The company has net vAT of $26m that comprises tax credit certificates (TCC) and vAT claimable for cash. The current
asset portion of vAT $26m comprises amounts that is estimated to be utilised by TCC to offset various indirect taxes
within the current period, and $8m represents applications that intended be submitted to claim cash refund within the
2014 financial year. The non-current amount of vAT receivable of $2.6m represents the estimated amount utilised in future
periods against tax liabilities of $2.6m.
(y) Rounding of amounts
The Company has applied the relief available to it under Class Order 98/100 and accordingly, amounts in the financial
report and directors’ report have been rounded to the nearest $1,000
082
2013 annual report 2. REVENUE
Operating activities:
Gold and silver sales
Non-operating activities:
Interest revenue
Foreign exchange gain
Other
Total revenue
3. EXPENSES
Profit before income tax expense/(income) has been
determined after charging/(crediting) the following items:
Depreciation of non-current assets (Note 11)
Amortisation expense (Note 12)
Total depreciation & amortisation
Employee benefits expense
Defined Contribution
Defined Benefit
Exploration expenditure written off
Impairment losses:
- assets written off
Operating lease rental:
- minimum lease payments
4. DIVIDENDS
Final un-franked dividend of A$0.02 per share was declared on 29 August
2012 and paid on 4 October 2012 (2012: 5 cents a share declared on 29
August 2011 and paid on 30 September 2011)
No Interim dividend was declared (2012: 5 cents a share declared on 21
February 2012 and paid on 23 March 2012)
CONSOLIDATED
2013
US$000
2012
US$000
100,622
80,802
24
3
31
368
5
13
100,680
81,188
6,121
6,934
13,055
6,366
73
298
6,849
61
61
87
3,925
-
3,925
4,594
5,305
9,899
8,771
141
270
-
-
-
87
9,348
10,019
19,367
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
5. TAXATION
(a) The components of tax expense comprise:
Current tax
Deferred tax (Note 15)
(b) The prima facie tax on profit before income tax is reconciled to the
income tax as follows:
Operating profit before income tax
Prima facie income tax expense/(credit) at 30% (2011: 30%)
on operating profit
less - tax effect of:
Other non-deductible/(non-assessable) expenses
Difference of effective foreign income tax rates
Deferred tax adjustment
Income tax expense/(benefit)
The applicable weighted average effective tax rates are as follows
The reason for the 0% weighted average effective tax rate for the
current year is due to the impact of the tax free holiday in Mindanao
Mineral Processing and Refining Corporation, a subsidiary of the
parent entity, through which sales of bullion are recorded.
(c) Deferred tax assets not brought to account, the benefits of which will
only be realised if the conditions for deductibility set out in Note 1(e)
occur:-
- Temporary differences
- Australian tax losses
- Philippine tax losses
CONSOLIDATED
2013
US$000
2012
US$000
116
(112)
4
50,185
15,056
1,266
(17,700)
1,382
4
0%
213
(1,321)
(1,108)
48,076
14,423
1,603
(17,134)
-
(1,108)
0%
1,515
2,775
-
4,290
511
2,774
1,153
4,438
The benefit of tax losses will only be obtained if:
(i) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Group in realising the benefit.
6. EARNINGS PER SHARE
Earnings used to calculate basic and diluted EPS
50,181
49,184
Weighted average number of ordinary shares used in the calculation of
the basic earnings per share.
Weighted average unlisted options outstanding
188,903,911
188,747,505
1,964,313
272,653
Weighted average of ordinary shares diluted as at 30 June 2013
190,868,224
189,020,158
084
2013 annual report 7. CURRENT RECEIVABLES
Gold awaiting settlement
GST/vAT receivables
Other receivables
Total current receivables
Refer ageing analysis in Financial Instruments Note 25(b).
8. INVENTORIES
Consumables - at cost
Ore stockpile - at cost
Gold Inventory - at cost
Total inventories
9. OTHER CURRENT ASSETS
Prepayments
10. NON CURRENT RECEIVABLES
GST/vAT receivables
Total non-current receivables
11. PROPERTY, PLANT & EQUIPMENT
Plant & equipment:
At cost
less - accumulated depreciation
Total plant and equipment at net book value
Furniture & fittings:
At cost
less - accumulated depreciation
Total furniture & fittings at net book value
Total carrying amount at end of year
Reconciliations:
Plant and equipment:
Carrying amount at beginning of year
plus - additions
plus - forex differences on translation
less - depreciation
Carrying amount at end of year
Furniture & fittings:
Carrying amount at beginning of year
plus - additions
less - disposals
plus - forex differences on translation
less - depreciation
Carrying amount at end of year
CONSOLIDATED
2013
US$000
2,881
23,315
3,421
29,617
9,283
3,593
5,463
18,339
2012
US$000
27,935
19,323
8,706
55,964
4,935
3,938
5,770
14,643
662
707
2,600
2,600
124,010
(22,832)
101,178
769
(398)
371
-
-
82,529
(18,966)
63,563
667
(301)
366
101,549
63,929
63,563
44,154
264
(6,803)
101,178
366
121
(61)
55
(110)
371
39,715
28,088
251
(4,491)
63,563
293
168
-
8
(103)
366
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
12. EXPLORATION , EVALUATION
& DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditure:
At cost
Development expenditure:
At cost
less - accumulated amortisation
Net development expenditure
Total carrying amount at end of year
Reconciliations:
Exploration and evaluation expenditure:
Carrying amount at beginning of year
plus - costs incurred
less - transferred to development
less - expenditure written off
plus/(less) - forex differences upon translation
Carrying amount at end of year
Development expenditure:
Carrying amount at beginning of year
plus - costs incurred
plus - transferred from exploration
less - amortisation expense
plus - forex differences upon translation
Carrying amount at end of year
13. BORROWINGS
Current borrowings
Unsecured liability – Interest bearing loan
Total Current borrowings
Non-Current borrowings
Secured liability – Interest bearing loan
Unsecured liability – Interest bearing loan
Total Non-Current borrowings
Total
CONSOLIDATED
2013
US$000
2012
US$000
29,186
42,461
215,482
(24,706)
190,776
219,962
42,461
24,017
(25,973)
(6,849)
(4,470)
29,186
140,436
34,494
25,973
(7,831)
(2,296)
190,776
1,725
1,725
134
394
528
2,253
158,236
(17,800)
140,436
182,897
27,100
35,107
(19,319)
-
(427)
42,461
89,282
28,957
19,319
(5,305)
8,183
140,436
-
-
-
-
-
-
Philsaga Mining Corporation (“Philsaga”), a subsidiary of the Company, obtained a short term unsecured facility from
Metropolitan Bank and Trust Company (“Metrobank”) in the Philippines of US$4.5M of which the outstanding balance at 30
June 2013 amounted to US$1.6M. The facility attracts an interest rate of 4% and expires during March 2014.
Philsaga obtained and has drawndown an unsecured facility of US$ 0.5M from Metrobank which is repayable over 5 years
at an interest rate of 2.7%
At balance date Philsaga has US$4.3M from Metrobank available as a facility for drawdown.
Philsaga obtained secured loans from two banks totalling US$0.2M. The security of the loans is the equipment purchased
and covers varying loan periods not exceeding 5 years and an average interest rate of 9%
Mindanao Mineral Processing and Refining Company, a subsidiary of Medusa, has availed itself of a facility from Security
Bank in the Philippines totalling US$4.7M. As at balance date the facility has not been utilised.
086
2013 annual report CONSOLIDATED
2013
US$000
2012
US$000
1,017
1,017
753
753
920
920
520
520
14. EMPLOYEE BENEFITS
Current:
Employee benefits
Total current employee benefit
Non-Current:
Retirement Benefit
Total current employee benefit
The Retirement benefit in Non-current liabilities relates to Philippine
based employees defined benefit plan. The most recent actuarial
valuations of plan assets and the present value of the defined benefit
obligation were carried out at 30 June 2012 by Actuarial Advisers and
management assessment for 30 June 2013. The present value of the
defined benefit obligation and the related current service cost and past
service cost was measured using the Projected Unit Credit method.
The principal assumptions used for the purposes of the actuarial
valuations were as follows:
Discount Rate
Expected rate of salary increase
6.14%
3.00%
6.14%
3.00%
Assumptions were developed by management with the assistance
of independent actuarial appraisers. Discount factors are determined
close to year-end by reference to high quality Government bonds that
are denominated in the currency in which the benefits will be paid and
that have terms to maturity approximating to the terms of the related
pension obligation. Other assumptions are based on management’s
historical experience.
Amounts recognised in profit or loss in respect of these defined benefit
plans are as follows:
Current service cost
Interest on obligation
Amortisation of past service cost-non vested
Total
The amount included in the statements of financial position arising from
the entity’s obligation in respect of its defined benefit plans is as follows:
Present value of defined benefit obligation
Unrecognised actuarial loss
Unamortised past service cost-non vested
Total
Movements in the present value of the defined benefit obligation in the
current period were as follows:
Balance beginning
Current service cost
Interest Cost
Unrecognised actuarial loss
Benefits paid
Foreign exchange gains/(loss)
Balance ending
191
46
61
298
910
(40)
(117)
753
739
191
46
-
(44)
(22)
910
173
38
59
270
739
(41)
(178)
520
469
173
38
41
-
18
739
The Company has no plan assets held by trustees but an employee retirement fund amounting to US$1,145,538 was
appropriated as at June 30, 2013. The employee retirement fund is presented as part of cash at bank as disclosed in Note 22.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
CONSOLIDATED
Opening
Balance
US$000
Forex on
translation
US$000
Credit/
(charged)
to Income
US$000
Closing
Balance
US$000
15. DEFERRED TAX
Consolidated Group
30 June 2013
Deferred tax liability
Capitalised exploration & evaluation expenditure
257
Deferred tax assets
Carried forward tax losses
Other
Carried forward tax losses
Consolidated Group
30 June 2012
Deferred tax liability
Capitalised exploration & evaluation expenditure
Deferred tax assets
Carried forward tax losses
1,632
1,632
257
78
(4)
(29)
(29)
-
(112)
(152)
152
-
-
141
1,451
152
1,603
257
233
1,321
1,632
CONSOLIDATED
2013
US$000
2012
US$000
16. AUDITOR’S REMUNERATION
remuneration received or due and receivable by the company’s
auditors, Grant Thornton audit Pty ltd for:
• auditing or reviewing the financial reports
• other services:
- financial reporting advice
- other services provided by related practice of auditor -
taxation and compliance
Total auditor’s remuneration
remuneration of other auditors of the company’s Philippines subsidiaries
for:
• auditing or reviewing the financial reports
• other services:
- other services provided by related practice of auditor -
legal and taxation
Total auditor’s remuneration
149
11
15
175
67
13
80
158
8
14
180
67
132
199
088
2013 annual report 17. ISSUED CAPITAL
188,903,911 ordinary shares (30 June 2012: 188,903,911)
less: issue costs
Total issued capital
Ordinary shares
Balance at beginning of year
Ordinary shares issued during the year:
(i) 600,000 options converted at A$1.25 each
(ii) 10,000 options converted at A$4.40 each
(iii) 10,000 options converted at A$4.40 each
plus: Transfer from option reserve
Balance at end of year
Ordinary shares
CONSOLIDATED
2013
US$000
73,070
-
73,070
73,070
-
-
-
-
2012
US$000
77,433
(4,363)
73,070
71,990
668
45
76
291
73,070
73,070
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Balance at beginning of year
Ordinary shares issued during the year:
14 September 2011
23 November 2011
16 December 2011
Balance at end of year
Capital Management
188,903,911
188,233,911
-
-
-
594,000
10,000
66,000
188,903,911
188,903,911
Management controls the capital of the Group by monitoring performance against budget to provide the shareholders with
adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group’s liabilities and capital includes ordinary share capital, options and financial liabilities, supported by financial
assets.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt levels,
distributions to shareholders and share issues.
Capital for the reporting period under review is summarised as follows:
Total Equity
Cash and cash equivalents
Capital
Total equity
Borrowings
Overall financing
Capital-to-overall financing ratio
There are no comparatives provided as borrowings were introduced in the current financial year.
2013
US$000
356,250
(4,698)
351,552
356,250
2,253
358,503
0.98
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
18. RESERVES
Option and performance rights reserve
Foreign currency translation reserve
Total reserves
(a) Option and performance rights reserve
CONSOLIDATED
2013
US$000
4,448
13,639
18,087
2012
US$000
3,740
20,020
23,760
The option reserve records items recognised as expenses on valuation of share based payments.
Unlisted options over ordinary shares at 30 June 2013 (unless otherwise stated, all unlisted options and performance rights have full vesting rights)
• 140,000 options expiring 28 November 2013 and exercisable at A$4.40 each
• 575,000 options expiring 3 July 2014 and exercisable at A$8.10 each (none of the options were vested at reporting date).
• 250,000 performance rights with various vesting dates (refer note 17(iii)) (none of the performance rights were vested at reporting date.)
• 1,000,000 options expiring 3 January 2015 and exercisable at A$5.10 each (none of the options were vested at reporting date).
The above unlisted options and performance rights do not entitle the holders to participate in any share issue of
the Company.
(b) Foreign Currency Translation Reserve
The foreign currency translation reserve for the group records exchange differences arising on translation of foreign
controlled subsidiaries.
19. SHARE BASED PAYMENTS
The following share based payment arrangements existed during 30 June 2013:
(i) Under an agreement dated 14 September 2009, and subsequently approved by shareholders at the Annual General
Meeting held on 17 November 2010, 150,000 options to acquire fully paid ordinary shares of the Company were issued
to a consultant. The options were valued at A$1.872 using a Black Scholes options pricing model. This price was
calculated under this valuation model (using historical share price volatility measures) and applying the following inputs:
Weighted average exercise price
- A$4.40
Weighted average life of option
- 36 months
Share price volatility
Risk free rate
Dividend Yield
- 60%
- 5.13%
- 0.81%
At reporting date 140,000 options remain unexercised.
(ii) On 4 July 2011, 575,000 options were issued to Philippine based employees. The options which hold no voting or
dividend rights have an expiry date of 3 July 2014 and are exercisable at A$8.10 per option. Under the terms of the Issue
the employees would be required to remain in the employment of the Company at 3 July 2012 to achieve 50% vesting
of the options, with full vesting if they remain employees of the Company a year later on 3 July 2013. At reporting date all
options remain unexercised.
(iii) At the Company’s Annual General Meeting on 10 November 2011 shareholders approved the issue of 250,000
Performance Rights to the Managing Director Peter Hepburn-Brown. A Performance Right entitles Mr Brown to acquire
one fully paid ordinary share in the Company subject to the satisfaction of certain performance criteria, as set out in the
terms of the grant of the performance right. Under the terms of the grant Mr Brown would be required to remain in the
employment of the Company at the vesting date.
During the year 250,000 Performance Rights lapsed due to performance criteria not being met.
090
2013 annual report The vesting periods applicable to the Performance Rights are as follows:
Number of Tranche 1 Rights
Grant Date
Vesting Date
100,000
(40% of the total number of
Performance Rights)
11 November 2011
As soon as the new Co-O Plant is
successfully commissioned within
budget, but provided this successful
commissioning of the Co-O Plant
within budget occurs on or before 30
June 2013.
Number of Tranche 2 Rights
Grant Date
Vesting Date
Year 1
50,000
(20% of the total number of
Performance Rights)
Year 2
50,000
(20% of the total number of
Performance Rights)
Year 3
50,000
(20% of the total number of
Performance Rights)
11 November 2011
11 November 2011
11 November 2011
30 June 2014 or 1 year after the
vesting Date of the Tranche 1
Performance Rights
(whichever is the earlier)
30 June 2015 or 2 years after
the vesting Date of the Tranche 1
Performance Rights
(whichever is the earlier)
30 June 2016 or 3 years after
the vesting Date of the Tranche 1
Performance Rights
(whichever is the earlier)
(iv) On 3 January 2012, 1,000,000 options were issued to Philippine based employees. The options which hold no voting
or dividend rights have an expiry date of 3 January 2015 and are exercisable at A$5.10 per option. Under the terms of
the Issue the employees would be required to remain in the employment of the Company at 3 January 2013 to achieve
50% vesting of the options, with full vesting if they remain employees of the Company a year later on 3 January 2014.
At reporting date all options remain unexercised.
Share based options and
performance rights
2013
2012
Number of
options and
performance
rights
Weighted
average exercise
price (A$)
Number of
options and
performance
rights
Weighted
average exercise
price (A$)
Outstanding at start of year
1,965,000
4.4000
Granted
Forfeited
Exercised
Outstanding at year end
Exercisable at year end
-
(250,000)
-
1,715,000
927,500
-
-
-
6.0487
4.4000
750,000
1,825,000
-
(610,000)
1,965,000
140,000
1.8800
5.3466
-
(1.3016)
5.0547
4.4000
During the year 250,000 Performance Rights lapsed due to performance criteria not being met.
The options and performance rights outstanding at 30 June 2013 (all of which are unlisted) had a weighted average
exercise price of A$5.7915 and a weighted average remaining contractual life of 15.25 months.
Included under administration expense in the Statement of Profit or Loss and other Comprehensive Income is (US$707,408)
(2012: US$1,952,240) and relates, in full, to equity-settled share based payment transactions relating to employees and nil
(2012: US$389,590) share based payment relating to a consultant (refer note 17(i)).
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
20. INVESTMENT IN SUBSIDIARIES
The following companies are controlled entities of Medusa Mining Limited as at 30 June 2013:
Controlled Entities
Date of
incorporation
Country of
incorporation
Medusa Exploration & Development Corporation
29 May 2003
Philippines
Phsamed Mining Corporation
23 Apr 2003
Philippines
Medusa Overseas Holding Corporation
08 May 2003
Philippines
Philsaga Mining Corporation
17 May 2001
Philippines
% interest held
2013
40%
40%
40%
40%
2012
40%
40%
40%
40%
Mindanao Mineral Processing and Refining Corporation
03 Nov 2005
Philippines
100%
100%
MEDUSA MINING LIMITED
100%
40%
MMPRC
3x Filipino
Directors
60%
MEDC
100%
MOHC
100%
PMC
Philipines entities:
- Mindanao Mineral Processing & Refining (“MMPRC”) - Processing Company
- Medusa Overseas Holding Corporation (“MOHC”) - Holding Company
- Medusa Exploration & Development Corporation (“MEDC”) -
Company Providing Geological Services
- Phsamed Mining Corporation (“Phsamed”) - Mining and Exploration Company
- Philsaga Mining Corporation (“PMC”) - Mining and Exploration Company
100%
Phsamed
Medusa Mining Limited (“Medusa”) holds 40% of the issued shares of Medusa Exploration and Development Corporation
(“MEDC”). As Medusa has various agreements in place and pursuant to local statutory provisions, Medusa has effective sole
rights to the economic returns of MEDC and its subsidiary companies. In such circumstances, the assets and liabilities of
MEDC and its subsidiaries have been attributed 100% to the Consolidated Entity.
21. KEY MANAGEMENT PERSONNEL REMUNERATION
This note is to be read in conjunction with Remuneration section of the Directors’ Report.
(a) Remuneration
The totals of remuneration paid to Key Management Personnel of the Group are as follows:
CONSOLIDATED
2013
US$000
2,634
51
-
2,685
2012
US$000
4,007
128
1,575
5,710
Short-term benefits
Post-employment benefits
Share based payments
Total
092
2013 annual report (b) Option holdings
The movement during the year in the number of options over ordinary shares in Medusa Mining Limited held directly,
indirectly or beneficially, by each key management personnel, including their personally related entities is as follows:
FINANCIAL YEAR 2012/13
Name
Directors
Balance
held
01/07/12
Options/rights
granted as
remuneration
Options/
rights
exercised
Geoffrey Davis
-
Peter Hepburn-Brown
250,000
Robert Weinberg
Andrew Teo
Ciceron Angeles
Gary Powell
-
-
-
-
Raul villanueva
300,000
Executives
Peter Alphonso
Roy Daniel
Samuel Afdal
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Options vested and exercisable are all the options vested at the reporting date;
2. Options that are not exercisable have not vested at the reporting date
FINANCIAL YEAR 2011/12
-
-
-
-
-
-
-
-
-
-
Options/
rights not
exercised
& lapsed
-
(250,000)
-
-
-
-
-
-
-
-
Balance
held
30/06/13
Vested &
exercisable
30/06/13 (1)
Total not
exercisable
30/06/13 (2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
150,000
150,000
-
-
-
-
-
-
-
-
-
Balance
held
01/07/11
Options/rights
granted as
remuneration
Options/
exercised
Options/
not
exercised
& lapsed
Balance
held
30/06/12
Vested &
exercisable
30/06/12 (1)
Total not
exercisable
30/06/12 (2)
Name
Directors
Geoffrey Davis
Peter Hepburn-Brown (3)
Robert Weinberg
Andrew Teo
Ciceron Angeles
Executives
Roy Daniel (5)
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
-
-
-
80,000
-
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Peter Alphonso (4)
80,000
Samuel Afdal (6)
-
1. Options vested and exercisable are all the options vested at the reporting date;
2. Options that are not exercisable have not vested at the reporting date
3. Allocated 250,000 performance rights on 11 November 2011
4. Exercised the options at A$1.25 per option
5. Retired as Finance Director 09 June 2011 but continued in an executive role as Chief Financial Officer until 1 July 2013
6. Resigned on 10 December 2012
medusa mining limited
nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
(b) Share holdings
The movement during the year in the number of ordinary shares in Medusa Mining Limited held directly, indirectly or
beneficially, by each key management personnel, including their personally related entities is as follows:
FINANCIAL YEAR 2012/13
Name
Directors
Balance
30/06/12
Shares
held at
appointment
Bonus
Issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/13
Geoffrey Davis
4,052,750
Robert Weinberg
Peter Hepburn-Brown
Andrew Teo
Ciceron Angeles
Raul villanueva (1)
Gary Powell (2)
Executives
Roy Daniel
Peter Alphonso
Samuel Afdal (3)
59,975
17,000
65,000
-
-
-
1,425,000
126,500
1,450,000
1. Appointed 24 January 2013
2. Appointed 24 January 2013
3. Resigned 10 December 2012
FINANCIAL YEAR 2011/12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
2,700
5,000
10,000
-
-
-
-
1,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,102,750
62,675
22,000
75,000
-
-
-
1,425,000
127,500
1,450,000
-
Balance
30/06/11
Shares
held at
appointment
Bonus
Issue(4)
of shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/12
Name
Directors
Geoffrey Davis
5,052,750
Robert Weinberg
Peter Hepburn-Brown
Andrew Teo
Ciceron Angeles(1)
Executives
Roy Daniel(2)
Peter Alphonso
Samuel Afdal
57,475
15,000
60,000
-
1,422,006
54,700
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,000
-
-
2,500
2,000
5,000
-
2,994
3,800
-
-
-
-
-
-
-
(1,000,000) 4,052,750
-
-
-
-
59,975
17,000
65,000
-
- 1,425,000
80,000
(20,000)
126,500
-
(550,000) 1,450,000
1. Appointed 28 June 2011
2. Retired as Finance Director 09 June 2011 but continued in an executive role as Chief Financial Officer.
094
2013 annual report 22. RELATED PARTIES
Related parties transactions of Medusa Mining Limited fall into the following categories:-
Key Management Personnel related parties
The following were key management personnel of the Group at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period.
Directors
Non-Executive Directors:
Geoffrey Davis - Chairman
Robert Weinberg
Mr Andrew Teo
Mr Ciceron Angeles
Mr Gary Powell (appointed 24 January 2013)
Executive Directors:
Mr Peter Hepburn-Brown - Managing Director
Mr Raul villanueva - President Philsaga Mining Corporation (appointed 24 January 2013)
Executives
Peter Alphonso - Company Secretary
Roy Daniel - Chief Financial Officer
Samuel Afdal - President, Philsaga Mining Corporation (resigned 10 December 2012)
Details of Key Management Personnel’s remuneration, shareholdings and option holdings are set out in the Remuneration
Report section of the Directors’ Report.
Apart from the Key Management Personnel related transactions with the Company or its controlled and affiliated entities
disclosed in this note, no Key Management Personnel has entered into a material contract with the Company since the end
of the financial year and there were no material contracts involving Management Personnel’s’ interests subsisting at year end.
Related parties:
Geoffrey Davis, Robert Weinberg, Peter Hepburn-Brown, Andrew Teo, Ciceron Angeles, Raul
villanueva and Gary Powell.
Type of transaction:
Director Protection Deed (“Deed”)
Transaction details:
The Deed entered into by the Company with each of the Directors of the Company, indemnifies
the Directors to the extent permitted by law, against any liability, which he may incur whilst
carrying out his duties as a Director of the Company and against any costs and expenses
incurred in defending legal proceedings brought against him as a Director.
The Deed requires the Company to maintain in force Directors’ and Officers’ Liability Insurance,
with an agreed cover level, for the duration of the Directors’ term of office and a period of 7
years thereafter.
The Deed also provides for the Directors to have access to the Company’s documents (including
Board papers) for a period of 7 years after he ceases to be a Director, subject to certain
confidentiality and other requirements being observed.
medusa mining limited
nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
Related party:
Cedardale Holdings Pty Ltd
Nature of relationship:
Director related entity (Geoffrey Davis)
Type of transaction:
Lease of office premises
Transaction details:
The Company occupies and leases its office premises (inclusive of parking bays) from Cedardale
Holdings Pty Ltd at an average rate of A$5,984; (2012: A$5,878) per month.
During the year, Cedardale Holdings Pty Ltd charged the Company A$71,306; (2012: A$71,553)
for the lease of office premises. No amounts outstanding at year end (2012: nil).
Related party:
Harvest Services Aust Pty Ltd
Nature of relationship:
Director related entity (Geoffrey Davis)
Type of transaction:
Consultancy Services Agreement
Transaction details:
Under the terms of this Consultancy Services Agreement, Harvest Services Aust Pty Ltd
(“Harvest Services”), a Company associated with Geoffrey Davis, agrees to provide the services
of Geoffrey Davis to the Company, commencing 1 July 2011.
Harvest is entitled to receive a consultancy fee of A$3,000 per day (excluding GST) and the
reimbursement of out of pocket expenses in respect of the provision of services as and when
reasonably required by the Company. The Company does not guarantee to make a minimum
number of requests for the provision of services.
During the year, Harvest Services charged the Company fees of A$27,597 (2012: A$756,750
which included a bonus A$375,000 approved by the Board of Directors). No amount remains
outstanding at year end (2012: nil).
Related parties:
Secdea Philippines Holdings Corporation & Advanced Concepts Holdings Limited
Nature of relationship:
Executive related entities (Samuel Afdal)
Type of transaction:
Royalty Deed of Agreement
Transaction details:
On 4 December 2006, Philsaga Mining Corporation (“Philsaga”), a related entity of Medusa,
executed a royalty agreement with the Secdea Philippines Holdings Corporation (a company
associated with Samuel Afdal), Yandal Investments Pty Ltd and Advanced Concepts Holdings
[collectively the “Royalty vendors”].
Under the terms of the royalty deed of agreement, Philsaga has agreed to pay the Royalty
vendors a royalty of US$20 per ounce of recovered gold obtained from extensions of the Co-O
Mine system mined on the eastern side of the Oriental Fault up to a limit of US$10 million. The
royalty will be payable on a quarterly basis.
During the year, US$54,700 (2012: US$104,771) was paid. US$137,623 (2012: US$26,799)
remained outstanding at year end.
096
2013 annual report
Related party:
SBF Philippines Drilling Resources Corporation
Nature of relationship:
Executive related entity (Samuel Afdal)
Type of transaction:
Drilling Services Agreement
Transaction details:
On 4 December 2006, Philsaga Mining Corporation (“Philsaga”), a related entity of Medusa,
entered into a drilling services agreement with SBF Philippines Drilling Resources Corporation
(“SBF Drilling”), a company associated with Samuel Afdal.
Under the terms of the drilling services agreement, Philsaga has engaged SBF Drilling to provide
Philsaga or the Medusa group of companies, with drilling services for the Co-O Mine and area
and further provide equipment, labour and expertise with respect to drilling services.
The engagement of SBF Drilling by Philsaga is for an initial term of 3 years and is renewable
thereafter for 1 year periods by mutual agreement between the parties. In consideration of SBF
Drilling providing the services, Philsaga will pay SBF Drilling commercial rates for its services.
During the year, SBF Drilling charged Philsaga US$15,462,098 (2012: US$24,901,184) in fees.
US$6,070,760 (2012: US$5,714,077) remains outstanding at year end.
Related party:
Boonjarding Ltd
Nature of relationship:
Director related entity (Gary Powell)
Type of transaction:
Mining & Mineral exploration consultancy services
Transaction details:
During the financial year consultancy fees of US$160,204 (2012: Nil) was charged to Philsaga.
medusa mining limited
nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
23. RETAINED PROFITS
Retained profit / at start of year
Net profit attributable to members of Company
Dividends Paid
Retained profits at end of year
24. NOTES TO STATEMENT OF CASH FLOWS
(a) Reconciliation of cash:
For the purposes of the Statement of Cash Flows, cash includes
cash on hand and short term deposits at call, net of outstanding
bank overdrafts. Cash at the end of the financial year as shown in
the Statement of Cash Flows is reconciled to the related items in the
Statement of Financial Position as follows:-
Cash at bank
Cash on hand
Total cash assets
(b) Reconciliation of profit after income tax to net cash provided
by operating activities:
Profit after income tax
add/(less)-
Non-cash items:
- Depreciation/ amortisation
- Exploration expenses written off
- Recognition of share based expenses
- Impairment
- Foreign exchange (gain) / loss
- Loss on asset disposal / write off
- Income tax credit / (expense)
add/(less) -
Changes in assets and liabilities
- Decrease in trade and other receivables
- Decrease / (Increase) in prepayments
- (Increase) in inventories
- Decrease in trade & other payables
- (Decrease) in deferred taxes payable
Net cash provided by operating activities
(c) Restricted Funds
CONSOLIDATED
2013
US$000
218,837
50,181
(3,925)
265,093
2012
US$000
189,020
49,184
(19,367)
218,837
4,697
1
4,698
12,467
1
12,468
50,181
49,184
13,055
6,849
707
-
(1)
41
4
70,836
23,746
44
(3,692)
3,955
(87)
94,802
9,899
-
2,342
-
628
-
(1,108)
60,945
1,148
(197)
(6,507)
7,172
-
62,561
The Group’s total cash assets mentioned above include restricted bank accounts as follows:
(i) A Rehabilitation fund of US$359,380 (2012: US$358,704) to be used at the end of life of mine for environmental
rehabilitation.
(ii) An Employee Retirement fund of US$1,145,538 (2012: US$1,059,592) established to meet employee entitlements
on retirement.
(iii) The Company has a Provident fund of US$240,895 (2012: US$308,184) that is intended to be used as payment to
employees upon retirement, which is unrestricted as to withdrawal.
98
2013 annual report 25. FINANCIAL RISK MANAGEMENT
(a) Financial Risk Management Policies
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term
investments, accounts receivable and payable.
The main purpose of non-derivative financial instruments is to raise finance for Group operations.
The Group does not speculate in the trading of derivative instruments.
(i) Treasury risk management
Senior executives of the Group regularly analyse financial risk exposure and evaluate treasury management strategies
in the context of the most recent economic conditions and forecasts.
The Group’s overall risk management strategy is outlined in the Corporate Governance Statement in the
Director’s Report.
(ii) Financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk,
liquidity risk, credit risk and price risk.
Interest rate risk
Interest rate risk is managed by investing cash with major financial institutions in both cash on deposit and term
deposit accounts. Interest rates on major deposits that are re-invested, are at a fixed rate on a monthly basis.
Price risk
The Group sells its gold produced at spot rate and no forward contracts or hedging is utilised. Whilst the Group is
cognisant of its exposure to fluctuations in the gold price, the current policy of the Board is not to hedge primarily
because the Group produces gold in the current economic environment at a very low cash cost. The Board’s risk
management policy acknowledges that as market factors are dynamic in nature all risk positions are monitored to
ensure that the Group‘s activities are consistent with the approach and strategy approved by the Board. The Board
therefore regularly reviews the spot price of gold to consider whether it should adopt any measures to mitigate risk.
Liquidity risk
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing
facilities are maintained.
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 maximum credit risk on financial assets of the Group which have been recognised in the Statement of Financial
Position, other than investment in shares, is generally the carrying amount, net of any provisions for impairment.
There are no other material amounts of collateral held as security.
The Company holds bullion in an unallocated account (referred to as “Gold awaiting settlement” in the Current
Receivables of the Statement of Financial Position) with a single reputable refiner.
The consolidated group does not have any other material credit risk exposure to any single receivable or group of
receivables under financial instruments entered into by the consolidated group.
Foreign currency risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated
in a currency that is not the entity’s functional currency. The risk can be measured by performing a sensitivity analysis
that quantifies the impact of different assumed exchange rates on the Group’s forecast cash flows.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
Whilst the Group is aware of its exposure to fluctuations in foreign currency, the current policy of the Board is not
to hedge.
(b) Financial instruments
(i) 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.
Weighted
Average
Effective
interest
Floating
Interest Rate Within 1 Year
Non-interest
Bearing
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
%
%
US$000
US$000
US$000
US$000
US$000
US$000
US$000
US$000
Consolidated Group
Financial Assets
Cash & cash
equivalent
0.70
2.4
4,439 10,098
Loans and receivables
-
-
-
-
4,439 10,098
Financial Liabilities
Financial liabilities at
amortised cost
Bank Loan
Trade & sundry
payables
-
-
-
-
-
-
-
-
-
-
-
2,253
-
-
-
-
259
2,170
4,698 12,268
6,302 55,964
6,302 55,964
6,561 58,134 11,000 68,232
-
-
2,253
-
-
- 18,616 14,602 18,616 14,602
2,253
- 18,616 14,602 20,869 14,602
CONSOLIDATED
Receivables are expected to be collected as follows:
Less than 6 months
6 months to 1 year
As at 30 June 2013 and 2012, all receivables were neither past
due nor impaired.
Trade and sundry payables are expected to be paid as follows:
Less than 6 months
(ii) Net fair values
2013
US$000
6,302
-
6,302
2012
US$000
39,557
16,407
55,964
18,616
18,616
14,602
14,602
The net fair value of cash and cash equivalents and non interest bearing monetary financial assets and liabilities
approximates their carrying value. The net fair value of financial assets and financial liabilities is based upon market
prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets
and liabilities with similar risk profiles.
100
2013 annual report (iii) Sensitivity analysis
The Group has performed sensitivity analysis relating to its exposure to interest rate risk, foreign currency risk and
price risk at reporting date. This sensitivity analysis demonstrates the effect on the current year results and equity
which could result from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2013, the effect on profit and equity as a result of changes in the interest rate, with all other variables
remaining constant would be as follows:
Change in profit before income tax / equity
- increase in interest rate by 100 basis points
- decrease in interest rate by 100 basis points
Foreign currency risk sensitivity analysis
CONSOLIDATED
2013
US$000
41
(41)
2012
US$000
251
(251)
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated
in a currency that is not the consolidated entity’s functional currency. The consolidated entity operates internationally
and is exposed to foreign exchange risk arising from the United States dollar. No programs for hedging foreign
exchange risk were implemented by the consolidated entity in the 2011 and 2013 financial years.
The following table shows the foreign currency risk on the financial assets and liabilities of the Groups operations
denominated in currencies other than the functional currency of the operations.
Net Financial Assets/(Liabilities) in US$000
AUD
USD
PHP
TOTAL US$
Consolidated
2013
Functional Currency of Group Entity
Australian Dollar
US Dollar
Philippine Peso
2012
Functional Currency of Group Entity
Australian Dollar
US Dollar
Philippine Peso
n/a
-
-
-
n/a
-
-
-
35
n/a
305
340
2,110
n/a
2,481
4,591
-
162
n/a
162
-
442
n/a
442
35
162
305
502
2,110
442
2,481
5,033
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
Change in profit before income tax / equity
- strengthening of A$ to US$ by 15%
- strengthening of Philippine Peso to US$ by 15%
- weakening of A$ to US$ presentation by 15%
- weakening of Philippine Peso to by 15%
Price risk sensitivity analysis
CONSOLIDATED
2013
US$000
2012
US$000
(5)
21
16
5
(21)
(16)
(275)
(314)
(589)
275
314
589
The policy of the Company is to sell gold at spot price and has not entered in hedging contracts. The Company’s
revenues were exposed to fluctuations in the price of gold. If the average selling price of gold of US$1,610 (2012:
US$1,690) for the financial year had increased/decreased by 10% the change in the profit before income tax for
the consolidated group would have been an increase/decrease of US$12.476 million (2012: US$8.034 million). The
above interest rate, foreign exchange rate and price risk sensitivity analysis has been performed on the assumption
that all other variables remain unchanged.
26. COMMITMENTS
(a) Exploration commitments:
The Company has certain obligations to perform minimum exploration
work to maintain rights of tenure to its exploration tenements. These
obligations may vary from time to time in accordance with tenements
held and are expected to be fulfilled in the normal course of operations
of the Group so as to avoid forfeiture of any tenement.
These obligations are not provided in the financial report and
are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total exploration commitments
3,168
3,155
6,323
4,080
1,722
5,802
(b) Operating lease expense commitments:
Non-cancellable operating lease contracted for but not capitalised in
the financial statements.
The Group leases office premises under two operating leases expiring
in November 2012 and July 2014. Under the terms of the operating
leases, the Group is provided with a right of renewal and the lessor
has the right to increments in lease payments on an annual basis
based on movements in the Consumer Price Index.
These obligations are not provided in the financial report and
are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total operating lease expense commitments
108
9
117
87
78
165
102
2013 annual report (c) Other contractual commitments:
(i) On 26 March 2008, Philsaga was granted Mineral Production
Sharing Agreement (“MPSA”) number 262-2008-XIII over the Co-O
mine. Under the terms of the Agreement Philsaga is committed to
mine related expenditure in the Philippines as follows:
These commitments are not provided in the financial report and
are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total other commitments
(ii) On 24 November 2009 Philsaga was granted Mineral Production
Sharing Agreement
(“MPSA”) number 2-996-2009-XIII over
the Co-O mine. Under the terms of the Agreement Philsaga
is committed to mine related expenditure in the Philippines
as follows:
These commitments are not provided in the financial report and
are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total other commitments
CONSOLIDATED
2013
US$000
2012
US$000
45
460
505
44
454
498
27
81
108
43
347
390
27. EVENTS SUBSEQUENT TO REPORTING DATE
On 1 July 2013 Mr Roy Daniel retired as Chief Financial Officer of the Company. Mr Peter Alphonso currently Company
Secretary was appointed as his replacement.
Other than the matter described above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material and/or unusual nature likely, in the opinion of the Directors of
the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the
Group in subsequent financial years.
28. SEGMENT INFORMATION
The Consolidated Group has identified its reportable operating segments based on the internal management reports that are
reviewed and used by the Managing Director (the chief operating decision maker) and his management team in assessing
performance and in determining the allocation of resources.
The Group segments are structured as Mine, Exploration and Other. Currently the only operational mine is the Co-O mine.
Other incorporates the Parent Entity’s activities
Segment Result, Segment Assets and Segment Liabilities
The measurement of segment results is in line with the basis of information presented to management for internal management
reporting purposes.
Segment Result is based on the net of revenues and expenditure corresponding to the specific segment.
Segment Revenues represent gold and silver sales at spot prices.
Segments Assets are allocated to segments based on their nature and physical location.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
Segment Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment. Segment Liabilities include trade and other payables.
The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not
considered part of the core operations of any segment:
-
income tax expense;
- gain on disposal of assets;
- deferred tax assets and liabilities;
-
-
interest revenue;
intercompany receivables and payables.
12 months to June 2013:
Segment revenue
Reconciliation of segment revenue to Group revenue
add:
Interest income
OTHER
Group Revenue
Segment result
Reconciliation of segment result to group result:
add back:
Gain on disposal of asset
Other revenue
Interest revenue
less:
Income tax expense
Group profit
Segment assets
Reconciliation of segment asset to group assets:
plus: Deferred tax assets
Total Group assets
Mining
US$000
Exploration
Other
US$000
US$000
Total
US$000
100,622
-
-
100,622
24
34
100,680
56,537
(1,238)
(5,180)
50,119
-
34
24
4
50,181
371,846
3,943
1,638
377,427
1,603
379,030
Segment liabilities
18,674
10
3,955
22,639
Reconciliation of segment liabilities to group liabilities
plus: Deferred liabilities
Total Group liabilities
141
22,780
104
2013 annual report 12 months to June 2012:
Segment revenue
Reconciliation of segment revenue to Group revenue
add:
Interest income
OTHER
Group Revenue
Segment result
Reconciliation of segment result to group result:
add back:
Gain on disposal of asset
Other revenue
Interest revenue
less:
Income tax expense
Group profit
Segment assets
Reconciliation of segment asset to group assets:
plus: Deferred tax assets
Total Group assets
Mining
US$000
Exploration
Other
US$000
US$000
Total
US$000
80,802
-
-
80,802
368
18
81,188
57,893
(143)
(10,060)
47,690
-
18
368
1,108
49,184
322,651
4,004
3,953
330,608
1,632
332,240
Segment liabilities
13,273
8
3,035
16,316
Reconciliation of segment liabilities to group liabilities
plus: Deferred liabilities
Total Group liabilities
Revenue and non-current
assets by geographical region
Australia
US$000
Philippines
US$000
12 months to June 2013:
Segment Revenue
Non-Current Assets
12 months to June 2012:
Segment Revenue
Non-Current Assets
-
15,825
-
35
100,622
308,286
80,802
246,791
257
16,573
Total
US$000
100,622
324,111
80,802
246,826
In accordance with AASB 8 disclosure requirements Non-Current Assets shown in geographical information include tangible
and intangible assets but exclude financial instruments, deferred tax assets, post-employment benefit assets and rights
arising under insurance contracts.
The Group sells it gold on the open market. Selection of a customer is at the Group’s discretion and there is no commitment
to exclusive sales to a particular customer. During the financial year ended 30 June 2013, all of the Group’s revenues
depended on a single customer (2012:100%).
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
29. PARENT COMPANY INFORMATION
Parent Entity:
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Assets
Issued Capital
Option Premium Reserve
Foreign Exchange Reserve
Accumulated Losses
Dividends paid
Total Equity
Profit/(loss) for the year
Total Comprehensive Income/(loss)
Payable under Service Arrangements
Refer Related Parties Note 22.
2013
US$000
2012
US$000
1,127
21,709
3,956
3,956
17,754
73,070
4,448
13,965
(31,460)
(42,269)
17,754
(5,155)
(6,779)
3,918
30,784
3,034
3,034
27,750
73,070
3,740
15,588
(26,304)
(38,344)
27,750
(4,807)
(6,970)
30. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
The following standards, amendments to standards and interpretations have been identified as those which may impact the
entity in the period of initial application. They are available for early adoption at 30 June 2013, but have not been applied in
preparing this financial report.
The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory
application dates for future reporting period, some of which are relevant to the Group. The Group has decided not to early
adopt any of the new and amended pronouncements. The Group’s assessment of the new and amended pronouncements
that are relevant to the Group but applicable in future reporting periods is set out below:
• AASB 9: Financial Instruments (December 2010) and AASB 2010-7: Amendments to Australian Accounting Standards
arising from AASB 9 (December 2010).
This standard is mandatorily applicable for annual reporting periods commencing on or after 1 January 2013. However,
AASB 2012-6 defers the application date of AASB 9 from 1 January 2013 to 1 January 2015. AASB 9 introduces new
requirements for the classification and measurement of financial assets and liabilities.
The entity has not yet assessed the full impact of AASB 9 as the standard does not apply mandatorily before 1 January
2015 and that IASB is yet to finalise the remaining phases of its project to replace AASB 39 Financial instruments:
Recognition and Measurement.
• AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of Interests in Other
Entities, AASB 127: Separate Financial Statements (August 2011) and AASB 128: Investments in Associates and Joint
ventures (August 2011) (as amended by AASB 2012-10: Amendments to Australian Accounting Standards – Transition
Guidance and Other Amendments), and AASB 2011-7: Amendments to Australian Accounting Standards.
AASB 10 provides a revised definition of “control” and additional application guidance so that a single control model will
apply to all investees. When adopted, this Standard is not expected to significantly impact the Group’s financial statements.
• AASB 11 requires joint arrangements to be classified as either “joint operations” (where the parties that have joint control
of the arrangement have rights to the assets and obligations for the liabilities) or “joint ventures” (where the parties that
have joint control of the arrangement have rights to the net assets of the arrangement).
When adopted, this Standard is not expected to significantly impact the Group’s financial statements.
106
2013 annual report • AASB 12 contains the disclosure requirements applicable to entities that hold an interest in a subsidiary, joint venture,
joint operation or associate. AASB 12 also introduces the concept of a “structured entity”, replacing the “special purpose
entity: concept currently used in Interpretation 112, and requires specific disclosures in respect of any investments in
unconsolidated structured entities.
When adopted, this Standard will affect disclosures only and therefore is not expected to significantly impact the Group’s
financial statements.
• AASB 13: Fair value Measurement and AASB 2011-8: Amendments to Australian Accounting Standards arising from
AASB 2013 (applicable for annual reporting periods commencing on or after 1 January 2013).
AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not
change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair
value is required or permitted by other Standards.
These Standards are expected to result in more detailed fair value disclosures, but are not expected to significant impact
the amounts recognised in these financial statements.
• AASB 2011-4: Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements (applicable for annual reporting periods beginning on or after 1 January 2013).
This Standard makes amendments to AASB 124 Related Party Disclosures to remove the individual key management
personnel (KMP) disclosure requirements by Australia specific paragraphs.
When adopted, these amendments are unlikely to have any significant impact on the financial statements.
• AASB 119: Employee Benefits (September 2011) and AASB 2011-10: Amendments to Australian Accounting Standards
arising from AASB 119 (September 2011) (applicable for annual reporting periods beginning on or after 1 January 2013).
This Standard introduces a number of changes to presentation and disclosure of a defined benefit plan. AASB 119 also
includes changes to the criteria for determining when termination benefits should be recognised as obligation.
The entity does not have any defined benefit plans. Therefore, these amendments will have no significant impact on the entity.
• AASB Interpretation 20: Stripping Costs in the Production Phase of Surface Mining (applicable for annual reporting
periods beginning on or after 1 January 2013).
This interpretation clarifies that costs of removing mine waste materials (overburden) to gain access to mineral ore deposits
during the production stage of a mine must be capitalized as inventories under AASB 102: Inventories if the benefits from
stripping activity is realised in the form of inventory produced.
The entity does not operate a surface mine. Therefore, there will be no impact on the financial statements when this
interpretation is first adopted.
• AASB 2012-2: Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial
Liabilities (application for annual reporting periods commencing on or after 1 January 2014).
This Standard amends the required disclosures in AASB 7 to include information that will enable users of an entity’s
financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated
with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s statement of financial position.
When adopted, there will be no impact on the entity as the entity does not have any netting arrangements in place.
• AASB 2012-5: Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 (applicable
for annual reporting periods beginning on or after 1 January 2013).
These amendments are a consequence of the annual improvement process, which provides a vehicle for making non-
urgent but necessary amendments to Standards.
When these amendments are first adopted, this Standard is not expected to significantly impact the Group’s financial statements.
medusa mining limited nOTeS TO THe FinanCiaL STaTeMenTS
for the year ended 30 June 2013
31. FRANKING ACCOUNT
The Company has no franking credits available.
32. COMPANY DETAILS
The registered office and principal place of business of the Company is:
Suite 7
11 Preston Street
Como
Western Australia 6152.
108
2013 annual report diReCTORS deCLaRaTiOn
1.
In the opinion of the Directors of Medusa Mining Limited (the “Company”):
(a)
the financial statements and notes set out on pages 70 to 110 and the remuneration disclosures that are contained
in pages 58 to 66 of the Remuneration Report in the Directors’ Report, are in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2013 and of its performance, for the financial
year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(iii) complying with International Financial Reporting Standards as disclosed in Note 1.
(b)
the remuneration disclosures that are contained in pages 58 to 66 of the Remuneration Report in the Directors’ Report
comply with Australian Accounting Standard AASB 124 Related Party Disclosures and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the financial year ended 30 June 2013.
Signed in accordance with a resolution of the Directors:
Peter Hepburn-Brown
Managing Director
Dated this 27th day of August 2013
medusa mining limited
independenT aUdiT RepORT
110
2013 annual report medusa mining limited independenT aUdiT RepORT
112
2013 annual report addiTiOnaL SHaReHOLdeR inFORMaTiOn
The shareholder information set out below was applicable as at at 24 September 2012.
1. SHAREHOLDING
(a) Distribution of shareholders and shares
Distribution
Number of Shareholders
Number of Shares
1
1,001
5,001
- 1,000
- 5,000
- 10,000
10,001
- 100,000
100,001
- 1,000,000
1,000,000
and over
Total
1,843
2,245
626
601
80
22
5417
976,941
6,006,446
4,781,982
16,276,428
23,646,879
159,033,390
188,903,911
The number of shareholdings held in less than marketable parcels is 457.
(b) Voting rights
The voting rights attaching to ordinary shares are, on a show of hands, every member present in person or by proxy shall
have one vote and upon a poll, each share shall have a vote.
(c) Twenty largest shareholders
Total number of ordinary shares on issue - 188,903,911
Name of shareholders
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
JP Morgan Nominees Australia Limited
ABN Amro Clearing Sydney Nominees Pty Ltd
Forty Traders
Cedardale Holdings Pty Ltd
Mr William Douglas Goodfellow
Merrill Lynch (Australia) Nominees Pty Limited
UCA Growth Fund Limited
Zero Nominees Pty Ltd
Barclayshare Nominees Limited
L R Nominees Limited
Nortrust Nominees Limited
TD Direct Investing Nominees (Europe) Limited
vidacos Nominees Limited
State Street Nominees Limited
CS Fourth Nominees Pty Ltd
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Total
Number of shares held
(%)
37,724,045
28,296,772
19.97%
14.98%
9,729,728
9,105,039
9,041,208
8,302,714
4,654,753
3,296,881
3,187,673
3,141,925
3,024,509
2,850,000
2,300,000
1,872,130
1,753,877
1,741,046
1,622,271
1,561,800
1,500,000
1,415,537
5.15%
4.82%
4.79%
4.40%
2.46%
1.75%
1.69%
1.66%
1.60%
1.51%
1.22%
0.99%
0.93%
0.92%
0.86%
0.83%
0.79%
0.75%
136,121,908
72.06%
medusa mining limited addiTiOnaL SHaReHOLdeR inFORMaTiOn
(d) On market buy back
There is no current on-market buy back.
(e) Substantial shareholders
An extract of the Company’s register of substantial shareholders is set out below:
Name
van Eck Associates
Wellington Management Company, LLP
Black Rock Group
Ordinary shares held
Number of shares
Percentage
10,336,734
14,825,476
9,541,215
5.47%
7.85%
6.10%
2. UNQUOTED EQUITY SECURITIES AND RESTRICTED SECURITIES
The following classes of unquoted equity securities and restricted securities are on issue:
Type of securities
Number of
securities
% held
• 140,000 unquoted options to subscribe for ordinary shares exercisable
at $4.40 per share, with an expiry date of 18 November 2013:
Persons holding 20% or more:
Nicholas Sayce
-
140,000
-
100%
• 575,000 unquoted options to subscribe for ordinary shares exercisable
at $8.10 per share, with an expiry date of 03 July 2014:
Persons holding 20% or more:
• 1,000,000 unquoted options to subscribe for ordinary shares
exercisable at $5.10 per share, with an expiry date of 3 January 2015:
Persons holding 20% or more:
-
-
-
-
3. THE NAME OF THE COMPANY SECRETARY IS:
Mr Peter Alphonso
4. THE PRINCIPAL REGISTERED OFFICE OF THE COMPANY IS:
Suite 7,
11 Preston Street
Como, WA 6152
Telephone:
(08) 9367 0601
Facsimile:
(08) 9367 0602
Email:
admin@medusamining.com.au
114
2013 annual report
5. THE REGISTERS OF THE COMPANY’S SECURITIES ARE HELD
AT THE FOLLOWING ADDRESSES:
Australia:
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building
45 St George’s Terrace
Perth, WA 6000
Telephone:
Facsimile:
+618 9323 2000
+618 9323 2033
Investor enquiries: 1300 557 010
United Kingdom:
Computershare Investor Services Plc
PO Box 82
The Pavilions
Bridgewater Road
Bristol BS99 7NH, UK
Telephone:
+44 (0)870 702 0003
Facsimile:
+44 (0)870 703 6116
6. STOCK EXCHANGE LISTINGS
Quotation has been granted for all the ordinary shares of the Company on:
• Australian Stock Exchange Limited (ASX)
(Home Exchange)
• London Stock Exchange (LSE)
medusa mining limited TENEMENT SCHEDULE
Name
Tenement ID
Registered Holder
Company's Interest
Royalty
Area (hectares)
Co-O Mine
MPSA No. 262-2008-XIII
Philsaga
MPSA No.299-2009-XIII
Co-O
APSA No. 00012-XIII
Philsaga
BMMRC
APSA No. 00087-XIII
Samuel Afdal
APSA No. 00088-XIII
Phsamed
Saugon
APSA No. 00098-XIII
APSA No. 00099-XIII
EP 017-XIII
EP 031-XIII
EP 032-XIII
EPA No. 00066-XIII
Philcord
Philcord
Philsaga
Philsaga
Philsaga
Philsaga
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
EPA No. 00067-XIII
Samuel Afdal
100% (assignment)
EPA No. 00069-XIII
EPA No. 00087-XIII
Phsamed
Philsaga
100.00%
100% (assignment)
-
-
-
-
-
1% net profit
1% net profit
-
-
-
-
-
-
-
Tambis
MPSA No. 344-2010-XIII
Philex
Das-Agan
MPSA No. 343-2010-XIII
Apical
Corplex
APSA No. 00028-XIII
APSA No. 00054-XIII
APSA No. 00056-XIII
APSA No. 00077-XIII
EPA No. 00186-XIII
Tagbina
EPA No. 00176-XIII
EPA No. 00180-XIII
EPA No. 00181-XIII
Sinug-ang
EPA No. 00114-XIII
Abbreviations:
Tenement types -
Das-agan
Apmedoro
Corplex
Corplex
Corplex
Corplex
Sursur
Sursur
Sursur
Salcedo
100.00%
100.00%
7% net smelter
3% gross
Earning 70% (JV)
-
100%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
3% net smelter
-
4% gross
3% net smelter
3% gross
3% gross
3% gross
-
2,538.7919
2,200.3595
339.8000
846.4371
7,303.7327
1,184.3821
676.8288
3,132.3100
3,978.5401
3,047.5336
6,769.1267
1,692.6910
7,789.7976
764.2000
6,207.6210
3,809.5500
2,084.0900
2,118.1600
162.0000
810.0000
7,111.3463
3,823.0000
5,948.0000
6,118.0000
190.3815
MPSA
EP
SSMP
- Mineral Production Sharing Agreement
- Exploration Permit
- Small Scale Mining Permit
APSA
EPA
AFTA
- Application for Mineral Production Sharing Agreement
- Exploration Permit Application
- Application for Financial Technical Assistance Agreement
Registered Holder -
Philsaga
- Philsaga Mining Corporation
Philex
- Philex Gold Philippines Inc
BMMRC
- Base Metals Mineral & Resources Corporation
Das-Agan
- Das-Agan Mining Corporation
Phsamed
- Phsamed Mining Corporation
Apmedoro
- APMEDORO Mining Corporation
Philcord
Corplex
- Mindanao Philcord Mining Corporation
Sursur
- Sursur Mining Corporation
- Corplex Resources Inc
Salcedo
- Neptali P. Salcedo
3
1
0
2
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O
P
E
R
L
A
U
N
N
A
D
E
T
M
L
G
N
N
M
A
S
U
D
E
M
I
I
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