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ANNUAL REPORT 2014
medusa mining limited
CONTENTS
Contents
Page number
Results for announcement to the market (Appendix 4E)
Corporate Directory
Highlights of Financial Year
Chairman’s Review
Review of Operations
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Shareholder Information
Tenement Schedule
2
3
4
6
7
45
54
70
72
73
74
75
76
109
110
113
116
medusa mining limited RESulTS FOR ANNOuNCEmENT TO THE mARkET
APPENDIX 4E
APPENDIX 4E
(APPENDIx 4E)
Appendix 4E
Appendix 4E
Preliminary final report
Period ending 30 June 2014
Preliminary final report
Period ending 30 June 2014
Name of entity
Name of entity
MEDUSA MINING LIMITED
MEDUSA MINING LIMITED
ABN or equivalent company
reference
ABN or equivalent company
reference
Half yearly
(tick)
Half yearly
(tick)
Preliminary
final (tick)
Preliminary
final (tick)
Half year/ financial ended (“current period”)
Half year/ financial ended (“current period”)
60 099 377 849
60 099 377 849
√
√
30 June 2014
30 June 2014
Results for announcement to the market
Results for announcement to the market
Revenues and profits:
Revenues and profits:
Revenues from ordinary activities
Revenues from ordinary activities
US$’000
US$’000
US$’000
US$’000
down 16%
down 16%
100,680
100,680
to
to
84,196
84,196
Profit from ordinary activities after tax attributable to members down 38%
Profit from ordinary activities after tax attributable to members down 38%
50,181
50,181
to
Net profit for the period attributable to members
Net profit for the period attributable to members
(All comparisons to the previous period ended 30 June 2013)
(All comparisons to the previous period ended 30 June 2013)
down 38%
down 38%
50,181
50,181
to
to
30,871
30,871
to
30,871
30,871
Dividends:
Dividends:
Interim dividend
Interim dividend
Final dividend
Final dividend
Total dividend paid for the year
Total dividend paid for the year
Amount per security
Amount per security
Franked amount per security
Franked amount per security
Nil
Nil
Nil
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
N/A
No dividends were declared and paid for period ended 30 June 2014.
No dividends were declared and paid for period ended 30 June 2014.
Net tangible assets per share:
Net tangible assets per share:
The net tangible assets per share as at 30 June 2014 was US$2.055 (30 June 2013: US$1.893)
The net tangible assets per share as at 30 June 2014 was US$2.055 (30 June 2013: US$1.893)
Change in control of entities:
Change in control of entities:
There has been no change in control, either gained or loss during the current period.
There has been no change in control, either gained or loss during the current period.
Associates and Joint Venture entities:
Associates and Joint Venture entities:
The Consolidated Group did not have a holding in any associates or joint venture entities during the
current period.
The Consolidated Group did not have a holding in any associates or joint venture entities during the
current period.
Other information:
Other information:
This report is based on accounts which are audited.
This report is based on accounts which are 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 2014
which accompany this report.
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 2014
which accompany this report.
2
Page 3 of 130
Page 3 of 130
2014 annual report
CORPORATE DIRECTORY
DIRECTORS
Andrew Boon San Teo
Non-Executive Chairman
Raul Conde Villanueva
Executive Director
Dr Robert Maurice Weinberg
Non-Executive Director
Ciceron Angeles
Non-Executive Director
Gary Raymond Powell
Non-Executive Director
COMPANY SECRETARY
Peter Stanley Alphonso
EXECUTIVE MANAGEMENT
Geoffrey John Davis
Chief Executive Officer
Peter Stanley Alphonso
Chief Financial Officer
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: + 618 9367 0601
Facsimile: + 618 9367 0602
Email: admin@medusamining.com.au
Website: www.medusamining.com.au
STOCK EXCHANGE LISTING
Australian Stock Exchange Limited (ASX)
Trading Code: mml
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
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
BANKERS
Commonwealth Bank
150 St George’s Terrace
Perth WA 6000
SHARE REGISTRY
Computershare Investor Services
level 2, Reserve Bank Building
45 St George’s Terrace
Perth WA 6000
Telephone: + 618 9323 2000
Facsimile: + 618 9323 2033
Investor enquiries: 1300 557 010
Shareholders who require information about
their shareholdings, dividend payments or related
administrative matters should contact the
Company’s share registry:
medusa mining limited
HIGHlIGHTS OF FINANCIAl YEAR
FINANCIAlS
• Revenues of uS$84.2 million compared to uS$100.7 million for the previous year, a decrease of 16%.
medusa is an un-hedged gold producer and received an average gold price of uS$1,299 per ounce from the sale
of 65,943 ounces of gold for the year (2013: 77,488 ounces at uS$1,610 per ounce);
• Earnings before interest, tax, depreciation and amortisation (“EBITDA”) of uS$48.3 million (uS$63.2 million in the
previous year), a decrease of approximately 24%;
• Basic earnings per share (“EPS”) of uS$0.154 on a weighted average basis, based on NPAT of uS$30.9 million (2013:
EPS of uS$0.266 based on NPAT of uS$50.2 million), a decrease of 42%;
• The Company had total cash and cash equivalent in gold on metal account of uS$13.68 million at year end (2013:
uS$7.45 million);
• No dividends were declared nor paid during the year (2014: Nil)
Description
Revenues
EBITDA
NPAT
EPS (basic)
Unit
uS$
uS$
uS$
uS$
30 June 2014
30 June 2013
Variance
uS$84.2m
uS$100.7m
(uS$16.5m)
uS$48.3m
uS$30.9m
uS$0.154
uS$63.2m
(uS$14.9m)
uS$50.2m
(uS$19.3m)
uS$0.266
(uS$0.112)
(%)
(16%)
(24%)
(38%)
(42%)
• Depreciation of fixed assets and amortisation of capitalised mine development and mine exploration was US$17.5
million (2013: uS$13.1 million);
• uS$23.6 million was expended on capital works associated with the new mill construction and infrastructure, mine
expansion and sustaining capital at the mine and mill (2013: uS$44.2 million).
• Capitalised mine development costs totalled uS$36.3 million for the year (2013: uS$34.5 million);
OPERATIONS
Description
Tonnes mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Unit
WmT
DmT
gpt
%
ounces
uS$/oz
30 June 2014
30 June 2013
521,899
460,004
4.76
85%
59,904
$418
364,257
309,648
7.02
90%
62,243
$313
(1) Net of development costs and includes royalties and local business taxes but no by-product credits
• The Company produced 59,904 ounces of gold for the year, compared to the previous year’s gold production of
62,243 ounces, at an average recovered grade of 4.76 g/t gold (2013: 7.02 g/t gold);
• The average cash cost for the year of uS$418 per ounce, was higher than the previous year’s average cash costs
of US$313 per ounce due primarily to excess mine manning levels,low mine productivity, treatment of significant
amounts of development ore and lower than budgeted mill recoveries.
4
2014 annual report PRODuCTION GuIDANCE TO 31 DECEmBER 2014
The production guidance for the six months to 31 December 2014 is expected to be between 40,000 to 45,000 ounces.
RESERvES AND RESOuRCES
New Resource and Reserve estimates for 2014 are incomplete and will be reported in accordance with JORC 2012
when finalised.
ExPlORATION
• Contiguous tenement package maintained at >800km2;
• Budgeted exploration for fiscal year 2015 of US$15 million (2014 FY actual: US$15.8 million);
• Exploration highlights at Co-O include:
- revised the vein classifications and interpretations; and
- underground drilling continues to confirm and extend mineralisation across strike and at depth.
• An Induced Polarisation, Resistivity and Ground magnetics geophysical programme was commenced over the
Co-O mine environs and which should be completed in the coming months;
• At the B2 Prospect adjacent to the Bananghilig Deposit, drilling has continued to assess the extent of the
mineralisation; and
• Regional exploration has continued over the Company’s granted tenements.
CORPORATE
Placement:
In the September 2013 quarter, the Company raised gross proceeds of A$34,002,702 via the placement of 18,890,390
ordinary shares at A$1.80 each to clients of Euroz Securities limited.
Board Changes:
mr Geoffrey Davis (Founding managing Director of medusa) retired as Non-Executive Chairman on 22 November
2013 and was succeeded by Non-Executive Director, mr Andrew Teo.
LSE delisting:
On 04 April 2014, application was made to the UK Listing Authority for the Securities to be removed from the Official
list, and to the london Stock Exchange (“lSE”) for the Securities to be removed from trading.
The last day of dealings in the Securities on the lSE was on 22 may 2014. The cancellation of the listing and of trading
in the Securities on the lSE took effect on 23 may 2014.
EvENTS SuBSEquENT TO YEAR END
Resignation of Managing Director
On 19 August 2014, mr Peter Hepburn-Brown tendered his resignation as managing Director and as a Board member
of medusa.
Appointment of Interim Chief Executive Officer
Mr Geoffrey Davis agreed to assume the role of Chief Executive Officer for an interim period following the resignation
of Peter Hepburn-Brown as Managing Director, and will officially commence his role on 1 September 2014.
medusa mining limited CHAIRmAN’S REvIEW
Dear Shareholders,
We are looking forward to an improved performance this financial year as most of the building blocks from our
expansion programme are now in place for the expanded mine and the new mill that is operating satisfactorily with
some additional improvements to come.
As announced on 1 September, the Board has appointed two experienced consulting mining engineers to coordinate
a complete review of the Company’s operations and make recommendations for improving the productivity and
associated activities to the Board. The Board is awaiting that report.
On 9 September an update report on the operations was provided. I think it is clear from this report that a lot of
activity has been underway during the year, and activities completed recently or that are currently in train will assist
in uplifting productivity in 2014-15.
The change from JORC 2004 reporting to JORC 2012 reporting for resources has had an effect on the Company’s
resource base at the Co-O mine and a lesser effect on the reserves, as has occurred with many other companies.
The continuing major re-interpretation of the vein system has also had an effect on the resources at this point,
however an interim resource estimate is under consideration to reflect further advances in the vein model. The Co-O
mine is a long life mine, therefore the mineralisation not included under the new standards hasn’t disappeared, it’s
been de-classified and hence is available to be re-incorporated into the resources in the future when the gold price
improves and/or costs are reduced.
Exploration at the Co-O Mine has focussed only on underground drilling, extending and infilling the vein system at
depth and across strike. Drilling will continue each year with the aim of at least replacing material mined each year.
In the Tambis region at the B2 Discovery adjacent to the Bananghilig or B1 Deposit, drilling has put some flesh on the
bones of this discovery with mineralisation now identified to be extensive and still open in some areas. Completed
drilling is too wide spaced for the estimation of a resource, but has adequately demonstrated the discovery of a
very large mineralised system.
Further metallurgical test work is proposed for B1 to investigate innovative ways of advancing this deposit towards
production.
The Safety, Environmental and Community activities throughout the year have continued to provide for and protect
our employees and the working environment while maintaining a low lost Time Incident Frequency Rate by industry
standards. There have been no environmental breaches during the year.
We are proud of our relationships with our host communities which have continued to be provided with a wide
range of services and assistance programmes as in past years.
The former managing Director and non-Executive Chairman, mr Geoff Davis agreed to return on 1 September as
the interim Chief Executive Officer while the Company seeks a new Managing Director after the resignation of Peter
Hepburn-Brown on 19 August.
In closing, I wish to thank my fellow Directors and our Perth office staff and also extend my appreciation to our
dedicated Filipino team who have grown into the expanded project which is not just the mining and milling, but
includes all the support personnel that make it possible.
We look forward to an improving production performance for the 2014-15 year.
Andrew Teo
Chairman
6
2014 annual report REvIEW OF OPERATIONS
Contents of Review of Operations
Page number
Highlights
Co-O Project
- Co-O Gold Production
- Co-O mill Expansion
- Co-O mine Expansion and Operations
- Co-O Current Operations and Plans
- Co-O mine Geology
- Group mineral Resources and Ore Reserves
- Co-O mine mineral Resources
- Co-O mine Ore Reserves
- Co-O Exploration
Tambis Project
- Bananghilig Gold Deposit
- B2 Discovery Area
- Tambis Regional
lingig Copper Project
Saugon Gold Deposit
Apical Project
Corplex Project
Sursur Project
usa Porphyry Copper-Gold Project
Tenements
Sustainability
- Health and Safety
- Environmental management and monitoring
- Workforce
- Community Participation, Programs and Benefits
Philippine Government
- Executive Order on mining in the Philippines
- Executive Order on Extractive Industries Transparency in the Philippines
JORC Compliance - Consent of Competent Person
8
12
12
12
13
13
14
14
15
17
18
25
25
26
31
32
34
35
35
35
35
36
37
37
38
40
40
43
43
43
44
medusa mining limited HIGHLIGHTS
“ The Company completed its expansion program with the successful
commissioning of the new CIL processing plant”
mINERAl RESOuRCES AND ORE RESERvES:
Table 1. Group mineral Resources and Ore Reserves as at 30 June 2014
Deposit
Category
Tonnes
Grade
g/t gold
Ounces
Gold
mINERAl RESOuRCES 1,2
Co-O Resources1
(JORC Code 2012)
Indicated
Inferred
Total Co-O Resources
Indicated & Inferred
Bananghilig Resources2
(JORC Code 2004)
Indicated
Inferred
Total Bananghilig Resources
Indicated & Inferred
Saugon Resources2
(JORC Code 2004)
Indicated
Inferred
Total Saugon Resources
Indicated & Inferred
TOTAL RESOURCES
Indicated & Inferred
Total Indicated Resources
Total Inferred Resources
ORE RESERvES
Co-O Reserves1
1,560,000
2,780,000
4,340,000
16,060,000
8,460,000
24,520,000
50,000
30,000
80,000
28,940,000
17,670,000
11,270,000
11.8
9.2
10.1
1.5
1.4
1.4
7.0
4.6
6.0
2.8
2.4
3.3
590,000
820,000
1,410,000
770,000
370,000
1,140,000
10,000
10,000
20,000
2,560,000
1,370,000
1,190,000
Probable
1,920,000
7.22
450,000
Notes:
1 Co-O mineral Resources and ore reserves estimated under guideline of JORC Code 2012
2 Bananghilig and Saugon Mineral Resources were previously prepared and first disclosed under JORC Code 2004, and have not been updated to comply with JORC
Code 2012 on the basis that the information has not materially changed since it was last reported (08 August 2013).
mineral Resources:
Co-O:
- a lower cut-off of 3.0 g/t gold, minimum mining widths of 1.2 metres, minimum grade of 2.7 g/t gold, minimum grade x width of 3.2 g.m/t have been applied,
- various upper cut-off gold grades (up to 300 g/t gold )have been applied to different veins
- a gold price of uS$1,500 has been applied
Bananghilig:
- lower cut-off of 0.8 g/t gold has been applied at and various upper cuts
Saugon:
- a lower cut-off of 2.0 g/t gold has been applied
rounding to the nearest 10,000 may result in some slight discrepancies in totals
Ore Reserves:
Ore Reserves are a subset of mineral Resources
Co-O:
- minimum mining widths of 1.25 metres (stopes ≥60°) and 1.5 metres (stopes <60°) have been applied, and where the vein width was equal to the minimum mining
width, and extra 0.25 metres dilution was added to the hangingwall.
- a further 10% dilution have been allowed for slabbing in mining of low angle stopes under draw,
- shape dilution of 8% of extra tonnage at 2 g/t gold, for extra development and to reflect pinch and swell of veins,
- 85% mining recovery for stopes < 10 g/t gold,
- 90% mining recovery for stopes ≥10 g/t gold,
- 50% of pillars for empty stopes in major veins are included in reserve and diluted to 200%,
- a cut-off grade of 2.0 g/t gold has been applied for development ore
- a cut-off grade averaging 3.0 g/t gold has been applied to broken ore (dependent on closeness to hoisting point)
- a cut-off grade of 3.8 g/t gold has been applied to developed stopes
- a cut-off grade of 4.3 g/t gold has been applied to un-developed stopes
- a gold price of uS$1,250 has been applied
The Company has maintained its exploration area
of more than 800 square kilometres.
8
2014 annual reportreview of operations Co-O OPERATIONS:
• Annual production of 59,904 ounces of gold at cash costs of uS$418 per ounce;
• Commissioning of the new CIl mill completed;
•
Increase in mine hoisting capacities continued:
•
Deepening of Baguio Shaft from level 3 to level 5 completed;
• Completion of two ore passes from levels 6 and 7 to level 8, and installation of conveyor feed belt;
• Commenced studies for the new 15E multi-purpose men and materials shaft; and
• Completion of ore passes (raises) from level 8 to level 6, as part of the plan to develop the 15E Shaft
TAmBIS REGION - BANANGHIlIG AND B2 DISCOvERY:
•
•
Drilling continued to encounter significant gold mineralisation at the B2 Discovery area, adjacent to the
Bananghilig deposit; and
Sterilisation drilling to delineate areas for a proposed plant site, tailings and waste storage facilities completed,
including geotechnical drilling for open pit walls and mill plant areas.
ON THE ExPlORATION FRONT:
DRILLING STATISTICS
Project
Co-O
Co-O mine
Sub-total Co-O Mine
Tambis
Bananghilig
Sub-total Bananghilig
GRAND TOTAL
Purpose
Number of Holes
Meterage
Resource underground
Geotechnical
Exploration B2
Sterilisation
Geotechnical
91
3
94
30
7
31
68
162
26,791
379
27,170
8,844
1,831
1,884
12,559
39,729
SUMMARY OF EXPLORATION ACTIVITIES
Co-O MINE
•
•
underground drilling is continuing to delineate additional resources and to upgrade inferred resources to the
indicated category; and
Surface and underground drilling results are being continuously incorporated into the mine resources/reserves
model and interpretations.
BANANGHILIG
•
Exploration drilling was completed on 17 June 2104 at the B2 Discovery area, proximal to the Bananghilig Deposit.
Significant mineralisation has been encountered which may contribute to and enhance future development of
the Bananghilig Deposit; and
•
Geotechnical investigations of the Bananghilig Deposit and potential infrastructure site is nearing completion.
Co-O REGIONAL
•
•
•
Induced Polarization, Resistivity and Ground magnetics surveys are almost complete although temporarily suspended;
Regional mapping and sampling programs are ongoing; and
vein systems outside of Co-O mine environs continue to be evaluated by mapping, trenching and sampling.
medusa mining limited Figure 1: Location diagram of the Company’s main project areas in relation to the significantly mineralised belts of the Philippines
10
2014 annual reportreview of operations Figure 2: Eastern mindanao topographical relief map, showing consolidated tenement outlines, mines, deposits and prospects.
medusa mining limited Co-O PROJECT
The Co-O gold mine (Figs 2 and 12) is operated by Philsaga mining Corporation under mineral Production Sharing
Agreement (“mPSA”) 262-2008-xIII, which covers some 2,539 hectares.
Co-O GOlD PRODuCTION
“ The Co-O Mine produced 59,904 ounces of gold during the year at cash
cost of $418 per ounce”
Table II. Co-O Gold Production Statistics for financial years ended 30 June 2013 and 2014
Period
Tonnes mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Gold sold
Average gold price received
Unit
wet tonnes
dry tonnes
gpt
%
ounces
uS$
ounces
uS$
Year ended
30 June 2014
Year ended
30 June 2013
521,899
460,004
4.76
85%
59,904
$418
65,943
$1,299
346,257
309,648
7.02
90%
62,243
$313
77,488
$1,610
(1) Net of development costs and includes royalties and local business taxes but no by-product credits
The Co-O mine produced 59,904 ounces of gold at an average recovered grade of 4.76 g/t gold for the year,
compared to the previous year’s gold production of 62,243 ounces at a head grade of 7.02 g/t gold.
The average cash cost for the year of uS$418 per ounce, was higher than the previous year’s average cash costs
of US$313 per ounce due primarily to the excess manning levels, low mine productivity, treatment of significant
amounts of development ore and lower than budgeted mill recoveries, and various other issues associated with the
installation, modification and commissioning of the new CIL plant.
FY2014 PRODUCTION GUIDANCE
The production guidance for the half year ending 31 December 2014 is between 40,000 to 45,000 ounces. Full year
guidance for 2014-2015 will be provided once the recently initiated mine operations review has been completed.
Co-O mIll ExPANSION
In November 2010, the Board approved a major expansion of the Co-O mine and the construction of a new CIl
Plant with nameplate capacity to process up to 750,000 tonnes per year.
Commissioning of the plant commenced in August 2013. The detoxification, thickener, CIL tanks, gold room facilities
and ancillary equipment associated with “wet” processing were all successfully commissioned during the September
2013 quarter.
The start-up of the new SAG mill was initially delayed due to the failure of the powercells, which were then repaired
and re-installed in early December 2013. A second set of power cells have been purchased. The SAG mill has since
operated satisfactorily according to design.
Construction of two new pre-leach tanks is underway and is expected to be completed late in the year. These tanks
will increase leaching time from 24 hours to approximately 30 hours which will improve gold recovery.
The old processing plant’s crushing and grinding circuit were refurbished to provide standby backup support to the
new CIl processing plant.
In addition, construction of supplementary infrastructure was completed during the year, including junior staff
accommodation, assay laboratory and metallurgy offices.
12
2014 annual reportreview of operations Co-O mINE ExPANSION AND OPERATIONS
The Co-O mine is an underground rail or tracked mine, utilising battery powered electric locomotives and 1.2 to
1.5 tonne mine cars. Ore and waste is mined using air-leg mining and is extracted from the mine utilising using two
horizontal adits (marathon and main Adits), four inclined 60º internal shafts (8E, 3W, 7W and 10W shafts), two vertical
external shafts (ventilation and level 8 (l8) shafts) and two inclined external shafts (Agsao and Baguio shafts) as
marked on Figure 3. Waste is used to backfill empty stopes wherever possible to reduce haulage to the surface.
The capacities of the small surface and underground shafts have been upgraded to allow extraction of upto1, 000
tonnes per day. The new l8 Shaft’s design hoisting capacity is 1,500 tonnes per day, thus giving a combined total
designed hoisting capacity of approximately 2,500 tonnes per day.
underground development and stoping continued on all levels (levels 1 to 8) during the year. Currently the mine
production is achieved from approximately 60 development headings and approximately 100 stopes.
During the June 2013 quarter, deepening of the Baguio Shaft commenced from level 3 down to level 5, including
rail and timber installation. This work was completed towards the end of December 2013, thus providing additional
hoisting capacity from levels 4 and 5.
Two ore passes were completed from levels 6 and 7 to level 8, adjacent to the l8 Shaft. In addition, a retractable
feed conveyor belt system was installed at level 8 to facilitate feeding of ore from the two ore pass chutes to the
level 8 Shaft feed hopper. The ore passes and feed conveyor have been commissioned and are fully operational.
Since June 2013, an Alimak Raise Climber system is being utilised to develop a raise from level 8 to level 6 at the 15E
position to connect with an existing internal shaft from level 5 to level 6. The 15E Raise will be used initially as an ore
pass and for ventilation purposes.
level development averaged approximately 1,500 metres per month resulting in a high percentage of development
ore to stoping ore in the mill feed. This accelerated development program has been essential to prepare the mine
for the increased production rates required under the expansion plans. This has resulted in temporary reduced head
grades to the mill and corresponding lower gold production, however many bottleneck issues have been overcome
that will be sustainable moving forward.
During the June 2104 quarter, the mining workforce was rationalised with a reduction in the number of mining
contractors. The reduction in workforce numbers, mainly contractors, as announced in the 30 June 2014 quarterly
report, was primarily attributable to the reduction in the number of development headings to approximately 60
priority headings, and to a lesser extent, excess manning levels built up during the shaft sinking and expansion phase.
The Company has used this opportunity to retire some managers whilst providing the opportunity for younger
personnel to take up management positions.
The extreme wet weather during December 2013 and January 2014 damaged the haul road from the mine to the
mill. An ongoing works program to repair and upgrade the haul road is continuing to mitigate potential damage
from future extreme weather events. This includes a new bridge over the Agsao River immediately adjacent to the
mine which is anticipated to be completed before end of the year.
Co-O mINE CuRRENT OPERATIONS AND PlANS
Two mining methods are currently utilised at the Co-O mine:
(i) Shrink stope mining
This method is predominantly used on vertical to sub-vertical veins where dilution can usually be reasonably well
controlled. Shrink stopes have a minimum mining width of 1.25 metres; and
(ii) Slot stope mining
This method is used on the numerous low-angle veins (described above) where it is difficult to control the dilution
from the hanging wall or roof. The minimum mining width for low angle veins is 1.5 metres, hence the higher dilution
in low-angle stopes is partly responsible for the overall lower than average grade achieved from the mine.
The productivity of slot stopes is not as high as shrink stopes, and hence they also incur slightly higher costs. Trialling
of various support methods to minimise the hanging wall dilution in the slot stopes is planned.
The objective to attain a long term mix of development to stoping ore of 30% to 70% is currently being achieved.
Approximately 40% of the stope ore is currently sourced from the more diluted lower angle slot stopes.
medusa mining limited Approximately 20% to 30% of the development ore at Co-O is by definition (in narrow vein mines) taken from Inferred
Resources as this development is required as part of the conversion process from Inferred to Indicated Resources.
In mid-December 2014, the l8 Shaft haulage will be upgraded to a 4.8 tonne skip and a double decker man-cage
configuration to replace the current 3.6 tonne skip and single man-cage configuration. This exercise will also require
the introduction of heavier duty winder ropes and replacement of gearing on the winder.
The above changes will increase the haulage capacity as a result of the increase in the skip payloads and reduce
the time required for the employees to travel to underground work stations.
Preliminary planning for a new “materials and men” external shaft down to level 8 by developing the 15E Raise to
surface has commenced with a diamond drill hole for geotechnical evaluation completed and currently being
assessed.
The proposed shaft is located approximately 355 metres to the south-southwest of level 8 shaft and which will be
named 15E Shaft (Figure 3). Its primary purpose will be for the transport of men and materials, with some additional ore
haulage capability. The shaft will also provide ventilation, another means of egress and be capable of deepening
to level 12 sometime in the future.
Co-O mINE GEOlOGY
The local geology and mineralisation at Co-O has been discussed in more detail in previous Annual Reports and in
following section. However, the extensive development that has been undertaken over the last two years, including
opening up level 8, has provided a much clearer understanding of the 3D shapes of the pinching and swelling of
the veins and grade distributions. Consequently since September 2013 a major review of the all the mine geological
data has been undertaken to develop a system of classifying the veins according to textures and their relationship
to the grade of the vein. This classification allows visual grade estimates to be undertaken at working faces to
expedite mining decisions and to assist in mine planning.
A significant amount of re-interpretation has been completed, including the recognition that the main west-trending
vein system is controlled by a major shear system. This shear system has controlled the orientation of the three main
sub-vertical veins (Central, Jereme and GHv) and caused the development of numerous link structures/veins in
some sections of the mine and mainly between the Jereme and GHv on the west side of the Oriental Fault. These
link structures/veins are commonly low-angle between 30° to 60° and are now being interpreted and verified from
numerous previous unallocated drill hole intersections and underground development and stoping.
In addition, the recognition of the Don Pedro vein’s northerly orientation on level 8 in 2013 has also resulted in
the recognition of a third vein orientation set. The Don Pedro vein has so far been mined up to level 7. vertical
development of the Don Pedro vein East by winzing has been completed from levels 8 to 9, and is underway from
Levels 9 to 10 as the first stage of opening up deeper levels in the mine.
Level development readily defines the pinch and swell nature of the veins in a horizontal direction, and now with an
increased number of levels and vertical development as well as stoping data, the pinch and swell characteristics
are being defined in a vertical sense. Pinching and swelling in a vertical direction affects the projection of veins to
depth where a significant proportion of the 2013 Inferred Resources are located, and provides additional controls
for refining resource estimates.
GROuP ORE RESERvES AND mINERAl RESOuRCES
The Annual mineral Resources and Ore Reserves Statement for the Company was released on 25 September 2014
and includes material Information for the individual deposits, including a material Information Summary pursuant to
ASx listing Rules 5.8 and 5.9 and the Assessment and Reporting Criteria in accordance with the Australian Code for
Reporting of Exploration Results, mineral Resources and Ore Reserves (the “JORC Code 2012”).
MINERAL RESOURCE AND ORE RESERVE ASSUMPTIONS
Mineral Resources are reported inclusive of Ore Reserves and includes all exploration and resource definition drilling
information up to 31 may 2014, and has been depleted for mining to 30 June 2014. Gold price assumptions used to
estimate mineral Resources and Ore Reserves are:
• mineral Resources: uS$1,500/oz gold
• Ore Reserves:
uS$1,250/oz gold
14
2014 annual reportreview of operations Co-O MINE MINERAL RESOURCES
Total Inferred and Indicated mineral Resources for the Co-O mine are now estimated at 4,339,000 tonnes at a grade
of 10.1 g/t gold for a total 1,410,000 ounces gold, compared to the estimate reported on 08 August 2013 of 6.88
million tonnes at a grade of 9.9 g/t gold for a total 2,190,000 ounces gold (Table III).
The changes in the Co-O Mine resources are primarily due to: mining depletion; modified vein interpretations through
increased geological knowledge of the different vein sets obtained by further underground mapping; application
of updated resource modelling parameters, application of revised economic constraints and reporting to JORC
Code 2012, guidelines.
Table III. Co-O mine mineral Resources as at 30 June 2014
(Refer ASx announcement dated 25 September 2014 for JORC Code, 2012 – Table 1 Report)
Category
Tonnes
g/t Gold
Indicated resources
Inferred resources
TOTAL
1,561,000
2,778,000
4,339,000
11.8
9.2
10.1
Ounces
591,000
819,000
1,410,000
Notes:
- a lower cut-off of 3 g/t gold, and minimum mining widths of 1.2 metres , minimum grade of 2.7 g/t gold, minimum grade x width of 3.2 g.m/t have been
applied.
- a gold price of $1,500 has been applied
- various upper cut-off gold grades up to 300 g/t gold have been applied to different veins
- rounding to the nearest 10,000 applied may result in some slight discrepancies in totals
Reporting of mineral Resources under JORC Code 2004 guidelines gave an estimate of the volume of in-ground
mineralisation above a certain cut-off grade (3 g/t gold at Co-O) and had a reasonable expectation of being
mined.
JORC Code 2012 requires a statement of assumptions used to define reasonable prospects for eventual economics
extraction for resource reporting, such as cut-off grade, minimum mining width and gold price parameters.
The current reported mineral resources differ from previous estimates as some vein material which is high grade but
narrow in width. This vein material may not meet the revised minimum requirements for economic extraction when
diluted for mining nominated gold price, and/or extraction cost and is therefore no longer allowed to be included
in the reported resource.
However, should the gold price improve or costs decrease, then this un-classified mineralisation may be available to
be included in future resource statements.
VEIN MODELLING AND RESOURCE ESTIMATION
Cube Consulting Pty ltd (“Cube”) of Perth, Western Australia, was contracted to undertake the Co-O mineral
resource estimate. A wireframe model of the vein system and the mine depletions were based on all available
information as at 30 June 2014. A Bulk Density value of 2.62 was used for mineral resource estimations.
Cube has applied a 2D longitudinal modelling approach based on an accumulation variable incorporating
mineralised vein horizontal width and intercept grade. Each sample within a mineralised vein was assigned a unique
code. This coding was used to control compositing. mineralised vein grades were composited across the entire
coded interval resulting in a single intercept composite
Block estimates were based on interpolation into 25mE x 25mRl parent cells with sub blocks of 6.25mE x 6.25mRl in
the longitudinal plane. Block discretisation points, required for block kriging were set to 5 x 5 points in the longitudinal
plane. There was no subdivision of the composites or blocks in the N direction, therefore only a single discretisation
point is appropriate.
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. various high-grade gold limits were applied to
individual veins prior to the calculation of the accumulation variable.
mining depletions as of 30 June 2014 were stamped into the 3D block model using the 2D string outlines digitised
from the Co-O mine long sections.
medusa mining limited The criteria used previously by Cube for resource classification has been adopted for this resource update. These
criteria include:
•
•
•
•
•
Geological continuity and vein volume;
Data quality;
Data spacing and mining information;
modelling technique; and
Estimation properties including search strategy, number of informing composites, average distance of
composites from blocks and kriging quality parameters such as slope of regression.
In addition to the above, the following economic parameters were considered when assessing the requirement for
reasonable prospects for economic extraction:
•
•
•
•
Gold price of uSD1,500 per ounce;
minimum mining width of 1.2 metres;
minimum diluted grade of 2.7 g/t Au, and
minimum diluted grade x width of 3.2 gram•metres/ tonne
As a result, areas within the interpreted mineralisation, which do not satisfy these requirements, are therefore not
included in the reporting of the mineral resource.
The final reporting of the mineral resource is undiluted above a 3 g/t Au cut-off, but is based on those areas that
meet the minimum cut-off grade and dilution requirements.
COMPARISON WITH PREVIOUS RESOURCE STATEMENT
A comparison between the current mineral resource and that stated at 30 June 2013 shows a significant decrease
in Inferred Resources and to a lesser amount Indicated Resources (Table II)
There are a number of factors responsible for the decreases, including:
•
•
Significant changes to the vein interpretation after exposure by mining and with additional information
from underground drilling. Changes to the interpretation have included the presence of less continuous
flatter dipping veins and the identification of prevailing NW-SE and NE-SW shears. These have replaced or
broken up the continuity of previously interpreted continuous E-W striking and steeply dipping veins and
has resulted is less interpreted volume and tonnes. In addition, vertical pinching and swelling of the veins
has become apparent from mining and development to date, which has also affected previous vertical
extrapolations of mineralisation;
No minimum width criteria were taken into consideration previously when reporting the mineral resource at
a cut-off of 3g/t Au. However, the 2014 mineral resource update has taken into account economic criteria
equivalent to a minimum diluted grade x width of 3.2 gram*metres/tonne as guidance for what defines
economic extraction in the reported mineral resource. As a result, there are areas within the interpreted
mineralisation which do not satisfy these requirements and are therefore no longer included within the
reportable mineral resource as per JORC Code 2012;
mining and depletion has continued since the previous resource statement (ASx announcement dated
08 August 2013). Additional depletion has also been applied to some areas above level 3 due to a lack of
complete survey records for mining prior to 2005.
Table IV. Comparison Summary of the total undiluted Co-O mineral resources at a block cut-off grade above 3.0 g/t
Au for years ending 30 June 2013 and 30 June 2014.
30 June 2013
30 June 2014
Variance
Category
Tonnes
Au
(g/t)
Au
(oz)
Tonnes
Au
(g/t)
Au
(oz)
Tonnes
Au
(g/t)
Au
(oz)
Indicated
2,100,000
12.1
820,000
1,561,000
11.8
591,000
Inferred
4,780,000
9.0
1,375,000
2,778,000
9.2
819,000
TOTAL
6,880,000
9.9
2,190,000
4,339,000
10.1
1,410,000
-26%
-42%
-37%
-2%
2%
2%
-28%
-40%
-35%
16
2014 annual reportreview of operations
Co-O mINE ORE RESERvES
Carras mining Pty ltd (“Carras”) of Perth, Western Australia was contracted to undertake the ore reserve estimation
based on the 2014 mineral resource wireframe model provided by Cube Consulting Pty ltd. This model was slightly
updated in parts to reflect more current observations made in the mine, where they are relevant to the Ore Reserve
study. A Bulk Density value of 2.62 was used for mineral resource estimations and 2.4 was used for the waste material.
The Ore Reserves estimate for the Co-O mine comprises a Probable Ore Reserve of 1,920,000 tonnes at an average
grade of 7.22 g/t gold for a total of 446,000 ounces gold.
Cut-off Grades
Cut-off grades used for the Reserve Estimate were derived after making allowances for mining and haulage,
surface haulage, milling, administration, royalty, development and an extra development factor for mining outside
of Reserves and underground drilling.
The following cut-off grades were used:
•
•
•
•
2.0 g/t gold for development ore;
3.0 g/t gold (average) for broken ore, depending on closeness to hoisting point;
3.8 g/t gold for developed stopes, and
4.3 g/t gold for undeveloped stopes.
For levels 1, 2 and 3 where haulage is very minimal, lower cut-off grades were used, consistent with the lower
haulage costs. The costs used to arrive at cut-off grades are based on actual validated mine costs.
mining Factors & Assumptions
The Resource was converted to Reserve by carrying out detailed design following the application of minimum
mining widths (mmW), dilution and cut-off grades to panels of size 30m x 50m high based on the Cube block
model. Costs were then applied to determine those panels within the Indicated category which were economic. If
economic, they were included in the Probable Reserve.
mining at Co-O utilizes both Shrink and Slot stope mining. These methods have been used at the mine since 1989
and are well understood.
The mmW and mining dilution factors used are:
•
MMW of 1.25 metres is applied to those panels with a dip ≥ 60 degrees.
Where the mmW was equal to 1.25 metres, then an additional dilution of 0.25 metres was added to the
HangingWall.
•
MMW of 1.50 metres is applied to those panels with a dip < 60 degrees.
Where the mmW was equal to 1.50 metres an additional 0.25 metres dilution was then added to the
HangingWall.
An additional dilution of 10% was allowed for the mining of the low angle stopes under draw.
shape dilution of 8% of extra tonnage at 2 g/t gold, for extra development and to reflect pinch and swell of
veins
For stopes < 10 g/t gold an 85% mining recovery was used.
For stopes ≥ 10 g/t gold a 90% mining recovery was used.
For empty stopes where Pillar recovery was occurring, 50% of the Pillars are included in the Reserve and
these are diluted 200%.
•
•
•
•
•
medusa mining limited Inferred Resources (6%) are only utilized in the Ore Reserve estimation when Inferred panels need to be developed
in order to access higher grade Indicated Resources (which must be able to carry all costs). This includes a small
component of development beyond the Indicated Resource as an exploration component.
A comparison between the current ore reserves and that stated at 30 June 2013 shows a decrease in Probable
Reserve ounces of 22% or 124,000 ounces gold (Table v).
The changes in the Co-O Mine reserves are primarily due to: mining depletion; modified vein interpretations
through increased geological knowledge of the different vein sets obtained by further underground mapping,
inclusion of further underground drilling results, more conservative mining dilution parameters and resource
modelling techniques.
Table V. Comparison Summary of the Co-O mine’s Ore Reserves for 30 June 2013 and 30 June 2014 after allowance
for depletion.
Reserve
Category
30 June 2013
30 June 2014
Variance
Tonnes
Au
(g/t)
Au
(oz)
Tonnes
Au
(g/t)
Au
(oz)
Tonnes
Au
(g/t)
Au
(oz)
Probable
1,650,000
10.7
570,000
1,920,000
7.22
446,000
16%
-33%
-22%
Co-O ExPlORATION
“ Underground exploration drilling continues to better define the Co-O
vein system over a strike length of approximately 2,000 metres. Drilling
is focusing on upgrading Inferred Resources to the Indicated category
and to delineate extensions to Inferred Resources, along strike from, and
beneath current development.”
RESOURCE DRILLING
A total of 91 underground diamond drill holes were completed to 30 June 2014 for a total advance of 26,791 metres.
The Company is currently using three large contract rigs and four smaller Company owned portable drilling rigs.
underground drilling is ongoing primarily to upgrade Inferred Resources to Indicated Resource category as well as
to delineate additional mineralisation and extensions to the Inferred resources.
Three drill chambers have been excavated on levels 3, 5 and 8 and one is planned to provide access for long term
drilling programmes as shown on Figures 3 and 4. Additional drilling is being planned to ensure that replacement of
reserves is achieved on an annual basis by upgrading Inferred Resources to the Indicated status, in conjunction with
level developmentand described in the announcement of 9 September 2014.
Details of significant intersection results obtained during the 2013-14 year have been reported in the September
2013, December 2013, March 2014 and June 2014 quarterly reports. Table VI below summarises the more significant
drill intersections obtained during the year.
18
2014 annual reportreview of operations Table VI. Co-O Mine – Significant underground drill hole results of ≥ 1 metre at ≥ 6 g/t gold, or ≥ 6 gram-metres.
(Refer ASx announcement date 25 September 2014 for JORC Code, 2012 – Table 1 Report)
Hole
Number5
East4
North4
RL4
Depth
(metres)
Dip (o)
Azimuth
(o)
From
(metres)
Width2
(metres)
Gold Grade1,3
(uncut)
(g/t gold)
l2-65W-004
l2-6E-001
613299
614063
913087
913100
107
103
96.26
26.30
3
3
190.87
331.27
UNDERGROUND EXPLORATION DRILL HOLES - LEVEL 2
UNDERGROUND EXPLORATION DRILL HOLES - LEVEL 3
l3-64W-002 5
l3-64W-010
l3-64W-012
l3-64W-014
l3-64W-016
613340
613348
613343
613344
613348
913026
913027
913033
913033
913026
62
61
61
61
62
291.1
492.0
256.8
327.4
439.3
3
-25
3
3
-25
222
124
13
20
138
l3-64W-017
613347
913023
60
550.7
-25
150
l3-64W-022
l3-64W-023
l3-64W-028
l3-64W-030
613349
613347
613350
613350
913057
913057
913057
913057
60
60
60
60
467.3
499.8
455.4
476.6
-41
-50
-48
-46
179
180
199
159
l5-42E-034 5
614380
912692
-47
424.4
-53
343
UNDERGROUND EXPLORATION DRILL HOLES - LEVEL 5
l5-42E-035 5
614381
912692
-47
415.5
-53
341
l5-42E-036 5
l5-42E-037 5
614382
614383
912692
912691
-47
-47
410.7
420.8
-53
-53
358
325
UNDERGROUND EXPLORATION DRILL HOLES - LEVEL 8
l8-9E-001
l8-19E-001
l8-19E-002
614054
614207
614208
912801
913105
913105
-189
-192
-192
120.1
487.1
435.2
3
3
-2
318
247
198
l8-19E-003
614207
913104
-192
477.80
-3
204.02
l8-19E-004
614208
913104
-192
500.90
-3
213.63
61.65
23.90
177.70
335.60
65.50
75.80
193.20
286.00
305.30
360.20
428.30
41.40
311.50
341.95
178.55
150.30
256.50
177.55
40.85
70.30
329.10
350.60
37.80
64.75
68.60
116.70
374.15
113.10
330.90
103.70
62.85
244.10
319.35
349.05
352.40
387.60
175.45
330.50
375.45
286.40
320.10
395.10
1.00
2.40
1.00
1.10
1.40
0.90
1.00
1.30
0.20
3.00
0.90
1.00
1.00
1.00
1.30
0.20
1.00
1.00
0.65
0.90
1.00
1.00
0.70
2.15
0.35
2.05
0.45
1.40
3.25
0.90
1.00
1.00
2.00
0.45
0.35
2.60
0.30
4.45
1.95
0.45
2.00
0.75
6.03
9.77
19.83
23.08
5.80
7.33
12.10
3.67
48.80
3.38
15.10
8.33
10.17
123.13
11.52
57.20
7.10
15.47
20.40
7.19
9.15
10.38
13.59
7.45
49.60
24.88
13.09
12.41
18.30
9.57
6.87
6.32
9.78
50.22
28.96
9.85
19.83
14.87
51.83
31.20
3.04
8.99
medusa mining limited Hole
Number5
East4
North4
RL4
Depth
(metres)
Dip (o)
Azimuth
(o)
From
(metres)
Width2
(metres)
Gold Grade1,3
(uncut)
(g/t gold)
l8-19E-005
614207
913104
-192
494.00
-3
222.7
UNDERGROUND EXPLORATION DRILL HOLES - LEVEL 8
l8-19E-008
l8-19E-009
l8-19E-010
l8-19E-011
614209
614209
614213
614213
913103
913103
913105
913105
l8-19E-013
l8-29E-003
614209
614276
913103
912913
l8-29E-004
l8-29E-005
614270
614271
912910
912909
-193
-193
-193
-193
-193
-191
-191
-191
402.0
415.0
449.2
463.0
415.0
393.4
115.6
475.9
l8-29E-006
l8-29E-007
l8-29E-008
614276
614276
614274
912913
912910
912908
-191
-191
-191
411.9
464.3
473.4
l8-29E-009
614276
912913
-191
452.2
l8-29E-010
614274
912908
-191
474.3
-23
-22
-29
-27
-29
0
3
3
3
3
3
3
3
189
175
157
141
177
57
219
213
68
116
174
93
142
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 3.0 g/t gold;
(iii) ≥ 1.0 metres down hole intercept width at ≥ 6.0 g/t gold, or
(iv) ≥ 6 gram.metres,and
(v) a maximum of 1.0 metre of down-hole internal dilution at ≤ 3 g/t gold.
2. Intersection widths are down-hole drill widths not true widths;
3. Assays are by Philsaga mining Corporation’s laboratory; and
4. Grid coordinates are based on the Philippine Reference System 92. Rl is elevation in metres relative to the mine Datum.
5. Note that some of the results were received after 30 June 2013 for holes completed prior to 30 June 2013.
237.30
329.50
155.85
14.75
164.15
180.40
380.85
200.15
100.50
120.65
168.20
53.65
47.65
55.00
108.70
156.60
180.35
183.40
90.70
0.40
57.80
169.30
203.80
80.65
186.60
236.55
337.25
194.50
292.00
1.60
2.30
1.05
1.05
1.25
0.60
0.95
1.40
1.10
0.85
2.80
2.20
0.60
0.90
0.90
1.00
2.05
0.75
0.65
0.90
0.65
1.20
0.50
0.85
3.85
1.00
5.15
1.00
1.70
8.75
3.59
10.50
7.17
21.91
15.07
8.77
24.38
5.83
8.11
22.76
19.43
15.50
15.86
16.34
21.18
34.22
60.60
13.09
7.10
58.98
6.44
4.09
20.00
7.31
78.70
14.78
15.48
44.03
20
2014 annual reportreview of operations s
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2014 annual reportreview of operations
Figure 5 below is a 3D perspective view of the current Co-O resource model with underground development as at
30 June 2014.
Figure 5: Co-O mine resource model and underground development
GEOTECHNICAL DRILLING
Three diamond drill holes were completed to investigate ground conditions within the Co-O mine environs for a total
of 379 metres. One of the drill holes was completed to evaluate geotechnical parameters for the proposed vertical
15E Shaft (Fig. 3).
GROUND GEOPHYSICAL SURVEY
The ground geophysical Induced Polarisation (“IP”) / Resistivity (“RES”) and ground magnetic survey commenced
in 2013 within the Co-O tenements, including the Co-O mine environs, is nearing completion. up to the end of June
2014, approximately 196 line kilometres of the survey was completed. Approximately 60 line kilometres remain to
be surveyed, however this program has been temporarily put on hold since July 2014 while area access is finalised.
Interpretations are anticipated to commence during the September/December 2014 quarters.
RECONNAISSANCE PROGRAMS
Reconnaissance mapping and sampling programs are ongoing throughout the Co-O group of granted tenements.
Co-O LOCAL GEOLOGY AND MINERALISATION
Detailed discussions and interpretations of the Co-O 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 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” within the Co-O Diatreme, as is the large Road 17 Mega Block.
medusa mining limited •
•
•
•
•
•
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. Its presence explains the general absence of near surface epithermal veins east of the Oriental Fault as
the veins are masked by the flare of the diatreme.
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 dimensions 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.
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
major veins generally strike west-northwest to westerly with dips predominantly 55° to 75° to the north for all veins,
except the Central Vein which is vertically dipping. Between the major veins, vein splits tend to be more flat-lying
with dips as low as 20°.
There is some mineralisation within the diatreme, however exploration to date has found the mineralisation to be
erratic and discontinuous, comprising wispy thin quartz vein stockworks and hydrothermal breccias.
After another episode of uplift and erosion, a thin veneer of sedimentary polymictic conglomerate to a maximum
thickness of about 30 metres, was deposited on top of the diatreme/maar complex.
RESEARCH
Detailed studies of the Co-O mine and surrounds have continued through 2013-14 with the Centre for Exploration
Targeting at the University of Western Australia. This research is still in progress, and is focussed primarily on fluid
inclusions, alteration and detailed vein texture studies on a large suite of samples collected from the various veins
throughout the Co-O mine. The aim of this research is to assist in better understanding and determining the extent
and nature of the Co-O hydrothermal system.
Co-O ExTENSIONAl DRIllING
The philosophy of exploring for additional resources and extensions to mineralisation by working outwards from
current mine infrastructure continued during the year.
Figure 3 is composite longitudinal projection of the Co-O Mine showing significant drill intercepts that have been
reported since 2010.
24
2014 annual reportreview of operations TAMBIS PROJECT
The Tambis Project, comprising the Bananghilig Gold Deposit and the B2 Discovery area (Figs 2 and 12), 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 (EO-79) 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 as shown on Figure 6. Additional information is contained in the
September 2011 quarterly report dated 24 October 2011, drilling updates on 17 January 2012, 8 August 2012, 21
November 2012 and 02 April 2013, operations update on 8 July 2013, resource estimation updates on 29 January
2013 and 8 August 2013, and the September 2013, December 2013, march 2014 and June 2014 quarterly reports.
DRILLING
No drilling was carried out within the Bananghilig Deposit area, however a total of 8,843.9 metres of core drilling in
30 holes were completed within the B2 area, adjacent and to the southeast of the Bananghilig Deposit (Fig. 7). The
drilling program was temporarily suspended on 17 June 2014 to enable collation of data obtained to date and to
prepare the area for down hole geophysical survey, which is anticipated to commence depending on contractor
availability.
Indicated and Inferred Mineral Resource Estimations
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
contains a summary of the parameters used in the resource estimation.
On 8 August 2013, a mineral resource update was announced using all drilling data up to 30 June 2013. A 0.8 g/t
gold cut-off was applied to the resource estimate resulting in 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 29 January 2013). The Indicated Resource ounces
increased by 26% to 766,000 ounces at 1.48 g/t gold (from 608,000 ounces at 1.59 g/t gold).
The Bananghilig mineral Resources were reported in accordance with The 2004 Australasian Code for Reporting of
Exploration Results, mineral Resources and Ore Reserves (JORC Code, 2004 Edition).
As there have been no material changes to the database for the Bananghilig Deposit since the last report resource
estimate, the Company is not required to report the resources in accordance with the Australasian Code for
Reporting of Exploration Results, mineral Resources and Ore Reserves (JORC Code, 2012 Edition).
The Company is in the process of re-evaluating the resource at Bananghilig together with the mineralisation at B2
since there is potential to significantly increase the resource base.
Resource modelling
The 8 August 2013 announcement contains a summary of the parameters utilised in the resource estimation, viz:
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 were 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;
medusa mining limited • an 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/m3 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.
BANANGHILIG SCOPING STUDY
On 9 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 are included in the 9 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.
On 2 April 2013, the Company announced the discovery of a new zone of gold mineralisation (now known as
the B2 Discovery area) proximal to the current Bananghilig Deposit (Fig. 8). The results of subsequent drilling may
have implications for the development of the current Bananghilig resource. The Bananghilig feasibility study which
commenced in 2013 was put on hold in September 2013 due to the gold price decline, market conditions and
pending further ongoing work at the B2 Discovery area.
GEOTECHNICAL AND STERILISATION DRILLING PROGRAMS
A geotechnical investigation drilling program commenced in July 2013 to investigate sites suitable for infrastructure
associated with the possible development of the Bananghilig Deposit, including plant site, waste, tailings and process
water storage facilities. This program was completed in October 2013, and selected core samples were submitted to
an independent materials testing laboratory. A total of 31 drill holes were completed for a total advance of 1,883.96
metres.
Geotechnical results are anticipated to be received during the December 2014 quarter.
A second ‘sterilisation drilling’ program was also carried out to identify any mineralisation within revised potential
infrastructure sites. A total of seven drill holes were completed for a total advance of 1,830.88 metres. Although minor
zones of alteration/mineralisation were encountered in some drill holes, no significant assay results were obtained
from these areas.
B2 DISCOvERY AREA
Drilling in the B2 area was carried out with up to three diamond rigs drilling on a 150 metre x 150 metre grid pattern.
Drilling was halted on 17 June 2014 to enable collation of assay data and to prepare for a program of down hole
geophysical survey, which is anticipated to commence in second half of the calendar year.
Part of the completed drilling program included closely spaced diamond drill holes between the high-grade
mineralisation encountered previously in drill holes TDH284 and TDH303 (Figs 7 and 8). Additional high-grade
mineralisation was encountered in many of these holes, and the continuity of the mineralisation between holes is
currently being evaluated. The down hole geophysical survey is expected to assist in the interpretations of the high-
grade mineralised zones.
A total of 8,843.9 metres of core drilling were completed in 30 holes.
26
2014 annual reportreview of operations Figure 6: Bananghilig area interpreted geology showing the position of the B2 Discovery beneath the limestone cover and relative to the Bananghilig deposit.
medusa mining limited Figure 7. Bananghilig 2013 resource model projection and the B2 drill hole projections showing significant drill assay intercepts
Figure 8. B2 section 11160mN showing multiple high grade hydrothermal breccia mineralisation intersections within the Tambis Diatreme Complex
28
2014 annual reportreview of operations B2 DRILLING RESULTS
Results of the initial discovery drilling at B2 were announced on 2 April 2012, 08 July 2013, the march 2013 and June
2013 Quarterly Reports as well as the 2013 Annual Report. A summary of significant results from drilling at the B2 area
for the FY2014 year are included in Table vI below.
Table VII. B2 Discovery Area – Significant drill hole results ≥1 g/t gold.
(Refer ASx Announcement dated 25_September 2014 for JORC Code, 2012 – Table 1 Report)
Hole Number
East4
North4
RL4
Depth
(metres)
Dip (o)
Azimuth
(o)
From
(metres)
Width2
(metres)
Gold Grade1,3
(uncut)
(g/t gold)
TDH308
613278
945405
156
359.1
-60
130
TDH310
TDH313
613435
613331
944948
945128
144
179
309.5
302.1
-60
-60
130
130
TDH314
613745
945277
117
312.6
-60
130
TDH316
TDH317
613537
613681
945355
944841
129
170
303.1
302.1
-60
-60
130
130
TDH321
613616
945073
118
297.6
-59
130
TDH322
613591
945089
111
300.6
-61
130
TDH323
613631
945114
119
307.6
-60
130
TDH325
613575
944927
199
300.5
TDH326
613583
945050
130
304.4
-60
-60
130
130
84.10
245.45
312.10
198.65
116.15
226.20
237.95
286.35
65.75
140.50
168.85
255.45
282.60
186.45
137.10
162.05
170.35
262.25
115.85
151.55
179.20
246.65
198.60
211.25
235.60
248.30
116.00
159.30
197.75
215.40
245.10
262.20
272.05
303.20
135.15
225.55
108.30
114.25
169.30
181.35
228.95
248.10
279.10
3.50
5.00
7.30
13.45
8.90
5.95
16.40
12.00
1.00
1.50
6.70
3.25
2.30
3.50
3.60
4.55
8.05
21.55
20.70
4.25
6.90
2.25
6.65
1.75
6.30
11.35
3.85
12.45
13.85
11.80
8.10
3.65
7.20
2.45
8.55
13.40
2.75
5.70
4.40
8.65
7.75
4.75
8.70
1.02
2.88
3.23
1.38
1.17
5.54
2.04
1.33
18.58
4.21
1.22
3.89
2.70
2.37
1.86
2.71
3.17
2.34
2.26
1.78
2.47
5.87
1.24
2.88
1.14
3.18
1.40
2.98
1.41
1.23
1.55
1.76
1.34
2.22
1.27
2.73
4.86
2.42
1.71
1.29
1.24
4.34
2.79
medusa mining limited
Hole Number
East4
North4
RL4
Depth
(metres)
Dip (o)
Azimuth
(o)
From
(metres)
Width2
(metres)
Gold Grade1,3
(uncut)
(g/t gold)
TDH327
TDH328
613577
613242
945103
945192
113
215
303.6
312.5
TDH330
613627
945064
124
294.5
TDH332
613555
945020
142
320.5
TDH334
613002
944955
147
302.1
TDH335
TDH337
612721
613104
944857
945134
201
144
301.8
300.1
-64
-60
-56
-60
-60
-60
-60
130
130
130
130
130
130
130
TDH338
613190
945048
218
303.4
-60
130
TDH339
TDH340
TDH341
TDH342
TDH343
613459
613719
613574
613420
613450
945608
945449
945541
945449
945033
TDH344
TDH345
613285
613153
944957
944893
117
124
134
194
189
203
190
304.0
310.4
300.6
301.1
303.8
300.0
300.6
-60
-60
-60
-60
-60
-60
-60
130
130
130
130
130
130
130
TDH346
613531
945147
137
300.6
-60
130
TDH347
613414
944861
130
301.8
-60
130
TDH348
613389
944701
102
300.6
-60
130
216.10
260.20
289.20
154.85
197.85
170.35
236.30
254.50
80.30
200.15
143.70
45.80
120.40
176.80
232.25
151.30
174.05
202.95
236.10
170.70
176.00
145.70
268.70
220.00
231.40
267.40
280.10
249.65
186.15
227.60
280.60
170.70
200.90
265.10
166.90
178.20
297.85
169.05
183.85
201.50
222.85
237.60
0.35
1.45
15.60
16.50
5.80
7.00
0.70
7.55
9.50
6.85
1.95
4.35
9.75
1.00
7.45
11.95
24.90
9.55
12.10
4.40
7.85
4.70
5.60
5.60
29.10
3.10
22.65
3.15
6.00
13.95
11.85
8.65
12.25
6.00
2.00
2.85
2.60
12.80
11.65
6.65
5.40
5.85
34.80
8.82
1.51
3.78
0.93
7.27
22.40
5.79
2.77
1.26
6.03
3.01
0.90
17.71
0.58
2.36
0.81
1.12
1.29
2.41
1.78
15.08
1.79
1.28
1.89
10.97
1.18
2.36
1.89
0.79
9.79
1.59
1.29
1.18
3.44
3.47
4.57
1.36
1.22
1.99
1.40
1.56
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 per 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 and Rl (elevation) based on the Philippine Reference System 92.
30
2014 annual reportreview of operations
TAmBIS REGIONAl
There is an ongoing program of geological mapping, trenching and sampling throughout the granted tenements of
the Tambis Regional Project area, including the areas surrounding the Bananghilig and B2 Discovery areas and the
Barobo Fault Corridor (Figs. 2, 9 and12).
Several prospective areas have been identified from the ongoing regional reconnaissance and exploration activities
that will be targeted for more detailed exploration activities during the 2014-2015 year. Activities will include detailed
geological mapping, soil geochemical surveys, ground geophysics (IP, RES and magnetics), trenching and possibly
diamond core drilling.
BAROBO FAULT CORRIDOR
Exploration within the Barobo Fault Corridor has so far identified many prospective areas, of which the Guinhalinan
area is currently the most prospective and most advanced (Fig. 9). more detailed descriptions of the geology,
exploration potential and previous drilling and rock sample geochemistry results have been reported in Company
announcements dated 16 July 2007, and 12 August 2009, June 2007 and September 2009 quarterly Reports and
2009 Annual Report.
Previous reconnaissance work had encountered mineralised zones represented by silicified boulders and outcrop.
The area is dominantly underlain by a sedimentary package consisting of well-bedded siltstone/sandstone sequence
and limestone units. Recent mapping and sampling have confirmed conceptual carbonate replacement and
sediment-hosted gold targets. At least two gently-dipping strata-bound potentially mineralised horizons have been
interpreted trending NW-SE with shallow to moderates dips to the east.
Figure 9: Tambis Region - Barobo Fault Corridor and Guinhalinan Prospect showing the location of significant results encountered in previous exploration
medusa mining limited lINGIG COPPER PROJECT
The lingig copper discovery is located within mineral Production Sharing Agreement (“mPSA”) 343-2010-xIII and
situated in Surigao del Sur province in east mindanao (Figs 2 and 12).
The mPSA is registered under Das-agan mining Corporation and 100% rights are assigned to Philsaga mining
Corporation subject to a gross royalty of 3% payable to Das-agan. covers approximately 80 km² (8,019 hectares) in
two blocks. The mPSA covers a total combined area of approximately 8,019 hectares in two blocks, of which the
lingig copper deposit is located in the southeastern block.
Figure 10: lingig interpreted geology showing drill hole locations, copper (Cu) and molybdenum (mo) soil geochemistry anomalies, and three IP anomalies
32
2014 annual reportreview of operations 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 three known copper mineralisation in lingig, namely Zone 1 (Au-bearing porphyry related Cu), and Zones
2 and 3 (magmatic-hydrothermal breccia-hosted Cu with porphyry-related Cu) as shown in Figure 10.
GOLD-BEARING PORPHYRY-RELATED COPPER MINERALISATION.
The porphyry-related Cu mineralisation at Zone 1 is gold-bearing, and is hosted mainly in basalt. mineralisation
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 is truncated by an
underlying thrust fault and potentially the rest of the mineralised zone is yet to be located. The mineralised diorite
porphyry intruding the basalt and the barren hornblende quartz diorite beneath the thrust fault are all propylitically
altered. One of the Company’s drill holes (lIN002) is well mineralised, starting at 2 metres below surface and
containing 267.3 metres at 0.52% Cu and 0.06 g/t Au down to the basal thrust zone.
BRECCIA-HOSTED MINERALISATION
magmatic-hydrothermal breccia pipes have been recognized in Zones 2 to 3. They are carrot-shaped, wide at
the upper parts and narrowing down and even disappearing at depth. They consist of angular to sub-rounded,
pebble to boulder-sized basalt and diorite clasts in a quartz diorite plutonic matrix. The basalt clasts sometimes
have quartz-sulphide veinlets and are cut again by later veinlets. The mineralisation 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 gold. Both the host quartz diorite and the breccia pipes are variably altered to potassic,
chlorite±sericite±epidote and propylitic alteration types. The zone containing the breccia bodies is tabular and
open to the south where the copper mineralisation is in intensely altered hydrothermal breccias with the most recent
drill hole intersections returning 154.7 metres at 0.19 % copper in hole lIN037 and 86.0 metres of 0.12 % copper in
hole lIN040.
The three mineralised zones (Zones 1, 2 & 3) identified to date are located along a northeast-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.
There is a coincident Cu-mo soil anomaly approximately 1km x >1km in size with mineralised Zones 1 and 2 and still
open to the north. This strengthens the opportunity to locate porphyry-related copper mineralisation to the north.
Test pitting, soil sampling and re-mapping were completed to complement the previous geochemistry and the
recent geophysical surveys are being used to assist in target definition for future drilling.
Data processing and interpretation of the data obtained from the ground Induced Polarisation, Resistivity and
Ground magnetics survey completed in 2013 was undertaken by an independent geophysical consultant. Two
aligned NE-trending IP high chargeability zones have been identified (Fig. 11). The larger of the two IP anomalies will
be one of the foci for future drilling with the aim of delineating economic mineralisation.
medusa mining limited SAUGON GOLD PROJECT
The Saugon Project comprises three granted exploration permits (EP 017-xIII, 031-xIII and 032-xIII) and four
exploration permit applications (EPA 00066-xIII, 00067-xIII, 00069-xIII and 00087-xIII) covering a combined total 27,174
hectares (Figs 2 and 12). The granted tenements and tenement applications are registered under Philsaga mining
Corporation, excepting EPA 00069-xIII which is in the process of being registered under Phsamed mining Corporation
(refer Tenement Schedule located elsewhere within this Annual Report).
FIRST HIT vEIN DEPOSIT
BACKGROUND
The First Hit vein (FHv) is situated within Exploration Permit xIII-017, approximately 10 kilometres south of the Co-O
Gold mine and 28 kilometres by road from the Co-O mill. Work commenced in early 2003 on the First Hit vein deposit
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 11: Saugon regional geology map
REGIONAL SETTING
Subsequent to the drilling in 2004, an aeromagnetic survey was completed which showed the 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 11. 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.
34
2014 annual reportreview of operations 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 completed a preliminary resource estimate for the FHv (refer 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. Since there has
been no material changes to the resource since the resource was last estimated, the Company is not required to
re-estimate the resource under the guidelines of the JORC 2012 Code, therefore the resource reported is compliant
with the guidelines of the JORC 2004 Code.
EXPLORATION
Exploration activities are ongoing and include detailed geological mapping and soil and rock geochemistry.
APICAL PROJECT
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 2,084 hectares in the Tambis Region 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 application is being progressed towards granting.
CORPLEX PROJECT
The Company through Philsaga has memoranda 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 tenement applications 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 tenement applications are being progressed towards granting.
USA PORPHYRY COPPER- GOLD PROJECT
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 being progressed towards granting.
medusa mining limited TENEMENTS
Figure 12 shows the locations of the Company’s granted tenements and tenement applications. Processing of
tenement applications has been stalled since the introduction of Executive Order 79 in 2012, and a review is currently
being undertaken by the government to determine the new legislation on mining taxes and royalties for submission
to Congress.
Figure 12: Tenement location map showing project areas and granted tenements and tenement applications.
36
2014 annual reportreview of operations SUSTAINABILITY
The Company continue to believe that its business should be founded on four key components that encompass our
commitment to all stakeholders. Improvements are still being made to organisational coherence, proper internal
procedures, regular checks and balances, performance and efficiencies. The four key components are:
• Health and Safety;
• Environmental Protection, management and monitoring;
• Work sustainability; and
• Community Participation, Development Programs and Benefits
HEAlTH AND SAFETY
During the year the following practices were undertaken:
• Comprehensive safety awareness at the mine and mill sites, including traffic regulation;
• Comprehensive emergency preparedness plans and programs at mine and mill sites;
• Regular comprehensive health checks for all employees;
• Expanded mining and safety training activities for all underground personnel;
•
•
•
•
Conducted 4 Basic life Support and Standard First Aid Training seminars for all mine and mill employees for use
at work and in the home;
Continued regular training, including rope rescue, and equipping for mine rescue and firefighting teams, with the
teams participating in annual national competitions;
Regular safety meetings that emphasise workforce participation in ensuring safety and hazard minimisation;
and,
Deployed search, rescue and recovery teams to the province of Bohol that was devastated by an earthquake
on October 15, 2013.
The 12 month lost Time Accident Frequency Rate to 30 June 2012 was 1.04, to 30 June 2013 was 0.10, and to June
30, 2014 was 0.18, 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: Awarded Fire Fighting Champion in the Provincial Fire Olympics
2014 held on June 19, 2014
Photo: Basic life support and first aid training
medusa mining limited ENvIRONmENTAl mANAGEmENT AND mONITORING
The Company is committed to its environmental protection, management 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 management and performance, and is committed to ensuring proper
rehabilitation 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 daily basis to monitor water quality in and around the Company’s facilities and the
samples collected were analysed, with the results submitted to the relevant authorities.
In all quarterly meetings and inspections of the different multi-Partite monitoring Teams (mmT) for the mine and for
the mill, the Company has been complimented on its environmental and social development programs.
Photo: Seedling of endemic species
Photo: Reforested surroundings at the mine site
38
2014 annual reportreview of operations The Company has also adopted the National Greening Program and Adopt-a-Forest Program of the Philippines
Government. For this fiscal year, Philsaga Mining Corporation and Mindanao Mineral Processing and Refining
Corporation have embarked on a 225 hectares reforestation program within the areas of the two host communities,
which also consequently benefitted the settlers therein as it gave them income for each seedling planted.
The Company has its own five nurseries producing local tree species for reforestation projects as well as the rubber
tree seedlings necessary for the establishment of the rubber livelihood programs of the surrounding communities. At
the end of the financial year, the nursery held over 200,000 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 program 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 program 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 Program 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 Program; 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.
•
•
•
•
Regular water testing and in-house testing of cyanide is conducted in conjunction with 24 hour monitoring of tailings
dams.
The Co-O Gold Project remains compliant 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 were conducted during the
financial year.
The Company has likewise established materials recovery and solid waste management facilities for proper
disposition of its domestic wastes. It maintains a “Reduce, Re-use and Recycle” policy for all solid wastes.
medusa mining limited CLIMATE CHANGE
It is a condition of the ECC for operation of the Co-O mine that it establishes a reforestation and carbon sink program
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: Grown re-afforestation 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 2014 the Company employed 2274 regular workforce and 2,439 contract workers
(mining, engineering, service provision, etc.).
The Company enhances employee skills and productivity through the attendance at training programs 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, PROGRAmS AND BENEFITS
COMMITMENT
Since 2001, Philsaga mining Corporation 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.
It is the Company’s objective to build on this record and strengthen reciprocal relationships between the Company
and other organisations and the communities in which it operates
EDUCATION
“ Through all our education initiatives, it is pleasing to report that about
10,000 students are enrolled at the schools supported by the Company.”
40
2014 annual reportreview of operations Scholarships
The Company has provided scholarship programs, both from the Social Development and management Program
(SDmP) and Corporation Social Responsibility (CSR) which commenced in 2003, has continued strongly during the year:
• Full education scholarships currently support over 75 students;
• Half scholarships support to 40 students;
• Educational assistance to 17 students.
Company schools and Adopt-a-School program
During the year, the Company supported the Philsaga High School Foundation at the Co-O mill site and the upper
Co-O Elementary School at the Co-O mine. In addition, it continued its “adopt–a-school” program in which 23
schools participated. Corporate sponsorship also assisted in achieving its aims.
The following were achieved:
•
•
•
Supported the salaries and wages, and meals of all teachers and workers of Philsaga High School Foundation,
including the master’s degree courses undertaken by some of the teachers and guidance counsellors. The
Company also provided for school chairs, books and other necessities for the additional three grade levels
imposed by the new educational program of the national government;
Provided funds for the school preparation of 23 schools prior to opening of classes, as well as school materials to
the school children;
Provided monthly honoraria to 43 teacher’s salaries and support for training seminars for teachers to upgrade
their teaching skills, as well as provision of instructional materials;
•
In conjunction with its partner agencies, provided school supplies for students;
• Provided two daily return bus services for high school students from remote areas to attend high school; and
• Provided monthly honoraria to 22 day care workers of various communities.
After the earthquake in Cebu and Bohol, as well as the super typhoon Yolanda (Internationally known as “Typhoon
Haiyan”) that hit the Provinces of leyte and Samar on November 8, 2013 (the strongest recorded tropical cyclone
in the country’s history), the Company had undertaken the repair of buildings and will provide for school materials
to 3 schools, located at municipality of Palo, leyte, municipality of Guiuan, Eastern Samar, and municipality of loon,
Bohol. The Company committed to spend Php 1 million each for the 3 schools. The turn-over of the rehabilitated
schools at Palo, leyte as well as loon, Bohol was scheduled on 1 September, 2014.
LIVELIHOOD PROJECTS
Rubber tree plantation
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 that provide income for 50-60 years from around year
seven. This year approximately 120 hectares were planted comprising
over 108,000 seedlings generated in the Company’s own nurseries.
Rice production financing
Photo: Rubber seedling nursery
This project has continued through the year aimed at progressively developing debt free farming communities
through the provision of financing arrangements to qualified farmers. The program is in its ninth cropping season and
is extending assistance to 100 beneficiaries covering 100 hectares of rice farms.
Added to this, the rice yield for each hectare financed is purchased by the Company at a price higher than
prevailing market prices. These rice yield are milled and the produce distributed to all its regular employees, the
police and military units around the area and the various tribal communities in the host communities.
COMMUNITY DEVELOPMENT AND ASSISTANCE PROGRAMS
The Company continued to provide assistance with a number of community-based projects.
Teacher training
The Company continued to support salaries for volunteer teachers as well as teacher training to improve teacher
knowledge and skills in conjunction with the Department of Education for the additional k9 to k12 programme.
medusa mining limited Honoraria to Teachers and Day care centre workers
Support was provided for 12 day care centres which cater for children below six years old. The Company continues
to provide honoraria to teachers and day care workers, and providing school supplies and instructional materials.
Community health
The Company provides general health and dental services to its employees and dependants, as well as residents of
surrounding communities and nearby municipalities.
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.
Fruit tree programs
The adoption of four sitios (or small villages) aims to provide a sustainable livelihood by planting of fruit trees suitable
in the area. The programs have the technical support of the Department of Agriculture and the Department of
Trade and Industry conducts various financial seminars.
Institutional partnering
The Company partners with various local government departments such as Department of Social Work and
Development, Department of labour and Employment, Department of Trade and Industry, Department of
Agriculture and Department of Education to achieve common goals. The same goes for various indigenous cultural
communities.
The Company has likewise created an informal partnership with Caraga State university by means of supporting all
its environmental and bio-diversity studies, monitoring and geo-tagging of the flora and fauna found in the mill and
mine sites.
Non-government organisation partnering
The Company continues to provide assistance to
•
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.
Support to the Livelihood Programs of the Union
The Company has provided funds for the livelihood programs of the union (Philsaga Employees labor union-PTGWO),
in conjunction with the Department of labour and Employment, such as tailoring and water purifying. It has also
funded the construction of a 3-storey building to house, the tailoring, the water purifying station and commissary to
sell goods, items and food at low profit margin.
Support to the Flood Victims
Agusan del Sur suffers a great amount of rainfall every year, and there are times when the rains cause excessive
flooding. The Company has provided for rescue boat engines as well as relief goods to the host municipalities, and
other surrounding municipalities.
Subsequent to super typhoon Yolanda, almost Php 2 million was given to various organisations that will provide relief
goods to the flood victims at the Provinces of Leyte and Samar.
Support to the Peace and Order
The Company has provided funds for the repair of vehicles, provided fuel to vehicles, food and building materials to
the various police and military units to maintain the peace and order situation in the Caraga Region.
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.
42
2014 annual reportreview of operations PHILIPPINE GOVERNMENT
ExECuTIvE ORDER ON mINING IN THE PHIlIPPINES
The President of the Philippines on 9 July 2012 released Executive Order No.79 (“EO-79”) 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 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-79 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-79 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 relevant information becomes available.
ExECuTIvE ORDER ON ExTRACTIvE INDuSTRIES TRANSPARENCY IN THE PHIlIPPINES
On 26 November 2013, Philippine President Benigno Aquino III signed Executive Order No. 147 entitled “Creating the
Philippine Extractive industries transparency Initiative” (“EO-147”).
Pursuant to Section 14 of the EO-79, the Philippine government commits to participate in the Extractive Industries
Transparency Initiative (EITI) that sets international standards for transparency and accountability in the extractive
industries and in government. Established in 2003, the EITI is a global coalition of governments, companies and
civil society collaborating to improve honest and responsible management of revenues from natural resources,
particularly oil, gas, metals and minerals.
Through EO-147, the Philippine government has instituted the Philippine Extractive Industries Transparency Initiative
(PH-EITI), which commits to ensure greater transparency and accountability in the extractive industries, specifically
in the way the government collects, and companies pay taxes from extractive industries;
The implications of the EO-147 with regards to the Company’s projects are not considered to have any negative
impact and the Company sees the Executive Order as a positive commitment by the Philippine Government to
adopt good governance practices in accordance with International Guidelines of the EITI.
medusa mining limited JORC COMPLIANCE - CONSENT OF COMPETENT PERSONS
mEDuSA mINING lImITED
The Information in this report relating to Exploration Results has been reviewed and is based on information compiled
mr Gary Powell who is a member of the Australian Institute of Geoscientists and a member of the Australasian Institute
of Mining & Metallurgy. Mr Powell is a Non-Executive Director of Medusa Mining Ltd and has sufficient experience
which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which
he is undertaking to qualify as a “Competent Person” as defined in the 2012 Edition of the “Australasian Code for
Reporting of Exploration Results, mineral Resources and Ore Reserves”. mr Powell consents to the inclusion in the
report of the matters based on his information in the form and context in which it appears.
CuBE CONSulTING PTY lTD
The information in this report that relates to Mineral Resources is based on, and fairly represents information and
supporting documentation compiled by mr mark Zammit, a Competent Person who is a member of the Australian
Institute of Geoscientists. Mr Zammit is employed by Cube Consulting Pty Ltd and has sufficient experience which
is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012 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 2012 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.
44
2014 annual reportreview of operations 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 (“ASX Principles”).
The Company’s practices are largely consistent with the ASx Principles and, except as disclosed below, the Company
believes it complied with each of those recommendations throughout the financial year ended 30 June 2014 and
to the date of this report. Details of the Company’s compliance with the ASx Principles are set out below, including
details of specific disclosures required by the ASX Principles.
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
ASX PrinciPleS, 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 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 [54] to [56].
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 criterion for
independence (see below for the criterion 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 six, comprised
of four 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.
ASX PrinciPleS, 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. Further, the Board is chaired by Andrew Teo, an independent Non-Executive Director.
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.
The Board does not consider the following Directors to be independent:
• Peter Hepburn Brown because he is currently employed in an executive capacity by medusa as its managing
Director (mr Hepburn-Brown resigned on 19 August 2014); and
• Raul villanueva because he is currently employed in an executive capacity by medusa as an Executive Director.
46
2014 annual reportcorporate governance statement 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.
The Chairperson, Andrew Teo, 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, Peter Hepburn-Brown, was 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 one occasion 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 [59] to [69]. Details of Directors’ attendance at Board meetings are set out in the
Directors’ Report on page [57].
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
ASX 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.
medusa mining limited 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 Chairman of the Nomination Committee) and
Andrew Teo. Peter Hepburn-Brown was a member of the Committee prior to his resignation on 19 August 2014.
The Nomination Committee, therefore, comprises a majority of independent Directors and is chaired by an
independent chair. One meeting of the Nomination Committee was held during the reporting period and
details of the members attendance at these meetings are included in the Directors’ Report on page [57].
Remuneration Committee
ASX 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, are Robert Weinberg
(as Chairperson of the Remuneration Committee) and Andrew Teo Peter Hepburn-Brown was a member of
the Committee until his resignation on 19 August 2014 who replaced Geoffrey Davis following his retirement in
November 2013. The Remuneration Committee, therefore, comprises a majority of independent Directors and
is chaired by an independent chair as recommended by ASxCGC Recommendation 8.2. One meeting of the
Remuneration Committee was held during the reporting period and details of the members’ attendance at these
meetings are included in the Directors’ Report on page [57].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.
The Board’s policy is that reviews of remuneration packages and policies applicable to Executive Directors, Non-
Executive Directors and Senior Executives are to 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 [63].
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), where that dealing has the effect of reducing or eliminating the risk associated with
48
2014 annual reportcorporate governance statement any equity incentives that the Company may offer from time to time. This is further detailed in the Directors’
Report on page [65]. 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
ASX PrinciPleS, 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, are Gary Powell (as Chairperson
of the Audit Committee), Andrew Teo, and Robert Weinberg. Geoffrey Davis retired as a Committee member
on 22 November 2013. The Audit Committee therefore, comprises 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 [54] to [56]. 2 meetings of the Audit Committee were held during the reporting period and ddetails of the
members’ attendance at these meetings are included in the Directors’ Report on page [57].
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;
• 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;
medusa mining limited • 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 consisted of Peter Hepburn-Brown (as Chairperson of the
Safety, Health and Environmental Committee), Robert Weinberg and Andrew Teo. Geoffrey Davis retired as a
Committee member on 22 November 2013. mr Hepburn-Brown resigned on 19 August 2014.
3 meetings of the Safety, Health and Environmental Committee were held during the reporting period and
details of the members’ attendance at these meetings are included in the Directors’ Report on page [57].
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.
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.
50
2014 annual reportcorporate governance statement Diversity Policy
ASX PrinciPleS, recommendAtionS 3.2, 3.3, 3.4, 3.5
Recommendation 3.2 of the ASx Principles 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 Recommendation 3.2 of the ASx Principles 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.
Recommendation 3.3 of the ASx Principles 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
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 Recommendation 3.4 of the ASX Principles, the Medusa workforce gender profile is set out in the
following table:
Role type
Technical
Supervisory /
professional
middle management
Senior management
Total
Board members
Share Trading Policy
Female
Female %
Male
Male%
20
9
7
2
38
-
38%
8%
25%
14%
18%
-
33
108
21
12
174
6
62%
92%
75%
86%
82%
100%
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.
medusa mining limited The Company delisted from the main market of the london Stock Exchange on 23 may 2014, During this period
Directors and applicable employees were subject to the rules of that Exchange which disallowed Directors and
applicable employees from dealing in the Company’s shares during a close period. This practice has continued
to date.
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
ASX PrinciPleS, 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:
• state or health of the industry sector;
• competition;
• market share (size);
• industrial relations;
• foreign exchange and interest rates;
• equity and commodity prices;
• political views; and
• a nation’s economic well-being.
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.
52
2014 annual reportcorporate governance statement Managing Director and Chief Financial Officer assurance
ASX PrinciPleS, 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 2014, the Board receives 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 to state 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 report to the Board as to the effectiveness of the
Company’s management of its material business risks.
Only the Chief Financial Officer’s assurance is available due to the resignation of the Managing Director
mr Peter Hepburn-Brown on 19 August 2014.
5. CONTINUOUS DISCLOSURE
ASX PrinciPleS, 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.
6. SHAREHOLDER COMMUNICATION
ASX PrinciPleS, 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.
medusa mining limited DIRECTOR’S 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
Period of Directorship
Non-Executive Directors:
mr Andrew Boon San Teo (Chairman)
since 15 February 2010 (appointed Chairman on 22 Nov 2013)
Dr Robert maurice Weinberg
since 01 July 2006
mr Ciceron Angeles
since 28 June 2011
mr Gary Raymond Powell
since 24 January 2013
mr Geoffrey John Davis
since 05 February 2002 (retired as Chairman on 22 Nov 2013)
Executive Directors:
mr Peter Gordon Hepburn-Brown
(managing Director)
since 15 September 2009 (resigned on 19 August 2014)
mr Raul Conde villanueva
since 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 ANDREW BOON SAN TEO
B.Com, uWA, (CPA)
Independent Non-Executive Chairman (appointed 22 November 2013)
Mr Teo is an accountant with 36 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
Chief Financial Officer/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 a member of the Audit Committee, Remuneration Committee, Nomination Committee and the Safety,
Health & Environment Committee.
mR RAul CONDE vIllANuEvA
ll.B., Attorney and Counselor-at-law
Executive Director
Attorney Raul villanueva was appointed an Executive Director of medusa on 24 January 2013 following his
appointment as President of the Company’s Philippines operating company, Philsaga mining Corporation
(“Philsaga”) in December 2012.
Attorney 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.
54
2014 annual reportDirector’s report 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 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 (AIm), london and kasbah Resources ltd
(appointed 15 November 2006), an ASx listed entity. Dr Weinberg was an independent Non-Executive Director
of Chaarat Gold Holdings ltd (from 10 January 2011 to 4 may 2014), also listed on AIm.
Dr Weinberg is Chairman of the Remuneration Committee and is also a member of the Safety, Health &
Environment Committee and Audit 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 37 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
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 31 years of experience working in Australia, Central Asia
and importantly, since 1997, 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 (AIm) in the united kingdom. In his role with metals Exploration plc, mr Powell
managed the progressing of the Runruno Gold Deposit in the Philippines to the drilled up resource stage (and
which is now in construction with forecast production in 2015).
Mr Powell has been overseeing the resource definition at the Company’s Co-O Mine and Bananghilig Project
and continues to consult to the Company as required. mr Powell was appointed as the Chairman of the Audit
Committee on 26 February 2014.
medusa mining limited mR GEOFFREY JOHN DAvIS
m.Sc., mining and Exploration Geology, B. Sc (Hons), Geology,
member, Australian Institute of Geoscientists.
Non-Executive Chairman
Retired 22 November 2013
mr 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 retired from the Board, Audit Committee,
Remuneration Committee and Safety, Health & Environment Committee on 22 November 2013.
mR PETER GORDON HEPBuRN-BROWN
BAppSc-mining Engineering (1980), Grad Dip Human Resources (1996), member of Inst of Engineers, Australia
Managing Director
Since Resigned 19 August 2014
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 36 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 appointed an independent Non-Executive Director of mRl Corporation limited, a
company listed on the ASx in Australia, on 7 February 2014. 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 was also the Chairman of the Health & Safety and Nomination Committees and was
appointed to the Remuneration Committee on 22 November 2013.
mr Hepburn-Brown has since resigned as managing Director and as a member of all Committees on 19 August 2014.
56
2014 annual reportDirector’s report 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 mr Peter Alphonso is responsible for the corporate secretarial functions of the Company
as well as all financial and statutory reporting of the Company and also 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.
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:
Name of Director
Board of
Directors
Meetings
Audit
Committee
Remuneration
Committee
SHE
Committee
Nomination
Committee
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
Peter Hepburn-Brown
Robert Weinberg
Andrew Teo
Ciceron Angeles
Raul villanueva
Gary Powell
2
6
6
6
6
6
6
2
6
5
6
5
6
6
1
-
2
2
-
-
1
-
-
1
2
-
-
1
(1) Number of meetings held during the time the Director held office during the year
1
-
1
1
-
-
-
1
-
1
1
-
-
-
1
3
3
3
-
-
-
1
3
3
3
-
-
-
-
1
-
1
1
-
-
-
1
-
1
1
-
-
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$30.9 million [2013: US$50.2 million].
Key financial results:
Key Results
Revenues
EBITDA
NPAT
EPS (basic)
Dividend per share
Nil
30 June 2014
30 June 2013
uS$84.2m
uS$48.3m
uS$30.9m
uS$0.154
uS$100.7m
uS$63.2m
uS$50.2m
uS$0.266
Nil
Variance
(uS$16.5m)
(uS$14.9m)
(uS$19.3m)
(uS$0.112)
Nil
(%)
16%
24%
38%
42%
N/A
medusa mining limited Medusa recorded a net profit after tax (“NPAT”) of US$30.9 million and earnings before interest, tax depreciation
and amortisation (“EBITDA”) of uS$48.3 million for the full year to 30 June 2014, compared to uS$50.2 million and
uS$63.2 million respectively in the previous year.
The Company recorded Revenues of uS$84.2 million compared to uS$100.7 million for the previous year. medusa
is an un-hedged gold producer and received an average price of uS$1,299 per ounce from the sale of 65,943
ounces of gold for the year (previous year: 77,488 ounces at uS$1,610 per ounce).
As at year end, the Company, had total cash and cash equivalent in gold on metal account of approximately
uS$13.68 million (2013: uS$7.45 million).
During the year:
• The Co-O mine produced 59,904 ounces of gold for the year, at an average recovered grade of 4.76 g/t gold
(2013: 62,243 ounces at average recovered grade of 7.02 g/t gold)
• The average cash cost for the year of uS$418 per ounce was higher than the previous year’s average
cash cost of uS$313 per ounce due primarily to excess mine manning levels, low mine productivity, SAG mill
commissioning delays and lower than budget mill recoveries.
• Depreciation of fixed assets and amortisation of capitalised mine development and mine exploration was
uS$17.5 million (2013: uS$13.1 million);
• uS$15.8 million was expended on exploration activities (2013:uS$24 million);
• Capitalised mine development costs totalled uS$36.3 million for the year (2013: uS$34.5 million);
• uS$23.6 million was expended on capital works associated with the new mill construction and infrastructure,
mine expansion and sustaining capital at the mine and mill (2013: uS$44.2 million);
7. REVIEW OF OPERATIONS
A review and summary information concerning the Group’s operations and exploration activities for the financial
year and the results of those operations are set out in the Chairman’s Review and managing Director’s Report
on Operations which will be available in the Full Annual Report.
8. DIVIDENDS
No dividends were declared during the financial year.
9. SIGNIFICANT CHANGE IN STATE OF AFFAIRS
Significant changes in the state of affairs of the Group during the financial year were as follows:
• In the September 2013 quarter, the Company raised gross proceeds of A$34,002,702 via the placement of
18,890,390 ordinary shares at A$1.80 each to clients of Euroz Securities limited
• On 4 April 2014, application was made to the uk listing Authority for the Securities to be removed from the
Official List, and to the London Stock Exchange (“LSE”) for the Securities to be removed from trading. The last
day of dealings in the Securities on the lSE was on 22 may 2014. The cancellation of the listing and of trading
in the Securities on the lSE took effect on 23 may 2014.
• On 22 November 2013 mr Geoffrey Davis retired as Chairman of the Company and mr Andrew Teo was
appointed as his replacement.
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
mr Hepburn-Brown resigned as managing Director and as a member of all Committees on 19 August 2014.
Mr Geoffrey Davis agreed to assume the role of Chief Executive Officer for an interim period following the resignation
of Peter Hepburn-Brown as Managing Director, and will officially commence his role on 1 September 2014.
58
2014 annual reportDirector’s report 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 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
Andrew Teo
Peter Hepburn-Brown(1)
Robert Weinberg
Ciceron Angeles
Raul villanueva
Gary Powell
(1) since resigned 19 August 2014.
No. of fully paid
ordinary shares
No. of options over
ordinary shares
No. of performance rights
over ordinary shares
75,000
22,000
62,675
-
-
-
-
-
-
-
300,000
-
-
-
-
-
-
-
13. REMUNERATION REPORT (AUDITED)
(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:
Andrew Teo, Chairman (appointed as Chairman 22 November 2013)
Robert Weinberg
Ciceron Angeles
Gary Powell
Geoffrey Davis, (retired as Chairman 22 November 2013)
Executive Directors:
Peter Hepburn-Brown, managing Director (since resigned 19 August 2014)
Raul villanueva
eXeCutive offiCerS
Peter Alphonso - Company Secretary
medusa mining limited (b) Directors’ and Executives’ remuneration (Company and consolidated)
The following tables provides the details of the remuneration of all Directors and Executives of the Group and
the nature and amount of the elements of their remuneration (in uS$’s) for the year ended 30 June 2014 and the
previous financial year.
-
-
-
-
-
-
-
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-
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0
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N
2014 annual reportDirector’s 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:
Financial year 2013/2014
Name
DIRECTORS
Geoffrey Davis(3)
Peter Hepburn-Brown(4)
Robert Weinberg
Andrew Teo
Ciceron Angeles
-
-
-
-
-
Raul villanueva
300,000
Gary Powell
EXECUTIVES
Peter Alphonso
-
-
Options/
rights
granted as
remuneration
Balance
01/07/13
Options/
rights
exercised
Options/ rights
not exercised
& lapsed
Balance
held
30/06/14
Vested &
exercisable
30/06/14 (1)
Total not
exercisable
30/06/14 (2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
(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
(3) mr Geoffrey David retired 22 November 2013
(4) mr Peter Hepburn-Brown resigned 19 August 2014
Financial year 2012/2013
Options/
rights
granted as
remuneration
Balance
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(3)
-
Peter Hepburn-Brown(4) 250,000
Robert Weinberg
Andrew Teo
Ciceron Angeles
Gary Powell
-
-
-
-
Raul villanueva
300,000
EXECUTIVES
Roy Daniel(5)
Peter Alphonso
Samuel Afdal(6)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(250,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
150,000
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
(3) mr Geoffrey Davis retired 22 November 2013
(4) mr Hepburn-Brown was allocated 250,000 performance rights on 11 November 2011
(5) Mr Roy Daniel retired as Finance Director 09 June 2011 but continued in an executive role as Chief Financial Officer until 30 June 2013
(6) mr Samuel Afdal resigned on 10 December 2012
medusa mining limited (f) Share holdings
The movement during the year in the number of ordinary shares in medusa mining limited held directly,
indirectly or beneficially, by each Director and key management personnel, including their personally related
entities is as follows:
Financial year 2013/2014
Balance
30/06/13
Shares held at
appointment
Bonus
Issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/14
Name
NON-EXECUTIVE
DIRECTORS
Andrew Teo
Geoffrey Davis (1)
Robert Weinberg
Ciceron Angeles
Gary Powell
75,000
4,102,750
62,675
-
-
EXECUTIVE DIRECTORS
Peter Hepburn-Brown (2)
22,000
Raul villanueva
Executives
-
Peter Alphonso
(1) mr Geoffrey Davis retired 22 November 2013
(2) mr Peter Hepburn-Brown since resigned 19 August 2014
127,500
Financial year 2012/2013
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
4,102,750
62,675
-
-
22,000
-
127,500
Name
NON-EXECUTIVE
DIRECTORS
Andrew Teo
Geoffrey Davis
Robert Weinberg
Ciceron Angeles
Gary Powell (2)
EXECUTIVE DIRECTORS
Peter Hepburn-Brown
Raul villanueva (1)
Executives
Roy Daniel (3)
Peter Alphonso
Samuel Afdal (4)
Balance
30/06/12
Shares held at
appointment
Bonus
Issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/13
65,000
4,052,750
59,975
-
-
17,000
-
1,425,000
126,500
1,450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
50,000
2,700
-
5,000
-
-
1,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
4,102,750
62,675
-
22,000
-
1,425,000
127,500
- 1,450,000
-
(1) Raul villanueva appointed 24 January 2013
(2) mr Gary Powell appointed 24 January 2013
(3) mr Roy Daniel retired 30 June 2013
(4) mr Samuel Afdal resigned 10 December 2012
62
2014 annual reportDirector’s report (g) 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.
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:
• Andrew Boon San Teo (Non-Executive Chairman): A$100,000 per annum;
• Dr Robert Weinberg (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 rewarding Executives for individual performances; and
• ensuring 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.
medusa mining limited 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.
• 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 2014.
64
2014 annual reportDirector’s report • 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.
No LTIs were granted to any key management personnel during the financial year ending 30 June 2014.
(h) 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
2010
2011
2012
2013
2014
Basic earnings per share (EPS)
Share price at 30 June
Share price increase
Total shareholder returns (TSR)
(1)
(2)
(3)
uS$0.378
uS$0.587
uS$0.261
uS$0.266
uS$0.154
A$3.90
A$1.70
77.3%
A$6.59
A$2.69
69.0%
A$4.83
A$1.55
(A$1.76)
(A$3.28)
(26.7%)
(67.5%)
A$1.85
A$0.30
19.4%
(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. No dividends were paid during the current financial year (Dividends totalling A$0.10 were paid in the 2011 and 2012 financial years and A$0.02 was paid
for the financial year ending 2013 No dividends were paid or capital returned in the previous respective years from 2008 to 2010).
$10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
e
c
i
r
P
e
r
a
h
S
$0.00
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Month/Year
(i) 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
(j) Employment contracts
eXecutive directorS
Peter Hepburn-Brown (managing Director) (Since resigned 19 August 2014)
Contract description: Employment contract between
(“Employee”).
the Company and Peter Hepburn-Brown
Term:
Services:
Remuneration:
Termination:
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.
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.
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 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
Company’s interests: interest in such areas as confidentiality, conflict of interests and business dealings.
The Employee’s contract also contains provisions for the protection of the Company’s
66
2014 annual reportDirector’s report
Peter Alphonso (Company Secretary/Chief Financial Officer)
Contract description: Employment contract between the Company and Peter Alphonso (“Employee”).
Term:
Role:
An initial term ending on 30 September 2015 (subject to earlier termination) (“Initial
Term”). If not terminated on or prior to 30 September 2015, the agreement will continue
until terminated.
The Employee is initially employed in the role of Company Secretary/Chief Financial
Officer 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:
Termination:
A$300,000 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 may be 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.
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
Company’s interests: interest in such areas as confidentiality, conflict of interests and business dealings.
The Employee’s contract also contains provisions for the protection of the Company’s
medusa mining limited
(j) Employment contracts (continued)
Raul Conde Villanueva (Executive Director of medusa mining limited and President of Philsaga mining
Corporation).
On 10 December 2012, Philsaga executed an employment contract with Raul Conde villanueva. under
the terms of the contract, Philsaga has engaged mr villanueva to adopt the role of President of Philsaga
as well as assume the position of Executive Director on the Board of medusa mining limited, supervise and
manage the business affairs of the corporation, implement administrative and operational policies, attend
to industrial relation matters and any other mining activities and associated complimentary services.
According to the contract Philsaga will pay mr villanueva A$20,000 per month which is subject to annual
reviews by the Board. Philsaga will additionally reimburse mr villanueva for all reasonable expenses incurred in
the performance of his services including entertainment, accommodation, meals, telephone and travelling.
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.
(k) Related Parties
Related parties:
Geoffrey Davis, Robert Weinberg, Peter Hepburn-Brown, Andrew Teo, Ciceron
Type of transaction:
Director Protection Deed (“Deed”)
Angeles, Raul villanueva and Gary Powell.
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.
Related party:
Cedardale Holdings Pty ltd
Nature of relationship: Director related entity (Geoffrey Davis – resigned 22 November 2013)
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; (2013: A$5,984) per month.
Cedardale Holdings Pty ltd charged the Company A$30,453 for the period 1 July 2014
to 22 November 2014 (date of resignation); (2013: A$71,306) for the lease of office
premises. No amounts were outstanding at year end (2013: 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.
68
2014 annual reportDirector’s report 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$217,990 (2013:
A$27,597). No amount remains outstanding at time of resignation (2013: nil).
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$269,607 (2013:160,204) was charged
to Philsaga.
(l) Un-issued shares under options/rights
Expiry date
Exercise price
No. of options/rights
No. of shares issued if options/rights
exercised
Employee options
3 January 2015
A$5.10
1,000,000
1,000,000
(m) Shares issued on exercise of options/rights
During or since the end of the financial year no options were exercised.
14.
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.
15.
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.
medusa mining limited
16. 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 in the Final Annual Report.
The Directors are not aware of any significant breaches of environmental regulations during the financial year.
17. 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.
18. 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 2014.
Taxation services
Financial reporting advice
Total non-audit services
2014
(US$)
5,000
-
5,000
2013
(US$)
14,600
10,959
25,559
19. AUDITOR’S INDEPENDENCE DECLARATION
The lead Auditor’s Independence Declaration for the year ended 30 June 2014 has been received and can
be found on page 20 of the Financial Report.
20. 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
Andrew Teo
Chairman
Dated at Perth this 29th day of August 2014
70
2014 annual reportDirector’s report AuDITORS INDEPENDENCE DEClARATION
medusa mining limited STATEmENT OF PROFIT OR lOSS AND
OTHER COmPREHENSIvE INCOmE
for the year ended 30 June 2014
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
Consolidated
Note
2
3
5
6,21
2014
uS$000
84,196
(42,806)
(107)
(8,265)
(2,358)
30,660
211
30,871
2013
uS$000
100,680
(33,551)
(6,849)
(8,508)
(1,587)
50,185
(4)
50,181
Other comprehensive income, net of income tax:
Exchange differences on translation of foreign operations
and other comprehensive income for the year
Total comprehensive income for the year
(4,837)
26,034
(6,381)
43,800
Overall operations:
Basic earnings per share (uS$ per share)
Diluted earnings per share (uS$ per share)
The accompanying notes form part of these financial statements
6
6
0.154
0.153
0.266
0.263
72
2014 annual report STATEmENT OF FINANCIAl POSITION
for the year ended 30 June 2014
Consolidated
Note
2014
uS$000
2013
uS$000
CURRENT ASSETS
Cash & cash equivalents
Trade & other receivables
Inventories
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Trade & other receivables
Property, plant & equipment
Intangible Assets
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
22
7
8
9
10
11
12
15
13
14
13
15
14
17
18
21
13,063
12,030
18,084
512
43,689
21,489
115,470
96
261,743
2,983
401,781
445,470
19,954
7,132
740
27,826
2,202
1,782
1,354
5,338
33,164
412,306
102,902
13,440
295,964
412,306
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
medusa mining limited STATEmENT OF CHANGES IN EquITY
for the year ended 30 June 2014
Share
Capital
Ordinary
Retained
Profits
Option and
Performance
rights
Foreign
Currency
Translation
Reserve
Note
uS$000
uS$000
uS$000
uS$000
TOTAL
uS$000
CONSOLIDATED
Balance at 30 June 2012
73,070
218,837
3,740
20,020
315,667
-
-
-
-
50,181
-
50,181
-
-
-
-
(6,381)
50,181
(6,381)
(6,381)
43,800
-
708
-
708
4,448
-
4,448
13,639
360,175
-
(3,925)
13,639
356,250
-
-
-
-
190
4,638
-
4,638
-
(4,837)
(4,837)
30,871
(4,837)
26,034
-
-
29,832
190
8,802
412,306
-
-
8,802
412,306
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
Share options issued during the
period in accordance with AASB
2 - share based payment
Sub-total
Dividends paid
19
4
73,070
269,018
-
(3,925)
Balance at 30 June 2013
73,070
265,093
Comprehensive Income
Net profit after tax
Other comprehensive income
Total comprehensive income for the year
-
-
-
30,871
-
30,871
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
Sub-total
Dividends paid
17
19
29,832
-
-
-
102,902
295,964
-
-
Balance at 30 June 2014
102,902
295,964
The accompanying notes form part of these financial statements
74
2014 annual report STATEmENT OF CASH FlOWS
for the year ended 30 June 2014
Consolidated
Note
2014
uS$000
2013
uS$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers & employees
Interest received
Net cash provided by operating activities
22
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant & equipment
Payments for intangible assets
Payments for exploration & evaluation activities
Payment for development activities
Net cash from (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
22
The accompanying notes form part of these financial statements
86,206
(36,637)
153
49,722
(20,224)
(96)
(8,196)
(45,318)
(73,834)
29,832
-
7,081
36,913
12,801
4,698
(4,436)
13,063
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
medusa mining limited NOTES TO THE FINANCIAl STATEmENTS
for the year ended 30 June 2014
Contents of notes to the financial statements
Page number
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Statement of significant accounting policies
Revenue
Expenses
Dividends
Taxation
Earnings per share
Current receivables
Inventories
Other current assets
Non-Current Receivables
Property, plant and equipment
Exploration, evaluation and development expenditure
Borrowings
Employee benefits
Deferred tax
Auditors’ remuneration
Issued capital
Reserves
Share based payments
Investments in subsidiaries
Retained profits
Notes to the statement of cash flows
Financial risk management
Commitments
Events subsequent to reporting date
Segment information
Parent company information
New standards and interpretations not yet adopted
Franking account
Company details
76
26
36
36
36
37
37
38
38
38
38
38
39
40
40
41
42
43
44
44
46
46
47
48
51
52
53
54
55
57
57
2014 annual reportTBC 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 26 August 2014.
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
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30
June 2014. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement
with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All
subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a
group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss
and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of
subsidiaries between the owners of the parent and the non-controlling interests based on their respective
ownership interests
A list of controlled entities during the year ended 30 June 2014 is presented in note 20.
(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 1July 2013.
New and revised standards that are effective for these financial statements
• A number of new and revised standards are effective for annual periods beginning on or after 1 July 2013.
Information on these new standards is presented below.
medusa mining limited AASB 10 Consolidated Financial Statements
• AASB 10 supersedes AASB 127 consolidated and Separate Financial Statements(AASB 127) and AASB
Interpretation 112 consolidation - Special Purpose entities. AASB 10 revises the definition of control and
provides extensive new guidance on its application. These new requirements have the potential to affect
which of the Group’s investees are considered to be subsidiaries and therefore to change the scope of
consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling
interests and accounting for loss of control of a subsidiary are unchanged.
• management has reviewed its control assessments in accordance with AASB 10 and has concluded that
there is no effect on the classification (as subsidiaries or otherwise) of any of the Group’s investees held
during the period or comparative periods covered by these financial statements.
AASB 11 Joint Arrangements
• AASB 11 supersedes AASB 131 Interests in Joint ventures (AAS 131) and AASB Interpretation 113 Jointly
Controlled Entities- Non-monetary-Contributions by venturers. AASB 11 revises the categories of joint
arrangement, and the criteria for classification into the categories, with the objective of more closely
aligning the accounting with the investor’s rights and obligations relating to the arrangement. In addition,
AASB 131’s option of using proportionate consolidation for arrangements classified as jointly controlled
entities under that Standard has been eliminated. AASB 11 now requires the use of the equity method for
arrangements classified as joint ventures (as for investments in associates).
• The Group’s does not maintain any joint arrangement within the scope of AASB 11. The application of AASB
11 did not have a material impact on the company.
AASB 12 Disclosure of interests in Other Entities
• AASB 12 integrates and makes consistent the disclosure requirements for various types of investments,
including unconsolidated structured entities. It introduces new disclosure requirements about the risks to
which an entity is exposed from its involvement with structured entities.
Consequential amendments to AASB 127 Separate Financial Statements and AASB 128 Investments in
Associates and Joint ventures
• AASB 127 now only addresses separate financial statements. AASB 128 brings investments in joint ventures
into its scope. However, AASB 128’s equity accounting methodology remains unchanged.
AASB 13 Fair value measurement
• AASB 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about
fair value measurements. It does not affect which items are required to be fair-valued. The scope of AASB
13 is broad and it applies for both financial and non-financial items for which other Australian Accounting
Standards require or permit fair value measurements or disclosures about fair value measurements, except
in certain circumstances.
• AASB 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure
requirements need not be applied to comparative information in the first year of application. The Group
has however included as comparative information the AASB 13 disclosures that were required previously
by AASB 7 Financial Instruments: Disclosures.
• The Group has applied AASB 13 for the first time in the current year.
Amendments to AASB 119 Employee Benefits
• The 2011 amendments to AASB 119 made a number of changes to the accounting for employee benefits,
the most significant relating to defined benefit plans. The amendments:
Eliminate the ‘corridor method’ and requires the recognition of re-measurements (including actuarial gains
and losses) arising in the reporting period in other comprehensive income;
Change the measurement and presentation of certain components of the defined benefit cost. The net
amount in profit or loss is affected by the removal of the expected return on plan assets and interest cost
components and their replacement by a net interest expense or income based on the net defined benefit
asset or liability; and
Enhance disclosures, including more information about the characteristics of defined benefit plans and
related risks.
78
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 • Under the amendments, employee benefits ‘expected to be settled wholly’ (as opposed to ‘due to be
settled’ under the superseded version of AASB 119) within 12 months after the end of the reporting period
are short-term benefits, and are therefore not discounted when calculating leave liabilities. As the Group
does not expect all annual leave for all employees to be used wholly within 12 months of the end of
reporting period, annual leave is included in ‘other long-term benefit’ and discounted when calculating
the leave liability. This change has had no impact on the presentation of annual leave as a current liability
in accordance with AASB 101 Presentation of Financial Statements.
• The application of AASB 119 did not have a material impact on the statement of comprehensive income,
statement of financial position, statement of cash flows and on the earnings per share for the year ended
30 June 2013 and 30 June 2014.
(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.
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
medusa mining limited 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
Straight line
20% to 33%
equipment)
Office furniture and fittings
Straight line
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.
(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.
80
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 (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 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
medusa mining limited 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.
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
82
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014
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 dollar the presentation
currency for the Group is uS dollar. The reason for using uS dollar as the presentation currency is that the uS
dollar 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.
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 dollar, mindanao mineral
Processing and Refining Corporation is United States dollar and the remaining entities are Philippine pesos.
The reason for using uS dollar as the presentation currency is that the uS dollar is the primary currency used
in the global gold market.
medusa mining limited (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
Recognition, Initial measurement and Derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument, and are measured initially at fair value adjusted by transactions
costs, except for those carried at fair value through profit or loss, which are measured initially at fair value.
Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Classification and Subsequent Measurement of Financial Assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as
hedging instruments are classified into the following categories upon initial recognition:
• loans and receivables
• Financial assets at Fair Value Through Profit or Loss (‘FVTPL’)
• Held-To-maturity (‘HTm’) investments; or
• Available-For-Sale (‘AFS’) financial assets
All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting
date to identify whether there is any objective evidence that a financial asset or a group of financial assets is
impaired. Different criteria to determine impairment are applied for each category of financial assets, which
are described below.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition, these are measured at amortised cost using the effective
interest method, less provision for impairment. Discounting is omitted where the effect of discounting is
immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category
of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other
objective evidence is received that a specific counterparty will default. Receivables that are not considered
to be individually impaired are reviewed for impairment in groups, which are determined by reference to
the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss
estimate is then based on recent historical counterparty default rates for each identified group.
HTm Investments
HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturity
other than loans and receivables. Investments are classified as HTM if the Group has the intention and ability
to hold them until maturity. The Group currently holds listed bonds designated into this category.
HTm investments are measured subsequently at amortised cost using the effective interest method. If there is
objective evidence that the investment is impaired, determined by reference to external credit ratings, the
financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying
amount of the investment, including impairment losses, are recognised in profit or loss.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables.
84
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 Financial liabilities are measured subsequently at amortised cost using the effective interest method, except
for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with
gains or losses recognised in profit or loss. All derivative financial instruments that are not designated and effective
as hedging instruments are accounted for at FvTPl.
(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.
(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 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
medusa mining limited 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.
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 $30m that comprises tax credit certificates (TCC) and VAT claimable for cash.
The current asset portion of vAT $17m comprises amounts that are estimated to be utilised by TCC to offset
various indirect taxes within the current period. The non-current amount of vAT receivable of $13m represents
the estimated amount utilised in future periods against tax liabilities of $13m.
(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
86
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 Consolidated
2014
uS$000
2013
uS$000
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
Amortisation expense
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
No Final dividend was declared (2013: 2 cents a share
declared on 29 August 2012 and paid on 4 October
2012)
No Interim dividend was declared
83,882
160
72
82
84,196
9,062
8,479
17,541
5,954
90
480
107
552
552
102
-
-
-
100,622
24
3
31
100,680
6,121
6,934
13,055
6,366
73
298
6,849
61
61
87
3,925
-
3,925
medusa mining limited Consolidated
2014
uS$000
2013
uS$000
-
261
(472)
(211)
116
(112)
-
4
30,660
9,198
50,185
15,056
1,162
(10,349)
250
(472)
(211)
0%
1,266
(17,700)
1,382
-
4
0%
263
3,290
-
3,553
1,515
2,775
-
4,290
5.
TAXATION
a) The components of tax expense comprise:
Current tax
Deferred tax
under / Over
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
under / Over
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
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
30,871
50,181
Weighted average number of ordinary shares used in the
200,632,560
188,903,911
calculation of the basic earnings per share.
Weighted average unlisted options outstanding
1,632,692
1,964,313
Weighted average of ordinary shares diluted as at 30 June 2014
202,265,252
190,868,224
88
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 7.
8.
9.
CURRENT RECEIVABLES
Gold awaiting settlement
GST/vAT receivables
Other receivables
Total current receivables
Refer ageing analysis in Financial Instruments Note 25(b).
INVENTORIES
Consumables - at cost
Ore stockpile - at cost
Gold Inventory - at cost
Total inventories
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
less - disposal
plus - forex differences on translation
less - depreciation
Carrying amount at end of year
Consolidated
2014
uS$000
2013
uS$000
619
8,410
3,001
12,030
9,916
2,862
5,306
18,084
512
21,489
21,489
147,660
(32,476)
115,184
799
(513)
286
2,881
23,315
3,421
29,617
9,283
3,593
5,463
18,339
662
2,600
2,600
124,010
(22,832)
101,178
769
(398)
371
115,470
101,549
101,178
23,582
(131)
(570)
(8,875)
115,184
63,563
44,154
-
264
(6,803)
101,178
medusa mining limited 11.
PROPERTY, PLANT & EQUIPMENT (continued)
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
2014
uS$000
2013
uS$000
371
39
(61)
56
(119)
286
366
121
(61)
55
(110)
371
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
29,857
29,186
264,991
(33,105)
231,886
261,743
29,186
15,768
(10,949)
(107)
(4,041)
29,857
190,776
36,329
10,949
(8,399)
2,231
231,886
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
90
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 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
metropolitan Bank and Trust Company
Consolidated
2014
uS$000
2013
uS$000
7,132
7,132
662
1,540
2,202
9,334
1,725
1,725
134
394
528
2,253
Philsaga mining Corporation (“Philsaga”), a subsidiary of the Company, obtained loans from metropolitan
Bank and Trust Company in 2014 and 2013 amounting to u$13.4m and u$4.5m, respectively. These loans
bear interest rates ranging from 3.75% to 4.00% and have terms of one (1) to sixty (60) months. As of June
30, 2014 and 2013, the outstanding balances of these loans amounted to u$8.2m and u$1.6m, respectively.
These amounts include loans that are denominated in Euro and Dollar acquired during the year.
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 2014. 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:
740
740
1,354
1,354
1,017
1,017
753
753
Discount Rate
Expected rate of salary increase
5.15%
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.
medusa mining limited Consolidated
2014
uS$000
2013
uS$000
14.
EMPLOYEE BENEFITS (continued)
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
280
55
40
375
1,745
(276)
(115)
1,354
910
280
55
313
(157)
344
1,745
191
46
61
298
910
(40)
(117)
753
739
191
46
-
(44)
(22)
910
The Company has no plan assets held by trustees but an employee retirement fund amounting to
uS$1,129,391(2013:uS$1,145,538) was appropriated as at June 30, 2014. The employee retirement fund is
presented as part of cash at bank.
Consolidated
Opening
Forex on
Credit/ (charged)
Closing
Balance
translation
to Income
Balance
uS$000
uS$000
uS$000
uS$000
15. DEFERRED TAX
Consolidated Group
30 June 2014
Deferred tax liability
Capitalised exploration & evaluation expenditure
141
Deferred tax assets
Carried forward tax losses
Other
Carried forward tax losses
1,451
152
1,603
-
-
-
-
1,641
1,782
2
1,378
1,380
1,453
1,530
2,983
92
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 Consolidated
Opening
Forex on
Credit/ (charged)
Closing
Balance
translation
to Income
Balance
uS$000
uS$000
uS$000
uS$000
15. DEFERRED TAX (continued)
Consolidated Group
30 June 2013
Deferred tax liability
Capitalised exploration & evaluation expenditure
257
(4)
(112)
141
Deferred tax assets
Carried forward tax losses
Other
78
233
Carried forward tax losses
1,632
(29)
1,321
152
-
1,632
152
1,603
Consolidated
2014
uS$000
2013
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
-
5
154
73
5
78
149
11
15
175
67
13
80
medusa mining limited 17.
ISSUED CAPITAL
207,794,301 ordinary shares (30 June 2013: 188,903,911)
Total issued capital
Ordinary shares
Balance at beginning of year
Ordinary shares issued during the year:
(i) Ordinary shares issued - new issues
Balance at end of year
Ordinary shares
Consolidated
2014
uS$000
2013
uS$000
102,902
102,902
73,070
29,832
102,902
73,070
73,070
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
188,903,911
188,903,911
Ordinary shares issued during the year:
07 November 2013 @ A$1.80
25 November 2013 @ A$1.80
Balance at end of year
Capital Management
9,445,195
9,445,195
-
-
207,794,301
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
Consolidated
2014
uS$000
2013
uS$000
412,306
(13,063)
399,243
412,306
9,334
421,640
95%
356,250
(4,698)
351,552
356,250
2,253
358,503
98%
94
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 18.
RESERVES
Option and performance rights reserve
Foreign currency translation reserve
Total reserves
(a) Option and performance rights reserve
Consolidated
2014
uS$000
2013
uS$000
4,638
8,802
13,440
4,448
13,639
18,087
The option reserve records items recognised as expenses on valuation of share based payments.
unlisted options over ordinary shares at 30 June 2014 (unless otherwise stated, all unlisted options
and performance rights have full vesting rights)
• 575,000 options expiring 3 July 2014 and exercisable at A$8.10 each
(the options were fully vested at reporting date).
• 1,000,000 options expiring 3 January 2015 and exercisable at A$5.10 each
(the options were fully 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 2014:
(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
- 60%
Risk free rate
Dividend Yield
- 5.13%
- 0.81%
At reporting date 140,000 options remain unexercised.
(i) 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.
medusa mining limited
(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 (resigned 19 august 2014) would be required to remain in the employment of the Company
at the vesting date.
During the year 2013, 250,000 Performance Rights lapsed due to performance criteria not being met.
The vesting periods applicable to the Performance Rights are as follows:
Number of Tranche 1 Rights
Grant Date
vesting Date
100,000
11 November 2011 As soon as the new Co-O Plant is successfully
(40% of the total number of
Performance Rights)
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
30 June 2014 or 1 year after the vesting
Date of the Tranche 1 Performance Rights
(whichever is the earlier)
11 November 2011
30 June 2015 or 2 years after the vesting
Date of the Tranche 1 Performance Rights
(whichever is the earlier)
11 November 2011
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$5.10 per
option. under the terms of the Issue the employees would be required to remain in the employment of the
Company at 3 January 2013 to achieve 50% vesting of the options, with full vesting if they remain employees
of the Company a year later on 3 January 2014. At reporting date all options remain unexercised.
Share based options and
performance rights
2014
2013
Number of
options and
performance
rights
Weighted
average
exercise
price (A$)
Number of
options and
performance
rights
Weighted
average
exercise
price (A$)
Outstanding at start of year
1,715,000
4.4000
1,965,000
4.4000
Granted
Forfeited
Exercised
Outstanding at year end
Exercisable at year end
-
-
-
(140,000)
-
(250,000)
-
-
1,575,000
-
-
-
6.0487
4.4000
1,715,000
927,500
6.0487
4.4000
During the year 2013, 250,000 Performance Rights lapsed due to performance criteria not being met.
The options and performance rights outstanding at 30 June 2014 (all of which are unlisted) had a weighted
average exercise price of A$6.1952 and a weighted average remaining contractual life of 3.99 months.
Included under administration expense in the Statement of Profit or Loss and other Comprehensive Income
is uS$190,547 (2013: uS$707,408) and relates, in full, to equity-settled share based payment transactions
relating to employees.
96
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 20.
INVESTMENT IN SUBSIDIARIES
The following companies are controlled entities of medusa mining limited as at 30 June 2014:
Controlled Entities
Date of
incorporation
Country of
incorporation
% interest held
2013
2012
medusa Exploration & Development Corporation
29 may 2003
Phsamed mining Corporation
medusa Overseas Holding Corporation
Philsaga mining Corporation
23 Apr 2003
08 may 2003
17 may 2001
Mindanao Mineral Processing and Refining
03 Nov 2005
Philippines
Philippines
Philippines
Philippines
Philippines
40%
40%
40%
40%
40%
40%
40%
40%
100%
100%
Corporation
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.
RETAINED PROFITS
Retained profit at start of year
Net profit attributable to members of Company
Dividends Paid
Retained profits at end of year
Consolidated
2014
uS$000
2013
uS$000
265,093
30,871
-
295,964
218,837
50,181
(3,925)
265,093
medusa mining limited
22. 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
- Foreign exchange (gain) / loss
- vAT write off
- 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
2014
uS$000
2013
uS$000
13,062
1
13,063
4,697
1
4,698
30,871
50,181
17,541
106
191
(72)
332
(19)
(253)
48,697
(1,303)
150
255
1,662
261
49,722
13,055
6,849
707
(1)
-
41
4
70,836
23,746
44
(3,692)
3,955
(87)
94,802
The Group’s total cash assets mentioned above include restricted bank accounts as follows:
(i) A Rehabilitation fund of uS$359,823 (2013: uS$359,380) to be used at the end of life of mine for
environmental rehabilitation.
(ii) An Employee Retirement fund of uS$1,129,391 (2013: uS$1,145,538) established to meet employee
entitlements on retirement.
(iii) The Company has a Provident fund of uS$258,020 (2013: uS$240,895) that is intended to be used
as payment to employees upon retirement, which is unrestricted as to withdrawal.
98
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014
23. 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.
Whilst the Group is aware of its exposure to fluctuations in foreign currency, the current policy of the
Board is not to hedge.
medusa mining limited
(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
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
%
%
uS$000
uS$000
uS$000
uS$000
uS$000
uS$000
uS$000
uS$000
Consolidated Group
Financial Assets
Cash & cash
equivalent
loans and
receivables
0.71
0.70 12,265
4,439
-
-
-
-
12,265
4,439
Financial Liabilities
Financial liabilities at amortised cost
Bank loan -
Current
Bank loan -
Non Current
Trade & sundry
payables
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Receivables are expected to be collected as follows:
less than 6 months
6 months to 1 year
-
-
-
7,132
-
-
-
-
2,202
2,253
798
259 13,063
4,698
3,620
6,302
3,620
6,302
4,418
6,561 16,683 11,000
-
-
-
-
7,132
-
2,202
2,253
-
- 19,954 18,616 19,954 18,616
9,334
2,253 19,954 18,616 29,288 20,869
Consolidated
2014
uS$000
2013
uS$000
3,620
-
3,620
6,302
-
6,302
As at 30 June 2014 and 2013, 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
19,891
19,891
18,616
18,616
The fair value of cash and cash equivalents and non- interest bearing monetary financial assets and
liabilities approximates their carrying value. The 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.
(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 2014, 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:
100
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014
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
2014
uS$000
2013
uS$000
123
(123)
41
(41)
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the consolidated entity’s functional currency. The consolidated entity operates internationally and is
exposed to foreign exchange risk arising from the united States dollar. No programs for hedging foreign exchange risk were
implemented by the consolidated entity in the 2011, 2013 and 2014 financial years.
The following table shows the foreign currency risk on the financial assets and liabilities of the Groups operations denominated
in currencies other than the functional currency of the operations.
Consolidated
2014
Functional Currency of Group Entity
Australian Dollar
uS Dollar
Philippine Peso
2013
Functional Currency of Group Entity
Australian Dollar
uS Dollar
Philippine Peso
Change in profit before income tax / equity
- strengthening of A$ to uS$ by 15%
- strengthening of Philippine Peso to uS$ by 15%
- weakening of A$ to uS$ by 15%
- weakening of Philippine Peso to by 15%
Price risk sensitivity analysis
Net Financial Assets/(liabilities) in uS$000
AuD
uS$
PHP
TOTAl uS$
n/a
-
-
-
n/a
-
-
-
574
-
740
1,314
35
n/a
305
340
2014
uS$000
-
707
-
707
-
162
n/a
162
Consolidated
2013
uS$000
(75)
(19)
(94)
75
19
94
574
707
740
2021
35
162
305
502
(5)
21
16
5
(21)
(16)
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$1,299 (2013: 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$8.564 million (2013: uS$12.476 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.
medusa mining limited 24. 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 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 exploration commitments
(b) Operating lease expense commitments:
Non-cancellable operating
capitalised in the financial statements.
lease contracted for but not
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 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 operating lease expense commitments
(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 299-2009-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
2014
uS$000
2013
uS$000
3,171
3,158
6,329
3,168
3,155
6,323
9
-
9
45
460
505
44
454
498
108
9
117
45
460
505
44
454
498
102
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014
25. EVENTS SUBSEQUENT TO REPORTING DATE
mr Hepburn-Brown resigned as managing Director and as a member of all Committees on 19 August 2014.
Mr Geoffrey Davis agreed to assume the role of Chief Executive Officer for an interim period following
the resignation of Peter Hepburn-Brown as Managing Director, and will officially commence his role on 1
September 2014.
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.
26. 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.
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.
medusa mining limited
12 months to June 2014:
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
Segment liabilities
Reconciliation of segment liabilities to group liabilities
plus: Deferred liabilities
Total Group liabilities
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
Segment liabilities
Reconciliation of segment liabilities to group liabilities
plus: Deferred liabilities
Total Group liabilities
104
Mining
uS$000
Exploration
uS$000
Other
uS$000
Total
uS$000
83,882
-
-
83,882
160
154
84,196
30,749
19
154
160
211
30,871
442,487
2,983
445,470
31,382
1,782
33,164
35,508
(20)
(4,739)
434,822
3,836
3,829
2,004
29,373
100,622
5
-
-
100,622
56,537
(1,238)
(5,180)
371,846
3,943
1,638
18,674
10
3,955
24
34
100,680
50,119
-
34
24
4
50,181
377,427
1,603
379,030
22,639
141
22,780
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 Revenue and non-current assets by geographical region
Australia
Phillippines
12 months to June 2014:
Segment Revenue
Non-Current Assets
12 months to June 2013:
Segment Revenue
Non-Current Assets
uS$000
uS$000
-
41,946
-
15,825
83,882
356,852
100,622
308,286
Total
uS$000
83,882
398,798
100,622
324,111
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 its 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 2014, all
of the Group’s revenues depended on a single customer (2013:100%).
27. 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)
2014
uS$000
2013
uS$000
3,636
45,707
2,004
2,004
1,127
21,709
3,956
3,956
43,703
17,754
102,902
4,638
14,596
(36,164)
(42,269)
43,703
(4,704)
(4,073)
73,070
4,448
13,965
(31,460)
(42,269)
17,754
(5,155)
(6,779)
medusa mining limited 28. 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
2014, 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
AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities.
These requirements improve and simplify the approach for classification and measurement of financial assets
compared with the requirements of AASB 139.
Effective date (annual reporting periods beginning on or after 1 January 2018).
The entity has not yet assessed the full impact of AASB 9 as this standard does not apply mandatorily before
1 January 2018 and the IASB is yet to finalise the remaining phases of its project to replace IAS 39 Financial
Instruments: Recognition and measurement (AASB 139 in Australia).
AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial
Liabilities
AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some
of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable
right of set-off” and that some gross settlement systems may be considered equivalent to net settlement.
Effective date (annual reporting periods beginning on or after 1 January 2014).
• When AASB 2012-3 is first adopted for the year ending 30 June 2015, there will be no impact on the entity
as this standard merely clarifies existing requirements in AASB 132.
AASB 2013-3 Recoverable Amount Disclosures for Non-Financial Assets
These narrow-scope amendments address disclosure of information about the recoverable amount of
impaired assets if that amount is based on fair value less costs of disposal. When developing IFRS 13 Fair
value measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about
the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made
in introducing those requirements resulted in the requirement being more broadly applicable than the IASB
had intended. These amendments to IAS 36 therefore clarify the IASB’s original intention that the scope of
those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs
of disposal. AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets.
Effective date (annual reporting periods beginning on or after 1 January 2014).
When these amendments are first adopted for the year ending 30 June 2015, they are unlikely to have any
significant impact on the entity given that they are largely of the nature of clarification of existing requirements.
AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010–2012 and
2011–2013 Cycles)
Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the issuance
by the International Accounting Standards Board (IASB) of International Financial Reporting Standards Annual
Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.
Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012 Cycle:
clarify that the definition of a ‘related party’ includes a management entity that provides key management
personnel services to the reporting entity (either directly or through a group entity); and
amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management
in applying the aggregation criteria.
Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013 Cycle
106
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 clarify that an entity should assess whether an acquired property is an investment property under AASB 140
Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine
whether the acquisition of the investment property constitutes a business combination.
When these amendments are first adopted for the year ending 30 June 2015, there will be no material
impact on the entitiy.
AASB 2014-1 Amendments to Australian Accounting Standards (Part B: Defined Benefit Plans: Employee
Contributions (Amendments to AASB 119))
Part B of AASB 2014-1 makes amendments to AASB 119 Employee Benefits to incorporate the IASB’s
practical expedient amendments finalised in International Financial Reporting Standard Defined Benefit
Plans: Employee Contributions (Amendments to IAS 19) in relation to the requirements for contributions from
employees or third parties that are linked to service.
The amendments clarify that if the amount of the contributions is independent of the number of years of
service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period
in which the related service is rendered, instead of attributing the contributions to the periods of service.
In contrast, if the amount of the contributions is dependent on the number of years of service, an entity is
required to attribute those contributions to periods of service using the same attribution method required by
paragraph 70 of AASB 119 for the gross benefit.
Effective date (annual reporting periods beginning on or after 1 July 2014).
When these amendments are first adopted for the year ending 30 June 2015, there will be no material impact
on the entitiy.
AASB 2014-1 Amendments to Australian Accounting Standards (Part E: Financial Instruments)
Part E of AASB 2014-1 makes amendments to Australian Accounting Standards to reflect the AASB’s decision
to defer the mandatory application date of AASB 9 Financial Instruments to annual reporting periods
beginning on or after 1 January 2018. Part E also makes amendments to numerous Australian Accounting
Standards as a consequence of the introduction of Chapter 6 Hedge Accounting into AASB 9 and to amend
reduced disclosure requirements for AASB 7 Financial Instruments: Disclosures and AASB 101 Presentation of
Financial Statements.
Effective date (annual reporting periods beginning on or after 1 January 2015).
• The entity has not yet assessed the full impact of these amendments.
IFRS 15 Revenue from Contracts with Customers
IFRS 15:
• replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue-related Interpretations
• establishes a new control-based revenue recognition model
• changes the basis for deciding whether revenue is to be recognised over time or at a point in time
• provides new and more detailed guidance on specific topics (e.g., multiple element arrangements,
variable pricing, rights of return, warranties and licensing)
• expands and improves disclosures about revenue
In the Australian context, the Australian Accounting Standards Board (AASB) is expected to issue the equivalent
Australian Standard (AASB 15 Revenue from Contracts with Customers), along with a new Exposure Draft (ED)
on income from transactions of Not-for-Profit (NFP) entities by September 2014.
Effective date (annual reporting periods beginning on or after 1 January 2017).
This standard is first adopted for the year ending 30 June 2018, the Company has not yet assessed the impact
of the transactions and balances to be recognised in the financial statements.
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)
The amendments to IAS 16 prohibit the use of a revenue-based depreciation method for property, plant and
equipment. Additionally, the amendments provide guidance in the application of the diminishing balance
method for property, plant and equipment.
medusa mining limited The amendments to IAS 38 present a rebuttable presumption that a revenue-based amortisation method
for intangible assets is inappropriate. This rebuttable presumption can be overcome (i.e. a revenue-based
amortisation method might be appropriate) only in two limited circumstances:
• the intangible asset is expressed as a measure of revenue, for example when the predominant limiting
factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to
operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative
tolls charged); or
• when it can be demonstrated that revenue and the consumption of the economic benefits of the
intangible asset are highly correlated.
The Australian Accounting Standards Board (AASB) is expected to issue the equivalent Australian amendment
shortly.
Effective date (annual reporting periods beginning on or after 1 January 2016).
When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact
on the transactions and balances recognised in the financial statements.
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)
The amendments to IFRS 11 state that an acquirer of an interest in a joint operation in which the activity of the
joint operation constitutes a ‘business’, as defined in IFRS 3 Business Combinations, should:
• apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs except principles
that conflict with the guidance of IFRS 11. This requirement also applies to the acquisition of additional
interests in an existing joint operation that results in the acquirer retaining joint control of the joint operation
(note that this requirement applies to the additional interest only, i.e. the existing interest is not remeasured)
and to the formation of a joint operation when an existing business is contributed to the joint operation by
one of the parties that participate in the joint operation; and
• provide disclosures for business combinations as required by IFRS 3 and other IFRSs.
The Australian Accounting Standards Board (AASB) is expected to issue the equivalent Australian amendment
shortly.
Effective date (annual reporting periods beginning on or after 1 January 2016).
When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact
on the transactions and balances recognised in the financial statements.
• The entity has not yet assessed the full impact of AASB 9 as this standard does not apply mandatorily before
1 January 2018.
29. FRANKING ACCOUNT
The Company has no franking credits available.
30. COMPANY DETAILS
The registered office and principal place of business of the Company is:
Suite 7
11 Preston Street
Como
Western Australia 6152
108
2014 annual reportNOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2014 DIRECTORS’ DEClARATION
for the year ended 30 June 2014
1. In the opinion of the Directors of medusa mining limited (the “Company”):
(a) the financial statements and notes set out on pages 72 to 108 and the remuneration disclosures that are
contained in pages 59 to 69 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 2014 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 59 to 69 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 2014.
Signed in accordance with a resolution of the Board of Directors
Andrew Teo
Chairman
Dated at Perth this 29th day of August 2014
medusa mining limited
AuDITORS INDEPENDENCE REPORT
for the year ended 30 June 2014
110
2014 annual report AuDITORS INDEPENDENCE REPORT
for the year ended 30 June 2014
medusa mining limited 112
2014 annual report ADDITIONAl SHAREHOlDER INFORmATION
The shareholder information set out below was applicable as at 19 September 2014.
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
1,823
2,193
691
797
74
14
5,592
936,361
6,037,667
5,254,354
22,877,923
21,234,810
151,453,186
207,794,301
The number of shareholdings held in less than marketable parcels is 527.
(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 - 207,794,301
Name of shareholders
Number of
(%)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
HSBC CuSTODY NOmINEES (AuSTRAlIA) lImITED
NATIONAl NOmINEES lImITED
J P mORGAN NOmINEES AuSTRAlIA lImITED
CITICORP NOmINEES PTY lImITED
ZERO NOmINEES PTY lTD
AmAlGAmATED DAIRIES lImITED
mR WIllIAm DOuGlAS GOODFEllOW
CEDARDALE HOLDINGS PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
uBS WEAlTH mANAGEmENT AuSTRAlIA NOmINEES PTY lTD
BARClAYSHARE NOmINEES lTD
BNP PARIBAS NOMS PTY LTD
HSBC CuSTODY NOmINEES (AuSTRAlIA) lImITED
HSBC CuSTODY NOmINEES (AuSTRAlIA) lImITED - A/C 2
YANDAl INvESTmENTS PTY lTD
TD DIRECT INVESTING NOMINEES (EUROPE) LTD
qIC lImITED
18. mR GIOvANNI SANTAluCIA
19. mRS SuSAN DAvIS
20. mR ROY PHIlIP DANIEl + mRS DONNA mARY DANIEl
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES
Total: Remaining Holders Balance
shares held
45,279,077
40,889,606
24,712,012
12,308,837
10,260,000
3,296,881
3,141,925
2,737,673
1,978,775
1,906,418
1,694,488
1,320,014
1,289,307
1,067,626
1,000,000
993,307
990,994
930,000
865,077
815,875
21.79
19.68
11.89
5.92
4.94
1.59
1.51
1.32
0.95
0.92
0.82
0.64
0.62
0.51
0.48
0.48
0.48
0.45
0.42
0.39
157,477,892
75.79%
50,316,409
24.21%
medusa mining limited (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
Ordinary shares held
Number of shares
Percentage
23,742,006
14,118,864
11.43%
6.79%
2. uNquOTED EquITY SECuRITIES AND RESTRICTED SECuRITIES
The following classes of unquoted equity securities and restricted securities are on issue:
Type of securities
• 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:
Number of
securities
% held
-
-
-
-
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
2014 annual report
ADDITIONAl SHAREHOlDER INFORmATION
for the year ended 30 June 2014
5. THE REGISTERS OF THE COmPANY’S SECuRITIES ARE HElD
AT THE FOllOWING ADDRESSES:
Computershare Investor Services Pty limited
level 2, Reserve Bank Building
45 St George’s Terrace
Perth, WA 6000
Telephone:
+618 9323 2000
Facsimile:
+618 9323 2033
Investor enquiries: 1300 557 010
6. STOCk ExCHANGE lISTINGS
quotation has been granted for all the ordinary shares of the Company on:
• Australian Stock Exchange limited (ASx)
(Home Exchange)
medusa mining limited TENEmENTS SCHEDulE
Name
Tenement ID
Registered
Holder
Company’s
Interest 1
Royalty
Area
(hectares)
Co-O Mine
mPSA No. 262-2008-xIII
Philsaga
mPSA No.299-2009-xIII
Philsaga
Co-O
APSA No. 00012-xIII
BmmRC
Saugon
APSA No. 00087-xIII
Samuel Afdal
APSA No. 00088-xIII
Phsamed
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
100.0%
100.0%
100.0%2
100.0%2
100.0%
100.0%2
100.0%2
100.0%
100.0%
100.0%
100.0%
EPA No. 00067-xIII
Samuel Afdal
100.0%2
EPA No. 00069-xIII
EPA No. 00087-xIII
Phsamed
Philsaga
Tambis
mPSA No. 344-2010-xIII
Philex
Das-Agan
mPSA No. 343-2010-xIII
Das-agan
100.0%
100.0%
100.0%
100.0%
-
-
-
-
-
1% net profit
1% net profit
-
-
-
-
-
-
-
7% net smelter
3% gross
APSA No. 00028-xIII
Apmedoro
Earning 70.0% (Jv)
-
Apical
Corplex
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
Corplex
Corplex
Corplex
Corplex
Sursur
Sursur
Sursur
Sinug-ang
EPA No. 00114-xIII
Salcedo/Philsaga
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
3% net smelter
-
4% gross
3% net smelter
3% gross
3% gross
3% gross
-
2,538.79
2,200.36
339.80
846.44
7,303.73
1,184.38
676.83
3,132.31
3,978.54
3,047.53
6,769.13
1,692.69
7,789.80
764.20
6,207.62
3,809.55
2,084.09
2,118.16
162.00
810.00
7,111.35
3,823.00
5,948.00
6,118.00
190.38
Notes:
1 There has been no change to Company’s interest for any tenement during the 2013-2014 financial year and there
has been no tenement acquired or disposed of during the same reporting period.
2 Assigned to Philsaga mining Corporation
ABBREvIATIONS:
Tenement types -
MPSA mineral Production Sharing Agreement
APSA Application for mineral Production Sharing Agreement
EP
Exploration Permit
EPA
Exploration Permit Application
SSMP
Small Scale mining Permit
Registered Holder -
Philsaga
Philsaga mining Corporation
Alcorn
Alcorn Gold Resources Corporation
BMMRC
Base metals mineral & Resources Corporation
Philex
Philex Gold Philippines Incorporated
Phsamed Phsamed mining Corporation
Das-Agan Das-Agan mining Corporation
Philcord mindanao Philcord mining Corporation
Apmedoro APmEDORO mining Corporation
Corplex
Corplex Resources Incorporated
Sursur
Sursur mining Corporation
Salcedo
Neptali P. Salcedo
116
2014 annual report
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ANNUAL REPORT 2014
medusa mining limited