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 Profit or Loss and other 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
3
4
5
7
8
49
58
75
76
77
78
79
80
115
116
119
121
Page 2 of 121
RESULTS FOR ANNOUNCEMENT TO THE MARKET (APPENDIX 4E)
Appendix 4E
Preliminary final report
Period ending 30 June 2015
Name of entity
MEDUSA MINING LIMITED
ABN or equivalent company
reference
Half yearly
(tick)
Preliminary
final (tick)
Half year/ financial ended (“current period”)
60 099 377 849
√
30 June 2015
Results for announcement to the market
Revenues and profits:
US$’000
US$’000
Revenues from ordinary activities
Up 46%
84,196
to 123,204
Profit from ordinary activities after tax attributable to members down 806%
30,871
to (218,109)
Net profit for the period attributable to members
down 806%
30,871
to (218,109)
(All comparisons to the previous period ended 30 June 2014)
Dividends:
Interim dividend
Final dividend
Total dividend paid for the year
Amount per security
Franked amount per security
Nil
Nil
Nil
N/A
N/A
N/A
No dividends were declared and paid for period ended 30 June 2015.
Net tangible assets per share:
The net tangible assets per share as at 30 June 2015 was US$0.909 (30 June 2014: US$2.055)
Change in control of entities:
There has been no change in control, either gained or loss during the current period.
Associates and Joint Venture entities:
The Consolidated Group did not have a holding in any associates or joint venture entities during the
current period.
Other information:
This report is based on accounts which 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 2015
which accompany this report.
Page 3 of 121
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
Robert Gordon Gregory
Chief Operating 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 11, Reserve Bank Building
172 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.
Page 4 of 121
HIGHLIGHTS OF FINANCIAL YEAR
HIGHLIGHTS OF THE FINANCIAL YEAR:
Financials
Revenues of US$123.0 million compared to US$84.2 million for the previous year, an increase of 46%.
Medusa is an un-hedged gold producer and received an average gold price of US$1,220 per ounce from the sale of
97,200 ounces of gold for the year (2014: 65,943 ounces at US$1,299 per ounce);
Earnings before interest, tax, depreciation and amortisation (“EBITDA”) of (US$186.8 million), and includes asset
impairment losses totalling US$259.6 million (2014: EBITDA of US$48.3 million), a decrease in EBITDA of
approximately 487%;
Basic earnings per share (“EPS”) of (US$1.050) on a weighted average basis, based on NPAT of (US$218.1
million) (2014: EPS of US$0.154 based on NPAT of US$30.9 million), a decrease of 782%;
The Company had total cash and cash equivalent in gold on metal account of US$14.6 million at year end (2014:
US$13.68 million);
Description
Revenues
EBITDA (1)
NPAT (1)
EPS (basic)
Unit
US$
US$
US$
US$
30 June 2015
30 June 2014
Variance
US$123.0M
US$84.2M
US$38.8M
(%)
46%
(US$186.8M)
(US$218.1M)
US$48.3M
(US$235.1M)
(487%)
US$30.9M
(US$249.0M)
(806%)
(US$1.050)
US$0.154
(US$1.204)
(782%)
(1) includes asset impairment losses totalling US$259.6 million
Depreciation of fixed assets and amortisation of capitalised mine development and mine exploration was US$31.7
million (2014: US$17.5 million);
US$11.2 million was expended on capital works associated with the new mill construction and infrastructure, mine
expansion and sustaining capital at the mine and mill (2014: US$23.6 million).
Exploration expenditure, inclusive of underground diamond drilling was US$11.3 million (2014: US$15.8 million)
Capitalised mine development costs totalled US$37.7 million for the year (2014: US$36.3 million);
Operations
Description
Tonnes mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Unit
WMT
DMT
gpt
%
ounces
US$/oz
30 June 2015
30 June 2014
659,495
582,311
5.61
93%
98,359
$385
521,899
460,004
4.76
85%
59,904
$418
(1) Net of development costs and includes royalties and local business taxes but no by-product credits
The Company produced 98,359 ounces of gold for the year, compared to the previous year’s gold production of
59,904 ounces, at an average recovered grade of 5.61 g/t gold (2014: 4.76 g/t gold);
The average cash cost for the year of US$385 per ounce, was marginally lower than the previous year’s average
cash costs of US$418 per ounce.
Production Guidance to 30 June 2016
The production guidance for the fiscal year to 30 June 2016 is expected to be between 120,000 to 130,000 ounces.
Page 5 of 121
HIGHLIGHTS OF FINANCIAL YEAR
Reserves and Resources
New Resource and Reserve estimates for 2015 have been reported in accordance with JORC 2012 during September
2015 and are included in this report.
Exploration
Budgeted exploration, inclusive of underground diamond drilling for fiscal year 2016 of US$11 million (2015 FY
actual: US$11.3 million);
Corporate
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 the role of Chief Executive Officer for an interim period following the resignation of Peter
Hepburn-Brown and officially commenced his interim role on 1 September 2014.
Dividend:
No dividends were declared nor paid during the year.
Page 6 of 121
CHAIRMAN’S REVIEW
Dear Shareholders,
I am pleased to report that the Company produced 98,359 ounces of gold for the year ended 30 June 2015,
which was well within the production guidance for the year. This was our first full year of production since the
new mill was eventually commissioned in the March 2014 quarter and the increased production was attained
via a combination of the following factors:
Improved mine tonnage from efficiencies and shaft hoisting upgrades;
Improved mine grades from the reduction of dilution;
Improved mine stope designs and contract mining arrangements;
Improved geological understanding and control; and
Improved mill recoveries.
For the current financial year we have provided production guidance of between 120,000 to 130,000 ounces
of gold.
With a view towards improving our ore hoisting systems for the future, the Board in April approved the
construction of a Service Shaft to Level 8 which we anticipate will greatly improve the efficiency of the Co-O
Mine with respect to the transport of men and materials, supervision, safety and ore hoisting. This Service
Shaft, due for completion around mid-2016, will be dedicated to the movement of men and materials, thus
freeing up the L8 Shaft which will then be used solely for hoisting of ore and waste.
Looking further ahead, we are also undertaking an extensive underground drilling programme to determine
future hoisting requirements for the mine as the mineralised bodies continue to depths of around 750 metres
below surface where they are currently only sparsely drilled, but with encouraging results so far.
The year just completed was the first full year under the new JORC 2012 standards for resources and
reserves. Whilst our resources suffered under the new guidelines (like many other companies), we have
managed for the last 7 years to maintain our annual reserves figure at around 450-500,000 ounces mark,
and are confident this trend will continue. The annual replacement of the mined reserves through the
conversion of resources to reserves, and the addition of new resources is typical for underground narrow
vein gold mines, and underground nickel sulphide, copper-lead-zinc and many other underground mining
situations.
Outside of Co-O in this current year, we anticipate a new resource estimate soon for the Company’s other
major asset, the Bananghilig (or B1) Deposit, following which mining studies will commence. We are also
programming our first scout drilling on another promising prospect about 7 kilometres south of Bananghilig,
called Guinhalinan.
Our safety statistics for the year are at the lower end of the scale in terms of comparison with other mining
jurisdictions. This is particularly pleasing as Co-O is a labour intensive mine, however we are always vigilant
in making sure we provide as safe a working environment for our employees and contractors as possible.
We continue to provide a wide range of educational programmes for a large number of students and other
services for our host communities, as well as regularly engaging them through on-site meetings and tours of
our operations. Their input is always welcome.
On the financial side, the Company on 27 August 2015 reported a statutory after tax loss of US$218.1 million
which included asset impairment losses of approximately US$260 million. Whilst it is never good to report
losses per se, it is very important to note that this impairment loss is essentially a non-cash charge to the
accounts, done in accordance with Accounting Standards and has no effect whatsoever on the Company’s
operations and in particular the resources and reserves of the Co-O Mine going forward. On a positive note,
the impairment will decrease future depreciation and amortisation charges.
The underlying operating result of the Company for the year was actually a profit amount of US$41.5 million
(after taking out the impairment charge of US$260 million) which was higher than the previous year’s profit
result of US$30.9 million.
In closing, I wish to express my appreciation for the efforts of our dedicated Filipino team, my fellow Directors
and our Perth office staff for a successful production year.
Page 7 of 121
REVIEW OF OPERATIONS
Contents of Review of Operations
Page
number
Highlights
Co-O Project
- Co-O Gold Production
- Co-O Mill
- Co-O Mine
- Co-O Mine Operations
- Co-O Mine Geology
- Group Ore Reserves and Mineral Resources
- Co-O Mine Mineral Resources
- Co-O Mine Ore Reserves
- Co-O Exploration
Tambis Project
- Bananghilig (B1) Gold Deposit
- B2 Discovery Area
- Guinhalinan Gold Prospect
Lingig Copper Project
Saugon Gold Deposit
Apical Project
Corplex Project
Usa Porphyry Copper-Gold Project
Coal Project
Tenements and Exploration Pipeline
Sustainability
- Health and Safety
- Environmental Management and Monitoring
- Workforce
- Community Participation, Programmes and Benefits
Philippine Government
- Executive Order on Mining in the Philippines
- Executive Order on Extractive Industries Transparency in the Philippines
JORC 2012 Compliance - Consents of Competent Persons
9
14
14
14
15
16
21
24
25
28
30
32
32
33
34
36
37
37
37
38
38
39
40
40
41
43
44
47
47
47
48
Tenement Schedule
121
Page 8 of 121
REVIEW OF OPERATIONS
HIGHLIGHTS
“The Company achieved production of 98,359 ounces within
guidance of 95-100,000 ounces for the FY ending 30 June 2015,
and has provided guidance of 120-130,000 ounces for FY 2015-
16.”
“The Company has also maintained its ore reserves at 427,000
ounces, after mining depletion, compared to FY2014 reserve
ounces of 446,000 ounces”.
Mineral Resources and Ore Reserves:
Table I. Group Mineral Resources and Ore Reserves as at 30 June 2015
Deposit
Category
Tonnes
(million)
MINERAL RESOURCES 1,2
Co-O Resources 1
Indicated
(JORC Code 2012)
Inferred
Total Co-O Resources
Indicated & Inferred
Bananghilig Resources 2
(JORC Code 2004)
Indicated
Inferred
Total Bananghilig Resources
Indicated & Inferred
Saugon Resources 2
Indicated
1.55
1.96
3.50
16.06
8.46
24.52
0.05
(JORC Code 2004)
Inferred
0.03
Total Saugon Resources
Indicated & Inferred
Total Resources
Total Resources
Indicated
Inferred
TOTAL RESOURCES
Indicated & Inferred
ORE RESERVES 1
Co-O Reserves 1
TOTAL RESERVES
Notes:
Probable
Probable
0.08
17.65
10.45
28.16
1.81
1.81
Grade
(g/t gold)
Gold Ounces
(million)
12.2
8.6
10.2
1.5
1.4
1.4
7.0
4.6
6.0
2.4
2.7
2.6
7.3
7.3
0.60
0.55
1.15
0.77
0.37
1.14
0.01
0.01
0.02
1.38
0.92
2.30
0.43
0.43
1
2
3
4
Mineral resources are reported inclusive or ore resources.
Co-O mineral resources and ore reserves estimated under guideline of JORC Code 2012.
Bananghilig and Saugon Mineral Resources were previously prepared and first disclosed under the 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).
Rounding of data may result in some apparent discrepancies in totals.
Mineral Resources:
Co-O:
- a minimum lower cut-off of 3.2 gram*metres/tonne accumulation, which incorporates a minimum mining width above cut-off grade;
- various upper cut-off grades up to 300 g/t gold have been applied to different veins, and
- a gold price of US$1,500 has been applied
Bananghilig:
- a lower cut-off grade of 0.8 g/t gold has been applied, and various upper cuts
Saugon:
- a lower cut-off grade of 2.0 g/t gold has been applied
Ore Reserves:
Ore Reserves are a subset of Mineral Resources, and includes recoverable pillars, broken ore and ROM stockpiles.
Co-O:
Page 9 of 121
REVIEW OF OPERATIONS
- minimum mining widths of 1.25 metres (stopes ≥50°) and 1.5 metres (stopes <50°) have been applied, and where the vein width was equal to, or
greater than the minimum mining width, an extra 0.25 metres dilution was added to the hangingwall.
- a further 10% dilution has been allowed for slabbing in mining of low angle stopes under draw,
- A 30% dilution was added to stopes on Levels 4 and 5 to allow for discontinuities,
- shape dilution of 5% 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,
- 25% recovery factor for sill pillars in empty stopes are included in reserve at a grade of 7g/t gold, to reflect current selective mining practice,
- 30% recovery factor has been applied to remnant ore, at their respective stope grades,
- a cut-off grade of 2.0 g/t gold has been applied for development ore,
- a cut-off grade of 3.8 g/t gold has been applied to developed stopes,
- a cut-off grade of 4.5 g/t gold has been applied to un-developed stopes,
- a gold price of US$1,150 per ounce has been applied.
Co-O Operations:
Annual production of 98,359 ounces of gold at a cash cost of US$385 per ounce;
The new CIL mill operated satisfactorily for the full year with recovery averaging 93%;
The L8 Shaft hoisting capacity was increased in January 2015 to 60,000 dry tonnes per
month:
Extensive additional development was commenced in January 2015 on Level 8 to provide
additional stopes to meet the increased haulage capacity;
Improvements in the transporting of ore to the shaft are in progress through de-bottle
necking and increased transporting capacity;
The Service Shaft to Level 8 was approved and commenced in April 2015 with an
approximate cost of US$10 million. It will:
Move all men and materials in and out of the mine, and
Free up the L8 Shaft to hoist rock only, increasing its capacity to 1,700 tonnes per day.
Changes to stope designs and protocols and contract payment systems are reducing dilution
and improving stope grades and safety; and
Development of Levels 9 and 10 is underway.
Tambis Region - Bananghilig Deposit and Guinhalinan:
A complete re-logging of all diamond drill holes in conjunction with detailed underground
mapping is close to being completed, resulting in improved interpretations of mineralisation
types and structural domains;
The current resource is anticipated to be updated to JORC 2012 compliance by end
December 2015;
Field work advancing the prospective Guinhalinan Prospect.
SUMMARY OF EXPLORATION ACTIVITIES
Co-O MINE
Underground drilling primarily focussed on upgrading Inferred Resources to the Indicated
category, with lesser amounts of drilling aimed at delineating additional resources peripheral to
current mining operations; and
Preparations are advanced for a major ‘deeps’ drilling programme to commence from Level 8 to
delineate down-plunge extensions to the resources, primarily between Levels 8-16.
Page 10 of 121
REVIEW OF OPERATIONS
Co-O REGIONAL
Induced Polarization, Resistivity and Ground Magnetics surveys were completed and
preliminary evaluation carried out; and
Surface work outside of Co-O Mine environs concentrated on the Road 17 West veins and
South Agsao areas with minor work on the North Tinago veins.
BANANGHILIG DEPOSIT
Surface and underground detailed mapping to link surface and underground observations with
drill hole interpretations were undertaken.
GUINHALINAN PROSPECT
Extensive corridor of high-order ‘gold in soil’ anomalies outlined over approxiamtely 5 kilometres
of strike, and
Mapping continues to establish strike continuity of silica-gold ‘carbonate replacement’ style of
mineralisation in stratabound calcareous horizons over at least 1.8 kilometres to date.
COAL PROJECT
Two Coal Operating Contracts awarded in December 2014, with scout drilling to commence
during the December 2015 quarter; and
Surface mapping identified several shallow-dipping zones of multiple sub-bituminous coal
seams up to 2.3 metres thick, and strike lengths of up to 3 km.
The Company has reduced its exploration area to approximately 596
square kilometres.
Page 11 of 121
REVIEW OF OPERATIONS
Figure 1: Location diagram of the Company’s main project areas in relation to the significantly mineralised belts of the Philippines as at 2014.
Page 12 of 121
REVIEW OF OPERATIONS
Figure 2: Eastern Mindanao tenement location plan, showing consolidated tenement outlines, mines, deposits and prospects.
Page 13 of 121
REVIEW OF OPERATIONS
Co-O PROJECT
The Co-O Gold Mine (Figs 1 and 2) is operated by Philsaga Mining Corporation under Mineral Production Sharing
Agreement (“MPSA”) 262-2008-XIII, which covers 2,539 hectares.
Co-O GOLD PRODUCTION
“The Co-O Mine produced 98,359 ounces of gold during the year at cash
cost of US$385 per ounce”
Table II. Co-O gold production statistics for financial years ended 30 June 2014 and 2015.
Period
Tonnes mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Gold sold
Average gold price received
Unit
wet tonnes
dry tonnes
gpt
%
ounces
US$
ounces
US$
Year ended
30 June 2015
Year ended
30 June 2014
659,495
582,311
5.61
93%
98,359
$385
97,200
$1,220
521,899
460,004
4.76
85%
59,904
$418
65,943
$1,299
Note:
(1) Net of development costs and includes royalties and local business taxes but no by-product credits
The Co-O Mine produced 98,359 ounces of gold at an average recovered grade of 5.61 g/t gold for the year, compared
to the previous year’s gold production of 59,904 ounces of gold at an average recovered grade of 4.76 g/t gold.
The average cash cost for the year of US$385 per ounce, was lower than the previous year’s average cash costs of
US$418 per ounce due primarily to the increased ounces, improved mine productivity, and improved mill recoveries.
FY2015-16 Production Guidance
The Co-O Mine guidance for 2015-16 financial year is 120,000 to 130,000 ounces.
The AISC guidance will remain at an elevated level until all mine medium term waste infrastructure projects are
completed and the cost efficiencies they produce materialise. In the longer term, once full hoisting capacities are
achieved in the mine, the AISC should lower to competitive industry levels.
Co-O MILL
Following commissioning of the Co-O Mill in the March quarter of 2014, during the FY2015 the mill has improved
recoveries from 85% to 93-94%, completed all major capital works and has performed satisfactorily as shown in Graph 1.
The low utilisation in December 2014 /January 2015 was due to the L8 Shaft upgrade.
The mill will likely remain under-utilized at the current lower gold prices as the mine concentrates on producing profitable
ounces by adjusting cut-off grades accordingly. Medusa is in the fortunate position of being able to take advantage of
increasing gold price and/or reduced operating cost to increase tonnages to the mill without further capital outlay.
A new tailings storage facility is currently being constructed and will be completed in Q1 FY2016. This will provide
storage capacity for at least 4 years at full mill capacity.
Page 14 of 121
REVIEW OF OPERATIONS
Graph 1 showing the mill utilization and recoveries for the FY 2015.
Co-O MINE
The Co-O Mine is an underground rail mine, utilising battery powered electric locomotives and 1.2 tonne mine cars. Ore
and waste is mined using air-leg mining and is extracted from the mine via two horizontal portals (Marathon and Main
Adits), four inclined 60º internal shafts (8E, 3W, 7W and 10W shafts), two vertical external shafts (Ventilation and L8
Shafts) and two inclined external shafts (Agsao and Baguio shafts) as shown on Figure 5. Waste is used to backfill
empty stopes wherever possible to reduce hoisting to the surface.
In September 2014 a major review of the mine commenced which resulted in a number of changes as summarised
below:
Reduce dilution by changing stope designs and protocols and change payment systems for contract mining;
Complete the upgrade to the L8 Shaft capacity over the December 2014-January 2015 period to 1,400 tpd;
Complete the planning of the Service Shaft and commence construction as soon as possible;
Improve mine support services such as mine planning, geological functions, engineering, mechanical and
electrical services;
Improve the ventilation and pumping systems; and
Plan the long term shaft haulage.
The mine now has the flexibility to adjust cut-off grades as required according to the gold price so it can continue
producing profitable ounces. Stope panels that are below cut-off grade, mainly in the upper levels of the mine, will not be
extracted at present. This may result in less tonnes, but more profitable ounces as costs are reduced in line with reduced
tonnes mined and milled. Should the gold price increase in the future, the cut-off grade will be decreased and the un-
mined stopes can be readily mined as development drives are already in place.
The milestones with respect to cost reductions over the 2015-16 FY are anticipated to be:
Completion of the new ventilation system in the December quarter 2015 which will reduce power consumption;
Completion and operation of the Service Shaft mid-CY 2016 which will vastly improve mine supervision, access
for men and materials as well as health and safety aspects of the operation. Once operational, the L8 Shaft will
be used exclusively for lower levels ore hoisting, increasing its capacity to 1700 tpd;
Steady state stope inventories following build up in 2014-15 FY; and
Improved primary ventilation increasing efficiencies and reducing electrical costs.
Page 15 of 121
REVIEW OF OPERATIONS
Co-O MINE OPERATIONS
Stoping methods
Two mining methods are currently utilised at the Co-O Mine:
Figure 3: Schematic diagram of a shrink stope.
Figure 4: Schematic diagram of a room and pillar (slot) stope.
(i)
Shrink stope mining
This method is predominantly used on steeply dipping veins with a minimum mining width of 1.25 metres. (Fig. 3)
Mining commences from the bottom and progresses upwards and the broken ore is left in the stope to provide
ground support. The volume of ore expands after blasting by about 30% and this material needs to be
progressively drawn from the stope during operation. Once blasting has reached the crown pillar, the remaining
70% of ore can be drawn quickly at low cost.
(ii)
Room and pillar (slot) mining
This method is used on the low-angle veins where the ore would not naturally flow to the draw points. (Fig. 4).The
broken ore needs to be scraped to the haulage level by mechanical slushers, and pillars need to be left behind for
ground support. The minimum mining width for low angle veins is 1.5 metres, hence the higher dilution is partly
responsible for the overall lower than average grade achieved from the upper parts of the mine where the low
angle veins are prominent. The ratio of room and pillar stopes to shrink stopes will likely decrease with depth.
New stope protocols and a new contract mining payment system were introduced in the December 2014 quarter to
promote better mining practices. The effects of these measures are shown on Graph 2 where the dilution has been
reduced as shown by rising grades, and the broken ore inventory in the stopes has been replenished. The replenishment
of inventory has resulted in short term higher costs and will reduce once steady state conditions are maintained.
Page 16 of 121
REVIEW OF OPERATIONS
Graph 2 showing the increases in stope broken ore inventories and the stope drawn grades.
Development
Development and stoping continued on all levels (Levels 1 to 8) during the year, as well as winzing (sinking a sub-vertical
shaft, called a winze, to a lower level) down to Levels 9 and 10 to establish internal shaft haulage to these levels where
horizontal on-vein development has recently commenced. Nearly all development is conducted on ore with waste
development being confined to ventilation raises, internal shafts and incidental infrastructure.
A total of 21,150 metres of horizontal and vertical development was completed in FY15. Currently the mine production is
achieved from approximately 60 development headings and approximately 100 to 110 stopes at an approximate 50:50
ratio.
L8 Shaft
The L8 Shaft continues to operate satisfactorily since the upgrade was completed in January 2015. However the
increased movement of materials, required for greater production from the lower levels, competes with skip ore hoisting
time. This will continue until such time as the construction of the Service Shaft is completed, commissioned and
operational. The additional hoisting capacity to 1700 tpd will be fully utilised regardless of increased cut-off grade due to
the centre of gravity of the mine operations moving downwards. The Level 8 Shaft hoisted 53% of total production for the
June quarter and this percentage will rise over time.
The current haulage capacity following the L8 Shaft upgrade is shown in Figure 5.
Page 17 of 121
REVIEW OF OPERATIONS
Figure 5:
Co-O Mine current haulage capacity.
Primary Ventilation
The primary ventilation circuit is being upgraded by installing a parallel 85kW Axial Fan adjacent to the
existing sole 85kW Axial Fan. A new 225kW Centrifugal Fan has been ordered and will be delivered Q4
CY2015. This fan will provide for a separate ventilation district for levels 6 – 10, increasing the overall
volume of air flow through the mine by 300%. The increased airflow will allow greater worker efficiency and
reduce the use of secondary ventilation by compressed air, hence reducing electrical demand on
compressors.
Service Shaft
A Service Shaft for transporting men and materials to Levels 3 to 8 is progressing on schedule as shown
schematically on Figure 6.
The Alimak (i) (2 metres x 2 metres) raise has completed 250 metres of the 350 metres from Level 8 up to
Level 3 where a new Alimak nest (ii) has been excavated at Level 3, and will continue for 50 metres to Level 2.
The shaft collar has been concreted and a blind sink of 83 metres to Level 2 will be undertaken using a crane
and kibble(iii) as shown in the photo following Figure 7.
The shaft headframe, main winder and sinking equipment are scheduled to arrive during the last quarter of
2015 and once installed, a sinking stage will be used to widen the shaft to its final dimensions (3.2 metres x
3.65 metres) (iv) from Level 1 to Level 8. Installation of ground support to the walls and equipping the level
accesses between Levels 3 to 8 will be done simultaneously. The rope guided man-cage is scheduled to be
installed in the second quarter CY2016.
On commissioning, all men and material movement will be transferred to the Service Shaft from the L8 Shaft,
and the latter will then be used exclusively to hoist ore, to attain its planned capacity of 1,700 tonnes per day.
Figure 7 shows the haulage capacity post completion of the Service Shaft.
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Figure 6:
Schematic representation of Service Shaft progress.
Notes:
1. Alimak Raise - a climbing platform that provides miners a safe and efficient method to construct long vertical raises. A cage
climbs a vertical raise fastened to the wall of the rise. The miners stand atop of the cage to drill the face, and the cage retreats to
a nest at the bottom of the raise during blasting;
2. Alimak Nest - where the Alimak retreats to when blasting;
3. Kibble - an engineered sinking bucket for lowering men and materials as well as hoisting broken rock;
4. The final dimensions have been chosen to allow a locomotive/mine car to be lowered intact, where currently they need to be dis-
assembled to be lowered down the L8 shaft.
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Figure 7:
Co-O Mine post –Service Shaft haulage capacity
Photo of Service Shaft collar currently being excavated.
Page 20 of 121
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Co-O MINE GEOLOGY
Detailed discussions and interpretations of the Co-O Mine geology and mineralisation were initially reported on 14
August 2012 and are also contained, with plans and sections, in the 2012, 2013 and 2014 Annual Reports.
During the past 12 months, the Company has embarked on an intensive review of the Co-O Mine geology, including
identification of structures and mineralisation
The key points from the extensive review, re-interpretations and re-modelling of the underground geology of the Co-O
Mine over the last 2 years are:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
The 3 main veins, Central, Jereme and GHV are continuous over a strike length of at least 1.5 kilometres, and are
open at depth to the east. For simplicity, Figure 8 shows only the GHV Vein resource model.
The horizontal length of the best mineralised core of the vein system is approximately 800 metres, and this core
plunges to the east at approximately 30°, as depicted on Figure 8. Economic mineralisation does occur outside
the core zone, but is less consistent.
The Co-O diatreme breccia disrupts the up-dip sections of some of the north dipping vein mineralisation in some
down-plunge positions (Fig. 9). In addition a consistent shatter zone, which is approximately 50-100 metres wide,
has now been identified peripheral to the diatreme, within which the veins’ continuity and characteristics become
less consistent and are generally not economic to mine.
Proximal to the eastern part of the Co-O vein system, the near surface underside of the diatreme and shatter
zone’s flare dips shallowly at approximately 10° to the south, and becomes steeper to approximately 50° dip with
increasing depth, diverging away from the north-dipping veins, and hence the veins are interpreted to be open
down-plunge, beneath the flare of the diatreme (Fig 9).
Some resource blocks currently extend (and are open) to beyond Level 12 (550 metres below Level 1). Additional
deep capacity drilling rigs are currently being acquired and will utilised to test the depth extensions to
mineralisation from drill chambers on Level 8 by drilling out the zone between Levels 12 and 16 to support the
case for an L16 Shaft to Level 16 (750 metres below Level 1).
Comparison with other similar epithermal vein systems, such as the Vera Nancy system in North Queensland,
currently being mined by Evolution Mining Limited, shows noteworthy similarities as shown in Figure 10. The
Vera Nancy system has a 4 kilometre strike length (Co-O has so far been mined over 1.5 kilometres), a similar
shallow plunge to its mineralisation, and a similar vertical extent of economic mineralisation.
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Figure 8:
Co-O Mine composite longitudinal projection showing the locations of reported significant drill intercepts (since 2010), underground
development, Service Shaft, proposed L16 position, and locations of drill chambers planned for 2015-2017 resource drilling programme. The
GHV Vein resource model (red) is also shown, demonstrating the potential for down-plunge extensions at depth.
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Figure 9: Cross-section through the L16 position
Page 23 of 121
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Figure 10: Longitudinal projection showing the Co-O vein system with the superimposed Vera Nancy vein system
GROUP ORE RESERVES AND MINERAL RESOURCES
The Annual Mineral Resources Update Statement and Annual Ore Reserves Update Statements for the Company were
released on 4 September 2015 and 25 September 2015 respectively, and include 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 Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (the “JORC Code 2012”).
The Mineral Resources and Ore Reserves Statements have been prepared in accordance with the JORC Code 2012 for
the Co-O Mine, whereas the Bananghilig and Saugon Mineral Resources were prepared and first disclosed under the
JORC Code 2004 and have not been updated to comply with the JORC Code 2012 on the basis that the information has
not materially changed since they were last reported.
The Company conducts regular internal and external reviews of Mineral Resource and Ore Reserve estimation
procedures to validate the quality and integrity of these procedures. External consultants are also regularly contracted to
conduct independent reviews of Mineral Resource and Ore Reserve estimation procedures and results. The reviews
have not identified any material issues with these procedures or results.
The Co-O Mine has a long history of Ore Reserve replacement by way of diamond drilling and conversion of Indicated
Resources (Graph 3). The Company remains confident in the long-term future of the Co-O Mine given the current
Mineral Resource inventory, the nature of the geology and the historic high conversion rate (~70%), after allowance for
mining recovery, of Indicated Mineral Resources to Ore Reserves. The Co-O Mine continues to maintain a minimum 2.5-
year mine plan, for Indicated Resource, but well in excess of a 5-year life, considering the resource endowment. This is
typical of the way these types of narrow vein, high-grade gold mines have operated for many years.
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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 2015, and has been depleted for mining to 30 June 2015. Gold price assumptions used to
estimate Mineral Resources and Ore Reserves are:
Mineral Resources: US$1,500/oz gold
US$1,150/oz gold
Ore Reserves:
Graph 3 showing Production, Ore Reserves and Mineral Resources status since 2007, demonstrating the Co-O Mine’s history of increasing resources
and replacing mine depletion.
NOTES: FY2007 to FY2013 – Ore Reserve ounces are classified under JORC Code 2004 guidelines.
FY2014, & FY2015 – Mineral Resource and Ore Reserve ounces are classified under JORC Code 2012 guidelines.
FY2015 reserves estimated using gold price of $1150/oz (FY2014 reserves at $1250/oz).
Co-O MINE MINERAL RESOURCES
Total Inferred and Indicated Mineral Resources for the Co-O Mine are now estimated at 3.50 million tonnes at an
average grade of 10.2 g/t gold for a total 1.15 million ounces gold, compared to the estimate reported on 25 September
2014 of 4.34 million tonnes at a grade of 10.1 g/t gold for a total 1.41 million ounces gold (Table III).
The changes in the Co-O Mine’s Mineral Resources are primarily due to mining depletion, inclusion of further
underground drilling results and development, reduction of some interpreted vein thicknesses at depth, addition of a
higher proportion of internal waste to reflect the discontinuous nature of some veins, application of a revised lower cut-off
grade, using an accumulation of 3.2 gram*metres/tonne to incorporate a minimum mining width above cut-off grade,
improved survey practices, resulting in better stope definition, and revision of availability of in-situ pillars due to mining
access.
Despite the mining depletion of 105,000 ounces in FY2015, the amount of ounces in the Indicated Resource category
remains largely unchanged, at a slightly higher grade. This is a result primarily of conversion from Inferred to Indicated
Resources by infill drilling and development, rather than extensional resource drilling.
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Table III. Co-O Mine Mineral Resources as at 30 June 2015
(Refer ASX announcement dated 04 September 2015 for JORC Code 2012 – Table 1 Report)
Mineral Resource
Tonnes
Grade
g/t Gold
Ounces
Gold
Category
Indicated resources
Inferred resources
TOTAL
1,546,000
1,958,000
3,504,000
12.2
8.6
10.2
604,000
545,000
1,149,000
Notes:
-
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 cuts (up to 300 g/t gold) have been applied to different veins.
a gold price of US$1,500 has been applied.
Rounding to the nearest 1,000 may result in some slight apparent discrepancies in totals.
-
-
-
Underground Drilling
Indicated Category
In FY2015, the focus of underground drilling and development was to upgrade resources, which had previously been
classified as Inferred, into the Indicated category. This programme was successful in that the current Indicated Resource
is relatively unchanged compared to the FY2014 Indicated Resource, despite the fact that 105,000 ounces have been
depleted by mining.
Inferred Category
There was limited drilling to the east and down plunge which focussed on extensions to the deposit. Drilling at the
western part of the deposit, did not intercept any additional significant mineralisation. As a consequence of this, there has
not been an overall increase in the total resource.
Current development (Figs 5 and 8) has focussed on establishing drill chambers on Level 8, to accommodate the newly
acquired deeper capacity drilling rigs, for a programme of deep drilling for strike extensions to the east and down plunge
extensions.
It is anticipated that this drilling will commence in the December quarter 2015, and complete 15,000 to 20,000 metres of
diamond coring aimed at increasing the total mineral resource.
Mineral Resource Estimation Methodology
The FY2015 Resource estimate was carried out by Philsaga's geological staff under the guidance of Mr Gary Powell,
(Manager Geology and Resources). The estimates were checked in detail by Carras Mining Pty Ltd, who acted in the
capacity as independent external auditor.
The method was identical to the procedure used by Mr Mark Zammit of Cube Consulting Pty Ltd ("Cube") of Perth,
Western Australia, for the FY2014 Mineral Resource estimate update (refer announcement of 25 September 2014).
Mr Zammit also carried out a high level review of the methodology implemented by Philsaga personnel and concluded
that "the same general approach used in the past has been adopted for the current updated resource estimate.
Differences between the previous 2014 model and the updated model have been attributed to additional information from
grade control, depletion and improved survey practices”.
Resource Vein Modelling
A wireframe model of the vein system and the mine depletions were based on all available information as at 31 May
2015. A Bulk Density value of 2.62 was used for Mineral Resource estimations.
Philsaga has applied a 2D longitudinal modelling approach (as used in all previous estimates by Cube) 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 cells. Block discretisation points, required for block
kriging were set to 5 x 5 points in the longitudinal plane.
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.
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Mining depletions as of 30th June 2015 were stamped into the 3D block model using the 2D string outlines digitised from
the Co-O Mine long sections, as provided by Philsaga's survey department.
Figure 11 is a perspective view of the Co-O Deposit resource model showing the major veins (GHV, Jereme and Central
Veins) in colour and associated sub-parallel and link veins in grey, plus development as at 30 June 2015.
Figure 11: Perspective view of the Co-O Mine’s 2015 resource model, major veins and underground development
Mineral Resource Estimation
The Co-O Mineral Resources have been estimated and reported in accordance with the guidelines of the 2012
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012).
The criteria used for resource classification 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 (unchanged from FY2014 resource
estimates).
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, and
Minimum diluted grade x width (accumulation) of 3.2 gram*metres/tonne to incorporate a minimum mining width
above cut-off grade.
The Indicated Resource boundary was drawn to encompass those blocks with higher estimation qualities, typically within
areas defined by drill hole data closer than 50 metres x 50 metres and usually approaching 25 metres x 25 metres and/or
with the inclusion of underground mine development where geological and volume continuity is well established.
Inferred Resource areas reflect identified veins where there is no mining information and with limited drill hole data.
There were no Measured Resources defined due to the short scale variability in volume and grade plus the moderate
risks identified in the data quality, data spatial location and mined volume definition.
The final reporting of the Mineral Resource is undiluted above a 3.2 gram*metres/tonne cut-off, which incorporates a
minimum mining width above cut-off grade.
Variography, search criteria and high grade cutting methodologies were as per those used for FY2014.
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Comparison with Previous Resource Statement
A comparison between the current Mineral Resource and that stated for 30 June 2014 in Table IV shows that the
Indicated Resource ounces have remained almost unchanged, at a slightly higher grade, despite having mined 105,000
ounces in FY2015. This means that the depletion has been replaced, mainly by upgrading FY2014 Inferred Resources.
The slightly higher grade of the Indicated category is attributable to the application of an accumulation cut-off grade, and
development of higher grade stoping areas, particularly in the lower levels of the mine (Levels 6 to 8), confirming the high
grade nature of the ore.
The Inferred Resource has been reduced as a consequence of the upgrading of Inferred to Indicated and other factors,
including:
minimal amount of drilling being carried out along strike to the east and down plunge to add resources;
mining and depletion continuing since the previous resource statement.
drilling at the western part of the deposit did not intersect significant mineralisation;
reduction of some interpreted vein widths to reflect the widths of veins as seen in the upper levels of the mine;
the addition of a higher proportion of internal waste to reflect the discontinuous nature of some veins;
some mining of previously stated inferred resources, and
Table IV Comparison summary of the total undiluted Co-O Mineral Resources at a block cut-off grade above 3.2
gram*metres/tonne gold (accumulation) for 30 June 2015, and above 3.0 g/t gold for 30 June 2014.
30 June 2014
30 June 2015
Variance
Category
Au
(g/t)
Indicated 1,561,000 11.8
Tonnes
Au (oz)
Tonnes Au (g/t)
591,000 1,546,000
12.2
Au
(oz)
604,000
Tonnes
Au
(g/t)
-1% +3%
Au
(oz)
+2%
Inferred
2,778,000
9.2
819,000 1,958,000
8.6
545,000
-30%
-6%
-34%
Total
4,340,000 10.1 1,410,000 3,504,000
Mineral Resources are reported inclusive of Ore Reserves
Notes:
10.2 1,149,000
-19% +1%
-19%
Co-O MINE ORE RESERVES
A summary of the Co-O Ore Reserves was last reported on 25 September 2014. There have been material changes to
the reserves since then due to mining depletion, significant underground development, some re-interpretations and re-
modelling of geology, as per discussion in the preceding sections, as well as the application of lower recoveries to pillars
and remnant ore blocks. The Annual Mineral Resources and Ore Reserves Update Statement announced on 25
September 2015 includes material information relating to the estimations processes.
Carras Mining Pty Ltd (“Carras”) of Perth, Western Australia, was contracted to undertake the Co-O Mine Ore Reserves
estimate.
The reported Ore Reserves is based on the Mineral Resources model produced by Philsaga’s geological division under
the supervision of Mr Gary Powell (Manager Geology & Resources). This model was 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.
Cut-off Grades
Cut-off grades used for the Reserve Estimate were derived after making allowances for mining and haulage, hoisting,
surface haulage, milling, administration, royalty, development and an extra development factor for mining outside of
Reserves, and a cost for all underground drilling.
The following gold price and cut-off grades were applied:
Gold price of US$1,150 per ounce gold;
2.0 g/t gold for development ore;
3.8 g/t gold for developed stopes, and
4.5 g/t gold for un-developed stopes.
For Levels 1, 2 and 3 where haulage is minimal, slightly 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, utilising Co-O operations mine design as a basis, following the application of
minimum mining widths (MMW), dilution and cut-off grades to panels of size 30m x 50m high based on the Philsaga
block model. Costs were then applied to determine those panels within the Indicated category, which were economic. If
Page 28 of 121
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economic, they were included in the Probable Reserve. A very small component (5%) of lower grade and Inferred
material was included to reflect actual mining practice.
Mining at Co-O utilizes both Shrink and Slot stope mining. Shrink Stope mining has been used at the mine since around
2004 and is well understood.
The MMW and mining dilution factors used are:
MMW of 1.25 metres is applied to those panels with a dip ≥ 50 degrees.
MMW of 1.50 metres is applied to those panels with a dip < 50 degrees.
Where the panel width was equal to, or greater than the MMW, an additional 0.25 metres dilution was then
added to the Hanging Wall.
An additional dilution of 10% was allowed for the mining of the low angle stopes under draw.
A further 30% dilution was added to stopes on levels 4 and 5 to allow for discontinuities.
a 30% dilution was added to stopes on Levels 4 and 5 to allow for discontinuities.
shape dilution of 5% of extra tonnage at 2 g/t gold applied, for extra development and to reflect pinch and swell
of veins, and faulting.
For stopes < 10 g/t gold an 85% mining recovery was used.
For stopes ≥ 10 g/t gold a 90% mining recovery was used.
25% recovery factor for sill pillars in empty stopes are included in reserve at a grade of 7g/t gold, to reflect
current selective mining practice,
30% recovery factor has been applied to remnant ore blocks, at their respective stope grades,
stopes containing less then 500 tonnes, were removed to account for ore loss.
Inferred Resources and low grade Indicated Resources (5%), are only utilised in the Ore Reserve estimation when those
panels need to be developed in order to access higher grade Indicated Resources (which must be able to carry all
costs). This also includes a small element of development beyond the Indicated Resource as an exploration component.
At the lowermost levels, winzing on ore and narrow vein development is, and always has been part of the strategy of
developing a new level. This accounts for only a small proportion (5%) of global Reserve ounces, located at Levels 10,
11 and 12, where current winzing and diamond coring is showing characteristics typical of the GHV high grade zones in
the levels above.
Underground Level development is continuous, with all other required infrastructure in place. The mine is currently
developing a service shaft at the 15E position, which will be utilised for hoisting men and materials from Level 8 to
surface.
There are no Proven Ore Reserves defined as no Measured Resources were estimated, as summarised in the preceding
section. A metallurgical recovery of 94% has been used, based on current milling recovery, but not applied to the
reported Reserve figures.
Comparison with Previous Reserve Statement
A comparison between the current ore reserves and that stated at 30 June 2014 shows a slight decrease in Probable
Reserve ounces of 4.3% or 19,000 ounces of gold (Table V).
The changes in the Co-O Mine reserves are primarily due to: mining depletion; inclusion of further underground drilling
results; modified vein interpretations through increased geological knowledge of the different vein sets obtained by
ongoing underground mapping, modification of gold cut-off grades, a lower mining recovery applied to remnant ore in
some historical stopes and pillars, and reporting at a lower gold price of US$1150/oz compared to FY2014’s gold price of
US$1250/oz.
Table V Comparison Summary of the Co-O Mine’s Ore Reserves for 30 June 2014 and 30 June 2015 after allowance
for mine depletion.
Reserve
Category
30 June 2014
30 June 2015
Variance
Tonnes
Au
(g/t)
Au (oz)
Tonnes
Au
(g/t)
Au
(oz)
Tonnes
Au
(g/t)
Au
(oz)
Probable
1,920,000
7.22
446,000
1,811,000
7.33
427,000
-5.7% +1.5%
-4.3%
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Co-O EXPLORATION
“Underground drilling during 2015-17 will primarily focus on converting
wide-spaced intersections in the down-dip and down-plunge vein
extensions between Levels 8 to 16 into resources, and upgrading
Inferred Resources to Indicated status, from new drill chambers on
Level 8.”
Resource Definition Drilling
The Company has been using three large underground rigs on contract, for resource drilling, and four smaller Company
owned portable drilling rigs for pre-development drilling. During the FY2015, underground drilling has been focussed
primarily to upgrade Inferred Resources to Indicated Resource category and to a lesser extent, delineate additional
mineralisation and extensions to the Inferred Resources within and peripheral to current mining operations.
Resource definition drilling was carried out from five drill chambers on Levels 3, 5 and 8. A total of 61 underground
diamond drill holes were completed to 30 June 2015 for a total advance of 25,400 metres, as summarised in Table VI.
Table VI. Summary of Co-O Mine underground drilling.
Project
Co-O Mine
GRAND TOTAL
Purpose
Number of Holes
Meterage
Resource Underground
Pre-Development
61
48
109
25,400
3,196
28,596
Details of significant intersection results obtained during the FY2015 have been reported in the September 2014,
December 2014, March 2015 and June 2015 quarterly reports. Table VII below summarises the more significant drill
intersections obtained during the year.
Table VII. Co-O Mine – significant underground drill hole results of ≥ 6 gram-metres.
(Refer FY2014 Quarterly Reports for JORC Code 2012 – Table 1 Reports)
RL 4
Hole Number
North 4
East 4
Depth
(metres)
Dip
(o)
Azimuth
(o)
From
(metres)
Width 2
(metres)
Gold Grade 1,3
(uncut) (g/t gold)
UNDERGROUND RESOURCE DRILLING - LEVEL 3
L3-17W-002
613894
913226
50
485.8
-31
188
L3-17W-003
613894
913226
50
505.6
-30
195
L3-17W-004
L3-17W-009
L3-17W-010
613893
613893
613897
913226
913226
913226
50
50
51
511.8
507.2
419.4
-29
-37
-31
201
204
171
L3-17W-012
L3-64W-016
613897
613353
913226
913058
50
62
501.7
439.3
-42
-25
172
138
L3-64W-017
613353
913055
60
550.7
-25
150
L3-64W-030
613350
913057
60
476.6
-46
159
182.00
359.10
413.20
365.85
368.05
5 241.85
239.55
469.45
168.40
292.00
306.85
265.55
375.25
193.20
305.30
428.30
41.40
311.50
341.95
108.00
177.55
0.50
1.15
0.85
0.60
0.75
5 1.65
4.95
1.15
1.05
3.70
7.95
2.35
2.65
1.00
0.20
0.90
1.00
1.00
1.00
2.45
1.00
17.07
15.21
7.07
20.85
22.78
5 6.68
3.57
8.20
7.00
2.96
6.36
5.65
8.93
11.14
50.47
15.34
8.64
10.30
130.66
6.72
15.47
L5-40W-001
613590
913079
-40
521.8
-18
208
178.00
2.00
3.15
UNDERGROUND RESOURCE DRILLING - LEVEL 5
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REVIEW OF OPERATIONS
UNDERGROUND RESOURCE DRILLING - LEVEL 8
L8-19E-003
614213
913136
-192
477.8
-3
204
L8-19E-004
614213
913136
-192
500.9
-3
214
L8-19E-005
L8-19E-013
L8-19E-014
614213
614214
614214
913137
913136
913136
-192
-193
-193
494.0
415.0
430.4
-3
-29
-24
223
179
193
L8-19E-016
614219
913137
-193
414.3
-20
142
L8-19E-017
614219
913137
-193
481.3
-19
125
L8-19E-020
614212
913137
-192
437.5
-15
216
L8-19E-022
614214
913136
-193
432.7
-30
172
L8-19E-024
614214
913136
-193
488.0
-35
173
L8-19E-025
614217
913136
-193
452.2
-22
144
L8-19E-026
L8-19E-028
L8-19E-029
614217
614217
614213
913136
913136
913136
-193
-193
-192
458.2
434.8
431.8
-30
-36
-41
149
164
198
L8-19E-030
614215
913136
-193
397.4
-33
158
L8-19E-032
614217
913135
-193
489.2
-32
152
L8-19E-033
614218
913135
-192
451.2
-7
116
L8-19E-034
614218
913135
-192
469.5
-15
116
L8-19E-035
614213
913136
-192
444.1
-15
194
L8-45E-004
614469
913041
-190
136.5
3
124
175.45
331.15
375.45
286.40
395.45
237.80
200.15
14.70
217.80
220.75
36.05
104.15
196.95
92.00
322.85
381.10
428.10
460.80
465.85
345.00
402.60
117.20
426.30
263.60
271.25
144.20
160.60
198.50
345.30
432.85
362.00
226.80
141.35
176.00
220.30
235.20
171.80
251.20
27.95
5 176.00
383.15
387.20
402.25
150.35
199.25
246.65
350.65
334.65
375.75
121.35
0.30
3.80
1.95
0.45
0.40
1.10
1.40
0.90
1.40
1.00
0.60
0.20
1.00
3.95
1.05
2.60
1.30
1.40
1.20
1.70
0.50
0.55
0.40
1.00
0.70
1.10
0.30
1.80
2.40
0.50
1.00
2.40
0.50
0.60
1.85
1.00
1.05
1.00
0.20
5 0.60
1.75
1.20
0.85
2.00
1.40
1.75
0.95
0.95
1.00
0.45
20.29
16.31
53.69
35.30
15.39
10.93
24.38
30.38
4.95
8.40
13.78
53.96
9.37
4.59
24.07
14.44
8.56
22.42
14.69
6.42
31.35
20.30
17.30
6.17
11.00
21.93
84.43
19.78
10.95
14.30
22.20
43.55
36.77
58.97
70.49
30.13
22.39
31.83
46.13
5 58.97
5.42
15.63
18.77
5.28
6.42
4.86
9.33
61.57
23.40
161.30
Notes:
1. Composited intercepts’ 'weighted average grades' calculated by using the following parameters:
(i) no upper gold grade cut-off applied;
(ii) ≥ 6 gram*metres, and
(iii) a maximum of 1.0 metre of down-hole internal dilution at ≤ 3 g/t gold.
Intersection widths are down-hole drill widths not true widths.
2.
3. Analysis by Classical Fire Assay technique and AAS finish, and carried out by Philsaga Mining Corporation’s laboratory.
4. Grid coordinates and elevation in metres relative to the Mine Datum.
5. Assay results were previously reported in 2014 Annual Report, and included here only for completeness of individual drill holes.
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Resource Definition Drilling Programme
Three more drill chambers are in the process of being developed on Level 8 to provide access for an extended ‘deeps’
drilling programme as indicated on Figures 8 and 9. The focus of the ‘deeps’ drilling programme is two-fold:
to ensure that replacement of mining depletion of ore reserves is maintained on an annual basis through
upgrading Inferred Resources to the Indicated status, in conjunction with level development, as described in the
announcements of 4 September 2015 and 25 September 2015, and
To increase the resource base by extending the current resources down-dip and down-plunge.
Co-O Regional Exploration
Ground Geophysical Survey
The ground geophysical Induced Polarisation (“IP”) / Resistivity (“RES”) and ground magnetic survey commenced in 2013
within the Co-O tenements, was terminated in July 2014 following a preliminary review of the information obtained from
this survey, which did not indicate the presence of any significant anomalies that warranted continuing the survey.
Preliminary interpretations have been carried out during the September 2014 and December 2014 quarters. No
significant anomalies have been identified, although further evaluation of the survey will be carried out in due course to
identify anomalies that may be less apparent.
Reconnaissance Programs
Regional exploration concentrated on areas proximal to the Co-O Mine environs to investigate mineralisation previously
encountered during surface mapping and drilling. Activities included detailed and reconnaissance geological mapping,
trenching and sampling programmes in the Tagabaka, North Tinago, South Agsao and West Road 17 prospects, where
a number of veins have been verified from previous work. Drilling targets have so far defined from this work at the West
Road 17 prospect, although the timing of the drilling programme is dependent on budgets.
Reconnaissance mapping and sampling programmes will continue throughout the Co-O group of granted tenements.
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 (B1) 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 12. 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.
On 8 August 2013, a Mineral Resource update was announced for the Bananghilig Deposit, 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 24.52 million tonnes was reported, containing 1,136,000 ounces at a grade of 1.44 g/t gold. The Mineral
Resources for the Bananghilig Gold Deposit were prepared and first disclosed under the JORC Code 2004. It has not
been updated to comply with the JORC Code 2012 on the basis that the information has not materially changed since it
was last reported.
During the FY2015, the Company has been carrying out detailed surface and underground mapping within the main
resource area, to provide supplementary information to the drilling database. This has provided a significant amount of
structural information which is being used to review the mineralisation interpretations and define various geological and
structural domains.
It is planned to remodel the Bananghilig Deposit’s resource to produce an updated resource statement in accordance
with the guidelines of the JORC code 2012 by the end of CY2015.
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B2 DISCOVERY AREA
The B2 discovery area was first encountered in 2013 during sterilisation drilling, and has been the subject of wide spaced
drilling, plus a small programme of close spaced drilling. The significance of this discovery is that the diatreme complex
hosting the Bananghilig Deposit extends beneath the limestone cover and hosts the B2 mineralisation. To date, the
southern and eastern margins of the Tambis Diatreme Complex have not yet been defined, thus constituting a large
complex with the potential to significantly increase the size of the current resource base.
B2 Drilling Results
Results of diamond drilling at the B2 Discovery area to 30 June 2014 have been announced on 02 April 2013 and 08 July
2013, in the March 2013, June 2013, September 2013, December 2013, March 2014 and June 2104 Quarterly Reports,
and the September 2013 and September 2014 Annual Reports. During the September 2014 quarter, final results were
received for the balance of the last three drill holes drilled in June 2014, TDH345, TDH347 and TDH348. A summary of
significant results from drilling at the B2 area for the FY2014 year are included in Table VIII below.
Table VIII: B2 Discovery Area – Significant drill hole results ≥1 g/t gold.
(Refer ASX Announcement September Quarterly report 2014 Appendix B for Table 1 prepared in accordance with JORC Code
2012))
Hole
Number
TDH345
East 4
North 4
RL 4
Depth
(metres)
Dip
(o)
Azimuth
(o)
From
(metres)
Width 2
(metres)
Gold Grade 1,3
(uncut) (g/t gold)
613153
944893
190
300.6
-60
130
186.15
227.60
280.60
166.90
178.20
297.85
169.05
183.85
201.50
222.85
237.60
6.00
13.95
11.85
2.00
2.85
2.60
12.80
11.65
6.65
5.40
5.85
1.89
0.79
9.79
3.44
3.47
4.57
1.36
1.22
1.99
1.40
1.56
TDH347
613414
944861
130
301.8
-60
130
TDH348
613389
944701
102
300.6
-60
130
Notes:
1. Composited intercepts’ 'weighted average grades' calculated by using the following parameters:
lower cut-off grade of 0.5 g/t gold;
(i) no upper gold grade cut-off applied;
(ii)
(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.
Exploration
A down-hole geophysics programme designed to investigate the potential to locate additional high-grade hydrothermal
breccia zones beneath the limestone cover was planned to commence during the FY2015. This programme has been
temporarily postponed due to reduced exploration budgets. It is planned to commence the geophysics survey once the
gold price improves to a level at which developing the Bananghilig Deposit is considered to be viable.
TAMBIS REGIONAL
There is an ongoing programme of geological mapping, trenching and sampling throughout the granted tenements of the
Tambis Regional Project area, including the areas surrounding the Bananghilig (B1) Deposit, B2 Discovery area and the
Guinhalinan Prospect (Figs 2 and 12).
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 FY2016. Activities will include detailed geological
mapping, soil geochemical surveys, trenching, scout diamond drilling and possibly ground geophysics (IP, RES and
magnetics).
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REVIEW OF OPERATIONS
Guinhalinan Gold Prospect
Background
The Guinhalinan Gold Prospect location is shown on Figures 2 and 12 within the northern block of granted MPSA 343-
2010-XIII, which is subject to a Mines Operating Agreement with Das-Agan Mining Corporation, who will receive a 3%
gross royalty on all production from the MPSA.
The mineralisation is generally associated with silicification of limestone-rich horizons within a sequence of calcareous
grits and siltstones. The outcrops of silicified material vary from massive fine-grained silica replacement with sphalerite,
chalcopyrite and galena, to friable, limonitic and siliceous material in sub-crop.
The sediments comprise an old calcareous sequence which dips eastwards towards the projected position of the Barobo
Fault. This sequence has been traced for at least 12.5 kilometres and hosts extensive skarn alteration at Kamarangan,
approximately 6 kilometres to the north.
The Usa porphyry copper and the Alikway base metal skarn prospects are located 2 kilometres and 1.5 kilometres
respectively to the south and southeast of Guinhalinan and adjacent to the projected position of the Barobo Fault.
Mineralisation
Details of the completed soil sampling programme conducted towards the end of 2104 are contained in the 28 January
2015 announcement and the March 2015 and June 2015 quarterly reports.
To date, field investigations have identified at least three different styles of gold mineralisation, namely:
(i)
Sediment-hosted, Carbonate Replacement Gold (+base-metals) mineralisation (CRG)
The south-western gold in soil anomalism is related to a shallow, east-dipping impure limestone unit(s). Gold
mineralisation is associated with silica replacement of carbonate facies rocks such as limestone and impure
limestone unit(s), in association with pyrite, chalcopyrite, sphalerite and lesser galena.
(ii)
Alluvial gold occurrence
At the eastern half of the soil geochemistry survey, the gold in soil anomalism appears to be associated
predominantly with a sub-horizontal, polymictic conglomerate unit containing pebble to boulder size clasts of
mineralised CRG and possibly detrital gold. This unit is discordant with, and post-dates the limestone unit(s)
hosting the CRG mineralisation. It continues to the northwest and southeast and may be an important indicator
for locating further primary CRG mineralisation along strike.
(iii)
Quartz±carbonate veins
The third style of mineralisation identified so far is related to intermediate sulphidation epithermal quartz±calcite
vein stockworks within argillically altered basement rocks. The soil anomalism in the north-western part of the
soil survey is most likely the manifestation of this style of mineralisation.
Follow-up of the soil anomalies includes detailed geological and regolith mapping, and sampling of the regolith and
underlying stratigraphy, to identify scout drilling targets.
Exploration
A programme of scout drilling is planned to commence in the first half of FY2016 to investigate the down-dip and strike
extension potential of the CRG mineralisation within the limestone unit(s).
Page 34 of 121
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Figure 12: Tambis region interpreted geology showing the positions of the Bananghilig Deposit, B2 Discovery Area beneath the limestone
cover, and the Guinhalinan Prospect.
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LINGIG COPPER PROJECT
The Lingig copper discovery is located within MPSA 343-2010-XIII, situated in Surigao del Sur province of Eastern
Mindanao (Fig. 2).
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. It covers a total of approximately 80 km² (8,019
hectares) in two blocks, of which the Lingig copper prospect is located in the south-eastern block.
Figure 13: Lingig interpreted geology showing drill hole locations, copper (Cu) and molybdenum (Mo) soil geochemistry
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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 targets 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 13. Refer to the
2014 Annual Report for more detail on the mineralisation styles.
The Resistivity and Ground Magnetics survey completed in 2013 delineated two aligned NE-trending IP high
chargeability zones. The larger of the two IP anomalies, comprising Zones 2 and 3, are planned to be tested by diamond
drilling during the first half of FY2016.
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 registered under Phsamed Mining Corporation.
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.
Total Inferred and Indicated Mineral Resources for the Saugon Gold Deposit (81,500 tonnes at a grade of 5.97 g/t gold),
remain unchanged from 2013, and were prepared and first disclosed under the JORC Code 2004. It has not been
updated to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was
last reported. Refer to the 2014 Annual Report for more details.
Exploration
Exploration activities involving primarily regional mapping have continued on a minimal basis. The project is currently
being reviewed.
APICAL PROJECT (Medusa earning 70%)
A Joint Venture Agreement (“JVA”) with MRL Gold Phils, Inc. (“MRL”) and an underlying claim owner covers an
application for Mineral Production Sharing Agreement (“APSA”) number 0028-XIII, situated in the provinces of Agusan del
Sur and Surigao del Sur in east Mindanao, and located to the north of the Co-O Mine and Mill. The APSA 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 PROJECTS
The Company, through Philsaga, has Memoranda of Agreement (“MOA”) with Corplex Resources Incorporated (“CRI”)
on four tenement applications, viz: APSA 000054-XIII covering approximately 2,118 hectares; APSA 000056-XIII
covering 162 hectares; APSA 000077-XIII covering approximately 810 hectares (including the Usa copper prospect
described below), and Exploration Permit application (“EPA”) 0000186-XIII covering 7,111 hectares.
The tenement applications are being progressed towards granting.
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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.
COAL PROJECT
On 18 December 2014, the Company announced, through its Philippine operating company, Philsaga Mining Corporation
(“PMC”), that PMC signed contracts with the Department of Energy (“DOE”) for 9,000 hectares of Coal Operating
Contracts (“COCs”) containing well-defined coal measures immediately to the east of the Co-O gold mining and milling
operations, with the strategy for a third party to own, build and operate a power station and to supply power to the
Company’s operations. The COCs are shown on Figure 2.
Strategy
Mindanao Island has a shortage of available power and despite new power stations coming on line. This shortage which
results in power outages at the Company’s operations is predicted to continue into the future due to rapid regional
growth.
The Company identified the opportunity to control its own future power sources several years ago and has been working
towards the granting of these COCs, which are subject to a bidding process conducted every 3 years by the Department
of Energy.
The first step towards ensuring a reliable power supply for the long-term operations of the Company was the granting of
these COCs.
The second step is to outline sufficient coal potential to support a medium-sized power station.
The third step is to develop a strategic alliance to construct and operate a power station, and to achieve this, the
Company initially completed a Heads of Agreement (“HOA”) with Swan Energy Pty Ltd of Perth (“Swan”), Western
Australia, to build, own and operate a 30MW power station as the exclusive power supplier to the Company’s operations.
Subsequent to cancelling the Heads of Agreement, in the short term, the Company will conduct exploration activities
itself to delineate potential coal seams within the COCs for future development by potential third party partners.
The Company has already identified coal seams outcropping at surface, that are of sub-bituminous quality and suitable to
feed a power station of the Circulating Fluidised Bed (CFB) boiler type, which is a clean, efficient, reliable and fuel-
flexible solution, and which will produce ash in a form suitable for use as fertiliser by local farming communities.
Geology
The Concessions granted by the Department of Energy total 9,000 hectares covering occurrences of known coal
measures in the sedimentary basin in two sections, Area 6 (COCs numbered 40-L-123, -124, -125 and -126) and Area 7
(COCs numbered 40-L-204, -205, -243, -244 and -283) as shown in Figure 2.
The sedimentary basin contains a regionally extensive, dominantly late Oligocene to Pleistocene carbonate sequence
overlapping the late Eocene to early Pliocene magmatic and volcanic complex basement rocks containing the
Company’s gold mining tenements and operations on the west, and Cretaceous to Eocene basement rocks on the east
containing the Company’s Lingig copper prospect.
The coal measures contain multiple coal seams which are contained in the basal parts of the sequence within the late
Oligocene to early Miocene Bislig Formation comprising basal conglomerates, sandstones, limestone and carbonaceous
mudstones.
The coal measures have previously been scout drilled in the 1970s, by at least 5 diamond holes, test pitted in 4 locations
and outcrop sampled in numerous locations by previous explorers. As the coal seams outcrop, it is anticipated that
sufficient volumes of open pittable material will potentially be available for the duration of the Company’s mining
operations.
The coal in Area 6 has been previously classified as sub-bituminous B to high volatile bituminous A coal rank using the
American Society for Testing and Materials (“ASTM”) classification scheme. On average the coal in Area 6 has heating
Page 38 of 121
REVIEW OF OPERATIONS
values of 6,500BTU/lb as returned by samples from 2 drill holes and 27 outcrops. Seam thicknesses of economic
importance are commonly between 1 and 2 metres.
The coal in Area 7 has been previously classified as sub-bituminous B to high volatile bituminous A coal rank using the
ASTM classification scheme. Outcrops with a thickness of more than 1 metre have heating values of 7,000 to 8,200
BTU/lb. Samples from 1 drill hole returned heating values of 6,499 BTU/lb and 7,994BTU/lb.
Reconnaissance exploration activities since January 2015 have included mapping to identify coal seams in preparation
for a scout drilling programme set to commence during the December 2015 quarter. Already, the Company has identified
outcropping coal seams ranging up to 2.3 metres in thickness over potential strike lengths of up to 3 kilometres. Most
outcrops to date have been identified as being of the sub-bituminous quality, although no results have yet been received
to confirm the coal quality.
TENEMENTS and EXPLORATION PIPELINE
As announced on 21 January 2015, the Company completed a review of its tenement holdings, which has since resulted
in a reduction of about 300 km², down from 806 km² to approximately 506 km² (Fig. 2). The reduction consists of a
combination of tenement application relinquishments and reductions, and area reductions in granted tenements.
Additional details are contained in the 21 January 2015 announcement.
The basis for the reduction is a result of downgrading, or recognition of absence of geological prospectivity, as
determined by a combination(s) of remote sensing interpretations, airborne geophysics, reconnaissance exploration,
perceived unfavourable terrain that does not permit viable exploration (e.g. extensive swamp areas), and/or conflicting
land use areas, such as rice field areas, other areas of intensive agriculture and urban areas.
Exploration Pipeline
As announced on 21 January 2015, an extensive review of the Company’s prospects as at 31 December 2014 has been
completed. Figure 14 below is a graphic representation of the development pipeline of exploration projects and
prospects and their respective status.
The current exploration priorities are:
Co-O Gold Mine environs – reconnaissance exploration to continue at the South Agsao and the West Road 17
prospects. Work at the North Tinago prospect has been completed;
Bananghilig (B1) and B2 Gold Projects – further work has been put on hold due to reduced exploration budgets,
including downhole geophysics, metallurgical testwork, and so forth;
Guinhalinan Gold Project – investigation and assessment of the regional ‘gold in soil’ anomalies as announced on
28 January 2015 will continue with scout drilling planned during the first half of FY2016;
Lingig Copper Project – scout drilling of the IP anomalies to be carried out during first half of FY2016, and
Coal Project – commencement of scout drilling in areas of outcropping sub-bituminous coal seams during first half
of FY2016.
Page 39 of 121
REVIEW OF OPERATIONS
Fig 14: Exploration pipeline summary
SUSTAINABILITY
The Company continues to base its business on four key components that encompass our commitment to all
stakeholders. Improvements continue to promote 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;
Employment sustainability; and
Community Participation, Development Programmes and Benefits
HEALTH AND SAFETY
As in previous years, the following practices were undertaken:
Comprehensive safety awareness at the mine and mill sites;
Comprehensive emergency preparedness plans and programmes at mine and mill sites;
Regular comprehensive health checks for all employees;
Expanded mining and safety training activities for all underground personnel;
Conducted 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; and
Regular safety meetings that emphasise workforce participation in ensuring safety and hazard minimisation.
The 12 month Lost Time Accident Frequency Rate to 30 June 2012 was 1.04, to 30 June 2013 was 0.10, to June 30,
2014 was 0.18 and to June 30, 2015 was 0.25, which is better than industry standards for manually intensive, narrow
vein, underground mines and demonstrates the maintenance of high safety standards during the year.
The Company hospital continued operating as a fully staffed and functional facility during the year with services available
for Company personnel and their families, and other local residents.
Page 40 of 121
REVIEW OF OPERATIONS
ENVIRONMENTAL MANAGEMENT AND MONITORING
The Company is committed to environmental protection and management and to complying with all applicable statutory
and regulatory environmental obligations.
The Company has commenced the process of ISO 14001 certification which should be completed in the second half of
CY 2016.
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 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 regular basis to monitor water quality in and around the Company's facilities and the samples
collected are analysed, with the results submitted to the relevant authorities.
In all quarterly meetings and inspections by the different Multi-Partite Monitoring Teams for the mine and for the mill, the
Company has been complimented on its environmental and social development programs.
Photo: Water sampling of local streams
Photo: Five hectare mangrove reforestation programme at Barobo.
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REVIEW OF OPERATIONS
The Company has also adopted the National Greening Programme and Adopt-a-Forest Programme of the Philippines
Government. For this fiscal year, Philsaga Mining Corporation and Mindanao Mineral Processing and Refining
Corporation have increased the reforestation programme to 254 hectares within the areas of the Company’s two host
communities. Work during the year involved primarily re-planting and weed control.
The Company owns five nurseries producing local tree species for reforestation projects as well as the rubber tree
seedlings necessary for the establishment of the rubber livelihood programmes 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 programme to inform and educate all
stakeholders, especially local residents, on the project’s mitigating measures;
-
rehabilitating roads with minimal land and ecological disturbance; and
- establishing a reforestation and carbon sink programme to mitigate greenhouse gas emissions of the project;
ensure that its mining and milling processing operations conform with the provisions of R.A. No, 6969 (Toxic
Substances and Hazardous and Nuclear Wastes Control Act of 1990), R.A. No. 9003 (Ecological Solid Waste
Management Act of 2000), R.A. No. 9275 (Philippine Clean Water Act of 2004), and R.A. No. 8749 (Philippine
Clean Air Act of 1999);
comply with the environmental management and protection requirements of the Philippine Mining Act of 1995 (RA.
No. 7942) and its Revised Implementing Rules and Regulations (D A, O No, 96-40, as amended), as well as the
pertinent provisions of the Memorandum of Agreement between the EMB and Mines and Geosciences Bureau
(“MGB”) executed on 16 April 1998, which include:
- submitting an Environmental Protection and Enhancement Programme with the Final Mine Rehabilitation and/or
Decommissioning Plan integrated thereto, to the MGB, for approval;
- setting up a Contingent Liability and Rehabilitation Fund and Environmental Trust Fund;
- maintaining the existing Mine Environmental Protection and Enhancement Office to competently handle the
environmental aspects of the project;
- establishing a Mine Rehabilitation Fund Committee and Multipartite Monitoring Team;
- submitting a Social Development and Management 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 Mines and Geosciences Bureau to ensure compliance. No material
failures or material non-compliance issues were identified by the inspections during the year.
During the year a filter press was installed to improve the quality of the water pumped out of the mine to the settling
ponds. The press removes as filter cake the silt resulting from settling in the settling ponds and thus producing clear
water which is neutralised before release.
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.
The Company has commenced an ‘adopt-a-creek” policy whereby two 2 kilometre sections of the Agsao River and
Bayugan 3 Creek have been monitored for water quality as well as being cleaned up through removal of rubbish.
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REVIEW OF OPERATIONS
ISO 14001 COMPLIANCE
On 30 April 2015, the Department of Environment and Natural Resources issued Administrative Order 2015-07
mandating that all mining contractors secure ISO Certification within one year of the effectivity of the order.
A qualified consultant has been appointed to assist the Company to secure its certification which should be completed
during the second half of CY2016.
CLIMATE CHANGE
It is a condition of the ECC for operation of the Co-O Mine that it establishes a reforestation and carbon sink programme
to mitigate greenhouse gas emissions of the project. The Company continues to comply with this condition, and all other
conditions imposed on it under the ECC.
The Company uses primarily grid hydro power at both the Co-O Mine and Mill as its primary power source ensuring
carbon dioxide emissions are minimised.
Acacia Magium
Chelocostus Speciosus Melastoma Spp
Caramus Spp Pandanus Spp Spathogiottis Picata
Photographs showing six local plant species
WORKFORCE
The Company is an equal opportunity employer that aims to provide a safe and healthy, hazard free work environment.
As at 30 June 2015 the Company employed 2,471 regular workforce and 2,774 contract workers (mining, engineering,
service provision, etc.).
The Company enhances employee skills and productivity through the attendance at training programmes and provision of
on-site training by consultants. Departmental organisational structures ensure that career advancement pathways are
available for conscientious and productive employees.
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REVIEW OF OPERATIONS
COMMUNITY PARTICIPATION, PROGRAMMES 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 8,800
students are enrolled at the schools supported by the Company.”
Scholarships
The Company continues to provide scholarship programmes, both from the Social Development and Management
Programme (SDMP) and Corporate Social Responsibility (CSR) which commenced in 2003, including:
Full education scholarships currently support over 41 students;
Half scholarships support to 4 students; and
Educational assistance to 31 students.
Company schools and Adopt-a-School programme
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” programme in which 22 schools
participated. Corporate sponsorship also assisted in achieving its aims.
The following were achieved:
Supported the wages and meals of all teachers and workers of Philsaga High School Foundation, The Company
also continued to fund the provision of school equipment, books and other necessities
Provided funds for school preparations prior to opening of classes, as well as school materials to the children;
Provided monthly honoraria to 48 teachers and support for training seminars for teachers to upgrade their teaching
skills, as well as provision of instructional materials;
In conjunction with various partner agencies, provided school supplies for students;
Provided daily return bus services for high school students from remote areas to attend the Philsaga High School;
and
Provided monthly honoraria to 20 day care workers of various communities serving 1,000 toddlers.
Vocational training
The Company regularly provides on-the-job training for student metallurgists, geologists, accountants other professions
and tradesmen (electricians, carpenters, masonary workers etc) at its operations.
LIVELIHOOD PROJECTS
Rubber tree plantations
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 the planted area
increased to approximately 401.5 hectares
using seedlings generated in the Company’s
own nurseries.
Photo: Established Rubber Tree Plantation located along side mill to mine access road
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REVIEW OF OPERATIONS
Rice production financing
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 programme is in its tenth cropping season and extends
assistance to approximately 100 beneficiaries covering approximately 100 hectares of rice farms.
The rice yield for each hectare financed is purchased by the Company at a price higher than prevailing market prices.
This rice yield is milled and 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 PROGRAMMES
The Company continued to provide assistance with a number of community-based projects.
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 (small villages) aims to provide a sustainable livelihood for the communities by the planting of
suitable fruit trees in a designated communal area. The programmes have the technical support of the Department of
Agriculture, and the Department of Trade and Industry conducts various financial seminars.
An area of 50 hectares located in the Rosario municipality was planted with rambutan seedlings during the year.
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. This includes various indigenous cultural communities.
The Company has an informal partnership with Caraga State University by means of supporting all its environmental and
bio-diversity studies of the flora and fauna found around the mill and mine sites.
Non-government organisation partnering
The Company continues to provide assistance to local communities and foundations, including
An orphanage housing 26 boys aged 6 to 17 years, which includes a programme for the boys to develop small
business skills; and
Care for the Elderly and PWD which caters 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 Programmes of the Union
The Company provides funds for the livelihood programmes of the Union (Philsaga Employees Labor Union-PTGWO) on
a case by case basis, in conjunction with the Department of Labour and Employment.
Support to the Flood Victims
Agusan del Sur is subject to monsoonal rainfall every year which can result in flooding. During these times the Company
is always prepared to provide relief goods and assistance teams to the host municipalities, and to other more distant
municipalities.
Support to the Peace and Order
The Company provides funds for transportation, provisions and building materials to the various law enforcement units to
assist in maintaining the peace and order situation in the Caraga Region.
Other assistance programmes
The Company provides assistance for a host of other one-off projects. In brief for the 2015 FY, the Company has
provided assistance for repair and upgrade of health and day centres, for the establishment of egg production and sorting
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REVIEW OF OPERATIONS
facilities, training in food processing, provision of hogs to farmers for breeding, construction of evacuation centres,
security fencing and other measures, recycling facilities, provision of travel allowances for health workers, funding for
road building and maintenance equipment, provision of materials for construction of community centres, provision of
wheel chairs, provision of medicines and infant monitoring equipment, provision of materials for school construction,
assistance with alleviating child mal-nourishment, provision of school buses, construction of rice milling and rice drying
facilities, installation of potable water and water storage projects, construction of a birthing clinic, amongst a number of
other smaller projects.
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.
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REVIEW 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, Saugon, Guinhalinan & Lingig Projects
The EO-79 will have no immediate impact on the Bananghilig, Saugon, Guinhalinan & Lingig Projects as the Company
can continue to explore, conduct feasibility studies and planning.
However, should any feasibility study be positive and the Company commits to developing one or more projects, timely
issuance of the relevant permits to commence construction maybe subject to new law on mining taxes and royalties
being proposed to 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. The Company has progressed through the
introductory first stage of the compliance requirements, and is undergoing the second stage involving auditing of the
Company’s operations.
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REVIEW OF OPERATIONS
JORC 2012 COMPLIANCE - CONSENTS OF COMPETENT
PERSONS
Medusa Mining Limited
Information in this report relating to Exploration Results and Co-O Mine’s Mineral Resources has been directed and
reviewed by Mr Gary Powell, and is based on information compiled by Philsaga Mining Corporation's Co-O mine-site
technical personnel. Mr Powell is a member of The Australian Institute of Geoscientists and the Australasian Institute of
Mining and Metallurgy. Mr Powell is Manager Geology and Resources, and is a full time employee of Medusa Mining Ltd,
and has sufficient experience which is relevant to the styles of mineralisation and type of deposits under consideration
and to the activities for 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.
Carras Mining Pty Ltd
The Information in this report relating to Ore Reserves is based on information compiled by Dr Spero Carras of Carras
Mining Pty Ltd. Dr Carras has also acted as Independent Auditor of the Mineral Resources, and in this capacity Carras
Mining Pty Ltd carried out parallel studies to validate the Mineral Resources estimated by Philsaga Mining Corporation's
Co-O mine-site technical personnel. Dr Carras is a Fellow of the Australasian Institute of Mining & Metallurgy and has
more than 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.
Cube Consulting Pty Ltd
The information in this report that relates to the Bananghilig and Saugon Mineral Resources is based on, and fairly
represents information and supporting documentation compiled by Mr Mark Zammit of Cube Consulting Pty Ltd. Mr
Zammit also conducted an independent high level review of the FY2015 Co-O mineral resource estimation methodology.
Mr Zammit is a member of the Australian Institute of Geoscientists 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.
FORWARD LOOKING STATEMENTS
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.
Page 48 of 121
CORPORATE GOVERNANCE
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 e nded 30 June 2015 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 Chief Executive Officer or Managing Director (as applicable) 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.
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CORPORATE GOVERNANCE
Composition of the Board
The Board comprises of three Non-Executive Directors and one Executive Director (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, is included in the Directors’ Report on pages [58] to
[60].
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 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 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 four,
comprised of three Non-Executive Directors and one Executive Director (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 Andrew Teo, Robert Weinberg, and Ciceron
Angeles 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.
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CORPORATE GOVERNANCE
The Board does not consider the following Directors to be independent:
Peter Hepburn Brown because he was 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.
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 and he resigned on 19 August 2014. Currently the Company does not have a
Managing Director.
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
ASX Principles, 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 [62] to [73].
Details of Directors' attendance at Board meetings are set out in the Directors' Report on page [60].
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 Principles, 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.
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CORPORATE GOVERNANCE
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) Andrew
Teo and Raul Villanueva. 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
[60].
Remuneration Committee
ASX Principles, 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), Andrew Teo and Ciceron Angeles. Peter Hepburn-Brown was a
member of the Committee until his resignation on 19 August 2014. 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
[60].
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 any
equity incentives that the Company may offer from time to time. This is further detailed in the Directors' Report
on page [69]. 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.
Page 52 of 121
CORPORATE GOVERNANCE
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 Ciceron Angeles (as
Chairperson of the Audit Committee), Andrew Teo, and Robert Weinberg. Gary Powell retired as a Committee
member on 7 December November 2014. 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 [58] to [60].
Two meetings of the Audit Committee were held during the reporting period and details of the members’
attendance at these meetings are included in the Directors’ Report on page [60].
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;
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 Raul Villanueva (as Chairperson of the Safety,
Health and Environmental Committee and appointed on 23 February 2015), Andrew Teo and Robert Weinberg.
Geoffrey Davis and Robert Gregory were appointed as Committee members on 23 February 2015 and 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 [60].
Page 53 of 121
CORPORATE GOVERNANCE
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.
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, filling 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 the ASX Principles.
Page 54 of 121
CORPORATE GOVERNANCE
While the Company considers diversity is important, the priority for the Company when recruiting is ensuring an
appropriate mix of qualifications, experience and expertise regardless of age, , 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
4
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.
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 Chief Executive Officer or
Managing Director (as applicable) 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 Chief executive Officer or Managing Director (as applicable) is responsible for reporting directly to the Board
on all matters associated with risk management and in fulfilling his duties, the Chief Executive Officer or
Managing Director (as applicable) 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);
Page 55 of 121
CORPORATE GOVERNANCE
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.
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
2015, 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.
Due to the resignation of the Managing Director Mr Peter Hepburn-Brown on 19 August 2014, the Chief
Executive Officer and the Chief Financial Officer provided the signed declaration.
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.
Page 56 of 121
CORPORATE GOVERNANCE
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
Page 57 of 121
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
Mr Ciceron Angeles
Mr Gary Raymond Powell
Executive Directors:
since 01 July 2006
since 28 June 2011
since 24 January 2013 (resigned 7 December 2014)
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.
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 over 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, and
Director of the Investment Banking & Equities division at Deutsche Bank in London, Head of the Global Mining
Research team at SG Warburg Securities. Dr Weinberg 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 SolGold Plc (appointed 22 November 2005), a
company listed on the Alternative Investment Market (AIM), London. 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 and
Kasbah Resources Ltd (from 15 November 2006 to 10 June 2015), an ASX listed entity.
Dr Weinberg is Chairman of the Remuneration Committee and is also a member of the Safety, Health &
Environment Committee and Audit Committee.
Page 58 of 121
DIRECTOR’S REPORT
Mr Ciceron. A. Angeles
B.Sc (Geology), MAppSc (Mineral Exploration), FAusIMM (CP), FSEG.
Independent Non-Executive Director
Philippines based, Mr Angeles is a geologist with over 35 years of experience in gold and base metal exploration
in Asia, mainly Philippines, Indonesia, China, Malaysia and Iran. His specialisations include epithermal gold-
silver, porphyry copper-gold and Carlin styles of mineralisation.
Mr Angeles obtained his MAppSc in Mineral Exploration from the University of New South Wales, Australia in
1985 and is a Fellow and accredited Chartered Professional (CP) in the discipline of geology of the Australasian
Institute of Mining and Metallurgy (AusIMM) and a Fellow of the Society of Economic Geologists. He was also the
Asia Exploration Manager for Newcrest Mining during which time Newcrest brought the Gosowong Gold Mine into
production.
Mr Angeles was the Technical Director of GGG Resources plc, a company listed on the ASX in Australia and AIM
in London, from 3 September 2009 until his resignation on 15 March 2012.
Mr Angeles is Chairman of the Nomination Committee and Audit Committee and a member of the Remuneration
Committee.
Mr Gary Raymond Powell
B.App.Sc. (Geology)
Member, Australian Institute of Geoscientists
Member, Australasian Institute of Mining & Metallurgy
Independent Non-Executive Director
Resigned 8 December 2014
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 32 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.
Mr Powell resigned from the Board and the Audit Committee on 8 December 2014.
Mr Peter Gordon Hepburn-Brown
BAppSc-Mining Engineering (1980), Grad Dip Human Resources (1996), Member of Inst of Engineers, Australia
Managing Director
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 resigned as Managing Director and as a member of all Committees on 19 August 2014.
Page 59 of 121
DIRECTOR’S REPORT
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.
Mr Villanueva was appointed as Chairman of The Safety, Health and Environment Committee on 23 February
2015 and is a member of the Nomination Committee.
3. COMPANY SECRETARY
Mr Peter Alphonso
B.Com, UWA (CPA)
Mr Peter Alphonso was appointed Company Secretary on 11 December 2007.
Mr Alphonso’s 37 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.
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:
Board of Directors
Meetings
Audit
Committee
Remuneration
Committee
SHE
Committee
Nomination
Committee
No. of
meetings
(1)
No.
attended
No. of
meetings
No.
attended
(1)
No. of
meetings
(1)
No.
attended
No. of
meetings
(1)
No.
attended
No. of
meetings
(1)
Name of Director
Peter Hepburn-Brown
Robert Weinberg
Andrew Teo
Ciceron Angeles
Raul Villanueva
-
4
4
4
4
-
3
4
4
4
-
2
2
1
-
-
1
2
1
-
-
1
1
-
-
-
1
1
-
-
2
Gary Powell
(1) Number of meetings held during the time the Director held office during the year
1
2
1
-
-
-
3
3
-
2
-
-
3
3
-
2
-
-
-
1
1
-
-
No.
attended
-
-
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 loss for the financial year attributable to members of Medusa Mining Limited after
provision of income tax was US$218.1 million (and includes impairment losses of US$259.6) [2014:
Consolidated profit of US$30.9 million].
Key financial results:
Key Results
Revenues
EBITDA
NPAT
EPS (basic)
30 June 2015
30 June 2014
Variance
US$123.2M
US$84.2M
US$39.0M
(%)
46%
(US$186.8M)
US$48.3M
(US$235.1M)
(487%)
(US$218.1M)
US$30.9M
(US$249.0M)
(806%)
(US$1.050)
US$0.154
(US$1.204)
(782%)
Dividend per share
Nil
Nil
Nil
N/A
Page 60 of 121
DIRECTOR’S REPORT
Medusa recorded a net loss after tax (“NPAT”) of (US$218.1 million) and earnings before interest, tax
depreciation and amortisation (“EBITDA”) of (US$186.8 million) for the full year to 30 June 2015, compared to
US$30.9 million and US$48.3 million respectively in the previous year.
The Company recorded Revenues of US$123.0 million compared to US$84.2 million for the previous year.
Medusa is an un-hedged gold producer and received an average price of US$1,220 per ounce from the sale of
97,200 ounces of gold for the year (previous year: 65,943 ounces at US$1,299 per ounce).
As at year end, the Company had total cash and cash equivalent in gold on metal account of US$14.60 million
(2014: US$13.68 million).
During the year:
The Co-O Mine produced 98,359 ounces of gold for the year, at an average recovered grade of 5.61 g/t
gold (2014: 59,904 ounces at average recovered grade of 4.76 g/t gold)
The average cash cost for the year of US$385 per ounce was marginally lower than the previous year’s
average cash cost of US$418 per ounce.
Depreciation of fixed assets and amortisation of capitalised mine development and mine exploration
was US$31.7 million (2014: US$17.5 million);
US$11.3 million was expended on exploration activities (2014:US$15.8 million);
Capitalised mine development costs totalled US$37.7 million for the year (2014: US$36.3 million);
US$11.2 million was expended on capital works associated with the new mill construction and
infrastructure, mine expansion and sustaining capital at the mine and mill (201 4: US$23.6 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
Directors’ 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:
On 19 August 2014 Mr Peter Hepburn-Brown resigned as Managing Director and as a member of all
Committees
On 1 September 2014 Mr Geoffrey Davis assumed the role of Chief Executive Officer for an interim
period following the resignation of Peter Hepburn-Brown as Managing Director
The Company recognised an Impairment charge of US$259.6 million (refer note 13)
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
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.
12. DIRECTORS’ INTEREST
The relevant interest of each Director in the share capital of the Co mpany at the date of this report is as
follows:
Name of Director
Andrew Teo
Robert Weinberg
Ciceron Angeles
Raul Villanueva
No. of fully paid
ordinary shares
No. of options over
ordinary shares
No. of performance
rights over ordinary
shares
95,000
82,675
-
50,000
-
-
-
500,000
-
-
-
-
Page 61 of 121
DIRECTOR’S REPORT
13. REMUNERATION REPORT (AUDITED)
(a) Details of Key Management Personnel
The Directors of Medusa Mining Ltd (‘the Group’) present the Remuneration Report for Key
Management Personnel, prepared in accordance with the Corporations Act 2001 and the
Corporations Regulations 2001.
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.
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 (Chairman)
Robert Weinberg
Ciceron Angeles
Gary Powell ( resigned 7 December 2014)
Executive Directors:
Peter Hepburn-Brown, Managing Director (resigned 19 August 2014)
Raul Villanueva
Executive Officers
Geoffrey Davis - Interim CEO appointed 1 September 2014
Robert Gregory - Chief Operating Officer appointed 19 November 2014
Peter Alphonso - Company Secretary
Page 62 of 121
DIRECTOR’S REPORT
(b) Key Management Personnel 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 2015 and the previous financial year.
Name
Year
Salary/ fees
Directors
’ fees
Non-
monetary
Bonus (3)
Super-
annuation
Other(6)
Incentive
plans
LSL(7)
Shares/
units
Options/
rights (8)
Short term benefits
Post-employment
benefits
Long-term benefits
Equity-settled
share-based payments
Termination
benefits
Cash-
settled
share-
based
payments
TOTAL
Proportion of
remuneration
performance
related
Value of
options as
proportion of
remuneration
Directors
Non-Executive
Andrew Teo
Robert Weinberg
Ciceron Angeles
Gary Powell (1)
Executive
Peter Hepburn-
Brown (5),
Raul Conde
Villanueva (2)
Executives
Geoffrey Davis (4)
Peter Alphonso
2015
2014
2015
2014
2015
2014
2015
2014
-
-
-
-
80,850
81,982
60,287
68,089
52,624
60,287
42,921
68,089
168,548
269,607
27,836
68,089
2015
80,142
2014
2015
696,147
438,663
2014
373,910
2015
2014
2015
2014
541,287
224,587
315,727
331,758
-
-
-
-
-
35,212
-
-
-
-
Robert Gregory (9)
2015
336,042
2014
-
Total
2015
1,933,033
229,260
2014
1,938,930
321,461
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,008
-
1,725
-
-
-
-
-
-
-
-
-
31,955
87,360
-
-
-
-
28,983
50,201
-
-
28,158
27,611
22,827
97,747
19,961
21,963
-
-
93,835
99,775
54,782
185,107
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,524
74,371
-
-
6,524
74,371
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
204,000
-
-
-
54,120
-
164,000
-
422,120
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,850
81,982
60,287
68,089
112,911
111,010
211,392
337,696
498,285
580,152
-
-
-
-
-
-
-
-
-
-
815,462
642,663
373,910
620,471
259,799
432,140
526,703
541,966
-
2,784,547
2,574,651
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31.7%
-
-
-
12.5%
-
30.2%
-
15.2%
-
(1) Mr Gary Powell appointed as a Director on 24 January 2013 and resigned on 7 December 2014.
(2) Mr Raul Villanueva appointed 24 January 2013
(3) Bonuses are generally paid in October and relate to the previo us year’s financial results. No bonuses will be paid to any Senior Executives during 2015/16 relating to the financial year e nded 30 June 2015.
(4) Mr Geoffrey Davis retired as a Director on 22 November 2013 and appointed as interim CEO on 19 August 2014.
(5) Mr Peter Hepburn-Brown resigned 19 August 2014
(6) Comprises Annual Leave accrued during the year but not paid
(7) Comprises Long Service Leave accrued during the year but not paid
(8) Comprises value of Options granted but not yet vested
(9) Robert Gregory was appointed Chief Operating Officer on 19 November 2014
Page 63 of 121
DIRECTOR’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 2014/2015
Name
Directors
Andrew Teo
Peter Hepburn-Brown(3)
Robert Weinberg
Ciceron Angeles
Raul Villanueva
Gary Powell(4)
Executives
Geoffrey Davis
Robert Gregory (5)
Peter Alphonso
Balance
01/07/14
Options/rights
granted as
remuneration
Options/
rights
exercised
Options/
Rights not
exercised
and lapsed
Balance
held
30/06/15
Vested &
exercisable
30/06/15 (1)
Total not
exercisable
30/06/15 (2)
-
-
-
-
-
-
-
-
300,000
500,000
-
-
-
-
-
-
500,000
165,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(300,000)
500,000
-
-
-
-
-
-
500,000
165,000
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
500,000
165,000
(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 Peter Hepburn-Brown resigned 19 August 2014
(4) Mr Gary Powell resigned 7 December 2014
(5) Mr Robert Gregory was appointed as Chief Operating Officer on 19 November 2014
Financial year 2013/2014
Name
Directors
Geoffrey Davis (3)
Peter Hepburn-Brown
Robert Weinberg
Andrew Teo
Ciceron Angeles
Raul Villanueva
Gary Powell
Executives
Peter Alphonso
Balance
01/07/13
Options/rights
granted as
remuneration
Options/
rights
exercised
Options/
Rights not
exercised
and lapsed
Balance
held
30/06/14
Vested &
exercisable
30/06/14 (1)
Total not
exercisable
30/06/14 (2)
-
-
-
-
-
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
Page 64 of 121
DIRECTOR’S REPORT
(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 are as follows:
Financial year 2014/15
Name
Non-Executive Directors
Andrew Teo
Robert Weinberg
Ciceron Angeles
Gary Powell (1)
Executive Directors
Peter Hepburn-Brown (2)
Raul Villanueva
Executives
Geoffrey Davis (3)
Robert Gregory(4)
Peter Alphonso
Balance
30/06/14
Shares held
at
appointment
Bonus
Issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/15
75,000
62,675
-
-
22,000
-
-
-
127,500
-
-
-
-
-
-
4,102,750
-
-
-
-
-
-
-
-
-
-
-
20,000
20,000
-
-
-
-
23,950
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,000
82,675
-
-
22,000
-
867,941
3,234,809
-
-
23,950
127,500
(1) Mr Gary Powell resigned 7 December 2014
(2) Mr Peter Hepburn-Brown resigned 19 August 2014
(3) Mr Geoffrey Davis was appointed as Interim CEO on 1 September 2014
(4) Mr Robert Gregory was appointed as Chief Operating Officer on 19 November 2014
Financial year 2013/14
Name
Non-Executive Directors
Andrew Teo
Geoffrey Davis (1)
Robert Weinberg
Ciceron Angeles
Gary Powell
Executive Directors
Peter Hepburn-Brown
Raul Villanueva
Executives
Peter Alphonso
Balance
30/06/13
Shares held
at
appointment
Bonus
Issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/14
75,000
4,102,750
62,675
-
-
22,000
-
127,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
4,102,750
62,675
-
-
22,000
-
127,500
(1) Mr Geoffrey Davis retired 22 November 2013
(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.
Page 65 of 121
DIRECTOR’S REPORT
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 Directors’ 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
Executive Remuneration:
Objective
the
level and mix of remuneration commensurate with
The Company’s aim is to ensure Executives perform at a high level by incentivising them
their position and
with
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.
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.
Page 66 of 121
DIRECTOR’S REPORT
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:
o 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;
o
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 2015.
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(h) below and Company performance in setting the performance criteria
applicable to its LTI based remuneration.
At a General Meeting held on 28 January 2015 shareholders approved the issue of
options to the following key management personnel.
Page 67 of 121
DIRECTOR’S REPORT
RAUL VILLANUEVA - Executive Director
Number of
Options
500,000
Vesting dates
Expiry date
150,000 Options on the 1st anniversary
of the Issue Date – 9 February 2016
On the 4th anniversary of
the Issue Date –
9 February 2019
Exercise
price
$1.00
150,000 Options on the 2nd anniversary
of the Issue Date – 9 February 2017
200,000 Options on the 3rd anniversary
of the Issue Date – 9 February 2018
ROBERT GREGORY – Chief Operating Officer
Number of
Options
500,000
Vesting dates
Expiry date
150,000 Options on the 1st anniversary
of the Issue Date – 16 December 2015
150,000 Options on the 2nd anniversary
of the Issue Date – 16 December 2016
200,000 Options on the 3rd anniversary
of the Issue Date – 16 December 2017
On the 4th anniversary of
the Issue Date –
16 December 2018
PETER ALPHONSO – Company Secretary /Chief Financial Officer
Number of
Options
165,000
Vesting dates
Expiry date
49,500 Options on the 1st anniversary
of the Issue Date – 16 December 2015
49,500 Options on the 2nd anniversary
of the Issue Date – 16 December 2016
66,000 Options on the 3rd anniversary
of the Issue Date – 16 December 2017
On the 4th anniversary of
the Issue Date – 16
December 2018
Exercise
price
$1.00
Exercise
price
$1.00
(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
2011
2012
2013
2014
2015
Basic earnings per share (EPS)
(1)
US$0.587 US$0.261
US$0.266 US$0.154
(US$1.050)
Share price at 30 June
A$6.59
A$4.83
A$1.55
A$1.85
A$0.84
Share price increase
Total shareholder returns (TSR)
(2)
(3)
A$2.69
(A$1.76)
(A$3.28)
A$0.30
(A$1.01)
69.0%
(26.7%)
(67.5%)
19.4%
(54.6%)
(1)
(2)
(3)
Basic EPS is calculated as net profit after tax divided by the weighted average number of ordinary shares;
Share price movement during the financial year;
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 and 2014 financial
years. (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).
Page 68 of 121
DIRECTOR’S REPORT
(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).
Page 69 of 121
DIRECTOR’S REPORT
(j)
Employment contracts
Executive Directors
Peter Hepburn-Brown (Managing Director) (Resigned 19 August 2014)
Contract
description:
Term:
Services:
Remuneration:
Employment contract between
(“Employee”).
the Company and Peter Hepburn-Brown
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.
the
In determining eligibility,
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.
the Board will consider without
limitation,
Variable remuneration - Long term incentive:
issue of 250,000
On 10 November 2011 shareholders approved
Performance Rights subject
to
performance criteria not being met the Performance Rights lapsed on 30 June
2013.
terms and conditions. Due
to specific
the
Termination:
Termination by the Company
During the Initial Term (other than as set out below in relation to a “Material
Diminution” or default by the Employee), the Company may terminate the
agreement by notice or payment in lieu of notice of a notice period equal to: (a)
the number of months remaining in the Initial Term; or (b) 12 months, if the
number of months remaining in the Initial Term is less than 12.
in certain
The Company may
circumstances, including if the Employee is in default of its obligations and does
not remedy that default in addition to other standard default situations.
the agreement
immediately
terminate
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:
The Employee’s contract also contains provisions for the protection of the
Company’s interest in such areas as confidentiality, conflict of interests and
business dealings.
Page 70 of 121
DIRECTOR’S REPORT
13.
(j) Employment contracts (continued)
Peter Alphonso (Company Secretary/Chief Financial Officer)
Contract
description:
Term:
Role:
Remuneration:
Employment contract between the Company and Peter Alphonso (“Employee”).
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.
Fixed remuneration:
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.
the
In determining eligibility,
performance of the Company, the Employee’s performance and prevailing
market conditions.
the Board will consider without
limitation,
Termination:
Termination by the Company
During the Initial Term (other than as set out below in relation to a “Material
Diminution” or default by the Employee), the Company may terminate the
agreement by notice or payment in lieu of notice of a notice period equal to: (a)
the number of months remaining in the Initial Term; or (b) 12 months, if the
number of months remaining in the Initial Term is less than 12.
in certain
The Company may
circumstances, including if the Employee is in default of its obligations and does
not remedy that default in addition to other standard default situations.
the agreement
immediately
terminate
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 Company
Secretary/Chief Financial Officer 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:
The Employee’s contract also contains provisions for the protection of the
Company’s interest in such areas as confidentiality, conflict of interests and
business dealings.
Page 71 of 121
DIRECTOR’S REPORT
13.
(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 Angeles,
Raul Villanueva and Gary Powell.
Type of transaction:
Director Protection Deed (“Deed”)
Transaction details:
The Deed entered into by the Company with each of the Directors of the Company,
indemnifies the Directors to the extent permitted by law, against any liability, which he
may incur whilst carrying out his duties as a Director of the Company and against any
costs and expenses incurred in defending legal proceedings brought against him as a
Director.
The Deed requires the Company to maintain in force Directors’ and Officers’ Liability
Insurance, with an agreed cover level, for the duration of the Directors’ term of office and
a period of 7 years thereafter.
The Deed also provides for the Directors to have access to the Company’s documents
(including Board papers) for a period of 7 years after he ceases to be a Director, subject
to certain confidentiality and other requirements being observed.
Related party:
Cedardale Holdings Pty Ltd
Nature of relationship:
Director related entity (Geoffrey Davis – resigned 22 November 2013. Appointed as Interim
CEO on 1 September 2014).
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$6,273; (2014: A$6,091) per month.
Cedardale Holdings Pty Ltd charged the Company A$75,281; (2014: A$30,453) for the
lease of office premises. No amounts were outstanding at year end (2014: nil).
Related party:
Harvest Services Aust Pty Ltd
Nature of relationship:
Director related entity (Geoffrey Davis) – Resigned 22 November 2013. Appointed as
interim CEO 1 September 2014.
Type of transaction:
Consultancy Services Agreement
Transaction details:
Under the terms of this Consultancy Services Agreement, Harvest Services
Aust Pty Ltd (“Harvest Services”), a Company associated with Geoffrey
Davis, agrees to provide the services of Geoffrey Davis to the Company,
commencing 1 July 2011.
Harvest is entitled to receive a consultancy fee of A$3,000 per day (excluding GST) and
the reimbursement of out of pocket expenses in respect of the provision of services as
and when reasonably required by the Company. The Company does not guarantee to
make a minimum number of requests for the provision of services.
During the year, Harvest Services charged the Company fees of Nil (2014: A$217,990).
No amount remains outstanding. (2014: nil).
Related party:
Boonjarding Ltd
Nature of relationship:
Director related entity (Gary Powell) – Resigned 7 December 2014.
Type of transaction:
Mining & Mineral exploration consultancy services
Transaction details:
During the financial year consultancy fees of Nil (2014:US$269,607) was charged to
Philsaga.
Page 72 of 121
DIRECTOR’S REPORT
(l) Un-issued shares under options/rights
At the date of this report, details of un-issued ordinary shares of the Company under option are as
follows:
Expiry date
Exercise price
No. of options/rights
No. of shares issued if
options/rights exercised
Employee options
16 December 2018
9 February 2019
Total
A$1.00
A$1.00
3,200,000
1,000,000
4,200,000
3,200,000
1,000,000
4,200,000
(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 Teo,
Angeles, Dr Weinberg and Villanueva and the following former Directors Messrs Davis, Powell, Hepburn-
Brown, Tomlinson, Jones, Daniel and 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.
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.
Page 73 of 121
DIRECTOR’S REPORT
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 2015.
Taxation services
Total non-audit services
2015
(US$)
15,000
15,000
2014
(US$)
5,000
5,000
19. AUDITOR’S INDEPENDENCE DECLARATION
The Lead Auditor’s Independence Declaration for the year ended 30 June 2015 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 27th day of August 2015
Page 74 of 121
AUDITORS INDEPENDENCE DECLARATION
Level 1
10 Kings Park Road
West Perth WA 600
Correspondence to: PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Medusa Mining Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as
lead auditor for the audit of Medusa Mining Limited for the year ended 30 June 2015, I
declare that, to the best of my knowledge and belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to
the audit.
GRANT THORNTON AUDIT PTY
LTD Chartered Accountants
J W Vibert
Registered Company Auditor
Perth, 27 August 2015
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms,
as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and
each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not
obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited
ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a
current scheme applies.
Page 75 of 121
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
for the year ended 30 June 2015
Consolidated
Note
2015
US$000
2014
US$000
Revenue
Cost of sales
Exploration & evaluation expenses
Administration expenses
Impairment expense
Other expenses
(Loss) / Profit before income tax expense
123,204
84,196
(71,976)
(42,806)
2
3
(267)
(8,428)
3,13
(259,595)
(1,732)
(218,794)
(107)
(8,265)
-
(2,358)
30,660
211
Income tax benefit
5
685
(Loss) / Profit attributable to members of the Group
(218,109)
30,871
Other comprehensive income / (loss), net of income tax:
Exchange differences on translation of foreign operations and
other comprehensive income /(loss) for the year
Total comprehensive (loss) / income for the year
Overall operations:
(2,493)
(220,602)
(4,837)
26,034
Basic (loss) / earnings per share (US$ per share)
Diluted (loss) / earnings per share (US$ per share)
6
6
(1.050)
(1.035)
0.154
0.153
The accompanying notes form part of these financial statements
Page 76 of 121
STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
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
Consolidated
Note
2015
US$000
2014
US$000
23
7
8
9
10
11
12
16
14
15
14
16
15
18
19
22
9,987
22,585
19,837
615
53,024
16,311
45,022
632
98,075
3,755
163,795
216,819
16,282
3,822
504
20,608
2,151
290
1,762
4,203
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
24,811
33,164
192,008
412,306
102,902
6,613
82,493
192,008
102,902
13,440
295,964
412,306
The accompanying notes form part of these financial statements.
Page 77 of 121
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
CONSOLIDATED
Balance at 30 June 2013
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
issued during the period
Share options issued during the period in
accordance with AASB 2 - share based payment
Sub-total
Dividends paid
Balance at 30 June 2014
Comprehensive Income
Net profit /(loss)after tax
Share
Capital
Ordinary
US$000
Retained
Profits
US$000
Note
Option and
Performance
Rights
Reserve
US$000
Foreign
Currency
Translation
Reserve
US$000
Total
US$000
73,070
265,093
4,448
13,639
356,250
-
-
-
30,871
-
30,871
18
20
29,832
-
-
-
-
-
-
-
190
-
30,871
(4,837)
(4,837)
(4,837)
26,034
-
-
29,832
190
102,902
295,964
4,638
8,802
412,306
-
-
-
-
-
102,902
295,964
4,638
8,802
412,306
(218,109)
-
(218,109)
-
-
-
-
(218,109)
(2,493)
(2,493)
(2,493)
(220,602)
Other comprehensive income /(loss)
Total comprehensive income for the year
Transactions with owners, in their capacity as
owners, and other transfers
Transfer from Option Reserve
Share options issued during the period in
accordance with AASB 2 - share based payment
20
-
-
-
-
-
Sub-total
Dividends paid
Balance at 30 June 2015
102,902
82,493
-
-
102,902
82,493
The accompanying notes form part of these financial statements.
4,638
(4,638)
-
304
304
-
304
-
-
-
304
6,309
192,008
-
-
6,309
192,008
Page 78 of 121
STATEMENT OF CASH FLOWS
for the year ended 30 June 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers & employees
Interest received
Consolidated
Note
2015
US$000
2014
US$000
122,570
86,206
(58,071)
(36,637)
73
153
Net cash provided by operating activities
23
64,572
49,722
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 increase in cash and cash equivalents held
Cash & cash equivalents at the beginning of the financial year
Exchange rate adjustment
(13,235)
(20,224)
(534)
(4,461)
(96)
(8,196)
(42,070)
(45,318)
(60,300)
(73,834)
-
-
(3,360)
(3,360)
912
13,063
(3,988)
29,832
-
7,081
36,913
12,801
4,698
(4,436)
Cash & cash equivalents at the end of the financial year
23
9,987
13,063
The accompanying notes form part of these financial statements.
Page 79 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Contents of notes to the financial statements
Page number
1.
2.
3.
4.
5.
6.
7.
8.
9.
Statement of significant accounting policies
Revenue
Expenses
Dividends
Taxation
Earnings per share
Current receivables
Inventories
Other current assets
10. Non-Current Receivables
11.
Property, plant and equipment
12.
Exploration, evaluation and development expenditure
13.
Impairment
14.
Borrowings
15.
Employee benefits
16. Deferred tax
17.
Auditors’ remuneration
18.
Issued capital
19. Reserves
20.
Share based payments
21.
Investments in subsidiaries
22. Retained profits
23. Notes to the statement of cash flows
24.
Financial risk management
25. Commitments
26.
Events subsequent to reporting date
27.
Segment information
28.
Parent company information
29. New standards and interpretations not yet adopted
30.
Franking account
31. Company details
81
92
93
92
93
93
94
94
94
94
94
95
96
98
99
100
100
101
102
102
103
103
104
105
108
109
109
111
112
114
114
Page 80 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
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 2015.
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 2015. 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 2015 is presented in note 21.
(b)
Comparative figures
Where required by Accounting Standards, comparative figures have been adjusted to conform to 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 2014.
New and revised standards that are effective for these financial statements
A number of new or amended standards became applicable for the current reporting period, however, the
Group did not have to change its accounting policies or make retrospective adjustments as a result of
adopting these standards. Information on these new standards which are relevant to the Group is
presented below.
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.
Page 81 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2014 and has been
adopted in this financial report. The adoption of these amendments has not had a material impact on the
Group as the amendments merely clarify the existing requirements in AASB 132.
AASB 2013-3 Amendments to AASB 136 – 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 and is applicable to
annual reporting periods beginning on or after 1 January 2014. The adoption of these amendments in this
financial report has not had a material impact on the Group as 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 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)
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 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.
Part A of AASB 2014-1 is applicable to annual reporting periods beginning on or after 1 July 2014. The
adoption of these amendments has not had a material impact on the Group as they are largely of the
nature of clarification of existing requirements.
Note 1 (b) Impact of standards issued but not yet applied by the Group
New and revised accounting standards and amendments that are currently issued for future reporting
periods that are relevant to the Group include:
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.
The effective date is for annual reporting periods beginning on or after 1 January 2018.
The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the
entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions
and balances recognised in the financial statements when it is first adopted for the year ending 30 June
2019.
AASB 14 Regulatory Deferral Accounts
AASB 14 permits first-time adopters of Australian Accounting Standards who conduct rate-regulated
activities to continue to account for amounts related to rate regulation in accordance with their previous
GAAP. Accordingly, an entity that applies AASB 14 may continue to apply its previous GAAP accounting
policies for the recognition, measurement, impairment and derecognition of its regulatory deferral account
balances. This exemption is not available to entities who already apply Australian Accounting Standards.
The effective date is for annual reporting periods beginning on or after 1 January 2016.
When AASB 14 becomes effective for the first time for the year ending 30 June 2017, it will not have any
impact on the entity.
Page 82 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118: Revenue, AASB 111 Construction Contracts and some revenue-related
Interpretations. In summary, AASB 15:
establishes a new revenue recognition model;
changes the basis for deciding whether revenue is to be recognised over time at a point in time;
provides a new and more detailed guidance on specific topics (eg multiple element arrangements,
variable pricing, rights of return and warranties); and
expands and improves disclosures about revenue.
The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the
entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions
and balances recognised in the financial statements when it is first adopted for the year ending 30 June
2018.
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of
Interests in Joint Operations
This amendment impacts on the use of AASB 11 when acquiring an interest in a joint operation.
The effective date is for 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.
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable
Methods of Depreciation and Amortisation
The amendments to AASB 116 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.
The effective date is for 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.
AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate
Financial Statements
The amendments introduce the equity method of accounting as one of the options to account for an entity’s
investments in subsidiaries, joint ventures and associates in the entity’s separate financial statements.
The effective date is for 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 financial statements.
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
The amendments address a current inconsistency between AASB 10 Consolidated Financial Statements
and AASB 128 Investments in Associates and Joint Ventures (2011). The amendments clarify that, on a
sale or contribution of assets to a joint venture or associate or on a loss of control when joint control or
significant influence is retained in a transaction involving an associate or a joint venture, any gain or loss
recognised will depend on whether the assets or subsidiary constitute a business, as defined in AASB 3
Business Combinations. Full gain or loss is recognised when the assets or subsidiary constitute a
business, whereas gain or loss attributable to other investors’ interests is recognised when the assets or
subsidiary do not constitute a business.
The effective date is for 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 financial statements.
Page 83 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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
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.
Page 84 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 profit or loss during the financial period in which they are incurred.
Depreciation
Plant and equipment (excluding the Co-O mine and milling equipment) is depreciated applying the straight
line method over their estimated useful lives, commencing from the time the asset is held ready for use.
Co-O mine and milling equipment ‘s useful life is estimated to approximate the expected life of the mine, the
depreciation rate is based on a charge proportional to the depletion of estimated recoverable gold ounces
contained in indicated and inferred resources.
Depreciation rates and methods are reviewed annually for appropriateness. When changes are made,
adjustments are reflected prospectively in current and future periods only.
The depreciation rates used for each class of depreciable assets are:
Class of fixed asset
Depreciation method
Depreciation rate (%)
Plant and equipment (excluding Co-O mine & milling equipment)
Office furniture and fittings
Straight line
Straight line
20% to 33%
7.5% to 20%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in profit or loss.
(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 profit or loss.
Impairment testing is performed annually for intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
(h) Operating leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor,
are charged as straight line over the length of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis
over the life of the lease term.
Page 85 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 is 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 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.
Page 86 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 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 relevant taxing authority. 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 taxing authorities is included as a current asset or liability in the Statement of
Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which are recoverable from, or
payable to, the taxing authorities 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.
Page 87 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 Group’s main functional currencies are the Australian dollar and
Philippines Peso, 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.
(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.
Page 88 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 change to the carrying
amount of the investment, including impairment losses, is recognised in profit or loss.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables.
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.
Page 89 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 13.
Key estimates - Recoverability of long lived assets
Certain assumptions are required to be made in order to assess the recoverability of capitalised development
expenditure. Key assumptions include the future price of gold, future cash flows, an estimated discount rate
and estimates of ore reserves. In addition, cash flows are projected over the life of mine, which is based on
proved and probable ore reserves. Estimates of ore reserves in themselves are dependent on various
assumptions, in addition to those described above, including cut-off grades. Changes in these estimates
could materially impact on ore reserves, and could therefore affect estimates of future cash flows used in the
assessment of recoverable amount.
Page 90 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 June 2012 code (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 (refer to note 13).
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 profit or
loss.
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 impairment change is included in profit or loss.
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 20).
Key estimates - VAT
The company has net VAT of $19m that comprises tax credit certificates (TCC) and VAT claimable for cash.
The current asset portion of VAT $3m 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 $16m
represents the estimated amount utilised in future periods against tax liabilities of $16m.
(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
Page 91 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
2.
REVENUE
Operating activities:
Gold and silver sales
Non-operating activities:
Interest revenue
Foreign exchange gain
Other
Total revenue
3.
EXPENSES
Profit /(loss) 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 plans
Defined Benefit plans
Exploration expenditure written off
Foreign exchange gain
Impairment losses:
- impairment expense
- assets written off
Operating lease rental:
- minimum lease payments
4.
DIVIDENDS
No Final dividend was declared (2014: No Final
dividend was declared)
No Interim or final dividend was declared or paid during
the current or previous financial years.
Consolidated
2015
Note
US$000
2014
US$000
123,093
83,882
79
-
32
160
72
82
123,204
84,196
12,449
19,240
31,689
9,062
8,479
17,541
8,332
5,954
123
291
267
224
13
259,595
819
260,414
37
-
-
90
480
107
-
-
552
552
102
-
-
Page 92 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
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% (2014: 30%) on
operating profit
less - tax effect of:
Other non-deductible/(non-assessable) expenses
Difference of effective foreign income tax rates
Deferred tax adjustment
Impairment of assets
Share based payments expense
Non-deductible foreign expenditure
Foreign Exchange
Charitable contribution
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
Consolidated
2015
US$000
2014
US$000
1,578
(2,263)
-
(685)
-
261
(472)
(211)
(218,795)
30,660
(65,638)
9,198
424
(18,467)
649
82,273
91
1,124
(1,946)
157
648
(685)
1,162
(10,349)
250
-
-
-
-
-
(472)
(211)
30%
-
165
3,576
-
3,741
263
3,290
-
3,553
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
(218,109)
30,871
Weighted average number of ordinary shares used in the calculation of
the basic earnings per share.
Weighted average unlisted options outstanding
207,794,301
200,632,560
2,859,315
1,632,692
Weighted average of ordinary shares diluted as at 30 June 2015
210,653,616
202,265,252
Page 93 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Consolidated
2014
2015
US$000
Note
US$000
7. CURRENT RECEIVABLES
Gold awaiting settlement
GST/VAT receivables
Other receivables
Total current receivables
Refer ageing analysis in Financial Instruments Note 25(b).
8.
INVENTORIES
Consumables - at cost
Ore stockpile - at cost
Gold Inventory - at cost
Total inventories
9. OTHER CURRENT ASSETS
Prepayments
10. NON CURRENT RECEIVABLES
GST/VAT receivables
Total non-current receivables
11. PROPERTY, PLANT & EQUIPMENT
Plant & equipment:
At cost
less - provision for impairment
less - accumulated depreciation
Total plant and equipment at net book value
Furniture & fittings:
At cost
less – provision for impairment
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
Less – forex differences on translation
less - impairment
less - depreciation
Carrying amount at end of year
4,626
17,165
794
22,585
14,965
2,270
2,602
19,837
619
8,410
3,001
12,030
9,916
2,862
5,306
18,084
615
512
16,311
16,311
21,489
21,489
157,334
147,660
(67,873)
(44,439)
45,022
-
(32,476)
115,184
908
(253)
(655)
-
799
-
(513)
286
45,022
115,470
115,184
11,247
(1,259)
-
(67,872)
(12,278)
45,022
101,178
23,582
(131)
(570)
-
(8,875)
115,184
13
Page 94 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
11. PROPERTY, PLANT & EQUIPMENT (continued)
Furniture & fittings:
Carrying amount at beginning of year
plus - additions
less - disposals
Less – forex differences on translation
less - impairment
less - depreciation
Total Carrying amount at end of year
12. EXPLORATION , EVALUATION & DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditure:
At cost
less – provisions for impairment
Total carrying amount at end of year
Development expenditure:
At cost
less – provisions for impairment
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
less - impairment
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 - impairment
plus - forex differences upon translation
Carrying amount at end of year
Consolidated
2015
US$000
Note
2014
US$000
286
109
-
-
(254)
(141)
-
15,157
(4,130)
11,027
326,654
(187,339)
(52,267)
87,048
98,075
371
39
(61)
56
-
(119)
286
29,857
-
29,857
264,991
-
(33,105)
231,886
261,743
29,857
10,122
29,186
15,768
(21,842)
(10,949)
(266)
(4,130)
(2,714)
11,027
(107)
-
(4,041)
29,857
231,886
190,776
36,635
21,842
(19,193)
(187,339)
3,217
87,048
36,329
10,949
(8,399)
-
2,231
231,886
13
13
13
Page 95 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
13.
IMPAIRMENT OF NON-CURRENT ASSETS
In accordance with the Group’s accounting policies and processes, the Group performs its impairment testing
annually at 30 June. Non-financial assets are reviewed at each reporting period to determine whether there is an
indication of impairment.
When indicators of impairment exist, a formal estimate of the recoverable amount is made. External and internal
indicators of impairment as at 30 June 2015 included;
Updated life of mine (‘LOM’) plans resultant from the JORC 12 Compliance Statement Review;
Increased expected future costs of production; and
Reduction in the Group’s market capitalisation relative to the carrying values of non-current assets.
Due to the indicators above, the Group assessed the recoverable amounts of its major cash-generating unit
(‘CGU), relating to the Co-O mining operations.
a) Impairment testing
i) Methodology
Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable amount
being the value in use of the CGU has been estimated using the discounted cashflows method based on the
Group’s recoverable minerals.
Value in use is estimated based on discounted cash flows using market based commodity price, estimated
quantities of recoverable minerals, production levels, operating costs and capital requirements. When Life of Mine
(LOM) plans fully utilise the existing mineral resource and the Group have demonstrated an ability to replenish
resources, an estimated replenishment rate has been applied to unmined resources.
The estimates in the value in use calculation are considered to be level 3 measurements as they are derived from
valuation techniques that include inputs that are not based on observable market data. The Group considers the
inputs and the valuation approach to be consistent with the approach taken by similar market participants.
Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are
sourced from the Group planning and budgeting process, mill capacity levels and mining plans for the following
year. The 2016 budget and mine plan were developed in the context of the current gold price environment.
Significant judgements and assumptions are made by the Group to determine value in use. This includes
assessing variable key assumptions such as gold market prices, cost structures, production utilisation and
capacity, available minerals and discount rates. Any change in these variable assumptions can cause adverse
changes in one or more of the assumptions used to estimate value in use.
ii) Key Assumptions
The table below summarises the key assumptions used in the 30 June 2015 carrying value assessments.
Comparison to the prior period has been provided.
Assumptions
Gold (US$ per ounce)
Post-Tax Discount rate (%)
Probable reserves
2015
2016-2020
1,200
11.1
590,000
Production capacity per annum
135,000-150,000
2014
2015-2019
1,300
10
820,000
120,000
Commodity prices
Commodity prices are estimated with reference to external market forecasts and reviewed at least annually. The
price applied has taken into account observable market data.
Discount rate
The future cash flows of the CGU are discounted by the estimated real after tax weighted average cost of capital
(WACC), pursuant to the Capital Asset Pricing Model. This has been estimated based on the Group level WACC
rate as the Co-O mining operation is the Group’s primary asset.
Page 96 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Production activity and operating and capital costs
Life of mine production activity and operating and capital cost assumptions are based on the Group’s latest
budget, including the five year budget and separately estimated LOM plan. Discounted cash flows include
expected cost improvements and sustaining capital requirements. Estimated production is assumed consistent
with the capacity constraint of the Co-O mill taken into account while assuming a constant recovery rate.
Resources and reserves
Resource and Reserve ounces were based on JORC 2012 and disclosed in the Review of Operations section of
the Group’s Annual Report.
iii) Impacts
The estimated recoverable amount of the Group’s Co-O mining operations CGU after reflecting the impairment
write downs has resulted in a non-current assets impairment charge of $259.6million after tax, as summarised in
the table below:
Development
Plant & Equipment
Mineral properties
Note
12
11
12
3
Carrying
amount
$’000
274,387
113,148
15,157
402,692
Impairment
$’000
Balance
$’000
(187,339)
87,048
(68,126)
(4,130)
45,022
11,027
(259,595)
143,097
b) Sensitivity Analysis
The impairment of the Co-O CGU has resulted in the recoverable amount of these assets being equal to their
revised carrying amounts as at 30 June 2015. Variation movements in any key assumptions described above
would result in a change to the estimated recoverable amount. Variations to the above assumption could have a
negative impact on recoverable amount which could indicate additional impairment to non-current assets.
The changes to estimated key assumptions would have the following approximate impact on the recoverable
amount of the CGU in its functional currency that has been subject to impairment in the 30 June 2015 statutory
accounts:
Assumption changes
US $100 per ounce change in gold price
1 percent increase/decrease in the discount rate
5 percent increase in operating costs
Effect on
Impairment
of
Co-O CGU
$’000
54,200
4,780
36,700
In addition to the above, the level of production activity is also a key assumption in the determination of
recoverable amount. Should the Group recognise decreases/increases in processing capacity, changes in
recoverable amount estimates may arise. Due to the number of factors that could impact production activity,
assessment to sensitivity has not been determined for these factors.
The sensitivities above assume specific assumption moves are in isolation, whilst all other assumptions are held
constant. In reality, a change in one of the aforementioned assumptions may accompany a change in another
assumption.
Page 97 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
14. 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
2015
US$000
2014
US$000
3,822
3,822
873
1,278
2,151
5,973
7,132
7,132
662
1,540
2,202
9,334
Philsaga Mining Corporation ("Philsaga"), a subsidiary of the Company, obtained loans from Metropolitan Bank
and Trust Company in 2015 and 2014 amounting to U$5.4M and U$13.4M, 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, 2015
and 2014, the outstanding balances of these loans amounted to U$5.4M and U$8.2M, respectively. These
amounts include loans that are denominated in Euro and Dollar acquired during the year.
15.
EMPLOYEE BENEFITS
Current:
Employee benefits
Total current employee benefit
Non-Current:
Retirement Benefit
Total current employee benefit
504
504
1,762
1,762
740
740
1,354
1,354
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:
Discount Rate –
Expected rate of salary increase -
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.
4.65%
3.00%
5.15%
3.00%
Page 98 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
15. 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
Benefits Paid
Actuarial loss
Unrecognised actuarial loss
Past service cost – non vested
Foreign exchange gains/(loss)
Balance ending
2015
US$000
2014
US$000
369
63
-
432
2,172
(313)
(97)
1,762
1,745
369
63
-
(6)
-
-
1
280
55
40
375
1,745
(276)
(115)
1,354
910
280
55
-
-
313
(157)
344
2,172
1,745
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
Balance
US$000
Forex on
translation
US$000
Credit/
(charged)
to Income
US$000
Closing
Balance
US$000
16. DEFERRED TAX
Consolidated Group
30 June 2015
Deferred tax liability
Capitalised exploration & evaluation expenditure
Deferred tax assets
Carried forward tax losses
Other
Carried forward tax losses
1,782
1,453
1,530
2,983
-
-
-
-
(1,492)
290
555
217
772
2,008
1,747
3,755
Page 99 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
16. DEFERRED TAX (continued)
Consolidated Group
30 June 2014
Deferred tax liability
Capitalised exploration & evaluation expenditure
Deferred tax assets
Carried forward tax losses
Other
Carried forward tax losses
Consolidated
Opening
Balance
US$000
Forex on
translation
US$000
Credit/
(charged)
to Income
US$000
Closing
Balance
US$000
141
1,451
152
1,603
-
-
-
-
1,641
1,782
2
1,453
1,378
1,530
1,380
2,983
Consolidated
2015
US$000
2014
US$000
17. 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
110
149
other services:
- 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
15
125
97
5
102
5
154
73
5
78
Page 100 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
18.
ISSUED CAPITAL
207,794,301 ordinary shares (30 June 2014: 207,794,301)
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
2015
US$000
2014
US$000
102,902
102,902
102,902
102,902
102,902
73,070
-
29,832
102,902
102,902
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company
in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par
value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
Balance at beginning of year
Ordinary shares issued during the year:
07 November 2013 @ A$1.80 pursuant to share placement
25 November 2013 @ A$1.80 pursuant to share placement
Balance at end of year
Capital Management
207,794,301
188,903,911
-
-
9,445,195
9,445,195
207,794,301
207,794,301
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
2015
US$000
2014
US$000
192,008
412,306
(9,987)
(13,063)
182,021
399,243
192,008
412,306
5,973
9,334
197,981
421,640
92%
95%
Page 101 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
19.
RESERVES
Option and performance rights reserve
Foreign currency translation reserve
Total reserves
(a) Option and performance rights reserve
Consolidated
2015
US$000
2014
US$000
304
6,309
6,613
4,638
8,802
13,440
The option reserve records items recognised as expenses on valuation of share based payments.
Unlisted options over ordinary shares at 30 June 2015
(unless otherwise stated, all unlisted options and performance rights have full vesting rights)
3,200,000 options expiring 16 December 2018 and exercisable at A$1.00 each
(the options were not vested at reporting date).
1,000,000 options expiring 9 February 2019 and exercisable at A$1.00 each
(the options were not vested at reporting date).
The above unlisted options 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.
20.
SHARE BASED PAYMENTS
The following share based payment arrangements existed during 30 June 2014:
(i) On 16 December 2014, 3,200,000 options were issued to Australian and Philippine based employees.
The options, which hold no voting or dividend rights have an expiry date of 16 December 2018 and are
exercisable at A$1.00 per option. Under the terms of the Issue the employees would be required to
remain in the employment of the Company at 16 December 2015 to achieve 30% vesting of the options,
at 16 December 2016 to achieve 30% vesting of the options, with full vesting if they remain employees of
the Company a year later on 16 December 2017. At reporting date all options remain unexercised.
(ii) On 9 February 2015, 1,000,000 options were issued to Australian and Philippine based employees. The
options which hold no voting or dividend rights have an expiry date of 9 February 2019 and are
exercisable at A$1.00 per option. Under the terms of the Issue the employees would be required to
remain in the employment of the Company at 9 February 2016 to achieve 30% vesting of the options, at
9 February 2017 to achieve 30% vesting of the options, with full vesting if they remain employees of the
Company a year later on 9 February 2018. At reporting date all options remain unexercised.
Share based options
Outstanding at start of year
Granted
Forfeited
Expired
Exercised
Outstanding at year end
Exercisable at year end
2015
2014
Number of options
and performance
rights
Weighted
average exercise
price (A$)
Number of options
and performance
rights
Weighted
average exercise
price (A$)
1,575,000
4,200,000
6.0487
1.0000
1,715,000
4.4000
-
-
(140,000)
(1,575,000)
6.0487
-
4,200,000
-
-
1.000
1.000
-
-
-
-
-
-
-
1,575,000
-
6.0487
4.4000
During the year 2015, 1,575,000 Options expired.
The options outstanding at 30 June 2015 (all of which are unlisted) had a weighted average exercise price of
A$1.00 and a weighted average remaining contractual life of 42.60 months.
Included under administration expense in the Statement of Profit or Loss and other Comprehensive Income is
US$304,025 (2014: US$190,547) and relates, in full, to equity-settled share based payment transactions relating
to employees.
Page 102 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
21. INVESTMENT IN SUBSIDIARIES
The following companies are controlled entities of Medusa Mining Limited as at 30 June 2015:
Controlled Entities
Medusa Exploration & Development Corporation
Phsamed Mining Corporation
Medusa Overseas Holding Corporation
Date of
incorporation
29 May 2003
23 Apr 2003
08 May 2003
Country of
incorporation
% interest held
2015
2014
Philippines
Philippines
Philippines
40%
40%
40%
40%
40%
40%
40%
40%
Philsaga Mining Corporation
17 May 2001
Philippines
Mindanao Mineral Processing and Refining Corporation
03 Nov 2005
Philippines
100%
100%
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.
22.
RETAINED PROFITS
Retained profit at start of year
Net (loss) /profit attributable to members of Company
Transfer from share option reserve
Retained profits at end of year
Consolidated
2015
US$000
2014
US$000
295,964
(218,109)
4,638
82,493
265,093
30,871
-
295,964
Page 103 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
23. 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 /(loss) after income tax to net cash
provided by operating activities:
(Loss) /Profit after income tax
add/(less)-
Non-cash items:
- Depreciation/amortisation
- Exploration expenses written off
- Recognition of share based expenses
- Impairment expense
- Foreign exchange (gain) / loss
- Bad debts written off
- VAT write off
- Deferred tax credit
- 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
9,986
1
9,987
13,062
1
13,063
(218,109)
30,871
ion
31,689
17,541
267
304
259,595
223
393
188
(283)
222
1,540
106
191
-
(72)
-
332
-
(19)
(253)
76,029
48,697
(5,376)
(103)
(1,756)
(3,501)
(721)
64,572
(1,303)
150
255
1,662
261
49,722
(c) Restricted Funds
The Group’s total cash assets mentioned above include restricted bank accounts as follows:
(i) A Rehabilitation fund of US$463,363 (2014: US$359,823) to be used at the end of life of mine for
environmental rehabilitation.
(ii) An Employee Retirement fund of US$1,100,879 (2014: US$1,129,391) established to meet
employee entitlements on retirement.
(iii) The Company has a Provident fund of US$266,673 (2014: US$258,020) that is intended to be
used as payment to employees upon retirement, which is unrestricted as to withdrawal.
Page 104 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
24.
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.
Page 105 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
(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
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
%
%
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
Consolidated Group
Financial Assets
Cash & cash equivalent
0.32
0.71
8,283 12,265
Loans and receivables
-
Financial Liabilities
Financial liabilities at amortised cost
Bank Loan - Current
Bank Loan – Non Current
Trade & sundry payables
-
-
-
-
-
-
-
-
-
8,283 12,265
-
-
-
-
-
-
1,704
5,420
798
9,987
13,063
3,620
5,420
3,620
7,124
4,418 15,407
16,683
-
-
-
-
-
-
-
-
3,822
2,151
7,132
2,202
-
-
-
-
3,822
2,151
7,132
2,202
-
- 16,282 19,954 16,282
19,954
5,973
9,334 16,282 19,954 22,255
29,288
Receivables are expected to be collected as follows:
Less than 6 months
6 months to 1 year
As at 30 June 2015 and 2014, all receivables were neither past due nor impaired.
Trade and sundry payables are expected to be paid as follows:
Less than 6 months
Consolidated
2015
US$000
2014
US$000
5,420
-
5,420
3,620
-
3,620
16,282
16,282
19,891
19,891
(ii)
Net fair values
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 2015, 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:
Page 106 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
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
2015
US$000
2014
US$000
87
(87)
123
(123)
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 2014 and
2015 financial years.
The following table shows the foreign currency risk on the financial assets and liabilities of the
Groups operations denominated in currencies other than the functional currency of the operations.
Net Financial Assets/(Liabilities) in US$000
AUD
US$
PHP
TOTAL US$
Consolidated
2015
Functional Currency of Group Entity
Australian Dollar
US Dollar
Philippine Peso
2014
Functional Currency of Group Entity
Australian Dollar
US Dollar
Philippine Peso
n/a
-
-
-
n/a
-
-
-
1,114
-
2,912
4,026
574
-
740
1,314
-
273
-
273
-
707
-
707
1,114
273
2,912
4,299
574
707
740
2021
Consolidated
2015
US$000
2014
US$000
(145)
(401)
(546)
145
401
546
(75)
(19)
(94)
75
19
94
Change in profit /(loss) before income tax / equity
- strengthening of A$ 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
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$1,168 (2014: US$1,299) 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$11.356
million (2014: US$8.564 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.
Page 107 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
25. COMMITMENTS
(a) Exploration commitments:
The Company has certain obligations to perform minimum exploration
work to maintain rights of tenure to its exploration tenements. These
obligations may vary from time to time in accordance with tenements
held and are expected to be fulfilled in the normal course of operations
of the Group so as to avoid forfeiture of any tenement.
These obligations are not provided in the financial report and are payable:
-
no later than 1 year
- 1 year or later and no later than 5 years
Total exploration commitments
(b) Operating lease expense commitments:
Non-cancellable operating lease contracted for but not capitalised in
the financial statements.
The Group leases office premises under two operating leases expiring
in June 2016 and July 2016. Under the terms of the operating leases,
the Group is provided with a right of renewal and the lessor has the
right to increments in lease payments on an annual basis based on
movements in the Consumer Price Index.
These obligations are not provided in the financial report and are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total operating lease expense commitments
(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
2015
2014
US$000
US$000
3,140
3,129
6,269
3,171
3,158
6,329
85
3
88
62
249
311
51
259
310
9
-
9
45
460
505
44
454
498
Page 108 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
26. EVENTS SUBSEQUENT TO REPORTING DATE
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.
27.
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.
Page 109 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
12 months to June 2015:
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
Mining
US$000
Exploration
Other
US$000
US$000
Total
US$000
123,093
-
-
123,093
79
32
123,204
(208,421)
(4,426)
(4,688)
(217,535)
-
32
79
685
(218,109)
209,591
1,047
2,426
213,064
-
3,755
216,819
Reconciliation of segment liabilities to group liabilities
23,462
12
1,047
24,521
plus: Deferred liabilities
Total Group liabilities
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
290
24,811
83,882
-
-
83,882
160
154
84,196
35,508
(20)
(4,739)
30,749
19
154
160
211
30,871
434,822
3,836
3,829
442,487
29,373
5
2,004
31,382
2,983
445,470
1,782
33,164
Page 110 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Revenue and non-current assets by geographical region
Australia
US$000
Philippines
US$000
Total
US$000
12 months to June 2015:
Segment Revenue
Non-Current Assets
12 months to June 2014:
Segment Revenue
Non-Current Assets
-
123,093
31,906
128,134
123,093
160,040
-
83,882
83,882
41,946
356,852
398,798
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 2015, all of
the Group's revenues depended on a single customer (2014:100%).
28.
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)
2015
US$000
2014
US$000
2,247
34,248
1,047
1,047
3,636
45,707
2,004
2,004
33,201
43,703
102,902
102,902
304
11,894
(39,630)
(42,269)
4,638
14,596
(36,164)
(42,269)
33,201
43,703
(3,466)
(6,168)
(4,704)
(4,073)
Page 111 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
29.
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
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 entity.
Page 112 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
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 entity.
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.
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).
Page 113 of 121
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
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.
30. FRANKING ACCOUNT
The Company has no franking credits available.
31. COMPANY DETAILS
The registered office and principal place of business of the Company is:
Suite 7
11 Preston Street
Como
Western Australia 6152
Page 114 of 121
DIRECTOR’S DECLARATION
for the year ended 30 June 2015
1.
In the opinion of the Directors of Medusa Mining Limited (the “Company”):
(a)
the financial statements and notes set out on pages 26 to 59 and the remuneration disclosures
that are contained in pages 7 to 18 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 2015 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)
(c)
the remuneration disclosures that are contained in pages 7 to 18 of the Remuneration Report
in the Directors’ Report comply with Australian Accounting Standard AASB 124 Related Party
Disclosures and
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 2015.
Signed in accordance with a resolution of the Board of Directors
__________________________
Andrew Teo
Chairman
Dated at Perth this 27 day of August 2015
Page 115 of 121
AUDITORS INDEPENDENT REPORT
Level 1
10 Kings Park Road
West Perth WA 600
Correspondence to: PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Medusa Mining Limited
Report on the financial report
We have audited the accompanying financial report of Medusa Mining Limited (the
“Company”), which comprises the consolidated statement of financial position as at 30 June
2015, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information and the directors’ declaration of the consolidated
entity
comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and
the Corporations Act 2001. The Directors’ responsibility also includes such internal
control as the Directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error. The Directors also state, in the notes to the financial report, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements,
the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit.
We conducted our audit in accordance with Australian Auditing Standards. Those
standards require us to comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Page 116 of 121
AUDITORS INDEPENDENT REPORT
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Directors, as well as evaluating the overall presentation
of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a the financial report of Medusa Mining Limited is in accordance with the Corporations
Act 2001, including:
i giving a true and fair view of the consolidated entity’s financial position as at 30
June 2015 and of its performance for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b the financial report also complies with International Financial Reporting
Standards as disclosed in the notes to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 10 to 18 of the directors’ report for
the year ended 30 June 2015. The Directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.
Page 117 of 121
AUDITORS INDEPENDENT REPORT
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Medusa Mining Limited for the year ended 30
June 2015, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J W Vibert
Registered Company Auditor
Perth, 27 August 2015
Page 118 of 121
ADDITIONAL SHAREHOLDER INFORAMTION
The shareholder information set out below was applicable as at 18 September 2015.
1.
Shareholding
(a)
Distribution of shareholders and shares
Distribution
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
- 1,000,000
1,000,000 and over
Total
Number of
Shareholders
Number of
Shares
1,669
1,992
718
951
90
15
5,435
851,985
5,478,917
5,570,866
28,535,598
24,117,903
143,239,032
207,794,301
The number of shareholdings held in less than marketable parcels is 1933.
(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
shares held
1
2
3
4
5
6
7
8
9
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
ZERO NOMINEES PTY LTD
AMALGAMATED DAIRIES LIMITED
CAZNA (OXFORD 1) LIMITED + CAZNA (OXFORD 2) LIMITED
BERNE NO 132 NOMINEES PTY LTD <594138 A/C>
10 CEDARDALE HOLDINGS PTY LTD
11 BNP PARIBAS NOMS PTY LTD
12 MR SAMUEL GONZALES AFDAL
13 ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
14 MR GIOVANNI SANTALUCIA
15 WARBONT NOMINEES PTY LTD
16 MR GIOVANNI SANTALUCIA
17
MR BRIAN JOHN GREENFIELD + MRS VIRGINIA ELIZABETH GREENFIELD
18 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
19 MR ROY PHILIP DANIEL + MRS DONNA MARY DANIEL
20 WARBONT NOMINEES PTY LTD
36,842,024
25,617,798
25,243,848
18,729,613
7,914,988
7,630,000
3,296,881
3,141,925
2,591,880
2,546,955
2,312,166
2,260,000
1,894,242
1,880,000
1,336,712
950,000
932,732
891,669
815,875
761,327
(%)
17.73
12.33
12.15
9.01
3.81
3.67
1.59
1.51
1.25
1.23
1.11
1.09
0.91
0.90
0.64
0.46
0.45
0.43
0.39
0.37
Total: Top 20 holders of ORDINARY FULLY PAID SHARES
Total: Remaining Holders Balance
147,590,635 71.03
60,203,666 28.97
Page 119 of 121
ADDITIONAL SHAREHOLDER INFORAMTION
(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
Ordinary shares held
Number of shares
Percentage
Van Eck Associates
13,440,522
Paradice Investment Management Pty Ltd
11,234,219
Dimensional Fund Advisors LP
10,401,492
6.47%
5.40%
5.00%
2.
UNQUOTED EQUITY SECURITIES AND RESTRICTED SECURITIES
The following classes of unquoted equity securities and restricted securities are on issue:
Type of securities
Number of securities
% held
3,200,000 unquoted options to subscribe for ordinary
shares exercisable at $1.00 per share, with an expiry
date of 16 December 2018
Persons holding 20% or more;
1,000,000 unquoted options to subscribe for ordinary
shares exercisable at $1.00 per share, with an expiry
date of 9 February 2019
Persons holding 20% or more;
Raul Conde Villanueva
Gary Raymond Powell
-
-
-
500,000
500,000
-
50%
50%
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
5.
The Register of the Company’s securities is held at the following address:
Computershare Investor Services Pty Limited
Level 11
172 St George’s Terrace
Perth, WA 6000
Australia
Telephone: +618 9323 2000
Facsimile:
Investor enquiries: 1300 557 010
+618 9323 2033
6.
Stock Exchange Listings
Quotation has been granted for all the ordinary shares of the Company on:
Australian Stock Exchange Limited (ASX)
(Home Exchange)
Page 120 of 121
TENEMENT SCHEDULE
Tenement Schedule
Name
Tenement ID
Registered
Company’s Interest 1 at Royalty 2
Area (hectares) at
Holder
30-Jun-
14
30-Jul-15
30-Jun-14
30-Jul-15
Co-O Mine
Co-O
Regional
Saugon
Tambis
Das-Agan
Apical
Corplex
Tagbina
Sinug-ang
Coal
Project
NOTES:
BMMRC
Afdal
Phsamed
Philcord
Philcord
PMC
PMC
PMC
PMC
Afdal
Phsamed
PMC
MPSA 262-2008-XIII PMC
MPSA 299-2009-XIII PMC
APSA 00012-XIII
APSA 00087-XIII
APSA 00088-XIII 3
APSA 00098-XIII 3
APSA 00099-XIII 3
EP 017-XIII
EP 031-XIII 3
EP 032-XIII
EPA 00066-XIII
EPA 00067-XIII
EPA 00069-XIII 3
EPA 00087-XIII 3
MPSA 344-2010-XIII Philex
MPSA 343-2010-XIII Das-agan
APSA 00028-XIII 3
Apmedoro
Corplex
APSA 00054-XIII
Corplex
APSA 00056-XIII
Corplex
APSA 00077-XIII
EPA 00186-XIII 3
Corplex
Sursur
EPA 00176-XIII
Sursur
EPA 00180-XIII
Sursur
EPA 00181-XIII
Salcedo / PMC
EPA 00114-XIII
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
Earning 70% (JV)
100%
100%
100%
100%
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
SUB-TOTAL
COC Area 6
COC Area 7
TOTAL
Philsaga
Philsaga
-
-
100%
100%
-
-
-
-
-
1% NPI
1% NPI
-
-
-
-
-
-
-
7% NSR
3% GSR
-
3% NSR
-
4% GSR
3% NSR
-
-
-
2,539
2,200
340
846
7,304
1,184
677
3,132
3,979
3,048
6,769
1,693
7,790
764
6,208
3,810
2,084
2,118
162
810
7,111
3,823
5,948
6,118
190
2,539
2,200
340
-
4,742
507
592
3,132
2,456
3,048
6,769
-
2,540
84
6,208
3,810
1,235
2,118
162
810
7,111
-
-
-
190
806
506
-
-
4,000
5,000
806
596
1.
2.
3.
There have been material changes to the Company’s interest since 30 June 2015, as reflected in the above table.
Royalties payable to registered holders, aside from the prescribed royalties payable to the Philippine government and
Indigenous People.
the
Awaiting for approval and confirmation by MGB of area reduction.
ABBREVIATIONS:
Tenement Types
MPSA
Mineral Production Sharing Agreement
EP
Exploration Permit
Registered Holders
Application
for Mineral Production Sharing
APSA
EPA
Agreement
Application for Exploration Permit
PMC
Philsaga Mining Corporation
Afdal
Samuel Afdal
BMMRC
Base Metals Mineral & Resources Corporation
Das-Agan
Das-Agan Mining Corporation
Phsamed Phsamed Mining Corporation
Apmedoro
APMEDORO Mining Corporation
Philcord
Mindanao Philcord Mining Corporation
Salcedo
Neptali P. Salcedo
Philex
Philex Gold Philippines Incorporated
Sursur
Sursur Mining Corporation
Corplex
Corplex Resources Incorporated
Royalty
NPI
NSR
Net Profit Interest
Net Smelter Royalty
GSR
Gross Smelter Royalty
Page 121 of 121