Registered Office
Level 3, 123 Adelaide Terrace
East Perth WA 6004
2011
A YEAR IN REVIEW METALS X GROUP
CORPORATE DIRECTORY
DIRECTORS
Peter G Cook (Non-Executive Chairman)
Warren S Hallam (Managing Director)
Dean P Will
Michael L Jefferies
Sanlin Zhang
Yimin Zhang (Alternate for Zhang Sanlin)
COMPANY SECRETARY
Fiona J Van Maanen
KEY MANAGEMENT
Ross Cook (GM – Bluestone Mines Tas JV)
Registered Office
Level 3, 123 Adelaide Terrace
EAST PERTH WA 6004
Phone: 61-8-9220 5700
61-8-9220 5757
Fax:
E-mail: reception@metalsx.com.au
Website: www.metalsx.com.au
POSTAL ADDRESS
GPO Box 2606
PERTH WA 6001
SECURITIES EXCHANGE
Listed on the Australian Securities Exchange
Code: MLX
SHARE REGISTRY
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Phone: 61-8-9315 2333
61-8-9315 2233
Fax:
E-mail: registrar@securitytransfer.com.au
DOMICILE AND COUNTRY OF INCORPORATION
Australia
CONT
EN
TS
01
COMPANY PROFILE
02
CHAIRMAN’S STATEMENT
03
OPERATIONAL REVIEW
21
DIRECTORS’ & FINACIAL REPORTS
COMPANY PROFILE
Metals X Limited (“Metals X” or “the Company”) is a diversified resource group with a considerable portfolio
of growth projects. Metals X has a pipeline of assets at all stages of development, from exploration through to
production with exposure to tin, nickel, gold, copper, zinc, phosphate, bauxite, uranium and lead.
Metals X is Australia’s largest tin producer with its 50% owned Renison Tin Project producing approximately 2.5% of
the global supply of tin.
Metals X owns 100% of the world class Wingellina Nickel Project which hosts a total global resource of over 180Mt
at 1% nickel including a mining reserve of 167 Million tonnes at 0.98% Ni, 0.08% Co and 47.3% Fe2O3. A project
development feasibility study completed in mid-2008 concluded a robust project for the construction of a nickel
and cobalt operation producing approximately 40,000tpa of nickel and 3,500tpa of cobalt for an initial mine life
of 40 years. Benchmark operating costs were globally competitive at US$3.34 per pound of nickel after cobalt
credits and the estimated capital cost was approximately $2.2 billion.
Metals X continues to move the project towards development including recently signing a landmark native title
mining agreement with the traditional owners enabling the project to be advanced and developed. The company is
continuing to discuss its development options with potential participants and financiers and has recently signed
a heads of agreement with China’s largest nickel producer, Jinchuan who will acquire a 20% direct interest in the
project.
Metals X makes strategic investments in projects that have been identified by its highly experienced mining
and technical personnel that exhibit strong qualities for capital appreciation, which are not possible to acquire
outright. Metals X actively provides technical and financial support to those companies and as a result of this
strategy holds a number of strategic investments including:
Westgold Resources Limited (“Westgold”) (25.02% interest) who holds resources of over 3 million ounces of
gold within its Rover Project near Tennant Creek in the Northern Territory and Murchison goldfield in Western
Australia;
Independence Group NL (“Independence”) (3.23% interest)which is a diversified producer with nickel, zinc,
copper and gold operations througout Australia;
Mongolian Resource Corporation Limited (“MRC”) (16.97% interest) an Australian listed Mongolian focused
resource company that is involved in the mining and exploration of gold, base metals, iron ore and coal;
Aziana Limited (“Aziana”) (25% interest) an established gold and bauxite explorer with highly prospective
projects in Madagascar.
As of the 30 June 2011 the Market value of Metals X investments was $72M and the company held cash and
working capital of $97.6M and has no debt.
Metals X posted a full year after tax profit for the 2010/11 financial year was $62.3M
01
COMPANY PROFILE
CHAIRMAN’S STATEMENT
Dear Shareholders
It is my pleasure to present you the Metals X Limited Annual Report for the period ending 30 June 2011.
The past year has seen Metals X make steady progress on a number of fronts.
Our Joint Venture tin operations in Tasmania maintained consistent and profitable performance, although the
operations performance is currently at levels below our internal expectations. The increased focus on brownfields
exploration was very successful in providing extension to the mining reserves and the overall resource base with
the highlight being a number of bonanza tin results from the Area 4 zone within the Renison Mine. Suffice to say
that the future of this mine has never been brighter throughout our seven years of ownership.
The Company has also made considerable progress in advancing the Wingellina Nickel Project toward
development. Most of the pre-development and logistical aspects required prior to development have been
completed and a landmark native title agreement with the key stakeholders was signed during the year that
paves the way for the development of this globally significant project.
Discussions continue with potential participants and financiers to provide funding for the development of the
Wingellina Nickel Project. An agreement was reached to swap Jinchuan’s 12.9% equity in Metals X for a direct 20%
interest in the Central Musgrave Project which will occur under a selective share buy-back process to be voted on
by shareholders and should complete by year end.
Our strategy to make strategic investments in assets via equity participation in other companies has paid
dividends with the partial divestment of our Jabiru Metals Limited stake into a takeover offer by Independence
Group NL resulting in the crystallisation of a substantial profit for the Company. We still hold a significant
shareholding in Independence and will do so until the Company believes its full market value is recognised.
We continued this strategy and have made further investments in the frontier resource countries of Mongolia and
Madagascar. In Mongolia we have acquired a 17% position in ASX-listed Mongolian Resource Company Limited.
While in Madagascar we acquired a 25% interest in Aziana Limited, an unlisted explorer who is at the forefront of
an exploration rush in Madagascar and we will assist this Company to list in the ensuing months.
We supported the consolidation of our gold investments during the year with the takeover of Aragon Resources
Limited by Westgold Resources Limited and we retain a 25% interest in the merged group. We believe that
Westgold has excellent assets and the potential to build into a major participant in the Australian gold producer
ranks.
On the financial front, our Company is in a strong position with substantial cash and investments with no debt.
The Company booked an after-tax profit for the year of $62.3m up 429% on the $12.5m for the previous year.
Metals X continues to struggle to gain market recognition for the value of its diverse asset base as reflected in its
share price. In the year forward, it is a major objective of the Board and I, to ensure this value is recognised.
The previous year witnessed a significant turn-around in our fortunes and this has been further enhanced in the
2011 year. The sound footing on which the Company now stands is a direct outcome of strong and committed
leadership of the Board coupled with the energy, drive and dedication of our executive team and their support
staff. On behalf of all shareholders, I acknowledge and thank all our staff for their dedication.
On behalf of my Board I thank all shareholders, internal and external stakeholders for their continued support and
belief in the Company during the year past.
Peter Cook
Chairman
02
CHAIRMAN’S STATEMENT
OPERATIONAL REVIEW
STRATEGIC REVIEW
During the previous twelve months Metals X has continued to advance its assets and we are pleased to be able
to report a significant increase in profit after tax for the group of $62.8M ($12.6M for 2010). In addition the
Company is now well positioned with cash and net receivables of $97.6M and investments in other listed entities
of approximately $72M.
The Renison Tin Project generated a profit for the group of $21.5M during the period. The Southern area of the mine
is now well established and within the next year it is anticipated that the higher grade Northern area will reach
full production resulting in a significant increase in tin output and reduced operating costs. Exploration within the
mine has been extremely successful with some highly significant results being released during the year.
Tin is still in short supply and is forecast to remain so for the medium term, with a deficit of approximately 10,000
tonnes for the 2011 financial year and a similar deficit expected for the succeding year. The price of tin reached
a record high of A$33,255 in April this year and although it has dropped back, tin fundamentals remain strong. It
is expected that higher tin prices will need to be achieved to encourage additional supply in order to address this
current market deficit.
Metals X has also achieved numerous milestones in relation to its globally significant Wingellina Nickel Project
and is now advancing towards financing and development. During the year Metals X signed a landmark mining
agreement with the traditional land owners of the project area, and in addition Jinchuan, China’s largest Nickel
producer agreed to acquire a 20% direct interest in the project. Pending final water studies, environmental studies
are complete and the majority of technical studies have been completed.
Metals X through its experienced mining team is continually evaluating and assessing projects and investment
opportunities. The impact and rewards of this approach was demonstrated in the substantial profit made from
the partial divestment of Jabiru Metals Limited during the year. Metals X has further expanded its strategic
investment with the acquisition of a 17% interest in Mongolian Resources Corporation Limited and a 25% interest
in Aziana Limited, a gold and bauxite exploration company in Madagascar. Metals X believes these investments
present an excellent opportunity as cornerstones into Mongolia and Madagascar both of which represent
significant untapped resource potential. These acquisitions complement our investment in Westgold Resources
Limited (25%) and Independence Group NL (3.2%).
The company remains in a very strong position with an exceptional cash position, investments and world class
assets including the Renison Tin Project and the Wingellina Nickel Project. With the continued support of our
shareholders and stakeholders we look forward once again to the year ahead.
Warren Hallam
Managing Director
03
OPERATIONAL REVIEW
OPERATING RESULTS
The net profit from continuing operations after
income tax of the Consolidated Entity for the
period was $62,801,803 (2010: $12,601,084),
an improvement of 398% as compared to the
previous year. This result reflects an increase
in operating profits from the Renison Tin Project,
and profit on the sale of shares in Jabiru Metals
Limited ($55,268,640), Aragon Resources
Limited ($196,199) and Icon Resources Limited
($252,942).
The Consolidated Entity’s net profit after income
tax for the year was $62,296,608 (2010:
$11,780,984), an improvement of 429% as
compared to the previous financial year.
NET PROFIT
“IMPROVEMENT
OF 398%”
PROJECTS
COLLINGWOOD
CLAUDE HILLS
MT DAVIES
WINGELLINA
RENISON
INVESTMENTS
MRC
INDEPENDENCE
AZIANA
WESTGOLD
04
OPERATIONAL REVIEW
NICKEL DIVISION
The Company’s nickel strategy is built around the Central Musgrave Project (“CMP”) located in the Central
Musgrave Ranges, straddling the triple-point of the WA/NT/SA borders. The project represents the Company’s
key nickel assets and comprises the globally significant Wingellina deposit, the Claude Hills Nickel prospect
and the Mt Davies exploration prospect. The project encompasses 1,957km2 of prospective exploration tenure
encompassing the whole of the Wingellina layered intrusive sub-set of the Giles Complex.
CENTRAL MUSGRAVE PROJECT
The CMP consists of exploration titles in both Western Australia and South Australia, covering the Giles complex
intrusives of the Musgrave block in central Australia. Key geological units are Giles Complex ultramafic and mafic
layered intrusives, which are known to host nickel and copper sulphide mineralisation, and importantly, nickel
and cobalt rich limonite ores. These ores are the product of deep weathering of the ultramafic lithologies within
the project area. In particular, these weathering processes formed the Wingellina and Claude Hills nickeliferous
ore bodies.
During the year works at the Central Musgrave Project year focused on the following key areas:
1. Completing a mining agreement with the native title holders in order to establish the Company’s right to
develop and mine the Wingellina Project;
2. Advancing financing and development options for the Wingellina Project;
3. Water exploration;
4. Finalising the statutory environmental approvals process, and undertaking additional field work necessary to
complete approvals; and
5. Expanding the resource base within the Company’s South Australian tenements.
Beadell
NORTHERN TERRITORY
^_
E69/535
CLAUDE HILLS
!(
Irrunytju
WINGELLINA
E3555
North
Scarface
I
A
L
A
R
T
S
U
A
N
R
E
T
S
E
W
I
A
L
A
R
T
S
U
A
H
T
U
O
S
E3932
E3555
CALCRETE
E3555
Scarface
^_
!(
Kalka
Pipalyatjara
!(
Greenwood
^_
^_
^_
Mt Davies
Giles Complex
Metasediments
Basement Gneiss
Resource Outlines
^_ Nickeliferous Laterite Occurence
Fault
0
2.5
5
7.5
10
Kms
Scale. 1:250,000
05
OPERATIONAL REVIEW
WINGELLINA DEPOSIT
The Wingellina Project, part of the CMP, is one of the
largest undeveloped nickeliferous ‘Pure Oxide’ limonite
accumulations in the world, consisting of over 180Mt of
ore at 1% Nickel of which 167Mt is categorised as Probable
Mining Reserves.
The mineralogy of the Wingellina ore is a major strength
of the project, being a “Nickel Limonite”, or “Pure Oxide
Tropical Laterite (POTL)” ore. Unlike most Australian
nickel laterite projects, Wingellina ore has characteristics
perfectly suited to High Pressure Acid Leaching (“HPAL”),
with high iron grades (resource average 47% Fe2O3)
and a very low concentration of magnesium (resource
average 1.6% Mg). There are many examples of high
iron, low magnesium lateritic nickel deposits which have
successfully and profitably produced nickel and cobalt
in metal or concentrate form. The characteristics of the
Wingellina ore are similar to that of Moa Bay in Cuba and
Ambatovy in Madagascar. The former began production
using HPAL in 1959, and is still operating today. Moa Bay,
Ambatovy and the Wingellina deposits all have similar
metallurgical characteristics which result in relatively low
acid consumption. Acid consumption has the largest impact
on operating costs in the HPAL process and as such is an
important consideration in adopting the HPAL technology.
The Wingellina Identified Mineral Resource estimate defines
an ore body containing approximately 1.8Mt of contained
nickel metal and 139Kt of Cobalt metal. Significantly,
over 92% of the resource is defined as a Probable Mining
Reserve in accordance with the JORC code, and resource
confidence is high.
WINGELLINA
“APPROXIMATELY
1.8Mt NICKEL
RESOURCE”
Class
Measured
Indicated
Inferred
Total
Class
Proven
Probable
Total
Total Identified Mineral Resource Estimate as at 30 June 2011 0.5% Ni (cut-off)
Tonnes (Kt)
68,847
98,623
15,727
183,197
Ni
1.00
0.97
0.97
0.98
Co
0.08
0.08
0.07
0.08
Mining Reserve Estimate as at 30 June 2011
Tonnes (Kt)
-
167,470
167,470
Ni
-
0.98
0.98
Co
-
0.08
0.08
Fe2O3
48.71
46.39
42.73
46.95
Fe2O3
-
47.34
47.34
Wingellina is only one of many known nickeliferous limonites areas within the CMP and is the only one to date
to have been extensively drilled out. During the year Metals X completed a drilling program at it’s Claude Hill
Prospect located approximately 25kms to the East of Wingellina where it has defined a JORC compliant Inferred
Resource of 33 million tonnes grading 0.81%Ni, 0.07% Co and 39% Fe2O3. *
Wingellina will be a simple mining operation with free-digging limonite ore existing in a number of pits over a
strike length of approximately 10 kms and widths of up to 500m. Average waste to ore strip ratios over the
mine life are 1.1:1 and 0.50:1 for the first 20 years. Mine sequencing in early years will take advantage of the
favourable orebody geometry, which allows mining to progress with a strategy to mine higher grade ores early in
the project life to maximize early cash flow. Average mined grades for the first 20 years are approximately 1.1%
Ni and 0.09% Co. The favourable mining conditions result in very low mining costs with low risk. Mining represents
less than 5% of the overall operating cost for the project.
Ore processing is planned with an annualized
treatment rate of 4.3 million tonnes of ore per
annum. Product is planned to be a mixed nickel-
cobalt hydroxide concentrate of 32%-38% purity,
which is to be sold and shipped off site for refining
to nickel and cobalt metal products.
The feasibility study demonstrated the ability to
profitably operate a mine in the Central Musgrave
Region notwithstanding the previously perceived
issues of location and isolation. The project is capital
intensive with an estimated construction cost of $2.2 billion (plus EPCM and contingency). Operating costs will
be maintained as low as possible through the use of piped natural gas for power supply, locally sourced calcrete
for neutralisation and local sourcing of good quality process water.
The Company has completed the bulk of its baseline environmental studies required for environmental approvals
for the project. All works required for the submission of the Public Environmental Review document are now
complete except for detailed definition of the proposed water sources, and associated baseline studies for
supporting infrastructure corridors.
* For full details, please refer to the Claude Hills section on page 9.
07
OPERATIONAL REVIEW
Water exploration has been focused on the known aquifer within
69/12 that is located approximately 100Km South West of Wingellina.
Drilling has intercepted a significant aquifer at approximately 140m
below surface, with drilling unable to progress deeper than 230m
due to substantial water pressure from within the aquifer. Data from
historical oil exploration (Vines#1 hole) and hydrological modelling
suggests that the aquifer extends to 300m below surface. Further
drilling and modelling is continuing.
Metals X held encouraging discussions with the Northern Territory
and South Australian authorities relating to the use of rail and
port infrastructure as suitable options for the project during the
year. Representatives from both states have expressed interest in
supporting use of road, rail and port networks, and discussions to
finalise transport options will be undertaken in the ensuing year.
WINGELLINA FINANCING AND DEVELOPMENT
The Company has significantly advanced the Wingellina Project and
is now reviewing options for finance and development. The Company
has held discussions with potential equity participants and financiers
with a focus on those international entities that are capable of
providing both technical expertise and funding.
During the year the Company announced that it had signed an
Agreement with China’s largest nickel producer Jinchuan Group
Limited (“Jinchuan”) to sell to Jinchuan a 20% direct interest in
the CMP as a part of the projects advancement towards future
production.
Under the terms of the agreement the Company will selectively
buy-back Jinchuan’s 12.89% shareholding (176 million ordinary fully
paid shares) in the Company in exchange for the 20% direct interest
in the CMP. The transaction is subject to a number of conditions
precedent including Metals X shareholder approval, Jinchuan board
approval, completion of due diligence and Australian federal and state
government approvals. Both parties are working to complete the
transaction in the near future. On completion the parties will form an
unincorporated Joint Venture (“JV”) over the CMP, with the Company
having an 80% interest and Jinchuan having a 20%. Metals X will
retain management of the project.
The Agreement with Jinchuan is an important and significant first
step in bringing together a consortium to advance the project to
production and the company is confident that other partners will
commit to the project in the near future.
08
OPERATIONAL REVIEW
WINGELLINA MINING AGREEMENT
In July 2010 Metals X signed a mining agreement (“the Agreement”) with the traditional owners and granted
native title holders of the Wingellina Project area through their representative bodies being the Yarnangu
Ngaanyatjarraku Parna Aboriginal Corporation, the Ngaanyatjarra Land Council (Aboriginal Corporation), and the
Ngaanyatjarra Council (Aboriginal Corporation).
The Agreement provides consent for the grant of a Mining lease, and subsequent mining operations over the
project, which subject to other regulatory approvals allows Wingellina to be developed. In addition the agreement
allows for the granting of additional project titles for water, pipelines, roads and other infrastructure over an area
in excess of 19,000 km2.
The landmark agreement was the first, and remains the only mining agreement to be successfully negotiated
in the Ngaanyatjarra Lands and the associated Aboriginal Reserves. Whilst the detail of the Agreement remains
confidential, the agreement includes reasonable and appropriate cash payments as project milestones are met,
a gross royalty interest in line with current Western Australian and national industry standards, and employment
and training initiatives for the local people.
The finalization of the Agreement was a major milestone in the development of Wingellina and an important focus
for financial and social development within the Ngaanyatjarra lands. The Agreement reflects a willingness by the
Ngaanyatjarra people to work together with mining companies in the development of resource projects providing
commercial and financial benefits to all stakeholders, whilst maintaining the respect of cultures, beliefs and
traditions of the traditional owners.
CLAUDE HILLS PROSPECT
Claude Hills is located approximately 25kms to the East of Wingellina and is one of a number of areas within the
Company's exploration titles where outcropping nickeliferous limonite similar to Wingellina is known. Metals
X completed an extensive drilling campaign at the Claude Hills prospect to complement the drilling campaign
carried out in late 2008 and has defined an Inferred Resource as follows:
Cut-off (% Ni)
0.5%
0.7%
Total Identified Mineral Resource Estimate as at 30 June 2011
Ni (%)
Million Tonnes
0.81%
33.3
0.96%
19.2
Co (%)
0.07%
0.08%
Fe2O3 (%)
39%
44%
A total of 264 holes (16,514m) have been drilled by Metals X to date over a strike length of approximately 11.5km.
The Claude Hills resource straddles the wholly owned tenement EL4751 and the Mt Davies JV tenement EL3932,
of which approximately 50% of the resource is located within EL4751 and the remainder in EL3932. Mineralisation
extends over a 5km strike length with widths of 50 to 250m and ore thicknesses of 12 to 60m, and lies below a
remobilised cover of 5-20m. The grades obtained are similar to Wingellina for nickel, cobalt and magnesium, but
the aluminium content is considerably lower. It is anticipated that the metallurgical behaviour of the ore will be as
favourable as Wingellina as a result of the low magnesium and alumina grades.
The presence of well developed nickeliferous limonite at Claude Hills is an exciting development in the
understanding of the Giles Complex, and the Company will continue to explore for additional resources to
complement the Wingellina Project. The likelihood of further developing additional resources outside of the
Wingellina deposit is considered to be high.
CLAUDE HILLS
“AN ADDITIONAL
33.3 Mt @ 0.81% Ni”
09
OPERATIONAL REVIEW
MT DAVIES JOINT VENTURE
Metals X through its wholly owned subsidiary Austral Nickel Pty
Ltd (“Austral”) entered into a farm-in agreement with Rio Tinto
Exploration Pty Ltd (“Rio Tinto”) in July 2009 to earn an initial 51%
interest in the South Australian exploration license E3932 (Mt
Davies). This tenement is encapsulated within Metals X’s 100%
owned tenement E3555, which is adjacent to the Wingellina deposit
and hosts part of the Claude Hills deposit. Austral can increase
its interest to 70% ownership by sole funding exploration and
development expenditure to the completion of a pre-feasibility study.
Rio Tinto can elect to contribute following the earn-in phase to retain
a 49% interest and can elect to earn-back up to 70% ownership within
60 business days after the delivery by Austral of the pre-feasibility
study, through the sole funding of a feasibility study. To date only a
small percentage of the mineralisation system has been tested and
there are numerous other limonite occurrences known to exist within
the Mt Davies license. In addition there is also significant potential
for the discovery of nickel and copper sulphides within the area.
COMMUNITY INVOLVEMENT
The CMP is located in a relatively remote part of Australia, where
mutual respect, assistance, and understanding are key factors in
successfully achieving our goals. Our Western Australian leases lie
within Aboriginal Reserve 17614, an area that is subject to a 99 year
lease to the Ngaanyatjarra Land Council. Our South Australian lease
lies on a freehold aboriginal land granted to the Anangu Pitjantjatjara
Yankunytjatjara (“APY”).
Metals X has maintained a full time presence at the project since
2005 and has been welcomed into the region by members of the
various communities, as evidenced by the completion of the mining
agreement for Wingellina. The Community support that the Company
has attained on the Aboriginal lands has been born out of the open
and mutually beneficial relationship that has been developed since
2005.
Metals X has directly employed many local people in all on ground
exploration and feasibility activities undertaken in the area, and
sees the training of local people as a critical factor in the future
development of the Wingellina operation.
Metals X has made its exploration camp available to accommodate
service personnel working in the local communities, and continues
to support local community development initiatives.
10
OPERATIONAL REVIEW
TIN DIVISION
Metals X is Australia’s largest tin producer through its 50% ownership of the Bluestone Mines Tasmania Joint
Venture (“BMTJV”). The key asset of BMTJV is the Renison Tin Project, which consists of the world class Renison
Tin Mine, a 680,000tpa tin concentrator and the proposed Renison Expansion Project (Rentails) which involves
the construction of a tailings re-treatment concentrator and tin fuming plant.
RENISON TIN PROJECT
The Renison Tin Project is located approximately 15km NE of Zeehan in the mineral-rich west coast region of
Tasmania. The Mt Bischoff open pit mine is located approximately 80km north of the Renison Tin Project.
The annual net operating profit after income tax for the Renison Tin Project was $21,506,342 compared to
$5,054,230 for the previous year.
Metals X’s share of revenue from tin concentrate sales from the Renison Tin Project for the financial year was
$69,015,638 (2010: $95,686,783). The revenue in the current year is lower than the previous year due to the sale
of 50% of the Tin Project in the previous year.
Metals X Entity’s interest for the Renison Tin Project is summarised below:
Mining
Renison Underground
Ore Hoisted (tonnes)
Grade (%Sn)
Mt Bischoff Open Pit
Ore Mined (tonnes)
Grade (%Sn)
Tin Concentration
Tonnes Processed (tonnes)
Grade (%Sn)
Recovery (%)
Concentrate Grade (%Sn)
Copper Metal Produced (tonnes)
Tin Metal Produced (tonnes)
Tin Metal Sales (tonnes)
2011
236,038
1.61
3,345
0.99
236,038
1.56
66
56
94
2,701
2,788
2010
333,441
1.70
186,639
1.31
535,239
1.56
67
55
-
5,340
5,129
* Note that in the 2010 year, Metals X held 100% of the project for 9 months, and 50% of the project for 3 months. The Company has held
50% of the project for the entirety of 2011.
The current operating costs average of approximately A$15,700 per tonne allow for a solid operating margin.
In the period since the mine was brought back to production in 2008, mining has been constrained to the
South Renison area whilst mine de-watering and rehabilitation of the flooded North Renison decline and other
associated ore zones were re-established. At year end de-watering and refurbishment of the Northern zone had
advance to a point that allowed access to the upper levels of the Zeehan ore body and subsequent to year end
has now advanced to deepest point in the North Renison Decline. Rehabilitation has now commenced on the cross
cuts and draw points of the Zeehan, Bruny, and Huon ore bodies with production expected to commence towards
the end of calendar year 2011.
11
OPERATIONAL REVIEW
Renison Mine
Mine Development Schematic Longitudinal Projection
South
Bassett
Deep Federal South
Envelopes Deeps
Lower Federal
Deep Federal
Envelope
Mid Federal
Wedge
Waratah
Schouten
Deep
Federal
North
North
Bassett
Cascade, King,
Dundas
North King
Mawson’s
Bruny
1430 Nth HW Drill Drive
Huon
Zeehan
Rendeep
North
Deep Huon
Area 4
Area 4
Down Plunge
Granite
Dolomite 1
Crimson Creek Formation
Dolomite 2
Dalcoath Member
Dolomite 3
Mined Out Area
Remaining Ore Reserve
(Stratabound
Mineralisations)
Remaining Ore Reserve
(Fault Mineralisations)
Recent / Highlight Drillhole
Resource
Fault
Decline
BMT Drillhole
Pre 2008 Drillhole
0 M
100 M
200 M
300 M
400 M
South
North
It is expected that once the higher grade production from the North Renison area commences, operating costs
will further decline as a result of the higher tin production. The company expects to achieve its targeted mine
productivity of 60,000 tonnes of ore per month and 8,000 tonnes of tin in concentrates per annum when mining
fronts are fully established in both the North and South Renison declines in early 2012.
Another major milestone in the tin concentrator was the commissioning of the copper circuit enabling copper
to be recovered as a co-product from the tin concentration process. Approximately 94 tonnes of copper was
produced for the year and the circuit has now been fully commissioned. Copper in concentrate is now being
output at a rate of approximately 500 tpa and is expected to increase further as higher grade coincident copper
areas are mined.
During the year a core focus of BMTJV was on mine exploration. Two diamond drills continuously focussed on
the task of upgrading and extending the Resources and Reserves of the mine. A third diamond drill rig operated
on the surface with a focus on open pittable surface targets within the mining lease. Over 33,000m of diamond
drilling was completed during the year.
The exploration outcomes resulted in an increase in the Total Identified Mineral Resource Estimate (as of 30
June 2011) to 8.35Mt @ 1.63%Sn containing 135,3790 tonnes of tin and underground mining reserves alone
were increased to 2.61Mt at 1.43%Sn containing 37,202 tonnes of tin.
Renison Mine
Area 4 Recent Results
Granite
Dolomite 1
Crimson Creek Formation
Dolomite 2
Dalcoath Member
Dolomite 3
Mined Out Area
Mineralisation
Resource
Fault
Decline
BMT Drill Hole
Pre 2008 Drillhole
Previously
mined
U4264 7.21m @ 6.52% Sn from 121.81m
U4229 3m @ 2.53% Sn
Zeehan
Zone
Huon
Zone
Waratah/Schouten
Zone
U4244 8.27m @ 2.17% Sn
U4238 6.87m @ 5.78% Sn
U4232 3.81m @ 3.17% Sn & 3.18m @ 6.85% Sn
Open and
to be tested
U4233 7.22m @ 3.09% Sn & 8.78m @ 6.10% Sn
U4239 2.5m @ 3.63% Sn
U4227 1.88m @ 3.00% Sn
U4246 5.18m @ 1.08% Sn
U4240 2.77m @ 3.23% Sn & 5m @ 2.07% Sn
U4247B 7.3m @ 2.89% Sn and 3.6m @ 1.89% Sn
U4234 1.84m @ 5.17% Sn and 9.68m @ 1.61% Sn
Current
Reserve
U4272 4.18m @ 13.87% Sn
U4228 4m @ 2.23% Sn
Zone of Demonstrated
Potential
U4242 6.02m @ 2.46% Sn
U4249 8.73m @ 2.41% Sn
Ore Reserve
Recent Drill Hole
To Federal mining zone
400m of untested strike
South
North
Area 4 Down Plunge
Open and to be tested
Current Resource
U4256 6.88m @ 6.53% Sn from 226m, and 7.94m @ 5.63% Sn from 273.1m.
12
OPERATIONAL REVIEW
Cross Section66500mNCross Section65700mN2000mRL66000mN67200mN1500mRL1000mRL66400 N66500 N66300 N66600 N66700 N66400 N66500 N66600 N66700 N1200 RL1300 RL1200 RL1300 RL The highlight was Area 4 were over 12,000m of drilling was
completed and resulted in a significant increase in the total resource
of the Area 4 Zone to 1.33 Mt @ 1.9% Sn. Importantly, Area 4 is
located approximately 150m from the main North Renison decline
allowing for easy access. It is expected that production from Area 4
will commence within the fourth quarter of the 2012 financial year.
Drilling in Area 4 also returned numerous bonanza intercepts,
including U4251 14.0m @ 8.11% Sn, U4233 8.78m @ 6.10% Sn and
U4238 8.27m @ 5.78% Sn. The mineralisation remains open to the
south and down plunge. Of significance was the drilling of a step out
hole approximately 100m out from the current resource boundary
returning an intercept of 4.18m @ 13.87% Sn & 0.36% Cu in hole
U4272 providing clear evidence of the growth opportunities that are
still to be realised from this part of the overall ore system.
Other significant exploration success was achieved from the Lower
and Upper Federal and the newly defined Mawson’s lode in the north
of the mine located below the Dundas and King Resource areas that
has continued to return significant high grade results including
5.01m @ 6.39% Sn & 0.20% Cu in hole U4449 and 12.41m @ 3.62% Sn
& 0.76% Cu in hole U4456.
MOUNT BISCHOFF
Mount Bischoff is a significant deposit in its own right producing
in excess of 60,000t of tin metal since the late 1800’s. Although
a resource remains at Mount Bischoff, the last of the ore from the
current open pit was mined in July 2010. The remaining Mount
Bischoff ore stockpiles were depleted by the end of 2010 as
production from the Renison underground was advanced to provide
the entire feed for the Renison Tin Concentrator.
The current strategy for the Mount Bischoff project is to remain in
care and maintenance in the short term whilst options for further
underground and open pit mining are evaluated. In addition, the
BMTJV partners are undertaking a tenement scale geophysical
review at Mount Bischoff to generate further exploration targets.
AREA 4
“A SIGNIFICANT
INCREASE TO
1.33 Mt @ 1.9% Sn”
13
OPERATIONAL REVIEW
RENISON EXPANSION PROJECT (RENTAILS)
The Renison Expansion Project's (“Rentails”) objective is to
reprocess and recover tin and copper from an estimated 18.95 Mt
of tailings output from the historical processing of tin ores at the
Renison Bell mine since 1965. The tailings have an average grade of
0.44% Tin and 0.20% Copper and represent one of the largest single
resources of tin available in Australia today.
Metals X completed a Definitive Feasibility Study into mining and re-
processing of tailings for the recovery of tin and copper at Rentails
in 2009. Financial outcomes estimated an average total cash
cost of production of $11,875 per tonne of tin after copper credits,
assuming a copper price of A$6,250 (current copper price A$8,300).
Capital costs were estimated to be AUD$ 194 million +/- 15%. The
study outcomes demonstrate that it remains exposed to upside from
tin and copper prices .
The proposed process route uses proven technology and has
developed a robust circuit for the recovery of both tin and copper.
In addition, the project would allow for the treatment of other tin
sulphide (stannite) ore bodies within the region, which are not
currently viable under conventional tin processing routes, as they
require tin fuming.
The Rentails flowsheet comprises the reclaiming of tailings
from the historical dams at a rate of 2Mt per annum, producing
approximately 5,300t of tin and 2,000t of copper in concentrate per
annum. The tailings ore is finely ground to increase the liberation
of the tin bearing minerals before removing the gangue sulphides
by flotation. The sulphide flotation tails which contain the fine tin
is then processed through classification, gravity recovery and tin
flotation circuits. Flotation produces a 10% tin concentrate that will
be smelted to produce a tin fume product assaying in excess of 68%
tin. A by-product from the fuming process will be a saleable copper
matte assaying 70% copper.
Metals X is currently working with its BMTJV partners to validate
the feasibility study in preparation to committing to the project
development.
RENTAILS
“ONE OF THE LARGEST
SINGLE RESOURCES OF
TIN IN AUSTRALIA”
14
OPERATIONAL REVIEW
COLLINGWOOD TIN PROJECT
The Company’s Collingwood Tin Project is located in Far North
Queensland approximately 30km south of Cooktown. The Company
has decided to dispose these assets and is currently actively
marketing the project for sale. In the meantime the project will
remain under care and maintenance.
There was no production from the project for the reporting period.
The net operating loss after income tax for the Collingwood Project
for the financial year was $505,195 (2010: $820,100). There was no
impairment of property, plant and equipment during the year (2010:
$500,000). There was no revenue from tin concentrate sales for the
year.
TIN MARKET
The LME Australian dollar tin price increased from approximately
A$20,000/t at the commencement of the year and reached an
historical high of A$33,255/t in April 2011 before receding to
approximately A$24,000/t by the end of the year.
The demand for tin returned to levels prior to the global financial
crisis of approximately 360,000 tonnes per annum while production
remained relatively flat at approximately 350,000 tonnes resulting in
a deficit of approximately 10,000 tonnes for the 2011 financial year.
The supply of tin continues to remain extremely tight as production
from China, Indonesia and Peru which together supplies 75% of
global tin-in-concentrate, continue to show signs of decline. Limited
additional global production capacity is currently being seen in
the short to medium term. It is estimated that the supply deficit
for the 2012 financial year will be similar to 2011 financial year of
approximately 10,000 tonnes.
In the current period of substantial market volatility, the tin price has
tended to trade in line with general market sentiment for base metals
without cognisance of its specific supply-demand fundamentals. We
expect price volatility in the current market but anticipate that the
solid underlying supply pressures will ultimately prevail and create
stronger pricing through 2012.
USD Tin Price and Stocks
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
0
1
/
8
0
/
0
1
0
1
/
7
0
/
1
2
0
1
/
8
0
/
0
3
0
1
/
9
0
/
9
1
0
1
/
0
1
/
9
0
1
/
0
1
/
9
2
0
1
/
1
1
/
8
1
0
1
/
2
1
/
8
0
1
/
2
1
/
8
2
0
1
/
2
1
/
7
1
1
1
/
2
0
/
6
1
1
/
2
0
/
6
2
1
1
/
3
0
/
8
1
1
1
/
4
0
/
7
1
1
/
4
0
/
7
2
1
1
/
5
0
/
7
1
1
1
/
6
0
/
6
1
1
/
6
0
/
6
2
1
1
/
7
0
/
6
1
1
1
/
8
0
/
5
1
1
/
8
0
/
5
2
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
INVESTMENTS
Metals X has operated a strategy over the past few years to build a diverse portfolio of metal and industrial
mineral interests. It is not always possible to acquire assets outright and when opportunities are identified our
strategy is to invest directly within the publicly listed or unlisted entity that owns the assets. We consider this
provides us with both the flexibility to fund and finance the exploration and development activities in a dedicated
manner without the competition for capital from our operations.
Metals X looks to take significant shareholdings and Board representation in these entities such as:
1. Westgold Resources Limited 25.02% (2010: 31.99%);
2. Independence Group NL 3.23% (2010: Nil);
3. Mongolian Resource Company Limited 16.97% (2010: Nil); and
4. Aziana Limited 25.00% (2010: Nil).
This strategy proved successful during the year as the Company crystallised a $55.2M profit from the partial sale
of its investment in Jabiru Metals Limited (now Independence Group).
WESTGOLD RESOURCES LIMITED
Westgold Resources Limited (“Westgold”) is an ASX listed (ASX:WGR) gold and base metals exploration company.
Its principal focus is on exploring and developing a new gold field at its Rover project near Tennant Creek in the
Northern Territory and the commencement of gold production from its large tenement holding in the Murchison
Goldfields of Western Australia. Westgold currently holds a combined resource of over 3.2 million ounces gold
equivalent within these two main projects and is aspiring to become Australia next 200,000 ounce per annum
gold equivalent producer.
Central Murchison Gold Project
The Central Murchison Project is located in the Murchison gold fields of Western Australia south of Cue. The project
includes the historical production areas of Big Bell, Day Dawn and Cuddingwarra that have collectively produced
over 5Moz.
During the year exploration programs continue to progress towards development and production. A successful
underground mining study was undertaken which envisages an 800,000 tpa processing facility to produce
approximately 100,000 oz pa. An open pit mining study is also in progress to supplement the underground ore
feed. The strategy is to build a centralised processing plant to re-commence mining and production from as early
as 2012. A current Total Identified Resource estimate of 2Moz has currently been identified.
Rover Project
The Rover project is located approximately 100kms SW of Tennant Creek in the Northern Territory. Westgold has
been targeting high grade gold and copper deposits similar to the historical mines of the Tennant Creek Goldfield
renowned for their exceptional high grade gold and copper mines which produced over 5M ounces of gold and
around 0.5Mt of copper metal between the 1930’s to late 1990’s.
The large portfolio of highly prospective tenements within the Rover field contains a number of coincident
magnetic and gravity anomalies that are interpreted to signify iron oxide copper gold (“IOCG”) bodies under
varying thicknesses (60m-250m) of un-conforming cover rocks. To date Westgold has focussed most of its
attention on two of these targets which have both resulted in the discovery of significant ore bodies referred to as
Rover 1 and Explorer 108.
During the year Westgold announced an updated resource at Rover 1 to 6.8 million tonnes at an equivalent gold
grade of 5.57g/t for 1.22 million ounces of gold equivalent.
Within the Rover field there are also several other exciting targets that have very similar magnetic and gravity
signatures of similar size. It is anticipated that several of the these targets will be drilled over the proceeding year
which could add significantly to the economics of the high quality Rover 1 discovery and to the development of a
new Australian gold field.
16
OPERATIONAL REVIEW
Explorer 108 is a large alteration system, mineralised throughout
with broad (100m+) intervals grading 2 to 5% Zn + Pb, but
importantly contains a number of high grade lenses up to 60m thick
containing grades over 7% Zn + Pb. The most significant of these
discovered to date occurs in the base of dolomite sequence directly
above the contact with the underlying acid volcanic sequence.
Westgold announced a maiden identified mineral resource estimate
for Explorer 108 in 2008 as follows:
8.7Mt @ 5.7% (Zn + Pb) using a 2.5% Zn+Pb lower cut-off; or
4.0Mt @ 8.2% (Zn + Pb) using a 5.0% Zn + Pb lower cut-off
During the year Westgold successfully completed the off market
takeover of Aragon Resources Limited (“Aragon”). Metals X Limited
participated in the takeover of Aragon by accepting Westgold’s
offer to acquire the Company’s 8.70% interest in Aragon for shares
in Westgold. The Company received 20,271,858 Westgold shares
as consideration for its 8.70% interest in Aragon. The Aragon share
sale resulted in a profit of $196,199 for Metals X. As a result of the
takeover Metals X percentage holding in Westgold was decreased
from 31.99% to approximately 24.5%. Metals X acquired an additional
10,457,150 Westgold shares subsequent to the takeover and
currently holds 25.02% of Wesgold’s issued capital.
INDEPENDENCE GROUP NL
Independence is an ASX listed (ASX:IGO) Australian diversified
explorer, developer and producer. Operations include the Long Nickel
mine and the high grade Jaguar VMS copper, zinc, and silver mine
in Western Australia. Independence also owns 30% of the 3.9Moz
Tropicana gold project currently being developed and holds various
exploration projects within Australia including the Stockman Copper,
Zinc and silver project and the Karlawinda gold project.
During the year Independence successfully completed the off
market takeover of Jabiru Metals Limited (“Jabiru”). Metals X Limited
participated in the takeover of Jabiru by signing a pre-bid agreement
with Independence to sell its 19.99% interest in Jabiru for cash and
shares in Independence. The Company received $48,089,540 in
cash and 6,558,571 Independence shares as consideration for its
19.99% interest in Jabiru. The Jabiru share sale has resulted in a
profit of $55,268,640 for the Company.
MONGOLIAN RESOURCES CORPORATION LIMITED
MRC is an Australian listed Mongolian resource company. MRC's
main two gold projects include the high grade Kargana (Blue Eyes)
Gold Project (85%) and the Sujigtei Gold Project (90%) which are
located 7 kms apart within the North Khentei gold belt of Mongolia.
The Blue Eyes deposit has been mined for over 80 years by artisanal
miners and currently contains an existing operation which is
advancing over three levels. Sujigtei was actively explored and
developed on five levels over 150 vertical meters in the 1960’s by the
East German Geological Department and has been worked in recent
times by artisanal miners.
17
OPERATIONAL REVIEW
MRC is currently targeting a maiden resource at the Blue Eyes and Sujigtei Gold Deposits located. The North
Khentei gold belt includes several historical mines and deposits including the Boroo and Gatsuurt gold mines,
Bumbat, Erren, Khargant and Sujigetei gold deposits. Feasibility studies have commenced on the development
of these high grade gold deposits, two mining licenses have been granted and the statutory approvals are at an
advanced state to recommence mining activities.
MRC advised that sampling for near surface open pittable gold from outcropping quartz stockworks near Blue
Eyes has returned an average of 1.0g/t from 319 samples. Rock chip samples have further highlighted the
potential for open pit mineralization returning gold assays of 18.8g/t, 17.9g/t, 9.0g/t and 7.8g/t.
MRC also holds exploration permits covering the Barglit Iron Ore Prospect (100%), the Doshin Thermal Coal
Prospect (100%) and various alluvial gold projects at Berleg, Selenge, Ovorhangay, Omnogovi and Bulgan.
40 E
AZIANA LIMITED
Aziana is an unlisted gold and bauxite explorer in Madagascar
which currently undergoing preparations to become a
publicly listed company on the ASX. The gold exploration
activities are focused on the Central Madagascar Gold Belt
(CMGB), Beforona Gold Belt (BGB) and Vohilava-Ampasary
Gold Belt (VAGB). Aziana’s gold prospects include large areas
where substantial artisanal mining and gold production have
occurred and Aziana is the first company to systematically
sample, drill and explore these highly prospective gold
targets.
300km
15 S
150km
15 S
40 E
40 E
0
45 E
15 S
In addition, Aziana is also the 99% beneficial owner of
the exciting Manantenina Bauxite Prospect in southern
Madagascar where exploration to date has shown significant
potential for large tonnages of high grade bauxite/gibbsite
development.
ANTANANARIVO
(Head Office)
20 S
20 S
20 S
25 S
ANTANDROKAZO
(GOLD)
Aziana has been an active explorer in Madagascar since 2006
and now holds a leading position in gold exploration. In the
past 5 years, Aziana has systematically reviewed the 10 main
gold belts in the country, completed reconnaissance field
works and selectively reduced its tenement portfolio from
over 16,000km2 to focus on the current core area of 950km2
of highly prospective gold tenure. Early stage fieldwork has
returned highly promising results and Aziana continues to
intensify its exploration activities on its core projects.
TOLIARA
25 S
25 S
PROTEROZOIC AGE
Ambatolampy Group,
Mica schist, amphibolite, quartzite
The CMGB sits within the Ambatolampy Group of rocks and
includes approximately half of Madagascar’s known artisanal
gold mining sites and Aziana’s key Alakamisy, Antandrokazo
and Antakasina gold projects. The BGB lies north-east of the
capital and hosts Aziana’s Grigri gold project while the VAGB
lies south-east of the capital and hosts Aziana’s Sakaleone
gold field.
Manampotsy Group,
Gneiss, granite
ALAKAMISY (GOLD)
(Field Office)
MORONDAVA
40 E
45 E
45 E
50 E
ANTSIRANANA
50 E
ANTSIRANANA
0
150km
300km
45 E
0
150km
300km
50 E
0
150km
MAHAJANGA
50 E
15 S
300km
ANTSIRANANA
ANTALAHA
MAHAJANGA
ANTSIRANANA
MAROVATO (GOLD)
ANTALAHA
ANTALAHA
MAROVATO (GOLD)
MAHAJANGA
ANTANANARIVO
(Head Office)
ALAKAMISY (GOLD)
(Field Office)
MAHAJANGA
ANTANDROKAZO
(GOLD)
ANTANANARIVO
(Head Office)
ALAKAMISY (GOLD)
(Field Office)
ANTANDROKAZO
(GOLD)
MAJOR FAULT
MORONDAVA
GRIGRI (GOLD)
VHMS Ag-Pb-Cu
ANTANANARIVO
GRIGRI (GOLD)
(Head Office)
VHMS Ag-Pb-Cu
MAROVATO (GOLD)
GRIGRI (GOLD)
VHMS Ag-Pb-Cu
ANTAKASINA (GOLD)
ANTAKASINA (GOLD)
ANTALAHA
ALAKAMISY (GOLD)
(Field Office)
ANTANDROKAZO
(GOLD)
MAROVATO (GOLD)
20 S
MORONDAVA
SAKALEONE (GOLD)
MORONDAVA
GRIGRI (GOLD)
ANOSIVOLO
VHMS Ag-Pb-Cu
(GOLD, COPPER, SILVER)
ANTAKASINA (GOLD)
SAKALEONE (GOLD)
MAJOR FAULT
TOLIARA
ANTAKASINA (GOLD)
ANOSIVOLO
TOLIARA
(GOLD, COPPER, SILVER)
MANANTENINA (BAUXITE)
(Field Office)
TOLAGNARO
SAKALEONE (GOLD)
TOLAGNARO
25 S
MAJOR FAULT
ANOSIVOLO
(GOLD, COPPER, SILVER)
TOLIARA
SAKALEONE (GOLD)
ANOSIVOLO
(GOLD, COPPER, SILVER)
MANANTENINA (BAUXITE)
(Field Office)
PROTEROZOIC AGE
MAJOR FAULT
Ambatolampy Group,
Mica schist, amphibolite, quartzite
TOLAGNARO
Ambatolampy Group,
Greenstone Belt,
Mica schist, amphibolite, quartzite
Gneiss, amphibolite, gabbro
Active Project
Greenstone Belt,
Gneiss, amphibolite, gabbro
PROTEROZOIC AGE
ARCHAEAN AGE
MANANTENINA (BAUXITE)
(Field Office)
ARCHAEAN AGE
Manampotsy Group,
Gneiss, granite
TOLAGNARO
PROTEROZOIC AGE
MANANTENINA (BAUXITE)
(Field Office)
ARCHAEAN AGE
Manampotsy Group,
Tana Block,
Gneiss, granite
Gneiss, migmatite
Ambatolampy Group,
Mica schist, amphibolite, quartzite
Greenstone Belt,
Gneiss, amphibolite, gabbro
Manampotsy Group,
Gneiss, granite
ARCHAEAN AGE
Greenstone Belt,
Gneiss, amphibolite, gabbro
Tana Block,
Gneiss, migmatite
Tana Block,
Gneiss, migmatite
Active Project
Other Gold Projects
Pan-African thrust
Other Gold Projects
Tana Block,
Gneiss, migmatite
Pan-African thrust
Active Project
Other Gold Projects
Pan-African thrust
Active Project
Other Gold Projects
Pan-African thrust
Metals X believes Aziana is a well-established gold and
Bauxite explorer in one of the world’s most untapped mineral
provinces.
18
OPERATIONAL REVIEW
IDENTIFIED MINERAL RESOURCES & MINING RESERVE ESTIMATES
IDENTIFIED MINERAL RESOURCE – CONSOLIDATED AS AT 30 JUNE 2011
TIN DIVISION
PROJECT
Measured
Renison Bell
Mt Bischoff
Rentails
Collingwood
Indicated
Renison Bell
Mt Bischoff
Rentails
Collingwood
Inferred
Renison Bell
Mt Bischoff
Rentails
Collingwood
TOTALS
Renison Bell
Mt Bischoff
Rentails
Collingwood
TIN
Tonnes (Kt) Grade (%Sn) Sn Metal (t)
COPPER
Tonnes (Kt) Grade (%Cu) Cu Metal (t)
917
2.01
18,473
479
19,505
0.44
86,594
19,505
Sub-total
20,422
0.51
105,067
19,985
0.28
0.21
0.21
1,321
41,353
42,673
Sub-total
Sub-total
4,260
968
-
652
5,879
3,177
699
-
51
3,927
8,354
1,667
19,505
702
30,229
1.52
0.59
-
1.29
1.34
1.66
0.47
-
1.12
1.44
1.63
0.54
0.44
1.28
0.80
64,585
5,681
-
8,436
78,702
2,732
3,300
-
570
56,602
135,790
8,981
86,594
9,006
240,370
2,995
0.39
11,737
2,995
0.39
11,737
1,242
0.36
4,426
1,242
0.36
4,426
4,716
19,505
0.37
0.21
17,484
41,353
24,221
0.24
58,837
Total I.M.R
NICKEL DIVISION
Wingellina
Measured
Indicated
Inferred
Total I.M.R
Cut Off (%Ni)
0.5
0.5
0.5
0.5
Tonnes(Mt)
68.8
98.6
15.7
183.2
Ni (%)
1.00
0.97
0.97
0.98
Co (%)
0.078
0.075
0.069
0.076
Fe203(%)
48.7
46.4
42.7
47.0
Claude Hills*
Inferred
Inferred
* Approximately 50% of the Claude Hills Resource is located within EL4751 and the remainder within the Mt Davies JV lease EL3932.
Cut-off (% Ni)
0.5
0.7
Tonnes (Mt)
33.3
19.2
Fe2O3 (%)
39
44
Co (%)
0.07
0.08
Ni (%)
0.81
0.96
19
OPERATIONAL REVIEW
MINING RESERVE ESTIMATE – CONSOLIDATED AS AT 30 JUNE 2011
TIN DIVISION
PROJECT
TIN
COPPER
Cut-off % Tonnes (Kt) Grade (%Sn) Sn Metal (t) Tonnes (Kt) Grade (%Cu) Cu Metal (t)
Proved Reserves
Renison Bell
Mt Bischoff
Rentails
Collingwood
0.80%
0.50%
0.00%
0.70%
378
1.67
6,313
376
0.13%
492
-
-
-
-
-
-
Sub-total
378
1.67
6,313
376
0.13%
492
Probable Reserves
Renison Bell
Mt Bischoff
Rentails
Collingwood
0.80%
0.50%
0.00%
0.70%
Sub-total
Total Mining Reserves
Renison Bell
Mt Bischoff
Rentails
Collingwood
Total Reserves
0.80%
0.50%
0.00%
0.70%
NICKEL DIVISION
2,230
1.39
30,890
1,541
0.29
4,481
18,664
-
20,894
0.44
-
0.54
82,553
18,664
0.21
39,409
-
113,442
20,206
0.22
43,890
2,608
1.43
37,202
1,918
0.26
4,973
18,664
-
21,272
0.44
-
0.56
82,553
18,664
0.21
39,409
-
119,755
20,582
0.22
44,383
Class
Proven
Probable
Total
Mining Reserve Estimate as at 30 June 2011
Tonnes (Kt)
-
167,470
167,470
Ni
-
0.98
0.98
Co
-
0.08
0.08
Fe2O3
-
47.34
47.34
*Reserves are a sub-set of the IMR estimate
COMPETENT PERSONS STATEMENT
The information in this report that relates to Exploration Results is compiled by Metals X technical employees
under the supervision of Mr Peter Cook (BSc (Applied Geology) (MSc (Min. Econ) MAusIMM). Mr Cook is not a
full-time employee of the company. Mr Cook is an advisor to Metals X and the Non-Executive Chairman of Metals
X. Mr Cook has sufficient experience which is relevant to the styles of mineralisation and types of deposit under
consideration and to the activities which they are undertaking to qualify as a Competent Person as defined in the
2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.
Mr Cook consents to the inclusion in this report of the matters based on his information in the form and context in
which it appears.
20
OPERATIONAL REVIEW
DIRECTORS’
AND
FINANCIAL
REPORT
22
DIRECTORS’ REPORT
38
AUDITOR’S INDEPENDENCE DECLARATION
39
CORPORATE GOVERNANCE STATEMENT
49
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE YEAR
ENDED 30 JUNE 2011
50
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2011
51
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
52
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2011
53
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30
JUNE 2011
116
DIRECTORS’ DECLARATION
117
INDEPENDENT AUDIT REPORT
119
SECURITY HOLDER INFORMATION AS AT 21
SEPTEMBER 2011
121
SUMMARY OF MINING TENEMENTS
DIRECTORS’ REPORT
The Directors submit their report together with the financial report of Metals X Limited (“Metals X” or “the
Company”) and of the Consolidated Entity, being the Company and its controlled entities, for the year ended 30
June 2011.
DIRECTORS
The names and details of the Company’s Directors in office during the financial period and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
Peter Gerard Cook - Non-Executive Chairman
Mr Cook is a Geologist (BSc (Applied Geology)) and a Mineral Economist (MSc (Min. Econ), MAusIMM). In
recent years he has been the Managing Director of Hill 50 Limited, the Chief Executive Officer of Harmony
Gold Australia Pty Ltd, Managing Director of Abelle Limited and Chairman of both Metals Exploration Limited
and Aragon Resources Limited. He has considerable experience in the fields of exploration and project and
corporate management of mining companies. He is also a director of Westgold Resources Limited and Kingsrose
Mining Limited and the Chairman of Pacific Niugini Limited. Mr Cook also serves on the Company’s Audit and
Remuneration Committees.
During the past three years he has served as a director of the following public listed companies:
• Westgold Resources Limited* (Appointed 19 March 2007);
• Aragon Resources Limited* (Appointed 18 May 2007);
• Pacific Niugini Limited* (Appointed 31 August 2009); and
• Kingsrose Mining Limited* (Appointed 10 October 2010).
Warren Shaye Hallam - Managing Director
Mr Hallam is a Metallurgist (B. App Sci (Metallurgy)) and a Mineral Economist (MSc (Min. Econ)) and holds a
Graduate Diploma in finance. He has considerable technical and commercial experience within the resources
industry. He is also a director of Westgold Resources Limited. In recent times he was the Managing Director of
Metals Exploration Limited.
During the past three years he has served as a director of the following public listed company:
• Westgold Resources Limited* (Appointed 18 March 2010).
Michael Leslie Jefferies - Non-Executive Director
Mr Jefferies has been an executive of Guinness Peat Group (“GPG”) for the past 19 years and has extensive
experience in finance and investment. He is a chartered accountant and holds a B. Comm. Mr Jefferies also
serves on the Company’s Audit and Remuneration Committees.
During the past three years he has served as a director of the following public listed companies:
• Tower Australia Group Limited (Appointed 8 August 2006 – Resigned 8 August 2008);
• Tower Limited* (Appointed 14 December 2006);
• Ozgrowth Limited* (Appointed 31 October 2007);
• Clearview Wealth Limited* (Appointed 4 November 2008); and
• Capral Limited* (Appointed 6 November 2008).
22
DIRECTORS’ REPORT
Dean Patrick Will - Executive Director (Appointed 12 July 2011)
Mr Will is a Mining Engineer (BEng) with a Master’s degree in Business Administration. Mr Will has over 26 years’
experience and has numerous senior and executive roles across a diversity of companies. For the past nine
years he has been the Chief Mining Engineer with Mincor Resources NL where he has been responsible for mining
engineering, project evaluations, assisting business development, evaluations and contract management and
successfully played a key role in Mincor’s nickel expansion strategy.
Mr Will has held no other public company directorships in the past three years.
Scott James Huffadine - Executive Director (Resigned 1 June 2011)
Mr Huffadine is a Geologist (BSc (Hons)) with broad experience in the resources industry, specifically in geology
and mining project management. Prior to joining the Company Mr Huffadine was employed by Harmony Gold
Australia Pty Ltd as the General Manager of the Hill 50 Gold Project for 4 years. His previous roles include Chief
Geologist for both Harmony and Hill 50 Gold (Mt Magnet Project). He has also held Underground, Open Pit and
Exploration Geology positions with WMC Resources at Mt Magnet WA, Dominion Mining at Mt Morgan’s WA and
Werrie Gold NSW.
During the past three years he has served as a director of the following public listed company:
• Westgold Resources Limited* (Appointed 1 June 2011).
Sanlin Zhang - Non-Executive Director
Mr Zhang is a Vice President of Jinchuan Group Limited and is responsible for international investments, legal
council and community infrastructure. He is also the Non-Executive Chairman of Albidon Limited.
During the past three years he has served as a director of the following public listed company:
• Albidon Limited* (Appointed 31 August 2010).
Yimin Zhang - Alternate Non-Executive Director
Mr Zhang joined the Board to act as an alternate director for Sanlin Zhang. Mr Zhang is the Chief Representative
for Jinchuan Australia and is also an Executive Director of Sino Nickel Pty Limited and Albidon Limited. Mr Zhang
has worked for Jinchuan since 1981 and has been posted to several overseas positions to which he has been
involved in numerous Jinchuan co-operative ventures. Mr Zhang holds a Diploma from the Metallurgical and
Architectural Institute of Chung Chan.
During the past three years he has served as a director of the following public listed company:
• Albidon Limited* (Appointed 9 September 2009).
* Denotes current directorship
23
DIRECTORS’ REPORT
INTERESTS IN THE SHARES OF THE COMPANY
As at the date of this report, the interests of the Directors in the shares and options of Metals X Limited were:
Director
P G Cook
W S Hallam
M L Jefferies
D P Will
S Zhang (1)
Y Zhang (Alt Director)
Total
Fully Paid Ordinary Shares
Options expiring on 30 November 2012
exercisable at $0.14
68,440,200
6,350,000
2,700,000
-
176,000,000
-
253,490,200
-
1,500,000
-
-
-
-
1,500,000
(1) Mr Zhang is a director of Jinchuan Group Limited which holds 176,000,000 fully paid ordinary shares in the Company.
COMPANY SECRETARY
Fiona Van Maanen - Company Secretary
Mrs Van Maanen is a CPA, holds a Bachelor of Business (Accounting) degree and a Graduate Diploma in Company
Secretarial Practice. She has many years of accounting and financial management experience in the mining and
resources industry and has been with the Company since incorporation.
DIVIDENDS
No dividends have been paid or declared by the Company during the financial period or up to the date of this report.
Refer to note 10 for available franking credits.
PRINCIPAL ACTIVITIES
The principal activities during the year of entities within the Consolidated Entity were:
• exploration for and the mining, processing, production and marketing of tin concentrate in Australia;
• exploration for nickel in Australia;
• exploration for phosphate in Australia;
• development of nickel projects; and
• exploration and mining for precious and base metals through significant shareholdings in Westgold Resources
Limited, Independence Group NL, Mongolian Resource Corporation Limited and Aziana Exploration Corporation.
There have been no significant changes in the nature of these activities during the year.
EMPLOYEES
The Consolidated Entity employed 87 employees at 30 June 2011 (2010: 81).
OPERATING AND FINANCIAL REVIEW
A full review of the operations of the Consolidated Entity during the year ended 30 June 2011 is included on pages
3 to 20.
24
DIRECTORS’ REPORT
OPERATING RESULTS
The net profit from continuing operations after income tax of the Consolidated Entity for the period was
$62,801,803 (2010: $12,601,084), an improvement of 398% as compared to the previous year. This result
reflects an increase in operating profits from the Renison Tin Project, profit on the sale of shares in Jabiru Metals
Limited ($55,268,640), Aragon Resources Limited ($196,199) and Icon Resources Limited ($252,942).
The Consolidated Entity’s net profit after income tax for the year was $62,296,608 (2010: $11,780,984), an
improvement of 429% as compared to the previous financial year.
REVIEW OF FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES
The consolidated statement of cash flows illustrates that there was an increase in cash and cash equivalents in
the year ended 30 June 2011 of $46,486,707 (2010: $22,547,138). The increase in cash inflow in comparison
with the prior year was due to the factors detailed below.
There has been an increase in the amount of cash generated from operating activities to $23,976,007 (2010:
$4,437,180), which is largely due to a decrease in operating costs at the Renison Tin Project.
There has been an increase in the amount of cash generated from investing activities to $22,502,060 (2010:
$8,665,319), which was mainly attributable to the sale of the Jabiru Metals Limited and Icon Resources Limited
shares for $48,579,912. This increase in cash flows was partly offset by the acquisition of shares in Mongolian
Resources Corporation Limited, Westgold Resources Limited and Aziana Exploration Corporation for a total of
$10,558,620.
Financing activities resulted in $8,640 (2010: $9,444,639) of net cash inflows. The increase in the previous year
was due to the placement of 178,000,000 shares to APAC Resources Limited for a total of $15,986,833 after
capital raising costs.
The Consolidated Entity’s debt has decreased by $1,675,890 (2010: $7,219,019) over the last year due repayment
of finance leases secured by mobile plant and equipment at the Renison Tin Project. Of the Consolidated Entity’s
debt, 81% ($941,788) is repayable within one year of 30 June 2011, compared to 76% ($2,153,380) in the
previous year.
CAPITAL EXPENDITURE
There has been a decrease in cash used to purchase property, plant and equipment in 2011 to $2,252,369 from
$2,700,248 for the year ended 30 June 2010. Capital commitments of $115,023 existed at the reporting date,
principally relating to the purchase of maintenance plant and equipment and a tailings dam lift for the Renison
Tin Project.
SHARE ISSUES DURING THE YEAR
Share Placements
There were no share placements during the financial year.
Option Conversions
No options were converted during the financial year.
25
DIRECTORS’ REPORT
CORPORATE INFORMATION
CORPORATE STRUCTURE
BLUESTONE
AUSTRALIA
PTY LTD
ACN 108 490 820
100%
BLUESTONE
NOMINEES
PTY LTD
ACN 092 257 013
Collingwood
Tin Project
100%
75%
MAD METALS
PTY LTD
ACN 149 449 169
100%
100%
100%
CHINGGIS METALS
PTY LTD
ACN 149 449 150
AGATON PHOSPHATE
PTY LTD
ACN 129 901 097
METALS
EXPLORATION
PTY LTD
ACN 005 483 009
100%
METEX NICKEL
PTY LTD
ACN 108 243 358
Central Musgrave
Project Exploration
Project
HINCKLEY RANGE
PTY LTD
ACN 052 098 496
Wingellina Nickel
Exploration
Project
AUSTRAL NICKEL
PTY LTD
ACN 092 816 558
Claude Hills Nickel
BLUESTONE
MINES TASMANIA
PTY LTD
ACN 108 492 628
50% of Bluestone
Mines Tasmania
Venture Project
50%
BLUESTONE MINES
TASMANIA JOINT
VENTURE PTY LTD
ACN 141 265 974
Manager of
Unincorporated
Bluestone Mines
Tasmania Joint Venture
26
DIRECTORS’ REPORT
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Total consolidated equity increased to $263,953,921 from $201,866,069, an increase of $62,087,853. The
movement was largely as a result of the increase in profits from the Renison Tin Project and the sale of Jabiru
Metals Limited and Aragon Resources Limited shares.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 16 June 2011 the Company announced its intention to conduct an on-market buy-back of up to 10% of its
issued capital over a twelve month period commencing on 1 July 2011. As at the date of this report the Company
had acquired 25,208,407 shares for a total value of $5,740,356.48 and an average price of $0.228 per share.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
It is expected that the Consolidated Entity will continue its exploration, mining, processing, production and
marketing of tin concentrate in Australia, and will continue its exploration and development of its nickel and
phosphate projects. These are described in more detail in the Review of Operations above.
Further information regarding likely developments in the operations of the Consolidated Entity and the expected
results from those operations in future financial years has not been included in this report because, in the opinion
of your directors, its disclosure would prejudice the interests of the Consolidated Entity.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Consolidated Entity’s activities are subject to the relevant environmental protection legislation
(Commonwealth and State legislation) at its projects. The Consolidated Entity believes that sound environmental
practice is not only a management obligation but the responsibility of every employee and contractor.
During the period our achievements in the environmental area included:
• Continued focus on environmental management; and
• Continuous review and improvement of our environmental management systems across all projects.
No fines were imposed and no prosecutions were instituted by a regulatory body during the period.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 7,575,000 unissued ordinary shares under option (8,275,000 at reporting
date), refer to note 29(e) for further details.
There are no participating rights or entitlements inherent in the options and option holders are not entitled to
participate in new issues of capital or bonus issues offered or made to shareholders during the currency of the
options.
Shares issued as a result of exercising options
No options were exercised during the financial year.
27
DIRECTORS’ REPORT
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company paid a premium in respect to a contract of insurance to insure Directors
and officers of the Company and related bodies corporate against those liabilities for which insurance is
permitted under section 199B of the Corporations Act 2001. Disclosure of the nature of the liabilities and the
amount of the premium is prohibited under the conditions of the contract of insurance.
DIRECTORS’ MEETINGS
The number of meetings of Directors’ (including meetings of committees of Directors) held during the year and
the number of meetings attended by each Director was as follows:
Directors Meetings
Audit
Remuneration
No of meetings held:
No of meetings attended:
P G Cook
W S Hallam
S J Huffadine
M L Jefferies
S Zhang
Y Zhang (Alt Director)
6
6
6
5
6
1
1
4
4
-
-
4
-
-
1
1
-
-
1
-
-
All Directors were eligible to attend all meetings held, except for Mr S Huffadine who was eligible to attend 5
meetings.
COMMITTEE MEMBERSHIP
As at the date of this report, the Company had an Audit Committee and a Remuneration Committee of the Board of
Directors.
Members acting on the committees of the Board during the year were:
Audit
P G Cook *
M L Jefferies
F J Van Maanen **
Remuneration
P G Cook *
M L Jefferies
Notes:
* Designates the Chairman of the Committee.
** Mrs Van Maanen is the Company Secretary and is not a Director.
28
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2011 outlines the remuneration arrangements of the
Company and the Consolidated Entity in accordance with the requirements of the Corporations Act 2001 (“the
Act”) and its regulations. This information has been audited as required by section 308(3C) of the Act.
The remuneration report details the remuneration arrangements for Key Management Personnel (“KMP”)
who are defined as those persons having authority and responsibility for planning, directing and controlling
the major activities of the Company and the Consolidated Entity, directly or indirectly, including any director
(whether executive or otherwise) of the parent company, and includes the five executives in the parent and the
Consolidated Entity receiving the highest remuneration.
For the purposes of this remuneration report, the term ‘executive’ includes the Managing Director, executive
directors, senior executives, general managers and secretary of the parent and the Consolidated Entity.
THE REMUNERATION REPORT IS PRESENTED UNDER THE FOLLOWING SECTIONS:
1. Individual key management personnel disclosures
2. Board oversight of remuneration
3. Non-executive Director remuneration arrangements
4. Executive remuneration arrangements
5. Company performance and the link to remuneration
6. Executive contractual arrangements
7. Equity instruments disclosures
1. INDIVIDUAL KEY MANAGEMENT PERSONNEL DISCLOSURES
Details of KMP including the top five remunerated executives of the Parent and Consolidated Entity are set out
below:
KEY MANAGEMENT PERSONNEL
Name
Directors
P G Cook
W S Hallam
S J Huffadine
M L Jefferies
D P Will
S Zhang
Y Zhang
Executives
P M Cmrlec
R D Cook
Position
Date of appointment Date of resignation
Non-Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Executive Director
Non-Executive Director
Alternate Non-Executive Director for S Zhang
23 Jul 2004
1 Mar 2005
17 Jun 2009
29 Dec 2006
12 July 2011
9 Nov 2009
3 Oct 2007
-
-
1 Jun 2011
-
-
-
-
General Manager – Central Musgrave Project
19 Nov 2007
1 Jun 2011
F J Van Maanen
Company Secretary
General Manager - Renison
22 Apr 2010
1 Jul 2005
-
-
Other than the appointment of D. Will as shown above, there were no other changes to key management
personnel after reporting date and before the date the financial report was authorised for issue.
29
DIRECTORS’ REPORT
2. BOARD OVERSIGHT OF REMUNERATION
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for making recommendations to the Board on the remuneration
arrangements for non-executive directors and executives.
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of non-
executive directors and executives on a periodic basis by reference to relevant employment market conditions
with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing
director and executive team.
REMUNERATION APPROVAL PROCESS
The Board approves the remuneration arrangements of the Managing Director and executives and all awards
made under the long-term incentive plan, following recommendations from the remuneration committee. The
Board also sets the aggregate remuneration of non-executive directors which is then subject to shareholder
approval.
The remuneration committee approves, having regard to the recommendations made by the Managing Director,
the level of the Consolidated Entity’s short-term incentive pool.
REMUNERATION STRATEGY
The Company’s remuneration strategy is designed to attract, motivate and retain employees and non-executive
directors by identifying and rewarding high performers and recognising the contribution of each employee to the
continued growth and success of the Consolidated Entity.
To this end, the company embodies the following principles in its remuneration framework:
retention and motivation of key executives;
•
• attraction of quality management to the Company; and
• performance incentives which allow executives to share the rewards of the success of the Company.
REMUNERATION STRUCTURE
In accordance with best practice corporate governance, the structure of non-executive director and senior
executive remuneration is separate and distinct.
3. NON-EXECUTIVE DIRECTOR REMUNERATION ARRANGEMENTS
REMUNERATION POLICY
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed
annually against fees paid to non-executive directors of comparable companies. The Board considers advice
from external consultants as well as the fees paid to non-executive Directors of comparable companies when
undertaking the annual review process.
The Company’s constitution and the ASX listing rules specify that the non-executive director fee pool shall be
determined from time to time by a general meeting. The last determination was at the annual general meeting
held on 24 November 2009 when shareholders approved an aggregate fee pool of $200,000 per year.
The board will not seek any increase for the non-executive director pool at the 2011 annual general meeting.
30
DIRECTORS’ REPORT
Structure
The remuneration of non-executive directors consists of director’s fees. Non-executives are entitled to receive
retirement benefits and to participate in any incentive programs. There are currently no specific incentive
programs.
The non-executive Chairman receives a base fee of $60,000 and each other non-executive director receives a
base fee of $40,000 for being a director of the Consolidated Entity. There are no additional fees for serving on any
board committees.
Mr Cook who is a non-executive director receives $215 per hour for each hour worked on behalf of the company.
These consultant fees are exclusive of non-executive directors fees.
Non-executive directors have long been encouraged by the Board to hold shares in the Company. The shares are
purchased by the directors at the prevailing market share price.
The remuneration report for the non-executive Directors for the year ending 30 June 2011 and 30 June 2010 is
detailed in Table 1 and Table 2 respectively of this report.
4. EXECUTIVE REMUNERATION ARRANGEMENTS
REMUNERATION POLICY
The Company aims to reward executives with a level and mix of remuneration commensurate with their position
and responsibilities within the Company. The current remuneration policy adopted is that no element of any
executive package be directly related to the Company’s financial performance. Indeed there are no elements of
any executive remuneration that are dependent upon the satisfaction of any specific condition. Remuneration
is not linked to the performance of the Company but rather to the ability to attract and retain executives of the
highest calibre. The overall remuneration policy framework however is structured in an endeavour to advance/
create shareholder wealth.
STRUCTURE
In determining the level and make-up of executive remuneration, the Remuneration Committee engages external
consultants as needed to provide independent advice.
Remuneration consists of the following key elements:
• Fixed remuneration (base salary and superannuation); and
• Variable remuneration (share options).
The proportion of fixed remuneration and variable remuneration for each executive for the period ending 30 June
2011 and 30 June 2010 are set out in Table 1 and Table 2.
FIXED REMUNERATION
Executive contracts of employment do not include any guaranteed base pay increase. Fixed remuneration is
reviewed annually by the remuneration committee. The process consists of a review of the Company, business
unit and individual performance, relevant comparative remuneration internally and externally and, where
appropriate, external advice independent of management.
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including
cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal
for the recipient without creating undue cost for the Company.
The fixed remuneration component for executives for the period ending 30 June 2011 and 30 June 2010 are set
out in Table 1 and Table 2.
31
DIRECTORS’ REPORT
VARIABLE REMUNERATION – LONG TERM INCENTIVE (LTI)
The objective of the LTI plan is to reward executives in a manner that aligns remuneration with the creation of
shareholder wealth.
LTI – Share options
Structure
LTI awards to executives are made under the Metals X Limited Employee Option Scheme and are delivered in
the form of shares options. The number of options issued is determined by the policy set by the remuneration
committee and is based on each executive’s role and position with the Consolidated Entity.
The share options will vest after one year or as determined by the Board of Directors and executives are able to
exercise the share options for up to three years after vesting before the options lapse. Where a participant ceases
employment prior to the vesting of their share options, the share options are forfeited. Where a participant ceases
employment after the vesting of their share options, the share options automatically lapse after six months of
ceasing employment.
Table 3 provides details of LTI options granted and the value of options granted, exercised and lapsed during the year.
Hedging of equity awards
The Company does not have a policy to prohibit executives from entering into arrangements to protect the value
of unvested LTI awards.
5. COMPANY PERFORMANCE AND THE LINK TO REMUNERATION
Remuneration is not linked to the performance of the Company but rather on the ability to attract and retain
executives of the highest calibre. The overall remuneration policy framework however is structured in an
endeavour to advance/create shareholder wealth.
The Metals X Limited Employee Option Scheme has no direct performance requirements but has specified time
restrictions on the exercise of options. The granting of options is in substance a performance incentive which
allows executives to share the rewards of the success of the Company.
The Consolidated Entity’s performance is reflected in the following table:
30 June 2007 30 June 2008 30 June 2009 30 June 2010 30 June 2011
Closing share price
Profit/(loss) per share (cents)
Net tangible assets per share
Total Shareholder Return
$0.39
-0.44
$0.18
90%
$0.41
-0.76
$0.20
4%
$0.11
-4.82
$0.15
-73%
$0.10
0.92
$0.15
-13%
$0.26
4.56
$0.19
166%
32
DIRECTORS’ REPORT
6. EXECUTIVE CONTRACTUAL ARRANGEMENTS
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are
provided below:
MANAGING DIRECTOR
The Managing Director, Mr Hallam is employed under an annual salary employment contract. The current
employment contract commenced on 17 June 2009. Under the terms of the present contract:
• Mr Hallam receives a fixed remuneration of $381,500 (including superannuation) per annum.
• Mr Hallam may resign from his position and thus terminate this contract by giving three months written
notice. On resignation any unvested options will be forfeited.
• The Company may terminate this employment agreement by providing three months written notice or
providing payment in lieu of notice period (based on the fixed component of Mr Hallam’s remuneration). On
termination on notice by the Company, any LTI options that have vested or that will vest during the notice
period will be released. LTI options that have not yet vested will be forfeited.
• The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs the Managing Director is only entitled to that portion of remuneration
that is fixed, and only up to the date of termination. On termination with cause by the Company, any LTI
options that have vested will be released. LTI options that have not yet vested will be forfeited.
OTHER EXECUTIVE DIRECTORS
Mr Huffadine was employed under an annual salary employment contract and receives a fixed remuneration of
$348,800 (including superannuation) per annum. The other terms of the employment contracts are:
• Executive Directors may resign from their position and thus terminate their contract by giving three months
written notice. On resignation any unvested options will be forfeited.
• The Company may terminate the employment agreement by providing three months written notice or
providing payment in lieu of notice period (based on the fixed component of the executive director’s
remuneration). On termination on notice by the Company, any LTI options that have vested or that will vest
during the notice period will be released. LTI options that have not yet vested will be forfeited.
• The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs the executive director is only entitled to that portion of remuneration
that is fixed, and only up to the date of termination. On termination with cause by the Company, any LTI
options that have vested will be released. LTI options that have not yet vested will be forfeited.
OTHER KMP
All other executives have standard employment contracts. The other terms of the employment contracts are:
• Executives may resign from their position and thus terminate their contract by giving one month written
notice. On resignation any unvested options will be forfeited.
• The Company may terminate the employment agreement by providing one month written notice or providing
payment in lieu of notice period (based on the fixed component of the executive’s remuneration). On
termination on notice by the Company, any LTI options that have vested or that will vest during the notice
period will be released. LTI options that have not yet vested will be forfeited.
33
DIRECTORS’ REPORT
• The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs the executive is only entitled to that portion of remuneration that is
fixed, and only up to the date of termination. On termination with cause by the Company, any LTI options that
have vested will be released. LTI options that have not yet vested will be forfeited.
Remuneration of key management personnel and the five highest paid executives of the Company and the
Consolidated Entity
Table 1: Remuneration for the year ended 30 June 2011
Short Term
Salary and
Fees
Non
monetary
benefits
Post
employ-
ment
Superan-
nuation
Long term
benefits
Share-
based
Payment
Total
Long
service
leave
Options
% Perfor-
mance
related
% of
remunera-
tion that
consists of
options
Non-executive
Directors
P G Cook
M L Jefferies
S Zhang
Y Zhang (Alt Director)
Executive Directors
W S Hallam
S J Huffadine*
Other key management
personnel
R D Cook
P M Cmrlec*
F J Van Maanen
172,230
40,000
-
-
212,230
-
-
-
-
-
5,400
-
-
-
5,400
-
-
-
-
-
323,013
420,645
4,636
4,456
20,487
40,372
23,778
-
133,490
170,884
130,655
-
11,700
1,895
4,533
4,121
13,813
-
11,309
26,607
1,178,687
17,746
81,087
68,874
Totals
1,390,917
17,746
86,487
68,874
* SJ Huffadine and CM Cmrlec both resigned on 1 June 2011.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
177,630
40,000
-
-
217,630
388,508
448,879
147,085
189,230
172,692
1,346,394
1,564,024
34
DIRECTORS’ REPORT
Remuneration of key management personnel and the five highest paid executives of the Company and the
Consolidated Entity
Table 2: Remuneration for the year ended 30 June 2010
Short Term
Salary and
Fees
Non
monetary
benefits
Post
employ-
ment
Superan-
nuation
Long term
benefits
Share-
based
Payment
Total
Long
service
leave
Options
% Perfor-
mance
related
% of
remunera-
tion that
consists of
options
Non-executive
Directors
P G Cook
M L Jefferies
P J Newton *
W Wei *
S Zhang
Y Zhang (Alt Director)
Executive Directors
W S Hallam
S J Huffadine
Other key management
personnel
R D Cook **
P M Cmrlec
D J Coutts *
T De Vries **
210,364
40,000
15,978
-
-
-
266,343
-
-
-
-
-
-
-
3,600
-
1,438
-
-
-
5,038
-
-
-
-
-
-
-
-
-
-
-
-
-
-
213,964
40,000
17,416
-
-
-
271,381
315,659
300,000
4,572
4,024
28,409
13,189
71,659
433,488
27,000
4,527
47,773
383,324
167,025
224,971
99,963
205,115
-
14,573
4,572
1,625
-
20,247
3,288
17,784
2,464
2,868
-
-
-
184,062
37,398
290,056
-
-
104,876
222,899
F J Van Maanen
112,828
5,583
10,155
8,722
24,932
162,220
1,425,561
20,376
121,456
31,770
181,762
1,780,925
Totals
1,691,904
20,376
126,494
31,770
181,762 2,052,306
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17.24
12.75
-
13.23
-
-
16.86
* PJ Newton resigned on 29 November 2009. W Wei resigned on 9 November 2009. DJ Coutts resigned on 14 August 2009.
** T DeVries resigned on 22 April 2010 and RD Cook was appointed on the same day.
35
DIRECTORS’ REPORT
7. EQUITY INSTRUMENTS
Table 3: Options awarded and vested during the year (Consolidated)
30 June 2011
Granted
Terms and conditions for each Grant
Vested
Granted
options
Grant
Date
Fair value
per option
at grant
date ˆ
Exercise
price per
option
Expiry
date
First
exercise
date
Last
exercise
date
Vested
number of
options
% of
options
vested
Executives
P M Cmrlec
F J Van Maanen
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
500,000
1,250,000
100%
100%
ˆ For details on valuation of the options, including models and assumptions used, please refer to note 33.
Table 4: Value of options awarded, exercised and lapsed during the yearˆ
Value of options granted
during the year
$
Value of options
exercised during the
year
$
Value of options lapsed
during the year
$
Total value of options
granted, exercised and
lapsed during the year
$
Executives
S J Huffadine *
-
-
-
-
ˆ For details on valuation of the options, including models and assumptions used, please refer to note 33.
* During the period 1,000,000 options issued to Mr S Huffadine lapsed unexercised and were subsequently forfeited. The value of the
options at the date of forfeiture was nil as the exercise price of the options was greater than the market value of the underlying shares.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
The maximum grant, which will be payable is equal to the number of options granted multiplied by the fair value
at the grant date. The minimum grant payable if the options lapse is zero.
There were no shares issued on exercise of compensation options during the year.
End of Audited Remuneration Report.
36
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
AUDITOR INDEPENDENCE
The Directors’ received the Independence Declaration, as set out on page 38, from Ernst & Young.
NON-AUDIT SERVICES
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied
that the provision of non-audit is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
Signed in accordance with a resolution of the Directors.
$
79,450
WS Hallam
Managing Director
Perth, 29 September 2011
37
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration to the Directors of Metals X Limited
In relation to our audit of the financial report of Metals X Limited for the financial year ended 30 June
2011 to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
D S Lewsen
Partner
Perth
29 September 2011
DL:VP:METALSX:008
Liability limited by a scheme approved
under Professional Standards Legislation
38
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Metals X Limited is responsible for the corporate governance of the Consolidated Entity.
The Board guides and monitors the business and affairs of Metals X Limited on behalf of the shareholders by
whom they are elected and to whom they are accountable. This statement reports on Metals X Limited’s key
governance principles and practices.
1. COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS
The Company, as a listed entity, must comply with the Corporations Act 2001 and the Australian Securities
Exchange (ASX) Listing Rules. The ASX Listing Rules require the Company to report on the extent to which it
has followed the Corporate Governance Recommendations published by the ASX Corporate Governance Council
(ASXCGC). Where a recommendation has not been followed, that fact is disclosed, together with the reasons for
the departure.
For further information on corporate governance policies adopted by the Company, refer to the corporate
governance section of our website: www.metalsx.com.au
The table below summaries the Company’s compliance with the Corporate Governance Council’s Recommendations:
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
Principle 1
Lay solid foundations for management and oversight
1.1
1.2
1.3
Establish the functions reserved to the board and those delegated to senior executives
and disclose those functions.
Disclose the process for evaluating the performance of senior executives.
Provide the information indicated in the Guide to reporting on principle 1.
Principle 2
Structure the Board to add value
A majority of the board should be independent directors.
The chair should be an independent director.
2(a)
2(h), 3(b),
Remunera-
tion Report
2(a), 2(h),
3(b), Re-
muneration
Report
2(e)
2(c), 2(e)
The roles of chair and chief executive officer should not be exercised by the same individual.
2(b), 2(c)
The board should establish a nomination committee.
Disclose the process for evaluating the performance of the board, its committees and
individual directors.
Provide the information indicated in the Guide to reporting on principle 2.
2(d)
2(h)
2(b), 2(c),
2(d), 2(e),
2(h)
2.1
2.2
2.3
2.4
2.5
2.6
Yes
Yes
Yes
No
No
Yes
No
Yes
Yes
Principle 3
Promote ethical and responsible decision-making
3.1
Establish a code of conduct and disclose the code or a summary as to:
4(a)
Yes
•
the practices necessary to maintain confidence in the company’s integrity;
• the practices necessary to take into account the company’s legal obligations and the
reasonable expectations of its stakeholders; and
• the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.
39
CORPORATE GOVERNANCE STATEMENT
Principle #
ASX Corporate Governance Council Recommendations (continued)
Reference
Comply
3.2
3.3
Establish a policy concerning trading in company securities by directors, senior executives
and employees and disclose the policy or a summary.
4(b)
Provide the information indicated in the Guide to reporting on principle 3.
4(a), 4(b)
Principle 4
Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The board should establish an audit committee.
The audit committee should be structured so that it:
• consists only of non-executive directors;
• consists of a majority of independent directors;
• is chaired by an independent chair, who is not chair of the board; and
• has at least three members.
The audit committee should have a formal charter
Provide the information indicated in the Guide to reporting on principle 4.
Principle 5
Make timely and balanced disclosure
5.1
5.2
Establish written policies designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at senior executive level for that compliance
and disclose those policies or a summary of those policies.
Provide the information indicated in the Guide to reporting on principle 5.
Principle 6
Respect the rights of shareholders
6.1
6.2
Design a communications policy for promoting effective communication with shareholders
and encouraging their participation at general meetings and disclose the policy or a
summary of that policy.
Provide the information indicated in the Guide to reporting on principle 6.
Principle 7
Recognise and manage risk
3(a)
3(a)
3(a)
3(a)
5(a), 5(b)
5(a), 5(b)
5(a), 5(b)
5(a), 5(b)
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
6(a)
Yes
The board should require management to design and implement the risk management and
internal control system to manage the company’s material business risks and report to
it on whether those risks are being managed effectively. The board should disclose that
management has reported to it as to the effectiveness of the company’s management of
its material business risks.
The board should disclose whether it had received assurance from the chief executive
officer (or equivalent) and the chief financial officer (or equivalent) that the declaration
provided in accordance with section 295A of the Corporations Act is founded on a 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.
Provide the information indicated in the Guide to reporting on principle 7.
Principle 8
Remunerate fairly and responsibly
8.1
8.2
8.3
The board should establish a remuneration committee.
Clearly distinguish the structure on non-executive directors’ remuneration from that of
executive directors and senior executives.
Provide the information indicated in the Guide to reporting on principle 8.
6(a), 6(b),
6(d)
Yes
6(c)
Yes
6(a), 6(b),
6(c), 6(d)
3(b)
3(b), Re-
muneration
Report
3(b)
Yes
Yes
Yes
Yes
7.1
7.2
7.3
7.4
40
CORPORATE GOVERNANCE STATEMENT
2. THE BOARD OF DIRECTORS
2(a) Roles and Responsibilities of the Board
The Board is accountable to the shareholders and investors for the overall performance of the Company and takes
responsibility for monitoring the Company’s business and affairs and setting its strategic direction, establishing
and overseeing the Company’s financial position.
The Board is responsible for:
• Appointing, evaluating, rewarding and if necessary the removal of the Managing Director (“MD”) and senior
management;
• Development of corporate objectives and strategy with management and approving plans, new investments,
major capital and operating expenditures and major funding activities proposed by management;
• Monitoring actual performance against defined performance expectations and reviewing operating
information to understand at all times the state of the health of the Company;
• Overseeing the management of business risks, safety and occupational health, environmental issues and
community development;
• Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
• Satisfying itself that there are appropriate reporting systems and controls in place to assure the board that
proper operational, financial, compliance, risk management and internal control process are in place and
functioning appropriately;
• Approving and monitoring financial and other reporting;
• Assuring itself that appropriate audit arrangements are in place;
• Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the Company has
adopted a Code of Conduct and that the Company practice is consistent with that Code; and other policies; and
• Reporting to and advising shareholders.
Other than as specifically reserved to the Board, responsibility for the day-to-day management of the Company’s
business activities is delegated to the Managing Director and Executive Management.
2(b) Board Composition
The Directors determine the composition of the Board employing the following principles:
• the Board, in accordance with the Company’s constitution must comprise a minimum of three Directors;
• the roles of the Chairman of the Board and of the Managing Director should be exercised by different
individuals;
• the majority of the Board should comprise Directors who are non-executive;
• the Board should represent a broad range of qualifications, experience and expertise considered of benefit to
the Company; and
• the Board must be structured in such a way that it has a proper understanding of, and competency in, the
current and emerging issues facing the Company, and can effectively review management’s decisions.
The Board is currently comprised of three non-executive Directors and two executive Directors. Details of the
members of the Board, their experience, expertise, qualifications, terms of office and independent status are set
out in the Directors’ Report of the Annual Report under the heading “Directors”.
41
CORPORATE GOVERNANCE STATEMENT
The Company’s constitution requires one-third of the Directors (or the next lowest whole number) to retire by
rotation at each Annual General Meeting (AGM). The Directors to retire at each AGM are those who have been
longest in office since their last election. Where Directors have served for equal periods, they may agree amongst
themselves or determine by lot who will retire. A Director must retire in any event at the third AGM since he or she
was last elected or re-elected.
Retiring Directors may offer themselves for re-election.
A Director appointed as an additional or casual Director by the Board will hold office until the next AGM when they
may be re-elected.
The Managing Director is not subject to retirement by rotation and, along with any Director appointed as an
additional or casual Director, is not to be taken into account in determining the number of Directors required to
retire by rotation.
2(c) Chairman and Managing Director
The Chairman is responsible for:
leadership of the Board;
•
• the efficient organisation and conduct of the Board’s functions;
• the promotion of constructive and respectful relations between Board members and between the Board and
management;
• contributing to the briefing of Directors in relation to issues arising at Board meetings;
•
• committing the time necessary to effectively discharge the role of the Chairman.
facilitating the effective contribution of all Board members; and
The Board does not comply with the ASX Recommendation 2.2 in that the Chairman, whilst a non-executive, is not
an independent Director due to his substantial interest in the Company (refer to 2(e) Independent Directors).
The Board has considered this matter and decided that the non-compliance does not affect the operation of the
Company.
The Managing Director is responsible for:
implementing the Company’s strategies and policies; and
•
• the day-to-day management of the Consolidated Entity’s business activities
The Board specifies that the roles of the Chairman and the Managing Director are separate roles to be undertaken
by separate people.
2(d) Nomination Committee
The Company does not comply with ASX Recommendation 2.4. The Company is not of a relevant size to consider
formation of a nomination committee to deal with the selection and appointment of new Directors and as such a
nomination committee has not been formed.
Nominations of new Directors are considered by the full Board in accordance with the Company’s “Selection of
New Directors Policy”.
2(e) Independent Directors
The Company recognises that independent directors are important in assuring shareholders that the Board
is properly fulfilling its role and is diligent in holding senior management accountable for its performance. The
Board assesses each of the directors against specific criteria to decide whether they are in a position to exercise
independent judgment.
42
CORPORATE GOVERNANCE STATEMENT
2. THE BOARD OF DIRECTORS (CONTINUED)
Directors of Metals X Limited are considered to be independent when they are independent of management and
free from any business or other relationship that could materially interfere with, or could reasonably be perceived
to materially interfere with, the exercise of their unfettered and independent judgement.
In making this assessment, the Board considers all relevant facts and circumstances. Relationships that the
Board will take into consideration when assessing independence are whether a Director:
•
•
is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a
substantial shareholder of the Company;
is employed, or has previously been employed in an executive capacity by the Company or another group
member, and there has not been a period of at least three years between ceasing such employment and
serving on the Board;
• has within the last three years been a principal of a material professional advisor or a material consultant to
the Company or another group member, or an employee materially associated with the service provided;
•
is a material supplier or customer of the Company or other group member, or an officer of or otherwise
associated directly or indirectly with a material supplier or customer; or
• has a material contractual relationship with the Company or another group member other than as a Director.
The Company does not comply with ASX Recommendation 2.1, there is a majority of non-executive Directors but
there is not a majority of independent Directors on the Board. In accordance with the definition of independence
above, none of the Directors of the Company are considered to be independent.
The Board believes that the Company is not of sufficient size to warrant the inclusion of more independent non-
executive Directors in order to meet the ASX recommendation of maintaining a majority of independent non-
executive Directors. The Company maintains a mix of Directors from different backgrounds with complementary
skills and experience.
In recognition of the importance of independent views and the Board’s role in supervising the activities of
management the Chairman must be a non-executive director.
2(f) Avoidance of conflicts of interest by a Director
In order to ensure that any interests of a Director in a particular matter to be considered by the Board are known
by each Director, each Director is required by the Company to disclose any relationships, duties or interests
held that may give rise to a potential conflict. Directors are required to adhere strictly to constraints on their
participation and voting in relation to any matters in which they may have an interest.
2(g) Board access to information and independent advice
Directors are able to access members of the management team at any time to request relevant information.
There are procedures in place, agreed by the board, to enable Directors, in furtherance of their duties, to seek
independent professional advice at the Company’s expense.
2(h) Review of Board performance
The performance of the board and each of its committees is reviewed regularly by the Chairman. The Chairman
conducts performance evaluations which involve an assessment of each board member’s performance against
specific and measurable qualitative and quantitative performance criteria. The performance criteria against
which directors and executives are assessed is aligned with the financial and non-financial objectives of Metals X
Limited. Directors whose performance is consistently unsatisfactory may be asked to retire.
The performance of each committee is against the requirements of their respective charters.
43
CORPORATE GOVERNANCE STATEMENT
3. BOARD COMMITTEES
To assist the Board in fulfilling its duties and responsibilities, it has established the following committees:
• Audit Committee; and
• Remuneration Committee.
3(a) Audit Committee
The Board has established an Audit Committee that has three members, comprising two non-executive directors
and the Company Secretary. The Audit Committee is governed by its charter, as approved by the Board. It is the
Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes
internal controls to deal with both the effectiveness and efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information
as well as non-financial considerations such as the benchmarking of operational key performance indicators. The
Board has delegated responsibility for establishing and maintaining a framework of internal control and ethical
standards to the Audit Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial information
for inclusion in financial report.
The Audit Committee’s main responsibilities include:
• approval of the scope and plan for the external audit;
•
•
•
review of the independence and performance of the external auditor;
review of significant accounting policies and practices; and
review and recommendation to the Board for the adoption of the Consolidated Entity’s half- year and annual
financial statements.
The Audit Committee does not comply with ASX Recommendation 4.2 as only two of the three members are non-
executive Directors and none are considered to be independent Directors (refer 2(e)). The Company believes that
the committee has appropriate financial expertise, all members are financially literate and have an appropriate
understanding of the Company’s activities. The Audit Committee is comprised of:
Name
P G Cook (Chairman)
M L Jefferies
F J Van Maanen
Position
Non-executive Chairman
Non-executive Director
Company Secretary
The qualifications of the committee are set out in the Directors’ Report of the Annual Report under the heading
“Directors”.
The number of times the Audit Committee has formerly met and the number of meetings attended by directors
during the financial year are reported in Directors’ Report of the Annual Report under the heading “Directors’
Meetings”.
External Auditors
The Company’s policy is to appoint external auditors who clearly demonstrate quality and independence. The
performance of the external auditor is reviewed annually and applications for tender of external audit services are
requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender
costs. It is Ernst & Young’s policy to rotate engagement partners on listed companies at least every five years.
An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided
in the notes to the financial statements in the Annual Report.
44
CORPORATE GOVERNANCE STATEMENT
3. BOARD COMMITTEES (CONTINUED)
There is no indemnity provided by the company to the auditor in respect of any potential liability to third parties.
The external auditor is requested to attend the annual general meeting and be available to answer shareholder
questions about the conduct of the audit and preparation and content of the audit report.
The directors are satisfied that the provision of non-audit services during the year by the auditors is compatible
with the general standard of independence for auditors imposed by the Corporations Act.
The directors are satisfied that the provision of the non-audit services did not compromise the auditor’s
independence requirements of the Corporations Act because the services were provided by persons who were
not involved in the audit and the decision as to whether or not to accept the tax planning advice was made by
management.
3(b) Remuneration Committee
The Board is responsible for determining and reviewing compensation arrangements for the directors themselves
and the Managing Director and executive team. The Board has established a Remuneration Committee,
comprising two non-executives. The Remuneration Committee is governed by its charter, as approved by the
Board. Members of the Remuneration Committee are:
Name
P G Cook (Chairman)
M L Jefferies
Position
Non-executive Chairman
Non-executive Director
The Remuneration Committee advises the Board on remuneration policies and practices generally, and makes
specific recommendations on remuneration packages and other terms of employment for executive directors,
senior executives and non-executive directors. Executive remuneration and other terms of employment are
reviewed annually by the Committee having regard to personal and corporate performance contribution to
long-term growth, relevant comparative information and independent expert advice. Each member of the senior
executive team signs a formal employment contract at the time of their appointment covering a range of matters
including their duties, rights and responsibilities. As well as base salary, remuneration packages may include
superannuation and retirement and termination entitlements. There is no scheme to provide retirement benefits,
other than statutory superannuation, to non-executive directors.
The remuneration received by directors and executives in the current period is contained in the “Remuneration
Report” within the Directors’ Report of the Annual Report.
The number of times the Remuneration Committee has formally met and the number of meetings attended by
directors during the financial year are reported in the Directors’ Report of the Annual Report under the heading
“Directors’ Meetings”.
4. ETHICAL AND RESPONSIBLE DECISION MAKING
4(a) Code of Ethics and Conduct
The Board endeavours to ensure that the Directors, officers and employees of the Company act with integrity and
observe the highest standards of behaviour and business ethics in relation to their corporate activities. The “Code
of Conduct” sets out the principles, practices, and standards of personal behaviour the Company expects people
to adopt in their daily business activities.
All Directors, officers and employees are required to comply with the Code of Conduct. Senior managers are
expected to ensure that employees, contractors, consultants, agents and partners under their supervision are
aware of the Company’s expectations as set out in the Code of Conduct.
45
CORPORATE GOVERNANCE STATEMENT
All Directors, officers and employees are expected to:
• comply with the law;
• act in the best interests of the Company;
• be responsible and accountable for their actions; and
• observe the ethical principles of fairness, honesty and truthfulness, including prompt disclosure of potential
conflicts.
4(b) Policy concerning trading in Company securities
The Company’s “Dealings in Company Shares and Options Policy” applies to all Directors, officers and employees.
This policy sets out the restrictions on dealing in securities by people who work for, or are associated with the
Company and is intended to assist in maintaining market confidence in the integrity of dealings in the Company’s
securities. The policy stipulates that the only appropriate time for a Director, officer or employee to deal in the
Company’s securities is when they are not in possession of price sensitive information that is not generally
available to the market.
As a matter of practice, Company shares may only be dealt with by Directors and officers of the Company under
the following guidelines:
• No trading is permitted in the period of 21 days prior to the announcement to the ASX of the Company’s full
year and half year results;
• Guidelines are to be considered complementary to and not replace the various sections of the Corporations Act
2001 dealing with insider trading; and
• Prior approval of the Chairman, or in his absence, the approval of two directors is required prior to any trading
being undertaken.
5. TIMELY AND BALANCED DISCLOSURE
5(a) Shareholder communication
The Company believes that all shareholders should have equal and timely access to material information
about the Company including its financial situation, performance, ownership and governance. The Company’s
“ASX Disclosure Policy” encourages effective communication with its shareholders by requiring that Company
announcements:
• be factual and subject to internal vetting and authorisation before issue;
• be made in a timely manner;
• not omit material information;
• be expressed in a clear and objective manner to allow investors to assess the impact of the information when
making investment decisions;
• be in compliance with ASX Listing Rules continuous disclosure requirements; and
• be placed on the Company’s website promptly following release.
Shareholders are encouraged to participate in general meetings. Copies of addresses by the Chairman or
Managing Director are disclosed to the market and posted on the Company’s website. 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.
46
CORPORATE GOVERNANCE STATEMENT
5. TIMELY AND BALANCED DISCLOSURE (CONTINUED)
5(b) Continuous disclosure policy
The Company is committed to ensuring that shareholders and the market are provided with full and timely
information and that all stakeholders have equal opportunities to receive externally available information issued
by the Company. The Company’s “ASX Disclosure Policy” described in 5(a) reinforces the Company’s commitment
to continuous disclosure and outline management’s accountabilities and the processes to be followed for
ensuring compliance.
The policy also contains guidelines on information that may be price sensitive. The Company Secretary has
been nominated as the person responsible for communications with the ASX. This role includes responsibility for
ensuring compliance with the continuous disclosure requirements with the ASX Listing Rules and overseeing and
coordinating information disclosure to the ASX.
6. RECOGNISING AND MANAGING RISK
The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance and
internal control systems. The Company’s policies are designed to ensure strategic, operational, legal, reputation
and financial risks are identified, assessed, effectively and efficiently managed and monitored to enable
achievement of the Company’s business objectives. A written policy in relation to risk oversight and management
has been established (“Risk Management and Internal Control Policy”). Considerable importance is placed on
maintaining a strong control environment. There is an organisation structure with clearly drawn responsibilities.
6(a) Board oversight of the risk management system
The Board is responsible for approving and overseeing the risk management system. The Board reviews, at least
annually, the effectiveness of the implementation of the risk management controls and procedures.
The principle aim of the system of internal control is the management of business risks, with a view to enhancing
the value of shareholders’ investments and safeguarding assets. Although no system of internal control can
provide absolute assurance that the business risks will be fully mitigated, the internal control systems have been
designed to meet the Company’s specific needs and the risks to which it is exposed.
Annually, the Board is responsible for identifying the risks facing the Company, assessing the risks and ensuring
that there are controls for these risks, which are to be designed to ensure that any identified risk is reduced to an
acceptable level.
The Board is also responsible for identifying and monitoring areas of significant business risk. Internal control
measures currently adopted by the Board include:
• monthly reporting to the Board in respect of operations and the Company’s financial position, with a
comparison of actual results against budget; and
•
regular reports to the Board by appropriate members of the management team and/or independent advisers,
outlining the nature of particular risks and highlighting measures which are either in place or can be adopted
to manage or mitigate those risks.
47
CORPORATE GOVERNANCE STATEMENT
6(b) Risk management roles and responsibilities
The Board is responsible for approving and reviewing the Company’s risk management strategy and policy.
Executive management is responsible for implementing the Board approved risk management strategy and
developing policies, controls, processes and procedures to identify and manage risks in all of the Company’s
activities.
The board is responsible for satisfying itself that management has developed and implemented a sound system
of risk management and internal control.
6(c) Managing Director and Chief Financial Officer Certification
The Managing Director and Chief Financial Officer (or equivalent) provide to the Board written certification that in
all material respects:
• The Company’s financial statements present a true and fair view of the Company’s financial condition and
operational results and are in accordance with relevant accounting standards;
• The statement given to the Board on the integrity of the Company’s financial statements is founded on a
sound system of risk management and internal compliance and controls which implement the policies
adopted by the Board; and
• The Company’s risk management and internal compliance and control system is operating efficiently and
effectively in all material respects.
6(d) Internal review and risk evaluation
Assurance is provided to the Board by executive management on the adequacy and effectiveness of
management controls for risk on a regular basis.
48
CORPORATE GOVERNANCE STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2011
Continuing operations
Revenue
Cost of sales
Gross profit/(loss)
Other income
Other expenses
Fair value change in financial instruments
Share of loss of associate
Impairment loss on investment in associates
Exploration and evaluation expenditure written off
Profit from continuing operations before income tax and finance costs
Finance costs
Profit before income tax
Income tax benefit/(expense)
Net profit after tax
Discontinued Operations
Loss from discontinued operations after income tax
Net profit after tax
Other comprehensive income
Share of change in equity of associate
Net fair value gains on available-for-sale financial assets
Income tax on items of other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Profit for the period is attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income for the period is attributable to:
Owners of the parent
Non-controlling interest
Notes
2011
2010
5
7(a)
6
7(b)
7(c)
19
19
23
7(d)
8
72,307,659
(57,984,022)
14,323,637
70,665,220
97,413,807
(99,783,417)
(2,369,610)
21,052,629
(3,637,636)
(3,050,362)
(57,464)
221,092
(17,358,674)
(1,151,466)
63,004,709
(394,920)
62,609,789
192,014
(57,464)
(127,475)
-
(254,475)
15,193,243
(1,145,058)
14,048,185
(1,447,101)
62,801,803
12,601,084
11
(505,195)
(820,100)
62,296,608
11,780,984
(980,165)
1,076,551
(322,966)
(226,580)
62,070,028
316,512
(4,069,739)
1,220,922
(2,532,305)
9,248,679
62,442,848
(146,240)
62,296,608
11,840,789
(59,805)
11,780,984
62,216,268
(146,240)
62,070,028
9,308,484
(59,805)
9,248,679
Earnings per share for profit from continuing operations attributable to the ordinary
equity holders of the company
- basic for profit for the year (cents)
- diluted for profit for the year (cents)
Earnings per share for profit attributable to the ordinary equity holders of the company
- basic for profit for the year (cents)
- diluted for profit for the year (cents)
9
9
9
9
4.61
4.60
4.57
4.57
0.98
0.97
0.92
0.91
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
49
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2011
Notes
2011
2010
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Other financial assets
Assets of disposal group classified as held for sale
Total current assets
NON-CURRENT ASSETS
Available-for-sale financial assets
Derivative financial instruments
Investment in associates
Property, plant and equipment
Mine properties and development costs
Intangible assets
Exploration and evaluation expenditure
Deferred tax assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest bearing loans and borrowings
Provisions
Liabilities directly associated with the assets classified as held for sale
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Interest bearing loans and borrowings
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Option premium reserve
Other reserves
Parent interests
Minority interests
TOTAL EQUITY
12
13
14
15
16
11
17
18
19
20
21
22
23
8
24
25
26
11
27
28
29
30
31
31
32
75,983,334
12,470,596
13,168,960
146,177
3,320,730
105,089,797
1,476,212
106,566,009
49,004,755
228,269
22,801,822
15,062,434
77,888,899
2,648,484
827,947
-
168,462,610
275,028,619
29,496,627
14,910,209
14,821,577
874,561
5,005,260
65,108,234
1,491,219
66,599,453
34,064,803
57,464
22,525,913
18,651,376
20,774,615
2,648,484
53,353,863
-
152,076,518
218,675,971
5,679,553
941,788
819,678
7,441,019
886,260
8,327,279
9,947,691
2,153,380
789,757
12,890,828
886,260
13,777,088
2,530,378
217,041
2,747,419
11,074,698
263,953,921
2,351,475
681,339
3,032,814
16,809,902
201,866,069
290,056,226
(41,680,191)
18,326,178
(2,729,920)
290,141,787
(104,123,039)
18,222,793
(2,503,340)
263,972,293
201,738,201
(18,372)
263,953,921
127,868
201,866,069
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
50
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received
Other income
Payments to suppliers and employees
Interest paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for mine properties and development
Payments for exploration and evaluation
Payments for research and development
Proceeds from sale of property, plant and equipment - Tasmanian tin assets
38(c)
Proceeds from sale of property, plant and equipment - other
Proceeds from sale of intangible assets
Payments for available-for-sale financial assets
Proceeds from sales of available-for-sale financial assets
Payments for investment in associates
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of shares
Payment of share issue costs
Proceeds from borrowings
Repayment of borrowings
Advance from customers
Payment of finance lease liabilities
Proceeds from performance bond facility
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Notes
2011
2010
72,977,803
94,334,494
1,904,148
624,118
1,081,219
709,283
(51,225,232)
(90,687,810)
(304,830)
(1,000,006)
12(i)
23,976,007
4,437,180
(2,252,369)
(2,700,248)
(8,607,433)
(8,264,256)
(4,858,324)
(3,384,694)
-
-
198,894
(56,149)
51,091,067
142,908
-
19,750,000
(7,150,000)
(37,762,112)
48,579,912
61,605
(3,408,620)
(10,212,802)
22,502,060
8,665,319
-
-
-
-
-
16,020,000
(33,167)
20,000,000
(20,000,000)
(2,644,230)
(1,675,890)
(3,897,964)
1,684,530
-
8,640
9,444,639
46,486,707
29,496,627
22,547,138
6,949,489
Cash and cash equivalents at the end of the period
12
75,983,334
29,496,627
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
51
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2011
Issued
capital $
Accumulated
losses $
Option
premium
reserve $
Other
reserves $
Owners of
the parent $
Non-
controlling
interest $
Total Equity $
2010
At 1 July 2009
274,280,247 (115,963,773)
17,907,652
28,965 176,253,091
187,618 176,440,709
-
-
-
Proft for the year
Other comprehensive
income, net of tax
Total comprehensive
income and expense
for the year net of tax
Transactions with
owners in their
capacity as owners
Issue share capital
16,020,000
Share-based payment
-
(33,167)
(125,293)
Share issue costs
Tax effect of share
issue costs
At 30 June 2010
2011
11,840,734
-
-
-
-
11,840,734
(59,750)
11,780,984
(2,532,305)
(2,532,305)
-
(2,532,305)
11,840,734
-
(2,532,305)
9,308,429
(59,750)
9,248,679
-
-
-
-
-
315,141
-
-
-
-
-
-
16,020,000
315,141
(33,167)
(125,293)
-
-
-
-
16,020,000
315,141
(33,167)
(125,293)
290,141,787 (104,123,039)
18,222,793
(2,503,340)
201,738,201
127,868 201,866,069
At 1 July 2010
290,141,787 (104,123,039 )
18,222,793
(2,503,340) 201,738,201
127,868 201,866,069
Profit for the year
Other comprehensive
income, net of tax
Total comprehensive
income and expense
for the year net of tax
Transactions with
owners in their
capacity as owners
Issue share capital
Share-based payment
Share issue costs
Tax effect of share
issue costs
At 30 June 2011
-
-
-
-
-
-
(85,561)
62,442,848
-
62,442,848
-
-
-
-
-
-
-
-
103,385
-
-
-
62,442,848
(146,240)
62,296,608
(226,580)
(226,580)
-
(226,580)
(226,580)
62,216,268
(146,240)
62,070,028
-
-
-
-
-
103,385
-
(85,561)
-
-
-
-
-
103,385
-
(85,561)
290,056,226 (41,680,191)
18,326,178
(2,729,920)
263,972,293
(18,372)
263,953,921
52
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
1. CORPORATE INFORMATION
The financial report of Metals X Limited for the year ended 30 June 2011 was authorised for issue in accordance
with a resolution of the Directors on 13 September 2011.
Metals X Limited (“the Parent”) is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Consolidated Entity are described in the Directors’
Report.
The address of the registered office is Level 3 Hyatt Centre, 123 Adelaide Terrace, East Perth, WA 6004.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PREPARATION
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian Accounting Standards and other authorative
pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for derivative financial instruments and
available-for-sale investments, which have been measured at fair value.
The financial report is presented in Australian dollars.
(B) STATEMENT OF COMPLIANCE
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting
Standards Board which include International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
Adoption of new accounting standards
In the current year, the Consolidated Entity has adopted all of the new and revised Standards and Interpretations
issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective
for annual reporting periods beginning on 1 July 2010. The adoption of these new and revised Standards and
Interpretations did not have any effect on the financial position or performance of the Consolidated Entity.
The Australian Standards and Interpretations mandatory for reporting periods beginning on or after 1 July 2010,
adopted include:
• AASB 2009-5 Amendments to Australian Accounting arising from the Annual Improvements Project;
• AASB 2009-8 Amendments to Australian Accounting - Group Cash-settled Share-based Payment Transactions
(AASB 2); and
• AASB 2010-3 Amendments to Australian Accounting arising from the Annual Improvements Project.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective have not been adopted by the Consolidated Entity for the annual reporting period ending 30 June 2011.
A full assessment has not yet been completed of the impact of all the new or amended Accounting Standards and
interpretations issued but not effective. These are outlined in the table below:
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Reference
Title
Summary
Application date
of standard*
Application date
for Group*
AASB 9 includes requirements for the classification and
measurement of financial assets resulting from the first
part of Phase 1 of the IASB’s project to replace IAS 39
Financial Instruments: Recognition and Measurement
(AASB 139 Financial Instruments: Recognition and
Measurement).
These requirements improve and simplify the approach
for classification and measurement of financial assets
compared with the requirements of AASB 139. The main
changes from AASB 139 are described below.
(a) Financial assets are classified based on (1) the
objective of the entity’s business model for managing
the financial assets; (2) the characteristics of the
contractual cash flows. This replaces the numerous
categories of financial assets in AASB 139, each of
which had its own classification criteria.
(b) AASB 9 allows an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are not held
for trading in other comprehensive income. Dividends
in respect of these investments that are a return on
investment can be recognised in profit or loss and
there is no impairment or recycling on disposal of the
instrument.
(c) Financial assets can be designated and measured at
fair value through profit or loss at initial recognition
if doing so eliminates or significantly reduces a
measurement or recognition inconsistency that
would arise from measuring assets or liabilities,
or recognising the gains and losses on them, on
different bases.
These amendments arise from the issuance of AASB
9 Financial Instruments that sets out requirements
for the classification and measurement of financial
assets. The requirements in AASB 9 form part of
the first phase of the International Accounting
Standards Board’s project to replace IAS 39 Financial
Instruments: Recognition and Measurement.
This Standard shall be applied when AASB 9 is
applied.
The revised AASB 124 simplifies the definition of a related
party, clarifying its intended meaning and eliminating
inconsistencies from the definition, including:
(a) The definition now identifies a subsidiary and an
associate with the same investor as related parties of
each other
(b) Entities significantly influenced by one person and
entities significantly influenced by a close member of
the family of that person are no longer related parties
of each other
(c) The definition now identifies that, whenever a person
or entity has both joint control over a second entity
and joint control or significant influence over a third
party, the second and third entities are related to
each other
A partial exemption is also provided from the disclosure
requirements for government-related entities. Entities
that are related by virtue of being controlled by the
same government can provide reduced related party
disclosures.
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2011
1 July 2011
AASB 9
Financial Instruments
AASB
2009-11
Amendments to
Australian Accounting
Standards arising
from AASB 9
[AASB 1, 3, 4, 5, 7,
101, 102, 108, 112,
118, 121, 127, 128,
131, 132, 136, 139,
1023 & 1038 and
Interpretations 10
& 12]
AASB 124
(Revised)
Related Party
Disclosures
(December 2009)
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reference
Title
Summary
Application date
of standard*
Application date
for Group*
AASB
2009-12
Amendments to
Australian Accounting
Standards
[AASBs 5, 8, 108, 110,
112, 119, 133, 137,
139, 1023 & 1031 and
Interpretations 2, 4,
16, 1039 & 1052]
AASB 1053
Application of Tiers of
Australian Accounting
Standards
AASB 1054
Australian Additional
Disclosures
This amendment makes numerous editorial changes
to a range of Australian Accounting Standards and
Interpretations.
In particular, it amends AASB 8 Operating Segments to
require an entity to exercise judgement in assessing
whether a government and entities known to be
under the control of that government are considered a
single customer for the purposes of certain operating
segment disclosures. It also makes numerous editorial
amendments to a range of Australian Accounting
Standards and Interpretations, including amendments to
reflect changes made to the text of IFRS by the IASB.
This Standard establishes a differential financial
reporting framework consisting of two Tiers of reporting
requirements for preparing general purpose financial
statements:
(a) Tier 1: Australian Accounting Standards
(b) Tier 2: Australian Accounting Standards – Reduced
Disclosure Requirements
Tier 2 comprises the recognition, measurement and
presentation requirements of Tier 1 and substantially
reduced disclosures corresponding to those
requirements.
The following entities apply Tier 1 requirements in
preparing general purpose financial statements:
(a) For-profit entities in the private sector that have
public accountability (as defined in this Standard)
(b) The Australian Government and State, Territory and
Local Governments
The following entities apply either Tier 2 or Tier 1
requirements in preparing general purpose financial
statements:
(a) For-profit private sector entities that do not have
public accountability
(b) All not-for-profit private sector entities
Public sector entities other than the Australian
Government and State, Territory and Local Governments
This standard is as a consequence of phase 1 of the joint
Trans-Tasman Convergence project of the AASB and FRSB.
This standard relocates all Australian specific disclosures
from other standards to one place and revises disclosures
in the following areas:
(a) Compliance with Australian Accounting Standards
(b) The statutory basis or reporting framework for
financial statements
(c) Whether the financial statements are general
purpose or special purpose
(d) Audit fees
(e) Imputation credits
1 January 2011
1 July 2011
1 July 2013
1 July 2013
1 July 2011
1 July 2011
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Reference
Title
Summary
Application date
of standard*
Application date
for Group*
Emphasises the interaction between quantitative and
qualitative AASB 7 disclosures and the nature and extent
of risks associated with financial instruments.
Clarifies that an entity will present an analysis of other
comprehensive income for each component of equity,
either in the statement of changes in equity or in the
notes to the financial statements.
Provides guidance to illustrate how to apply disclosure
principles in AASB 134 for significant events and
transactions.
Clarifies that when the fair value of award credits is
measured based on the value of the awards for which
they could be redeemed, the amount of discounts
or incentives otherwise granted to customers not
participating in the award credit scheme, is to be taken
into account.
This Standard makes numerous editorial amendments
to a range of Australian Accounting Standards and
Interpretations, including amendments to reflect changes
made to the text of IFRS by the IASB.
These amendments have no major impact on the
requirements of the amended pronouncements.
The amendments increase the disclosure requirements
for transactions involving transfers of financial assets.
Disclosures require enhancements to the existing
disclosures in IFRS 7 where an asset is transferred but
is not derecognised and introduce new disclosures for
assets that are derecognised but the entity continues to
have a continuing exposure to the asset after the sale.
The requirements for classifying and measuring financial
liabilities were added to AASB 9. The existing requirements
for the classification of financial liabilities and the ability
to use the fair value option have been retained. However,
where the fair value option is used for financial liabilities
the change in fair value is accounted for as follows:
The change attributable to changes in credit risk are
presented in other comprehensive income (OCI)
The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes in
credit risk are also presented in profit or loss.
1 January 2011
1 July 2011
1 January 2011
1 July 2011
1 July 2011
1 July 2011
1 January 2013
1 July 2013
This Standard amendments many Australian Accounting
Standards, removing the disclosures which have been
relocated to AASB 1054.
1 July 2011
1 July 2011
AASB
2010-4
AASB
2010-5
AASB
2010-6
AASB
2010-7
AASB
2011-1
Further Amendments
to Australian
Accounting Standards
arising from the
Annual Improvements
Project [AASB 1, AASB
7, AASB 101, AASB 134
and Interpretation 13]
Amendments to
Australian Accounting
Standards
[AASB 1, 3, 4, 5,
101, 107, 112, 118,
119, 121, 132, 133,
134, 137, 139, 140,
1023 & 1038 and
Interpretations 112,
115, 127, 132 & 1042]
Amendments to
Australian Accounting
Standards –
Disclosures on
Transfers of Financial
Assets [AASB 1 &
AASB 7]
Amendments to
Australian Accounting
Standards arising
from AASB 9
(December 2010)
[AASB 1, 3, 4, 5,
7, 101, 102, 108,
112, 118, 120,
121, 127, 128, 131,
132, 136, 137, 139,
1023, & 1038 and
interpretations 2, 5,
10, 12, 19 & 127]
Amendments to
Australian Accounting
Standards arising
from the Trans-Tasman
Convergence project
[AASB 1, AASB 5, AASB
101, AASB 107, AASB
108, AASB 121, AASB
128, AASB 132, AASB
134, Interpretation
2, Interpretation 112,
Interpretation 113]
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reference
Title
Summary
Application date
of standard*
Application date
for Group*
AASB 13
Fair Value
Measurement
AASB
2011-7
AASB
2011-9
Amendments to
Australian Accounting
Standards arising
from the Fair Value
Measurement
Standard
Amendments
to Australian
Accounting Standards
-Presentation of
Items of Other
Comprehensive
Income
[AASB 1, 5, 7, 101,
112, 120, 121, 132,
133, 134, 1039 &
1049]
AASB 11
Joint Arrangements
AASB 12
Disclosure of Interests
in Other Entities
AASB 13 establishes a single source of guidance under
Australian Accounting Standards for determining the fair
value of assets and liabilities. AASB 13 does not change
when an entity is required to use fair value, but rather,
provides guidance on how to determine fair value under
Australian Accounting Standards when fair value is
required or permitted by Australian Accounting Standards.
Application of this definition may result in different fair
values being determined for the relevant assets.
AASB 13 also expands the disclosure requirements for
all assets or liabilities carried at fair value. This includes
information about the assumptions made and the
qualitative impact of those assumptions on the fair value
determined.
1 January 2013
1 July 2013
Consequential amendments to existing Australian
Accounting Standards as a result of the adoption of AASB
13 Fair Value Measurement.
1 January 2013
1 July 2013
The main change resulting from the amendments relates
to the Statement of Comprehensive Income and the
requirement for entities to group items presented in other
comprehensive income on the basis of whether they are
potentially reclassifiable to profit or loss subsequently
(reclassification adjustments). The amendments do not
remove the option to present profit or loss and other
comprehensive income in two statements.
The amendments do not change the option to present
items of OCI either before tax or net of tax. However, if
the items are presented before tax then the tax related
to each of the two groups of OCI items (those that might
be reclassified to profit or loss and those that will not be
reclassified) must be shown separately.
AASB 11 replaces AASB 131 Interests in Joint Ventures
and Interpretation 113 Jointly- controlled Entities –
Non-monetary Contributions by Ventures. AASB 11 uses
the principle of control in AASB 10 to define joint control,
and therefore the determination of whether joint control
exists may change. In addition AASB 11 removes the
option to account for jointly controlled entities (JCEs)
using proportionate consolidation. Instead, accounting
for a joint arrangement is dependent on the nature of
the rights and obligations arising from the arrangement.
Joint operations that give the venturers a right to
the underlying assets and obligations themselves is
accounted for by recognising the share of those assets
and obligations. Joint ventures that give the venturers a
right to the net assets is accounted for using the equity
method. This may result in a change in the accounting for
the joint arrangements held by the group.
AASB 12 includes all disclosures relating to an entity’s
interests in subsidiaries, joint arrangements, associates
and structures entities. New disclosures have been
introduced about the judgements made by management
to determine whether control exists, and to require
summarised information about joint arrangements,
associates and structured entities and subsidiaries with
non-controlling interests.
1 July 2012
1 July 2012
1 January 2013
1 July 2013
1 January 2013
1 July 2013
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Reference
Title
Summary
Application date
of standard*
Application date
for Group*
AASB
2011-7
Amendments to
Australian Accounting
Standards arising from
the Consolidation and
Joint Arrangement
Standards
Consequential amendments to AASB 127 Separate
Financial Statements and AASB 128 Investments in
Associates as a result of the adoption of AASB 10
Consolidated Financial Statements, AASB 11 Joint
Arrangements and AASB 12 Disclosure of Interests in
Other Entities.
1 January 2013
1 July 2013
AASB 119
(revised)
Employee Benefits
****
Consolidated Financial
Statements
****
Joint Arrangements
The main amendments to the standard relating to defined
benefit plans are as follows :-
• Elimination of the option to defer the recognition of
actuarial gains and losses (the ‘corridor method’);
• Remeasurements (essentially actuarial gains and
losses) to be presented in other comprehensive
income;
• Past service cost will be expensed when the plan
amendments occur regardless of whether or not they
are vested; and
• Enhanced disclosures for Tier 1 entities.
The distinction between short-term and other long-term
employee benefits under the revised standard is now
based on expected timing of settlement rather than
employee entitlement.
The revised standard also requires termination benefits
(outside of a wider restructuring) to be recognised only
when the offer becomes legally binding and cannot be
withdrawn.
IFRS 10 establishes a new control model that applies
to all entities. It replaces parts of IAS 27 Consolidated
and Separate Financial Statements dealing with the
accounting for consolidated financial statements and SIC-
12 Consolidation – Special Purpose Entities.
The new control model broadens the situations when an
entity is considered to be controlled by another entity
and includes new guidance for applying the model to
specific situations, including when acting as a manager
may give control, the impact of potential voting rights
and when holding less than a majority voting rights may
give control. This is likely to lead to more entities being
consolidated into the group.
IFRS 11 replaces IAS 31 Interests in Joint Ventures
and SIC-13 Jointly- controlled Entities – Non-monetary
Contributions by Ventures. IFRS 11 uses the principle of
control in IFRS 10 to define joint control, and therefore
the determination of whether joint control exists may
change. In addition IFRS 11 removes the option to account
for jointly controlled entities (JCEs) using proportionate
consolidation. Instead, accounting for a joint arrangement
is dependent on the nature of the rights and obligations
arising from the arrangement. Joint operations that
give the venturers a right to the underlying assets and
obligations themselves is accounted for by recognising
the share of those assets and obligations. Joint ventures
that give the venturers a right to the net assets is
accounted for using the equity method. This may result
in a change in the accounting for the joint arrangements
held by the group.
1 January 2013
1 January 2013
1 January 2013
1 July 2013
1 January 2013
1 July 2013
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reference
Title
Summary
Application date
of standard*
Application date
for Group*
****
Disclosure of Interests
in Other Entities
****
Fair Value
Measurement
IFRS 12 includes all disclosures relating to an entity’s
interests in subsidiaries, joint arrangements, associates
and structures entities. New disclosures have been
introduced about the judgements made by management
to determine whether control exists, and to require
summarised information about joint arrangements,
associates and structured entities and subsidiaries with
non-controlling interests.
IFRS 13 establishes a single source of guidance under
IFRS for determining the fair value of assets and
liabilities. IFRS 13 does not change when an entity is
required to use fair value, but rather, provides guidance
on how to determine fair value under IFRS when fair
value is required or permitted by IFRS. Application of
this definition may result in different fair values being
determined for the relevant assets.
IFRS 13 also expands the disclosure requirements for
all assets or liabilities carried at fair value. This includes
information about the assumptions made and the
qualitative impact of those assumptions on the fair value
determined.
1 January 2013
1 July 2013
1 January 2013
1 July 2013
Designates the beginning of the applicable annual reporting period unless otherwise stated.
*
** Only applicable to not-for-profit/public sector entities.
*** Only applicable to entities that would fit in Tier 2 (Reduced Disclosure Requirements) category.
**** The AASB has not issued this standard, which was finalised by the IASB in May 2011.
(C) CHANGES IN ACCOUNTING POLICY
The accounting policies used in the preparation of these financial statements are consistent with those used in
previous years.
(D) BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the parent entity and its subsidiaries
(‘the Consolidated Entity’) as at 30 June each year.
Subsidiaries are all those entities over which the Consolidated Entity has the power to govern the financial and
operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when assessing whether a consolidated entity
controls another entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company,
using consistent accounting policies. In preparing consolidated financial statements, all intercompany balances
and transactions, income and expenses and profit and losses resulting from intra-group transactions, have been
eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Consolidated Entity and
cease to be consolidated from the date on which control is transferred out of the Consolidated Entity.
Where there is loss of control of a controlled entity, the consolidated financial statements include the results for
the part of the reporting period during which the Company has control.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive
income and are presented within equity in the consolidated statement of financial position, separately from the
equity of the owners of the parent.
Changes in ownership interest of a subsidiary (without a change in control) is accounted for as a transaction with
owners in their capacity as owners.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(E) FOREIGN CURRENCY TRANSLATION
(i) Functional and presentation currency
Both the functional and presentation currency of the Company and its Australian subsidiaries is Australian dollars (A$).
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
translated at the rate of exchange at the reporting date.
All exchange differences in the consolidated financial report are taken to the statement of comprehensive income.
(F) OPERATING SEGMENTS
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components
of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker
to make decisions about resources to be allocated to the segment and assess its performance and for which
discrete financial information is available. This includes start up operations which are yet to earn revenues.
Management will also consider other factors in determining operating segments such as the existence of a line
manager and the level of segment information presented to the board of directors.
Operating segments have been identified based on the information provided to the chief operating decision
makers – being the executive management team.
The Consolidated Entity aggregates two or more operating segments when they have similar economic
characteristics.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However,
an operating segment that does not meet the quantitative criteria is still reported separately where information
about the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are
combined and disclosed in a separate category for “all other segments”.
(G) CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-
term deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.
For the purposes of the Statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest bearing loans
and borrowings in the current liabilities on the statement of financial position.
(H) TRADE AND OTHER RECEIVABLES
Trade and other receivables, which generally have 30-60 day terms, are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest rate method, less an allowance for impairment.
Collectibility of trade and other receivables is reviewed on an ongoing basis. Individual debts that are known to
be uncollectible are written off when identified. An impairment allowance is recognised when there is objective
evidence that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor,
default payments or debts more than 60 days overdue are considered objective evidence of impairment. The
amount of the impairment loss is the receivable carrying amount compared to the present value of estimated
future cash flows, discounted at the original effective interest rate.
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(I) INVENTORIES
Inventories are valued at the lower of cost and net realisable value.
Cost includes expenditure incurred in acquiring and bringing the inventories to their existing condition and
location and is determined using the weighted average cost method.
(J) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
The Consolidated Entity uses derivative financial instruments to manage commodity price exposures. Such
derivative financial instruments are initially recorded at fair value on the date on which the derivative contract is
entered into and are subsequently remeasured to fair value.
Certain derivative instruments are also held for trading for the purpose of making short term gains. None of the
derivatives qualify for hedge accounting and changes in fair value are recognised immediately in profit or loss in
other revenue and expenses.
Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
(K) INTEREST IN JOINTLY CONTROLLED ASSETS
The Consolidated Entity recognises its share of the assets, classified as property, plant and equipment, mine
properties and development, intangible assets and exploration and evaluation expenditure. In addition, the
Consolidated Entity recognises it share of assets, liabilities, expenses and income from the use and output of the
jointly controlled assets.
(L) AVAILABLE-FOR-SALE INVESTMENTS
All available-for-sale investments are initially recognised at fair value plus directly attributable transaction costs.
Available-for-sale investments are those non-derivative financial assets, principally equity securities that are
designated as available-for-sale. Investments are designated as available for sale if they do not have fixed maturities
and fixed and determinable payments and management intends to hold them for the medium to long term.
After initial recognition, available-for-sale investments are measured at fair value. Gains or losses are recognised
as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity
is included in the statement of comprehensive income.
The fair value of investments that are actively traded in organised markets is determined by reference to quoted
market bid prices at the close of business on the reporting date.
For investments with no active market, fair value is determined using valuation techniques. Such valuation
techniques include using recent arm’s length transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models. Where fair
value cannot be reliably measured for certain unquoted investments, these investments are measured at cost.
(M) INVESTMENTS IN ASSOCIATES
The Consolidated Entity’s investment in its associates is accounted for using the equity method of accounting
in the consolidated financial statements. The associates are entities over which the Consolidated Entity has
significant influence and that are neither subsidiaries nor joint ventures.
The Consolidated Entity generally deems it has significant influence if it has over 20% of the voting rights.
Under the equity method, investments in the associates are carried in the consolidated statement of financial
position at cost plus post-acquisition changes in the Consolidated Entity’s share of net assets of the associates.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After
application of the equity method, the Consolidated Entity determines whether it is necessary to recognise any
impairment loss with respect to the Consolidated Entity’s net investment in associates. Goodwill included in the
carrying amount of the investment in associate is not tested separately, rather the entire carrying amount of the
investment is tested for impairment as a single asset. If an impairment is recognised, the amount is not allocated
to the goodwill of the associate.
The Consolidated Entity’s share of its associates’ post-acquisition profits or losses is recognised in the statement
of comprehensive income, and its share of post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends
receivable from associates reduce the carrying amount of the investment.
When the Consolidated Entity’s share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured long-term receivables and loans, the Consolidated Entity does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the associate.
The reporting dates of the associates and the Consolidated Entity are identical and the associates’ accounting
policies conform to those used by the Consolidated Entity for like transactions and events in similar.
(N) BUSINESS COMBINATIONS
Subsequent to 1 July 2009
Business combinations are accounted for using the acquisition method. The consideration transferred in a
business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-
date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners
of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the
acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree
either at fair value or at the appropriate share of the acquiree’s identifiable net assets. Acquisition-related costs
are expensed as incurred.
When the Consolidated Entity acquires a business, it assess the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the
Consolidated Entity’s operating or accounting policies and other pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in the host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or
liability will be recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If
the contingent consideration is classified as equity, it shall not be remeasured.
Prior to 1 July 2009
Business combinations were accounted for using the purchase method. Transaction costs directly attributable
to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority
interest) was measured at the proportionate share of the acquiree’s identifiable net assets.
Business combinations achieved in stages were accounted for in separate steps. Any additional interest in the
acquiree acquired did not affect previously recognised goodwill. The goodwill amounts calculated at each step
acquisition were accumulated.
When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree
were not reassessed on acquisition unless the business combination resulted in a change in the terms of the
contract that significantly modified the cash flows that otherwise would have been required under the contract.
Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow
was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent
consideration were adjusted against goodwill.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(O) PROPERTY, PLANT AND EQUIPMENT
Plant and equipment is stated at historical cost less accumulated depreciation and any impairment in value.
Capital work-in-progress is stated at cost and comprises all costs directly attributable to bringing the assets
under construction ready to their intended use. Capital work-in-progress is transferred to property, plant and
equipment at cost on completion.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, or where appropriate,
over the estimated life of the mine.
Major depreciation periods are:
- Mine specific plant and equipment is depreciated using – the shorter of life of mine or useful life. Useful life
ranges from 2 to 10 years.
- Mine Buildings – the shorter of life of mine or useful life. Useful life ranges from 5 to 10 years.
- Office Plant and equipment is depreciated at 33% per annum for computers and office machines and 20% per
annum for other office equipment and furniture.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets
or cash-generating units are written down to their recoverable amount.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the
period the item is derecognised.
(P) EXPLORATION AND EVALUATION EXPENDITURE
Expenditure on acquisition, exploration and evaluation relating to an area of interest is carried forward at cost
where rights to tenure of the area of interest are current and;
i)
it is expected that expenditure will be recouped through successful development and exploitation of the area
of interest or alternatively by its sale and/or;
ii) exploration and evaluation activities are continuing in an area of interest but at balance date have not yet
reached a stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. Where uncertainty exists as to the future viability of certain
areas, the value of the area of interest is written off to the statement of comprehensive income or provided
against.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash
generating unit level whenever facts and circumstances suggest that the carrying amount of the asset may
exceed its recoverable amount.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated
recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. Any
impairment losses are recognised in the statement of comprehensive income.
(Q) MINE PROPERTIES AND DEVELOPMENT
Expenditure on the acquisition and development of mine properties within an area of interest are carried forward
at cost separately for each area of interest. Accumulated expenditure is amortised over the life of the area of
interest to which such costs relate on a production output basis.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Impairment
The carrying value of capitalised mine properties and development expenditure is assessed for impairment
whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable
amount.
The recoverable amount of capitalised mine properties and development expenditure is the higher of fair value
less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the
cash-generating unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to
its fair value.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated
recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. Any
impairment losses are recognised in the statement of comprehensive income.
(R) NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE AND DISCONTINUED OPERATIONS
Non-current assets and disposal groups are classified as held for sale and measured at the lower of their carrying
amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale
transaction. They are not depreciated or amortised. For an asset or disposal group to be classified as held for sale
it must be available for immediate sale in its present condition and its sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair
value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an
asset (or disposal group), but is not in excess of any cumulative impairment loss previously recognised. A gain or
loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised
as the date of derecognition.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for
sale and that represents a separate major line of business or geographical area of operations, is part of a
single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued operations are presented separately on the face of
the statement of comprehensive income and the assets and liabilities are presented separately on the face of the
statement of financial position.
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(S) INTANGIBLES
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. Internally generated assets, excluding capitalised development costs, are not capitalised and
expenditure is charged against profits or losses in the year the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives
are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite
useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the
amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation
expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent
with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the
cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an
indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be
supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change
in an accounting estimate and is thus accounted for on a prospective basis.
Research and development costs
Research costs are expensed as incurred. An asset arising from development expenditure on an internal project
is recognised only when the Consolidated Entity can demonstrate the technical feasibility of completing the
intangible asset so that it will be available for use or sale, or its intention to complete and its ability to use or sell
the asset, how the asset will generate future economic benefits, the availability of resources to complete the
development and the ability to measure reliably the expenditure attributable to the intangible asset during its
development. Following the initial recognition of the development expenditure, the cost model is applied requiring
the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any
expenditure so capitalised is amortised over the period of expected benefits from the related project.
The carrying value of an asset arising from development expenditure is tested for impairment annually when the asset
is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.
A summary of policies applied to the Consolidated Entity’s intangible assets is as follows:
Royalty Assets
• Useful Lives
Finite.
Development Costs
• Useful Lives
Finite.
•
Amortisation method used
•
Amortisation method used
Amortised over the period of expected future
benefit from the related project on a unit of
production basis.
Amortised over the period of expected future
benefit from the related project on a straight-line
basis.
•
Internally generated or acquired
•
Internally generated or acquired
Acquired.
•
Impairment testing
Internally generated.
•
Impairment testing
Annually and more frequently when an
indication of impairment exists. The amortisation
method is reviewed at each financial period end.
Annually for assets not yet available for use
and more frequently when an indication of
impairment exists. The amortisation method is
reviewed at each financial period.
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(T) REHABILITATION COSTS
The Group is required to decommission and rehabilitate mines and processing sites at the end of their producing
lives to a condition acceptable to the relevant authorities.
The expected cost of any approved decommissioning or rehabilitation programme, discounted to its net present
value, is provided when the related environmental disturbance occurs. The cost is capitalised when it gives rise
to future benefits, whether the rehabilitation activity is expected to occur over the life of the operation or at the
time of closure. The capitalised cost is amortised over the life of the operation and the increase in the net present
value of the provision for the expected cost is included in financing expenses. Expected decommissioning and
rehabilitation costs are based on the discounted value of the estimated future cost of detailed plans prepared
for each site. Where there is a change in the expected decommissioning and restoration costs, the value of the
provision and any related asset are adjusted and the effect is recognised in profit or loss on a prospective basis
over the remaining life of the operation.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation,
technology or other circumstances. Cost estimates are not reduced by potential proceeds from the sale of assets
or from plant clean up at closure.
(U) RECOVERABLE AMOUNT OF ASSETS
At each reporting date, the Consolidated Entity assesses whether there is any indication that an asset may
be impaired. Where an indicator of impairment exists, the Consolidated Entity makes a formal estimate of
recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is
considered impaired and is written down to its recoverable amount.
The recoverable amount of plant and equipment, mine properties and development and exploration and
evaluation expenditure is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the
cash-generating unit to which the assets belongs, unless the asset’s value in use can be estimated to be close to
its fair value.
An assessment is also made at each reporting date as to whether there is any indication that a previously
recognised impairment loss may no longer exist or may have decreased. If such indication exists, the recoverable
amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the
estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If
that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount
cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is
carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal
the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any
residual value, on a systematic basis over its remaining useful life.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(V) TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised cost and due to their short-term nature they are not
discounted. They represent liabilities for goods and services provided to the Consolidated Entity prior to the end
of the financial year that are unpaid and arise when the Consolidated Entity becomes obliged to make future
payments in respect of the purchase of these goods and services. The amounts are unsecured and usually paid
within 30 days of recognition.
(W) INTEREST-BEARING LOANS AND BORROWINGS
All loans and borrowings are initially recognised at the fair value of the consideration received less directly
attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the effective interest rate method.
Borrowings are classified as current liabilities unless the Consolidated Entity has the unconditional right to defer
settlement of the liability for at least 12 months after the reporting date.
(X) BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised
as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
(Y) PROVISIONS
Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the reporting date. The discount rate used to determine the present value reflects
current market assessments of the time value of money and the risks specific to the liability. The increase in the
provision resulting from the passage of time is recognised in finance costs.
(Z) LEASES
Leases are classified at their inception as either operating or finance leases based on the economic substance of
the agreement so as to reflect the risks and benefits incidental to ownership.
(i) Operating Leases
The minimum lease payments of operating leases, where the lessor effectively retains substantially all of
the risks and benefits of ownership of the leased item, are recognised as an expense in the statement of
comprehensive income on a straight-line basis over the lease term.
Contingent rentals are recognised as an expense in the financial year in which they are incurred.
(ii) Finance Leases
Leases which effectively transfer substantially all the risks and benefits incidental to ownership of the leased
item to the Consolidated Entity are capitalised at the inception of the lease at the fair value of the leased
property or, if lower, at the present value of the minimum lease payments.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly to the statement of comprehensive income.
Capitalised leased assets are depreciated over the estimated useful life of the asset or where appropriate, over
the estimated life of the mine.
The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and
amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever
is the shorter.
(AA) ISSUED CAPITAL
Issued and paid up capital is recognised at the fair value of the consideration received by the Consolidated Entity.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction in
the proceeds received.
(AB) REVENUE
Revenue is measured at the fair value of the consideration received or receivable to the extent it is probable that
the economic benefits will flow to the Consolidated Entity and the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised:
Tin sales
Revenue from tin production is recognised when the significant risks and rewards of ownership in the product
has passed to the buyer pursuant to a sales contract. For tin concentrate sales, the sales price is determined on
a provisional basis at the date of delivery. Adjustments to the sale price occur based on movements in the metal
price up to the date of final pricing. Final pricing is determined within 45 days of delivery.
Interest income
Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset to the net carrying amount of the financial asset.
Nickel royalty revenue
Revenue from nickel royalties is recognised on an accruals basis in accordance with the substance of the
relevant agreement.
(AC) SHARE-BASED PAYMENT TRANSACTIONS
The Consolidated Entity provides benefits to employees (including Directors) in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled
transactions).
The Consolidated Entity has one plan in place that provides these benefits. It is the Employee Share Option Plan
(“ESOP”) which provides benefits to all employees including Directors. The scheme has no direct performance
requirements but has specified time restrictions on the exercise of options. The share options will vest after
one year or as determined by the Board of Directors and employees and Directors are able to exercise the share
options for up to three years after vesting before the options lapse. Where a participant ceases employment prior
to the vesting of their share options, the share options are forfeited. Where a participant ceases employment
after the vesting of their share options, the share options automatically lapse after six months of ceasing
employment. The Company does not have a policy to prohibit executives from entering into arrangements to
protect the value of unvested LTI awards.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the
date at which they are granted. The fair value is determined by using a Black & Scholes model. Further details of
which are given in note 33.
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(AC) SHARE-BASED PAYMENT TRANSACTIONS (CONTINUED)
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked
to the price of the shares of Metals X Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date
on which the relevant employees become fully entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive
income is the product of (i) the grant date fair value of the award; (ii) the current best estimate of the number of
awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting
period and the likelihood of non-market performance conditions being met; and (iii) the expired portion of the
vesting period.
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated
above less the amounts already charged in previous periods. There is a corresponding credit to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards
vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest
irrespective of whether or not the market condition is fulfilled, provided that all other conditions are satisfied.
If a non-vesting condition is within the control of the Consolidated Entity, Company or the employee, the failure
to satisfy the condition is treated as a cancellation. If a non-vesting condition within the control of neither the
Consolidated Entity, Company nor employee is not satisfied during the vesting period, any expense for the award
not previously recognised is recognised over the remaining vesting period, unless the award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. An additional expense is recognised for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new
award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of
earnings per share.
(AD) EMPLOYEE BENEFITS
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick
leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’
services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities
are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are
measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures, and periods of service. Expected future payments are discounted using market yields
at the reporting date on national government bonds with terms to maturity and currencies that match, as
closely as possible, the estimated future cash outflows.
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(iii) Superannuation
Contributions made by the Consolidated Entity to employee superannuation funds, which are defined
contribution plans, are charged as an expense when incurred.
(AE) INCOME TAX
The Consolidated Entity entered into a tax consolidated group as of 1 July 2004.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
• when the taxable temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it
is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be
utilised:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
• when the deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Unrecognised income taxes are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of
comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
Tax consolidation legislation
Metals X Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation as of 1 July 2004. The head entity, Metals X Limited and the controlled entities in the tax consolidated
group continue to account for their own current and deferred tax amounts. The Consolidated Entity has applied the
group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate
to members of the tax consolidated group.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(AF) OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
Commitments and contingencies are disclosed net of amounts of GST recoverable from, or payable to, the
taxation authority.
(AG) EARNINGS PER SHARE
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any
costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent adjusted for:
• cost of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discriminatory changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements and estimates on historical experience and on other various factors it believes
to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management has identified the following critical accounting policies for which significant judgements, estimates
and assumptions are made. Actual results may differ from these estimates under different assumptions and
conditions and may materially affect financial results or the financial position reported in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the
financial statements.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(i) Significant accounting judgments
• Determination of mineral resources and ore reserves
The determination of reserves impacts the accounting for asset carrying values, depreciation and
amortisation rates and provisions for mine rehabilitation. Metals X Limited estimates its mineral resource and
reserves in accordance with the Australian code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves 2004 (the “JORC code”). The information on mineral resources and ore reserves were prepared
by or under the supervision of Competent Persons as defined in the JORC code. The amounts presented are
based on the mineral resources and ore reserves determined under the JORC code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and
assumptions that are valid at the time of estimation may change significantly when new information
becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may
change the economic status of reserves and may, ultimately, result in the reserves being restated.
•
Impairment of available-for-sale-investments
In determining the amount of impairment of financial assets, the Consolidated Entity has made judgements in
identifying financial assets whose decline in fair value below cost is considered “significant” or “prolonged”. A
significant decline is assessed based on the historical volatility of the share price.
The higher the historical volatility, the greater the decline in fair value required before it is likely to be
regarded as significant. A prolonged decline is based on the length of time over which the share price has
been depressed below cost. A sudden decline followed by immediate recovery is less likely to be considered
prolonged compared to a sustained fall of the same magnitude over a longer period.
The Consolidated Entity considers a less than a 10% decline in fair value is unlikely to be considered significant
for investments actively traded in a liquid market, whereas a decline in fair value of greater than 20% will often
be considered significant. For less liquid investments that have historically been volatile (standard deviation
greater than 25%), a decline of greater than 30% is usually considered significant.
Generally, the Consolidated Entity does not consider a decline over a period of less than three months to be
prolonged. However, where the decline in fair value is greater than six months for liquid investments and 12
months for illiquid investments, it is usually considered prolonged.
• Classification of assets and liabilities as held for sale
The Consolidated Entity classifies assets and liabilities as held for sale when the carrying amount will be
recovered through a sale transaction. The assets and liabilities must be available for immediate sale and the
Consolidated Entity must be committed to selling the assets either through the entering into a contractual
sale agreement or the activation and commitment to a program to locate a buyer and dispose of the assets
and liabilities.
(ii) Significant accounting estimates and assumptions
• Mine rehabilitation provision
The Consolidated Entity assesses its mine rehabilitation provision on an annual basis in accordance with the
accounting policy stated in note 2(t). Significant judgement is required in determining the provision for mine
rehabilitation as there are many transactions and other factors that will affect the ultimate liability payable
to rehabilitate the mine site. Factors that will affect this liability include future development, changes in
technology and changes in interest rates. When these factors change or become known in the future, such
difference will impact the mine rehabilitation provision in the period in which they change or become known.
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
(CONTINUED)
(ii) Significant accounting estimates and assumptions (Continued)
• Classification of and valuation of investments
The Consolidated Entity has decided to classify investments in listed securities as “available-for-sale”
investments and movements in fair value are recognised directly in equity. The fair value of listed shares has
been determined by reference to published price quotations on an active market.
•
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of
factors, including whether the Consolidated Entity decides to exploit the related lease itself or, if not, whether it
successfully recovers the related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future
technological changes, which could impact the cost of mining, future legal changes (including changes to
environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in
the future, profits and net assets will be reduced in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not
yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be
written off, profits and net assets will be reduced in the period in which this determination is made.
•
•
Impairment of capitalised mine development expenditure
The future recoverability of capitalised mine development expenditure is dependent on a number of factors,
including the level of proved, probable and inferred mineral resources, future technological changes, which
could impact the cost of mining, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
To the extent that capitalised mine development expenditure is determined not to be recoverable in the future,
profits and net assets will be reduced in the period in which this determination is made.
Impairment of property, plant and equipment
Property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount
may not be recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by
reference to the higher of “value in use” (being net present value of expected future cash flows of the relevant
cash generating unit) and “fair value less costs to sell”.
In determining the value in use, future cash flows are based on:
• estimates of the quantities of ore reserves and mineral resources for which there is a high degree of
•
•
•
confidence of economic extraction;
future production levels;
future commodity prices; and
future cash costs of production and capital expenditure.
Variations to the expected cash flows, and the timing thereof, could result in significant changes to any
impairment losses recognised, if any, which in turn could impact future financial results.
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
• Life of mine method of amortisation and depreciation
The Consolidated Entity applies the life of mine method of amortisation and depreciation to its mine specific
plant and to mine properties and development based on ore tonnes mined. These calculations require the
use of estimates and assumptions. Significant judgement is required in assessing the available reserves
and the production capacity of the plants to be depreciated under this method. Factors that are considered
in determining reserves and resources and production capacity are the Consolidated Entity’s history of
converting resources to reserves and the relevant time frames, the complexity of metallurgy, markets and
future developments. When these factors change or become known in the future, such differences will impact
pre tax profit and carrying values of assets. During the year there was a decrease in the available reserves,
which has had an impact on assets being amortised using the unit of production amortisation method
resulting in an increase in the amortisation expense for the period.
• Share-based payment transactions
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 a Black & Scholes model, using the assumptions as discussed in note 33. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities in the next annual reporting period but may impact expenses and equity.
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Consolidated Entity’s principal financial instruments comprise receivables, payables, unsecured loans,
finance lease and hire purchase contracts, cash and short-term deposits and derivatives.
Risk exposures and responses
The Consolidated Entity manages its exposure to key financial risks, including interest rate risk and currency risk
in accordance with the Consolidated Entity’s financial risk management policy. The objective of the policy is to
support the delivery of the Consolidated Entity’s financial targets while protecting future financial security.
The Consolidated Entity enters into derivative transactions, principally zero cost collar put and call options.
The purpose is to manage the commodity price risks arising from the Consolidated Entity’s operations. These
derivatives provide economic hedges, but do not qualify for hedge accounting and are based on limits set by
the board. The main risks arising from the Consolidated Entity’s financial instruments are interest rate risk,
foreign currency risk, commodity risk, credit risk, equity price risk and liquidity risk. The Consolidated Entity
uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate, foreign exchange risk and assessments of market forecasts for
interest rate, foreign exchange and commodity prices. Ageing analysis of and monitoring of receivables are
undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow
forecasts.
The board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and
agrees policies for managing each of the risks identified below, including for interest rate risk, credit allowances
and cash flow forecast projections.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
The Consolidated Entity’s principal financial instruments include investments in cash, equities, payables, interest
bearing liabilities and derivatives. The accounting classification of each category of financial instruments as
defined in note 2, and their carrying amounts, are set out below:
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Note
Cash
and cash
equivalents
Loans and
receivables
Financial
assets held
for trading
Financial
liabilities at
amortised
cost
Available-for-
sale financial
assets
Total carrying
amount
2011
Financial assets
Cash and cash equivalents
Trade and other receivables
(current)
Other financial assets
Available-for-sale financial
assets (non-current)
Derivatives (non-current)
Financial liabilities
Trade and other payables
(current)
Interest bearing loans
(current)
Interest bearing loans
(non-current)
Net
2010
Financial assets
Cash and cash equivalents
Trade and other receivables
(current)
Other financial assets
Available-for-sale financial
assets (non-current)
Derivatives (non-current)
Financial liabilities
Trade and other payables
(current)
Interest bearing loans
(current)
Interest bearing loans
(non-current)
10
13
16
17
18
24
25
28
10
13
16
17
18
24
25
28
75,983,334
-
-
-
-
-
12,470,596
3,320,730
-
-
75,983,334
15,791,326
-
-
-
-
228,269
228,269
-
-
-
-
-
-
-
-
-
75,983,334
12,470,596
3,320,730
49,004,755
49,004,755
-
228,269
49,004,755
141,007,684
-
-
-
-
-
-
-
-
-
-
-
-
(5,679,553)
(941,788)
(217,041)
(6,838,382)
-
-
-
-
(5,679,553)
(941,788)
(217,041)
(6,838,382)
75,983,334
15,791,326
228,269
(6,838,382)
49,004,755 134,169,302
29,496,627
-
-
-
-
-
14,910,209
5,005,260
-
-
29,496,627
19,915,469
-
-
-
-
57,464
57,464
-
-
-
-
-
-
-
-
-
29,496,627
14,910,209
5,005,260
34,064,803
34,064,803
-
57,464
34,064,803
83,534,363
-
-
-
-
-
-
-
-
-
-
-
-
(9,947,691)
(2,153,380)
(681,339)
(12,782,410)
-
-
-
-
(9,947,691)
(2,153,380)
(681,339)
(12,782,410)
Net
29,496,627
19,915,469
57,464 (12,782,410)
34,064,803
70,751,953
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(a) Interest rate risk
The Consolidated Entity’s exposure to risks of changes in market interest rates relate primarily to the
Consolidated Entity’s long term debt obligations and cash balances. The level of debt is disclosed in notes 25 and
28. The Consolidated Entity’s policy is to manage its interest cost using fixed rate debt. Therefore the Consolidated
Entity does not have any variable interest rate risk on its debt. The Consolidated Entity constantly analyses its
interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions,
alternative financing positions and the mix of fixed and variable interest rates. The following sensitivity analysis
is based on the interest rate risk exposures in existence at the reporting date. The sensitivity analysis is based on
the variable position.
At 30 June 2011, if interest rates had moved by a reasonably possible 1%, as illustrated in the table below, with all
other variables held constant, post tax losses and equity would have been affected as follows:
Post tax profit
higher/(lower)
Other Comprehensive Income
higher/(lower)
2011
2010
2011
2010
Judgements of reasonably possible movements:
+ 1.0% (100 basis points)
- 1.0% (100 basis points)
65,823
(65,823)
70,261
(70,261)
-
-
-
-
A sensitivity of +%1 or -1% has been selected as this is considered reasonable given the current level of short-term
and long-term Australian dollar interest rates. The movements in profit are due to possible higher or lower interest
income from variable rate cash balances. The sensitivity is lower in 2011 than 2010 because of cash backed
performance bond funds being converted from floating interest rates to fixed interest term deposits in 2011.
At the reporting date the Consolidated Entity’s exposure to interest rate risk and the effective weighted average
interest rate for classes of financial assets and financial liabilities is set out below.
2011
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Net financial assets/(liabilities)
Floating interest
rate
Fixed interest
Non-Interest
bearing
Total carrying
amount
9,403,323
66,580,011
-
-
9,403,323
-
2,570,730
69,150,741
-
12,470,596
750,000
13,220,596
-
-
-
-
(5,679,553)
(1,158,829)
(1,158,829)
-
(5,679,553)
75,983,334
12,470,596
3,320,730
91,774,660
(5,679,553)
(1,158,829)
(6,838,382)
84,936,278
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
2010
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Net financial assets/(liabilities)
(b) Credit risk
Floating interest
rate
Fixed interest
Non-Interest
bearing
Total carrying
amount
5,782,053
23,714,574
-
4,255,260
10,037,313
-
-
23,714,574
-
14,910,209
750,000
15,660,209
6,949,489
3,733,658
4,255,260
14,938,407
-
-
-
-
(9,947,691)
(14,437,589)
(2,834,719)
(2,834,719)
-
(10,053,738)
(9,947,691)
(24,491,327)
(9,552,920)
Credit risk arises from the financial assets of the Consolidated Entity, which comprises cash and cash
equivalents, trade and other receivables, available-for-sale financial assets, other financial assets held as
security and derivative instruments. Cash and cash equivalents are held with National Australia Bank which is
an Australian Bank with an AA credit rating (Standard & Poor’s). The Consolidated Entity’s exposure to credit risk
arises from potential default of the counter party, with the maximum exposure equal to the carrying amount of
the financial assets (as outlined in each applicable note) as well as $3,320,730 (2010: $5,005,260) in relation to
financial guarantees granted and security deposits (refer to note 16).
The Consolidated Entity does not hold any credit derivatives to offset its credit exposure.
The Consolidated Entity trades only with recognised, creditworthy third parties and as such collateral is not
requested nor is it the Consolidated Entity’s policy to securitise its trade and other receivables.
Receivable balances are monitored on an ongoing basis with the result that the Consolidated Entity does not have
a significant exposure to bad debts.
There are no significant concentrations of credit risk within the Consolidated Entity.
(c) Price risk
Commodity Price Risk
The Consolidated Entity’s revenues are exposed to commodity price fluctuations, in particular tin prices.
Periodically the Consolidated Entity enters into derivatives contracts to manage commodity price exposure. In the
2011 financial year the Consolidated utilised derivatives to manage commodity price exposure however, these
contracts were minor and there were no contracts outstanding at the year end.
A summary of the Consolidated Entity’s assets subject to commodity risk is set out below:
Current assets
Trade receivables
2011
2010
1,962,509
4,930,361
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
At 30 June 2011, if commodity prices had moved by a reasonably possible 5%, as illustrated in the table below,
with all other variables held constant, post tax losses and equity would have been affected as follows:
Post tax profit
higher/(lower)
Other Comprehensive Income
higher/(lower)
2011
2010
2011
2010
Judgements of reasonably possible movements:
Price + 5%
Price - 5%
68,688
(68,688)
172,563
(172,563)
-
-
-
-
A sensitivity of +5% or -5% has been selected as this is considered reasonable given recent fluctuations in tin
commodity prices and management’s expectations of future movements. The movements in commodity prices
are due to possible higher or lower commodity prices from tin sales that are classified as trade receivables (refer
to note 2(h)). The sensitivity in 2011 is lower due to a lower trade receivables balance at 30 June 2011 due to the
sale of 50% of the Renison Tin Project in the previous financial year.
Equity Security Price Risk
The Consolidated Entity’s revenues are exposed to equity security price fluctuations arising from investments in
equity securities.
At 30 June 2011, if equity security prices had moved by a reasonably possible 10%, as illustrated in the table
below, with all other variables held constant, post tax losses and equity would have been affected as follows:
Post tax profit
higher/(lower)
Other Comprehensive Income
higher/(lower)
2011
2010
2011
2010
Judgements of reasonably possible movements:
Price + 10%
Price - 10%
15,979
(15,979)
30,055
3,430,333
2,358,504
(30,055)
(3,430,333)
(2,358,504)
A sensitivity of +10% or -10% has been selected as this is considered reasonable given recent fluctuations in
equity prices and management’s expectations of future movements. The movements in other comprehensive
income are due to possible higher or lower equity security prices from investments in equity securities that are
classified as available-for-sale financial assets (refer to note 2(l)). The overall sensitivity for post tax losses and
equity in 2011 is higher due to increases in the market value of the underlying securities during the financial
year and the increased equity investments in Mongolian Resource Corporation Limited, Independence Group NL,
Westgold Resources Limited and Aziana Exploration Corporation (refer to notes 17 and 19).
(d) Foreign Currency Risk Exposure
As a result of sales receipts being denominated in Malaysian Ringgit and US dollars, the Consolidated Entity’s
cash flows can be affected by movements in the Malaysian Ringgit/Australian dollar and US dollar /Australian
dollar exchange rates. The Consolidated Entity’s exposure to foreign currency is however not considered to be
significant.
(e) Liquidity Risk
Liquidity risk arises from the financial liabilities of the Consolidated Entity and the subsequent ability to meet the
obligations to repay the financial liabilities as and when they fall due.
The Consolidated Entity’s objective is to maintain a balance between continuity of funding and flexibility through
the use of finance and hire purchase leases.
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
The table below reflects all contractually fixed payables and receivables for settlement, repayment and interest
resulting from recognised financial assets and liabilities, including derivative financial instruments as of 30
June 2011. For derivative financial instruments the market value is presented, whereas for the other obligations
the respective undiscounted cash flows for the respective upcoming fiscal years are presented. Cash flows for
financial assets and liabilities without fixed amount or timing are based on the conditions existing as 30 June.
The remaining contractual maturities of the Consolidated Entity’s financial liabilities are:
2011
2010
6 months or less
6 - 12 months
1 - 5 years
Over 5 years
6,518,430
141,399
235,665
-
6,895,494
11,014,823
1,361,401
697,478
-
13,073,702
Maturity analysis of financial assets and liabilities based on management’s expectation.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows.
Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets
used in our ongoing operations such as property, plant, equipment and investments of working capital e.g.
inventories and trade receivables. To monitor existing financial assets and liabilities as well as to enable effective
controlling of future risks, management monitors its Consolidated Entity’s expected settlement of financial assets
and liabilities on an ongoing basis.
2011
Financial assets
Cash and equivalents
Trade and other receivables
Available-for-sale financial assets
Derivatives-held for trading
Other financial assets
Financial liabilities
Trade and other payables
Interest bearing loans
Net inflow/(outflow)
<6 months
6-12 months
1-5 years
>5 years
Total
9,927,557
70,291,841
12,470,596
-
228,269
3,320,730
-
-
-
-
25,947,152
70,291,841
-
-
-
-
-
-
-
-
80,219,398
12,470,596
49,004,755
49,004,755
-
-
228,269
3,320,730
49,004,755
145,243,748
(5,679,553)
(838,877)
(6,518,430)
19,428,722
-
(141,399)
(141,399)
70,150,442
-
(235,665)
(235,665)
(235,665)
-
-
-
49,004,755
(5,679,553)
(1,215,941)
(6,895,494)
138,348,254
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2010
Financial assets
Cash and equivalents
Trade and other receivables
Available-for-sale financial assets
Derivatives-held for trading
Other financial assets
<6 months
6-12 months
1-5 years
>5 years
Total
5,977,616
24,516,659
14,910,209
-
57,464
5,005,260
-
-
-
-
25,950,549
24,516,659
-
-
-
-
-
-
-
-
30,494,275
14,910,209
34,064,803
34,064,803
-
-
57,464
5,005,260
34,064,803
84,532,011
Financial liabilities
Trade and other payables
Interest bearing loans
Net inflow/(outflow)
(f) Fair Values
(9,947,691)
(1,067,132)
(11,014,823)
14,935,726
-
(1,361,401)
(1,361,401)
23,155,258
-
(697,478)
(697,478)
(697,478)
-
-
-
34,064,803
(9,947,691)
(3,126,011)
(13,073,702)
71,458,309
All financial assets and liabilities recognised in the statement of financial position, due to their short term nature,
carrying amount approximates fair value unless otherwise stated in the applicable notes.
The methods for estimating fair value are outlined in the relevant notes to the financial statements.
The Consolidated Entity uses various methods in estimating the fair value of a financial instrument. The methods
comprise:
Level 1 - the fair value is calculated using quoted prices in active markets.
Level 2 - the fair value is estimated using inputs other than quoted prices included in level 1 that are observable
for the asset or liability, either directly (as prices) or indirectly (derived from price).
Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised
in the table below.
Quoted
market
price
(Level 1)
2011
Valuation
technique
market
observable
inputs
(Level 2)
Valuation
technique
non market
observable
inputs
(Level 3)
Total
Quoted
market
price
(Level 1)
2010
Valuation
technique
non market
observable
inputs
(Level 3)
Total
Financial Assets
Available-for-sale financial assets
Listed investments
Unlisted investments
Derivatives
Listed investments
Unlisted investments
47,004,755
-
-
-
-
2,000,000
-
-
-
-
-
2,000,000
-
228,269
228,269
47,004,755 34,064,803
- 34,064,803
-
-
-
-
-
57,464
57,464
-
-
47,004,755
2,000,000
228,269 49,233,024 34,064,803
57,464 34,122,267
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Quoted market price represents the fair value determined based on quoted prices on active markets as at the
reporting date without any deduction for transaction costs. The fair value of the listed equity investments are
based on quoted market prices.
For financial instruments not quoted in active markets, the Consolidated Entity uses valuation techniques
such as present value techniques, comparison to similar instruments for which market observable prices exist
and other relevant models used by market participants. These valuation techniques use both observable and
unobservable market inputs.
Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs
that are not significant to the overall valuation include interest rate swaps, forward commodity contracts and
foreign exchange contracts not traded on a recognised exchange.
The fair value of unlisted debt and equity securities, as well as other investments that do not have an active
market, are based on valuation techniques using market data that is not observable. Where the impact of credit
risk on the fair value of a derivative is significant, and the inputs on credit risk (e.g., CDS spreads) are not
observable, the derivative would be classified as based on non observable market inputs (Level 3). Certain long
dated forward commodity contracts where there are no observable forward prices in the market are classified as
Level 2 as the unobservable inputs are not considered significant to the overall value of the contract.
Transfer between categories
There were no transfers between Level 1 and Level 2 during the year.
5. REVENUE
Revenue from sale of tin concentrate
Revenue from nickel royalties
Interest received - other corporations
Total revenue
6. OTHER INCOME
Net (loss)/gain on sale of assets
Net gain on share investments
(Loss)/gain on deemed disposal of associate
Other income
Total other income
7. EXPENSES
(a) Cost of sales
Salaries, wages expense and other employee benefits
Superannuation expense
Other cash costs
Reversal of write-down in value of inventories to estimated net realisable value
Royalty
2011
2010
69,015,638
95,686,783
-
3,292,021
599,859
1,127,165
72,307,659
97,413,807
2011
(463,516)
55,717,781
14,788,837
622,118
2010
19,101,536
34,035
1,207,775
709,283
70,665,220
21,052,629
2011
2010
6,383,364
16,020,872
532,393
1,413,621
38,136,610
55,042,363
(1,832,571)
(2,967,314)
2,158,215
1,900,994
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Depreciation and amortisation expense
Depreciation of non-current assets
Property, plant and equipment
Buildings
Amortisation of non-current assets
Mine, properties and development costs
Intangible assets
Total cost of sales
(b) Other expenses
Administration expenses
Employee benefits expense
Salaries and wages expense
Directors’ fees and other benefits
Superannuation expense
Other employee benefits
Share-based payments
Other administration expenses
Consulting expenses
Travel and accommodation expenses
Administration costs
Operating lease costs
Depreciation expense
Depreciation of non-current assets
Property plant and equipment
Total Administration expenses
Other expenses
Care and maintenance costs
Foreign exchange (profit)/loss
Total other expenses
(c) Fair value change in financial instruments
Fair value change in derivatives
Gain on derivatives
Total fair value change in financial instruments
(d) Finance costs
Interest
Unwinding of rehabilitation provision discount
Total finance costs
2011
2010
3,661,459
251,364
6,299,690
392,789
8,693,188
21,295,433
-
384,969
57,984,022
99,783,417
1,965,882
1,638,753
105,400
175,507
23,993
103,385
101,895
178,818
16,321
315,141
2,374,167
2,250,928
452,880
228,602
525,194
121,668
397,123
199,688
688,090
39,525
1,328,344
1,324,426
204,976
219,328
3,907,487
3,794,682
-
(269,851)
(269,851)
3,637,636
-
(744,320)
(744,320)
3,050,362
57,464
-
57,464
57,464
-
57,464
330,970
63,950
394,920
1,000,006
145,052
1,145,058
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
8. INCOME TAX
(a) Major components of income tax expense:
Income Statement
Current income tax expense
Current income tax benefit
Recognition/derecognition of carry forward losses and other temporary differences
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to recoupment of carry forward tax losses in current year
Relating to origination and reversal of temporary differences in current year
Adjustments in respect of current income tax of previous years
Income tax (benefit)/expense reported in the statement of comprehensive income
(b) Amounts charged or credited directly to equity
Deferred income tax related to items charged or credited directly to equity
Unrealised (gain)/loss on available-for-sale investments
Share issue costs
Income tax (benefit)/expense reported in equity
(c)
A reconciliation of income tax benefit and the product of accounting loss before income tax
multiplied by the Consolidated Entity’s applicable income tax rate is as follows:
2011
2010
-
(14,698,290)
(4,261,697)
-
3,484,319
(435,558)
8,236,339
9,251,277
10,375,231
(11,397,637)
(60,109)
(408,526)
193,228
1,095,629
(322,965)
(85,561)
(408,526)
1,220,922
(125,293)
1,095,629
Accounting profit before tax from continuing operations
Loss before tax from discontinued operations
Total accounting profit before income tax
62,609,789
14,048,185
(721,707)
(1,171,572)
61,888,082
12,876,613
At statutory income tax rate of 30% (2010: 30%)
18,566,425
3,862,984
Non-assessable items
Non-deductible items
Deductible items
Prior year tax benefits
Unrecognised tax losses and other temporary differences
Income tax (benefit)/expense reported in income the statement of comprehensive
income
-
(5,925,000)
130,706
(85,561)
(4,321,806)
(14,698,290)
97,471
(181,815)
(242,330)
3,484,319
(408,526)
1,095,629
Effective income tax rate
-0.7%
8.5%
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(d) Deferred income tax at 30 June relates to the following:
Statement of financial position
Statement of comprehensive income
2011
2010
2011
2010
Deferred tax liabilities
Intangible assets
Exploration
Deferred mining
-
-
-
(16,365,494)
(15,983,715)
(381,781)
(4,796,171)
(3,513,503)
(1,282,668)
Mine site establishment and refurbishment
(2,150,246)
(2,694,073)
543,827
Research and development
Available-for-sale financial assets
Interest receivable
Inventories
Diesel rebate
Gross deferred tax liabilities
Deferred tax assets
(794,545)
(7,246,353)
(430,145)
(738,210)
(4,397)
(794,545)
-
-
(7,246,353)
(13,784)
(668,750)
(927)
(416,361)
(69,460)
(3,470)
(32,525,561)
(23,669,297)
7,208,313
(594,178)
3,746,015
5,025,762
777,701
-
(13,784)
953,446
13,793
Accelerated depreciation for tax purposes
3,136,644
3,713,210
(576,565)
(932,202)
Accelerated amortisation for tax purposes
Investment in associates
Derivative held for trading
Inventories
Borrowing costs
Equity raising costs
Accrued expenses
Provision for employee entitlements
Provision for fringe benefits tax
Provision for rehabilitation
Recognised tax losses
Gross deferred tax assets
Net deferred tax liabilities
Deferred tax income benefit
-
5,778
-
114,407
-
37,775
37,650
353,659
3,521
933,196
-
256,843
146,878
664,178
13,288
123,336
35,955
279,329
3,343
930,688
-
(2,747,828)
(251,065)
(146,878)
(342,030)
17,239
(549,771)
(1,044,039)
(13,288)
(1,798)
-
1,695
74,330
178
2,508
-
(1,545)
(221,718)
2,637
(641,375)
27,902,931
17,502,249
32,525,561
23,669,297
-
-
(10,315,122)
11,204,409
(e)
(f)
Tax Consolidation
The Company and its 100% owned subsidiaries are a tax consolidated group with effect from 1 July 2004. Metals X Limited is the
head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement that provides for the
allocation of income tax liabilities between the entities should the head entity default on its tax payments obligations. No amounts
have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for
the allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to members of the tax
consolidated group in accordance with a group allocation approach which is consistent with the principles of AASB 112 ‘Income
Taxes’.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the controlled entities
intercompany accounts with the tax consolidated group head company, Metals X Limited. The nature of the tax funding agreement
is such that no tax consolidation contributions by or distributions to equity participants are required.
(g) Unrecognised Losses
At 30 June 2011, there are unrecognised losses of $7,862,244 for the Consolidated Entity (2010: $22,237,568).
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
9. EARNINGS PER SHARE
The following reflects the income used in the basic and diluted earnings per share computations.
(a) Earnings used in calculating earnings per share
For basic earnings per share:
Net profit from continuing operations attributable to ordinary equity holders of the parent
62,948,043
12,660,889
2011
2010
Loss attributable to discontinued operations
Net profit attributable to ordinary equity holders of the parent
Basic earnings per share (cents)
For diluted earnings per share:
Net profit from continuing operations attributable to ordinary equity holders of the parent
(from basic EPS)
Loss attributable to discontinued operations
Net profit attributable to ordinary equity holders of the parent
Fully diluted earnings per share (cents)
(505,195)
(820,100)
62,442,848
11,840,789
4.57
0.92
62,948,043
12,660,889
(505,195)
(820,100)
62,442,848
11,840,789
4.57
0.91
(b) Weighted average number of shares
Weighted average number of ordinary shares for basic earnings per share
1,365,661,782
1,290,072,741
Effect of Dilution:
Share Options
1,787,500
15,275,000
Weighted average number of ordinary shares adjusted for the effect of dilution
1,367,449,282
1,305,347,741
There are no instruments (e.g. share options) excluded from the calculation of diluted earnings per share that could potentially
dilute basic earnings per share in the future because they are antidilutive for either of the periods presented.
The Company commenced an on market buy-back of its ordinary shares on 1 July 2011. As at the date of this report the Company
had acquired 25,208,407 shares resulting in a reduction of the Company’s ordinary shares.
There have been no transactions involving ordinary shares or potential ordinary shares since that would significantly change
the number of ordinary shares or potential ordinary shares outstanding between the reporting date and before the completion of
these financial statements.
10. DIVIDENDS PAID AND PROPOSED
2011
2010
No dividends have been paid or declared by the Company during the financial period or up to the
date of this report.
The amount of franking credits available for the subsequent financial year are:
• franking account balance as at the end of the financial year
5,930,931
5,930,931
at 30% (2010: 30%)
• franking credits that will arise from the payment of income tax
payable as at the end of the financial year
The amount of franking credits available for future reporting years
-
-
5,930,931
5,930,931
The franking credits were transferred to the Consolidated Entity on the acquisition of the Metals Exploration Limited Group.
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
11. DISCONTINUED OPERATIONS
(a) Details of operations held for sale:
In 2009 the board of directors decided to dispose of Bluestone Nominees Pty Ltd, the company that owns the Collingwood Tin
Project. The Company publicly announced this decision in February 2009 and is currently pursuing a suitable acquirer for the
project.
(b)
Financial performance of operations held for sale
The results of the discontinued operations for the year are presented below:
Revenue
Expenses
Gross loss
Other income
Finance costs
Impairment loss on property, plant and equipment
Exploration and evaluation expenditure written off
Loss before tax from discontinued operations
Income tax benefit:
- related to pre-tax profit/(loss)
Loss for the year from discontinued operations
Loss per share - cents per share
- basic from discontinued operations
- diluted from discontinued operations
(c)
Assets and liabilities - held for sale operations
2011
2010
-
(685,454)
(685,454)
2,000
-
-
(38,253)
(721,707)
-
(639,446)
(639,446)
9,219
-
(500,000)
(41,345)
(1,171,572)
216,512
351,472
(505,195)
(820,100)
(0.04)
(0.04)
(0.06)
(0.06)
The major classes of assets and liabilities of Bluestone Nominees Pty Ltd at 30 June 2011 are as follows:
Assets
Property, plant and equipment
Liabilities
Provisions
Net assets attributable to discontinued operations
(d) Cash flow information - held for sale operations
Operating activities
Investing activities
Net cash flow
1,476,212
1,476,212
1,491,219
1,491,219
(886,260)
(886,260)
589,952
(886,260)
(886,260)
604,959
(675,177)
(36,253)
(711,430)
84,436
(23,345)
61,091
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
12. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Total
Reconciliation to statement of cash flows
For the purposes of the cash flows, cash and cash equivalents comprise the following at 30 June:
Cash at bank and in hand
Short-term deposits
STATEMENT OF CASH FLOWS RECONCILIATION
Reconciliation of net profit/(loss) after income tax to net cash flows from operating
activities
Net profit after income tax
Income tax (benefit)/expense
Amortisation and depreciation
Impairment losses
Gain on deemed disposal of associate
Share based payments
Unwinding of rehabilitation provision discount
Fair value change in financial instruments
Exploration and evaluation expenditure written off
Profit on disposal of available-for-sale financial assets
Profit on disposal of intangible assets
Loss/(profit) on disposal of property, plant and equipment
Share of associates' net losses
Changes in assets and liabilities
(Increase)/decrease in inventories
(Increase)/decrease in trade and other debtors
Increase/(decrease) in trade and other creditors
Increase/(decrease) in employee entitlements
Net cash from operating activities
13. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables (a)
Other debtors (b)
2011
9,403,323
66,580,011
2010
5,782,053
23,714,574
75,983,334
29,496,627
9,403,323
66,580,011
5,782,053
23,714,574
75,983,334
29,496,627
62,296,608
11,780,984
(408,526)
1,095,629
12,810,987
28,592,210
17,358,674
500,000
(14,788,837)
(1,207,775)
103,385
63,950
57,464
1,189,720
315,141
145,052
57,464
295,820
(55,717,781)
(34,035)
-
(5,266,690)
478,517
(13,844,070)
(221,092)
127,475
23,223,069
22,557,205
1,652,616
(2,522,463)
3,167,995
(13,395,022)
(4,268,137)
(1,845,667)
200,464
23,976,007
(356,873)
4,437,180
2011
1,962,509
10,508,087
2010
4,930,361
9,979,848
12,470,596
14,910,209
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(a)
Trade receivables are non-interest bearing and are generally on 30 - 90 day terms.
(b) Other debtors primarily relate to cash calls advanced to the Bluestone Mines Tasmania Joint
Venture. Other debtors are non-interest bearing and are generally on 30 - 90 day terms.
(c)
The carrying amounts disclosed above represent the fair value.
Collectibility of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to
be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the
Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60
days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount
compared to the present value of estimated future cash flows, discounted at the original effective interest rate.
14. INVENTORIES (CURRENT)
Ore stocks at net realisable value
Tin in circuit at cost
Tin concentrate at cost
Copper concentrate at cost
Stores and spares at cost
Provision for obsolete stores and spares
Total inventories at lower of cost and net realisable value
2011
2010
147,395
132,757
823,380
207,420
10,747,418
11,806,514
49,731
2,460,701
(369,042)
-
2,229,166
(244,903)
13,168,960
14,821,577
During the year due to an increase in the Tin metal price there was a reversal of inventory write-downs of $1,832,571 (2010:
reversal of write-down $2,967,314) for the Consolidated Entity. This expense is included in cost of sales refer to note 7(a).
15. OTHER ASSETS (CURRENT)
Prepayments
16. OTHER FINANCIAL ASSETS (CURRENT)
Other financial asset (a)
Other receivables - cash on deposit - performance bond facility (b)
2011
2010
146,177
874,561
2011
750,000
2,570,730
3,320,730
2010
750,000
4,255,260
5,005,260
(a) Other financial assets are used by way of security for the mining contractor at the Bluestone Mines Tasmania Joint Venture.
(b)
The cash on deposit is interest bearing and is used by way of security for government performance bonds.
17. AVAILABLE-FOR-SALE FINANCIAL ASSETS (NON-CURRENT)
Shares - Australian listed
Shares - British Virgin Island unlisted
2011
2010
47,004,755
34,064,803
2,000,000
-
49,004,755
34,064,803
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
17. AVAILABLE-FOR-SALE FINANCIAL ASSETS (NON-CURRENT) (CONTINUED)
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.
Listed shares
The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in
an active market.
The Consolidated Entity has a 3.23% (2010: Nil) ownership interest in Independence Group NL which is a listed resources
company. During the period Independence Group NL completed a takeover of Jabiru Metals Limited. As a result of the takeover the
Consolidated Entity sold its ownership interest (2010: 19.99%) in Jabiru Metals Limited to Independence Group NL. Consideration
received for the Jabiru Metals Limited shares was $48,089,540 in cash and 6,558,571 shares in Independence Group NL.
The Consolidated Entity has a 16.97% (2010: Nil) ownership interest in Mongolian Resource Corporation Limited which is a listed
resources company.
During the period the Consolidated Entity disposed of its interest in Icon Resources Limited, which is a listed exploration company
(2010: 4.76% ownership interest).
Unlisted shares
The fair value of the unlisted available-for-sale investments has been estimated using valuation techniques based on
assumptions, which are outlined in note 2(l), that are not supported by observable market prices or rates. Management believes
that the estimated fair value resulting from the valuation techniques and recorded in the statement of financial position and the
related changes in fair value recorded in other comprehensive income are reasonable and the most appropriate at the reporting
date.
The Consolidated Entity has a 25% (2010: Nil) ownership interest in Aziana Exploration Corporation, which is an unlisted
exploration company.
18. DERIVATIVE FINANCIAL INSTRUMENTS (NON-CURRENT)
Derivatives - held for trading
Derivatives - held for trading
2011
2010
228,269
57,464
The Consolidated Entity holds 670,000 unlisted options in Mongolian Resource Corporation Limited ("MRC"). These options were
acquired for nil cost as part of a capital raisind in MRC. On acquisition the options were valued using the binomial method. The fair
value of the options have been determined using the binomial method. In 2010 the Consolidated Entity held 3,830,929 options
in Aragon Resources Limited. These options were acquired for nil cost on 30 July 2007 as part of the IPO of Aragon Resources
Limited. On acquisition the options were valued using the binomial method. The options expired unexercised in September 2010.
(a)
Instruments used by the Consolidated Entity
The Consolidated Entity is party to derivative financial instruments in the normal course of business in order to manage exposure
to fluctuations in commodity prices in accordance with the Consolidated Entity's financial risk management policies (refer to note
4).
19. INVESTMENTS IN ASSOCIATES (NON-CURRENT)
(a)
Investment details
Listed
Westgold Resources Limited
Aragon Resources Limited
2011
2010
22,801,822
19,170,160
-
3,355,753
22,801,822
22,525,913
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(b) Movements in carrying value of the Consolidated Entity's investment in associates
Westgold Resources Limited
At 1 July
Additions
Share of (losses)/profits after income tax
Gain on deemed disposal of associate
Impairment
Share of change in reserves
At 30 June
Aragon Resources Limited
At 1 July
Additions
Share of profits/(losses) after income tax
Gain on deemed disposal of associate
Share of change in reserves
Disposal of investment
At 30 June
2011
2010
19,170,160
10,150,112
8,965,137
(736,648)
13,727,073
(17,358,674)
(965,225)
8,912,803
97,503
-
-
9,742
22,801,822
19,170,160
3,355,753
626,400
957,740
1,061,764
(14,939)
(5,986,718)
766,185
1,300,000
(224,978)
1,207,775
306,771
-
-
3,355,753
(c)
Fair Value of investment in listed entities
Based on the quoted share price the fair value of the Consolidated Entity's share investment in Westgold Resources Limited at
balance date is $22,801,822 (2010: $21,874,691).
Based on the quoted share price the fair value of the Consolidated Entity's share investment in Aragon Resources Limited at
balance date is nil (2010: $3,355,753).
(d)
Summarised financial information
The following table illustrates summarised financial information relating to the Consolidated Entity's associates:
Extracts from the associates' statements of financial position:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
11,364,730
26,931,526
106,269,419
54,971,362
117,634,149
81,902,888
4,370,705
3,202,247
7,572,952
2,776,859
3,808,141
6,585,000
110,061,197
75,317,888
Share of associates' net assets
27,537,311
17,847,442
Extracts from the associates' statements of comprehensive income:
Revenue
Net profit/(loss)
5,562,031
4,670,268
1,992,216
(245,477)
The Company has a 25.02% (2010: 31.99%) interest in Westgold Resources Limited (“Westgold”), which is involved in the
exploration for base metals in the Northern Territory. Westgold is listed on the Australian Securities Exchange. At the end of the
period the Company’s investment was $22,801,822 (2010: $19,170,160) which represents cost plus post-acquisition changes in
the Company's share of net assets of Westgold.
During the period Westgold completed a takeover of Aragon Resources Limited ("Aragon"). As a result of the takeover the
Consolidated Entity sold its 8.70% (2010: 8.72%) interest in Aragon to Westgold. The Consolidated entity recognised a profit on the
sale of the Aragon shares to Westgold of $196,199.
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
20. PROPERTY, PLANT & EQUIPMENT (NON-CURRENT)
Plant and equipment
At cost
Accumulated depreciation
Net carrying amount
Land and buildings
At cost
Accumulated depreciation
Net carrying amount
Capital work in progress at cost
Total property, plant and equipment
Movement in property, plant and equipment
Plant and equipment
At 1 July net of accumulated depreciation
Additions
Disposals - other
Disposals (refer to note 38)
Depreciation charge for the year
At 30 June net of accumulated depreciation
Land and buildings
At 1 July net of accumulated depreciation
Additions
Disposals - other
Disposals (refer to note 38)
Depreciation charge for the year
At 30 June net of accumulated depreciation
Capital work in progress
At 1 July net of accumulated depreciation
Additions
Disposals (refer to note 38)
Transfer to mine properties & development
Transfer to plant and equipment
Transfer to land and buildings
At 30 June
2011
2010
20,881,245
21,671,323
(11,321,898)
(8,528,076)
9,559,347
13,143,247
5,550,576
(731,324)
4,819,252
5,112,001
(481,803)
4,630,198
683,835
877,931
15,062,434
18,651,376
13,143,247
31,206,574
940,526
(657,991)
1,519,203
(56,603)
-
(13,006,909)
(3,866,435)
(6,519,018)
9,559,347
13,143,247
4,630,198
444,832
(4,414)
9,113,457
134,314
-
-
(4,224,784)
(251,364)
4,819,252
(392,789)
4,630,198
877,931
2,252,369
-
(1,061,107)
(940,526)
(444,832)
683,835
303,052
2,700,248
(342,524)
(129,328)
(1,519,203)
(134,314)
877,931
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30 June 2011 is $2,827,596
(2010: $4,485,166). Value of plant and equipment purchased under finance leases and hire purchase contracts for 30 June 2011
financial year is nil (2010: Nil).
Leased assets and assets under hire purchase contracts are pledged as security for the related finance lease and hire purchase
lease liabilities (refer to notes 25 and 28).
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
21. MINE PROPERTY AND DEVELOPMENT (NON-CURRENT)
Development areas at cost
Mine site establishment
Net carrying amount
Mine site establishment
Mine site establishment
Accumulated amortisation
Impairment
Net carrying amount
Mine capital development
Accumulated amortisation
Impairment
Net carrying amount
2011
2010
59,908,605
59,908,605
4,304,400
4,304,400
31,545,457
30,539,938
(25,816,607)
(21,822,320)
(4,322,330)
(4,322,330)
1,406,520
4,395,288
45,080,208
35,882,459
(21,340,393)
(16,641,491)
(7,166,041)
(7,166,041)
16,573,774
12,074,927
Total mine properties and development
77,888,899
20,774,615
Movement in mine properties and development
Development areas at cost
At 1 July
Additions
Transfer from exploration and evaluation expenditure (refer to note 23)
At 30 June
Mine site establishment
At 1 July net of accumulated amortisation
Additions
Disposals (refer to note 38)
Transfer from capital work in progress (refer to note 20)
Increase/(decrease) in rehabilitation provision
Amortisation charge for the year
At 30 June net of accumulated amortisation
Mine capital development
At 1 July net of accumulated amortisation
Additions
Disposals (refer to note 38)
Transfer from exploration and evaluation expenditure (refer to note 23)
Amortisation charge for the year
At 30 June net of accumulated amortisation
4,304,400
1,805,695
53,798,510
3,623,412
680,988
-
59,908,605
4,304,400
4,395,288
22,609,334
-
-
1,061,107
(55,589)
-
(6,211,677)
129,328
(44,580)
(3,994,286)
(12,087,117)
1,406,520
4,395,288
12,074,927
24,832,805
6,801,738
7,583,268
-
(12,062,735)
2,396,011
929,905
(4,698,902)
(9,208,316)
16,573,774
12,074,927
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
22. INTANGIBLE ASSETS (NON-CURRENT)
Development projects at cost
At cost
Net carrying amount
Nickel royalties
At acquisition value
Accumulated amortisation
Accumulated Impairment
Net carrying amount
Total intangible assets
Movement in intangible assets
Development projects at cost
At 1 July net of accumulated amortisation
Additions
Disposals (refer to note 38)
At 30 June net of accumulated amortisation
Nickel royalties
At 1 July net of accumulated amortisation
Additions
Disposals
Amortisation charge for the year
Impairment
At 30 June net of accumulated amortisation
2011
2010
2,648,484
2,648,484
2,648,484
2,648,484
-
-
-
-
7,142,857
(6,450,976)
(691,881)
-
2,648,484
2,648,484
2,648,484
5,240,820
-
-
56,149
(2,648,485)
2,648,484
2,648,484
-
-
-
-
-
-
14,868,284
-
(14,483,315)
(384,969)
-
-
Description of the Consolidated Entity’s intangible assets
Development costs
Development costs are carried at cost less accumulated amortisation and accumulated impairment losses. This intangible asset is
still in the development stage. It has been assessed as having a finite life and will be amortised using the straight line method over
the life of the project. This intangible asset relates to the Rentails Development Project.
Nickel royalties
Nickel royalties are carried at cost less accumulated amortisation and accumulated impairment losses. These intangible assets
have been assessed as having a finite life and are amortised using the units of production method over the life of the assets.
The amortisation has been recognised in the income statement in the line “cost of sales”. If an impairment indication arises, the
recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the
carrying amount.
Intangible assets (nickel royalties) were disposed of by the Consolidated Entity during the previous year.
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
23. EXPLORATION EXPENDITURE (NON-CURRENT)
Exploration and evaluation costs carried forward in respect of mining areas of interest
Pre-production areas
At Cost
Accumulated impairment
Net carrying amount
Movement in deferred exploration and evaluation expenditure
At 1 July net of accumulated impairment
Additions
Disposals (refer to note 38)
Transferred to mine capital development (refer to note 21)
Transferred to development areas (refer to note 21)
Expenditure written off
At 30 June net of accumulated impairment
2011
2010
827,947
53,353,863
-
-
827,947
53,353,863
53,353,863
51,567,468
4,820,071
3,343,349
-
(2,396,011)
(53,798,510)
(372,574)
(929,905)
-
(1,151,466)
(254,475)
827,947
53,353,863
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful
development and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried forward for the
development phase is not recognised pending the commencement of production.
During the year exploration and evaluation expenditure of $53,798,510 relating to the Wingellina Nickel Project was transferred to
Mine Properties and Development. Completion of the first phase feasibility study in 2008 and signing the heads of agreement with
Jinchuan during the year to advance the project.
During the year a review was undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest. Exploration and evaluation expenditure of $1,189,720 (2010: $295,820) was written off to
the income statement, $38,253 (2010: $41,345) of this expense is attributable to exploration and evaluation expenditure written
off in relation to the Collingwood Tin Project (refer to note 11). The major expenditure written off in the current financial year relate
to the Agaton Phosphate Project ($580,524) and the Mt Bischoff Tin Project ($359,272). The major expenditure written off in the
previous financial year related to areas of interest within the Wingellina and Claude Hills Projects. Management decided to abandon
future exploration of these areas due to low potential from results returned in the areas.
24. TRADE AND OTHER PAYABLES (CURRENT)
Trade creditors (a)
Sundry creditors and accruals (b)
2011
3,205,562
2,473,991
5,679,553
2010
5,480,419
4,467,272
9,947,691
(a) Trade creditors are non-interest bearing and generally on 30 day terms.
(b) Sundry creditors and accruals are non-interest bearing and generally on 30 day terms.
Due to the short term nature of these payables, their carrying value approximates their fair value.
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
25. INTEREST BEARING LOANS AND BORROWINGS (CURRENT)
Lease liability
Represents finance leases which have repayment terms of 36 months.
26. PROVISIONS (CURRENT)
Provision for annual leave
Provision for fringe benefits tax payable
The nature of the provisions is described in note 2(ad).
27. PROVISIONS (NON-CURRENT)
Provision for long service leave (a)
Provision for Rehabilitation (b)
(a)
The nature of this provisions is described in note 2(ad).
(b) Provision for rehabilitation
2011
2010
941,788
2,153,380
2011
2010
807,941
11,737
819,678
778,612
11,145
789,757
2011
305,985
2,224,393
2,530,378
2010
135,443
2,216,032
2,351,475
Environmental obligations associated with the retirement or disposal of mining properties and/or of exploration activities are
recognised when the disturbance occurs and are based on the extent of the damage incurred. The provision is measured as the
present value of the future expenditure. The rehabilitation liability is remeasured at each reporting period in line with the change
in the time value of money (recognised as an interest expense in the statement of comprehensive income and an increase
in the provision), and additional disturbances/change in the rehabilitation cost are recognised as additions/changes to the
corresponding asset and rehabilitation liability.
(c) Movements in provision for rehabilitation
At 1 July
Arising/(reversing) during the year
Adjustment due to revised conditions
Unwind of discount
Disposal (refer to note 38)
At 30 June
2,216,032
4,353,954
-
(55,589)
63,950
-
-
(44,580)
145,052
(2,238,394)
2,224,393
2,216,032
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
28. INTEREST BEARING LOANS AND BORROWINGS (NON-CURRENT)
Lease liability
2011
2010
217,041
681,339
Represents finance leases which have repayment terms of 36 months from inception.
The carrying amount of the Consolidated Entity's non-current loans and borrowings approximate their fair value. The difference between
the carrying amount and fair value is immaterial.
Financing facilities available
At reporting date, the following financing facilities were available:
Total facilities
- finance lease facility
Facilities used at reporting date
- finance lease facility
Assets pledged as security:
1,158,829
2,834,719
1,158,829
2,834,719
The carrying amounts of assets pledged as security for current and non-current interest bearing liabilities are:
Non-current
Finance lease
Plant and equipment
Total non-current assets pledged as security
Plant and equipment assets are pledged against lease liabilities for the term of the lease period.
29. ISSUED CAPITAL
(a) Ordinary Shares
Issued and fully paid
(b) Movements in ordinary shares on issue
At 1 July 2009
Issued on 3 December 2009 for cash pursuant to placement
Deferred tax asset recognised on equity transactions
Share issue costs
At 30 June 2010
Deferred tax asset recognised on equity transactions
Share issue costs
At 30 June 2011
(c)
Terms and conditions of contributed equity
2,827,596
2,827,596
4,485,166
4,485,166
2011
2010
290,056,226
290,141,787
Number
$
1,187,661,782
178,000,000
-
-
274,280,247
16,020,000
(125,293)
(33,167)
1,365,661,782
290,141,787
-
-
1,365,661,782
(85,561)
-
290,056,226
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholder meetings. In the event of winding up the Company the holders are entitled to participate in the proceeds from the sale
of all surplus assets in proportion to the number of and amounts paid up on shares held.
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
29. ISSUED CAPITAL (CONTINUED)
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par share values.
Accordingly, the Parent does not have authorised capital nor par value in respect of its issued shares.
(d) Escrow Restrictions
There are no current escrow restrictions on the issued capital of the Company.
(e) Options on Issue
Unissued ordinary shares of the company under option at the date of this report are as follows:
Type
Unlisted**
Unlisted**
Unlisted*
Unlisted**
Unlisted*
Total
Expiry Date
31 March 2012
31 July 2012
30 November 2012
30 November 2013
30 November 2013
Exercise Price
Number of options
36 cents
45 cents
14 cents
13 cents
13 cents
225,000
1,000,000
2,500,000
2,850,000
1,000,000
7,575,000
* The above options are exercisable at any time on or before the expiry date.
** These options were issued pursuant to the Metals X Limited Employee Option Scheme and can only be exercised pursuant to
the scheme rules.
Share options carry no right to dividends and no voting rights.
(f) Option conversions
There were no option conversions during the financial year.
(g) Capital management
Capital managed by the Board includes shareholder equity, which was $290,056,226 at 30 June 2011 (2010: $290,141,787).
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that
ensures the lowest cost of capital available to the entity. Managed capital is disclosed on the face of the statement of financial
position and comprises shareholder equity, accumulated losses and reserves.
Management may adjust the capital structure to take advantage of favourable costs of capital or higher returns on assets. As the
market is constantly changing, management may issue new shares or sell assets to raise cash, change the amount of dividends
to be paid to shareholders (if at all) or return capital to shareholders.
During the financial year ending 30 June 2011, management did not pay a dividend and does not expect to pay a dividend in the
foreseeable future.
The Consolidated Entity monitors the adequacy of capital by analysing cash flow forecasts for each of its projects. To a lesser
extent, gearing ratios are also used to monitor capital. Appropriate capital levels are maintained to ensure that all approved
expenditure programs are adequately funded. This funding is derived from an appropriate combination of debt and equity.
The gearing ratio is calculated as net debt divided by total capital. Net debt is defined as interest bearing liabilities and total capital is
calculated as ‘equity as shown in the statement of financial position (including minority interest).
During the year ended 30 June 2011, interest bearing liabilities decreased as a result of the Consolidated Entity making
repayments of its finance lease facility to finance property, plant and equipment at its Renison Tin Project (refer to note 38). The
net effect was a decrease in the gearing ratio.
Gearing ratio
Net debt
Capital
The entity is not subject to any externally imposed capital requirements.
2011
2010
0.44%
1.00%
1,158,829
263,853,027
2,834,719
201,866,069
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
30. ACCUMULATED LOSSES
At 1 July
Net profit in current period attributable to members of the parent entity
At 30 June
31. RESERVES
CONSOLIDATED ENTITY
At 1 July 2009
Share based payments
Share of change in equity of associate
Fair value on available-for-sale financial assets
Tax effect on gain on available-for-sale financial assets
At 30 June 2010
Share based payments
Share of change in equity of associate
Fair value on available-for-sale financial assets
Tax effect on gain on available-for-sale financial assets
At 30 June 2011
Nature and purpose of reserves
Net unrealised gains reserve
2011
2010
(104,123,039)
(115,963,773)
62,442,848
11,840,734
(41,680,191)
(104,123,039)
Option premium
reserve
$
Net unrealised
gains reserve
$
Total
$
17,907,652
315,141
-
-
-
18,222,793
103,385
-
-
-
18,326,178
28,965
-
316,512
(4,069,739)
1,220,922
(2,503,340)
-
(980,165)
1,076,551
(322,966)
(2,729,920)
17,936,617
315,141
316,512
(4,069,739)
1,220,922
15,719,453
103,385
(980,165)
1,076,551
(322,966)
15,596,258
This reserve records the movements in the fair value of available-for-sale investments and the share of changes in equity of
associates.
Option premium reserve
This reserve is used to record the value of options issued.
The option premium reserve relates to the issue of:
Details of issue
Rights issue - capital raising cost
Employee option scheme
Employee option scheme
Employee option scheme
Employee option scheme
Employee option scheme
Employee option scheme
Employee option scheme
Employee option scheme
Employee option scheme
Share-based payment - director
Share-based payment - director
Share-based payment - contractor
Share-based payment - contractor
Share-based payment - contractor
Placement fee - capital raising cost
Convertible notes conversion
Acquisition of a subsidiary
Total
Number of
options
Fair value per
option ($)
110,540,000
1,890,000
400,000
2,200,000
400,000
3,900,000
1,700,000
825,000
1,000,000
2,850,000
4,000,000
2,500,000
400,000
1,000,000
1,000,000
2,000,000
67,500,000
16,750,000
220,855,000
0.057
0.102
0.414
0.114
0.168
0.122
0.084
0.119
0.150
0.050
0.174
0.048
0.168
0.120
0.103
0.049
0.111
0.099
Value
6,312,054
191,880
165,524
250,300
67,272
475,134
142,260
98,434
150,421
142,111
694,563
119,432
67,272
119,631
103,385
97,288
7,463,700
1,665,517
18,326,178
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
32. MINORITY INTEREST
Equity contribution
Accumulated losses
Non-controlling interest share of net assets in controlled entity
33. SHARE-BASED PAYMENTS
2011
2010
2,500
(206,045)
185,173
(18,372)
2,500
(59,805)
185,173
127,868
2011
2010
(a)
Recognised share-based payment expense
The expense recognised for services received during the year is shown in the table below:
Expense arising from equity-settled share-based payments
103,385
315,141
The share-based payment plan is described below. There have been no cancellations or modifications to the plan during 2011 and
2010.
(b)
Employee Share Option Plan
The Consolidated Entity has an Employee Option Scheme (EOS) for the granting of non-transferable options to senior executives
and other staff members of the Consolidated Entity in accordance with guidelines established by the Board of the Company.
The options issued under the EOS will vest when the following conditions are met:
(i)
(ii)
The EOS has no direct performance requirements but has specified time restrictions on the exercise of options.
The director or senior executive or other staff member continues to be employed by the Consolidated Entity on the first
anniversary of the grant date or as determined by the Board of Directors.
Other relevant terms and conditions applicable to the options granted under EOS include:
(i)
(ii)
(iii)
The options are issued for nil consideration;
The options will not be quoted on the ASX;
The exercise price of the options is equal to 120% of the weighted average closing sale price of the Company’s fully paid
ordinary shares on ASX over the 5 trading days immediately preceding the day on which the Board resolves to offer that
Option;
Any options that are not exercised by the fourth anniversary of their grant date will lapse;
The options will lapse after six months if a person ceases employment with the Consolidated Entity;
(iv) Options vest after one year or as determined by the Board of Directors;
(v)
(vi)
(vii) Upon exercise, these options will be settled in ordinary fully paid shares of the Company; and
(viii) The Board of Directors may alter, delete or add to the terms and conditions of the EOS at any time.
(c)
Summary of options granted under the Employee Option Scheme
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options issued
under the EOS.
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the year end
2011
Number
7,775,000
-
-
(3,000,000)
4,775,000
2011
WAEP
0.326
-
-
0.397
0.240
2010
Number
8,550,000
3,100,000
-
(3,875,000)
7,775,000
Exercisable at the year end
4,775,000
0.240
4,925,000
2010
WAEP
0.333
0.130
-
0.261
0.326
0.400
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
The outstanding balance as at 30 June 2011 is represented by the following table:
Grant date
Vesting date
Expiry date
Exercise
price
Options
granted
Options
lapsed/
cancelled
Options
exercised
Number of options at
end of period
6 September 2007
6 September 2008
31 August 2011
35 cents
1,700,000
(1,000,000)
31 March 2008
31 March 2009
31 March 2012
36 cents
1,850,000
(1,625,000)
17 July 2008
1 June 2009
17 July 2009
31 July 2012
45 cents
1,250,000
(250,000)
1 June 2010
30 June 2013
13 cents
500,000
(500,000)
27 November 2009
6 July 2010
30 November 2013
13 cents
3,100,000
(250,000)
Total
8,400,000
(3,625,000)
On issue
Vested
700,000
700,000
225,000
225,000
1,000,000
1,000,000
-
-
2,850,000
2,850,000
4,775,000
4,775,000
-
-
-
-
-
-
(d) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2011 is 1.73 years (2010: 2.08
years).
(e) Range of exercise price
The range of exercise prices for ESOP options outstanding at the end of the year was $0.13 - $0.45 (2010: $0.13 - $0.45).
As the range of prices is wide, refer to section (c) above for further information in assessing the number and timing of additional
shares that may be issued and the cash that may be received upon exercise of those options.
(f) Weighted average fair value
The weighted average fair value of options granted during the year was nil (2010: $0.13).
(g) Option pricing model
The fair value of the equity-settled share options granted under the EOS is estimated at the date of grant using a Black & Scholes
model, which takes into account factors including the options exercise price, the volatility of the underlying share price, the risk-
free interest rate, the market price of the underlying share at grant date and the expected life of the option.
The following table gives the assumptions made in determining the fair value of the options granted:
Grant date
Expected Volatility (%)
Risk-free interest rate (%)
Expected life of options (yrs)
Options exercise price ($)
Share price at grant date ($)
Fair value at grant date ($)
2011
Nil
2010
27 Nov 2009
n/a
n/a
n/a
n/a
n/a
n/a
85%
4.80%
2.5
$0.13
$0.11
$0.050
The effects of early exercise have been incorporated into the calculations by using an expected life for the option that is shorter
than the contractual life based on historical exercise behaviour, which is not necessarily indicative of exercise patterns that may
occur in the future. The expected volatility was determined using a historical sample of the Company’s share price over a 12 month
period. The resulting expected volatility therefore reflects the assumptions that the historical volatility is indicative of future trends,
which may also not necessarily be the actual outcome.
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
33. SHARE-BASED PAYMENTS (CONTINUED)
(h) Directors options
In addition to the EOS, the Company has issued options to Directors.
Other relevant terms and conditions applicable to the options granted to Directors include:
(i)
(ii)
(iii)
(iv)
(v)
The options issued to Directors vest immediately;
The option issue has no direct performance requirements;
The options are issued for nil consideration;
The options will not be quoted on the ASX;
The exercise price of the options is equal to 120% of the weighted average closing sale price of the Company’s fully paid
ordinary shares on ASX over the 20 trading days immediately preceding the day on which the members resolve to offer that
Option;
Any options that are not exercised by the third anniversary of their grant date will lapse; and
(vi)
(vii) Upon exercise, these options will be settled in ordinary fully paid shares of the Company.
(i)
Summary of options granted to Directors
The following table illustrates the number and weighted average (WAEP) of, and movements in, share options issued to Directors:
2011
Number
2011
WAEP
2010
Number
2010
WAEP
Outstanding at the beginning of the year
6,500,000
0.337
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the year end
-
-
(4,000,000)
2,500,000
-
-
0.460
0.140
4,000,000
2,500,000
-
-
6,500,000
Exercisable at the end of the year
2,500,000
0.140
6,500,000
The outstanding balance as at 30 June 2011 is represented by the following table:
0.460
0.140
-
-
0.337
0.337
Grant date
Vesting date
Expiry date
Exercise
price
Options
granted
Options
lapsed/
cancelled
Options
exercised
Number of options at
end of period
27 November 2009
27 November 2009
30 November 2012
14 cents
2,500,000
Total
2,500,000
-
-
-
-
On issue
Vested
2,500,000
2,500,000
2,500,000
2,500,000
(j) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2011 is 1.42 years (2010: 1.19).
(k)
Range of exercise price
The exercise price for options outstanding at the end of the year was $0.14 (2010: $0.14 - $0.46).
(l) Weighted average fair value
The weighted average fair value of options granted during the year was nil (2010: $0.14).
(m)
Contractors options
In addition to the EOS, the Company has issued options to Contractors.
Other relevant terms and conditions applicable to the options granted to Contractors include:
(i)
(ii)
(iii)
(iv)
(v)
The options issued to Contractors vest immediately;
The option issue has no direct performance requirements;
The options are issued for nil consideration;
The options will not be quoted on the ASX;
The exercise price of the options is equal to 120% of the weighted average closing sale price of the Company’s fully paid
ordinary shares on ASX over the 5 trading days immediately preceding the day on which the members resolve to offer that
Option;
Any options that are not exercised by the expiry date as determined by the Directors at their grant date will lapse; and
(vi)
(vii) Upon exercise, these options will be settled in ordinary fully paid shares of the Company.
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(n)
Summary of options granted to Contractors
The following table illustrates the number and weighted average (WAEP) of, and movements in, share options issued to
Contractors:
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the year end
2011
Number
1,000,000
1,000,000
-
(1,000,000)
1,000,000
2011
WAEP
0.460
0.320
-
0.460
0.320
2010 Number
1,400,000
-
-
(400,000)
1,000,000
2010
WAEP
0.426
0.000
-
0.340
0.460
Exercisable at the end of the year
1,000,000
0.320
1,000,000
0.460
The outstanding balance as at 30 June 2011 is represented by the following table:
Grant date
Vesting date
Expiry date
Exercise
price
Options
granted
Options
lapsed/
cancelled
Options
exercised
Number of options at
end of period
1 December 2010
1 December 2010
30 November 2013
32 cents
1,000,000
Total
1,000,000
-
-
-
-
On issue
Vested
1,000,000
1,000,000
1,000,000
1,000,000
(o) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2011 is 2.42 years (2010: 1.25).
(p)
Range of exercise price
The exercise price for options outstanding at the end of the year was $0.32 (2010: $0.46).
(q) Weighted average fair value
The weighted average fair value of options granted during the year was $0.10 (2010: nil).
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
34. COMMITMENTS
(a) Capital commitments
Commitments relating to jointly controlled assets
2011
2010
At 30 June 2011 the Consolidated Entity has capital commitments that relate principally to the purchase of maintenance plant and
equipment for the Bluestone Mines Tasmania Joint Venture.
Capital expenditure commitments
Estimated capital expenditure contracted for at reporting date, but not recognised as liabilities in respect of the Bluestone Mines
Tasmania Joint Venture
- Within one year
115,023
223,868
(b) Operating lease commitments - Company as lessee
The Company has entered into commercial property leases on office rental and remote area residential accommodation. The
Company has entered into commercial leases on office equipment. These operating leases have an average life of between
one month and three years with renewal options included in the contracts. The Company also has commercial leases over the
tenements in which the mining operations are located. These tenement leases have a life of between six months and twenty
one years. In order to maintain current rights to explore and mine the tenements the Consolidated Entity is required to perform
minimum exploration work to meet the expenditure requirements specified by the relevant state governing body. There are
no restrictions placed on the lessee by entering into these contracts. The operating lease commitments include Joint Venture
commitments as disclosed in note 38.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
(i)
Property leases as lessee:
- Within one year
- After one year but not more than five years
(ii) Equipment leases:
- Within one year
- After one year but not more than five years
(iii) Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
2011
2010
250,243
779,310
1,029,553
246,971
1,026,768
1,273,739
13,764
19,499
33,263
282,043
936,111
861,519
11,677
550
12,227
245,157
807,441
933,688
2,079,673
1,986,286
(c) Operating lease commitments - Company as lessor
The Company has entered into a commercial sub-lease on the above mentioned office space which expired in January 2011.
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
(i)
Property leases as lessor:
- Within one year
- After one year but not more than five years
- After more than five years
2011
2010
-
-
-
-
57,943
-
-
57,943
(d)
Finance lease and hire purchase commitments
The Company has finance leases and hire purchase contracts for various items of plant and machinery. The leases do have terms
of renewal but no escalation clauses. Renewals are at the option of the specific entity that holds the lease. The finance and hire
purchase contracts have an average term of 36 months with the right to purchase the asset at the completion of the lease term for
a pre-agreed amount.
Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the
minimum lease payments are as follows:
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
Included in the financial statements as:
Current interest-bearing loans and borrowings (note 25)
Non-current interest-bearing loans and borrowings (note 28)
Total included in interest-bearing loans and borrowings
The weighted average interest rate impact in the leases for the Company is 14.23% (2010: 9.70%).
2011
Minimum lease
payments
Present value
of lease
payments
980,276
235,665
1,215,941
(57,112)
1,158,829
941,788
217,041
1,158,829
-
1,158,829
2010
Minimum lease
payments
Present value
of lease
payments
2,428,534
697,478
3,126,012
(291,293)
2,834,719
2,153,380
681,339
2,834,719
-
2,834,719
2011
2010
941,788
217,041
1,158,829
2,153,380
681,339
2,834,719
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
35. CONTINGENT ASSETS AND LIABILITIES
(a) Royalties
At the Bluestone Mines Tasmania Joint Venture Renison Tin Project the following royalties apply:
• Bluestone Mines Tasmania Pty Ltd has an obligation to pay a State Government Royalty on tin production at the rate of: 1.6% of
Net sales + (profit x 0.4 x profit/net sales). This royalty is capped at 5% of Net Sales.
At the Collingwood Tin Project the following royalties apply (the project is currently under care and maintenance):
• Bluestone Nominees Pty Ltd has an obligation to pay a private royalty of 2% of the Net Smelter Return from the sale of ores,
concentrates or other mineral products produced.
• A State Government royalty of 2% of the value of the mineral produced is applicable.
36. EVENTS AFTER THE BALANCE SHEET DATE
On 16 June 2011 the Company announced its intention to conduct an on-market buy-back of up to 10% of its issued capital over a
twelve month period commencing on 1 July 2011. As at the date of this report the Company had acquired 25,208,407 shares for a
total value of $5,740,356.48 and an average price of $0.228 per share.
37. AUDITOR'S REMUNERATION
Amounts received or due and receivable by Ernst & Young (Australia) for:
2011
2010
An audit or review of financial reports of the entity and any other entity within the
Consolidated Entity
192,627
161,338
Other services in relation to the entity and any other entity in the Consolidated Entity:
- tax compliance
Total auditor remuneration
79,450
272,077
43,575
204,913
38. INTEREST IN A JOINTLY CONTROLLED OPERATION
In 2010 the subsidiary Bluestone Mines Tasmania Pty Ltd sold 50% of the assets at its Renison Tin Project and entered into a
jointly controlled operation called the Bluestone Mines Tasmania Joint Venture. The Consolidated Entity is entitled to 50% of
the operation's production. The Consolidated Entity's interest in the assets and liabilities of the jointly controlled operation are
included in the consolidated statement of financial position.
2011
2010
(a) Commitments relating to the jointly controlled assets
Share of capital commitments (refer to note 34(a))
115,023
223,868
Share of operating lease commitments (refer to note 34(b))
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
(i) Property leases as lessee:
- Within one year
(ii) Equipment leases:
- Within one year
- After one year but not more than five years
2011
2010
985
985
13,764
19,499
33,263
7,230
7,230
11,677
550
12,227
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(iii) Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
(b)
Impairment
No assets employed in the jointly controlled operation were impaired during the year (2010: nil).
(c)
Assets and liabilities sold to the Joint Venture partner
2011
2010
172,916
683,795
15,724
872,435
126,863
503,734
134,251
764,848
Current assets
Inventories
Trade and other receivables
Other assets
Non-current assets
Property, plant and equipment (refer to note 20)
Mine properties and development costs (refer to note 21)
Intangible assets (refer to note 22)
Exploration and evaluation expenditure (refer to note 23)
Total assets
Current liabilities
Interest bearing loans and borrowings (refer to note 25)
Provisions (refer to note 26)
Non-current liabilities
Interest bearing loans and borrowings (refer to note 28)
Provisions (refer to note 27)
Total liabilities
Net assets disposed
Proceeds from sale of assets
Profit on sale of assets
As at 19 March
2010
3,685,448
25,026
693,397
4,403,871
17,574,217
18,274,412
2,648,485
372,574
38,869,688
43,273,559
(1,813,499)
(389,585)
(2,203,084)
(1,507,556)
(2,238,394)
(3,745,950)
(5,949,034)
37,324,525
51,091,067
13,766,542
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
39. OPERATING SEGMENTS
Identification of reportable segments
The Consolidated Entity has identified its operating segments based on internal reports that are reviewed and
used by the executive management team (the chief operating decision makers) in assessing performance and in
determining the allocation of resources.
The operating segments are identified by management based on the manner in which resources are allocated.
Discrete financial information about each of these operating businesses is reported to the executive
management team on at least a monthly basis.
The reportable segments are based on aggregated operating segments determined by the similarity of the
mineral being mined or explored, as these are the sources of the Consolidated Entity’s major risks and have the
most effect on rates of return.
The Consolidated Entity comprises the following reportable segments:
-
Tin Projects:
- Nickel Projects:
-
Phosphate Projects: Phosphate exploration projects.
Mining, treatment and marketing of tin concentrate.
Nickel royalty income and exploration of nickel assets.
Accounting policies and inter-segment transactions
The accounting policies used by the Consolidated Entity in reporting segments internally are the same as those
contained in note 2 to the financial report.
The Consolidated Entity does not have any inter-entity sales.
Corporate charges comprise non-segmental expenses such as head office expenses and interest. Corporate
charges are not allocated to operating segments.
It’s the Consolidated Entity’s policy that if items of revenue and expense are not allocated to operating segments
then any associated assets and liabilities are not allocated to segments. This is to avoid allocations within
segments which management believe would be inconsistent.
The following items and associated assets and liabilities are not allocated to operating segments as they are not
considered part of the core operations of any segment:
Interest revenue.
•
• Fair value gains/losses on financial instruments.
• Net gains on disposal of available-for-sale investments.
• Share of loss of associates.
• Finance costs.
The following table presents revenue and profit information for reportable segments for the years ended 30 June
2011 and 30 June 2010.
Major customers
The Consolidated Entity only has one customer to which it provides both products and services. The Consolidated
Entity sends its tin concentrate to a South East Asian customer that accounts for 95% of external revenue (2010: 98%).
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Year ended 30 June 2011
Tin Projects
Nickel Projects
Phosphate
Projects
Unallocated
items
Total
Revenue
Sales to external customers
69,015,638
Other revenue from external customers
Other revenue
Total segment revenue
-
-
69,015,638
-
-
-
-
-
-
-
-
-
-
69,015,638
-
3,292,021
3,292,021
3,292,021
72,307,659
Segment net operating profit/(loss)
after tax
33,858,795
9,255,204
(3,971)
(27,972,259)
15,137,769
Other segment information
Other income
Interest income
Interest expense
48,374
5,266,685
-
(288,300)
-
-
-
-
-
63,350,161
70,665,220
3,292,021
(42,670)
3,292,021
(330,970)
Depreciation and amortisation
(12,494,665)
(111,200)
(200)
(204,922)
(12,810,987)
Exploration and evaluation expenditure
written off
(359,272)
(211,670)
(580,524)
-
(1,151,466)
Impairment losses
Share of loss of associate
Other non-cash expenses
Income tax expense
-
-
(63,950)
-
-
-
11,036,808
4,675,785
Discontinued operations after tax income
(505,195)
-
-
-
-
-
-
(17,358,674)
(17,358,674)
221,092
221,092
(103,385)
(167,335)
(15,520,579)
192,014
-
(505,195)
Segment assets
60,318,050
60,412,009
51
103,589,273
224,319,383
Investments in associates
Capital expenditure
-
-
-
22,801,822
22,801,822
(11,158,445)
(3,838,429)
(19,223)
37,518,157
22,502,060
Segment liabilities
(8,768,393)
(491,529)
4,326
(932,842)
(10,188,438)
Cash flow information
Net cash flow from operating activities
25,966,625
(173,195)
Net cash flow from investing activities
(11,158,445)
(3,838,429)
(29,491)
(19,223)
(1,787,932)
23,976,007
37,518,157
22,502,060
Net cash flow from financing activities
(16,056,181)
4,016,932
48,204
11,999,685
8,640
108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
39. OPERATING SEGMENTS (CONTINUED)
Year ended 30 June 2010
Tin Projects
Nickel Projects
Phosphate
Projects
Unallocated
items
Total
Revenue
Sales to external customers
Other revenue from external customers
Other revenue
Total segment revenue
Segment net operating profit/(loss)
after tax
Other segment information
Other income
Interest income
Interest expense
95,686,783
-
-
95,686,783
-
599,859
-
599,859
-
-
-
-
-
-
1,127,165
1,127,165
95,686,783
599,859
1,127,165
97,413,807
(12,661,910)
8,730,484
38,670
785,328
(3,107,428)
14,008,372
5,266,685
-
(738,137)
-
-
-
-
-
1,777,572
1,127,165
21,052,629
1,127,165
(261,869)
(1,000,006)
Depreciation and amortisation
(27,867,970)
(504,711)
(200)
(219,328)
(28,592,209)
Exploration and evaluation expenditure
written off
Impairment losses
Share of loss of associate
Other non-cash expenses
Income tax benefit
Discontinued operations after tax
income
-
-
-
(145,052)
(4,836,931)
(820,100)
(1,810)
(252,665)
-
-
-
-
-
-
4,317,688
19,435
-
-
(127,475)
(315,141)
(947,293)
(254,475)
-
(127,475)
(460,193)
(1,447,101)
-
-
-
(820,100)
Segment assets
73,906,406
57,125,951
564,881
51,465,247
183,062,485
Investments in associates
Capital expenditure
-
-
-
22,525,913
22,525,913
38,822,803
17,778,284
(58,467)
(47,877,301)
8,665,319
Segment liabilities
(14,149,649)
(807,412)
(28,348)
(938,233)
(15,923,642)
Cash flow information
Net cash flow from operating activities
Net cash flow from investing activities
4,742,150
38,822,803
2,160,382
17,778,284
5,555
(2,470,907)
(58,467)
(47,877,301)
Net cash flow from financing activities
(43,757,076)
(19,971,989)
52,272
73,121,432
4,437,180
8,665,319
9,444,639
(a) Segment revenue reconciliation to the statement of comprehensive income
Total segment revenue
Other revenue from continuing operations
Total revenue
2011
2010
72,307,659
97,413,807
-
-
72,307,659
97,413,807
Revenue from external customers by geographical locations is detailed below. Revenue is attributable to geographical location
based on the location of the customers. The Company does not have external revenues from external customers that are
attributable to any foreign country other than as shown.
Australia
3,292,021
1,727,024
South east asia
Total revenue
69,015,638
95,686,783
72,307,659
97,413,807
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(b)
Segment net operating profit/(loss) after tax reconciliation to the statement of
comprehensive income
2011
2010
Executive management meet on a regular basis to assess the performance of each segment
by analysing the segment's net operating profit after tax. A segment's net operating profit
after tax excludes non operating income and expense such as dividends received, fair value
gains and losses, gains and losses on disposal of assets and impairment charges. Income
tax expenses are calculated on the segment's net profit or loss.
Reconciliation of segment net operating loss after tax to net profit/(loss) before tax :
Segment net operating profit/(loss) after tax
Income tax expense
Share of loss of associates
Finance costs
Corporate expenses
Impairment of assets
(Loss)/gain on deemed disposal of associate
Exploration and evaluation expenditure written off
Fair value gain on financial instruments
Net gains on disposal of available-for-sale investments
Net gain on disposal of assets
Total net profit before tax per statement of comprehensive income
15,137,769
(192,014)
221,092
(394,920)
(3,637,636)
(17,358,674)
14,788,837
(1,151,466)
(57,464)
55,717,781
(463,516)
62,609,789
(3,107,428)
1,447,101
(127,475)
(1,145,058)
(3,050,362)
-
1,207,775
(254,475)
(57,464)
34,035
19,101,536
14,048,185
(c) Segment assets reconciliation to the statement of financial position
In assessing the segment performance on a regular basis, executive management analyses the segment result as described above in
relation to segment assets. Segment assets are those operating assets of the entity that management views as directly attributing to
the performance of the segment. These assets include plant, equipment, receivables, inventory and intangibles and exclude available-
for-sale assets, derivative assets and deferred tax assets.
Reconciliation of operating assets to total assets:
Segment operating assets
Available-for-sale assets
Derivative assets
Assets of disposal group classified as held for sale
Total assets per the statement of financial position
224,319,383
49,004,755
228,269
1,476,212
275,028,619
183,062,485
34,064,803
57,464
1,491,219
218,675,971
(d) Segment liabilities reconciliation to the statement of financial position
Segment liabilities includes trade and other payables and debt. The Consolidated Entity has a centralised finance function that
is responsible for raising debt and capital for the entire operations. Each entity or business uses this central function to invest
excess cash or obtain funding for its operations. Executive management reviews the level of debt for each segment on a regular
basis.
Reconciliation of operating liabilities to total liabilities:
Segment operating liabilities
Liabilities of disposal group classified as held for sale
Total liabilities per the statement of financial position
10,188,438
886,260
11,074,698
15,923,642
886,260
16,809,902
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
40. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
(i) Directors
P G Cook
W S Hallam
S J Huffadine
M L Jefferies
D P Will
Sanlin Zhang
Y Zhang
(ii) Executives
R D Cook
P M Cmrlec
F J Van Maanen
Non-Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Executive Director
Non-Executive Director
Alternate for Mr Sanlin Zhang
Appointed
23 July 2004
1 March 2005
17 June 2009
29 December 2006
12 July 2011
9 November 2009
3 October 2007
Resigned
-
-
1 June 2011
-
-
-
-
General Manager - Renison
General Manager - Central Musgrave Project
Company Secretary
Appointed
22 April 2010
19 November 2007
1 July 2005
Resigned
-
1 June 2011
-
Other than the appointment of D. Will as shown above there are no other changes of the key management personnel after the
reporting date and the date the financial report was authorised for issue.
(b) Compensation of Key Management Personnel
Short-term employee benefits
Post employment benefits
Other long-term benefts
Share-based payment
(c) Option holdings of Key Management Personnel (including nominees)
2011
1,408,663
86,487
68,874
-
1,564,024
2010
1,712,280
126,494
31,770
181,762
2,052,306
Granted as
remuneration
Net change
other ˆ
Options
exercised
Balance at
end of period
30 June 2011
Not vested
and not
exercisable
Vested and
exercisable
30 June 2011
Directors
P G Cook
W S Hallam
S J Huffadine *
M L Jefferies
S Zhang
Y Zhang (Alternate
Director)
Executives
P M Cmrlec *
R D Cook
F J Van Maanen
Balance at
beginning of
period 1 July
2010
2,000,000
2,500,000
2,000,000
-
-
-
1,250,000
400,000
700,000
-
-
-
-
-
-
-
-
-
(2,000,000)
(1,000,000)
(2,000,000)
-
-
-
-
-
-
-
-
-
-
1,500,000
-
-
-
-
(1,250,000)
(400,000)
-
-
-
-
-
-
700,000
-
-
-
-
-
-
-
-
-
-
-
1,500,000
-
-
-
-
-
-
700,000
2,200,000
Total
8,850,000
-
(6,650,000)
-
2,200,000
All options are exercisable once vested.
ˆ Options lapsed during the period and forfeited.
* S J Huffadine and P M Cmrlec both resigned on 1 June 2011 and are no longer a Director and Executive respectively.
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
(c) Option holdings of Key Management Personnel (including nominees)
30 June 2010
Directors
P G Cook
W S Hallam
S J Huffadine
M L Jefferies
P J Newton *
W Wei
S Zhang
Y Zhang (Alternate
Director)
Executives
P M Cmrlec
R D Cook
D J Coutts **
T De Vries **
F J Van Maanen
Balance at
beginning
of period 1
July 2009
Granted as
remunera-
tion
2,000,000
-
1,000,000
1,500,000
1,000,000
1,000,000
-
-
-
-
-
500,000
400,000
1,000,000
500,000
550,000
-
-
-
-
-
750,000
-
-
-
Net change
other
Options
exercised
-
-
-
-
-
-
-
-
-
-
(1,000,000)
(500,000)
500,000
(350,000)
Total
6,950,000
3,750,000
(1,850,000)
Balance
at end of
period 30
June 2010
2,000,000
2,500,000
2,000,000
-
-
-
-
-
Not vested
and not
exercisable
Vested and
exercisable
-
-
-
-
-
-
-
-
2,000,000
2,500,000
2,000,000
-
-
-
-
-
1,250,000
750,000
400,000
-
-
-
-
-
500,000
400,000
-
-
700,000
500,000
200,000
8,850,000
1,250,000
7,600,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
All options are exercisable once vested.
* Mr P J Newton resigned on 24 November 2009 and is no longer a Director.
** D J Coutts and T De Vries resigned on 14 August 2009 and 22 April 2010 respectively and are no longer Executives.
(d) Shareholdings of Key Management Personnel
Ordinary shares held in Metals X Limited (number)
30 June 2011
Directors
P G Cook
W S Hallam
S J Huffadine *
M L Jefferies
S Zhang
Y Zhang (Alternate Director)
Executives
P M Cmrlec *
R D Cook
F J Van Maanen
Total
Balance held
at 1 July 2010
Granted as
remuneration
On exercise of
options
Net change
other
68,440,200
6,350,000
-
2,700,000
176,000,000
-
-
-
2,070,000
255,560,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance held
at 30 June
2011
68,440,200
6,350,000
-
2,700,000
176,000,000
-
-
-
2,070,000
255,560,200
-
-
-
-
-
-
-
-
-
-
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
40. KEY MANAGEMENT PERSONNEL (CONTINUED)
Ordinary shares held in Metals X Limited (number)
30 June 2010
Directors
P G Cook
W S Hallam
S J Huffadine
M L Jefferies
P J Newton **
W Wei ***
S Zhang ***
Y Zhang (Alternate Director)
Executives
P M Cmrlec
R D Cook
D J Coutts****
T De Vries****
F J Van Maanen
Total
Balance held
at 1 July 2009
Granted as
remuneration
On exercise of
options
Net change
other
Balance held
at 30 June
2010
67,296,200
6,350,000
-
2,700,000
66,219,002
176,000,000
-
-
-
-
-
-
2,070,000
320,635,202
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,144,000
68,440,200
-
-
-
6,350,000
-
2,700,000
(66,219,002)
(176,000,000)
-
-
176,000,000
176,000,000
-
-
-
-
-
-
-
-
-
-
-
2,070,000
-
(65,075,002)
255,560,200
* S J Huffadine and P M Cmrlec both resigned on 1 June 2011 and are no longer a Director and Executive respectively.
** Mr P J Newton resigned on 24 November 2009 and is no longer a Director.
*** On 9 November 2009 Mr W Wei resigned and Mr S Zhang was appointed as a Director representing Jinchuan Group Limited who
hold 176,000,000 shares in the Company.
**** D J Coutts and T De Vries resigned on 14 August 2009 and 22 April 2010 respectively and are no longer Executives.
All equity transactions with key management personnel other than those arising from the exercise of remuneration options have
been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm's
length.
(e)
Loans to Key Management Personnel
There were no loans to key management personnel during the current or previous financial year.
(f) Other transactions and balances with Key Management Personnel
Mr PG Cook, Mr WS Hallam and Mr PM Cmrlec are Directors of Westgold Resources Limited (“Westgold”) and its controlled entities. In
the current period $72,877 (2010: $31,179) has been charged to Westgold for Directors fees.
Mr PG Cook is also a Director of Aragon Resources Limited (“Aragon”). Mrs FJ Van Maanen is the Company Secretary of Aragon. The
Consolidated Entity provides accounting, secretarial and administrative services at cost to Aragon. In the current period $48,039
(2010: $116,193) has been charged to Aragon for these services and Directors fees.
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
41. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements include the financial statements of Metals X Limited and the subsidiaries listed in the
following table:
Name
Agaton Phosphate Pty Ltd
Bluestone Australia Pty Ltd
Metals Exploration Pty Ltd
Mad Metals Pty Ltd
Chinggis Metals Pty Ltd
Subsidiary companies of Metals Exploration Limited
Austral Nickel Pty Ltd
Harbour Capital (WA) Pty Ltd *
Hinckley Range Pty Ltd
Metex Nickel Pty Ltd
Subsidiary companies of Bluestone Australia Pty Ltd
Bluestone Mines Tasmania Pty Ltd
Bluestone Nominees Pty Ltd
Subsidiary companies of Bluestone Mines Tasmania Pty Ltd
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
Investment ($)
2011
75%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
2010
75%
100%
100%
-
-
100%
100%
100%
100%
100%
100%
2011
2010
750,000
750,000
19,950,000
19,950,000
71,714,235
71,714,235
2
2
-
-
92,414,239
92,414,235
9,058,896
9,058,896
-
220,020
1,069,750
1,069,750
1
1
1
1
1
1
Bluestone Mines Tasmania Joint Venture Pty Ltd
Australia
50%
50%
50
50
* Harbour Capital (WA) Pty Ltd was deregistered on 11 May 2011.
(b) Ultimate parent
Metals X Limited is the ultimate parent entity. There are no Class Orders in place at 30 June 2011.
(c) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in note 40.
(d)
Transactions with related parties
(i)
Jointly controlled assets
Amounts charged by Bluestone Australia Pty Ltd to the unincorporated Bluestone Mines
Tasmania Joint Venture for services provided *
309,734
282,397
(ii)
Associates
Amounts charged by Bluestone Australia Pty Ltd to Aragon Resources Ltd for services provided **
229,370
116,193
2011
2010
Amounts charged by Bluestone Australia Pty Ltd to Westgold Resources Ltd for services provided ***
243,464
31,179
* Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% joint venture interest in the unincorporated Bluestone Mines Tasmania
Joint Venture.
** The Company had an 8.70% interest in Aragon Resources Limited (2010: 8.72%) prior to the sale of the shares to Westgold
Resources Limited on 14 April 2011.
*** The Company has a 25.02% interest in Westgold Resources Limited (2010: 31.99%).
114
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
42. INFORMATION RELATING TO METALS X LIMITED ("THE PARENT ENTITY")
2010
2011
Current assets
Total assets
Current Liabilities
Total Liabilities
Issued capital
Accumulated losses
Option premium reserve
Other reserves
Profit of the parent entity
Total comprehensive income of the parent entity
Guarantees entered into by the parent entity in relation to the debts of its subsidiries.
Contingent liabilities of the parent entity.
Contractual commitments by the parent entity for the acquisition of property, plant or equipment.
79,923,951
27,546,305
289,470,356
202,129,401
284,762
284,762
263,332
263,332
299,336,226
299,421,787
(16,435,491)
(112,621,608)
18,326,178
18,222,793
(12,041,318)
(3,156,903)
289,185,595
201,866,069
96,186,116
11,158,236
87,301,700
9,248,679
Nil
Nil
Nil
Nil
Nil
Nil
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Metals X Limited, I state that:
In the opinion of the Directors:
(a) the financial statements and notes of the Company and of the Consolidated Entity are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Company's and the Consolidated Entity's financial position as at 30 June
2011 and of their performance for the year ended on that date; and
(ii) complying with the Australian Accounting Standards (including the Australian Accounting Interpretations)
and Corporations Regulations 2001; and
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 2(b) and;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
(d) this declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2011.
On behalf of the Board.
Warren Hallam
Managing Director
Perth, 29 September 2011
116
DIRECTOR'S DECLARATION
INDEPENDENT AUDIT REPORT
Independent auditor's report to the members of Metals X Limited
Report on the financial report
We have audited the accompanying financial report of Metals X Limited, which comprises the consolidated
statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the 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 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2 (b), the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
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 that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. 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. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
DL:VP:METALSX:009
Liability limited by a scheme approved
under Professional Standards Legislation
117
INDEPENDENT AUDIT REPORT
INDEPENDENT AUDIT REPORT
Opinion
In our opinion:
a.
the financial report of Metals X Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2011
and of its performance for the year ended on that date; and
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
Note 2 (b).
Report on the remuneration report
We have audited the Remuneration Report included in of the directors' report for the year ended 30 June
2011. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Metals X Limited for the year ended 30 June 2011, complies
with section 300A of the Corporations Act 2001.
Ernst & Young
D S Lewsen
Partner
Perth
29 September 2011
DL:VP:METALSX:009
118
INDEPENDENT AUDIT REPORT
SECURITY HOLDER INFORMATION AS AT 21
SEPTEMBER 2011
(a)
Top 20 Quoted Shareholders
Sun Hung Kai Investment Services Limited
Jinchuan Group Limited
Sun Hung Kai Investment Services Limited
National Nominees Limited
Sabatica Pty Limited
All-States Finance Pty Ltd
Fitel Nominees Limited
Bell Potter Nominees Limited
Ajava Holdings Pty Ltd
Richard Farleigh
Peter Gerard Cook
Equity Trustees Limited
JP Morgan Nominees Australia Limited
HSBC Custody Nominees Australia Limited
Joan Christine Cook
Oaksouth Pty Ltd
Western Bridge Pty Ltd
Western Bridge Pty Ltd
Milstern Enterprises Pty Ltd
Citicorp Nominees Pty Ltd
Total
%
21.58
13.05
10.31
6.44
5.91
3.93
3.69
3.17
2.94
1.78
1.60
1.30
1.15
0.82
0.52
0.52
0.51
0.47
0.41
0.39
Number of shares
291,052,299
176,000,000
139,000,000
86,804,106
79,742,210
53,000,000
49,817,046
42,738,997
39,610,000
23,979,065
21,550,000
17,480,394
15,474,066
11,083,995
7,056,200
7,000,000
6,888,889
6,401,990
5,500,000
5,314,616
80.49
1,085,493,873
(b) Distribution of quoted ordinary shares
Number of share holders
Number of shares
Size of parcel
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 to 25,000,000
Total
(c) Number of holders with less than a marketable parcel of ordinary shares
(d) Substantial Shareholders
Apac Resources Limited
Jinchuan Group Limited
COL Capital Limited
Guinness Peat Group plc and its subsidiaries
Chong Sok Un
Peter Gerard Cook
119
SECURITY HOLDER INFORMATION AS AT 21 SEPTEMBER 2011
96
932
860
2,163
422
4,473
609
%
29.08
12.89
7.35
6.57
5.15
5.01
28,103
2,960,469
7,160,278
77,701,038
1,260,733,582
1,348,583,470
1,173,219
Number of shares
397,130,281
176,000,000
100,376,141
89,742,210
70,331,581
68,440,200
(e) Voting Rights
The voting rights for each class of security on issue are:
Ordinary fully paid shares
Each ordinary shareholder is entitled to one vote for each share held.
Options
The holders of options have no rights to vote at a general meeting of the company.
(f) Unquoted Equity Securities
Number of Options
Exercise Price
225,000
1,000,000
2,500,000
2,850,000
1,000,000
36 cents
45 cents
14 cents
13 cents
32 cents
Expiry Date
31/03/2012
31/07/2012
30/11/2012
30/11/2013
30/11/2013
Number holders
3
1
2
10
1
120
SECURITY HOLDER INFORMATION AS AT 21 SEPTEMBER 2011
SUMMARY OF MINING TENEMENTS
BLUESTONE MINES TASMANIA PTY LTD
RENISON – 50%
ML 12M/1995
MOUNT BISCHOFF – 50%
ML 12M/2006
ML 2M/2008
MOUNT RAMSAY – 50%
EL 72/2007
BLUESTONE NOMINEES PTY LTD
COLLINGWOOD – 100%
ML 2796
ML 3065
ML 3066
ML 3067
ML 3068
ML 3069
ML 3070
MDL 111
MDL 112
EPM 14815
MOUNT GARNET – 100%
MDL 381
HINCKLEY RANGE PTY LTD
WINGELLINA – 100%
E 69/0535
E 69/0012
E 69/0013
AUSTRAL NICKEL PTY LTD
CLAUDE HILLS – 100%
EL 4751
121
SUMMARY OF MINING TENEMENTS