2012
ANNUAL
REPORT
CORPORATE DIRECTORY
DIRECTORS
Peter Cook (Chairman)
Warren Hallam (Managing Director)
Dean Will
Andrew Ferguson
Xie Penggen
Yimin Zhang (Alternate for Xie Penggen)
COMPANY SECRETARY
Fiona J Van Maanen
KEY MANAGEMENT
Ross Cook (GM – Bluestone Mines Tasmania JV)
Michael Poepjes (Chief Mining Engineer)
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
Fax:
61-8-9315 2233
E-mail: registrar@securitytransfer.com.au
DOMICILE AND COUNTRY OF INCORPORATION
Australia
TABLE OF CONTENTS
CORPORATE DIRECTORY
COMPANY PROFILE
CHAIRMAN’S STATEMENT
MANAGING DIRECTOR’S OPERATIONS REVIEW
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2012
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION FOR THE YEAR ENDED 30 JUNE 2012
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2012
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2012
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1
4
5
6
22
40
41
53
54
55
56
57
DIRECTORS’ DECLARATION
124
INDEPENDENT AUDIT REPORT
125
SECURITY HOLDER INFORMATION AS AT
11 SEPTEMBER 2012
127
SUMMARY OF MINING TENEMENTS
129
COMPANY PROFILE
Metals X Limited (“Metals X” or “the Company”) is a diversified resource group with a considerable portfolio of
growth assets at all stages of development; from exploration through to production; with exposure to tin, nickel,
gold, silver, copper, zinc, bauxite and lead.
Metals X is Australia’s largest tin producer with its 50% owned Tasmanian Renison Tin assets producing approximately
2.5% of the global supply of tin concentrates.
Metals X owns 100% of the world class Wingellina Nickel-Cobalt Project (“Wingellina”) which hosts a total global
resource of over 183Mt at 0.98% Ni including a mining reserve of 167Mt at 0.98% Ni, 0.08% Co and 47.3% Fe2O3. A
project development feasibility study completed in 2008 concluded a robust project for the construction of a nickel
and cobalt operation producing approximately 40,000tpa of nickel and 3,000tpa of cobalt for an initial mine life of
40 years at an operating cost of US$3.34 per pound of nickel after cobalt credits.
Metals X continues to move Wingellina towards development and has signed a landmark Native Title Mining
Agreement with the traditional owners enabling the project to be advanced and developed. On 4 September
Metals X announced that it had signed a non-binding Memorandum of Understanding (“MOU”) with Samsung C&T
Corporation (“Samsung”) to establish a framework for collaboration and co-operation to develop Wingellina towards
production. Samsung has agreed to use its financial reputation and capacity to assist Metals X with the financing
and developing of the project. Metals X’s objective of the collaboration is for the Company to retain a 30% interest in
Wingellina free carried to production.
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. Metals X actively provides technical and
financial support to those companies, these strategic investments including:
• Westgold Resources Limited (“Westgold”) (26.98% interest) which holds resources of over 3.9Moz of gold
within its Murchison goldfield in Western Australia and Rover project near Tennant Creek in the Northern
Territory (Metals X and Westgold have agreed to merge via a scheme of arrangement that if successful will
result in Metals X acquiring 100% of Westgold).
• Mongolian Resource Corporation Limited (14.76% interest) a Mongolian focused resource company that is
involved in the mining and exploration of gold.
•
Aziana Limited (25% interest) an established gold and bauxite explorer with highly prospective projects in
Madagascar.
• Reed Resources Limited (5.17% interest) is a diversified explorer and emerging producer with gold, lithium,
titanium, vanadium and iron projects throughout Australia (the majority of this holding was acquired in late
June and early July 2012); and
•
Independence Group NL (2.82% interest) is a diversified producer with nickel, zinc, copper and gold operations
throughout Australia (this investment was as a result of Independence takeover of Jabiru Metals Limited of
which Metals X owned a 19.99% holding);
As of 30 June 2012 the market value of Metals X investments was $50M and the company held cash and working
capital of $62M and has no debt.
4
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 2012.
The past year has seen Metals X make steady progress on a number of fronts.
Our joint venture tin operations in Tasmania maintained consistent performance, although the mine’s productivity
was at levels below our internal expectations. We re-invested heavily into the long-term future of the operation,
primarily on capital mine development and advancement of the Renison North lodes which has set the mine up
for a bright future. Our geologists have now extended the Mineral Resources of tin to an equivalent of 14 years of
plant capacity and Mining Reserves have expanded to 5 years. I have no doubt that the conversion of resources to
reserves will be much higher in the fullness of time as it is sometimes difficult and expensive to drill-out reserves
from the limited underground positions. That said, I do believe the Renison mine is in the strongest position it has
been since we have owned it and any recovery in metal prices will reflect positively on our bottom line.
The Company has continued in advancing the Wingellina Nickel-Cobalt 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 has been signed paving the way for the development of this globally
significant project. On 4 September the Company signed a MOU with Samsung that will see them collaborate with
Metals X to complete a Detailed Feasibility Study (“DFS”) and move the Wingellina Project to production. Further,
Samsung has agreed to use its financial reputation and capacity to assist Metals X with financing and development
proposals for the project.
Our strategy to make investments in assets via equity participation in other companies has continued throughout
the year. We still hold a significant shareholding in the ASX listed entities Independence Group NL, Mongolian
Resource Corporation Limited, Reed Resources Limited and Aziana Limited.
We commenced the consolidation of our gold investments and our intent to build a significant in-house gold division
with an agreed merger by scheme of arrangement with Westgold. This is expected to conclude in October 2012.
On the financial front, our Company is in a strong position with substantial cash and investments with no debt. We
completed our on-market share buy-back having acquired 48.99 million shares at an average price of $0.22 per
share.
The year past has been one of unprecedented dis-interest in small stocks and growth assets. Like many others,
Metals X has seen its share price whittle away on small volumes in the backdrop of lower buyer interest. Despite
this, I can assure you that your Board and management will continue to strive to see that significant gap between
fair market value of our assets and the share price is bridged.
After a very strong profit in the 2011 financial year it is disappointing to book a loss for the current year. However,
the majority of this is due to depreciation in the market value of investments in line with general market trends for
the year.
On behalf of our Board I thank our shareholders for their patience and belief in the company over the past year. We
look forward to a far more positive 2013 financial year.
Peter Cook
Chairman
CHAIRMAN’S STATEMENT
5
MANAGING
DIRECTOR’S
OPERATIONS
REVIEW
OPERATING RESULTS
The net loss after income tax of the Consolidated Entity for the period was $43,717,642 (2011: $62,296,608
profit), a decline of 170% as compared to the previous year. This result reflects impairment losses on
“available-for-sale financial assets” of $24,490,872 and impairment losses on “investment in associates”
of $8,064,451 as a result of declines in the share prices of Mongolian Resource Corporation Limited,
Independence Group NL and Westgold Resources Limited. Also the operating profit from the Renison Tin
Project was lower than the previous financial year mainly due to the lower tin price and higher AUD:USD
exchange rate.
TIN MARKET
The average LME Australian dollar tin price for the year was approximately A$21,500 compared to the
previous year’s average price of A$26,500.
The supply of tin continues to remain extremely tight as production from China, Indonesia and Peru which
supplies 75% of global tin-in-concentrate production continue to show signs of declining supply with limited
additional global production capacity being seen in the short to medium term. During the year the LME
stockpiles observed a decline of 45% from 22,385t on the 1 July 2011 to 12,260t on 30 June 2012 (currently
11,500t) which is equivalent to less than two weeks of supply. It is estimated that the market supply deficit
from 2012/2013 will be similar to that observed in 2011/2012 of approximately 8,000t to 10,000t.
6
MANAGING DIRECTOR’S OPERATIONS REVIEW
NICKEL
DIVISION
The cornerstone of the Company’s nickel division is its 100%
ownership of the world-class nickel assets in the Central Musgrave
Project (“CMP”) located in the Central Musgrave Ranges.
The CMP straddles the triple-point of the WA/NT/SA borders and the
project encompasses 1,957km2 of prospective exploration tenure
that includes the Wingellina nickel deposit, the Claude Hills nickel
deposit, and the Mt Davies exploration prospects.
CENTRAL MUSGRAVE PROJECT
The key focus for the project is the development of the Wingellina nickel and cobalt deposit discussed in detail
below.
Work at the CMP during the year focused on the following key areas:
1. advancing the financing and development options for the Wingellina project;
2. finalising the statutory environmental approvals process;
3.
4.
further expanding the resource base within the Company’s South Australian tenements; and
the collection of airborne electromagnetic survey data to target primary nickel and sulphide conductors.
WINGELLINA NICKEL-COBALT PROJECT
The Wingellina Nickel-Cobalt Project (“Wingellina”) is one of the largest undeveloped nickel-cobalt mines in the
world today.
Metals X has previously completed a phase 1 feasibility study (+/- 25%) that confirmed a robust project for the
construction of a 4.3Mtpa nickel and cobalt High Pressure Acid Leaching (“HPAL”) plant producing approximately
40,000tpa of nickel and 3,000tpa of cobalt. The initial mine life is 40 years with an estimated benchmark operating
cost of US$3.34 per pound of nickel after cobalt credits. The key financial outcomes of the project concluded an
after tax NPV (8% real) of A$3.4 billion based on a nickel price of US$20,000, cobalt price of $45,000 and a US$
exchange rate of $0.85. Capital cost estimates were A$2.2 billion.
The Mineral Resource Estimate defines an ore body containing approximately 1.8Mt of contained nickel metal
and 139,000t of cobalt metal. Significantly, over 91% of the resource is defined as a Probable Mining Reserve in
accordance with the JORC code (refer to page 21 for Resource and Reserve Estimates).
Beadell
NORTHERN TERRITORY
^_
E69/535
CLAUDE HILLS
!(
Irrunytju
WINGELLINA
E3555
North
Scarface
I
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A
N
R
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T
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E
W
I
A
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A
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A
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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
Metals X Central Musgrave Lease Holdings
8
MANAGING DIRECTOR’S OPERATIONS REVIEW
Wingellina will be a simple mining operation with free-digging limonite ore occurring over a number of pits with a
strike length of approximately 10km and widths of up to 500m. Average waste: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. This allows mining to progress with a strategy to mine higher grade ores early in the project life
to maximise 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. Direct mining costs are less than 5%
of the overall operating cost for the project.
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 HPAL, with high iron grades (resource average 47% Fe2O3) and a very low concentration of
magnesium (resource average 1.6% Mg). The Wingellina ore has similar metallurgical characteristics to the
successfully HPAL operations in the world today with a 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 Company has completed all of its baseline environmental studies and associated documentation required for
the submission of the Public Environmental Review (“PER”) document with the exception of detailed definition of
the proposed water sources which is currently underway.
Metals X currently expects final PER documentation to be submitted to the EPA in the final quarter of 2012.
Schematic View of the Wingellina Nickel-Cobalt Project
MANAGING DIRECTOR’S OPERATIONS REVIEW
9
WINGELLINA FINANCE FOR DEVELOPMENT
On 4 September the Company signed a MOU with Samsung that will see Samsung collaborate with Metals X to
complete an updated DFS and move the Wingellina Project to production. Further, Samsung has agreed to use its
financial reputation and capacity to assist Metals X with financing and development proposals for the project.
Upon completion of a successful DFS and project approval, the objectives of the collaboration are for Metals X
to retain a 30% interest in Wingellina free carried to production and Samsung will be awarded the Engineering,
Procurement and Construction contract on normal commercial terms. Samsung can also acquire direct equity in
Wingellina and provide project delivery.
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 19,000km2.
CLAUDE HILLS DEPOSIT
Claude Hills is located approximately 25km to the east of Wingellina in South Australia and is one of a number of
areas where outcropping nickeliferous limonite similar to Wingellina occurs within the Company’s exploration titles.
Metals X completed a drilling campaign at the Claude Hills prospect in 2010 to complement the drilling campaign
carried out in late 2008 (refer to page 21 for Resource and Reserve Estimates).
The Claude Hills resource straddles the wholly owned tenement EL4751 and the Mt Davies JV tenement EL3932 (see
Mt Davies section below), 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 12m
to 60m, and lies below a remobilised cover of 5m to 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.
10
MANAGING DIRECTOR’S OPERATIONS REVIEW
MT DAVIES JOINT VENTURE WITH RIO TINTO EXPLORATION
In July 2009 Metals X entered into a farm-in agreement with Rio Tinto Exploration Pty Ltd (“Rio Tinto”) 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 EL4751, which is adjacent to the Wingellina deposit, and hosts part of
the Claude Hills deposit. The Company 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 Metals X of the pre-feasibility study, through the sole funding of a feasibility study.
AIRBORNE GEOPHYSICAL SURVEY
During the year Metals X conducted an airborne geophysical (EM) survey within the Claude Hills (EL4751) and
Mt Davies (EL3932) tenements in South Australia. The survey primarily targeted nickel and copper sulphide
mineralisation and platinum group elements.
The survey was carried out using a SPECTREM system covering a total of 5,280 line kilometres with a line spacing
of 250m. The SPECTREM system is a proven, high-powered, deep-looking EM system developed in the mid 1990’s.
It is more capable of penetrating surface weathered features and detecting deeper targets than other fixed-wing
systems currently in use.
Initial interpretation by SPECTREM located 148 targets of which 15 zones were determined as high priority targets
with a further nine anomalies warranting follow-up exploration. Anomalies are in the process of being accessed
with Aboriginal ground heritage clearances underway.
COMMUNITY INVOLVEMENT
Metals X has been welcomed into the region by members of the various communities as evidenced by the
completion of the Native Title 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 continues to directly employ a number of local community members to assist
with ongoing exploration and project development activities.
MANAGING DIRECTOR’S OPERATIONS REVIEW
11
TIN DIVISION
Metals X is a globally significant tin producer through its 50%
ownership of the Bluestone Mines Tasmania Joint Venture. The
key assets of the Joint Venture are the world class Renison
Tin Mine, a 700,000tpa tin concentrator plant, the Renison
Expansion Project (Rentails) and the Mount Bischoff Project.
RENISON TIN PROJECT – ANNUAL PERFORMANCE
The Renison Tin Project is located approximately 15km north-east of Zeehan on Tasmania’s west coast. The Mount
Bischoff open pit mine is located approximately 80km north of the Renison Tin Project.
During the year the company significantly advanced capital mine development and completed the de-watering
and rehabilitation of the Northern Decline. For the first time in over a decade the Northern and Southern extents
of the mine are in production. As a consequence, the mine’s stocks of capitally developed tonnes have increased
significantly setting the mine up well for the future.
Production from the mine was steady but still short of required levels throughout the year. This was impacted by
delays in completing access to northern end of the mine and a seismic event which required ground rehabilitation
and additional support in the Federal Decline.
The annual net operating loss for the Renison Tin Project was $9.2M compared to a profit of $21.5M for the previous
year which was mainly attributable to the lower annual tin price compared to the previous financial year and the
delays experienced in access the higher grade Northern zones of the mine.
Metals X’s share of revenue from tin concentrate sales from the Renison Tin Project for the financial year was
$48.9M (2011: $69.0M).
Metals X Entity’s interest (50%) for the Renison Tin Project is summarised below:
Mining
Renison Underground
Ore Hoisted (tonnes)
Grade (%Sn)
Mt Bischoff Open Pit
Ore Mined (tonnes)
Grade (%Sn)
Tin Concentration
Tonnes Processed (tonnes)
Grade (%Sn)
Recovery (%)
Concentrate Grade (%Sn)
Copper Metal Produced (tonnes)
Tin Metal Produced (tonnes)
Tin Metal Sales (tonnes)
Operating Cost ($/t Sn)
Average Realised Tin Price ($/t Sn)
2012
267,697
1.46
-
-
272,792
1.45
63
53
242
2,500
2,445
$18,708
$20,006
2011
236,038
1.61
3,345
0.99
236,038
1.56
66
56
94
2,701
2,788
$16,800
$24,755
Operating costs per tonne were higher due to lower productivity against a high fixed cost base. The lower productivity
was due to lower production grades as a direct result of delays in accessing and mining some of the higher grade
northern lodes.
The long-term objective of the Renison Tin Project is a steady state production rate of approximately 60,000t of ore
per month from the North Renison and South Renison declines combined and the production of 7,000t - 8,000t of
tin in concentrates per annum.
MANAGING DIRECTOR’S OPERATIONS REVIEW
13
Capital mine development during the financial year was well in excess of the sustaining capital requirements of
the mine. Overall capital mine development during the year increased 64% from 1,072m to 1,762m with developed
stocks (ore blocks ready to be mined) increasing to 460,000t from 320,000t and the amount of capital developed
stocks (accessible to main decline but not yet developed laterally) at the end of the financial year being 973,000t.
During the year the mining fleet was also replaced and upgraded and has been fully commissioned. The upgrade
included replacing two loaders, three additional trucks, an additional Jumbo, an additional charge up machine and
a replacement of the underground grader.
Renison Bell
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
0 M
100 M
200 M
300 M
400 M
Resource
Fault
Decline
BMT Drillhole
Pre 2008 Drillhole
South
North
R
enison Bell – Mine Development Schematic Longitudinal Projection
THE RENISON TIN CONCENTRATOR
The tin concentrator plant performance was generally dictated by the mine performance with production rates
running at nameplate capacity towards the end of the year. A new spiral circuit on the regrind mill has been installed
and has been fully commissioned reducing the impact of fine grinding of tin in the circuit. The ultra-fine recovery
circuit was optimised and two additional high-speed centrifugal concentrators are planned to be installed to further
complement the three units currently in operation which will further enhance fine tin recovery.
Approximately 483t (100%) of copper in concentrate were produced during the year. Copper production is expected
to increase further as the higher-grade copper areas are mined.
14
MANAGING DIRECTOR’S OPERATIONS REVIEW
Cross Section66500mNCross Section65700mN2000mRL66000mN67200mN1500mRL1000mRL RENISON EXPLORATION
Underground and surface drilling continued to focus on the upgrading and extension of the Resources and
Reserves in the underground mine and on near surface targets within the Renison mining lease. In addition, a
deep penetrating aeromagnetic survey was completed to assist in targeting extensional surface and underground
exploration opportunities.
Two underground diamond rigs operated for the entire year with a focus on the upgrading and extension of the
Resource and Reserves of the Renison mine. Excellent success was achieved from a number of parts of the mine
and this translated in significant increases in the overall Mineral Resource and Mining Reserve.
RENISON MINERAL RESOURCE AND MINING RESERVES
The success of exploration works during the year has resulted in a significant increase in both the Mineral Resources
and Mining Reserve Estimates. The total Mining Reserve Estimate of tin metal for the Renison underground mine
was increased by 23% (in addition to depletion from mine production), to 45,700t of contained tin metal, with a 13%
increase of Mineral Resource Estimate (in addition to mine depletion), to 153,500t of contained tin metal.
Of significance was a 64% increase in the measured and Indicated Resource Estimate of the Area 4 zone which
now totals 772,000t @ 2.4% Sn containing 18,700t of tin metal which has been converted to a probable reserve of
687,000t @ 1.90% Sn. In addition, an inferred resource estimate for the Area 4 Down-plunge zone details a further
948,000t @ 1.8% Sn containing 17,400t of tin metal.
Overall the total tin inventory is globally significant, and now totals 31Mt at 0.80% Sn containing 260,900t of
contained tin metal across the Tasmanian tin projects, of which the Renison and Rentails projects contains 153,500t
and 89,400t of tin metal respectively (refer to page 19 for Resource and Reserve Estimates).
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. Open pit mining since 2009 has produced approximately a further 5,000t of tin metal. Significant
tin resources remain at depth under the Mount Bischoff pit and numerous historically mined areas remain
underexplored.
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.
MANAGING DIRECTOR’S OPERATIONS REVIEW
15
RENISON EXPANSION PROJECT
The Renison Expansion Project (“Rentails”) holds a resource of over 83,000t of tin and 40,000t of copper. The
project objective is to reprocess and recover tin and copper from an estimated 20Mt of tailings from the historical
processing of tin ores from the Renison mine at an average grade of 0.45% tin and 0.21% copper.
Metals X completed a Definitive Feasibility Study for the Expansion Project in 2009 into the mining and re-
processing of the tailings for the recovery of tin and copper. Feasibility outcomes were that an integrated 2Mtpa
tin-concentrator and fumer plant (proven technology) could be constructed and produce approximately 5,300t of
tin and 2,000t of copper contained in concentrates per annum. Financial outcomes estimated an average total
cash cost of production of A$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 A$194M +/- 15%. 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.
Metals X is currently working with its Renison Joint Venture partners to validate the feasibility study in preparation
for committing to the project development when tin prices return to anticipated higher and sustainable levels.
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 of these assets and is currently actively marketing the project for sale. In the
meantime the project will remain under care and maintenance.
16
MANAGING DIRECTOR’S OPERATIONS REVIEW
INVESTMENTS
Metals X has operated a strategy over the past few years to build a diverse portfolio of metal and industrial mineral
interests. When opportunities emerge 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 wich includes:
1. Westgold Resources Limited (ASX:WGR) 26.98% (2011: 25.02%);
2.
Independence Group NL (ASX:IGO) 2.82% (2011: 3.23%);
3. Reed Resources Limited (ASX:RDR) 5.17% (2011: Nil);
4. Mongolian Resource Corporation Limited (ASX:MUB) 14.76% (2011: 16.97%); and
5. Aziana Limited 25.00% (ASX:AZK) (2011: 25.00%).
WESTGOLD RESOURCES LIMITED – MERGER PROPOSAL
Westgold is an ASX listed gold and base metals exploration company.
Westgold boasts a resource of over 3.9Moz of gold equivalence and is endeavouring to become Australians next
mid-tier gold producer with targeted production of 200,000oz per annum from two development ready projects:
1. The Central Murchison Gold Project (“CMGP”) – Western Australia
2. The Rover Project - Tennant Creek Region - Northern Territory
The CMGP consists of the three historic goldfields of Big Bell, Cuddingwarra and Day Dawn which host a total
Identified Mineral Resource Estimate of 2.7Moz of gold from a number of high-grade underground, lower grade open
pit sources and stockpiles within the project area. Westgold’s current strategy is to build a centralised processing
plant to re-commence mining and production from underground and open pit mines within its CMGP. Westgold is
currently completing a Definitive Feasibility at the CMGP that contemplates a 1.2M – 1.5Mtpa conventional gold
processing plant that will produce an average of 100,000oz over an initial mine life of 8 years.
At its Rover Project near Tennant Creek in the Northern Territory Westgold is also targeting production from its Rover
1 Prospect where it has defined a virgin deposit of +1.22Moz gold equivalent resource. The Rover 1 ore body is
an iron-oxide-copper gold ore system with lodes of gold and copper. Significant co-mineralisation of cobalt and
bismuth also occurs.
At Rover, Westgold is proposing an exploration decline to enable more detailed drill evaluation. It has submitted a
Mine Management Plan to the appropriate statutory authorities in the Northern Territory and anticipates approvals
to be received by the end of 2012.
On 14 May 2012 Metals X announced a merger by scheme of arrangement with Westgold. Under the terms of the
merger, eligible Westgold shareholders will receive 11 new Metals X shares for every 10 Westgold shares held.
Also eligible Westgold option holders will receive 11 new Metals X options for every 10 Westgold options held at
an exercise price of 10/11th of the current exercise price. The merger is expected to be complete in October 2012.
18
MANAGING DIRECTOR’S OPERATIONS REVIEW
TIN DIVISION
MINERAL RESOURCES ESTIMATES – CONSOLIDATED SUMMARY
(Calculated as at 31 March 2012)
Project
C u t- o f f
(%Sn)
Tonnes (Kt) Grade (%Sn) Sn Metal (t)
Tonnes (Kt)
Tin
Copper
Grade
(%Cu)
Cu Metal (t)
Measured
Renison Bell 0.80%
0.50%
Mt Bischoff
0.00%
Rentails
Collingwood
0.70%
Sub-total
Indicated
Renison Bell 0.80%
0.50%
Mt Bischoff
0.00%
Rentails
Collingwood
0.70%
Sub-total
Inferred
Renison Bell 0.80%
0.50%
Mt Bischoff
0.00%
Rentails
Collingwood
0.70%
Sub-total
TOTALS
Renison Bell 0.80%
0.50%
Mt Bischoff
0.00%
Rentails
Collingwood
0.70%
Grand Total
972
-
19,999
-
20,971
5,457
968
-
652
7,077
3,256
699
-
51
4,005
9,685
1,667
19,999
702
32,053
2.00
-
0.45
-
0.52
1.46
0.59
-
1.29
1.33
1.67
0.47
-
1.12
1.45
1.58
0.54
0.45
1.28
0.81
19,400
-
89,400
-
108,800
79,900
5,700
-
8,400
94,000
54,200
3,300
-
600
58,100
153,500
9,000
89,400
9,000
260,900
778
-
19,999
-
20,777
4,754
-
-
-
4,754
1,624
-
-
-
1,624
7,156
-
19,999
-
27,155
0.35
-
0.21
-
0.22
0.34
-
-
-
0.34
0.43
-
-
-
0.43
0.36
-
0.21
-
0.25
2,700
-
42,400
-
45,100
16,000
-
-
-
16,000
7,000
-
-
-
7,000
25,700
-
42,400
-
68,100
Notes: Renison Bell, Mt Bischoff and Rentails Resources are 50% owned by Metals X.
MANAGING DIRECTOR’S OPERATIONS REVIEW
19
TIN DIVISION (CONTINUED)
MINING RESERVES ESTIMATE – CONSOLIDATED SUMMARY
Mining Reserves are a subset of the Mineral Resource Estimate
(Calculated as at 31 March 2012)
Project
C u t- o f f
(%Sn)
Tonnes (Kt)
Tin
Grade
(%Sn)
Sn Metal
(t)
Tonnes (Kt)
Proved Reserves
Renison Bell
Mt Bischoff
Rentails
Collingwood
0.80%
0.50%
0.00%
0.70%
372
1.44
5,300
-
-
-
-
-
-
-
-
-
372
-
Copper
Grade
(%Cu)
0.32
-
Cu Metal
(t)
1,200
-
Sub-total
372
1.44
5,300
372
0.32
1,200
Probable Reserves
Renison Bell
Mt Bischoff
Rentails
Collingwood
Sub-total
0.80%
0.50%
0.00%
0.70%
Total Mining Reserves
Renison Bell
Mt Bischoff
Rentails
Collingwood
Total Reserves
0.80%
0.50%
0.00%
0.70%
2,970
-
19,158
-
22,128
3,342
-
19,158
-
22,500
1.36
-
0.45
-
0.57
1.37
-
0.45
-
0.58
40,300
2,603
-
-
85,300
19,158
-
0.27
-
0.21
6,900
-
40,400
125,600
21,761
0.22
47,300
45,700
2,974
-
-
85,300
19,158
-
0.27
-
0.21
8,100
-
40,400
131,000
22,132
0.22
48,500
Notes: Renison Bell, Mount Bischoff and Rentails Reserves are 50% owned by Metals X.
Figures have been rounded and hence may not add up exactly to the given totals.
Cut-off grades are estimated using current operating cost estimates for the projects and a tin price of
A$24,000 per tonne. Additional modifying factors to account for minimum mining width, ore loss, mining
recovery and mining dilution, etc, were applied in the estimation of the Mining Reserve.
20
MANAGING DIRECTOR’S OPERATIONS REVIEW
NICKEL DIVISION
MINERAL RESOURCES ESTIMATES – CONSOLIDATED SUMMARY
(Calculated as at 30 June 2012)
Wingellina
Measured
Indicated
Inferred
Total I.M.R
Claude Hills
Inferred
Inferred
Cut Off (%Ni)
0.5
0.5
0.5
0.5
Cut-off (% Ni)
0.5
0.7
Tonnes(Mt)
68.8
98.6
15.7
183.2
Tonnes (Mt)
33.3
19.2
Ni (%)
1.00
0.97
0.97
0.98
Ni (%)
0.81
0.96
Co (%)
0.078
0.075
0.069
0.076
Co (%)
0.07
0.08
Fe203(%)
48.7
46.4
42.7
47.0
Fe2O3 (%)
39
44
MINING RESERVES ESTIMATE – CONSOLIDATED SUMMARY
Mining Reserves are a subset of the Mineral Resource Estimate
(Calculated as at 30 June 2012)
Wingellina
Proven
Probable
Total
Tonnes (Kt)
-
167,470
167,470
Ni (%)
-
0.98
0.98
Co (%)
-
0.08
0.08
Fe2O3 (%)
-
47.34
47.34
Competent Persons Statement
The information in this Resource report that relates to exploration results and mineral resources are compiled by Metals X technical
employees under the supervision of Mr. Peter Cook BSc (Appl. Geol), MSc (Min. Econ.) and M.AusIMM). Mr Cook is an advisor to, 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.
The information in this Resource report that relates to ore reserves for Metals X is based on information compiled by Mr Michael Poepjes
(BEng (Mining), MSc (Min. Econ.) and M.AusIMM), Chief Mining Engineer of Metals X. Mr Poepjes has sufficient experience which is relevant
to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr
Poepjes consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
MANAGING DIRECTOR’S OPERATIONS REVIEW
21
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 2012.
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 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 and Aziana 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);
• Kingsrose Mining Limited (Appointed 10 October 2010 – Resigned 21 August 2012); and
•
Aziana Limited* (Appointed 30 May 2011).
Warren 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 and Aziana 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 companies:
• Westgold Resources Limited* (Appointed 18 March 2010); and
•
Aziana Limited* (Appointed 30 May 2011).
22
DIRECTORS’ REPORT
Michael Jefferies – Non-Executive Director (Resigned 10 May 2012)
Mr Jefferies has been an executive of Guinness Peat Group (“GPG”) for the past 20 years and has extensive
experience in finance and investment. He is a Chartered Accountant and holds a B. Comm.
During the past three years he has served as a director of the following public listed companies:
•
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).
Dean 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, 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.
Xie Penggen – Non-Executive Director (Appointed – 9 February 2012)
Mr Xie Penggen is a minerals processing engineer with over 24 years of experience in the mining industry. Mr Xie
commenced his career within the Jinchuan Group where he has undertaken various operational, technical and
management roles. He is currently an executive in Jinchuan’s global investment group which is responsible for the
Group’s international investments.
Mr Penggen has held no other public company directorships in the past three years.
Sanlin Zhang – Non-Executive Director (resigned – 9 February 2012)
Mr Zhang is a Vice President of Jinchuan Group Limited and is responsible for international investments, legal
counsel 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 Xie Penggen. 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).
DIRECTORS’ REPORT
23
Andrew Ferguson – Non-Executive Director (Appointed - 10 May 2012)
Mr Ferguson is an Executive Director and the Chief Executive Officer of APAC Resources Limited. Mr Ferguson
holds a Bachelor of Science Degree in Natural Resource Development and worked as a mining engineer in Western
Australia in the mid 90’s. In 2003, Mr Ferguson co-founded New City Investment Managers in the United Kingdom.
He has a proven track record in fund management and was the former co-fund manager of City Natural Resources
High Yield Trust, which was awarded ’Best UK Investment Trust’ in 2006. In addition, he managed New City High
Yield Trust Ltd. and Geiger Counter Ltd. He worked as Chief Investment Officer for New City Investment Managers
CQS Hong Kong, a financial institution providing investment management services to a variety of investors. He has
14 years of experience in the finance industry specialising in global natural resources. Mr Ferguson 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 company:
•
ABM Resources Limited* (Appointed 9 July 2012).
* Denotes current directorship
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
A C Ferguson (1)
D P Will
X Penggen (2)
Y Zhang (Alt Director)
Total
Fully Paid Ordinary
Shares
Options expiring on 30
November 2012
exercisable at $0.14
Options expiring on
30 November 2014
exercisable at $0.30
68,940,200
6,350,000
397,630,281
-
176,000,000
-
-
1,500,000
-
-
-
-
-
1,250,000
-
1,250,000
-
-
648,920,481
1,500,000
2,500,000
(1) AC Ferguson is a director of APAC Resources Limited which holds 397,630,281 fully paid ordinary shares in the Company.
(2) X Penggen is a director of Jinchuan Group Limited which holds 176,000,000 fully paid ordinary shares in the Company.
24
DIRECTORS’ REPORT
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 a number of 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 the Consolidated Entity were:
•
•
•
exploration for and the mining, processing, production and marketing of tin concentrate in Australia;
exploration and development of nickel projects in Australia; and
exploration and mining for precious and base metals through significant shareholdings in Westgold Resources
Limited, Independence Group NL, Mongolian Resource Corporation Limited, Reed Resources Limited and
Aziana Limited.
There have been no significant changes in the nature of these activities during the year.
EMPLOYEES
The Consolidated Entity employed 89 employees at 30 June 2012 (2011: 87).
OPERATING AND FINANCIAL REVIEW
A full review of the operations of the Consolidated Entity during the year ended 30 June 2012 is included on pages
6 to 21.
DIRECTORS’ REPORT
25
OPERATING RESULTS
The Consolidated Entity’s net loss after income tax for the period was $43,717,642 (2011: $62,296,608 profit), a
decline of 170% as compared to the previous financial year.
The results reflect:
•
•
Tin sales revenue for the year from the Renison Tin Project (50% owned) was 29% lower compared with the
previous financial year. This was mostly attributable to the decline in the tin price and a decrease in tin
production due to the production of lower grade ore while higher grade areas in the mine are being developed.
Impairment losses on “available-for-sale financial assets” of $24,490,872 as a result of declines in the
share prices of Mongolian Resource Corporation Limited (“MRC”) ($2,191,731) and Independence Group NL
(“Independence”) ($22,299,141). In the previous financial 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 total investment in Jabiru by the Company was $37,765,892. Following the takeover of
Jabiru 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 sale resulted in a profit of $55,268,640 in the previous financial year.
•
Impairment loss on “investment in associate” of $8,064,451 due to a decline in the share price of Westgold
Resources Limited (“Westgold”).
REVIEW OF FINANCIAL CONDITION
Liquidity and Capital Resources
The consolidated statement of cash flows illustrates that there was a decrease in cash and cash equivalents in the
year ended 30 June 2012 of $33,011,974 (2011: $46,486,707 increase). The decrease in cash inflow in comparison
with the prior year was due to the factors detailed below.
There has been decrease in the amount of cash generated from operating activities to $5,942,682 (2011:
$23,976,007), which is largely due to a decrease in tin price and production at the Renison Tin Project.
There has been increase in the amount of cash used in investing activities to $25,835,981 (2011: $22,502,060
inflow), which was mainly attributable to the cash re-investment at the Renison Tin Project and the acquisition of
securities in Reed Resources Limited, Westgold and Aziana Limited for a total of $9,267,180. Cash inflows in the
previous year were mainly due to the sale of the Jabiru and Icon Resources Limited shares for $48,579,912.
Financing activities resulted in $13,118,675 (2011: $8,640 inflow) of net cash outflows. This is mainly due to the
on-market share buy-back of 48,998,525 shares for an amount of $10,932,265 undertaken during the year.
The Consolidated Entity’s debt has increased by $3,291,433 (2011: $1,675,890 decrease) over the last year due
to an upgrade of the mining fleet at the Renison Tin Project subject finance lease. Of the Consolidated Entity’s debt,
34% ($1,507,448) is repayable within one year of 30 June 2012, compared to 81% ($941,788) in the previous year.
Capital Expenditure
There has been an increase in cash used to purchase property, plant and equipment in 2012 to $2,525,291 from
$2,252,369 in 2011. Capital commitments of $299,457 existed at the reporting date, principally relating to the
purchase of plant and equipment for the Renison Tin Project.
26
DIRECTORS’ REPORT
CORPORATE INFORMATION
CORPORATE STRUCTURE
TIN
NICKEL
GROWTH
BLUESTONE
AUSTRALIA
PTY LTD
ACN 108 490 820
100%
BLUESTONE
NOMINEES
PTY LTD
ACN 092 257 013
Collingwood
Tin Project
100%
100%
METALS
EXPLORATION
PTY LTD
ACN 005 483 009
100%
BLUESTONE
MINES TASMANIA
PTY LTD
ACN 108 492 628
50% of Bluestone
Mines Tasmania
Venture Project
50%
(cid:17)(cid:62)(cid:104)(cid:28)(cid:94)(cid:100)(cid:75)(cid:69)(cid:28)
(cid:68)(cid:47)(cid:69)(cid:28)(cid:94)(cid:3)(cid:3)(cid:100)(cid:4)(cid:94)(cid:68)(cid:4)(cid:69)(cid:47)(cid:4)
(cid:58)(cid:75)(cid:47)(cid:69)(cid:100)(cid:3)(cid:3)(cid:115)(cid:28)(cid:69)(cid:100)(cid:104)(cid:90)(cid:28)(cid:3)(cid:3)(cid:87)(cid:100)(cid:122)(cid:3)(cid:3)(cid:62)(cid:100)(cid:24)
ACN 141 265 974
Manager of
Unincorporated
Bluestone Mines
Tasmania Joint Venture
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
100%
MAD METALS
PTY LTD
ACN 149 449 169
100%
CHINGGIS METALS
PTY LTD
ACN 149 449 150
27%
ACN 139 627 446
5.2%
ACN 099 116 631
2.8%
25%
ACN 092 786 304
ACN 151 159 812
14.8%
ACN 127 620 482
SHARE ISSUES DURING THE YEAR
Share Placements
There were no share placements during the financial year.
Share Buy-Back
On 1 July 2011 the Company commenced an on-market buy-back of up to 10% of its issued capital over a twelve
month period. During the financial period the Company had acquired 48,998,525 shares for a total value of
$10,932,265 and an average price of $0.22 per share.
Option Conversions
No options were converted during the financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Total equity decreased to $212,823,758 from $263,953,921 a decrease of $51,130,163. The movement was largely
as a result of operating losses from the Renison Tin Project, impairment losses on available-for-sale financial
assets and impairment losses on investments in associates as a result of declines in the share prices of MRC,
Independence and Westgold.
DIRECTORS’ REPORT
27
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 4 September the Consolidated Entity announced that it had signed a non-binding Memorandum of Understanding
(“MOU”) with Samsung C&T Corporation (“Samsung”) to establish a framework for collaboration and co-operation
to develop the Wingellina Nickel-Cobalt Project (“Project”) towards production. Under the MOU Samsung will offer
its experience and expertise to assist in the completion of a Detailed Feasibility Study (“DFS”). Upon successful
completion of the DFS and approval of the Project, Samsung will be awarded the Engineering, Procurement and
Construction contract on normal commercial terms. Samsung has agreed to use its financial reputation and capacity
to assist the Company with financing and development proposals for the project. Objectives of the collaboration are
for the Company to retain a 30% interest in Wingellina free carried to production and Samsung will commit direct
equity to the Project.
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 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 11,100,000 unissued ordinary shares under option (12,150,000 at reporting
date), refer to note 28(e) for further details.
On 30 November 2011 the Company issued 4,850,000 options to directors and employees at an exercise price of
$0.30 expiring 30 November 2014.
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.
28
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
D P Will
A C Ferguson
M L Jefferies
S Zhang
X Penggen
Y Zhang (Alt Director)
7
7
7
7
2
6
-
-
3
4
4
-
-
1
3
-
-
-
1
1
-
-
1
-
-
-
-
All Directors were eligible to attend all Director’s meetings held, except for:
•
AC Ferguson – eligible to attend 2 meetings;
• ML Jefferies – eligible to attend 6 meetings;
•
•
X Penggen – eligible to attend 3 meetings; and
S Zhang – eligible to attend 3 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 *
Remuneration
P G Cook *
M L Jefferies **
M L Jefferies **
A C Ferguson **
A C Ferguson **
F J Van Maanen ***
Notes:
* Designates the Chairman of the Committee.
** ML Jefferies resigned and AC Ferguson was appointed on 10 May 2012.
*** FJ Van Maanen is the Company Secretary and is not a Director.
DIRECTORS’ REPORT
29
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2012 outlines the remuneration arrangements of 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 is presented under the following sections:
1.
Introduction
2. Remuneration governance
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
INTRODUCTION
1.
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 Consolidated Entity.
For the purposes of this remuneration report, the term ‘executive’ includes the Managing Director, executive
directors, senior executives, general managers and secretary of the Consolidated Entity.
Details of KMP of the Consolidated Entity are set out below:
Name
Directors
P G Cook
W S Hallam
A C Ferguson
M L Jefferies
D P Will
S Zhang
X Penggen
Y Zhang
Executives
R D Cook
M P Poepjes
F J Van Maanen
Position
Date of appointment Date of resignation
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Executive Director
Non-Executive Director
Non-Executive Director
Alternate Non-Executive Director for X Penggen
General Manager – Renison
Chief Mining Engineer
Company Secretary
23 Jul 2004
1 Mar 2005
10 May 2012
29 Dec 2006
12 Jul 2011
9 Nov 2009
9 Feb 2012
3 Oct 2007
22 Apr 2010
8 Aug 2011
1 Jul 2005
-
-
-
10 May 2012
-
9 Feb 2012
-
-
-
-
-
There were no other changes to key management personnel after reporting date and before the date the financial
report was authorised for issue.
30
DIRECTORS’ REPORT
REMUNERATION GOVERNANCE
2.
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.
NON-EXECUTIVE DIRECTOR REMUNERATION ARRANGEMENTS
3.
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 seek an increase for the non-executive director pool at the 2012 annual general meeting to an
aggregate value of $300,000.
DIRECTORS’ REPORT
31
3.
NON-EXECUTIVE DIRECTOR REMUNERATION ARRANGEMENTS (CONTINUED)
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 $75,000 and each other non-executive director receives a base
fee of $45,000 for being a director of the Consolidated Entity. There are no additional fees for serving on any board
committees.
A company associated with Mr Cook provides consulting services at $250 per hour for each hour worked on behalf
of the Company. These fees are exclusive of non-executive director’s fees and compensate Mr Cook for additional
time spent on services outside of his usual non-executive director duties.
Non-executive directors have long been encouraged by the Board to hold shares in the Company and align their
interests with the Company’s shareholders. 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 2012 and 30 June 2011 is
detailed in Table 1 and Table 2 respectively of this report.
EXECUTIVE REMUNERATION ARRANGEMENTS
4.
Remuneration Policy
The Company’s executive remuneration strategy is designed to attract, motivate and retain high performing
individuals and align the interests of executives and shareholders.
No KMP appointed during the period received a payment as part of their consideration for agreeing to hold the
position.
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 and cash bonus).
The proportion of fixed remuneration and variable remuneration for each executive for the period ending 30 June
2012 and 30 June 2011 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.
32
DIRECTORS’ REPORT
The fixed remuneration component for executives for the period ending 30 June 2012 and 30 June 2011 are set out
in Table 1 and Table 2.
Variable Remuneration
Short Term Incentive (“STI”) – cash bonus
The objective of the STI is to link the increase in shareholder value over the year with the remuneration received by
the executives charged with achieving that increase. The total potential STI cash bonus available is set at a level so
as to provide sufficient incentive to the executives to achieve the performance goals and such that the cost to the
Consolidated Entity is reasonable in the circumstances.
Annual STI payments granted to each executive depends on their performance over the preceding year and are
based on recommendations from the Managing Director following collaboration with the Board. Typically included
are measures such as contribution to strategic initiatives, risk management and leadership/team contribution.
The aggregate of annual STI payments available for executives across the Consolidated Entity is subject to the
approval of the Board.
Long Term Incentive (“LTI”) – Share options
The objective of the LTI plan is to reward executives in a manner that aligns remuneration with the creation of
shareholder wealth. As such LTI’s are made to executives who are able to influence the generation of shareholder
wealth and thus have an impact on the Consolidated Entity’s performance.
LTI awards to executives are made under the Metals X Limited Long Term Incentive Plan 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 prohibits executives from entering into arrangements to protect the value of unvested LTI awards.
The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their
remuneration package.
DIRECTORS’ REPORT
33
COMPANY PERFORMANCE AND THE LINK TO REMUNERATION
5.
STI remuneration is linked to the performance of the Company. In the current financial year cash bonuses were
awarded to executives based on the Company’s performance in the preceding financial year.
LTI 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 Long Term Incentive Plan 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.
30 June 08
30 June 09
30 June 10
30 June 11
30 June 12
Closing share price
Profit/(loss) per share (cents)
Net tangible assets per share
Total Shareholder Return
$0.41
-0.76
$0.20
4%
$0.11
-4.82
$0.15
-73%
$0.10
0.92
$0.15
-13%
$0.26
4.48
$0.19
166%
$0.15
-3.31
$0.16
-43%
EXECUTIVE CONTRACTUAL ARRANGEMENTS
6.
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 $436,000 (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.
34
DIRECTORS’ REPORT
Other executive directors
Mr Will was employed under an annual salary employment contract and receives a fixed remuneration of $337,900
(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.
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.
DIRECTORS’ REPORT
35
EXECUTIVE CONTRACTUAL ARRANGEMENTS (CONTINUED)
6.
Remuneration of key management personnel of the Consolidated Entity
Table 1: Remuneration for the year ended 30 June 2012
Short Term
Post
employ-
ment
Long
term
benefits
Share-
based
Payment
Salary and
Fees
Cash
Bonus
Non
monetary
benefits
Superan-
nuation
Long
service
leave
Options
Total
% Perfor-
mance
related
% of
remuner-
ation that
consists of
options
Non-executive Directors
P G Cook
A C Ferguson
M L Jefferies *
X Penggen
S Zhang *
Y Zhang (Alt Director)
Executive Directors
214,025
6,411
38,256
-
-
-
258,692
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,750
-
-
-
-
-
6,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
220,775
6,411
38,256
-
-
-
265,442
-
-
-
-
-
-
-
W S Hallam **
323,232 25,000
4,385
17,101
14,363
103,801
487,882
5.12
D P Will
304,236
Other key management personnel
R D Cook
M P Poepjes
133,900
173,889
-
-
-
4,875
25,000
1,635
103,801
439,547
-
-
12,051
12,973
-
158,924
15,650
935
49,825
240,299
-
-
-
F J Van Maanen ***
160,253 12,500
4,618
14,423
3,541
41,521
236,856
5.28
1,095,510 37,500
13,878
84,225
33,447
298,948 1,563,508
Totals
1,354,202 37,500
13,878
90,975
33,447
298,948 1,828,950
-
-
-
-
-
-
-
21.28
23.62
-
20.73
17.53
*
**
***
S Zhang and ML Jefferies resigned on 9 February 2012 and 10 May 2012 respectively.
WS Hallam is a Director of Westgold and Aziana Limited (“Aziana”). During the period Westgold and Aziana paid for
Directors fees associated with Westgold and Aziana.
FJ Van Maanen is the Company Secretary of Aziana. During the period Aziana paid for Company Secretarial fees
associated with Aziana.
36
DIRECTORS’ REPORT
Table 2: Remuneration for the year ended 30 June 2011
Short Term
Post
employ-
ment
Long
term
benefits
Share-
based
Payment
Total
Salary
and Fees
Cash
Bonus
Non
monetary
benefits
Superan-
nuation
Long
service
leave
Options
% Perfor-
mance
related
% of
remuner-
ation that
consists of
options
Non-executive Directors
P G Cook
M L Jefferies
S Zhang
Y Zhang (Alt Director)
172,230
-
40,000
-
-
-
-
-
212,230
-
Executive Directors
W S Hallam *
S J Huffadine**
323,013
420,645
Other key management personnel
R D Cook
P M Cmrlec*
F J Van Maanen ***
-
-
-
-
-
133,490
170,884
130,655
1,178,687
1,390,917
-
-
-
-
-
5,400
-
-
-
5,400
-
-
-
-
-
4,636
20,487
40,372
4,456
23,778
-
-
11,700
1,895
4,533
13,813
-
4,121
11,309
26,607
-
-
-
-
-
-
-
-
-
-
177,630
40,000
-
-
217,630
388,508
448,879
147,085
189,230
172,692
-
-
17,746
81,087
68,874
- 1,346,394
17,746
86,487
68,874
- 1,564,024
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
WS Hallam is a Director of Westgold. During the period Westgold paid for Directors fees associated with Westgold.
SJ Huffadine resigned on 1 June 2011.
PM Cmrlec resigned on 1 June 2011. CM Cmrlec was a Director of Westgold. During the period Westgold paid for Directors
fees associated with Westgold.
FJ Van Maanen is the Company Secretary of Aragon Resources Limited (“Aragon”). During the period Aragon paid for
Company Secretarial fees associated with Aragon.
DIRECTORS’ REPORT
37
Totals
*
**
**
***
EQUITY INSTRUMENTS DISCLOSURES
7.
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
Directors
W S Hallam
1,250,000
29/11/11
$0.083
$0.30
29/11/14
29/11/11
29/11/14
1,250,000
D P Will
1,250,000
29/11/11
$0.083
$0.30
29/11/14
29/11/11
29/11/14
1,250,000
Executives
M P Poepjes
600,000
29/11/11
$0.083
$0.30
29/11/14
29/11/11
29/11/14
600,000
F J Van Maanen
500,000
29/11/11
$0.083
$0.30
29/11/14
29/11/11
29/11/14
500,000
Total
3,600,000
3,600,000
^ For details on valuation of the options, including models and assumptions used, please refer to note 32.
100%
100%
100%
100%
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
$
W S Hallam
D P Will
M P Poepjes
F J Van Maanen
103,801
103,801
49,825
41,521
-
-
-
-
-
-
-
-
103,801
103,801
49,825
41,521
^ For details on valuation of the options, including models and assumptions used, please refer to note 32.
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.
38
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
AUDITOR INDEPENDENCE
The Directors’ received the Independence Declaration, as set out on page 40, 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
$
57,350
Signed in accordance with a resolution of the Directors.
WS Hallam
Managing Director
Perth, 20 September 2012
DIRECTORS’ REPORT
39
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 2012, 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
20 September 2012
DL:DR:METALSX:022
Liability limited by a scheme approved
under Professional Standards Legislation
40
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.
COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS
1.
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
Establish the functions reserved to the board and those delegated to senior executives and
disclose those functions.
2(a)
1.1
1.2
1.3
2.1
2.2
2.3
2.4
2.5
2.6
2(h), 3(b),
Remunera-
tion Report
2(a), 2(h),
3(b), Re-
muneration
Report
2(e)
2(c), 2(e)
Yes
Yes
Yes
No
No
Yes
No
Yes
Yes
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.
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)
Principle 3
Promote ethical and responsible decision-making
3.1
Establish a code of conduct and disclose the code or a summary as to:
6(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.
3.2
Establish a policy concerning diversity and disclose the policy or a summary. The policy
should include requirements for the board to establish measurable objectives for achieving
gender diversity and for the board to assess annually both the objectives and progress in
achieving them.
6(c)
Yes
CORPORATE GOVERNANCE STATEMENT
41
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
3.3
3.4
3.5
Disclose in each annual report the measurable objectives for achieving gender diversity set
by the board in accordance with the diversity policy and progress towards achieving them.
Disclose in each annual report the proportion of women employees in the whole
organisation, women in senior executive positions and women on the board.
6(c)
6(c)
Provide the information indicated in the Guide to reporting on principle 3.
6(a), 6(c)
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)
4(a), 4(b)
4(a), 4(b)
4(a), 4(b)
4(a), 4(b)
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
7.1
7.2
7.3
7.4
Establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
5(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 and the chief financial officer 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.
5(a), 5(b),
5(d)
Yes
5(c)
Yes
5(a), 5(b),
5(c), 5(d)
Yes
42
CORPORATE GOVERNANCE STATEMENT
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
Principle 8
Remunerate fairly and responsibly
8.1
8.2
8.3
8.4
The board should establish a remuneration committee.
The remuneration committee should be structured so that it:
• consists of a majority of independent directors;
• is chaired by an independent chair; and
• has at least three members.
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.
3(b)
3(b)
3(b)
3(b)
Yes
No
Yes
Yes
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.
CORPORATE GOVERNANCE STATEMENT
43
2.
THE BOARD OF DIRECTORS (CONTINUED)
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”.
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;
facilitating the effective contribution of all Board members; and
committing the time necessary to effectively discharge the role of the Chairman.
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.
44
CORPORATE GOVERNANCE STATEMENT
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.
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.
CORPORATE GOVERNANCE STATEMENT
45
2.
THE BOARD OF DIRECTORS (CONTINUED)
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.
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.
46
CORPORATE GOVERNANCE STATEMENT
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
Position
PG Cook (Chairman)
Chairman & Non-Executive Director
AC Ferguson
Non-Executive Director
FJ Van Maanen
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.
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.
CORPORATE GOVERNANCE STATEMENT
47
3. BOARD COMMITTEES (CONTINUED)
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-executive directors. The Remuneration Committee is governed by its charter, as approved by the Board.
The Remuneration Committee does not comply with ASX Recommendation 8.2 as none of the Directors are
considered to be independent Directors (refer 2(e)). The Company believes that the committee has appropriate
expertise and all members have an appropriate understanding of the Company’s activities. Members of the
Remuneration Committee are:
Name
Position
PG Cook (Chairman)
Chairman & Non-Executive Director
AC Ferguson
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.
Non-executive directors are remunerated by way of fees, in the form of cash and superannuation contributions.
Non-executive directors do not participate in schemes designed for the remuneration of executives. Non-executive
directors do not receive options or bonus payments. 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 formerly 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”.
48
CORPORATE GOVERNANCE STATEMENT
4.
TIMELY AND BALANCED DISCLOSURE
4(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.
4(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.
5. 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.
CORPORATE GOVERNANCE STATEMENT
49
5. RECOGNISING AND MANAGING RISK (CONTINUED)
5(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.
5(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.
5(C) MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER CERTIFICATION
The Managing Director and Chief Financial Officer 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 implements the policies adopted by
the Board; and
the Company’s risk management an internal compliance and control system is operating efficiently and
effectively in all material respects.
5(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.
50
CORPORATE GOVERNANCE STATEMENT
6.
ETHICAL AND RESPONSIBLE DECISION MAKING
6(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.
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.
6(B) POLICY CONCERNING TRADING IN COMPANY SECURITIES
The Company’s “Securities Trading 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 one month prior to the announcement to the ASX of the Company’s
quarterly, half year and full 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.
CORPORATE GOVERNANCE STATEMENT
51
6.
ETHICAL AND RESPONSIBLE DECISION MAKING (CONTINUED)
6(C) POLICY CONCERNING DIVERSITY
The Company encourages diversity in employment throughout the Company and in the composition of the Board,
as a mechanism to ensure that the Company is able to draw on a variety of skill, talent and previous experiences in
order to maximise the Company’s performance.
The Company’s “Diversity Policy” has been implemented to ensure the Company has the benefit of a diverse range
of employees with different skills, experience, age, gender, race and cultural backgrounds, and that the Company
reports its results on an annual basis in achieving measurable targets which are set by the Board as part of
implementation of the Diversity Policy.
The table below outlines the diversity objectives established by the Board, the steps taken during the year to
achieve these objectives, and the outcomes.
Objectives
Steps Taken/Outcome
Increase the number of women in the workforce, including
management and at board level.
•
•
Metals X appointed no females in managerial roles.
As at 30 June 2012, women represented 16% in the Consolidated
Entity’s workforce (2011: 15%), 2% in key management positions
(2011: 2%) and Nil at board level (2011: Nil).
Key senior female appointments during the year include:
Review gender pay gaps on an annual basis and implement
actions to address any variances.
Provide flexible workplace arrangements.
Provide career development opportunities for every employee,
irrespective of any cultural, gender and other differences.
Promote an inclusive culture that treats the workforce with
fairness and respect.
As a part of the annual remuneration review, the Board assesses
the performance and salaries of all key management personnel and
executive directors. Any gender pay disparities are addressed.
During the year Metals X employed 10 employees on flexible work
arrangements (2011: 8).
Whilst Metals X places special focus on gender diversity, career
development opportunities are equal for all employees.
Employees are encouraged to attend professional development
courses/workshops throughout the year.
Metals X has set a zero tolerance policy against discrimination of
employees at all levels. The Company provides avenues to employees
to voice their concerns or report any discrimination.
No cases of discrimination were reported during the year (2011: Nil).
52
CORPORATE GOVERNANCE STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2012
Continuing operations
Revenue
Cost of sales
Gross (loss)/profit
Other income
Other expenses
Fair value change in financial instruments
Impairment loss on available-for-sale financial assets
Share of (loss)/profit of associate
Impairment loss on investment in associates
Exploration and evaluation expenditure written off
(Loss)/profit before income tax and finance costs
Finance costs
(Loss)/profit before income tax
Income tax benefit/(expense)
Net (loss)/profit after tax
Other comprehensive income
Share of change in equity of associate
Net fair value change in available-for-sale financial assets
Reclassification of cumulative fair value changes in available-for-sale financial assets
previously recognised in equity to the profit and loss
Income tax on items of other comprehensive income
Other comprehensive profit/(loss) for the period, net of tax
Total comprehensive (loss)/profit for the period
(Loss)/profit for the period is attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive (loss)/profit for the period is attributable to:
Owners of the parent
Non-controlling interest
Notes
2012
2011
5
7(a)
6
7(b)
7(c)
16
18
18
22
7(d)
8
52,907,011
(57,714,749)
(4,807,738)
815,377
(4,609,688)
(434,906)
(24,490,872)
(2,344,646)
(8,064,451)
(285,175)
(44,222,099)
(386,274)
(44,608,373)
890,731
72,307,659
(57,984,022)
14,323,637
70,652,215
(4,294,853)
(57,464)
-
221,092
(17,358,674)
(1,189,719)
62,296,234
(408,152)
61,888,082
408,526
(43,717,642)
62,296,608
1,059,669
107,369
(980,165)
1,076,551
2,843,188
-
(852,957)
3,157,269
(40,560,373)
(322,966)
(226,580)
62,070,028
(43,923,687)
206,045
(43,717,642)
62,442,848
(146,240)
62,296,608
(40,766,418)
206,045
(40,560,373)
62,216,268
(146,240)
62,070,028
(Loss)/earnings per share for profit attributable to the ordinary equity holders of the company
9
- basic for profit for the year (cents)
9
- diluted for profit for the year (cents)
(3.31)
(3.31)
4.57
4.57
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
53
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2012
Notes
2012
2011
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Other financial assets
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
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest bearing loans and borrowings
Provisions
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
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
30
31
42,971,360
13,364,361
11,898,557
203,334
3,990,730
72,428,342
75,983,334
12,470,596
13,168,960
146,177
3,320,730
105,089,797
29,689,236
448,989
19,839,153
18,757,169
87,080,629
-
1,675,900
157,491,076
229,919,418
49,004,755
228,269
22,801,822
16,538,646
77,888,899
2,648,484
827,947
169,938,822
275,028,619
8,320,501
1,507,488
959,732
10,787,721
5,679,553
941,788
819,678
7,441,019
3,365,165
2,942,774
6,307,939
17,095,660
212,823,758
3,416,638
217,041
3,633,679
11,074,698
263,953,921
279,086,186
(85,603,878)
18,728,928
612,522
212,823,758
290,056,226
(41,680,191)
18,326,178
(2,729,920)
263,972,293
-
212,823,758
(18,372)
263,953,921
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2012
54
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2012
OPERATING ACTIVITIES
Receipts from customers
Interest received
Other income
Payments to suppliers and employees
Interest paid
Net cash flows from operating activities
INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for mine properties and development
Payments for exploration and evaluation
Proceeds from sale of property, plant and equipment - other
Payments for available-for-sale financial assets
Payments for derivative financial instruments
Proceeds from sales of available-for-sale financial assets
Payments for investment in associates
Net cash flows (used in)/from investing activities
FINANCING ACTIVITIES
Payment for share buy-back
Payment of finance lease liabilities
Proceeds from minority interest share forfeiture
Proceeds from performance bond facility
Payments for performance bond facility
Net cash flows (used in)/from financing activities
Notes
2012
2011
47,550,501
4,705,048
1,190,622
(47,263,268)
(240,221)
5,942,682
72,977,803
1,904,148
624,118
(51,225,232)
(304,830)
23,976,007
11(i)
(2,525,291)
(10,048,109)
(4,170,610)
175,209
(4,224,797)
(655,625)
-
(4,386,758)
(25,835,981)
(2,252,369)
(8,607,433)
(4,858,324)
198,894
(7,150,000)
-
48,579,912
(3,408,620)
22,502,060
(10,932,265)
(1,663,910)
(2,500)
-
(520,000)
(13,118,675)
-
(1,675,890)
-
1,684,530
-
8,640
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Cash and cash equivalents at the end of the period
(33,011,974)
75,983,334
42,971,360
46,486,707
29,496,627
75,983,334
11
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
55
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2012
Issued
capital
Accumulated
losses
Option
premium
reserve
Other
reserves
Owners of
the parent
Non-
controlling
interest
Total Equity
290,141,787 (104,123,039)
18,222,793
(2,503,340)
201,738,201
127,868 201,866,069
-
-
-
62,442,848
-
62,442,848
-
-
-
-
62,442,848
(146,240)
62,296,608
(226,580)
(226,580)
-
(226,580)
(226,580)
62,216,268
(146,240)
62,070,028
2011
At 1 July 2010
Profit for the year
Other comprehensive
income, net of tax
Total comprehensive
(loss)/profit for the
year net of tax
Transactions with owners in their capacity as owners
Share-based payment
Share issue costs
-
-
(85,561)
-
-
-
103,385
-
-
-
-
-
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
290,056,226
(41,680,191)
18,326,178
(2,729,920)
263,972,293
(18,372)
263,953,921
Tax effect of share
issue costs
At 30 June 2011
2012
At 1 July 2011
Loss for the year
Other comprehensive
income, net of tax
Total comprehensive
(loss)/profit for the
year net of tax
-
-
(43,923,687)
-
-
(43,923,687)
Transactions with owners in their capacity as owners
Share buy-back
Share-based payment
(10,932,265)
-
Tax effect of share
issue costs
Reverse non-
controlling interest in
share of net assets
Non-controlling
interest share of net
assets
(37,775)
-
-
-
-
-
-
-
-
-
-
-
402,750
-
-
-
-
(43,923,687)
206,045
(43,717,642)
3,157,269
3,157,269
-
3,157,269
3,157,269
(40,766,418)
206,045 (40,560,373)
-
-
-
(10,932,265)
402,750
(37,775)
185,173
185,173
-
-
-
-
(10,932,265)
402,750
(37,775)
185,173
-
-
(187,673)
(187,673)
At 30 June 2012
279,086,186
(85,603,878)
18,728,928
612,522
212,823,758
-
212,823,758
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
56
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
CORPORATE INFORMATION
1.
The financial report of Metals X Limited for the year ended 30 June 2012 was authorised for issue in accordance
with a resolution of the Directors on 20 September 2012.
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, 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 2011. 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 2011,
adopted include:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
57
Reference
Summary
Application
date of
standard*
Application date
for Consolidated
Entity*
AASB 124
(Revised)
AASB
2009-12
The revised AASB 124 Related Party Disclosures (December 2009) simplifies the definition
of a related party, clarifying its intended meaning and eliminating inconsistencies from
the definition, including:
a.
b.
c.
The definition now identifies a subsidiary and an associate with the same investor
as related parties of each other
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
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.
Amendments to Australian Accounting Standards
[AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16,
1039 & 1052]
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.
Amendments to Australian Accounting Standards arising from the Annual Improvements
Project
[AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13]
Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and
the nature and extent of risks associated with financial instruments.
01/01/2011
01/07/2011
01/01/2011
01/07/2011
AASB
2010-4
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.
01/01/2011
01/07/2011
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.
AASB
2010-5
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]
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.
01/01/2011
01/07/2011
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
58
Reference
Summary
Application
date of
standard*
Application date
for Consolidated
Entity*
Australian Additional Disclosures
This standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence
project of the AASB and FRSB.
This standard, with AASB 2011-1 relocates all Australian specific disclosures from other
standards to one place and revises disclosures in the following areas:
AASB 1054
a.
b.
Compliance with Australian Accounting Standards
The statutory basis or reporting framework for financial statements
01/07/2011
01/07/2011
c. Whether the entity is a for-profit or not-for-profit entity
d. Whether the financial statements are general purpose or special purpose
e.
f.
Audit fees
Imputation credits
AASB
2010-6
Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial
Assets [AASB 1 & AASB 7]
The amendments increase the disclosure requirements for transactions involving
transfers of financial assets but which are 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.
01/07/2011
01/07/2011
Amendments to Australian Accounting Standards – Extending Relief from Consolidation,
the Equity Method and Proportionate Consolidation
[AASB 127, AASB 128 & AASB 131]
This Standard makes amendments to:
AASB 2011-
5**
›
›
›
AASB 127 Consolidated and Separate Financial Statements
01/07/2011
01/07/2011
AASB 128 Investments in Associates
AASB 131 Interests in Joint Ventures
to extend the circumstances in which an entity can obtain relief from consolidation, the
equity method or proportionate consolidation, and relates primarily to those applying the
reduced disclosure regime or not-for-profit entities.
Interpretation of Standards
AASB 1048
AASB 1048 identifies the Australian Interpretations and classifies them into two
groups: those that correspond to an IASB Interpretation and those that do not. Entities
are required to apply each relevant Australian Interpretation in preparing financial
statements that are within the scope of the Standard. The revised version of AASB 1048
updates the lists of Interpretations for new and amended Interpretations issued since the
June 2010 version of AASB 1048.
01/07/2011
01/07/2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
59
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 2012.
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:
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
AASB 2011-
3**
AASB
2011-9
Amendments
to Australian
Accounting
Standards –
Orderly Adoption
of Changes to the
ABS GFS Manual
and Related
Amendments
[AASB 1049]
Amendments
to Australian
Accounting
Standards –
Presentation
of Other
Comprehensive
Income
[AASB 1, 5, 7, 101,
112, 120, 121,
132, 133, 134,
1039 & 1049]
AASB 10
Consolidated
Financial
Statements
AASB 11
Joint
Arrangements
This Standard makes amendments including clarifying the definition of
the ABS GFS Manual, facilitating the orderly adoption of changes to the
ABS GFS Manual and related disclosures to AASB 1049.
Amendments to Australian Accounting Standards – Improvements to
AASB 1049 can be found in AASB 2011-13.
01/07/2012 01/07/2012
This Standard requires entities to group items presented in other
comprehensive income on the basis of whether they might be reclassified
subsequently to profit or loss and those that will not.
01/07/2012 01/07/2012
AASB 10 establishes a new control model that applies to all entities.
It replaces parts of AASB 127 Consolidated and Separate Financial
Statements dealing with the accounting for consolidated financial
statements and UIG-112 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.
Consequential amendments were also made to other standards via AASB
2011-7.
AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-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 it 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.
Consequential amendments were also made to other standards via AASB
2011-7 and amendments to AASB 128.
01/01/2013 01/07/2013
01/01/2013 01/07/2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
60
Reference
Title
Summary
AASB 12
Disclosure of
Interests in Other
Entities
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 judgments 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.
AASB 13
Fair Value
Measurement
AASB 119
Employee
Benefits
Interpreta-
tion 20
Stripping Costs
in the Production
Phase of a
Surface Mine
AASB 13 establishes a single source of guidance for determining the fair
value of assets and liabilities. AASB 13 does not change when an entity
is required to use fair value, but rather, provides guidance on how to
determine fair value when fair value is required or permitted. 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.
Consequential amendments were also made to other standards via AASB
2011-8.
The main change introduced by this standard is to revise the accounting
for defined benefit plans. The amendment removes the options for
accounting for the liability, and requires that the liabilities arising from
such plans is recognized in full with actuarial gains and losses being
recognized in other comprehensive income. It also revised the method of
calculating the return on plan assets.
The revised standard changes the definition of short-term employee
benefits. The distinction between short-term and other
long-term
employee benefits is now based on whether the benefits are expected to
be settled wholly within 12 months after the reporting date.
Consequential amendments were also made to other standards via AASB
2011-10.
interpretation applies to stripping costs
This
incurred during the
production phase of a surface mine. Production stripping costs are to
be capitalised as part of an asset, if an entity can demonstrate that it
is probable future economic benefits will be realised, the costs can be
reliably measured and the entity can identify the component of an ore
body for which access has been improved. This asset is to be called the
“stripping activity asset”.
The stripping activity asset shall be depreciated or amortised on a
systematic basis, over the expected useful life of the identified component
of the ore body that becomes more accessible as a result of the stripping
activity. The units of production method shall be applied unless another
method is more appropriate.
Consequential amendments were also made to other standards via AASB
2011-12.
Application
date of
standard*
Application
date for
Group*
01/01/2013 01/07/2013
01/01/2013 01/07/2013
01/01/2013 01/07/2013
01/01/2013 01/07/2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
61
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
This standard sets out amendments to International Financial Reporting
Standards (IFRSs) and the related bases for conclusions and guidance
made during the International Accounting Standards Board’s Annual
Improvements process. These amendments have not yet been adopted
by the AASB.
The following items are addressed by this standard:
IFRS 1 First-time Adoption of International Financial Reporting Standards
•
•
Repeated application of IFRS 1
Borrowing costs
IAS 1 Presentation of Financial Statements
•
Clarification of the requirements for comparative information
IAS 16 Property, Plant and Equipment
•
Classification of servicing equipment
IAS 32 Financial Instruments: Presentation
•
Tax effect of distribution to holders of equity instruments
IAS 34 Interim Financial Reporting
•
Interim financial reporting and segment information for total assets
and liabilities
01/01/2013 01/07/2013
This Amendment deletes from AASB 124 individual key management
personnel disclosure requirements for disclosing entities that are not
companies.
01/07/2013 01/07/2013
Annual
Improvem-
ents
2009–
2011 Cycle
****
Annual
Improvements to
IFRSs 2009–
2011 Cycle
AASB
2011-4
Amendments
to Australian
Accounting
Standards
to Remove
Individual Key
Management
Personnel
Disclosure
Requirements
[AASB 124]
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
62
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
AASB 1053
Application of
Tiers of Australian
Accounting
Standards
This Standard establishes a differential financial reporting framework
consisting of two Tiers of reporting requirements for preparing general
purpose financial statements:
a.
b.
Tier 1: Australian Accounting Standards
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.
b.
For-profit entities in the private sector that have public accountability
(as defined in this Standard)
01/07/2013 01/07/2013
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.
b.
c.
For-profit private sector entities that do not have public
accountability
All not-for-profit private sector entities
Public sector entities other than the Australian Government and
State, Territory and Local Governments.
Consequential amendments to other standards to implement the regime
were introduced by AASB 2010-2, 2011-2, 2011-6, 2011-11 and 2012-1.
AASB
2012-2
AASB
2012-5
AASB
2012-3
Amendments
to Australian
Accounting
Standards –
Disclosures
– Offsetting
Financial Assets
and Financial
Liabilities
Amendments
to Australian
Accounting
Standards arising
from Annual
Improvements
2009–2011
Cycle; and
Amendments
to Australian
Accounting
Standards
– Offsetting
Financial Assets
and Financial
Liabilities;
Instruments:
AASB 2012-2 principally amends AASB 7 Financial
Disclosures to require disclosure of information that will enable users of
an entity’s financial statements to evaluate the effect or potential effect
of netting arrangements, including rights of set-off associated with the
entity’s recognised financial assets and recognised financial liabilities,
on the entity’s financial position.
01/01/2013 01/07/2013
AASB 2012-5 makes amendments resulting from the 2009-2011 Annual
Improvements Cycle. The Standard addresses a range of improvements,
including the following:
•
•
repeat application of AASB 1 is permitted (AASB 1); and
01/01/2013 01/07/2013
clarification of the comparative information requirements when an
entity provides a third balance sheet (AASB 101 Presentation of
Financial Statements).
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments:
Presentation to address inconsistencies identified in applying some of
the offsetting criteria of AASB 132, including clarifying the meaning of
“currently has a legally enforceable right of set-off” and that some gross
settlement systems may be considered equivalent to net settlement.
01/01/2014 01/07/2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
63
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
AASB 9
Financial
Instruments
AASB 9 includes requirements for the classification and measurement
of financial assets. It was further amended by AASB 2010-7 to reflect
amendments to the accounting for financial liabilities.
These requirements improve and simplify the approach for classification
and measurement of financial assets compared with the requirements of
AASB 139. The main changes are described below.
a.
b.
c.
Financial assets that are debt instruments will be 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.
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.
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.
d. Where the fair value option is used for financial liabilities the change
in fair value is to be accounted for as follows:
i.
The change attributable to changes in credit risk are presented
in other comprehensive income (OCI)
ii.
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.
Consequential amendments were also made to other standards as a
result of AASB 9, introduced by AASB 2009-11 and superseded by AASB
2010-7 and 2010-10.
01/01/2015
***
01/07/2015
*
**
***
Designates the beginning of the applicable annual reporting period unless otherwise stated.
Only applicable to not-for-profit/public sector entities
AASB ED 215 Mandatory effective date of IFRS 9 proposes to defer the mandatory effective date of AASB 9 from annual periods
beginning 1 January 2013 to annual periods beginning on or after 1 January 2015, with early application permitted. At the time of
preparation, finalisation of ED 215 is still pending by the AASB. However, the IASB has deferred the mandatory effective date of IFRS
9 to annual periods beginning on or after 1 January 2015, with early application permitted.
****
These IFRS amendments have not yet been adopted by the AASB. In order to claim compliance with IFRS, these amendments should
be noted in the financial statements.
(C) CHANGES IN ACCOUNTING POLICY
The accounting policies used in the preparation of these financial statements are consistent with those used in
previous years.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
64
(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.
A change in ownership interest of a subsidiary (without a change in control) is accounted for as a transaction with
owners in their capacity as owners.
FOREIGN CURRENCY TRANSLATION
(E)
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
65
(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.
TRADE AND OTHER RECEIVABLES
(H)
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.
INVENTORIES
(I)
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
66
(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.
INTEREST IN JOINTLY CONTROLLED ASSETS
(K)
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.
AVAILABLE-FOR-SALE INVESTMENTS
(L)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
67
INVESTMENTS IN ASSOCIATES
(M)
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.
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 financial statements of the associate are prepared for the same reporting period as the Consolidated Entity.
When necessary, adjustments are made to bring the accounting policies in line with those of the Consolidated
Entity.
(N) BUSINESS COMBINATIONS
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
68
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. Subsequent settlement is accounted
for within equity. In instances, where the contingent consideration does not fall within the scope of AASB 39, it is
measured in accordance with the appropriate AASB.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interest over the fair value of the identifiable net assets acquired and
liabilities assumed. If this consideration is lower than the fair value of the identifiable net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of
the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured
based on the relative value of the operation disposed of and the portion of the cash-generating unit retained.
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
69
(O) PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
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 reporting 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.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
70
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
71
INTANGIBLES
(S)
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:
Development Costs
Useful lives
Amortisation method used
Finite
Amortised over the period of expected future benefit from the related
project on a straight-line basis.
Internally generated or acquired
Internally generated
Impairment testing
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 end.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
72
(T) 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.
(U) 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.
(V) 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
73
INTEREST-BEARING LOANS AND BORROWINGS
(W)
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.
PROVISIONS
(Y)
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.
LEASES
(Z)
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
74
(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.
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.
ISSUED CAPITAL
(AA)
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 risks 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 shipment.
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 35 days after arrival at port.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
75
(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 Long Term Incentive Plan (“LTIP”)
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 immediately for Directors
and after one year or as determined by the Board of Directors for employees. 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 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 32.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
76
(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.
(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.
(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) 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.
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
77
(AG) 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
78
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.
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
79
SIGNIFICANT ACCOUNTING JUDGMENTS (CONTINUED)
(I)
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(v). 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.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
80
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.
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 an increase in the available reserves, which has had an impact on assets being
amortised using the unit of production amortisation method resulting in a decrease 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 32. 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
81
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
4.
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:
2012
Financial assets
Cash and cash equivalents
Trade and other receivables
(current)
Other financial assets
Available-for-sale
assets (non-current)
financial
Derivatives (non-current)
Financial liabilities
Trade and other payables
(current)
Interest
(current)
bearing
loans
Interest bearing loans (non-
current)
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
11
12
15
16
17
23
24
27
42,971,360
-
-
-
-
-
13,364,361
3,990,730
-
-
42,971,360
17,355,091
-
-
-
-
448,989
448,989
-
-
-
-
-
-
-
-
-
42,971,360
13,364,361
3,990,730
29,689,236
29,689,236
-
448,989
29,689,236
90,464,676
-
-
-
-
-
-
-
-
-
-
-
-
(8,320,501)
(1,507,488)
(2,942,774)
(12,770,763)
-
-
-
-
(8,320,501)
(1,507,488)
(2,942,774)
(12,770,763)
42,971,360
17,355,091
448,989
(12,770,763)
29,689,236
77,693,913
Net
82
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
2011
Financial assets
Cash and cash equivalents
Trade and other receivables
(current)
Other financial assets
Available-for-sale
assets (non-current)
financial
Derivatives (non-current)
Financial liabilities
Trade and other payables
(current)
Interest
(current)
bearing
loans
Interest bearing loans (non-
current)
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
11
12
15
16
17
23
24
27
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)
Net
75,983,334
15,791,326
228,269
(6,838,382)
49,004,755 134,169,302
INTEREST RATE RISK
(A)
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 24 and 27. 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 2012, if interest rates had moved by a reasonably possible 0.5%, 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)
2012
2011
2012
2011
Judgements of reasonably possible movements:
+ 0.5% (50 basis points)
- 0.5% (50 basis points)
15,297
(15,297)
32,912
(32,912)
-
-
-
-
A sensitivity of +%0.5 or -0.5% 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 2012 than 2011 due to a decrease in
the balance of cash and cash equivalents 2012.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
83
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.
(A)
INTEREST RATE RISK (CONTINUED)
2012
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Floating interest
rate
Fixed interest
Non-Interest
bearing
Total carrying
amount
4,370,591
38,600,769
-
-
4,370,591
-
3,090,730
41,691,499
-
13,364,361
900,000
14,264,361
42,971,360
13,364,361
3,990,730
60,326,451
-
-
-
(8,320,501)
(4,450,262)
-
(8,320,501)
(4,450,262)
-
(4,450,262)
(8,320,501)
(12,770,763)
Net financial assets/(liabilities)
47,555,688
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
75,983,334
12,470,596
3,320,730
91,774,660
(5,679,553)
(1,158,829)
-
-
-
-
(5,679,553)
-
(1,158,829)
(1,158,829)
(5,679,553)
(6,838,382)
84,936,278
(B) CREDIT RISK
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 $3,090,730 (2011: $2,570,730) in relation to financial guarantees granted and
security deposits (refer to note 15).
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
84
(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 2012 financial
year the Consolidated Entity 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
2012
2011
3,302,940
1,962,509
At 30 June 2012, if commodity 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)
2012
2011
2012
2011
Judgements of reasonably possible movements:
Price + 10%
Price - 10%
231,206
(231,206)
137,376
(137,376)
-
-
-
-
A sensitivity of +10% or -10% 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 2012 is higher due to a higher trade receivables balance at 30 June 2012.
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 2012, if equity security prices had moved by a reasonably possible 20%, 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)
2012
2011
2012
2011
Judgements of reasonably possible movements:
Price + 20%
Price - 20%
70,538
(70,538)
31,958
3,994,793
6,860,666
(31,958)
(3,994,793)
(6,860,666)
A sensitivity of +20% or -20% 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 2012
is lower due to decreases in the market value of the underlying securities during the financial year (refer to notes
16 and 17).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
85
(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.
LIQUIDITY RISK
(E)
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.
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
2012. 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:
2012
2011
6 months or less
6 - 12 months
1 - 5 years
Over 5 years
9,203,821
858,129
3,248,508
-
13,310,458
6,518,430
141,399
235,665
-
6,895,494
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.
2012
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
4,619,503
40,799,139
13,364,361
-
448,989
3,990,730
-
-
-
-
22,423,583
40,799,139
-
-
-
-
-
-
-
-
45,418,642
13,364,361
29,689,236
29,689,236
-
-
448,989
3,990,730
29,689,236
92,911,958
(8,320,501)
(883,320)
(9,203,821)
13,219,762
-
(858,129)
(858,129)
39,941,010
-
(3,248,508)
(3,248,508)
(3,248,508)
-
-
-
29,689,236
(8,320,501)
(4,989,957)
(13,310,458)
79,601,500
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
86
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
-
-
-
-
-
-
-
-
49,004,755
-
-
80,219,398
12,470,596
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
FAIR VALUES
(F)
For 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.
2012
Quoted market price
(Level 1)
Valuation technique
market observable
inputs (Level 2)
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
29,689,236
-
-
-
29,689,236
-
-
-
-
-
-
-
-
29,689,236
-
-
448,989
448,989
448,989
30,138,225
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
87
(F)
FAIR VALUES (CONTINUED)
2011
Quoted market price
(Level 1)
Valuation technique
market observable
inputs (Level 2)
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
-
-
-
47,004,755
-
-
-
-
-
-
2,000,000
-
228,269
2,228,269
47,004,755
2,000,000
-
228,269
49,233,024
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
During the period there was a removal of the Aziana Exploration Corporation shares out of Level 3 and transferred to
investment in associates when the shares were acquired by Aziana Limited prior to its Initial Public Offering (refer
to note 18). There were no transfers between Level 1 and Level 2, and no transfers into and out of Level 3 fair value
measurement. Aziana Limited listed options were added to Level 1 listed derivative investments. The fair value
decrease of the available-for-sale investments have been recorded in other comprehensive income.
5. REVENUE
Revenue from sale of tin concentrate
Interest received - other corporations
Total revenue
2012
2011
48,915,245
69,015,638
3,991,766
3,292,021
52,907,011
72,307,659
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
88
6. OTHER INCOME
Net (loss)/gain on sale of assets
Net gain on share investments
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 production cash costs
2012
(375,245)
-
-
1,190,622
2011
(478,521)
55,717,781
14,788,837
624,118
815,377
70,652,215
2012
2011
6,884,078
6,383,364
619,567
532,393
36,029,427
38,136,610
Write-down (reversal of write-down) in value of inventories to estimated net realisable value
2,478,051
(1,832,571)
Royalty
757,630
2,158,215
Depreciation and amortisation expense
Depreciation of non-current assets
Property, plant and equipment
Buildings
Amortisation of non-current assets
Mine, properties and development costs
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
3,923,868
261,757
3,661,459
251,364
6,760,371
8,693,188
57,714,749
57,984,022
1,862,681
1,965,882
130,541
190,904
10,860
402,750
105,400
175,507
23,993
103,385
2,597,736
2,374,167
509,054
204,257
467,383
111,905
452,880
228,602
525,412
121,668
1,292,599
1,328,562
41,319
204,976
3,931,654
3,907,705
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
89
7. EXPENSES (CONTINUED)
Other expenses
Care and maintenance costs
Foreign exchange loss/(profit)
Total other expenses
(c) Fair value change in financial instruments
Fair value change in derivatives
Total fair value change in financial instruments
(d) Finance costs
Interest
Unwinding of rehabilitation provision discount
Total finance costs
8. INCOME TAX
(a) Major components of income tax expense:
Income Statement
Current income tax expense
Current income tax benefit
2012
2011
653,719
24,315
678,034
656,999
(269,851)
387,148
4,609,688
4,294,853
434,906
434,906
57,464
57,464
275,717
110,557
386,274
344,202
63,950
408,152
2012
2011
(4,828,469)
-
(Recognition)/derecognition of carry forward losses and other temporary differences
12,731,288
(14,698,290)
Adjustments in respect of current income tax of previous years
483,518
(4,261,697)
Deferred income tax
Relating to recoupment of carry forward tax losses in current year
-
8,236,339
Relating to origination and reversal of temporary differences in current year
(8,746,498)
10,375,231
Adjustments in respect of deferred income tax of previous years
Income tax reported in the income statement
(530,570)
(890,731)
(60,109)
(408,526)
(b) Amounts charged or credited directly to equity
Deferred income tax related to items charged or credited directly to equity
Unrealised gain on available-for-sale investments
Share issue costs
Income tax reported in equity
(852,956)
(322,965)
(37,775)
(85,561)
(890,731)
(408,526)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
90
(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:
Total accounting profit before income tax
2012
2011
(44,608,373)
61,888,082
At statutory income tax rate of 30% (2011: 30%)
(13,382,512)
18,566,425
Non-deductible items
Deductible items
Prior year tax benefits
Tax losses not brought to account
Recognition of tax losses not previously recognised
Income tax reported in income the statement of comprehensive income
Effective income tax rate
(d) Deferred income tax at 30 June relates to the following:
206,747
(399,202)
130,706
(85,561)
(47,052)
(4,321,806)
12,731,288
-
-
(14,698,290)
(890,731)
(408,526)
2.0%
-0.7%
Statement of financial position
Statement of comprehensive income
2012
2011
2012
2011
Deferred tax liabilities
Exploration
Deferred mining
(15,090,614)
(16,365,494)
1,274,881
(381,781)
(6,524,102)
(4,796,171)
(1,727,931)
(1,282,668)
Mine site establishment and refurbishment
(4,283,758)
(2,150,246)
(2,133,512)
543,827
Research and development
-
(794,545)
794,545
-
Available-for-sale financial assets
(784,259)
(7,246,353)
6,462,094
(7,246,353)
Interest receivable
Inventories
Diesel rebate
Gross deferred tax liabilities
Deferred tax assets
Property, plant and equipment
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
(216,161)
(693,266)
(1,953)
(430,145)
(738,210)
(4,397)
(27,594,113)
(32,525,561)
213,984
44,944
2,444
(416,361)
(69,460)
(3,470)
2,507,887
4,075,487
130,472
857,652
18,320
-
30,253
430,968
1,346
878,090
3,136,644
5,778
-
114,407
-
37,775
37,650
353,659
3,521
933,196
(628,757)
4,069,709
130,472
743,245
18,320
-
(7,397)
77,309
(2,175)
(55,106)
(576,565)
(251,065)
(146,878)
(549,771)
(13,288)
-
1,695
74,330
178
2,508
18,663,638
27,594,113
27,902,931
32,525,561
-
-
Deferred tax income expense/(benefit)
9,277,069
(10,315,122)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
91
8. INCOME TAX (CONTINUED)
(e)
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.
(f)
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 2012, there are unrecognised losses of $21,446,488 for the Consolidated Entity (2011: $7,862,244).
9. EARNINGS PER SHARE
2012
2011
The following reflects the income used in the basic and diluted earnings per share computations.
(a)
(Loss)/earnings used in calculating earnings per share
For basic (loss)/earnings per share:
Net (loss)/profit from continuing operations attributable to ordinary equity holders of the
parent
Net (loss) profit attributable to ordinary equity holders of the parent
Basic (loss)/earnings per share (cents)
(43,923,687)
62,442,848
(43,923,687)
62,442,848
(3.31)
4.57
For diluted (loss)/earnings per share:
Net (loss)/profit from continuing operations attributable to ordinary equity holders of the
parent (from basic EPS)
Net (loss) profit attributable to ordinary equity holders of the parent
Fully (loss)/diluted earnings per share (cents)
(43,923,687)
62,442,848
(43,923,687)
62,442,848
(3.31)
4.57
(b) Weighted average number of shares
Weighted average number of ordinary shares for basic (loss)/earnings per share
1,327,661,216
1,365,661,782
Effect of Dilution:
Share Options
-
1,787,500
Weighted average number of ordinary shares adjusted for the effect of dilution
1,327,661,216
1,367,449,282
The Company had 12,150,000 shares options on issue that are excluded from the calculation of diluted loss per share for the current
financial period because they were anti-dilutive as their inclusion reduced the loss per share. In 2011 the Company had on issue
1,787,500 share options included in the calculation of diluted profit per share.
The Company commenced an on market buy-back of its ordinary shares on 1 July 2012. As at the date of this report the Company
had acquired 48,998,525 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
92
10. DIVIDENDS PAID AND PROPOSED
2012
2011
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.
11. 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
Loss/(profit) on disposal of property, plant and equipment
Share of associates' net losses/(profits)
2012
2011
4,370,591
9,403,323
38,600,769
66,580,011
42,971,360
75,983,334
4,370,591
9,403,323
38,600,769
66,580,011
42,971,360
75,983,334
(43,717,642)
62,296,608
(890,731)
(408,526)
10,987,315
12,810,987
32,555,323
17,358,674
-
(14,788,837)
402,750
110,557
434,906
285,175
103,385
63,950
57,464
1,189,720
-
(55,717,781)
375,245
478,517
2,344,646
(221,092)
2,887,544
23,223,069
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
93
11. CASH AND CASH EQUIVALENTS (CONTINUED)
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
12. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables (a)
Other debtors (b)
2012
2011
1,270,404
(1,100,923)
1,652,616
3,167,995
2,613,391
(4,268,137)
272,266
200,464
5,942,682
23,976,007
2012
2011
3,302,940
1,962,509
10,061,421
10,508,087
13,364,361
12,470,596
(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.
13. 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
2012
2011
140,767
126,702
147,395
132,757
9,578,898
10,747,418
146,327
49,731
2,310,888
2,460,701
(405,025)
(369,042)
11,898,557
13,168,960
During the year due to a decrease in the Tin metal price there were inventory write-downs of $2,478,051 (2011: reversal of write-
down $1,832,571) for the Consolidated Entity. This expense is included in cost of sales refer to note 7(a).
14. OTHER ASSETS (CURRENT)
Prepayments
2012
2011
203,334
146,177
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
94
15. OTHER FINANCIAL ASSETS (CURRENT)
Other financial asset (a)
Other receivables - cash on deposit - performance bond facility (b)
2012
900,000
3,090,730
3,990,730
2011
750,000
2,570,730
3,320,730
(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.
16. AVAILABLE-FOR-SALE FINANCIAL ASSETS (NON-CURRENT)
Shares - Australian listed
Shares - British Virgin Island unlisted
2012
29,689,236
-
2011
47,004,755
2,000,000
29,689,236
49,004,755
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 2.82% (2011: 3.23%) ownership interest in Independence Group NL which is a listed resources
company.
The Consolidated Entity has a 4.57% (2011: nil) ownership interest in Reed Resources Limited which is a listed resources company.
The Consolidated Entity has a 15.33% (2011: 16.97%) ownership interest in Mongolian Resource Corporation Limited which is a listed
resources company.
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.
In the previous period the Consolidated Entity had a 25% ownership interest in Aziana Exploration Corporation, which was an unlisted
exploration company.
During the year a review was undertaken of each available-for-sale investment to identify any financial assets whose decline in
fair value below cost is considered significant or prolonged. An impairment amount of $24,490,872 (2011: nil) was recognised
in the income statement as a result of declines in the share prices of Mongolian Resource Corporation Limited ($2,191,731) and
Independence Group NL ($22,299,141).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
95
17. DERIVATIVE FINANCIAL INSTRUMENTS (NON-CURRENT)
Derivatives - held for trading
Derivatives - held for trading
2012
2011
448,989
228,269
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 raising 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. The Consolidated Entity also holds 14,014,500 listed options
in Aziana Limited. These options were acquired for nil cost as part of the IPO of Aziana Limited. The fair value of the options for 30
June 2012 has been determined directly by reference to published price quotations in an active market.
(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).
18. INVESTMENTS IN ASSOCIATES (NON-CURRENT)
(a)
Investment details
Listed
Westgold Resources Limited
Aziana Limited
(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
Aziana Limited
At 1 July
Transfer from available-for-sale financial assets at cost
Additions
Share of (losses)/profits after income tax
Share of change in reserves
At 30 June
2012
2011
15,755,563
22,801,822
4,083,590
-
19,839,153
22,801,822
2012
2011
22,801,823
19,170,160
1,917,383
(1,735,613)
-
8,965,137
(736,648)
13,727,073
(8,064,451)
(17,358,674)
836,421
(965,225)
15,755,563
22,801,823
-
2,000,000
2,469,375
(609,033)
223,248
4,083,590
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
96
Aragon 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
2012
2011
-
-
-
-
-
-
-
3,355,753
626,400
957,740
1,061,764
(14,939)
(5,986,718)
-
(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
reporting date is $15,755,563 (2011: $22,801,822).
Based on the quoted share price the fair value of the Consolidated Entity's share investment in Aziana Limited at reporting date is
$4,484,640 (2011: nil).
(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
Share of associates' net assets
Extracts from the associates' statements of comprehensive income:
Revenue
Net profit/(loss)
15,985,881
11,364,730
110,180,321
106,269,419
126,166,202
117,634,149
4,579,239
3,155,708
7,734,947
4,370,705
3,202,247
7,572,952
118,431,255
110,061,197
31,733,687
27,537,311
759,791
(7,314,989)
5,562,031
4,670,268
The Company has a 26.98% (2011: 25.02%) interest in Westgold , which is involved in the exploration for base metals in the Northern
Territory and Western Australia. Westgold is listed on the Australian Securities Exchange. At the end of the period the Company’s
investment was $15,755,563 (2011: $22,801,822) which represents cost plus post-acquisition changes in the Company's share
of net assets of Westgold.
The Company has a 25.00% (2011: nil) interest in Aziana, which is involved in the exploration for base metals in Madagascar. Aziana
is listed on the Australian Securities Exchange. At the end of the period the Company’s investment was $4,083,590 (2011: nil) which
represents cost plus post-acquisition changes in the Company's share of net assets of Aziana.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
97
19. PROPERTY, PLANT & EQUIPMENT (NON-CURRENT)
Plant and equipment
At cost
Accumulated depreciation
Impairment
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
Depreciation charge for the year
At 30 June net of accumulated depreciation
Land and buildings
At 1 July net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June net of accumulated depreciation
Capital work in progress
At 1 July net of accumulated depreciation
Additions
Transfer to mine properties & development
Transfer to plant and equipment
Transfer to land and buildings
At 30 June
2012
2011
38,328,974
34,599,938
(21,738,747)
(19,747,096)
(3,942,962)
(3,942,961)
12,647,265
10,909,881
5,940,901
(1,203,560)
4,737,341
5,886,734
(941,804)
4,944,930
1,372,563
683,835
18,757,169
16,538,646
10,909,881
14,493,781
6,528,593
(826,022)
940,526
(657,991)
(3,965,187)
(3,866,435)
12,647,265
10,909,881
4,944,930
4,755,876
54,168
-
(261,757)
4,737,341
444,832
(4,414)
(251,364)
4,944,930
683,835
7,783,760
877,931
2,252,369
(512,271)
(1,061,107)
(6,528,593)
(54,168)
1,372,563
(940,526)
(444,832)
683,835
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30 June 2012 is $4,953,949
(2011: $2,827,596). Value of plant and equipment purchased under finance leases and hire purchase contracts for 30 June 2012
financial year is $5,258,469 (2011: 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 24 and 27).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
98
20. 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
2012
2011
61,561,433
59,908,605
61,561,433
59,908,605
34,411,967
31,545,457
(26,807,434)
(25,816,607)
(4,322,330)
(4,322,330)
3,282,203
1,406,520
56,512,971
45,080,208
(27,109,937)
(21,340,393)
(7,166,041)
(7,166,041)
22,236,993
16,573,774
Total mine properties and development
87,080,629
77,888,899
Movement in mine properties and development
Development areas at cost
At 1 July
Additions
Transfer from exploration and evaluation expenditure (refer to note 22)
At 30 June
Mine site establishment
At 1 July net of accumulated amortisation
Additions
Transfer from capital work in progress (refer to note 19)
Transfer from intangible development projects (refer to note 21)
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
Transfer from exploration and evaluation expenditure (refer to note 22)
Amortisation charge for the year
At 30 June net of accumulated amortisation
59,908,605
1,652,828
4,304,400
1,805,695
-
53,798,510
61,561,433
59,908,605
1,406,520
4,395,288
-
-
512,271
1,061,107
2,648,484
(294,245)
-
(55,589)
(990,827)
(3,994,286)
3,282,203
1,406,520
16,573,774
12,074,927
8,395,281
3,037,482
6,801,738
2,396,011
(5,769,544)
(4,698,902)
22,236,993
16,573,774
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
99
21. INTANGIBLE ASSETS (NON-CURRENT)
Development projects at cost
At cost
Net carrying amount
Total intangible assets
Movement in intangible assets
Development projects at cost
At 1 July net of accumulated amortisation
Additions
Transferred to mine capital development (refer to note 20)
At 30 June net of accumulated amortisation
Description of the Consolidated Entity’s intangible assets
Development costs
2012
2011
-
-
-
2,648,484
2,648,484
2,648,484
2,648,484
2,648,484
-
(2,648,484)
-
-
-
2,648,484
Development costs are carried at cost less accumulated amortisation and accumulated impairment losses. This asset related to the
Renison Expansion Project which has progressed past the development stage and accordingly the costs were transferred to mine
properties and development during the period.
22. 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
Transferred to mine capital development (refer to note 20)
Transferred to development areas (refer to note 20)
Expenditure written off
At 30 June net of accumulated impairment
2012
2011
1,675,900
827,947
-
-
1,675,900
827,947
827,947
53,353,863
4,170,610
4,858,324
(3,037,482)
(2,396,011)
-
(53,798,510)
(285,175)
1,675,900
(1,189,719)
827,947
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.
In the prior 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 $285,175 (2011: $1,189,719) was written off to
the income statement. The major expenditure written off in the current financial year relates to the Renison Tin Project ($82,293),
the Collingwood Tin Project ($55,357) and the Wingellina Nickel Project ($147,525). The major expenditure written off in the previous
financial year related to areas of interest within the Agaton Phosphate and Mount Bischoff Projects. Management decided to abandon
future exploration of these areas due to low potential from results returned in the areas.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
100
23. TRADE AND OTHER PAYABLES (CURRENT)
Trade creditors (a)
Sundry creditors and accruals (b)
2012
2011
5,235,688
3,084,813
8,320,501
3,205,562
2,473,991
5,679,553
(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.
24. INTEREST BEARING LOANS AND BORROWINGS (CURRENT)
Lease liability
Represents finance leases which have repayment terms of 36 months.
25. PROVISIONS (CURRENT)
Provision for annual leave
Provision for fringe benefits tax payable
The nature of the provisions are described in note 2(ad).
26. PROVISIONS (NON-CURRENT)
Provision for long service leave (a)
Provision for Rehabilitation (b)
(a)
The nature of the provisions are described in note 2(ad).
(b) Provision for rehabilitation
2012
2011
1,507,488
941,788
2012
2011
955,247
4,485
959,732
807,941
11,737
819,678
2012
438,200
2,926,965
3,365,165
2011
305,985
3,110,653
3,416,638
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
At 30 June
3,110,653
3,102,292
-
(294,245)
110,557
-
(55,589)
63,950
2,926,965
3,110,653
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
101
27. INTEREST BEARING LOANS AND BORROWINGS (NON-CURRENT)
Lease liability
2012
2,942,774
2011
217,041
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:
4,450,262
1,158,829
4,450,262
1,158,829
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.
28. ISSUED CAPITAL
(a) Ordinary Shares
Issued and fully paid
(b) Movements in ordinary shares on issue
At 1 July 2010
Deferred tax asset recognised on equity transactions
At 30 June 2011
Deferred tax asset recognised on equity transactions
Share buy-back
At 30 June 2012
(c)
Terms and conditions of contributed equity
4,953,949
4,953,949
2,827,596
2,827,596
2012
2011
279,086,186
290,056,226
Number
$
1,365,661,782
-
290,141,787
(85,561)
1,365,661,782
290,056,226
-
(48,998,525)
1,316,663,257
(37,775)
(10,932,265)
279,086,186
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.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
102
(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**
Total
Expiry Date
30 November 2012
30 November 2013
30 November 2013
30 November 2014
Exercise Price
Number of options
14 cents
13 cents
32 cents
30 cents
2,450,000
2,800,000
1,000,000
4,850,000
11,100,000
(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 $212,823,758 at 30 June 2012 (2011: $290,056,226). 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 2012, 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 2012, interest bearing liabilities increased as a result of the Consolidated Entity increasing its
finance lease facility to finance additional property, plant and equipment at its Renison Tin Project (refer to note 37). The net effect
was an increase in the gearing ratio.
Gearing ratio
Net debt
capital
The entity is not subject to any externally imposed capital requirements.
29. ACCUMULATED LOSSES
At 1 July
Net profit in current period attributable to members of the parent entity
At 30 June
2012
2011
2.09%
0.44%
4,450,262
212,823,758
1,158,829
263,953,921
2012
2011
(41,680,191)
(43,923,687)
(85,603,878)
(104,123,039)
62,442,848
(41,680,191)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
103
30. RESERVES
At 30 June 2010
Share based payments
Share of change in equity of associate
Fair value change in available-for-sale financial assets
Tax effect on fair value change in available-for-sale financial
assets
At 30 June 2011
Share based payments
Share of change in equity of associate
Non-controlling interest share of net assets
Fair value change in available-for-sale financial assets
Tax effect on fair value change in available-for-sale financial
assets
At 30 June
Option premium
reserve
Net unrealised gains
reserve
18,222,793
103,385
-
-
(2,503,340)
-
(980,165)
1,076,551
Total
15,719,453
103,385
(980,165)
1,076,551
-
(322,966)
(322,966)
18,326,178
402,750
-
-
-
(2,729,920)
-
1,059,669
185,173
2,950,557
15,596,258
402,750
1,059,669
185,173
2,950,557
-
(852,957)
(852,957)
18,728,928
612,522
19,341,450
Nature and purpose of reserves
Net unrealised gains reserve –This reserve records the movements in the fair value of available-for-sale investments, the movements
in non-controlling interests 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
Employee option scheme
Share-based payment - director
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
Value
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
2,350,000
4,000,000
2,500,000
2,500,000
400,000
1,000,000
1,000,000
2,000,000
67,500,000
16,750,000
225,705,000
0.057
0.102
0.414
0.114
0.168
0.122
0.084
0.119
0.150
0.050
0.083
0.174
0.048
0.083
0.168
0.120
0.103
0.049
0.111
0.099
6,312,054
191,880
165,524
250,300
67,272
475,134
142,260
98,434
150,421
142,111
195,147
694,563
119,432
207,603
67,272
119,631
103,385
97,288
7,463,700
1,665,517
18,728,928
The options have been valued using a Black & Scholes model, which takes account of 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
104
31. NON-CONTROLLING INTEREST
Equity contribution
Accumulated losses
Non-controlling interest share of net assets in controlled entity
2012
2011
2,500
(206,045)
185,173
(18,372)
-
-
-
-
Agaton Phosphate Pty Ltd of which the Consolidated Entity owned 75% was deregistered on 27 March 2012.
32. SHARE-BASED PAYMENTS
(a) Recognised share-based payment expense
The expense recognised for services received during the year is shown in the table below:
2012
2011
Expense arising from equity-settled share-based payments
402,750
103,385
The share-based payment plan is described below. There have been no cancellations or modifications to the plan during 2012 and
2011.
(b)
Long Term Incentive Plan
The Consolidated Entity has a Long term Incentive Plan (“LTIP”) 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 LTIP will vest when the following conditions are met:
i.
ii.
The LTIP 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 LTIP include:
i.
ii.
iii.
iv.
v.
vi.
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;
Options vest after one year or as determined by the Board of Directors;
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; and
vii. Upon exercise, these options will be settled in ordinary fully paid shares of the Company
viii. The Board of Directors may alter, delete or add to the terms and conditions of the LTIP at any time.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
105
32. SHARE-BASED PAYMENTS (CONTINUED)
(c) Summary of options granted under the Long Term Incentive Plan
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options issued
under the LTIP.
2012 Number
2012 WAEP
2011 Number
2011 WAEP
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
4,775,000
2,350,000
-
(975,000)
6,150,000
0.240
0.300
-
0.341
0.247
7,775,000
-
-
(3,000,000)
4,775,000
Exercisable at the year end
6,150,000
0.247
4,775,000
0.301
-
-
0.397
0.240
0.240
The outstanding balance as at 30 June 2012 is represented by the following table:
Vesting
date
17/7/09
06/07/10
29/11/11
Grant date
17/07/08
27/11/09
29/11/11
Total
Expiry date
Exercise
price
Options
granted
Options
lapsed/
cancelled
Options
exercised
31/07/12
30/11/13
29/11/14
45 cents
13 cents
30 cents
1,250,000
3,100,000
2,350,000
(250,000)
(300,000)
-
6,700,000
(550,000)
Number of options at end
of period
On issue
Vested
1,000,000
2,800,000
2,350,000
1,000,000
2,800,000
2,350,000
6,150,000
6,150,000
-
-
-
-
(d) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2012 is 1.58 years (2011: 1.73
years).
(e) Range of exercise price
The range of exercise prices for LTIP options outstanding at the end of the year was $0.13 - $0.45 (2011: $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 $0.08 (2011: nil).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
106
(g) Option pricing model
The fair value of the equity-settled share options granted under the LTIP is estimated at the date of grant using a Black & Scholes
model, which takes into account factors including the options exercise price, the volatility of the underlying share price, the risk-free
interest rate, the market price of the underlying share at grant date and the expected life of the option.
The following table gives the assumptions made in determining the fair value of the options granted:
Grant date
Expected Volatility (%)
Risk-free interest rate (%)
Expected life of options (yrs)
Options exercise price ($)
Share price at grant date ($)
Fair value at grant date ($)
2012
Nil
60%
3.15%
2.5
$0.30
$0.25
$0.083
2011
Nil
n/a
n/a
n/a
n/a
n/a
n/a
2010
Nil
80%
4.98%
2.0
$0.32
$0.26
$0.103
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.
(h) Directors options
In addition to the LTIP, 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;
vi.
Any options that are not exercised by the third anniversary of their grant date will lapse; and
vii. Upon exercise, these options will be settled in ordinary fully paid shares of the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
107
32. SHARE-BASED PAYMENTS (CONTINUED)
(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:
2012 Number
2012 WAEP
2011 Number
2011 WAEP
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
2,500,000
2,500,000
-
-
5,000,000
0.140
0.300
-
-
0.220
6,500,000
-
-
(4,000,000)
2,500,000
Exercisable at the end of the year
5,000,000
0.220
2,500,000
0.337
-
-
0.460
0.140
0.140
The outstanding balance as at 30 June 2012 is represented by the following table:
Grant date
Vesting
date
Expiry date
Exercise
price
Options
granted
Options
lapsed/
cancelled
Options
exercised
27/11/09
29/11/11
27/11/09
29/11/11
30/11/12
29/11/14
14 cents
30 cents
2,500,000
2,500,000
Total
5,000,000
-
-
-
Number of options at end
of period
On issue
Vested
2,500,000
2,500,000
2,500,000
2,500,000
5,000,000
5,000,000
-
-
-
(j) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2012 is 2.92 years (2011: 1.42).
(k) Range of exercise price
The exercise price for options outstanding at the end of the year was $0.14 - $0.30 (2011: $0.14).
(l) Weighted average fair value
The weighted average fair value of options granted during the year was $0.08 (2011: nil).
(m)
Contractors options
In addition to the LTIP, 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;
vi.
Any options that are not exercised by the expiry date as determined by the Directors at their grant date will lapse; and
vii. Upon exercise, these options will be settled in ordinary fully paid shares of the Company.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
108
(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:
2012 Number
2012 WAEP
2011 Number
2011 WAEP
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
1,000,000
-
-
-
1,000,000
0.320
-
-
-
0.320
1,000,000
1,000,000
-
(1,000,000)
1,000,000
Exercisable at the end of the year
1,000,000
0.320
1,000,000
0.460
0.320
-
0.460
0.320
0.320
The outstanding balance as at 30 June 2012 is represented by the following table:
Grant date
Vesting
date
Expiry date
Exercise
price
Options
granted
Options
lapsed/
cancelled
Options
exercised
01/12/10
01/12/10
30/11/13
32 cents
1,000,000
Total
1,000,000
-
-
Number of options at end
of period
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 2012 is 1.42 years (2011: 2.42).
(p) Range of exercise price
The exercise price for options outstanding at the end of the year was $0.32 (2011: $0.32).
(q) Weighted average fair value
The weighted average fair value of options granted during the year was nil (2011: $0.10).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
109
33. COMMITMENTS
(a) Capital commitments
Commitments relating to jointly controlled assets
At 30 June 2012 the Consolidated Entity has capital commitments that relate principally to the purchase of 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
(b) Operating lease commitments - Company as lessee
2012
299,457
2011
115,023
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
37.
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
261,931
521,954
783,885
250,243
779,310
1,029,553
18,013
17,774
35,787
306,236
854,356
391,850
1,552,442
13,764
19,499
33,263
282,043
936,111
861,519
2,079,673
(c) Operating lease commitments - Company as lessor
The Company has entered into a commercial sub-lease on the above mentioned office space.
(i)
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
Property leases as lessor:
- Within one year
- After one year but not more than five years
18,013
17,774
35,787
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
110
(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 24)
Non-current interest-bearing loans and borrowings (note 27)
Total included in interest-bearing loans and borrowings
2012
Minimum lease
payments
Present value
of lease
payments
1,741,449
3,248,508
4,989,957
(539,695)
4,450,262
1,507,488
2,942,774
4,450,262
-
4,450,262
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
2012
2011
1,507,488
2,942,774
4,450,262
941,788
217,041
1,158,829
The weighted average interest rate impact in the leases for the Company is 5.70% (2011: 14.23%).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
111
34. CONTINGENT ASSETS AND LIABILITIES
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: 1.9% of
Net sales + (profit x 0.4 x profit/net sales). This royalty is capped at 5.35% 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.
35. EVENTS AFTER THE BALANCE SHEET DATE
On 4 September the Consolidated Entity announced that it had signed a non-binding Memorandum of Understanding (“MOU”)
with Samsung C&T Corporation (“Samsung”) to establish a framework for collaboration and co-operation to develop the Wingellina
Nickel-Cobalt Project (“Project”) towards production. Under the MOU Samsung will offer its experience and expertise to assist in the
completion of a Detailed Feasibility Study (“DFS”). Upon successful completion of the DFS and approval of the Project, Samsung will
be awarded the Engineering, Procurement and Construction contract on normal commercial terms. Samsung has agreed to use its
financial reputation and capacity to assist the Company with financing and development proposals for the project. Objectives of the
collaboration are for the Company to retain a 30% interest in Wingellina free carried to production and Samsung will commit direct
equity to the Project.
36. AUDITOR’S REMUNERATION
Amounts received or due and receivable by Ernst & Young (Australia) for:
2012
2011
An audit or review of financial reports of the entity and any other entity within the Consolidated
Entity
177,102
192,627
Other services in relation to the entity and any other entity in the Consolidated Entity:
- tax compliance
Total auditor remuneration
57,350
234,452
79,450
272,077
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
112
37. INTEREST IN A JOINTLY CONTROLLED OPERATION
The Consolidated Entity has a 50% interest in the Renison Tin Project which is 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.
(a) Commitments relating to the jointly controlled assets
2012
2011
Share of capital commitments (refer to note 33(a))
299,457
115,023
Share of operating lease commitments (refer to note 33(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
(iii) Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
2,694
2,694
13,764
5,735
19,499
189,619
576,341
-
765,960
985
985
13,764
19,499
33,263
172,916
683,795
15,724
872,435
(b)
Impairment
No assets employed in the jointly controlled operation were impaired during the year (2011: nil).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
113
38. 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:
Mining, treatment and marketing of tin concentrate.
Nickel Projects:
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 2012 and 30 June
2011.
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 92% of external revenue (2011: 95%).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
114
Year ended 30 June 2012
Revenue
External customers
Other revenue
Total revenue
Results
Other income
Interest expense
Depreciation and amortisation
Exploration and evaluation expenditure
written off
Impairment losses
Share of loss of associate
Other non-cash expenses
Income tax (expense)/benefit
Tin Projects
Nickel Projects
Adjustments and
eliminations
Total
48,915,245
-
48,915,245
-
-
-
-
3,991,766
3,991,766
48,915,245
3,991,766
52,907,011
18,079
(275,167)
(10,837,073)
-
-
(108,926)
797,298
(550)
(41,316)
815,377
(275,717)
(10,987,315)
(137,651)
(147,524)
-
(285,175)
-
-
(110,557)
(10,825,114)
-
-
-
82,788
(32,555,323)
(2,344,646)
(402,750)
11,633,057
(32,555,323)
(2,344,646)
(513,307)
890,731
Segment profit/(loss)
(8,384,195)
(127,300)
5,785,110
(2,726,385)
Operating assets
69,859,039
62,469,005
67,453,149
199,781,193
Operating liabilities
(14,525,083)
(206,699)
(2,363,878)
(17,095,660)
Other disclosures
Investments in associates
Capital expenditure
-
(19,463,962)
-
(2,161,275)
19,839,153
(4,210,744)
19,839,153
(25,835,981)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
115
38. OPERATING SEGMENTS (CONTINUED)
Year ended 30 June 2011
Revenue
External customers
Other revenue
Total segment revenue
Results
Other income
Interest expense
Depreciation and amortisation
Exploration and evaluation expenditure
written off
Impairment losses
Share of loss of associate
Other non-cash expenses
Income tax benefit/(expense)
Tin Projects
Nickel Projects
Adjustments and
eliminations
Total
69,015,638
-
69,015,638
-
-
-
-
3,292,021
3,292,021
69,015,638
3,292,021
72,307,659
35,369
(301,532)
(12,494,665)
5,266,685
-
(111,200)
65,350,161
(42,670)
(205,122)
70,652,215
(344,202)
(12,810,987)
(397,525)
(211,670)
(580,524)
(1,189,719)
-
-
(63,950)
11,253,320
-
-
-
4,675,785
(17,358,674)
221,092
(103,385)
(15,520,579)
(17,358,674)
221,092
(167,335)
408,526
Segment profit/(loss)
11,570,669
(96,366)
3,881,978
15,356,281
Operating assets
61,794,262
60,412,009
103,589,324
225,795,595
Operating liabilities
(9,654,653)
(491,529)
(928,516)
(11,074,698)
Other disclosures
Investments in associates
Capital expenditure
-
(11,158,445)
-
(3,838,429)
22,801,822
37,498,934
22,801,822
22,502,060
(a) Segment revenue reconciliation to the statement of comprehensive income
Total segment revenue
Other revenue from continuing operations
Total revenue
2012
52,907,011
-
52,907,011
2011
72,307,659
-
72,307,659
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
South east asia
Total revenue
3,991,766
48,915,245
52,907,011
3,292,021
69,015,638
72,307,659
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
116
(b) Segment (loss)/profit reconciliation to the statement of comprehensive income
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 (loss)/profit:
2012
2011
Segment (loss)/profit
Income tax expense at 30% (2011: 30%)
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
Impairment loss on available-for-sale financial assets
Net gains on disposal of available-for-sale investments
Net gain on disposal of assets
Total consolidated (loss)/profit
(2,726,385)
(890,731)
(2,344,646)
(386,274)
(4,609,688)
(8,064,451)
-
(285,175)
(434,906)
(24,490,872)
-
(375,245)
(44,608,373)
15,356,281
(408,526)
221,092
(408,152)
(4,294,853)
(17,358,674)
14,788,837
(1,189,719)
(57,464)
-
55,717,781
(478,521)
61,888,082
(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:
2012
2011
Segment operating assets
Available-for-sale assets
Derivative assets
Total assets per the statement of financial position
199,781,193
29,689,236
448,989
229,919,418
225,795,595
49,004,755
228,269
275,028,619
(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:
2012
2011
Segment operating liabilities
Total liabilities per the statement of financial position
17,095,660
17,095,660
11,074,698
11,074,698
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
117
39. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
(i) Directors
P G Cook
W S Hallam
D P Will
A C Ferguson
M L Jefferies
X Penggen
S Zhang
Y Zhang
(ii) Executives
R D Cook
M P Poepjes
F J Van Maanen
Non-Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Alternate for X Penggen
Appointed
Resigned
23 July 2004
1 March 2005
12 July 2011
10 May 2012
29 December 2006
9 February 2012
9 November 2009
3 October 2007
-
-
-
-
10 May 2012
-
9 February 2012
-
Appointed
Resigned
General Manager - Renison
Chief Mining Engineer
Company Secretary
22 April 2010
8 August 2011
1 July 2005
-
-
-
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 benefits
Share-based payment
2012
2011
1,405,580
90,975
33,447
298,948
1,828,950
1,408,663
86,487
68,874
-
1,564,024
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
118
Granted as
remuneration
Net change
other ^
Options
exercised
Balance at
end of period
30 June 2012
Not vested
and not
exercisable
Vested and
exercisable
(c) Option holdings of Key Management Personnel (including nominees)
Balance at
beginning of
period 1 July
2011
-
1,500,000
-
-
-
-
-
-
-
30 June 2012
Directors
P G Cook
W S Hallam
D P Will
A C Ferguson
M L Jefferies *
S Zhang *
X Penggen
Y Zhang (Alternate
Director)
Executives
R D Cook
M P Poepjes
F J Van Maanen
-
1,250,000
1,250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
700,000
600,000
500,000
-
(200,000)
Total
2,200,000
3,600,000
(200,000)
All options are exercisable once vested.
^ Options lapsed during the period and forfeited.
-
-
-
-
-
-
-
-
-
-
-
-
-
2,750,000
1,250,000
-
-
-
-
-
-
600,000
1,000,000
5,600,000
-
-
-
-
-
-
-
-
-
-
-
-
-
2,750,000
1,250,000
-
-
-
-
-
-
600,000
1,000,000
5,600,000
* ML Jefferies and S Zhang resigned on 10 May 2012 and 9 February 2012 respectively and are no longer Directors.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
119
39. KEY MANAGEMENT PERSONNEL (CONTINUED)
(c) Option holdings of Key Management Personnel (including nominees)
30 June 2011
Directors
P G Cook
W S Hallam
S J Huffadine *
M L Jefferies
S Zhang
Balance at
beginning of
period 1 July
2010
2,000,000
2,500,000
2,000,000
-
-
Y Zhang (Alternate
Director)
-
Executives
P M Cmrlec *
R D Cook
F J Van Maanen
1,250,000
400,000
700,000
Granted as
remuneration
Net change
other ^
Options
exercised
Balance at
end of period
30 June 2011
Not vested
and not
exercisable
Vested and
exercisable
-
-
-
-
-
-
-
-
-
(2,000,000)
(1,000,000)
(2,000,000)
-
-
-
(1,250,000)
(400,000)
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
-
-
-
-
-
-
700,000
2,200,000
-
-
-
-
-
-
-
-
-
-
-
1,500,000
-
-
-
-
-
-
700,000
2,200,000
Total
8,850,000
-
(6,650,000)
All options are exercisable once vested.
^ Options lapsed during the period and forfeited.
*
SJ Huffadine and PM Cmrlec both resigned on 1 June 2011 and are no longer a Director and Executive respectively.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
120
(c) Shareholdings of Key Management Personnel
Ordinary shares held in Metals X Limited (number)
30 June 2012
Balance held at 1
July 2011
Granted as
remuneration
On exercise of
options
Net change other
Balance held at
30 June 2012
Directors
P G Cook
W S Hallam
D P Will
A C Ferguson *
M L Jefferies **
S Zhang ***
X Penggen ***
Y Zhang (Alternate Director)
Executives
R D Cook
M P Poepjes
F J Van Maanen
Total
68,440,200
6,350,000
-
-
2,700,000
176,000,000
-
-
-
-
2,070,000
255,560,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
397,630,281
(2,700,000)
(176,000,000)
176,000,000
-
68,440,200
6,350,000
-
397,630,281
-
-
176,000,000
-
-
-
-
394,930,281
-
-
2,070,000
650,490,481
* On 10 May 2012 AC Ferguson was appointed as a Director representing Apac Resources Limited who hold 397,630,281 shares in
the Company.
** ML Jefferies resigned on 10 May 2012 and is no longer a Director.
*** On 9 February 2012 S Zhang resigned and X Penggen was appointed as a Director representing Jinchuan Group Limited who hold
176,000,000 shares in the Company.
30 June 2011
Balance held at 1
July 2010
Granted as
remuneration
On exercise of
options
Net change other
Balance held at
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
68,440,200
6,350,000
-
2,700,000
176,000,000
-
-
-
2,070,000
255,560,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68,440,200
6,350,000
-
2,700,000
176,000,000
-
-
-
2,070,000
255,560,200
*
SJ Huffadine and PM Cmrlec both resigned on 1 June 2011 and are no longer a Director and Executive respectively.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
121
39. KEY MANAGEMENT PERSONNEL (CONTINUED)
(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
PG Cook and WS Hallam are Directors of Westgold and its controlled entities. In the current period $45,780 (2011: $72,877) has
been charged to Westgold for Directors fees.
PG Cook and WS Hallam are of Aziana. FJ Van Maanen is the Company Secretary of Aziana. The Consolidated Entity provides
accounting, secretarial and administrative services at cost to Aziana. In the current period $96,818 (2011: Nil) has been charged to
Aziana for these Company Secretarial and Directors fees.
40. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements include the financial statements of Metals X Limited and the subsidiaries listed in the
following table:
Name
Country of
incorporation
Agaton Phosphate Pty Ltd *
Bluestone Australia Pty Ltd
Metals Exploration Pty Ltd
Mad Metals Pty Ltd
Chinggis Metals Pty Ltd
Australia
Australia
Australia
Australia
Australia
Subsidiary Companies of Metals Exploration Pty Ltd
Austral Nickel Pty Ltd
Hinckley Range Pty Ltd
Metex Nickel Pty Ltd
Australia
Australia
Australia
Subsidiary companies of Bluestone Australia Pty Ltd
Bluestone Mines Tasmania Pty Ltd
Bluestone Nominees Pty Ltd
Australia
Australia
Ownership Interest
Investment ($)
2012
2011
2012
2011
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
1
1
100%
100%
100%
100%
100%
-
19,950,000
71,714,235
2
2
91,664,239
750,000
19,950,000
71,714,235
2
2
92,414,239
9,058,896
1,069,750
1
9,058,896
1,069,750
1
1
1
1
1
Subsidiary companies of Bluestone Mines Tasmania Pty Ltd
Bluestone Mines Tasmania Joint
Venture Pty Ltd
Australia
50%
50%
50
50
* Agaton Phosphate Pty Ltd was deregistered on 27 March 2012.
(b) Ultimate parent
Metals X Limited is the ultimate parent entity. There are no Class Orders in place at 30 June 2012.
(c) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in note 39.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
122
(d)
Transactions with related parties
2012
2011
(i)
Jointly controlled assets
Amounts charged by Bluestone Australia Pty Ltd to the unincorporated Bluestone Mines
Tasmania Joint Venture for services provided *
354,836
309,734
(ii)
Associates
Amounts charged by Bluestone Australia Pty Ltd to Aziana Ltd for services provided **
281,016
-
Amounts charged by Bluestone Australia Pty Ltd to Westgold Resources Ltd for services
provided ***
407,188
243,464
Amounts charged by Bluestone Australia Pty Ltd to Aragon Resources Ltd for services
provided ****
-
229,370
*
Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% joint venture interest in the unincorporated Bluestone Mines Tasmania
Joint Venture.
**
The Company has a 25.00% interest in Aziana Limited (2011: 25.00%).
*** The Company has a 26.98% interest in Westgold Resources Limited (2011: 25.02%).
**** The Company had an 8.70% interest in Aragon Resources Limited prior to the sale of the shares to Westgold Resources Limited
on 14 April 2011.
41. INFORMATION RELATING TO METALS X LIMITED (“THE PARENT ENTITY”)
Current assets
Total assets
Current Liabilities
Total Liabilities
Issued capital
Accumulated losses
Option premium reserve
Other reserves
Total Equity
(Loss)/profit of the parent entity
Total comprehensive (loss)/profit of the parent entity
2012
2011
46,678,789
258,780,642
1,573,524
1,573,524
79,923,951
289,470,356
284,762
284,762
288,366,186
(37,280,516)
18,728,928
(12,607,479)
257,207,119
299,336,226
(16,435,491)
18,326,178
(12,041,318)
289,185,595
(20,845,025)
(21,411,186)
96,186,116
87,301,700
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
Contingent liabilities of the parent entity.
Contractual commitments by the parent entity for the acquisition of property, plant or
equipment.
Nil
Nil
Nil
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
123
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.
ii.
giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 30 June
2012 and of their performance for the year ended on that date; and
complying with the Australian Accounting Standards (including the Australian Accounting Interpretations)
and Corporations Regulations 2001; and
the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 2(b) and;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
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 2012.
b.
c.
d.
On behalf of the Board.
WS Hallam
Managing Director
Perth, 20 September 2012
124
DIRECTORS’ DECLARATION
INDEPENDENT AUDIT REPORT
Independent audit report to 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 2012, 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, 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:DR:METALSX:021
Liability limited by a scheme approved
under Professional Standards Legislation
INDEPENDENT AUDIT REPORT
125
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 2012
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.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2012. 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 2012, complies
with section 300A of the Corporations Act 2001.
Ernst & Young
D S Lewsen
Partner
Perth
20 September 2012
DL:DR:METALSX:021
126
INDEPENDENT AUDIT REPORT
SECURITY HOLDER INFORMATION AS AT 11
SEPTEMBER 2012
(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
Fitel Nominees Limited
All-States Finance Pty Ltd
Ajava Holdings Pty Ltd
Bell Potter Nominees Limited
Richard Farleigh
Peter Gerard Cook
JP Morgan Nominees Australia Limited
Sun Hung Kai Investment Services Limited
HSBC Custody Nominees Australia Limited
Western Bridge Pty Ltd
Joan Christine Cook
Oaksouth Pty Ltd
Milstern Enterprises Pty Ltd
RBC Investor Services Australia Nominees Pty Ltd
Liberty Management Pty Ltd
Total
(b) Distribution of quoted ordinary 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
%
19.68
13.37
10.56
7.62
6.06
4.43
4.03
3.05
2.64
1.82
1.64
1.51
1.01
0.75
0.66
0.54
0.53
0.42
0.39
0.37
81.08
Number of shares
259,130,281
176,000,000
139,000,000
100,264,299
79,742,210
58,325,779
53,000,000
40,110,000
34,705,348
23,979,065
21,550,000
19,880,799
13,265,866
9,852,916
8,655,212
7,056,200
7,000,000
5,500,000
5,175,713
4,900,000
1,067,093,688
Number of share
holders
Number of shares
104
892
778
2,006
417
4,197
621
28,803
2,835,762
6,440,384
71,804,450
1,235,553,858
1,316,663,257
1,208,965
SECURITY HOLDER INFORMATION
AS AT 11 SEPTEMBER 2012
127
%
30.16
13.26
5.84
5.24
Number of shares
397,130,281
176,000,000
79,742,210
68,940,200
(d) Substantial Shareholders
Apac Resources Limited
Jinchuan Group Limited
Guinness Peat Group plc and its subsidiaries
Peter Gerard Cook
(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
2,500,000
2,800,000
1,000,000
4,800,000
14 cents
13 cents
32 cents
30 cents
Expiry Date
30/11/2012
30/11/2013
30/11/2013
30/11/2014
Number holders
2
9
1
12
SECURITY HOLDER INFORMATION
AS AT 11 SEPTEMBER 2012
128
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 69/0012
E 69/0535
E 69/2458
E 69/3017
AUSTRAL NICKEL PTY LTD
CLAUDE HILLS – 100%
EL 4751
SUMMARY OF MINING TENEMENTS
129