MINERAL COMMODITIES LIMITED
ABN 39 008 478 653
2008
ANNUAL REPORT
Printed by City Printing & Design (08) 9470 2325
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For personal use only MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Corporate Directory
Directors
Joseph Anthony Caruso - Non-Executive Chairman
Mark Victor Caruso - Managing Director
Gregory Hugh Steemson Non-Executive Director
Company Secretary
Peter Torre
Registered Office
Solicitors
Auditors
Share Registry
Unit 15, Level 1
51-53 Kewdale Road
Welshpool Western Australia 6106
Telephone: (61 8) 9353 4890
Facsimile: (61 8) 9353 4894
Email: info@mncom.com.au
Website: www.mncom.com.au
Steinepreis Paganin
Level 4, Next Building
16 Milligan Street
Perth WA 6000
BDO Kendalls Audit and Assurance (WA) Pty Ltd
128 Hay Street
Subiaco, Western Australia 6008
Advanced Share Registry Ltd
150 Stirling Highway
Nedlands, Western Australia 6009
Telephone: (61 8) 9389 8033
Facsimile: (61 8) 9389 7871
Bankers
Australia & New Zealand Banking Group Ltd
77 St Georges Terrace
Perth WA 6000
Stock Exchange Listing
The Company is Listed on the Australian Stock
Exchange Limited under ASX Code - MRC
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Shareholder Information (Continued)
Distribution of Shareholders and Option holders
Contents
Range of Holdings
1 1,000
1,001 5,000
5,001 10,000
10,001 100,000
100,001 and over
Total holders
Marketable Parcels
Number of
Shareholders
Number of Shares
126
421
203
434
145
42,841
1,465,244
1,694,681
16,453,123
121,737,132
1,329
141,393,021
Number of shareholders holding less than a marketable parcel of ordinary shares is 759.
Voting Rights
Every ordinary shareholder present in person or by proxy at meetings of shareholders shall have one vote for
every share held.
Option holders have the right to attend meetings but have no voting rights until the options are exercised.
Substantial shareholders
The following shareholders are considered substantial shareholders:
-
-
Mirabaud Investment Limited holding 9.30% of the issued ordinary shares at the date of their last substantial
interest notice to the Company.
Zurich Bay Holdings Pty Ltd holding 13.05% of the issued ordinary shares.
Restricted securities
There are no restricted securities.
Share buy backs
There is no current on market share buy back.
CORPORATE DIRECTORY
Inside Front Cover
CHAIRMANS LETTER
DIRECTORS REPORT
INCOME STATEMENTS
BALANCE SHEETS
CASH FLOW STATEMENTS
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS DECLARATION
AUDITORS INDEPENDENCE DECLARATION
INDEPENDENT AUDITORS REPORT
STATEMENT OF CORPORATE GOVERNANCE
SHAREHOLDER INFORMATION
2
3
12
13
14
15
17
52
53
54
56
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Chairmans Letter
Dear Shareholders
Shareholder Information
Additional information required by the Australian Stock Exchange Ltd Listing Rules and not disclosed elsewhere in this report. This
information is current as at 13 April 2009.
The year 2008 proved to be a year of varied outcomes for your Company. As indicated in my letter to you
last year, the Companys persistence resulted in the Mining Right being granted for the Tormin Mineral
Sands Project. The execution of the Mining Right eventually took place in November 2008.
Twenty Largest Shareholders
The Company has since commenced procedures to appoint an engineering group to update the existing
feasibility study. Based on a positive outcome to this phase of work, the Company will let a tender for a turn
key project to produce zircon and rutile concentrate. On the current schedule, the plant should be
operational by the end of calendar 2010.
The approval of the Mining Right for the Xolobeni Project has proved to be a more arduous process. Despite
being advised that the Mining Right was forthcoming, the Company was informed that an appeal was lodged
against the decision which will result in further delays in this process. The Company will continue to pursue
this project as its merits are substantial.
During the year, the Company actively sought to divest its interests in its Sierra Leone Diamond Operations
and was successful in securing a bidder for the project. This, however, was frustrated via the intervention of
parties in Sierra Leone which created legal impediments to the sale. The Company has continued in an
attempt to remove these impediments so that these assets can be dealt with accordingly. The Board will
continue to ensure that the Company exits this project in the most efficient and economic manner.
The Company maintained its large holding in Allied Gold Limited despite having to sell a few parcels of
shares in order to fund ongoing operations. Allied Gold Limited has evolved into a significant gold producer
and is extremely well placed to capitalise on the current strong gold markets.
The Company is also positioning itself to divest other smaller investments, in particular its investment in
Petro Ventures Limited which should result in a positive return to the Company, providing further working
capital to develop the Tormin Mineral Sands Project.
I would once again like to thank the employees of the Mineral Commodities Group for their tolerance and
perseverance throughout the past year and in particular for their continued commitment and efforts. I would
also like to thank you our shareholders for maintaining your confidence in the Group in these difficult global
economic times and hope that your support will continue.
Joseph A. Caruso
Chairman
Name
Number of Ordinary
Shares
Percentage of
Issued Shares
HSBC Custody Nom Aust Ltd
24,747,009
Zurich Bay Holdings Pty Ltd (Minesite Construction A/C)
18,450,988
ANZ Nominees Ltd
Keng Heng Goh
Kathryn Yule
Specialist Hearing Services Pty Ltd
Kevin Anthony Leo and Leticia Leo
Mr Isaac Cohen and Mrs Estelle Mary Cohen and Mr David
Peter Cohen
6,301,552
5,175,000
4,800,000
4,500,000
3,400,000
2,500,000
17.50%
13.05%
4.46%
3.66%
3.39%
3.18%
2.40%
1.77%
Mr David Geoffrey Vincent and Mrs Guiseppina Antonina
Vincent
2,050,000
1.45%
National Nominees Limited
Mr Gregory Hugh Steemson and Mrs Barbara Fay Steemson
(GH Steemson Family Super Account)
2,008,482
1,510,000
1.42%
1.07%
Mr Anthony Grant Melville and Mrs Elaine Sandra Melville
(Melville Super Account)
1,500,000
1.06%
International Mining Services Ltd
Robert Cameron Galbraith
Ms Kathryn Yule
Mr Emanuel Richard Brian Dillon (The Complete A/C)
Mr David Phillip Whitehead and Mrs Linda Susan Whitehead
(Dalin Super Fund A/C)
Mr David Geoffrey Vincent (The Canella family A/C)
Mr Ian Thomson
Kingarth Pty Ltd
1,500,000
1,459,221
1,282,500
1,235,652
1,100,000
1,036,000
1,000,000
1,000,000
1.06%
1.03%
0.91%
0.87%
0.78%
0.73%
0.71%
0.71%
86,556,404
61.22%
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Statement of Corporate Governance (Continued)
Directors Report
Timely and balanced disclosure
MRC is committed to promoting investor confidence and ensuring that shareholders and the market have equal
access to information and are provided with timely and balanced disclosure of all material matters concerning the
Company. Additionally, MRC recognises its continuous disclosure obligations under the ASX Listing Rules and the
Corporations Act.
The Board informs shareholders of all major developments affecting the Company by:
The Directors present their report together with the Financial Report of Mineral Commodities
Limited (the Company) and its controlled entities (the Group) for the year ended 31
December 2008.
DIRECTORS
The Directors of the Company in office during or since the end of the financial year are:
Preparing half yearly and annual financial reports and making these available to all shareholders.
Preparing quarterly activity and cash flow reports.
Advising the market of matters requiring disclosure under Australian Stock Exchange Continuous Disclosure
Rules.
Mr Joseph A Caruso Non Executive Chairman
Mr Mark V Caruso Managing Director
Gregory Hugh Steemson - Non Executive Director
Maintaining a record of significant ASX announcements on the Companys website.
Directors have been in office since the start of the financial year to the date of this report.
Submitting proposed major changes in the Companys affairs to a vote of shareholders, as required by the
Corporation Law.
Reporting to shareholders at annual general meetings on the Companys activities during the year. All
shareholders that are unable to attend these meetings are encouraged to communicate issues or ask
questions by writing to the Company.
The Company does not have a formal disclosure policy however, the Board and management are aware of their
responsibilities in respect of identifying material information and coordinating disclosure of that information where
required by the ASX Listing Rules.
Ethical and responsible decisionmaking
DIRECTORS INFORMATION
Joseph Anthony Caruso (63 Years of Age)
Non-Executive Chairman
Mr Caruso is a Director of Zurich Bay Holdings Pty Ltd and Construction Manager of Simto Australia Pty Ltd, both
of which are involved in mining, earthmoving and civil engineering construction earthworks. Mr Caruso has
considerable experience in managing and administration of engineering, mining, raw materials production
operations, earthmoving and related infrastructure utilities services resource contracts. Mr Caruso has been a
director of Mineral Commodities Limited since September 2000.
Code of Conduct
The Board has created a framework for managing the Company including internal controls, business risk
management processes and appropriate ethical standards.
Mark Victor Caruso (47 Years of Age)
Managing Director
The Board has adopted practices for maintaining confidence in the Company's integrity including promoting
integrity, trust, fairness and honesty in the way employees and Directors conduct themselves and MRCs business,
avoiding conflicts of interest and not misusing company resources. A formal Code of Conduct has not been adopted
for all employees and Directors of MRC due to the total number of employees and directors only being 6.
Securities Trading Policy
The Company has adopted a policy that imposes certain restrictions on directors and employees trading in the
securities of the Company. Key aspects of the policy are:
All directors and employees are to formally notify the Company Secretary of their beneficial shareholdings
in the Company and any changes to this within 2 days of such change occurring. The Company Secretary
maintains a register of interests in the Company held by directors.
No director or employee or any entities controlled by them is allowed to trade in the securities of the
Company without notifying the Chairman.
No director or employee or any entity controlled by them is allowed to engage in the business of active
dealing in the Companys securities.
A director or employee or any entities controlled by them must not trade at any time when he or she is in
possession of information which if generally available would materially affect the price or value of the
Companys securities.
Other Information
The ASX guidelines also prescribe that the Company should maintain a dedicated corporate governance
information section on its website. Such a dedicated information section is not presently available on the
Companys website, although the annual financial report will be posted to the website and the Statement of
Corporate Governance can be viewed there.
Mr Caruso is a Director of Zurich Bay Holdings Pty Ltd and Simto Australia Pty Ltd, both of which are involved in
mining, earthmoving and civil engineering construction earthworks. Mr Caruso has been a director of Mineral
Commodities Limited since September 2000. He is also a Director of Allied Gold Limited. Former directorships of
public listed companies in the last 3 years are CI Resources Limited from October 2003 to May 2007.
Gregory Hugh Steemson (56 Years of Age)
Non Executive Director
Mr Steemson is a qualified Geologist and Geophysicist with an extensive background in exploration, development
and management of mining projects. Mr Steemson has been a Director of the Company since April 2001. Mr
Steemson is also a Director of Allied Gold Limited. Former directorships of public listed companies in the last 3
years include Sandfire Resources Limited from June 2003 to August 2007.
Due to the size of the Company, all directors consider matters which would normally be dealt with by Audit and
Remuneration Committees.
COMPANY SECRETARY
Peter Torre CA, ACIS, MAICD
Mr Torre was appointed Company Secretary of Mineral Commodities Limited in July 2006. He is a Chartered
Accountant and a Chartered Secretary. He was previously a partner of an internationally affiliated firm of
Chartered Accountants. Mr Torre is the Company Secretary of several ASX listed companies and is a Director of
ORT Limited and Carbine Resources Ltd.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was exploration for mineral sands and other mineral resources.
This has mainly involved exploration and evaluation of the Xolobeni Mineral Sands Project in the Eastern Cape
Province of South Africa and the Tormin Mineral Sands Project in the Western Cape Province of South Africa.
There were no significant changes in the nature of activities of the Group during the year.
ANNUAL REPORT 2008
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ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
CONSOLIDATED RESULTS
Statement of Corporate Governance (Continued)
Any equity based compensation of directors is required to be approved in advance by shareholders.
The loss of the group after income tax and outside equity interests was $1,515,661 (2007: Loss of $7,010,080)
Presently, the roles of Chairman and Managing Director have been separated.
DIVIDENDS
No dividends have been paid, declared or recommended for payment, in respect of the current financial year.
REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS
Highlights of the Companys operations for the period under review are as follows:
South African Projects
Xolobeni Mineral Sands Project
In March 2007, Mineral Commodities Limiteds (MRCs) majority owned South African subsidiary Transworld Energy
and Minerals Resources SA Pty Ltd (TEM) lodged the Mining Right Application for the Xolobeni Heavy Mineral Sands
Project with the Department of Minerals and Energy (DME) in Port Elizabeth.
TEM has since completed the Environmental Impact Assessment (EIA), which was submitted to the DME on
22 October 2007. After a series of government department and public meetings aimed at reviewing the scope and
outcomes of the EIA and accompanying Environmental Management Programme (EMP), an updated report was
resubmitted on 20 December 2007. This report addressed the various matters arising from the consultation
process.
During the year, TEM attended meetings at the DMEs head offices in Pretoria and regional office in Port Elizabeth
to clarify various aspects of the application. Briefing sessions with XolCo (MRCs Black Economic Empowerment
BEE) partner and the Tribal Authority also continued during the period to update the community on the Mining
Right Application process and position.
On 4 August 2008, the Company announced that it has received notification from the DME that they will proceed
to grant to TEM, the Mining Right for the Kwanyana block within the Xolobeni Mineral Sands tenement area. The
remaining areas will be held under a Prospecting Right valid to 2010 which can be extended until applications are
made to convert the remaining areas to Mining Rights on a block by block requirement.
Initial indications were that the Xolobeni Mining Right was to be signed on 31 October 2008. The Minister of
Minerals and Energy (the Minister) and a high level delegation visited the Xolobeni Project in August 2008 and in
an open meeting with the AmaDiba community members advised that the Xolobeni Mining Right would be granted.
However in September 2008, the Company was advised that on behalf of the AmaDiba Crisis Committee (the ACC)
and its members, the Grahamstown office of the Legal Resources Centre had filed a Notice of Appeal (the Appeal)
with the Minister. The ACC requested the Minister to suspend and then appeal the decision to grant the mining
right.
The issue date of the Mining Right has been deferred pending the outcome of the Appeal.
Tormin Mineral Sands Project
The Tormin deposit is covered by two tenements, one held by the Company and the other held in the name of
Steenvas Pty Ltd but under option to the Company.
On 15 February 2008 the Company received notification from the DME that the Mining Right had been granted to
its South African subsidiary Mineral Sands Resources (Pty) Ltd and as announced on 28 November 2008, the
Mining Right and the Steenvas Mining Right Conversion were executed by the respective companies and the DME.
The execution of the mining right was underpinned by the entering into of a new Black Empowerment arrangement
with Xolco, the Companys BEE partner on the Xolobeni Mineral Sands Project.
The Company has commenced proceedings to appoint an engineering contractor to complete the final plant design
and engineering.
The Company also announced subsequent to year end that the DME has granted to its South African subsidiary
Mineral Sands Resources (Pty) Ltd, a Reconnaissance Permit (Permit) over the marine area adjacent to its Tormin
Mineral Sands Project. The area is approximately 12 km long and 1 km wide from the low water mark out to sea
enclosing an area of 1280ha. The Permit allows for a prospecting of zircon, ilmenite, garnet, leucoxene and rutile.
The Managing Director is responsible for supervising the management of the business as designated by the Board.
This ensures the appropriate independent functioning of the Board and management.
MRCs nonexecutive Directors may not hold office for a continuous period in excess of three years or past the
third annual general meeting following their appointment, whichever is longer, without submitting for reelection.
Directors are elected or reelected, as the case may be, by shareholders in a general meeting. Directors may offer
themselves for reelection. A Director appointed by the Directors (e.g., to fill a casual vacancy) will hold office
only until the conclusion of the next annual general meeting of MRC but is eligible for reelection at that meeting.
Under MRCs Constitution, voting requires a simple majority of the Board. The Chairman holds a casting vote.
The Company has procedures enabling any director or committee of the board to seek external professional advice
as considered necessary, at the Companys expense subject to prior consultation with the Chairman. A copy of
any advice sought by a director would be made available to all directors.
Board and management effectiveness
Responsibility for the overall direction and management of MRC, its corporate governance and the internal
workings of MRC rests with the Board notwithstanding the delegation of certain functions to the Managing Director
and management generally (such delegation effected at all times in accordance with MRCs Constitution and its
corporate governance policies).
An evaluation procedure in relation to the Board, individual Directors and Company Executives has not taken
place. Given the small scale of the Companys current activities, the performance of the executives and directors is
easily monitored and discussed in Board meetings. Once the nature and scale of activities increases, the Company
will initiate formal evaluation procedures.
Financial reporting
The Managing Director and the Company Secretary are required to state in writing that the Companys financial
reports present a true and fair view, in all material respects, of the Companys financial condition and operational
results in accordance with the relevant accounting standards and are founded on a system of risk management
and internal compliance and control and the Companys risk management and internal compliance and control
system is operating efficiently and effectively in all material respects.
Committees of the Board of Directors
The Board has not established any permanent committees, namely an Audit and Risk Committee and a
Remuneration and Nomination Committee. The Board and scale of actives is not of a sufficient size to warrant
separate committees in this regard.
In the absence of an audit committee, the entire Board undertakes the function of an audit committee. The duties
of this committee include:
to be focal point of communication between the Board, management and the external auditor;
to recommend and supervise the engagement of the external auditor and monitor auditor performance;
review the effectiveness of management information and other systems of internal control;
review all areas of significant financial risk and arrangements in place to contain those to acceptable levels;
review significant transactions that are not a normal part of the Companys business;
review the year end and interim financial information and ASX reporting statements;
to monitor the internal controls and accounting compliance with the Corporations Act, ASX Listing Rules,
external audit reports and ensure prompt remedial action where required; and
review the Companys financial statements and accounting procedures.
The Companys auditor is invited to attend the annual general meeting and the Company supports the principle of
the auditor being available to answer questions on the conduct of the audit and the content of the audit report.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Statement of Corporate Governance
The Board of Directors of Mineral Commodities Limited (MRC) is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders
by whom they are elected and to whom they are accountable.
In accordance with the Australian Stock Exchange (ASX) Corporate Governance Councils (CGC) Principles of
Good Corporate Governance and Best Practice Recommendations the Corporate Governance Statement must
contain certain specific information and must disclose the extent to which the Company has followed the guidelines
during the period. Where a recommendation has not been followed, that fact must be disclosed together with the
reasons for the departure.
The Companys corporate governance practices were in place throughout the year and are compliant, unless
otherwise stated, with the Corporate Governance Councils principles and recommendations, which are noted
below.
Principle 1.
Lay solid foundations for management and oversight
Principle 2.
Structure the Board to add value
Principle 3.
Promote ethical and responsible decision making
Principle 4.
Safeguard integrity in financial reporting
Principle 5.
Make timely and balanced disclosure
Principle 6.
Respect the rights of shareholders
Principle 7.
Recognise and manage risk
Principle 8.
Remunerate fairly and responsibly
A summary of the corporate governance policies and practices adopted by MRC is set out below.
Role of the Board of Directors
The Board of MRC is responsible for setting the Companys strategic direction and providing effective governance
over MRCs affairs in conjunction with the overall supervision of the Companys business with the view of
maximising shareholder value. The Board's key responsibilities are to:
(a) chart the direction, strategies and financial objectives for MRC and monitor the implementation of those
policies, strategies and financial objectives;
(b) monitor compliance with regulatory requirements, ethical standards and external commitments;
(c) appoint, evaluate the performance of, determine the remuneration of, plan for the succession of and, where
appropriate, remove the Chief Executive Officer if in place or similar person acting in the executive capacity;
and
(d) ensure that the Board continues to have the mix of skills and experience necessary to conduct MRCs
activities, and that appropriate directors are selected and appointed as required.
In accordance with MRCs Constitution, the Board delegates responsibility for the daytoday management of MRC
to the Managing Director (subject to any limits of such delegated authority as determined by the Board from time
to time). Management as a whole is charged with reporting to the Board on the performance of the Company.
Board structure and composition
The Board currently is comprised of 3 directors, none of which are independent nonexecutive Directors. Details
of each directors skill, expertise and background are contained within the directors report included with the
companys annual financial statements.
Independence, in this context, is defined to mean a nonexecutive Director who is free from any interest and any
business or other relationship that could, or could reasonably be perceived to, materially interfere with the
Director's ability to act in the best interests of MRC. The definition of independence in ASX Recommendation 2.1 is
taken into account for this purpose.
It is the Boards intention to increase the size of the Board as the scale of activities develops, and such expansion
will see an introduction of independent non-executive directors. In the absence of such scale, the Board does not
believe that the existence of further independent non-executive directors would be of benefit to the Company.
Details of directors shareholdings are disclosed in the directors report and financial report. There are no
retirement schemes other that the payment of statutory superannuation contributions.
Directors Report (Continued)
Sierra Leone Operations
The Companys wholly owned Sierra Leone subsidiary, Kariba Kono (SL) Ltd, owns the No. 11 Oversize Tailings
Dump at Koidu. The operations were placed under care and maintenance pending an engineering and design
review following the failure of the 80tph diamond pan plant supplied by ProMet Engineers Africa (Pty) Ltd.
The MRC Board has resolved to divest either Kariba Kono (SL) Ltd or its assets. On 4 June 2008 the Company
announced that it had entered into a Heads of Agreement with ROK Diamonds Ltd to sell the No 11 diamondiferous
gravel dump at Koidu, Sierra Leone.
Consideration for the sale was to be US$2M apportioned as follows:
(1)
(2)
US$1.5M payable at settlement; and
The balance of US$0.5M may be converted to ordinary seed shares in ROK Diamonds Limited at MRCs
election within 12 months or the float of ROK Diamonds Limited whichever occurs first.
The sale was not to include the Diamond Pan Plant.
On 25 August 2008, the Company announced that due to certain legal impediments currently in place in Sierra
Leone which prevented the divestment of these assets, the current Agreement with ROK was terminated.
Legal Proceedings
On 12 October 2007 the Company commenced legal proceedings in the Federal Court of Australia against ProMet
Engineers Africa (Pty) Ltd (ProMet), ProMet Engineers Pty Ltd, James Dinsdale Cribbes, Robert John Bennett and
Richard George Ford for breach of contract, misleading and deceptive conduct and breaches of the Trade Practices
Act in relation to the diamond pan plant in Sierra Leone.
On 10 December 2008, the Company attended a mediation conference in the Federal Court of Western Australia
with ProMet Engineers and its insurer ACE Insurance Australia. On 27 January 2009, the Company announced that
the parties agreed to settle for an amount of AUD$2 million to be paid to MRC without admission of liability.
All plant and machinery delivered under the construction contract remains in the possession and ownership of
MRC.
Petro Ventures International Limited
During the year the Company continued as a seed capital investor in Petro Ventures International Limited (Petro
Ventures) and holds a 9.13% stake. Petro Ventures has presently secured three project areas in the UK, offshore
Romania and onshore Hungary. Petro Ventures working interest in the projects is 5%, 20% and 10% respectively.
Updates in respect to the exploration activities of Petro Ventures can be reviewed in the Companys quarterly
reports lodged with the Australian Stock Exchange.
Investment in Allied Gold Limited
Allied Gold Limited (ALD) is a listed gold production and exploration company with the Tabar Islands Gold Project
in Papua New Guinea as its principal asset. This comprises the Simberi Oxide Gold Project and exploration property
on the Tabar Islands Group. ALD successfully commissioned its processing plant operation and poured its first gold
in February 2008 and has continued to announce successful exploration results along with a recent Resource
upgrade.
MRC remains as one of the largest shareholders in ALD and currently holds 15.5 million shares in ALD.
The market value of MRCs shareholding at 31 December 2008 was $6.51 million.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
FINANCIAL POSITION
The net assets of the group has increased by $2,289,907 from 31 December 2007 to $21,339,716 at 31 December
2008. This is mainly as a result of the reclassification of the investment in Allied Gold Ltd from equity accounted
to fair value.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The company will continue the process of development of both the Tormin and Xolobeni projects in South Africa.
The Company will seek to divest its interest in the Sierra Leone Diamond Project at a value acceptable to the
Board. The Board will continue to review other projects and opportunities in the interest of increasing shareholder
value.
ENVIRONMENTAL REGULATIONS
In the course of its normal mining and exploration activities, the Company adheres to environmental regulations
imposed upon it by the relevant regulatory authorities, particularly those regulations relating to ground
disturbance and the protection of rare and endangered flora and fauna. The Company has complied with all
material environmental requirements up to the date of this report.
SCHEDULE OF MINING TENEMENTS
Mining tenements currently held by the economic entity are:
Area
Entity holding the
interest
% Held
Title
Status
Xolobeni South Africa
Transworld Energy &
Minerals Resources
100
New order Prospecting
Right
Granted
the financial report as at 31 December 2006 due to the fact that the financial information was not
considered reliable by the Board of Directors and ourselves.
As Erebus Plc and Kariba Kono Ltd are controlled by Mineral Commodities Ltd at 31 December
2006, all assets and liabilities of these subsidiaries should have been recorded within the
consolidated balance sheet of Mineral Commodities Ltd. These assets and liabilities should have
been recorded at their fair value at the date of acquisition, with any excess of consideration over the
net assets acquired being recorded as goodwill. In addition the results of these subsidiaries from
the date of acquisition (23 June 2006) should have been included in the consolidated income
statement and the cash flows since acquisition to 31 December 2006.
As at 1 January 2007 the company consolidated Erebus Plc and Kariba Kono Ltd. As Erebus Plc
and Kariba Kono Ltd incurred losses from the date of acquisition being 23 June 2006 until 31
December 2006 which were not recorded in the consolidated entity, this has had the effect of
overstating the acquired assets and understating accumulated losses as at the date of
consolidation (1 January 2007). The Company and ourselves were unable to quantify this amount.
Auditor’s Opinion
(a)
In our opinion, except for the effects of such adjustments, if any, as might have been
determined to be necessary had we been able to quantify the amounts as explained above,
the financial report of Mineral Commodities Limited is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at
31 December 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
Tormin South Africa
Mineral Sands Resources
100
Mining Right
Granted
(b) The financial report also complies with International Financial Reporting Standards as
Koidu Sierra Leone
Kariba Kono (SL) Ltd
100
Mining Lease 3/04
Granted
SIGNIFICANT CHANGES IN STATE OF AFFAIRS AND LIKELY DEVELOPMENTS
The following significant changes in the state of affairs of the Consolidated Entity occurred during the year:
In December 2008, 18,400,000 shares were issued under a placement at $0.02 per share to raise $368,000.
OPTIONS
The total number of unissued ordinary shares under option at the date of this report is 2,250,000, all of which are
not listed. Options do not entitle the holder to receive a dividend paid to ordinary shareholders. New issues of
options and options exercised in the period is as follows:
Date of Grant
No of Options
Exercise Price
Expiry date
Opening Balance 31 December 2007
3,600,000
- Options Exercised
-
- Options Lapsed
(1,350,000)
Balance at 31 December 2008
2,250,000
Various
-
35 cents
Various
Various
-
11 May 2008
30 September 2009
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31
December 2008. 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of Mineral Commodities Limited for the year ended 31
December 2008, complies with section 300A of the Corporations Act 2001.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Peter Toll
Director
Perth, 31st March 2009
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
DIRECTORS SHAREHOLDING INTERESTS
The relevant interest of each director in the share capital of the Company, shown in the Register of Directors
Shareholding at the date of the Directors Report is:
Director
Ordinary Shares
Options over Ordinary Shares
Direct
Indirect
Direct
Indirect
J A Caruso
M V Caruso
-
18,450,988
12,627
18,450,988
G H Steemson
1,510,000
-
-
-
-
-
-
-
J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd,
which holds 18,450,988 shares in the Company.
MEETINGS OF DIRECTORS
The number of directors meetings and number of meetings attended by each of the directors of the Company
during the financial year are:
J A Caruso
M V Caruso
G H Steemson
Meetings Held
Meetings Attended
1
1
1
1
1
1
Other matters of board business have been resolved by circular resolutions of directors, which are a record of
decisions made at a number of informal meetings of the directors held to control, implement and monitor the
Companys activities throughout the year.
INDEPENDENT AUDITOR’S REPORT
To the members of Mineral Commodities Limited
Report on the Financial Report
We have audited the accompanying financial report of Mineral Commodities Limited, which
comprises the balance sheet as at 31 December 2008, and the income statement, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of significant
accounting policies, other explanatory notes 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 and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that compliance with the Australian equivalents to
International Financial Reporting Standards ensures that the financial report, comprising the
financial statements and notes, complies 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. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the 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 control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Qualification
As disclosed in the audit report to the financial statements for the year ended 31 December 2007,
the Company had not consolidated two subsidiaries being Erebus Plc and Kariba Kono Ltd into the
income statement, balance sheet, cash flow statement, statement of changes in equity or notes to
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
REMUNERATION REPORT (Audited)
The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
Principles used to determine the nature and amount of remuneration.
Details of remuneration
Service Agreements
Share-based compensation
Additional Information
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
A. Principles used to determine the nature and amount of remuneration
In order to retain and attract executives of sufficient calibre to facilitate the efficient and effective management of
the Companys operations, the board reviews the remuneration packages of all directors and executive officers on
an annual basis and makes recommendations. Remuneration packages are reviewed with due regard to
performance and other relevant factors.
Remuneration packages may contain the following key elements:
(a) Directors Fees;
(b)
(c)
Salary & Consultancy;
Benefits including provision of motor vehicle, superannuation.
Fees payable to non-executive directors reflect the demands which are made on, and the responsibilities of the
directors. The Board reviews non-Executive directors fees and payments annually.
Executives are offered a competitive base pay that consists of fixed components. Base pay for senior executives is
reviewed annually to ensure the executives pay is competitive with the market. Total Base Pay can be structured
as a total employment package which may be delivered as a combination of cash and prescribed non-financial
benefits at the executives discretion.
There were no short or medium term cash incentives provided to any executives of the company during the
financial year. Short or medium term cash incentives are not incorporated into any executives salary packages at
the time of this report.
The directors are not required to hold any shares in the company under the constitution of the company; however,
to align directors interests with shareholders interests the directors are encouraged to hold shares in the
company.
Remuneration is not directly related to company performance or key performance indicators.
The board has no separate remuneration committee due to the size of the company. The directors perform the
role of a remuneration committee as disclosed in the Corporate Governance statement.
B. Details of Remuneration
The key management personnel of Mineral Commodities Ltd Group are the directors of Mineral Commodities Ltd
and the Company Secretary Mr Peter Torre who reported directly to the Managing Director. The amounts disclosed
are therefore applicable for both Mineral Commodities Limited and the Mineral Commodities Limited Group.
31 March 2009
The Directors
Mineral Commodities Ltd
Unit 15, Level 1
51-53 Kewdale Rd
Welshpool WA 6106
Dear Sirs
DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF MINERAL
COMMODITIES LIMITED
As lead auditor of Mineral Commodities Limited for the year ended 31 December 2008,
I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
• any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Mineral Commodities and the entities it controlled
during the period.
Peter Toll
Director
Details of the remuneration of directors and the key management personnel (as defined in AASB 124 Related Party
Disclosures) of Mineral Commodities Limited and the Mineral Commodities Limited Group are set out in the
following tables.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Perth, Western Australia.
There are no long term benefits amounts due to Directors and key management personnel.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Declaration
The Directors of the Company declare that:
Directors Report (Continued)
1.
The financial statements, comprising the income statement, balance sheet, cash flow statement, statement
of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 including;
(a)
complying with Australian Accounting Standards, Corporations Regulations 2001; and other mandatory
professional reporting requirements, and
(b) give a true and fair view of the companys and consolidated entitys financial position as at 31
December 2008 and of the performance for the year ended on that date.
Non Executive Directors
Short-term
benefits
Post
employment
benefits
Share-based
payments
Percentage
performance
based
Year
Cash Salary
and fees
Superannuation Shares/Options
Totals
$
$
$
$
2.
3.
In the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
The remuneration disclosures set out on Pages 8 to 10 of the Directors Report comply with S300A of the
Corporations Act 2001.
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors:
Mark V Caruso
Managing Director
Dated at Perth, Western Australia this 31st day of March 2009
Joe Caruso
2008
44,037
2007
44,037
Greg Steemson
2008
68,200
2007
69,800
2008
112,237
2007
113,837
Sub-total Non Executive
Directors
Executive Directors
Mark Caruso
2008
48,000
2007
48,000
Other Key Management
Personnel
Peter Torre
2008
72,000
Total Key
Management
Personnel
Compensation
2007
75,000
2008
232,237
2007
236,837
3,963
3,963
-
-
3,963
3,963
-
-
-
-
3,963
3,963
-
-
-
-
-
-
-
-
-
9,800
48,000
48,000
68,200
69,800
116,200
117,800
48,000
48,000
72,000
84,800
236,200
9,800
250,600
-
-
-
-
-
-
-
-
-
-
Number of
options
granted and
vested during
the year
Number of
ordinary
shares issued
on exercise of
options
Options
as a %
of total
Date of
exercise
of
options
Price per
option
when
exercised
Non Executive Directors
Joe Caruso
Greg Steemson
Sub-total Non Executive Directors
Executive Directors
Mark Caruso
Other Key Management Personnel
Peter Torre
Year
2008
2007
2008
2007
2008
2007
2008
2007
2008
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2007
250,000
13%
ANNUAL REPORT 2008
52
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.30
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
C. Service Agreements
Notes to the Financial Statements (Continued)
28
DISCONTINUED OPERATIONS (continued)
There were no formal service agreements with any directors or key management personnel.
(b)
Financial performance and cash flow information
D. Share Based Compensation
Options
Options were granted by the Company to Mr Peter Torre in November 2007 for no consideration. In addition,
options were granted under the Mineral Commodities Limited Employee Option Plan which was approved by
shareholders at a general meeting held in November 2007. All full time employees, part time employees,
consultants and Directors of the Company are eligible to participate in the plan at the absolute discretion of the
board.
Options are granted under the plan for no consideration and are at terms stipulated at the discretion of the Board.
For further details of the options issued please, refer to Note 22(b) and 26.
E. Additional Information
There is no additional information to be provided in respect to the remuneration of the directors.
End of the Audited Remuneration Report
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Mineral Commodities Limited adhere to strict principles of corporate governance. The Companys Corporate
Governance statement is included before the Additional ASX Information section of the Annual Financial Report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No event or transaction has arisen in the interval between the end of the financial year and the date of this report
of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the
operations of the Company or the Consolidated Entity, the results of those operations or the state of affairs of the
Company or the Consolidated Entity in future financial years unless otherwise disclosed in this Directors Report.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings.
INSURANCE OF OFFICERS
During the financial year the Company has paid an insurance premium to insure the directors and secretaries of
the company and its controlled entities. The premium paid was $44,120 representing $14,707 per director. The
liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities
that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their
position or of information to gain advantage for themselves or someone else or to cause detriment to the
company.
AUDITORS INDEPENDENCE DECLARATION
The Auditors Independence Declaration as required by Section 307(c) of the Corporations Act 2001 is set out on
Page 53 and forms part of this report.
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
2,000,000
6,859
2,006,859
-
-
-
2,000,000
-
2,000,000
-
-
-
Revenue
Promet settlement
Other income
Total revenue
Expenses
Site Operating expenses
(685,556)
(1,274,802)
(44,500)
(44,530)
General & administration expenses
(254,650)
(95,283)
(60,845)
(59,608)
Impairment of loans to subsidiaries
-
(3,606,608)
(1,446,278)
(3,277,369)
Impairment of fixed assets
(1,104,766)
(1,385,087)
(1,003,974)
(1,385,087)
Impairment of exploration asset
(983,070)
Impairment of investment in subsidiary
-
-
-
-
-
(100,000)
(2,154,612)
Total expenses
(3,028,042)
(6,361,780)
(2,655,597)
(6,921,206)
Loss before income tax
(1,021,183)
(6,361,780)
(655,597)
(6,921,206)
Income tax expense
-
-
-
-
Loss from discontinued operations
(1,021,183)
(6,361,780)
(655,597)
(6,921,206)
29
CONTINGENT LIABILITIES
There are no Contingent Liabilities.
30.
SUBSEQUENT EVENTS
No event or transaction has arisen in the interval between the end of the financial year and the date of this
report of a material and unusual nature that is likely, in the opinion of the Directors of the Company, to
affect significantly the operations of the Company or the Consolidated Entity, the results of those
operations or the state of affairs of the Company or the Consolidated Entity in future financial years.
ANNUAL REPORT 2008
10
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Directors Report (Continued)
27.
COMMITMENTS
(a)
Non-Cancellable Operating Leases
NON-AUDIT SERVICES
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditors expertise and experience with the company and/or the group are important.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as
follows:
There were no nonaudit services provided by BDO Kendalls in the year.
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non related firms:
Within one year
78,297
69,720
78,297
69,720
Later than one year but not later than
five years
79,000
147,000
79,000
147,000
Total
157,297
216,720
157,297
216,720
Audit Services:
$
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Audit and review of financial reports
70,421
Non BDO Kendalls audit firm (Tuffias Sandberg)
5,832
Total remuneration for audit services
76,253
The operating lease is a rental agreement for the Companys office premises in Welshpool. The lease is for a
3 year term expiring on 15 February 2011. The lease provides for annual rent reviews to the higher of CPI
or market.
BDO Kendalls Audit & Assurance (WA) Pty Ltd continues in office.
This report has been made in accordance with a resolution of the Directors.
(b)
Exploration Tenement Leases Commitments for Expenditure.
In order to maintain current rights of tenure to exploration tenements, the Company and consolidated
entity is required to outlay lease rentals and to meet the minimum expenditure requirements which are
not considered to be material.
28
DISCONTINUED OPERATIONS
(a)
Description
Kariba Kono (SL) Ltd
Due to the uncertainty regarding the outcome of the legal impediments in Sierra Leone provisions for
impairment have been made against the value of exploration expenditure including the Number 11 Dump,
fixed assets and loans owing to Mineral Commodities Ltd.
Blackhawk Oil & Gas Ltd
The Company is dormant and has no assets, accordingly a provision for impairment has been made
against the value of Mineral Commodities investment in and loans receivable from Blackhawk Oil & Gas
Ltd.
Mark V Caruso
Managing Director
Perth, Western Australia
31 March 2009
ANNUAL REPORT 2008
50
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Income Statements
For the Year Ended 31 December 2008
Note
Consolidated
Company
2008
$
2007
$
Restated
2008
$
2007
$
Restated
Revenue from continuing operations
2
609,221
765,304
1,104,875
1,176,126
Notes to the Financial Statements (Continued)
26.
SHARE BASED PAYMENTS (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 31 December 2007 was
between $0.02 and $0.039.
The fair value at grant date is independently determined using a Binomial option valuation model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price at
grant date and the expected price volatility of the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option.
Exploration written off
10
(157,663)
(186,867)
(157,663)
(186,867)
The model inputs for options granted during the year ended 31 December 2007 included:
Share based payments
-
(78,500)
-
(78,500)
General & Administration expenses
(985,273)
(795,892)
(1,069,086)
(783,433)
Depreciation and Amortisation
(17,942)
(17,685)
(16,399)
(15,947)
Employee Benefits
15
60,336
(48,563)
60,336
(48,563)
Finance costs
(3,157)
-
(3,157)
Share of net result of associates using
the equity method
11(a)
-
(286,097)
-
-
-
(Loss)/Profit before income tax
(494,478)
(648,300)
(81,094)
62,816
Income tax expense
4
-
-
-
-
(Loss)/Profit from continuing operations
(494,478)
(648,300)
(81,094)
62,816
Loss from discontinued operations
28
(1,021,183)
(6,361,780)
(655,597)
(6,921,206)
Loss for the year
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Loss for the year attributable to the
members of the parent entity
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Minority interest
-
-
-
-
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Loss per share attributable to the ordinary equity holders of the company.
Basic and diluted (loss) per share
(cents)
19
(1.2)
(6.1)
The income statements are to be read in conjunction with the notes to the financial statements.
(a) Options are granted for no consideration and vest immediately with no performance criteria required
to be met; however there are rules if an employee terminates employment before exercising the
options. Vested options expire 30 September 2009.
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Exercise price: $0.30 for 1,750,000 options and $0.40 for 500,000 options
Grant date: 23 November 2007 for 500,000 options at $0.30 and 500,000 options at $0.40 and 16
November 2007 for 1,250,000 options at $0.30
Expiry date: 30 September 2009
Share Price at grant date $0.225
Expected price volatility of company s shares:50%
Expected dividend yield: Nil
Risk free Interest rate: 6.35%
The expected price volatility is based on historic volatility (based on the remaining life of the options)
adjusted for any expected changes to future volatility due to publicly available information.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of
employee benefit expense were as follows:
Options issued under employee incentive
option scheme
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
-
-
78,500
78,500
-
-
78,500
78,500
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
26.
SHARE BASED PAYMENTS
(a)
Employee Option Plan
Balance Sheets
as at 31 December 2008
The establishment of the Mineral Commodities Employee Incentive Option Scheme was approved by
shareholders at the 2006 annual general meeting. The incentive scheme is designed to provide long term
incentives for senior staff to deliver long term shareholder returns. Under the plan, participants are
granted options which vest immediately but are not exercisable until 30 September 2009. Participation in
the plan is at the Boards discretion and no individual has a contractual right to participate in the plan or to
receive any guaranteed benefits.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share within 10 business days.
Set out below are summaries of options granted under the plan:
Consolidated and parent entity 2008
Grant date
Expiry
date
Exercise
price
Balance
at start of
the year
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance at
end of the
year
Vested and
exercisable
at end of
the year
16-Nov-07 30-Sep-09
$0.30
1,250,000
23-Nov-07 30-Sep-09
$0.30
500,000
23-Nov-07 30-Sep-09
$0.40
500,000
2,250,000
-
-
-
-
-
-
-
-
-
-
-
-
1,250,000
1,250,000
500,000
500,000
500,000
500,000
2,250,000
2,250,000
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
Other current assets
Note
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
5
6
7
8
797,328
2,177,864
256,698
2,150,627
2,242,278
499,921
2,088,241
6,957,094
436,398
6,957,094
13,145
16,723
13,145
285,995
436,398
16,723
Total Current Assets
10,009,845
3,130,906
9,315,178
2,889,743
NON-CURRENT ASSETS
Property, plant and equipment
Exploration & development
expenditure
Investments accounted for using the
equity method
Other financial assets
Trade and other receivables
9
10
11(a)
11(b)
13
373,060
1,575,105
367,316
1,426,744
12,026,008
11,394,491
3,298,437
-
-
4,562,213
-
6
-
-
-
1,451,001
1,551,001
11,841,568
9,917,134
Weighted average exercise price
$0.322
Total Assets
22,408,919
19,398,939
22,975,063
20,346,835
Total Non-Current Assets
12,399,074
16,268,033
13,659,885
17,457,092
No options expired during the periods covered by the above table.
The weighted average remaining contractual life of share options outstanding at the end of the period was
0.75 years. (2007: 1.75 years)
Consolidated and parent entity 2007
Grant date
Expiry
date
Exercise
price
Balance
at start of
the year
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance at
end of the
year
Vested and
exercisable
at end of
the year
CURRENT LIABILITIES
Trade and other payables
Provisions
14
15
1,041,056
260,647
402,374
28,147
88,483
28,147
Total Current Liabilities
1,069,203
349,130
430,521
Total Liabilities
NET ASSETS
1,069,203
349,130
430,521
21,339,716
19,049,809
22,544,542
20,166,383
91,969
88,483
180,452
180,452
16-Nov-07 30-Sep-09
$0.30
23-Nov-07 30-Sep-09
$0.30
23-Nov-07 30-Sep-09
$0.40
-
-
-
-
1,250,000
500,000
500,000
2,250,000
-
-
-
-
-
-
-
-
Weighted average exercise price
$0.32
No options expired during the periods covered by the above table.
1,250,000
1,250,000
500,000
500,000
EQUITY
500,000
500,000
2,250,000
2,250,000
Contributed equity
Reserves
Accumulated losses
Parent entity interest
16
17
18
39,804,350
39,436,350
39,804,350
39,436,350
4,917,465
1,479,897
2,738,300
(8,550)
(23,516,439)
(22,000,778)
(19,998.108)
(19,261,417)
21,205,376
18,915,469
22,544,542
20,166,383
Minority interest
12
134,340
134,340
-
-
TOTAL EQUITY
21,339,716
19,049,809
22,544,542
20,166,383
The balance sheets are to be read in conjunction with the notes to the financial statements.
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Cash Flow Statements
For the year ended 31 December 2008
Notes to the Financial Statements (Continued)
25.
FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to meet commitments as and when
they fall due. The Board monitors rolling cash flow forecasts to manage liquidity risk. The only financial
liabilities of the Group at balance date are trade and other payables, these amounts are unsecured.
As at reporting date the Group had sufficient cash reserves to meet its requirements. The Group therefore
had no credit standby facilities or arrangements for further funding in place.
The only financial liabilities the Group had at reporting date were trade payables incurred in the normal
course of the business. These were non interest bearing and were due within the normal 30 day terms of
creditor payments.
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets, such as available for sale securities, is
based on quoted market prices as at reporting date. The quoted market price used for financial assets held
by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market such as unlisted investments
is determined using valuation techniques where applicable. Where this is unable to be done they are held
at cost.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short term nature.
Note
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
CASH FLOWS FROM OPERATING ACTIVITIES
Exploration and development expenditure
(1,882,412)
(2,812,802)
(157,663)
(144,611)
Interest Received
89,995
133,000
74,739
127,830
Payments to suppliers & employees
(1,320,262)
(1,857,890)
(573,188)
(923,491)
Interest Paid
Sundry Income
(3,157)
2,664
-
-
(3,157)
2,664
-
-
Net cash outflows from operating activities
24(a)
(3,113,172)
(4,537,692)
(656,605)
(940,272)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for plant and equipment
9
(7,946)
(354,890)
(5,445)
(330,137)
Purchase of equity investments
(14,826)
(494,601)
(14,826)
(494,601)
Purchase of further investment in associate
11(a)
-
(632,043)
-
(632,043)
Proceeds from sales of investments
1,387,407
1,344,513
1,387,407
1,344,513
Investment in controlled entities
11(b)
Loans advanced to controlled entities
-
-
-
-
-
-
(2,972,460)
(3,586,856)
Loans repaid by other entities
1,070,000
450,000
1,070,000
450,000
Loans to other entities
(1,070,000)
(450,000)
(1,070,000)
(450,000)
Net cash inflow/(outflow) from investing
activities
1,364,635
(137,021)
(1,605,324)
(3,699,124)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of shares
16
368,000
4,349,306
368,000
4,349,306
Net cash inflow from financing activities
368,000
4,349,306
368,000
4,349,306
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
financial year
Effects of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at end of financial
year
(1,380,537)
(325,407)
(1,893,929)
(290,090)
2,177,864
2,561,364
2,150,627
2,440,717
-
(58,093)
-
-
5
797,328
2,177,864
256,698
2,150,627
The cash flow statements are to be read in conjunction with the notes to the financial statements.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Statement of Changes in Equity
25.
FINANCIAL RISK MANAGEMENT (continued)
Group and Parent entity sensitivity
Price Risk
The consolidated entity has an exposure to equity securities price risk. This arises from investments held
by the consolidated entity and classified on the balance sheet as available for sale financial assets. Neither
the Group nor the parent entity are exposed to commodity price risk.
2008
PRICE RISK
-20%
+20%
Carrying
amount
$
Profit
$
Equity
$
Profit
$
Equity
$
Available for sale investments
Listed Shares & Options
6,580,870
Unlisted shares
2007
Available for sale investments
Listed Shares & Options
Unlisted shares
376,224
6,957,094
Carrying
amount
$
75,000
361,398
436,398
-
-
-
(1,316,174)
(75,245)
(1,391,419)
-
-
-
1,316,174
75,245
1,391,419
PRICE RISK
-20%
+20%
Profit
$
Equity
$
Profit
$
Equity
$
-
-
-
(15,000)
(72,280)
(87,280)
-
-
-
15,000
72,280
87,280
Cash flow and fair value interest rate risk
The Groups only interest rate risk arises from cash and cash equivalents held. Deposits and current
accounts held with variable rates expose the Group to cash flow interest rate risk. The Group does not
consider this to be material to the group and have therefore not undertaken any further analysis of risk
exposure.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits
with banks, as well as credit exposures including outstanding receivables.
All cash balances held at banks are held at internationally recognised institutions. The majority of
receivables held are with related parties and within the Group. Given this, the credit quality of financial
assets that are neither past due or impaired can be assessed by reference to historical information about
default rates.
CONSOLIDATED
ENTITY
For the year ended
31 December 2008
Contributed
Equity
$
Accum-
ulated
Losses
$
Foreign
Currency
Translation
Reserve
Share
Based
payments
Reserve
Financial
Asset
Reval-
uation
Reserve
General
Reserve
Minority
Interests
Total
Equity
$
$
$
$
$
$
39,436,350 (22,000,777) 2,551,100 (1,162,270)
78,500
12,567
134,340 19,049,810
Balance at the
beginning of the
year
Movement for the
year
Net Income
recognised directly in
equity
Loss for the year
Total recognised
income and expense
during the year
Contributions of
equity
-
-
-
-
-
-
-
-
578,059
578,059
(1,515,661)
-
-
(1,515,661)
-
578,059
-
-
-
-
-
-
-
2,859,509
2,859,509
-
2,859,509
-
-
-
-
-
-
-
-
-
-
3,437,568
3,437,568
(1,515,661)
1,921,907
368,000
-
-
Issue of equity
368,000
Transaction costs on
share issues
Employee share
scheme
Balance at the end
of the year
-
-
-
-
-
-
-
-
-
-
-
39,804,350 (23,516,438) 2,551,100
(584,211)
78,500
2,872,076
134,340 21,339,717
Contributed
Equity
$
Accum-
ulated
Losses
$
Share
Based
payments
Reserve
Foreign
Currency
Translation
Reserve
Financial
Asset
Revaluation
Reserve
$
$
$
Total
Equity
$
39,436,350
(19,261,417)
78,500
(99,617)
12,567
20,166,383
PARENT ENTITY
For the year ended
31 December 2008
Balance at the beginning
of the year
Movement for the year
Net Income recognised
directly in equity
Loss for the year
Total recognised income and
expense during the year
Contributions of equity
-
-
-
-
-
-
(736,691)
(736,691)
-
-
-
-
-
-
-
(112,659)
2,859,509
2,746,850
(112,659)
2,859,509
2,746,850
-
-
-
-
-
-
-
-
-
-
(736,691)
(736,691)
368,000
-
-
Issue of equity
368,000
Transaction costs on share
issues
Employee share scheme
-
-
-
-
-
ANNUAL REPORT 2008
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Balance at the end of the
year
39,804,350
(19,998,108)
78,500
(212,276)
2,872,076
22,544,542
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Statement of Changes in Equity (Continued)
Notes to the Financial Statements (Continued)
25.
FINANCIAL RISK MANAGEMENT (continued)
The Groups exposure to foreign currency risk at the reporting date was as follows:
Canadian
$
US
$
31-Dec-08
South
African
Rand
GB
£
-
-
5,882
388
3,425,678
-
-
465,448
-
5,882
388
3,891,926
3,891,126
-
-
-
-
Sierra
Leone
Leones
1,118,957
1,240,280
31-Dec-07
Canadian
$
US
$
South
African
Rand
Sierra
Leone
Leones
-
-
2,452
93,247 11,712,580
-
1,095,385
1,250,000
-
11,628
-
-
-
2,359,237
11,628
2,452 1,188,632 12,962,580
-
(4,704)
(3,764,126)
(16,360)
(5,489,600)
-
-
(793,782)
-
5,882
(4,316)
127,800
127,000
(16,360)
(3,130,363)
11,628
2,452
394,850 12,962,580
Cash and cash
equivalents
Trade and
other
receivables
Available for
sale
investments
Trade and
other payables
The carrying amounts of the parent entitys financial assets and liabilities are denominated in Australian dollars except
as set out below:
Trade and
other
receivables
Available for
sale
investments
Canadian
$
US
$
-
5,882
5,882
-
-
-
31-Dec-08
South
African
Rand
11,930,674
-
11,930,674
GB
£
-
-
-
31-Dec-07
Sierra
Leone
Leones
Canadian US
$
$
South
Africa
Rand
Sierra
Leone
Leones
-
-
-
-
-
10,322,259
11,628
-
-
11,628
-
10,322,259
-
-
-
35,087,042 (14,990,697)
2,551,100
(588,456)
CONSOLIDATED
ENTITY
For the year ended
31 December 2007
Contributed
Equity
$
Accum-
ulated
Losses
$
Foreign
Currency
Translation
Reserve
Share
Based
payments
Reserve
General
Reserve
Financial
Asset
Reval-
uation
Reserve
Minority
Interests
Total
Equity
$
$
Balance at the
beginning of the
year
Movement for the
year
Net Income
recognised directly in
equity
Loss for the year
Total recognised
income and expense
during the year
Contributions of
equity
-
-
-
-
-
-
(7,010,080)
(7,010,080)
Issue of equity
4,505,308
Transaction costs on
share issues
(156,000)
Employee share
scheme
-
-
-
-
$
-
-
-
-
-
-
-
78,500
$
$
$
514,028
134,340 22,707,357
(501,461)
(501,461)
-
(501,461)
-
-
-
-
-
-
-
-
-
-
(1,075,275)
(1,075,275)
(7,010,080)
(8,085,355)
4,505,308
(156,000)
78,500
-
(573,814)
-
-
-
-
-
-
(573,814)
-
(573,814)
-
-
-
Balance at the end
of the year
39,436,350 (22,000,777)
2,551,100 (1,162,270)
78,500
12,567
134,340 19,049,810
PARENT ENTITY
For the year ended
31 December 2007
Contributed
Equity
$
Accum-
ulated
Losses
$
Balance at the beginning
of the year
35,087,042
(12,403,027)
Movement for the year
Net Income recognised
directly in equity
Loss for the year
Total recognised income and
expense during the year
Contributions of equity
-
-
-
-
-
-
(6,858,390)
(6,858,390)
Issue of equity
4,505,308
Transaction costs on share
issues
(156,000)
Employee share scheme
-
-
-
-
$
-
-
-
-
-
-
-
78,500
Share
Based
payments
Reserve
Foreign
Currency
Translation
Reserve
Financial
Asset
Revaluation
Reserve
Total
Equity
$
$
514,028
23,198,043
$
-
(99,617)
(501,461)
(601,078)
(99,617)
(501,461)
(601,078)
-
-
-
-
-
-
-
-
-
-
(6,858,390)
(6,858,390)
4,505,308
(156,000)
78,500
Balance at the end of the
year
39,436,350
(19,261,417)
78,500
(99,617)
12,567
20,166,383
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements
25.
FINANCIAL RISK MANAGEMENT
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Consolidated entitys activities expose it to a variety of financial risks: market risk (including currency
risk, interest rate risk and price risk), credit risk and liquidity risk. The Consolidated entitys overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Consolidated entity.
The Consolidated entity does not hold any derivative financial instruments.
The Consolidated entity uses sensitivity analysis in the case of interest rate and foreign exchange risks and
aging analysis for credit risk, to measure different types of risk to which it is exposed.
Risk management is carried out by the Board of Directors.
The Consolidated entity and the parent entity hold the following financial instruments:
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Financial Assets
Cash and cash equivalents
797,328
2,177,864
256,698
2,150,627
Trade and other receivables
2,242,279
499,921
13,929,809
10,203,129
Available for sale investments
6,957,094
3,734,835
6,957,094
4,998,611
9,996,701
6,412,620
21,143,601
17,352,367
Financial Liabilities
Trade and other payables
1,041,056
349,130
402,374
180,452
8,955,645
6,063,490
20,741,227
17,171,915
Market Risk
Foreign exchange risk
The Group and the parent entity operate internationally and are exposed to foreign exchange risk arising
from various currency exposures primarily with respect to the South African Rand, Great British Pound,
and US Dollar.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the Consolidated entitys functional currency and net investments in
foreign operations. The risk is measured using sensitivity analysis and cash flow forecasting.
The Consolidated entity and the parent entity currently hold no derivatives or foreign exchange contracts
to hedge their foreign exchange risk exposure.
(a)
Basis of Accounting
This financial report is for Mineral Commodities Limited as the parent entity and Mineral Commodities
Limited and controlled entities, as the consolidated entity. Mineral Commodities Limited is an Australian
domiciled public listed company.
This general purpose financial report for the year ended 31 December 2008 has been prepared in
accordance with Australian Accounting Standards and Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting
Standards (AIFRS). Compliance with AIFRS ensures that the financial report of Mineral Commodities
Limited as the Parent entity and Mineral Commodities Limited and controlled entities comply with
International Financial Reporting Standards (IFRS).
Historical Cost Convention
The financial report has been prepared on an accruals basis and is based on historical costs modified by
the revaluation of available for sale financial assets for which the fair value basis of accounting has been
applied.
The following significant accounting policies have been adopted in the preparation and presentation of the
financial report and have been consistently applied to all the years presented, unless otherwise stated.
(b)
Principles of Consolidation
The consolidated financial report incorporates the assets and liabilities of all subsidiaries of Mineral
Commodities Ltd (Company or parent entity) as at 31 December 2008 and the results of its
subsidiaries for the year then ended. Mineral Commodities Ltd and its subsidiaries together are referred to
in this financial report as the consolidated entity.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Subsidiaries are those entities over which the Group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one-half of the voting rights.
Where control of an entity is obtained during a financial year, its results are included in the consolidated
income statement from the date on which control commences. Where control of an entity ceases during a
financial year, its results are included for that part of the year during which control existed.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group
refer to Note (1h).
The Group applies a policy of treating transactions with minority interests as transactions with parties
external to the Group. Disposals to minority interests result in gains and losses for the Group that are
recorded in the income statement. Purchases from minority interests result in goodwill, being the
difference between any consideration paid and the relevant share acquired of the carrying value of
identifiable net assets of the subsidiary.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
24(a) RECONCILIATION OF LOSS FOR THE YEAR TO NET CASH OUTFLOW FROM OPERATING
(b)
Principles of Consolidation (continued)
ACTIVITIES
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income
statement and balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Mineral
Commodities Limited.
On 23 June 2006, Mineral Commodities Limited completed a takeover of Erebus Plc and effectively took
control from this date. Immediately following the handing over of control to Mineral Commodities Limited,
the accounting and financial records of Erebus Plc were requisitioned so that Mineral Commodities Limited
could also control this function. Upon receipt of the accounting records subsequent to the reporting date,
it became apparent that the records were incomplete and the Company began the process of
reconstructing the records with the limited information that was available.
As at 31 December 2006, the records were not sufficiently reliable to be able to represent a true and fair
view of the financial position of Erebus Plc and its subsidiary for the full year ended 31 December 2006 due
to the incomplete information received up to the date of acquisition.
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Profit/(loss) after income tax and outside
equity interest
(1,515,661)
(7,010,080)
(736,691)
(6,858,389)
Depreciation
105,225
102,511
60,899
60,477
Unrealised foreign exchange loss/(gain)
Non bank interest income not in cash
-
-
-
-
-
3,085
(430,049)
(304,809)
Impairment losses
2,087,836
4,991,695
2,550,252
6,817,068
Management fees not received in cash
(45,000)
(75,000)
(140,685)
(111,183)
Share Based Payments
-
78,500
-
78,500
The value of the consideration paid for Erebus Plc was $2,297,935 comprising 9,406,878 shares and
3,135,626 unlisted options.
(Profit)/loss on sale of investment in listed
companies
(471,562)
(539,419)
(471,562)
(539,419)
For these reasons, the Directors of Mineral Commodities decided not to consolidate Erebus Plc from 23
June 2006 and to report its investment in Erebus Ltd at cost in the Economic Entity for the year ended 31
December 2006.
The majority of the expenditure within the Erebus Group relates to the mining activities and is capitalised
accordingly in the balance sheet. The acquisition and consolidation of the Erebus Group would have
resulted in assigning a fair value to the mining right. The Directors believe that this value essentially
represents the value of the consideration that was paid to takeover the company and reflecting the
investment at cost at 31 December 2006 was a more appropriate way of reporting to shareholders given
the situation.
As the Company did not consolidate Erebus at 31 December 2006, the Investment in Erebus and loan
receivable from Erebus were not eliminated.
The Mineral Commodities Group that was reported as at 31 December 2006 therefore consisted of the
Parent Entity, Mineral Commodities Limited and the subsidiary companies listed in Note 11(b) with the
exception of Erebus Ltd and its subsidiary: Erebus Ltd and its subsidiary were consolidated into the Group
for the 2007 financial year. This had the effect of overstating exploration and evaluation expenditure and
understating the accumulated loss at initial date of consolidation (1 January 2007).
In 2007 Erebus Ltd transferred its interest in Kariba Kono (SL) Ltd to MRC Africa Pty Ltd. On completion
of this transfer there was no requirement to maintain Erebus Ltd a UK Company, therefore application was
made to Companies House in the UK to have the Company dissolved, and this was confirmed with effect
from 19 August 2008.
(c)
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised:
Interest Income
Interest and other income is recognised as it accrues on a time proportion basis using the effective interest
method.
Provision employee entitlements
(60,336)
48,563
(60,336)
48,563
Equity accounting adjustments
-
286,097
-
-
Exploration expenditure written off
157,663
186,867
157,663
186,867
Exploration expenditure capitalised
(2,505,464)
(2,233,094)
(157,663)
(144,611)
Other non-cash items
93,520
(49,696)
60,852
33,919
Changes in assets and liabilities during the
year:
Increase (decrease) in trade payables and
other liabilities
(Increase) decrease in trade and other
receivables
778,017
(72,461)
308,013
(55,471)
(1,740,988)
(255,192)
(1,800,877)
(157,886)
(Increase) decrease in prepayments
3,578
3,017
3,578
3,017
Net cash inflow / (outflow) from
operating activities
(3,113,172)
(4,537,692)
(656,606)
(940,272)
24(b) NON-CASH INVESTING AND FINANCING ACTIVITIES
The group has no available finance facilities as at balance date.
ANNUAL REPORT 2008
18
ANNUAL REPORT 2008
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 that those
the Group would have adopted if dealing at arms length.
(d)
Loans to key management personnel
There were no loans to key management personnel during the period.
(e)
Other transactions and balances with key management personnel
There were no transactions or balances with key personnel except as disclosed in this note and Note 23.
23.
RELATED PARTY TRANSACTIONS
There were no transactions with directors or director related entities during the financial period other than
the payment of directors remuneration as is disclosed on Note 22 and the payment of $8,454 for
secretarial services provided by Minesite Constructions Ltd an entity in which Mr Joseph Caruso and Mr
Mark Caruso are Directors and have a relevant interest in the Company.
Mineral Commodities Ltd is a shareholder in Allied Gold Ltd owning 15,534,379 shares or 3.78% of the
issued share capital at balance date. Mark Caruso and Greg Steemson are also directors of Allied Gold
Limited.
Wholly owned group
The group consists of Mineral Commodities Limited and its subsidiaries. Details of entities in the group are
set out in Note 11.
Transactions between Mineral Commodities Limited and other entities in the group during the years ended
31 December 2008 and 31 December 2007 consisted of loans advanced and payments received and made
on inter company accounts. These transactions were made on normal commercial terms and conditions
and at market rates.
During the financial year, the Company provided management, accounting and administration services to
other entities in the wholly-owned group.
An impairment loss was booked on the receivable from Kariba Kono and Blackhawk Oil & Gas Ltd; refer to
Note 13(a) for more information. All other inter company receivables are expected to be receivable in full.
Key management personnel
Disclosures relating to key management personnel are set out in Note 22.
(d)
Taxes
Income taxes
The charge for current income tax expense or revenue is based on the profit for the year adjusted for any
non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are
substantively enacted by the balance sheet date. Income tax expense is adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and unused tax losses.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the initial recognition of an asset or liability,
excluding a business combination, where this has no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled. Deferred tax is credited in the income statement except where it relates to
items that may be credited directly to equity, in which case the deferred tax is adjusted directly against
equity.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income taxation legislation and the anticipation that the
economic entity will derive sufficient future assessable income to enable the benefit to be realised and
comply with the conditions or deductibility imposed by the law.
The income tax expense for the year is calculated using the 30% tax rate (2007: 30%).
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred
on a purchase of goods & 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
where receivables and payables 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 in the Balance Sheet.
Cash flows are included in the Cash Flow Statement 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 the amount of GST recoverable from, or payable to,
the taxation authority.
(e)
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the groups entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented
in Australian dollars which is the parent entitys functional and presentation currency.
ANNUAL REPORT 2008
42
ANNUAL REPORT 2008
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(e)
Foreign Currency Transactions and Balances (continued)
(b)
Option holdings of key management personnel
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rated prevailing
at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the
date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at
the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement,
except where deferred in equity as a qualifying net investment hedge.
Group Companies
The financial results and position of group entities whose functional currency is different from the groups
presentation currency are translated into the presentation currency as follows;
Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.
Income and expenses are translated at average exchange rates for the period.
Exchange differences arising on translation of foreign operations are recognised directly in the groups
foreign currency translation reserve in the balance sheet. These differences are recognised in the income
statement in the period in which the operation is disposed.
(f)
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment losses.
Acquisition
Items of plant and equipment are initially recorded at cost and includes any expenditure that is directly
attributable to acquisition of the items. Subsequent costs are included in the assets carrying amount or
recognised as a separate asset as appropriate. All other repairs and maintenance are charged to the
income statement during the reporting period in which they are incurred.
Depreciation of Plant and Equipment
Plant and equipment are depreciated at rates based upon the expected useful lives of these assets. The
expected useful lives of these assets are 3-10 years.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date. An assets carrying amount is written down immediately to its recoverable amount if the assets
carrying amount is greater than its estimated recoverable amount.
Disposal of Assets
The gain or loss on disposal of assets is calculated as the difference between the carrying amount of the
asset at the time of disposal and the proceeds on disposal and is included in the income statement in the
year of disposal.
The numbers of options over ordinary shares in the company held during the financial year by each
director of Mineral Commodities Limited and other key management personnel of the Consolidated entity
are set out below:
2008
Key
Management
Personnel
Mark Caruso
Joseph Caruso
Greg Steemson
Peter Torre
250,000
2007
Balance at
1 January '08
Granted
as Remu-
neration
Options
Exercised
Options
Lapsed
Balance at
31 Dec '08
Vested and
exercisable Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
-
-
-
-
Key
Management
Personnel
Balance at
1 January '07
Granted
as Remu-
neration
Options
Exercised
Options
Lapsed
Balance at
31 Dec '07
Vested and
Exercisable Unvested
Mark Caruso
3,089,547
Joseph Caruso
3,085,338
Greg Steemson
53,333
-
-
-
Peter Torre
-
250,000
-
-
-
-
3,089,547
3,085,338
53,333
-
-
-
-
-
-
-
250,000
250,000
-
-
-
-
(c)
Shareholdings of key management personnel
The numbers of ordinary shares in the company held during the financial year by each director of Mineral
Commodities Limited and other key management personnel of the Consolidated entity are set out below:
2008
Director
Balance at
1 January 08
Received as
Remuneration
Options
Exercised
Net change
other
Balance
31 Dec 08
Mark Caruso
11,569,353
Joseph Caruso
11,556,726
Greg Steemson
210,000
Peter Torre
-
-
-
-
-
-
-
-
-
6,894,262
18,463,615
6,894,262
18,450,988
1,300,00
1,510,000
-
-
2007
Director
Balance at
1 January 07
Received as
Remuneration
Options
Exercised
Net change
other
Balance
31 Dec 07
Mark Caruso
9,268,642
Joseph Caruso
9,256,015
Greg Steemson
210,000
Peter Torre
-
-
-
-
-
-
-
-
-
2,300,711
11,569,353
2,300,711
11,556,726
-
-
210,000
-
Joseph and Mark Caruso are both directors of Zurich Bay Holdings Pty Ltd which has a relevant interest in
18,450,988 shares
ANNUAL REPORT 2008
20
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
20.
SEGMENT INFORMATION (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Secondary Reporting
(g)
Exploration and Development Expenditure
Business Segments
The consolidated entity operates in only one business segment being the field of exploration for mineral
resources.
21.
AUDITORS REMUNERATION
During the year, the following fees were paid or payable for services provided by the auditor of the parent
entity and non-related audit firms:
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Amounts received or due and receivable
by auditors for:
Auditors of the parent entity
Audit and review
70,421
45,893
70,421
45,893
Non-related practice of the auditors
Audit of subsidiaries
5,832
12,713
-
-
76,253
58,606
70,421
45,893
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a)
Key Management Personnel Compensation
Economic Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Key Management Personnel
Short-term employee benefits
232,237
236,837
232,237
236,837
Post-employment benefits
Share-based payments
3,963
-
3,963
9,800
3,963
-
3,963
9,800
Costs incurred during the exploration and development stages of specific areas of interest are
accumulated. Such costs are only carried forward if they are expected to be fully recouped through the
successful development of the area, or where activities to date have not yet reached a stage to allow
reasonable assessment regarding the existence of economically recoverable reserves, otherwise this
expenditure is recognised in the income statement. Costs are written off as soon as an area has been
abandoned or considered to be non-commercial or provided against where an area is considered non-
commercial at the period end.
Once production commences, expenditure accumulated in respect of areas of interest is amortised on a
unit of production basis over the life of the total proven economically recoverable reserves. Restoration
costs recognised in respect of areas of interest in the exploration and evaluation stage are carried forward
as exploration and evaluation expenditure. Costs recognised after the commencement of production in
areas of interest will be charged to the profit and loss statement.
(h)
Investments
Interests in - Subsidiaries
Investments in subsidiaries are carried in the Companys financial report at cost less any impairment
losses. Dividends and distributions are brought to account in the Companys income statement when they
are declared by the subsidiaries.
Investments in associates
Associates are all entities over which the Consolidated entity has significant influence but not control,
generally accompanying a shareholding of between 20%-50% of the voting rights. Investments in
associates are accounted for in the parent entity financial statements using the cost method and in the
consolidated financial statements using the equity method of accounting, after initially being recognised at
cost. The Consolidated entitys investment in associates includes goodwill (net of any accumulated
impairment loss) identified on acquisition.
The Consolidated entitys share of its associates post acquisition profits or losses is recognised in the
income statement, and its share of post acquisition movements in reserves is recognised directly in
reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the
investment.
(i)
Impairment of Assets
At each reporting date, the group reviews the carrying values of it tangible assets and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the assets fair value less costs to sell and
value in use, is compared to the assets carrying value. Any excess of the assets carrying value over it
recoverable amount is expensed to the income statement.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
236,200
250,600
236,200
250,600
(j)
Financial Instruments
The Group classifies its financial instruments in the following categories. The classification depends on the
purpose for which the financial instrument was acquired. Management determines the classification of its
financial instruments at initial recognition.
Recognition and de recognition
Regular purchases and sales of financial assets are recognised on trade date; the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction
costs. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or been transferred and the Group has transferred substantially all the risks and rewards of
ownership.
ANNUAL REPORT 2008
40
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 23
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Financial Instruments (continued)
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are
applied to determine the fair value of all unlisted securities, including recent arms length transactions,
reference to similar instructions and other pricing models.
Loans and receivables
Loans and receivables are recognised at amortised cost using the effective interest rate method. They are
included within current assets, except for those with maturities greater than 12 months after the reporting
date which are classified as non-current assets.
Available-for-sale financial assets
Available-for-sale financial assets are recognised at fair value. Unrealised gains and losses arising from
changes in fair value are taken directly to equity until the instrument is sold at which time any balance in
equity relating to the instrument is recycled to the income statement as part of the profit or loss on sale.
Financial Liabilities
Financial liabilities are recognised at amortised cost, comprising original debt less principle payments and
amortisation of transaction costs.
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial instrument
has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged
decline in the value of the instrument is considered to determine whether an impairment has arisen.
Impairment losses are recognised in the income statement. Impairment losses recognised on equity
instruments classified as available for sale are not reversed through the income statement.
(l)
Contributed Equity
Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of
the share proceeds received.
(m)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts
are shown within short-term borrowings in current liabilities on the balance sheet.
(n)
Earnings/ (Loss) per Share
Basic Earnings/ (Loss) per Share
Basic earnings per share is determined by dividing the profit after income tax attributable to members of
Mineral Commodities Ltd by the weighted average number of ordinary shares outstanding during the
financial year.
Diluted Earnings/ (Loss) per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by
taking into account amounts unpaid on ordinary shares and any reduction in earnings per share would
arise from the exercise of options outstanding at the end of the financial year.
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ANNUAL REPORT 2008
22
8972 MC_annual_report_PRINT.indd 24
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
17.
RESERVES
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
General Reserve
2,551,100
2,551,100
-
-
Financial asset revaluation reserve
2,872,076
12,567
2,872,076
12,567
Share based payments reserve
78,500
78,500
78,500
78,500
Foreign currency translation reserve
(584,211)
(1,162,270)
(212,276)
(99,617)
4,917,465
1,479,897
2,738,300
(8,550)
Nature and purpose of reserves
General Reserve
The General Reserve arose from the issue of shares in MRC Resources Pty Ltd to an entity outside the
economic entity.
Financial asset revaluation reserve
The financial asset revaluation reserve arises from the revaluation at balance sheet date of available for
sale financial assets.
Foreign Currency Translation reserve
The foreign currency translation reserve records the unrealised foreign currency differences arising from
the translation of operations into the presentational currency of the group. Refer to accounting policy Note
1(e).
Share Based Payments Reserve
The share based payments reserve is used to recognise the fair value of options issued to employees but
not exercised and the fair value of shares issued to employees.
18.
ACCUMULATED LOSSES
Accumulated losses at beginning of the
year
Net profit (loss) attributable to
members
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
(22,000,778)
(14,990,698)
(19,261,417)
(12,403,027)
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Accumulated losses at end of the year
(23,516,439)
(22,000,778)
(19,998,108)
(19,261,417)
(o)
Employee Benefits
Wages and Salaries, Annual Leave and Sick Leave
Provision is made for the consolidated entitys liability for employee entitlements arising from services
rendered by employees to balance date. These benefits include annual leave. Sick leave is non-vesting
and has not been provided for. Employee entitlements expected to be settled within one year have been
measured at the amounts expected to be paid when the liabilities are settled and are recognised in other
payables.
The contributions made to defined contribution superannuation funds by entities within the consolidated
entity are charged against profits when due.
Share-Based Payments
Share-based compensation benefits are provided to employees via the Mineral Commodities Employee
Incentive Option Scheme. Information relating to this scheme is set out in Note 26.
The fair value of options granted under the Mineral Commodities Employee Incentive Option Scheme is
recognised as an employee expense with a corresponding increase in equity. The fair value is measured at
grant date and recognised over the period during which the employee becomes unconditionally entitled to
the options.
The fair value at grant date is independently determined using a Binomial option pricing model that takes
into account the exercise price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option.
(p)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor,
are recognised on a straight line basis.
(q)
Segment reporting
A business segment is identified for a group of assets and operations engaged in providing services that
are subject to risks and returns that are different to those of other business segments. A geographical
segment is identified when services are provided within a particular economic environment subject to risks
and returns that are different from those of segments operating in other economic environments.
(r)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and the amount
can be reliably estimated.
(s)
Comparatives
Where required by Accounting Standards comparative figures have been adjusted to conform with changes
in presentation for the current financial year.
19
LOSS PER SHARE
(t)
Non-current assets (or disposal groups) held for sale and discontinued operations
Basic loss per share (cents per share)
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic loss per share
Loss used in the calculation of basic loss
per share
Consolidated
2008
$
(1.2)
2007
$
(6.1)
124,098,533
114,795,289
(1,515,661)
(7,010,080)
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be
recovered principally through a sale or transaction rather than continuing use. They are measured at the
lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax
assets, assets arising from employee benefits, financial assets, investment property and non-current
biological assets that are carried at fair value and contractual rights under insurance contracts, which are
specifically exempt from this requirement.
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 increase in fair value less costs to
sell of an asset (or disposal group), but 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 at the date of de recognition.
The dilutive effect of the options has not been disclosed as the options were anti-dilutive.
ANNUAL REPORT 2008
38
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 25
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
16.
CONTRIBUTED EQUITY
(t)
Non-current assets (or disposal groups) held for sale and discontinued operations (continued)
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised
while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale continue to be recognised.
A discontinued operation is a component of the entity that has been disposed of or has been abandoned,
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 co-ordinated 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 income statement.
(u)
Critical accounting estimates and judgements
The Group makes significant estimates and judgements concerning the future. The resulting accounting
estimates may not equal the related actual results. The estimates and judgements that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Critical Accounting Estimates
The directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future
events and are based on current trends and economic data, obtained both externally and within the group.
Significant judgements in applying the entitys accounting policies
Impairment
During the year, the consolidated entity impaired its property, plant and equipment (Note 9), and
exploration and development expenditure (Note 10) in relation to the Sierra Leone assets, as the directors
have assessed that these amounts are no longer recoverable. In the parent entity, intercompany loans
totalling $1,446,278 (2007: $3,438,935) (Note 13) have been impaired as they have been assessed as
non recoverable. Although the net assets of the group are less than the parent, the intercompany loans
are considered to be recoverable through the future development of the tenements held by the
subsidiaries.
Available for sale financial assets
During the year, the company sold 4milllion shares in Allied Gold Limited, and that company restructured
their Board such that it is considered that MRC has lost significant influence (Note 11(a)). The Directors
have reclassified the remaining investment in Allied Gold as available for sale financial assets because
they intend to hold the investments to earn benefits in the medium to long term increases in the value of
these investments or they do not meet the criteria to be held as financial assets through profit and loss as
they are not monitored and evaluated on a fair value basis.
Exploration and development expenditure
Recoupment of the capitalised exploration and evaluation expenditure is dependant on the successful
development and commercial exploitation of the Xolobeni Mineral Sands and the Tormin Mineral Sands
areas of interest in South Africa. The capitalised expenditure in relation to the Xolobeni project is expected
to be fully recoverable once the grant of the mining right has been affirmed by the Minister of Minerals and
Energy in South Africa.
2008
Number of
shares
2007
Number of
shares
2008
$
2007
$
122,993,385
106,436,002
39,436,350
35,087,042
-
-
-
12,000,000
4,373,883
183,500
-
-
-
3,120,000
1,311,908
73,400
Balance at beginning of financial
year
Placement of shares, July 2007
Conversion of listed 30 cent options
Conversion of 40 cent options
Placement of shares, December
2008
Costs of capital raising
-
18,400,000
-
-
368,000
-
-
(156,000)
Balance at end of financial year
141,393,385
122,993,385
39,804,350
39,436,350
In December 2008 the Company placed 18.4 million shares to various Investors at 2 cents per share
to raise $368,000.
(a)
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
company in proportion to the number of and amounts paid on the shares held. On a show of hands every
holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
(b)
Capital risk management
The Groups and the parent entitys objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they can continue to provide returns to shareholders and benefits for
other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets in order
to maintain sufficient funds necessary to continue its operations.
As a junior mineral explorer debt financing is not an option until such time as the Companys projects have
reached a stage at which debt financing can be obtained, therefore the company considers its contributed
equity as its capital during this period.
ANNUAL REPORT 2008
24
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 26
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
14.
TRADE AND OTHER PAYABLES - CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Trade payables - unsecured
704,742
156,517
129,170
25,616
Other payables and accruals - unsecured
336,314
104,130
273,204
66,353
1,041,056
260,647
402,374
91,969
Refer to Note 25 for details of interest rates incurred on payables.
Risk Exposure
Information about the Groups and the parent entitys exposure to foreign exchange risk is provided in
Note 25.
15.
PROVISIONS NON-CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Provision for employee entitlements
Opening balance
88,483
39,920
88,483
39,920
Movement for the period
(60,336)
48,563
(60,336)
48,563
Provision for employee entitlements
28,147
88,483
28,147
88,483
Employee entitlements represent unused annual and long service leave.
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(v)
Accounting Standards not yet effective
Australian Accounting Standards that have recently been issued or amended but are not yet effective for
the parent and consolidated entity have not been adopted for the annual reporting period ended
31 December 2008.
AASB
Amendment
Affected
Standard(s)
Nature of Change to Accounting
Policy
Application
Date of
Standard*
Application
Date for
Group
AASB 3 (reissued
March 2008)
Business Combinations Released as part of long term
international convergence project
between IASB and FASB. The
revised standard introduces more
detailed guidance on accounting for
step acquisitions, adjustments to
contingent consideration, assets
acquired that the purchaser does
not intend to use, reacquired rights
and share-based payments as part
of purchase consideration. Also, all
acquisition costs will have to be
expensed instead of being
recognised as part of goodwill.
The revised AASB 101: Presentation
of Financial Statements issued in
September 2007 requires the
presentation of a statement of
comprehensive income.
The revised AASB 123: Borrowing
Costs issued in June 2007 has
removed the option to expense all
borrowing costs. This amendment
will require the capitalisation of all
borrowing costs directly attributable
to the acquisition, construction or
production of a qualifying asset.
However, there will be no direct
impact to the amounts included in
the financial group as they already
capitalize borrowing costs related to
qualifying assets.
Removal of option to expense all
borrowing costs and when adopted
will require the capitalisation of all
borrowing costs directly attributable
to the acquisition of a qualifying
asset. There is expected to be no
impact on the financial report of the
Group.
Requires changes to presentation
and disclosure but will not affect any
of the amounts recognised in the
financial statements.
1 July 2009
Business
combinations
where the
acquisition
date is on or
after the
beginning of
the first
reporting
period that
commences
1 July 2009
or later
1.1.2009
1.7.2009
1.1.2009
1.7.2009
1 Jan 09
1 Jan 09
1 Jan 09
1 Jan 09
AASB 20078
Amendments to
Australian
Accounting
Standards
AASB 20076
Amendments to
Australian
Accounting
Standards
Revised AASB
123 and AASB
2007-6
Revised AASB
101
AASB 101 Presentation
of Financial
Statements
AASB 1 First time
adoption of AIFRS
AASB 101 Presentation
of Financial
Statements
AASB 107 Cash Flow
Statements
AASB 111 Construction
Contracts
AASB 116 Property,
Plant and Equipment
AASB 138 Intangible
Assets
AASB 123 Borrowing
Costs and AASB 2007-
6 Amendments to
Australian Accounting
Standards arising from
AASB 123,
Revised AASB 101
Presentation of
Financial Statements
and AASB 2007-8
Amendments to
Australian Accounting
Standards arising from
AASB 101.
ANNUAL REPORT 2008
36
ANNUAL REPORT 2008
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23/4/09 4:00:16 PM
AASB 8 and
AASB 2007-3
AASB 8 Operating
Segments and AASB
2007-3 Amendments
to Australian
Accounting Standards
arising from AASB 8.
Significant change in the approach
to segment reporting and
disclosure, however it is not
expected to affect any of the
amounts recognised in the financial
statements.
1 Jan 09
1 Jan 09
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
12. MINORITY INTERESTS
(v)
Accounting Standards not yet effective (continued)
The following amendments are not applicable to the Group and therefore have no impact
AASB
Amendment
Affected Standard(s)
Nature of Change to
Accounting Policy
Application
Date of
Standard
Application
Date for
Group
No change to accounting policy
required. Therefore no impact.
1 Jul 08
1 Jan 09
No change to accounting policy
required. Therefore no impact.
1 Jan 09
1 Jan 09
2007-9
2008-2
AASB-I 14
Amendments to Australian
Accounting Standards arising
from the review of AASs 27,
29 and 31.
Amendments to Accounting
Standards Puttable
Financial Instruments and
Obligations Arising on
Liquidation
AASB-I 14 The limit on a
Defined Benefit Asset,
Minimum Funding
Requirements and their
Interaction
Application date is for the annual reporting periods beginning on or after the date shown in the above table.
No change to accounting policy
required. Therefore no impact.
1 Jan 08
1 Jan 08
13.
TRADE AND OTHER RECEIVABLES NON-CURRENT
During the year, two subsidiaries ownership interests were restructured to comply with South African
legislation. Ordinary shares were issued to the Black Empowerment Parties to effect these changes.
Minority interests in subsidiaries comprise:
Interest in retained profits at the beginning of the financial
year after adjusting for outside equity interests in the
entities acquired during the financial year
Operating loss
Share capital
Reserves
Total minority interests
Consolidated Entity
2007
2008
$
$
-
-
-
-
54,710
79,630
54,710
79,630
134,340
134,340
Opening Balance
Investment in subsidiary
Adjustment arising from consolidation
Loans and advances - controlled entities
Less impairment
Total Trade and other receivables
-
-
-
-
-
-
2,261,727
9,917,134
9,100,328
-
(2,261,727)
-
-
-
-
-
-
-
3,370,712
4,255,741
(1,446,278)
(3,438,935)
11,841,568
9,917,134
Recovery of the loans to controlled entities is dependent upon the commercial exploitation of mining
tenements held by the controlled entities.
(a)
Impaired receivables and receivables past due
As at 31 December 2008 non current loans and advances with a nominal value of $1,446,278 (2007
$3,438,935) were impaired.
This related to the following loans:
(i) $1,415,246 advanced to Kariba Kono (SL) Ltd. It is expected that the sale of the assets of this entity
will not generate sufficient funds in order for this receivable to be repaid. Please refer to Note 1(b) in
respect to loans to Erebus Ltd and Kariba Kono (S.L.) Ltd.
(ii) $31,033 (2007: Nil) advanced to Blackhawk Oil & Gas Ltd and Queensland Minex NL were also
considered to be impaired.
(b)
Risk Exposure
Information about the Groups and the parent entitys exposure to credit risk, foreign exchange and
interest rate risk is provided in Note 25.
ANNUAL REPORT 2008
26
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 28
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
11(b) SUBSIDIARIES
2.
OTHER REVENUE FROM CONTINUING OPERATIONS
Erebus Plc (refer Note (1b)
Ord
United Kingdom
-
100
Australia
100
100
1,000
1,000
3.
LOSS FOR THE YEAR
-
-
-
-
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Unquoted investments - at cost
Shares in controlled entities
6
6
-
-
1,451,001
1,551,001
1,451,001
1,551,001
Subsidiaries
Parent Entity
Class of
Share
Place of
Incorporation Equity Holding
2007
2008
%
%
Cost to Company
2008
$
2007
$
Mineral Commodities Limited
Australia
-
-
Controlled Entities
Rexelle Pty Ltd
Queensland Minex NL
Q Smelt Pty Ltd
Mincom Waste Pty Ltd
MRC Resources (Pty) Ltd
MRC Africa Pty Ltd
Ord
Ord
Ord
Ord
Ord
Ord
Kariba Kono (S.L.) Ltd (refer
Note (1b)
Blackhawk Oil & Gas Ltd
Ord
Ord
Less Impairment
Australia
100
100
1,450,001
1,450,001
Australia
100
100
4,718,302
4,718,302
Australia
90
90
Australia
100
100
South Africa
100
100
-
-
-
-
-
-
Sierra Leone
100
100
Australia
100
100
100,000
100,000
6,269,303
6,269,303
(4,818,302)
(4,718,302)
1,451,001
1,551,001
Subsidiaries of MRC
Resources (Pty) Ltd
Class of
Share
Place of
Incorporation Equity Holding
2007
2008
%
%
Cost to Company
2008
$
2007
$
Transworld Energy & Minerals
Resources (SA) (Pty) Limited ¹
Mineral Sands Resources (Pty)
Ltd ²
Nyati Titanium Eastern Cape
(Pty) Ltd
MRC Metals (Pty) Ltd
Skeleton Coast Resources (Pty)
Ltd
Ord
South Africa
56
75
2,500,000
2,500,000
Ord
Ord
Ord
Ord
South Africa
50
100
South Africa
100
100
South Africa
100
100
Namibia
100
100
-
-
-
-
-
-
-
-
Please refer to Note 1(b) in respect to Erebus Ltd and Kariba Kono Pty Ltd.
¹ MRC Resources (Pty) Ltd shareholding reduced by 19% following the transfer to the Black Economic
Enterprise partner.
² MRC Resources (Pty) Ltd shareholding reduced by 50% following the transfer to the Black Economic
Enterprise partner
Interest
Interest revenue from unrelated
entities
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
89,995
133,000
74,739
127,830
Interest revenue from controlled entity
-
-
415,225
304,809
Other Income
Gain from sales of investments in
listed companies
89,995
133,000
489,964
432,639
471,562
539,419
471,562
539,419
Management fees
45,000
90,000
140,685
201,183
Miscellaneous and other income
2,664
2,885
2,664
2,885
Total Revenue from continuing
operations
609,221
765,304
1,104,875
1,176,126
Loss before income tax has been
arrived at after charging the following:
Exploration expenditure written off
157,663
186,867
157,663
186,867
Operating Lease rentals
70,133
69,741
70,133
69,741
Depreciation - Plant and Equipment
62,442
102,511
60,899
60,477
Superannuation contributions
26,350
25,585
19,876
17,984
Movement in provision for employee
entitlements
(60,336)
48,563
(60,336)
48,563
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
4.
INCOME TAX
11(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
-
-
-
-
-
-
-
-
The components of current income tax
expense comprise:
Current taxation
Income tax (benefit) reported in the
income statement
The prima facie tax on loss before
income tax is reconciled to the income
tax expense as follows:
Interests are held in the following associated companies:
Name
Listed
Principal
Activity
Ownership
Interest
Carrying Amount of
Investment
2008 2007
2008
2007
%
%
Allied Gold Ltd (Incorporated in Australia)
Mineral
exploration
Ord
3.78
5.71
-
-
3,298,437
3,298,437
Movements during the year in Equity Accounted investments
in Associated Companies
Carrying amount at beginning of financial year
3,298,437
3,623,988
Loss before income tax
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Disposal of Leonaust Mining Company Ltd
Prima facie tax payable / (benefit) on
loss @ 30% (2007:30%)
(454,698)
(2,103,024)
(221,007)
(2,057,517)
Non allowable items
427,222
(429,596)
917,548
70,113
Non-assessable income
(43,110)
(43,110)
(43,110)
(43,110)
Net deferred tax assets not brought to
account
Benefit of losses not previously
brought to account
Income tax expense / (benefit)
Future income tax benefit arising from
un-recouped deductions at balance
date, for Australian tax resident
entities.
70,586
2,575,730
(653,430)
2,030,514
-
-
-
-
-
-
-
-
Revenue losses
Capital losses
3,644,600
2,923,764
1,726,016
1,467,402
4,689,637
4,643,254
4,689,637
4,643,254
In addition the economic entity has unconfirmed tax losses and accumulated exploration expenditure that
gives rise to potential carry forward tax benefits in South Africa amounting to approximately Rand 16.2
million (approximately A$2.7 million). The benefit of these potential future tax benefits has not been
brought to account, and will only be realised if circumstances similar to those described above, also apply
to the economic entitys future operations in South Africa.
There are no franking credits available.
Investments in associates acquired during the year, at
cost
Cost of shares in associates sold during the year
Share of associate's net loss
Net gain on deemed disposal
Reclassify to Fair Value
-
-
-
-
-
(74,174)
632,043
(686,890)
(286,097)
89,567
(3,298,437)
-
Carrying amount at end of financial year
-
3,298,437
Summarised Presentation of Aggregate Assets, Liabilities and
Performance of Associates
The Consolidated entitys share of the results of its associate and its
aggregated assets (including goodwill) and liabilities are as follows:
Current Assets
Non current assets
Total assets
Current liabilities
Non current liabilities
Total liabilities
Net assets as reported by associates
Share of net (loss) profit
after income tax as reported by the associate
2008
2007
$
$
-
-
-
-
-
-
-
-
528,021
7,541,951
8,069,972
3,096,004
411,755
3,507,759
4,562,213
(286,097)
During 2008 Mineral Commodities Limited sold 4 million shares in Allied Gold Limited reducing its
ownership to 3.78%, as a consequence of this and also Board restructure the holding has been reclassified
as an available for sale investment with a fair value of $6,524,439 refer Note 7.
Prior to this, although Mineral Commodities Limited owned less than 20% of Allied Gold Limited, it was in a
position of significant influence because it is one of the largest shareholders of Allied Gold Limited, and two
of the Mineral Commodities Limited directors are also directors of Allied Gold, amounting to 40% Board
representation throughout the relevant period.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
10.
EXPLORATION AND DEVELOPMENT EXPENDITURE
5.
CASH AND CASH EQUIVALENTS
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Exploration expenditure - costs carried
forward in respect of areas of interest
in:
Exploration and evaluation phases
12,026,008
11,394,491
Total exploration and evaluation
expenditure
12,026,008
11,394,491
Reconciliation of the carrying amount of
mining tenements at the beginning and
end of the current and the previous
financial year.
Carrying amount at beginning of year
11,394,491
8,863,985
Exploration expenditure on consolidation
of Erebus/ Kariba Kono
-
4,606,608
-
-
-
-
-
-
42,256
-
Expenditure during the year
2,505,464
2,233,094
157,663
144,611
Expenditure outlaid other than in cash
-
-
Impairment of exploration expenditure
(983,069)
(3,606,608)
Foreign exchange translation reserve
(733,215)
(515,721)
-
-
-
-
-
-
Write off discontinued projects
(157,663)
(186,867)
(157,663)
(186,867)
Carrying amount at end of year
12,026,008
11,394,491
-
-
Recoupment of carried forward exploration and evaluation expenditure is dependent upon the granting of
mining rights and successful development and commercial exploitation of each area of interest, or
otherwise by their sale at an amount not less than the carrying value.
The impairment loss of $983,069 (2007:3,606,608) was brought to account in respect of the exploration
assets contained within the Companys Sierra Leone project. The impairment value has been calculated to
write off all carrying value.
11(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Consolidated
2008
$
2007
$
Investment in companies accounted for
using the equity method
At the beginning of the year
3,298,437
4,562,213
Equity accounting adjustments
-
(1,263,776)
Reclassify to fair value investment
(3,298,437)
-
-
3,298,437
Cash at Bank
797,328
2,177,864
256,698
2,150,627
797,328
2,177,864
256,698
2,150,627
The effective interest rate on cash at bank in 2008 was 6.38% (2007:6.0%)
(a)
Interest rate risk exposure
The consolidated and parent entitys exposure to interest rate risk is discussed in Note 25.
(b)
Reconciliation to cash at the end of the year
The above figures represent the cash at the end of the financial year as shown in the Cash Flow
Statement.
6.
TRADE AND OTHER RECEIVABLES CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Trade receivables
Term deposits
Other receivables
54,026
35,634
54,026
35,639
12,934
36,950
-
-
2,094,068
361,897
2,034,216
250,356
Loans receivable from other entities
81,250
65,440
-
-
2,242,278
499,921
2,088,241
285,995
(a)
Fair Values and credit risk
Due to the short term nature of these receivables the carrying values represent their respective fair values
as at 31 December 2008 and 2007.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivables mentioned above. Refer to Note 25 for more information on the risk management policy of the
Group and the credit quality of the entitys receivables.
(b)
Foreign Exchange and Interest Rate Risk
Information about the Groups and the parent entitys exposure to foreign exchange and interest rate Risk
in relation to trade and other receivables is provided in Note 25.
(c)
Other Receivables
An amount of $2,000,000 (2007: Nil) relates to the settlement reached with Promet et al, which was
received in January 2009. These amounts generally arise from transactions outside the usual operating
activities of the Group and collateral is not normally obtained.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
7.
FINANCIAL ASSETS - CURRENT
7.
FINANCIAL ASSETS CURRENT (continued)
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
(a)
Risk Exposure
Information about the Groups and the parent entitys exposure to credit risk, foreign exchange and
interest rate risk is provided in Note 25.
Available for sale Investments
Investments in companies listed on a
recognised stock exchange - shares at
fair value
At the beginning of the year
75,000
10,000
75,000
10,000
Investments re classified from unlisted
investments
-
65,000
-
65,000
Adjustment to fair value
(18,569)
-
(18,569)
-
8
OTHER CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Prepayments
13,145
16,723
13,145
16,723
Reclassify investment in Allied Gold Ltd
from equity accounted investments
Total available for sale investments in
companies listed on a recognised stock
exchange
Available for sale investment in
companies not listed on a recognised
stock exchange
56,431
75,000
56,431
75,000
6,524,439
-
6,524,439
-
9.
PROPERTY, PLANT AND EQUIPMENT
6,580,870
75,000
6,580,870
75,000
Accumulated depreciation
(290,568)
(218,951)
(163,109)
(135,818)
Plant and office equipment - at cost
663,628
1,794,056
530,425
1,562,562
Total property, plant and equipment
373,060
1,575,105
367,316
1,426,744
At the beginning of the year
361,398
50,000
361,398
50,000
Investment this year
14,826
376,398
14,826
376,398
Transfer to Investments listed on a
recognised stock exchange
Total available for sale investments in
companies not listed on a recognised
stock exchange¹
-
(65,000)
-
(65,000)
376,224
361,398
376,224
361,398
Total Financial Assets - Current
6,957,094
436,398
6,957,094
436,398
Available for sale financial assets comprise investments in the ordinary share capital of various entities.
There are no fixed returns or fixed maturity date attached to these investments.
Fair Value of Investment in Allied Gold Limited
The market value of this investment in Allied Gold at balance date was $6,524,439 based on a price per
share of 42 cents. The investment by Mineral Commodities Ltd in Allied Gold Ltd has been reclassified
from equity accounted to fair value refer Note 11(a).
¹ Non listed investments have been valued as an approximate to their fair value.
Reconciliation of the carrying amount
of plant & equipment at the beginning
and end of the current and previous
financial year
Plant and office equipment
Carrying amount at beginning of year
1,575,105
2,544,443
1,426,744
2,542,171
Additions
Impairment
Depreciation
7,946
518,260
5,445
330,137
(1,104,766)
(1,385,087)
(1,003,974)
(1,385,087)
(105,225)
(102,511)
(60,899)
(60,477)
Carrying amount at end of year
373,060
1,575,105
367,316
1,426,744
(a)
During 2008 an impairment loss of $1,003,974 (2007 $1,385,087) was brought to account in respect of
the Diamond pan plant situated in Sierra Leone. The impairment value has been calculated to write off the
full carrying value.
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
7.
FINANCIAL ASSETS - CURRENT
7.
FINANCIAL ASSETS CURRENT (continued)
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
(a)
Risk Exposure
Information about the Groups and the parent entitys exposure to credit risk, foreign exchange and
interest rate risk is provided in Note 25.
Available for sale Investments
Investments in companies listed on a
recognised stock exchange - shares at
fair value
At the beginning of the year
75,000
10,000
75,000
10,000
Investments re classified from unlisted
investments
-
65,000
-
65,000
Adjustment to fair value
(18,569)
-
(18,569)
-
8
OTHER CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Prepayments
13,145
16,723
13,145
16,723
Reclassify investment in Allied Gold Ltd
from equity accounted investments
Total available for sale investments in
companies listed on a recognised stock
exchange
Available for sale investment in
companies not listed on a recognised
stock exchange
56,431
75,000
56,431
75,000
6,524,439
-
6,524,439
-
9.
PROPERTY, PLANT AND EQUIPMENT
6,580,870
75,000
6,580,870
75,000
Accumulated depreciation
(290,568)
(218,951)
(163,109)
(135,818)
Plant and office equipment - at cost
663,628
1,794,056
530,425
1,562,562
Total property, plant and equipment
373,060
1,575,105
367,316
1,426,744
At the beginning of the year
361,398
50,000
361,398
50,000
Investment this year
14,826
376,398
14,826
376,398
Transfer to Investments listed on a
recognised stock exchange
Total available for sale investments in
companies not listed on a recognised
stock exchange¹
-
(65,000)
-
(65,000)
376,224
361,398
376,224
361,398
Total Financial Assets - Current
6,957,094
436,398
6,957,094
436,398
Available for sale financial assets comprise investments in the ordinary share capital of various entities.
There are no fixed returns or fixed maturity date attached to these investments.
Fair Value of Investment in Allied Gold Limited
The market value of this investment in Allied Gold at balance date was $6,524,439 based on a price per
share of 42 cents. The investment by Mineral Commodities Ltd in Allied Gold Ltd has been reclassified
from equity accounted to fair value refer Note 11(a).
¹ Non listed investments have been valued as an approximate to their fair value.
Reconciliation of the carrying amount
of plant & equipment at the beginning
and end of the current and previous
financial year
Plant and office equipment
Carrying amount at beginning of year
1,575,105
2,544,443
1,426,744
2,542,171
Additions
Impairment
Depreciation
7,946
518,260
5,445
330,137
(1,104,766)
(1,385,087)
(1,003,974)
(1,385,087)
(105,225)
(102,511)
(60,899)
(60,477)
Carrying amount at end of year
373,060
1,575,105
367,316
1,426,744
(a)
During 2008 an impairment loss of $1,003,974 (2007 $1,385,087) was brought to account in respect of
the Diamond pan plant situated in Sierra Leone. The impairment value has been calculated to write off the
full carrying value.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
10.
EXPLORATION AND DEVELOPMENT EXPENDITURE
5.
CASH AND CASH EQUIVALENTS
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Exploration expenditure - costs carried
forward in respect of areas of interest
in:
Exploration and evaluation phases
12,026,008
11,394,491
Total exploration and evaluation
expenditure
12,026,008
11,394,491
Reconciliation of the carrying amount of
mining tenements at the beginning and
end of the current and the previous
financial year.
Carrying amount at beginning of year
11,394,491
8,863,985
Exploration expenditure on consolidation
of Erebus/ Kariba Kono
-
4,606,608
-
-
-
-
-
-
42,256
-
Expenditure during the year
2,505,464
2,233,094
157,663
144,611
Expenditure outlaid other than in cash
-
-
Impairment of exploration expenditure
(983,069)
(3,606,608)
Foreign exchange translation reserve
(733,215)
(515,721)
-
-
-
-
-
-
Write off discontinued projects
(157,663)
(186,867)
(157,663)
(186,867)
Carrying amount at end of year
12,026,008
11,394,491
-
-
Recoupment of carried forward exploration and evaluation expenditure is dependent upon the granting of
mining rights and successful development and commercial exploitation of each area of interest, or
otherwise by their sale at an amount not less than the carrying value.
The impairment loss of $983,069 (2007:3,606,608) was brought to account in respect of the exploration
assets contained within the Companys Sierra Leone project. The impairment value has been calculated to
write off all carrying value.
11(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Consolidated
2008
$
2007
$
Investment in companies accounted for
using the equity method
At the beginning of the year
3,298,437
4,562,213
Equity accounting adjustments
-
(1,263,776)
Reclassify to fair value investment
(3,298,437)
-
-
3,298,437
Cash at Bank
797,328
2,177,864
256,698
2,150,627
797,328
2,177,864
256,698
2,150,627
The effective interest rate on cash at bank in 2008 was 6.38% (2007:6.0%)
(a)
Interest rate risk exposure
The consolidated and parent entitys exposure to interest rate risk is discussed in Note 25.
(b)
Reconciliation to cash at the end of the year
The above figures represent the cash at the end of the financial year as shown in the Cash Flow
Statement.
6.
TRADE AND OTHER RECEIVABLES CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Trade receivables
Term deposits
Other receivables
54,026
35,634
54,026
35,639
12,934
36,950
-
-
2,094,068
361,897
2,034,216
250,356
Loans receivable from other entities
81,250
65,440
-
-
2,242,278
499,921
2,088,241
285,995
(a)
Fair Values and credit risk
Due to the short term nature of these receivables the carrying values represent their respective fair values
as at 31 December 2008 and 2007.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivables mentioned above. Refer to Note 25 for more information on the risk management policy of the
Group and the credit quality of the entitys receivables.
(b)
Foreign Exchange and Interest Rate Risk
Information about the Groups and the parent entitys exposure to foreign exchange and interest rate Risk
in relation to trade and other receivables is provided in Note 25.
(c)
Other Receivables
An amount of $2,000,000 (2007: Nil) relates to the settlement reached with Promet et al, which was
received in January 2009. These amounts generally arise from transactions outside the usual operating
activities of the Group and collateral is not normally obtained.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
4.
INCOME TAX
11(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
-
-
-
-
-
-
-
-
The components of current income tax
expense comprise:
Current taxation
Income tax (benefit) reported in the
income statement
The prima facie tax on loss before
income tax is reconciled to the income
tax expense as follows:
Interests are held in the following associated companies:
Name
Listed
Principal
Activity
Ownership
Interest
Carrying Amount of
Investment
2008 2007
2008
2007
%
%
Allied Gold Ltd (Incorporated in Australia)
Mineral
exploration
Ord
3.78
5.71
-
-
3,298,437
3,298,437
Movements during the year in Equity Accounted investments
in Associated Companies
Carrying amount at beginning of financial year
3,298,437
3,623,988
Loss before income tax
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Disposal of Leonaust Mining Company Ltd
Prima facie tax payable / (benefit) on
loss @ 30% (2007:30%)
(454,698)
(2,103,024)
(221,007)
(2,057,517)
Non allowable items
427,222
(429,596)
917,548
70,113
Non-assessable income
(43,110)
(43,110)
(43,110)
(43,110)
Net deferred tax assets not brought to
account
Benefit of losses not previously
brought to account
Income tax expense / (benefit)
Future income tax benefit arising from
un-recouped deductions at balance
date, for Australian tax resident
entities.
70,586
2,575,730
(653,430)
2,030,514
-
-
-
-
-
-
-
-
Revenue losses
Capital losses
3,644,600
2,923,764
1,726,016
1,467,402
4,689,637
4,643,254
4,689,637
4,643,254
In addition the economic entity has unconfirmed tax losses and accumulated exploration expenditure that
gives rise to potential carry forward tax benefits in South Africa amounting to approximately Rand 16.2
million (approximately A$2.7 million). The benefit of these potential future tax benefits has not been
brought to account, and will only be realised if circumstances similar to those described above, also apply
to the economic entitys future operations in South Africa.
There are no franking credits available.
Investments in associates acquired during the year, at
cost
Cost of shares in associates sold during the year
Share of associate's net loss
Net gain on deemed disposal
Reclassify to Fair Value
-
-
-
-
-
(74,174)
632,043
(686,890)
(286,097)
89,567
(3,298,437)
-
Carrying amount at end of financial year
-
3,298,437
Summarised Presentation of Aggregate Assets, Liabilities and
Performance of Associates
The Consolidated entitys share of the results of its associate and its
aggregated assets (including goodwill) and liabilities are as follows:
Current Assets
Non current assets
Total assets
Current liabilities
Non current liabilities
Total liabilities
Net assets as reported by associates
Share of net (loss) profit
after income tax as reported by the associate
2008
2007
$
$
-
-
-
-
-
-
-
-
528,021
7,541,951
8,069,972
3,096,004
411,755
3,507,759
4,562,213
(286,097)
During 2008 Mineral Commodities Limited sold 4 million shares in Allied Gold Limited reducing its
ownership to 3.78%, as a consequence of this and also Board restructure the holding has been reclassified
as an available for sale investment with a fair value of $6,524,439 refer Note 7.
Prior to this, although Mineral Commodities Limited owned less than 20% of Allied Gold Limited, it was in a
position of significant influence because it is one of the largest shareholders of Allied Gold Limited, and two
of the Mineral Commodities Limited directors are also directors of Allied Gold, amounting to 40% Board
representation throughout the relevant period.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
11(b) SUBSIDIARIES
2.
OTHER REVENUE FROM CONTINUING OPERATIONS
Erebus Plc (refer Note (1b)
Ord
United Kingdom
-
100
Australia
100
100
1,000
1,000
3.
LOSS FOR THE YEAR
-
-
-
-
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Unquoted investments - at cost
Shares in controlled entities
6
6
-
-
1,451,001
1,551,001
1,451,001
1,551,001
Subsidiaries
Parent Entity
Class of
Share
Place of
Incorporation Equity Holding
2007
2008
%
%
Cost to Company
2008
$
2007
$
Mineral Commodities Limited
Australia
-
-
Controlled Entities
Rexelle Pty Ltd
Queensland Minex NL
Q Smelt Pty Ltd
Mincom Waste Pty Ltd
MRC Resources (Pty) Ltd
MRC Africa Pty Ltd
Ord
Ord
Ord
Ord
Ord
Ord
Kariba Kono (S.L.) Ltd (refer
Note (1b)
Blackhawk Oil & Gas Ltd
Ord
Ord
Less Impairment
Australia
100
100
1,450,001
1,450,001
Australia
100
100
4,718,302
4,718,302
Australia
90
90
Australia
100
100
South Africa
100
100
-
-
-
-
-
-
Sierra Leone
100
100
Australia
100
100
100,000
100,000
6,269,303
6,269,303
(4,818,302)
(4,718,302)
1,451,001
1,551,001
Subsidiaries of MRC
Resources (Pty) Ltd
Class of
Share
Place of
Incorporation Equity Holding
2007
2008
%
%
Cost to Company
2008
$
2007
$
Transworld Energy & Minerals
Resources (SA) (Pty) Limited ¹
Mineral Sands Resources (Pty)
Ltd ²
Nyati Titanium Eastern Cape
(Pty) Ltd
MRC Metals (Pty) Ltd
Skeleton Coast Resources (Pty)
Ltd
Ord
South Africa
56
75
2,500,000
2,500,000
Ord
Ord
Ord
Ord
South Africa
50
100
South Africa
100
100
South Africa
100
100
Namibia
100
100
-
-
-
-
-
-
-
-
Please refer to Note 1(b) in respect to Erebus Ltd and Kariba Kono Pty Ltd.
¹ MRC Resources (Pty) Ltd shareholding reduced by 19% following the transfer to the Black Economic
Enterprise partner.
² MRC Resources (Pty) Ltd shareholding reduced by 50% following the transfer to the Black Economic
Enterprise partner
Interest
Interest revenue from unrelated
entities
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
89,995
133,000
74,739
127,830
Interest revenue from controlled entity
-
-
415,225
304,809
Other Income
Gain from sales of investments in
listed companies
89,995
133,000
489,964
432,639
471,562
539,419
471,562
539,419
Management fees
45,000
90,000
140,685
201,183
Miscellaneous and other income
2,664
2,885
2,664
2,885
Total Revenue from continuing
operations
609,221
765,304
1,104,875
1,176,126
Loss before income tax has been
arrived at after charging the following:
Exploration expenditure written off
157,663
186,867
157,663
186,867
Operating Lease rentals
70,133
69,741
70,133
69,741
Depreciation - Plant and Equipment
62,442
102,511
60,899
60,477
Superannuation contributions
26,350
25,585
19,876
17,984
Movement in provision for employee
entitlements
(60,336)
48,563
(60,336)
48,563
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
12. MINORITY INTERESTS
(v)
Accounting Standards not yet effective (continued)
The following amendments are not applicable to the Group and therefore have no impact
AASB
Amendment
Affected Standard(s)
Nature of Change to
Accounting Policy
Application
Date of
Standard
Application
Date for
Group
No change to accounting policy
required. Therefore no impact.
1 Jul 08
1 Jan 09
No change to accounting policy
required. Therefore no impact.
1 Jan 09
1 Jan 09
2007-9
2008-2
AASB-I 14
Amendments to Australian
Accounting Standards arising
from the review of AASs 27,
29 and 31.
Amendments to Accounting
Standards Puttable
Financial Instruments and
Obligations Arising on
Liquidation
AASB-I 14 The limit on a
Defined Benefit Asset,
Minimum Funding
Requirements and their
Interaction
Application date is for the annual reporting periods beginning on or after the date shown in the above table.
No change to accounting policy
required. Therefore no impact.
1 Jan 08
1 Jan 08
13.
TRADE AND OTHER RECEIVABLES NON-CURRENT
During the year, two subsidiaries ownership interests were restructured to comply with South African
legislation. Ordinary shares were issued to the Black Empowerment Parties to effect these changes.
Minority interests in subsidiaries comprise:
Interest in retained profits at the beginning of the financial
year after adjusting for outside equity interests in the
entities acquired during the financial year
Operating loss
Share capital
Reserves
Total minority interests
Consolidated Entity
2007
2008
$
$
-
-
-
-
54,710
79,630
54,710
79,630
134,340
134,340
Opening Balance
Investment in subsidiary
Adjustment arising from consolidation
Loans and advances - controlled entities
Less impairment
Total Trade and other receivables
-
-
-
-
-
-
2,261,727
9,917,134
9,100,328
-
(2,261,727)
-
-
-
-
-
-
-
3,370,712
4,255,741
(1,446,278)
(3,438,935)
11,841,568
9,917,134
Recovery of the loans to controlled entities is dependent upon the commercial exploitation of mining
tenements held by the controlled entities.
(a)
Impaired receivables and receivables past due
As at 31 December 2008 non current loans and advances with a nominal value of $1,446,278 (2007
$3,438,935) were impaired.
This related to the following loans:
(i) $1,415,246 advanced to Kariba Kono (SL) Ltd. It is expected that the sale of the assets of this entity
will not generate sufficient funds in order for this receivable to be repaid. Please refer to Note 1(b) in
respect to loans to Erebus Ltd and Kariba Kono (S.L.) Ltd.
(ii) $31,033 (2007: Nil) advanced to Blackhawk Oil & Gas Ltd and Queensland Minex NL were also
considered to be impaired.
(b)
Risk Exposure
Information about the Groups and the parent entitys exposure to credit risk, foreign exchange and
interest rate risk is provided in Note 25.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
14.
TRADE AND OTHER PAYABLES - CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Trade payables - unsecured
704,742
156,517
129,170
25,616
Other payables and accruals - unsecured
336,314
104,130
273,204
66,353
1,041,056
260,647
402,374
91,969
Refer to Note 25 for details of interest rates incurred on payables.
Risk Exposure
Information about the Groups and the parent entitys exposure to foreign exchange risk is provided in
Note 25.
15.
PROVISIONS NON-CURRENT
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Provision for employee entitlements
Opening balance
88,483
39,920
88,483
39,920
Movement for the period
(60,336)
48,563
(60,336)
48,563
Provision for employee entitlements
28,147
88,483
28,147
88,483
Employee entitlements represent unused annual and long service leave.
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(v)
Accounting Standards not yet effective
Australian Accounting Standards that have recently been issued or amended but are not yet effective for
the parent and consolidated entity have not been adopted for the annual reporting period ended
31 December 2008.
AASB
Amendment
Affected
Standard(s)
Nature of Change to Accounting
Policy
Application
Date of
Standard*
Application
Date for
Group
AASB 3 (reissued
March 2008)
Business Combinations Released as part of long term
international convergence project
between IASB and FASB. The
revised standard introduces more
detailed guidance on accounting for
step acquisitions, adjustments to
contingent consideration, assets
acquired that the purchaser does
not intend to use, reacquired rights
and share-based payments as part
of purchase consideration. Also, all
acquisition costs will have to be
expensed instead of being
recognised as part of goodwill.
The revised AASB 101: Presentation
of Financial Statements issued in
September 2007 requires the
presentation of a statement of
comprehensive income.
The revised AASB 123: Borrowing
Costs issued in June 2007 has
removed the option to expense all
borrowing costs. This amendment
will require the capitalisation of all
borrowing costs directly attributable
to the acquisition, construction or
production of a qualifying asset.
However, there will be no direct
impact to the amounts included in
the financial group as they already
capitalize borrowing costs related to
qualifying assets.
Removal of option to expense all
borrowing costs and when adopted
will require the capitalisation of all
borrowing costs directly attributable
to the acquisition of a qualifying
asset. There is expected to be no
impact on the financial report of the
Group.
Requires changes to presentation
and disclosure but will not affect any
of the amounts recognised in the
financial statements.
1 July 2009
Business
combinations
where the
acquisition
date is on or
after the
beginning of
the first
reporting
period that
commences
1 July 2009
or later
1.1.2009
1.7.2009
1.1.2009
1.7.2009
1 Jan 09
1 Jan 09
1 Jan 09
1 Jan 09
AASB 20078
Amendments to
Australian
Accounting
Standards
AASB 20076
Amendments to
Australian
Accounting
Standards
Revised AASB
123 and AASB
2007-6
Revised AASB
101
AASB 101 Presentation
of Financial
Statements
AASB 1 First time
adoption of AIFRS
AASB 101 Presentation
of Financial
Statements
AASB 107 Cash Flow
Statements
AASB 111 Construction
Contracts
AASB 116 Property,
Plant and Equipment
AASB 138 Intangible
Assets
AASB 123 Borrowing
Costs and AASB 2007-
6 Amendments to
Australian Accounting
Standards arising from
AASB 123,
Revised AASB 101
Presentation of
Financial Statements
and AASB 2007-8
Amendments to
Australian Accounting
Standards arising from
AASB 101.
ANNUAL REPORT 2008
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AASB 8 and
AASB 2007-3
AASB 8 Operating
Segments and AASB
2007-3 Amendments
to Australian
Accounting Standards
arising from AASB 8.
Significant change in the approach
to segment reporting and
disclosure, however it is not
expected to affect any of the
amounts recognised in the financial
statements.
1 Jan 09
1 Jan 09
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
16.
CONTRIBUTED EQUITY
(t)
Non-current assets (or disposal groups) held for sale and discontinued operations (continued)
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised
while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale continue to be recognised.
A discontinued operation is a component of the entity that has been disposed of or has been abandoned,
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 co-ordinated 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 income statement.
(u)
Critical accounting estimates and judgements
The Group makes significant estimates and judgements concerning the future. The resulting accounting
estimates may not equal the related actual results. The estimates and judgements that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Critical Accounting Estimates
The directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future
events and are based on current trends and economic data, obtained both externally and within the group.
Significant judgements in applying the entitys accounting policies
Impairment
During the year, the consolidated entity impaired its property, plant and equipment (Note 9), and
exploration and development expenditure (Note 10) in relation to the Sierra Leone assets, as the directors
have assessed that these amounts are no longer recoverable. In the parent entity, intercompany loans
totalling $1,446,278 (2007: $3,438,935) (Note 13) have been impaired as they have been assessed as
non recoverable. Although the net assets of the group are less than the parent, the intercompany loans
are considered to be recoverable through the future development of the tenements held by the
subsidiaries.
Available for sale financial assets
During the year, the company sold 4milllion shares in Allied Gold Limited, and that company restructured
their Board such that it is considered that MRC has lost significant influence (Note 11(a)). The Directors
have reclassified the remaining investment in Allied Gold as available for sale financial assets because
they intend to hold the investments to earn benefits in the medium to long term increases in the value of
these investments or they do not meet the criteria to be held as financial assets through profit and loss as
they are not monitored and evaluated on a fair value basis.
Exploration and development expenditure
Recoupment of the capitalised exploration and evaluation expenditure is dependant on the successful
development and commercial exploitation of the Xolobeni Mineral Sands and the Tormin Mineral Sands
areas of interest in South Africa. The capitalised expenditure in relation to the Xolobeni project is expected
to be fully recoverable once the grant of the mining right has been affirmed by the Minister of Minerals and
Energy in South Africa.
2008
Number of
shares
2007
Number of
shares
2008
$
2007
$
122,993,385
106,436,002
39,436,350
35,087,042
-
-
-
12,000,000
4,373,883
183,500
-
-
-
3,120,000
1,311,908
73,400
Balance at beginning of financial
year
Placement of shares, July 2007
Conversion of listed 30 cent options
Conversion of 40 cent options
Placement of shares, December
2008
Costs of capital raising
-
18,400,000
-
-
368,000
-
-
(156,000)
Balance at end of financial year
141,393,385
122,993,385
39,804,350
39,436,350
In December 2008 the Company placed 18.4 million shares to various Investors at 2 cents per share
to raise $368,000.
(a)
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
company in proportion to the number of and amounts paid on the shares held. On a show of hands every
holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
(b)
Capital risk management
The Groups and the parent entitys objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they can continue to provide returns to shareholders and benefits for
other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets in order
to maintain sufficient funds necessary to continue its operations.
As a junior mineral explorer debt financing is not an option until such time as the Companys projects have
reached a stage at which debt financing can be obtained, therefore the company considers its contributed
equity as its capital during this period.
ANNUAL REPORT 2008
24
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
17.
RESERVES
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
General Reserve
2,551,100
2,551,100
-
-
Financial asset revaluation reserve
2,872,076
12,567
2,872,076
12,567
Share based payments reserve
78,500
78,500
78,500
78,500
Foreign currency translation reserve
(584,211)
(1,162,270)
(212,276)
(99,617)
4,917,465
1,479,897
2,738,300
(8,550)
Nature and purpose of reserves
General Reserve
The General Reserve arose from the issue of shares in MRC Resources Pty Ltd to an entity outside the
economic entity.
Financial asset revaluation reserve
The financial asset revaluation reserve arises from the revaluation at balance sheet date of available for
sale financial assets.
Foreign Currency Translation reserve
The foreign currency translation reserve records the unrealised foreign currency differences arising from
the translation of operations into the presentational currency of the group. Refer to accounting policy Note
1(e).
Share Based Payments Reserve
The share based payments reserve is used to recognise the fair value of options issued to employees but
not exercised and the fair value of shares issued to employees.
18.
ACCUMULATED LOSSES
Accumulated losses at beginning of the
year
Net profit (loss) attributable to
members
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
(22,000,778)
(14,990,698)
(19,261,417)
(12,403,027)
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Accumulated losses at end of the year
(23,516,439)
(22,000,778)
(19,998,108)
(19,261,417)
(o)
Employee Benefits
Wages and Salaries, Annual Leave and Sick Leave
Provision is made for the consolidated entitys liability for employee entitlements arising from services
rendered by employees to balance date. These benefits include annual leave. Sick leave is non-vesting
and has not been provided for. Employee entitlements expected to be settled within one year have been
measured at the amounts expected to be paid when the liabilities are settled and are recognised in other
payables.
The contributions made to defined contribution superannuation funds by entities within the consolidated
entity are charged against profits when due.
Share-Based Payments
Share-based compensation benefits are provided to employees via the Mineral Commodities Employee
Incentive Option Scheme. Information relating to this scheme is set out in Note 26.
The fair value of options granted under the Mineral Commodities Employee Incentive Option Scheme is
recognised as an employee expense with a corresponding increase in equity. The fair value is measured at
grant date and recognised over the period during which the employee becomes unconditionally entitled to
the options.
The fair value at grant date is independently determined using a Binomial option pricing model that takes
into account the exercise price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option.
(p)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor,
are recognised on a straight line basis.
(q)
Segment reporting
A business segment is identified for a group of assets and operations engaged in providing services that
are subject to risks and returns that are different to those of other business segments. A geographical
segment is identified when services are provided within a particular economic environment subject to risks
and returns that are different from those of segments operating in other economic environments.
(r)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and the amount
can be reliably estimated.
(s)
Comparatives
Where required by Accounting Standards comparative figures have been adjusted to conform with changes
in presentation for the current financial year.
19
LOSS PER SHARE
(t)
Non-current assets (or disposal groups) held for sale and discontinued operations
Basic loss per share (cents per share)
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic loss per share
Loss used in the calculation of basic loss
per share
Consolidated
2008
$
(1.2)
2007
$
(6.1)
124,098,533
114,795,289
(1,515,661)
(7,010,080)
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be
recovered principally through a sale or transaction rather than continuing use. They are measured at the
lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax
assets, assets arising from employee benefits, financial assets, investment property and non-current
biological assets that are carried at fair value and contractual rights under insurance contracts, which are
specifically exempt from this requirement.
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 increase in fair value less costs to
sell of an asset (or disposal group), but 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 at the date of de recognition.
The dilutive effect of the options has not been disclosed as the options were anti-dilutive.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Financial Instruments (continued)
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are
applied to determine the fair value of all unlisted securities, including recent arms length transactions,
reference to similar instructions and other pricing models.
Loans and receivables
Loans and receivables are recognised at amortised cost using the effective interest rate method. They are
included within current assets, except for those with maturities greater than 12 months after the reporting
date which are classified as non-current assets.
Available-for-sale financial assets
Available-for-sale financial assets are recognised at fair value. Unrealised gains and losses arising from
changes in fair value are taken directly to equity until the instrument is sold at which time any balance in
equity relating to the instrument is recycled to the income statement as part of the profit or loss on sale.
Financial Liabilities
Financial liabilities are recognised at amortised cost, comprising original debt less principle payments and
amortisation of transaction costs.
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial instrument
has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged
decline in the value of the instrument is considered to determine whether an impairment has arisen.
Impairment losses are recognised in the income statement. Impairment losses recognised on equity
instruments classified as available for sale are not reversed through the income statement.
(l)
Contributed Equity
Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of
the share proceeds received.
(m)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts
are shown within short-term borrowings in current liabilities on the balance sheet.
(n)
Earnings/ (Loss) per Share
Basic Earnings/ (Loss) per Share
Basic earnings per share is determined by dividing the profit after income tax attributable to members of
Mineral Commodities Ltd by the weighted average number of ordinary shares outstanding during the
financial year.
Diluted Earnings/ (Loss) per Share
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ANNUAL REPORT 2008
22
8972 MC_annual_report_PRINT.indd 24
23/4/09 4:00:14 PM
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
20.
SEGMENT INFORMATION (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Secondary Reporting
(g)
Exploration and Development Expenditure
Business Segments
The consolidated entity operates in only one business segment being the field of exploration for mineral
resources.
21.
AUDITORS REMUNERATION
During the year, the following fees were paid or payable for services provided by the auditor of the parent
entity and non-related audit firms:
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Amounts received or due and receivable
by auditors for:
Auditors of the parent entity
Audit and review
70,421
45,893
70,421
45,893
Non-related practice of the auditors
Audit of subsidiaries
5,832
12,713
-
-
76,253
58,606
70,421
45,893
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a)
Key Management Personnel Compensation
Economic Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Key Management Personnel
Short-term employee benefits
232,237
236,837
232,237
236,837
Post-employment benefits
Share-based payments
3,963
-
3,963
9,800
3,963
-
3,963
9,800
Costs incurred during the exploration and development stages of specific areas of interest are
accumulated. Such costs are only carried forward if they are expected to be fully recouped through the
successful development of the area, or where activities to date have not yet reached a stage to allow
reasonable assessment regarding the existence of economically recoverable reserves, otherwise this
expenditure is recognised in the income statement. Costs are written off as soon as an area has been
abandoned or considered to be non-commercial or provided against where an area is considered non-
commercial at the period end.
Once production commences, expenditure accumulated in respect of areas of interest is amortised on a
unit of production basis over the life of the total proven economically recoverable reserves. Restoration
costs recognised in respect of areas of interest in the exploration and evaluation stage are carried forward
as exploration and evaluation expenditure. Costs recognised after the commencement of production in
areas of interest will be charged to the profit and loss statement.
(h)
Investments
Interests in - Subsidiaries
Investments in subsidiaries are carried in the Companys financial report at cost less any impairment
losses. Dividends and distributions are brought to account in the Companys income statement when they
are declared by the subsidiaries.
Investments in associates
Associates are all entities over which the Consolidated entity has significant influence but not control,
generally accompanying a shareholding of between 20%-50% of the voting rights. Investments in
associates are accounted for in the parent entity financial statements using the cost method and in the
consolidated financial statements using the equity method of accounting, after initially being recognised at
cost. The Consolidated entitys investment in associates includes goodwill (net of any accumulated
impairment loss) identified on acquisition.
The Consolidated entitys share of its associates post acquisition profits or losses is recognised in the
income statement, and its share of post acquisition movements in reserves is recognised directly in
reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the
investment.
(i)
Impairment of Assets
At each reporting date, the group reviews the carrying values of it tangible assets and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the assets fair value less costs to sell and
value in use, is compared to the assets carrying value. Any excess of the assets carrying value over it
recoverable amount is expensed to the income statement.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
236,200
250,600
236,200
250,600
(j)
Financial Instruments
The Group classifies its financial instruments in the following categories. The classification depends on the
purpose for which the financial instrument was acquired. Management determines the classification of its
financial instruments at initial recognition.
Recognition and de recognition
Regular purchases and sales of financial assets are recognised on trade date; the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction
costs. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or been transferred and the Group has transferred substantially all the risks and rewards of
ownership.
ANNUAL REPORT 2008
40
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 23
21
23/4/09 4:00:14 PM
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(e)
Foreign Currency Transactions and Balances (continued)
(b)
Option holdings of key management personnel
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rated prevailing
at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the
date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at
the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement,
except where deferred in equity as a qualifying net investment hedge.
Group Companies
The financial results and position of group entities whose functional currency is different from the groups
presentation currency are translated into the presentation currency as follows;
Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.
Income and expenses are translated at average exchange rates for the period.
Exchange differences arising on translation of foreign operations are recognised directly in the groups
foreign currency translation reserve in the balance sheet. These differences are recognised in the income
statement in the period in which the operation is disposed.
(f)
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment losses.
Acquisition
Items of plant and equipment are initially recorded at cost and includes any expenditure that is directly
attributable to acquisition of the items. Subsequent costs are included in the assets carrying amount or
recognised as a separate asset as appropriate. All other repairs and maintenance are charged to the
income statement during the reporting period in which they are incurred.
Depreciation of Plant and Equipment
Plant and equipment are depreciated at rates based upon the expected useful lives of these assets. The
expected useful lives of these assets are 3-10 years.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date. An assets carrying amount is written down immediately to its recoverable amount if the assets
carrying amount is greater than its estimated recoverable amount.
Disposal of Assets
The gain or loss on disposal of assets is calculated as the difference between the carrying amount of the
asset at the time of disposal and the proceeds on disposal and is included in the income statement in the
year of disposal.
The numbers of options over ordinary shares in the company held during the financial year by each
director of Mineral Commodities Limited and other key management personnel of the Consolidated entity
are set out below:
2008
Key
Management
Personnel
Mark Caruso
Joseph Caruso
Greg Steemson
Peter Torre
250,000
2007
Balance at
1 January '08
Granted
as Remu-
neration
Options
Exercised
Options
Lapsed
Balance at
31 Dec '08
Vested and
exercisable Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
-
-
-
-
Key
Management
Personnel
Balance at
1 January '07
Granted
as Remu-
neration
Options
Exercised
Options
Lapsed
Balance at
31 Dec '07
Vested and
Exercisable Unvested
Mark Caruso
3,089,547
Joseph Caruso
3,085,338
Greg Steemson
53,333
-
-
-
Peter Torre
-
250,000
-
-
-
-
3,089,547
3,085,338
53,333
-
-
-
-
-
-
-
250,000
250,000
-
-
-
-
(c)
Shareholdings of key management personnel
The numbers of ordinary shares in the company held during the financial year by each director of Mineral
Commodities Limited and other key management personnel of the Consolidated entity are set out below:
2008
Director
Balance at
1 January 08
Received as
Remuneration
Options
Exercised
Net change
other
Balance
31 Dec 08
Mark Caruso
11,569,353
Joseph Caruso
11,556,726
Greg Steemson
210,000
Peter Torre
-
-
-
-
-
-
-
-
-
6,894,262
18,463,615
6,894,262
18,450,988
1,300,00
1,510,000
-
-
2007
Director
Balance at
1 January 07
Received as
Remuneration
Options
Exercised
Net change
other
Balance
31 Dec 07
Mark Caruso
9,268,642
Joseph Caruso
9,256,015
Greg Steemson
210,000
Peter Torre
-
-
-
-
-
-
-
-
-
2,300,711
11,569,353
2,300,711
11,556,726
-
-
210,000
-
Joseph and Mark Caruso are both directors of Zurich Bay Holdings Pty Ltd which has a relevant interest in
18,450,988 shares
ANNUAL REPORT 2008
20
ANNUAL REPORT 2008
8972 MC_annual_report_PRINT.indd 22
41
23/4/09 4:00:13 PM
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 that those
the Group would have adopted if dealing at arms length.
(d)
Loans to key management personnel
There were no loans to key management personnel during the period.
(e)
Other transactions and balances with key management personnel
There were no transactions or balances with key personnel except as disclosed in this note and Note 23.
23.
RELATED PARTY TRANSACTIONS
There were no transactions with directors or director related entities during the financial period other than
the payment of directors remuneration as is disclosed on Note 22 and the payment of $8,454 for
secretarial services provided by Minesite Constructions Ltd an entity in which Mr Joseph Caruso and Mr
Mark Caruso are Directors and have a relevant interest in the Company.
Mineral Commodities Ltd is a shareholder in Allied Gold Ltd owning 15,534,379 shares or 3.78% of the
issued share capital at balance date. Mark Caruso and Greg Steemson are also directors of Allied Gold
Limited.
Wholly owned group
The group consists of Mineral Commodities Limited and its subsidiaries. Details of entities in the group are
set out in Note 11.
Transactions between Mineral Commodities Limited and other entities in the group during the years ended
31 December 2008 and 31 December 2007 consisted of loans advanced and payments received and made
on inter company accounts. These transactions were made on normal commercial terms and conditions
and at market rates.
During the financial year, the Company provided management, accounting and administration services to
other entities in the wholly-owned group.
An impairment loss was booked on the receivable from Kariba Kono and Blackhawk Oil & Gas Ltd; refer to
Note 13(a) for more information. All other inter company receivables are expected to be receivable in full.
Key management personnel
Disclosures relating to key management personnel are set out in Note 22.
(d)
Taxes
Income taxes
The charge for current income tax expense or revenue is based on the profit for the year adjusted for any
non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are
substantively enacted by the balance sheet date. Income tax expense is adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and unused tax losses.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the initial recognition of an asset or liability,
excluding a business combination, where this has no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled. Deferred tax is credited in the income statement except where it relates to
items that may be credited directly to equity, in which case the deferred tax is adjusted directly against
equity.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income taxation legislation and the anticipation that the
economic entity will derive sufficient future assessable income to enable the benefit to be realised and
comply with the conditions or deductibility imposed by the law.
The income tax expense for the year is calculated using the 30% tax rate (2007: 30%).
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred
on a purchase of goods & 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
where receivables and payables 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 in the Balance Sheet.
Cash flows are included in the Cash Flow Statement 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 the amount of GST recoverable from, or payable to,
the taxation authority.
(e)
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the groups entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented
in Australian dollars which is the parent entitys functional and presentation currency.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements (Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
24(a) RECONCILIATION OF LOSS FOR THE YEAR TO NET CASH OUTFLOW FROM OPERATING
(b)
Principles of Consolidation (continued)
ACTIVITIES
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income
statement and balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Mineral
Commodities Limited.
On 23 June 2006, Mineral Commodities Limited completed a takeover of Erebus Plc and effectively took
control from this date. Immediately following the handing over of control to Mineral Commodities Limited,
the accounting and financial records of Erebus Plc were requisitioned so that Mineral Commodities Limited
could also control this function. Upon receipt of the accounting records subsequent to the reporting date,
it became apparent that the records were incomplete and the Company began the process of
reconstructing the records with the limited information that was available.
As at 31 December 2006, the records were not sufficiently reliable to be able to represent a true and fair
view of the financial position of Erebus Plc and its subsidiary for the full year ended 31 December 2006 due
to the incomplete information received up to the date of acquisition.
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Profit/(loss) after income tax and outside
equity interest
(1,515,661)
(7,010,080)
(736,691)
(6,858,389)
Depreciation
105,225
102,511
60,899
60,477
Unrealised foreign exchange loss/(gain)
Non bank interest income not in cash
-
-
-
-
-
3,085
(430,049)
(304,809)
Impairment losses
2,087,836
4,991,695
2,550,252
6,817,068
Management fees not received in cash
(45,000)
(75,000)
(140,685)
(111,183)
Share Based Payments
-
78,500
-
78,500
The value of the consideration paid for Erebus Plc was $2,297,935 comprising 9,406,878 shares and
3,135,626 unlisted options.
(Profit)/loss on sale of investment in listed
companies
(471,562)
(539,419)
(471,562)
(539,419)
For these reasons, the Directors of Mineral Commodities decided not to consolidate Erebus Plc from 23
June 2006 and to report its investment in Erebus Ltd at cost in the Economic Entity for the year ended 31
December 2006.
The majority of the expenditure within the Erebus Group relates to the mining activities and is capitalised
accordingly in the balance sheet. The acquisition and consolidation of the Erebus Group would have
resulted in assigning a fair value to the mining right. The Directors believe that this value essentially
represents the value of the consideration that was paid to takeover the company and reflecting the
investment at cost at 31 December 2006 was a more appropriate way of reporting to shareholders given
the situation.
As the Company did not consolidate Erebus at 31 December 2006, the Investment in Erebus and loan
receivable from Erebus were not eliminated.
The Mineral Commodities Group that was reported as at 31 December 2006 therefore consisted of the
Parent Entity, Mineral Commodities Limited and the subsidiary companies listed in Note 11(b) with the
exception of Erebus Ltd and its subsidiary: Erebus Ltd and its subsidiary were consolidated into the Group
for the 2007 financial year. This had the effect of overstating exploration and evaluation expenditure and
understating the accumulated loss at initial date of consolidation (1 January 2007).
In 2007 Erebus Ltd transferred its interest in Kariba Kono (SL) Ltd to MRC Africa Pty Ltd. On completion
of this transfer there was no requirement to maintain Erebus Ltd a UK Company, therefore application was
made to Companies House in the UK to have the Company dissolved, and this was confirmed with effect
from 19 August 2008.
(c)
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised:
Interest Income
Interest and other income is recognised as it accrues on a time proportion basis using the effective interest
method.
Provision employee entitlements
(60,336)
48,563
(60,336)
48,563
Equity accounting adjustments
-
286,097
-
-
Exploration expenditure written off
157,663
186,867
157,663
186,867
Exploration expenditure capitalised
(2,505,464)
(2,233,094)
(157,663)
(144,611)
Other non-cash items
93,520
(49,696)
60,852
33,919
Changes in assets and liabilities during the
year:
Increase (decrease) in trade payables and
other liabilities
(Increase) decrease in trade and other
receivables
778,017
(72,461)
308,013
(55,471)
(1,740,988)
(255,192)
(1,800,877)
(157,886)
(Increase) decrease in prepayments
3,578
3,017
3,578
3,017
Net cash inflow / (outflow) from
operating activities
(3,113,172)
(4,537,692)
(656,606)
(940,272)
24(b) NON-CASH INVESTING AND FINANCING ACTIVITIES
The group has no available finance facilities as at balance date.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Notes to the Financial Statements
25.
FINANCIAL RISK MANAGEMENT
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Consolidated entitys activities expose it to a variety of financial risks: market risk (including currency
risk, interest rate risk and price risk), credit risk and liquidity risk. The Consolidated entitys overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Consolidated entity.
The Consolidated entity does not hold any derivative financial instruments.
The Consolidated entity uses sensitivity analysis in the case of interest rate and foreign exchange risks and
aging analysis for credit risk, to measure different types of risk to which it is exposed.
Risk management is carried out by the Board of Directors.
The Consolidated entity and the parent entity hold the following financial instruments:
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Financial Assets
Cash and cash equivalents
797,328
2,177,864
256,698
2,150,627
Trade and other receivables
2,242,279
499,921
13,929,809
10,203,129
Available for sale investments
6,957,094
3,734,835
6,957,094
4,998,611
9,996,701
6,412,620
21,143,601
17,352,367
Financial Liabilities
Trade and other payables
1,041,056
349,130
402,374
180,452
8,955,645
6,063,490
20,741,227
17,171,915
Market Risk
Foreign exchange risk
The Group and the parent entity operate internationally and are exposed to foreign exchange risk arising
from various currency exposures primarily with respect to the South African Rand, Great British Pound,
and US Dollar.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the Consolidated entitys functional currency and net investments in
foreign operations. The risk is measured using sensitivity analysis and cash flow forecasting.
The Consolidated entity and the parent entity currently hold no derivatives or foreign exchange contracts
to hedge their foreign exchange risk exposure.
(a)
Basis of Accounting
This financial report is for Mineral Commodities Limited as the parent entity and Mineral Commodities
Limited and controlled entities, as the consolidated entity. Mineral Commodities Limited is an Australian
domiciled public listed company.
This general purpose financial report for the year ended 31 December 2008 has been prepared in
accordance with Australian Accounting Standards and Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting
Standards (AIFRS). Compliance with AIFRS ensures that the financial report of Mineral Commodities
Limited as the Parent entity and Mineral Commodities Limited and controlled entities comply with
International Financial Reporting Standards (IFRS).
Historical Cost Convention
The financial report has been prepared on an accruals basis and is based on historical costs modified by
the revaluation of available for sale financial assets for which the fair value basis of accounting has been
applied.
The following significant accounting policies have been adopted in the preparation and presentation of the
financial report and have been consistently applied to all the years presented, unless otherwise stated.
(b)
Principles of Consolidation
The consolidated financial report incorporates the assets and liabilities of all subsidiaries of Mineral
Commodities Ltd (Company or parent entity) as at 31 December 2008 and the results of its
subsidiaries for the year then ended. Mineral Commodities Ltd and its subsidiaries together are referred to
in this financial report as the consolidated entity.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Subsidiaries are those entities over which the Group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one-half of the voting rights.
Where control of an entity is obtained during a financial year, its results are included in the consolidated
income statement from the date on which control commences. Where control of an entity ceases during a
financial year, its results are included for that part of the year during which control existed.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group
refer to Note (1h).
The Group applies a policy of treating transactions with minority interests as transactions with parties
external to the Group. Disposals to minority interests result in gains and losses for the Group that are
recorded in the income statement. Purchases from minority interests result in goodwill, being the
difference between any consideration paid and the relevant share acquired of the carrying value of
identifiable net assets of the subsidiary.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Statement of Changes in Equity (Continued)
Notes to the Financial Statements (Continued)
25.
FINANCIAL RISK MANAGEMENT (continued)
The Groups exposure to foreign currency risk at the reporting date was as follows:
Canadian
$
US
$
31-Dec-08
South
African
Rand
GB
£
-
-
5,882
388
3,425,678
-
-
465,448
-
5,882
388
3,891,926
3,891,126
-
-
-
-
Sierra
Leone
Leones
1,118,957
1,240,280
31-Dec-07
Canadian
$
US
$
South
African
Rand
Sierra
Leone
Leones
-
-
2,452
93,247 11,712,580
-
1,095,385
1,250,000
-
11,628
-
-
-
2,359,237
11,628
2,452 1,188,632 12,962,580
-
(4,704)
(3,764,126)
(16,360)
(5,489,600)
-
-
(793,782)
-
5,882
(4,316)
127,800
127,000
(16,360)
(3,130,363)
11,628
2,452
394,850 12,962,580
Cash and cash
equivalents
Trade and
other
receivables
Available for
sale
investments
Trade and
other payables
The carrying amounts of the parent entitys financial assets and liabilities are denominated in Australian dollars except
as set out below:
Trade and
other
receivables
Available for
sale
investments
Canadian
$
US
$
-
5,882
5,882
-
-
-
31-Dec-08
South
African
Rand
11,930,674
-
11,930,674
GB
£
-
-
-
31-Dec-07
Sierra
Leone
Leones
Canadian US
$
$
South
Africa
Rand
Sierra
Leone
Leones
-
-
-
-
-
10,322,259
11,628
-
-
11,628
-
10,322,259
-
-
-
35,087,042 (14,990,697)
2,551,100
(588,456)
CONSOLIDATED
ENTITY
For the year ended
31 December 2007
Contributed
Equity
$
Accum-
ulated
Losses
$
Foreign
Currency
Translation
Reserve
Share
Based
payments
Reserve
General
Reserve
Financial
Asset
Reval-
uation
Reserve
Minority
Interests
Total
Equity
$
$
Balance at the
beginning of the
year
Movement for the
year
Net Income
recognised directly in
equity
Loss for the year
Total recognised
income and expense
during the year
Contributions of
equity
-
-
-
-
-
-
(7,010,080)
(7,010,080)
Issue of equity
4,505,308
Transaction costs on
share issues
(156,000)
Employee share
scheme
-
-
-
-
$
-
-
-
-
-
-
-
78,500
$
$
$
514,028
134,340 22,707,357
(501,461)
(501,461)
-
(501,461)
-
-
-
-
-
-
-
-
-
-
(1,075,275)
(1,075,275)
(7,010,080)
(8,085,355)
4,505,308
(156,000)
78,500
-
(573,814)
-
-
-
-
-
-
(573,814)
-
(573,814)
-
-
-
Balance at the end
of the year
39,436,350 (22,000,777)
2,551,100 (1,162,270)
78,500
12,567
134,340 19,049,810
PARENT ENTITY
For the year ended
31 December 2007
Contributed
Equity
$
Accum-
ulated
Losses
$
Balance at the beginning
of the year
35,087,042
(12,403,027)
Movement for the year
Net Income recognised
directly in equity
Loss for the year
Total recognised income and
expense during the year
Contributions of equity
-
-
-
-
-
-
(6,858,390)
(6,858,390)
Issue of equity
4,505,308
Transaction costs on share
issues
(156,000)
Employee share scheme
-
-
-
-
$
-
-
-
-
-
-
-
78,500
Share
Based
payments
Reserve
Foreign
Currency
Translation
Reserve
Financial
Asset
Revaluation
Reserve
Total
Equity
$
$
514,028
23,198,043
$
-
(99,617)
(501,461)
(601,078)
(99,617)
(501,461)
(601,078)
-
-
-
-
-
-
-
-
-
-
(6,858,390)
(6,858,390)
4,505,308
(156,000)
78,500
Balance at the end of the
year
39,436,350
(19,261,417)
78,500
(99,617)
12,567
20,166,383
ANNUAL REPORT 2008
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For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Statement of Changes in Equity
25.
FINANCIAL RISK MANAGEMENT (continued)
Group and Parent entity sensitivity
Price Risk
The consolidated entity has an exposure to equity securities price risk. This arises from investments held
by the consolidated entity and classified on the balance sheet as available for sale financial assets. Neither
the Group nor the parent entity are exposed to commodity price risk.
2008
PRICE RISK
-20%
+20%
Carrying
amount
$
Profit
$
Equity
$
Profit
$
Equity
$
Available for sale investments
Listed Shares & Options
6,580,870
Unlisted shares
2007
Available for sale investments
Listed Shares & Options
Unlisted shares
376,224
6,957,094
Carrying
amount
$
75,000
361,398
436,398
-
-
-
(1,316,174)
(75,245)
(1,391,419)
-
-
-
1,316,174
75,245
1,391,419
PRICE RISK
-20%
+20%
Profit
$
Equity
$
Profit
$
Equity
$
-
-
-
(15,000)
(72,280)
(87,280)
-
-
-
15,000
72,280
87,280
Cash flow and fair value interest rate risk
The Groups only interest rate risk arises from cash and cash equivalents held. Deposits and current
accounts held with variable rates expose the Group to cash flow interest rate risk. The Group does not
consider this to be material to the group and have therefore not undertaken any further analysis of risk
exposure.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits
with banks, as well as credit exposures including outstanding receivables.
All cash balances held at banks are held at internationally recognised institutions. The majority of
receivables held are with related parties and within the Group. Given this, the credit quality of financial
assets that are neither past due or impaired can be assessed by reference to historical information about
default rates.
CONSOLIDATED
ENTITY
For the year ended
31 December 2008
Contributed
Equity
$
Accum-
ulated
Losses
$
Foreign
Currency
Translation
Reserve
Share
Based
payments
Reserve
Financial
Asset
Reval-
uation
Reserve
General
Reserve
Minority
Interests
Total
Equity
$
$
$
$
$
$
39,436,350 (22,000,777) 2,551,100 (1,162,270)
78,500
12,567
134,340 19,049,810
Balance at the
beginning of the
year
Movement for the
year
Net Income
recognised directly in
equity
Loss for the year
Total recognised
income and expense
during the year
Contributions of
equity
-
-
-
-
-
-
-
-
578,059
578,059
(1,515,661)
-
-
(1,515,661)
-
578,059
-
-
-
-
-
-
-
2,859,509
2,859,509
-
2,859,509
-
-
-
-
-
-
-
-
-
-
3,437,568
3,437,568
(1,515,661)
1,921,907
368,000
-
-
Issue of equity
368,000
Transaction costs on
share issues
Employee share
scheme
Balance at the end
of the year
-
-
-
-
-
-
-
-
-
-
-
39,804,350 (23,516,438) 2,551,100
(584,211)
78,500
2,872,076
134,340 21,339,717
Contributed
Equity
$
Accum-
ulated
Losses
$
Share
Based
payments
Reserve
Foreign
Currency
Translation
Reserve
Financial
Asset
Revaluation
Reserve
$
$
$
Total
Equity
$
39,436,350
(19,261,417)
78,500
(99,617)
12,567
20,166,383
PARENT ENTITY
For the year ended
31 December 2008
Balance at the beginning
of the year
Movement for the year
Net Income recognised
directly in equity
Loss for the year
Total recognised income and
expense during the year
Contributions of equity
-
-
-
-
-
-
(736,691)
(736,691)
-
-
-
-
-
-
-
(112,659)
2,859,509
2,746,850
(112,659)
2,859,509
2,746,850
-
-
-
-
-
-
-
-
-
-
(736,691)
(736,691)
368,000
-
-
Issue of equity
368,000
Transaction costs on share
issues
Employee share scheme
-
-
-
-
-
ANNUAL REPORT 2008
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Balance at the end of the
year
39,804,350
(19,998,108)
78,500
(212,276)
2,872,076
22,544,542
For personal use only
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Cash Flow Statements
For the year ended 31 December 2008
Notes to the Financial Statements (Continued)
25.
FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to meet commitments as and when
they fall due. The Board monitors rolling cash flow forecasts to manage liquidity risk. The only financial
liabilities of the Group at balance date are trade and other payables, these amounts are unsecured.
As at reporting date the Group had sufficient cash reserves to meet its requirements. The Group therefore
had no credit standby facilities or arrangements for further funding in place.
The only financial liabilities the Group had at reporting date were trade payables incurred in the normal
course of the business. These were non interest bearing and were due within the normal 30 day terms of
creditor payments.
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets, such as available for sale securities, is
based on quoted market prices as at reporting date. The quoted market price used for financial assets held
by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market such as unlisted investments
is determined using valuation techniques where applicable. Where this is unable to be done they are held
at cost.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short term nature.
Note
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
CASH FLOWS FROM OPERATING ACTIVITIES
Exploration and development expenditure
(1,882,412)
(2,812,802)
(157,663)
(144,611)
Interest Received
89,995
133,000
74,739
127,830
Payments to suppliers & employees
(1,320,262)
(1,857,890)
(573,188)
(923,491)
Interest Paid
Sundry Income
(3,157)
2,664
-
-
(3,157)
2,664
-
-
Net cash outflows from operating activities
24(a)
(3,113,172)
(4,537,692)
(656,605)
(940,272)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for plant and equipment
9
(7,946)
(354,890)
(5,445)
(330,137)
Purchase of equity investments
(14,826)
(494,601)
(14,826)
(494,601)
Purchase of further investment in associate
11(a)
-
(632,043)
-
(632,043)
Proceeds from sales of investments
1,387,407
1,344,513
1,387,407
1,344,513
Investment in controlled entities
11(b)
Loans advanced to controlled entities
-
-
-
-
-
-
(2,972,460)
(3,586,856)
Loans repaid by other entities
1,070,000
450,000
1,070,000
450,000
Loans to other entities
(1,070,000)
(450,000)
(1,070,000)
(450,000)
Net cash inflow/(outflow) from investing
activities
1,364,635
(137,021)
(1,605,324)
(3,699,124)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of shares
16
368,000
4,349,306
368,000
4,349,306
Net cash inflow from financing activities
368,000
4,349,306
368,000
4,349,306
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
financial year
Effects of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at end of financial
year
(1,380,537)
(325,407)
(1,893,929)
(290,090)
2,177,864
2,561,364
2,150,627
2,440,717
-
(58,093)
-
-
5
797,328
2,177,864
256,698
2,150,627
The cash flow statements are to be read in conjunction with the notes to the financial statements.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
26.
SHARE BASED PAYMENTS
(a)
Employee Option Plan
Balance Sheets
as at 31 December 2008
The establishment of the Mineral Commodities Employee Incentive Option Scheme was approved by
shareholders at the 2006 annual general meeting. The incentive scheme is designed to provide long term
incentives for senior staff to deliver long term shareholder returns. Under the plan, participants are
granted options which vest immediately but are not exercisable until 30 September 2009. Participation in
the plan is at the Boards discretion and no individual has a contractual right to participate in the plan or to
receive any guaranteed benefits.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share within 10 business days.
Set out below are summaries of options granted under the plan:
Consolidated and parent entity 2008
Grant date
Expiry
date
Exercise
price
Balance
at start of
the year
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance at
end of the
year
Vested and
exercisable
at end of
the year
16-Nov-07 30-Sep-09
$0.30
1,250,000
23-Nov-07 30-Sep-09
$0.30
500,000
23-Nov-07 30-Sep-09
$0.40
500,000
2,250,000
-
-
-
-
-
-
-
-
-
-
-
-
1,250,000
1,250,000
500,000
500,000
500,000
500,000
2,250,000
2,250,000
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
Other current assets
Note
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
5
6
7
8
797,328
2,177,864
256,698
2,150,627
2,242,278
499,921
2,088,241
6,957,094
436,398
6,957,094
13,145
16,723
13,145
285,995
436,398
16,723
Total Current Assets
10,009,845
3,130,906
9,315,178
2,889,743
NON-CURRENT ASSETS
Property, plant and equipment
Exploration & development
expenditure
Investments accounted for using the
equity method
Other financial assets
Trade and other receivables
9
10
11(a)
11(b)
13
373,060
1,575,105
367,316
1,426,744
12,026,008
11,394,491
3,298,437
-
-
4,562,213
-
6
-
-
-
1,451,001
1,551,001
11,841,568
9,917,134
Weighted average exercise price
$0.322
Total Assets
22,408,919
19,398,939
22,975,063
20,346,835
Total Non-Current Assets
12,399,074
16,268,033
13,659,885
17,457,092
No options expired during the periods covered by the above table.
The weighted average remaining contractual life of share options outstanding at the end of the period was
0.75 years. (2007: 1.75 years)
Consolidated and parent entity 2007
Grant date
Expiry
date
Exercise
price
Balance
at start of
the year
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance at
end of the
year
Vested and
exercisable
at end of
the year
CURRENT LIABILITIES
Trade and other payables
Provisions
14
15
1,041,056
260,647
402,374
28,147
88,483
28,147
Total Current Liabilities
1,069,203
349,130
430,521
Total Liabilities
NET ASSETS
1,069,203
349,130
430,521
21,339,716
19,049,809
22,544,542
20,166,383
91,969
88,483
180,452
180,452
16-Nov-07 30-Sep-09
$0.30
23-Nov-07 30-Sep-09
$0.30
23-Nov-07 30-Sep-09
$0.40
-
-
-
-
1,250,000
500,000
500,000
2,250,000
-
-
-
-
-
-
-
-
Weighted average exercise price
$0.32
No options expired during the periods covered by the above table.
1,250,000
1,250,000
500,000
500,000
EQUITY
500,000
500,000
2,250,000
2,250,000
Contributed equity
Reserves
Accumulated losses
Parent entity interest
16
17
18
39,804,350
39,436,350
39,804,350
39,436,350
4,917,465
1,479,897
2,738,300
(8,550)
(23,516,439)
(22,000,778)
(19,998.108)
(19,261,417)
21,205,376
18,915,469
22,544,542
20,166,383
Minority interest
12
134,340
134,340
-
-
TOTAL EQUITY
21,339,716
19,049,809
22,544,542
20,166,383
The balance sheets are to be read in conjunction with the notes to the financial statements.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Income Statements
For the Year Ended 31 December 2008
Note
Consolidated
Company
2008
$
2007
$
Restated
2008
$
2007
$
Restated
Revenue from continuing operations
2
609,221
765,304
1,104,875
1,176,126
Notes to the Financial Statements (Continued)
26.
SHARE BASED PAYMENTS (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 31 December 2007 was
between $0.02 and $0.039.
The fair value at grant date is independently determined using a Binomial option valuation model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price at
grant date and the expected price volatility of the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option.
Exploration written off
10
(157,663)
(186,867)
(157,663)
(186,867)
The model inputs for options granted during the year ended 31 December 2007 included:
Share based payments
-
(78,500)
-
(78,500)
General & Administration expenses
(985,273)
(795,892)
(1,069,086)
(783,433)
Depreciation and Amortisation
(17,942)
(17,685)
(16,399)
(15,947)
Employee Benefits
15
60,336
(48,563)
60,336
(48,563)
Finance costs
(3,157)
-
(3,157)
Share of net result of associates using
the equity method
11(a)
-
(286,097)
-
-
-
(Loss)/Profit before income tax
(494,478)
(648,300)
(81,094)
62,816
Income tax expense
4
-
-
-
-
(Loss)/Profit from continuing operations
(494,478)
(648,300)
(81,094)
62,816
Loss from discontinued operations
28
(1,021,183)
(6,361,780)
(655,597)
(6,921,206)
Loss for the year
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Loss for the year attributable to the
members of the parent entity
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Minority interest
-
-
-
-
(1,515,661)
(7,010,080)
(736,691)
(6,858,390)
Loss per share attributable to the ordinary equity holders of the company.
Basic and diluted (loss) per share
(cents)
19
(1.2)
(6.1)
The income statements are to be read in conjunction with the notes to the financial statements.
(a) Options are granted for no consideration and vest immediately with no performance criteria required
to be met; however there are rules if an employee terminates employment before exercising the
options. Vested options expire 30 September 2009.
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Exercise price: $0.30 for 1,750,000 options and $0.40 for 500,000 options
Grant date: 23 November 2007 for 500,000 options at $0.30 and 500,000 options at $0.40 and 16
November 2007 for 1,250,000 options at $0.30
Expiry date: 30 September 2009
Share Price at grant date $0.225
Expected price volatility of company s shares:50%
Expected dividend yield: Nil
Risk free Interest rate: 6.35%
The expected price volatility is based on historic volatility (based on the remaining life of the options)
adjusted for any expected changes to future volatility due to publicly available information.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of
employee benefit expense were as follows:
Options issued under employee incentive
option scheme
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
-
-
78,500
78,500
-
-
78,500
78,500
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes to the Financial Statements (Continued)
Directors Report (Continued)
27.
COMMITMENTS
(a)
Non-Cancellable Operating Leases
NON-AUDIT SERVICES
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditors expertise and experience with the company and/or the group are important.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as
follows:
There were no nonaudit services provided by BDO Kendalls in the year.
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non related firms:
Within one year
78,297
69,720
78,297
69,720
Later than one year but not later than
five years
79,000
147,000
79,000
147,000
Total
157,297
216,720
157,297
216,720
Audit Services:
$
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Audit and review of financial reports
70,421
Non BDO Kendalls audit firm (Tuffias Sandberg)
5,832
Total remuneration for audit services
76,253
The operating lease is a rental agreement for the Companys office premises in Welshpool. The lease is for a
3 year term expiring on 15 February 2011. The lease provides for annual rent reviews to the higher of CPI
or market.
BDO Kendalls Audit & Assurance (WA) Pty Ltd continues in office.
This report has been made in accordance with a resolution of the Directors.
(b)
Exploration Tenement Leases Commitments for Expenditure.
In order to maintain current rights of tenure to exploration tenements, the Company and consolidated
entity is required to outlay lease rentals and to meet the minimum expenditure requirements which are
not considered to be material.
28
DISCONTINUED OPERATIONS
(a)
Description
Kariba Kono (SL) Ltd
Due to the uncertainty regarding the outcome of the legal impediments in Sierra Leone provisions for
impairment have been made against the value of exploration expenditure including the Number 11 Dump,
fixed assets and loans owing to Mineral Commodities Ltd.
Blackhawk Oil & Gas Ltd
The Company is dormant and has no assets, accordingly a provision for impairment has been made
against the value of Mineral Commodities investment in and loans receivable from Blackhawk Oil & Gas
Ltd.
Mark V Caruso
Managing Director
Perth, Western Australia
31 March 2009
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
C. Service Agreements
Notes to the Financial Statements (Continued)
28
DISCONTINUED OPERATIONS (continued)
There were no formal service agreements with any directors or key management personnel.
(b)
Financial performance and cash flow information
D. Share Based Compensation
Options
Options were granted by the Company to Mr Peter Torre in November 2007 for no consideration. In addition,
options were granted under the Mineral Commodities Limited Employee Option Plan which was approved by
shareholders at a general meeting held in November 2007. All full time employees, part time employees,
consultants and Directors of the Company are eligible to participate in the plan at the absolute discretion of the
board.
Options are granted under the plan for no consideration and are at terms stipulated at the discretion of the Board.
For further details of the options issued please, refer to Note 22(b) and 26.
E. Additional Information
There is no additional information to be provided in respect to the remuneration of the directors.
End of the Audited Remuneration Report
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Mineral Commodities Limited adhere to strict principles of corporate governance. The Companys Corporate
Governance statement is included before the Additional ASX Information section of the Annual Financial Report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No event or transaction has arisen in the interval between the end of the financial year and the date of this report
of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the
operations of the Company or the Consolidated Entity, the results of those operations or the state of affairs of the
Company or the Consolidated Entity in future financial years unless otherwise disclosed in this Directors Report.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings.
INSURANCE OF OFFICERS
During the financial year the Company has paid an insurance premium to insure the directors and secretaries of
the company and its controlled entities. The premium paid was $44,120 representing $14,707 per director. The
liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities
that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their
position or of information to gain advantage for themselves or someone else or to cause detriment to the
company.
AUDITORS INDEPENDENCE DECLARATION
The Auditors Independence Declaration as required by Section 307(c) of the Corporations Act 2001 is set out on
Page 53 and forms part of this report.
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
2,000,000
6,859
2,006,859
-
-
-
2,000,000
-
2,000,000
-
-
-
Revenue
Promet settlement
Other income
Total revenue
Expenses
Site Operating expenses
(685,556)
(1,274,802)
(44,500)
(44,530)
General & administration expenses
(254,650)
(95,283)
(60,845)
(59,608)
Impairment of loans to subsidiaries
-
(3,606,608)
(1,446,278)
(3,277,369)
Impairment of fixed assets
(1,104,766)
(1,385,087)
(1,003,974)
(1,385,087)
Impairment of exploration asset
(983,070)
Impairment of investment in subsidiary
-
-
-
-
-
(100,000)
(2,154,612)
Total expenses
(3,028,042)
(6,361,780)
(2,655,597)
(6,921,206)
Loss before income tax
(1,021,183)
(6,361,780)
(655,597)
(6,921,206)
Income tax expense
-
-
-
-
Loss from discontinued operations
(1,021,183)
(6,361,780)
(655,597)
(6,921,206)
29
CONTINGENT LIABILITIES
There are no Contingent Liabilities.
30.
SUBSEQUENT EVENTS
No event or transaction has arisen in the interval between the end of the financial year and the date of this
report of a material and unusual nature that is likely, in the opinion of the Directors of the Company, to
affect significantly the operations of the Company or the Consolidated Entity, the results of those
operations or the state of affairs of the Company or the Consolidated Entity in future financial years.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Declaration
The Directors of the Company declare that:
Directors Report (Continued)
1.
The financial statements, comprising the income statement, balance sheet, cash flow statement, statement
of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 including;
(a)
complying with Australian Accounting Standards, Corporations Regulations 2001; and other mandatory
professional reporting requirements, and
(b) give a true and fair view of the companys and consolidated entitys financial position as at 31
December 2008 and of the performance for the year ended on that date.
Non Executive Directors
Short-term
benefits
Post
employment
benefits
Share-based
payments
Percentage
performance
based
Year
Cash Salary
and fees
Superannuation Shares/Options
Totals
$
$
$
$
2.
3.
In the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
The remuneration disclosures set out on Pages 8 to 10 of the Directors Report comply with S300A of the
Corporations Act 2001.
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors:
Mark V Caruso
Managing Director
Dated at Perth, Western Australia this 31st day of March 2009
Joe Caruso
2008
44,037
2007
44,037
Greg Steemson
2008
68,200
2007
69,800
2008
112,237
2007
113,837
Sub-total Non Executive
Directors
Executive Directors
Mark Caruso
2008
48,000
2007
48,000
Other Key Management
Personnel
Peter Torre
2008
72,000
Total Key
Management
Personnel
Compensation
2007
75,000
2008
232,237
2007
236,837
3,963
3,963
-
-
3,963
3,963
-
-
-
-
3,963
3,963
-
-
-
-
-
-
-
-
-
9,800
48,000
48,000
68,200
69,800
116,200
117,800
48,000
48,000
72,000
84,800
236,200
9,800
250,600
-
-
-
-
-
-
-
-
-
-
Number of
options
granted and
vested during
the year
Number of
ordinary
shares issued
on exercise of
options
Options
as a %
of total
Date of
exercise
of
options
Price per
option
when
exercised
Non Executive Directors
Joe Caruso
Greg Steemson
Sub-total Non Executive Directors
Executive Directors
Mark Caruso
Other Key Management Personnel
Peter Torre
Year
2008
2007
2008
2007
2008
2007
2008
2007
2008
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2007
250,000
13%
ANNUAL REPORT 2008
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-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.30
9
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
REMUNERATION REPORT (Audited)
The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
Principles used to determine the nature and amount of remuneration.
Details of remuneration
Service Agreements
Share-based compensation
Additional Information
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
A. Principles used to determine the nature and amount of remuneration
In order to retain and attract executives of sufficient calibre to facilitate the efficient and effective management of
the Companys operations, the board reviews the remuneration packages of all directors and executive officers on
an annual basis and makes recommendations. Remuneration packages are reviewed with due regard to
performance and other relevant factors.
Remuneration packages may contain the following key elements:
(a) Directors Fees;
(b)
(c)
Salary & Consultancy;
Benefits including provision of motor vehicle, superannuation.
Fees payable to non-executive directors reflect the demands which are made on, and the responsibilities of the
directors. The Board reviews non-Executive directors fees and payments annually.
Executives are offered a competitive base pay that consists of fixed components. Base pay for senior executives is
reviewed annually to ensure the executives pay is competitive with the market. Total Base Pay can be structured
as a total employment package which may be delivered as a combination of cash and prescribed non-financial
benefits at the executives discretion.
There were no short or medium term cash incentives provided to any executives of the company during the
financial year. Short or medium term cash incentives are not incorporated into any executives salary packages at
the time of this report.
The directors are not required to hold any shares in the company under the constitution of the company; however,
to align directors interests with shareholders interests the directors are encouraged to hold shares in the
company.
Remuneration is not directly related to company performance or key performance indicators.
The board has no separate remuneration committee due to the size of the company. The directors perform the
role of a remuneration committee as disclosed in the Corporate Governance statement.
B. Details of Remuneration
The key management personnel of Mineral Commodities Ltd Group are the directors of Mineral Commodities Ltd
and the Company Secretary Mr Peter Torre who reported directly to the Managing Director. The amounts disclosed
are therefore applicable for both Mineral Commodities Limited and the Mineral Commodities Limited Group.
31 March 2009
The Directors
Mineral Commodities Ltd
Unit 15, Level 1
51-53 Kewdale Rd
Welshpool WA 6106
Dear Sirs
DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF MINERAL
COMMODITIES LIMITED
As lead auditor of Mineral Commodities Limited for the year ended 31 December 2008,
I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
• any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Mineral Commodities and the entities it controlled
during the period.
Peter Toll
Director
Details of the remuneration of directors and the key management personnel (as defined in AASB 124 Related Party
Disclosures) of Mineral Commodities Limited and the Mineral Commodities Limited Group are set out in the
following tables.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Perth, Western Australia.
There are no long term benefits amounts due to Directors and key management personnel.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
DIRECTORS SHAREHOLDING INTERESTS
The relevant interest of each director in the share capital of the Company, shown in the Register of Directors
Shareholding at the date of the Directors Report is:
Director
Ordinary Shares
Options over Ordinary Shares
Direct
Indirect
Direct
Indirect
J A Caruso
M V Caruso
-
18,450,988
12,627
18,450,988
G H Steemson
1,510,000
-
-
-
-
-
-
-
J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd,
which holds 18,450,988 shares in the Company.
MEETINGS OF DIRECTORS
The number of directors meetings and number of meetings attended by each of the directors of the Company
during the financial year are:
J A Caruso
M V Caruso
G H Steemson
Meetings Held
Meetings Attended
1
1
1
1
1
1
Other matters of board business have been resolved by circular resolutions of directors, which are a record of
decisions made at a number of informal meetings of the directors held to control, implement and monitor the
Companys activities throughout the year.
INDEPENDENT AUDITOR’S REPORT
To the members of Mineral Commodities Limited
Report on the Financial Report
We have audited the accompanying financial report of Mineral Commodities Limited, which
comprises the balance sheet as at 31 December 2008, and the income statement, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of significant
accounting policies, other explanatory notes 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 and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that compliance with the Australian equivalents to
International Financial Reporting Standards ensures that the financial report, comprising the
financial statements and notes, complies 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. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the 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 control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Qualification
As disclosed in the audit report to the financial statements for the year ended 31 December 2007,
the Company had not consolidated two subsidiaries being Erebus Plc and Kariba Kono Ltd into the
income statement, balance sheet, cash flow statement, statement of changes in equity or notes to
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ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
FINANCIAL POSITION
The net assets of the group has increased by $2,289,907 from 31 December 2007 to $21,339,716 at 31 December
2008. This is mainly as a result of the reclassification of the investment in Allied Gold Ltd from equity accounted
to fair value.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The company will continue the process of development of both the Tormin and Xolobeni projects in South Africa.
The Company will seek to divest its interest in the Sierra Leone Diamond Project at a value acceptable to the
Board. The Board will continue to review other projects and opportunities in the interest of increasing shareholder
value.
ENVIRONMENTAL REGULATIONS
In the course of its normal mining and exploration activities, the Company adheres to environmental regulations
imposed upon it by the relevant regulatory authorities, particularly those regulations relating to ground
disturbance and the protection of rare and endangered flora and fauna. The Company has complied with all
material environmental requirements up to the date of this report.
SCHEDULE OF MINING TENEMENTS
Mining tenements currently held by the economic entity are:
Area
Entity holding the
interest
% Held
Title
Status
Xolobeni South Africa
Transworld Energy &
Minerals Resources
100
New order Prospecting
Right
Granted
the financial report as at 31 December 2006 due to the fact that the financial information was not
considered reliable by the Board of Directors and ourselves.
As Erebus Plc and Kariba Kono Ltd are controlled by Mineral Commodities Ltd at 31 December
2006, all assets and liabilities of these subsidiaries should have been recorded within the
consolidated balance sheet of Mineral Commodities Ltd. These assets and liabilities should have
been recorded at their fair value at the date of acquisition, with any excess of consideration over the
net assets acquired being recorded as goodwill. In addition the results of these subsidiaries from
the date of acquisition (23 June 2006) should have been included in the consolidated income
statement and the cash flows since acquisition to 31 December 2006.
As at 1 January 2007 the company consolidated Erebus Plc and Kariba Kono Ltd. As Erebus Plc
and Kariba Kono Ltd incurred losses from the date of acquisition being 23 June 2006 until 31
December 2006 which were not recorded in the consolidated entity, this has had the effect of
overstating the acquired assets and understating accumulated losses as at the date of
consolidation (1 January 2007). The Company and ourselves were unable to quantify this amount.
Auditor’s Opinion
(a)
In our opinion, except for the effects of such adjustments, if any, as might have been
determined to be necessary had we been able to quantify the amounts as explained above,
the financial report of Mineral Commodities Limited is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at
31 December 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
Tormin South Africa
Mineral Sands Resources
100
Mining Right
Granted
(b) The financial report also complies with International Financial Reporting Standards as
Koidu Sierra Leone
Kariba Kono (SL) Ltd
100
Mining Lease 3/04
Granted
SIGNIFICANT CHANGES IN STATE OF AFFAIRS AND LIKELY DEVELOPMENTS
The following significant changes in the state of affairs of the Consolidated Entity occurred during the year:
In December 2008, 18,400,000 shares were issued under a placement at $0.02 per share to raise $368,000.
OPTIONS
The total number of unissued ordinary shares under option at the date of this report is 2,250,000, all of which are
not listed. Options do not entitle the holder to receive a dividend paid to ordinary shareholders. New issues of
options and options exercised in the period is as follows:
Date of Grant
No of Options
Exercise Price
Expiry date
Opening Balance 31 December 2007
3,600,000
- Options Exercised
-
- Options Lapsed
(1,350,000)
Balance at 31 December 2008
2,250,000
Various
-
35 cents
Various
Various
-
11 May 2008
30 September 2009
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31
December 2008. 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of Mineral Commodities Limited for the year ended 31
December 2008, complies with section 300A of the Corporations Act 2001.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Peter Toll
Director
Perth, 31st March 2009
ANNUAL REPORT 2008
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ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Statement of Corporate Governance
The Board of Directors of Mineral Commodities Limited (MRC) is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders
by whom they are elected and to whom they are accountable.
In accordance with the Australian Stock Exchange (ASX) Corporate Governance Councils (CGC) Principles of
Good Corporate Governance and Best Practice Recommendations the Corporate Governance Statement must
contain certain specific information and must disclose the extent to which the Company has followed the guidelines
during the period. Where a recommendation has not been followed, that fact must be disclosed together with the
reasons for the departure.
The Companys corporate governance practices were in place throughout the year and are compliant, unless
otherwise stated, with the Corporate Governance Councils principles and recommendations, which are noted
below.
Principle 1.
Lay solid foundations for management and oversight
Principle 2.
Structure the Board to add value
Principle 3.
Promote ethical and responsible decision making
Principle 4.
Safeguard integrity in financial reporting
Principle 5.
Make timely and balanced disclosure
Principle 6.
Respect the rights of shareholders
Principle 7.
Recognise and manage risk
Principle 8.
Remunerate fairly and responsibly
A summary of the corporate governance policies and practices adopted by MRC is set out below.
Role of the Board of Directors
The Board of MRC is responsible for setting the Companys strategic direction and providing effective governance
over MRCs affairs in conjunction with the overall supervision of the Companys business with the view of
maximising shareholder value. The Board's key responsibilities are to:
(a) chart the direction, strategies and financial objectives for MRC and monitor the implementation of those
policies, strategies and financial objectives;
(b) monitor compliance with regulatory requirements, ethical standards and external commitments;
(c) appoint, evaluate the performance of, determine the remuneration of, plan for the succession of and, where
appropriate, remove the Chief Executive Officer if in place or similar person acting in the executive capacity;
and
(d) ensure that the Board continues to have the mix of skills and experience necessary to conduct MRCs
activities, and that appropriate directors are selected and appointed as required.
In accordance with MRCs Constitution, the Board delegates responsibility for the daytoday management of MRC
to the Managing Director (subject to any limits of such delegated authority as determined by the Board from time
to time). Management as a whole is charged with reporting to the Board on the performance of the Company.
Board structure and composition
The Board currently is comprised of 3 directors, none of which are independent nonexecutive Directors. Details
of each directors skill, expertise and background are contained within the directors report included with the
companys annual financial statements.
Independence, in this context, is defined to mean a nonexecutive Director who is free from any interest and any
business or other relationship that could, or could reasonably be perceived to, materially interfere with the
Director's ability to act in the best interests of MRC. The definition of independence in ASX Recommendation 2.1 is
taken into account for this purpose.
It is the Boards intention to increase the size of the Board as the scale of activities develops, and such expansion
will see an introduction of independent non-executive directors. In the absence of such scale, the Board does not
believe that the existence of further independent non-executive directors would be of benefit to the Company.
Details of directors shareholdings are disclosed in the directors report and financial report. There are no
retirement schemes other that the payment of statutory superannuation contributions.
Directors Report (Continued)
Sierra Leone Operations
The Companys wholly owned Sierra Leone subsidiary, Kariba Kono (SL) Ltd, owns the No. 11 Oversize Tailings
Dump at Koidu. The operations were placed under care and maintenance pending an engineering and design
review following the failure of the 80tph diamond pan plant supplied by ProMet Engineers Africa (Pty) Ltd.
The MRC Board has resolved to divest either Kariba Kono (SL) Ltd or its assets. On 4 June 2008 the Company
announced that it had entered into a Heads of Agreement with ROK Diamonds Ltd to sell the No 11 diamondiferous
gravel dump at Koidu, Sierra Leone.
Consideration for the sale was to be US$2M apportioned as follows:
(1)
(2)
US$1.5M payable at settlement; and
The balance of US$0.5M may be converted to ordinary seed shares in ROK Diamonds Limited at MRCs
election within 12 months or the float of ROK Diamonds Limited whichever occurs first.
The sale was not to include the Diamond Pan Plant.
On 25 August 2008, the Company announced that due to certain legal impediments currently in place in Sierra
Leone which prevented the divestment of these assets, the current Agreement with ROK was terminated.
Legal Proceedings
On 12 October 2007 the Company commenced legal proceedings in the Federal Court of Australia against ProMet
Engineers Africa (Pty) Ltd (ProMet), ProMet Engineers Pty Ltd, James Dinsdale Cribbes, Robert John Bennett and
Richard George Ford for breach of contract, misleading and deceptive conduct and breaches of the Trade Practices
Act in relation to the diamond pan plant in Sierra Leone.
On 10 December 2008, the Company attended a mediation conference in the Federal Court of Western Australia
with ProMet Engineers and its insurer ACE Insurance Australia. On 27 January 2009, the Company announced that
the parties agreed to settle for an amount of AUD$2 million to be paid to MRC without admission of liability.
All plant and machinery delivered under the construction contract remains in the possession and ownership of
MRC.
Petro Ventures International Limited
During the year the Company continued as a seed capital investor in Petro Ventures International Limited (Petro
Ventures) and holds a 9.13% stake. Petro Ventures has presently secured three project areas in the UK, offshore
Romania and onshore Hungary. Petro Ventures working interest in the projects is 5%, 20% and 10% respectively.
Updates in respect to the exploration activities of Petro Ventures can be reviewed in the Companys quarterly
reports lodged with the Australian Stock Exchange.
Investment in Allied Gold Limited
Allied Gold Limited (ALD) is a listed gold production and exploration company with the Tabar Islands Gold Project
in Papua New Guinea as its principal asset. This comprises the Simberi Oxide Gold Project and exploration property
on the Tabar Islands Group. ALD successfully commissioned its processing plant operation and poured its first gold
in February 2008 and has continued to announce successful exploration results along with a recent Resource
upgrade.
MRC remains as one of the largest shareholders in ALD and currently holds 15.5 million shares in ALD.
The market value of MRCs shareholding at 31 December 2008 was $6.51 million.
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ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Directors Report (Continued)
CONSOLIDATED RESULTS
Statement of Corporate Governance (Continued)
Any equity based compensation of directors is required to be approved in advance by shareholders.
The loss of the group after income tax and outside equity interests was $1,515,661 (2007: Loss of $7,010,080)
Presently, the roles of Chairman and Managing Director have been separated.
DIVIDENDS
No dividends have been paid, declared or recommended for payment, in respect of the current financial year.
REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS
Highlights of the Companys operations for the period under review are as follows:
South African Projects
Xolobeni Mineral Sands Project
In March 2007, Mineral Commodities Limiteds (MRCs) majority owned South African subsidiary Transworld Energy
and Minerals Resources SA Pty Ltd (TEM) lodged the Mining Right Application for the Xolobeni Heavy Mineral Sands
Project with the Department of Minerals and Energy (DME) in Port Elizabeth.
TEM has since completed the Environmental Impact Assessment (EIA), which was submitted to the DME on
22 October 2007. After a series of government department and public meetings aimed at reviewing the scope and
outcomes of the EIA and accompanying Environmental Management Programme (EMP), an updated report was
resubmitted on 20 December 2007. This report addressed the various matters arising from the consultation
process.
During the year, TEM attended meetings at the DMEs head offices in Pretoria and regional office in Port Elizabeth
to clarify various aspects of the application. Briefing sessions with XolCo (MRCs Black Economic Empowerment
BEE) partner and the Tribal Authority also continued during the period to update the community on the Mining
Right Application process and position.
On 4 August 2008, the Company announced that it has received notification from the DME that they will proceed
to grant to TEM, the Mining Right for the Kwanyana block within the Xolobeni Mineral Sands tenement area. The
remaining areas will be held under a Prospecting Right valid to 2010 which can be extended until applications are
made to convert the remaining areas to Mining Rights on a block by block requirement.
Initial indications were that the Xolobeni Mining Right was to be signed on 31 October 2008. The Minister of
Minerals and Energy (the Minister) and a high level delegation visited the Xolobeni Project in August 2008 and in
an open meeting with the AmaDiba community members advised that the Xolobeni Mining Right would be granted.
However in September 2008, the Company was advised that on behalf of the AmaDiba Crisis Committee (the ACC)
and its members, the Grahamstown office of the Legal Resources Centre had filed a Notice of Appeal (the Appeal)
with the Minister. The ACC requested the Minister to suspend and then appeal the decision to grant the mining
right.
The issue date of the Mining Right has been deferred pending the outcome of the Appeal.
Tormin Mineral Sands Project
The Tormin deposit is covered by two tenements, one held by the Company and the other held in the name of
Steenvas Pty Ltd but under option to the Company.
On 15 February 2008 the Company received notification from the DME that the Mining Right had been granted to
its South African subsidiary Mineral Sands Resources (Pty) Ltd and as announced on 28 November 2008, the
Mining Right and the Steenvas Mining Right Conversion were executed by the respective companies and the DME.
The execution of the mining right was underpinned by the entering into of a new Black Empowerment arrangement
with Xolco, the Companys BEE partner on the Xolobeni Mineral Sands Project.
The Company has commenced proceedings to appoint an engineering contractor to complete the final plant design
and engineering.
The Company also announced subsequent to year end that the DME has granted to its South African subsidiary
Mineral Sands Resources (Pty) Ltd, a Reconnaissance Permit (Permit) over the marine area adjacent to its Tormin
Mineral Sands Project. The area is approximately 12 km long and 1 km wide from the low water mark out to sea
enclosing an area of 1280ha. The Permit allows for a prospecting of zircon, ilmenite, garnet, leucoxene and rutile.
The Managing Director is responsible for supervising the management of the business as designated by the Board.
This ensures the appropriate independent functioning of the Board and management.
MRCs nonexecutive Directors may not hold office for a continuous period in excess of three years or past the
third annual general meeting following their appointment, whichever is longer, without submitting for reelection.
Directors are elected or reelected, as the case may be, by shareholders in a general meeting. Directors may offer
themselves for reelection. A Director appointed by the Directors (e.g., to fill a casual vacancy) will hold office
only until the conclusion of the next annual general meeting of MRC but is eligible for reelection at that meeting.
Under MRCs Constitution, voting requires a simple majority of the Board. The Chairman holds a casting vote.
The Company has procedures enabling any director or committee of the board to seek external professional advice
as considered necessary, at the Companys expense subject to prior consultation with the Chairman. A copy of
any advice sought by a director would be made available to all directors.
Board and management effectiveness
Responsibility for the overall direction and management of MRC, its corporate governance and the internal
workings of MRC rests with the Board notwithstanding the delegation of certain functions to the Managing Director
and management generally (such delegation effected at all times in accordance with MRCs Constitution and its
corporate governance policies).
An evaluation procedure in relation to the Board, individual Directors and Company Executives has not taken
place. Given the small scale of the Companys current activities, the performance of the executives and directors is
easily monitored and discussed in Board meetings. Once the nature and scale of activities increases, the Company
will initiate formal evaluation procedures.
Financial reporting
The Managing Director and the Company Secretary are required to state in writing that the Companys financial
reports present a true and fair view, in all material respects, of the Companys financial condition and operational
results in accordance with the relevant accounting standards and are founded on a system of risk management
and internal compliance and control and the Companys risk management and internal compliance and control
system is operating efficiently and effectively in all material respects.
Committees of the Board of Directors
The Board has not established any permanent committees, namely an Audit and Risk Committee and a
Remuneration and Nomination Committee. The Board and scale of actives is not of a sufficient size to warrant
separate committees in this regard.
In the absence of an audit committee, the entire Board undertakes the function of an audit committee. The duties
of this committee include:
to be focal point of communication between the Board, management and the external auditor;
to recommend and supervise the engagement of the external auditor and monitor auditor performance;
review the effectiveness of management information and other systems of internal control;
review all areas of significant financial risk and arrangements in place to contain those to acceptable levels;
review significant transactions that are not a normal part of the Companys business;
review the year end and interim financial information and ASX reporting statements;
to monitor the internal controls and accounting compliance with the Corporations Act, ASX Listing Rules,
external audit reports and ensure prompt remedial action where required; and
review the Companys financial statements and accounting procedures.
The Companys auditor is invited to attend the annual general meeting and the Company supports the principle of
the auditor being available to answer questions on the conduct of the audit and the content of the audit report.
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Statement of Corporate Governance (Continued)
Directors Report
Timely and balanced disclosure
MRC is committed to promoting investor confidence and ensuring that shareholders and the market have equal
access to information and are provided with timely and balanced disclosure of all material matters concerning the
Company. Additionally, MRC recognises its continuous disclosure obligations under the ASX Listing Rules and the
Corporations Act.
The Board informs shareholders of all major developments affecting the Company by:
The Directors present their report together with the Financial Report of Mineral Commodities
Limited (the Company) and its controlled entities (the Group) for the year ended 31
December 2008.
DIRECTORS
The Directors of the Company in office during or since the end of the financial year are:
Preparing half yearly and annual financial reports and making these available to all shareholders.
Preparing quarterly activity and cash flow reports.
Advising the market of matters requiring disclosure under Australian Stock Exchange Continuous Disclosure
Rules.
Mr Joseph A Caruso Non Executive Chairman
Mr Mark V Caruso Managing Director
Gregory Hugh Steemson - Non Executive Director
Maintaining a record of significant ASX announcements on the Companys website.
Directors have been in office since the start of the financial year to the date of this report.
Submitting proposed major changes in the Companys affairs to a vote of shareholders, as required by the
Corporation Law.
Reporting to shareholders at annual general meetings on the Companys activities during the year. All
shareholders that are unable to attend these meetings are encouraged to communicate issues or ask
questions by writing to the Company.
The Company does not have a formal disclosure policy however, the Board and management are aware of their
responsibilities in respect of identifying material information and coordinating disclosure of that information where
required by the ASX Listing Rules.
Ethical and responsible decisionmaking
DIRECTORS INFORMATION
Joseph Anthony Caruso (63 Years of Age)
Non-Executive Chairman
Mr Caruso is a Director of Zurich Bay Holdings Pty Ltd and Construction Manager of Simto Australia Pty Ltd, both
of which are involved in mining, earthmoving and civil engineering construction earthworks. Mr Caruso has
considerable experience in managing and administration of engineering, mining, raw materials production
operations, earthmoving and related infrastructure utilities services resource contracts. Mr Caruso has been a
director of Mineral Commodities Limited since September 2000.
Code of Conduct
The Board has created a framework for managing the Company including internal controls, business risk
management processes and appropriate ethical standards.
Mark Victor Caruso (47 Years of Age)
Managing Director
The Board has adopted practices for maintaining confidence in the Company's integrity including promoting
integrity, trust, fairness and honesty in the way employees and Directors conduct themselves and MRCs business,
avoiding conflicts of interest and not misusing company resources. A formal Code of Conduct has not been adopted
for all employees and Directors of MRC due to the total number of employees and directors only being 6.
Securities Trading Policy
The Company has adopted a policy that imposes certain restrictions on directors and employees trading in the
securities of the Company. Key aspects of the policy are:
All directors and employees are to formally notify the Company Secretary of their beneficial shareholdings
in the Company and any changes to this within 2 days of such change occurring. The Company Secretary
maintains a register of interests in the Company held by directors.
No director or employee or any entities controlled by them is allowed to trade in the securities of the
Company without notifying the Chairman.
No director or employee or any entity controlled by them is allowed to engage in the business of active
dealing in the Companys securities.
A director or employee or any entities controlled by them must not trade at any time when he or she is in
possession of information which if generally available would materially affect the price or value of the
Companys securities.
Other Information
The ASX guidelines also prescribe that the Company should maintain a dedicated corporate governance
information section on its website. Such a dedicated information section is not presently available on the
Companys website, although the annual financial report will be posted to the website and the Statement of
Corporate Governance can be viewed there.
Mr Caruso is a Director of Zurich Bay Holdings Pty Ltd and Simto Australia Pty Ltd, both of which are involved in
mining, earthmoving and civil engineering construction earthworks. Mr Caruso has been a director of Mineral
Commodities Limited since September 2000. He is also a Director of Allied Gold Limited. Former directorships of
public listed companies in the last 3 years are CI Resources Limited from October 2003 to May 2007.
Gregory Hugh Steemson (56 Years of Age)
Non Executive Director
Mr Steemson is a qualified Geologist and Geophysicist with an extensive background in exploration, development
and management of mining projects. Mr Steemson has been a Director of the Company since April 2001. Mr
Steemson is also a Director of Allied Gold Limited. Former directorships of public listed companies in the last 3
years include Sandfire Resources Limited from June 2003 to August 2007.
Due to the size of the Company, all directors consider matters which would normally be dealt with by Audit and
Remuneration Committees.
COMPANY SECRETARY
Peter Torre CA, ACIS, MAICD
Mr Torre was appointed Company Secretary of Mineral Commodities Limited in July 2006. He is a Chartered
Accountant and a Chartered Secretary. He was previously a partner of an internationally affiliated firm of
Chartered Accountants. Mr Torre is the Company Secretary of several ASX listed companies and is a Director of
ORT Limited and Carbine Resources Ltd.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was exploration for mineral sands and other mineral resources.
This has mainly involved exploration and evaluation of the Xolobeni Mineral Sands Project in the Eastern Cape
Province of South Africa and the Tormin Mineral Sands Project in the Western Cape Province of South Africa.
There were no significant changes in the nature of activities of the Group during the year.
ANNUAL REPORT 2008
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ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Chairmans Letter
Dear Shareholders
Shareholder Information
Additional information required by the Australian Stock Exchange Ltd Listing Rules and not disclosed elsewhere in this report. This
information is current as at 13 April 2009.
The year 2008 proved to be a year of varied outcomes for your Company. As indicated in my letter to you
last year, the Companys persistence resulted in the Mining Right being granted for the Tormin Mineral
Sands Project. The execution of the Mining Right eventually took place in November 2008.
Twenty Largest Shareholders
The Company has since commenced procedures to appoint an engineering group to update the existing
feasibility study. Based on a positive outcome to this phase of work, the Company will let a tender for a turn
key project to produce zircon and rutile concentrate. On the current schedule, the plant should be
operational by the end of calendar 2010.
The approval of the Mining Right for the Xolobeni Project has proved to be a more arduous process. Despite
being advised that the Mining Right was forthcoming, the Company was informed that an appeal was lodged
against the decision which will result in further delays in this process. The Company will continue to pursue
this project as its merits are substantial.
During the year, the Company actively sought to divest its interests in its Sierra Leone Diamond Operations
and was successful in securing a bidder for the project. This, however, was frustrated via the intervention of
parties in Sierra Leone which created legal impediments to the sale. The Company has continued in an
attempt to remove these impediments so that these assets can be dealt with accordingly. The Board will
continue to ensure that the Company exits this project in the most efficient and economic manner.
The Company maintained its large holding in Allied Gold Limited despite having to sell a few parcels of
shares in order to fund ongoing operations. Allied Gold Limited has evolved into a significant gold producer
and is extremely well placed to capitalise on the current strong gold markets.
The Company is also positioning itself to divest other smaller investments, in particular its investment in
Petro Ventures Limited which should result in a positive return to the Company, providing further working
capital to develop the Tormin Mineral Sands Project.
I would once again like to thank the employees of the Mineral Commodities Group for their tolerance and
perseverance throughout the past year and in particular for their continued commitment and efforts. I would
also like to thank you our shareholders for maintaining your confidence in the Group in these difficult global
economic times and hope that your support will continue.
Joseph A. Caruso
Chairman
Name
Number of Ordinary
Shares
Percentage of
Issued Shares
HSBC Custody Nom Aust Ltd
24,747,009
Zurich Bay Holdings Pty Ltd (Minesite Construction A/C)
18,450,988
ANZ Nominees Ltd
Keng Heng Goh
Kathryn Yule
Specialist Hearing Services Pty Ltd
Kevin Anthony Leo and Leticia Leo
Mr Isaac Cohen and Mrs Estelle Mary Cohen and Mr David
Peter Cohen
6,301,552
5,175,000
4,800,000
4,500,000
3,400,000
2,500,000
17.50%
13.05%
4.46%
3.66%
3.39%
3.18%
2.40%
1.77%
Mr David Geoffrey Vincent and Mrs Guiseppina Antonina
Vincent
2,050,000
1.45%
National Nominees Limited
Mr Gregory Hugh Steemson and Mrs Barbara Fay Steemson
(GH Steemson Family Super Account)
2,008,482
1,510,000
1.42%
1.07%
Mr Anthony Grant Melville and Mrs Elaine Sandra Melville
(Melville Super Account)
1,500,000
1.06%
International Mining Services Ltd
Robert Cameron Galbraith
Ms Kathryn Yule
Mr Emanuel Richard Brian Dillon (The Complete A/C)
Mr David Phillip Whitehead and Mrs Linda Susan Whitehead
(Dalin Super Fund A/C)
Mr David Geoffrey Vincent (The Canella family A/C)
Mr Ian Thomson
Kingarth Pty Ltd
1,500,000
1,459,221
1,282,500
1,235,652
1,100,000
1,036,000
1,000,000
1,000,000
1.06%
1.03%
0.91%
0.87%
0.78%
0.73%
0.71%
0.71%
86,556,404
61.22%
ANNUAL REPORT 2008
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Shareholder Information (Continued)
Distribution of Shareholders and Option holders
Contents
Range of Holdings
1 1,000
1,001 5,000
5,001 10,000
10,001 100,000
100,001 and over
Total holders
Marketable Parcels
Number of
Shareholders
Number of Shares
126
421
203
434
145
42,841
1,465,244
1,694,681
16,453,123
121,737,132
1,329
141,393,021
Number of shareholders holding less than a marketable parcel of ordinary shares is 759.
Voting Rights
Every ordinary shareholder present in person or by proxy at meetings of shareholders shall have one vote for
every share held.
Option holders have the right to attend meetings but have no voting rights until the options are exercised.
Substantial shareholders
The following shareholders are considered substantial shareholders:
-
-
Mirabaud Investment Limited holding 9.30% of the issued ordinary shares at the date of their last substantial
interest notice to the Company.
Zurich Bay Holdings Pty Ltd holding 13.05% of the issued ordinary shares.
Restricted securities
There are no restricted securities.
Share buy backs
There is no current on market share buy back.
CORPORATE DIRECTORY
Inside Front Cover
CHAIRMANS LETTER
DIRECTORS REPORT
INCOME STATEMENTS
BALANCE SHEETS
CASH FLOW STATEMENTS
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS DECLARATION
AUDITORS INDEPENDENCE DECLARATION
INDEPENDENT AUDITORS REPORT
STATEMENT OF CORPORATE GOVERNANCE
SHAREHOLDER INFORMATION
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MINERAL COMMODITIES LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Corporate Directory
Directors
Joseph Anthony Caruso - Non-Executive Chairman
Mark Victor Caruso - Managing Director
Gregory Hugh Steemson Non-Executive Director
Company Secretary
Peter Torre
Registered Office
Solicitors
Auditors
Share Registry
Unit 15, Level 1
51-53 Kewdale Road
Welshpool Western Australia 6106
Telephone: (61 8) 9353 4890
Facsimile: (61 8) 9353 4894
Email: info@mncom.com.au
Website: www.mncom.com.au
Steinepreis Paganin
Level 4, Next Building
16 Milligan Street
Perth WA 6000
BDO Kendalls Audit and Assurance (WA) Pty Ltd
128 Hay Street
Subiaco, Western Australia 6008
Advanced Share Registry Ltd
150 Stirling Highway
Nedlands, Western Australia 6009
Telephone: (61 8) 9389 8033
Facsimile: (61 8) 9389 7871
Bankers
Australia & New Zealand Banking Group Ltd
77 St Georges Terrace
Perth WA 6000
Stock Exchange Listing
The Company is Listed on the Australian Stock
Exchange Limited under ASX Code - MRC
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MINERAL COMMODITIES LIMITED
ABN 39 008 478 653
2008
ANNUAL REPORT
Printed by City Printing & Design (08) 9470 2325
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