MINERAL COMMODITIES LIMITED
ABN 39 008 478 653
ANNUAL FINANCIAL REPORT
31 DECEMBER 2009
For personal use only
Mineral Commodities Limited
Annual Financial Report for the year ended 31 December 2009
Corporate Directory
Directors
Joseph Anthony Caruso - Non-Executive Chairman
Mark Victor Caruso - Non-Executive Director
Peter Torre - 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:
Facsimile:
Email:
Website:
(61 8) 9353 4890
(61 8) 9353 4894
info@mncom.com.au
www.mncom.com.au
Steinepreis Paganin
Level 4, Next Building
16 Milligan Street
Perth WA 6000
BDO Audit (WA) Pty Ltd
38 Station St
Subiaco, Western Australia 6008
Advanced Share Registry Ltd
150 Stirling Highway
Nedlands, Western Australia 6009
(61 8) 9389 8033
Telephone:
(61 8) 9389 7871
Facsimile:
Stock Exchange Listing
The Company is Listed on the Australian Stock
Exchange Limited under ASX Code - MRC
For personal use only
Mineral Commodities Limited
Annual Financial Report for the year ended 31 December 2009
Contents
DIRECTORS’ REPORT
STATEMENTS OF COMPREHENSIVE INCOME
STATEMENTS OF FINANCIAL POSITION
STATEMENTS OF CASH FLOWS
STATEMENTS OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
INDEPENDENT AUDITOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
ADDITIONAL SHAREHOLDER INFORMATION
2
11
12
13
14
16
46
47
48
50
54
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report
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 2009.
DIRECTORS
The Directors of the Company in office during or since the end of the financial year are:
. Mr Joseph A Caruso – Non Executive Chairman
. Mr Mark V Caruso – Non Executive Director
. Gregory Hugh Steemson – Managing Director
Directors have been in office since the start of the financial year to the date of this report.
DIRECTORS’ INFORMATION
Joseph Anthony Caruso (64 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.
Mark Victor Caruso (48 Years of Age)
Managing Director
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 and Carbine Resources Limited from December 2008 to March 2010.
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.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was undertaking procedures for the development of mineral sands projects and
investigations into other mineral resources. This has mainly involved the 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.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
CONSOLIDATED RESULTS
The loss of the group after income tax and non-controlling interests was $642,991 (2008: Loss of $1,515,661).
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 Company’s operations for the period under review are as follows:
South African Projects
Xolobeni Mineral Sands Project
In March 2007, Mineral Commodities Limited’s (“MRC’s”) majority owned South African subsidiary Transworld Energy and Minerals
Resources SA Pty Ltd (“TEM”) lodged the Mining Right Application for the Xolobeni Project with the Department of Minerals and Energy
(“DME”).
On 4 August 2008 MRC announced that it had received notification from the DME that the Mining Right for the Kwanyana block within
the Xolobeni Project area would be granted. The remaining blocks (Sikombe, Mnyameni and Mpahlane) would then be held under a
Prospecting Right valid to 2010 which could be extended until applications are made to convert each block into a Mining Right.
The Kwanyana block represents approximately 30% of the mining area and contains around 46% of the total insitu ilmenite resource.
However, in September 2008, the Company was advised that, on behalf of the AmaDiba Crisis Committee (“ACC”) and its members, the
Grahamstown office of the Legal Resources Centre filed a Notice of Appeal (“the Appeal”) with the Minister of the DME. The ACC
requested the Minister to suspend and then appeal the decision to grant the Mining Right.
MRC believes that due to the importance of the Xolobeni Project to the area, the Minister will continue to support the issuing of the
Xolobeni Mining Right, however, the issue date has been deferred pending the outcome of the Appeal. The Company has therefore
taken steps to minimise expenditure on the project pending a resolution of the Appeal.
Tormin Mineral Sands Project
The Tormin Mineral Sands Project is located on the west coast of South Africa, approximately 400km north of Cape Town. The main
minerals of interest are zircon and rutile which are contained in a high grade beach placer deposit north of the Oliphants River outfall.
Previous studies have demonstrated that the Tormin Project can produce an enriched non-magnetic saleable concentrate containing
predominately zircon and rutile. The base case production model consists of an annual production of 30,000 to 40,000 tonnes of
concentrates grading up to 80% zircon and 10% rutile.
As announced on the 24th of June 2009, the Company commissioned K’Enyuka, a South African engineering firm, to undertake a
Definitive Feasibility Study for the Project. The results of the study have been incorporated in a financial model developed on behalf of
the Company by MSP Engineering Pty Ltd, a Perth based resource consultancy firm specialising in industrial minerals.
The Base Case investigated by K’Enyuka is based on hydraulic mining of the beach deposits and hydraulically transferring the sand
from the beach to a stockpile ahead of a primary gravity circuit. Mining operations are to be conducted on a day shift basis only and
surplus mining and stockpile capacity has been incorporated to accommodate for tidal and adverse weather events.
The primary spiral plant is designed for a nominal throughput capacity of 1.6 Mtpa and comprises a primary spiral circuit for removal of
silica and light heavies followed by a wet high intensity magnetic separation (WHIMS) circuit for removal of magnetic minerals including
ilmenite and garnet which are subsequently hydraulically transferred back to the beach for deposition as tailings with the silica fraction.
The resultant non-magnetic concentrates, rich in zircon and rutile, are exported as a combined concentrate.
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For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
The salient results of the K’Enyuka study were released in the quarterly reports lodged during the period. During the course of the study
there was a number of value adding opportunities identified which have been modelled at desktop level by MSP as part of trade off and
optimisation studies.
The trade off and optimisation studies considered the following two primary opportunities being an optimisation of the Base Case and a
beach concentrator model. Both of these options showed favourable economics. The Project also has substantial garnet resources. The
plant design allowed for the extraction of the +200 micron fraction garnet but this aspect was not included in the operating costs and the
operating synergies arising.
The Company is currently in discussions with potential investors and its existing Black Empowerment Partner to determine the
economics of an upfront divestment of this Project versus the risk/reward to the Company of its development.
Investment in Africa Uranium Limited
As advised during the period, MRC elected to not proceed to stage 2 funding of Africa Uranium’s (“AUL”) exploration activities in Africa.
During the period, MRC was issued with a further 10% interest in AUL as compensation for the exploration undertaken by MRC during
the stage 1 funding.
During the period, Cape Lambert Resources Limited obtained a 10% beneficial interest in AUL and in late 2009 undertook two drilling
programmes on AUL’s Hoasib Project. In its ASX release on 20 January 2009, Cape Lambert Resources Limited advised that the
results from the programmes were promising and in line with expectations.
In March 2010, Oklo Uranium Limited announced that it had entered into a transaction with Africa Uranium Limited to acquire its 70%
interest in the Hoasib project for an estimated value of approximately $20 million.
Investment in Petro Ventures International Limited
The Company holds a 9.31% interest in Petro Ventures International Limited (“Petro Ventures”). Petro Ventures has interests in two
project areas which are located in offshore Romania and onshore Hungary. Petro Ventures’ working interest in the projects is 20% and
10% respectively.
Petro Ventures and its partners continue to develop these projects. Based on results to date, the Romanian project is likely to be
commercial. The project in Hungary is in the early stages of exploration.
Investment in Allied Gold Limited (ASX listed: ALD)
MRC currently holds approximately 9.5 million shares of ALD’s issued fully paid ordinary shares.
Allied Gold undertook a significant level of corporate activity during the second half of the year with the successful takeover of Australian
Solomons Gold Limited, the listing of its securities on the Toronto Stock Exchange and the completion of a $150 million capital raising to
undertake the expansion initiatives at its Simberi Oxide Project and the Development of the Gold Ridge Project in the Solomon Islands.
During the period, the Company divested certain parcels of shares held in Allied in order to assist with working capital funding.
FINANCIAL POSITION
The net assets of the group have decreased by $1,495,460 from $21,339,716 at 31 December 2008 to $19,844,256 at 31 December
2009.
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 Board will
continue to review other projects and opportunities in the interest of increasing shareholder value.
ENVIRONMENTAL REGULATIONS
The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to
report annual greenhouse gas emissions and energy use in Australia. For the first measurement period the directors have assessed that
there are no current reporting requirements, but may be required to do so in the future.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
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.
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
and Mining Right over Kwinyana
Block
Granted – subject
to appeal
Tormin – South Africa
Mineral Sands Resources
100
Mining Right
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:
OPTIONS
•
In July 2009, 57,357,208 listed options to acquire shares at 20cents with an expiry date of 31 December 2012 were issued under
the terms of a non-renounceable entitlement at an issue price of $0.005 per option to raise $286,786 excluding costs.
• 2,250,000 unlisted options over ordinary shares were not exercised and expired during 2009.
Options do not entitle the holder to receive a dividend paid to ordinary shareholders.
New issues of options and options exercised in the period are as follows:
Listed options
No of Options
Exercise Price
Expiry date
Opening Balance 31 December 2008
- Options issued
- Options Exercised
-
57,357,208
-
-
20 cents
-
31 December 2012
Balance at 31 December 2009
57,357,208
-
-
Unlisted Options
No of Options
Exercise Price
Expiry date
Opening Balance 31 December 2008
2,250,000
- Options Exercised
- Options Lapsed
Balance at 31 December 2009
-
(2,250,000)
-
Various
-
Various
-
Various
-
Various
-
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
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:
2009
Ordinary Shares
Balance at
1 January ‘09
Received as
Remuneration
Options
Exercised
Net change
other
Balance
31 Dec ‘09
Mark Caruso -Indirect
- Direct
Joseph Caruso
Greg Steemson
18,450,988
12,627
18,450,988
1,510,000
-
-
-
-
-
-
-
-
600,000
-
600,000
-
19,050,988
12,627
19,050,988
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 19,050,988
shares in the Company.
2009
Listed Options
Balance at
1 January '09
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Mark Caruso
Joseph Caruso
Greg Steemson
-
-
-
-
-
-
-
-
-
-
-
-
Net change
other
7,380,396
Balance at
31 Dec '09
7,380,396
7,380,396
7,380,396
604,000
604,000
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
3
3
3
3
3
3
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 Company’s activities throughout the year.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
REMUNERATION REPORT (Audited)
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service Agreements
D. Share-based compensation
E. 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 Company’s
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)
(b)
(c)
Directors Fees;
Salary & Consultancy; and
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.
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.
There are no long term benefits amounts due to Directors and key management personnel.
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For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
Short-term
benefits
Post
employment
benefits
Share-
based
payments
Percentage
performance
based
$
$
$
Totals $
Non Executive Directors
Joe Caruso
Mark Caruso
Sub-total non executive
directors
Executive Directors
Greg Steemson
Other Key Management
Personnel
Peter Torre
Total Key management
personnel
compensation
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
44,037
44,037
48,000
48,000
92,037
92,037
188,200
68,200
72,000
72,000
352,237
232,237
3,963
3,963
-
-
3,963
3,963
-
-
-
-
3,963
3,963
-
-
-
-
-
-
-
-
-
-
-
48,000
48,000
48,000
48,000
96,000
96,000
188,200
68,200
72,000
72,000
356,200
236,200
-
-
-
-
-
-
-
-
-
-
-
-
No options were issued to Directors or other Key Management Personnel during 2009 or the previous year as part of their remuneration.
C. Service Agreements
Mr Gregory Steemson was appointed as Managing Director of Mineral Commodities Limited in May 2009.
In accordance with the terms of the agreement with Mr Steemson, he was paid a fixed sum of $20,000 per month. There are no short
or long term incentives to be provided to Mr Steemson and there is no specific term to his tenure.
The Company may terminate the contract by the provision of a 1 month notice period. Mr Steemson may terminate the contract by the
provision of two months notice. There are no payments upon termination of the contract.
There were no other service agreements.
D. Share Based Compensation
No options or shares were issued to Directors or other Key Management Personnel during 2009 or the previous year as part of their
remuneration.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
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 Company’s Corporate Governance statement is included before the
Additional ASX Information section of the Annual Financial Report.
SIGNIFICANT EVENTS AFTER THE BALANCE SHEET 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 other than what has been disclosed elsewhere in this financial report, 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 $34,300 representing $11,433 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 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.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration as required by Section 307(C) of the Corporations Act 2001 is set out on page 47 and forms
part of this report.
NON-AUDIT SERVICES
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the company and/or the group are important.
There were no non–audit services provided by BDO Audit (WA) Pty Ltd in the year.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors Report (continued)
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:
Audit Services:
BDO Audit (WA) Pty Ltd
Audit and review of financial reports
Non BDO audit firm (Tuffias Sandberg)
Total remuneration for audit services
BDO Audit (WA) Pty Ltd continues in office.
$
48,752
6,364
55,116
This report has been made in accordance with a resolution of the Directors.
Gregory Steemson
Perth, Western Australia
31 March 2010
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Statements of Comprehensive Income
For the year ended 31 December 2009
Note
Consolidated
Company
Revenue from continuing operations
2
Administration expenses
Employees and consultants remuneration
Depreciation and amortisation
2009
$
995,439
(567,677)
(270,906)
(14,356)
Exploration and evaluation costs
12
(133,783)
Finance costs
(16,239)
2008
$
2009
$
2008
$
609,221
1,621,539
1,104,875
(715,165)
(209,772)
(17,942)
(157,663)
(3,157)
(542,129)
(270,906)
(12,226)
(133,783)
(15,926)
(798,978)
(209,772)
(16,399)
(157,663)
(3,157)
(Loss) / Profit from continuing operations
(7,522)
(494,478)
646,569
(81,094)
(1,002,961)
(1,103,699)
(974,970)
(1,185,969)
Income tax expense
(Loss) Profit from continuing operations
Loss from discontinued operations
(Loss) / Profit for the year
Other comprehensive income
Changes in the fair value of available-for- sale
financial assets
Exchange differences on translation of foreign
operations
Other comprehensive income for the year net of
tax
4
5
-
-
(7,522)
(494,478)
(635,469)
(1,021,183)
(642,991)
(1,515,661)
-
646,569
(554,862)
91,707
-
(81,094)
(655,597)
(736,691)
(1,165,147)
2,859,509
(1,165,147)
2,859,509
(173,901)
578,059
(28,116)
(112,659)
(1,339,048)
3,437,568
(1,193,263)
2,746,850
Total comprehensive income for the year
(1,982,039)
1,921,907
(1,101,556)
2,010,159
Loss / Profit is attributable to:
Owners of Mineral Commodities Ltd
(642,991)
(1,515,661)
91,707
(736,691)
Non-controlling interest
-
-
-
-
(642,991)
(1,515,661)
91,707
(736,691)
Total comprehensive income for the year is
attributable to
Owners of Mineral Commodities Ltd
(1,982,039)
1,921,907
(1,101,556)
2,010,159
Non-controlling interest
-
-
-
-
(1,982,039)
1,921,907
(1,101,556)
2,010,159
cents
Earnings/(Loss) per share from continuing operations attributable to the ordinary equity holders of the company.
Basic Loss per share
From continuing operations attributable to
the ordinary shareholders of the company
(cents per share)
From discontinued operations (cents per
share)
Total basic loss per share attributable to the
ordinary equity holders of the company
(cents per share)
0.040
0.82
0.046
1.2
0.45
0.01
cents
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Statements of Financial Position
as at 31 December 2009
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Other current assets
Non - current asset held for sale
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Exploration & development expenditure
Other financial assets
Trade and other receivables
Total Non-Current Assets
Total Assets
CURRENT LIABILITIES
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Parent entity interest
Non-controlling interest
TOTAL EQUITY
Note
Consolidated
Company
2009
2008
$
2009
$
2008
$
7
8
9
10
11(b)
11
12
13(b)
15
16
17
18
153,566
539,358
6,070,777
13,351
165,639
797,328
2,242,278
6,957,094
13,145
-
151,739
28,524
6,070,777
13,351
165,639
256,698
2,088,241
6,957,094
13,145
-
6,942,691
10,009,845
6,430,030
9,315,178
26,515
373,060
13,159,249
12,026,008
22,664
-
367,316
-
6
-
6
-
1,450,003
1,451,001
14,240,022
11,841,568
13,185,770
12,399,074
15,712,689
13,659,885
20,128,461
22,408,919
22,142,719
22,975,063
251,699
32,506
284,205
284,205
1,041,056
28,147
1,069,203
1,069,203
180,648
32,506
213,154
213,154
402,374
28,147
430,521
430,521
19,844,256
21,339,716
21,929,565
22,544,542
40,004,350
39,804,350
40,004,350
39,804,350
3,672,977
4,917,465
1,753,115
2,738,300
(24,011,920)
(23,516,439)
(19,827,900)
(19,998,108)
19,665,407
21,205,376
21,929,565
22,544,542
14
178,849
134,340
-
-
19,844,256
21,339,716
21,929,565
22,544,542
The above statements of financial position should be read in conjunction with the accompanying notes.
- 12 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Statements of Cash Flows
For the year ended 31 December 2009
Note
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
CASH FLOWS FROM OPERATING ACTIVITIES
Exploration and development expenditure
(1,307,142)
(1,882,412)
(133,783)
(157,663)
Interest received
50,937
89,995
22,943
74,739
Payments to suppliers & employees
(494,625)
(1,320,262)
1,057,226
(573,188)
Interest paid
Sundry income
Net cash (outflows) / inflows from operating
activities
CASH FLOWS FROM INVESTING ACTIVITIES
(16,239)
100
(3,157)
2,664
(15,926)
100
(3,157)
2,664
23(a)
(1,766,969)
(3,113,172)
930,560
(656,605)
Payment for plant and equipment
11(a)
(28,942)
(7,946)
(28,704)
Purchase of investments
Proceeds from sales of investments
Loans advanced to controlled entities
Loans repaid by other entities
Loans to other entities
Net cash inflow/(outflow) from investing
activities
(5,445)
(14,826)
(1,488,644)
(14,826)
(1,488,644)
2,154,216
1,387,407
2,154,216
1,387,407
-
-
-
-
(2,158,965)
(2,972,460)
1,070,000
(1,070,000)
-
-
1,070,000
(1,070,000)
636,630
1,364,635
(1,522,097)
(1,605,324)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of shares and options
17, 18
486,578
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of financial
year
Cash and cash equivalents at end of financial
year
486,578
368,000
368,000
486,578
486,578
368,000
368,000
(643,761)
(1,380,537)
(104,959)
(1,893,929)
797,327
2,177,864
256,698
2,150,627
7
153,566
797,327
151,739
256,698
The above statements of Cash Flows should be read in conjunction with the accompanying notes.
- 13 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Statements of Changes in Equity
Consolidated Entity
For the year ended 31 December 2009
Balance at 1 January 2009
Loss for the year
Exchange differences on translation of foreign operations
Transfer to profit and loss on shares sold
Changes in the fair value of available for sale financial
assets
Transfer from reserve – on expiry of options
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Contributions of equity net of transaction costs
Issue of listed options net of costs
Increase in non controlling interest
Balance at the end of the year
Contributed
Equity
$
Listed options
reserve
$
39,804,350
-
-
-
-
-
-
200,000
286,578
40,004,350
286,578
Listed options
Reserve
Parent Entity
For the year ended 31 December 2009
Contributed Equity
$
Balance at 1 January 2009
Loss for the year
Exchange differences on translation of foreign
operations
Transfer to profit and loss on shares sold
Change in the fair value of available for sale financial
assets
Total comprehensive income for the year
Contributions of equity net of transaction costs
Issue of listed options net of costs
Transfer from reserve – on expiry of options
Balance at the end of the year
Accum-
ulated
Losses
$
(23,516,438)
(642,991)
-
-
78,500
(564,491)
-
-
-
69,009
(24,011,920)
General
Reserve
$
Currency
Translation Reserve
$
Share Based
Payments
Reserve
$
Financial Asset
Revaluation
Reserve
$
Total
Non-controlling
interest
$
$
Total
Equity
2,551,100
(584,211)
78,500
2,872,076
-
-
-
-
-
-
-
(113,518)
2,437,582
(173,901)
-
-
(173,901)
-
-
-
-
(78,500)
(78,500)
-
-
-
-
(955,187)
(209,960)
-
(1,165,147)
-
-
(758,112)
-
1,706,929
21,205,377
(642,991)
(173,901)
(955,187)
(209,960)
-
(1,982,039
-
200,000
286,578
(44,509)
19,665,407
134,340
-
-
-
-
-
-
-
44,509
178,849
21,339,717
(642,991))
(173,901)
(955,187)
(209,960)
-
(1,982,039
200,000
286,578
-
19,844,256
Accumulated
Losses
$
Share Based
payments Reserve
$
Currency Translation
Reserve
$
Financial
Asset
Revaluation
Reserve
$
Total
Equity
$
22,544,542
91,707
(28,116)
(955,186)
(209,960)
39,804,350
-
-
-
(19,998,108)
91,707
78,500
(212,276)
2,872,076
-
-
(28,116)
(955,186)
(209,960)
91,707
(28,116)
(1,165,147)
(1,101,555)
200,000
-
40,004,350
286,578
286,578
78,500
(19,827,900)
(78,500)
-
-
(240,392)
-
1,706,929
200,000
286,578
-
21,929,565
- 14 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Statements of Changes in Equity
Consolidated Entity
Contributed Equity
For the year ended 31 December 2008
$
Accum-
ulated
Losses
$
General Reserve
Currency
Translation
Reserve
Share Based
Payments Reserve
Financial Asset
Revaluation
Reserve
$
$
$
$
Total
Non-controlling
interest
Total
Equity
$
$
134,340
-
-
-
-
19,049,809
(1,515,661)
578,059
2,859,509
1,921,907
368,000
21,339,716
39,436,350
(22,000,777)
2,551,100
(1,162,270)
78,500
12,567
Balance at 1 January 2008
Loss for the year
Exchange differences on translation of foreign operations
Transfer to profit and loss on shares sold
Changes in the fair value of available for sale financial assets
Total comprehensive income for the year
Transactions with owners in their capacity as owners
(1,515,661)
-
-
(1,515,661)
-
-
-
-
Contributions of equity net of transaction costs
368,000
578,059
578,059
-
-
-
-
-
18,915,469
(1,515,661)
578,059
-
-
-
2,859,509
2,859,509
2,859,509
1,921,907
368,000
Balance at the end of the year
39,804,350
(23,516,438)
2,551,100
(584,211)
78,500
2,872,076
21,205,376
134,340
Parent Entity
Contributed Equity
Accumulated
Losses
Share Based
payments
Reserve
Currency
Translation
Reserve
Financial
Asset
Revaluation
Reserve
For the year ended 31 December 2008
$
$
$
$
$
Balance at 1 January 2008
Loss for the year
Exchange differences on translation of foreign operations
Change in the fair value of available for sale financial assets
Total comprehensive income for the year
Contributions of equity net of transaction costs
Balance at the end of the year
39,436,350
-
-
368,000
39,804,350
(19,261,417)
(736,691)
-
78,500
(99,617)
12,567
-
(112,659)
(736,691)
(112,659)
2,859,509
2,859,509
(19,998,108)
78,500
(212,276)
2,872,076
Total
Equity
$
20,166,383
(736,691)
(112,659)
2,859,509
2,010,159
368,000
22,544,542
- 15 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements
1.
(a)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
These financial statements are 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.
The general purpose financial statements for the year ended 31 December 2009 have 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 statements
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 2009 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 parent and or subsidiary 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 parent company.
Subsidiaries are those entities over which the Parent company 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 statements of comprehensive
income 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 – refer to note (f).
The Consolidated entity applies a policy of treating transactions with minority interests as transactions with external parties to
the entity. Disposals to minority interests result in gains and losses for the Consolidated entity are recorded in the statement of
comprehensive income. 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.
- 16 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
1.
(b)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation (continued)
Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements of Mineral
Commodities Limited.
(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.
(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 date of the
Statements of Financial Position. 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 (2008: 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
Statements of Financial Position.
Cash flows are included in the Statements of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating
cash flows.
- 17 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 group’s 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
entity’s functional and presentation currency.
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 profit for the year except where
deferred in equity as a qualifying net investment hedge.
Subsidiary Companies
The financial results and position of subsidiary companies whose functional currency is different from the consolidated entities
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.
Hedge of a net investment in a foreign operation
The group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign
operation and the parent entity’s functional currency (AUD), regardless of whether the investment is held directly or through an
intermediate parent.
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a
foreign operation are recognised in other comprehensive income to the extent that the hedge is effective, and are presented
within equity in the foreign currency translation reserve. To the extent that the hedge is ineffective, such differences are
recognised in profit or loss. When the hedged part of a net investment is disposed of, the relevant amount in the foreign
currency translation reserve is transferred to profit or loss as part of the profit or loss on disposal.
(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.
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 profit for the year 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.
- 18 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 profit for the year of disposal.
(g)
Exploration and Development Expenditure
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 profit for the year. Costs are written off as soon as an
area has been abandoned or considered to be non-commercial or impaired 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 for the year.
(h)
Investments
Interests in Subsidiaries
Investments in subsidiaries are carried in the Company’s financial report at cost less any impairment losses. Dividends and
distributions are brought to account in profit 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 entity’s investment in associates includes goodwill (net of any
accumulated impairment loss) identified on acquisition.
The Consolidated entity’s share of its associates post acquisition profits or losses is recognised in profit for the year, 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 Consolidated entity reviews the carrying values of its 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 asset’s fair value less costs to sell and value in use, is compared to the asset’s
carrying value. Any excess of the asset’s 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.
(j)
Financial Instruments
The Consolidated entity classifies its financial instruments on initial recognition. The classification depends on the purpose for
which the financial instrument was acquired.
- 19 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
1.
(k)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments (continued)
Recognition and derecognition
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.
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 arm’s length transactions, reference to similar instruments and other
pricing models.
Loans and receivables
Loans and receivables are recognised initially at fair value and subsequently 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 initially at fair value and subsequently
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.
- 20 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
1.
(o)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Employee Benefits
Wages and Salaries, Annual Leave and Sick Leave
Provision is made for the consolidated entity’s 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 25.
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
The Group has applied AASB 8 “Operating Segments” from 1st January 2009. AASB 8 requires a “management approach”
under which segment information is presented on the same basis as that used for internal reporting purposes. This has
resulted in an increase in the number of reportable segments presented. The previously reported “Africa” segment has been
disaggregated into the two areas of interest “Tormin” and “Xolobeni”.
Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the Directors that make strategic decisions.
There is no goodwill attached to any of the segments. There has been no impact on the measurement of the assets and
liabilities reported for each segment. Comparatives for 2008 have been restated on the new basis of reporting.
(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.
- 21 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
(t)
Non-current assets (or disposal groups) held for sale and discontinued operations
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.
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 derecognition.
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 and critical estimate in applying the entity’s accounting policies
Impairment
During the year, the consolidated entity impaired its property, plant and equipment (Note 11), 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 $358,373 (2008: $1,446,278 ) (Note 15) have been impaired in the 2008 year 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 or by sale.
Available for sale financial assets
During the year, the company sold 5 milllion shares in Allied Gold Limited, and in 2008 that company restructured their Board
such that it is considered that MRC has lost significant influence (Note 13(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 and the Company proceeds to further develop this
project.
- 22 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment in Unlisted Entities
Investments in unlisted entities have been measured using valuation models. Assumptions and estimates have been used in
these valuations models. Should any of these assumptions or estimates change, this could significantly effect the carrying
values of theses investments.
(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 2009.
Reference
Title
Summary
AASB 3
(Revised)
Business
Combinations
revised
The
standard
introduces a number of
significant changes to the
accounting
for business
combinations.
AASB
2008-3
to
Amendments
Australian
Accounting
Standards
arising
from AASB 3 and
AASB 127
9
Financial
Instruments
AASB
(issued
December
2009)
a
Amending standard issued
as
of
revisions to AASB 3 and
AASB 127.
consequence
classification
Amends
for
measurement of
assets
the requirements
and
financial
Application
date for Group*
1 January 2010
1 January 2010
1 January 2010
Application date
of standard*
1 July 2009
1 July 2009
Periods beginning
on or after 1
January 2013
Impact on Group
financial report
Unless
the Group
enters into Business
Combinations in the
future, this standard
is not applicable and
will
therefore have
no impact.
Unless
the Group
enters into Business
Combinations in the
future, this standard
is not applicable and
will
therefore have
no impact.
the recent
Due
to
these
release
of
amendments
and
that adoption is only
mandatory for the 31
December 2013 year
end, the entity has
not yet made an
the
assessment of
impact
these
amendments.
of
* designates the beginning of the applicable annual reporting period unless otherwise stated.
No other standards, interpretations or amendments which have been issued are expected to have an impact on the group.
- 23 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
2.
OTHER REVENUE FROM CONTINUING OPERATIONS
Interest
Interest revenue from unrelated entities
Interest revenue from controlled entity
Other Income
Profit from sales of investments in listed
companies
Management fees
Miscellaneous and other income
Consolidated
Company
2009
$
50,937
-
50,937
2008
$
89,995
-
89,995
944,402
471,562
-
100
45,000
2,664
2009
$
22,943
553,453
576,396
944,402
100,641
100
944,502
519,226
1,045,143
2008
$
74,739
415,225
489,964
471,562
140,685
2,664
614,911
Total Revenue from continuing operations
995,439
609,221
1,621,539
1,104,875
From discontinued operations
Promet settlement
Other income
Note 5
3.
EXPENSES
-
-
-
2,000,000
6,859
2,006,859
-
-
-
2,000,000
-
2,000,000
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
Loss before income tax has been arrived at after
charging the following:
Exploration expenditure written off
133,783
157,663
133,783
157,663
Operating lease rentals
Depreciation - plant and equipment
Superannuation contributions
Movement in provision for employee entitlements
70,133
14,356
14,329
4,359
70,133
17,942
26,350
(60,336)
70,133
12,226
14,329
4,359
70,133
16,399
19,876
(60,336)
- 24 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
4.
INCOME TAX
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
-
-
-
-
-
-
-
-
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:
(Loss) / Profit before income tax
(642,991)
(1,515,661)
91,707
(736,691)
Prima facie tax payable / (benefit) on loss
@ 30% (2007:30%)
Non allowable items
Non-assessable income
(192,897)
(454,698)
27,512
(221,007)
(542,252)
(43,110)
(43,110)
427,222
(418,564)
Net deferred tax assets not brought to account
778,259
70,586
Benefit of losses not previously brought to account
Income tax expense / (benefit)
-
-
-
-
(43,110)
434,163
-
-
917,548
(43,110)
(653,430)
-
-
Future income tax benefit arising from
un-recouped deductions at balance date,
for Australian tax resident entities.
Revenue losses
Capital losses
3,984,681
3,644,600
1,934,806
1,726,016
4,689,637
4,689,637
4,689,637
4,689,637
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 86 million (approximately A$13m (2008:
A$2m)). The benefit of these potential deferred tax assets has not been brought to account, and will only be realised if
circumstances similar to those described above, also apply to the economic entity’s future operations in South Africa.
There are no franking credits available.
- 25 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
5
(a)
DISCONTINUED OPERATIONS
Description
Kariba Kono (SL) Ltd
Following the ceasing of operations in 2008 and subsequent withdrawal from Sierra Leone further provisions have been made
against the value of remaining plant and equipment held as available for sale.
(b) Financial performance and cash flow information
Consolidated
Company
Revenue
Promet settlement
Other income
Total revenue
Expenses
Site Operating expenses
General & administration expenses
Impairment of loans to subsidiaries
2009
$
2008
$
2009
$
-
-
-
2,000,000
6,859
2,006,859
(314,220)
(125,758)
(685,556)
(254,650)
-
-
-
-
(998)
2008
$
2,000,000
-
2,000,000
(44,500)
(60,845)
-
(358,373)
(1,446,278)
Impairment of fixed assets
(195,491)
(1,104,766)
(195,491)
(1,003,974)
Impairment of exploration asset
Impairment of investment in Black hawk Oil &
Gas Ltd
-
-
(983,070)
-
-
-
-
(100,000)
Total expenses
Loss before income tax
Income tax expense
(Loss after income tax from discontinued
operations
(635,469)
(3,028,042)
(554,862)
(2,655,597)
(1,021,183)
(554,862)
(655,597)
-
-
-
-
(635,469)
(1,021,183)
(554,862)
(655,597)
Net cash inflow/(outflow) from operating activities
(439,978)
(933,347)
Net cash inflow /(outflow) from investing activities
(195,491)
(87,836)
Net Cash used by discontinued operations
(635,469)
(1,021,183)
-
(554,862)
(554,864)
(103,345)
(552,252)
(655,597)
(c) Carrying amounts of assets and liabilities
Cash and cash equivalents
Property plant and equipment
Non – current assets held for sale
Receivables & Prepayments
Total Assets
Trade Creditors
Total Liabilities
Net Assets
-
-
165,639
5
165,644
(46,024)
(46,024)
119,620
- 26 -
16,826
339,427
-
-
-
165,639
81,871
438,124
(63,110)
(63,110)
375,014
5
165,644
(46,024)
(46,024)
119,620
-
339,427
-
-
339,427
-
339,427
339,427
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
5
DISCONTINUED OPERATIONS (cont’d)
Blackhawk Oil & Gas Ltd
This subsidiary company is dormant and has no assets, accordingly in 2008 a provision for impairment was made against the value of
Mineral Commodities investment in and loans receivable from Blackhawk Oil & Gas Ltd.
Amounts charged to the income statement
Impairment of the Investment in Blackhawk Oil & Gas Ltd
Impairment of Loan to Blackhawk Oil & Gas Ltd
6.
SEGMENT INFORMATION
Company
2009
2008
-
-
100,000
34,708
The Group has applied AASB 8 “Operating Segments” from 1st January 2009. AASB 8 requires a “management approach” under which
segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the
number of reportable segments presented. The previously reported “Africa” segment has been disaggregated into the two areas of
interest “Tormin” and “Xolobeni”.
Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the Board of Directors which makes strategic decisions.
There is no goodwill attaching to any of the segments. There has been no impact on the measurement of the assets and liabilities
reported for each segment. Comparatives for 2008 have been restated on the new basis of reporting.
There are two operating segments for South Africa, these are exploration and development projects one Tormin Mineral Sands held in
Minerals Sands Resources Ltd and located on the West coast. The other is the Xolobeni Mineral Sands projected held in Transworld
Energy and Minerals located on the East coast.
In Australia the Group operates in two segments, investing in the securities of unrelated entities and interest on the deposit of surplus
funds. The other segment is the corporate overhead associated with the management and administration of the company’s projects and
corporate administration.
2009
South Africa
Australia
Tormin
$
Xolobeni
$
Investing
Corporate
$
Discontinued
operations
Totals
$
$
Revenue from operations
Profit from sales of investments in
listed companies
Interest earned from unrelated
entities
Interest earned from controlled
entity
Management fees from controlled
entity
Other income
Inter segment revenue
-
-
944,402
26,594
1,400
22,943
-
-
-
-
-
-
-
-
-
-
-
-
-
-
553,453
100,641
100
(654,094)
Total segment revenue
26,594
1,400
967,345
100
-
-
-
-
-
-
-
944,402
50,937
553,453
100,641
100
(654,094)
995,439
Segment results
Profit / (Loss) before income tax
2
-
967,345
(974,869)
(635,469)
(642,991)
- 27 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
6.
SEGMENT INFORMATION (Continued)
2008
Africa
Australia
Discontinued
operations
Totals
Tormin
Xolobeni
Investing
Corporate
Revenue from operations
$
$
$
$
$
Gain from sales of investments
in listed companies
Interest earned from unrelated
entities
Interest earned from controlled
entity
Management fees from
controlled entity
Management fees from
unrelated entity
Other revenue
Inter segment revenue
Total segment revenue
-
-
471,562
7,316
7,316
75,363
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
415,225
95,685
45,000
2,664
-
-
-
-
-
6,859
471,562
89,995
415,225
95,685
45,000
9,523
(510,910)
-
(510,910)
7,316
7,316
546,925
47,664
6,859
616,080
Segment results
(Loss) / Profit before income tax
1,383
1,383
(160)
(160)
546,925
(1,042,626)
(1,021,183)
(1,515,661)
546,925
(1,042,626)
(1,021,183)
(1,515,661)
Total segment assets
31 December 2009
31 December 2008
3,953,063
9,722,704
6,070,777
216,278
165,639
20,128,461
2,962,423
9,665,306
6,957,094
2,725,400
98,697
22,408,920
- 28 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
7.
CASH AND CASH EQUIVALENTS
Cash at Bank
Consolidated
Company
2009
$
153,566
153,566
2008
$
797,328
797,328
2009
$
151,739
151,739
2008
$
256,698
256,698
The effective interest rate on cash at bank in 2009 was 3.00% (2008:6.38%)
(a)
Interest rate risk exposure
The consolidated and parent entity’s exposure to interest rate risk is discussed in Note 24.
(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 Statement of Cash Flows.
8.
TRADE AND OTHER RECEIVABLES – CURRENT
Trade receivables
Security deposits¹
Other receivables²
Consolidated
Company
2009
$
167
423,352
115,839
2008
$
54,026
12,934
2009
$
167
-
2008
$
54,026
-
2,094,068
28,357
2,034,216
Loans receivable from other entities
-
81,250
-
-
539,358
2,242,278
28,524
2,088,241
¹
²
Includes a secured deposit of $410,574 with First Rand bank held as security for a performance guarantee issued by the Bank
in favour of the South African Department of Minerals and Energy in respect of Mineral Sands Resources (Pty) Ltd obligations
under the Tormin Mining right.
This amount includes a VAT refund of $69,629 due to Mineral Sands Resources from the South African Revenue Service.
(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
2009 and 2008.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned
above. Refer to Note 24 for more information on the risk management policy of the Group and the credit quality of the entity’s
receivables.
(b)
Foreign Exchange and Interest Rate Risk
Information about the Group’s and the parent entity’s exposure to foreign exchange and interest rate Risk in relation to trade
and other receivables is provided in Note 24.
- 29 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
8.
TRADE AND OTHER RECEIVABLES – CURRENT (Continued)
(c)
Other Receivables
In 2008 an amount of $2,000,000 represented 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.
9.
FINANCIAL ASSETS - CURRENT
Available for sale Investments
Investments in companies listed on a
recognised stock exchange - shares at fair
value
At the beginning of the year
Re classify investment in Allied Gold Ltd from
equity accounted investments
Sales of shares in Allied Gold Ltd at FV
31/12/08 5 mill @ $0.42cents
Disposal of other listed shares
Fair value movement
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 exchanges
At the beginning of the year
Investment this year
Fair value movement
Total available for sale investments in
companies not listed on a recognised stock
exchange¹
Consolidated
2009
$
2008
$
Company
2009
2008
$
6,580,870
75,000
6,580,870
75,000
-
6,524,439
-
6,524,439
(2,100,000)
(65,000)
(938,387)
-
-
(2,100,000)
(65,000)
-
-
(18,569)
(938,387)
(18,569)
3,477,483
6,580,870
3,477,483
6,580,870
376,224
1,488,643
728,427
361,398
14,826
376,224
1,488,643
361,398
14,826
-
728,427
-
2,593,294
376,224
2,593,294
376,224
Total Financial Assets - Current
6,070,777
6,957,094
6,070,777
6,957,094
Available for sale financial assets comprise investments in the ordinary share capital of various entities. There are no fixed
returns or fixed maturity dates attached to these investments.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
- 30 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
9.
FINANCIAL ASSETS – CURRENT (Continued)
Consolidated
Company
2009
2009
$
Level 1
2008
$
Level 2
Available for sale financial assets
3,477,483
2,593,294
2009
$
Level 3
-
-
2008
$
Total
6,070,777
6,070,777
Total
2008
3,477,483
2,593,294
Level 1
Level 2
Level 3
Total
Available for sale financial assets
6,580,870
376,224
Total
6,580,870
376,224
-
-
6,957,094
6,957,094
Fair Value of Investment in Allied Gold Limited
The market value of this investment in Allied Gold at balance date was $3,423,673 based on a price per share of 32.5 cents.
The investment by Mineral Commodities Ltd in Allied Gold Ltd was reclassified from equity accounted to fair value in 2008.
refer note 13(a).
¹ Non listed investments have been valued as an approximate to their fair value using accepted valuation models. Inputs into
the models have been based on market evidence where available, or on managements best estimate.
(a) Risk Exposure
Information about the Group’s and the parent entity’s exposure to credit risk, foreign exchange and interest rate risk is
provided in Note 24.
10.
OTHER – CURRENT
Prepayments
13,351
13,145
13,351
13,145
11.
PROPERTY, PLANT AND EQUIPMENT
(a)
Plant and office equipment - at cost
Accumulated depreciation
Total property, plant and equipment
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
Additions
Impairment
Depreciation
307,753
(281,238)
26,515
663,628
(290,568)
373,060
178,312
(151,649)
26,663
530,425
(163,109)
367,316
373,060
28,942
1,575,105
7,946
367,316
28,704
1,426,744
5,445
(195,491)
(1,104,766)
(195,491)
(1,003,974)
(14,356)
(105,225)
(12,226)
(60,899)
Transferred to Available for sale assets
(165,639)
-
(165,639)
-
Carrying amount at end of year
26,515
373,060
22,664
367,316
- 31 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
11.
PROPERTY, PLANT AND EQUIPMENT (Continued)
Consolidated
Company
(b) Non-current asset held for sale
Available for sale plant and equipment
165,639
2009
$
2008
$
-
2009
$
165,639
2008
$
-
During 2009 further adjustments to impairment losses of $195,491 (2008 $1,003,974) were brought to account in respect of
the available for sale Plant and Equipment ex Sierra Leone. The impairment value has been calculated to write off the full
carrying value less the estimated net sale value.
12.
EXPLORATION AND DEVELOPMENT EXPENDITURE
Exploration expenditure - costs carried forward
in respect of areas of interest in:
Exploration and evaluation phases
13,159,249
12,026,008
Total exploration and evaluation expenditure
13,159,249
12,026,008
Reconciliation of the carrying amount of
exploration and development expenditure at the
beginning and end of the current and the
previous financial year.
Carrying amount at beginning of year
Expenditure during the year
Impairment of exploration expenditure
Foreign exchange movements
Write off discontinued projects
12,026,008
11,394,491
1,394,052
-
(127,028)
(133,783)
2,505,464
(983,069)
(733,215)
(157,663)
-
-
-
-
-
-
133,783
157,663
-
-
-
-
(133,783)
(157,663)
Carrying amount at end of year
13,159,249
12,026,008
-
-
In March 2007, Mineral Commodities Limited’s (“MRC’s”) majority owned South African subsidiary Transworld Energy and
Minerals Resources SA Pty Ltd (“TEM”) lodged the Mining Right Application for the Xolobeni Project with the Department of
Minerals and Energy (“DME”).
On 4 August 2008 MRC announced that it had received notification from the DME that the Mining Right for the Kwanyana
block within the Xolobeni Project area would be granted. The remaining blocks (Sikombe, Mnyameni and Mpahlane) would
then be held under a Prospecting Right valid to 2010 which could be extended until applications are made to convert each
block into a Mining Right.
The Kwanyana block represents approximately 30% of the mining area and contains around 46% of the total insitu ilmenite
resource.
However, in September 2008, the Company was advised that, on behalf of the AmaDiba Crisis Committee (“ACC”) and its
members, the Grahamstown office of the Legal Resources Centre filed a Notice of Appeal (“the Appeal”) with the Minister of
the DME. The ACC requested the Minister to suspend and then appeal the decision to grant the Mining Right.
MRC believes that due to the importance of the Xolobeni Project to the area, the Minister will continue to support the issuing of
the Xolobeni Mining Right. The Company has therefore taken steps to minimise expenditure on the project pending a
resolution of the Appeal.
- 32 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
12.
EXPLORATION AND DEVELOPMENT EXPENDITURE (Continued)
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 in 2008 was brought to account in respect of the exploration assets contained within the
Company’s Sierra Leone project. The impairment value was calculated to write off all the carrying value.
13(a)
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investment in companies accounted for using
the equity method
At the beginning of the year
Equity accounting adjustments
Reclassify to fair value investment
13 (b) SUBSIDIARIES
Consolidated
2009
$
2008
$
-
-
-
-
3,298,437
-
(3,298,437)
-
Unquoted investments - at cost
Shares in controlled entities
Subsidiaries
Parent Entity
Mineral Commodities Limited
Controlled Entities
Rexelle Pty Ltd
Queensland Minex NL
Q Smelt Pty Ltd
Mincom Waste Pty Ltd
MRC Resources (Pty) Ltd
MRC Africa Pty Ltd
Kariba Kono (S.L.) Ltd (refer note 1b)
Blackhawk Oil & Gas Ltd
Less Impairment
Consolidated
Company
2009
$
-
-
2008
$
-
-
2009
$
1,450,003
1,450,003
2008
$
1,451,001
1,451,001
Class of
Share
Place of
Incorporation
Equity Holding
2008
2009
%
%
Cost to Company
2009
$
2008
$
Australia
Australia
Australia
Australia
Australia
South Africa
Australia
Sierra Leone
Australia
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
100
100
90
100
100
100
100
100
100
100
90
100
100
100
100
100
- 33 -
1,450,001
1,450,001
4,718,302
4,718,302
-
-
-
1,000
-
-
-
-
1,000
-
100,000
100,000
6,269,303
6,269,303
(4,818,300)
(4,818,302)
1,450,003
1,451,001
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements
(continued)
13 (b) SUBSIDIARIES (Continued)
Subsidiaries of MRC Resources (Pty) Ltd
Place of
Incorporation
Equity Holding
2008
2009
%
%
Cost to Company
2009
$
2008
$
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
Ord
Ord
Ord
Ord
South Africa
South Africa
South Africa
South Africa
Namibia
56
50
100
100
100
56
50
100
100
100
2,500,000
2,500,000
-
-
-
-
-
-
-
-
¹ In 2008 MRC Resources (Pty) Ltd shareholding reduced by 19% following the transfer to the Black Economic Enterprise
partner.
² In 2008 MRC Resources (Pty) Ltd shareholding reduced by 50% following the transfer to the Black Economic Enterprise
partner
14.
NON-CONTROLLING INTERESTS
Non-controlling interests in subsidiaries comprise:
Interest in retained earnings 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
2009
$
2008
$
-
-
54,748
124,101
178,849
-
-
54,710
79,630
134,340
During 2008 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 in accordance with the respective agreements entered
into with the Black Empowerment partners.
- 34 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
15.
TRADE AND OTHER RECEIVABLES – NON-CURRENT
Opening Balance
Loans and advances - controlled entities
Interest on Loans
Less movement in impairment
Total Trade and other receivables
Consolidated
Entity
2009
2008
-
-
-
-
-
Parent Entity
2009
11,841,568
2,203,374
2008
9,917,134
2,955,487
553,453
415,225
(358,373)
(1,446,278)
14,240,022
11,841,568
-
-
-
-
-
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 2009 non current loans and advances with a nominal value of $1,804,651 (2008: $1,446,278) were
impaired.
This related to the following loans:
(i) $1,773,619 (2008:1,415,246) 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.
(ii) $31,033 (2008: $31,033) advanced to Blackhawk Oil & Gas Ltd and Queensland Minex NL were also considered to be
impaired.
.
Risk Exposure
(b)
Information about the Group’s and the parent entity’s exposure to credit risk, foreign exchange and interest rate risk is
provided in Note 24.
16.
TRADE AND OTHER PAYABLES - CURRENT
Trade payables - unsecured
Other payables and accruals - unsecured
(a)
Fair Values and credit risk
Consolidated
Company
2009
$
67,488
184,211
251,699
2008
$
704,742
336,314
1,041,056
2009
$
42,461
138,187
180,648
2008
$
129,170
273,204
402,374
Due to the short term nature of these payables the carrying values represent their respective fair values as at 31 December
2009 and 2008.
(b)
Foreign Exchange and Interest Rate Risk
Information about the Group’s and the parent entity’s exposure to foreign exchange and interest rate Risk in relation to trade
and other payables is provided in Note 24 .
- 35 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
17.
CONTRIBUTED EQUITY
2009
Number of
shares
2008
Number of
shares
2009
$
2008
$
Balance at beginning of financial year
141,393,385
122,993,385
39,804,350
39,436,350
Consideration for shares in Africa Uranium Ltd
2,000,000
18,400,000
200,000
368,000
Costs of capital raising
-
-
-
-
Balance at end of financial year
143,393,385
141,393,385
40,004,350
39,804,350
•
In June 2009 the Company issued 2 million shares as part consideration to acquire a 10% interest in Africa Uranium Ltd
(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 Group’s and the parent entity’s 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 at the Company’s projects have reached a stage at
which debt financing can be obtained, therefore the company considers its contributed equity as it’s capital during this period.
Investments such as the shareholding in Allied Gold Ltd are also regarded as part of the capital base and sold as required to
fund ongoing operations.
18.
RESERVES
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
General Reserve
2,437,582
2,551,100
-
-
Financial asset revaluation reserve
1,706,929
2,872,076
1,706,929
2,872,076
Listed options reserve
286,578
-
286,578
-
Share based payments reserve
-
78,500
-
78,500
Foreign currency translation reserve
(758,112)
(584,211)
(240,392)
(212,276)
3,672,977
4,917,465
1,753,115
2,738,300
- 36 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
18.
RESERVES (Continued)
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 presentation currency of the group. Refer to accounting policy Note 1 (e).
Share Based Payments Reserve
The share based payments reserve was used to recognise the fair value of options issued to employees but not exercised and
the fair value of shares issued to employees. These options were not exercised by the expiry date of 30 September 2009 and
have thus lapsed.
Listed Options Reserve
Proceeds form the issue of 57,357,208 listed options pursuant to an entitlement issue.
19.
LOSS PER SHARE
(a) Basic loss per share
From continuing operations attributable to the ordinary
shareholders of the company (cents per share)
From discontinued operations (cents per share)
Total basic loss per share attributable to the ordinary
equity holders of the company (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 from
continued operations
Loss used in the calculation of basic loss per share from
discontinued operations
Consolidated
2009
cents
0.005
0.445
.045
2008
cents
0.040
0.82
1.2
142,434,481
124,098,533
(7,522)
(494,478)
(635,469)
(1,021,183)
There are 57,357,208 options with an exercise price of 20 cents and an expiry date of 31 December 2012 on issue as at 31 December
2009. These potential ordinary shares are not considered dilutive and accordingly have not been used to calculate dilutive earnings per
share.
20.
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:
Amounts received or due and receivable by auditors
for:
Auditors of the parent entity
Audit and review
Non-related practice of the auditors
Audit of subsidiaries
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
48,752
70,421
48,752
70,421
6,364
55,116
- 37 -
5,832
76,253
-
48,752
-
70,421
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
21.
KEY MANAGEMENT PERSONNEL DISCLOSURES
Key Management Personnel Compensation
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Economic Entity
Parent Entity
2009
$
352,237
3,963
356,200
2008
$
232,237
3,963
236,200
2009
$
352,237
3,963
356,200
2008
$
232,237
3,963
236,200
(c)
Option holdings of key management personnel
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:
2009
Key
Management
Personnel
Mark Caruso
Joseph Caruso
Greg Steemson
Peter Torre
2008
Key
Management
Personnel
Mark Caruso
Joseph Caruso
Greg Steemson
Balance at
1 January '09
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Net change
other
Balance at
31 Dec '09
Vested and
exercisable
-
-
-
250,000
-
-
-
-
-
-
-
-
-
-
-
7,380,396
7,380,396
7,380,396
7,380,396
7,380,396
7,380,396
604,000
604,000
604,000
(250,000)
-
-
-
Balance at
1 January '08
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Balance at
31 Dec '08
Vested and
Exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
Peter Torre
250,000
The net change other above was the take up of the entitlement issued undertaken by the Company during the period.
- 38 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
21.
(d)
KEY MANAGEMENT PERSONNEL DISCLOSURES (Continued)
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:
2009
Director
Mark Caruso
Joseph Caruso
Greg Steemson
Peter Torre
2008
Director
Mark Caruso
Joseph Caruso
Greg Steemson
Peter Torre
Balance at
1 January ‘09
Received as
Remuneration
Options
Exercised
Net change other
18,463,615
18,450,988
1,510,000
-
-
-
-
-
-
-
-
-
600,000
600,000
-
-
Balance at
1 January ‘08
Received as
Remuneration
Options
Exercised
Net change other
11,569,353
11,556,726
210,000
-
-
-
-
-
-
-
-
-
6,894,262
6,894,262
1,300,00
-
Balance
31 Dec ‘09
19,063,615
19,050,988
1,510,000
-
Balance
31 Dec ‘08
18,463,615
18,450,988
1,510,000
-
Joseph and Mark Caruso are both directors of Zurich Bay Holdings Pty Ltd which has a relevant interest in 19,050,988 shares.
The net change other above was the take up of the entitlement issue undertaken by the Company during the period.
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
arm’s length.
(e)
Loans to key management personnel
There were no loans to key management personnel during the period.
(f)
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 22.
22.
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 in note 21 and the payment of $642 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 10,534,379 shares or 1.02% 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 13.
Transactions between Mineral Commodities Limited and other entities in the group during the years ended 31 December 2009
and 31 December 2008 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.
- 39 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
22.
RELATED PARTY TRANSACTIONS (Continued)
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 in 2009 and the loans from Kariba Kono and Blackhawk
Oil & Gas Ltd in 2008, refer to Note 15 (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 21.
23(a)
RECONCILIATION OF LOSS FOR THE YEAR TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
Profit/(loss) after income tax and outside equity
interest
(642,991)
(1,515,661)
91,707
(736,691)
Depreciation
14,356
105,225
12,226
60,899
Non bank interest income not in cash
-
-
(553,453)
(430,049)
Impairment losses
195,491
2,087,836
554,862
2,550,252
Management fees not received in cash
-
(45,000)
(100,641)
(140,685)
Provision for Employee Entitlements
4,359
(60,336)
4,359
(60,336)
(Profit)/loss on sale of investment in listed
companies
(944,402)
(471,562)
(944,402)
(471,562)
Exploration expenditure written off
133,783
157,663
133,763
157,663
Exploration expenditure capitalised
(1,394,052)
(2,505,464)
(133,763)
(157,663)
Other non-cash items
(46,866)
93,520
28,119
60,852
Changes in assets and liabilities during the year:
Increase (decrease) in trade payables and other
liabilities
(Increase) decrease in trade and other
receivables
(789,357)
778,017
(226,346)
308,013
1,702,916
(1,740,988)
2,064,335
(1,800,877)
(Increase) decrease in prepayments
(206)
3,578
(206)
3,578
Net cash inflow / (outflow) from operating
activities
(1,766,969)
(3,113,172)
930,560
(656,606)
23(b)
Non-cash Investing and Financing Activities
The group has no available finance facilities as at balance date.
- 40 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
24.
FINANCIAL RISK MANAGEMENT
The Group and the Parent entity hold the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available for sale investments
Non current - inter company loans
Financial Liabilities
Trade Creditors
Other payables
Consolidated
Company
2009
$
2008
$
2009
$
2008
$
153,566
539,358
6,070,777
-
797,328
2,242,279
6,957,094
151,739
28,524
6,070,777
256,698
2,088,241
6,957,094
-
14,240,022
11,841,568
6,763,701
9,996,701
20,491,062
21,143,601
67,488
184,211
704,742
336,314
251,699
1,041,056
42,461
138,187
180,648
129,170
273,204
402,374
6,512,002
8,955,645
20,310,414
20,741,227
The Group’s 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 Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the group. Risk management is
carried out by the Board of Directors.
The Group does not hold any derivative financial instruments.
Financial Risk
The main risk the group is exposed to through its financial instruments are exchange rate risk, interest rate risk, liquidity risk,
credit risk and price risk.
Foreign exchange risk
The Parent entity operates internationally and is exposed to foreign exchange risk arising from various currency exposures.
The parent entity is primarily exposed with respect to the South African Rand arising from the investments in and loans to its
South African subsidiaries.
Foreign exchange risk arises from assets and liabilities denominated in a currency that is not the Parent company’s functional
currency and net investments in foreign operations.
The Group and the parent entity currently hold no derivatives or foreign exchange contracts to hedge their foreign exchange
risk exposure.
Based on the financial instruments held by the parent as at the reporting date, the sensitivity of parent entities profits after tax
for the year and equity at the reporting date to movements in the Australian Dollar to South African Rand was:
o Had the Australian Dollar weakened / strengthened by 5% against the South African Rand with all other variables
remaining constant, the parent entities profit after tax would have been $678,702 lower / higher (2008: $558,779
lower / higher). The reasonable possible change is based on historical changes in rates estimated by management.
- 41 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
24.
FINANCIAL RISK MANAGEMENT (Continued)
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 and investments in unlisted entities.
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.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the
economic entity’s maximum exposure to credit risk without taking account of the value of any collateral or other security
obtained.
Interest Rate Risk
The Company’s exposure to interest rate risk relates primarily to the Company’s floating interest rate cash balance which is
subject to movements in interest rates. The Board monitors its cash balance on an ongoing basis and liaises with its financiers
regularly to mitigate cash flow interest rate risk. Interest is charged on the loans from the parent company to the South African
subsidiaries at rates permitted by the South African reserve bank. This interest is eliminated on consolidation.
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. Should additional cash be required to
fund operations this may be raised from the sale of listed equities held as available for sale. The Group therefore had no other
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.
Price Risk
The parent company has an exposure to equity securities price risk. This arises from investments held by the company and
classified on the statement of financial position as available for sale financial assets. Neither the group nor the parent entity
are exposed to commodity price risk.
The following table summarises the impact of any increases/decreases in the market price of available for sale equity
investments. The percentage used is based on possible volatility of the share price of listed investments. The percentage used
is based on possible volatility of the share price and market value of the investments held. The 30% reasonable movement is
based on managements estimate of historical changes.
2009
Carrying amount
$
Profit
$
Equity
$
Profit
$
Equity
$
-30%
+30%
Price Risk
Available for sale
investments
Listed Shares & Options
Unlisted shares
3,477,483
2,593,294
6,070,777
-
-
(1,043,245)
(777,798)
(1,821,233)
-
-
1,043,245
777,798
1,821,233
- 42 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
24.
FINANCIAL RISK MANAGEMENT (Continued)
2008
Carrying
amount $
Price Risk
-20%
+20%
Profit $
Equity $
Profit $
Equity $
Available for sale
investments
Listed shares
Unlisted shares
6,580,870
376,224
6,957,094
-
-
-
(1,316,174)
(75,245)
(1,391,419)
-
-
-
1,316,174
75,245
1,391,419
25.
(a)
SHARE BASED PAYMENTS
Employee Option Plan
The establishment of the Mineral Commodities Employee Incentive Option Scheme was approved by shareholders at the 2006
annual general meeting. The incentive scheme was designed to provide long term incentives for senior staff to deliver long
term shareholder returns. Under the plan, participants are granted options which vested immediately but were not exercisable
until 30 September 2009. Participation in the plan was at the Boards discretion and no individual has a contractual right to
participate in the plan or to receive any guaranteed benefits. At the expiry date none of the options were exercised and
consequently lapsed.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option was convertible into one ordinary share within 10 business days.
Set out below are summaries of options granted under the plan:
Consolidated and parent entity – 2009
Grant date
Expiry date
16-Nov-07
30-Sep-09
23-Nov-07
30-Sep-09
23-Nov-07
30-Sep-09
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
$0.30
$0.30
$0.40
1,250,000
500,000
500,000
2,250,000
-
-
-
-
-
-
-
-
1,250,000
500,000
500,000
2,250,000
-
-
-
-
-
-
-
-
Weighted average exercise price
$0.322
The weighted average remaining contractual life of share options outstanding at the end of the period was nil (2008:0.75
years)
- 43 -
For personal use only
Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
25.
SHARE BASED PAYMENTS (Continued)
Consolidated and parent entity – 2008
Grant date
Expiry date
16-Nov-07
30-Sep-09
23-Nov-07
30-Sep-09
23-Nov-07
30-Sep-09
Weighted average exercise price
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
$0.30
$0.30
$0.40
1,250,000
500,000
500,000
2,250,000
$0.32
2
-
-
-
-
-
-
-
-
-
-
-
-
1,250,000
1,250,000
500,000
500,000
500,000
500,000
2,250,000
2,250,000
-
$0.322
$0.322
No options expired during the periods covered by the above table.
26 .
COMMITMENTS
(a)
Non- Cancellable Operating Leases
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Total
Consolidated
Company
2009
$
76,444
9,572
86,016
2008
$
78,297
79,000
157,297
2009
$
76,444
9,572
86,016
2008
$
78,297
79,000
157,297
The operating lease is a rental agreement for the Company’s 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.
(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.
27
CONTINGENT LIABILITIES
There are no Contingent Liabilities.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Notes to the Financial Statements (continued)
28.
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.
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Mineral Commodities Limited
Annual Financial Statements for the year ended 31 December 2009
Directors’ Declaration
The Directors of the Company declare that:
1.
The financial statements, comprising the statement of comprehensive income, statement of financial position, statement of cash
flow, statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 including;
(a)
(b)
complying with Australian Accounting Standards, Corporations Regulations 2001; and other mandatory professional
reporting requirements, and
give a true and fair view of the company’s and consolidated entity’s financial position as at 31 December 2009 and of the
performance for the year ended on that date.
2.
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.
3.
The remuneration disclosures set out on pages 7 to 9 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:
Greg Steemson
Managing Director
Dated at Perth, Western Australia this 31st day of March 2010
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For personal use only 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 Securities Exchange (ASX) Corporate Governance Council’s (“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 Company’s corporate governance practices were in place throughout the year and are compliant, unless otherwise stated,
with the Corporate Governance Council’s principles and recommendations, which are noted below.
Principle 1.
Principle 2.
Principle 3.
Principle 4.
Principle 5.
Principle 6.
Principle 7.
Principle 8.
Lay solid foundations for management and oversight
Structure the Board to add value
Promote ethical and responsible decision making
Safeguard integrity in financial reporting
Make timely and balanced disclosure
Respect the rights of shareholders
Recognise and manage risk
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 Company’s strategic direction and providing effective governance over
MRCs’ affairs in conjunction with the overall supervision of the Company’s 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 day–to–day 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 non–executive Directors. Details of each
directors skill, expertise and background are contained within the directors report included with the company’s annual
financial statements.
Independence, in this context, is defined to mean a non–executive 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 Board’s 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 than the payment of statutory superannuation contributions.
Any equity based compensation of directors is required to be approved in advance by shareholders.
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Presently, the roles of Chairman and Managing Director have been separated.
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’ non–executive 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 re–election. Directors are elected or
re–elected, as the case may be, by shareholders in a general meeting. Directors may offer themselves for re–election. 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 re–election 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 Company’s 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 MRC’ Constitution and its corporate governance policies).
An evaluation procedure in relation to the Board, individual Directors and Company Executives has not taken place since the
inception of the Company. Given the small scale of the Company’s 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, Internal Control and Risk Management
The Board has overall responsibility for MRC;s systems of internal control. These systems are designed to ensure effective
and efficient operations, including financial reporting and compliance with laws and regulation, with a view to managing risk
of failure to achieve business objectives. It must be recognized however that internal control systems provide only reasonable
and not absolute assurance against the risk of material loss.
The Board reviews the financial position of MRC on a weekly basis. For annual financial statements, the Managing Director
and the Company Secretary are required to state in writing that:
•
the Company’s financial reports present a true and fair view, in all material respects, of the Company’s 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 Company’s risk
management and internal compliance and control system is operating efficiently and effectively in all material
respects.
Management has not formally reported to the Board on the effectiveness of the Company’s management of material business
risk. Management and the Board interact on a day to day basis and risk is currently being considered on an informal day to
day basis across the financial, operational and organisation aspects of the Company’s business.
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 the 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;
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•
•
•
•
•
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 Company’s 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 Company’s financial statements and accounting procedures.
The Company’s 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.
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 Company’s shareholders are responsible for voting on the appointment of directors. The Board informs shareholders of
all major developments affecting the Company by:
• 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.
• Maintaining a record of significant ASX announcements on the Company’s website.
• Submitting proposed major changes in the Company’s affairs to a vote of shareholders, as required by the Corporation
Law.
• Reporting to shareholders at annual general meetings on the Company’s 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 decision–making
Code of Conduct
The Board has created a framework for managing the Company including internal controls, business risk management
processes and appropriate ethical standards.
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 director’s 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.
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• 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
Company’s 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 Company’s 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 Company’s website, although the
annual financial report will be posted to the website and the Statement of Corporate Governance can be viewed there.
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MINERAL COMMODITIES LIMITED AND ITS CONTROLLED ENTITIES
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 6 April 2010.
Twenty Largest Shareholders
NNaammee
HSBC Custody Nominees (Australia) Ltd
Zurich Bay Holdings Pty Ltd
ANZ Nominees Limited
Miss Kathryn Yule
Mr Keng Heng Goh
Mr Kevin Anthony Leo and Mrs Leticia Leo
IEC Investments Pty Ltd
National Nominees Limited
Mr David Geoffrey Vincent and Mrs Guiseppina Antonina Vincent
Mr Anthony Grant Melville and Mrs Elaine Sandra Melville
Mrs Elaine Sandra Melville
Africa Uranium Limited
Mr Gregory Hugh Steemson and Mrs Barbara Fay Steemson
International Mining Services Ltd
Robert Cameron Galbraith
Mr David Geoffrey Vincent
Mr Ian Thomson
Kingarth Pty Ltd
Mr Emanuel Richard Brian Dillon
Mr William Davidson Meek
Twenty Largest Option Holders
NNaammee
HSBC Custody Nominees (Australia) Ltd
Zurich Bay Holdings Pty Ltd
Mr Anthony Grant Melville and Mrs Elaine Sandra Melville
Mr Christopher Victor Caruso
Mr Emanuel Richard Brian Dillon
International Mining Services
Kevin Leo
Mr Kevin Anthony Leo and Mrs Leticia Leo
Mr David Geoffrey Vincent and Mrs Guiseppina Antonina Vincent
Goffacan Pty Ltd
Mr Isaac Cohen & Mrs Estelle Mary Cohen & Mr David Peter Cohen
Lawrence Crowe Consulting
National Nominees Limited
Mr Gregory Hugh Steemson and Mrs Barbara Fay Steemson
Mr Gerald Magree
Mr Robert Cameron Galbraith
Mr Ross Nicholaidis
Distribution of Shareholders and Optionholders
1,000,000
667,200
604,000
600,000
583,689
500,000
1.74%
1.16%
1.05%
1.04%
1.01%
0.87%
40,674,199
70.91%
Range of holdings
Number of
shareholders
Number of shares
Number of Options
Number of
option
holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
134
404
190
415
150
44,188
1,404,816
1,595,021
15,848,226
124,500,770
Total holders
1,293
143,393,021
24
88
47
139
65
363
12,766
238,098
349,927
5,921,251
50,835,166
57,357,208
Marketable Parcels
Number of shareholders holding less than a marketable parcel of ordinary shares is 775.
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 10.7% of the issued ordinary shares at the date of their last substantial
interest notice to the Company.
- Zurich Bay Holdings Pty Ltd holding 13.28% of the issued ordinary shares.
Restricted securities
There are no restricted securities.
Share buy backs
There is no current on market share buy back.
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