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D I R E C T O R S
Mr Joseph Anthony Caruso
Mr Mark Victor Caruso
Mr Peter Patrick Torre
Mr James Gerald Leahy
Mr Guy Redvers Walker
Non-Executive Director
Executive Chairman
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
C O M P A N Y S E C R E T A R Y
Mr Peter Patrick Torre
R E G I S T E R E D O F F I C E
40 Murray Road North
Welshpool,
Western Australia 6106
Telephone:
Facsimile:
Email:
Website:
S O L I C I T O R S
Steinepreis Paganin
Level 4, Next Building
16 Milligan Street
Perth WA 6000
A U D I T O R S
(61 8) 6253 1100
(61 8) 9258 3601
info@mncom.com.au
www.mncom.com.au
BDO Audit (WA) Pty Ltd
38 Station St
Subiaco, Western Australia 6008
S H A R E R E G I S T R Y
Link Market Services Limited
Ground Floor, 178 St Georges Terrace
PERTH WA 6000
Telephone 1300 554 474
S T O C K E X C H A N G E L I S T I N G
The Company is listed on the Australian Securities
Exchange Limited under ASX Code - MRC
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C O N T E N T S
C H A I R M A N ’ S L E T T E R
C H I E F E X E C U T I V E O F F I C E R ’ S L E T T E R
D I R E C T O R ’ S R E P O R T
C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
D I R E C T O R S ’ D E C L A R A T I O N
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
S T A T E M E N T O F C O R P O R A T E G O V E R N A N C E
S H A R E H O L D E R I N F O R M A T I O N
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C H A I R M A N ’ S L E T T E R
Dear Shareholders,
Your Company has commenced an exciting phase in its development. The 2012 year was one in which
considerable milestones were achieved to proceed with the development of the Company’s Tormin Mineral
Sands Project (Tormin).
The Company’s efforts and patience over the years was rewarded with the decision by the Department of
Environmental Affairs and Development Planning in South Africa to approve the Environmental Management
Programme (EMP) for Tormin. The EMP was the final material impediment to the Company proceeding
to undertake accelerated development activities.
The decision vindicates the Company’s persistence and patience on the project as it has always been the view
of the Board that the Tormin project will add considerable value to the Company.
The same persistence and patience will be applied in respect to the Company’s Xolobeni Mineral Sands
Project (Xolobeni). The Company is encouraged by the continuing momentum that is building for the
development of Xolobeni and is confident that, once all final studies are completed, the economic and social
benefits of Xolobeni, including the upliftment of the local Amadiba population, will create a compelling case
for its development and show beyond doubt that responsible mining can make a significant contribution
to sustainable development.
The value of the Company’s investment in Allied Gold Mining PLC was fully realised during the year with the
completion of a merger with St Barbara Limited. This investment has provided considerable benefit to the
Company over the years. The Company continued to assess its non-core investments in an effort to realise value
for its shareholders. The Company continued to assess other projects throughout the year and will continue
to assess further projects in the interest of maximizing shareholder value.
The coming year will be a defining one for the future of your Company. On behalf of the Board, I would like
to thank you, our shareholders, for your continued support and trust your support will endure in the future.
I would also like to thank the staff both in Australian and overseas who work tirelessly in ensuring the success
or our Company and projects.
Mark V. Caruso
Chairman
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89Whilst a number of objections to the prospecting right application were received, the Company remainsoptimistic that these objections will be responded to comprehensively and satisfactorily and expects the rightto be granted in 2013APPOINTMENT OF INDEPENDENT NON-EXECUTIVE DIRECTORSLast, but not least, Mr James Leahy and Mr Guy Walker were appointed as directors of the Company inDecember 2012. Both James and Guy have already made a significant contribution to the executivemanagement team as the Company evolves from a pure exploration entity to being a significant participantin the global mineral sands market.PRIORITIES AND OUTLOOK FOR 2013Despite having achieved so much in 2012, it is clearly only the beginning of the transformation of MineralCommodities and there is so much that lies ahead for 2013.Completing the construction and commissioning of Tormin on time and on budget is clearly of paramount importance. This is followed closely in priority by the conclusion of off-take agreements for the products to be produced from Tormin. Initial discussions started at the end of the 2012 and the market response to the products has been very promising. Every effort will therefore be made to finalise comprehensive offtake agreements early in 2013.The value of the relatively unique offshore zone and its ability to replenish Tormin should substantiallyextend the project’s Life of Mine can also not be understated. As indicated previously, a full program toprove and quantify the extent of this will commence later this year.The Xolobeni Project not only has the capacity to be a world-class ilmenite asset, but also the catalyst for social transformation of one of South Africa’s poorest communities. As previously indicated, the Company believes that it has and will continue to successfully deal with the objections to the project. Of greater significance is the recent groundswell of support for the project, including the ANC secretary-general, Gwede Mantashe, who called on all mayors and councillors in the Eastern Cape to unite behind the granting of mining licences in the area to unlock its development potential ability to create jobs in poverty-stricken communities. This makes the Company even more determined to finalise the outstanding background studies required for the mining right application. I am grateful to have been part of the wonderful year of change in 2012, but even more so to the executive team and consultants who have supported me. I would also like to thank the Board and shareholders for the faith and they have shown in us. The trust you have placed in us is not taken likely and we look forward to completing the transformation of Mineral Commodities in 2013.Andrew LashbrookeChief Executive OfficerCHIEF EXECUTIVE OFFICER’S LETTERDear Shareholders,I believe that we will be able to look back and mark 2012 as the point in Mineral Commodities’ history whenso much changed. This is as much true personally given my appointment this year as Chief Executive of Mineral Commodities,as it is for the Company given the great strides we have made towards the development of all of our projects, and as it is for the loyal shareholders whose patience and faith in the Company is soon to be rewarded.It is therefore worthwhile for us to look back with a sense of pride on all that was achieved in 2012. SUMMARY OF OUR ACHIEVEMENTS IN 2012Regulatory Approval for Tormin ProjectA significant amount of work was undertaken during the year on the Tormin Mineral Sands Project (Tormin). As a result of these efforts, the Company received the final major regulatory approvals necessary to commence construction and development of Tormin.Tormin is a World-Class resource with robust economics which will underpin the transition of Mineral Commodi-ties from explorer to miner and provide the catalyst to support ongoing development of its mineral sands project development pipeline in South Africa without further shareholder dilution and also explore other opportunitiesin the industrial minerals sector.FundingBased on the shareholder and regulatory approvals, a successful capital raising was undertaken. The AUD$14.5 million raised in a difficult economic and commodity environment provided further evidence of the exceptional quality of Tormin and ensured that the Company was able to proceed with the full scale development of Tormin. EPCM Contractor appointed for TorminBy the end of 2012 the Company had taken the first steps in the development of Tormin by appointing an EPCM contractor. Perth-based MSP Engineering Pty Ltd was appointed in this capacity given their extensive experience in projects of this nature, successful involvement in many aspects of the design and feasibility studies for the project, and financial benefit to Mineral Commodities from leveraging this combined experience. By the end of 2012, MSP Engineering had prepared scope specifications and most of the tender documents had been distributed. This will ensure that all major contracts will be awarded within the first quarter of 2013 and that Tormin will be in full production during the fourth quarter of 2013.Tormin Offshore ProspectingDuring 2012, the Company applied for and was granted the prospecting rights to the offshore area at Tormin. The offshore prospecting area extends 1km out to sea from the low water mark and covers the full length of the existing 12km Tormin tenement. Based on the proven geology of the area, the offshore rights represent the first step in MRC’s initiatives to significantly extend the Tormin Life of Mine. A comprehensive test program to prove and quantify the extent of replenishment from this offshore zone will be undertaken in 2013.Xolobeni ProjectA new prospecting right application was submitted for the Kwanyana block of the Xolobeni Project. The prospecting right would restore all blocks within the Xolobeni Project to the same status and enable the Company to complete the background studies necessary to make an application for a mining right over theentire area. For personal use only D I R E C T O R S
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 2012.
M R P E T E R T O R R E
Non Executive Director and Company Secretary
D I R E C T O R S R E P O R T
The Directors of the Company in office during or since the end of the financial year are:
Mr Mark Victor Caruso
Mr Joseph Anthony Caruso
Mr Peter Patrick Torre
Mr James Gerald Leahy
Mr Guy Redvers Walker
Executive Chairman
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
D I R E C T O R S ’ I N F O R M A T I O N
M R M A R K V I C T O R C A R U S O
Executive Chairman
Mr Caruso has extensive experience in mining, earthmoving and civil engineering
construction earthworks. Mr Caruso has been a director of Mineral Commodities
Limited since September 2000. He was previously Chairman of Allied Gold Mining
PLC,(AGMP) responsible for the delivery of the Gold Ridge Project in the Solomon
Islands and the Simberi Gold Project in Papua New Guinea. After resigning from
AGMP Mr Caruso transitioned into the position of Executive Chairman of Mineral
Commodities in August 2012.
M R J O S E P H A N T H O N Y C A R U S O
Non-Executive Director
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. He was previously Non-Executive Chairman of the Company,
moving to the position of Non-Executive Director in August 2012.
Mr Torre was appointed Company Secretary of Mineral Commodities Limited in July
2006, and as a director of the Company on 1 April 2010. He is a Chartered Accountant,
a Chartered Secretary and a member of the Australian Institute of Company Directors.
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 Neo Resources Limited and Mission New Energy Limited.
M R J A M E S G E R A L D L E A H Y
Non Executive Director
Following a period on the London Metal Exchange, Mr Leahy has spent the past 27
years in the mining industry as a specialist corporate broker, including mining finance,
origination and equity sales. He has worked on a wide range of projects, worldwide,
ranging from industrial minerals, precious metals, copper, diamonds, coal, uranium
and iron ore. Mr Leahy has substantial experience with international institutional fund
managers, hedge funds and sector specialists. Over the years Mr Leahy has been
involved in more than 30 IPO’s and a large number of primary and secondary placings,
developing junior companies through to production and beyond. Mr Leahy is currently
a director of Continental Coal, Bacanora Minerals and Forte Energy.
M R G U Y R E D V E R S W A L K E R
Non Executive Director
Mr Walker is a highly accomplished director and senior investment management
executive with over 20 years financial markets experience. Mr Walker currently
sits on the boards of several mining companies at different stages of development
including Metals Exploration plc. (an AIM listed gold development company),
Navigator Resources (an ASX listed gold production company) and ENK plc. (a Nickel
mining company). Mr Walker has extensive experience in capital raising through both
traditional banks and alternative lenders.
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D I R E C T O R S R E P O R T
Due to the size of the Company, all directors considered matters which would normally be dealt with by Audit and
Remuneration Committees during the year.
P R I N C I P A L A C T I V I T I E S
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 Tormin Mineral
Sands Project in the Western Cape Province of South Africa and the Xolobeni Mineral Sands Project in the Eastern Cape
Province of South Africa.
There were no significant changes in the nature of activities of the Group during the year.
C O N S O L I D A T E D R E S U L T S
The loss of the group after income tax and non-controlling interests was $1,191,061 (2011: $2,135,788).
D I V I D E N D S
No dividends have been paid, declared or recommended for payment, in respect of the current financial year.
R E V I E W O F O P E R A T I O N S A N D F U T U R E D E V E L O P M E N T S
Highlights of the Company’s operations for the period under review are as follows:
S o u t h A f r i c a n P r o j e c t s
To r m i n M i n e r a l S a n d s P r o j e c t
During the period, the Company completed and submitted all the necessary documentation required for the remaining
regulatory matters in relation to the Tormin Mineral Sands Project (Tormin) and in July 2012, the Company received
notification of the approval of its Environmental Management Plan by Department of Environmental Affairs and
Development Planning (DEADP). The Company was therefore in a position to proceed to ensure appropriate financing
was in place to develop Tormin for production to commence in 2013.
The Company successfully completed the book build for a placement of new fully paid shares to institutional and
sophisticated investors and related parties, to raise approximately A$14.5 million (before costs) (“Capital Raising”).
The shares under the Capital Raising were issued at a price of A$0.085 per share (“Issue Price”), which represents the
closing price of MRC’s shares on 22 October 2012.
London Based Mirabaud Securities LLP acted as Sole Broker and Bookrunner on the Capital Raising.
The Capital Raising was completed in three tranches: the first tranche of approximately A$10.25 million to institutional
and sophisticated investors (“Placement”); the second tranche of approximately A$3.4 million was issued to related
parties of the Company; and the third tranche was issued issued by way of a private placement of approximately
$850,000 to a sophisticated investor who participated in the first tranche (“Private Placement”).
MRC issued approximately 170.5 million Shares in total pursuant to the Capital Raising. The first tranche of the Shares
issued pursuant to the Placement of approximately 120.6 million Shares were admitted to trading on the ASX on
30 October 2012 and completed in accordance with shareholder approval received on 31 May 2012.
Existing directors of MRC subscribed for up to A$3.4 million in Shares on the same terms as those issued to third party
investors under the Placement. The issue of Shares to directors of MRC was approved by shareholders on
21 December 2012 and was completed in January 2013.
The issue of approximately 9.9 million Shares pursuant to the Private Placement occured immediately following the
issue to existing directors of MRC.
The Company is now positioned to proceed with the full scale development of Tormin, particularly as there is sufficient
indication from the ongoing tender process that the capital required to complete the development will be available to
the Company when required.
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Demand for the Tormin Ilmenite and Non-Magnetic concentrate has been strong and the Company is advanced
with negotiations for all products.
O F F S H O R E P R O S P E C T I N G R I G H T S
During the period, the Company also advised that its subsidiary, MSR, received notification from the Department
of Mineral Resources (DMR) that the application for the prospecting rights for the offshore area immediately
adjacent to Tormin had been approved.
The offshore prospecting area covers an area of 12 square kilometres and extends 1km out to sea from the low
water mark and covers the full length of the existing 12km Tormin tenement.
The established geology of the region confirms that the source of the beach deposits is a Heavy Mineral-rich off-
shore zone and that the dynamic coastline serves to replenish the beaches by transporting sediment from deeper
waters. The Company is optimistic that that replenishment from, or exploitation of this area could at least double
the expected Life of Mine of Tormin.
The offshore prospecting right consequently represents the first step in MRC’s initiatives to significantly extend
the Tormin Life of Mine. The Company intends to commence a test program to identify and quantify the beach
replenishment in the first quarter of 2013.
P R O J E C T E C O N O M I C S A N D D E V E L O P M E N T C O S T S
Based on TZMI product pricing and Definitive Feasibility Study (DFS) estimates, the project economics for Tormin
are robust. On an initial 5-year Life of Mine extracting primarily Zircon and Rutile Non-Magnetic concentrate,
economic models suggest an NPV of AUD$68.9m with an IRR of 87.9%.
Engineering plans were substantially progressed for dry separation of the magnetic concentrates, which would
enable the separation and sale of Ilmenite and Garnet which will further enhance Tormin’s economics i.e an NPV
of AUD$94m and IRR of 97%. Development of the required dry processing facilities is expected to cost
approximately AUD$4 million.
The Company has noted recent reports of a softening market for zircon and rutile. Despite this, demand for
the products to be produced from Tormin remains strong. In addition, given the extremely low operating costs
(Opex) based substantially in South African Rand (ZAR), Tormin is largely insensitive to changes in capital
expenditure or Opex. Importantly in this regard, a 10% reduction in commodity prices is offset by a 5%
evaluation of the ZAR. Accordingly, the recent 15% devaluation of the ZAR to the AUD (8.2 to 9.4) allows for
a 30% reduction in commodity prices before the economic models are negatively affected. Based on the above,
the Company does not believe that it is appropriate to change its economic forecasts at this time.
A P P O I N T M E N T O F E P C M C O N T R A C T O R
The Company was pleased to advise during the last quarter that its subsidiary, Mineral Sands Resources (Pty) Ltd
(MSR), has appointed Perth-based MSP Engineering Pty Ltd (MSP Engineering) as EPCM contractor to complete
the construction and commissioning of the plant required for Tormin.
MSP Engineering has been appointed as engineering contractor to complete the process and engineering
design, and support the construction management and commissioning of the Tormin Development and
Processing Plants. The decision to engage MSP Engineering as engineering contractor was based on the
quality of the previous and ongoing project work undertaken, and its detailed understanding of the ore body
and development of process flow design and plant requirements. In addition, MSP Engineering has a strong
track record in engineering and delivering projects in the mineral sands sector. The appointment of MSP
Engineering and its historical and continuing involvement with Tormin significantly shortens the overall delivery
timetable for the project and will provide greater certainty that the budgeted capital expenditure for Tormin
of $16 million will be maintained.
By the end of the financial year, MSP Engineering had prepared scope specifications and most of the tender
documents had been distributed.
P R O D U C T O F F - T A K E D I S C U S S I O N S
Tormin will produce approximately 48,000 tonnes pa of enriched Non-Magnetic concentrate containing 38,000
tonnes of Zircon and 5,500 tonnes of Rutile. This material will require secondary treatment through a third party
dry separation plant. In addition, the Company will produce approximately 100,000 tonnes to 125,000 tonnes
f finished IImenite product once MRC installs its own dry processing infrastructure in early 2014. Garnet
concentrate will also be sold to Blastrite for secondary treatment.
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X O L O B E N I P R O J E C T ( S O U T H A F R I C A )
The Xolobeni Mineral Sands Project (Xolobeni) resource is 346 million tonnes of 5.0% heavy mineral, with 65%
of this resource in the Measured category.
Xolobeni is therefore regarded as one of the largest undeveloped mineral sands resources in the world
containing in excess of 9,000,000 tonnes of ilmenite.
In November 2011 the Department of Mineral Resources (DMR) extended the prospecting rights over the
Xolobeni project, excluding the Kwanyana block, for a further period of 3 years. During the first quarter of 2012,
this right was executed and submitted for registration and subsequently registered by the DMR in the third
quarter of 2012.
MRC has also previously advised that the DMR had withdrawn the previously granted Conditional Mining Right
over the Kwanyana block and that it was engaging with the DMR and Minister in relation to these matters.
Based on this, the Company resolved to withdraw all previous applications in respect of the Kwanyana block
and immediately file a new PRA over the same block.
The benefit of this approach is that the Kwanyana block will be re-aligned with the rest of the Xolobeni project
which will enable the Company to progress its application to develop Xolobeni in its entirety and, in so doing,
demonstrate that this can be undertaken responsibly and sustainably in the interests of all stakeholders.
The DMR accepted the new PRA over the Kwanyana block in the first quarter of 2012 and, in accordance with
prevailing legislation, directed the Company to submit an Environmental Management Plan (EMP) for the
prospecting work and details of its engagement with all stakeholders with an interest in the project.
The Company compiled an EMP for the Kwanyana block prospecting work and undertook a comprehensive
stakeholder engagement process (SEP) during the second quarter of 2012. The EMP and SEP report were also
lodged with the DMR in accordance with the required timetable.
A number of objections to the PRA were received. Accordingly, the DMR was required by law to call a meeting
to consider the objections and representations made by the Company. This meeting was held on 28 November
2012.
Based on the information presented at that meeting, the DMR has instructed the Company to undertake
additional consultation with parties that have an interest in the project. Planning for this consultation is
currently in progress and the consultation is expected to be concluded within the first quarter of 2013.
In a significant development, online news service Fever-red reported that ANC Secretary-General, Gwede
Mantashe, has publicly called on mayors and councilors to change the mindsets of communities fighting
against the proposed N2 toll road and granting of licenses for mining at Xolobeni.
Mantashe also pointed out that the region “is one of the poorest areas” and “he believes it will be well served
by a road system and mining that will increase access, which in turn will create an enabling environment for
unlocking the development potential of the area.”
The Company is encouraged by the continuing momentum that is building for the development of Xolobeni
and is confident that, once all final studies are completed, the economic and social benefits of Xolobeni to uplift
the local Amadiba population will create a compelling case for the continued support of its development and
show beyond doubt that mining can co-exist with environmentally responsible development.
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D I R E C T O R S R E P O R T
I N V E S T M E N T I N A L L I E D G O L D M I N I N G P L C ( A S X L I S T E D : A L D )
On 29 June 2012, Allied Gold Mining PLLC (AGMPLC) announced that it had reached an agreement with
St Barbara Limited (St Barbara) on a recommended offer to combine the two companies through a scheme
of arrangement.
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.
Under the terms of the offer, AGMPLC shareholders received A$1.025 in cash and 0.8 St Barbara shares for each
AGMPLC share held. Based on AGMPLC’s share price on 28 June 2012 (the day before the announcement),
this represented a 92.3% premium.
S C H E D U L E O F M I N I N G T E N E M E N T S
Mining tenements currently held by the economic entity are:
St Barbara and AGMPLC advised the market that the combination has a clear strategic and financial rationale,
is value enhancing, and provides various benefits for shareholders of the combined group.
The scheme became effective as at 7 September 2012. The Company disposed of its remaining holding in
AGMPLC during the period.
I n v e s t m e n t i n P e t r o V e n t u r e s I n t e r n a t i o n a l L i m i t e d
The Company maintains a significant investment in Petro Ventures International Ltd (“PVIL”) an Exploration &
Prospecting company operating in the Northern Hemisphere. PVIL has strategic oil & gas working interests in
Romania, Hungary, Holland and France.
Area
Entity holding the interest
% Held
Title
Status
Xolobeni – South Africa Transworld Energy & Minerals
100
New order Prospecting Right Granted
Resources
Tormin – South Africa
Mineral Sands Resources
Tormin – South Africa
Mineral Sands Resources
100
100
Mining Right
Granted
Offshore Prospecting Right
Granted
S I G N I F I C A N T C H A N G E S I N S T A T E O F A F F A I R S A N D L I K E LY D E V E L O P M E N T S
The following significant changes in the state of affairs of the Consolidated Entity occurred during the year:
During the period London broker Mirabaud Securities LLP were appointed to undertake an IPO however they
withdrew from the IPO placing due to volatility in the capital markets in the later half of the period. Alternative
financing arrangements are being concluded.
S H A R E S
PVIL is currently seeking to divest its Romanian interests, which should result in a redistribution of capital to PVIL
shareholders.
F I N A N C I A L P O S I T I O N
The net assets of the group have increased from $14,415,126 at 31 December 2011 to $20,962,421 at 31 December
2012.
F U T U R E D E V E L O P M E N T S , P R O S P E C T S A N D B U S I N E S S S T R A T E G I E S
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.
E N V I R O N M E N T A L R E G U L A T I O N S
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.
120,615,000 new fully paid ordinary shares were issued on 30 October 2012 pursuant to the capital raising noted
previously.
The Placement was completed in October 2012 in accordance with shareholder approval received on 31 May
2012. Existing directors of MRC subscribed for up to A$3.4 million in shares in MRC (Shares) on 21 January 2013
on the same terms as those issued under the Placement. The issue of Shares to directors of MRC was approved
by shareholders on 21 December 2012.
The final issue of approximately 9.9 million Shares pursuant to the Private Placement was also approved
by shareholders on 21 December 2012 and took place on 24 January 2013 following the issue to existing
directors of MRC.
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D I R E C T O R S R E P O R T
O P T I O N S
D I R E C T O R S ’ S H A R E H O L D I N G I N T E R E S T S
During the period 1,000,000 Unlisted Options exercisable at $0.20 on or before 31 December 2015 were issued
to directors of the Company pursuant to shareholder approval received on 21 December 2012 (5,000,000 in total).
5,000,000 Unlisted Options exercisable at $0.20 on or before 31 December 2015 and 1,000,000 Unlisted Options
exercisable at $0.35 on or before 31 December 2015 were issued to the CEO of the Company.
57,357,208 listed options exercisable at $0.20 expired on 31 December 2012.
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:
Options
Opening Balance 1
January 2012
Options issued
Options Exercised
Options Lapsed
Balance at 31 December
2012
No of Options
Exercise Price Expiry Date
57,357,208
$0.20 31 December 2012
10,000,000
1,000,000
57,357,208
10,000,000
$0.20 31 December 2015
$0.35 31 December 2015
-
-
$0.20 31 December 2012
$0.20 31 December 2015
1,000,000
$0.35 31 December 2015
2012
Options
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Balance at
1 Jan2012/
appointment
Received as
Remuneration
Options
Exercised
Options
Lapsed
Net
change
other
Balance at
31 Dec 2012
7,380,396
7,380,396
200,000
40,000
-
-
-
-
-
-
-
-
-
-
-
7,380,396
1,000,000
7,380,396
1,000,000
200,000
1,000,000
40,000
1,000,000
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
M E E T I N G S O F D I R E C T O R S
The number of directors meetings and number of meetings attended by each of the directors of the Company
during the financial year are:
Meetings Held
Meetings Attended
J A Caruso
M V Caruso
P P Torre
G R Walker
J G Leahy
6
6
6
-
-
3
6
6
-
-
D I R E C T O R S ’ S H A R E H O L D I N G I N T E R E S T S
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:
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.
2012
Ordinary Shares
Balance at 1
January 2012 / on
Appointment
Received as
Remuneration
Options
Exercised
Net change
other
Balance
28 March 2013
Mark Caruso -Indirect
- Direct
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
21,569,988
12,627
21,569,988
500,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
40,000,000
61,569,988
-
12,627
40,000,000
61,569,988
-
-
-
500,000
100,000
-
J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd,
which holds 61,569,988 shares in the Company.
20
21
For personal use only
R E M U N E R A T I O N R E P O R T
R E M U N E R A T I O N R E P O R T ( A u d i t e d )
The remuneration report is set out under the following main headings:
A. P R I N C I P L E S U S E D T O D E T E R M I N E T H E N A T U R E A N D A M O U N T O F R E M U N E R A T I O N
B. D E T A I L S O F R E M U N E R A T I O N
C. S E R V I C E A G R E E M E N T S
D. S H A R E - B A S E D C O M P E N S A T I O N
E. A D D I T I O N A L I N F O R M A T I O N
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
The board had no separate remuneration committee during the year due to the size of the Company.
The directors performed the role of a remuneration committee as disclosed in the Corporate Governance statement.
A Remuneration and Nomination Committee was established subsequent to the reporting period.
V o t i n g a n d c o m m e n t s m a d e a t t h e C o m p a n y ’ s 2 0 1 2 A n n u a l G e n e r a l M e e t i n g
Mineral Commodities Limited received the unanimous support of shareholders present on the remuneration
report at the Annual General Meeting for the 2012 financial year and 94% of proxy votes were in favour of the
resolution to approve the remuneration report. The Company did not receive any specific feedback at the AGM
or throughout the year on its remuneration practices.
A. P R I N C I P L E S U S E D T O D E T E R M I N E T H E N A T U R E A N D A M O U N T O F R E M U N E R A T I O N
B. D E T A I L S O F R E M U N E R A T I O N
The key management personnel of Mineral Commodities Limited Group are the directors of Mineral
Commodities Limited and Mr Andrew Lashbrooke, the CEO. 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.
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 Key Management Personnel,
if any, on an annual basis and makes recommendations. Remuneration packages are reviewed with due regard
to performance and other relevant factors. No remuneration consultants have been used due to the small
number of employees and Key Management Personnel.
Remuneration packages may contain the following key elements:
(a) Directors Fees;
(b) 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,
if any, is reviewed annually to ensure the executive 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. Long-term incentives are provided to directors and other Key Management Personnel
to incentivise them to deliver long-term shareholder returns. These are determined based on what the Board vies
as reasonable based on market conditions. Any grant of securities to directors of the Company must be approved
by shareholders in general meeting.
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. Directors Fees and
the Remuneration of the CEO is fixed. There is no at risk component of any remuneration of the Key Management
Personnel.
22
23
For personal use only R E M U N E R A T I O N R E P O R T
There were no non-cash benefits provided to Key Management Personnel during the year.
The following fees are applicable to non-executive directors of the Company
Cash
benefits
Post
employment
benefits
Share-based
payments
Totals
Percentage
performance
based
Share based
payments as a
percentage of
remuneration
$
$
$
$
Non Executive Directors
Joseph Caruso
Mark Caruso
Peter Torre
Guy Walker
James Leahy
Sub-total non executive
directors
Other Key Management
Personnel CEO
Andrew Lashbrooke
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Total Key management
personnel compensation
2012
2011
45,107
44,037
140,333
48,000
83,083
72,000
1,521
-
1,521
-
271,565
164,037
50,000
-
321,565
164,037
4,060
3,963
10,044
-
-
-
137
-
137
-
14,378
3,963
33,500
-
82,667
48,000
33,500
183,877
-
48,000
33,500
116,583
-
33,500
-
72,000
35,158
-
33,500
35,158
-
-
167,500
-
453,443
168,000
-
-
189,830
239,830
-
-
14,378
3,963
357,330
-
693,273
168,000
%
40.52
-
18.21
-
28.73
-
95.28
-
95.28
-
36.94
-
79.15
51.54
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Base Fees
From 1 December 2012
Up to 30 November 2012
Non-Executive Directors
$55,000
$48,000
Additional Fees
From 9 February 2013
Up to 9 February 2012
Audit Committee Chair
Audit Committee Member
Remuneration and Nomination
Committee Chair
Remuneration and Nomination
Committee Member
C. S E R V I C E A G R E E M E N T S
$10,000
$5,000
$10,000
$5,000
-
-
-
-
The following service agreements are in effect at 31 December 2012.
M A R K C A R U S O
Commenced
Term
Total Remuneration package
Termination benefits
P E T E R T O R R E
Commenced
Term
Total Remuneration package
Termination benefits
6 August 2012
No fixed term
$250,000 per annum
12 months base salary plus any payment in lieu of notice
1 November 2012
No fixed term
$150,000 per annum
12 months base salary plus any payment in lieu of notice
A N D R E W L A S H B R O O K E
Commenced
Term
Total Remuneration package
Termination benefits
1 November 2012
No fixed term
$300,000
None
There are no other service agreements.
24
25
For personal use only
D. S H A R E - B A S E D C O M P E N S A T I O N
S I G N I F I C A N T E V E N T S A F T E R T H E R E P O R T I N G D A T E
During the period 1,000,000 Unlisted Options exercisable at $0.20 on or before 31 December 2015 were issued
to all 5 directors of the Company pursuant to shareholder approval received on 21 December 2012 (5,000,000
in total) and a further 5,000,000 Unlisted Options exercisable at $0.20 on or before 31 December 2015 to the CEO
of the Company. These were independently valued using the Black Scholes method at $0.0335 per option.
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 note 27 of this financial
report, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the
results of those operations or the state of affairs of the Company or the Consolidated Entity in future financial
years unless otherwise disclosed in this Directors Report.
1,000,000 Unlisted Options exercisable at $0.35 on or before 31 December 2015 were issued to the CEO of
the Company. These were independently valued using the Black Scholes method at $0.0233 per option.
P R O C E E D I N G S O N B E H A L F O F T H E G R O U P
All options issued vested immediately upon issue.
No Options issued as remuneration were exercised or lapsed during the period.
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings.
Details of options over ordinary shares in the Company provided as remuneration to each director of Mineral
Commodities Limited and each of the key management personnel are set out below;
I N S U R A N C E O F O F F I C E R S
R E M U N E R A T I O N R E P O R T
Name
Number of Op-
tions granted
during the year
Value of Options
at grant date
Number of
Options vested
during the year
Number of
options lapsed
during the year
Value at lapse
date.
Directors
Mr Mark Caruso
Mr Joseph
Caruso
Mr Peter Torre
Mr James Leahy
Mr Guy Walker
Other Key
Management
Personnel
Mr Andrew
Lashbrooke
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
$33,500
$33,500
$33,500
$33,500
$33,500
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
5,000,000
167,500
5,000,000
1,000,000
22,330
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
E. A D D I T I O N A L I N F O R M A T I O N
There is no additional information to be provided in respect to the remuneration of the directors.
End of the Audited Remuneration Report
C O R P O R A T E G O V E R N A N C E
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 will be included before the Additional ASX Information section of the Annual
Financial Report.
During the financial year the Group has paid an insurance premium to insure the directors and secretaries
of the company and its controlled entities. The premium paid was $34,745 representing $6,949 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 Directors or Officers of entities in the Group, and any other
payments arising from liabilities incurred by the officers in connection with such proceedings. This does not
include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper
use by the officers of their position or of information to gain advantage for themselves or someone else or to
cause detriment to the Group.
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
The Auditor’s Independence Declaration as required by Section 307C of the Corporations Act 2001 is set out on
page 73 and forms part of this report.
N O N - A U D I T S E R V I C E S
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.
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:
Audit and review of financial reports
BDO Audit (WA) Pty Ltd
BDO Cape Town South Africa
Total remuneration for audit services
$
64,122
11,726
75,848
BDO Audit (WA) Pty Ltd continues in office.
This report has been made in accordance with a resolution of the Directors.
Mark Caruso
Perth, Western Australia
28 March 2013
26
27
For personal use only C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E
For the year ended 31 December 2012
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
as at 31 December 2012
Note
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
$
C U R R E N T A S S E T S
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Other current assets
Total Current Assets
N O N - C U R R E N T A S S E T S
Receivables
Property, plant and equipment
Exploration & development expenditure
Total Non-Current Assets
Total Assets
C U R R E N T L I A B I L I T I E S
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
NET ASSETS
E Q U I T Y
Contributed equity
Reserves
Accumulated losses
Parent entity interest
Non-controlling interest
T O T A L E Q U I T Y
7
8
9
10
8
11
12
15
16
17
14
7,769,202
148,087
532,113
10,925
8,460,327
427,272
68,689
12,996,362
13,492,323
21,952,650
966,802
23,427
990,229
990,229
249,389
101,344
3,027,651
11,163
3,389,547
333,736
21,582
12,506,413
12,861,731
16,251,278
1,799,752
36,400
1,836,152
1,836,152
20,962,421
14,415,126
50,912,158
(1,451,375)
(28,677,211)
20,783,572
178,849
20,962,421
41,204,350
804,656
(27,772,729)
14,236,277
178,849
14,415,126
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes.
Note
Consolidated
Consolidated
Revenue from continuing operations
2
Other Income
12
11
9
24
3
4
9
17
Administration expenses
Employees and consultants remu-
neration
Exploration and evaluation costs
Depreciation and amortisation
Loss on disposal of assets
Impairment of Investments
Share based payments
Abandoned acquisition costs
Finance costs
Loss before income tax
Income tax expense
(Loss) from continuing operations
(Loss) 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
Total comprehensive income for the
year
Loss is attributable to:
Owners of Mineral Commodities
Limited
Non-controlling interest
Total comprehensive income for the
year is attributable to
Owners of Mineral Commodities
Limited
Non-controlling interest
31 Dec 2012
$
42,282
476,769
519,051
(668,978)
(204,934)
-
(28,428)
(152)
(227,110)
(357,330)
(123,243)
(99,937)
(1,710,112)
(1,191,061)
-
(1,191,061)
(1,191,061)
31 Dec 2011
$
31,515
756,936
788,451
(535,939)
(156,689)
(253)
(4,998)
(5,307)
(54,000)
-
(2,164,281)
(2,772)
(2,924,239)
(2,135,788)
-
(2,135,788)
(2,135,788)
(1,588,095)
(2,509,112)
(738,688)
(2,511,827)
(2,326,783)
(5,020,939)
(3,517,844)
(7,156,727)
(1,191,061)
(2,135,788)
-
(1,191,061)
-
(2,135,788)
(3,517,844)
(7,156,727)
-
(3,517,844)
-
(7,156,727)
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)
Cents
Cents
(0.687)
(1.40)
-
-
(0.687)
(1.40)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
28
29
For personal use only
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
For the year ended 31 December 2012
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
Note
Consolidated
Consolidated
Consolidated Entity
Contributed
Equity
Reserves
Accumulated
Losses
For the year ended 31 December 2012
$
$
$
Totals
$
Non-control-
ling interest
Total Equity
$
$
C A S H F L O W S F R O M O P E R A T I N G A C T I V I T I E S
Interest received
Payments to suppliers & employees
Discontinued acquisition
Interest paid
Sundry income
31 Dec 2012
31 Dec 2011
$
$
42,282
(744,254)
(1,427,776)
(99,937)
-
31,515
(1,625,251)
-
(2,772)
12,750
Net cash outflows from operating activities
22(a)
(2,229,685)
(1,583,758)
C A S H F L O W S F R O M I N V E S T I N G A C T I V I T I E S
Exploration and development expenditure
Investment in listed shares
Payment for plant and equipment
Proceeds from sale of plant and equipment
Loan to associated company
Proceeds from sales of investments
Net cash inflow from investing activities
11
C A S H F L O W S F R O M F I N A N C I N G A C T I V I T I E S
Proceeds from the issue of shares and options (net of costs)
16
Loan received
Loan repaid
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Exchange rate movement on opening balances
Cash and cash equivalents at end of financial year
7
(914,089)
(350,000)
(79,687)
4,000
(113,636)
1,495,102
41,690
9,707,808
1,407,509
(1,407,509)
9,707,808
7,519,813
248,260
1,129
7,769,202
(964,523)
-
(24,910)
-
-
1,431,074
441,641
1,200,000
-
-
1,200,000
57,883
191,026
480
249,389
The above Consolidated Statement of Cash flows should be read in conjunction with the accompanying notes.
Balance at 1 January 2012
41,204,350
804,656
(27,772,729) 14,236,278
178,849
14,415,127
Loss for the year
Other Comprehensive loss for the year
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
Contributions of equity net of
transaction costs
Unlisted Options issued
Reclassify Option Reserve for expired
options
-
-
-
(1,191,061)
(1,191,061)
(2,326,783)
(2,326,783)
(2,326,783)
(1,191,061)
(3,517,844)
9,707,808
-
-
9,707,808
357,330
(286,578)
286,578
357,330
-
-
-
-
-
(1,191,061)
(2,326,783)
(3,517,844)
9,707,808
357,330
-
Balance at the end of the year
50,912,158
(1,451,375)
(28,677,212) 20,783,572
178,849
20,962,421
Consolidated Entity
Contributed
Equity
Reserves
Accumulated
Losses
For the year ended 31 December 2011
$
$
$
Totals
$
on-controlling
interest
Total Equity
$
$
Balance at 1 January 2011
40,004,350
5,825,595
(25,636,941)
20,193,004
178,849
20,371,853
Loss for the year
Other comprehensive income for
the year net of tax
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
Contributions of equity net of
transaction costs
-
-
-
-
1,200,000
-
(2,135,788)
(2,135,788)
(5,020,939)
-
(5,020,939)
(5,020,939)
(2,135,788)
(7,156,727)
-
-
1,200,000
-
-
-
-
-
(2,135,788)
(5,020,939)
(7,156,727)
1,200,000
Balance at the end of the year
41,204,350
804,656
(27,772,729)
14,236,277
178,849
14,415,126
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
30
31
For personal use only N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
1.
S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
( A )
B A S I S O F A C C O U N T I N G
( D )
T A X E S
These financial statements are for Mineral Commodities Limited and its controlled entities, as the consolidated
entity (group). Mineral Commodities Limited is an Australian domiciled public listed company.
The general purpose financial statements for the year ended 31 December 2012 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.
C o m p l i a n c e w i t h I F R S
The financial statements of Mineral Commodities Limited and controlled entities also comply with International
Financial Reporting Standards (IFRS).
I n c o m e t a x e s
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 at the reporting date. Income tax expense is adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and unused tax losses.
Deferred tax is accounted for using the 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.
H i s t o r i c a l C o s t C o n v e n t i o n
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.
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 to profit or loss except where it relates to items that may be credited
directly to equity, in which case the deferred tax is adjusted directly against equity.
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 )
P R I N C I P L E S O F C O N S O L I D A T I O N
The consolidated financial report incorporates the assets and liabilities of all subsidiaries of Mineral
Commodities Limited (“Company” or “parent entity”) as at 31 December 2012 and the results of its subsidiaries
for the year then ended. Mineral Commodities Limited and its subsidiaries together are referred to in this
financial report as the group.
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.
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 (2011: 30%).
G o o d s a n d S e r v i c e s Ta x ( G S T )
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.
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.
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.
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 1 (h).
The Consolidated entity applies a policy of treating transactions with non-controlling interests as transactions
with external parties to the entity. Disposals to non-controlling interests result in gains and losses for the
Consolidated entity are recorded in the statement of comprehensive income. Purchases from non-controlling
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.
( C )
R E V E N U E R E C O G N I T I O N
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 recog-
nised 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:
I n t e r e s t I n c o m e
Interest and other income is recognised as it accrues on a time proportion basis using the effective interest method.
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. Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
( E )
F O R E I G N C U R R E N C Y T R A N S A C T I O N S A N D B A L A N C E S
F u n c t i o n a l a n d p r e s e n t a t i o n c u r r e n c y
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.
T r a n s a c t i o n a n d b a l a n c e s
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-mon-
etary 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.
32
33
For personal use only N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
1.
S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S ( C O N T I N U E D )
S u b s i d i a r y C o m p a n i e s
The financial results and position of subsidiary companies whose functional currency is different from the con-
solidated 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.
H e d g e o f a n e t i n v e s t m e n t i n a f o r e i g n o p e r a t i o n
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 dis-
posed 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 accumu-
lated depreciation and impairment losses.
Items of plant and equipment are initially recorded at cost and includes any expenditure that is directly attribut-
able 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.
D e p r e c i a t i o n o f P l a n t a n d E q u i p m e n t
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.
D i s p o s a l o f A s s e t s
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.
Where the Directors conclude that the technical feasibility and commercial viability of extracting a mineralre-
source are demonstrable and that future economic benefits are probable, further expenditure is capitalised as
part of property, plant and equipment.
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 recog-
nised 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
I n t e r e s t s i n S u b s i d i a r i e s
Investments in subsidiaries are carried in the Company’s financial report at cost less any impairment losses. Divi-
dends and distributions are brought to account in profit when they are declared by the subsidiaries.
I n v e s t m e n t s i n a s s o c i a t e s
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 invest-
ment 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 are 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 it tangible assets and intangible
assets to determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the 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 profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recov-
erable 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.
R e c o g n i t i o n a n d d e - r e c o g n i t i o n
Regular purchases and sales of financial assets are recognised on trade date; the date on which the Group com-
mits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Finan-
cial 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.
(K)
Financial Instruments (continued)
F a i r v a l u e
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 simi-
lar instruments and other pricing models.
L o a n s a n d r e c e i v a b l e s
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.
34
35
For personal use only N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
1.
S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S ( C O N T I N U E D )
A v a i l a b l e - f o r - s a l e f i n a n c i a l a s s e t s
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 profit or loss as part of the profit or loss on sale.
F i n a n c i a l L i a b i l i t i e s
Financial liabilities are recognised initially at fair value and subsequently at amortised cost, comprising original
debt less principle payments and amortisation of transaction costs.
I m p a i r m e n t
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 impairment has arisen. Impairment losses are recognised
in profit or loss. 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 in the statement of financial position.
(N)
Trade and Other receivables
Trade and other receivables are recognised initially at fair value. They are presented as current assets unless
collection is not expected for more than 12 months after the reporting date.
Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off by reducing the carrying amount directly. The amount of the impairment loss is
recognised in profit and loss within other expenses.
(O)
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 Limited 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.
(P)
Employee Benefits
W a g e s a n d S a l a r i e s , A n n u a l L e a v e , L o n g S e r v i c e a n d S i c k L e a v e
Provision is made for the consolidated entity’s liability for employee entitlements arising from services rendered
by employees to reporting date. These benefits include annual and long service 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.
S h a r e - B a s e d P a y m e n t s
The issue of Employee options was approved by shareholders at a general meeting of the Company held on 21
December 2012 and the fair value of these has been expensed. The total Share Based payment expense for the
period was $357,330 (2011 $0).The fair value at grant date is independently determined using an appropriate
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.
(Q)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor,
are recognised on a straight line basis.
(R)
Segment reporting
Operating segments are 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.
(S)
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.
(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 de-recognition.
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 statement of comprehensive income.
36
37
For personal use only (v)
Accounting Standards not yet effective
Reference
Title
Nature of Change
Application date
of standard
Impact on Consolidated
financial statements
Application date
for Group
1 January 2015
Periods beginning
on or after
1 January 2015
Adoption of AASB 9 is only
mandatory for the year
ending 31 December 2015.
The Group has not yet
made an assessment of the
impact of these amend-
ments.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
1.
S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S ( C O N T I N U E D )
(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.
C r i t i c a l A c c o u n t i n g E s t i m a t e s
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.
E x p l o r a t i o n a n d d e v e l o p m e n t e x p e n d i t u r e
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 $7,924,368
(2011:$8,191,050) refer note 12 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.
I n v e s t m e n t i n U n l i s t e d E n t i t i e s
The investments in Africa Uranium Ltd has been fully impaired $1,488,643 (2011 $1,488,643).
The remaining investment in an unlisted entity Petro Ventures International Ltd has been valued by using
information provided by the Company including unaudited financial statements. Assumptions and estimates
have been used in this valuation refer note 9. Should any of these assumptions or estimates change,
this could significantly effect the carrying value of this investment.
AASB 9
(issued December
2009 and amended
December 2010)
Financial
Instruments
AASB 10
(issued August 2011)
Consolidated
Financial
Statements
AASB 11
(issued August 2011)
Joint
Arrangements
AASB 12
(issued August 2011)
Disclosure of
Interests in
Other Entities
Amends the requirements
for classification and
measurement of financial
assets. The available-for-
sale and held-to-maturity
categories of financial
assets in AASB 139 have
been eliminated.
AASB 9 requires that gains
or losses on financial
liabilities measured at fair
value are recognised in
profit or loss, except that
the effects of changes in
the liability’s credit risk are
recognised in other
comprehensive income.
Introduces a single ‘control
model’ for all entities,
including special purpose
entities (SPEs), whereby all
of the following conditions
must be present:
Power over investee
(whether or not power
used in practice)
Exposure, or rights, to
variable returns from
investee
Ability to use power
over investee to affect
the Group’s returns from
investee.
Introduces the concept of
‘defacto’ control for entities
with less than 50% owner-
ship interest in an entity,
but which have a large
shareholding compared
to other shareholders.
This could result in more
instances of control and
more entities being
consolidated.
Joint arrangements will
be classified as either ‘joint
operations’ (where parties
with joint control have
rights to assets and
obligations for liabilities)
or ‘joint ventures’ (where
parties with joint control
have rights to the net
assets of the arrangement).
Combines existing
disclosures from AASB 127
Consolidated and
Separate Financial
Statements, AASB 128
Investments in Associates
and AASB 131 Interests
in Joint Ventures.
Introduces new disclosure
requirements for interests
in associates and joint
arrangements, as well
as new requirements for
unconsolidated structured
entities.
38
39
1 January 2013
Annual reporting
periods commencing
on or after
1 January 2013
When this standard is
first adopted for the year
ended 31 December 2013,
there will be no impact on
transactions and balances
recognised in the financial
statements because the
[Entity] does not have any
special purpose entities.
The Group does not have
‘defacto’ control of any
entities with less than 50%
ownership interest in an
entity.
1 January 2013
1 January 2013
Annual reporting
periods commencing
on or after
1 January 2013
Annual reporting
periods commencing
on or after
1 January 2013
When this standard is
first adopted for the year
ended 31 December 2013,
there will be no impact on
transactions and balances
recognised in the financial
statements because the
Group has not entered into
any joint arrangements.
As this is a disclosure
standard only, there will
be no impact on amounts
recognised in the
financial statements.
However, additional
disclosures will be required
for interests in associates
and joint arrangements, as
well as for unconsolidated
structured entities.
For personal use only Reference
Title
Nature of Change
AASB 13 (issued
September 2011)
Fair Value
Measurement
AASB 119 (reissued
September 2011
Employee
Benefits
AASB 2011-4 (issued
July 2011)
Interpretation 20
(issued November
2011)
Amendments
to Australian
Accounting
Standards
to Remove
Individual Key
Management
Personnel
Disclosure
Requirements
Stripping
Costs in the
Production
Phase of a
Surface Mine
AASB 2012-5 (is-
sued June 2012)
Annual
Improvements
to Australian
Accounting
Standards
2009-2011
Cycle
AASB 13 establishes a single
framework for measuring
fair value of financial and
non-financial items recog-
nised at fair value in the
statement of financial posi-
tion or disclosed in the notes
in the financial statements.
Additional disclosures
required for items measured
at fair value in the statement
of financial position, as well
as items merely disclosed at
fair value in the notes to the
financial statements.
Extensive additional disclo-
sure requirements for items
measured at fair value that
are ‘level 3’ valuations in the
fair value hierarchy that are
not financial instruments
Employee benefits expected
to be settled (as opposed to
due to settled under current
standard) wholly within 12
months after the end of the
reporting period are
short-term benefits, and
therefore not discounted
when calculating leave
liabilities. Annual leave not
expected to be used wholly
within 12 months of end
of reporting period will in
future be discounted when
calculating leave liability.
Amendments to remove
individual key management
personnel (KMP) disclosure
requirements from AASB
124 to eliminate duplicated
information required under
the Corporation Act 2001
Clarifies that costs of remov-
ing mine waste materials
(overburden) to gain access
to mineral ore deposits
during the production phase
of a mine must be capital-
ised as inventories under
AASB 102 Inventories if the
benefits from stripping
activity is realised in the
form of inventory produced.
Otherwise, if stripping
activity provides improved
access to the ore, stripping
costs must be capitalised
as a non-current, stripping
activity asset if certain
recognition criteria are met.
Non-urgent but necessary
changes to IFRSs (IAS1, IAS
16 & IAS 32) e.g: AASB 116
clarifies that items such as
spare parts, stand-by or
service equipment are
required to be classified
as property, plant and
equipment and not inventory
Application date
of standard
Impact on Consolidated
financial statements
Annual reporting
periods commencing
on or after 1 January
2013
When this standard is
adopted for the first time
for the year ended 31
December 2013, additional
disclosures will be required
about fair values.
Application date
for Group
1 January 2013
Annual periods
commencing on or
after 1 January 2013
Annual periods com-
mencing on or after
1 January 2013
Annual periods
commencing on or
after 1 January 2013
1 January 2013
1 January 2013
1 January 2013
When this standard is first
adopted for 31 December
2013 year end, annual leave
liabilities will be
recalculated on
1 January 2012 as long-
term benefits because
they are not expected to
be settled wholly within
12 months after the end of
the reporting period. This
will result in a reduction of
the annual leave liabilities
recognised on 1 January
2012, and a corresponding
increase in retained
earnings at that date
When this standard is first
adopted for the year ended
31 December 2013 the
[Entity] will show reduced
disclosures under Key
Management Personnel
note to the financial
statements
The [Entity] does not oper-
ate a surface mine. There
will therefore be no impact
on the financial statements
when this interpretation is
first adopted.
Periods commencing
on or after 1 January
2013
When this standard is first
adopted for the year ended
31 December 2013, there
will be no material impact.
1 January 2013
IFRS (issued)
December 2011
Mandatory
Effective
Date of IFRS 9
and Transition
Disclosures
AASB 2012-9 (is-
sued December
2012)
Amendment
to AASB 1048
arising from the
Withdrawal of
Australian Inter-
pretation 1039
1 January 2015
1 January 2013
Entities are no
longer required
to restate
comparatives
on first time
adoption. In-
stead, additional
disclosures on
the effects of
transition are
required.
Deletes Australi-
an Interpretation
1039 Substan-
tive Enactment
of Major Tax
Bills In Australia
from the list
of mandatory
Australian Inter-
pretations to be
applied by enti-
ties preparing
financial state-
ments under the
Corporations Act
2001 or other
general purpose
financial state-
ments.
Annual reporting
periods
commencing on
or after
1 January 2015
Annual reporting
periods begin-
ning on or after
1 January 2013
As comparatives are
no longer required to
be restated, there
will be no impact
on amounts
recognised in the
financial statements.
However, additional
disclosures will be
required on transi-
tion, including the
quantitative effects of
reclassifying financial
assets on transition.
There will be no
impact on first-time
adoption of this
amendment as the
[entity] does not
account for proposed
changes in
taxation legislation
until the relevant Bill
has passed through
both Houses of
Parliament, which is
consistent with the
views expressed by
the Australian
Accounting Stand-
ards Board in their
agenda decision of
December 2012.
No other standards, interpretations or amendments which have been issued are expected to have an impact on the group.
40
41
For personal use only N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( C O N T I N U E D )
2 .
I N C O M E
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
$
Revenue
Interest revenue from unrelated entities
42,282
31,515
Other Income
Profit from sales of investments in available
for sale financial assets
Miscellaneous and other income
Total Other Income
464,769
744,186
12,000
476,769
12,750
756,936
3 .
E X P E N S E S
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
$
Loss before income tax has been arrived at
after charging the following:
Abandoned acquisition costs¹
123,243
2,164,281
Exploration expenditure written off
Operating lease rentals
Depreciation - plant and equipment
Superannuation contributions
Movement in provision for employee entitle-
ments
-
49,238
28,428
50,322
2,250
253
36,178
4,998
75,029
6,730
Impairment of investments
227,110
54,000
4 .
I N C O M E T A X
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
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 fol-
lows:
$
-
-
$
-
-
(Loss) / Profit before income tax
(1,191,061)
(2,135,788)
Prima facie tax payable / (benefit) on loss
@ 30% (2011:30%)
Non allowable items
Non-assessable income
Net deferred tax assets not brought to account
Income tax expense / (benefit)
(357,318)
108,591
(790,806)
1,039,533
-
(640,736)
(2,026,120)
(847,294)
3,514,150
-
Future income tax benefit arising from
un-recouped deductions at reporting date
for Australian tax resident entities.
Revenue losses
Capital losses
4,612,124
4,689,637
4,430,446
4,689,637
¹ In July 2011 the Company entered into a Share Sale Agreement with subsidiaries of Cristal Australia Pty Ltd
(Cristal) pursuant to which the Company would acquire 100% of the issued capital in Cable Sands (W.A.) Pty Ltd
and Cable Sands Pty Ltd (together Cable Sands) for a total consideration of A$96 million, with a further
A$5 million payment contingent upon Zircon prices reaching US$2,700 by the end of 2013. The final material
condition precedent to the Acquisition was the procurement of funding for the Acquisition. Prevailing global
markets provided for difficult conditions in which to raise funds and as a result the necessary funding has not been
secured. On 20 December 2011, MRC advised that the conditions precedent, as set out in the Share Sale Agreement
had not been met within the required timeframe. As a result the proposed Acquisition came to an end.
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 133 million
(approximately A$15 million (2011:14 million). 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.
42
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( C O N T I N U E D )
5 .
S E G M E N T I N F O R M A T I O N
Operating segments are 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 as-
sets and liabilities reported for each segment.
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.
2012
Africa
Australia
Revenue from operations
$
$
$
$
$
Tormin
Xolobeni
Investing Corporate
Totals
Gain from sales of invest-
ments in listed companies
Interest earned from unre-
lated entities
Other income
Total segment revenue/
income
Segment results
Profit/(Loss) before in-
come tax
Included in segment re-
sults are the following:
Abandonment of acquisi-
tion
9,120
1,013
32,149
9,120
1,013
464,769
496,918
12,000
12,000
42,282
476,769
519,051
15,580
1,730
146,565 (1,354,936)
(1,191,061)
(123,243)
(123,243)
Total segment assets
5,688,876
7,934,347
532,113
7,797,315
21,952,650
Total segment liabilities
256.598
28,511
-
705,121
990,229
2011
Africa
Australia
Revenue from operations
Interest earned from
unrelated entities
Other revenue
Total segment revenue
Segment results
Tormin
Xolobeni
Investing
Corporate
$
11,131
-
11,131
$
1,237
-
1,237
$
19,147
744,186
763,333
$
-
12,750
12,750
Totals
$
31,515
756,936
788,451
(Loss) before income tax
(42,343)
(4,705)
(1,454,948)
(633,792)
(2,135,788)
Included in segment re-
sults is the following:
Abandonment of acquisi-
tion
-
-
(2,164,281)
-
(2,164,281)
Total segment assets
4,688,269
8,191,050
3,027,651
344,309
Total segment liabilities
64,542
7,171
-
1,764,439
16,251,279
1,836,152
6 . P A R E N T E N T I T Y I N F O R M A T I O N
The following details information related to the parent entity, Mineral Commodities Limited, at 31 December 2012.
The information presented here has been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Contributed equity
Accumulated losses
Option reserve
Other reserves
Total equity
Loss for the year
Other comprehensive income / (loss) for the year
Total comprehensive income / (loss) for the year
31 Dec 2012
31 Dec 2011
$
8,321,359
14,343,036
22,664,395
$
3,350,369
12,783,155
16,133,524
705,103
1,718,397
-
-
705,103
1,718,397
21,959,292
14,415,127
50,912,158
41,204,350
(28,265,939)
(27,789,386)
357,330
(1,044,257)
21,959,292
(763,131)
(1,400,512)
(2,163,643)
286,578
713,585
14,415,127
(6,996,396)
(2,509,112)
(9,505,508)
44
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7.
C A S H A N D C A S H E Q U I V A L E N T S
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables
mentioned above. Refer to Note 23 for more information on the risk management policy of the Group and the
credit quality of the entity’s receivables.
Cash at Bank
Consolidated
Consolidated
31 Dec 2012
$
7,769,202
7,769,202
31 Dec 2011
$
249,389
249,389
The effective interest rate on cash at bank in 2012 was 2.30% (2011:4.25%).
(a)
(b)
Interest rate risk exposure
The consolidated entity’s exposure to interest rate risk is discussed in Note 23.
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 .
T R A D E A N D O T H E R R E C E I V A B L E S
Current
Trade receivables
Other receivables
Non-Current
Security deposits¹
Advance to Blue Bantry²
Consolidated
Consolidated
31 Dec 2012
$
31 Dec 2011
$
22,871
125,216
148,087
313,636
113,636
427,272
7,144
94,200
101,344
333,736
-
333,736
(b)
Foreign Exchange and Interest Rate Risk
Information about the Group’s exposure to foreign exchange and interest rate Risk in relation to trade and
other receivables is provided in Note 23.
9 .
F I N A N C I A L A S S E T S - C U R R E N T
Available for sale Investments
Investments in companies listed on a recognised stock
exchange - shares at fair value
At the beginning of the year
Cost of Allied Gold Mining Plc Shares sold
Fair value movement
Impairment of listed shares
Subscription monies paid for Perpetual Resources Ltd
Transfer from Financial asset revaluation reserve on
shares sold
Total available for sale investments in companies
listed on a recognised stock exchange
Available for sale investment in companies not listed
on a recognised stock exchange
At the beginning of the year
Fair value movement
Impairment of unlisted shares
Total available for sale investments in companies not
listed on a recognised stock exchange
Consolidated
Consolidated
31 Dec 2012
$
31 Dec 2011
$
1,653,000
(1,030,333)
5,173,000
(686,888)
-
(1,440,000)
(14,000)
350,000
(54,000)
-
(589,667)
(1,339,112)
369,000
1,653,000
1,374,651
(998,428)
(213,110)
163,113
1,104,651
270,000
-
1,374,651
Total Financial Assets
532,113
3,027,651
¹ Includes a secured deposit of $313,636 (2011 $324,063 ) 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.
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. Total impairment
recognised during the period is $227,110 (2011:54,000)
² An amount of Rand 1 million has been advanced to the BEE partner Blue Bantry refer note 25.
There are no receivables past due and impaired
(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 2012 and 2011.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:45)(cid:70)(cid:87)(cid:70)(cid:77)(cid:1)(cid:18)(cid:27)(cid:1) (cid:82)(cid:86)(cid:80)(cid:85)(cid:70)(cid:69)(cid:1)(cid:81)(cid:83)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:9)(cid:86)(cid:79)(cid:66)(cid:69)(cid:75)(cid:86)(cid:84)(cid:85)(cid:70)(cid:69)(cid:10)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:74)(cid:69)(cid:70)(cid:79)(cid:85)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)
(cid:45)(cid:70)(cid:87)(cid:70)(cid:77)(cid:1)(cid:19)(cid:27)(cid:1)(cid:1)(cid:74)(cid:79)(cid:81)(cid:86)(cid:85)(cid:84)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:82)(cid:86)(cid:80)(cid:85)(cid:70)(cid:69)(cid:1)(cid:81)(cid:83)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:69)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:74)(cid:79)(cid:1)(cid:45)(cid:70)(cid:87)(cid:70)(cid:77)(cid:1)(cid:18)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:80)(cid:67)(cid:84)(cid:70)(cid:83)(cid:87)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
(cid:45)(cid:70)(cid:87)(cid:70)(cid:77)(cid:1)(cid:20)(cid:27)(cid:1)(cid:1)(cid:74)(cid:79)(cid:81)(cid:86)(cid:85)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:80)(cid:83)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:80)(cid:67)(cid:84)(cid:70)(cid:83)(cid:87)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:69)(cid:66)(cid:85)(cid:66)(cid:1)(cid:9)(cid:86)(cid:79)(cid:80)(cid:67)(cid:84)(cid:70)(cid:83)(cid:87)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:74)(cid:79)(cid:81)(cid:86)(cid:85)(cid:84)(cid:10)
46
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( C O N T I N U E D )
9 .
F I N A N C I A L A S S E T S – C U R R E N T ( C o n t i n u e d )
11.
P R O P E R T Y, P L A N T A N D E Q U I P M E N T
2012
Level 1
Level 2
Level 3
Total
Available for sale financial assets
369,000
163,113
532,113
Total
2011
369,000
163,113
532,113
Level 1
Level 2
Level 3
Total
Available for sale financial assets
1,653,000
- 1,374,651 3,027,651
Total
1,653,000
- 1,374,651 3,027,651
Fair Value of Investment in Allied Gold Mining Plc
The remaining shares held in Allied Gold Mining Plc were sold during the year. In 2011 the market value of the
investment in Allied Gold Mining Plc at balance date was $1,620,000 based on a price of $2.16 per share.
The level 3 investment in an unlisted entity has been valued by using information provided by the Company
together with information from an independent source. Assumptions and estimates have been used in this
valuation. Should any of these assumptions or estimates change, this could significantly effect the carrying
value of this investment.
(a) Risk Exposure
Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in Note 23.
1 0 . O T H E R – C U R R E N T
Consolidated Consolidated
31 Dec 2012
31 Dec 2011
$
10,925
$
11,163
Prepayments
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
Disposals
Depreciation
Carrying amount at end of year
31 Dec 2012
$
31 Dec 2011
$
149,095
(80,406)
68,689
74,952
(53,370)
21,582
21,582
79,687
(4,152)
(28,428)
68,689
7,377
24,910
(5,707)
(4,998)
21,582
1 2 .
E X P L O R A T I O N A N D D E V E L O P M E N T E X P E N D I T U R E
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
$
12,996,362
12,996,362
12,506,413
12,506,413
Exploration expenditure - costs carried for-
ward in respect of areas of interest in:
Exploration and evaluation phases
Total exploration and evaluation expenditure
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
12,506,413
13,928,167
Expenditure during the year
Foreign exchange movements
Write off discontinued projects
Carrying amount at end of year
1,169,193
(679,244)
-
896,573
(2,318,074)
(253)
12,996,362
12,506,413
48
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For personal use only S O U T H A F R I C A N P R O J E C T S
T O R M I N M I N E R A L S A N D S P R O J E C T
B a c k g r o u n d
During the period, the Company completed and submitted all the necessary documentation required for
the remaining regulatory matters in relation to the Tormin Mineral Sands Project (Tormin) and in July 2012,
the Company received notification of the approval of its Environmental Management Plan by DEADP.
The Company was therefore in a position to proceed to ensure appropriate financing was in place to develop
Tormin for production to commence in 2013.
The Company is now positioned to proceed with the full scale development of Tormin, particularly as there
is sufficient indication from the ongoing tender process that the capital required to complete the development
will be available to the Company when required.
P r o j e c t E c o n o m i c s a n d D e v e l o p m e n t C o s t s
Based on TZMI product pricing and Definitive Feasibility Study (DFS) estimates, the project economics for Tormin
are robust. On an initial 5-year Life of Mine extracting primarily Zircon and Rutile Non-Magnetic concentrate,
economic models suggest an NPV of AUD$68.9m with an IRR of 87.9%.
Engineering plans were substantially progressed for dry separation of the magnetic concentrates, which would
enable the separation and sale of Ilmenite and Garnet which will further enhance Tormin’s economics i.e an NPV
of AUD$94m and IRR of 97%. Development of the required dry processing facilities is expected to cost
approximately AUD$4 million.
The Company has noted recent reports of a softening market for zircon and rutile. Despite this, demand for
the products to be produced from Tormin remains strong. In addition, given the extremely low operating costs
(Opex) based substantially in South African Rand (ZAR), Tormin is largely insensitive to changes in capital
expenditure or Opex. Importantly in this regard, a 10% reduction in commodity prices is offset by a 5%
devaluation of the ZAR. Accordingly, the recent 15% devaluation of the ZAR to the AUD (8.2 to 9.4) allows for
a 30% reduction in commodity prices before the economic models are negatively affected. Based on the above,
the Company does not believe that it is appropriate to change its economic forecasts at this time.
50
51
For personal use only S O U T H A F R I C A N P R O J E C T S
A p p o i n t m e n t o f E P C M C o n t r a c t o r
The Company was pleased to advise during the last quarter that its subsidiary, Mineral Sands Resources (Pty) Ltd
(MSR), has appointed Perth-based MSP Engineering Pty Ltd (MSP Engineering) as EPCM contractor to complete
the construction and commissioning of the plant required for Tormin.
MSP Engineering has been appointed as engineering contractor to complete the process and engineering
design, and support the construction management and commissioning of the Tormin Development and
Processing Plants. The decision to engage MSP Engineering as engineering contractor was based on the quality
of the previous and ongoing project work undertaken, and its detailed understanding of the ore body and
development of process flow design and plant requirements. In addition, MSP Engineering has a strong track
record in engineering and delivering projects in the mineral sands sector. The appointment of MSP Engineering
and its historical and continuing involvement with Tormin significantly shortens the overall delivery timetable for
the project and will provide greater certainty that the budgeted capital expenditure for Tormin of $16 million will
be maintained.
By the end of the financial year, MSP Engineering had prepared scope specifications and most of the tender
documents had been distributed.
P r o d u c t O f f - t a k e d i s c u s s i o n s
Tormin will produce approximately 48,000 tonnes pa of enriched Non-Magnetic concentrate containing 38,000
tonnes of Zircon and 5,500 tonnes of Rutile. This material will require secondary treatment through a third party
dry separation plant. In addition, the Company will produce approximately 100,000 tonnes to 125,000 tonnes of
finished IImenite product once MRC installs its own dry processing infrastructure in early 2014. Garnet
concentrate will also be sold to Blastrite for secondary treatment.
Demand for the Tormin Ilmenite and Non-Magnetic concentrate has been strong and the Company is advanced
with negotiations for all products.
O f f s h o r e P r o s p e c t i n g R i g h t s
During the period, the Company also advised that its subsidiary, MSR, received notification from the Department
of Mineral Resources (DMR) that the application for the prospecting rights for the offshore area immediately
adjacent to Tormin had been approved.
The offshore prospecting area covers an area of 12 square kilometres and extends 1km out to sea from the low
water mark and covers the full length of the existing 12km Tormin tenement.
52
53
For personal use only S O U T H A F R I C A N P R O J E C T S
X O L O B E N I P R O J E C T ( S O U T H A F R I C A )
B a c k g r o u n d
The Xolobeni Mineral Sands Project (Xolobeni) resource is 346 million tonnes of 5.0% heavy mineral, with 65%
of this resource in the Measured category.
Xolobeni is therefore regarded as one of the largest undeveloped mineral sands resources in the world
containing in excess of 9,000,000 tonnes of ilmenite.
In November 2011 the DMR extended the prospecting rights over the Xolobeni project, excluding the Kwanyana
block, for a further period of 3 years. During the first quarter of 2012, this right was executed and submitted
for registration and subsequently registered by the DMR in the third quarter of 2012.
MRC has also previously advised that the DMR had withdrawn the previously granted Conditional Mining Right
over the Kwanyana block and that it was engaging with the DMR and Minister in relation to these matters.
Based on this, the Company resolved to withdraw all previous applications in respect of the Kwanyana block
and immediately file a new PRA over the same block.
The benefit of this approach is that the Kwanyana block will be re-aligned with the rest of the Xolobeni project
which will enable the Company to progress its application to develop Xolobeni in its entirety and, in so doing,
demonstrate that this can be undertaken responsibly and sustainably in the interests of all stakeholders.
The DMR accepted the new PRA over the Kwanyana block in the first quarter of 2012 and, in accordance with
prevailing legislation, directed the Company to submit an Environmental Management Plan (EMP) for the
prospecting work and details of its engagement with all stakeholders with an interest in the project.
The Company compiled an EMP for the Kwanyana block prospecting work and undertook a comprehensive
stakeholder engagement process (SEP) during the second quarter of 2012. The EMP and SEP report were also
lodged with the DMR in accordance with the required timetable.
A number of objections to the PRA were received. Accordingly, the DMR was required by law to call
a meeting to consider the objections and a representations made by the Company. This meeting was held
on 28 November 2012.
Based on the information presented at that meeting, the DMR has instructed the Company to undertake
additional consultation with parties that have an interest in the project. Planning for this consultation is
currently in progress and the consultation is expected to be concluded within the first quarter of 2013.
In a significant development, online news service Fever-red reported that ANC Secretary-General, Gwede
Mantashe, has publicly called on mayors and councillors to change the mindsets of communities fighting
against the proposed N2 toll road and granting of licenses for mining at Xolobeni.
Mantashe also pointed out that the region “is one of the poorest areas” and “he believes it will be well served
by a road system and mining that will increase access, which in turn will create an enabling environment for
unlocking the development potential of the area.”
The Company is encouraged by the continuing momentum that is building for the development of Xolobeni
and is confident that, once all final studies are completed, the economic and social benefits of Xolobeni to uplift
the local Amadiba population will create a compelling case for the continued support of its development and
show beyond doubt that mining can co-exist with environmentally responsible development.
54
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1 3 . S U B S I D I A R I E S
1 4 .
N O N - C O N T R O L L I N G I N T E R E S T S
Class of Share
Place of Incorporation
Equity
Holding
2012
%
Equity
Holding
2011
%
Australia
Australia
Australia
Australia
Australia
South Africa
Australia
Australia
Australia
South Africa
South Africa
South Africa
South Africa
Namibia
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
100
100
90
100
100
100
100
100
56
50
100
100
100
100
100
90
100
100
100
100
100
56
50
100
100
100
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
Blackhawk Oil & Gas Ltd
MRC Cable Sands Pty Ltd
Transworld Energy & Minerals
Resources (SA) (Pty) Limited
Mineral Sands Resources
(Pty) Ltd
Nyati Titanium Eastern Cape
(Pty) Ltd
MRC Metals (Pty) Ltd
Skeleton Coast Resources
(Pty) Ltd
Non-controlling interests in subsidiaries comprise:
Interest in retained earnings at the beginning of the
financial year after adjusting for non-controlling
equity interests in the entities acquired during the
financial year
Operating loss
Share capital
Reserves
Total non-controlling interests
Consolidated
Entity
Consolidated
Entity
31 Dec 2012
31 Dec 2011
$
$
-
-
54,748
124,101
178,849
54,748
124,101
178,849
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.
1 5 .
T R A D E A N D O T H E R P AYA B L E S - C U R R E N T
Trade payables - unsecured
Other payables and accruals - unsecured
(a) Fair Values and credit risk
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
530,916
435,886
966,802
$
640,914
1,158,838
1,799,752
Due to the short term nature of these payables the carrying values represent their respective fair values
as at 31 December 2012 and 2011.
(b) Foreign Exchange and Interest Rate Risk
Information about the Group’s exposure to foreign exchange and interest rate Risk in relation to trade
and other payables is provided in Note 23.
56
57
For personal use only
1 6 .
C O N T R I B U T E D E Q U I T Y
Balance at beginning of financial
year
Placement of 10 Million shares in
March 2011
Placement of 120,615,000 shares
as approved by shareholders at
the Annual General Meeting on 31
May 2012
2012 Number
of shares
2011 Number of
shares
2012
$
2011
$
153,393,385
143,393,385
41,204,350 40,004,350
Consolidated Entity
General
Reserve
Financial Asset
revaluation
Foreign
Currency
Unlisted
Options
Listed
Options
Total
$
$
$
10,000,000
1,200,000
Balance at 1 January 2011
2,437,582
4,097,207
(995,772)
120,615,000
10,252,864
$
-
$
$
286,578
5,825,595
(2,509,112)
(2,511,827)
Revaluation
-
(2,509,112)
Exchange differences on
translation of foreign opera-
tions
(2,511,827)
Costs of capital raising
-
-
(545,056)
-
Balance at end of financial year
274,008,385
153,393,385
50,912,158 41,204,350
(a) Ordinary Shares
Balance at 31 December 2011
2,437,582
1,588,095
(3,507,599)
-
286,578
804,656
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 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 Group’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 Perpetual Resources Ltd are also regarded as part of the capital base
and sold as required to fund ongoing operations.
1 7.
R E S E R V E S
General Reserve
Financial asset revaluation reserve
Foreign currency translation re-
serve
Unlisted options reserve
Listed options reserve
Consolidated
31 Dec 2012
31 Dec 2011
$
2,437,582
1,588,095
(3,507,599)
-
286,578
804,656
$
2,437,582
-
(4,246,287)
357,330
-
(1,451,375)
58
Revaluation on disposal of
listed shares
Revaluation of unlisted
shares held for resale
Issue of unlisted options
Transfer to Accumulated
Losses
Exchange differences on
translation of foreign opera-
tions
(589,667)
(998,428)
(589,667)
(998,428)
357,330
357,330
(286,578)
(286,578)
(738,688)
(738,688)
Balance at 31 December 2012
2,437,582
-
(4,246,287)
357,330
-
(1,451,375)
N a t u r e a n d p u r p o s e o f r e s e r v e s
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 reporting 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).
Listed Options Reserve
Records the amounts received in a prior year from the issue of listed options.
Un-listed Options Reserve
The value of the share based payment options issued in 2012
59
For personal use only 1 8 .
L O S S P E R S H A R E
2 0 .
K E Y M A N A G E M E N T P E R S O N N E L D I S C L O S U R E S
(a) Basic loss per share
From continuing operations attributable to
the ordinary shareholders of the company
(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
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
cents
(0.68)
cents
(1.40)
(0.68)
(1.40)
173,495,885
151,667,357
(1,191,061)
(2,315,788)
There were 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 2011. These potential ordinary shares are not considered dilutive and accordingly
were not used to calculate dilutive earnings per share. The options were unexercised and therefore lapsed
at 31 December 2012.
1 9 .
A U D I T O R S ’ R E M U N E R A T I O N
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 paid or due and payable
to the auditors
Auditors of the parent entity
Audit and review
Non Assurance services
BDO (WA) Tax
Audit of subsidiaries
BDO Cape Town South Africa
Non-related practice of the auditors
Consolidated
31 Dec 2012
$
Consolidated
31 Dec 2011
$
64,122
-
11,726
-
75,848
61,368
140,129
-
17,179
218,676
K e y M a n a g e m e n t P e r s o n n e l C o m p e n s a t i o n
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share based payments
Consolidated Group
Consolidated Group
31 Dec 2012
31 Dec 2011
$
$
321,565
14,378
357,330
693,273
164,037
3,963
-
168,000
( a ) O p t i o n h o l d i n g s o f k e y m a n a g e m e n t p e r s o n n e l
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:
2012
Key Management
Personnel
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Andrew Lashbrooke
Balance at
1 January
2012 or on
appoint-
ment
7,380,396
7,380,396
200,000
40,000
-
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Net
change
other
Balance
at 31 Dec
2012
Vested and
exercisable
Unvested
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
6,000,000
-
-
-
-
-
-
7,380,396
7,380,396
200,000
40,000
-
-
- 1,000,000
1,000,000
- 1,000,000
1,000,000
- 1,000,000
1,000,000
- 1,000,000
1,000,000
- 1,000,000
1,000,000
- 6,000,000
6,000,000
-
-
-
-
-
60
61
For personal use only 2 1.
R E L A T E D P A R T Y T R A N S A C T I O N S
Minesite Construction Services a Company associated with Mr Mark Caruso and Mr Joseph Caruso has provided
office space to Mineral Commodities Limited (MRC) throughout 2012. The amount paid by MRC was $54,000.
This is considered to be an arms length commercial rent. There is no formal sub lease in place.
Zurich Bay Holdings Ltd a Company associated with Mr Mark Caruso and Mr Joseph Caruso provided an
unsecured loan facility of $1,407,509 for which it received interest of $99,937. This loan was made on a
commercial arms-length basis and was repaid in full prior to 31 December 2012.
Mineral Commodities Limited was a shareholder in Allied Gold Mining PLC owning 750,000 shares at
31 December 2011 these were sold during the year. Mark Caruso and Peter Torre were also officers of Allied
Gold Mining PLC but resigned during 2012.
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 2012 and 31 December 2011 consisted of loans advanced and payments received and made on
inter-company accounts. These transactions were made on normal commercial terms and conditions and at
market rates.
During the financial year, the Company provided management, accounting and administration services
to other entities in the wholly owned group.
Key management personnel
Disclosures relating to key management personnel are set out in Note 20.
O p t i o n h o l d i n g s o f k e y m a n a g e m e n t p e r s o n n e l ( c o n t i n u e d )
2011
Key Management
Personnel
Mark Caruso
Joseph Caruso
Peter Torre
Balance at
1 January
2012 or on
appointment
7,380,396
7,380,396
200,000
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Net
change
other
Balance
at 31 Dec
2012
Vested
and
exercis-
able
Unvested
-
-
-
-
-
-
-
-
-
-
-
-
7,380,396 7,380,396
7,380,396 7,380,396
200,000
200,000
-
-
-
( b )
S h a r e h o l d i n g s o f k e y m a n a g e m e n t p e r s o n n e l
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:
2012
Director
Balance at
January
2012 or on
appointment
Received as
Remuneration
Options
Exercised
Balance
Net
change
other
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Andrew Lashbrooke
21,582,615
21,569,988
500,000
100,000
-
-
2011
Director
Mark Caruso
Joseph Caruso
Peter Torre
Balance at
January
2012 or on
appointment
21,582,615
21,569,988
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,582,615
21,569,988
500,000
100,000
-
-
Received as
Remuneration
Options
Exercised
Balance
Net
change
other
-
-
-
-
-
-
-
-
-
21,582,615
21,569,988
500,000
Joseph and Mark Caruso are both directors of Zurich Bay Holdings Pty Ltd which has a relevant interest
in 21,569,988 shares.
All equity transactions with key management personnel, other than those arising from the exercise of
remuneration options, have been entered into under terms and conditions no more favourable than those
the Group would have adopted if dealing at arm’s length.
(c) Loans to key management personnel
There were no loans to key management personnel during the period.
(d) 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 21.
62
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2 2 ( a ) . R E C O N C I L I A T I O N O F L O S S F O R T H E Y E A R T O N E T C A S H O U T F L O W
F R O M O P E R A T I N G A C T I V I T I E S
Trade and other receivables
Counterparties with external credit rating
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
$
Profit/(loss) after income tax and outside equity interest
(1,191,061)
(2,135,788)
Depreciation
Impairment losses
Provision for Employee Entitlements
(Profit) on sale of investment in listed companies
Value of un-listed options issued
Loss on disposal of fixed assets
Exploration expenditure written off
Changes in assets and liabilities during the year:
Increase/(decrease) in trade payables and other liabilities
(Increase) decrease in trade and other receivables
(Increase) decrease in prepayments
28,428
227,110
(12,973)
(464,769)
357,330
152
-
(1,046,345)
(127,795)
238
4,998
54,000
6,730
(744,186)
-
5,707
253
1,210,890
14,425
(787)
Net cash inflow / (outflow) from operating activities
(2,229,685)
(1,583,758)
2 2 ( B ) . N O N - C A S H I N V E S T I N G A N D F I N A N C I N G A C T I V I T I E S
The group has no available finance facilities as at reporting date. The group did not undertake any
non-cash financing or investing activities during the period (2011: none).
2 3 .
F I N A N C I A L R I S K M A N A G E M E N T
The Group holds the following financial instruments:
Financial Assets
Cash at bank and short term bank deposits
AA - (Standard & Poor’s/Fitch)
BBB+ (Fitch)
Total Cash at bank and short term deposits
Consolidated
Consolidated
31 Dec 2012
31 Dec 2011
$
$
7,569,613
199,589
7,769,202
230,642
18,747
249,389
AAA (Fitch)
BBB+ (Fitch)
Counterparties without external credit rating
Sundry trade receivables
Total Receivables
Available for sale investments
Financial Liabilities
Trade Creditors
Other payables
31 December 2012
31 December 2012
$
45,631
348,724
394,355
78,293
472,648
532,113
8,773,963
530,916
435,886
966,802
7,807,161
$
25,696
333,736
359,432
75,648
435,080
3,027,651
3,712,120
640,914
1,158,838
1,799,752
1,912,368
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.
F i n a n c i a l R i s k
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.
F o r e i g n e x c h a n g e r i s k
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures. The primary exposure is in respect to the South African Rand arising from the investments in
and loans to South African entities.
Foreign exchange risk arises from assets and liabilities denominated in a currency that is not the Reporting
Company’s functional currency and net investments in foreign operations.
The Group does not hold any derivatives or foreign exchange contracts to hedge it’s foreign exchange
risk exposure.
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Price Risk
Price Risk
Price Risk
Price Risk
Price Risk
-30%
-30%
+30%
+30%
2012
Carrying amount
$
Profit
$
Equity
$
Profit
$
Equity
$
Available for
sale investments
Listed Shares &
Options
Unlisted shares
369,000
(110,700)
163,113
532,113
(48,934)
(159,634)
110,700
48,934
159,634
Price Risk
Price Risk
Price Risk
Price Risk
Price Risk
2011
Carrying amount
$
-30%
Profit
$
-30%
Equity
$
+30%
Profit
$
Available for
sale investments
Listed Shares &
Options
Unlisted shares
1,653,000
(495,900)
1,374,651
3,027,651
(412,395)
(908,295)
+30%
Equity
$
495,900
412,395
908,295
2 3 .
F I N A N C I A L R I S K M A N A G E M E N T ( C o n t i n u e d )
Based on the financial instruments held at the reporting date, the sensitivity of the Group’s profits after tax for
the year and equity at the reporting date to movements in the Australian Dollar to South African Rand was:
Had the Australian Dollar weakened / strengthened by 19% against the South African Rand with all other
variables remaining constant, the Group’s profit after tax would have been $3,289 lower / higher (2011: $8,940
lower / higher) and equity would have been $2,310,089 lower / higher (2011: $2,022,662 lower / higher)
The reasonable possible change is based on historical changes in rates estimated by management.
C r e d i t R i s k
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.
I n t e r e s t R a t e R i s k
The Group’s exposure to interest rate risk relates primarily to the Group’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.
L i q u i d i t y r i s k
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.
P r i c e R i s k
The Group has an exposure to equity securities price risk. This arises from investments held by the Group and
classified on the Statement of Financial Position as available for sale financial assets. The Group is not 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 and market value of
the investments held. The 30% reasonable movement is based on management’s estimate of historical changes.
66
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2 4 .
S H A R E B A S E D P AY M E N T S
2 5 . C O M M I T M E N T S
The issue of Employee options was approved by shareholders at a general meeting of the Company held
on 21 December 2012. The Employee option plan is designed to provide long-term incentives for senior
managers and above (including directors) to deliver long-term shareholder returns.
Options granted under the plan carry no dividend or voting rights. When exercisable each option
is convertible into one ordinary share at the predetermined exercise
Grant
Date
2012
Expiry
date
Exercise
price
Fair
Value
at grant
date
Options
at the
start of
the year
Granted
during the
year
Exercised
during
the year
Forfeited
during
the year
Balance at
the end of
the year
Vested at
the end of
the year
21 Dec
2012
21 Dec
2012
31 Dec
2015
31 Dec
2015
20 cents¹
35 cents²
3.35
cents
2.23
cents
-
-
-
10,000,000
1,000,000
11,000,000
-
-
-
-
-
-
10,000,000
10,000,000
1,000,000
1,000,000
11,000,000
11,000,000
F a i r v a l u e o f o p t i o n s g r a n t e d
The assessed fair value at grant date of options during the year ended 31 December 2012 was independently
determined using a Black-Scholes 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. The total Share Based
payment expense for the period was $357,330 (2011 $0).
( a )
N o n - C a n c e l l a b l e O p e r a t i n g L e a s e s
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
Consolidated
31 Dec 2012
31 Dec 2011
$
-
-
-
$
1,875
-
1,875
The operating lease was a short term rental agreement for the Group’s previous office premises in Kewdale.
The Company presently occupies office space leased by Zurich Bay Holdings, refer note 21. There is currently
no formal sub-lease or rental agreement in place however this will be at commercial rate for the space occupied.
(b) The Company, via MRCR, and Blue Bantry are both 50% shareholders in Mineral Sands Resources Pty Ltd
(MSR), the entity which owns the Tormin Mineral Sands Project (Tormin).
MRC has agreed to provide Blue Bantry access to an amount of funding to support the original objective by
advancing through the Loan certain benefits Blue Bantry would expect to receive from Tormin. The Loan
consists of an upfront amount of ZAR1 million (approx AUD$114K) which has already been paid with a further
ZAR13 million (approx AUD$1.50M) payable no later than 31 December 2012, subject to the successful capital
raising for the development of Tormin. Blue Bantry will repay the Loan from distributions that it will receive
in the future from MSR. The additional ZAR 13 million was outstanding at 31 December 2012 pending
completion of administrative procedures.
The model inputs for options granted during the year ended 31 December 2012 included:
( c ) E x p l o r a t i o n Te n e m e n t L e a s e s – C o m m i t m e n t s f o r E x p e n d i t u r e
a. Options granted for no consideration with the expectation that the majority of these Options would be
exercised towards the end of the term of the Options and there are no market based vesting conditions.
b. Exercise price
c. Grant date
d. Risk-free interest rate
e. Exercise date 31 December 2015
f. Share price at grant date 8.08 cents
g. Expected price volatility of the company’s shares : 86%
h. Expected dividend yield – nil
¹ 20 cents
¹ 21 December 2012
¹ 2.50%
² 35 cents
² 21 December 2012
² 2.57%
The expected price volatility is based on the historic volatility and the general trend in share prices of the
companies in similar businesses and trading on the ASX over the past 4 and 12 months.
In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to outlay
lease rentals and to meet the minimum expenditure requirements which are not considered to be material.
2 6 .
C O N T I N G E N T L I A B I L I T I E S
There are no Contingent Liabilities.
2 7.
S U B S E Q U E N T E V E N T S
Share Capital
Further placements of 49,937,000 were issued in January 2013 raising a further $ 4,202,413 net of expenses.
No other 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 Group, the
results of those operations or the state of affairs of the Group in future financial years unless otherwise disclosed
in this Directors Report.
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D I R E C T O R ’ S D E C L A R A T I O N
T H E D I R E C T O R S O F T H E C O M P A N Y D E C L A R E T H A T:
1.
2.
3.
The financial statements, comprising the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of cash flow, consolidated
statement of changes in equity and accompanying notes, are in accordance with the Corporations
Act 2001 including;
(a) complying with Australian Accounting Standards and the Corporations Regulations 2001 and,
(b) give a true and fair view of the consolidated entity’s financial position as at 31 December 2012
and of its performance for the year ended on that date.
The Company has included in the notes to the financial statements an explicit and unreserved statement
of compliance with International Financial Reporting Standards.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable.
The directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors:
Mark Caruso
Non Executive Director
Dated at Perth, Western Australia this 28th day of March 2013
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7273For personal use only 7475For personal use only S T A T E M E N T O F C O R P O R A T E G O V E R N A N C E
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”) “Princi-
ples 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.
R O L E O F T H E B O A R D O F D I R E C T O R S
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 Chief Executive Officer (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.
B O A R D S T R U C T U R E A N D C O M P O S I T I O N
The Board currently is comprised of 5 directors, two of which are independent non–executive Directors who were
appointed in December 2012. 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.
In the absence of any significant scale in the Company’s existing operations, the Board does not believe that the
existence of further independent non-executive directors would be of any additional benefit to the Company.
As stated above, the Board will ensure that it continues to have the mix of skills and experience necessary to
conduct MRCs’ activities, and that appropriate directors are selected and appointed as required.
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.
S T A T E M E N T O F C O R P O R A T E G O V E R N A N C E
Any equity based compensation of directors is required to be approved in advance by shareholders.
Presently, the roles of Chairman and Chief Executive Officer have been separated. The present Chairman of the
Company is not considered to be an independent director. Notwithstanding this, all directors of the Company
are, and were during the reporting period, independent in character and judgment.
The Chief Executive Officer 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.
B O A R D A N D M A N A G E M E N T E F F E C T I V E N E S S
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 Chief Executive
Officer 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. With the
appointment of a Chief Executive Officer and additional directors during the second half of 2012, evaluation
procedures are expected to take place during the current financial year.
F I N A N C I A L R E P O R T I N G , I N T E R N A L C O N T R O L A N D R I S K M A N A G E M E N T
The Board has overall responsibility for MRC’ 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 Chief
Executive Officer and the Company Secretary are required to state in writing that:
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Company’s financial condition and operational results in accordance with the relevant accounting standards; and
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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. On the commencement of operations, the process of risk reporting will be formalized.
76
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For personal use only S T A T E M E N T O F C O R P O R A T E G O V E R N A N C E ( C O N T ’ D )
C O M M I T T E E S O F T H E B O A R D O F D I R E C T O R S
The Board established two permanent Board committees In February 2013 to assist the Board in the performance
of its functions:
(a) the Audit, Compliance and Risk Committee; and
(b) the Remuneration and Nomination Committee.
These Committees were not in existence throughout the 2012 financial year. The Board and scale of activities was
not of a sufficient size to warrant separate committees in this regard.
Each committee has a charter, which sets out the Committee’s purpose and responsibilities. The Committees are
described further below.
A U D I T, C O M P L I A N C E A N D R I S K C O M M I T T E E
The purpose of the Audit, Compliance and Risk Committee is to provide assistance to the Board in its review of:
(a) MRC’s financial reporting, internal control structure and risk management systems;
(b) the internal and external audit functions; and
(c) MRC’s compliance with legal and regulatory requirements in relation to the above.
The Audit, Compliance and Risk Committee has specific responsibilities in relation to MRC’s financial reporting
process; the assessment of accounting, financial and internal controls; the appointment of external auditor;
the assessment of the external audit; the independence of the external auditor; and setting the scope of the
external audit.
The Audit, Compliance and Risk Committee must comprise at least three non–executive Directors that have
diverse, complementary backgrounds, with two independent non–executive Directors. The Chairman of the Audit,
Compliance and Risk Committee must be an independent non–executive Director.
The members of the Audit, Compliance and Risk Committee are: Mr Walker (Chairman), Mr Leahy, and Mr Torre.
R E M U N E R A T I O N A N D N O M I N A T I O N C O M M I T T E E
The purpose of the Remuneration and Nomination Committee is to discharge the Board’s responsibilities relating
to the nomination and selection of Directors and the compensation of the Company’s executives and Directors.
The key responsibilities of the Remuneration and Nomination Committee are to:
(a) ensure the establishment and maintenance of a formal and transparent procedure for the selection and
appointment of new Directors to the Board; and
(b) establish transparent and coherent remuneration policies and practices, which will enable MRC to attract,
retain and motivate executives and Directors who will create value for shareholders and to fairly and re
sponsibly reward executives.
The Remuneration and Nomination Committee must comprise at least three non–executive Directors, two of
which must be independent non–executive Directors. The Chairman of the Remuneration and Nomination Com-
mittee must be an independent non–executive Director.
E T H I C A L A N D R E S P O N S I B L E D E C I S I O N – M A K I N G
C O D E O F C O N D U C T
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
was adopted in February 2013.
D I V E R S I T Y
The Company only consists of 8 employees and directors. Where possible and when the Company expands,
the Company will employ a broad mix of individuals reflecting its philosophy of hiring the best candidate for
all positions at all levels irrespective of race, religion or gender. In terms of the composition of the Board and
Board nominations, the Board will consider the requirements of the Davies Report and the Australian Stock
Exchange Corporate Governance Principles as part of the overall Board appointment process of determining
the composition of the Board that is the most appropriate for the Group.
At present, the Company does not have a diversity policy due to the small number of emnployees. The Company
employs 1 female, representing 12.5% of the total employees and directors.
A policy is currently being developed. The objective of the policy will be for the Company to embrace the
diversity of skills, ideas and experiences of an individual and recognise that a workforce is made up of people
with differences in age, gender, sexual orientation, disability, religion or national origin or social origin
contributes to MRC’s success and organizational strength. It ensures all employees are treated with fairness
and respect.
MRC is committed to embedding a corporate culture that embraces diversity through;
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of qualified candidates
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place and business behaviour that is deemed as unlawful (discrimination, harassment, bullying, vilification
and victimization)
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The members of the Remuneration and Nomination Committee are: Mr Leahy (Chairman), Mr Walker, and Mr
Joseph Caruso.
S E C U R I T I E S T R A D I N G P O L I C Y
The remuneration policy which sets out the terms and conditions for the Chief Executive Officer and other senior
executives is set out in the Remuneration Report included in the Directors Report.
T I M E LY A N D B A L A N C E D D I S C L O S U R E
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:
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(cid:116)(cid:1)(cid:1)(cid:1)(cid:1)(cid:49)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:82)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:77)(cid:90)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:253)(cid:80)(cid:88)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:84)(cid:15)
(cid:116)(cid:1)(cid:1)(cid:1)(cid:1)Advising the market of matters requiring disclosure under Australian Stock Exchange Continuous Disclosure Rules.
(cid:116)(cid:1)(cid:1)(cid:1)(cid:1)(cid:46)(cid:66)(cid:74)(cid:79)(cid:85)(cid:66)(cid:74)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:83)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:229)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)(cid:34)(cid:52)(cid:57)(cid:1)(cid:66)(cid:79)(cid:79)(cid:80)(cid:86)(cid:79)(cid:68)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:8)(cid:84)(cid:1)(cid:88)(cid:70)(cid:67)(cid:84)(cid:74)(cid:85)(cid:70)(cid:15)
(cid:116)(cid:1)(cid:1)(cid:1)(cid:1)(cid:52)(cid:86)(cid:67)(cid:78)(cid:74)(cid:85)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:80)(cid:84)(cid:70)(cid:69)(cid:1)(cid:78)(cid:66)(cid:75)(cid:80)(cid:83)(cid:1)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:8)(cid:84)(cid:1)(cid:66)(cid:71)(cid:71)(cid:66)(cid:74)(cid:83)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:1)(cid:87)(cid:80)(cid:85)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:13)(cid:1)(cid:66)(cid:84)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:1)(cid:1)
Corporation Law.
(cid:116)(cid:1)(cid:1)(cid:1)(cid:1)(cid:51)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:8)(cid:84)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:15)(cid:1)
All shareholders that are unable to attend these meetings are encouraged to communicate issues or ask
questions by writing to the Company.
The Company has adopted a formal disclosure policy. 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.
A Securities Trading Policy has been adopted by the Board to set a standard of conduct, which demonstrates
MRC’s commitment to ensuring awareness of the insider trading laws, and that employees and Directors
comply with those laws. The Securities Trading Policy imposes additional share trading restrictions on Directors,
the Company Secretary, executives and employees involved in monthly financial accounting processes
(“specified persons”).
Under the Securities Trading Policy, specified persons are only permitted to buy and sell securities if they do not
possess non–public price sensitive information and trading occurs outside of specified restricted periods. These
periods are the periods commencing on the first day of the month before the end of the half–year or full year
period and ending on the next business day after the announcement of the results for that period. In addition,
before a specified person can deal in MRC’s securities they must obtain clearance from the appropriate officer,
confirming that there is no reason why they cannot trade.
O T H E R I N F O R M A T I O N
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.
78
79
For personal use only
S H A R E H O L D E R I N F O R M A T I O N
M a r k e t a b l e P a r c e l s
Number of shareholders holding less than a marketable parcel of ordinary shares is 391.
V o t i n g R i g h t s
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.
S u b s t a n t i a l s h a r e h o l d e r s
The following shareholders are substantial shareholders of the Company:
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:46)(cid:7)(cid:40)(cid:1)(cid:42)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:46)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)
(cid:26)(cid:15)(cid:18)(cid:19)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:84)(cid:84)(cid:86)(cid:70)(cid:69)(cid:1)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)
(cid:59)(cid:86)(cid:83)(cid:74)(cid:68)(cid:73)(cid:1)(cid:35)(cid:66)(cid:90)(cid:1)(cid:41)(cid:80)(cid:77)(cid:69)(cid:74)(cid:79)(cid:72)(cid:84)(cid:1)(cid:49)(cid:85)(cid:90)(cid:1)(cid:45)(cid:85)(cid:69)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:1)
(cid:18)(cid:26)(cid:15)(cid:23)(cid:19)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:84)(cid:84)(cid:86)(cid:70)(cid:69)(cid:1)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)
(cid:34)(cid:54)(cid:1)(cid:46)(cid:74)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:1)
(cid:1)
(cid:53)(cid:80)(cid:83)(cid:78)(cid:74)(cid:79)(cid:1)(cid:41)(cid:80)(cid:77)(cid:69)(cid:74)(cid:79)(cid:72)(cid:84)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:1)(cid:1)(cid:1)
(cid:1)
(cid:1)
(cid:18)(cid:26)(cid:15)(cid:26)(cid:17)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:84)(cid:84)(cid:86)(cid:70)(cid:69)(cid:1)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)
(cid:18)(cid:18)(cid:15)(cid:17)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:84)(cid:84)(cid:86)(cid:70)(cid:69)(cid:1)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)
R e s t r i c t e d s e c u r i t i e s
There are no restricted securities.
S h a r e b u y b a c k s
There is no current on market share buy back.
T W E N T Y L A R G E S T S H A R E H O L D E R S
Additional information required by the Australian Stock Exchange Ltd Listing Rules and not disclosed elsewhere
in this report. This information is current as at 3 April 2013.
Rank
Name
Number of
Ordinary
Shares
Percentage
of issued
shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
18
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AU MINING LIMITED
ZURICH BAY HOLDINGS PTY LTD
ZURICH BAY HOLDINGS PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
MISS KATHRYN YULE
JP MORGAN NOMINEES AUSTRALIA LIMITED
INTERNATIONAL MINING SERVICES LIMITED
BLASTRITE GULF FZE
MR KEVIN ANTHONY LEO & MRS LETICIA LEO
NATIONAL NOMINEES LIMITED
IEC INVESTMENTS PTY LTD
MR DAVID GEOFFREY VINCENT & MRS GIUSEPPINA ANTONINA VINCENT
INTERNATIONAL MINING SERVICES LTD
MR ROBERT CAMERON GALBRAITH
MS KATHRYN YULE
MR WILLIAM DAVIDSON MEEK
ZURICH BAY HOLDINGS PTY LTD
KINGARTH PTY LTD
MR ASHLLEY WALLISS
MR DONALD BOYD
MR DAVID GEOFFREY VINCENT
82,623,746
64,464,000
40,000,000
20,605,988
12,039,402
11,529,307
10,059,500
5,296,843
4,565,500
3,473,515
2,902,709
2,805,442
2,147,596
1,870,000
1,500,000
1,459,221
1,282,500
1,000,000
1,000,000
1,000,000
1,000,000
900,000
836,000
25.50%
19.90%
12.35%
6.36%
3.72%
3.56%
3.11%
1.64%
1.41%
1.07%
0.90%
0.87%
0.66%
0.58%
0.46%
0.45%
0.40%
0.31%
0.31%
0.31%
0.31%
0.28%
0.26%
TOTAL
274,361,269
84.69%
Range of
holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 –
100,000
100,001 – and
over
Total holders
Number of
shareholders
Number of
shares
136
363
175
353
134
40,619
1,268,790
1,462,012
13,436,875
307,745,047
1,161
323,953,343
80
81
For personal use only 82
83
For personal use only 84
For personal use only