A N N U A L R E P O R T 2 0 1 3
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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,
It is with pleasure that I present the 2013 Annual Report to the shareholders of the Company. Last year I noted
that your Company had commenced an exciting phase in its development, with considerable milestones being
achieved to proceed with the Tormin Mineral Sands Project (Tormin). It is with immense pride that I can now
report that Tormin was developed and commissioned on time and on budget during the 2013 financial year.
Of particular importance to the Board of Mineral Commodities Limited, was the exemplary safety record during
the development of Tormin, recording in excess of 140,000 man hours without a loss time injury. We will work to
ensure this record is maintained during the operation of Tormin.
The finalization of the project itself could not have been achieved without the patience and continued support of
the shareholders of the Company, and the Board sincerely thanks you for your unwavering commitment to stand
by the board in its decision to pursue this project.
As indicated last year 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.
With the commencement of operations at Tormin, this will enable the Company with a means to ensure all
aspects of its projects are optimized to provide for maximum return to shareholders through a prudent and
rewarding capital management policy.
The financial information reported within this annual report reflects that of a developing Company and we look
forward to reporting on our operations in the coming financial year.
On behalf of the Board, I would like to thank our CEO Mr. Andrew Lashbrooke, our Partners in South Africa from
the Xolobeni Community, and all the staff both in Australia and overseas who have worked tirelessly in ensuring
the success of the development of Tormin. We look forward to their continued commitment and drive to ensure
the same operational success.
Mark V. Caruso
Chairman
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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
Dear Shareholders,
We started the year with a great sense of anticipation that, having patiently pursued the Company’s projects for
many years, the efforts would be rewarded and that 2013 would see Mineral Commodities successfully transition
from an exploration phase to a fully fledged mineral sands producer.
I am delighted to report that the ambitious development targets for 2013 were met in all respects and it is with
great pride that I am able to highlight some of what was achieved over the past year.
D e v e l o p m e n t o f t h e To r m i n P r o j e c t
Construction and development of the Tormin Mineral Sands Project (Tormin) commenced in early 2013 and was
completed on time and under budget by the end of the year.
Importantly, commissioning of all mining and processing equipment and infrastructure was also completed
within the same timeframe and by the end of the year the Company had mined and stockpiled in excess of 6
weeks’ processing feedstock at the Tormin Secondary Concentrator Plant (SCP).
X o l o b e n i P r o j e c t
The Company pursued its prospecting right application for the Kwanyana block of the Xolobeni Mineral Sands
Project during the year.
Whilst the project faces a number of challenges, each has been dealt with to the satisfaction of the Department
of Mineral Resources and the Company is pleased that the process has led to increased political, regulator and
community support for the project.
As the Company remains confident that its application will be approved and that a mining right will be awarded
in due course, a number of baseline studies required for the project were initiated in 2013. The first results are
very pleasing, particularly in relation to water supply, and the Company will continue with subsequent phases of
these studies in 2014.
PR I O R I T I E S A N D OU T L O O K F O R 2 0 1 4
As a result, the Board was able to confirm that with effect from January 2014 Mineral Commodities had
completed the development of Tormin and had commenced full production.
The Company is pleased with all that has been achieved in 2013 and, in particular, that the efforts in every aspect
of the value chain will produce significant benefits for the group in future years.
S a f e t y a n d H u m a n R e s o u r c e s
Through the development of Tormin the Company created 65 full time jobs and during commissioning up to 120
employees and contractors were operating on site. In line with the Company’s commitment to the upliftment of
its Empowerment Partners in South Africa and the local community, approximately 50% of these operators had
never previously had employment.
The skills transfer through this process was particularly rewarding, but also presented a safety challenge.
Completing construction and development of Tormin without a lost time injury was consequently a remarkable
achievement.
R e p l e n i s h m e n t f r o m t h e O f f s h o r e A r e a
The Company holds the prospecting rights to the area 1 km seawards of the Tormin tenement. Based on the
belief that the beach resource would be replenished from this zone after mining activity has removed the ore.
By the end of the year 99% of the ore stockpiled at the SCP had been replenished to within 10% of the original
grading.
The immediate objectives for 2014, however, are to ensure initial production plans and financial forecasts for
Tormin are met.
Thereafter the Company will focus its attention on the potential value of the offshore area at Tormin and its ability
to support increased output or an extended Life of Mine.
The interest received in the Ilmenite produced at Tormin is also expected to lead to the conclusion of an offtake
for this product in early 2014.
The Xolobeni Project clearly has the capacity to be a world-class Ilmenite asset. The Company therefore expects
to use Tormin to support its case that it can successfully develop, manage and rehabilitate mineral sands projects
in South Africa and demonstrate its ability to responsibly and sustainably develop the Xolobeni Project to the
benefit of all Stakeholders.
I am privileged to have been part of the incredible transformation of Mineral Commodities over the past
12 months. I am particularly grateful to the Board, project team, management and fellow employees of the
Company for their dedication and enthusiasm that has made the transformation possible and rewarding.
These results have exceeded initial expectations and the Company will proceed with its testing programme in
2014 of the potential for the offshore area to significantly extend the Tormin Life of Mine.
We are all also constantly mindful of the trust you have placed in us and remain committed to developing the
Company in your best interests.
S a l e s a n d M a r k e t i n g
During the year the Company concluded an offtake agreement with Wogen Pacific Limited (“Wogen”) for 100% of
the non-magnetic concentrate to be produced at Tormin. The agreement also provided Mineral Commodities with
significant working capital benefits and a pre-finance arrangement of $2 million.
This agreement with Wogen not only provides the economic underpinning for Tormin but also confirms the
market support for the products it will produce.
During the year an arrangement was also concluded with Transnet, South Africa’s rail operator, for a dedicated
rail service to be made available for Tormin product. This will provide a safer alternative to road transport and
significantly reduce the cost of logistics to the port.
Andrew Lashbrooke
Chief Executive Officer
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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 2013.
P E T E R T O R R E
Non Executive Director and Company Secretary
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 and Company Secretary
Independent Non-Executive Director
Independent Non-Executive Director
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 Mission New Energy Limited. In the previous three years he was
previously a Director of Neo Resources Limited, resigning in September 2013.
D I R E C T O R S ’ I N F O R M A T I O N
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. Mr Caruso is also a Director of Perpetual Resources
Limited being appointed in September 2013.
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 28
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 Bacanora Minerals Ltd and Forte Energy NL. He was previously a director
of Continental Coal Ltd, Alberta Coal and OPI.
J O S E P H A N T H O N Y C A R U S O
Non-Executive Director
G U Y R E D V E R S W A L K E R
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 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 listed mining companies including exploration, development and
production companies. Mr. Walker has extensive experience in capital raising through
both traditional banks and alternative lenders. Mr Walker is currently a director of
Navigator Resources Limited, Bacanora Minerals Ltd and Metals Exploration plc.
He was previously a director of ENK plc.
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D I R E C T O R S R E P O R T
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 development of the Tormin
Mineral Sands Project in the Western Cape Province of South Africa and the evaluation of 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 $1,622,215 (2012: $1,191,061).
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
T O R M I N MI N E R A L S A N D S PR O J E C T
L to R: Andrew Lashbrooke (CEO), Mark Caruso (Executive Chairman), Madiba Qunya (Blue Bantry), Ms Susan Shabangu,
MP (Minister of Mineral Resources), Mr Gugile Nkwinti (Minister of Rural Development and Land Reform)
The Company commenced and concluded the development of the Tormin Mineral Sands Project on time and on
budget during the year.
Commissioning of the Primary Beach Concentrators (“PBCs”) commenced in October 2013, followed shortly
thereafter by the commencement of mining operations. By mid-December 2013, the Company had mined and
stockpiled in excess of 60,000 tonnes of HMC at the Secondary Concentrator Plant (“SCP”).
Fabrication and construction of the SCP infrastructure, plant and plate-work was completed during the last quarter
of the year. The water supply to the SCP, process water dams, steel structure and mechanical equipment were also
installed and tested.
Initial cold commissioning was undertaken in the first week of December, 2013 and hot commissioning commenced
on the 11th December, 2013 and by the end of the year, the Company had achieved nameplate output at very close to
design specification.
The seasonal ocean and tidal conditions between the months of August and October served to act as a natural
catalyst to upgrading the beach resource. The extremely high grade of ROM encountered on the beach allowed the
Company to feed ROM ore directly into the SCP bypassing the PBCs.
Based on the success of associating the PBC spirals with the SCP, the Company has decided to permanently relocate
and operate the PBCs at the SCP and not on the beach. This will result in significant de-risking of the PBC operation
and require only one PBC unit to be operated in the future as it will not be affected by daily tidal movements and
ocean conditions.
T O R M I N S A L E S A N D MA R K E T I N G
As separately announced, the Company and its subsidiary, Mineral Sands Resources Proprietary Limited (MSR),
which owns Tormin, concluded an offtake agreement with Wogen Pacific Limited for 100% of the non-magnetic
concentrate (Concentrate) to be produced at Tormin.
Pursuant to the agreement, Wogen will pay MSR for the Concentrate at an FOB level. Thereafter, Wogen will fund
the shipping and processing of the Concentrate until such time as it is sold into the local Chinese market in finished
product form, with sale proceeds net of commission, shipping and processing costs being paid over to MRC.
L to R: Andrew Lashbrooke (CEO), Mark Caruso (Executive Chairman), Guy Walker (Non-Executive Director), James Leahy
(Non-Executive Director), Madiba Qunya (Blue Bantry), Zwelenzima Mingingi (MSR)
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D I R E C T O R S R E P O R T
The established geology of the region confirms that the source of the Tormin beach deposit is a Heavy Mineral-
rich offshore zone and that the dynamic coastline serves to replenish the beaches by transporting sediment from
deeper waters.
Formal studies, including drilling and sampling, will take place during the first half of 2014 with a view to
identifying and quantifying the extent of beach replenishment and the extent of the offshore resource.
In the interim beach mining operations have confirmed the previous informal tests conducted by the Company.
Ore removed by the beach operations has been replenished by the sea in one tidal cycle. Within 3 days thereafter
natural jigging by the beach returns the deposit to within 10% of the initial resource grading. Certain areas of the
beach have already been mined 4 times in an effort to test the extent of replenishment and to date no reduction
in overall resource grading has been experienced.
The Company is therefore optimistic that replenishment of the beach will increase the expected life of Tormin.
The testing planned for the first quarter as well as the empirical results from beach mining over this period will
provide significant inputs into this assessment.
D I R E C T O R ’ S R E P O R T ( C O N T I N U E D )
Wogen also provided MRC with US$2 million under a pre-finance arrangement associated with the offtake
arrangement. MRC was able to draw down against the arrangement up to 31 December 2013 and, while interest
will accrue from the time it is drawn, capital and interest will only become payable when Tormin comes into
commercial production.
The Tormin mine plan and engineering processing design provides for primary beach concentration of 1.2 Mtpa
producing approximately 48,000 tonnes of Zircon/Rutile Concentrate grading up to 80% Zircon and 10% Rutile.
Phase Two of the Tormin Project Development provides for further processing through construction of a dry
mineral separation plant (MSP) to produce various magnetic concentrates, including up to 125,000 tonne per
annum Ilmenite and 100,000 tonne per annum of Garnet.
The Company has also received a number of proposals for the Ilmenite to be produced from Tormin. MRC is in
advanced negotiations with these parties and therefore hopes to be in a position to finalise an offtake for 100%
of the Ilmenite in the first half of 2014. The Ilmenite concentrate is currently being stockpiled until an offtake
agreement is finalised and the additional plant required to produce this product is acquired and installed.
Delivery of the Garnet concentrate to Blastrite will commence in the first half of 2014 under the terms of that
offtake agreement.
L O G I S T I C S
The supply chain team has made significant progress with the SA rail operator, Transnet, and a dedicated rail
service has been agreed. This will improve the economics and logistics flow of the product to port.
The first Zircon/Rutile Concentrate Product to Wogen Pacific was shipped on 25 January 2014 and will continue
on a weekly basis into the future.
S A F E T Y & HU M A N RE S O U R C E S
MRC commenced operations with an exemplary safety record at Tormin and was pleased to announce during the
year that by the commencement of the commissioning of the Secondary Concentration Plant (“SCP”), MRC had
achieved in excess of 140,000 man hours on site without a Lost Time Injury.
This record is even more impressive given the tight schedule, the number of separate contractors on site towards
the end of the Project and that the vast majority of workers on site were drawn from the local community, who
were relatively inexperienced and were working shifts as the site operated 24 hours per day.
T O R M I N - OF F S H O R E PR O S P E C T I N G A C T I V I T I E S
MRC has previously reported that a prospecting right for the offshore area immediately adjacent to Tormin was
awarded towards the end of 2012. The offshore prospecting area covers an area of 12 sqkm and extends 1km out
to sea from the low water mark and covers the full length of the existing 12km Tormin tenement.
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D I R E C T O R S R E P O R T
X O L O B E N I M I N E R A L S A N D S P R O J E C T ( S O U T H A F R I C A )
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 subsequently registered by the DMR in the third quarter of 2012.
MRC has 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. The Company
subsequently withdrew all previous applications in respect of the Kwanyana block and immediately applied for a
new prospecting right 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.
The DMR accepted the new prospecting right application (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 instructed the Company to undertake additional
consultation. A comprehensive consultation process, designed to identify and engage with all potential
interested and affected parties was implemented during the latter part of the year. In addition, in keeping with
local traditions, a series of pre-meetings were held with the traditional leaders in the Xolobeni area to update
them on developments with the project, brief them on the planned consultation process and gain their approval
for the process.
X O L O B E N I PU B L I C P A R T I C I P A T I O N SU C C E S S F U L LY CO M P L E T E D
Having obtained the traditional leadership’s approval of the planned process and updated the DMR in the first
quarter, the public consultation process took place in March and April 2013. Subsequently, feedback from all the
meetings has been collated into a comprehensive issues and response trial which has been incorporated into a
stakeholder engagement report (SER). The SER was completed in the last quarter and submitted to all relevant
parties at the DMR for evaluation.
In late December 2013, the Company was advised that the DMR will meet to consider the SEP and other matters
relating to the Kwanyana PRA on 22 January 2014.
The Company attended the meeting after the year end on 22 January 2014 as planned. The representations made
by the Company were well received and all objections appropriately addressed. The Company therefore remains
optimistic that the DMR will award a new prospecting right over the Kwanyana block during the first half of
2014 and enable the Company to do the final work necessary to submit a mining right application for the entire
Xolobeni tenement as soon thereafter as possible.
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X O L O B E N I BA S E L I N E S T U D I E S
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
D I R E C T O R S R E P O R T
The following significant changes in the state of affairs of the Consolidated Entity occurred during the year:
C O R P O R A T E
In January 2013, the Company successfully completed all three tranches of the $14.5 million capital raising to
institutional and sophisticated investors and related parties.
Existing directors of the Company subscribed for up to A$3.4 million in shares in the Company on the same
terms as those issued under the original placement. The final issue of approximately 9.9 million shares pursuant
to the private placement took place on 23 January 2013.
On 4 September 2013 Mineral Commodities Limited announced that it intended to undertake a 1 for 4 non-
renounceable entitlement issue of approximately 80,988,228 fully paid ordinary shares to raise approximately
$6,479,066. The price of New Shares under the Offer was $0.08 each. The Offer was fully underwritten by
Zurich Bay Holdings Pty Ltd and Au Mining Limited. The Prospectus for the Offer was lodged with ASIC on
4 September 2013.
Following completion of the Offer, the Company has the following securities on issue:
•
•
•
404,941,571 fully paid ordinary shares listed on the ASX
10,000,000 Unlisted Options exercisable at $0.20 on or before 31 December 2015
1,000,000 Unlisted Options exercisable at $0.35 on or before 31 December 2015
In the interim, work has commenced on preparation for the various baseline studies that are required as part of
the prospecting works programme and in preparation for and application for a mining right for Xolobeni.
By the end of the quarter MRC had appointed a specialist to commence a water study on the Xolobeni area.
The Company expects this work to be completed in the first half of 2014.
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 $20,962,421 at 31 December 2012 to $28,582,858 at 31
December 2013.
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 Group will continue the process of development and operation 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.
In the course of its normal mining and exploration activities, the Group 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.
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:
Country
Location
Number
Type of Right
Status
Interest
South Africa
Tormin
(WC)30/5/1/2/2/163MR
Mining
Approved
100%
South Africa
South Africa
Tormin
Tormin
(WC)30/5/1/2/2/162MR
Mining
Approved
100%
(WC)30/5/1/1/2/10036PR
Prospecting
Approved
100%
South Africa
Xolobeni
EC30/5/1/1/2/6PR
Prospecting
Approved
100%
South Africa
Kwanyana
EC30/5/1/1/2/10025PR
Prospecting
Under
Application
100%
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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
No further options were issued in the period covered by this report.
New issues of options and options exercised in the period are as follows:
Options
Opening Balance 1
January 2013
No of Options
Exercise Price Expiry Date
10,000,000
$0.20 31 December 2015
1,000,000
$0.35 31 December 2015
Balance at 31 December
2013
10,000,000
$0.20 31 December 2015
1,000,000
$0.35 31 December 2015
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
2013
Options
Balance at
1 Jan 2013
Received as
Remuneration
Options
Exercised
Options
Lapsed
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
Net
change
other
Balance at
31 Dec 2013
-
-
-
-
-
-
-
-
-
-
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:
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:
Name
2013
Ordinary Shares
Balance at 1
January 2013
Received as
Remuneration
Options
Exercised
Net change
other
Balance
31 March 2014
Mark Caruso - Indirect
- Direct
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
21,569,988
12,627
21,569,988
500,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
56,784,026
78,354,014
3,157
15,784
55,437,497
77,007,485
125,000
25,000
-
625,000
125,000
-
J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd,
which holds 77,007,485 shares in the Company.
Number of meetings held
A being total of meetings eligible to attend
B being total of meetings actually attended
Mr Joseph Anthony Caruso
Mr Mark Victor Caruso
Mr Peter Patrick Torre
Mr Guy Walker
Mr James Leahy
Directors’ Meetings Audit Committee
Meeting
Remuneration
Committee
Meeting
A
7
7
7
7
7
B
4
7
7
7
7
A
-
-
4
4
4
B
-
-
4
4
4
A
2
-
2
2
2
B
1
-
2
2
2
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.
20
21
For personal use only 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:
During the year the board appointed a separate remuneration and nomination committee.
R E M U N E R A T I O N R E P O R T
Loss for the year
Closing Share price
2013
1,622,215
18.5 cents
2012
1,191,061
9.9 cents
2011
2,135,788
7.5 cents
2010
1,625,021
8.1 cents
2009
642,991
4.5 cents
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 3 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 99% 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.
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.
There were no non-cash benefits provided to Key Management Personnel during the year.
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.
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
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
believes 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 D I R E C T O R S R E P O R T
( C O N T I N U E D )
The following fees are applicable to directors and key Management Personnel of the Company.
Cash
benefits
Post
employment
benefits
Share-based
payments
Totals
Percentage
performance
based
Share based
payments as a
percentage of
remuneration
$
$
Executive Chairman
Mark Caruso
Non Executive Directors
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Total Director
remuneration
Other Key Management
Personnel CEO
Andrew Lashbrooke
Total Key management
personnel compensation
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
279,095
140,333
54,489
45,107
150,000
83,083
68,264
1,521
68,264
1,521
620,112
271,565
300,000
50,000
920,112
321,565
20,905
10,044
4,973
4,060
-
-
-
137
-
137
25,878
14,378
-
-
25,878
14,378
$
-
$
300,000
33,500
183,877
-
33,500
59,462
82,667
-
150,000
33,500
116,583
-
33,500
-
33,500
-
167,500
68,264
35,158
68,264
35,158
645,990
453,443
-
300,000
189,830
239,830
-
357,330
945,990
693,273
%
-
18.21
-
40.52
-
28.73
-
95.28
-
95.28
-
36.94
-
79.15
-
51.54
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Base Fees
From 1 December 2013
Up to 30 November 2013
Non-Executive Directors
$55,000
$55,000
Additional Fees
From 9 February 2014
Up to 9 February 2013
Audit Committee Chair
Audit Committee Member
Remuneration and Nomination
Committee Chair
Remuneration and Nomination
Committee Member
$10,000
$5,000
$10,000
$5,000
$10,000
$5,000
$10,000
$5,000
C. S E R V I C E A G R E E M E N T S
The following service agreements are in effect at 31 December 2013.
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
$300,000 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 per annum
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
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
In 2012 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.
The Auditor’s Independence Declaration as required by Section 307C of the Corporations Act 2001 is set out on
page 75 and forms part of this report.
N O N - A U D I T S E R V I C E S
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.
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.
All options issued vested immediately upon issue.
There were no non–audit services provided by BDO Audit (WA) Pty Ltd in the year.
D I R E C T O R S R E P O R T
( C O N T I N U E D )
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:
2013
2012
$
$
Audit and review of financial reports
BDO Audit (WA) Pty Ltd
BDO Cape Town South Africa
60,000
64,122
19,261
11,726
Total remuneration for audit services
79,261
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
31 March 2014
No Options issued as remuneration were exercised or lapsed during the period.
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.
EN D O F T H E A U D I T E D RE M U N E R A T I O N RE P O R T
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.
E V E N T S S U B S E Q U E N T T O B A L A N C E D A T E
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 28 of this financial
report, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the re-
sults 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.
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
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.
I N S U R A N C E O F O F F I C E R S
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 $35,018 representing $7,004 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.
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 PR O F I T O R L O S S A N D O T H E R CO M P R E H E N S I V E
IN C O M E
For the year ended 31 December 2013
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 2013
Note
Consolidated
Consolidated
31 Dec 2013
$
31 Dec 2012
$
Note
Consolidated
Consolidated
31 Dec 2013
31 Dec 2012
$
$
2
7
4
Revenue
Other operating income
Administration expenses
Employees and consultants
remuneration
Exploration and evaluation costs
Depreciation and amortisation
Loss on disposal of assets
Share based payments
Abandoned acquisition costs
Loss from Operations
Finance expense
Finance income
Impairment of available for sale
investment
Loss before tax
Tax expense
(Loss) after income tax
Other comprehensive income
Items that will or maybe reclassified
to profit or loss
Changes in the fair value of available-
for-sale financial assets
Exchange differences on translation
of foreign operations
Other comprehensive loss for the
year net of tax
Total comprehensive loss for the year
Loss is attributable to:
Owners of Mineral Commodities
Limited
Non-controlling interest
Total comprehensive loss for the year
is attributable to
Owners of Mineral Commodities
Limited
Non-controlling interest
3,000
3,000
(1,063,618)
(201,644)
(98,412)
(156,659)
-
-
-
(1,520,333)
(1,517,333)
(171,233)
229,464
(163,113)
(1,622,215)
-
(1,622,215)
(262,500)
(880,168)
476,769
476,769
(668,978)
(204,934)
-
(28,428)
(152)
(357,330)
(123,243)
(1,383,065)
(906,296)
(99,937)
42,282
(227,110)
(1,191,061)
-
(1,191,061)
(1,588,095)
(738,688)
(1,142,668)
(2,326,783)
(2,764,883)
(3,517,844)
(1,622,215)
(1,191,061)
-
(1,622,215)
-
(1,191,061)
(2,764,883)
(3,517,844)
-
(2,764,883)
-
(3,517,844)
C U R R E N T A S S E T S
Cash and cash equivalents
Trade and other receivables
Inventories
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 expenditure
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
Short term borrowings
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
8
9
11
12
10
9
13
14
14
16
16
17
18
15
1,694,264
1,315,004
869,068
106,500
11,594
7,769,202
148,087
-
532,113
10,925
3,996,430
8,460,327
829,979
5,665,045
12,397,535
15,322,494
34,215,053
38,211,483
2,840,687
6,787,938
-
9.628.625
9.628.625
28,582,858
61,297,477
(2,594,042)
(30,299,426)
28,404,009
178,849
28,582,858
427,272
68,689
12,996,362
-
13,492,323
21,952,650
966,802
-
23,427
990,229
990,229
20,962,421
50,912,158
(1,451,375)
(28,677,211)
20,783,572
178,849
20,962,421
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes.
Loss per share attributable to the ordinary equity holders of the parent.
Basic Loss per share
From continuing operations attributable to the ordinary
shareholders of the company (cents per share)
Cents
Cents
(0.64)
(0.68)
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with
the other accomanying 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 2013
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
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
Balance at 1 January 2013
50,912,158
(1,451,375)
(28,677,212) 20,783,572
178,849
20,962,421
Consolidated
Consolidated
Consolidated Entity
Contributed
Equity
Reserves
Accumulated
Losses
Totals
Non-controlling
interest
Total Equity
31 Dec 2013
31 Dec 2012
$
$
For the year ended 31 December 2013
$
$
$
$
$
$
Interest received
Payments to suppliers & employees
Discontinued acquisition
Interest paid
Sundry income
229,464
(1,564,361)
-
(171,233)
-
42,282
(744,254)
(1,427,776)
(99,937)
-
Net cash outflows from operating activities
(1,506,130)
(2,229,685)
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
Payments for Mining plant and equipment
Mine Development expenditure
Purchase of general fixed assets
Investment in listed shares
Proceeds from sale of plant and equipment
Loan to associated company
Proceeds from sales of investments
Net cash inflow from investing activities
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)
Short term Borrowings
Loan repaid
Net cash inflow from financing activities
Net (decrease)/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
(165,220)
(5,750,995)
(15,407,392)
(2,020)
-
-
(423,219)
-
(21,748,846)
10,385,319
6,787,938
-
17,173,257
(6,081,719)
7,769,202
6,782
1,694,264
(914,089)
-
-
(79,687)
(350,000)
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
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
-
-
-
-
(1,622,215)
(1,622,215)
(1,142,668)
-
(1,142,668)
(1,142,668)
(1,622,215)
(2,764,883)
10,385,319
-
-
10,385,319
-
-
-
-
(1,622,215)
(1,142,668)
(2,764,883)
10,385,319
Balance at the end of the year
61,297,477
(2,594,042)
(30,299,426) 28,404,009
178,849
28,582,858
Consolidated Entity
Contributed
Equity
Reserves
Accumulat-
ed Losses
Totals
Non-controlling
interest
Total Equity
For the year ended 31 December 2012
$
$
$
$
$
$
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
-
357,330
(286,578)
(286,578)
-
-
9,707,808
357,330
-
-
-
-
-
-
(1,191,061)
2,326,783)
(3,517,844)
9,707,808
357,330
-
The above Consolidated Statement of Cash flows should be read in conjunction with the accompanying notes.
Balance at the end of the year
50,912,158 (1,451,375)
(28,677,212) 20,783,572
178,849
20,962,421
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
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 2013 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).
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.
The accounting policies adopted are consistent with those of the previous financial year unless otherwise stated.
The following standards for first time use annual reporting periods beginning on or after 1 January 2013 have
been reviewed and applied by the Group in the year ended 31 December 2013:
•
•
•
AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of
Interests in Other Entities and AASB 127 Separate Financial Statements
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB13
AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting
Standards arising from AASB 119 (September 2011)
It has been determined by the Group that there is no impact, material or otherwise, of the above standards on its
business and, therefore, no change is necessary to the Group accounting policies.
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.
( 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 2013 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.
Subsidiaries are those entities over which the company has control. The Group controls an entity when the Group
is exposed to or has rights to variable returns from its involvement with the entity and has the ability to direct the
activities of the entity.
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 (j).
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
recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
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.
( D )
T A X E S
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.
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.
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 (2012: 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.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
in the Statements of Financial Position.
Cash flows are included in the Statements of Cash Flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority,
are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
32
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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
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 )
(G)
EX P L O R A T I O N A N D DE V E L O P M E N T EX P E N D I T U R E
( 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
(i)
E x p l o r a t i o n a n d E v a l u a t i o n E x p e n d i t u r e
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-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values
were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit for the year except
where deferred in equity as a qualifying net investment hedge.
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
consolidated entities presentation currency are translated into the presentation currency as follows;
Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.
Income and expenses are translated at average exchange rates for the period.
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
disposed of, the relevant amount in the foreign currency translation reserve is transferred to profit or loss as part
of the profit or loss on disposal.
(F)
PR O P E R T Y , PL A N T A N D EQ U I P M E N T
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment losses.
Items of plant and equipment are initially recorded at cost and includes any expenditure that is directly
attributable to acquisition of the items. Subsequent costs are included in the assets carrying amount or
recognised as a separate asset as appropriate. All other repairs and maintenance are charged to the profit
for the year in which they are incurred.
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.
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for
each area of interest. Such expenditure comprises direct costs and does not include general overheads or
administrative expenditure not having a specific nexus with a particular area of interest.
Exploration expenditure for each area of interest is carried forward as an asset provided the rights to tenure of
the area of interest are current and one of the following conditions is met:
•
•
The exploration and evaluation expenditures are expected to be recouped through successful
development and exploitation of the area of interest, or alternatively, by its sale; or
Exploration and evaluation activities in the area of interest have not, at the reporting date, reached
a stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or in relation to, the area of interests are
continuing.
Exploration expenditure is written off when it fails to meet at least one of the conditions outlined above or an
area of interest is abandoned.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and
circumstances suggest that the carrying amount exceeds the recoverable amount the impairment loss will be
measured and disclosed in accordance with AASB 136 Impairment of Assets.
When a decision is made to develop an area of interest, all carried forward exploration expenditure in relation to
the area of interest is transferred to Mine Properties and Development.
(ii)
M i n e P r o p e r t i e s a n d D e v e l o p m e n t
Development expenditure represents the accumulated exploration, evaluation, land and development
expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of a mineral
resource has commenced.
When further development expenditure is incurred in respect of a mine property after commencement of
production, such expenditure is carried forward as part of the mine property only when substantial future
economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of
production.
In some circumstances, where conversion of resources into reserves is expected, some resources may be
included. Development and land expenditure still to be incurred in relation to the current reserves are included in
the amortisation calculation. Where the life of the assets are shorter than the mine life their costs are amortised
based on the useful life of the assets.
The estimated recoverable reserves and life of the mine and the remaining useful life of each class of asset
is reassessed at least annually. Where there is a change in the reserves/resources amortisation rates are
correspondingly adjusted.
S t r i p p i n g C o s t s i n t h e P r o d u c t i o n P h a s e o f a S u r f a c e M i n e
Production stripping costs (also known as deferred mining costs) are to be capitalised as part of an asset if:
•
•
•
There is a probable future economic benefits will be realised;
The costs can be reliably measured; and
The component of an ore body for which access has been improved can be identified.
The stripping activity asset shall be amortised on a systematic basis, over the expected useful life of the
identified component of the ore body that becomes more accessible as a result of the stripping activity.
34
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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 )
(H)
IN V E N T O R I E S
Raw materials and stores, ore stockpiles and work in progress and finished gold stocks are physically measured
or estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell
is assessed annually based on the amount estimated to be obtained from sale of the item of inventory in the
normal course of business, less any anticipated costs to be incurred prior to its sale.
Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead
expenditure and depreciation and amortisation relating to mining activities, the latter being allocated on the
basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted
average costs. Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale.
Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of
weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, or
net realisable value. Any provision for obsolescence is determined by reference to specific stock items identified.
During the exploration and development phase, where the cost of extracting the ore exceeds the likely
recoverable amount, work in progress inventory is written down to net realisable value.
(I)
IN V E S T M E N T S
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.
Dividends 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
investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.
The Consolidated entity’s share of its associates post acquisition profits or losses 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.
(J)
IM P A I R M E N T O F A S S E T S
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
recoverable amount of the cash-generating unit to which the asset belongs.
(K)
FI N A N C I A L IN S T R U M E N T S
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or been transferred and the Group has transferred substantially all the risks and rewards of ownership.
(L)
FI N A N C I A L IN S T R U M E N T S (C O N T I N U E D)
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.
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.
(M)
CO N T R I B U T E D EQ U I T Y
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.
(N)
CA S H A N D CA S H EQ U I V A L E N T S
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.
(O)
TR A D E A N D O T H E R R E C E I V A B L E S
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.
The Consolidated entity classifies its financial instruments on initial recognition. The classification depends on
the purpose for which the financial instrument was acquired.
(P)
EA R N I N G S / ( L O S S) P E R SH A R E
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
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.
36
37
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 )
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.
(Q)
EM P L O Y E E BE N E F I T S
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. There were no Share Based payment in 2013
(2012 $357,330).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.
(R)
LE A S E S
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor,
are recognised on a straight line basis.
(S)
SE G M E N T R E P O R T I N G
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.
(T)
PR O V I S I O N S
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.
(U)
NO N-C U R R E N T A S S E T S (O R D I S P O S A L G R O U P S) H E L D F O R S A L E
D I S C O N T I N U E D O P E R A T I O N S
A N D
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.
(V)
TR A D E A N D O T H E R P AYA B L E S
Trade and other payables are recognised originally at fair value and subsequently measured at amortised cost
using the effective interest rate method. Trade and other payables represent liabilities for goods and services pro-
vided to the Group prior to the end of each reporting period that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of goods and services. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months from the reporting date.
(W)
IN T E R E S T BE A R I N G L O A N S A N D BO R R O W I N G S
All loans and borrowings are initially recognised at cost, being fair value of the consideration received net of is-
sue costs associated with the borrowing.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost
using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs, and
any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as
through the amortisation process.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting periods.
(X)
CR 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 A N D J U D G E M E N T S
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.
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 dependent 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 $7,770,410 (2012:$
7,924,368) refer note 13 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 and Petro Ventures International Ltd have been fully impaired at
31 December 2013, (carrying value at 31 December 2012 was $163,113.)
38
39
For personal use only
Application date
for Group
1 January 2015
1 January 2017
(V)
A c c o u n t i n g S t a n d a r d s n o t y e t e f f e c t i v e
Reference
Title
Nature of Change
Application date
of standard
Impact on Consolidated
financial statements
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 )
R e s e r v e s a n d R e s o u r c e s
In order to calculate ore reserves and mineral resources, estimates and assumptions are required about a
range of geological, technical and economic factors, including quantities, grades, production techniques,
recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.
The consolidated entity estimates its ore reserves and mineral resources based on information compiled by
Competent Persons (as defined in accordance with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves as revised in December 2004 (the JORC code).
As economic assumptions used to estimate reserves change and as additional geological data is generated
during the course of operations, estimates of reserves and mineral resources may vary from period to period.
Changes in reported reserves and mineral resources may affect the Group’s financial results and financial posi-
tion in a number of ways, including the following:
Asset carrying values may be affected due to changes in estimated future cash flows;
Depreciation and amortisation charges in profit and loss may change where such charges are determined by the
units of production basis, or where the useful economic lives of assets change; and
Restoration and rehabilitation provision may be affected due to changes in the magnitude of future restoration
and rehabilitation expenditure.
AASB 9
(issued December
2009 and amended
December 2010)
Financial
Instruments
AASB 2013-9
(issued December
2013)
Amendments
to Australian
Accounting
Standards –
Conceptual
Framework,
Materiality
and Financial
Instruments
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.
Annual reporting
periods beginning
on or after 1 January
2017
The Group currently
applies hedge accounting.
It is expected that the
application of the new
amendments will not have
an impact on the entity’s
financial statements.
OR
The Group enters into
derivatives to manage
[foreign currency/interest
rate/commodity price risk]
but it currently does not
apply hedge accounting.
These derivative
instruments are currently
recognised as fair value
changes in profit or loss.
Under the amendment, the
entity is likely to qualify and
will elect to apply cash flow
hedge accounting. When
this amendment applies,
the fair value changes
relating to the effective
portion of the derivatives
will be recognised in other
comprehensive income
and reclassified to profit
or loss when the hedged
forecast cash flow affects
profit or loss, or if the
transaction results in the
recognition of a non-
financial asset or liability,
the gain or loss recognised
in other comprehensive
income is included in the
initial carrying amount of
the non-financial asset or
liability. These changes
apply prospectively so
comparatives do not need
to be restated.
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.
Makes three amendments
to AASB 9:
• Adding the new hedge
accounting requirements
into AASB 9
• Deferring the effective
date of AASB 9 from 1
January 2015 to 1 January
2017, and
• Making available
for early adoption the
presentation of changes
in ‘own credit’ in other
comprehensive income
(OCI) for financial liabilities
under the fair value
option without early
applying the other AASB 9
requirements.
Under the new hedge
accounting requirements:
• The 80-125% highly
effective threshold has
been removed
• Risk components of non-
financial items can qualify
for hedge accounting
provided that the risk
component is separately
identifiable and reliably
measurable
• An aggregated position
(i.e. combination of a
derivative and a non-
derivative) can qualify for
hedge accounting provided
that it is managed as one
risk exposure
• When entities designate
the intrinsic value of
options, the initial time
value is deferred in OCI
and subsequent changes in
time value are recognised
in OCI
• When entities designate
only the spot element
of a forward contract,
the forward points can
be deferred in OCI and
subsequent changes
in forward points are
recognised in OCI.
40
41
For personal use only Reference
Title
Nature of Change
Application date
of standard
Impact on Consolidated
financial statements
Application date
for Group
AASB 2013-4
(issued July 2013)
Initial foreign currency basis
spread can also be deferred
in OCI with subsequent
changes be recognised in
OCI
• Net foreign exchange cash
flow positions can qualify for
hedge accounting.
FAmendments
to Australian
Accounting
Standards –
Novation of
Derivatives
and Continua-
tion of Hedge
Accounting
(AASB 139)
Clarifies treatment
of novated hedging
instruments and
continuation of hedge
accounting where entities
are required to replace
the original party with a
central counterparty as
a consequence of laws
or regulations or the
introduction of laws and
regulation.
AASB 2013-5
(issued August
2013)
Amendments
to Australian
Accounting
Standards
-Investment
Entities
AASB 2012-6
(issued September
2012)
Amendments
to Australian
Accounting
Standards -
Mandatory
Effective Date
of AASB 9
and Transition
Disclosures
The amendment defines
an ‘investment entity’ and
requires a parent that is an
investment entity to measure
its investments in particular
subsidiaries at fair value
through profit or loss in its
consolidated and separate
financial statements.
The amendment prescribes
three criteria that must be
met in order for an entity to
be defined as an investment
entity, as well as four ‘typical
characteristics’ to consider in
assessing the criteria.
The amendment also
introduces disclosure
requirements for investment
entities into AASB 12
Disclosure of Interests in
Other Entities and amends
AASB 127 Separate Financial
Statements.
Defers the effective date
of AASB 9 to 1 January
2015. Entities are no
longer required to restate
comparatives on first time
adoption. Instead, additional
disclosures on the effects of
transition are required.
Annual reporting
periods beginning
on or after 1 January
2014
Annual reporting
periods beginning
on or after 1 January
2014
There will be no impact
on first-time adoption of
this amendment as the
Group 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 Standards
Board in their agenda
decision of December 2012.
As the Group does not
meet the definition of an
investment entity, it will
continue to consolidate its
investments in subsidiaries
in accordance with AASB
10 Consolidated Financial
Statements.
1 January 2014
1 January 2015
Annual reporting
periods beginning
on or after 1 January
2015
As comparatives are no
longer required to be
restated, there will be no
impact on amounts recog-
nised in the financial state-
ments. However, additional
disclosures will be required
on transition, including the
quantitative effects of re-
classifying financial assets
on transition
1 January 2014
2 .
I N C O M E
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 )
Other Operating Income
Profit from sales of investments in available
for sale financial assets
Miscellaneous and other income
Total Other Income
Consolidated
Consolidated
31 Dec 2013
31 Dec 2012
$
-
3,000
3,000
$
464,769
12,000
476,769
3 .
E X P E N S E S B Y N A T U R E
Loss before income tax has been arrived at
after charging the following:
Abandoned acquisition costs
Exploration expenditure written off
Operating lease rentals
Depreciation - plant and equipment
Superannuation contributions
Movement in provision for employee
entitlements
Consolidated
Consolidated
31 Dec 2013
31 Dec 2012
$
-
98,412
76,444
156,659
18,927
-
$
123,243
-
49,238
28,428
50,322
2,250
Impairment of available for sale
163,113
227,110
No other standards, interpretations or amendments which have been issued are expected to have an impact on the group.
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5 .
S E G M E N T I N F O R M A T I O N
4 .
I N C O M E T A X
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:
Consolidated
Consolidated
31 Dec 2013
31 Dec 2012
$
-
-
$
-
-
(Loss) / Profit before income tax
(1,622,215)
(1,191,061)
Prima facie tax payable / (benefit) on loss
@ 30% (2012:30%)
Non allowable items
Non-assessable income
Net deferred tax assets not brought to account
Income tax expense / (benefit)
(486,665)
-
(466,240)
952,905
-
(357,318)
108,591
(790,806)
1,039,533
-
Future income tax benefit arising from
un-recouped deductions at reporting date
for Australian tax resident entities.
Revenue losses
Capital losses
4,986,157
4,689,637
4,612,124
4,689,637
In addition the economic entity has unconfirmed tax losses and accumulated exploration expenditure that
gives rise to potential carry forward tax benefits in South Africa amounting to approximately Rand 163 million
(approximately A$17.5 million (2012:15 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.
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
assets 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.
2013
Africa
Australia
Tormin
Xolobeni
Investing
Corporate
Totals
Development
Exploration
Exploration
Total Revenue from
operations
Other income
Total revenue from
external sources
Group’s revenue per
consolidated statement
of profit or loss and other
comprehensive income
$
-
-
$
-
-
$
-
-
$
-
$
$
3,000
3,000
3,000
3,000
-
3,000
3,000
Depreciation
Segment loss
(130,976)
(184,463)
(870)
(5,672)
(24,813)
(156,659)
(1,327,198)
(1,517,333)
Impairment of available
for sale asset
Finance expense
Finance income
(163,113)
(171,233)
229,464
(1,622,215)
44
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2012
Africa
Australia
2012
Africa
Australia
Tormin
Xolobeni
Investing
Corporate
Totals
Tormin
Xolobeni
Investing
Corporate
Totals
Development
Exploration
Exploration
Development
Exploration
Revenue from operations
Other income
Total revenue from
external sources
Depreciation
$
-
$
-
$
-
$
-
$
$
12,000
12,000
12,000
12,000
(28,428)
(28,428)
Segment loss
(15,580)
(1,730)
(146,565)
(1,080,992)
(1,244,867)
Impairment of available
for sale asset
Finance expense
Finance income
Gain on sale of
investments
Abandonment of
acquisition
(227,110)
(102,792)
42,282
464,769
(123,343)
(1,191,061)
2013
Africa
Australia
Tormin
Xolobeni
Investing
Corporate
Totals
Development
Exploration
$
$
$
$
$
$
Additions to non-current
assets
Reportable segment
assets
Available for sale
financial assets
Total Group assets
Reportable segment
liabilities
Loans and borrowings
23,923,661
4,627,125
7,785,968
1,768,229
38,104,983
106,500
38,211,483
2,439,212
401,475
2,840,687
6,787,938
9,628,625
Additions to non-current
assets
Reportable segment
assets
Available for sale
financial assets
Total Group assets
Reportable segment
liabilities
Loans and borrowings
$
$
$
$
$
$
5,688,876
7,934,347
7,797,315
21,420,538
532,113
21,952,651
256,598
28,511
705,121
990,230
-
990,230
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 2013.
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
Fair value investments held for resale reserve
Foreign currency translation reserve
Total equity
Loss for the year
Other comprehensive income / (loss) for the year
Total comprehensive income / (loss) for the year
31 Dec 2013
31 Dec 2012
$
1,948,676
31,829,294
33,777,970
2,739,357
-
2,739,357
$
8,321,359
14,343,036
22,664,395
705,103
-
705,103
31,038,613
21,959,292
61,297,477
(29,154,556)
357,330
(262,500)
(1,199,138)
31,038,613
(888,617)
(417,381)
(1,305,998)
50,912,158
(28,265,939)
357,330
-
(1,044,257)
21,959,292
(763,131)
(1,400,512)
(2,163,643)
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7.
F I N A N C E I N C O M E A N D E X P E N S E
Finance income
Interest received on bank
deposits
Finance Expense
Interest expense on
financial liabilities
measured at amortised cost
Establishment fees on short
term borrowing
2013
2012
229,464
229,464
42,282
42,282
71,233
99,937
100,000
-
171,233
99,937
8 .
C A S H A N D C A S H E Q U I V A L E N T S
Cash at Bank
Consolidated Group
31 Dec 2013
$
1,694,264
1,694,264
31 Dec 2012
$
7,769,202
7,769,202
The effective interest rate on cash at bank in 2013 was 3.0% (2012 :2.30%).
(a)
(b)
Interest rate risk exposure
The consolidated entity’s exposure to interest rate risk is discussed in Note 24.
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.
9 .
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 receivables3
Non-Current
Security deposits¹
Advance to Blue Bantry²
Consolidated Group
31 Dec 2013
$
31 Dec 2012
$
15,328
1,299,676
1,315,004
293,124
536,855
829,979
22,871
125,216
148,087
313,636
113,636
427,272
¹ Includes a secured deposit of $293,124 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.
² An amount of Rand 5 million (2012 1 million) has been advanced to the BEE partner Blue Bantry refer note 26.
³
Includes $1,081,138 of VAT refundable from the South African revenue service (2012 $35,088)
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 2013 and 2012.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables
mentioned above. Refer to Note 24 for more information on the risk management policy of the Group and the
credit quality of the entity’s receivables.
(b)
Foreign Exchange and Interest Rate Risk
Information about the Group’s exposure to foreign exchange and interest rate Risk in relation to trade and
other receivables is provided in Note 24.
1 0 .
P R E P AY M E N T S
Prepayments
11.
I N V E N T O R I E S
Raw materials at cost
Finished product
Spare parts and
consumables
Consolidated Group
31 Dec 2013
$
11,594
31 Dec 2012
$
10,925
Consolidated
31 Dec 2013
$
31 Dec 2012
$
380,646
358,415
130,007
869,068
-
-
-
-
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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 )
1 2 .
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
Consolidated Group
31 Dec 2013
$
31 Dec 2012
$
At the beginning of the year
Cost of Allied Gold Mining Plc Shares sold
369,000
1,653,000
-
(1,030,333)
Revaluation of listed shares transferred to reserve
(262,500)
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 charged to profit and
loss
Total available for sale investments in companies not
listed on a recognised stock exchange
-
-
(14,000)
350,000
(589,667)
106,500
369,000
163,113
-
(163,113)
1,374,651
(998,428)
(213,110)
-
163,113
2013
Level 1
Level 2
Level 3
Total
Available for sale financial assets
106,500
-
-
-
-
106,500
106,500
106,500
Level 1
Level 2
Level 3
Total
Total
2012
Available for sale financial assets
369,000
Total
369,000
-
-
163,113
532,113
163,113
532,113
The level 3 investment in an unlisted entity has been fully impaired in 2013.
(a) Risk Exposure
Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in Note 24.
Total Financial Assets
106,500
532,113
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. Listed shares held for resale have
been adjusted to market value at balance date. The investment in unlisted shares has been fully impaired and
charged to the statement of profit or loss and other comprehensive income.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
50
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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 )
1 3 .
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
1 4 .
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
At 1 January 2012
Exploration expenditure - costs carried
forward in respect of areas of interest in:
Expenditure during the year
Foreign exchange movements
At 31 December 2012
At 1 January 2013
Expenditure during the year
Foreign exchange movements
Write off discontinued projects
At 31 December 2013
Development
Exploration
-
-
-
-
15,322,494
-
-
12,506,413
1,169,193
(679,244)
12,996,362
12,996,362
147,058
(647,473)
(98,412)
15,322,494
12,397,535
Other - Current
Cost
1 January 2012
Additions
Disposals
At 31 December 2012
At 1 January 2013
Additions
Disposals
Mining Plant
machinery and
vehicles
Office
equipment and
furnishings
-
-
-
-
-
5,750,995
-
74,952
79,688
(5,545)
149,095
149,095
2,020
-
Totals
74,952
79,688
(5,545)
149,095
149,095
5,753,015
-
At 31 December 2013
5,750,995
151,115
5,902,110
Depreciation
At 1 January 2012
Depreciation
Disposals
At 31 December 2012
At 1 January 2013
Depreciation
Disposals
At 31 December 2013
Net book value
At 1 January 2012
At 31 December 2012
At 31 December 2013
-
-
-
-
-
131,846
-
131,846
-
-
5,619,149
53,371
28,428
(1,393)
80,406
80,406
24,813
-
105,219
21,582
68,689
45,896
53,371
28,428
(1,393)
80,406
80,406
156,659
-
237,065
21,582
68,689
5,665,045
Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in Note 24.
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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
The Company commenced and concluded the development of the Tormin Mineral Sands Project on time and on
budget during the year.
Commissioning of the Primary Beach Concentrators (“PBCs”) commenced in October 2013, followed shortly
thereafter by the commencement of mining operations. By mid-December 2013, the Company had mined and
stockpiled in excess of 60,000 tonnes of HMC at the Secondary Concentrator Plant (“SCP”).
Fabrication and construction of the SCP infrastructure, plant and plate-work was completed during the last
quarter of the year. The water supply to the SCP, process water dams, steel structure and mechanical equipment
were also installed and tested.
Initial cold commissioning was undertaken in the first week of December, 2013 and hot commissioning
commenced on the 11th December, 2013 and by the end of the year, the Company had achieved nameplate
output at very close to design specification.
The seasonal ocean and tidal conditions between the months of August and October served to act as a natural
catalyst to upgrading the beach resource. The extremely high grade of ROM encountered on the beach allowed
the Company to feed ROM ore directly into the SCP bypassing the PBCs.
Based on the success of associating the PBC spirals with the SCP, the Company has decided to permanently
relocate and operate the PBCs at the SCP and not on the beach. This will result in significant de-risking of the
PBC operation and require only one PBC unit to be operated in the future as it will not be affected by daily tidal
movements and ocean conditions.
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X O L O B E N I M I N E R A L S A N D S P R O J E C T ( S O U T H A F R I C A )
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 subsequently registered by the DMR in the third quarter of 2012.
MRC has advised that the DMR had withdrawn the previously granted Conditional Mining Right over Kwanyana
block and that it the was engaging with the DMR and Minister in relation to these matters. The Company
subsequently withdrew all previous applications in respect of the Kwanyana block and immediately applied for a
new prospecting right 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.
The DMR accepted the new prospecting right application (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 instructed the Company to undertake additional
consultation. A comprehensive consultation process, designed to identify and engage with all potential
interested and affected parties was implemented during the last quarter. In addition, in keeping with local
traditions, a series of pre-meetings were held with the traditional leaders in the Xolobeni area to update them
on developments with the project, brief them on the planned consultation process and gain their approval for
the process.
X o l o b e n i P u b l i c P a r t i c i p a t i o n S u c c e s s f u l l y C o m p l e t e d
Having obtained the traditional leadership’s approval of the planned process and updated the DMR in the first
quarter, the public consultation process took place in March and April 2013. Subsequently, feedback from all the
meetings has been collated into a comprehensive issues and response trial which has been incorporated into a
stakeholder engagement report (SER). The SER was completed in the last quarter and submitted to all relevant
parties at the DMR for evaluation.
In late December 2013, the Company was advised that the DMR will meet to consider the SEP and other matters
relating to the Kwanyana PRA on 22 January 2014.
The Company attended the meeting after the year end on 22 January 2014 as planned. The representations made
by the Company were well received and all objections appropriately addressed. The Company therefore remains
optimistic that the DMR will award a new prospecting right over the Kwanyana block during the first half of
2014 and enable the Company to do the final work necessary to submit a mining right application for the entire
Xolobeni tenement as soon thereafter as possible.
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1 5 ( b ) . N O N - C O N T R O L L I N G I N T E R E S 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 ) X o l o b e n i B a s e l i n e S t u d i e s
In the interim, work has commenced on preparation for the various baseline studies that are required as part of
the prospecting works programme and in preparation for and application for a mining right for Xolobeni. By end
of the quarter MRC had appointed a specialist to commence a water study on the Xolobeni area. The Company
expects this work to be completed in the first half of 2014.
1 5 ( a ) . S U B S I D I A R I E S A N D T R A N S A C T I O N S W I T H N O N - C O N T R O L L I N G I N T E R E S T S
Set out below are the group’s principal subsidiaries at 31 December 2013. Unless otherwise stated, the
subsidiaries as listed below have share capital consisting solely of ordinary shares, which are held directly by the
group, and the proportion of ownership interests held equals the voting rights held by the group. The country of
incorporation or registration is also their principal place of business.
Class of Share Place of Incorporation
Equity
Holding
Equity
Holding
N C I
interest
N C I
interest
2013
2012
2013
2012
%
%
%
%
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
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Australia
Australia
Australia
Australia
Australia
South Africa
Australia
Australia
Australia
South Africa
100
100
90
100
100
100
100
100
56
100
100
90
100
100
100
100
100
56
South Africa
50
50
South Africa
100
100
South Africa
Namibia
100
100
100
100
-
-
10
-
-
-
-
-
44
50
-
-
-
44
50
-
-
-
Transworld Energy &
Minerals Resources (SA)
(Pty) Limited
Mineral Sands Resources
(Pty) Ltd
Q Smelt Pty Ltd
2013
2012
2013
2012
2013
2012
Summarised balance sheet
Current assets
Current liabilities
Current net assets
3,508
-
3,508
4,204
2,079,665
34,292
-
(6,660,005)
-
4,204
(4,580,340)
34,292
Non-current assets
6,296,644
6,436,391
25,809,799
5,307,018
Non-current liabilities
(5,512,399
(5,603,371)
(20,384,275)
(4,309,692
Non-current net assets
784,245
833,020
5,425,524
997,326
Net assets
Accumulated NCI
787,753
124,139
837,224
124,139
Summarised statement of
comprehensive income
Revenue
Loss for the period
Other comprehensive income
-
3,314
-
Total comprehensive income
3,314
Loss attributed to NCI
-
-
-
-
-
845,184
1,031,618
-
-
-
-
129,659
-
1,176
-
129,659
1,176
-
-
2
-
2
-
-
2
2
-
2
-
-
2
54,710
54,710
-
-
-
-
-
-
-
-
-
-
Summarised cash flows
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Net increase/(decrease) in
cash and cash equivalents
(2,017,607)
(21,085,759)
23,139,433
36,067
As noted (above), the company, via its wholly owned subsidiary MRC Resources (Proprietary) Limited, has an
interest of 50% of the issued capital in Mineral Sands Resources (proprietary) Limited (MSR). Whilst the group
controls 50% of the share voting power, it has been determined that the group effectively has 100% control due
to its control over the relevant activities for accounting purposes, controls the management of MSR, and also
controls the board of MSR due to provisions set out in the Shareholders Agreement entered into between the
shareholders of MSR.
58
59
For personal use only N O N - C O N T R O L L I N G I N T E R E S T S ( c o n t i n u e d )
1 7.
C O N T R I B U T E D E Q U I T Y
Therefore these financial statements include 100% of the results of MSR. In addition to the holding of the
issued capital, the group also holds Class A and B Preference Shares in MSR which effectively provides for the
repayment of the capital investment and deemed investment by the Company’s Black Empowerment partner.
Due to the terms attached to these A and B Preference Shares, they are categorised as an equity instrument.
As the A Preference Shares and B Preference Shares would be redeemed out of distributable profits and net
assets of MSR before all other ordinary shareholders, until such time as the net assets exceed the value of the
unredeemed A and B Preference shares, no value has been attributed to the non-controlling interest. Until that
time, the non-controlling interest has no rights to the assets or results of the company, and therefore has not
been allocated any value in these financial statements.
1 6 .
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
Short term borrowings¹
Amounts due under equipment acquisition
agreements²
Consolidated Group
31 Dec 2013
31 Dec 2012
$
2,010,726
829,961
2,840,687
2,337,900
4,450,038
6,787,938
$
530,916
435,886
966,802
-
-
-
¹ Short term borrowings consist of a pre finance and marketing agreement facility of US$2.0 million which was
drawn down in September 2013. This facility is repayable over a twelve month period in quarterly instalments
commencing three months after production has commenced.
Balance at beginning of financial
year
2013 Number of
shares
2012 Number of
shares
2013
$
2012
$
274,008,385
153,393,385
50,912,158
41,204,350
Conversion of Listed Options
8,322
-
1,664
-
Placement of 120,615,000 shares
as approved by shareholders at
the Annual General Meeting on
31 May 2012
Placement
Proceeds of rights issue
Costs of capital raising
-
120,615,000
-
10,252,864
49,937,000
80,988,228
-
-
-
-
4,244,645
6,479,058
(340,048)
-
-
(545,056)
Balance at end of financial year
404,941,935
274,008,385
61,297,477
50,912,158
a) Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company
in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of
ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share
is entitled to one vote.
(b) Capital risk management
The Group’s 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.
² The Group entered into two Master rental agreements to acquire mobile mining equipment. Under the terms of
these agreements there is an option to purchase which the Group intends to exercise.
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.
(a) Fair Values and credit risk
1 8 .
R E S E R V E S
Due to the short term nature of these payables the carrying values represent their respective fair values as at
31 December 2013 and 2012.
(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 24.
General Reserve
Financial asset revaluation reserve
Consolidated Group
31 Dec 2013
31 Dec 2012
$
2,437,582
(262,500)
$
2,437,582
-
Foreign currency translation reserve
(5,126,455)
(4,246,287)
Unlisted options reserve
357,330
357,330
(2,594,042)
(1,451,375)
60
61
For personal use only
1 8 .
R E S E R V E S ( c o n t i n u e d )
1 9 .
L O S S P E R S H A R E
Consolidated Entity
General
Reserve
Financial Asset
revaluation
Foreign
Currency
Unlisted
Options
Listed
Options
Total
Balance at 1 January 2012
2,437,582
1,588,095
(3,507,599)
$
$
$
$
-
$
$
286,578
804,656
(589,667)
(998,428)
357,330
357,330
(286,578)
(286,578)
(738,688)
(738,688)
(589,667)
(998,428)
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
operations
Revaluation of listed shares
held for resale
Exchange differences on
translation of foreign
operations
Balance at 31 December 2012
2,437,582
-
(4,246,287)
357,330
-
(1,451,374)
(262,500)
(262,500)
Balance at 31 December 2013
2,437,582
(262,500)
(5,126,455)
357,330
-
(2,594,042)
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
(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
31 Dec 2013
31 Dec 2012
cents
(0.64)
cents
(0.68)
(0.64)
(0.68)
251,763,939
173,495,885
(1,622,215)
(1,191,061)
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.
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
Audit of subsidiaries
BDO Cape Town South Africa
Consolidated
31 Dec 2013
$
60,000
19,261
79,261
31 Dec 2012
$
64,122
11,726
75,848
(880,168)
(880,168)
2 0 .
A U D I T O R S ’ R E M U N E R A T I O N
62
63
For personal use only 2 1.
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
( 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
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
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:
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share based payments
Consolidated Group
31 Dec 2013
31 Dec 2012
$
$
920,112
25,878
-
945,990
321,565
14,378
357,330
693,273
( 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:
2013
Key Management
Personnel
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Balance at
1 January
2013 or on
appoint-
ment
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
Andrew Lashbrooke
6,000,000
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
2013
Vested and
exercisable
Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 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
-
-
-
-
-
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
-
-
-
-
-
2013
Director
Balance at
1 January
2013 or on
appointment
Received as
Remuneration
Options
Exercised
Net change
other
Balance
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Andrew Lashbrooke
21,582,615
21,569,988
500,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,787,183
78,369,798
55,437,497
77,007,485
125,000
25,000
625,000
125,000
-
-
-
-
2012
Director
Balance at
January
2012 or on
appointment
Received as
Remuneration
Options
Exercised
Net change
other
Balance
Mark Caruso
Joseph Caruso
Peter Torre
Guy Walker
James Leahy
Andrew Lashbrooke
21,582,615
21,569,988
500,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,582,615
21,569,988
500,000
100,000
-
-
Joseph and Mark Caruso are both directors of Zurich Bay Holdings Pty Ltd which has a relevant interest
in 77,007,485 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 22.
64
65
For personal use only
2 2 .
R E L A T E D P A R T Y T R A N S A C T I O N S
2 3 ( 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
Minesite Construction Services a Company associated with Mr Mark Caruso and Mr Joseph Caruso has provided
office space to Mineral Commodities Limited (MRC) throughout 2013. The amount paid by MRC was $54,000
(2012 $54,000). This is considered to be an arms length commercial rent. There is no formal sub lease in place.
Zurich Bay Holdings Pty Ltd a Company associated with Mr Mark Caruso and Mr Joseph Caruso participated in
an underwriting agreement on the Rights Issue for which it received a fee of $98,942.
Minesite Construction Services has provided Secretarial staff to the Executive Chairman pursuant to an Executive
Service Agreement at a total cost of $51,600. These have been reimbursed on an arms length basis at normal
commercial rates. During 2014 to the date of this report a further amount of $12,900 has been paid.
Minesite Construction Services has provided technical staff during the year ended 31 December 2013 to the
Groups’ Subsidiary which operates the Tormin Mineral Sands project at a total cost of $54,300 these have been
reimbursed on an arms-length basis at normal commercial rates. During 2014 to the date of this report a further
$50,242 has been paid.
Wholly owned group
The group consists of Mineral Commodities Limited and its subsidiaries. Details of entities in the group are
set out in Note 15.
Transactions between Mineral Commodities Limited and other entities in the group during the years ended
31 December 2013 and 31 December 2012 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 21.
2 3 ( 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
Consolidated
Consolidated
31 Dec 2013
31 Dec 2012
$
$
Profit/(loss) after income tax and outside equity interest
(1,622,215)
(1,191,061)
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 in Inventory
(Increase) decrease in prepayments
156,659
163,113
(23,427)
-
-
-
-
1,873,884
(1,184,407)
(869,068)
(669)
28,428
227,110
(12,973)
(464,769)
357,330
152
-
(1,046,345)
(127,795)
-
238
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 (2012: none).
2 4 .
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
Trade and other receivables
Counterparties with external credit rating
AAA (Standard & Poors)
BBB+ (Standard & Poors)
Counterparties without external credit rating
Sundry trade receivables
Total Receivables
Available for sale investments
Financial Liabilities
Trade Creditors
Other payables
Short term borrowings
Equipment financing
Consolidated
31 Dec 2013
$
1,632,839
61,425
1,694,264
31 Dec 2012
$
7,569,613
199,589
7,769,202
31 December 2013
31 December 2012
$
24,029
1,374,261
1,398,290
221,431
1,619,721
106,500
3,420,485
2,010,726
829,961
2,840,687
2,337,900
4,450,038
6,787,938
9,628,625
$
45,631
348,724
394,355
78,293
472,648
532,113
8,773,963
530,916
435,886
966,802
-
-
966,802
966,802
Net cash inflow / (outflow) from operating activities
(1,506,130)
(2,229,685)
(6,208,140)
7,807,161
66
67
For personal use only
2 4 .
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 )
L i q u i d i t y r i s k
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.
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 $9,431 lower / higher (2012: $3,289
lower / higher) and equity would have been $5,636,808 lower / higher (2012: $2,310,089 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.
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 also exposed to commodity price risk as a result of fluctuations in the market price of commodities.
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.
Price Risk
Price Risk
Price Risk
Price Risk
Price Risk
-30%
-30%
+30%
+30%
2013
Carrying amount
$
Profit
$
Equity
$
Profit
$
Commodity
price variation
– Inventory
product
Available for
sale investments
Listed Shares &
Options
739,022
(221,707)
106,500
(31,950)
845,522
(253,657)
Equity
$
221,707
(31,950)
(253,657)
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
68
69
For personal use only
2 5 .
S H A R E B A S E D P AY 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 pay-
ment expense for the period was $0 (2012 $357,330).
The model inputs for options granted during the year ended 31 December 2012 included:
2 6 .
C O M M I T M E N T S
( a )
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 ad-
vancing through the Loan certain benefits Blue Bantry would expect to receive from Tormin. The Loan consists of
an upfront amount of ZAR5 million (approx AUD$5364K) which has already been paid with a further ZAR 9 million
(approx AUD$970k) which was to be payable no later than 31 December 2012,. Blue Bantry will repay the Loan
from distributions that it will receive in the future from MSR. The additional ZAR 9 million was outstanding at 31
December 2013 pending completion of administrative.
( b ) 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
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 7.
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 8 .
S U B S E Q U E N T E V E N T S
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 re-
port, 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.
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.
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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.
(a)
(b)
2.
3.
The financial statements, comprising the consolidated statement of profit or loss and other
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;
complying with Australian Accounting Standards and the Corporations Regulations 2001 and,
give a true and fair view of the consolidated entity’s financial position as at 31 December 2013 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
Executive Chairman
Dated at Perth, Western Australia this 31st day of March 2014
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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
The Board of Directors of Mineral Commodities Limited (MRC) is responsible for the corporate governance
of the Company. The Board guides and monitors the business and affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
In accordance with the Australian Securities Exchange (ASX) Corporate Governance Council’s (“CGC”) “Principles
of Good Corporate Governance and Best Practice Recommendations” the Corporate Governance Statement
must contain certain specific information and must disclose the extent to which the Company has followed
the guidelines during the period. Where a recommendation has not been followed, that fact must be disclosed
together with the reasons for the departure.
The Company’s corporate governance practices were in place throughout the year and are compliant, unless
otherwise stated, with the Corporate Governance Council’s principles and recommendations, which are noted
below.
Principle 1.
Principle 2.
Principle 3.
Principle 4.
Principle 5.
Principle 6.
Principle 7.
Principle 8.
Lay solid foundations for management and oversight
Structure the Board to add value
Promote ethical and responsible decision making
Safeguard integrity in financial reporting
Make timely and balanced disclosure
Respect the rights of shareholders
Recognise and manage risk
Remunerate fairly and responsibly
A summary of the corporate governance policies and practices adopted by MRC is set out below.
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 executive Chairman and 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 Executive
Chairman and 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, Board Committees and Company
executives has been adopted by the Board. An evaluation procedure took place immediately following the year
end. The evaluation of the Board as a whole is facilitated through the use of a questionnaire required to be
completed by each Board Member, the results of which were summarized and discussed with the Chairman of
the Board and tabled for discussion at a Board Meeting. Similarly each individual director was required to self
assess his performance and to discuss the results with the Chairman. The same procedure is undertaken for the
Audit, Compliance and Risk Committee and the Remuneration and Nomination Committee.
To ensure management, as well as Board effectiveness, the Board, through the Remuneration and Nomination
Committee has direct responsibility for evaluating the performance of the Chief Executive Officer. A formal
evaluation of the Chief Executive Officer will be undertaken at the end of the 2014 financial year, subsequent
to the first year of operation.
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:
•
the Company’s financial reports present a true and fair view, in all material respects, of the Company’s
financial condition and operational results in accordance with the relevant accounting standards; and
are founded on a system of risk management and internal compliance and control and the Company’s risk
management and internal compliance and control system is operating efficiently and effectively in all
material respects.
•
Management has not formally reported to the Board on the effectiveness of the Company’s management of
material business risk, however risk reports are provided to the Board via the Audit, Compliance and Risk
Committee. Each reportable risk is discussed ensuring appropriate mitigation strategies are implemented by the
Group. Management and the Board interact on a day to day basis and risk is currently being considered across
the financial, operational and organization aspects of the Company’s business. The Company will continue to
monitor, assess and report its business risks
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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
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
The Board established two permanent Board committees In February 2013 to assist the Board in the performance
of its functions:
(a)
(b)
the Audit, Compliance and Risk Committee; and
the Remuneration and Nomination Committee.
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)
(c) MRC’s compliance with legal and regulatory requirements in relation to the above.
the internal and external audit functions; and
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 responsibly
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
Committee must be an independent non–executive Director.
The members of the Remuneration and Nomination Committee are: Mr Leahy (Chairman), Mr Walker, and
Mr Joseph Caruso.
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 employs 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.
The Company implemented a diversity policy subsequent to year end. The objective of the policy is 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;
• Recruitment on the basis of competence and performance and selection of candidates from a diverse pool of
qualified candidates
• Maintaining selection criteria that does not indirectly disadvantage people from certain groups
• Providing equal employment opportunities through performance and flexible working practices
• Maintaining a safe working environment and supportive culture by taking action against inappropriate
workplace and business behaviour that is deemed as unlawful (discrimination, harassment, bullying,
vilification and victimization)
• Promoting diversity across all levels of the business
• Undertaking diversity initiatives and measuring their success
• Regularly surveying our work climate
• The Board of Directors establishing measurable objectives in achieving gender diversity.
The Company currently employs 135 staff, with 36 females, representing 27%. There are no female directors.
The Company has not yet set any measurable objectives as it has concentrated on finalising the development of
the Tormin Mineral Sands Project. Operations commenced in January 2014 and the Company will endeavour to
set measurable objectives during the 2014 financial year.
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.
S E C U R I T I E S T R A D I N G P O L I C Y
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:
• Preparing half yearly and annual financial reports and making these available to all shareholders.
• Preparing quarterly activity and cash flow reports.
• Advising the market of matters requiring disclosure under Australian Stock Exchange Continuous Disclosure Rules.
• Maintaining a record of significant ASX announcements on the Company’s website.
• Submitting proposed major changes in the Company’s affairs to a vote of shareholders, as required by the
Corporation Law.
• Reporting to shareholders at annual general meetings on the Company’s activities during the year. All share
holders 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.
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S H A R E H O L D E R I N F O R M A T I O N
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 8 April 2013.
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AU MINING LIMITED
ZURICH BAY HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
JP MORGAN NOMINEES AUSTRALIA
INTERNATIONAL MINING SERVICES LIMITED
MISS KATHRYN YULE
BLASTRITE GULF FZE
MR KEVIN ANTHONY LEO & MRS LETICIA LEO
MR ASHLLEY WALLISS
MR ROBERT CAMERON GALBRAITH
NATIONAL NOMINEES LIMITED
REGIONAL MANAGEMENT PTY LTD
KINGARTH PTY LTD
MR WILLIAM DAVIDSON MEEK
MR GRANT MENHENNETT
MR DONALD BOYD
PHILEL PTY LTD
MR CHRISTOPHER VICTOR CARUSO
Number of
Ordinary
Shares
Percentage
of issued
shares
87,049,171
80,580,000
77,007,485
56,939,911
12,039,402
11,560,154
7,206,875
6,342,000
3,473,515
2,700,000
2,086,295
1,459,221
1,392,209
1,346,540
1,000,000
1,000,000
954,481
900,000
867,675
750,000
21.50%
19.90%
19.02%
14.06%
2.97%
2.85%
1.78%
1.57%
0.86%
0.67%
0.52%
0.36%
0.34%
0.33%
0.25%
0.25%
0.24%
0.22%
0.21%
0.19%
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 293.
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:
•
•
•
•
M&G Investment Management Limited
8.84% of the issued ordinary shares
Zurich Bay Holdings Pty Ltd holding
19.02% of the issued ordinary shares
AU Mining Limited
20.6% of the issued ordinary shares
Tormin Holdings Limited
14.7% of the issued ordinary shares
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
TOTAL
356,654,934
88.09%
There is no current on market share buy back.
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
128
334
177
366
135
37,480
1,138,979
1,450,648
13,355,771
388,958,693
1,140
404,941,571
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