Annual Report
MRG Metals Ltd
ABN: 83 148 938 532
For the period 24 January 2011
to 30 June 2011
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Contents
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Review of Operations
Corporate Governance Statement
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Consolidated Financial Statements
1. Nature of Operations
2. General Information and Statement of Compliance
3. Changes in Accounting Policies
4. Summary of Accounting Policies
5. Revenue
6. Segment Reporting
7. Other Receivables
8. Cash and Cash Equivalents
9. Equity
10. Employee Remuneration
11. Trade and Other Payables
12. Exploration and Evaluation
13. Income Tax Expense
14. Auditor Remuneration
15. Earnings per Share and Dividends
16. Reconciliation of Cash Flows from Operating Activities
17. Related Party Transactions
18. Contingent Assets and Contingent Liabilities
19. Commitments
20. Financial Instrument Risk
21. Capital Risk Management
22. Post-Reporting Date Events
23. Parent Entity Information
24. Authorisation of Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Corporate Directory
Directors & Secretary
Albert Pietrzak
Non Executive Chairman
Andrew Van Der Zwan
Managing Director and Chief Executive Officer
Shane Turner
Non Executive Director and Company Secretary
Principal place of business
Level 8, 350 Collins Street, Melbourne VIC 3000
Telephone: +61 3 9642 8575
Email: info@mrgmetals.com.au
www.mrgmetals.com.au
Fax: +61 3 96425662
Registered office
Level 1, 1-3 Bath Lane, Ballarat Victoria 3350
PO Box 237, Ballarat VIC 3353
Telephone: +61 3 5330 5800 Fax: +61 3 5333 1667
Corporate accountant and Registered ASIC Agent
RSM Bird Cameron
Level 1, 1-3 Bath Lane, Ballarat VIC 3350
PO Box 685, Ballarat VIC 3353
Telephone: +61 3 5330 5800 Fax: +61 3 5333 1667
www.rsmi.com.au
Solicitors
Middletons
Level 25, 525 Collins Street, Melbourne VIC 3000
Telephone: +61 3 9205 2000 Fax: +61 3 9205 2055
www.middletons.com
Share Registry
Link Market Services Limited
Ground Floor, 178 St Georges Terrace, Perth WA 6000
Telephone: 1300 554 474
Auditor
Grant Thornton Audit Pty Ltd
Level 2, 215 Spring Street, Melbourne Vic 3000
Telephone (office): +61 3 8663 6000 Fax: +61 3 8663 6333
Email: brad.taylor@au.gt.com
Website: www.grantthornton.com.au
Stock Exchange Listing
ASX Codes: MRQ , MRQO
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
4
Directors’ Report
The Directors of MRG Metals Ltd present their Report together with the financial statements of the
consolidated entity, being MRG Metals Ltd (‘the Company’) and its controlled entity, MRG Metals
(Australia) Pty Ltd (‘the Group’) for the periodended 30 June 2011 and the Independent Audit
Report thereon. The Company was incorporated on 24 January 2011 and this Report is for the
period from 24 January 2011 to 30 June 2011.
Director details
The following persons were directors of MRG Metals Ltd during or since the end of the financial
year.
Mr Andrew Van Der Zwan
BA Chemical Engineering
Managing Director
Director since 14/02/2011
Andrew has 25 years engineering and commercial experience, both local and international. He was a
Non Executive Director of Gulfx Ltd for 11 years and was employed in various senior positions
within the worldwide operations of Exxon Mobil for 17 years.
Other current directorships:
None
Previous directorships (last 3 years):
None
Interests in shares:
2,160,000 shares
Interest in options:
1,080,000 options
Mr Albert Pietrzak
BA Mechanical Engineering
Independent Non-Executive Director
Independent Chairman
Director since incorporation 24/01/2011
Albert has 40 years engineering and commercial experience. He was Managing Director of an
engineering company for 33 years. He is a fully qualified IFR pilot, an engineering consultant and
an investor.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Mr Albert Pietrzak (continued)
Other current directorships:
None
Previous directorships (last 3 years):
None
Interests in shares:
2,130,000 shares
Interest in options:
1,065,000 options
Mr Shane Turner
CA, Bachelor of Business
Independent Non-Executive Director
Director since incorporation 24/01/2011
Shane is a Chartered Accountant and has 23 years financial and accounting experience. He has been
employed with KPMG, a large regional public accounting practice, operated his own public
accounting practice and now is employed with RSM Bird Cameron. He was a Non Executive
Director and Company Secretary for Metminco Ltd for 2 years.
Other current directorships:
None
Previous directorships (last 3 years):
Metminco Ltd
Interests in shares:
1,470,000 shares
Interest in options:
735,000 options
Mr Nicholas Fammartino
Independent Non-Executive Director
Director since incorporation 24/01/2011 and resigned 14/02/2011
Other current directorships and previous directorships (last 3 years) are for listed entities only and
exclude all other types of directorships, unless otherwise stated.
Interests in shares and options stated above are at the date of this financial report.
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Consolidated Financial Statements
30 June 2011
6
Company secretary
Shane Turner is a Chartered Accountant and the Group Chief Financial Officer. Shane has held
senior positions with a number of professional accounting firms and has a degree in Business.
Shane has previously held the role of company secretary for Metminco Ltd for 2 years. He has been
the company secretary of MRG Metals Ltd since incorporation on 24/01/2011.
Principal activities
During the period, the principal activities of entities within the Group were exploration and
development of gold, base metals and other commodities within Australia.
There have been no significant changes in the nature of these activities during the period.
Review of operations and financial results
The operating result of the Group for the period since incorporation on 24 January 2011 was a loss
of $316,660. Refer detailed Review of Operations that follows this report.
Earnings per share (1.33) cents.
Since listing, monies raised have been used consistent with that described in the IPO Prospectus,
including:
augment the Company’s exploration of mining tenements,
assist the Company to identify and assess new mining opportunities,
finance the acquisition of interests in mineral properties,
-
-
-
- meet the Company’s ongoing administration and corporate overhead expenses, and
- meet the one-off expenses of the offer.
Further information on the detailed operations of the Group during the year are included later in
the Review of Operations Report.
Significant changes in the state of affairs
During the year, the following changes occurred within the Group:
• Incorporation of Company On 24 January 2011, the Group was incorporated. A total of
14,800,000 shares were issued to Directors and Consultants and Promoters raising $74,000 before
costs.
• Information Memorandum On 22 February 2011, the Company issued an Information
Memorandum. A total of 50,000,000 shares were issued to seed capitalists raising $3,125,000
before costs.
• On 11 March 2011 the Company issued 3,600,000 shares to promoters for assistance in raising
seed capital at an issue price of $0.001 which raised $3,600.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
• Initial Public Offering
7
On 5 April 2011, the Company issued a Prospectus. A total of 12,466,000 shares were issued to
the public raising $2,493,200 before costs.
• Tenement Acquisitions On 8 June 2011, the Company was listed on the ASX. On this listing,
tenement acquisitions were completed which resulted in a total of 5,250,000 shares being issued
and payment of $62,354 (refer note 12).
Dividends
There were no dividends declared or paid during the financial period.
Events arising since the end of the reporting period
Since the end of the year the following significant events have occurred:
• On 4 July 2011, the Group completed the acquisition of tenements prospective for Gold at
Kalgoorlie East, WA. This resulted in 1,000,000 shares being issued and payment of $20,000;
• On 26 July 2011, the Group completed an option for the 30% acquisition of tenements
prospective for Coal and Bauxite at Collie South, WA. This resulted in 1,000,000 shares being
issued and payment of $50,000; and
• On 12 August 2011, the Company issued a non renounceable Options Prospectus for 1 option
for every 2 shares held, to issue up to 44,058,000 options and raise $440,580 before costs. On 28
September 2011, the Company allotted 38,816,708 options, to raise $388,167. These options are
exerciseable at $0.25 within five years.
• There are no other events occurring since the end of the year that have, or may, significantly
affect the Group’s operations, results of those operations or the state of affairs of the Group.
Likely developments
Information on likely developments in the Group’s operations and the expected results have not
been included in this report because the directors believe it would likely result in unreasonable
prejudice to the Group.
Directors’ meetings
The number of meetings of directors held during the period and the number of meetings attended
by each director were as follows:
Name
Andrew Van Der Zwan
Albert Pietrzak
Shane Turner
Nicholas Fammartino
Board meetings
A
8
10
10
3
B
7
10
10
3
Where:
A is the number of meetings the Director was entitled to attend
B is the number of meetings the Director attended
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Consolidated Financial Statements
30 June 2011
8
Remuneration Report (audited)
The Directors of MRG Metals Ltd (‘the Group’) present the Remuneration Report prepared in
accordance with the Corporations Act 2001 and the Corporations Regulations 2001.
The remuneration report is set out under the following main headings:
a. Principles used to determine the nature and amount of remuneration
b. Details of remuneration
c. Service agreements
d. Share-based remuneration
(a) Principles used to determine the nature and amount of remuneration
The principles of the Group’s executive strategy and supporting incentive programs and frameworks
are:
• To align rewards to business outcomes that deliver value to shareholders;
• To drive a high performance culture by setting challenging objectives and rewarding high
performing individuals; and
• To ensure remuneration is competitive in the relevant employment market place to support the
attraction, motivation and retention of executive talent.
MRG Metals Ltd has structured a remuneration framework that is market competitive and
complementary to the reward strategy of the Group.
The Board, in accordance with its charter as approved by the Board, is responsible for determining
and reviewing compensation arrangements for the directors and the executive team.
The Board may engage independent external consultants and advisors to provide any necessary
information to assist in the discharge of its responsibilities.
The remuneration structure that has been adopted by the Group consists of the following
components:
• Fixed remuneration being annual salary; and
• Superannuation to meet statutory obligations.
The Board assesses the appropriateness of the nature and amount of remuneration on a periodic
basis by reference to recent employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality Board and executive team.
The payment of bonuses, share options and other incentive payments are reviewed by the Board
annually as part of the review of executive. All bonuses, options and incentives must be linked to
pre-determined performance criteria.
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Consolidated Financial Statements
30 June 2011
9
(b) Details of remuneration
Details of the nature and amount of each element of the remuneration of each key management personnel (‘KMP’) of MRG Metals Ltd are shown in the table
below. The $5,000 paid to Pietrzak was in recognition of outstanding contribution to the successful capital raising in connection with the IPO.
Director and other Key Management Personnel Remuneration
Short term employee benefits
Name
Executive director
Van Der Zwan
Cash salary
and fees ($)
Cash bonus
($)
Non-
monetary
benefits ($)
56,250
-
Non-executive directors
Pietrzak
Turner
Fammartino
20,833
35,833
-
5,000
-
-
2011 Total
112,916
5,000
Post-
employment
benefits
Long-term
benefits
Termination
benefits
Share-based
payments
Superannuation
($)
Long-term
bonus ($)
Termination
payments ($)
Options ($)
Total ($)
% of
remuneration
that is
performance
based
-
-
-
-
-
5,063
1,875
3,225
10,163
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61,313
27,708
39,058
-
128,079
Nil
Nil
Nil
Nil
Nil
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Consolidated Financial Statements
30 June 2011
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(c) Service agreements
Remuneration and other terms of employment for the Executive Directors and other Key
Management Personnel are formalised in a service agreement. The major provisions of the
agreements relating to remuneration are set out below:
Name
Van Der Zwan
Pietrzak
Turner - Director
Turner - Secretary
Base salary
Term of agreement
150,000 Three Years
50,000 Rotation per Corporations Act 2001
50,000 Rotation per Corporations Act 2001
36,000 No fixed term
Notice period
Six Months
Nil
Nil
Nil
(d) Share based remuneration
During the year, there was no share based remuneration paid or outstanding.
End of audited remuneration report.
Environmental legislation
The Group’s projects are subject to environmental regulation under laws of the Commonwealth and
States and Territories in Australia, specifically the Group is required to comply with terms of the
grant of the tenement and all directions given to it under those terms of the tenement which it
holds. There have been no known breaches of the tenement conditions, and no such breaches have
been notified by any government agency during the period ended 30 June 2011.
Indemnities given and insurance premiums paid to auditors and officers
During the year, MRG Metals Ltd negotiated a premium to insure officers of the Group. The
officers of the Group covered by the insurance policy include all directors.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings
that may be brought against the officers in their capacity as officers of the Group, and any other
payments arising from liabilities incurred by the officers in connection with such proceedings, other
than where such liabilities arise out of 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 to cause detriment to the Group.
Details of the amount of the premium paid in respect of the insurance policies are not disclosed as
such disclosure is prohibited under the terms of the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnity any current or former officer or auditor of the
Group against a liability incurred as such by an officer or auditor.
Non-audit services
During the year, Grant Thornton Audit Pty Ltd, the Group’s auditors, performed certain other
services in addition to their statutory audit duties.
The Board has considered the non-audit services provided during the year by the auditor and is
satisfied that the provision of those non-audit services during the year is compatible with, and did
not compromise, the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
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Consolidated Financial Statements
30 June 2011
11
• All non-audit services were subject to the corporate governance procedures adopted by the
Group and have been reviewed by the Board to ensure they do not impact upon the impartiality
and objectivity of the auditor; and
• The non-audit services do not undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve
reviewing or auditing the auditor’s own work, acting in a management or decision-making
capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.
Details of the amounts paid to the auditors of the Group, Grant Thornton Audit Pty Ltd, and its
related practices for audit and non-audit services provided during the year are set out in note 14 to
the Financial Statements.
A copy of the auditor’s independence declaration as required under s307C of the Corporations Act
2001 is included on page 13 of this financial report and forms part of this Directors’ Report.
Proceedings of behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Company, or to intervene in any proceedings to which the
Company is a party, for the purpose of taking responsibility on behalf of the Company for all or
part of those proceedings.
Signed in accordance with a resolution of the directors.
Albert Pietrzak
Chairman
28 September 2011
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Consolidated Financial Statements
30 June 2011
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Grant Thornton Audit Pty Ltd
ACN 130 913 594
Level 2
215 Spring Street
Melbourne
Victoria 3000
GPO Box 4984
Melbourne
Victoria
3001
T +61 3 8663 6000
F +61 3 8663 6333
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of MRG Metals Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of MRG Metals Limited for the period ended 30 June 2011, I declare that, to the best
of my knowledge and belief, there have been:
a. no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b. no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B Taylor
Director – Audit & Assurance
Melbourne, 28 September 2011
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited,
together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Review of Operations
Highlights:
• Raising $2.5 million of new equity via an IPO in June 2011
•
• Finalising the acquisition of 5 Projects in conjunction with the IPO namely
In excess of $5 million in cash at time of listing.
o Xanadu Gold project
o Braemore Battery Copper and Gold project
o Mulgul Copper and Gold project
o Diorite Gold Project
o Bell Chambers Gold project
• Acquisition of prospective Kalgoorlie East Gold project
o And subsequent identifying high Gold and Nickel anomalies
• Acquisition of prospective Collie South Coal project
o Appointment of consulting Geologist based in Perth
• Appointment of Western Tenement Services to administer tenements
•
• Market capitalisation of in excess of $25 million
Issue of 1:2 non renounceable option rights entitlement
Executive summary of exploration activities and acquisitions
MRG Metals Ltd (“MRG”) listed in June 2011 with a suite of Gold and Copper projects within the Gold belt
of WA. After listing, MRG has aggressively pursued and been successful in obtaining 2 unique opportunities.
The first was the Kalgoorlie East Gold project with outstanding characteristics, which significantly enhances
the Company’s Gold prospects. Secondly, the Board determined that expansion into Coal, in regions
consistent with the existing tenements, would add diversity to the portfolio and provide significant upside
given the potential size and value of the project. This resulted in the acquisition of the Collie South Coal
project.
The Board continues to look for additional unique opportunities, but is now prioritising activities to best
deliver near term exploration success. As a result, it is likely that the Kalgoorlie East Gold, Collie South Coal
and Xanadu Gold projects will attract the majority of Management’s focus in the next 12 months.
As the Company was incorporated in January 2011 and listed in June 2011; the majority of activities listed
below occurred in the latter part of the financial year ended 30 June 2011, and in the first quarter of the new
financial year.
PROJECT ACTIVITIES:
Kalgoorlie East Project
The Kalgoorlie East Project comprises 15 PL’s covering over 1,700 Ha located approximately 12km east of
Kalgoorlie in Western Australia. The project was acquired by MRG Metals Ltd in July 2011.
The Company immediately commenced exploration by completing an interpretation of publically available
aeromagnetic data for gold and nickel targets using mineralised trends and geological settings known to occur
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Consolidated Financial Statements
30 June 2011
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within the Golden Ridge Greenstone Belt. This work led to the identification of nine structural and
geological targets considered prospective for gold and nickel.
A program of soil sampling was completed, aimed at testing these structural and geological targets. A total of
1,287 geochemical samples were collected on GPS located gridlines generally at 50m x 200m and 50m x 400m
spacing. Samples were analysed for a suite of metals including Au (ppb), As, Ag, Cu, Ni, Cr, Pb and Zn
(ppm).
Results have been encouraging with several gold (+/- arsenic) anomalies identified within the project area and
in some instances associated with structural targets. A peak Au value received from the sampling was 168 ppb
Au, with 41 samples returning assay values +40 ppb ( 3%), and 160 samples returning assay values of +25
ppb (12%) of the 1,287 samples collected.
Distribution of the gold geochemical anomalies appear to show a broad association with geological contacts,
generally between mafic-ultramafic rocks and sediments, and follow the broad NNW strike of lithologies
within the Golden Ridge Greenstone Belt.
Interpretation of Ni (ppm) assay results (up to 1,586 ppm) in conjunction with other elements considered
useful pathfinders (Cr, Cu, Zn) has defined broad areas of interest for further work.
Field checking of several anomalous zones shows positive correlation with geological observations and
detailed mapping and infil soil sampling will be completed to better define gold and nickel targets prior to
initial drilling and ground geophysics being planned.
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Consolidated Financial Statements
30 June 2011
Xanadu
15
The project is located 38km south east of Paraburdoo in the Proterozoic Ashburton Basin of Western
Australia. Gold mineralisation was initially discovered in 1985 by BP Minerals following regional stream
sediment programmes.
The project comprises 14 Prospecting Licences covering 12km of northwest trending poorly exposed
Proterozoic sediments and carbonates. The project is prospective for Carlin-style gold mineralisation
associated with the Duck Creek Dolomite and surrounding sediments.
The project has been the focus for gold and base metals exploration with over 25,000m of drilling since 1993
as well as small scale mining at the Amphitheatre Pit since the early 1990’s. However, several areas remain to
be fully tested and present themselves as exploration targets which the Company plans to immediately test
with drilling.
A small heap leach mining operation was established by Nugold Hills Mines in 1993. A total of 167,000t @
1.8 g/t Au was reportedly mined and placed on the leach pads with a further 90,000t of lower grade material
mined but not processed. It is believed that operational difficulties with the heap leach operation lead to the
project being placed on care and maintenance shortly after.
Newcrest Mining Ltd completed substantial exploration programmes at Xanadu from 1999-2006, including
the bulk of the previously mentioned 25,000 metres of drilling. This work resulted in the discovery of several
prospect areas within the Xanadu Project which require further follow-up work.
Many resource estimates were made before and during the course of the mining operation. None have been
made since. Given the lack of QA/QC, geological interpretation, assumed SG and other data these would
now be considered non JORC compliant.
The following table lists published resources for the Xanadu Gold Project.
Deposit
Category
Claudius
Amphitheatre
Ceasar
Stynes
Total
T
90,000
239,000
109,000
365,000
140,000
41,000
37,000
1,021,000
g/t
AU
3.20
2.04
3.67
2.42
1.17
2.67
2.70
2.38
grams
AU
288,000
487,560
400,030
883,300
163,800
109,470
99,900
2,432,060
Oz JORC
AU
9,260
15,677
12,863
28,402
5,267
3,520
3,212
78,201
Inferred
Indicated
Indicated
Indicated
Indicated
Indicated
Indicated
The resources have been estimated by various cross sectional polygonal methods, with differing cut off
grades. It is expected that these resources are conservative, and significant potential remains to define
additional resources.
The resources could be readily made JORC Compliant once the geological interpretation is completed and
some validation drilling undertaken.
Recent work has consisted of acquisition of all available open file data and entering of assays and collars into
a Micromine database. The open pit string was also digitized to produce a digital terrain model of the open
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Consolidated Financial Statements
30 June 2011
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pit with the aim of locating targets below the open pit floor. Due to time constraints, the geological data from
the hardcopy drill logs was not digitized.
MRG has recently purchased a digital database that contains historical exploration completed at Xanadu. This
data is to be reviewed and updated into the existing MRG database. It is hoped that further targets areas will
be identified from this historical data.
Collie South Coal
In late July 2011, MRG finalised agreement for an option to acquire a 100% interest of the Collie South Coal
project. The project sits in a region of known reserves of 2.4 billion tonnes and confirmed resource in excess
of 700 million tonnes. The Collie South target sits within this region and has potential consistent in
magnitude. Potential for new coal bearing basins identified in acquired tenements, with limited previous
exploration. Collie South Coal project covers 101 Blocks covering >50 km2 within the Collie basin 26km x
13km x 2km thick. Known Coal fields in the area have similar geological settings.
Since the acquisition, MRG has appointed the services of a locally based consultant Geologist to fast track the
development of exploration activities. Recent activities include the compilation of existing digital plans,
gravity data, previous drill locations and the acquisition of satellite images. Once the data has been compiled
it is planned to undertake ground based gravity surveys in the target zones.
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Consolidated Financial Statements
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Braemore Battery Gold and Copper Project
The Braemore Battery Project is located 5-10 kilometres north of the township of Leonora in the Eastern
Goldfields, WA. Previous exploration, mainly in the northern portion of the project area resulted in the
delineation of several Au-As soil anomalies associated with a structural disruption in sheared Archaean
sediments and volcanics. Limited RAB drilling over these soil anomalies had returned intercepts including 4m
@ 2 g/t and 4m @ 0.25 g/t Au which the Company plans to follow-up with further soil sampling and
drilling.
Field inspection of several of the anomalous zones indicates much of the area has laterite and soil cover over
deeply weathered rocks. It is considered that further soil sampling should be utilised to better outline
anomalies prior to further drilling.
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Consolidated Financial Statements
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Mulgul Gold Project
Mulgul is located 200 kilometres due north of Meekatharra and lies within the Proterozoic Bangemall Basin in
the Gascoyne Region. Copper mineralisation occurs within the project at the Mulgul Copper Prospect, where
a series of composite shears with narrow limonitic veins have developed. Soil sampling over the workings
have identified an anomalous 500mx 300m copper zone which requires infill sampling. Reconnaissance style
stream sediment sampling by previous explorers have also identified anomalous gold and copper drainage
areas. Further work aimed at testing the significance of these is also planned once the tenement is granted.
The project lies 15km south west of the Abra Base Metal deposit (50.3 million tonnes at 4.0% Pb and 10 g/t
Ag, and 9.8 million tonnes at 0.6% Cu and 0.5 g/t Au).
A geological review to assess potential target areas is to be completed by the Company.
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The Diorite Gold Project is located approximately ~30km northwest of Leonora and 10km west of the
King of the Hills Gold Mine in the Eastern Goldfields, WA. The project comprises three granted PL’s
covering a total of 542 Ha (5.4 km2), which straddle a granite-basalt contact. Previous work has been of a
reconnaissance nature, although structural targets prospective for gold have been interpreted to trend into the
project area.
The Company recently completed geological mapping and sampling with no significant results received or
geological targets identified.
Finally, the Bell Chambers Gold project comprises a single EL south of Sandstone in the Murchison
District. Limited exploration within the project has been of a reconnaissance nature only and the tenement is
considered to be a grassroots exploration project.
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Consolidated Financial Statements
30 June 2011
Corporate Governance Statement
20
This Corporate Governance Statement sets out the extent to which the Company's practices comply with the
ASX Corporate Governance Council's Principles of Good Corporate Governance and Recommendations
(Recommendations). The Recommendations are not mandatory.
ASX Corporate Governance
Council Recommendation
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1: Companies
should establish functions reserved
to the board and those delegated to
senior executives and disclose those
functions
responsibilities of
MRG policy
Compliance
Company's
Complies
The
Corporate
Governance framework includes a
Board Charter, which details the
specific
the
Board and identifies those areas of
authority delegated
senior
executives.
The Board will set performance
criteria to review the performance
of senior management.
to
the
The Board Charter is available on
the Company's website.
Recommendation 1.2: Companies
should disclose the process for
evaluating
the performance of
senior executives
Recommendation 1.3: Companies
should provide
information
indicated in the Guide to reporting
on Principle 1
Principle 2: Structure the board to add value
Recommendation 2.1: A majority
Two of
three
directors, being Albert Pietrzak
of the board should be independent
and
are
Shane
directors
independent directors.
Albert Pietrzak is the Chairman
and is an independent director.
Albert Pietrzak is the Chairman.
Andrew Van Der Zwan is the
Chief Executive Officer.
Recommendation 2.2: The chair
should be an independent director
Recommendation 2.3: The roles
of chair and chief executive officer
should not be exercise by the same
individual
Recommendation 2.4: The board
should
a nomination
committee
the Company's
establish
Turner,
into consideration
The Company does not currently
have a nomination committee.
appointments will be
Board
decided by the Board as a whole,
taking
the
needs of the Company at the
relevant time.
The Company Secretary plays an
integral role in monitoring the
conduct and activities of Board,
ensuring
an
appropriate mix of skills and
experience
reviewing
and
individual director's performance.
the Board has
Recommendation 2.5: Companies
should disclose the process for
evaluating the performance of the
board, its committees and individual
directors
Complies
Complies
Complies
Complies
Complies
The Board does not
consider it necessary given
the size of the Company's
current operations.
Complies
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
ASX Corporate Governance
Council Recommendation
21
MRG policy
Compliance
the
Recommendation 2.6: Companies
should provide
information
indicated in the Guide to reporting
on Principle 2
Principle 3: Promote ethical and responsible decision making
Recommendation 3.1: Companies
should establish a code of conduct
and disclose the code or a summary
of the code as to:
Complies
Complies
The Chief Executive Officer is
reviewing
responsible
the
for
the Company
performance of
Secretary.
This information, where relevant,
has been disclosed
the
Directors’ Report.
in
the Company's
the Company's
The Board has established a Code
of Conduct as to the practices
necessary to maintain confidence
in
integrity;
practices necessary to take into
legal
account
obligations and
the reasonable
expectations of shareholders and
the
and
responsibility
accountability of individuals for
reporting and investigating reports
of unethical practices.
The Code of Conduct is available
on the Company's website.
-
-
-
-
the practices necessary to
maintain confidence in the
company's integrity
the practices necessary to take
into account their legal
obligations and the reasonable
expectations of their
stakeholders
the responsibility and
accountability of individuals
for reporting and investigating
reports of unethical practices
trading in securities of the
Company
Recommendation 3.2: Companies
should establish a policy concerning
diversity and disclose the policy or a
summary of that policy. The policy
should include requirements for the
establish measurable
board
to
objectives
for achieving gender
diversity for the board and to assess
annually both the objectives and
progress in achieving them
Recommendation 3.3: Companies
should disclose
in each annual
report the measurable objectives for
achieving gender diversity set by the
the
board
diversity
progress
and
towards achieving them
Recommendation 3.4: Companies
in each annual
should disclose
in accordance with
policy
The Company does not currently
have a diversity policy.
Once
has
the
established its operations, it will
develop a policy that complements
its needs.
Company
The Company does not currently
have a diversity policy.
has
the
Once
established its operations, it will
develop a policy that complements
its needs.
Company
is committed to
prepare
Diversity
and
Board
review
appropriate
policy.
is committed to
prepare
Diversity
and
Board
review
appropriate
policy.
None at present.
None at present due to
the size of Company.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
in
in
the
MRG policy
ASX Corporate Governance
Council Recommendation
report the proportion of women
whole
employees
senior
organisation, women
executive positions and women on
the board
Recommendation 3.5: Companies
information
should provide
indicated in the Guide to reporting
on Principle 3
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1: The board
should establish an audit committee
the
The Code of Conduct and the
diversity policy (once established)
will be available on the Company's
website.
The Company does not currently
have an audit committee. The
functions of this committee will
be carried out by the whole Board.
The Company Secretary has
significant experience in financial
and accounting matters and will be
for
primarily
monitoring and preparing
the
External
reports.
financial
resources will be commissioned
where necessary.
responsible
22
Compliance
is committed to
prepare
Diversity
and
Board
review
appropriate
policy.
The Board does not
consider it necessary given
the size of the Company's
current operations.
Refer to comments in 4.1 above.
Refer to comments in 4.1
above.
Recommendation 4.2: The audit
committee should be structured so
that it:
-
-
-
consists only of non-executive
directors
consists of a majority of
independent directors
is chaired by an independent
chair, who is not chair of the
board
- has at least 3 members
Refer to comments in 4.1 above.
Refer to comments in 4.1 above.
the
Recommendation 4.3: The audit
committee should have a formal
charter
Recommendation 4.4: Companies
should provide
information
indicated in the Guide to reporting
on Principle 4
Principle 5: Make timely and balanced disclosure
Recommendation 5.1: Companies
should establish written policies
designed to ensure compliance with
disclosure
ASX Listing Rule
ensure
requirements
and
to
The Company has established a
Continuous Disclosure Policy
which applies to all directors and
senior management.
Refer to comments in 4.1
above.
Refer to comments in 4.1
above.
Complies
For personal use only
23
Compliance
Complies
Complies
Complies
Complies
Complies
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
MRG policy
for
the
ASX Corporate Governance
Council Recommendation
accountability at a senior executive
level
that compliance and
disclose those policies or a summary
of those policies
Recommendation 5.2: Companies
should provide
information
indicated in the Guide to reporting
on Principle 5
Principle 6: Respect the rights of shareholders
Recommendation 6.1: Companies
should design a communications
for promoting effective
policy
communication with shareholders
and encouraging their participation
at general meetings and disclose
their policy or a summary of that
policy
Recommendation 6.2: Companies
should provide
information
indicated in the Guide to reporting
on Principle 6
the
Principle 7: Recognise and manage risk
Recommendation 7.1: Companies
should establish policies for the
and management of
oversight
material business risks and disclose
a summary of those policies
Company's
The
Continuous
Disclosure Policy will be available
on the Company's website.
The Company is committed to all
shareholders
stakeholders
and
having equal and timely access to
material information regarding the
operations and results of
the
Company.
Where required, this information
will be provided via the ASX.
Otherwise,
information will be
made available on the Company's
website.
The Company will provide an
explanation of any departures (if
any)
the best practice
recommendations in Principle 6 in
its future annual reports.
from
considers
Given the size of the Company's
current operations, the Board has
formed the view that a separate
risk committee is not necessary.
The Board itself monitors all areas
of operational and financial risk
for
strategies
and
appropriate
risk management
arrangements on an ongoing basis.
If considered necessary, external
input will be sought to assess and
counteract identified risks.
The Board will
that
require
Andrew Van Der Zwan, as
Managing Director and Chief
Executive Officer, design and
implement an appropriate risk
management and internal control
system and provide a report to the
Board at the relevant time.
require management
implement
Recommendation 7.2: The board
to
should
the risk
design and
management and internal control
system to manage the company's
material business risks and report to
it on whether those risks are being
managed effectively. The board
should disclose that management
the
to
has reported
it as
to
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
24
that
ASX Corporate Governance
Council Recommendation
effectiveness of
the company's
management of its material business
risks
Recommendation 7.3: The board
should disclose whether
it has
received assurance from the CEO
the declaration
and CFO
provided in accordance with section
295A of the Corporations Act is
founded on a sound system of risk
management and internal control
and that the system is operating
effectively in all material respects in
relation to financial reporting risks
Recommendation 7.4: Companies
information
should provide
indicated in the Guide to reporting
on Principle 7
the
MRG policy
Compliance
The Board will seek this assurance
from Andrew Van Der Zwan as
Chief Executive Officer.
Complies
The Company will provide an
explanation of any departures (if
any)
the best practice
recommendations in Principle 7 in
its future annual reports.
from
Complies
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1: The board
should establish a remuneration
committee
The Company does not currently
have a remuneration committee. .
is responsible for
The Board
recommendations
making
regarding
and
director
management
remuneration
packages.
The Board does not
consider it necessary given
the size of the Company's
current operations
Recommendation
The
remuneration committee should be
structured so that it:
8.2:
-
-
consists of a majority of
independent directors
is chaired by an independent
chair
- has at least three members
clearly distinguish
Recommendation 8.3: Companies
should
the
structure of non-executive directors'
remuneration from that of executive
directors and senior executives
Refer to comments in 8.1 above.
Refer to comments in 8.1
above.
Complies
The Board is aware of the need to
ensure
remains
remuneration
competitive and consistent with
competitor companies and that
remuneration
the
performance of the Company over
time.
an
The directors performing
executive role are remunerated
their
based on
the scope of
reflects
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
ASX Corporate Governance
Council Recommendation
25
MRG policy
Compliance
as
the
and
determined
responsibilities
performance of the Company.
Non-executive directors are paid
fees
by
shareholders.
The Company will provide the
regarding
disclosure
requisite
executive remuneration policies in
its annual report.
The Company will provide an
explanation of any departures (if
the best practice
any)
recommendations in Principle 8 in
its future annual reports.
from
Complies
Recommendation 8.4: Companies
should provide
information
indicated in the Guide to reporting
on Principle 8
the
The Board actively monitors the Company's governance framework, related practices and overall
culture.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
26
Statement of Financial Position
As of 30 June 2011
Assets
Current
Cash and cash equivalents
Other receivables
Total current assets
Non-current
Exploration & Evaluation
Total non-current assets
Total assets
Liabilities
Current
Employee benefits
Trade and other payables
Total current liabilities
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Total equity
Notes
Consolidated
2011
$
8
7
12
10
11
9
5,145,091
92,370
5,237,461
1,146,623
1,146,623
6,384,084
4,716
150,034
154,750
154,750
6,229,334
6,545,994
(316,660)
6,229,334
This statement should be read in conjunction with the notes to the financial statements.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
27
Statement of Comprehensive Income
for the period 24/1/11 to 30/6/11
Revenue
Employee benefits expense
Administrative Expenses
Loss before tax
Tax expense
Lossafter tax
Other comprehensive income, net of tax
Total comprehensive losses
Earnings per share
Basic earnings per share
Earnings from continuing operations
Diluted earnings per share
Earnings from continuing operations
Notes
Consolidated
24/1/11 -
30/6/11
$
5
10
13
15
28,840
(127,795)
(217,705)
(316,660)
-
(316,660)
-
(316,660)
Cents
(1.33)
(1.33)
This statement should be read in conjunction with the notes to the financial statements.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
28
Statement of Changes in Equity
for the period 24/1/11 to 30/6/11
Balance at 24 January 2011
Other Comprehensive Income
Loss after income tax expense for the period
Transactions with owners
Issue of share capital
Less capital raising costs
Total transactions with owners
Share
Capital
$
Retained
earnings
$
Total
equity
$
-
-
-
-
(316,660)
(316,660)
6,967,200
(421,206)
6,545,994
-
-
-
6,967,200
(421,206)
6,545,994
Balance at 30 June 2011
6,545,994
(316,660)
6,229,334
This statement should be read in conjunction with the notes to the financial statements.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Statement of Cash Flows
for the period 24/1/11 to 30/6/11
Operating activities
Interest received
Payments to suppliers and employees
Net cash from continuing operations
Net cash used in operating activities
Investing activities
Payment for exploration & evaluation
Net cash used in investing activities
Financing activities
Proceeds from issue of share capital
Capital raising costs
Net cash from (used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
29
Consolidated
24/1/11 to
30/6/11
Notes
-
-
16
8
-
28,840
(329,944)
(301,104)
(301,104)
(72,924)
(72,924)
5,695,800
(176,681)
5,519,119
5,145,091
-
5,145,091
This statement should be read in conjunction with the notes to the financial statements.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
30
Notes to the consolidated financial statements
Nature of operations
1
The activities of MRG Metals Ltd and its subsidiary, MRG Metals (Australia) Pty Ltd are exploration
and development of gold, base metals and other commodities within Australia.
General information and statement of compliance
2
The consolidated general purpose financial statements of the Group have been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. Compliance with
Australian Accounting Standards results in full compliance with the International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
MRG Metals Ltd is the Group's ultimate parent company. MRG Metals Ltd is a public company
incorporated and domiciled in Australia.
The consolidated financial statements for the period ended 30 June 2011 were approved and authorised
for issue by the board of directors on 28 September 2011 (see note 24).
Changes in accounting policies
Overall considerations
3
3.1
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current
reporting period.
The adoption of these Accounting Standards and Interpretations did not have any impact on the
financial performance or position of the Group.
3.2
New Accounting Standards and Interpretations not yet mandatory or early
adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the Group for the reporting period ended 30 June
2011. The Group has not yet assessed the impact of these new or amended Accounting Standards and
Interpretations.
Summary of accounting policies
Overall considerations
4
4.1
The significant accounting policies that have been used in the preparation of these consolidated financial
statements are summarised below.
The consolidated financial statements have been prepared using the measurement bases specified by
Australian Accounting Standards for each type of asset, liability, income and expense. The measurement
bases are more fully described in the accounting policies below.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
31
Presentation of financial statements
4.2
AASB 101 requires two comparative periods to be presented for the statement of financial position in
certain circumstances. As this is the first reporting period since incorporation on 24 January 2011, no
comparatives are provided.
Basis of consolidation
4.3
The Group financial statements consolidate those of the parent company and its subsidiary
undertakings drawn up to 30 June 2011. Subsidiaries are all entities over which the Group has the
power to control the financial and operating policies. The Group obtains and exercises control through
more than half of the voting rights. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Amounts reported in the
financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year
are recognised from the effective date of acquisition, or up to the effective date of disposal, as
applicable.
Segment reporting
4.4
Operating segments are presented using the ‘management approach’, where information is presented on
the same basis as the internal reports provided to chief operating decision makers, being the Board of
Directors. The Board of Directors are responsible for the allocation of resource to operating segments
and assessing their performance.
Revenue
4.5
Interest income is recognised when received.
Operating expenses
4.6
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their
origin.
Exploration and evaluation
4.7
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of
interest. These costs are only carried forward to the extent that they are expected to be recouped
through the successful development of the area or where activities in the area have not yet reached a
stage that permits reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the
year in which the decision to abandon the area is made.
A regular review for impairment is undertaken of each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest.
Income taxes
4.8
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not
recognised in other comprehensive income or directly in equity.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
32
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian
Taxation Office (ATO) and other fiscal authorities relating to the current or prior reporting periods, that
are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or
loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have
been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the
carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on
the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary
differences associated with investments in subsidiaries and joint ventures is not provided if reversal of
these temporary differences can be controlled by the Group and it is probable that reversal will not
occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to
apply to their respective period of realisation, provided they are enacted or substantively enacted by the
end of the reporting period. Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised
against future taxable income.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in
profit or loss, except where they relate to items that are recognised in other comprehensive income (such
as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised
in other comprehensive income or equity, respectively.
Cash and cash equivalents
4.9
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value.
Other Receivables
4.10
Other receivables are recognised at amortised cost, less any impairment.
Trade Payables
4.11
These amounts represent liabilities for goods and services provided the Group prior to the end of the
financial period and which are unpaid, Due to their short term nature they are measured at amortised
cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Earnings per share
4.12
Basic earnings per share is calculated by dividing the profit attributable to the owners of MRG Metals
Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary
shares issued during the financial period.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
33
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares.
Equity
4.13
Share capital represents the nominal value of shares that have been issued. Any transaction costs
associated with the issuing of shares are deducted from share capital, net of any related income tax
benefits.
Retained earnings include all current and prior period retained profits.
4.14
Post employment benefits and short-term employee benefits
The Group provides post employment benefits through various defined contribution plans.
A defined contribution plan is a superannuation plan under which the Group pays fixed contributions
into an independent entity. The Group has no legal or constructive obligations to pay further
contributions after its payment of the fixed contribution. The Group contributes to several plans and
insurances for individual employees that are considered defined contribution plans. Contributions to the
plans are recognised as an expense in the period that relevant employee services are received.
Short-term employee benefits, including annual leave entitlement, are current liabilities included in
‘employee benefits’, measured at the undiscounted amount that the Group expects to pay as a result of
the unused entitlement.
Provisions, contingent liabilities and contingent assets
4.15
Provisions are recognised when present obligations as a result of a past event will probably lead to an
outflow of economic resources from the Group and amounts can be estimated reliably. Timing or
amount of the outflow may still be uncertain. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on
the most reliable evidence available at the reporting date, including the risks and uncertainties associated
with the present obligation. Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering the class of obligations as a whole.
Provisions are discounted to their present values, where the time value of money is material.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
Possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an
asset are considered contingent assets.
Goods and Services Tax (GST)
4.16
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables
in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST
components of investing and financing activities, which are disclosed as operating cash flows.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
34
4.17
Significant management judgement in applying accounting policies
The following are significant management judgements in applying the accounting policies of the Group
that have the most significant effect on the financial statements.
Deferred tax assets
The assessment of the probability of future taxable income in which deferred tax assets can be utilised is
based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable
income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the
numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a
positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it
can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition
of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed
individually by management based on the specific facts and circumstances. Estimation uncertainty
When preparing the financial statements management undertakes a number of judgements, estimates
and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results may differ from the judgements, estimates and assumptions made by management,
and will seldom equal the estimated results.
Information about significant judgements, estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Exploration and evaluation assets
At each reporting date, the directors review the carrying amount of each area of interest, with reference
to the indicators of impairment outlined in AASB 6 Exploration for and Evaluation of Mineral
Resources. No indicators of impairment were noted in the current period.
Tax Losses
The Grouphas not recognised a deferred tax asset with regard to unused tax losses and other temporary
differences, as it has not been determined whether the Company will generate sufficient taxable income
against which the unused tax losses and other temporary differences can be utilised in the foreseeable
future.
Share based payments
The Group measures the cost of share based payments at fair value at the issue date.
5
Revenue
Interest received
Consolidated
24/1/11 -
30/6/11
$
28,840
28,840
Segment reporting
6
The Group is organised into one operating segment, which is the exploration and development of gold,
base metals and other commodities within Australia. This operating segment is based on the internal
reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating
Decision Makers) in assessing performance and in determining the allocation of resources.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
7
Other receivables
GST receivables
Prepayments
Other receivables
The receivables noted above are not impaired nor past due.
Cash and cash equivalents
8
Cash and cash equivalents include the following components:
Cash at bank and in hand:
AUD
Short term deposits (AUD)
Cash and cash equivalents
35
Consolidated
2011
$
49,704
42,666
92,370
Consolidated
2011
$
1,085,091
4,060,000
5,145,091
The effective interest rate on short-term bank deposits is 6.1%; these deposits have an average maturity
of 180 days but can be redeemed prior to maturity without penalty on interest earned.
Equity
Share capital
9
9.1
The share capital of MRG Metals Ltd consists only of fully paid ordinary shares, the shares do not have
a par value. All shares are equally eligible to receive dividends and the repayment of capital and
represent one vote at the shareholders' meeting of MRG Metals Ltd.
Movement in share capital
Date Issued
Details
24 Jan 2011
24 Jan 2011
8 March 2011
11 March 2011
8 June 2011
8 June 2011
Shares issued and fully paid:
Issued to Directors at $0.005
Issued to Consultants at $0.005
Issued to Seed Capitalists at $0.0625
Issued to Promoters at $0.06251
Issued to Tenement Vendors at $0.20
Issued to Public on IPO at $0.20
Total issued shares at 30 June 2011
Less costs of capital raising for above items2
Total share capital at 30 June 2011
Quantity
2,800,000
12,000,000
50,000,000
3,600,000
5,250,000
12,466,000
86,116,000
Consolidated
24/1/11 - 30/6/11
$
14,000
60,000
3,125,000
225,000
1,050,000
2,493,200
6,967,200
(421,206)
6,545,994
1These shares were awarded to promoters, whom assisted with the seed capital raising, at an issue price
of $0.001 per share (totalling $3,600). These shares have been recognised at the fair value of the shares
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
as denoted by the issue price of the seed capital raising.
36
2 Included in the costs of capital raising is $221,400 of share based payments to promoters.
Dividends
9.2
No dividends were declared or paid during the year. There are no franking credits outstanding at period
end.
Employee remuneration
Employee benefits expense
10
10.1
Expenses recognised for employee benefits are analysed below:
Salaries and fees
Superannuation
Employee benefits expense
Consolidated
24/1/11 -
30/6/11
$
117,633
10,162
127,795
Employee benefits
10.2
The liabilities recognised for employee benefits in the statement of financial position consist of the
following amounts:
Current:
- Other short term employee obligations
Consolidated
2011
$
4,716
4,716
The current portion of these liabilities represents the Group’s obligations to its current employees that
are expected to be settled during 2012. Other short-term employee obligations arise from accrued annual
leave entitlement at the reporting date.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Trade and other payables
11
Trade and other payables recognised in the statement of financial position can be analysed
as follows:
Current
- Trade payables
- Other payables and accrued expenses
12
Exploration and evaluation assets
Cost as at 24 Jan 2011
Additions:
Xanadu – 4,000,000 shares @ $0.20 and $25,100
Mulgul - $12,254
Braemore Battery - 1,000,000 shares @ $0.20 and $20,000
Diorite/Bellchambers - 250,000 shares @ $0.20 and $5,000
Other acquisition and exploration costs
Cost as at 30 June 2011
37
Consolidated
2011
$
96,782
53,252
150,034
Consolidated
2011
$
825,100
12,254
220,000
55,000
34,269
1,146,623
The shares issued as consideration for tenement purchases are equivalent to the fair value of those
tenements at the issue price of the Initial Public Offering.
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on
successful development and commercial exploitation, or alternatively, sale of the respective areas of
interest.
Income tax expense
13
The relationship between the expected tax expense based on the tax rate of MRG Metals Ltd and the
reported tax expense in profit or loss can be reconciled as follows, also showing major components of
tax expenses:
Profit/(loss) before tax
Expected tax expense/(benefit) @ 30%
Adjustment for non-deductible expenses:
- Movement in accruals
- Movement in provisions
-
Incorporation expenses
- Exploration and evaluation expenses
Current period tax loss not recognised
Current tax expense
Consolidated
24/1/11 -
30/6/11
$
(316,660)
(94,998)
10,800
1,415
457
(7,497)
(89,823)
89,823
-
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Deferred tax expense:
- Temporary differences
- Unused tax losses
Deferred tax assets not recognised
38
5,175
89,823
94,998
The above potential tax benefit has not be recognised as the recovery is uncertain.
The taxation benefit of tax losses and temporary differences not brought to account will only be
obtained if:
-
the Group derives future assessable income of a nature and an amount sufficient to enable the
benefit from the deductions for the losses to be realised;
the Group continues to comply with the conditions for deductibility imposed by law; and
no change in tax legislation adversely affects the Group in realising the benefits from deducting
the tax losses.
-
-
14
Auditor remuneration
Audit services
Auditors of MRG Metals Ltd – Grant Thornton
- Audit of the financial report
Audit services remuneration
Other services
Auditors of MRG Metals Ltd – Grant Thornton
- Preparation of an Investigating Accountants Report
Total other service remuneration
Total Auditor’s remuneration
Consolidated
24/1/11 -
30/6/11
$
20,000
20,000
9,800
9,800
29,800
Earnings per share
15
The weighted average number of shares for the purposes of diluted earnings per share can be
reconciled to the weighted average number of ordinary shares used in the calculation of basic
earnings per share as follows:
Loss after income tax
Weighted average number of shares used in basic earnings per share
Weighted average number of shares used in diluted earnings per share
Earnings Per Share
Diluted Earnings Per Share
Consolidated
2011
(316,660)
23,807,858
23,807,858
(1.3) cents
(1.3) cents
As there were no options issued during the period, diluted earnings per share is the same as basis
earnings per share.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
16
Reconciliation of cash flows from operating activities
Cash flows from operating activities
Profit/(loss) for the period
Change in other assets
Change in trade and other payables
Change in other employee obligations
Net cash from operating activities
Non cash investing and financing activities
39
Consolidated
24/1/11 -
30/6/11
$
(316,660)
(67,737)
78,577
4,716
(301,104)
The Group purchased tenements via share based payments (refer to Note 12) and also awarded shares
to promoters of seed capital (refer to Note 9.1).
Related party transactions
17
The Parent entity is MRG Metals Ltd.
MRG Metals Ltd owns 100% of the shares of MRG Metals (Australia) Pty Ltd.
MRG Metals (Australia) Pty Ltd owns the mining tenements and has no other Assets or Liabilities.
The Group's related parties include its key management and others as described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no
guarantees were given or received.
Transactions with related parties
17.1
The following transactions occurred with related parties
Payment for goods and services:
During the year the Company entered into an agreement with Calatos Pty Ltd in relation to consulting
fees for services relating to marketing, dealing with shareholders and capital raising. The fees payable are
$120,000 per annum. At the time of entering into the agreement, Mr Bruce McFarlane, a shareholder of
Calatos Pty Ltd, held a controlling interest in MRG Metals Ltd.
Calatos Pty Ltd was the recipient of 250,000 shares at $0.001 per share as a part of the allocation of
shares to promoters whom assisted the Group with its seed capital raising as noted at Note 9.1. These
shares had a fair value of $15,626 and have been recognised as capital raising costs.
The Company also purchased the tenement at Mulgul from Calatos Pty Ltd for $12,254.
The Group used the accounting services of RSM Bird Cameron, an entity associated with Mr. Turner.
The amounts billed were based on normal market rates and amounted to $68,000.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
40
Receivable from and payable to related parties
There were no trade receivable from or trade payables to related parties.
Loans to/from related parties
There were no loans to or from related parties at the reporting date.
Terms and conditions
All transactions are made on normal commercial terms and conditions and at market rates.
17.2 Transactions with key management personnel
Key management of the Group are the Board of Directors. Key management personnel remuneration is
set out in the Remuneration Report in the Director’s Report.
Equity instruments held by KMP
17.3
The number of shares in the Company during the 2011 reporting period by each of the key management
personnel of the Group, including their related parties are set out below:
Year ended 30 June 2011
Van Der Zwan
Pietrzak
Turner
Fammartino
Balance at
start of
year
-
-
-
-
-
Received
on
exercise
Other
changes
Held at
the end of
the
reporting
period
-
-
-
-
-
-
-
-
(1,860,000)
2,160,000
2,130,000
1,470,000
-
(1,860,000)
5,760,000
Additions
2,160,000
2,130,000
1,470,000
1,860,000
7,620,000
These shares were acquired in initial capital raising of Company, via issue to Seed Capitalists and via
Initial Public Offering. Mr. Fammartino resigned on 14 February 2011.
Contingent assets and contingent liabilities
18
The Group has no contingent assets as 30 June 2011.
The Group has no contingent liabilities at 30 June 2011.
19
Commitments for expenditure
Exploration and evaluation:
Within 12 months
2011
$
310,760
310,760
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
41
Exploration and evaluation:
In order to maintain current rights of tenure to exploration tenements, the Group is required to outlay
rentals and to meet the minimum expenditure requirements of the State Mine Departments. Minimum
expenditure commitments may be subject to renegotiation and with approval may otherwise be avoided
by sale, farm out or relinquishment. These obligations are not provided in the accounts and are payable.
20
Financial instrument risk
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The main types of risks are
market risk (including interest rate risk), credit risk and liquidity risk.
The Group's risk management is carried out by the board of directors, and focuses on actively securing
the Group's short to medium-term cash flows by minimising the exposure to financial markets.
The Group does not engage in the trading of financial assets for speculative purposes nor does it write
options. The most significant financial risks to which the Group is exposed are described below.
Foreign currency sensitivity
20.1
To date, all of the Group's transactions have been carried out in Australian Dollars.
Interest rate sensitivity
20.2
The Group's only exposure to interest rate risk is in relation to deposits held. Deposits are held with
reputable banking financial instutions.
At 30 June 2011, there was $4,060,000 on deposit at 6.10% (refer Note 8)
An increase/decrease by 30% or 1.83 basis points would have a favourable/adverse affect on profit for
the year of $74,298. The percentage change is based on the expected volatility of interest rates using
market data and analysts’ forecasts.
Credit risk analysis
20.3
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is
exposed to minimal credit risk as its only exposure is to interest receivable and GST refunds.
Liquidity risk analysis
20.4
Liquidity risk is that the Group might be unable to meet its obligations. The Group manages its liquidity
needs by monitoring actual and forecast cash inflows and outflows due in day-to-day business.
The Group's working capital, being current assets less current liabilities, at 30 June 2011 was $5,082,711.
Based on this, the directors are satisfied the Group will have sufficient funds to pay its debts as and
when they fall due.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
42
As at 30 June 2011, the Group's non-derivative financial liabilities have contractual maturities (including
interest payments where applicable) as summarised below:
30 June 2011
Trade and other payables
Total
Current
Non current
Within 6
months
$
150,034
150,034
6 to 12
months
$
-
-
1 to 5 years
$
-
-
Later than 5
years
$
-
-
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying
values of the liabilities at the reporting date. Unless otherwise stated, the carrying amounts of financial
instruments reflect their fair values due to their short term nature.
Capital risk management
21
The Group’s objectives when managing capital is to ensure the Group's ability to continue as a going
concern so that it can provide an adequate return to shareholders.
The Group would look to raise capital when an opportunity to invest in a business, company or tenement is
seen as value adding.
Post-reporting date events
22
Since the end of the year the following significant events have occurred:
• On 4 July 2011, the Group completed the acquisition of tenements prospective for Gold at
Kalgoorlie East, WA. This resulted in 1,000,000 shares being issued and payment of $20,000;
• On 26 July 2011, the Group completed an option for the 30% acquisition of tenements prospective
for Coal and Bauxite at Collie South, WA. This resulted in 1,000,000 shares being issued and payment
of $50,000; and
• On 12 August 2011, the Company issued a non renounceable Options Prospectus for 1 option for
every 2 shares held, to issue up to 44,058,000 options and raise $440,580 before costs. On 28
September 2011, the Company allotted 38,816,708 options, to raise $388,167. These options are
exerciseable at $0.25 within five years.
• There are no other events occurring since the end of the year that have, or may, significantly affect
the Group’s operations, results of those operations or the state of affairs of the Group.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Parent entity information
23
Information relating to MRG Metals Ltd (‘the parent entity’)
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Statement of comprehensive income
Profit/(loss) for the period
Total comprehensive income
43
2011
$
5,237,461
6,384,084
154,750
154,750
6,545,994
(316,660)
6,229,334
(316,660)
(316,660)
Authorisation of financial statements
24
The consolidated financial statements for the period ended 30 June 2011 were approved by the board of
directors on 28 September 2011.
Albert Pietrzak
Chairman
Shane Turner
Director/Secretary)
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
Directors’ declaration
44
1. In the opinion of the directors of MRG Metals Ltd:
a
the consolidated financial statements and notes of MRG Metals Ltd are in accordance with the
Corporations Act 2001, including
i.
giving a true and fair view of its financial position as at 30 June 2011and of its performance for
the financial period ended on that date; and
ii.
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b there are reasonable grounds to believe that MRG Metals Ltd will be able to pay its debts as
and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act
2001 from the chief executive officer and chief financial officer for the financial period ended 30 June
2011.
3. The consolidated financial statements comply with International Financial
Reporting Standards.
Signed in accordance with a resolution of the directors:
Dated at Melbourne, the 28th day of September 2011
_______________________Albert Pietrzak
Director
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
45
Grant Thornton Audit Pty Ltd
ACN 130 913 594
Level 2
215 Spring Street
Melbourne
Victoria 3000
GPO Box 4984
Melbourne
Victoria
3001
T +61 3 8663 6000
F +61 3 8663 6333
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of MRG Metals Limited
Report on the financial report
We have audited the accompanying financial report of MRG Metals Limited (the “Company”), which
comprises the consolidated statement of financial position as at 30 June 2011, the consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the period then ended, notes comprising a summary of significant
accounting policies and other explanatory information and the directors’ declaration of the consolidated
entity comprising the Company and the entities it controlled at the period’s end or from time to time
during the financial period.
Directors responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view of the financial report in accordance with Australian Accounting Standards and the
Corporations Act 2001. This responsibility includes such internal controls as the Directors determine are
necessary to enable the preparation of the financial report to be free from material misstatement,
whether due to fraud or error. The Directors also state, in the notes to the financial report, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance
with the Australian equivalents to International Financial Reporting Standards ensures that the financial
report, comprising the financial statements and notes, complies with International Financial Reporting
Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards which require us to comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material misstatement.
an opinion on the effectiveness of the Company’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Directors, as well as evaluating the overall presentation of the
financial report.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
46
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the Company’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating
the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Electronic presentation of audited financial report
This auditor’s report relates to the financial report of MRG Metals Limited and controlled entities for
the period ended 30 June 2011 included on MRG Metals Limited’s web site. The Company’s Directors
are responsible for the integrity of MRG Metals Limited’s web site. We have not been engaged to report
on the integrity of MRG Metals Limited’s web site. The auditor’s report refers only to the statements
named above. It does not provide an opinion on any other information which may have been
hyperlinked to/from these statements. If users of this report are concerned with the inherent risks
arising from electronic data communications they are advised to refer to the hard copy of the audited
financial report to confirm the information included in the audited financial report presented on this
web site.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Auditor’s opinion
In our opinion:
a
the financial report of MRG Metals Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011
and of its performance for the period ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
47
b
the financial report also complies with International Financial Reporting Standards as disclosed in
the notes to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 8 to 10 of the directors’ report for the
period ended 30 June 2011. The Directors of the Company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of MRG Metals Limited for the period ended 30 June 2011,
complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B. Taylor
Director - Audit & Assurance
Melbourne, 28 September 2011.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
48
ASX Additional Information
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this
report is set out below. The information is effective as at 21 September 2011.
Substantial Shareholders
The number of substantial shareholders and their associates are set out below:
Shareholder
Ottawa Resources P/L
Number of Shares
12,530,000
Voting Rights
Ordinary shares
On a show of hands, every member present at a
meeting in person or by proxy shall have one
vote and upon a poll each share shall have one
vote
Options
No voting rights
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
1,000,000 and over
Shares
2
33
140
177
120
472
There were 3 holders of less than a marketable parcel of ordinary shares.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
49
Ordinary Shares
Number Held %of issued shares
3.09
2.99
2.75
2.75
2.75
2.58
2.06
1.79
1.79
1.72
1.72
1.72
1.37
1.37
1.37
1.37
1.37
1.07
1.06
1.06
1.06
1.03
39.81
900,000
870,000
800,000
800,000
800,000
750,000
600,000
520,000
520,000
500,000
500,000
500,000
400,000
400,000
400,000
400,000
400,000
312,500
309,500
300,000
300,000
300,000
11,582,000
Twenty largest quoted shareholders
PW Askins & HM Ansell
UBS Wealth Management Australia Nominees P/L
Bigson P/L
G & C Hedt P/L
J Powell
Gulf Country Investments P/L
L Knight
Tigerland Investments P/L
Ottawa Resources P/L
Aznanob P/L
Life-Style Connections P/L
TRR Investments P/L
A & J Turner P/L
Notemarl P/L
S Popovic
Rylet P/L
33rd Infinity P/L
RL Staggard & DL Berry
HSBC Custody Nominees (Australia) Ltd
K Van Der Zwan
N Fammartino
RA Hewett
Restricted equity securities
The following securities are subject to escrow:
-
-
-
-
28,336,000
5,250,000
1,000,000
24,439,000
59,025,000
Escrowed until 18 March 2012
Escrowed until 27 May 2012
Escrowed until 11 August 2012
Escrowed until 8 June 2013
Securities exchange
The Company is listed on the Australian Securities Exchange under the code MRQ.
Tenements
The Tenements held by the Company at reporting date are as follows:
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2011
50
Project
Xanadu
Bell Chambers
Diorite
Diorite
Diorite
Mulgul
Braemore Battery
Braemore Battery
Braemore Battery
Braemore Battery
Braemore Battery
Braemore Battery
Braemore Battery
Braemore Battery
Braemore Battery
Tenement
% Owned
P52/1366
P52/1367
P52/1368
P52/1369
P52/1372
P52/1373
P52/1374
P52/1375
P52/1376
P52/1377
P52/1378
P52/1379
P52/1380
P52/1381
E57/778
P37/7651
P37/7652
P37/7653
E52/2669
P37/7008
P37/7009
P37/7765
P37/7766
P37/7767
P37/7768
P37/7769
P37/7070
P37/7771
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
For personal use only