Musgrave Minerals Limited
Annual Report 2012

Plain-text annual report

Annual Report Annual Report Annual Report Annual Report Annual Report Exploration for base metal deposits, silver and gold mineralisation in South Australia. ABN 12 143 890 671 Musgrave Minerals Ltd is a dedicated mineral resources company focused on base metal, silver and gold exploration in South Australia. The Company’s functional and presentational currency is Australian Dollars. A description of the Company’s operations and principal activities is included in the Review of Operations and the Directors’ Report. ASX Code: MGV Issued Shares: 121M Cash Balance: $13.6M ABN: 12 143 890 671 Top shareholders Mithril Resources Ltd Independence Group NL Goldsearch Ltd JP Morgan Nominees Australia Limited Barrick (Australia Pacific) Ltd Integra Mining Ltd i Musgrave Minerals Annual Report 2012 Corporate Information Directors Share Registry Graham Ascough (Non-Executive Chairman) Computershare Investor Services Pty Ltd Robert Waugh (Managing Director) Level 5, 115 Grenfell Street Kelly Ross (Non-Executive Director) ADELAIDE, SA, 5000 John Percival (Non-Executive Director) Company Secretary Donald Stephens Registered Office C/- HLB Mann Judd (SA) Pty Ltd 167-169 Fullarton Road DULWICH, SA, 5065 Principal Place of Business 19 Richardson Street, WEST PERTH, 6005 Western Australia T: +61 (8) 9324 1061 F: +61 (8) 9324 1014 Auditor Grant Thornton South Australian Partnership Chartered Accountants Level 1, 67 Greenhill Road WAYVILLE SA 5034 Legal Advisors O’Loughlins Lawyers Level 2, 99 Frome Street ADELAIDE, SA, 5000 Bankers National Australia Bank 22 - 28 King William Street info@musgraveminerals.com.au ADELAIDE SA 5000 www.musgraveminerals.com.au Musgrave Minerals Annual Report 2012 ii Contents 1 Chairman’s Letter 2 Review of Operations 11 Summary of Tenements 12 Directors’ Report 19 Corporate Governance Statement 25 Auditor’s Independence Declaration 26 Statement of Comprehensive Income 27 Statement of Financial Position 28 Statement of Changes in Equity 29 Statement of Cash Flows 30 Notes to the Financial Statements 48 Directors’ Declaration 49 Independent Auditor’s Report 52 ASX Additional Information iii Musgrave Minerals Annual Report 2012 Chairman’s Letter Dear Fellow Shareholder, It is my pleasure to present the 2012 annual report for Musgrave Minerals Limited. As the Company listed on the Australian Securities Exchange in April 2011, this has been our fi rst full year of operation, and it has been pleasing to see so much activity and exploration completed on our projects in the Musgrave Province of north-west South Australia in the past 12 months. Our very busy year has included four drilling programs completed at two sites – the Moorilyanna Prospect at the Mimili Project, and at the Deering Hills Project. This is great progress by our team in which we identifi ed primary copper mineralisation at Moorilyanna and intersected disseminated stringer copper sulphides in Giles Complex gabbros in diamond core drilled at Musgrave has built a strong exploration team that is dedicated to the task at hand – continuing to identify and test high quality targets across our project portfolio. Musgrave will maintain its strategy of defi ning and testing high-quality base metal targets within the region, whilst actively seeking additional opportunities to diversify our portfolio. In closing, I would like to thank the management and staff of Musgrave for their work over the past year. There is much work to do to follow up on the past year’s activities, and we look forward to seeing the results of this over the coming year. Graham Ascough Deering Hills. These drill programs came on the back of a great Chairman deal of work including ground electromagnetic and geophysical surveys and vacuum drilling, which helped our team identify these targets. We will continue to work to defi ne and test targets within our high-quality portfolio of tenements over the coming year, with our primary aim to identify and defi ne an economic mineral resource. An exciting development for Musgrave in May 2012 was the granting of four new Exploration Licences in far north-west South Australia. The granting of these licences more than doubles Musgrave’s previous granted exploration area from 5,590km2 to over 12,800km2. These new licences are highly prospective for copper and nickel sulphide mineralisation. The receipt of these licences demonstrates the relationship that Musgrave has forged with Anangu Pitjantjatjara Yankunytjatjara (“APY” – a body corporate established by the APY Lands Rights Act 1981, SA) and Traditional Owners. These are the fi rst mineral Exploration Licences to be granted in APY lands since 2008, and Musgrave is the fi rst company to hold active mineral Exploration Licences over these areas, providing us with a great opportunity. We look forward to commencing our work programs on these new areas in the year ahead. Musgrave has recently announced a new joint venture with Menninnie Metals Pty Ltd on the Menninnie Dam silver-zinc-lead project in the Southern Gawler Craton of South Australia. This is an excellent opportunity for Musgrave and we look forward to drill testing new targets at Menninnie Dam in 2012-2013 in conjunction with our program in the Musgrave Ranges. Musgrave Minerals Ltd Annual Report 2012 1 Review of Operations Musgrave Minerals Ltd (‘Musgrave Minerals’ or the ‘Company’) is dedicated to discovering deposits of economic mineralisation in South Australia, using systematic and well- resourced exploration methods and programs. We have a leading exploration landholding in the Musgrave region, with tenements covering an area in excess of 50,000km2 (Figure 1), and have recently expanded our portfolio by establishing a joint venture with Menninnie Metals Pty Ltd for the Menninnie Dam silver-zinc-lead project in the Southern Gawler Craton of South Australia. The Musgrave Province is one of the last under-explored frontiers for mineral exploration in Australia, and is prospective for a number of commodities. The centrepiece is the recognition of, and access to, the under-explored potential of the Giles Anangu Pitjantjatjara Yankunytjatjara (“APY”) land (Aboriginal freehold land). Musgrave Minerals continues to develop the strong relationship with the APY people that our cornerstone investor companies had commenced. For many years the Musgrave Province has been deemed prospective for mineral exploration, although exploration has been relatively restricted until more recent times. Access has now improved with Musgrave Minerals successfully negotiating the grant of four new exploration licence applications in areas never before granted to mineral explorers. Musgrave Minerals now holds 11 granted exploration licences totalling more than 12,900km2. We are in the process of advancing additional tenements through the granting process and expect to have exploration access to more new prospective ground in the next 12 months. The key to exploration success in the Musgrave Province is the adoption and implementation of the latest technology and geological expertise with a systematic exploration approach combined with a commitment to strong community relations. Complex, a 1080Ma, aged, mafic-ultramafic, layered, intrusive During Musgrave Minerals’ first full year of operation, the complex that hosts the massive Nebo/Babel deposit, a major Company focused on two main project areas, Deering Hills and nickel and copper sulphide deposit in the Western Australian Moorilyanna (Figure 1). During this period, we successfully portion of the province. The recent discovery of high-grade magmatic nickel-copper sulphides at the Nova deposit in the Fraser Range of Western Australia by Sirius Resources has highlighted the potential of the ~1300Ma mafic intrusives within the Birksgate Complex of the eastern Musgrave to host similar nickel-copper sulphide deposits. This is potentially significant and opens a new window of opportunity within the Musgrave Province which hosts similar age and style rocks to those identified at Nova. In South Australia, the Musgrave Province lies almost entirely within Figure 1: Musgrave Minerals’ Project Location Map 2 Musgrave Minerals Ltd Annual Report 2012 completed three drilling campaigns at Deering Hills and one We have established a strong exploration team that will at Moorilyanna, along with a range of other field activities continue to focus on the exploration and potential development to advance targets to a drill-ready stage. The Company has of mineral projects in the Musgrave region of South Australia. successfully demonstrated the prospectivity of the area by identifying magmatic nickel-copper sulphide mineralisation at Deering Hills and primary hydrothermal copper mineralisation at Moorilyanna. Musgrave Minerals is continuing to define new targets through the use of 3D magnetic and gravity modelling along with airborne electromagnetics, geological mapping, geochemistry and ground electrical geophysical surveys. The Company is developing a pipeline of targets for drill testing in the next 12 months. The exploration completed to date clearly demonstrates our ability to be an effective explorer in the region and validates our exploration strategy and targeting methodologies. Corporate Musgrave Minerals Ltd listed on the Australian Securities Exchange (“ASX”) on 29 April 2011. During the Company’s first full financial year since listing, Musgrave Minerals spent $4.7 million on exploration and administration activities. At the end of June 2012, the Company was well resourced, holding $13.6 million in cash. As part of the Company’s growth strategy, the Board and management are using expertise and industry experience to assess a range of additional opportunities for joint venture or acquisition. Musgrave have recently executed a Heads of Agreement with Menninnie Metals Pty Ltd on the Menninnie Dam Ag-Zn-Pb project in the Southern Gawler Craton of South Australia. The Menninnie Dam project has a number of exciting targets the Company will drill test in the coming 12 months. Exploration Activities Mimili Project EL3954 & EL3955 (100% Musgrave Minerals Ltd) • Primary copper mineralisation intersected in reverse circulation (RC) drilling at Moorilyanna • Priority drill target at Ragnar identified • Two mid-late time ground EM conductors awaiting drill testing RC drill bits MGV Board members (from left) Graham Ascough, John Percival, Robert Waugh and Kelly Ross Musgrave Minerals Ltd Annual Report 2012 3 Musgrave Minerals owns 100% of the Mimili Project which consists of two exploration licences, EL3955 and EL3954. The project is situated 40km west of the Stuart Highway and approximately 70km north-west of Marla in South Australia. Exploration within the Mimili Project was focused at the Moorilyanna Prospect during the year with the Company undertaking reconnaissance mapping, sampling, an induced polarisation (IP) survey and an RC drilling program. The information gleaned from this work has been invaluable in increasing our understanding of the geology of the area and its regional prospectivity. RC sampling at Moorilyanna RC sampling at Moorilyanna Drilling of six co-incident IP and copper geochemical targets intersected primary copper mineralisation over narrow widths. The drilling has highlighted a number of new targets for follow- up work, including the Ragnar target (Figures 2 and 3). A significant IP anomaly has been identified at Ragnar, with co- incident copper mineralisation (Figure 2). Drill hole MOORC016 was drilled to test the IP target but stopped short of the target depth due to a high influx of ground water. The hole terminated in highly altered sheared gabbro with visible disseminated sulphides and 0.14% Cu near the end of hole (Figure 4). The Ragnar target is located at an excellent geological address on the edge of a regional graben margin fault and intersecting north- west structure. A regional geochemical program is planned for this target before drilling will recommence. 4 Musgrave Minerals Ltd Annual Report 2012 RC drill rig console Figure 2: Location of Mimili Project geochemical anomalies and the Ragnar target on a grey scale aeromagnetic image Musgrave Minerals Ltd Annual Report 2012 5 RC sampling at Moorilyanna Figure 3: Location of Moorilyanna drill holes on geochemical Cu grid and aster image Figure 4: IP inverted chargeability model for Ragnar cross section showing untested target 6 Musgrave Minerals Ltd Annual Report 2012 Deering Hills Project The Giles complex mafic intrusives are host to the massive nickel-copper sulphide mineralisation on the Western Australian EL3941 & EL3942 (100% Musgrave Minerals Ltd) side of the Musgrave Province at Nebo-Babel, which is currently • Magmatic sulphides identified in drilling at the Valen target owned by BHP Billiton. • Strong off-hole conductor identified in DHEM at Valen • Mt Alvey and Minbar nickel-copper-PGE geochemical targets identified A regional gravity survey was undertaken at Deering Hills and has helped to prioritise targets for drill testing. The gravity and magnetic surveys together with geochemical vacuum drilling has defined a number of co-incident targets for drill testing. The current exploration methodology has proven to be effective and The Deering Hills Project consists of two wholly-owned a new versatile time domain electromagnetic survey (“VTEM”) tenements, EL3941 Hanging Knoll and EL3942 Mount Hardy, will be undertaken to cover a regional gravity anomaly south of located in the central region of the Musgrave Province in far Pallatu (Figure 6). northern South Australia. EL3942 is one of the most prospective tenements in the portfolio and has been one of the focuses of our exploration. The regional vacuum drilling program has identified a number of very good geochemical targets for follow-up exploration. The Minbar target (Figure 6) is defined over a strike length of more than 5,000m with peak values of 1,847ppm Ni, 482ppm Cu and 114ppb Pt and Pd in weathered ultramafic at shallow depths. Minbar is co-incident with a strong gravity and magnetic anomaly. Diamond drilling at Deering Hills A regional vacuum and two diamond drilling programs have been completed during the year at Deering Hills and have confirmed the presence of stringer and disseminated magmatic sulphide within Giles formation gabbros within the project area. The best intersection was 0.31m @ 0.25% Cu from 116.07m down hole in DEEDDH004 at the Valen prospect. This result is encouraging as it supports the hypothesis that we could be close to larger, higher grade nickel-copper sulphide targets. A down- hole electromagnetic (“DHEM”) survey has identified a strong off-hole conductor in DEEDDH004 which is yet to be drill tested. This is also encouraging for the adjacent targets at Pallatu (Figure 5). Cutting and sampling diamond drill core at Deering Hills Musgrave Minerals Ltd Annual Report 2012 7 Figure 5: Valen drill target shown on airborne conductivity image within the Deering Hills Project Figure 6: 3D gravity image showing Pallatu EM targets in relation to regional Ni-Cu-PGE geochemical anomalies and new VTEM survey area 8 Musgrave Minerals Ltd Annual Report 2012 Mt Woodroffe Project EL3940 (100% Musgrave Minerals Ltd) • High priority ‘Lister’ target identified The Mt Woodroffe Project is situated on EL3940 within a large, geologically complex area, straddling the Mann Fault Complex and Woodroffe Thrust Zone in the central Musgrave Province. A high priority VTEM target has been highlighted for follow-up ground EM. The target titled ‘Lister’ (Figure 7) is a co-incident VTEM, magnetic, gravity and geochemical anomaly occurring at the junction of two distinct geological features in a similar setting to many known mineralised magmatic nickel, copper systems. A ground EM survey is being planned to site drill holes at Lister. An airborne VTEM survey is also planned to commence to the west of the current targets. The new airborne survey is co-incident with a regional gravity anomaly (Rimmer anomaly) and chonolithic magnetic anomaly defined from 3D magnetic imaging (Figure 7). Bryson Hill Project EL4047 (Musgrave Minerals Ltd earning 75% from Pitjantjatjara Mining Company Pty Limited and Zeil No. 1 Pty Limited) The Bryson Hill Project is located in the far easterly portion of the Musgrave Province. The tenement is covered by spinifex sand plains and dunes with only very minimal sub-crop or outcrop. Little previous exploration has been undertaken within the tenement area. A regional airborne VTEM survey is planned over a portion of EL4047 along with geological mapping and ground follow-up. Other Projects During the year, Musgrave Minerals was granted four new exploration licences covering a combined area of 7,300km2 (Figure 8). These licences more than double the Company’s current explorable ground holding. Musgrave is the first company to hold an active exploration tenement in this part of the region. Musgrave signed a Deed of Exploration with the executive Board of Anangu Pitjantjatjara Yankunytjatjara (“APY” – a body corporate established by the APY Lands Rights Act 1981, SA) in relation to these four tenements. They are the first mineral exploration licences granted in APY Lands since 2008, making it a significant milestone for the Company and highlighting the strong relationship Musgrave has already forged with APY. Musgrave Minerals holds a 100% interest in three of the licences (EL4850, EL4852, and EL4853) and can earn up to a 75% interest in EL4851 (Figure 8). Figure 7: Mt Woodroffe Project showing Lister target, 3D magnetic image, regional gravity response and new VTEM survey area Musgrave Minerals Ltd Annual Report 2012 9 Figure 8: Location of new tenements granted during the year The new licences cover areas that are considered prospective Mr Waugh consents to the inclusion in the report of the matters based on their for magmatic nickel-copper sulphide deposits and are information in the form and context in which it appears. interpreted to be predominantly covered by thin (<20m) sand with minor outcropping and sub-cropping geology. With Forward Looking Statement the newly granted licences, Musgrave Minerals has a total of This report has been prepared by Musgrave Minerals Limited (Musgrave 11 granted exploration licences and 32 exploration licence Minerals). The information contained in this report may contain professional applications in the South Australian portion of the Musgrave opinion and is given in good faith. Certain information in this document has been Province. derived from third parties and Musgrave Minerals has no reason to believe that it Planning and interpretation is underway on these new tenements. Initial heritage surveys are required before field work can commence. Competent Person’s Statement The information in this report that relates to Exploration Results is based on information compiled by Mr Robert Waugh. Mr Waugh is a fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and a member of the Australian Institute of Geoscientists (AIG). Mr Waugh is Managing Director of Musgrave Minerals Limited. Mr Waugh has sufficient industry experience to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. is not accurate, reliable or complete. Any forward-looking statements included in this document involve subjective judgment and analysis and are subject to uncertainties, risks and contingencies, many of which are outside the control of, and may be unknown to, Musgrave Minerals. In particular, they speak only as of the date of this document, they assume the success of Musgrave Minerals strategies, and they are subject to significant regulatory, business, competitive and economic uncertainties and risks. Actual future events may vary materially from the forward-looking statements and the assumptions on which the forward-looking statements are based. Recipients of this document (Recipients) are cautioned to not place undue reliance on such forward-looking statements. 10 Musgrave Minerals Ltd Annual Report 2012 Summary of Tenements Tenement EL4850 EL4851 EL4852 EL4853 EL3939 EL3940 EL3941 EL3942 EL3954 EL3955 EL4047 EL1996/260 EL1996/262 EL1996/336 EL1996/337 EL1996/338 EL1996/339 EL1996/340 EL1996/341 EL1996/342 EL1996/534 EL1997/040 EL1997/053 EL1997/055 EL1997/056 EL1997/057 EL1997/058 EL1997/059 EL1997/060 EL1997/061 EL1997/062 EL1997/063 EL1997/143 EL1997/144 EL1997/186 EL1997/297 EL1997/321 EL1997/468 EL1997/605 EL1999/035 EL2001/031 EL2008/154 EL2008/155 EL2008/156 EL2008/239 Project Musgrave Musgrave PMC JV Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave PMC JV Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave PMC JV Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Musgrave Locality Status SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA SA Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Area 2385 Km 2 2360 Km 2 1342 Km 2 2 1256 Km 2 22 Km 424 Km 2 427 Km 2 565 Km 2 714 Km 2 1906 Km 2 2 1535 Km 2 519 Km 463 Km 2 653 Km 2 2 1854 Km 2 620 Km 1301 Km 2 2198 Km 2 1230 Km 2 2136 Km 2 1783 Km 2 1507 Km 2 2 1013 Km 2 595 Km 1241 Km 2 1656 Km 2 1721 Km 2 2 2308 Km 2 666 Km 2108 Km 2 1926 Km 2 1957 Km 2 2 1040 Km 2 835 Km 1815 Km 2 2 2015 Km 2 624 Km 215 Km 2 152 Km 2 692 Km 2 2 338 Km 2 37 Km 2 34 Km 2 12 Km 2 46 Km MGV Interest 100% 0% (may earn up to 75%) 100% 100% 100% 100% 100% 100% 100% 100% 0% (may earn up to 75%) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 0% (may earn up to 75%) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Musgrave Minerals Ltd Annual Report 2012 11 Directors’ Report Geoscientist of Ontario, Canada. Mr Ascough is a member of the Company’s audit committee. Other directorships: Your directors present their report on Musgrave Minerals Ltd • Mithril Resources Ltd (Appointed 9 October 2006) (the Company) for the financial year ended 30 June 2012. • Aguia Resources Limited (Appointed 19 October 2010) Directors The names of the Directors in office at any time during, or since the end of, the year are: Graham Ascough, Non-Executive Chairman Robert Waugh, Managing Director Kelly Ross, Non-Executive Director John Percival, Non-Executive Director Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Names, Qualifications, Experience and Special Responsibilities Mr Graham Ascough BSc, PGeo (Non-Executive Chairman), Director since 26 May 2010 Graham Ascough has more than 22 years of industry exploration experience evaluating mineral projects and resources in Australia and overseas. Mr Ascough is a Non- Mr Robert Waugh MSc, BSc, FAusIMM, MAIG (Managing Director), Director since 6 March 2011 Robert Waugh has over 24 years of experience in the resources sector including more than eight years in the Musgrave region. Mr Waugh was a critical member of the WMC Resources Limited exploration team that discovered the massive Nebo- Babel nickel/copper/PGM deposit at West Musgrave in 2000. He was subsequently Project Manager of the team that defined the initial resource at Nebo-Babel. Mr Waugh has held senior exploration management roles at WMC Resources (WMC), BHP Billiton Exploration Limited (BHP), Fusion Resources Limited, Cameco Australia Limited and Raisama Limited. Mr Waugh spent over 19 years with WMC and subsequently BHP, following the takeover of WMC in 2005. He has extensive exploration and mining experience in a range of commodities including nickel, copper, gold, uranium and PGMs. Mr Waugh holds a Bachelor of Science degree majoring in geology from the University of Western Australia and a Masters of Science in Mineral Economics from Curtin University and the Western Australian School of Mines. Mr Waugh is a Fellow of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Waugh is a member of the Company’s audit committee. Other directorships: Executive Director of ASX listed Mithril Resources Limited. He is • None a geophysicist by training and prior to joining Mithril Resources Limited, Mr Ascough was the Australian Manager of Nickel and PGM Exploration at the major Canadian resources house, Falconbridge Limited (acquired by Xstrata Plc in 2006). He has had broad industry involvement ranging from playing a leading role in setting the strategic direction for significant country- wide exploration programmes to working directly with junior explorers. He is also the non-executive Chairman of ASX listed Aguia Resources Limited. Mr Ascough is also a Councillor of the South Australian Chamber of Mines and Energy and is Chair of its Exploration Committee. He is a member of the Australasian Institute of Mining and Metallurgy and is a Professional Mrs Kelly Ross BBus, CPA, ACSA (Non-Executive Director), Director since 26 May 2010 Kelly Ross is a qualified accountant holding a Bachelor of Business (Accounting) and has the designation CPA from the Australian Society of Certified Practicing Accountants. Mrs Ross is a Chartered Secretary with over 25 years’ experience in accounting and administration in the mining industry and was the Company Secretary of Independence Group NL for 10 years. Mrs Ross is currently a Non-Executive Director of Independence Group NL (ASX). Mrs Ross is the chair of the Company’s audit committee. 12 Musgrave Minerals Ltd Annual Report 2012 Other directorships: Interests in the Shares and Options of the • Independence Group NL (Appointed 16 September 2002) Company and Related Bodies Corporate Mr John Percival Non-Executive Director, Director since 26 May 2010 John Percival has been involved in investment and merchant banking for over 25 years including 15 years as Investment Manager of Barclays Bank New Zealand Limited. In addition he has extensive experience in stockbroking, corporate finance and investment management. Mr Percival is currently Executive Director - Operations of Goldsearch Limited (ASX). Mr Percival is a member of the Company’s audit committee. As at the date of this report, the interests of the directors in the shares and options of Musgrave Minerals Ltd were: Number of Ordinary Shares Number of Options over Ordinary Shares Graham Ascough Robert Waugh John Percival Kelly Ross 200,000 80,000 100,000 50,000 750,000 5,000,000 500,000 500,000 Other directorships: Dividends Paid or Recommended Goldsearch Limited (Appointed 11 October 1995) Company Secretary Mr Donald Stephens BAcc, FCA, Company Secretary since 26 May 2010 No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. Principal Activities The principal activities of the Company during the financial Donald Stephens is a Chartered Accountant and corporate year were: adviser with over 25 years experience in the accounting industry, including 14 years as a partner of HLB Mann Judd (SA) Pty Ltd, Chartered Accountants. He is a director of Papyrus Australia Ltd, Mithril Resources Ltd and TW Holdings Ltd and is company secretary to Toro Energy Ltd and Petratherm Ltd. He holds other public company secretarial positions and directorships with private companies and provides corporate advisory services to a wide range of organisations. Review of Operations Previously provided. Operating Results • to carry out exploration of mineral tenements by agreement, both on a joint venture basis and by the Company in its own right; • to continue to seek extensions of areas held and to seek out new areas with mineral potential; and • to evaluate results achieved through surface sampling, geophysical surveys and drilling activities carried out during the year. Risk Management The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that the The loss of the Company after providing for income tax Company’s objectives and activities are aligned with the risks amounted to ($276,182)[2011: ($2,251,700)]. and opportunities identified by the Board. The Company believes that it is crucial for all Board members to be a part of this process, and as such the Board has not established a separate risk management committee. Musgrave Minerals Ltd Annual Report 2012 13 The Board has a number of mechanisms in place to ensure that guidelines are quite detailed and encompass not only the impact management’s objectives and activities are aligned with the risks on the land and vegetation but covers such subjects as pollution, identified by the Board. These include the following: approvals from relevant parties including land owners and • Board approval of a strategic plan, which is designed to meet stakeholders’ needs and manage business risk. • Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets, including the establishment and monitoring of performance indicators of both a financial and non financial nature. Significant Changes in the State of Affairs No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. Future Developments Disclosure of information regarding likely developments in the operations of the Company in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, this information has not been disclosed in this report. Environmental Regulations The Company is aware of its responsibility to impact as little as possible on the environment, and where there is any disturbance, to rehabilitate sites. During the year under review the work carried out was in South Australia and the entity followed procedures and pursued objectives in line with guidelines published by the South Australian Government. These land users, heritage, health and safety and proper restoration practices. The Company supports this approach and is confident that it properly monitors and adheres to these objectives, and any local conditions applicable, both in South Australia and elsewhere. The Company is committed to minimising environmental impacts during all phases of exploration, development and production through a best practice environmental approach. The Company shares responsibility for protecting the environment for the present and the future. It believes that carefully managed exploration programs should have little or no long-lasting impact on the environment and the Company has formed a best practice policy for the management of its exploration programs. The Company properly monitors and adheres to this approach and there were no environmental incidents to report for the year under review. Furthermore, the Company is in compliance with the state and/or commonwealth environmental laws for the jurisdictions in which it operates. Occupational Health, Safety and Welfare In running its business, Musgrave Minerals Ltd aims to protect the health, safety and welfare of employees, contractors and guests. In the reporting year the Company experienced no medical aid incidents and no lost time injuries. The Company reviews its Occupational Health, Safety and Welfare (OHS&W) policy at regular intervals to ensure a high standard of OHS&W. Subsequent Events There were no significant events that occurred after balance date. 14 Musgrave Minerals Ltd Annual Report 2012 Unissued Shares At the date of this report, the following options to acquire ordinary shares in the Company were on issue: Issue Date Expiry Date Exercise Price 21/08/2010 17/02/2011 17/02/2011 09/05/2011 24/01/2012 20/08/2015 17/02/2016 17/02/2016 08/05/2016 23/01/2017 $0.25 $0.36 $0.50 $0.36 $0.25 Balance at 1 July 2011 Net Issued / (Exercised or Expired) During Year Balance at 30 June 2012 7,750,000 4,750,000 2,500,000 500,000 - 15,500,000 - - - - 525,000 525,000 7,750,000 4,750,000 2,500,000 500,000 525,000 16,025,000 Share Options Remuneration Report - Audited Shares issued as a result of exercise of options No shares were issued during the year as a result of an exercise of options. New options issued This report outlines the remuneration arrangements in place for Directors and executives of Musgrave Minerals Ltd. Remuneration philosophy The Board is responsible for determining remuneration policies applicable to Directors and senior executives of the During the financial year, a total of 525,000 unlisted options Company. The broad policy is to ensure that remuneration were issued to employees as an incentive. The options are properly reflects the individuals’ duties and responsibilities and exercisable at $0.25 and expire 23/01/2017. Refer to note 14 of that remuneration is competitive in attracting, retaining and the financial statements in relation to these options. motivating people with appropriate skills and experience. At the time of determining remuneration consideration is given by the Board to the Company’s financial performance. Indemnification and Insurance of Directors and Officers Employment contracts To the extent permitted by law, the Company has indemnified (fully insured) each Director and the Company Secretary of the Company for a premium of $13,452. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings (that may be brought) against the officers in their capacity as officers of the Company or a related body, 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 or to cause detriment to the Company. The employment conditions of the Managing Director, Mr Robert Waugh, are formalised in an employment contract. Under this contract, the Company agrees to employ Mr Waugh as Managing Director of the Company for a period of three years commencing on 7 March 2011 with his current gross annual salary, inclusive of 9% superannuation guarantee, being $290,000. The Company may terminate the employment contract without cause by providing six (6) months written notice or making payment in lieu of notice, based on the annual salary component. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any time. Musgrave Minerals Ltd Annual Report 2012 15 The employment conditions of the Exploration Manager, Dr remuneration component and offering specific long-term Justin Gum, are formalised in a contract of employment. Dr Gum incentives. commenced employment on 1 October 2010 and his current gross annual salary, inclusive of superannuation guarantee, is $171,675. Either party may terminate the employment contract without cause by providing one (1) month’s written notice or making payment in lieu of notice (in the case of the Company) or forfeiture of one month’s salary (in the case of Dr Gum), based on the annual salary component. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any time. The non-executive directors and other executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to directors and executives is expensed as incurred. Executives are also entitled to participate in the Company share option scheme. Options are valued using the Black-Scholes methodology. Key management personnel remuneration and equity holdings The Board currently determines the nature and amount of remuneration for Board members and senior executives of the Company. The policy is to align director and executive objectives The board policy is to remunerate non-executive directors at market rates based on comparable companies for time, commitment and responsibilities. The Board determines payments to non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when with shareholder and business objectives by providing a fixed required. 16 Musgrave Minerals Ltd Annual Report 2012 Table 1: Director remuneration for the year ended 30 June 2012 and 30 June 2011 Graham Ascough** 2012 2011 Robert Waugh 2012 2011 John Percival ** 2012 2011 Kelly Ross ** 2012 2011 Total 2012 2011 Primary Benefits Post Employment Share-based Payments Totals Salary & Fees Superannuation Options 65,100 10,900 266,055 84,829 45,000 7,500 45,000 7,500 421,155 110,729 - - 23,945 7,635 4,050 675 4,050 675 32,045 8,985 - 139,500 - 902,500 - 93,000 - 93,000 65,100 150,400 290,000 994,964 49,050 101,175 49,050 101,175 - 1,228,000 453,200 1,347,714 Table 2: Remuneration of key management personnel for the year ended 30 June 2012 and 30 June 2011 Justin Gum 2012 2011 Donald Stephens*&** 2012 2011 Total 2012 2011 Primary Benefits Post Employment Share-based Payments Totals Salary & Fees Superannuation Options 139,000 99,533 - - 139,000 99,533 24,500 8,958 - - 24,500 8,958 - 98,500 - 93,000 - 191,500 163,500 206,991 - 93,000 163,500 299,991 No options were issued to any Key Management Personnel as part of remuneration for the year ended 30 June 2012. No portion of remuneration paid or payable to any Key Management Personnel employed by the Company was performance based in 2011 or 2012. *HLB Mann Judd (SA) Pty Ltd has received professional fees for accounting, taxation and secretarial services provided during the year amounting to $131,671 (2011: $68,300). Donald Stephens, the Company Secretary, is a consultant with HLB Mann Judd (SA) Pty Ltd. ** Graham Ascough and Donald Stephens are Non-Executive Directors of Mithril Resources Ltd which is the beneficial holder of 7.67% of the issued capital of Musgrave Minerals Ltd. John Percival is an Executive Director of Goldsearch Ltd which is the benficial holder of 7.17% of the issued capital of Musgrave Minerals Ltd. Kelly Ross is a Non-Executive Director of Independence Group NL which is the beneficial holder of 7.46% of the issued capital of Musgrave Minerals Ltd. Musgrave Minerals Ltd Annual Report 2012 17 Use of Remuneration Consultants Auditor Independence and Non-Audit During the fi nancial year, there were no remuneration recommendations made in relation to key management personnel for the Company by any remuneration consultants. Voting and Comments Made at the Services Grant Thornton Audit Pty Ltd, in its capacity as auditor for Musgrave Minerals Ltd, has not provided any non-audit services throughout the reporting period. The auditor’s independence declaration for the year ended 30 June 2012 as required under section 307C of the Corporations Act 2001 has been received Company’s 2011 Annual General Meeting and can be found on page 25. Musgrave Ltd received more than 78% of “yes” votes on its remuneration report for the 2011 fi nancial year by proxy. The Company did not receive any specifi c feedback at the AGM on its remuneration report. Signed in accordance with a resolution of the Directors. Directors’ Meetings Mr Graham Ascough The number of meetings of Directors (including meetings of Chairman committees of Directors) held during the year and the number of meetings attended by each Director were as follows: 25th September 2012 Directors’ Meetings Audit Committee Director Eligible Attended Eligible Attended Graham Ascough Robert Waugh John Percival Kelly Ross 8 8 8 8 8 8 8 8 2 2 1 2 2 2 1 2 Members acting on the audit committee of the board are: • Kelly Ross (Chairperson) • Graham Ascough • Robert Waugh • John Percival Proceedings on Behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. 18 Musgrave Minerals Ltd Annual Report 2012 Corporate Governance Statement Introduction The Board of Directors has adopted a corporate framework for the Company which is underpinned by the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations with 2010 Amendments (2nd Edition) (Recommendations) applicable to ASX-listed entities. This Section addresses each of the Corporate Governance Principles and, where the Company has not followed a Recommendation, this is identified with the reasons for not following the Recommendation. Those charters and policies Director and senior executives, including the Company Secretary, against the objectives and performance indicators established by the Board. • Overseeing the establishment and maintenance of adequate internal controls and effective monitoring systems. • Overseeing the implementation and management of effective safety and environmental performance systems. • Ensuring all major business risks are identified and effectively managed. • Ensuring that the Group meets its legal and statutory obligations. • Overseeing of the Company, including its control and accountability systems. The functions delegated to senior executives include: • Implementing the Company’s vision, values and business that form the basis of the corporate governance practices of the plan. Company are located on the Company’s website. • Managing the business to agreed capital and operating expenditure budgets. Principle 1: Lay solid foundations for • Identifying and exploring opportunities to build and management and oversight sustain the business. • Allocating resources to achieve the desired business Recommendation 1.1 - Functions reserved to the Board and delegated to senior executives outcomes. The Board is accountable to Shareholders for the performance of the Company and has overall responsibility for its operations. Day to day management of the Company’s affairs, and the implementation of the corporate strategy and policy initiatives, is formerly delegated by the Board to the Managing Director. The Company has established functions reserved to the Board and functions delegated to senior executives. The functions reserved to the Board include: • Approving the strategic direction and related objectives of the Company and monitoring management performance in the achievement of these objectives; • Adopting budgets and monitoring the financial performance of the Company. • Sharing knowledge and experience to enhance success. • Facilitating and monitoring the potential and career development of the Company’s people resources. • Identifying and mitigating areas of risk within the business. • Managing effectively the internal and external stakeholder relationships and engagement strategies. • Determining the senior executives’ position on strategic and operational issues. For the purposes of the proper performance of their duties, the Directors are entitled to seek independent professional advice at the Company’s expense, unless the Board determines otherwise. The Board schedules meetings on a regular basis and other meetings as and when required. • Reviewing annually the performance of the Managing The Company has not formally established the functions Musgrave Minerals Ltd Annual Report 2012 19 reserved to the Board and those delegated to senior executives Board. Those Directors who have interests in specific transactions in accordance with recommendations 1.1 and 1.3 of the ASX or potential transactions do not receive Board papers related to Corporate Governance Council. Given the size of the Company, those transactions or potential transactions, do not participate the Board has not considered it necessary to formulate a Board in any part of a Directors’ meeting which considers those charter. Recommendation 1.2 - Performance evaluation of senior executives The Managing Director and senior management participate in annual performance reviews. The performance of staff is measured against the objectives and performance indicators transactions or potential transactions, are not involved in the decision making process in respect of those transactions or potential transactions, and are asked not to discuss those transactions or potential transactions with other Directors. Recommendation 2.1 - A majority of the Board should be independent Directors established by the Board. A performance evaluation for The Board is conscious of the need for independence senior executives will take place in the upcoming reporting and ensures that where a conflict of interest may arise, the period in accordance with the Company’s documented relevant Director(s) leave the meeting to ensure a full and frank process. The performance of senior executives is reviewed by discussion of the matter(s) under consideration by the rest comparing performance against agreed measures, examining of the Board. Those Directors who have interests in specific the effectiveness and results of their contribution and transactions or potential transactions do not receive Board identifying areas for potential improvement. In accordance with papers related to those transactions or potential transactions, recommendations 1.2 and 1.3 of the ASX Corporate Governance do not participate in any part of a Directors’ meeting which Council the Company has not disclosed a description of the considers those transactions or potential transactions, are not performance evaluation process in addition to the disclosure involved in the decision making process in respect of those above. Principle 2 - Structure the Board to add value At the date of this statement the Board consists of the following directors Mr Graham Ascough, Chair Mr Robert Waugh, Managing Director Mrs Kelly Ross, Non-Executive Director Mr John Percival, Non-Executive Director The Board considers this to be an appropriate composition given the size and development of the Group at the present time. The names of directors including details of their qualification and experience are set out in the Directors’ Report of this Financial Report. Independence transactions or potential transactions, and are asked not to discuss those transactions or potential transactions with other Directors. Each Director is required by the Company to declare on an annual basis the details of any financial or other relevant interests that they may have in the Company. The Board has determined that its three non-executive Directors are not independent as defined under Recommendation 2.1. The Company is therefore at variance with Recommendation 2.1 in that a majority of Directors are not independent. The Board considers its current structure to be an appropriate composition of the required skills and experience, given the experience of the individual Directors and the size and development of the Company at the present time. Each individual member of the Board is satisfied that whilst the Company may not comply with Recommendation 2.1, all Directors bring an independent judgment to bear on Board decisions. Recommendation 2.2 - The chair should be an independent Director The Board is conscious of the need for independence The Company’s Chairman, Mr Graham Ascough, is not an and ensures that where a conflict of interest may arise, the independent Director as defined under Recommendation 2.1. relevant Director(s) leave the meeting to ensure a full and frank discussion of the matter(s) under consideration by the rest of the 20 Musgrave Minerals Ltd Annual Report 2012 Recommendation 2.3 - The roles of chair and Managing Director should be separated The roles of the Chairman and the Managing Director are not be exercised by the same individual. The Company has therefore complied with Recommendation 2.3. Recommendation 2.4 - Nomination Committee The Board has not established a Nomination and Remuneration This policy provides that it is the responsibility of each Representative to ensure they do not breach the insider trading prohibition in the Corporations Act. Breaches of the insider trading prohibition will result in disciplinary action being taken by the Company. Representatives must also obtain written consent from the Chairman (or, in the case of the Chairman, from the Board) prior to trading in the Company’s securities. Committee in accordance with recommendation 2.4 of the Corporate Governance Council. The Board takes ultimate Subject to these restrictions, the policy provides that Directors, the Company Secretary and employees of, or contractors to, responsibility for these matters and continues to monitor the the Company that have access to the Company’s financial composition of the Board and the roles and responsibilities of its information or drilling results are permitted to trade in the members. Accordingly, the Company does not have a Nomination Company’s securities throughout the year except during the and Remuneration Committee Charter in accordance with following periods: recommendations 2.4 and 2.6 of the ASX Corporate Governance Council. Recommendation 2.5 - Process for evaluating the performance of the Board The Board continues to review performance against 1. The period between the end of the March, June, September and December quarters and the release of the Company’s quarterly report to ASX for so long as the Company is required by the Listing Rules to lodge quarterly reports; and appropriate measures and identify ways to improve performance. 2. 24 hours after the following events: The Board has not formally disclosed the review process in accordance with recommendations 2.5 and 2.6 of the ASX Corporate Governance Council. The Board takes ultimate responsibility for these matters and does not consider the disclosure of the performance evaluation necessary at this stage. (a) Any major announcements; (b) The release of the Company’s quarterly, half yearly and annual financial results to the ASX; and (c) The Annual General Meeting and all other General Recommendation 2.6 - Additional information concerning the Board and Directors Meetings. In exceptional circumstances the Board may waive The Company has included the disclosures required by the requirements of the Share Trading Policy to allow Recommendation 2.6 in this annual report. There are procedures Representatives to trade in the shares of the Company, provided in place, agreed by the Board, to enable Directors, in furtherance to do so would not be illegal. of their duties, to seek independent professional advice at the Company’s expense. A performance evaluation for the board, its committees and directors has not taken place during the reporting period. Directors must advise the Company Secretary of changes to their shareholdings in the Company within two (2) business days of the change. Principle 3 - Promote ethical and responsible decision making Securities Trading Policy Recommendation 3.1 - Code of Conduct The Board recognises the need for Directors and employees to observe the highest standards of behaviour and business ethics when engaging in corporate activity. The Company maintains a reputation for integrity and is highly committed to demonstrating appropriate corporate practices and decision The Company has established a policy concerning trading in making. The Company’s officers and employees are required the Company’s shares by the Company’s officers, employees and to act in accordance with the law and with the highest ethical contractors and consultants to the Company while engaged in standards. The Board has adopted and disclosed a formal code of work for the Company (Representatives). Musgrave Minerals Ltd Annual Report 2012 21 conduct applying to the Board and all employees in accordance Recommendation 4.1 - Audit Committee with recommendations 3.1 and 3.5 of the Corporate Governance Council. The Company has established an Audit Committee. Recommendation 3.2 and Recommendation 3.3 - Diversity Policy The ASX Corporate Governance Council has released Recommendation 4.2 - Structure of the Audit Committee The Company’s Audit Committee does not comply with all of the requirements of Recommendation 4.2. The details are as amendments dated 30 June 2010 to the 2nd edition Corporate follows: Governance Principles and Recommendations in relation to diversity. For the purpose of the amendments diversity includes, but is not limited to, gender, age, ethnicity and cultural background. • the Audit Committee does not consist only of non- executive Directors; there are three non-executive Directors and one executive Director; • the Audit Committee does not consist of a majority of The Company continues to strive towards achieving objectives independent Directors; and established towards increasing gender diversity. The Company’s Code of Ethics and Conduct states that the Company has a proactive stance on diversity and assesses all staff and Board appointments on their merits with consideration to diversity a driver in decision making. The Company however has not yet developed or disclosed a formal diversity policy and therefore has not complied with the recommendations 3.2 and 3.3 of the Corporate Governance Council. Recommendation 3.4 and 3.5 - Reporting in Annual Report At the date of this Annual Report, the Company employs 7 staff members (excluding the Non-Executive Directors), of which 2 are female. The Board of Directors consists of 3 male directors and 1 female director. The Company has disclosed the information suggested in Recommendation 3.5 in this Annual Report. Principle 4 - Safeguard integrity in financial reporting • the Audit Committee is chaired by Mrs Kelly Ross, who is not an independent Director. Although none of the members of the Audit Committee are independent, the Board has nevertheless determined that the composition of the Audit Committee represents the only practical mix of Directors that have an appropriate range of qualifications and expertise and that can understand and competently deal with current and emerging relevant business issues. Recommendation 4.3 - Audit Committee Charter The Audit Committee’s primary responsibilities are to: • oversee the existence and maintenance of internal controls and accounting systems; • oversee the management of risk within the Company; • oversee the financial reporting process; • review the annual and half-year financial reports and recommend them for approval by the Board; The Company has structured financial management to independently verify and safeguard the integrity of its financial • nominate external auditors; reporting. The structure established by the Company includes: • review the performance of the external auditors and • Review and consideration of the financial statements by the Audit Committee. • A process to ensure the independence and competence of the Company’s external auditors. existing audit arrangements; and • ensure compliance with laws, regulations and other statutory or professional requirements, and the Company’s governance policies. The Company has adopted an Audit Committee Charter which sets out its role, responsibilities and membership requirements 22 Musgrave Minerals Ltd Annual Report 2012 and reflects the matters set out in the commentary and guidance Principle 6 - Respect the rights of for Recommendation 4.3. Recommendation 4.4 - Additional Information concerning the Audit Committee shareholders The Board strives to ensure that Shareholders are provided with sufficient information to assess the performance of The disclosures required by Recommendation 4.4 are the Company and its Directors and to make well-informed contained within this annual report. investment decisions. In accordance with the guide to reporting on Principle 4, the Company’s Audit Committee Charter is available on the Company’s website. The Board is responsible for the selection and appointment of the external auditor and the Company’s auditor Grant Thornton has complied with the Corporations Act provisions requiring audit and review partner rotation every 5 years. Principle 5 - Make timely and balanced disclosure Recommendation 6.1 - Shareholder Communications Policy Information is communicated to Shareholders through: • annual, half-yearly and quarterly financial and activity reports; • annual and other general meetings convened for Shareholder review and approval of Board proposals; • continuous disclosure of material changes to ASX; and • the Company’s website where all ASX announcements, The Company has a policy that all shareholders and investors notices and financial reports are published as soon as have equal access to the Company’s information. The Board possible after release to ASX. ensures that all price sensitive information is disclosed to ASX in accordance with the continuous disclosure requirements of the Corporations Act and Listing Rules. The Company Secretary has primary responsibility for all communications with ASX and is accountable to the Board through the Chair. Recommendation 5.1 - ASX Listing Rule Disclosure Requirements The Company has established a Continuous Disclosure Policy which sets out the key obligations of Directors and employees in relation to continuous disclosure as well as the Company’s obligations under the Listing Rules and Corporations Act. The policy also provides procedures for internal notification and external disclosures, as well as procedures for promoting understanding of compliance with disclosure requirements. The auditor is required to attend the annual general meeting of Shareholders. The Chairman will permit Shareholders to ask questions about the conduct of the audit and the preparation and content of the audit report. The Company has adopted a Shareholder Communications Policy for: • promoting effective communication with shareholders; and • encouraging shareholder participation at annual and other general meetings. Recommendation 6.2 - Availability of Shareholder Communications Policy The disclosures required by Recommendation 6.2 have been The policy reflects the matters set out in the commentary and icluded in this annual report. guidance for Recommendation 5.1. A copy of the Company’s Shareholder Communications Policy Recommendation 5.2 - Continuous Disclosure Policy is available on the Company’s website. The disclosures required by Recommendation 5.2 are included in this annual report. Principle 7 - Recognise and manage risk A copy of the Company’s Continuous Disclosure Policy is available on the Company’s website. The Board has identified the significant areas of potential business and legal risk of the Company. In addition the Board has Musgrave Minerals Ltd Annual Report 2012 23 developed the culture, processes and structures of the Company to encourage a framework of risk management which identifies, Recommendation 7.4 - Additional Information concerning Risk Management monitors and manages the material risks facing the organisation. Recommendation 7.1 - Risk Management Policies The Company has included the disclosures required by Recommendation 7.4 in this annual report. The identification, monitoring and, where appropriate, the reduction of significant risk to the Company is the responsibility of the Managing Director and the Board. The Board has also established the Audit Committee which addresses the risks of The Company has publicly disclosed a risk management policy outlining the oversight and management of material business risks in accordance with recommendation 7.1 and 7.4 of the Corporate Governance Council. the Company. The Board reviews and monitors the parameters under which such risks will be managed. Management accounts are prepared and reviewed with the Managing Director at subsequent Board meetings. Budgets are prepared and compared against actual results. Management and the Board monitor the Company’s material business risks and reports are considered at regular meetings. Principle 8 - Remunerate fairly and responsibly Recommendation 8.1 - Remuneration Committee The Board has not established a Remuneration Committee or disclosed a Committee Charter on the Company’s website and therefore has not complied with recommendations 8.1 The Company has publicly disclosed a a risk management and 8.3 of the Corporate Governance Council. The Board takes policy for the oversight and management of material business ultimate responsibility for these matters and does not consider a risks in accordance with recommendations 7.1 and 7.4 of the Remuneration Committee to be appropriate at this stage. Corporate Governance Council. Recommendation 7.2 - Risk Management and Internal Control System Recommendation 8.2 - Structure of Remuneration Committee The Board has not established a Remuneration Committee The Company has developed a risk management framework or disclosed a Committee Charter on the Company’s website which is supported by the Board of Directors and management. and therefore has not complied with recommendations 8.2 The policy provides a framework for identifying, assessing, monitoring and managing risks of the Company. The Board requires management to report on the policy as to whether those risks are being managed effectively. Recommendation 7.3 - Statement from the Managing Director and Company Secretary The Managing Director and the Company Secretary have stated in writing to the Board 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 are in accordance with relevant accounting standards. Included in this statement is a confirmation that the Company’s risk management and internal controls are operating efficiently and effectively. and 8.3 of the Corporate Governance Council. The Board takes ultimate responsibility for these matters and does not consider a Remuneration Committee to be appropriate at this stage. Recommendation 8.3 - Remuneration of Executive Directors, Executives and Non-Executive Directors The Chairman and the non-executive Directors are entitled to draw Director’s fees and receive reimbursement of reasonable expenses for attendance at meetings. The Company is required to disclose in its annual report details of remuneration to Directors. The maximum aggregate annual remuneration which may be paid to non-executive Directors is $250,000 per annum. This amount cannot be increased without the approval of the Company’s Shareholders. Recommendation 8.4 - Additional Information Concerning Remuneration The Company will include the disclosures required by Recommendation 8.4 in its future annual reports. 24 Musgrave Minerals Ltd Annual Report 2012 Musgrave Minerals Ltd Annual Report 2012 25 Statement of Comprehensive Income For the year ended 30 June 2012 Other income Employee benefits expense Depreciation expense Finance costs Other expenses Loss before income tax Income tax expense Loss from continuing operations Other comprehensive income Total comprehensive loss for the year Earnings per share: Basic earnings per share Diluted earnings per share Note 6 (a) 6 (d) 6 (b) 6 (c) 6 (e) 7 8 8 2012 $ 2011 $ 926,309 (509,790) (111,405) (11,134) (565,632) (271,652) (4,530) (276,182) - (276,182) Cents Cents (0.23) (0.23) 227,039 (1,843,093) (13,023) (903) (311,495) (1,941,475) (310,225) (2,251,700) - (2,251,700) (7.56) (7.56) 26 Musgrave Minerals Ltd Annual Report 2012 Statement of Financial Position As at 30 June 2012 Note 2012 $ 2011 $ Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Property, plant and equipment Exploration and evaluation assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Provisions Total current liabilities Non-current liabilities Borrowings Provisions Total Non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained losses Total equity 9 10 11 12 13 15 16 17 16 17 18 19 20 13,570,860 133,257 182,029 13,886,146 224,276 13,538,949 13,763,225 27,649,371 313,432 64,587 87,060 465,079 50,854 4,182 55,036 520,115 17,781,987 194,824 178,275 18,155,086 212,767 9,597,272 9,810,039 27,965,125 465,496 7,925 22,830 496,251 89,155 1,196 90,351 586,602 27,129,256 27,378,523 26,718,899 2,944,985 (2,534,628) 27,129,256 26,729,469 2,907,500 (2,258,446) 27,378,523 Musgrave Minerals Ltd Annual Report 2012 27 Statement of Changes in Equity For the year ended 30 June 2012 Balance at 1 July 2010 Total comprehensive loss Share based payments Fair value of options issued for consideration for tenements acquired Seed capital issued to vendors Shares issued pursuant to prospectus Shares issued as consideration for tenements acquired Transaction costs (net of tax) Balance as at 30 June 2011 Balance at 1 July 2011 Total comprehensive loss Share based payments Transaction costs (net of tax) Balance as at 30 June 2012 Note Issued capital Retained losses Share option reserve 197,699 (6,746) Total 190,953 14 18 18 18 18 14 18 - - - 1,300,000 20,000,000 6,000,000 (768,230) (2,251,700) - (2,251,700) - - - - - - 1,419,500 1,419,500 1,488,000 1,488,000 - - - - 1,300,000 20,000,000 6,000,000 (768,230) 26,729,469 (2,258,446) 2,907,500 27,378,523 26,729,469 (2,258,446) 2,907,500 27,378,523 - - (10,570) (276,182) - (276,182) - - 37,485 37,485 - (10,570) 26,718,899 (2,534,628) 2,944,985 27,129,256 28 Musgrave Minerals Ltd Annual Report 2012 Statement of Cash Flows For the year ended 30 June 2012 Note 2012 $ 2011 $ Cash flows from operating activities Payments to suppliers and employees Finance costs Interest received Net cash used in operating activities 9 Cash flows from investing activities Purchase of plant and equipment Payments for exploration activities Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Transaction costs on issue of shares Proceeds from borrowings Repayment of borrowings Net cash provided by financing activities Net(decrease)/increase in cash and cash equivalents Cash at the beginning of the year Cash at the end of the year (1,069,074) (10,564) 877,147 (202,491) (152,240) (3,860,767) (4,013,007) - (14,012) 65,658 (47,275) 4,371 (4,211,127) 17,781,987 13,570,860 (847,300) - 227,039 (620,261) (221,246) (1,895,131) (2,116,377) 21,300,000 (1,078,455) - 97,080 20,318,625 17,781,987 200,000 17,781,987 Musgrave Minerals Ltd Annual Report 2012 29 Notes to the Financial Statements For the year ended 30 June 2012 1 Nature of operations Musgrave Minerals Ltd principal activities are to carry out Standards arising from the Trans-Tasman Convergence Project, and made several minor amendments to a number of AASBs. These standards eliminate a large portion of the differences between the Australian and New Zealand accounting standards and IFRS and retain only additional disclosures considered necessary. These changes also simplify some current disclosures for Australian entities and remove others. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to exploration of mineral tenements, to continue to seek extensions existing standards have been published but are not yet effective, of areas held and to seek out new areas with mineral potential and have not been adopted early by the Company. and to evaluate results achieved through surface sampling, geophysical surveys and drilling activities. 2 General information and statement of compliance The general purpose financial statements of the Company 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). Musgrave Minerals Ltd is a for-profit entity for the purpose of preparing the financial statements. Musgrave Minerals Ltd is a public company incorporated and domiciled in Australia and listed on the ASX (ASX Code: MGV). Management anticipates that all of the relevant pronouncements will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial statements. AASB 9 Financial Instruments (effective from 1 January 2013) The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with impairment The financial statements for the year ended 30 June 2012 methodology and hedge accounting are still being developed. (including comparatives) were approved and authorised for issue by the board of directors on 25 September 2012. 3 Changes in accounting policies Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Company. However, they do not expect to implement the amendments until all chapters of AASB 9 have been published and they can comprehensively assess the impact of all changes. Adoption of AASBs and improvements to AASBs 2011 - AASB 1054 and AASB 2011-1 AASB 11 Joint Arrangements (AASB 11) The AASB has issued AASB 1054 Australian Additional Disclosures and 2011-1 Amendments to Australian Accounting AASB 11 supersedes AASB 131 Interests in Joint Ventures (AASB 131). It aligns more closely the accounting by the investors with their rights and obligations relating to the joint 30 Musgrave Minerals Ltd Annual Report 2012 arrangement. It introduces two accounting categories (joint international equivalent (which includes requirements to operations and joint ventures) whose applicability is determined disclose aggregate (rather than individual) amounts of KMP based on the substance of the joint arrangement. In addition, compensation), and remove duplication with the Corporations AASB 131’s option of using proportionate consolidation for joint Act 2011. The amendments are applicable for annual periods ventures has been eliminated. AASB 11 now requires the use beginning on or after 1 July 2013. The Company’s management of the equity accounting method for joint ventures, which is have yet to assess the impact of these amendments. currently used for investments in associates. Consequential amendments to AASB 127 Separate Financial Statements (AASB 127) and AASB 128 Investments in Associates and Joint Ventures (AASB 128) AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Clarifies that costs of removing mine waste materials (overburden) to gain access to mineral ore deposits during the AASB 127 Consolidated and Separate Financial Statements production phase of a mine must be capitalised as inventories was amended to AASB 127 Separate Financial Statements which under AASB 112 Inventories if the benefits from stripping activity now deals only with separate financial statements. AASB 128 is realised in the form of inventory produced. Otherwise, if brings investments in joint ventures into its scope. However, stripping activity provides improved access to the ore, stripping AASB 128’s equity accounting methodology remains unchanged. costs must be capitalised as a non-current, stripping activity AASB 13 Fair Value Measurement (AASB 13) AASB 13 does not affect which items are required to be fair- valued, but clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods beginning on or after 1 January 2013. The Company’s management have yet to assess the impact of this new standard. AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income (AASB 101 Amendments) The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and asset if certain recognition criteria are met (as an addition to, or enhancement of, an existing asset). The interpretation is applicable for annual periods beginning on or after 1 January 2013. The interpretation will have no impact on the Company as it has no mining activities. 4 Summary of accounting policies (a) Overall considerations The significant accounting policies that have been used in the preparation of these financial statements are summarised below. The 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 (b) will be reclassified subsequently to profit or loss when accounting policies below. specific conditions are met. It is applicable for annual periods beginning on or after 1 July 2012. The Company’s management (b) Income Tax expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items. The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (AASB 124 Amendments) Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. AASB 2011-4 makes amendments to AASB 124 Related Party Disclosures to remove individual key management personnel disclosure requirements, to achieve consistency with the Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Musgrave Minerals Ltd Annual Report 2012 31 Current and deferred income tax expense (income) is charged Plant and equipment or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any Except for business combinations, no deferred income tax is accumulated impairment. In the event the carrying amount of recognised from the initial recognition of an asset or liability, plant and equipment is greater than the estimated recoverable where there is no effect on accounting or taxable profit or loss. amount, the carrying amount is written down immediately to Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. (a) a legally enforceable right of set-off exists; and Depreciation (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. (c) Property, Plant and Equipment The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line and dminishing value basis over the asset’s useful life to the Company commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The useful life for each class of depreciable assets are: Each class of property, plant and equipment is carried at Class of fixed asset cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and Equipment Motor Vehicles Useful life 2-10 years 6-8 years 32 Musgrave Minerals Ltd Annual Report 2012 The assets’ residual values and useful lives are reviewed, and legislation. Accordingly the costs have been determined on the adjusted if appropriate, at the end of each reporting period. basis that the restoration will be completed within one year of An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. abandoning the site. (e) Leases Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to the Company, are classified as finance leases. Leased assets are depreciated on a straight- line basis over the shorter of their estimated useful lives or the surplus relating to that asset are transferred to retained earnings. lease term. (d) Exploration and Development Expenditure Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered 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 Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term. (f) Impairment testing of non-current assets existence of economically recoverable reserves. For impairment assessment purposes, assets are grouped at Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest. Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash- generating unit level. All assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Company’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. Musgrave Minerals Ltd Annual Report 2012 33 An impairment charge is reversed if the cash-generating unit’s flows will necessitate an adjustment to the carrying value with a recoverable amount exceeds its carrying amount. consequential recognition of an income or expense item in profit Finance leases are capitalised by recognising an asset and a or loss. liability at the lower of the amounts equal to the fair value of The Company does not designate any interests in subsidiaries, the leased property or the present value of the minimum lease associates or joint venture entities as being subject to the payments, including any guaranteed residual values. Lease requirements of Accounting Standards specifically applicable to payments are allocated between the reduction of the lease financial instruments. liability and the lease interest expense for the period. (i) Loans and receivables (g) Financial Instruments Recognition and initial measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or cost. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the reporting period. (ii) Classification and subsequent measurement of financial liabilities The Company’s financial liabilities include borrowings and trade and other payables. Financial liabilities are measured at amortised cost using the effective interest method. All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. (h) Interests in Joint Ventures A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled operation involves use of assets and other resources of the venturers rather than establishment of a separate entity. The Company recognises its interest in the jointly controlled operations by recognising the assets that it controls and the liabilities that it incurs. The Company also recognises the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the The effective interest method is used to allocate interest jointly controlled operation. income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash The Company has entered into a number of Joint Ventures with various parties to explore on certain tenements that the Company has a beneficial interest in. (i) Equity-settled compensation The Company operates an employee share option plan. Share- 34 Musgrave Minerals Ltd Annual Report 2012 based payments to employees are measured at the fair value of Interest revenue is recognised using the effective interest rate the instruments issued and amortised over the vesting periods. method. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity All revenue is stated net of the amount of goods and services tax (GST). (m) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. instruments that eventually vest. All other borrowing costs are recognised in profit or loss in the (j) Provisions period in which they are incurred. (n) Goods and Services Tax (GST) Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it Revenues, expenses and assets are recognised net of the is probable that an outflow of economic benefits will result and amount of GST, except where the amount of GST incurred is not that outflow can be reliably measured. recoverable from the Australian Taxation Office (ATO). Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. (k) Cash and Cash Equivalents Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST Cash and cash equivalents include cash on hand, deposits components of cash flows arising from investing or financing available on demand with banks, other short-term highly liquid activities which are recoverable from, or payable to, the ATO investments with original maturities of 6 months or less, and are presented as operating cash flows included in receipts from bank overdrafts. Bank overdrafts are reported within short-term customers or payments to suppliers. borrowings in current liabilities in the statement of financial position. (o) Government Grants (l) Revenue and Other Income Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all Revenue is measured at the fair value of the consideration grant conditions will be met. Grants relating to expense items received or receivable after taking into account any trade are recognised as income over the periods necessary to match discounts and volume rebates allowed. When the inflow of the grant to the costs they are compensating. Grants relating consideration is deferred, it is treated as the provision of to assets are credited to deferred income at fair value and are financing and is discounted at a rate of interest that is generally credited to income over the expected useful life of the asset on a accepted in the market for similar arrangements. The difference straight-line basis. between the amount initially recognised and the amount ultimately received is interest revenue. Revenue from the sale of (p) Contributed equity goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Musgrave Minerals Ltd Annual Report 2012 35 (q) Earnings per share (r) Comparative Figures Basic earnings per share is calculated as net profit attributable When required by Accounting Standards, comparative figures to members of the parent, adjusted to exclude any costs of have been adjusted to conform to changes in presentation for servicing equity (other than dividends), divided by the weighted the current financial year. average number of ordinary shares, adjusted for any bonus element. (s) Critical Accounting Estimates and Judgments Diluted earnings per share adjusts the figures used in the The Directors evaluate estimates and judgments incorporated determination of basic earnings per share to take into account into the financial statements based on historical knowledge the weighted average number of shares assumed to have been and best available current information. Estimates assume a issued for no consideration in relation to dilutive potential reasonable expectation of future events and are based on ordinary shares. current trends and economic data, obtained both externally and within the Company. 36 Musgrave Minerals Ltd Annual Report 2012 Key estimates (i) Impairment (c) Finance expenses The Company assesses impairment at the end of each Finance costs reporting period by evaluating conditions and events specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. (ii) Exploration and evaluation expenditure The Company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage that permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $13,538,949. 5 Operating Segments The Board has considered the requirements of AASB 8 Operating Segments and the internal reports that are reviewed by the chief operating decision maker (the Managing Director) in allocating resources and have concluded at this time that there are no separately identifiable segments. 6 Revenue and expenses (a) Other income Fuel tax credits Interest received 2012 2011 $ $ 11,345 - 914,964 227,039 926,309 227,039 (b) Depreciation of non-current assets Plant and equipment 81,411 11,212 Motor vehicles 29,994 1,811 111,405 13,023 2012 2011 592 10,542 11,134 - 903 903 1,173,740 629,402 Interest applicable to hire- purchase (d) Employees benefits expense Wages, salaries, directors fees and other remuneration expenses Superannuation expense 101,473 19,982 Transfer to/(from) annual leave provision Transfer to/(from) long service leave provision 64,230 22,830 2,986 1,196 Share-based payments expense 37,485 1,385,000 Transfer to capitalised tenements (e) Other expenses Secretarial, professional and consultancy (870,124) (215,317) 509,790 1,843,093 88,776 105,258 Occupancy costs 100,722 35,616 Share register maintenance 34,495 9,986 Insurance costs 33,766 11,935 Promotion, advertising and sponsorship ASIC and securities exchange fees Travel expenses Audit fees 25,301 28,611 33,221 6,959 38,004 27,939 13,250 14,000 Computer expenses 39,438 17,213 Recruitment costs Employer related on costs 31,610 34,563 - - Other expenses 92,486 53,978 565,632 311,495 Musgrave Minerals Ltd Annual Report 2012 37 7 Income tax expense The major components of income tax expense are: 2012 2011 $ $ Net loss attributable to ordinary equity holders of the parent entity 2012 2011 $ $ (276,182) (2,251,700) Current income tax charge/ (benefit) Income tax expense/ (benefit) reported in the income statement 4,530 4,530 2012 2011 4,530 4,530 A reconciliation between tax expense and the product of Weighted average number of ordinary shares for basic earnings per share Effect of dilution 121,000,000 29,781,868 accounting profit before income tax multiplied by the Company’s Share options N/A N/A applicable income tax rate is as follows: Weighted average number of ordinary shares adjusted for the effect of dilution 121,000,000 29,781,868 2012 2011 $ $ Accounting profit before income tax (271,652) (1,941,475) At the Company’s statutory income tax rate of 30% (2011: 30%) Immediate write off of capital expenditure Expenditure not allowable for income tax purposes (81,496) (582,443) (1,182,503) (860,873) 11,830 415,624 Other deductible items (64,905) (64,905) Tax losses not recognised due to not meeting recognition criteria 1,317,074 1,092,597 Tax portion of share issue costs 4,530 310,225 Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the basic and diluted earnings per share computations: In accordance with AASB 133 ’Earnings per Share’, as potential ordinary shares may only result in a situation where their conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect has been taking into account. 4,530 310,225 There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements. The Company has tax losses arising in Australia of $7,298,847 (2011: $2,946,856) that are available indefinitely for offset against future taxable profits of the companies in which the losses arose. 9 Cash and cash equivalents 8 Earnings per share 2012 2011 $ $ Basic earnings per share amounts are calculated by dividing Cash at bank and in hand 460,860 651,987 net profit for the year attributable to ordinary equity holders of Short-term deposits 13,110,000 17,130,000 the parent by the weighted average number of ordinary shares outstanding during the year. 13,570,860 17,781,987 38 Musgrave Minerals Ltd Annual Report 2012 Cash at bank earns interest at floating rates based on daily deposit rates. 10 Trade and other receivables Short-term deposits are made for varying periods between one day and six months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rate. Goods and services tax receivable 2012 2011 $ $ 121,912 194,824 2012 2011 $ $ Fuel tax credits receivable 11,345 - 133,257 194,824 Reconciliation to Statement of Cash Flows For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 30 June: Cash at bank and in hand 460,860 651,987 Short-term deposits 13,110,000 17,130,000 13,570,860 17,781,987 Reconciliation of net loss after tax to net cash flows from operations Prepayments Accrued interest Net profit/(loss) (276,182) (2,251,700) Adjustments for non-cash items: Depreciation 111,405 13,023 Share based payments 37,485 1,385,000 Non cash income tax expense 4,530 310,225 Information regarding the credit risk of current receivables is set out in note 24. 11 Other current assets 2012 2011 $ $ 3,761 28,969 178,268 149,306 182,029 178,275 12 Property, plant and equipment 2012 2011 $ $ Plant and equipment cost Opening balance 128,761 4,612 61,567 190,477 32,730 (28,969) Additions Disposals (28,962) 149,306 Accumulated depreciation (212,280) (411,649) Opening balance Depreciation 67,216 24,026 Disposals (202,491) (620,261) 54,478 124,149 (2,083) - 181,156 128,761 11,280 68 81,411 11,212 (1,071) - 91,620 11,280 Changes in assets and liabilities (Increase) in trade and other receivables (Increase)/decrease in prepayments (Increase)/decrease in interest receivable (Decrease) in trade and other payables Increase in employee entitlements Net cash from operating activities Musgrave Minerals Ltd Annual Report 2012 39 12 Property, plant and equipment (continued) 13 Exploration and evaluation assets 2012 2011 $ $ 89,536 117,481 Net book value of plant and equipment Motor vehicles cost Opening balance 97,097 - 69,448 97,097 166,545 97,097 Exploration, evaluation and development costs carried forward in respect of mining areas of interest Exploration and evaluation phases 2012 2011 $ $ 13,538,949 9,597,272 13,538,949 9,597,272 1,811 29,994 31,805 The ultimate recoupment of costs carried forward for - exploration and evaluation phases is dependent on the 1,811 1,811 successful development and commercial exploitation or sale of the respective mining areas. Exploration Total $ $ Capitalised tenement expenditure movement reconciliation Balance at beginning of year 9,597,272 9,597,272 Additions through expenditure capitalised 3,941,677 3,941,677 Balance at end of year 13,538,949 13,538,949 Exploration and Evaluation expenditure has been 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 recovered reserves. Additions Accumulated depreciation Opening balance Depreciation Net book value of motor vehicles Total net book value of property, plant and equipment 134,740 95,286 224,276 212,767 The useful life of the assets was estimated as follows both for 2011 and 2012: Plant and equipment 2 to 10 years Motor Vehicles 6 - 8 years The carrying value of plant and equipment held under hire purchase contracts at 30 June 2012 is $159,726 (2011: $97,096). Additions of plant and equipment held under hire purchase contracts made during the year totalled $62,630 (2011: $97,096). 40 Musgrave Minerals Ltd Annual Report 2012 14 Share based payments Employee Share Option Plan The Company has established the Musgrave Minerals Ltd Employee Share Option Plan and a summary of the Rules of the Plan are set out below: • All employees (full and part time) will be eligible to participate in the Plan after a qualifying period of 12 months employment by a member of the Company, although the Board may waive this requirement. • Options are granted under the Plan at the discretion of the board and if permitted by the board, may be issued to an employee’s nominee. • Each option is to subscribe for one fully paid ordinary share in the Company and will expire 5 years from its date of issue. An option is exercisable at any time from its date of issue. Options will be issued free. The exercise price of options will be determined by the board, subject to a minimum price equal to the market value of the Company’s shares at the time the board resolves to offer those options. The total number of shares the subject of options issued under the Plan, when aggregated with issues 2012 2012 2011 2011 No. WAEP No. WAEP 15,500,000 0.33 - - 525,000 0.25 15,500,000 0.33 16,025,000 0.33 15,500,000 0.33 1,025,000 0.30 500,000 0.36 Outstanding at the beginning of the year Granted during the year Outstanding at the end of the year Exercisable at the end of the year The Board may amend the Plan Rules subject to the requirements of the Listing Rules. The expense recognised in the Statement of Comprehensive Income in relation to share- based payments is disclosed in note 6 (d). The following table illustrates the number (No.) and weighted average exercise prices (WAEP) and movements in share options under the Company’s Employee Share Option Plan issued during the year: during the previous 5 years pursuant to the Plan and any The outstanding balance as at 30 June 2012 is represented by: other employee share plan, must not exceed 5% of the Company’s issued share capital. • If, prior to the expiry date of options, a person ceases to be an employee of a Group company for any reason other than retirement at age 60 or more (or such earlier age as the board permits), permanent disability, redundancy or death, the options held by that person (or that person’s nominee) automatically lapse on the first to occur of a) • 7,750,000 options exercisable at any time until 20 August 2015 with an exercise price of $0.25. • 4,750,000 options exercisable at any time until 17 February 2016 with an exercise price of $0.36. • 2,500,000 options exercisable at any time until 17 February 2016 with an exercise price of $0.50. the expiry of the period of 1 month from the date of such • 500,000 options exercisable at any time until 8 May 2016 occurrence, and b) the expiry date. If a person dies, the with an exercise price of $0.36. options held by that person will be exercisable by that person’s legal personal representative. • Options cannot be transferred other than to the legal personal representative of a deceased option holder. • 525,000 options exercisable at any time until 23 January 2017 with an exercise price of $0.25. The weighted average remaining contractual life for the share options outstanding as at 30 June 2012 is 3.44 years (2011: 4.40 • The Company will not apply for official quotation of any years). options. • Shares issued as a result of the exercise of options will of the year was $0.25 - $0.50 (2010: $0.25 - $0.50). rank equally with the Company’s previously issued shares. The weighted average fair value of options granted during the The range of exercise prices for options outstanding at the end • Option holders may only participate in new issues of year was $0.071 (2011: $0.188 ). securities by first exercising their options. Musgrave Minerals Ltd Annual Report 2012 41 The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant using a Black-Scholes model taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the year ended 30 June 2012 and 30 June 2011: 17 Provisions Current Annual leave provision: 2012 2011 $ $ 2011 2012 Balance at 1 July 22,830 - Historical volatility (%) 100%-135% 114% Net increase/(decrease in 5.00% 3.43% provision) 64,230 22,830 5 5 Closing Balance 30 June 87,060 22,830 Risk free interest rate Expected life of options (years) 15 Trade and other payables 2012 2011 $ $ Trade payables (i) 43,606 239,838 Other payables (ii) 269,826 225,658 Non-current Long service leave: Balance at 1 July Net increase/(decrease in provision) 1,196 - 2,986 1,196 Closing Balance 30 June 4,182 1,196 313,432 465,496 18 Issued capital i. Trade payables are non-interest bearing and are normally settled on 30-day terms. ii. Other payables are non-interest bearing and are normally settled within 30 - 90 days. Information regarding the credit risk of current payables is set out in note 24. 2012 2011 $ $ 121,000,000 fully paid ordinary shares (2011: 121,000,000) 26,718,899 26,729,469 26,718,899 26,729,469 16 Borrowings Current Obligations hire purchase contracts Non-current Obligations hire purchase contracts 2012 2011 $ $ 64,587 7,925 64,587 7,925 50,854 89,155 50,854 89,155 42 Musgrave Minerals Ltd Annual Report 2012 Ordinary shares Number $ Number $ Balance at beginning of financial year 121,000,000 26,475,469 4,000,000 197,699 2012 2011 Seed capital issued 18 November 2010 Seed capital issued 7 December 2010 Shares issued pursuant to prospectus Shares issued as consideration for tenements acquired Transaction costs on share issue (net of tax) - - - - - - - - - 10,178,000 1,017,800 2,822,000 28,200 80,000,000 20,000,000 24,000,000 6,000,000 (10,570) - (768,230) Balance at end of financial year 121,000,000 26,464,899 121,000,000 26,475,469 Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly, the Company does not have authorised capital nor par value in respect of its issued shares. Fully paid ordinary shares carry one vote per share and carry the right to dividends (in the event such a dividend was declared). Share option reserve (a) (a) Share option reserve Balance at beginning of financial year Issue of options to Directors and Company Secretary (2,250,000 options) Issue of options to Managing Director (2,250,000 options) Issue of options to Managing Director (2,250,000 options) Issue of options to tenement vendors (7,750,000 options) Issue of options under ESOP (2012: 525,000 options, 2011: 500,000 options) 20 Retained earnings 2012 $ 2011 $ 2,944,985 2,944,985 2,907,500 - - - - 37,485 2,944,985 2,907,500 2,907,500 - 418,500 465,000 437,500 1,488,000 98,500 2,907,500 2012 $ 2011 $ Balance at beginning of financial year (2,258,446) (6,746) Net loss attributable to members of the parent entity (276,182) (2,251,700) Balance at end of the financial year (2,534,628) (2,258,446) Musgrave Minerals Ltd Annual Report 2012 43 21 Commitments for expenditure 23 Auditor’s remuneration 2012 2011 $ $ 2012 2011 $ $ Operating leases Not longer than 1 year 97,254 96,598 Longer than 1 year and not longer than 5 years 267,448 169,046 364,702 265,644 Audit or review of the financial report 13,250 14,000 Other non-audit services + - 6,250 13,250 20,250 + The auditor prepared the Investigating Accountants’ Report for the Company’s Hire purchase commitments prospectus dated 8 March 2011. Not longer than 1 year 72,219 86,488 Longer than 1 year and not longer than 5 years 53,467 43,456 24 Financial risk management 125,686 129,944 Capital risk management Less: future finance charges (10,245) (32,864) The Company manages its capital to ensure that it will be able 115,441 97,080 to continue as a going concern while maximising the return to stakeholders. Exploration leases In order to maintain current rights of tenure to exploration tenements held under agreement with founding shareholders, the Company will be required to spend in the year ending 30 The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses as disclosed in notes 18, 19, 20 respectively. June 2012 net amounts of approximately $1,835,000 (2011: Proceeds from share issues are used to maintain and expand $1,200,000) in respect of tenement lease rentals and to meet the Groups exploration activities and fund operating costs. minimum expenditure requirements. These obligations are expected to be fulfilled in the normal course of operations. 2012 2011 $ $ 22 Contingent liabilities and contingent Financial assets assets At the date of signing this report, the Company is not aware Cash and cash equivalents 13,570,860 17,781,987 Trade receivables 133,257 194,824 of any Contingent Asset or Liability that should be disclosed in Financial liabilities accordance with AASB 137. It is however noted that the Company has various bank guarantees totalling $110,000 at 30 June 2012 (2011: $50,000) which act as collateral over the lease of offices at 19 Richardson St, West Perth and the Company’s Visa business Payables Borrowings credit cards. 313,432 465,496 115,441 97,080 Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from activities. 44 Musgrave Minerals Ltd Annual Report 2012 The Group does not have any significant credit risk exposure Liquidity and interest risk tables to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which The carrying amount of financial assets recorded in the the Company can be required to pay. The table includes both financial statements, net of any allowances for losses, represents interest and principal cash flows. the Group’s maximum exposure to credit risk. Interest rate risk The tables listed below detail the Group’s interest bearing assets, consisting solely of cash on hand and on short term deposit (with all maturities less than one year in duration). Weighted average effective interest rate % Less than one year $ 2012 Fixed interest rate 5.54 13,110,000 Variable interest rate - 460,860 Weighted average effective interest rate % Less than one year $ 2011 Fixed interest rate 6.10 17,130,000 Variable interest rate - 651,987 Weighted average effective interest rate % Less than one year $ Longer than 1 year and not longer than 5 years $ 8.66 64,587 50,854 - 22,830 - Weighted average effective interest rate % Less than one year $ Longer than 1 year and not longer than 5 years $ 8.50 7,925 89,155 - 465,496 - 2012 Interest bearing Non-interest bearing 2011 Interest bearing Non-interest bearing At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s: • net loss would increase or decrease by $82,578 which is mainly attributable to the Group’s exposure to interest rates on its variable bank deposits. 25 Related party disclosure and key management personnel remuneration The following individuals are classified as key management personnel in accordance with AASB 124 ’Related Party Disclosures’: Liquidity risk management Graham Ascough, Non-Executive Chairman Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves. Robert Waugh, Managing Director Kelly Ross, Non-Executive Director John Percival, Non-Executive Director Justin Gum, Exploration Manager Musgrave Minerals Ltd Annual Report 2012 45 Short-term employee benefits Post employment benefits Share-based payments 2012 $ 2011 $ 560,155 56,545 - 616,700 210,262 17,943 1,386,500 1,614,705 (a). Option holdings of Key Management Personnel 30 June 2012 Balance at begining of year Granted as remuner- ation Exercised Net change other Balance at end of year Expiry Date First Exercise Date Last Exercise Date Graham Ascough 750,000 Robert Waugh 2,500,000 Robert Waugh 2,500,000 John Percival Kelly Ross Justin Gum 500,000 500,000 500,000 Donald Stephens 500,000 - - - - - - - - - - - - - - - - - - - - - 750,000 17/02/16 28/04/13 17/02/16 2,500,000 17/02/16 28/04/13 17/02/16 2,500,000 17/02/16 28/04/13 17/02/16 500,000 17/02/16 28/04/13 17/02/16 500,000 17/02/16 28/04/13 17/02/16 500,000 08/05/16 09/05/11 08/05/16 500,000 17/02/16 28/04/13 17/02/16 30 June 2011 Balance at begining of year Granted as remuner- ation Exercised Net change other Balance at end of year Expiry Date First Exercise Date Last Exercise Date Graham Ascough Robert Waugh Robert Waugh John Percival Kelly Ross Justin Gum Donald Stephens - - - - - - - 750,000 2,500,000 2,500,000 500,000 500,000 500,000 500,000 - - - - - - - - - - - - - - 750,000 17/02/16 28/04/13 17/02/16 2,500,000 17/02/16 28/04/13 17/02/16 2,500,000 17/02/16 28/04/13 17/02/16 500,000 17/02/16 28/04/13 17/02/16 500,000 17/02/16 28/04/13 17/02/16 500,000 08/05/16 09/05/11 08/05/16 500,000 17/02/16 28/04/13 17/02/16 46 Musgrave Minerals Ltd Annual Report 2012 (b). Shareholdings of Key Management Personnel 30 June 2012 Graham Ascough Robert Waugh John Percival Kelly Ross Justin Gum Donald Stephens 30 June 2011 Graham Ascough Robert Waugh John Percival Kelly Ross Justin Gum Donald Stephens Balance at 1 July 11 On Exercise of Options Net change other Balance 30 June 2012 200,000 80,000 100,000 50,000 40,000 Balance at 1 July 10 - - - - - - - - - - - - - - - - - - - 200,000 80,000 100,000 50,000 40,000 - On Exercise of Options Net change other Balance 30 June 2011 - - - - - - 200,000 80,000 100,000 50,000 40,000 - 200,000 80,000 100,000 50,000 40,000 - 26 Subsequent events The directors are not aware of any significant events that have ocurred since the end of the reporting period that should be disclosed. Musgrave Minerals Ltd Annual Report 2012 47 Directors’ Declaration The Directors of the company declare that: 1. the fi nancial statements and notes, as set out on pages 13 to 39, are in accordance with the Corporations Act 2001 b. the fi nancial statements and notes for the fi nancial year comply with Accounting Standards; and c. the fi nancial statements and notes for the fi nancial year give a true and fair view; and 3. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. and: This declaration is made in accordance with a resolution of the Board of Directors. a. comply with Accounting Standards, which, as stated in accounting policy Note 1 to the fi nancial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the fi nancial position as at 30 June 2012 and of the performance for the year ended on that date of the company; 2. the Managing Director and Company Secretary have each declared that: a. the fi nancial records of the company for the fi nancial year have been properly maintained in accordance with s 286 of the Corporations Act 2001; Mr Graham Ascough Chairman 25 September 2012 48 Musgrave Minerals Ltd Annual Report 2012 Musgrave Minerals Ltd Annual Report 2012 49 50 Musgrave Minerals Ltd Annual Report 2012 Musgrave Minerals Ltd Annual Report 2012 51 ASX Additional Information The number of shareholders, by size of holding, in each class are: Fully Paid Ordinary Shares Unlisted Options Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 30 September 2012. The use of cash and cash equivalents The Company has used all cash and cash equivalents for the purpose of carrying out its stated business objectives. 1-1,000 1,001 - 5,000 5,000 – 10,000 10,001 - 100,000 100,001 and over Holding less than a marketable parcel 5 43 271 730 136 1,185 55 - - - 2 12 14 - Distribution of equity securities Substantial shareholders Ordinary share capital • 121,000,000 fully paid ordinary shares are held by 1,185 individual shareholders. There are 26,500,000 restricted and unquoted ordinary shares in escrow until 28 April 2013. All issued ordinary shares carry one vote per share. Ordinary shareholders Mithril Resources Investments Pty Ltd Independence Group NL Number Fully paid Percentage 9,283,871 7.67% 9,027,000 7.46% 7.17% Goldsearch Limited 8,673,000 Options • 16,025,000 unlisted options are held by 14 individual option holders. One holder, Mr Robert Waugh and Mrs Sara Waugh , holds 5,000,000 unlisted options (equivalent to 31.20% of total unlisted options). 52 Musgrave Minerals Ltd Annual Report 2012 Twenty largest holders of quoted equity securities Fully paid ordinary shares Number Percentage Mithril Resources Investments Pty Ltd Independence Group NL Goldsearch Limited JP Morgan Nominees Australia Limited Barrick (Australia Pacific) Limited Integra Mining Limited JP Morgan Nominees Australia Limited Argonaut Resources NL Mr William Douglas Goodfellow King Town Holdings Pty Ltd Forty Traders Limited Hipete Pty Limited Premar Capital Nominees Pty Ltd Finico Pty Ltd Octavian Services Pty Ltd Yyarandi Investments Pty Ltd Merrill Lynch (Australia) Nominees Pty Limited Kavalex Pty Limited Vector Nominees Pty Limited Purser Family Super Pty Ltd 9,283,871 9,027,000 8,673,000 8,088,000 6,000,000 5,516,129 5,293,554 2,500,000 1,540,000 1,065,000 1,000,000 1,000,000 1,000,000 800,000 800,000 800,000 747,604 666,341 600,000 579,018 64,979,517 7.67% 7.46% 7.17% 6.68% 4.96% 4.56% 4.37% 2.07% 1.27% 0.88% 0.83% 0.83% 0.83% 0.66% 0.66% 0.66% 0.62% 0.55% 0.50% 0.48% 53.70% Musgrave Minerals Ltd Annual Report 2012 53 Musgrave Minerals Ltd 19 Richardson Street, West Perth, 6005 Western Australia T: +61 (8) 9324 1061 F: +61 (8) 9324 1014 info@musgraveminerals.com.au www.musgraveminerals.com.au 

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