Musgrave Minerals Limited
Annual Report 2013

Plain-text annual report

ANNUAL REPORT 2013 Exploration for base metal deposits, silver and gold mineralisation in South Australia ABN 12 143 890 671 Musgrave Minerals Limited is a dedicated exploration company focused on base metals, silver and gold in the highly prospective Musgrave Province and Gawler Craton regions of 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: $9.6M (30th June 2013) ABN: 12 143 890 671 Top shareholders Mithril Resources Ltd Independence Group NL Goldsearch Ltd Barrick (Australia Pacific) Ltd Silver Lake Resources Ltd Corporate Information Directors Graham Ascough (Non-Executive Chairman) Robert Waugh (Managing Director) Kelly Ross (Non-Executive Director) 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, WA, 6005 T: +61 (8) 9324 1061 F: +61 (8) 9324 1014 info@musgraveminerals.com.au www.musgraveminerals.com.au Share Registry Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide, SA, 5000 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 i Musgrave Minerals Ltd Corporate Information Contents Chairman’s Letter Review of Operations Summary of Tenements JORC 2012 Table 1 Directors’ Report Corporate Governance Statement Auditor’s Independence Declaration Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information 2 3 17 24 36 43 50 51 52 53 54 55 77 78 81 1 Contents Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 1 Chairman’s Letter Dear Fellow Shareholder, priority EM and geochemical targets at the Deering Hills Project that warrant drilling, and we also identified targets for It gives me great pleasure to present the 2013 Annual Report follow-up after a soil geochemical program over the Ragnar for Musgrave Minerals Limited. The past 12 months have target at Mimili, along with EM and geochemical targets at Mt been very active as the Company further establishes itself as Woodroffe. an explorer in the highly prospective regions of the Musgrave Province and Gawler Craton in South Australia. The recently granted Pallatu tenement has been identified Our agreement signed with Menninnie Metals Pty Ltd, a a large nickel sulphide system with coincident geophysical subsidiary of ASX-listed Terramin Australia Ltd (TZN), to earn anomalies in a favourable geological setting. We look forward as a priority area as the targets show all the right criteria for up to a 75% stake in the Menninnie Dam silver-lead-zinc to advancing this target in 2013. project in the Gawler Craton, has proved to be an important decision for the Company. Menninnie Dam is well located Our work during the past year has demonstrated that in terms of infrastructure, already has an existing mineral Musgrave Minerals is moving in the right direction with the resource, and there is plenty of exploration upside to add to objective of making significant discoveries across our projects. this, with a growing number of high-quality targets awaiting We are well-funded to continue exploration, with $9.6 million drill testing. in the bank – a position many of our peers would no doubt Already our team has discovered new base metal envy. mineralisation on the project being the zinc, silver and gold I would like to thank our management and staff for their mineralisation discovered at the Tank Hill target. An airborne exceptional hard work and dedication over the past year, geophysical survey identified VTEM (versatile time domain and to our shareholders for their loyalty and support. The electromagnetic) anomalies co-incident with silver geochemical upcoming year will undoubtedly be busy again for our team targets and these will be our focus at Menninnie Dam in the and we look forward to sharing with you the results of their immediate future. work. We have again been active across our tenement package in the Musgrave Province, continuing our approach of systematic exploration that we believe will return the best results for the Graham Ascough Company and our shareholders. We currently have high- Chairman MGV Board members (from left) Robert Waugh, Graham Ascough, Kelly Ross and John Percival 2 Musgrave Minerals Ltd Musgrave Minerals Ltd Chairman’s Letter Review of Operations Musgrave Minerals Limited (ASX: MGV) is an Australian-based exploration company focused on base metal, gold and silver exploration in the Musgrave Geological Province and Gawler Craton regions of South Australia. Musgrave Minerals is focused on exploring for massive and disseminated nickel and copper sulphide mineralisation in the Musgrave region and high grade silver-zinc-lead mineralisation at Menninnie Dam. During the year the Company focused on three main project areas, Deering Hills and Mt Woodroffe in the Musgrave and Menninnie Dam. During this period, we successfully completed four drilling campaigns, one at Deering Hills and three at Menninnie Dam, along with two airborne VTEM surveys and a range of other field activities to advance targets to a drill-ready stage. The Company has successfully demonstrated the prospectivity of all three project areas and will continue to advance targets through to drilling. In South Australia, the Musgrave Province lies almost entirely within Anangu Pitjantjatjara Yankunytjatjara (“APY”) land Figure 1: Musgrave Minerals’ project location map (Aboriginal freehold land). Musgrave Minerals continues to also located just 20km from the recent Paris silver discovery. develop a strong relationship with the APY and is continuing Historical drilling at Menninnie Dam has focused on the to progress new exploration tenements to grant in our region. existing resource area leaving significant potential for new discoveries in the region. Menninnie Dam, approximately 100km west of Port Augusta in South Australia, is a silver- zinc-lead project comprising five licences which cover an area of 2,471km2 in the southern Musgrave returned a very encouraging drill result from the Gawler Craton. initial drilling at Tank Hill at Menninnie Dam returning 6m @ 4.9% Zn, 0.7% Pb, 62g/t Ag, 1.2g/t Au in MDRC039. The The Company has an agreement with Menninnie Metals Pty mineralisation is only 5km north-east of the existing Menninnie Ltd, a subsidiary of Terramin Australia Limited (ASX: TZN), to Central and Viper deposits. earn a 51% interest in the Menninnie Dam Project in the first stage, and up to a 75% interest thereafter. Musgrave Minerals is committed to exploration success and making the next significant discovery to drive shareholder The project hosts the Menninnie Central and Viper mineralised value. zones which have a JORC-compliant Inferred Mineral Resource of 7.7Mt at 27g/t Ag, 3.1% Zn and 2.6% Pb (estimated by Terramin Australia Limited in 2011 in accordance with the 2004 JORC code). These zones are not closed off and there is potential for further resources to be defined. The project is 3 Review of Operations Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 3 Corporate Exploration Activities Musgrave Minerals Ltd listed on the Australian Securities Exchange (“ASX”) on 29 April 2011. Menninnie Dam Project EL5039, 4813, 4285, 4669, 4865 (Musgrave Minerals Ltd During the past year, Musgrave spent $3.9 million on earning up to 75%) exploration and administration activities and received $0.29 million in regard to the 2011/2012 Financial Year Research and Development refund. • MGV commenced aggressive exploration program in November 2012 after signing Heads of Agreement to acquire up to 75% of the Project At the end of June 2013, the Company was well resourced, • Zinc, silver and gold mineralisation discovered at holding $9.6 million in cash. Tank Hill target which remains open In October 2012, the Company signed 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. Much of Musgrave’s exploration activities during the past year o MDRC39 intersected 6m @ 4.9% Zn, 0.7% Pb, 62g/t Ag, 1.2g/t Au • Silver, zinc and graphite intersected at the Mannequin prospect have focused on this project. • New co-incident VTEM and silver geochemical targets identified for further work During the March quarter, new exploration licences for the Musgrave tenement package were granted for a period of two Musgrave Minerals is earning a 51% interest in the Menninnie years, replacing the existing tenure. MGV Geologist viewing core at Deering Hills Dam silver-zinc-lead project in South Australia in the first stage, and up to a 75% interest thereafter, after signing a Heads of Agreement with Menninnie Metals Pty Ltd, a 100% subsidiary of Terramin Australia Limited (ASX: TZN). Menninnie Dam comprises five Exploration Licences (ELs) covering a contiguous area of 2,471km² in the Gawler Craton, about 100km west of Port Augusta. The project hosts two zones, Menninnie Central and Viper, that have an Inferred Mineral Resource of 7.7Mt at 27g/t silver, 3.1% zinc and Drilling at Tank Hill, Menninnie Dam 4 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Figure 2: Location of the Menninnie Dam Project, South Australia 2.6% lead (estimated by Terramin in 2011 in accordance with Au soil geochemistry. The Company drilled 13 holes into this the 2004 JORC code) which are not closed off. The project target during the year with encouraging results. has significant potential to discover new economic mineral deposits. Drill hole MDRC39 at Tank Hill intersected 6m @ 4.9% Zn, 0.7% Pb, 62g/t Ag, 1.2g/t Au from 133m down hole Musgrave Minerals commenced its exploration at Menninnie in fresh rock within a broader zone of 30m @ 1.9% Zn, Dam in November 2012, focusing on five target areas, Tank 0.5% Pb, 21g/t Ag, 0.27g/t Au from 132m down hole. The Hill, Mannequin, Viper South, Nonning and Phone Hill. mineralisation is only 5km north-east of the existing Menninnie Musgrave completed three drilling campaigns on the project Central and Viper deposits at Menninnie Dam. during the year, drilling 31 reverse circulation (RC) drill holes for 5,250m and one diamond drill hole to a depth of 267m. As a result of the mineralisation intersected at Tank Hill, Tank Hill MGV commenced further RC drilling in May focusing on this prospect and following up the encouraging zinc-silver-gold The Tank Hill target is a 2km long induced polarisation (“IP”) and lead intersection in MDRC39. The program consisted of six anomaly with co-incident anomalous surface Zn, Pb, Ag and RC holes and a single diamond hole. 5 Review of Operations Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 5 Sieved sulphide at Menninnie Dam Results include 2m @ 4.2% Zn, 0.9% Pb, 267g/t Ag, 0.44g/t quality information is available at this stage. The graphite is Au from 138m down hole in fresh rock within a broader zone co-incident with a strong airborne VTEM conductor identified of 22m @ 0.7% Zn, 0.4% Pb, 44g/t Ag, 0.09g/t Au, from at the Mannequin target. Follow-up drilling is currently being 126m down hole in drill hole MDRC44. Current interpretation planned. suggests that the true width of the mineralisation will be approximately 70-80% of the intersection widths. Viper Mineralisation remains open to the northwest and southeast. Drilling at Viper targeted the up-dip projection of the Mannequin interpreted Ag-Pb-Zn lodes. MDRC26 at Viper intersected 6m @ 49.4g/t Ag from 60m suggesting that the Viper lodes may The Mannequin target is a 3km long IP anomaly. This IP be offset by one or more faults. response is more extensive and more intense than the responses over the inferred resource at Menninnie Central. Nonning The modelled source of the IP response extends from near- The Nonning target is a 1.5km long IP chargeability anomaly. surface to significant depth. The area is covered by transported The IP response is in an area of favourable geology and major overburden making surface geochemistry ineffective. The regional structural intersections with no previous drilling. Mannequin target was tested with six RC drill holes. The area is covered by thin sedimentary cover and surface geochemical data is not yet available for this target. A single Highly anomalous silver, zinc and total graphitic carbon (TGC) RC hole was drilled at Nonning but failed to reach target values were intersected (Figure 3). This includes a result of depth due to excessive ground water. This target remains 20m @ 12.4g/t Ag from 68m down hole in weathered clay in untested. drill hole MDRC28. At the base of this anomalous silver zone was 1m @ 3.5% Zn, 0.7% Pb and 21.1g/t Ag from 87m down Surface geochemical surveys have identified a number of hole. encouraging Ag, Pb, Zn, Cu and Au anomalies for follow- up exploration. The survey included analysis for low level Further analysis of graphitic zones intersected in drill holes silver (Ag) geochemistry which has not been undertaken MDRC31 and MDRC32 returned a best intersection of 10m on the Menninnie Dam tenements before. Low level silver @ 6.3% TGC in hole MDRC32. No grain size or carbon geochemistry through soil sampling was a key factor in the 6 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Figure 3: Menninnie Dam drill hole locations on IP chargeability image and landsat background 7 Review of Operations Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 7 discovery of the Paris silver deposit by Investigator Resources only 20km to the west of Menninnie. MGV undertook a 398 line km airborne VTEM survey across the Menninnie Dam project during the June quarter. The survey aimed to define new base metal and graphitic targets within the Menninnie Dam project area. The VTEM survey identified seven high-priority targets, four of which are co-incident with silver geochemical anomalism. Mineralised rock-chip samples up to 13.3g/t Ag were identified within a strongly altered epithermal zone at the Erebus target. The Erebus geochemical anomaly, where there has been no drilling to date, is approximately 1.5km in length and is co- incident with high quality VTEM anomalies (Figure 5). Follow-up exploration will include additional mapping, rock- chip sampling and infill soil geochemistry to better define targets for drill testing. Figure 4: Tank Hill drill hole locations and significant results on IP chargeability image and landsat background Figure 5: Menninnie Dam priority VTEM anomalies on silver soil geochemical image with Paris insert for anomaly size comparison * JORC (2004 Edition)-compliant inferred resource for the Menninnie Central and Viper deposits was reported by Terramin Australia Limited (ASX: TZN) on 1st March 2011 Zone Tonnes x103 Zn (%) Pb (%) Ag (%) Pb + Zn (%) Total Menninnie Central 5,240 3.5 2.7 28 6.1 Total Viper 2,460 2.3 2.4 24 4.8 Total Menninnie Central and Viper 7,700 3.1 2.6 27 5.7 Inferred Resource (at 2.5% Pb+Zn cut-off) as at 15 February 2011 MGV is not aware of any new information that would affect the material nature of this resource calculation. *Competent Person’s Statement The information in this report that relates to Mineral Resources or Ore Reserves is based on information thoroughly reviewed by Mr Robert Waugh, a Competent Person who 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 and a full-time employee of Musgrave Minerals Ltd. Mr Waugh has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration 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’. Mr Waugh consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 8 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Deering Hills Project EL5172 & EL5173 – formerly EL3941 & EL3942 (100% Musgrave Minerals Ltd) • Extensive geochemical vacuum drilling program completed • Regional gravity survey completed defining areas of prospective Giles Complex rocks under cover • Minbar and Caliban targets returned highly anomalous nickel, copper and PGE (Platinum Group Elements) values increasing the prospectivity for massive Ni-Cu sulphides • Vacuum drilling at Alvey target identified area prospective for stratiform PGE mineralisation • Grant of high priority Pallatu tenement • Basement drill testing of targets planned for late in 2013 The Deering Hills Project is in the centre of the Musgrave geological province about 200km west of the Stuart Highway and Adelaide to Darwin rail line (Figure 6). The focus at Deering Hills is to continue to define and develop targets in preparation for basement drill testing for massive nickel-copper sulphides. A total of 813 shallow geochemical vacuum holes for more than 14,000m were drilled at Deering Hills during the year to a maximum depth of 55m. This drilling defined co-incident basement nickel-copper and PGE anomalies at Minbar, Caliban (formally called West Pallatu) and Alvey for further follow-up exploration. All three targets are co-incident with strong gravity highs and magnetic responses permissive with possible magmatic nickel-copper sulphide mineralisation. Results from shallow geochemical vacuum drilling at the Minbar target returned highly anomalous nickel, copper and PGE values over an area that is 1.5km in length. Peak values at Minbar were 1847ppm Ni, 482ppm Cu and 121ppb Pt + Pd (PGE). These values are high for shallow geochemical drilling and suggest a sulphide source. Previous drilling by Mithril Resources Ltd intersected a PGE mineralised horizon with the best intersection 17.1m @ 9 Review of Operations Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 9  Figure 6: Location of MGV’s Musgrave geological province tenements, South Australia. 0.49g/t Pt + Pd including 8m @ 0.77g/t Pt + Pd. Shallow vacuum geochemical drilling by Musgrave at the Alvey target identified a second, to date untested horizon, prospective for stratiform PGE mineralisation similar to that in the PGE-rich Bushveld Complex of South Africa. The geochemical target has been defined over a strike length of approximately 2.5km within rock types favourable to host this style of mineralisation. At the Alvey PGE target, two detailed infill geochemical vacuum drill lines (25m spaced holes) returned two strong gold assays of 43ppb and 66ppb Au. These holes also contained strong PGE, nickel and copper anomalism. The Caliban nickel-copper geochemical target (Figure 7) extends over 1km of strike in favourable gabbroic basement rock types. The results at Caliban and Minbar are highly anomalous for this style of sampling. The Caliban geochemical anomaly is 3km along strike from the highly rated Pallatu VTEM targets. Vacuum drilling at Deering Hills 10 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Figure 7: Image showing new Pallatu licence with Ni-Cu vacuum geochemical drilling result and VTEM targets (red stars) on orthoimage and VTEM B-field image as insert Review of Operations 11 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 11 Figure 8: Image showing new Pallatu licence with VTEM targets, co-incident Bouguer gravity anomaly and magnetic anomalies in relation to the known Giles Complex mafic/ultramafic intrusives. The remainder of the licence is under shallow sand cover. The vacuum geochemical drilling program also covered initial traverses across the Lyta, Dius and Vintari targets. Ground EM over VTEM and geochemical anomalies is planned for later in Mimili Project EL5174 & EL5175 – formerly EL3954 & EL3955 (100% 2013 to better define precise drill hole locations for basement Musgrave Minerals Ltd) drill testing at Deering Hills. • Geochemical sampling completed at Ragnar target The granting of the Pallatu tenement (EL5317) in August 2013 • Regional soil geochemical program identified nickel is a significant step towards accessing and drill testing ten high and copper targets for follow-up priority VTEM targets within this new exploration licence. • New VTEM anomalies identified at West Graben The new licence (Figure 7) covers a very prospective area of known Giles Complex intrusives adjacent to a number of high priority VTEM conductors modelled under shallow sand cover. Giles Complex intrusives are known to host nickel sulphide mineralisation elsewhere in the Musgrave Province. A VTEM survey flown by Musgrave Minerals to detect massive sulphide mineralisation highlighted a cluster of 10 priority conductive targets at Pallatu for follow-up. The VTEM targets at Pallatu are along strike from the anomalous nickel-copper-PGE (platinum group element) geochemical anomalies identified from shallow vacuum drilling at Caliban and Minbar (Figure 7) and are co-incident with a large gravity anomaly and magnetic response (Figure 8). This is consistent with the geophysical response from other known magmatic nickel sulphide deposits of this model type. Musgrave Minerals owns 100% of the Mimili Project which consists of two exploration licences, EL5174 and EL5175. The project is situated 40km west of the Stuart Highway and approximately 70km north-west of Marla in South Australia (Figure 6). Moorilyanna Prospect The Moorilyanna copper-gold prospect is located on tenement EL5175 less than 40km from the Stuart Highway and Adelaide to Darwin rail line. Musgrave Minerals undertook a regional soil geochemical program over the Ragnar target area at Moorilyanna. The survey successfully identified a number of copper geochemical targets for follow-up exploration including an anomaly overlying the untested IP target near MOORC016 (Figure 9). The 2012 VTEM survey delineated three local bedrock conductors in the south west corner of EL5175 referred to as the West Graben targets. Follow up work will include geochemical sampling and ground EM. 12 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Figure 9: Schematic gridded image of Ragnar copper geochemical targets shown on orthoimage Bryson Hill landscape Review of Operations 13 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 13 Mimili Regional Mt Woodroffe Project Musgrave Minerals undertook a regional mapping and surface geochemical sampling over the Mail Road target area in the EL5171 – formerly EL3940 (100% Musgrave Minerals Ltd) northern part of EL5175. The survey confirmed a number • Airborne VTEM survey identifies targets for further of copper and nickel geochemical targets for follow-up exploration exploration including anomalous surface copper and nickel samples at Valeri containing peak values of 308ppm Cu and 491ppm Ni. This is encouraging as the Valeri target is coincident with both an aeromagnetic and gravity high. Further follow-up is planned. • Surface Ni-Cu geochemical soil anomalies identified at the Rimmer target • Rock chip sampling at the Kochanski target returned anomalous peak values of 0.14% Cu and 727ppm Ni. The Mt Woodroffe Project is situated on EL5171 within a large, geologically complex area, straddling the Mann Fault Complex and Woodroffe Thrust Zone in the central Musgrave Province (Figure 6). It covers an area of approximately 424km2. Musgrave flew a 645 line km airborne VTEM survey over the Mt Woodroffe tenement and identified a number of priority targets for follow-up including the Lister, Rimmer, Skutters, Kochanski and Starbug targets (Figure 10). All five targets are co-incident with regional gravity and magnetic highs consistent with the magmatic nickel-copper sulphide model. Follow-up of these targets commenced with Musgrave conducting geochemical sampling over the targets in the June quarter. A number of surface geochemical soil anomalies were identified including peak copper and nickel anomalism of 308ppm Cu and 171ppm Ni at the Rimmer target and 443ppm Ni at the Skutters target. Further exploration including additional soil and rock-chip sampling and ground EM surveys are planned. Field camp at Moorilyanna 14 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Figure 10: Mt Woodroffe VTEM targets with VTEM colour EM amplitude image overlaying ortho-image Bryson Hill Project EL5205 – formerly EL4047 (Musgrave Minerals Ltd earning 75% from Pitjantjatjara Mining Company Pty Limited and Zeil No. 1 Pty Limited) The Bryson Hill Project covers an area of approximately 1,535km2 and is located in the far easterly portion of the SA Musgrave Province. The tenement is covered by spinifex sand plains and dunes with only very minimal sub-crop. Little previous exploration has been undertaken within the tenement area. Musgrave flew an airborne VTEM survey over portions of the large Bryson Hill project area and identified a number of priority targets for follow-up. Mapping and geochemical sampling commenced at Bryson Hill in the June quarter. Other Musgrave Province Projects During the year, Musgrave Minerals submitted heritage survey requests for tenements EL4850, EL4851, EL4852 and EL4853. Heritage surveys have commenced on EL4850 with exploration due to commence later this year. 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. The new licences cover areas that are considered prospective for magmatic nickel-copper sulphide deposits and are interpreted to be predominantly covered by thin (<20m) aeolian sand with minor outcropping and sub-cropping geology. With the newly granted licences, Musgrave Minerals has a total of 10 granted exploration licences and 32 exploration licence applications in the South Australian portion of the Musgrave Province. Musgrave Principal Geologist Justin Gum mapping at Mt Woodroffe Review of Operations 15 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 15 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 20012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Waugh consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. Forward Looking Statements (among others) the risk of adverse or unanticipated market, financial or This report has been prepared by Musgrave Minerals Ltd (MGV). The information contained in this report is a professional opinion only and is given in good faith. Certain information in this document has been derived from third parties and though Musgrave Minerals has no reason to believe that it is not accurate, reliable or complete, it has not been independently audited or verified by MGV. This report is in summary form and does not purport to be all inclusive or complete. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained. This is for information purposes only. Neither this nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of MGV shares in any jurisdiction. This does not constitute investment advice and has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs and the opinions and recommendations in this report are not intended to represent recommendations of particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks, which include political developments. To the fullest extent permitted by law, MGV, its officers, employees, related bodies corporate, agents and advisers do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this report. No responsibility for any errors or omissions from this arising out of negligence or otherwise is accepted. 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, MGV. In particular, they speak only as of the date of this document, they assume the success of MGV’s 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. 16 Musgrave Minerals Ltd Musgrave Minerals Ltd Review of Operations Summary of Tenements Tenement 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 Previous Tenement ID Project Locality Status 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 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 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 (km2) 519 463 653 1854 620 1301 2198 1230 2136 1783 1507 1013 595 1241 1656 1721 2308 666 2108 1926 1957 1040 835 1815 2015 624 215 152 692 338 MGV Interest 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% Summary of Tenements 17 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 17 Previous Tenement ID Tenement EL2008/154 EL2008/156 Project Locality Status Musgrave Musgrave Musgrave Musgrave PMC JV Musgrave Musgrave EL3940 Musgrave EL3941 Musgrave EL3942 Musgrave EL3954 Musgrave EL3955 Musgrave EL4047 Musgrave PMC JV Musgrave- Menninnie Metals JV Musgrave- SA SA SA SA SA SA SA SA SA SA SA SA SA Area (km2) 37 12 2385 2360 1342 1256 424 427 565 714 1906 1535 MGV Interest 100% 100% 100% 0% (may earn up to 75%) 100% 100% 100% 100% 100% 100% 100% 0% (may earn up to 75%) Application Application Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted 101 0% (may earn up to 75%) Menninnie Metals SA Granted 312 0% (may earn up to 75%) JV Musgrave- Menninnie Metals SA Granted 208 0% (may earn up to 75%) JV Musgrave- Menninnie Metals SA Granted 988 0% (may earn up to 75%) JV Musgrave- Menninnie Metals SA Granted 862 0% (may earn up to 75%) JV EL4850 EL4851 EL4852 EL4853 EL5170 EL5171 EL5172 EL5173 EL5174 EL5205 EL5039 EL4813 EL4285 EL4669 EL4865 18 Musgrave Minerals Ltd Musgrave Minerals Ltd Summary of Tenements Appendix 1: Summary of Menninnie Dam Drill Hole Locations and Significant Results Drill Hole ID Drill Type Prospect Easting (m) Northing (m) Az Dip (degrees) RL Total Depth (m) From (m) Interval (m) Zn (%) Pb (%) Ag (g/t) Au (g/t) MDRC16 MDRC17 MDRC18 MDRC19 MDRC20 MDRC21 MDRC22 MDRC23 MDRC24 RC RC RC RC RC RC RC RC RC Phone Hill 629646 6383501 283 Phone Hill 629647 6383103 275 Phone Hill 629893 6383505 277 Phone Hill 630103 6383515 280 Phone Hill 630604 6383554 280 Phone Hill 630304 6383903 96 Phone Hill 630253 6383904 106 Phone Hill 629895 6384620 277 Viper 632877 6385154 270 -60 -60 -60 -60 -60 -60 -60 -60 -60 294 90 296 120 302 150 310 319 72 72 319 144 318 198 303 303 48 84 MDRC25 RC Viper 632943 6385007 270 -60 309 125 MDRC26 MDRC27 RC RC Viper Viper 632950 6384801 270 632885 6385276 270 -60 -60 MDRC28 RC Viper 635998 6387546 270 -60 MDRC29 RC Mannequin 635755 6387645 270 MDRC30 RC Mannequin 635835 6387649 270 -60 -60 287 156 275 156 284 156 Including 276 102 280 102 MDRC31 RC Mannequin 635247 6388556 270 -60 272 132 MDRC32 RC Mannequin 635337 6388557 270 -60 276 90 19 32 0 51 60 48 68 87 13 30 33 50 66 84 89 121 55 88 55 88 MDRC33 MDRC34 MDRC35 MDRC36 MDRC37 RC RC RC RC RC Tank Hill 635207 6392249 277 Tank Hill 635003 6392255 97 Tank Hill 635297 6392267 277 Tank Hill 635194 6392406 270 Tank Hill 635346 6391986 270 -60 -60 -60 -60 -60 265 198 149 265 151 268 158 268 109 NSA NSA NSA NSA NSA NSA NSA 0.46 NSA 0.14 - - 0.42 0.42 0.56 1.23 - 4.8 2.3 2.9 0.46 0.47 49.4 0.75 0.90 4.0 0.26 0.07 12.4 3.49 0.74 21.1 NSA - - - - - 0.43 0.45 - - - - - - - 0.44 0.12 7.3 5.3 4.5 11.4 4.2 1.0 - 2.4 5.7 - - - - - 0.40 - - 5.7 0.40 - - - - - - - - - - - - - - - - - - - - 0.72 0.06 2.9 0.02 NSA NSA NSA 2 1 1 1 6 2 20 1 1 1 1 1 1 1 9 1 1 1 1 1 1 273 199 125 3 0.34 0.04 5.70 0.03 Summary of Tenements 19 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 19 Drill Hole ID Drill Type Prospect Easting (m) Northing (m) Az Dip (degrees) RL Total Depth (m) From (m) Interval (m) Zn (%) Pb (%) Ag (g/t) Au (g/t) MDRC38 RC Mannequin North 635593 6389679 270 -60 220 121 MDRC39 RC Tank Hill 636002 6391753 180 -60 261 211 including MDRC39 RC Tank Hill 636002 6391753 180 -60 261 211 MDRC40 RC Tank Hill 635998 6391696 180 -60 262 156 MDRC40 RC Tank Hill 635998 6391696 180 -60 262 156 including MDRC40 RC Tank Hill 635998 6391696 180 -60 262 156 MDRC41 RC Tank Hill 636003 6391814 180 -60 262 210 MDRC41 RC Tank Hill 636003 6391814 180 -60 262 210 including MDRC41 RC Tank Hill 636003 6391814 180 -60 262 210 MDRC42 RC Tank Hill 635942 6391633 180 -60 260 234 MDRC42 RC Tank Hill 635942 6391633 180 -60 260 234 including 51 56 66 84 91 95 97 101 132 6 168 181 10 16 24 25 35 61 75 86 98 102 124 70 95 101 174 180 189 190 191 196 199 41 45 66 69 70 1 1 1 4 1 1 2 1 0.04 0.01 5.10 0.02 0.06 0.02 10.10 0.02 0.59 0.22 1.20 0.02 0.03 0.03 5.10 - 0.04 0.03 4.60 0.02 0.06 0.02 4.70 0.05 0.03 4.75 0.07 0.26 9.10 - - - 30 1.90 0.46 20.51 0.27 4.92 0.74 62.13 1.17 1 1 1 1 6 1 2 1 1 1 1 2 1 2 1 1 3 2 1 3 1 1 1 1 1 1 5 1 0.47 0.20 17.30 0.03 0.47 0.05 3.80 0.10 0.01 0.56 0.90 0.01 0.46 0.70 - - 0.06 0.26 7.93 0.03 0.07 0.49 19.70 0.12 0.03 0.08 4.60 0.04 0.44 0.06 1.90 0.64 0.10 2.50 - - 0.76 0.19 6.40 0.11 0.37 0.06 9.00 0.03 0.57 0.07 2.35 0.01 0.31 0.04 5.90 - 0.05 0.35 5.80 0.05 0.02 0.01 4.00 0.23 0.13 0.26 8.60 0.18 0.07 0.02 6.30 0.10 0.21 0.71 21.40 0.33 0.09 0.13 10.90 - 1.58 1.04 12.60 0.01 3.03 1.91 21.40 0.39 0.26 6.60 - - 0.30 0.10 7.50 0.06 0.00 0.03 6.40 0.10 0.51 0.04 0.70 - 0.29 0.18 4.50 0.02 0.67 0.33 6.54 0.04 1.55 0.48 10.50 0.01 20 Musgrave Minerals Ltd Musgrave Minerals Ltd Summary of Tenements Drill Hole ID Type Prospect Easting Drill (m) Northing (m) Az Dip (degrees) RL Total Depth (m) From (m) Interval (m) Zn (%) Pb (%) Ag (g/t) Au (g/t) MDRC42 RC Tank Hill 635942 6391633 180 -60 260 234 MDRC43 RC Tank Hill 636066 6391747 180 -60 258 114 MDRC44 RC Tank Hill 636167 6391751 180 -60 264 192 MDRC44 RC Tank Hill 636167 6391751 180 -60 264 192 including MDRC44 RC Tank Hill 636167 6391751 180 -60 264 192 MDRC44 RC Tank Hill 636167 6391751 180 -60 MDRC44 MDRC45 RC RC Tank Hill 636167 6391751 180 Tank Hill 635838 6391532 270 -60 -60 264 192 including 264 192 262 96 76 157 188 204 211 40 77 80 81 41 61 70 88 89 120 126 138 143 2 1 2 5 1 1 1 1 1 5 1 2 6 1 4 0.24 0.13 4.85 0.02 0.46 0.04 0.90 0.06 0.03 9.45 - - 0.03 0.01 5.42 0.13 0.01 0.01 4.80 0.11 0.17 0.05 4.60 0.32 0.09 6.40 1.34 0.05 1.00 0.28 0.05 4.00 - - - - 0.01 0.02 7.50 0.21 0.11 0.08 16.30 0.09 0.19 0.07 6.25 0.04 0.39 0.42 23.72 0.06 0.60 1.69 88.50 0.07 0.39 0.17 8.10 - 22 0.71 0.38 44.1 0.09 2 5 4.17 0.87 267 0.44 0.19 0.19 10.50 0.05 NSA 156.00 2.50 0.30 0.07 162.50 1.50 0.22 0.09 5.4 9.2 0.11 0.08 MD117 Diam Tank Hill 636002 6391785 180 -60 262 267 171.50 1.00 0.71 0.18 13.7 0.04 194.18 0.82 0.05 0.07 7.5 0.11 206.15 0.70 0.34 0.15 13.3 0.04 NORC01 RC Nonning 638829 6395996 270 -60 235 103 NSA Drill Hole ID Drill Type Prospect Easting (m) Northing (m) Azimuth (degrees) Dip (degrees) Total Depth (m) From (m) To (m) Interval (m) TGC (%) MDRC31 RC Mannequin 635247 6388556 270 -60 132 MDRC32 RC Mannequin 635337 6388557 270 -60 90 44 60 70 85 45 70 75 87 1 10 5 2 7.1* 6.3 5.9 6.2* Notes (see JORC 2012 Table 1 Menninie Dam Project for further details) 1. All intervals recorded in this table are above 0.4% Zn and containing no more than 1m of internal dilution below 0.4% Zn 2. High grade interval is above 1.0% Zn 3. NSA (no significant assay) – No assay above 4g/t Ag, 0.4% Zn or 0.4% Pb or 5.0% TGC 4. No high grade cut was used 5. g/t (grams per tonne) Summary of Tenements 21 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 21 Appendix 2a: Summary of MGV Deering Hills Vacuum Drill Hole Locations and Significant Results Drill Hole ID Target Easting (m) Northing (m) Azimuth (degrees) Dip (degrees) Total Depth (m) From (m) To (m) Interval (m) Ni (ppm) Cu (ppm) Pt + Pd (ppb) DEEVAC220 Alvey 612000 7095750 DEEVAC220 Alvey 612000 7095750 DEEVAC228 Alvey 612500 7094750 DEEVAC892 Alvey 612500 7095400 DEEVAC1078 Alvey 613101 7094902 DEEVAC1079 Alvey 613098 7094925 DEEVAC1079 Alvey 613098 7094925 DEEVAC1080 Alvey 613099 7094952 DEEVAC1080 Alvey 613099 7094952 DEEVAC1081 Alvey 613102 7094976 DEEVAC1082 Alvey 613100 7094998 DEEVAC1083 Alvey 613099 7095026 DEEVAC1083 Alvey 613099 7095026 DEEVAC1084 Alvey 613101 7095053 DEEVAC1084 Alvey 613101 7095053 DEEVAC1085 Alvey 613096 7095076 DEEVAC1089 Alvey 612001 7095824 DEEVAC1090 Alvey 611996 7095854 DEEVAC1091 Alvey 612000 7095873 DEEVAC1093 Alvey 611700 7095550 DEEVAC279 Caliban 587500 7099500 DEEVAC1170 Caliban 587506 7099699 DEEVAC1172 Caliban 587500 7099900 DEEVAC1176 Caliban 587500 7100399 DEEVAC083 Minbar 598500 7098000 DEEVAC083 Minbar 598500 7098000 DEEVAC083 Minbar 598500 7098000 DEEVAC104 Minbar 601500 7096500 DEEVAC361 Minbar 598000 7098500 DEEVAC361 Minbar 598000 7098500 DEEVAC690 Minbar 599000 7098700 DEEVAC695 Minbar 599000 7098100 DEEVAC722 Minbar 598000 7099200 DEEVAC725 Minbar 597500 7098300 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 28.8 27 28.8 28.8 25.2 27 12.6 10.8 12.6 17.4 15.6 17.4 37.2 35.4 37.2 37.2 33.6 35.4 37.2 35.4 37.2 37.2 33.6 35.4 37.2 35.4 37.2 37.2 35.4 37.2 37.2 35.4 37.2 37.2 31.8 33.6 37.2 33.6 35.4 33.6 30 31.8 33.6 31.8 33.6 31.8 28.2 30 28 24.6 26.4 28.65 26.4 28.2 30 28.2 30 13.8 12 13.8 53.4 49.8 51.6 37.2 22.8 24.6 33 24.6 26.4 26.4 17.2 19 25.2 18 19.8 25.2 19.8 21.6 25.2 21.6 23.4 29.7 6.6 6.6 27 3 4.8 28.8 4.8 6.6 15.6 13.8 15.6 28.2 26.4 28.2 13.8 8.4 12 6.6 13.8 8.4 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 485 486 552 337 775 622 566 456 489 486 551 801 550 509 444 406 525 640 416 764 446 614 931 625 1397 619 1847 1044 946 976 483 400 972 524 174 155 325 180 142 121 107 136 107 145 210 318 234 230 161 141 121 155 100 121 402 302 163 442 305 135 331 482 59 105 364 308 90 412 331 309 116 139 109 71 40 60 37 119 85 172 60 64 27 74 176 161 104 35 6 16 10 41 103 114 56 56 34 84 121 103 37 70 22 Musgrave Minerals Ltd Musgrave Minerals Ltd Summary of Tenements Notes (see JORC 2012 Table 1. Musgrave Project for further details) 1. All intervals with coincident Ni (>400ppm Ni) and Cu (>100ppm Cu) are recorded here 2. NSA (no significant assay) 3. ppm (parts per million) 4. ppb (parts per billion) Appendix 2b: Summary of Historical Mithril Resources Ltd Deering Hills RC Drill Hole Locations and Significant Results Drill Hole ID Target Easting (m) Northing (m) Azimuth (degrees) Dip (degrees) To (m) From (m) Interval (m) Ni (ppm) Cu (ppm) Pt + Pd (ppb) Total Depth (m) MAD 1 Alvey 611764 7095200 389 -60 358 MAD 2 Alvey 611960 7095135 399 -60 358 including 273 277 358 382 386 287.4 14.4 283 360.8 399.1 394 6 2.8 17.1 8 461 381 546 485 531 90 90 335 181 223 465 813 451 494 771 Notes (see JORC 2012 Table 1, Musgrave Project for 7. Sample preparation by dry pulverisation and multi element further details) 1. Co-ordinates are in UTM grid (GDA94 Z52) and have been measured by hand-held GPS 2. Drilling was undertaken utilising a diamond drilling rig 3. Diamond core was cut using a manually operated core saw 4. All samples are analysed at geological intervals between 0.2 and 2m lengths 5. Geological sample logging was undertaken at variable intervals based on geology with colour, alteration and lithology recorded for each interval 6. Sample preparation and sample analysis is undertaken by ALS Chemex analysis by four acid digest (hydrochloric, nitric, perchloric and hydrofluoric acid) and ICP-AES to acceptable detection limits and Au, Pt and Pd by 30g FA 1CP-AES 8. Analysis for a total of 36 elements is recorded including possible deleterious elements such as arsenic 9. An accurate dip and strike of the mineralisation is yet to be determined and the true width of the intercepts is not yet known 10. ppm (parts per million) 11. ppb (parts per billion) Summary of Tenements 23 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 23 The following section is provided to ensure compliance with the JORC (2012) requirements for the reporting of exploration results. Menninnie Dam Project JORC 2012 TABLE 1 Section 1 Sampling Techniques and Data Criteria Explanation Commentary Sampling techniques Nature and quality of sampling (eg cut Drilling is undertaken on a priority basis with channels, random chips, or specific drill type and hole spacing influenced by specialised industry standard measurement geological, topographical and physical factors. tools appropriate to the minerals under Sampling is undertaken using standard investigation, such as down hole gamma industry practices. sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. Surface geochemical sampling is undertaken following standard industry practice using stainless steel or nylon mesh sieves. Include reference to measures taken to ensure Drill hole co-ordinates are in UTM grid sample representivity and the appropriate (GDA94 Z53) and have been measured by calibration of any measurement tools or hand-held GPS with an accuracy of ±4 metres. systems used. Aspects of the determination of mineralisation Diamond drilling is used to obtain samples that are Material to the Public Report. In varying in length from 0.2 to 2m. Reverse cases where ‘industry standard’ work has circulation (RC) drilling was used to obtain 1m been done this would be relatively simple (eg samples. ‘reverse circulation drilling was used to obtain 1m samples from which 3kg was pulverised to produce a 30g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information. All RC samples are chips and are homogenously split using a cyclone splitter and analysed as 5m composites or individual 1m samples. Individual 1m samples were analysed where elevated base metals or favourable alteration was identified. Individual samples weigh less than 3kg to ensure total preparation at the laboratory pulverization stage. The sample size is deemed appropriate for the grain size of the material being sampled. Drilling techniques Drill type (eg core, reverse circulation, open- A combination of RC and diamond drilling is hole hammer, rotary air blast, auger, Bangka, undertaken. Diamond core is a combination sonic, etc) and details (eg core diameter, triple of NQ2 and HQ. Drill core is orientated or standard tube, depth of diamond tails, using a down hole spear and structural face-sampling bit or other type, whether core measurements recorded in “Geo-calculator” is oriented and if so, by what method, etc). software program. Drill sample recovery Method of recording and assessing core and Diamond core recoveries are logged and chip sample recoveries and results assessed. recorded in the database. No significant core loss issues were identified. Total RC sample weights are monitored but not individually recorded in reconnaissance drilling and as such sample recovery is not accurately measured. 24 Musgrave Minerals Ltd Musgrave Minerals Ltd JORC 2012 Table 1 Criteria Explanation Commentary Drill sample recovery (continued) Measures taken to maximise sample recovery Diamond core is reconstructed into and ensure representative nature of the continuous intervals on angle iron racks for samples. orientation and reconciliation against core block markers. Rod and metre counts are routinely carried out by the driller. RC samples are split using a cyclone or riffle splitter to ensure representative sampling. Composite samples are combined using a spear (tube) sampler. Whether a relationship exists between sample No bias has been observed between sample recovery and grade and whether sample bias recovery and grade. may have occurred due to preferential loss/ gain of fine/coarse material. Logging Whether core and chip samples have been Geotechnical logging was carried out on geologically and geotechnically logged to a diamond core for recovery and RQD. All level of detail to support appropriate Mineral geological, structural and alteration related Resource estimation, mining studies and observations are stored in the database for metallurgical studies. both RC and diamond core. Whether logging is qualitative or quantitative Logging of lithology, structure, alteration, in nature. Core (or costean, channel, etc) mineralisation, colour and other features of photography. core or RC chips is undertaken on a routine basis. Both wet and dry photography of diamond core is undertaken on a tray by tray basis. The total length and percentage of the All drill holes are logged in full. relevant intersections logged. Sub-sampling techniques and sample If core, whether cut or sawn and whether Diamond core is cut and sampled on preparation quarter, half or all core taken. geological intervals. A diamond core saw was used to cut the core and selected half core intervals were submitted for analysis. If non-core, whether riffled, tube sampled, RC samples are cyclone split at 1m intervals rotary split, etc and whether sampled wet or and tube sampled as 5m composites. All dry. measures are taken to maintain a dry sample although some samples are wet when significant groundwater is intersected. For all sample types, the nature, quality and Sample preparation and base metal and appropriateness of the sample preparation precious metal analysis is undertaken by technique. Intertek Genalysis, in Wingfield, South Australia. Sample preparation by dry pulverisation to 90% passing 75 micron. Quality control procedures adopted for Field QC procedures involve the use of all sub-sampling stages to maximise certified reference standards, duplicates and representivity of samples. blanks at appropriate intervals. Measures taken to ensure that the sampling is Sampling was carried out using MGV representative of the in situ material collected, protocols and QAQC procedures as per including for instance results for field industry best practice. Duplicate samples are duplicate/second-half sampling. routinely checked against originals. Whether sample sizes are appropriate to the Sample sizes are considered appropriate for grain size of the material being sampled. the commodities and elements explored and analysed for. JORC 2012 Table 1 25 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 25 Criteria Explanation Commentary Quality of assay data and laboratory tests The nature, quality and appropriateness of the Drill sample analysis is undertaken by Intertek assaying and laboratory procedures used and Genalysis, in Wingfield, South Australia, whether the technique is considered partial multi element analysis by four acid total or total. digest (hydrochloric, nitric, perchloric and hydrofluoric acid) and ICP-OES and ICP-MS to acceptable detection limits and Au by FA25/ MS. Analysis for a total of 37 elements is recorded.  Sample preparation and total graphitic carbon (TGC) analysis was undertaken by Intertek Genalysis, in Maddington, Western Australia. Sample preparation by dry pulverisation and total graphitic carbon analysis by CS Analyser to 0.1% TGC. Soil geochemical sample analysis is undertaken by ACME Labs in Vancouver, Canada. Multi element analysis by aqua regia digestion Ultratrace ICP-MS analysis (1F05 & 1F04) For geophysical tools, spectrometers, No geophysical tools were used to estimate handheld XRF instruments, etc, the mineral or element percentages. A portable parameters used in determining the analysis XRF, Niton XL3t 950 GOLD+ was used to including instrument make and model, assist with sample selection intervals for reading times, calibrations factors applied and laboratory analysis. their derivation, etc. Nature of quality control procedures adopted In addition to MGV standards, duplicates (eg standards, blanks, duplicates, external and blanks, Genalysis incorporate laboratory laboratory checks) and whether acceptable QAQC including standards, blanks and levels of accuracy (ie lack of bias) and repeats as a standard procedure. Certified precision have been established. reference materials that are relevant to the type and style of mineralisation targeted are inserted at regular intervals. ACME incorporate laboratory QAQC including standards, blanks and repeats as a standard procedure. Verification of sampling and assaying The verification of significant intersections by At least two company representatives verify either independent or alternative company significant intersections including , either the personnel. Managing Director, Exploration Manager, Principal Geologist or Project Geologist. The use of twinned holes. No twin holes have yet been drilled by MGV. Documentation of primary data, data entry Primary data is collected using a standard set procedures, data verification, data storage of Excel templates on a Toughbook laptop (physical and electronic) protocols. computer using lookup codes. Geological sample logging was undertaken on one metre intervals for RC drilling with colour, structure, alteration and lithology recorded for each interval. Data is verified before loading to a CSA Global database. Geological logging of all diamond core was undertaken. Discuss any adjustment to assay data. No adjustments or calibrations were made to any assay data reported by MGV. 26 Musgrave Minerals Ltd Musgrave Minerals Ltd JORC 2012 Table 1 Criteria Explanation Commentary Location of data points Accuracy and quality of surveys used to locate Drill hole co-ordinates and surface drill holes (collar and down-hole surveys), geochemical sample locations are in UTM grid trenches, mine workings and other locations (GDA94 Z53) and have been measured by used in Mineral Resource estimation. hand-held GPS with an accuracy of ±4 metres. Down hole surveys were undertaken utilised a single shot camera recording at intervals varying between 12 and 30m. Specification of the grid system used. Drill hole co-ordinates are in UTM grid (GDA94 Z53) Quality and adequacy of topographic control. Drill hole RL’s are approximate using hand held GPS. Data spacing and distribution Data spacing for reporting of Exploration Variable drill hole spacings were used to Results. adequately test targets. Soil samples were collected on variable grid spacings. Whether the data spacing and distribution is The mineralisation has not yet been sufficient to establish the degree of geological demonstrated to have sufficient continuity to and grade continuity appropriate for the support the definition of Mineral Resource Mineral Resource and Ore Reserve estimation and Reserves under the classification applied procedure(s) and classifications applied. under the 2012 JORC Code. Whether sample compositing has been Composite samples on 5m intervals were applied. undertaken outside visually mineralised zones to determine background responses. Orientation of data in relation to geological Whether the orientation of sampling achieves The precise dip and strike of the structure unbiased sampling of possible structures and mineralisation is not yet known and it is the extent to which this is known, considering unclear at this stage whether any sampling the deposit type. has a set bias. If the relationship between the drilling No orientation based sampling bias is known orientation and the orientation of key at this time. mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material. Sample security The measures taken to ensure sample security. Chain of custody is managed by MGV. Samples are stored on site and transported to Intertek Genalysis in Wingfield, South Australia by a licenced reputable transport company. When at Genalysis samples are stored in a locked yard before being processed and tracked through preparation and analysis using the Lab Track system. Audits or reviews The results of any audits or reviews of No external audits or reviews of sampling sampling techniques and data. techniques and data have been undertaken. JORC 2012 Table 1 27 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 27 Section 2 Reporting of Exploration Results Criteria Explanation Commentary Mineral tenement and land tenure status Type, reference name/number, location and All drilling has been within tenements EL5039 ownership including agreements or material and EL4813 within the Menninnie Dam Joint issues with third parties such as joint ventures, Venture between Musgrave Exploration Pty partnerships, overriding royalties, native Ltd, a wholly owned subsidiary of Musgrave title interests, historical sites, wilderness or Minerals Ltd and Menninnie Metals Pty Ltd, a national park and environmental settings. wholly owned subsidiary of Terramin Australia Limited. Musgrave has the right to earn a 51% interest in the Menninnie Dam Project in the first stage, and up to a 75% interest thereafter. The tenements are within the Gawler Range Aboriginal Corporation, Native Title Determination Area. Exploration done by other parties Acknowledgment and appraisal of exploration Terramin Australia and other parties have The security of the tenure held at the time of The tenements are in good standing and no reporting along with any known impediments known impediments exist. to obtaining a licence to operate in the area. by other parties. historically held the area but very little basement drilling has been undertaken outside the Menninnie Central and Viper deposit areas. Geology Deposit type, geological setting and style of Musgrave is exploring for multi commodity mineralisation. style deposits consistent with porphyry- epithermal style systems. Drill hole Information A summary of all information material to Refer to appendix 1 in the body of this report. the understanding of the exploration results including a tabulation of the following information for all Material drill holes: • easting and northing of the drill hole collar • elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar • dip and azimuth of the hole • down hole length and interception depth • hole length. Data aggregation methods In reporting Exploration Results, weighting Refer to notes below appendix 1 in the body averaging techniques, maximum and/or of this report. minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated. Where aggregate intercepts incorporate Refer to notes below appendix 1 in the body short lengths of high grade results and of this report. longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. The assumptions used for any reporting of No metal equivalent values are currently used metal equivalent values should be clearly for reporting of exploration results. stated. 28 Musgrave Minerals Ltd Musgrave Minerals Ltd JORC 2012 Table 1 Criteria Explanation Commentary Relationship between mineralisation widths These relationships are particularly important An accurate dip and strike and the controls and intercept lengths in the reporting of Exploration Results. on mineralisation are yet to be determined and the true width of the intercepts is not yet known. If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’). Diagrams Appropriate maps and sections (with scales) Refer to figures 1, 2, 3, 4 and 5 and Appendix and tabulations of intercepts should be 1 in the body of this report. included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views. Balanced reporting Where comprehensive reporting of all All drill results are reported. Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results. Other substantive exploration data Other exploration data, if meaningful and All material results from geochemical and material, should be reported including (but geophysical surveys related to these prospects not limited to): geological observations; have previously been reported. geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances. Analysis for a total of 37 elements is undertaken including possible deleterious elements such as arsenic. Anomalous results are reported. Further work The nature and scale of planned further A range of exploration techniques are being work (eg tests for lateral extensions or depth considered to progress exploration including extensions or large-scale step-out drilling). additional drilling. Diagrams clearly highlighting the areas of Refer to figures, 3, 4 and 5 in the body of this possible extensions, including the main report. geological interpretations and future drilling areas, provided this information is not commercially sensitive. JORC 2012 Table 1 29 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 29 Musgrave Project JORC 2012 TABLE 1 Section 1 Sampling Techniques and Data Criteria Explanation Commentary Sampling techniques Nature and quality of sampling (eg cut Drilling is undertaken on a priority basis with channels, random chips, or specific drill type and hole spacing influenced by specialised industry standard measurement geological, topographical and physical factors. tools appropriate to the minerals under Sampling is undertaken using standard investigation, such as down hole gamma industry practices. sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. Surface geochemical sampling is undertaken following standard industry practice using stainless steel or nylon mesh sieves. Include reference to measures taken to ensure Drill hole co-ordinates are in UTM grid sample representivity and the appropriate (GDA94 Z52) and have been measured by calibration of any measurement tools or hand-held GPS with an accuracy of ±4 metres. systems used. Aspects of the determination of mineralisation Diamond drilling is used to obtain samples that are Material to the Public Report. In varying in length from 0.2 to 2m. cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain Reverse circulation (RC) drilling was used to obtain 1m samples. 1m samples from which 3kg was pulverised All samples are chips and are homogenously to produce a 30g charge for fire assay’). split using a cyclone splitter and are analysed In other cases more explanation may be as 5m composites or individual 1m samples. required, such as where there is coarse gold Individual 1m samples were analysed where that has inherent sampling problems. Unusual elevated base metals or favourable alteration commodities or mineralisation types (eg was identified. submarine nodules) may warrant disclosure of detailed information. Individual samples weigh less than 3kg to ensure total preparation at the laboratory pulverization stage. The sample size is deemed appropriate for the grain size of the material being sampled. Vacuum drilling is used as a geochemical sampling process to enable metal detection and the interpretation of basement lithology in areas of alluvial, colluvial and aeolian cover. Individual 1.8m samples are only collected from the cover-insitu regolith contact and end of hole. Drilling techniques Drill type (eg core, reverse circulation, open- A combination of RC and diamond drilling is hole hammer, rotary air blast, auger, Bangka, undertaken. Diamond core is a combination sonic, etc) and details (eg core diameter, triple of NQ2 and HQ. Drill core is orientated or standard tube, depth of diamond tails, using a down hole spear and structural face-sampling bit or other type, whether core measurements recorded in “GeoCalculator” is oriented and if so, by what method, etc). software program. 30 Musgrave Minerals Ltd Musgrave Minerals Ltd JORC 2012 Table 1 Criteria Drill sample recovery Explanation Commentary Method of recording and assessing core and Diamond core recoveries are logged and chip sample recoveries and results assessed. recorded in the database. No significant core loss issues were identified. Total vacuum and RC sample weights are monitored but not individually recorded in reconnaissance drilling and as such sample recovery is not accurately measured. Measures taken to maximise sample recovery Diamond core is reconstructed into and ensure representative nature of the continuous intervals on angle iron racks for samples. orientation and reconciliation against core block markers. Rod and meter counts are routinely carried out by the driller. RC samples are split using a cyclone or riffle splitter to ensure representative sampling. Composite samples are combined using a spear (tube) sampler. Vacuum samples are obtained using a tube sampler. Whether a relationship exists between sample No bias has been observed between sample recovery and grade and whether sample bias recovery and grade. may have occurred due to preferential loss/ gain of fine/coarse material. Logging Whether core and chip samples have been Geotechnical logging was carried out on geologically and geotechnically logged to a diamond core for recovery and RQD. All level of detail to support appropriate Mineral geological, structural and alteration related Resource estimation, mining studies and observations are stored in the database for metallurgical studies. both RC and diamond core. Whether logging is qualitative or quantitative Logging of lithology, structure, alteration, in nature. Core (or costean, channel, etc) mineralisation, colour and other features photography. of core, RC chips and vacuum samples is undertaken on a routine basis. Both wet and dry photography of diamond core is undertaken on a tray by tray basis. The total length and percentage of the All drill holes are logged in full. relevant intersections logged. Sub-sampling techniques and sample If core, whether cut or sawn and whether Diamond core is cut and sampled on preparation quarter, half or all core taken. geological intervals. A diamond core saw was If non-core, whether riffled, tube sampled, RC samples are cyclone split at 1m intervals rotary split, etc and whether sampled wet or and tube sampled as 5m composites. All used to cut the core and selected half core intervals were submitted for analysis. dry. measures are taken to maintain a dry sample although some samples are wet when significant groundwater is intersected. Vacuum samples are collected at selected geochemical zones within the hole and constitute 1.8m intervals sampled with a tube sampler. The 1.8m basement interface sample was analysed in all holes where it was intersected. Only selected samples were analysed within drill holes from geological logging. JORC 2012 Table 1 31 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 31 Criteria Explanation Commentary Sub-sampling techniques and sample For all sample types, the nature, quality and Sample preparation and base metal and preparation (continued) appropriateness of the sample preparation precious metal analysis is undertaken by technique. Intertek Genalysis, in Wingfield, South Australia. Sample preparation by dry pulverisation to 90% passing 75 micron. Quality control procedures adopted for Field QC procedures involve the use of all sub-sampling stages to maximise certified reference standards, duplicates and representivity of samples. blanks at appropriate intervals. Measures taken to ensure that the sampling is Sampling was carried out using MGV representative of the in situ material collected, protocols and QAQC procedures as per including for instance results for field industry best practice. Duplicate samples are duplicate/second-half sampling. routinely checked against originals. Whether sample sizes are appropriate to the Sample sizes are considered appropriate for grain size of the material being sampled. the commodities and elements explored and analysed for. Quality of assay data and laboratory tests The nature, quality and appropriateness of the Drill sample and soil geochemical analysis assaying and laboratory procedures used and is undertaken by Intertek Genalysis, in whether the technique is considered partial Wingfield, South Australia, multi element or total. analysis by four acid total digest (hydrochloric, nitric, perchloric and hydrofluoric acid) and ICP-OES and ICP-MS to acceptable detection limits and Au by FA25/MS. Analysis for a total of 37 elements is recorded. For geophysical tools, spectrometers, No geophysical tools were used to estimate handheld XRF instruments, etc, the mineral or element percentages. A portable parameters used in determining the analysis XRF, Niton XL3t 950 GOLD+ was used to including instrument make and model, assist with sample selection intervals for reading times, calibrations factors applied and laboratory analysis. their derivation, etc. Nature of quality control procedures adopted In addition to MGV standards, duplicates (eg standards, blanks, duplicates, external and blanks, Genalysis incorporate laboratory laboratory checks) and whether acceptable QAQC including standards, blanks and levels of accuracy (ie lack of bias) and repeats as a standard procedure. Certified precision have been established. reference materials that are relevant to the type and style of mineralisation targeted are inserted at regular intervals. Verification of sampling and assaying The verification of significant intersections by At least two company representatives verify either independent or alternative company significant intersections including, either the personnel. Managing Director, Exploration Manager, Principal Geologist or Project Geologist. The use of twinned holes. No twin holes have yet been drilled by MGV. Documentation of primary data, data entry Primary data is collected using a standard set procedures, data verification, data storage of Excel templates on a Toughbook laptop (physical and electronic) protocols. computer using lookup codes. Geological sample logging was undertaken on one metre intervals (RC) and 1.8m intervals (vacuum) with colour, structure, alteration and lithology recorded for each interval. Data is verified before loading to a CSA Global database. Geological logging of all diamond core was undertaken. Discuss any adjustment to assay data. No adjustments or calibrations were made to any assay data reported by MGV. 32 Musgrave Minerals Ltd Musgrave Minerals Ltd JORC 2012 Table 1 Criteria Explanation Commentary Location of data points Accuracy and quality of surveys used to locate Drill hole co-ordinates and surface drill holes (collar and down-hole surveys), geochemical sample locations are in UTM grid trenches, mine workings and other locations (GDA94 Z52) and have been measured by used in Mineral Resource estimation. hand-held GPS with an accuracy of ±4 metres. Down hole surveys were undertaken for all RC and diamond drill holes utilised a single shot camera recording at intervals varying between 12 and 30m. No down hole surveys where undertaken on vacuum drill holes. All vacuum drill holes are vertical. Specification of the grid system used. Drill hole co-ordinates are in UTM grid (GDA94 Z52) Quality and adequacy of topographic control. Drill hole RL’s are approximate using hand held GPS. Data spacing and distribution Data spacing for reporting of Exploration Variable drill hole spacings were used to Results. adequately test targets (RC & diamond drilling) and to adequately cover target areas with vacuum drilling. Soil samples were collected on variable grid spacings. Whether the data spacing and distribution is The mineralisation has not yet been sufficient to establish the degree of geological demonstrated to have sufficient continuity to and grade continuity appropriate for the support the definition of Mineral Resource Mineral Resource and Ore Reserve estimation and Reserves under the classification applied procedure(s) and classifications applied. under the 2012 JORC Code. Whether sample compositing has been In RC drill holes composite samples on 5m applied. intervals were undertaken outside visually mineralised zones to determine background responses. No compositing of samples was undertaken on diamond or vacuum drill holes. Orientation of data in relation to geological Whether the orientation of sampling achieves The precise dip and strike of the structure unbiased sampling of possible structures and mineralisation is not yet known and it is the extent to which this is known, considering unclear at this stage whether any sampling the deposit type. has a set bias. If the relationship between the drilling No orientation based sampling bias is known orientation and the orientation of key at this time. mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material. Sample security The measures taken to ensure sample security. Chain of custody is managed by MGV. Samples are stored on site and transported to Intertek Genalysis in Wingfield, South Australia by a licenced reputable transport company. When at Genalysis samples are stored in a locked yard before processing and then tracked through preparation and analysis using the Lab Track system. Audits or reviews The results of any audits or reviews of No external audits or reviews of sampling sampling techniques and data. techniques and data have been undertaken. JORC 2012 Table 1 33 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 33 Section 2 Reporting of Exploration Results Criteria Explanation Commentary Mineral tenement and land tenure status Type, reference name/number, location and All drilling has been within wholly owned ownership including agreements or material MGV tenements EL5173 and EL5175 within issues with third parties such as joint ventures, the Musgrave Project area. partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. The tenements are APY aboriginal freehold lands. All surface geochemical sampling was within Musgrave Minerals tenure. The security of the tenure held at the time of The tenements are in good standing and no reporting along with any known impediments known impediments exist. to obtaining a licence to operate in the area. Exploration done by other parties Acknowledgment and appraisal of exploration No historical drilling has been undertaken by by other parties. any third party that is relevant to the current targets. Geology Deposit type, geological setting and style of Musgrave is exploring for multi commodity mineralisation. style deposits consistent with low MgO magmatic Ni-Cu systems. Drill hole Information A summary of all information material to Refer to appendix 2 in the body of this report. the understanding of the exploration results including a tabulation of the following information for all Material drill holes: • easting and northing of the drill hole collar • elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar • dip and azimuth of the hole • down hole length and interception depth • hole length. Data aggregation methods In reporting Exploration Results, weighting Refer to notes below appendix 2 in the body averaging techniques, maximum and/or of this report. minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated. Where aggregate intercepts incorporate Refer to notes below appendix 2 in the body short lengths of high grade results and of this report. longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. The assumptions used for any reporting of No metal equivalent values are currently used metal equivalent values should be clearly for reporting of exploration results. stated. 34 Musgrave Minerals Ltd Musgrave Minerals Ltd JORC 2012 Table 1 Criteria Explanation Commentary Relationship between mineralisation widths These relationships are particularly important An accurate dip and strike and the controls and intercept lengths in the reporting of Exploration Results. on mineralisation are yet to be determined and the true width of the intercepts is not yet known. If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’). Diagrams Appropriate maps and sections (with scales) Refer to figures 1, 6, 7, 8, 9 and 10 and and tabulations of intercepts should be Appendix 2 in the body of this report. included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views. Balanced reporting Where comprehensive reporting of all All RC and diamond drill results are reported. Exploration Results is not practicable, All vacuum drill results are shown on the representative reporting of both low and high gridded geochemical image in figure 7 of this grades and/or widths should be practiced report. to avoid misleading reporting of Exploration Results. Other substantive exploration data Other exploration data, if meaningful and All material results from geochemical and material, should be reported including (but geophysical surveys related to these prospects not limited to): geological observations; have previously been reported. geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances. Analysis for a total of 37 elements is undertaken including possible deleterious elements such as arsenic. Anomalous results are reported. Further work The nature and scale of planned further A range of exploration techniques are being work (eg tests for lateral extensions or depth considered to progress exploration including extensions or large-scale step-out drilling). additional drilling. Diagrams clearly highlighting the areas of Refer to figures 7, 8, 9 and 10 in the body of possible extensions, including the main this report. geological interpretations and future drilling areas, provided this information is not commercially sensitive. JORC 2012 Table 1 35 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 35 Directors’ Report He is a Member of the Australian Institute of Mining and Metallurgy, and is a Professional Geoscientist of Ontario, Canada. Mr Ascough is a member of the Company’s audit Your directors present their report on Musgrave Minerals Ltd and its subsidiary (the Group) for the financial year ended 30 committee. June 2013. 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. Names, qualifications, experience and special responsibilities Mr Graham Ascough BSc, PGeo, MAusIMM (Non-Executive Chairman), Director since 26 May 2010 Graham Ascough is a senior resources executive with more than 24 years of industry experience evaluating mineral projects and resources in Australia and overseas. He has had broad industry involvement ranging from playing a leading role in setting the strategic direction for significant country-wide exploration programs to working directly with mining and exploration companies. Mr Ascough is a geophysicist by training and was the Managing Director of ASX listed Mithril Resources Limited from October 2006 until June 2012. Prior to joining Mithril in 2006, 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). Other directorships: Mithril Resources Ltd (Appointed 9 October 2006) Aguia Resources Limited (Appointed 19 October 2010) Phoenix Copper Limited (Appointed 10 December 2012) AO Energy Limited (Appointed 31 July 2013) 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 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 Master 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: None 36 Musgrave Minerals Ltd Musgrave Minerals Ltd Directors’ Report Mrs Kelly Ross Ltd (resigned 14 December 2012). Additionally he is Company BBus, CPA, ACSA (Non-Executive Director), Director since 26 Secretary to Minotaur Exploration Ltd, Mithril Resources Ltd, May 2010 Petratherm Ltd and Toro Energy Limited. He holds other public company secretarial positions and directorships with private Kelly Ross is a qualified accountant holding a Bachelor of companies and provides corporate advisory services to a wide Business (Accounting) and has the designation CPA from the range of organisations. 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 Operating Results years. Mrs Ross is currently a Non-Executive Director of ASX The loss of the Group after providing for income tax amounted listed Independence Group NL. Mrs Ross is the chair of the to $585,809 (2012: $276,182). Company’s audit committee. Other directorships: Independence Group NL (Appointed 16 September 2002) Interests in the Shares and Options of the Company and Related Bodies Corporate Mr John Percival As at the date of this report, the interests of the directors in Non-Executive Director, Director since 26 May 2010 the shares and options of Musgrave Minerals Ltd were: 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 ASX listed Goldsearch Limited. Mr Percival is a member of the Company’s audit committee. Other directorships: Goldsearch Limited (Appointed 11 October 1995) Company Secretary Mr Donald Stephens Number of Ordinary Shares Number of Options over Ordinary Shares 200,000 80,000 200,000 50,000 750,000 5,000,000 500,000 500,000 Graham Ascough Robert Waugh John Percival Kelly Ross Dividends Paid or Recommended No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. BAcc, FCA, Company Secretary since 26 May 2010 Principal Acitivites Mr Stephens is a Chartered Accountant and corporate adviser with over 25 years experience in the accounting industry, The principal activities of the Group during the financial year were: including 14 years as a partner of HLB Mann Judd (SA), a • to carry out exploration of mineral tenements both on a firm of Chartered Accountants. He is a director of Mithril joint venture basis and by the Group in its own right; Resources Ltd, Papyrus Australia Ltd, Lawson Gold Ltd, AO Energy Limited and was formerly a director of TW Holdings • to continue to seek extensions of areas held and to seek out new areas with mineral potential; and Directors’ Report 37 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 37 • to evaluate results achieved through surface sampling, geophysical surveys and drilling activities carried out during Environmental Regulations 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 Company’s objectives and activities are aligned with the risks 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. The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the following: • Board approval of a strategic plan, which is designed to meet stakeholders’ needs and manage business risk. The Group 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 guidelines encompass not only the impact on the land and vegetation but cover such subjects as pollution, approvals from relevant parties including land owners and land users, heritage, health and safety and proper restoration practices. The Group 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 Group is committed to minimising environmental impacts during all phases of exploration, development and production through a best practice environmental approach. The Group shares responsibility for protecting the environment for the present and the future. It believes that carefully managed • Implementation of Board approved operating plans and exploration programs should have little or no long-lasting budgets and Board monitoring of progress against these impact on the environment and the Group has formed a budgets, including the establishment and monitoring best practice policy for the management of its exploration of performance indicators of both a financial and non- programs. The Group properly monitors and adheres to this 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 approach and there were no environmental incidents to report for the year under review. Furthermore, the Group is in compliance with the state and/or commonwealth environmental laws for the jurisdictions in which it operates. Occupational Health, Safety and Welfare affect the operations of the Group, the results of those In running its business, Musgrave Minerals Ltd aims to protect operations, or the state of affairs of the Group in future the health, safety and welfare of employees, contractors and financial years. Future Developments Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results of those operations is likely to result in guests. In the reporting year the Company experienced one medical aid incident and no lost time injuries. The Company reviews its Health and Safety policy at regular intervals to ensure a high standard of Health and Safety. Subsequent Events unreasonable prejudice to the Company. Accordingly, this There were no significant events that occurred after balance information has not been disclosed in this report. date. 38 Musgrave Minerals Ltd Musgrave Minerals Ltd Directors’ Report 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 Balance at 1 July 2012 Net Issued/ (Exercised or expired) Balance at 30 June 2013 21/08/2010 17/02/2011 17/02/2011 09/05/2011 24/01/2012 06/03/2013 25/03/2013 20/08/2015 17/02/2016 17/02/2016 08/05/2016 23/01/2017 05/03/2018 24/03/2018 $0.25 $0.36 $0.50 $0.36 $0.25 $0.25 $0.25 7,750,000 4,750,000 2,500,000 500,000 525,000 - - 16,025,000 - - - - (150,000) 500,000 75,000 425,000 7,750,000 4,750,000 2,500,000 500,000 375,000 500,000 75,000 16,450,000 Share Options Shares issued as a result of exercise of options No shares were issued during the year as a result of the exercise of options. New options issued During the financial year a total of 575,000 unlisted options were issued to employees as an incentive. The options are officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Group. Remuneration Report - Audited This report outlines the remuneration arrangements in place for Directors and Executives of Musgrave Minerals Ltd. exercisable at $0.25 and expire 24 March 2018 (75,000) and 5 March 2018 (500,000). Refer to note 13 to the financial Remuneration philosophy The Board is responsible for determining remuneration policies statements for further information. Indemnification and Insurance of Directors and Officers To the extent permitted by law, the Group has indemnified (fully insured) each Director and the Company Secretary of the Group for a premium of $13,236. 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 Group 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 applicable to Directors and senior executives of the Group. The broad policy is to ensure that remuneration properly reflects the individuals’ duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people with appropriate skills and experience. At the time of determining remuneration consideration is given by the Board to the Group’s financial performance. Employment contracts 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, Directors’ Report 39 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 39 being $290,000. Either party may terminate the employment component. Termination payments are generally not payable contract without cause by providing six (6) months written on resignation or dismissal for serious misconduct. In the notice or by making payment in lieu of notice (in the case instance of serious misconduct the Company can terminate of the Company), based on the annual salary component. employment at any time. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious The employment conditions of the Principal Geologist, Dr misconduct the Company can terminate employment at any Justin Gum, are formalised in a contract of employment. time. Dr Gum commenced employment on 1 October 2010 and his current gross annual salary, inclusive of superannuation The employment conditions of the Exploration Manager, Mr guarantee, is $171,675. Either party may terminate the Ian Warland, are formalised in a contract of employment. employment contract without cause by providing one (1) Mr Warland commenced employment on 6 March 2013 and month’s written notice or making payment in lieu of notice his current gross annual salary, inclusive of superannuation (in the case of the Company) or forfeiture of one month’s guarantee, is $218,000. Either party may terminate the salary (in the case of Dr Gum), based on the annual salary employment contract without cause by providing one (1) component. Termination payments are generally not payable month’s written notice or making payment in lieu of notice on resignation or dismissal for serious misconduct. In the (in the case of the Company) or forfeiture of one month’s instance of serious misconduct the Company can terminate salary (in the case of Mr Warland), based on the annual salary employment at any time. Table 1: Director remuneration for the year ended 30 June 2013 and 30 June 2012 Short-term employee benefits Post employment benefits Share based payments Salary & Fees Superannuation $ $ Options Total $ Graham Ascough ** 2013 2012 Robert Waugh ** 2013 2012 Kelly Ross ** 2013 2012 John Percival ** 2013 2012 Total 2013 2012 65,000 65,100 266,055 266,055 45,000 45,000 46,012 45,000 422,067 421,155 - - 23,945 23,945 4,050 4,050 3,038 4,050 31,033 32,045 - - - - - - - - - - 65,000 65,100 290,000 290,000 49,050 49,050 49,050 49,050 453,100 453,200 40 Musgrave Minerals Ltd Musgrave Minerals Ltd Directors’ Report Table 2: Remuneration of key management personnel for the year ended 30 June 2013 and 30 June 2012 Short-term employee benefits Post employment benefits Share based payments Salary & Fees Superannuation $ $ Options $ Total $ Justin Gum 2013 2012 Ian Warland 2013 2012 Donald Stephens * & ** 2013 2012 Total 2013 2012 156,875 139,000 14,119 24,500 - - 170,994 163,500 51,571 4,641 21,550 77,762 - - - - - - - - - - - - 208,446 139,000 18,760 24,500 21,550 - 248,756 163,500 * HLB Mann Judd (SA) Pty Ltd has received professional fees for accounting, taxation and secretarial services provided during the year amounting to $150,541 including GST (2012: $131,671). 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 beneficial 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. Use of Remuneration Consultants Directors’ Meetings During the financial year, there were no remuneration The number of meetings of Directors (including meetings of recommendations made in relation to key management committees of Directors) held during the year and the number personnel for the Company by any remuneration consultants. of meetings attended by each Director were as follows: Voting and Comments Made at the Company’s 201 Annual General Meeting Musgrave Minerals Ltd received more than 98% of “yes” votes on its remuneration report for the 2012 financial year by proxy. The Company did not receive any specific feedback at the AGM on its remuneration report. Directors’ Meetings Audit Committee Director Eligible Attended Eligible Attended Graham Ascough Robert Waugh John Percival Kelly Ross 7 7 7 7 7 7 7 7 2 2 2 2 2 2 2 2 Directors’ Report 41 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 41 Members acting on the audit committee 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. Auditor Independence and Non-Audit 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 2013 as required under section 307C of the Corporations Act 2001 has been received and can be found on page 12. Signed in accordance with a resolution of the Directors. Mr Graham Ascough Chairman 25 September 2013 42 Musgrave Minerals Ltd Musgrave Minerals Ltd Directors’ Report 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. 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 This Section addresses each of the Corporate Governance obligations. 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 that form the basis of the corporate governance practices of • Overseeing of the Company, including its control and accountability systems. The functions delegated to senior executives include: the Company are located on the Company’s website. • Implementing the Company’s vision, values and business Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 - Functions reserved to the Board and delegated to senior executives The Board is accountable to Shareholders for the performance plan. • Managing the business to agreed capital and operating expenditure budgets. • Identifying and exploring opportunities to build and sustain the business. • Allocating resources to achieve the desired business outcomes. of the Company and has overall responsibility for its • Sharing knowledge and experience to enhance success. 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. • 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 The Company has established functions reserved to the Board relationships and engagement strategies. 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. • Reviewing annually the performance of the Managing • 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. Corporate Governance Statement 43 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 43 The Company has not formally established the functions transactions or potential transactions do not receive Board reserved to the Board and those delegated to senior executives papers related to those transactions or potential transactions, in accordance with recommendations 1.1 and 1.3 of the do not participate in any part of a Directors’ meeting which ASX Corporate Governance Council. Given the size of the considers those transactions or potential transactions, are not Company, the Board has not considered it necessary to involved in the decision making process in respect of those formulate a Board charter. transactions or potential transactions, and are asked not to 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 discuss those transactions or potential transactions with other Directors. Recommendation 2.1 - A majority of the Board should be independent Directors The Board is conscious of the need for independence and established by the Board. A performance evaluation for ensures that where a conflict of interest may arise, the relevant senior executives will take place in the upcoming reporting Director(s) leave the meeting to ensure a full and frank period in accordance with the Company’s documented discussion of the matter(s) under consideration by the rest process. The performance of senior executives is reviewed by of the Board. Those Directors who have interests in specific comparing performance against agreed measures, examining transactions or potential transactions do not receive Board the effectiveness and results of their contribution and papers related to those transactions or potential transactions, identifying areas for potential improvement. In accordance do not participate in any part of a Directors’ meeting which with recommendations 1.2 and 1.3 of the ASX Corporate considers those transactions or potential transactions, are not Governance Council the Company has not disclosed a involved in the decision making process in respect of those description of the performance evaluation process in addition transactions or potential transactions, and are asked not to to the disclosure 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, Non-Executive Chair Mr Robert Waugh, Managing Director Mrs Kelly Ross, Non-Executive Director Mr John Percival, Non-Executive Director 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 this to be an appropriate composition given the size and development of the Group at the present The Board considers its current structure to be an appropriate time. The names of directors including details of their composition of the required skills and experience, given qualification and experience are set out in the Directors’ Report the experience of the individual Directors and the size and of this Financial Report. Independence 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 The Board is conscious of the need for independence and Directors bring an independent judgment to bear on Board ensures that where a conflict of interest may arise, the relevant decisions. Director(s) leave the meeting to ensure a full and frank discussion of the matter(s) under consideration by the rest of the Board. Those Directors who have interests in specific 44 Musgrave Minerals Ltd Musgrave Minerals Ltd Corporate Governance Statement Recommendation 2.2 - The chair should be an independent Director The Company’s Chairman, Mr Graham Ascough, is not an independent Director as defined under Recommendation 2.1. Recommendation 2.3 - The roles of chair and Managing Director should be separated The roles of the Chairman and the Managing Director are not Principle 3 - Promote ethical and responsible decision making Securities Trading Policy The Company has established a policy concerning trading in the Company’s shares by the Company’s officers, employees and contractors and consultants to the Company while engaged in work for the Company (Representatives). being exercised by the same individual. The Company has This policy provides that it is the responsibility of each therefore complied with Recommendation 2.3. Representative to ensure they do not breach the insider trading Recommendation 2.4 - Nomination Committee The Board has not established a Nomination and Remuneration Committee in accordance with recommendation 2.4 of the Corporate Governance Council. The Board takes ultimate responsibility for these matters and continues to monitor the composition of the Board and the roles and responsibilities of its members. Accordingly, the Company does not have a Nomination and Remuneration Committee Charter in accordance with 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 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. Subject to these restrictions, the policy provides that Directors, the Company Secretary and employees of, or contractors to, the Company that have access to the Company’s financial information or drilling results are permitted to trade in the Company’s securities throughout the year except during the following periods: 1. the period between the end of the March, June, September and December quarters and the release of appropriate measures and identify ways to improve the Company’s quarterly report to ASX for so long as the performance. The Board has not formally disclosed the review Company is required by the Listing Rules to lodge quarterly process in accordance with recommendations 2.5 and 2.6 reports; and 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 2. 24 hours after the following events: (a) Any major announcements; stage. Recommendation 2.6 - Additional information concerning the Board and Directors The Company has included the disclosures required by Recommendation 2.6 in this annual report. There are procedures in place, agreed by the Board, to enable Directors, in furtherance 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. (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 Meetings. In exceptional circumstances the Board may waive the requirements of the Share Trading Policy to allow Representatives to trade in the shares of the Company, provided to do so would not be illegal. Directors must advise the Company Secretary of changes to their shareholdings in the Company within two (2) business days of the change. Corporate Governance Statement 45 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 45 Recommendation 3.1 - Code of Conduct The Board recognises the need for Directors and employees to observe the highest standards of behaviour and business Principle 4 - Safeguard integrity in financial reporting ethics when engaging in corporate activity. The Company The Company has structured financial management to maintains a reputation for integrity and is highly committed to independently verify and safeguard the integrity of its financial demonstrating appropriate corporate practices and decision reporting. The structure established by the Company includes: making. The Company’s officers and employees are required to act in accordance with the law and with the highest ethical standards. The Board has adopted and disclosed a formal code of conduct and ethics applying to the Board and all employees in accordance with recommendations 3.1 and 3.5 of the Corporate Governance Council. Recommendation 3.2 and Recommendation 3.3 - Diversity Policy The ASX Corporate Governance Council has released amendments dated 30 June 2010 to the 2nd edition Corporate 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 Company continues to strive towards achieving objectives established towards increasing gender diversity. • 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. Recommendation 4.1 - Audit Committee The Company has established an Audit Committee. 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 follows: • 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 independent Directors; and The Company will assess all staff and Board appointments on • the Audit Committee is chaired by Mrs Kelly Ross, who is their merits with consideration to diversity a driver in decision not an independent Director. making. The Company has not yet developed or disclosed a Although none of the members of the Audit Committee are formal diversity policy and therefore has not complied with the independent, the Board has nevertheless determined that recommendations 3.2 and 3.3 of the Corporate Governance the composition of the Audit Committee represents the only Council. Recommendation 3.4 and 3.5 - Reporting in Annual Report At the date of this Annual Report, the Company employs 8 staff members (excluding the Non-Executive Directors and the Managing Director), 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. 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; 46 Musgrave Minerals Ltd Musgrave Minerals Ltd Corporate Governance Statement • review the annual and half-year financial reports and in relation to continuous disclosure as well as the Company’s recommend them for approval by the Board; obligations under the Listing Rules and Corporations Act. • nominate external auditors; • review the performance of the external auditors and existing audit arrangements; and The policy also provides procedures for internal notification and external disclosures, as well as procedures for promoting understanding of compliance with disclosure requirements. • ensure compliance with laws, regulations and other The policy reflects the matters set out in the commentary and statutory or professional requirements, and the Company’s guidance for Recommendation 5.1. governance policies. The Company has adopted an Audit Committee Charter which sets out its role, responsibilities and membership requirements Recommendation 5.2 - Continuous Disclosure Policy The disclosures required by Recommendation 5.2 are included and reflects the matters set out in the commentary and in this annual report. guidance for Recommendation 4.3. Recommendation 4.4 - Additional Information concerning the Audit Committee The disclosures required by Recommendation 4.4 are contained within this annual report. 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 A copy of the Company’s Continuous Disclosure Policy is available on the Company’s website. Principle 6 - Respect the rights of shareholders The Board strives to ensure that Shareholders are provided with sufficient information to assess the performance of the Company and its Directors and to make well-informed investment decisions. Recommendation 6.1 - Shareholder Communications Policy Information is communicated to Shareholders through: • annual, half-yearly and quarterly financial and activity reports; The Company has a policy that all shareholders and investors have equal access to the Company’s information. The Board • annual and other general meetings convened for Shareholder review and approval of Board proposals; ensures that all price sensitive information is disclosed to ASX • continuous disclosure of material changes to ASX; and 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. • the Company’s website where all ASX announcements, notices and financial reports are published as soon as possible after release to ASX. 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 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. Corporate Governance Statement 47 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 47 The Company has adopted a Shareholder Communications in accordance with recommendations 7.1 and 7.4 of the Policy for: Corporate Governance Council. • 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 included in this annual report. Recommendation 7.2 - Risk Management and Internal Control System The Company has developed a risk management framework which is supported by the Board of Directors and management. The policy provides a framework for identifying, assessing, monitoring and managing risks of the Company. A copy of the Company’s Shareholder Communications Policy is available on the Company’s website. The Board requires management to report on the policy as to whether those risks are being managed effectively. Principle 7 - Recognise and manage risk 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 The Board has identified the significant areas of potential reports present a true and fair view, in all material respects, of business and legal risk of the Company. In addition the Board the Company’s financial condition and operational results are has developed the culture, processes and structures of the in accordance with relevant accounting standards. Included Company to encourage a framework of risk management in this statement is a confirmation that the Company’s risk which identifies, monitors and manages the material risks management and internal controls are operating efficiently facing the organisation. and effectively. Recommendation 7.1 - Risk Management Policies The identification, monitoring and, where appropriate, Recommendation 7.4 - Additional Information concerning Risk Management The Company has included the disclosures required by the reduction of significant risk to the Company is the Recommendation 7.4 in this annual report. responsibility of the Managing Director and the Board. The Board has also established the Audit Committee which The Company has publicly disclosed a risk management policy addresses the risks of the Company. outlining the oversight and management of material business risks in accordance with recommendation 7.1 and 7.4 of the The Board reviews and monitors the parameters under Corporate Governance Council. 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. The Company has publicly disclosed a risk management policy for the oversight and management of material business risks 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 48 Musgrave Minerals Ltd Musgrave Minerals Ltd Corporate Governance Statement therefore has not complied with recommendations 8.1 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 8.2 - Structure of 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 8.2 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 has included the disclosures required by Recommendation 8.4 in this annual report. Corporate Governance Statement 49 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 49 50 Musgrave Minerals Ltd Musgrave Minerals Ltd Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2013 Other income Impairment of exploration and evaluation assets Employee benefits expense Depreciation expense Finance expenses Other expenses Loss before income tax expense Income tax benefit/(expense) Loss from continuing operations Loss attributable to members of the parent entity Other comprehensive income Total comprehensive income for the year Earnings per share: Basic earnings per share Diluted earnings per share Note 5 (a) 5 (d) 5 (b) 5 (c) 5 (e) 6 7 7 Consolidated Group Year ended 30 June 2013 $ Year ended 30 June 2012 $ 581,613 926,309 (354,939) - (464,272) (509,790) (89,049) (111,405) (8,271) (11,134) (543,517) (565,632) (878,435) (271,652) 292,626 (4,530) (585,809) (276,182) (585,809) (276,182) - - (585,809) (276,182) Cents Cents (0.48) (0.48) (0.23) (0.23) This statement should be read in conjunction with the notes to the financial statements Statement of Profit and Loss 51 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 51 Consolidated Statement of Financial Position As at 30 June 2013 Consolidated Group Note 30 June 2013 30 June 2012 $ $ Current Assets Cash and cash equivalents Trade and other receivables Other current 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 Short-term borrowings Short-term provisions Total Current Liabilities Non-Current Liabilities Long-term borrowings Long-term provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Retained earnings Total Equity 8 9 10 11 12 14 15 16 15 16 17 18 19 9,565,706 13,570,860 123,681 54,160 133,257 182,029 9,743,547 13,886,146 176,439 17,055,933 17,232,372 26,975,919 251,061 47,293 90,517 388,871 6,174 13,619 19,793 408,664 224,276 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 26,567,255 27,129,256 26,718,899 2,958,083 (3,109,727) 26,567,255 26,718,899 2,944,985 (2,534,628) 27,129,256 This statement should be read in conjunction with the notes to the financial statements 52 Musgrave Minerals Ltd Musgrave Minerals Ltd Statement of Financial Position Consolidated Statement of Changes in Equity For the Year Ended 30 June 2013 Consolidated Group Note Issued Capital Ordinary $ Share Option Reserve $ Accumulated Losses $ Total Equity $ Balance at 1 July 2011 26,729,469 2,907,500 (2,258,446) 27,378,523 Total comprehensive loss for the year Share based payments Transaction costs (net of tax) Balance at 30 June 2012 - - (10,570) - (276,182) (276,182) 37,485 - - - 37,485 (10,570) 26,718,899 2,944,985 (2,534,628) 27,129,256 Balance at 1 July 2012 26,718,899 2,944,985 (2,534,628) 27,129,256 Total comprehensive loss for the year Share based payments Transfer from share option reserve due to lapse of options under employee share option plan 18 - - - - (585,809) (585,809) 23,808 - 23,808 (10,710) 10,710 - Balance at 30 June 2013 26,718,899 2,958,083 (3,109,727) 26,567,255 This statement should be read in conjunction with the notes to the financial statements Statement of Changes in Equity 53 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 53 Consolidated Statement of Cash Flows For the Year Ended 30 June 2013 Note Consolidated Group Year ended 30 June 2013 $ Year ended 30 June 2012 $ Cash Flows from Operating Activities Payments to suppliers and employees Interest received Finance costs Receipt of R&D Tax Concession Net Cash Used in Operating Activities 8 Cash Flows From Investing Activities Payments for property, plant and equipment Payments for exploration activities Net Cash Used in Investing Activities Cash Flows from Financing Activities Payment of transaction costs for issue of shares Proceeds from borrowings Repayment of borrowings Net Cash Provided by/(Used in) Financing Activities Net increase/(decrease) in cash and cash equivalents Cash at the beginning of the year Cash at the end of the Year 8 (1,073,892) (1,069,074) 689,810 (7,991) 292,626 (99,447) (39,112) (3,800,309) (3,839,421) - - (66,286) (66,286) (4,005,154) 13,570,860 9,565,706 877,147 (10,564) - (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 This statement should be read in conjunction with the notes to the financial statements 54 Musgrave Minerals Ltd Musgrave Minerals Ltd Statement of Cash Flows Notes to the Financial Statements For the Year Ended 30 June 2013 1. Nature of operations 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 accounting policies below. Musgrave Minerals Ltd principal activities are to carry out exploration of mineral tenements, to continue to seek b. Principle of Consolidation The consolidated financial statements incorporate the assets, extensions of areas held and to seek out new areas with liabilities and results of entities controlled by Musgrave mineral potential and to evaluate results achieved through Minerals Ltd at the end of the reporting period. A controlled surface sampling, geophysical surveys and drilling activities. entity is any entity over which Musgrave Minerals Ltd has the 2. General information and statement of compliance The general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). 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). The financial statements for the year ended 30 June 2013 (including comparatives) were approved and authorised for issue by the Board of Directors on 25 September 2013. ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in note 24 to the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated Group have been eliminated in full on consolidation. Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the consolidated statement of financial position and statement of profit or loss and comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date. c. Business combinations Business combinations occur where an acquirer obtains control 3. Summary of accounting over one or more businesses. policies a. Overall considerations The significant accounting policies that have been used in A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control Notes to the Financial Statements 55 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 55 is attained, whereby the fair value of the identifiable assets Deferred tax assets and liabilities are calculated at the tax rates acquired and liabilities (including contingent liabilities) assumed that are expected to apply to the period when the asset is is recognised (subject to certain limited exemptions). realised or the liability is settled and their measurement also reflects the manner in which management expects to recover When measuring the consideration transferred in the business or settle the carrying amount of the related asset or liability. combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to Deferred tax assets relating to temporary differences and initial recognition, contingent consideration classified as equity unused tax losses are recognised only to the extent that it is is not remeasured and its subsequent settlement is accounted probable that future taxable profit will be available against for within equity. Contingent consideration classified as an which the benefits of the deferred tax asset can be utilised. asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, Where temporary differences exist in relation to investments in unless the change in value can be identified as existing at subsidiaries, branches, associates, and joint ventures, deferred acquisition date. tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and All transaction costs incurred in relation to business it is not probable that the reversal will occur in the foreseeable combinations are recognised as expenses in profit or loss when future. incurred. The acquisition of a business may result in the recognition of enforceable right of set-off exists and it is intended that net goodwill or a gain from a bargain purchase. settlement or simultaneous realisation and settlement of the Current tax assets and liabilities are offset where a legally d. Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). 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. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss. respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (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. e. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to 56 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements the estimated recoverable amount and impairment losses are An asset’s carrying amount is written down immediately to its recognised either in profit or loss or as a revaluation decrease recoverable amount if the asset’s carrying amount is greater if the impairment losses relate to a revalued asset. A formal than its estimated recoverable amount. assessment of recoverable amount is made when impairment indicators are present. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses The carrying amount of plant and equipment is reviewed are included in the statement of profit or loss and other annually by directors to ensure it is not in excess of the comprehensive income. When revalued assets are sold, recoverable amount from these assets. The recoverable amounts included in the revaluation surplus relating to that amount is assessed on the basis of the expected net cash asset are transferred to retained earnings. 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 f. Exploration and Development Expenditure Exploration, evaluation and development expenditures incurred amounts. are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are The cost of fixed assets constructed within the consolidated expected to be recovered through the successful development group includes the cost of materials, direct labour, borrowing of the area or where activities in the area have not yet reached costs and an appropriate proportion of fixed and variable a stage that permits reasonable assessment of the existence of overheads. economically recoverable reserves. Subsequent costs are included in the asset’s carrying amount Accumulated costs in relation to an abandoned area are or recognised as a separate asset, as appropriate, only when written off in full against profit in the year in which the it is probable that future economic benefits associated with decision to abandon the area is made. the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance When production commences, the accumulated costs for are charged to the statement of profit or loss and other the relevant area of interest are amortised over the life of the comprehensive income during the financial period in which area according to the rate of depletion of the economically they are incurred. Depreciation recoverable reserves. A regular review is undertaken of each area of interest to The depreciable amount of all fixed assets including buildings determine the appropriateness of continuing to capitalise costs and capitalised lease assets, but excluding freehold land, is in relation to that area of interest. depreciated on a straight-line or diminishing value basis over the asset’s useful life to the Group commencing from the time Costs of site restoration are provided over the life of the the asset is held ready for use. Leasehold improvements are project from when exploration commences and are included depreciated over the shorter of either the unexpired period of in the costs of that stage. Site restoration costs include the the lease or the estimated useful lives of the improvements. dismantling and removal of mining plant, equipment and The useful life for each class of depreciable assets are: the site in accordance with local laws and regulations and Class of Fixed Asset Plant and equipment Motor Vehicles Useful life 2 - 10 years 6 - 8 years clauses of the permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. building structures, waste removal, and rehabilitation of The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Notes to the Financial Statements 57 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 57 Any changes in the estimates for the costs are accounted on a costs to sell and value-in-use. To determine the value-in-use, prospective basis. In determining the costs of site restoration, management estimates expected future cash flows from each there is uncertainty regarding the nature and extent of cash-generating unit and determines a suitable interest rate in the restoration due to community expectations and future order to calculate the present value of those cash flows. The legislation. Accordingly the costs have been determined on the data used for impairment testing procedures are directly linked basis that the restoration will be completed within one year of to the Group’s latest approved budget, adjusted as necessary abandoning the site. g. Leases Leases of fixed assets where substantially all the risks and 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 benefits incidental to the ownership of the asset, but not the asset-specific risks factors. legal ownership that is transferred to the Group, are classified as finance leases. Leased assets are depreciated on a straight- All assets are subsequently reassessed for indications that an line basis over the shorter of their estimated useful lives or the impairment loss previously recognised may no longer exist. lease term. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as i. Financial Instruments expenses in the periods in which they are incurred. Recognition and initial measurement Lease incentives under operating leases are recognised as a Financial assets and financial liabilities are recognised when liability and amortised on a straight-line basis over the lease the entity becomes a party to the contractual provisions to the term. instrument. For financial assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of Finance leases are capitalised by recognising an asset and a the asset (ie trade date accounting is adopted). liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease Financial instruments are initially measured at fair value plus payments, including any guaranteed residual values. Lease transaction costs, except where the instrument is classified “at payments are allocated between the reduction of the lease fair value through profit or loss”, in which case transaction liability and the lease interest expense for the period. costs are expensed to profit or loss immediately. h. Impairment testing of non-current assets For impairment assessment purposes, assets are grouped at Classification and subsequent measurement Financial instruments are subsequently measured at fair value, the lowest levels for which there are largely independent cash amortised cost using the effective interest rate method, or inflows (cash-generating units). As a result, some assets are cost. tested individually for impairment and some are tested at cash- generating unit level. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal All assets or cash-generating units are tested for impairment repayments and any reduction for impairment, and adjusted whenever events or changes in circumstances indicate that the for any cumulative amortisation of the difference between that carrying amount may not be recoverable. initial amount and the maturity amount calculated using the effective interest method. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds Fair value is determined based on current bid prices for all its recoverable amount, which is the higher of fair value less quoted investments. Valuation techniques are applied to 58 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements determine the fair value for all unlisted securities, including establishment of a separate entity. The Group recognises its recent arm’s length transactions, reference to similar interest in the jointly controlled operations by recognising instruments and option pricing models. the assets that it controls and the liabilities that it incurs. The Group also recognises the expenses that it incurs and its share The effective interest method is used to allocate interest of the income that it earns from the sale of goods or services income or interest expense over the relevant period and is by the jointly controlled operation. equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and The Group has entered into a number of Joint Ventures with other premiums or discounts) through the expected life (or various parties to explore on certain tenements that the when this cannot be reliably predicted, the contractual term) Company has a beneficial interest in. of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying k. Equity-settled compensation The Group operates an employee share option plan. Share- value with a consequential recognition of an income or based payments to employees are measured at the fair value expense item in profit or loss. of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are The Group does not designate any interests in subsidiaries, measured at the fair value of goods or services received or the associates or joint venture entities as being subject to the fair value of the equity instruments issued, if it is determined requirements of Accounting Standards specifically applicable to the fair value of the goods or services cannot be reliably financial instruments. (i). Loans and receivables 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 Group’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. j. 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 measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share 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 instruments that eventually vest. l. Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. m. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of 6 months or less, and bank overdrafts. Bank overdrafts are reported within Notes to the Financial Statements 59 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 59 short-term borrowings in current liabilities in the statement of activities which are recoverable from, or payable to, the ATO financial position. are presented as operating cash flows included in receipts from customers or payments to suppliers. n. Revenue and Other Income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade q. Government Grants Government grants are recognised at fair value where there discounts and volume rebates allowed. When the inflow is reasonable assurance that the grant will be received and all of consideration is deferred, it is treated as the provision grant conditions will be met. Grants relating to expense items of financing and is discounted at a rate of interest that is are recognised as income over the periods necessary to match generally accepted in the market for similar arrangements. The the grant to the costs they are compensating. Grants relating difference between the amount initially recognised and the to assets are credited to deferred income at fair value and are amount ultimately received is interest revenue. Revenue from credited to income over the expected useful life of the asset on the sale of goods is recognised at the point of delivery as this a straight-line basis. corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. r. Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are Interest revenue is recognised using the effective interest rate shown in equity as a deduction, net of tax, from the proceeds. method. All revenue is stated net of the amount of goods and services tax (GST). o. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a s. Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. substantial period of time to prepare for their intended use or Diluted earnings per share adjusts the figures used in the sale are added to the cost of those assets, until such time as determination of basic earnings per share to take into account the assets are substantially ready for their intended use or sale. the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential All other borrowing costs are recognised in profit or loss in the ordinary shares. period in which they are incurred. p. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the t. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for amount of GST, except where the amount of GST incurred is the current financial year. not recoverable from the Australian Taxation Office (ATO). 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 u. Critical Accounting Estimates and Judgments The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally components of cash flows arising from investing or financing and within the Group. 60 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements Key estimates (i) Impairment on non-depreciable assets measured using the revaluation model in AASB 116 Property, Plant and Equipment should always be based on recovery through sale. The Group assesses impairment at the end of each 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. These amendments have had no impact on the Group. AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income (Applies annual reporting periods beginning on or after 1 July 2012) (ii) Exploration and evaluation expenditure The Group 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 the evaluation of such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $17,055,933 (2012: $13,538,949). v. New and amended standards adopted by the Group AASB 2010-8 Amendments to Australian Accounting Standard – Deferred Tax: Recovery of Underlying Assets (Applies to annual reporting periods beginning on or after 1 January 2012) AASB 2010-8 provides clarification on the determination of deferred tax assets and deferred tax liabilities when investment properties are measured using the fair value model in AASB 140 Investment Properties. It introduces a rebuttable presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model where the objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. AASB 2010-8 also includes the requirement that the measurement of deferred tax assets and deferred tax liabilities AASB 2011-9 requires entities to group items presented in Other Comprehensive Income on the basis of whether they are potentially re-classifiable to profit or loss subsequently, and changes the title of ‘statement of comprehensive income’ to ‘statement of profit or loss and other comprehensive income’. The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on the Group’s accounting policies or the amounts reported during the current year. The adoption of AASB 2011-9 has resulted in changes to the Group’s presentation of its financial statements. w. Accounting standards issued but not yet effective and not been adopted early by the Group The Group notes the following Accounting Standards which have been issued but are not yet effective at 30 June 2013. These standards have not been adopted early by the Group. The Group ‘s assessment of the impact of these new standards and interpretations is set out below: (i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2015) Notes to the Financial Statements 61 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 61 AASB 9 introduces new requirements for the classification Recognition and Measurement and have not been and measurement of financial assets and liabilities. changed. The Group has not yet decided when to adopt These requirements improve and simplify the approach for classification and measurement of financial assets and AASB 9. liabilities compared with the requirements of AASB 139. (ii) AASB 10 Consolidated Financial Statements, AASB 11 The main changes are: - Financial assets that are debt instruments will be Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and classified based on (1) the objective of the entity’s Joint Ventures, AASB 2011-7 Amendments to Australian business model for managing the financial assets; and Accounting Standards arising from the Consolidation (2) the characteristics of the contractual cash flows. and Joint Arrangements Standards and AASB 2012-10 - Allows an irrevocable election on initial recognition Transition Guidance and Other Amendments (effective 1 Amendments to Australian Accounting Standards – to present gains and losses on investments in equity January 2013) instruments that are not held for trading in other comprehensive income (instead of in profit or loss). - Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. - Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. - Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows; - The change attributable to changes in credit risk are presented in other comprehensive income (OCI) and; - AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12 Consolidation – Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns. When this standard is first adopted for the year ended 30 June 2014, there will be no impact on the transactions and balances recognised in the financial statements. - The remaining change is presented in profit or loss. - AASB 11 replaces AASB 131 Interests in Joint Ventures There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The de-recognition rules have been transferred from AASB 139 Financial Instruments: and AASB Interpretation 113 Jointly-controlled Entities – Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. 62 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements In addition, AASB 11 removes the option to account The Group is yet to undertake a detailed analysis of for jointly-controlled entities using proportionate the differences between the current fair valuation consolidation. Instead, accounting for a joint arrangement methodologies used and those required by AASB 13. is dependent on the nature of the rights and obligations However, when this standard is adopted for the first time arising from the arrangement. Joint operations that for the year ended 30 June 2014, there will be no impact give the venturers a right to the underlying assets and on the financial statements because the revised fair value obligations for liabilities are accounted for by recognising measurement requirements apply prospectively from 1 the share of those assets and liabilities. Joint ventures that January 2013. give the venturers a right to the net assets are accounted for using the equity method. When this standard is first adopted for the year ended 30 Amendments to Australian Accounting Standards arising June 2014, there will be no impact on transactions and from AASB 119 (September 2011) (iv) Revised AASB 119 Employee Benefits and AASB 2011-10 balances recognised in the financial statements because the joint arrangements in place relate to joint operations. - AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by the Group will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Group’s investments. Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a “partial disposal” concept. When this standard is first adopted for the year ended 30 June 2014, there will be no impact on the transactions and balances recognised in the financial statements. (iii) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013) AASB 13 explains how to measure fair value and aims to enhance fair value disclosures. Application of the new standard will impact the type of information disclosed in the notes to the financial statements. The AASB released a revised standard on accounting for employee benefits. It requires the recognition of all re-measurements of defined benefit liabilities/assets immediately in other comprehensive income (removal of the so-called ‘corridor’ method), the immediate recognition of all past service cost in profit or loss and the calculation of a net interest expense or income by applying the discount rate to the net defined benefit liability or asset. This replaces the expected return on plan assets that is currently included in profit or loss. The standard also introduces a number of additional disclosures for defined benefit liabilities/assets and could affect the timing of the recognition of termination benefits. The amendments will have to be implemented retrospectively. The Group does not have any defined benefit plans. Therefore, these amendments will have no impact on the Group. (v) AASB Interpretation 20 Stripping Costs in the Production Phase of Surface Mining This interpretation clarifies that costs of removing mine waste materials (overburden) to gain access to mineral ore deposits during the production phase of a mine must be capitalised as inventories under AASB 102 Inventories, if the benefits from stripping activity is realised in the form of inventory produced. Otherwise, if stripping activity provides improved access to the ore, stripping costs must Notes to the Financial Statements 63 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 63 be capitalised as a non-current asset (if certain recognition (viii) AASB 2012-3 Amendments to Australian Accounting criteria are met, as an addition to, or enhancement of, an Standards – Offsetting Financial Assets and Financial existing asset). Liabilities The Group does not operate a surface mine. Therefore, there will be no impact on the financial statements when this interpretation is first adopted for reporting periods commencing from 1 January 2013. AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. (vi) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management When AASB 2012-3 is first adopted for the year ended 30 Personnel Disclosure Requirements June 2015, there will be no impact on the Group as this standard merely clarifies existing requirements in AASB The Standard amends AASB 124 Related Party Disclosures 132. to remove the individual key management personnel (KMP) disclosures required by Australian specific paragraphs. This amendment reflects the AASB’s view that these disclosures are more in the nature of governance disclosures that are better dealt within the legislation, rather than by the accounting standards. When these amendments are first adopted for the year ending 30 June 2014, they are unlikely to have any significant impact on the Group. (vii) AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities This Standard amends the required disclosures in AASB 7 to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. This Standard also amends AASB 132 to refer to the additional disclosures added to AASB 7 by this Standard. When this AASB 2012-2 is first adopted for the year ended 30 June 2014, there will be no impact on the Group as the Group does not have any netting arrangements in place. (ix) Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. When these amendments are adopted for the first time on 1 January 2014, they are unlikely to have any significant impact on the Group given that they are largely of the nature of clarification of existing requirements. (x) IFRIC Interpretation 21 Levies IFRIC 21 addressed how an entity should account for liabilities to pay levies imposed by governments, other than income taxes, in its financial statements (in particular, when the entity should recognise a liability to pay a levy). IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). 64 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements The Interpretation clarifies that the obligating event that There are no other standards that are not yet effective gives rise to a liability to pay a levy is the activity described and that are expected to have a material impact on the in the relevant legislation that triggers the payment of entity in the current or future reporting periods and on the levy. For example, if the activity that triggers the foreseeable future transactions. payment of the levy is the generation of revenue in the current period and the calculation of that levy is based on the revenue that was generated in a previous period, the obligating event for that levy is the generation of revenue 4. Operating Segments in the current period. The generation of revenue in the The Board has considered the requirements of AASB 8 previous period is necessary, but not sufficient, to create a Operating Segments and the internal reports that are reviewed present obligation. by the chief operating decision maker (the Managing Director) in allocating resources and have concluded at this time that When this interpretation is adopted for the first time on 1 there are no separately identifiable segments. January 2014, there will be no significant impact on the financial statements as the Group is not subject to any levies addressed by this interpretation. Notes to the Financial Statements 65 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 65 5. Revenue and expenses (a) Other income Interest revenue Fuel tax credits (b) Depreciation of non current assets Plant and equipment Motor Vehicles (c) Finance expenses Finance costs Interest applicable to hire-purchase (d) Employees benefits expense Wages, salaries, directors fees and other remuneration expenses Superannuation expense Transfer to/(from) annual leave provision Transfer to/(from) long service leave provision Share-based payments expense Transfer to capitalised tenements (e) Other expenses from ordinary activities Secretarial, professional and consultancy Occupancy costs Share register maintenance Insurance costs Promotion, advertising and sponsorship Audit fees Computer expenses Recruitment costs Employer related on-costs Other expenses Consolidated 2013 $ 2012 $ 578,699 2,914 581,613 60,199 28,850 89,049 85 8,186 8,271 1,228,097 103,772 3,457 9,437 23,808 (904,299) 464,272 184,824 104,550 33,836 30,529 31,467 30,264 47,053 - 55,161 25,833 543,517 914,964 11,345 926,309 81,411 29,994 111,405 592 10,542 11,134 1,173,740 101,473 64,230 2,986 37,485 (870,124) 509,790 88,776 100,722 34,495 33,766 25,301 13,250 39,438 31,610 34,563 163,711 565,632 66 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements 6. Income tax (benefit)/expense Income Tax The major components of income tax expense are: Statement of Profit or Loss and Other Comprehensive Income Current income tax Current income tax charge/(benefit) Research and Development Tax offset Income tax expense/(benefit) reported in the income statement Consolidated 2013 $ 2012 $ - 4,530 (292,626) - (292,626) 4,530 A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows: Accounting profit/(loss) before income tax (878,435) (271,652) At the Group’s statutory income tax rate of 30% (2012: 30%) (263,531) (81,496) Immediate write off of capital expenditure (1,161,577) (1,182,503) Expenditure not allowable for income tax purposes 113,993 11,830 Other deductible items (64,905) (64,905) Tax losses not recognised due to not meeting recognition criteria 1,376,020 1,317,074 Tax portion of share issue costs - 4,530 - 4,530 The Company has tax losses arising in Australia of $11,102,030 (2012: $6,649,093) that are available indefinitely for offset against future taxable profits of the companies in which the losses arose. Notes to the Financial Statements 67 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 67 7. Earnings per share 8. Cash and cash equivalents Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares Consolidated 2013 $ 2012 $ outstanding during the year. Cash and Cash Equivalents 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. Cash at bank and in hand 1,155,706 460,860 Short-term deposits 8,410,000 13,110,000 9,565,706 13,570,860 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 banks and in hand 1,155,706 460,860 The following reflects the income and share data used in the Short-term deposits 8,410,000 13,110,000 basic and diluted earnings per share computations: 9,565,706 13,570,860 Reconciliation of net loss after tax to net cash flows from Consolidated 2013 $ 2012 $ (585,809) (276,182) Net profit/(loss) attributable to ordinary equity holders of the parent entity Weighted average number of ordinary shares for basic 121,000,000 121,000,000 earnings per share Effect of dilution Share options N/A N/A Weighted average number 121,000,000 121,000,000 of ordinary shares adjusted for the effect of dilution 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. 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. operations Net loss Adjustments for non-cash items: Depreciation Share based payments Non cash income tax expense Changes in assets and liabilities Decrease/(Increase) in trade and other receivables Decrease/(Increase) in prepayments Decrease/(Increase) in interest receivable Increase/(Decrease) in trade and other payables Increase/(Decrease) in employee entitlements Net cash (used in)/provided by operating activities (585,809) (276,182) 89,049 23,808 - 111,405 37,485 4,530 9,576 643 127,226 223,166 12,894 61,567 32,730 (28,962) (212,280) 67,216 (99,447) (202,491) 68 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements 9. Trade and other receivables 11. Property, plant and equipment (continued) Consolidated 2013 $ 2012 $ Consolidated 2013 $ 2012 $ Goods & Services Tax receivable 116,656 121,912 equipment Property, plant and Fuel tax credits receivable 7,025 11,345 Cost 123,681 133,257 Balance at 1 July 181,156 128,761 Information regarding the credit risk of current receivables is set out in note 23. Additions Disposals 41,212 - 54,478 (2,083) Balance at 30 June 222,368 181,156 10. Other current assets Accumulated depreciation Balance at 1 July Depreciation for the year Consolidated Disposals 91,620 60,199 - 151,819 70,549 11,280 81,411 (1,071) 91,620 89,536 Balance at 30 June Net book value Total Cost Opening balance 347,701 225,858 Additions Disposals 41,212 123,926 - (2,083) Balance at 30 June 388,913 347,701 Accumulated depreciation Opening balance 123,425 13,091 Depreciation for the year 89,049 111,405 Disposals - (1,071) Balance at 30 June 212,474 123,425 Net book value 176,439 224,276 Prepayments Accrued income 2013 $ 3,118 51,042 54,160 2012 $ 3,761 178,268 182,029 11. Property, plant and equipment Consolidated 2013 $ 2012 $ 166,545 - 97,097 69,448 Motor vehicles Cost Balance at 1 July Additions Balance at 30 June 166,545 166,545 Accumulated depreciation Balance at 1 July Depreciation for the year Balance at 30 June 31,805 28,850 60,655 1,811 29,994 31,805 Net book value 105,890 134,740 Notes to the Financial Statements 69 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 69 12. Exploration and evaluation assets • 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. Consolidated 2013 $ 2012 $ Exploration and evaluation 17,055,933 13,538,949 phases 17,055,933 13,538,949 • 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 without cost to the employee. 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 The ultimate recoupment of costs carried forward for time the Board resolves to offer those options. The total exploration and evaluation phases is dependent on the number of shares the subject of options issued under the successful development and commercial exploitation or sale of Plan, when aggregated with issues during the previous 5 the respective mining areas. years pursuant to the Plan and any other employee share plan, must not exceed 5% of the Company’s issued share Consolidated group Exploration Total capital. $ $ • If, prior to the expiry date of options, a person ceases to Balance 1 July 2012 13,538,949 13,538,949 be an employee of a Group company for any reason other Additions through expenditure 3,871,923 3,871,923 than retirement at age 60 or more (or such earlier age as capitalised the Board permits), permanent disability, redundancy or Imairment of relinquished (354,939) (354,939) death, the options held by that person (or that person’s tenements nominee) automatically lapse on the first to occur of a) Balance at 30 June 2013 17,055,933 17,055,933 the expiry of the period of 6 months from the date of Exploration and Evaluation expenditure has been carried forward to the extent that it is 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. 13. 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: such occurrence, and b) the expiry date. If a person dies, the 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. • The Company will not apply for official quotation of any options. • Shares issued as a result of the exercise of options will rank equally with the Company’s previously issued shares. • Option holders may only participate in new issues of securities by first exercising their options. The Board may amend the Plan Rules subject to the requirements of the Listing Rules. The expense recognised in the Statement of Profit or Loss and Other Comprehensive • All employees (full and part time) will be eligible to Income in relation to share-based payments is disclosed in participate in the Plan after a qualifying period of 12 note 6(d). The following table illustrates the number (No.) and months employment by a member of the Group, although weighted average exercise prices (WAEP) and movements in the Board may waive this requirement. share options under the Company’s Employee Share Option Plan issued during the year: 70 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements 2013 2013 2012 2012 No. WAEP No. WAEP Outstanding 16,025,000 0.33 15,500,000 0.33 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. 575,000 0.25 525,000 0.25 year ended 30 June 2013 and 30 June 2012: The following table lists the inputs to the model used for the at the beginning of the year Granted during the year 2013 2012 Historical volatility (%) 82% 114% Risk-free interest rate (%) 3.12% 3.43% Expected life of option (years) 5 5 Expired/ (150,000) 0.25 - - lapsed during the year Outstanding 16,450,000 0.32 16,025,000 0.33 at the end of the year Exercisable 16,450,000 0.32 1,025,000 0.30 14. Trade and other payables at the end of the year The outstanding balance as at 30 June 2013 is represented by the following options: Trade payables (i) Other payables (ii) Consolidated 2013 $ 2012 $ 94,018 43,606 157,043 269,826 251,061 313,432 Issue Date Expiry Date 21/08/2010 20/08/2015 17/02/2011 17/02/2016 17/02/2011 17/02/2016 09/05/2011 08/05/2016 24/01/2012 23/01/2017 06/03/2013 05/03/2018 25/03/2013 24/03/2018 Exercise Price Number of options outstanding $0.25 $0.36 $0.50 $0.36 $0.25 $0.25 $0.25 7,750,000 4,750,000 2,500,000 500,000 375,000 500,000 75,000 16,450,000 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 23. 15. Borrowings The weighted average remaining contractual life for the share options outstanding as at 30 June 2013 is 2.50 years (2012: 3.44 years). Current Hire purchase contracts The range of exercise prices for options outstanding at the end of the year was $0.25 - $0.50 (2012: $0.25 - $0.50). Non-current The weighted average fair value of options granted during the year was $0.041 (2012: $0.071). Hire purchase contracts Consolidated 2013 $ 2012 $ 47,293 47,293 6,174 6,174 64,587 64,587 50,854 50,854 Motor vehicles with a carrying value of $100,923 (2012: $128,117) act as security for the hire purchase liabilities. Notes to the Financial Statements 71 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 71 16. Provisions Current Annual leave provision: Consolidated 2013 $ 2012 $ 21. Contingent liabilities and contingent assets At the date of signing this report, the Company is not aware of any Contingent Asset or Liability that should be disclosed in accordance with AASB 137. It is however noted that the Company has various bank guarantees totalling $110,000 at Balance at 1 July 87,060 22,830 30 June 2013 (2012: $110,000) which act as collateral over Net increase/(decrease in provision) 3,457 64,230 Company’s Visa business credit cards. the lease of offices at 19 Richardson St, West Perth and the Closing balance 30 June 90,517 87,060 Non-current Long service leave: Balance at 1 July Net increase/(decrease in provision) 4,182 9,437 Closing balance 30 June 13,619 1,196 2,986 4,182 17. Issued capital Consolidated 2013 $ 2012 $ 121,000,000 fully paid ordinary shares (2012: 121,000,000) 26,718 26,718,899 22. Auditor’s remuneration Consolidated 2013 $ 2012 $ Audit or review of the financial report 30,264 13,250 30,264 13,250 23. Financial risk management Capital risk management The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to 26,718,899 26,718,899 stakeholders. There were no movements in issued capital either in the current year or for the year ended 30 June 2012. 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). 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 17, 18 and 19 respectively. Proceeds from share issues are used to maintain and expand the Group’s exploration activities and fund operating costs. Financial Assets Cash and cash equivalents Trade receivables Financial Liabilities Payables Borrowings 2013 $ 2012 $ 9,565,706 13,570,860 123,681 133,257 251,061 53,467 313,432 115,441 72 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements Credit risk management Credit risk refers to the risk that a counterparty will default Liquidity risk management Ultimate responsibility for liquidity risk management rests on its contractual obligations resulting in financial loss to the with the Board, which has built an appropriate liquidity Group. The Group has adopted a policy of only dealing with risk management framework for the management of the creditworthy counterparties as a means of mitigating the risk Group’s short, medium and long-term funding and liquidity of financial loss from activities. management requirements. The Group manages liquidity risk by maintaining adequate reserves. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds is limited Liquidity and interest risk tables The following table details the Company’s remaining because the counterparties are banks with high credit-ratings contractual maturity for its non-derivative financial liabilities. assigned by international credit-rating agencies. The table has been drawn up based on the undiscounted cash The carrying amount of financial assets recorded in the the Company can be required to pay. The table includes both flows of financial liabilities based on the earliest date on which financial statements, net of any allowances for losses, interest and principal cash flows. represents the Group’s maximum exposure to credit risk. Weighted average effective interest rate % Less than one year $ Longer than 1 year and not longer than 5 years $ 8.66 47,293 6,174 - 251,061 - 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 - 313,432 - 2013 Interest bearing Non-interest bearing 2012 Interest bearing Non-interest bearing Interest rate risk The tables 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 $ 2013 Fixed interest rate Variable interest rate 4.21 - 8,410,000 1,155,706 Weighted average effective interest rate % Less than one year $ 2012 Fixed interest rate 5.54 13,110,000 Variable interest rate - 460,860 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 $42,050 which is mainly attributable to the Group’s exposure to interest rates on its variable bank deposits. Notes to the Financial Statements 73 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 73 24. Controlled entities Country of incorporation Ownership interest 2013 % 2012 % Australia Australia 100 - Name of entity Parent entity Musgrave Minerals Ltd Subsidiaries Musgrave Exploration Pty Ltd Guarantees Musgrave Minerals Ltd has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries. Contingent Liabilities Contingent liabilities of the parent entity have been incorporated into the Group information in note 21. The contingent liabilities of the parent are consistent with that of the Group. Contractual Commitments Contractual Commitments of the parent entity have been incorporated into the Group information in note 20. The contractual commitments of the parent are consistent with 25. Parent entity information that of the Group. 2013 $ 2012 $ Financial Position Assets Current Assets 9,743,547 13,886,146 Non-current Assets 17,232,372 13,763,225 26. Related party disclosure and key management personnel remuneration 26,975,919 27,649,371 The following individuals are classified as key management personnel in accordance with AASB 124 ’Related Party Liabilities Disclosures’: Current liabilities 388,871 465,079 Graham Ascough, Non-Executive Chairman Non-current Liabilities 19,793 55,036 Robert Waugh, Managing Director 408,664 520,115 Kelly Ross, Non-Executive Director Equity Issued Capital 26,718,899 26,718,899 Reserves 2,958,083 2,944,985 Retained Earnings (3,109,727) (2,534,628) John Percival, Non-Executive Director Donald Stephens, Company Secretary Justin Gum, Principal Geologist Ian Warland, Exploration Manager Financial Performance found in the remuneration report. 26,567,255 27,129,256 Details of key management personnel’s remuneration can be (Loss) for the year (585,809) (276,182) Other comprehensive - - income (585,809) (276,182) 74 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements a). Aggregate remuneration for Key Management Personnel Short-term employee benefits Post employment benefits Share-based payments Consolidated 2013 $ 2012 $ 630,513 49,793 21,550 701,856 560,155 56,545 - 616,700 (b). Option holdings of Key Management Personnel 30-Jun-13 Balance at beginning of period Granted as remuneration Options Exercised Net change other Balance at end of period Vested at 30 June 2013 Expiry Date First Exercise Date Last Exercise Date Graham Ascough 750,000 Robert Waugh John Percival Kelly Ross Donald Stephens Justin Gum Ian Warland 2,500,000 2,500,000 500,000 500,000 500,000 500,000 - 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 17/02/16 28/04/13 17/02/16 500,000 08/05/16 09/05/11 08/05/16 500,000 05/03/18 06/03/15 05/03/18 30-Jun-12 Balance at beginning of period Granted as remuneration* Options Exercised Net change other Balance at end of period Vested at 30 June 2012 Expiry Date First Exercise Date Last Exercise Date Graham Ascough 750,000 Robert Waugh John Percival Kelly Ross Donald Stephens Justin Gum 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 17/02/16 28/04/13 17/02/16 500,000 08/05/16 09/05/11 08/05/16 Notes to the Financial Statements 75 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 75 (c). Shareholdings of Key Management Personnel 30 June 2013 Balance at 1 July 12 On Exercise of Options Net Change Other Balance 30 June 13 Directors Graham Ascough Robert Waugh John Percival Kelly Ross Donald Stephens Justin Gum Ian Warland 200,000 80,000 100,000 50,000 - 40,000 - 30 June 2012 Balance at 1 July 11 On Exercise of Options Directors Graham Ascough Robert Waugh John Percival Kelly Ross Donald Stephens Justin Gum 200,000 80,000 100,000 50,000 - 40,000 - - - - - - - - - - - - - - - 100,000 Net Change Other - - - - - - - - - - 200,000 80,000 200,000 50,000 - 40,000 - Balance 30 June 12 200,000 80,000 100,000 50,000 - 40,000 Director related entities During the year, Musgrave Minerals Ltd was invoiced by Mithril Resources Ltd (‘Mithril’) in relation to expenditure incurred by Mithril on Musgrave’s behalf. These transactions were undertaken on an arm’s length basis and in aggregate for the year ended 30 June 2013 totalled $54,802 excluding GST (2012: $51,810). HLB Mann Judd (SA) Pty Ltd has received professional fees for accounting, taxation and secretarial services provided during the year amounting to $150,541 including GST (2012: $131,671). Donald Stephens, the Company Secretary, is a consultant with HLB Mann Judd (SA) Pty Ltd. 27. Subsequent events The Directors are not aware of any significant events that have occurred since the end of the reporting period that should be disclosed. 76 Musgrave Minerals Ltd Musgrave Minerals Ltd Notes to the Financial Statements Directors’ Declaration In accordance with a resolution of the Directors of Musgrave Minerals Ltd, the Directors of the Company declare that: 1. the consolidated financial statements and notes, as set out on pages 51 to 76, are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the consolidated Group; 2. in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and 3. the Managing Director and Company Secretary have each declared that: a. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b. the financial statements and notes for the financial year comply with Accounting Standards; and c. the financial statements and notes for the financial year give a true and fair view; and This declaration is made in accordance with a resolution of the Board of Directors. Mr Graham Ascough Chairman 25 September 2013 Directors’ Declaration 77 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 77 78 Musgrave Minerals Ltd Musgrave Minerals Ltd Independent Auditor’s Report Independent Auditor’s Report 79 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 79 80 Musgrave Minerals Ltd Musgrave Minerals Ltd Independent Auditor’s Report ASX Additional Information Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as The number of shareholders, by size of holding, in each class are: Substantial shareholders Ordinary shareholders Fully paid Number % Mithril Resources Investments Pty Ltd 9,283,871 7.67% follows. The information is current as at 25 September 2013. Independence Group NL 9,027,000 7.46% Goldsearch Ltd 8,673,000 7.17% Distribution of equity securities Number of shareholders Unlisted Options 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over 8 46 257 696 163 1,170 - - - 2 14 16 Ordinary share capital • 121,000,000 fully paid ordinary shares are held by 1,170 Fully Paid Ordinary Shares Ordinary shareholders Number % Mithril Resources Investments Pty Ltd 9,283,871 7.67% Independence Group NL 9,027,000 7.46% Goldsearch Ltd 8,673,000 7.17% Barrick (Australia Pacific) Limited 6,000,000 4.96% Integra Mining Limited 5,516,129 4.56% Argonaut Resources NL 2,500,000 2.07% Kimbriki Nominees Pty Ltd 2,000,000 1.65% individual shareholders. Mr William Douglas Goodfellow 1,540,000 1.27% All issued ordinary shares carry one vote per share and carry the rights to dividends. Options JP Morgan Nominees Australia Limited 1,429,662 1.18% Octifil Pty Ltd 1,300,000 1.07% King Town Holdings Pty Ltd 1,100,000 0.91% 1,000,000 0.83% 1,000,000 0.83% • 16,450,000 unlisted options are held by 16 option holders. Allise Pty Ltd One holder, Mr Robert Waugh and Mrs Sara Waugh Forty Traders Limited , holds 5,000,000 unlisted options (equivalent to 30.40% of total unlisted options). Hipete Pty Limited 1,000,000 0.83% Premar Capital Nominees Pty Ltd 1,000,000 0.83% Kavalex Pty Limited 800,000 0.66% Citicorp Nominees Pty Limited 731,764 0.60% Forsyth Barr Custodians Ltd Mr Stephen Simunovic + Mr Dragan 696,900 0.58% Simunovic Merrill Lynch (Australia) Nominees Pty Limited 657,604 0.54% 55,944,830 46.24% ASX Additional Information 81 Musgrave Minerals Ltd Musgrave Minerals Ltd Annual Report 2013 81 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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