ANNUAL REPORT 2014
Exploration for base and precious metals
in the Musgrave and Southern Gawler
Cratons regions of South Australia and the
Fraser Range region of Western Australia
ASX: MGV
Musgrave Minerals Ltd 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 also
has a new project in the very prospective Fraser Range
region of Western Australia.
The Company’s functional and presentation 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: $6.1M (as of 30 June 2014)
ABN: 12 143 890 671
Top shareholders
Mithril Resources Ltd
Independence Group NL
Barrick (Australia Pacific) Ltd
Silver Lake Resources Ltd
Goldsearch 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
169 Fullarton Road
Dulwich, South Australia, 5065
Principal Place of Business
19 Richardson Street
West Perth, Western Australia, 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, South Australia, 5000
Auditor
Grant Thornton Audit Pty Ltd
Chartered Accountants
Level 1, 67 Greenhill Road
Wayville, South Australia, 5034
Legal Advisors
O’Loughlins Lawyers
Level 2, 99 Frome Street
Adelaide, South Australia, 5000
i
Corporate Information
Contents
Chairman’s Letter
Review of Operations
Summary of Tenements
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
12
13
22
29
30
31
32
33
34
54
55
58
1
Contents
1
Chairman’s Letter
Dear Fellow Shareholder,
undertaken detailed soil sampling over Frakes, which
returned highly anomalous silver values offset from the
It is my pleasure to present Musgrave Minerals Ltd’s
drilling warranting further work.
Annual Report for the Financial Year ending 30 June
2014. During the year, the Company has continued to
Our team has expanded our projects to cover new
actively explore its portfolio of projects in the Musgrave
opportunities in the Southern Gawler Craton of South
Province and Gawler Craton regions of South Australia,
Australia with the Toondulya and Corunna projects
and has achieved some pleasing results.
targeting silver-lead-zinc and copper-gold mineralisation.
The past year has again proven quite difficult for junior
We are excited with our new Mamba project in the
resource companies such as ours but with a strong
Fraser Range of Western Australia, along strike from
project portfolio and some excellent targets to be tested
the world class Nova-Bollinger nickel-copper discoveries
in the near term, Musgrave Minerals is well positioned
made by Sirius Resources. We expect this tenement to
to capitalise on the growing demand for base metals
be granted in the third quarter of the current year but
and improving market conditions going forward.
we have already started to collect baseline datasets
Musgrave undertook four separate drilling programs
during the year testing more than 10 separate targets
including the acquisition of high resolution magnetic
data to assist with targeting.
as well as multiple geophysical, geological and
We will also continue to pursue advanced-stage
geochemical programs across its projects. The result
exploration and development opportunities over the
of this exploration has been seen at Pallatu, part of
next 12 months that fit our strategy for maximising
the Deering Hills Project in the Musgrave, where we
shareholder value.
have intersected a narrow interval of massive sulphide.
Although narrow, it is technically significant as it is
I take this opportunity to thank our Managing Director,
one of only a few massive nickel sulphide intersections
our staff and my fellow Board members for their hard
ever identified in the South Australian portion of the
work and dedication over the past year.
Musgrave Province and demonstrates the prospective of
the region.
Our other exciting discovery during the year was
high-grade silver intersected at the Frakes target at
Menninnie Dam in the Gawler Craton. Results here
I also thank you, our Shareholders, for your continued
support and hope that it will continue in the future.
were very encouraging, with an intercept of 10m at
Graham Ascough
990g/t Ag including 2m at 3,942g/t Ag. We have since
Chairman
2
Corporate Information
Review of Operations
Musgrave Minerals Ltd (ASX: MGV) is an Australian-
based exploration company focused on base metal,
gold and silver exploration in the Musgrave Range and
Gawler Craton regions of South Australia and the Fraser
Range of Western Australia (Figure 1).
The Musgrave tenements are prospective for massive
and disseminated nickel and copper sulphides within
the mafic/ultramafic Giles Complex intrusives and base
metal mineralisation within the Birksgate Complex
meta-volcanic and meta-sedimentary sequences.
southern Gawler Craton, Toondulya Bluff and Corunna.
Toondulya Bluff is prospective for high grade gold
mineralisation similar to the Challenger deposit and
Corunna for epithermal copper-gold and silver-lead-zinc
mineralisation (Figure 2).
Musgrave also has a new project in the Fraser Range of
Western Australia along strike from the Nova-Bollinger
deposits discovered by Sirius Resources. The Mamba
project tenement (EL28/2405) is still in application.
Tenement grant is expected early in 2015 (Figure 1).
Corporate
Menninnie Dam, located 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 Gawler Craton.
During the past year, Musgrave Minerals spent $3.1
million on exploration activities. At the end of June
2014, the Company is well resourced, holding $6.1
million in cash.
The Company has a Farm in and Joint Venture
Agreement with Menninnie Metals Pty Ltd, a subsidiary
of Terramin Australia Limited (ASX: TZN), to earn a 51%
interest in the Menninnie Dam Project in the first stage,
and up to a 75% interest thereafter.
The project hosts the Menninnie Central and Viper
deposits 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).
Musgrave has two new wholly owned projects in the
Musgrave also continued to progress its research
and development activities and received $0.49M in
regard to the 2012/2013 Financial Year Research and
Development rebate.
Musgrave Minerals will continue to pursue new
advanced stage opportunities to complement its existing
portfolio of projects.
Figure 1: Musgrave Minerals’ Project Location Map.
Figure 2: Musgrave Minerals’ Southern Gawler Projects.
3
Review of Operations
3
Exploration Activities
Musgrave Region Projects
Figure 3: Location of MGV’s Musgrave Geological Province tenements, South Australia.
Deering Hills Project
EL5172, EL5173 & EL5317
- (100% Musgrave Minerals Ltd)
• Musgrave granted the Pallatu exploration licence
(EL5317)
• Five Pallatu EM targets drilled, all intersecting
massive, matrix or disseminated sulphide
• New targets identified at Pallatu 6 and Pallatu 7 and
diamond drilling commenced over these, post-year
end
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 in the
far north-west of South Australia (Figure 3).
In the September quarter, MGV was granted the Pallatu
Exploration Licence as part of the Deering Hills Project.
The Pallatu licence (Figure 4) covers a very prospective
area of known Giles Complex intrusives associated
with a number of high-priority VTEM (versatile time
domain electromagnetic) conductors modelled under
shallow sand cover. Giles Complex intrusives are known
to host nickel sulphide mineralisation elsewhere in the
Musgrave Province.
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 the Caliban and Minbar targets,
and coincident with a large gravity anomaly and
4
Review of Operations
permissive magnetic response. This is consistent with
the geophysical response from other known magmatic
nickel sulphide deposits of this type.
Initial drilling at Pallatu intersected a combination of
massive, matrix and disseminated sulphide (Figure 5) in
all five drill holes from as shallow as 35.7m down hole.
The drilling demonstrated that the system is mineralised
with peak assays up to 0.5% nickel, 0.8% copper and
0.6g/t Pt, Pd + Au (platinum, palladium + gold) over
narrow intervals in fresh rock. The mineralisation is
hosted within sulphide bearing Giles Complex gabbros
and pyroxenites (see ASX announcement 9th December
2013).
A re-assessment of ground EM data highlighted a
potentially significant and extensive subtle conductor at
Figure 4: Location of ground EM targets (late-time fixed
loop transient electromagnetic (FLTEM) response) on Landsat
backdrop. Interpreted Giles (mafic/ultramafic) host rocks are
shown in green.
depth to the north of the drilling. This target identified
prospective contact has been covered by ground EM.
as Pallatu 7 is interpreted as approximately 350m long
Musgrave is looking at a range of options to continue to
progress this exploration opportunity.
at a vertical depth of approximately 280m, which was at
the limit of the interpretability of the existing EM survey
data.
A detailed ground electromagnetic survey over the area
in April confirmed this target at Pallatu 7, as well as the
Pallatu 6 conductor to the north-east (Figure 4) (see ASX
announcement 27th May 2014). MGV commenced
a diamond drilling program over the targets post-
year end, which consisted of 2 drill holes for 441m of
drilling over the two targets. Disseminated sulphide was
intersected in both holes. A down hole electromagnetic
survey commenced in August to test for potential
conductive off-hole massive sulphide mineralisation (see
ASX announcement 25th August 2014).
Figure 5a
Figure 5b
The Pallatu nickel sulphide mineralisation is located
on a prospective intrusive contact that extends
over approximately 20km. To date only 1km of this
Figure 5a: Massive sulphide in drill hole PALDDH001 from
41.6m down hole.
Figure 5b: Disseminated sulphide in drill hole PALDDH001
from 41.1m down hole.
Photo of ground EM crew and diamond drill rig at Pallatu
5
Review of Operations
5
Mimili Project
EL5174 & EL5175 - (100% Musgrave Minerals Ltd)
Musgrave undertook geological mapping, surface rock-
chip and geochemical sampling, and ground EM surveys
• Mapping, rock-chip and geochemical sampling
identified new targets at Baltar, Valerii and Helo
• Regional soil geochemical program over the Ragnar
target at the Moorilyanna Prospect identified copper
geochemical targets for follow-up exploration
over selected VTEM targets. This confirmed basement
EM conductors at the Lister and Kochanski targets and
returned anomalous Ni, Cu, Co and PGE’s in rock-chip
samples. Additional ground EM is required to better
define these targets for drill testing.
The Mimili Project consists of two wholly-owned
exploration licences and is located in the eastern portion
of the Musgrave region (Figure 3).
Musgrave undertook geological mapping, surface rock-
chip and geochemical sampling over selected targets
at Mimili. This returned anomalous results at a number
of new targets including Baltar, Valerii and Helo where
ground EM surveys were undertaken. Additional ground
EM is required to complete coverage of these targets.
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 (Figure 2).
Additional follow-up geochemical sampling was
completed at the Ragnar target and surrounding area
which successfully identified a number of copper
geochemical targets for follow-up exploration, including
a surface anomaly overlying the untested IP target near
MOORC016. Drill testing of this target is required.
Mt Woodroffe Project
EL5171 (100% Musgrave Minerals Ltd)
• Geological mapping and rock-chip and geochemical
sampling together with interpretation of airborne
electromagnetic data identified new targets
• EM surveys were undertaken and basement
conductors were identified at Lister and Kochanski
nickel-copper targets
The Mt Woodroffe Project is situated in the eastern
portion of the Musgrave Geological Province, located
approximately 115km west of the Stuart Highway and
Adelaide to Darwin rail line (Figure 3).
6
Review of Operations
Bryson Hill Project
EL5205 (Musgrave Minerals Ltd earning 75% from
Pitjantjatjara Mining Company Pty Limited and Zeil No.
1 Pty Limited)
• Nickel-copper sulphide gossan identified at Smeagol
target
The Bryson Hill Project covers an area of approximately
1,535km2 and is located in the eastern portion of the
Musgrave Province (Figure 2). Musgrave identified a
new nickel-copper sulphide gossan at a target named
Smeagol. A nickel-copper gossan is the iron-rich
weathered product of nickel-copper sulphide.
A follow-up soil geochemical sampling program at
Smeagol identified a broad co-incident nickel-copper
geochemical anomaly associated with the gossan. The
soil anomaly extended from the gossan to the south-
east onto flat sand plain, where it is open along strike.
The Company completed a heritage survey followed by
a ground EM survey over the Smeagol target but did not
identify the presence of a basement conductor.
Figure 6: Image showing Smeagol gossan samples on Ni + Cu
soil geochemical grid overlaying ortho-image.
Other Musgrave Tenements
The Company holds four additional granted tenements
Viper deposits that have a combined Inferred mineral
resource of 7.7Mt at 27g/t silver, 3.1% zinc and 2.6%
(EL4850-4853) and 30 exploration licence applications
lead (estimated by Terramin in 2011 in accordance with
(ELA’s) over numerous prospective areas in the South
the 2004 JORC code).
Australian Musgrave Province. The tenements host
Giles Complex intrusives which are prospective for
The project is located just 20km from the Paris silver
nickel-copper sulphide mineralisation.
discovery. Previous drilling at Menninnie Dam has
focused on the existing resource area. Musgrave is
actively testing new targets in this under-explored
region and has the potential to discover new economic
mineral deposits.
MGV identified seven high-priority VTEM (versatile
time domain electromagnetic) anomalies (Figure
7) with co-incident surface silver and base metal
geochemical anomalism. The Company undertook
geological mapping, surface rock-chip sampling and soil
geochemistry on these targets, identifying anomalous
surface rock-chip samples at a number of targets
(see ASX announcement, September 2013 Quarterly
Activities and Cashflow Report, 31st October 2013).
Drilling undertaken to follow up five targets (Spare
Rib, Frakes, Erebus, Tank Hill and Masaraga) across the
Southern Gawler Project
Menninnie Dam Project
EL5039, 4813, 4285, 4669, 4865 (Musgrave Minerals
Ltd earning 51% in the first instance and up to 75%
thereafter)
• Seven high-priority VTEM targets identified
• Drilling testing of multiple targets including Spare
Rib, Frakes, Erebus, Tank Hill and Masaraga
• Significant lead, zinc and silver mineralisation
intersected at Spare Rib including:
o 20m @ 2.0% Pb from 67m in MDAC307
o 12m @ 1.6% Zn from 54m in MDAC306
• High-grade silver intersected at Frakes:
o 10m @ 990g/t Ag from 43m in MDAC375 including
2m @ 3,942g/t Ag
• Detailed soil sampling grid (50m x 100m) over Frakes
returned highly anomalous silver values offset from
drilling
Menninnie Dam comprises five Exploration Licences
(ELs) covering a contiguous area of 2,471km² in the
Gawler Craton, about 100km west of Port Augusta
(Figure 2). The project hosts the Menninnie Central and
Aircore Drilling at Menninnie Dam
Figure 7: Location of Menninnie Dam prospects with
anomalous rock-chip sample results and VTEM targets on
silver soil geochemical grid and ortho-image.
7
Review of Operations
7
Menninnie Dam project comprised 87 drill holes for
Deeper diamond drilling at Spare Rib suggests a
3,417m of aircore drilling to a maximum hole depth of
complex grade distribution and a possible off-hole shoot
103m.
lunge.
The drilling intersected significant lead, zinc and
Musgrave also intersected high-grade silver at the Frakes
silver mineralisation at the Spare Rib target (see ASX
prospect (see ASX announcement 5th February 2014).
announcement 28th January 2014).
The Frakes prospect is 5km south-west of the existing
Including:
• 20m @ 2.0% Pb from 67m in MDAC307
• 12m @ 1.6% Zn from 54m in MDAC306
Figure 8: Location of drill hole collars at Frakes prospect with
infill surface geochemistry showing significant surface silver
geochemical anomalism west and south east of drilling.
Menninnie Central and Viper deposits at Menninnie
Dam, and Spare Rib is 2km east of Viper. Follow-
up diamond drilling has identified complex geology
and has thus far failed to confirm continuity of the
mineralisation (Figure 8).
Significant intercepts from Frakes include:
• 10m @ 990g/t Ag, 0.3 g/t Au, 0.2% Cu, 0.4% Pb
and 0.3% Zn from 43m
o Including 2m @ 3,942g/t Ag, 1.0g/t Au, 0.9%
Cu, 0.7% Pb, 0.8% Zn from 44m.
Musgrave is continuing to link the observed geology
back into its developing epithermal model for the
project area with the aim of defining new high priority
targets for drill testing.
Additional detailed soil sampling over the Frakes target
to better define the silver anomalism returned highly
anomalous silver values including a peak value of
407.3ppb Ag at the western edge of the grid where the
anomalism remains open (see ASX announcement 23rd
May 2014). Follow-up drilling to test this target is being
planned.
8
Review of Operations
Pallatu Landscape
* 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
Deposit
Total Menninnie Central
Total Viper
Total Combined Menninnie Central
and Viper
Tonnes x103
Zn (%)
Pb (%)
Ag (g/t)
Pb+Zn (%)
5,240
2,460
7,700
3.5
2.3
3.1
2.7
2.4
2.6
28
24
27
6.1
4.8
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 industry
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
their information in the form and context in which it appears.
New Fraser Range Project
E28/2405 (Mamba Project)
Subsequent to the end of the period, Musgrave
Minerals was successful in a ballot for Fraser Range
tenement E28/2405 in Western Australia, now named
the Mamba Project. The Company was in the ballot
with 10 other applicants which went before the WA
Department of Mines and Petroleum’s Wardens Court
on 18th July 2014. The project covers approximately
180km2.
The new tenement application is in the same belt as
the world class Nova-Bollinger nickel-copper sulphide
discoveries of Sirius Resources NL (ASX: SIR) in south-
eastern WA. The tenement is along strike from Sirius’
Nova deposit and only 5km from the Trans Australian
rail line (Figure 9).
Musgrave’s technical team has commenced reviewing
previous exploration conducted on the tenement and
Figure 9: Location of Musgrave’s new Mamba Project in the
Fraser Range of Western Australia.
9
Review of Operations
9
has identified compelling targets within the regional
Subsequent to the end of the period Musgrave was
aeromagnetics that warrant follow-up exploration.
successful in the ERA ballot process to obtain priority
New Southern Gawler Projects
EL5403 (Toondulya Bluff Project), E2014/00092
(Corunna Project)
in the grant of the Corunna tenement in the Southern
Gawler craton area approximately 30km east of
Menninnie Dam (Figure 2). The tenement covers an area
of 260km2 and is prospective for silver-lead-zinc and
copper-gold mineralisation. Historical rock chip samples
on the project have been identified with up to 148g/t
During the period, Musgrave was granted the Toondulya
Ag and 0.5% Pb (see ASX announcement 25th August
Bluff tenement, in the southern Gawler Craton. The
tenement covers 390km2 and is prospective for high-
grade gold mineralisation.
2014).
Musgrave is continuing to assess and evaluate new
projects and opportunities to increase shareholder value.
Competent Person’s Statement
The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore
Reserves is based on information compiled and/or 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 2012 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.
Logging Pallatu Core
10
Review of Operations
Research and Development
Musgrave has established a strong relationship with
CSIRO, the Commonwealth Scientific and Industrial
Research Organisation, Australia’s national science
agency, with a research agreement focussing on new
understandings and data interpretations that can be
applied to our exploration in the Musgrave Province.
We have also instigated research into a new geological
model for our exploration in the Southern Gawler Craton
of South Australia. We look forward to continuing our
research partnerships in the coming year and the exciting
developments that they may deliver.
Forward Looking Statements
transactions involve risks, which include (among
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
others) the risk of adverse or unanticipated market,
financial or political developments.
good faith. Certain information in this document
To the fullest extent permitted by law, MGV, its
has been derived from third parties and though
officers, employees, related bodies corporate, agents
Musgrave Minerals has no reason to believe that it
and advisers do not make any representation or
is not accurate, reliable or complete, it has not been
warranty, express or implied, as to the currency,
independently audited or verified by MGV.
accuracy, reliability or completeness of any
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
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
own analysis in order to satisfy themselves as to
accepted.
the accuracy and completeness of the information,
statements and opinions contained.
Any forward-looking statements included in
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 presentation
are not intended to represent recommendations
of particular investments to particular persons.
Recipients should seek professional advice when
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
deciding if an investment is appropriate. All securities
forward-looking statements.
11
Review of Operations
11
Summary of Tenements
Tenement
Previous
Tenement
ID
Project
Locality
Status
Area
(km2)
MGV Interest
EL1996/260
EL1996/262
EL1996/336
EL1996/337
EL1996/338
EL1996/339
EL1996/340
EL1996/341
EL1996/342
EL1996/534
EL1997/040
EL1997/053
EL1997/055
EL1997/056
EL1997/057
EL1997/058
EL1997/059
EL1997/060
EL1997/061
EL1997/062
EL1997/063
EL1997/143
EL1997/144
EL1997/186
EL1997/297
EL1997/321
EL1997/468
EL1997/605
EL1999/035
EL2001/031
EL2008/154
EL4850
EL4851
EL4852
EL4853
EL5170
EL5171
EL5172
EL5173
EL5174
EL5317
EL5205
EL5039
EL4813
EL4285
EL4669
EL4865
EL5403
EL2014/00092
EL28/2405
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave PMC JV
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave PMC JV
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
Musgrave
EL3940
EL3941
EL3942
EL3954
EL3955
EL4047
Musgrave PMC JV
Musgrave-Menninnie Metals JV
Musgrave-Menninnie Metals JV
Musgrave-Menninnie Metals JV
Musgrave-Menninnie Metals JV
Musgrave-Menninnie Metals JV
Toondulya Bluff
Corunna
Mamba
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
SA
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
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
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
37
2385
2360
1342
1256
424
427
565
714
1906
12
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
0% (may earn up to 75%)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0% (may earn up to 75%)
100%
100%
100%
100%
100%
100%
100%
100%
1535
0% (may earn up to 75%)
101
312
208
988
862
380
260
180
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%
12
Summary of Tenements
Directors’ Report
Your directors present their report on Musgrave Minerals
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
Ltd and its subsidiary (the Group) for the financial year
Company’s audit committee.
ended 30 June 2014.
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
Other directorships:
Mithril Resources Ltd (Appointed 9 October 2006)
Phoenix Copper Ltd (Appointed 10 December 2012)
Avalon Minerals Ltd (Appointed 29 November 2013)
Former directorships:
Reproductive Health Science Ltd (Retired 2 April 2014)
Aguia Resources Ltd (Appointed 19 October 2010,
resigned 15 November 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 ten years in the
Musgrave region. Mr Waugh was a critical member
of the WMC Resources Ltd 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 in a number of companies including
Graham Ascough is a senior resources executive with
WMC Resources (WMC) and BHP Billiton Exploration
more than 24 years of industry experience evaluating
Ltd (BHP). Mr Waugh has extensive exploration and
mineral projects and resources in Australia and overseas.
mining experience in a range of commodities including
He has had broad industry involvement ranging from
nickel, copper, gold, uranium and PGMs. Mr Waugh
playing a leading role in setting the strategic direction
holds a Bachelor of Science degree majoring in geology
for significant country-wide exploration programs
from the University of Western Australia and a Master
to working directly with mining and exploration
of Science in Mineral Economics from Curtin University
companies.
and the Western Australian School of Mines. Mr Waugh
is a Fellow of the Australasian Institute of Mining and
Mr Ascough is a geophysicist by training and was the
Metallurgy and a Member of the Australian Institute of
Managing Director of ASX listed Mithril Resources
Geoscientists. Mr Waugh is a member of the Company’s
Ltd from October 2006 until June 2012. Prior to joining
audit committee.
Mithril in 2006, Mr Ascough was the Australian
Manager of Nickel and PGM Exploration at the major
Other directorships:
Canadian resources house, Falconbridge Ltd
None
(acquired by Xstrata Plc in 2006).
13
Directors’ Report
13
Mrs Kelly Ross
BBus, CPA, ACSA (Non-Executive Director), Director
since 26 May 2010
Judd (SA), a firm of Chartered Accountants. He is a
director of Mithril Resources Ltd, Papyrus Australia Ltd,
Lawson Gold Ltd, Petratherm Ltd, Reproductive Health
Science Ltd and was formerly a director of TW Holdings
Ltd (resigned 14 December 2012). Additionally he is
Kelly Ross is a qualified accountant holding a Bachelor
Company Secretary to Minotaur Exploration Ltd, Mithril
of Business (Accounting) and has the designation CPA
Resources Ltd and Petratherm Ltd. He holds other public
from the Australian Society of Certified Practicing
company secretarial positions and directorships with
Accountants. Mrs Ross is a Chartered Secretary
private companies and provides corporate advisory
with over 25 years’ experience in accounting and
services to a wide range of organisations.
administration in the mining industry and was the
Company Secretary of Independence Group NL for 10
years. Mrs Ross is currently a Non-Executive Director
of ASX listed Independence Group NL. Mrs Ross is the
chair of the Company’s audit committee.
Other directorships:
Independence Group NL (Appointed 16 September
2002)
Mr John Percival
Non-Executive Director, Director since 26 May 2010
Operating Results
The loss of the Group after providing for income tax
amounted to $4,859,861 (2013: $585,809).
Interests in the Shares and
Options of the Company and
Related Bodies Corporate
As at the date of this report, the interests of the
John Percival has been involved in investment and
directors in the shares and options of Musgrave
merchant banking for over 25 years including 15
Minerals Ltd were:
years as Investment Manager of Barclays Bank New
Zealand Ltd. 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
Graham Ascough
Percival is a member of the Company’s audit committee.
Other directorships:
Goldsearch Ltd (Appointed 11 October 1995)
Robert Waugh
John Percival
Kelly Ross
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
Company Secretary
Dividends Paid or Recommended
Mr Donald Stephens
BAcc, FCA (Company Secretary) – held office since 26
May 2010
No dividends were paid or declared since the start of
the financial year. No recommendation for payment of
dividends has been made.
Mr Stephens is a Chartered Accountant and corporate
adviser with over 25 years experience in the accounting
industry, including 14 years as a partner of HLB Mann
14
Directors’ Report
Principal Activities
The principal activities of the Group during the financial
year were:
Significant Changes in the State
of Affairs
No matters or circumstances have arisen since the end
• to carry out exploration of mineral tenements both
of the financial year which significantly affected or may
on a joint venture basis and by the Group in its own
significantly affect the operations of the Group, the
right;
results of those operations, or the state of affairs of the
• to continue to seek extensions of areas held and to
Group in future financial years.
seek out new areas with mineral potential; and
• to evaluate results achieved through surface
sampling, geophysical surveys and drilling activities
carried out during the year.
Risk Management
Future Developments
The current area of strategic focus for the Group is the
exploration for base metal, gold and silver exploration in
the following areas:
• the Southern Gawler Craton region of South
The Company takes a proactive approach to risk
Australia;
management. The Board is responsible for ensuring that
• Menninnie Dam, located in South Australia; and
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.
•
Implementation of Board approved operating plans
and budgets and Board monitoring of progress
against these budgets, including the establishment
and monitoring of performance indicators of both a
financial and non-financial nature.
• The Musgrave region of South Australia.
The Group is continuing to develop a pipeline of targets
for drill testing over the next 12 months. Due to the
inherent risks in mineral exploration, it is not possible
at this stage to predict the future results of these
operations, but the Company is well capitalised with
over $6 million in cash on hand to undertake these
activities.
Environmental Regulations
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
15
Directors’ Report
15
local conditions applicable, both in South Australia and
commonwealth environmental laws for the jurisdictions
elsewhere.
in which it operates.
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 exploration programs
should have little or no long-lasting impact on the
environment and the Group has formed a best practice
policy for the management of its exploration programs.
The Group properly monitors and adheres to this
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
Unissued Shares
Occupational Health, Safety and
Welfare
In running its business, Musgrave Minerals Ltd aims to
protect the health, safety and welfare of employees,
contractors and guests. In the reporting year the
Company experienced one medically treated 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.
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
2013
Net Issued/
(Exercised or
expired)
Balance at 30
June 2014
21/08/2010
17/02/2011
17/02/2011
09/05/2011
24/01/2012
06/03/2013
25/03/2013
11/03/2014
20/08/2015
17/02/2016
17/02/2016
08/05/2016
23/01/2017
05/03/2018
24/03/2018
10/03/2019
$0.25
$0.36
$0.50
$0.36
$0.25
$0.25
$0.25
$0.12
7,750,000
4,750,000
2,500,000
500,000
375,000
500,000
75,000
-
16,450,000
-
-
-
-
-
-
-
575,000
575,000
7,750,000
4,750,000
2,500,000
500,000
375,000
500,000
75,000
575,000
17,025,000
Share Options
New options issued
Shares issued as a result of exercise of
options
During the financial year a total of 575,000 unlisted
options were issued to employees as an incentive. The
options are exercisable at $0.12 and expire 10 March
2019. Refer to note 13 to the financial statements for
No shares were issued during the year as a result of the
further information.
exercise of options.
16
Directors’ Report
Indemnification and Insurance of
Directors and Officers
Company for a period of three years commencing
on 7 March 2011 (with the contract being indefinite
subsequent to this period, subject to a 6 month notice
period) with his current gross annual salary, inclusive
To the extent permitted by law, the Group has
of 9.5% superannuation guarantee, being $290,000.
indemnified (fully insured) each Director and the
Either party may terminate the employment contract
Company Secretary of the Group for a premium of
without cause by providing six (6) months written notice
$14,560 (including GST). The liabilities insured include
or by making payment in lieu of notice (in the case of
costs and expenses that may be incurred in defending
the Company), based on the annual salary component.
civil or criminal proceedings (that may be brought)
Termination payments are generally not payable on
against the officers in their capacity as officers of the
resignation or dismissal for serious misconduct. In
Group or a related body, and any other payments arising
the instance of serious misconduct the Company can
from liabilities incurred by the officers in connection
terminate employment at any time.
with such proceedings, other than where such liabilities
arise out of conduct involving a wilful breach of duty
by the officers or the improper use by the officers of
their position or of information to gain advantage for
themselves or someone else or to cause detriment to
the Group.
Remuneration Report - Audited
This report outlines the remuneration arrangements in
place for Directors and Executives of Musgrave Minerals
Ltd.
Remuneration philosophy
The Board is responsible for determining remuneration
policies applicable to Directors and senior executives
The employment conditions of the Exploration
Manager, Mr Ian Warland, are formalised in a contract
of employment. Mr Warland commenced employment
on 6 March 2013 and his current gross annual salary,
inclusive of superannuation guarantee, is $218,000.
Either party may terminate the employment contract
without cause by providing one (1) month’s written
notice or making payment in lieu of notice (in the case
of the Company) or forfeiture of one month’s salary
(in the case of Mr Warland), based on the annual
salary component. Termination payments are generally
not payable on resignation or dismissal for serious
misconduct. In the instance of serious misconduct the
Company can terminate employment at any time.
of the Group. The broad policy is to ensure that
The employment conditions of the Principal Geologist,
remuneration properly reflects the individuals’ duties
Dr Justin Gum, are formalised in a contract of
and responsibilities and that remuneration is competitive
employment. Dr Gum commenced employment on
in attracting, retaining and motivating people with
1 October 2010 and his current gross annual salary,
appropriate skills and experience. At the time of
inclusive of superannuation guarantee, is $171,675.
determining remuneration consideration is given by the
Either party may terminate the employment contract
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
without cause by providing one (1) month’s written
notice or making payment in lieu of notice (in the
case of the Company) or forfeiture of one month’s
salary (in the case of Dr Gum), based on the annual
salary component. Termination payments are generally
not payable on resignation or dismissal for serious
misconduct. In the instance of serious misconduct the
Company can terminate employment at any time.
17
Directors’ Report
17
Director remuneration arrangements
Key Management Personnel
The Board seeks to set aggregate remuneration at a
The following individuals are classified as key
level that provides the Company with the ability to
management personnel in accordance with AASB 124
attract and retain directors of the highest calibre, whilst
’Related Party Disclosures’:
incurring a cost that is acceptable to shareholders.
The Company’s constitution and the ASX listing
rules specify that the non-executive director (NED)
fee pool shall be determined from time to time by a
general meeting. The last determination disclosed in
the Company’s prospectus dated 28 February 2011
Graham Ascough, Non-Executive Chairman
Robert Waugh, Managing Director
Kelly Ross, Non-Executive Director
John Percival, Non-Executive Director
Donald Stephens, Company Secretary
approved an aggregate fee pool of $250,000 per year.
Justin Gum, Principal Geologist
Ian Warland, Exploration Manager
The Board will not seek any increase for the NED pool at
the 2014 AGM.
Table 1: Director remuneration for the year ended 30 June 2014 and 30 June 2013
Short-term employee
benefits
Post employment
benefits
Share based
payments
Salary & Fees
Superannuation
$
$
Options
Total
$
Graham Ascough*
Robert Waugh #
Kelly Ross *
John Percival
Total
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
65,000
65,000
256,414
266,055
45,000
45,000
49,163
46,012
415,577
422,067
-
-
23,718
23,945
4,163
4,050
-
3,038
27,881
31,033
-
-
-
-
-
-
-
-
-
-
65,000
65,000
280,132
290,000
49,163
49,050
49,163
49,050
443,458
453,100
# Note: Rob Waugh took leave without pay during the year ended 30 June 2014, hence his aggregate remuneration did not match his
gross annual salary noted in the note in relation to employment contracts.
18
Directors’ Report
Table 2: Remuneration of key management personnel for the year ended 30 June 2014 and 30 June 2013
Short-term employee
benefits
Post employment
benefits
Share based
payments
Salary & Fees
$
Superannuation $
Options
$
Total
$
Justin Gum
Ian Warland
Donald Stephens *
Total
2014
2013
2014
2013
2014
2013
2014
2013
157,500
156,875
201,180
51,571
49,050
49,050
407,730
257,496
14,569
14,119
18,500
4,641
-
-
33,069
18,760
5,220
-
10,440
21,550
-
-
15,660
21,550
177,289
170,994
230,120
77,762
49,050
49,050
456,459
297,806
* 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. 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.
Option holdings of Key Management Personnel
30-Jun-14
Balance at
beginning
of period
Granted as
remuneration
Options
Exercised
Net
change
other
Balance
at end
of
period
Vested at 30 June 2014
Expiry
Date
First Exercise
Date
Last Exercise
Date
Graham Ascough
750,000
Robert Waugh
John Percival
Kelly Ross
2,500,000
2,500,000
500,000
500,000
Donald Stephens
500,000
Justin Gum
Ian Warland
500,000
500,000
-
-
-
-
-
-
-
100,000*
-
200,000*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
100,000
10/03/19
11/03/14
10/03/19
500,000
05/03/18
06/03/13
05/03/18
200,000
10/03/19
11/03/14
10/03/19
19
Directors’ Report
19
* The above options issued to Key Management Personnel
were not performance based in nature. They have been issued
under the Employee Share Option Plan, refer to note 13 of
the financial statements for further details. The fair value per
option granted during the period was $0.052.
Shareholdings of Key Management Personnel
Balance
at 1
July 13
On
Exercise
of
Options
Net
Change
Other
Balance
30 June
14
Remuneration Report Ends
Directors’ Meetings
The number of meetings of Directors (including
meetings of committees of Directors) held during the
year and the number of meetings attended by each
Director were as follows:
Directors’ Meetings
Audit Committee
Director
Eligible
Attended
Eligible
Attended
Graham
Ascough
Robert
Waugh
John
Percival
Kelly Ross
8
8
8
8
8
8
7
8
2
2
2
2
2
2
2
2
Members acting on the audit committee are:
-
-
-
-
-
200,000
80,000
200,000
50,000
-
-
-
-
-
-
-
-
40,000
80,000
Kelly Ross (Chairperson)
-
-
Graham Ascough
Robert Waugh
John Percival
30 June
2014
Directors
Graham
Ascough
Robert
Waugh
John
Percival
200,000
80,000
200,000
Kelly Ross
50,000
Donald
Stephens
Justin
Gum
Ian
Warland
-
40,000
-
Use of Remuneration Consultants
During the financial year, there were no remuneration
Proceedings on Behalf of the Company
recommendations made in relation to key management
No person has applied for leave of Court to bring
personnel for the Company by any remuneration
proceedings on behalf of the Company or intervene in
consultants.
Voting and Comments Made at the
Company’s 2013 Annual General Meeting
Musgrave Minerals Ltd received more than 97% of
“yes” votes on its remuneration report for the 2013
financial year by proxy. The Company did not receive
any specific feedback at the AGM on its remuneration
report.
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.
Matters Subsequent to the Reporting Date
A number of irregular transactions have come to
the attention of the Board in preparing the financial
statements for the Group. The Board is presently
investigating these irregularities and has engaged
independent assistance to review the matter. At
the date of signing this report, the transactions are
considered immaterial to the Group.
20
Directors’ Report
Bryson Geochem Sampling
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 financial year. The
auditor’s independence declaration for the year ended
30 June 2014 as required under section 307C of the
Corporations Act 2001 has been received and can be
found on page 15.
Signed in accordance with a resolution of the Directors.
Mr Graham Ascough
Chairman
30 September 2014
21
Directors’ Report
21
Corporate Governance
Statement
responsibility for its operations. Day to day management
of the Company’s affairs, and the implementation of
the corporate strategy and policy initiatives, is formerly
delegated by the Board to the Managing Director.
Introduction
The Board of Directors has adopted a corporate
The Company has established functions reserved to the
Board and functions delegated to senior executives.
framework for the Company which is underpinned by
The functions reserved to the Board include:
the ASX Corporate Governance Council’s Corporate
• Approving the strategic direction and related
Governance Principles and Recommendations with
objectives of the Company and monitoring
2010 Amendments (2nd Edition) (Recommendations)
management performance in the achievement of
applicable to ASX-listed entities.
these objectives;
This Section addresses each of the Corporate
performance of the Company.
Governance Principles and, where the Company has
• Reviewing annually the performance of the
• Adopting budgets and monitoring the financial
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 the Company are
located on the Company’s website.
Managing 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.
The Company notes the recent amendments to the ASX
• Overseeing the implementation and management
Corporate Governance Principles and Recommendations
of effective safety and environmental performance
(3rd Edition), issued 27 March 2014. These changes are
systems.
due to take effect for a listed entity’s first full financial
year commencing on or after 1 July 2014 and include
the addition of a recommendation to disclose the
details of their internal audit function (Recommendation
7.3) and a move to greater disclosure in relation to
economic, environmental and social sustainability risks
(Recommendation 7.4). The Company will assess the
impact of these changes during the 2015 financial year
• Ensuring all major business risks are identified and
effectively managed.
• Ensuring that the Group meets its legal and statutory
obligations.
• Overseeing of the Company, including its control and
accountability systems.
The functions delegated to senior executives include:
and disclose its compliance with these amended rules in
•
Implementing the Company’s vision, values and
its 2015 Annual Report.
business 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.
• Sharing knowledge and experience to enhance
success.
• Facilitating and monitoring the potential and career
development of the Company’s people resources.
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 of the Company and has overall
22
Corporate Governance Statement
•
Identifying and mitigating areas of risk within the
Mr Graham Ascough Chair
business.
• Managing effectively the internal and external
stakeholder relationships and engagement strategies.
• Determining the senior executives’ position on
strategic and operational issues.
For the purposes of the proper performance of their
duties, the Directors are entitled to seek independent
professional advice at the Company’s expense, unless
the Board determines otherwise. The Board schedules
meetings on a regular basis and other meetings as and
when required.
The Company has not formally established the functions
reserved to the Board and those delegated to senior
executives in accordance with recommendations 1.1 and
1.3 of the ASX Corporate Governance Council. Given
the size of the Company, the Board has not considered
it necessary to formulate a Board charter.
Recommendation 1.2 - Performance
evaluation of senior executives
The Managing Director and senior management
participate in annual performance reviews. The
performance of staff is measured against the objectives
and performance indicators established by the Board. A
performance evaluation for senior executives has taken
place during the reporting period in accordance with the
Company’s documented process. The performance of
senior executives is reviewed by comparing performance
against agreed measures, examining the effectiveness
and results of their contribution and identifying
areas for potential improvement. In accordance with
recommendations 1.2 and 1.3 of the ASX Corporate
Governance Council the Company has not disclosed a
description of the performance evaluation process in
addition 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 Robert Waugh Managing Director
Mrs Kelly Ross Non-Executive Director
Mr John Percival Non-Executive Director
The Board considers this to be an appropriate
composition given the size and development of the
Group at the present time. The names of directors
including details of their qualification and experience are
set out in the Directors’ Report of this Financial Report.
Independence
The Board is conscious of the need for independence
and ensures that where a conflict of interest may arise,
the relevant 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 transactions or potential
transactions do not receive Board papers related to
those transactions or potential transactions, do not
participate in any part of a Directors’ meeting which
considers those transactions or potential transactions,
are not involved in the decision making process in
respect of those transactions or potential transactions,
and are asked not to discuss those transactions or
potential transactions with other Directors.
Recommendation 2.1 - A majority of the
Board should be independent Directors
The Board is conscious of the need for independence
and ensures that where a conflict of interest may arise,
the relevant 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 transactions or potential
transactions do not receive Board papers related to
those transactions or potential transactions, do not
participate in any part of a Directors’ meeting which
considers those transactions or potential transactions,
are not involved in the decision making process in
respect of those transactions or potential transactions,
and are asked not to discuss those transactions or
potential transactions with other Directors. Each
Director is required by the Company to declare on an
23
Corporate Governance Statement
23
annual basis the details of any financial or other relevant
accordance with recommendations 2.4 and 2.6 of the
interests that they may have in the Company.
ASX Corporate Governance Council.
The Board has determined that its three non-executive
Directors are not independent as defined under
Recommendation 2.1. The Company therefore has not
complied with Recommendation 2.1 in that a majority
of Directors are not independent.
The Board considers its current structure to be an
appropriate composition of the required skills and
experience, given the experience of the individual
Directors and the size and development of the Company
at the present time. Each individual member of the
Board is satisfied that whilst the Company may not
comply with Recommendation 2.1, all Directors bring an
independent judgment to bear on Board decisions.
Recommendation 2.2 - The chair should be
an independent Director
The 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 to +be exercised by the same individual. The
Company has therefore complied with Recommendation
2.3.
Recommendation 2.4 - Nomination
Committee
Recommendation 2.5 - Process for
evaluating the performance of the Board
The Board continues to review performance against
appropriate measures and identify ways to improve
performance. The Board has not formally disclosed the
review process in accordance with recommendations
2.5 and 2.6 of the ASX Corporate Governance Council.
The Board takes ultimate responsibility for these matters
and does not consider the disclosure of the performance
evaluation necessary at this stage.
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.
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 Board has not established a Nomination and
the Company while engaged in work for the Company
Remuneration Committee in accordance with
(Representatives).
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
This policy provides that it is the responsibility of each
Representative to ensure they do not breach the insider
trading prohibition in the Corporations Act. Breaches of
the insider trading prohibition will result in disciplinary
action being taken by the Company.
24
Corporate Governance Statement
Representatives must also obtain written consent from
applying to the Board and all employees in accordance
the Chairman (or, in the case of the Chairman, from the
with recommendations 3.1 and 3.5 of the Corporate
Board) prior to trading in the Company’s securities.
Governance Council.
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:
Recommendation 3.2 and
Recommendation 3.3 - Diversity Policy
The Company continues to strive towards achieving
objectives established towards increasing gender
diversity.
1. the period between the end of the March, June,
The Company assesses all staff and Board appointments
September and December quarters and the release
on their merits with consideration to diversity a driver
of the Company’s quarterly report to ASX for so
in decision making. The Company has developed and
long as the Company is required by the Listing Rules
disclosed a formal diversity policy and therefore has
to lodge quarterly reports; and
2. 24 hours after the following events:
(a) Any major announcements;
(b) The release of the Company’s quarterly, half
yearly and annual financial results to the ASX;
and
(c) The Annual General Meeting and all other
General Meetings.
In exceptional circumstances the Board may waive
the requirements of the Share Trading Policy to allow
complied with the recommendations 3.2 and 3.3 of the
Corporate Governance Council.
Recommendation 3.4 and 3.5 - Reporting
in Annual Report
At the date of this Annual Report, the Company
employs 5 staff members (excluding the Non-
Executive Directors and the Managing Director), of
which 1 is female. The Board of Directors consists
of 3 male directors and 1 female director. The
Company has disclosed the information suggested in
Representatives to trade in the shares of the Company,
Recommendation 3.5 in this Annual Report.
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.
Recommendation 3.1 - Code of Conduct
Principle 4 - Safeguard integrity
in financial reporting
The Company has structured financial management
to independently verify and safeguard the integrity of
its financial reporting. The structure established by the
The Board recognises the need for Directors and
Company includes:
employees to observe the highest standards of
behaviour and business ethics when engaging in
corporate activity. The Company maintains a reputation
for integrity and is highly committed to demonstrating
appropriate corporate practices and decision 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
• 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.
25
Corporate Governance Statement
25
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
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 Audit Committee is chaired by Mrs Kelly Ross,
the Company’s auditor Grant Thornton has complied
who is not an independent Director.
with the Corporations Act provisions requiring audit and
review partner rotation every 5 years.
Although none of the members of the Audit Committee
are independent, the Board has nevertheless determined
that the composition of the Audit Committee represents
the only practical mix of Directors that have an
appropriate range of qualifications and expertise and
that can understand and competently deal with current
and emerging relevant business issues.
Recommendation 4.3 - Audit Committee
Charter
Principle 5 - Make timely and
balanced disclosure
The Company has a policy that all shareholders
and investors have equal access to the Company’s
information. The Board ensures that all price sensitive
information is disclosed to ASX in accordance with the
continuous disclosure requirements of the Corporations
Act and Listing Rules. The Company Secretary has
The Audit Committee’s primary responsibilities are to:
primary responsibility for all communications with ASX
• oversee the existence and maintenance of internal
controls and accounting systems;
• oversee the management of risk within the
Company;
• oversee the financial reporting process;
• review the annual and half-year financial reports and
recommend them for approval by the Board;
• nominate external auditors;
• review the performance of the external auditors and
existing audit arrangements; and
• ensure compliance with laws, regulations and other
statutory or professional requirements, and the
Company’s governance policies.
The Company has adopted an Audit Committee Charter
which sets out its role, responsibilities and membership
requirements and reflects the matters set out in the
commentary and guidance for Recommendation 4.3.
and is accountable to the Board through the Chair.
Recommendation 5.1 - ASX Listing Rule
Disclosure Requirements
The Company has established a Continuous Disclosure
Policy which sets out the key obligations of Directors
and employees in relation to continuous disclosure as
well as the Company’s obligations under the Listing
Rules and Corporations Act. The policy also provides
procedures for internal notification and external
disclosures, as well as procedures for promoting
understanding of compliance with disclosure
requirements.
The policy reflects the matters set out in the
commentary and guidance for Recommendation 5.1.
26
Corporate Governance Statement
Recommendation 5.2 - Continuous
Disclosure Policy
Recommendation 6.2 - Availability of
Shareholder Communications Policy
The disclosures required by Recommendation 5.2 are
The disclosures required by Recommendation 6.2 have
included in this annual report.
been included in this annual report.
A copy of the Company’s Continuous Disclosure Policy is
available on the Company’s website.
A copy of the Company’s Shareholder Communications
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;
• annual and other general meetings convened for
Shareholder review and approval of Board proposals;
• continuous disclosure of material changes to ASX;
and
• the Company’s website where all ASX
announcements, notices and financial reports are
published as soon as possible after release to ASX.
The auditor is required to attend the annual general
meeting of Shareholders. The Chairman will permit
Shareholders to ask questions about the conduct of
the audit and the preparation and content of the audit
report.
The Company has adopted a Shareholder
Communications Policy for:
• promoting effective communication with
shareholders; and
• encouraging shareholder participation at annual and
other general meetings.
Principle 7 - Recognise and
manage risk
The Board has identified the significant areas of
potential business and legal risk of the Company.
In addition the Board has developed the culture,
processes and structures of the Company to encourage
a framework of risk management which identifies,
monitors and manages the material risks facing the
organisation.
Recommendation 7.1 - Risk Management
Policies
The identification, monitoring and, where appropriate,
the reduction of significant risk to the Company is the
responsibility of the Managing Director and the Board.
The Board has also established the Audit Committee
which addresses the risks of the Company.
The Board reviews and monitors the parameters under
which such risks will be managed. Management
accounts are prepared and reviewed with the Managing
Director at subsequent Board meetings. Budgets are
prepared and compared against actual results.
Management and the Board monitor the Company’s
material business risks and reports are considered at
regular meetings.
The Company has publicly disclosed a risk management
policy for the oversight and management of material
business risks in accordance with recommendations 7.1
and 7.4 of the Corporate Governance Council.
27
Corporate Governance Statement
27
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.
The Board requires management to report on the policy
as to whether those risks are being managed effectively.
Recommendation 7.3 - Statement from the
Managing Director and Company Secretary
The Managing Director and the Company Secretary
have stated in writing to the Board that the Company’s
financial reports present a true and fair view, in all
material respects, of the Company’s financial condition
and operational results are in accordance with relevant
accounting standards. Included in this statement is a
confirmation that the Company’s risk management and
internal controls are operating efficiently and effectively.
Recommendation 7.4 - Additional
Information concerning Risk Management
The Company has included the disclosures required by
Recommendation 7.4 in this annual report.
The Company has publicly disclosed a risk management
policy outlining the oversight and management
of material business risks in accordance with
recommendation 7.1 and 7.4 of the Corporate
Governance Council.
Principle 8 - Remunerate fairly
and responsibly
Recommendation 8.1 - Remuneration
Committee
The Board has not established a Remuneration
Committee or disclosed a Committee Charter on the
Company’s website and therefore has not complied
with recommendations 8.1 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.
28
Corporate Governance Statement
29
Auditor’s Independence Declaration
29
Consolidated Statement of Profit or Loss and
Comprehensive Income
For the year ended 30 June 2014
Revenue
Impairment of exploration and evaluation assets
Employee benefits expense
Depreciation expense
Finance expenses
Other expenses
Consolidated Group
Year ended
30 June 2014
30 June 2013
$
$
308,551
581,613
(4,373,984)
(354,939)
(561,869)
(464,272)
(66,923)
(1,727)
(89,049)
(8,271)
(652,517)
(543,517)
Note
5 (a)
5 (d)
5(b)
5 (c)
5 (e)
Loss before income tax expense
(5,348,469)
(878,435)
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
6
7
7
488,608
292,626
(4,859,861)
(585,809)
(4,859,861)
(585,809)
-
-
(4,859,861)
(585,809)
Cents
(4.02)
(4.02)
Cents
(0.48)
(0.48)
This statement should be read in conjunction with the notes to the financial statements
30
Statement of Comprehensive Income
Consolidated Statement of Financial Position
As at 30 June 2014
Consolidated Group
30 June 2014
30 June 2013
Note
$
$
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
6,139,459
89,786
25,498
6,254,743
135,723
15,748,622
15,884,345
22,139,088
219,690
-
151,076
370,766
-
30,913
30,913
401,679
9,565,706
123,681
54,160
9,743,547
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
21,737,409
26,567,255
26,718,899
2,973,818
(7,955,308)
21,737,409
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
31
Statement of Financial Position
31
Consolidated Statement of Changes in Equity
For the year ended 30 June 2014
Consolidated Group
Issued Capital
Ordinary
Share Option
Reserve
Note
$
$
Accumulated
Losses
$
Total
Equity
$
Balance at 1 July 2012
Total profit or loss
Other comprehensive income for the year
Share based payments
13
Transfer from share option reserve due to lapse of
options under employee share option plan
26,718,899
2,944,985
(2,534,628)
27,129,256
(585,809)
(585,809)
-
-
-
-
23,808
-
-
(10,710)
10,710
-
23,808
-
Balance at 30 June 2013
26,718,899
2,958,083
(3,109,727)
26,567,255
Balance at 1 July 2013
Total profit or loss
Other comprehensive income for the year
Share based payments
13
Transfer from share option reserve due to lapse of
options under employee share option plan
26,718,899
2,958,083
(3,109,727)
26,567,255
-
-
-
-
-
-
30,015
(4,859,861)
(4,859,861)
-
-
-
30,015
-
(14,280)
14,280
Balance at 30 June 2014
26,718,899
2,973,818
(7,955,308)
21,737,409
This statement should be read in conjunction with the notes to the financial statements
32
Statement of Changes in Equity
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Consolidated Group
Note
Year ended 30 Jun 2014
Year ended 30 Jun 2013
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
(1,107,086)
(1,073,892)
Interest received
Finance costs
Receipt of Research and Development 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
Repayment of borrowings
NET CASH USED IN FINANCING ACTIVITIES
Net decrease in cash and cash equivalents
Cash at the beginning of the year
306,105
(1,274)
488,608
(313,647)
(33,318)
(3,032,829)
(3,066,147)
-
(46,453)
(46,453)
(3,426,247)
9,565,706
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
CASH AT THE END OF THE YEAR
8
6,139,459
9,565,706
This statement should be read in conjunction with the notes to the financial statements
33
Statement of Cash Flows
33
Notes to the Financial
Statements
For the year ended 30 June 2014
1. Nature of operations
Musgrave Minerals Ltd principal activities are to carry
out exploration of mineral tenements, to continue to
seek extensions of areas held and to seek out new areas
with mineral potential and to evaluate results achieved
through surface sampling, geophysical surveys and
drilling activities.
3. Summary of accounting
policies
a. Overall considerations
The significant accounting policies that have been used
in the preparation of these financial statements are
summarised below.
The financial statements have been prepared using the
measurement bases specified by Australian Accounting
Standards for each type of asset, liability, income
and expense. The measurement bases are more fully
described in the accounting policies below.
2. General information and
statement of compliance
The general purpose financial statements of the
Group have been prepared in accordance with the
b. Principle of Consolidation
The consolidated financial statements include the
financial position and performance of controlled entities
from the date on which control is obtained until the
requirements of the Corporations Act 2001, Australian
date that control is lost.
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
Intragroup assets, liabilities, equity, income, expenses
and cashflows relating to transactions between entities
in the consolidated entity have been eliminated in full
for the purpose of these financial statements.
the purpose of preparing the financial statements.
Appropriate adjustments have been made to a
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
2014 (including comparatives) were approved and
authorised for issue by the Board of Directors on 30
September 2014.
controlled entity’s financial position, performance and
cash flows where the accounting policies used by
that entity were different from those adopted by the
consolidated entity. All controlled entities have a June
financial year end.
A list of controlled entities is contained in Note 24 to
the financial statements.
Subsidiaries
Subsidiaries are all entities (including structured
entities) over which the parent has control. Control is
established when the parent is exposed to, or has rights
to variable returns from its involvement with the entity
and has the ability to affect those returns through its
power to direct the relevant activities of the entity.
34
Notes to the Financial Statements
c. Business combinations
Business combinations occur where an acquirer
obtains control over one or more businesses. A
business combination is accounted for by applying the
Deferred income tax expense reflects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
acquisition method, unless it is a combination involving
Current and deferred income tax expense (income) is
entities or businesses under common control. The
charged or credited outside profit or loss when the tax
business combination will be accounted for from the
relates to items that are recognised outside profit or
date that control is attained, whereby the fair value of
loss.
the identifiable assets acquired and liabilities (including
contingent liabilities) assumed is recognised (subject to
certain limited exemptions).
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
When measuring the consideration transferred in the
taxable profit or loss.
business combination, any asset or liability resulting
from a contingent consideration arrangement is also
included. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset
or liability is remeasured in each reporting period to
fair value, recognising any change to fair value in profit
or loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to business
combinations are recognised as expenses in profit or
loss when incurred.
The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain
purchase.
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 tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled and
their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability.
Deferred tax assets relating to temporary differences
and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be
available against which the benefits of the deferred tax
asset can be utilised.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates, and
joint ventures, deferred tax assets and liabilities are
not recognised where the timing of the reversal of the
temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where
a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will
occur. Deferred tax assets and liabilities are offset where:
(a) a legally enforceable right of set-off exists; and
35
Notes to the Financial Statements
35
(b) the deferred tax assets and liabilities relate to
The cost of fixed assets constructed within the
income taxes levied by the same taxation authority
consolidated Group includes the cost of materials, direct
on either the same taxable entity or different taxable
labour, borrowing costs and an appropriate proportion
entities where it is intended that net settlement
of fixed and variable overheads.
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.
Tax consolidation
Musgrave Minerals Ltd and its wholly owned
Australian controlled entity decided to implement the
tax consolidation legislation as at 1 July 2013. The
Australian Taxation Office has been notified of this
decision.
e. Property, Plant and Equipment
Each class of property, plant and equipment is carried
at cost 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
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as
appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged
to the statement of profit or loss during the financial
period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including
buildings and capitalised lease assets, but excluding
freehold land, is depreciated on a straight-line or
diminishing value basis over the asset’s useful life to
the Group commencing from the time the asset is held
ready for use. Leasehold improvements are depreciated
over the shorter of either the unexpired period of the
lease or the estimated useful lives of the improvements.
The useful life for each class of depreciable assets are:
Class of Fixed Asset
Useful life
2 - 10 years
6 - 8 years
event the carrying amount of plant and equipment is
Plant and equipment
greater than the estimated recoverable amount, the
Motor Vehicles
carrying amount is written down immediately to the
estimated recoverable amount and impairment losses
are recognised either in profit or loss or as a revaluation
decrease if the impairment losses relate to a revalued
asset. A formal assessment of recoverable amount is
made when impairment indicators are present.
The carrying amount of plant and equipment is
reviewed annually by directors to ensure it is not in
excess of the recoverable amount from these assets.
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
The recoverable amount is assessed on the basis of
Gains and losses on disposals are determined by
the expected net cash flows that will be received from
comparing proceeds with the carrying amount. These
the asset’s employment and subsequent disposal. The
gains and losses are included in the statement of profit
expected net cash flows have been discounted to their
or loss.
present values in determining recoverable amounts.
36
Notes to the Financial Statements
f. Exploration and Development
g. Leases
Expenditure
Exploration, evaluation and development expenditures
incurred are capitalised in respect of each identifiable
area of interest. These costs are only capitalised to the
extent that they are expected to be recovered through
the successful development of the area or where
activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of
economically recoverable reserves.
Accumulated costs in relation to an abandoned area are
written off in full against profit in the year in which the
decision to abandon the area is made.
When production commences, the accumulated costs
for the relevant area of interest are amortised over the
Leases of fixed assets where substantially all the risks
and benefits incidental to the ownership of the asset,
but not the legal ownership that is transferred to the
Group, are classified as finance leases. Leased assets are
depreciated on a straight-line basis over the shorter of
their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially
all the risks and benefits remain with the lessor, are
recognised as expenses in the periods in which they are
incurred.
Lease incentives under operating leases are recognised
as a liability and amortised on a straight-line basis over
the lease term.
life of the area according to the rate of depletion of the
Finance leases are capitalised by recognising an asset
economically recoverable reserves.
A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to
capitalise costs in relation to that area of interest.
Costs of site restoration are provided over the life of
the project from when exploration commences and are
included in the costs of that stage. Site restoration costs
include the dismantling and removal of mining plant,
equipment and building structures, waste removal,
and rehabilitation of the site in accordance with local
laws and regulations and clauses of the permits. Such
costs have been determined using estimates of future
costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are
accounted on a prospective basis. In determining
the costs of site restoration, there is uncertainty
regarding the nature and extent of the restoration
due to community expectations and future legislation.
Accordingly the costs have been determined on the
basis that the restoration will be completed within one
year of abandoning the site.
and a liability at the lower of the amounts equal to the
fair value of the leased property or the present value of
the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between
the reduction of the lease liability and the lease interest
expense for the period.
h.
Impairment testing of non-current
assets
For impairment assessment purposes, assets are
grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a
result, some assets are tested individually for impairment
and some are tested at cash-generating unit level.
All assets or cash-generating units are tested
for impairment whenever events or changes in
circumstances indicate that the carrying amount may
not be recoverable.
An impairment loss is recognised for the amount by
which the asset’s or cash-generating unit’s carrying
amount exceeds its recoverable amount, which is the
higher of fair value less costs to sell and value-in-use.
To determine the value-in-use, management estimates
37
Notes to the Financial Statements
37
expected future cash flows from each cash-generating
amortisation of the difference between that initial
unit and determines a suitable interest rate in order
amount and the maturity amount calculated using the
to calculate the present value of those cash flows.
effective interest method.
The data used for impairment testing procedures are
directly linked to the Group’s latest approved budget,
adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount
factors are determined individually for each cash-
generating unit and reflect management’s assessment of
respective risk profiles, such as market and asset-specific
risks factors.
All assets are subsequently reassessed for indications
that an impairment loss previously recognised may no
longer exist. An impairment charge is reversed if the
cash-generating unit’s recoverable amount exceeds its
carrying amount.
i.
Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised
when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is
equivalent to the date that the Group commits itself to
either the purchase or sale of the asset (ie trade date
accounting is adopted).
Financial instruments are initially measured at fair value
plus transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which
case transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair
value, amortised cost using the effective interest rate
method, or cost.
Fair value is determined based on current bid prices for
all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities,
including recent arm’s length transactions, reference to
similar instruments and option pricing models.
The effective interest method is used to allocate interest
income or interest expense over the relevant period and
is equivalent to the rate that discounts estimated future
cash payments or receipts (including fees, transaction
costs and other premiums or discounts) through the
expected life (or when this cannot be reliably predicted,
the contractual term) of the financial instrument to the
net carrying amount of the financial asset or financial
liability. Revisions to expected future net cash flows will
necessitate an adjustment to the carrying value with a
consequential recognition of an income or expense item
in profit or loss.
The Group does not designate any interests in
subsidiaries, associates or joint venture entities as being
subject to the requirements of Accounting Standards
specifically applicable to 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
Amortised cost is the amount at which the financial
and trade and other payables
asset or financial liability is measured at initial
recognition less principal repayments and any reduction
for impairment, and adjusted for any cumulative
Financial liabilities are measured at amortised cost using
the effective interest method.
38
Notes to the Financial Statements
All interest-related charges and, if applicable, changes in
the fair value of the instruments issued and amortised
an instrument’s fair value that are reported in profit or
over the vesting periods. Share-based payments to
loss are included within finance costs or finance income.
non-employees are measured at the fair value of goods
j.
Joint arrangements
A joint venture is an arrangement that the Group
controls jointly with one or more other investors,
and over which the Group has rights to a share of
the arrangement’s net assets rather than direct rights
to underlying assets and obligations for underlying
liabilities. A joint arrangement in which the Group has
direct rights to underlying assets and obligations for
underlying liabilities is classified as a joint operation.
Investments in joint ventures are accounted for using
the equity method. Interests in joint operations are
accounted for by recognising the Group’s assets
(including its share of any assets held jointly), its
liabilities (including its share of any liabilities incurred
jointly), its revenue from the sale of its share of the
output arising from the joint operation, its share of
the revenue from the sale of the output by the joint
operation and its expenses (including its share of any
expenses incurred jointly). Any goodwill or fair value
or services received or the fair value of the equity
instruments issued, if it is determined the fair value
of the goods or services cannot be reliably measured,
and are recorded at the date the goods or services
are received. The corresponding amount is recorded
to the 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.
adjustment attributable to the Group’s share in the
Provisions are measured using the best estimate of the
associate or joint venture is not recognised separately
amounts required to settle the obligation at the end of
and is included in the amount recognised as investment.
the reporting period.
The carrying amount of the investment in joint ventures
is increased or decreased to recognise the Group’s share
of the profit or loss and other comprehensive income of
the joint venture, adjusted where necessary to ensure
consistency with the accounting policies of the Group.
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 short-term borrowings in current
Unrealised gains and losses on transactions between
liabilities in the statement of financial position.
the Group and its joint ventures are eliminated to the
extent of the Group’s interest in those entities. Where
unrealised losses are eliminated, the underlying asset is
also tested for impairment.
k. Equity-settled compensation
n. Revenue and Other Income
Revenue is measured at the fair value of the
consideration received or receivable after taking into
account any trade discounts and volume rebates
allowed. When the inflow of consideration is deferred, it
The Group operates an employee share option plan.
is treated as the provision of financing and is discounted
Share-based payments to employees are measured at
at a rate of interest that is generally accepted in
39
Notes to the Financial Statements
39
the market for similar arrangements. The difference
between the amount initially recognised and the
amount ultimately received is interest revenue. Revenue
from the sale of goods is recognised at the point of
delivery as this corresponds to the transfer of significant
risks and rewards of ownership of the goods and the
cessation of all involvement in those goods.
q. Government Grants
Government grants are recognised at fair value where
there is reasonable assurance that the grant will be
received and all grant conditions will be met. Grants
relating to expense items are recognised as income
over the periods necessary to match the grant to the
costs they are compensating. Grants relating to assets
are credited to deferred income at fair value and are
Interest revenue is recognised using the effective interest
credited to income over the expected useful life of the
rate method.
asset on a straight-line basis.
All revenue is stated net of the amount of goods and
r. Contributed equity
services tax (GST).
o. Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of assets that necessarily
take a substantial period of time to prepare for their
intended use or sale are added to the cost of those
assets, until such time as the assets are substantially
ready for their intended use or sale.
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
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
All other borrowing costs are recognised in profit or loss
ordinary shares, adjusted for any bonus element.
in the period in which they are incurred.
p. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Taxation
Office (ATO).
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the weighted average number of shares
assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
t. Comparative Figures
Receivables and payables are stated inclusive of the
When required by Accounting Standards, comparative
amount of GST receivable or payable. The net amount
figures have been adjusted to conform to changes in
of GST recoverable from, or payable to, the ATO is
presentation for the current financial year.
included with other receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
payable to, the ATO are presented as operating cash
flows included in receipts from customers or payments
to suppliers.
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
40
Notes to the Financial Statements
economic data, obtained both externally and within the
AASB 10 Consolidated Financial Statements is effective
Group.
Key estimates
(i) Impairment
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
for annual reporting periods beginning on or after 1
January 2013 and therefore the Group has applied it
for the first time in these financial statements. AASB
10 includes a new definition of control, including
additional guidance for specific situations such as
control in a principal / agent situation and when holding
less than majority voting rights may give control. AASB
10 supersedes the previous requirements of AASB 127
Consolidated and Separate Financial Statements and
Interpretation 112 Consolidation - Special Purpose
Entities and resulted in consequential amendments to a
value-in-use calculations which incorporate various
number of other standards.
key assumptions.
(ii) Exploration and evaluation expenditure
The Group has reviewed its investment in other entities
to determine whether any changes were required to the
The Group capitalises expenditure relating to
consolidated entity under AASB 10. The composition of
exploration and evaluation where it is considered
the consolidated entity is the same under AASB 10 and
likely to be recoverable or where the activities have
therefore there is no change to the reported financial
not reached a stage that permits a reasonable
position and performance.
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 $15,748,622 (2013: $17,055,933).
v. New and amended standards adopted
by the Group
During the current year, the following standards became
mandatory and have been adopted retrospectively by
the Group:
AASB 11 Joint Arrangements replaces AASB 131
Interests in Joint Ventures and Interpretation 112 Jointly
Controlled Entities - Non monetary Contributions by
Venturers as well as consequential amendments to a
number of other standards. AASB 11 uses the revised
definition of control from AASB 10 and once joint
control is determined, then classifies joint arrangements
as either joint ventures or joint operations. Joint
ventures are accounted for using the equity method,
proportionate consolidation is not permitted under
AASB 11. Joint operations are accounted for by
incorporating the venturer’s share of assets, liabilities,
income and expenses into the financial statements.
There were no changes to the accounting for joint
• AASB 10 Consolidated Financial Statements
arrangements under AASB 11.
• AASB 11 Joint Arrangements
• AASB 12 Disclosure of Interests in Other Entities
• AASB 13 Fair Value Measurement
• AASB 119 Employee Benefits
The accounting policies have been updated to reflect
changes in the recognition and measurement of assets,
liabilities, income and expenses and the impact of
adoption of these standards is discussed below.
AASB 12 Disclosure of Interests in Other Entities
includes all disclosures relating to an entity’s interest
in associates, joint arrangements, subsidiaries and
structured entities. On adoption of AASB 12, additional
disclosures have been included in the financial
statements in relation to investments held.
AASB 13 Fair Value Measurement does not change
what and when assets or liabilities are recorded at fair
41
Notes to the Financial Statements
41
value. It provides guidance on how to measure assets
Year ended 30 June 2015:
and liabilities at fair value, including the concept of
highest and best use for non financial assets. AASB
13 has not changed the fair value measurement basis
for any assets or liabilities held at fair value, however
additional disclosures on the methodology and fair
value hierarchy have been included in the financial
statements.
AASB 1031: Materiality
AASB 2013-4, Novation of Derivatives and
Continuation of Hedge Accounting
AASB 2013-5, Investment Entities
AASB 2013-9, Conceptual Framework, Materiality
and Financial Instruments
AASB 119 Employee benefits changes the basis for
determining the income or expense relating to defined
AASB 2014-1, Amendments to Australian
Accounting Standards
benefit plans and introduces revised definitions for short
These standards make changes to a number of existing
term employee benefits and termination benefits.
Australian Accounting Standards and are not expected
The Group reviewed the annual leave liability to
determine the level of annual leave which is expected
to be paid more than 12 months after the end of the
reporting period. Whilst this has been considered to
be a long term employee benefits for the purpose of
measuring the leave under AASB 119, the effect of
discounting was not considered to be material and
therefore has not been performed.
w. New Accounting Standards and
Interpretations
The accounting standards that have not been early
adopted for the year ended 30 June 2014, but will be
applicable to the group in future reporting periods,
are detailed below. Apart from these standards, other
accounting standards that will be applicable in future
periods have been reviewed, however they have been
considered to be insignificant to the group.
At the date of authorisation of these financial
statements, certain new standards, amendments
and interpretations to existing standards have been
published but are not yet effective, and have not
been adopted early by the group. Management
anticipates that all of the relevant pronouncements
will be adopted in the group’s accounting policies for
the first period beginning after the effective date of
the pronouncement. Information on new standards,
amendments and interpretations that are expected
to be relevant to the group’s financial statements is
provided opposite.
to result in a material change to the manner in which
the Group’s financial result is determined or upon the
extent of disclosures included in future financial reports.
Year ended 30 June 2017: Amendments to AASB
116 and AASB 138, Clarification of acceptable
methods of depreciation and amortisation
This standard will clarify that revenue based methods
to calculate depreciation and amortisation are not
considered appropriate. This will not result in a change
to the manner in which the Group’s financial result is
determined as no such method is currently in use.
Year ended 30 June 2018: IFRS 15: Revenue from
Contracts with Customers
This standard will change the timing and in some cases
the quantum of revenue received from customers.
IFRS 15 requires an entity to recognise revenue by
identifying for each customer contract, the performance
obligations in the contract and the transaction price.
The transaction price is then allocated against the
performance obligations in the contract with revenue
recognised when (or as) the entity satisfies each
performance obligation. Management are currently
assessing the impact of the new standard but it is not
expected to have a material impact on the financial
performance or financial position of the consolidated
entity.
42
Notes to the Financial Statements
Year ended 30 June 2019: AASB 9: Financial
Instruments
This standard introduces new requirements for the
classification and measurement of financial assets and
liabilities. These requirements improve and simplify the
approach for classification and measurement of financial
assets compared with the requirements of AASB 139.
The main changes are
• Financial assets that are debt instruments will be
classified based on (1) the objective of the entity’s
business model for managing the financial assets;
and (2) the characteristics of the contractual cash
flows.
• Allows an irrevocable election on initial recognition
to present gains and losses on investments in equity
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.
4. Operating Segments
The Board has considered the requirements of AASB 8
Operating Segments and the internal reports that are
reviewed by the chief operating decision maker (the
Managing Director) in allocating resources and have
concluded at this time that there are no separately
identifiable segments.
5. Revenue and expenses
(a) Revenue
Interest revenue
Other revenue
(b) Depreciation of non-
current assets
Plant and equipment
Motor Vehicles
Consolidated
2014
$
2013
$
295,150
578,699
13,401
2,914
308,551
581,613
44,379
22,544
66,923
-
1,727
1,727
60,199
28,850
89,049
85
8,186
8,271
• Where the fair value option is used for financial
(c) Finance expenses
liabilities the change in fair value is to be accounted
Finance costs
by presenting changes in credit risk in other
Interest applicable to hire-
comprehensive income (OCI) and the remaining
purchase
change in the statement of profit or loss.
This standard is not expected to result in a material
change to the manner in which the Group’s financial
(d) Employees benefits
expense
result is determined or upon the extent of disclosures
Wages, salaries, directors
included in future financial reports although the Group
will quantify the effect of the application of AASB 9
fees and other remuneration
1,406,121
1,228,097
expenses
when the final standard, including all phases, is issued.
Contributions to defined
contribution superannuation
130,872
103,772
funds
There are no other standards that are not yet effective
Transfer to/(from) annual leave
and that are expected to have a material impact on the
provision
entity in the current or future reporting periods and on
foreseeable future transactions.
Transfer to/(from) long service
leave provision
48,559
3,457
17,294
9,437
43
Notes to the Financial Statements
43
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
Employer related on-costs
Other expenses
Consolidated
2014
$
2013
$
Consolidated
2014
$
2013
$
(d) Employees benefits
expense (continued)
Share-based payments expense
30,015
23,808
A reconciliation between tax expense and the product of
accounting loss before income tax multiplied by the Group’s
applicable income tax rate is as follows:
(1,070,992)
(904,299)
before income tax
Accounting profit/(loss)
(4,859,861)
(585,809)
561,869
464,272
At the Group’s statutory income
tax rate of 30% (2013: 30%)
Immediate write off of capital
126,984
184,824
expenditure
(1,457,958)
(263,531)
(920,002)
(1,161,577)
112,703
104,550
22,140
47,958
33,836
30,529
34,135
31,467
29,548
18,853
35,108
225,088
30,264
47,053
55,161
25,833
652,517
543,517
Expenditure not allowable for
income tax purposes
1,312,195
113,993
Other deductible items
(64,905)
(64,905)
Tax losses not recognised due to
not meeting recognition criteria
1,130,670
1,376,020
The Company has tax losses arising in Australia of
$13,781,828 (2013: $10,012,928) that are available
indefinitely for offset against future taxable profits of
the companies in which the losses arose.
7. Earnings per share
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 outstanding during the year.
6. Income tax (benefit)/expense
Income Tax
The major components of income tax expense are:
Consolidated
2014
$
2013
$
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.
(488,608)
(292,626)
(488,608)
(292,626)
Current income tax
Current income tax charge/
(benefit)
Research and Development Tax
offset
Income tax expense/(benefit)
reported in the statement
of profit or loss and
comprehensive income
44
Notes to the Financial Statements
The following reflects the income and share data used in
the basic and diluted earnings per share computations:
Consolidated
2014
$
2013
$
Consolidated
2014
$
2013
$
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
829,459
1,155,706
Net profit/(loss) attributable to
ordinary equity holders of the
(4,859,861)
(585,809)
Short-term deposits
5,310,000
8,410,000
parent entity
6,139,459
9,565,706
Weighted average number
of ordinary shares for basic
121,000,000
121,000,000
Reconciliation of net loss
after tax to net cash flows
from operations
earnings per share
Effect of dilution
Share options
N/A
N/A
Adjustments for non-cash items:
Net loss
(4,859,861)
(585,809)
Weighted average number of
ordinary shares adjusted for the
121,000,000
121,000,000
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 taken into
account.
Depreciation
Share based payments
66,923
30,015
Impairment expense
4,373,984
89,049
23,808
-
Changes in assets and liabilities
Decrease/(Increase) in trade and
other receivables
Decrease/(Increase) in
prepayments
Decrease/(Increase) in interest
receivable
33,895
9,576
3,117
643
25,544
127,226
(65,117)
223,166
77,853
12,894
(313,647)
(99,447)
There have been no other transactions involving
Increase/(Decrease) in trade and
ordinary shares or potential ordinary shares between
other payables
the reporting date and the date of completion of these
Increase/(Decrease) in employee
financial statements.
8. Cash and cash equivalents
entitlements
Net cash (used in)/provided
by operating activities
Consolidated
2014
$
2013
$
9. Trade and other receivables
Consolidated
2014
$
2013
$
Goods & Services Tax receivable
54,343
116,656
CASH AND CASH
EQUIVALENTS
Cash at bank and in hand
829,459
1,155,706
Fuel tax credits receivable
-
7,025
Short-term deposits
5,310,000
8,410,000
Other receivables
6,139,459
9,565,706
35,443
89,786
-
123,681
Information regarding the credit risk of current
receivables is set out in note 23.
45
Notes to the Financial Statements
45
10. Other current assets
Prepayments
Accrued income
Consolidated
2014
$
2013
$
-
25,498
25,498
3,118
51,042
54,160
11. Plant and equipment
Consolidated
2014
$
2013
$
Motor vehicles
Cost
Balance at 1 July
166,545
166,545
Additions
-
-
Balance at 30 June
166,545
166,545
Accumulated depreciation
Balance at 1 July
Depreciation for the year
Balance at 30 June
60,655
22,544
83,199
31,805
28,850
60,655
Net book value
83,346
105,890
Plant and equipment
Cost
Consolidated
2014
$
2013
$
Total
Cost
Opening balance
388,913
347,701
Additions
Disposals
26,207
41,212
-
-
Balance at 30 June
415,120
388,913
Accumulated depreciation
Opening balance
212,474
123,425
Depreciation for the year
66,923
89,049
Disposals
-
-
Balance at 30 June
279,397
212,474
Net book value
135,723
176,439
12. Exploration and evaluation
assets
Exploration and evaluation
phases
Consolidated
2014
$
2013
$
15,748,622
17,055,933
15,748,622
17,055,933
Balance at 1 July
222,368
181,156
Additions
Disposals
26,207
41,212
-
-
Balance at 30 June
248,575
222,368
The ultimate recoupment of costs carried forward for
exploration and evaluation phases is dependent on the
successful development and commercial exploitation or
sale of the respective mining areas.
Accumulated depreciation
Balance at 1 July
Depreciation for the year
Disposals
151,819
44,379
-
91,620
60,199
-
Balance at 30 June
196,198
151,819
Net book value
52,377
70,549
46
Notes to the Financial Statements
Consolidated Group
Exploration
Total
$
$
Balance 1 July 2013
17,055,933
17,055,933
Additions through expenditure
capitalised *
3,066,673
3,066,673
Impairment of tenements
(4,373,984)
(4,373,984)
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 time the Board resolves
to offer those options. The total number of shares
Balance at 30 June 2014
15,748,622
15,748,622
the subject of options issued under the Plan, when
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 has not yet reached a stage
that permits reasonable assessment of the existence of
economically recovered reserves.
*During the year ended 30 June 2014, a total of $4,373,984
has been taken as an impairment of the consolidated group’s
exploration and evaluation assets. Of this amount, $4,182,966
relates to the impairment of Exploration Licence Applications
within the South Australian Musgrave Region. Whist the
Company still considers these areas to be prospective, the
board has taken the view that due to the length of time the
licences have remained in application phase and the likelihood
of these changing status in the near future, the decision has
been made to impair these amounts in the current period.
aggregated with issues during the previous 5 years
pursuant to the Plan and any other employee share
plan, must not exceed 5% of the Company’s issued
share capital.
•
If, prior to the expiry date of options, a person
ceases to be an employee of a Group company for
any reason other than retirement at age 60 or more
(or such earlier age as the Board permits), permanent
disability, redundancy or death, the options held by
that person (or that person’s nominee) automatically
lapse on the first to occur of a) the expiry of
the period of 6 months from the date of 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
13. Share based payments
any options.
Employee Share Option Plan
The Company has established the Musgrave Minerals
Ltd Employee Share Option Plan and a summary of the
Rules of the Plan are set out below:
• All employees (full and part time) will be eligible to
participate in the Plan after a qualifying period of
12 months employment by a member of the Group,
although the Board may waive this requirement.
• Options are granted under the Plan at the discretion
of the Board and if permitted by the Board, may be
issued to an employee’s nominee.
• Each option is to subscribe for one fully paid ordinary
• 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 Income in relation to share-based
payments is disclosed in note 6(d). The following table
illustrates the number (No.) and weighted average
exercise prices (WAEP) and movements in share options
under the Company’s Employee Share Option Plan
share in the Company and will expire 5 years from
issued during the year:
47
Notes to the Financial Statements
47
2014
2014
2013
2013
No.
WAEP
No.
WAEP
The weighted average fair value of options granted
during the year was $0.052 (2013: $0.041).
16,450,000
0.32
15,500,000
16,025,000
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
575,000
0.12
575,000
0.25
options were granted.
-
-
(150,000)
0.25
The following table lists the inputs to the model used
for the year ended 30 June 2014 and 30 June 2013:
Outstanding
at the
beginning
of the year
Granted
during the
year
Expired/
lapsed
during the
year
Outstanding
at the end
17,025,000
0.32
16,450,000
0.32
of the year
Exercisable
at the end
17,025,000
0.32
16,450,000
0.32
of the year
Historical volatility (%)
2014
96%
2013
82%
Risk-free interest rate (%)
3.43%
3.12%
Expected life of option (years)
5
5
The outstanding balance as at 30 June 2014 is
represented by the following options:
14. Trade and other payables
Trade payables (i)
Other payables (ii)
Consolidated
2014
$
2013
$
100,501
94,018
119,189
157,043
219,690
251,061
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.
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
11/03/2014
10/03/2019
Exercise
Price
Number
of options
outstanding
$0.25
$0.36
$0.50
$0.36
$0.25
$0.25
$0.25
$0.12
7,750,000
4,750,000
2,500,000
500,000
375,000
500,000
75,000
575,000
17,025,000
The weighted average remaining contractual life for the
share options outstanding as at 30 June 2014 is 1.61
years (2013: 2.50 years).
The range of exercise prices for options outstanding at
the end of the year was $0.12 - $0.50 (2013: $0.25 -
$0.50).
48
Notes to the Financial Statements
15. Borrowings
17. Issued capital
Current
Hire purchase contracts
Non-current
Hire purchase contracts
Consolidated
2014
$
2013
$
-
-
-
-
64,587
64,587
50,854
50,854
Motor vehicles with a carrying value of $83,346 (2013:
$100,923) acted as security for the hire purchase
liabilities.
16. Provisions
Current
Annual leave provision:
Consolidated
2014
$
2013
$
121,000,000 fully paid ordinary
shares (2013: 121,000,000)
Consolidated
2014
$
2013
$
26,718,899
26,718,899
26,718,899
26,718,899
There were no movements in issued capital either in the
current year or for the year ended 30 June 2013.
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).
Refer note 13 for details of share options.
Balance at 1 July
90,517
87,060
Net increase/(decrease in
provision)
60,559
3,457
Closing balance 30 June
151,076
90,517
18. Reserves
Consolidated
2014
$
2013
$
Non-current
Long service leave:
Balance at 1 July
Net increase/(decrease in
provision)
13,619
4,182
17,294
9,437
Closing balance 30 June
30,913
13,619
Reserves
Share option reserve (a)
2,973,818
2,958,083
2,973,818
2,958,083
(a) Share option reserve
Balance at beginning of
financial year
Issue of options to employees
2,958,083
2,944,985
under the Employee Share
30,015
37,485
Option Plan
Transfer to retained earnings
upon lapse of options
Balance at end of financial
year
(14,280)
(10,710)
2,973,818
2,958,083
49
Notes to the Financial Statements
49
19. Retained losses
are expected to be fulfilled in the normal course of
operations.
Consolidated
2014
$
2013
$
21. Contingent liabilities and
Balance at beginning of
financial year
Net loss attributable to
members of the parent entity
Transfer from share option
reserve
Balance at end of financial
year
(3,109,727)
(2,534,628)
contingent assets
(4,859,861)
(585,809)
14,280
10,710
(7,955,308)
(3,109,727)
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 30 June 2014 (2013: $110,000)
which act as collateral over the lease of offices at 19
Richardson Street, West Perth and the Company’s Visa
business credit cards.
Operating leases
Not longer than 1 year
30,063
97,254
Audit or review of the financial
report
20. Commitments for
expenditure
Consolidated
2014
$
2013
$
Longer than 1 year and not
longer than 5 years
Hire purchase commitments
Not longer than 1 year
Longer than 1 year and not
longer than 5 years
Less: future finance charges
-
-
-
-
-
-
-
170,194
267,448
49,819
6,261
56,080
(2,613)
53,467
Exploration leases
In order to maintain current rights of tenure to
exploration tenements the Company will be required
to spend in the year ending 30 June 2014 net amounts
of approximately $1,907,500 (2013: $2,090,000)
in respect of tenement lease rentals and to meet
minimum expenditure requirements. These obligations
50
Notes to the Financial Statements
22. Auditor’s remuneration
Consolidated
2014
$
2013
$
29,548
30,264
29,548
30,264
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 stakeholders.
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.
2014
$
2013
$
Weighted average
effective interest rate
Less than
one year
%
$
FINANCIAL ASSETS
Cash and cash equivalents
6,139,459
9,565,706
Trade receivables
104,523
123,681
FINANCIAL LIABILITIES
Payables
Borrowings
219,690
251,061
-
53,467
Credit risk management
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in
financial loss to the Group. The Group has adopted a
policy of only dealing with creditworthy counterparties
as a means of mitigating the risk of financial loss from
activities.
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 because the counterparties
are banks with high credit-ratings assigned by
international credit-rating agencies.
The carrying amount of financial assets recorded in the
financial statements, net of any allowances for losses,
represents the Group’s maximum exposure to credit risk.
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).
2013
Fixed interest rate
Variable interest
rate
4.21
8,410,000
2.61
1,155,706
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 $38,863
which is mainly attributable to the Group’s exposure
to interest rates on its variable bank deposits.
Liquidity risk management
Ultimate responsibility for liquidity risk management
rests with the Board, which has built an appropriate
liquidity risk management framework for the
management of the Group’s short, medium and long-
term funding and liquidity management requirements.
The Group manages liquidity risk by maintaining
adequate reserves.
Liquidity and interest risk tables
The following table details the Company’s remaining
contractual maturity for its non-derivative financial
liabilities. The table has been drawn up based on the
undiscounted cash flows of financial liabilities based on
the earliest date on which the Company can be required
to pay. The table includes both interest and principal
cash flows.
Weighted
average
effective
interest
rate
%
Less than
one year
$
Longer
than 1
year and
not longer
than 5
years
$
-
219,690
-
Weighted average
effective interest rate
Less than
one year
%
$
2014
Fixed interest rate
Variable interest
rate
2014
Non-interest
bearing
3.61
5,310,000
1.19
829,459
51
Notes to the Financial Statements
51
Weighted
average
effective
interest
rate
%
Less than
one year
$
Longer
than 1
year and
not longer
than 5
years
$
Equity
Issued Capital
Reserves
2014
$
2013
$
26,718,899
26,718,899
2,973,818
2,958,083
2013
Interest
bearing
Non-interest
bearing
Retained Earnings
(7,955,308)
(3,109,727)
21,737,409
26,567,255
8.66
47,293
6,174
Financial Performance
-
251,061
-
(Loss) for the year
(4,859,861)
(585,809)
Other comprehensive income
-
-
(4,859,861)
(585,809)
24. Controlled entities
Guarantees
Country of
incorporation
Ownership
interest
2014
2013
%
%
Australia
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.
Australia
100
100
Contractual Commitments
Name of entity
Parent entity
Musgrave Minerals
Ltd
Subsidiaries
Musgrave Exploration
Pty Ltd
25. Parent entity information
2014
$
2013
$
Financial Position
Assets
Current Assets
6,254,743
9,743,547
Non-current Assets
15,884,345
17,232,372
22,139,088
26,975,919
Liabilities
Current liabilities
370,766
388,871
Non-current Liabilities
30,913
19,793
401,679
408,664
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 that of the Group.
26. Related party disclosure
and key management
personnel remuneration
The following individuals are classified as key
management personnel in accordance with AASB 124
’Related Party Disclosures’:
Graham Ascough, Non-Executive Chairman
Robert Waugh, Managing Director
Kelly Ross, Non-Executive Director
52
Notes to the Financial Statements
27. Subsequent events
A number of irregular transactions have come to
the attention of the Board in preparing the financial
statements for the Group. The Board is presently
investigating these irregularities and has engaged
independent assistance to review the matter. At
the date of signing this report, the transactions are
considered immaterial to the Group and the reported
results.
John Percival, Non-Executive Director
Donald Stephens, Company Secretary
Justin Gum, Principal Geologist
Ian Warland, Exploration Manager
Details of key management personnel’s remuneration
can be found in the remuneration report.
Aggregate remuneration for Key Management
Personnel
Consolidated
2014
$
2013
$
Short-term employee benefits
823,307
679,563
Post employment benefits
Share-based payments
60,950
15,660
49,793
21,550
899,918
750,906
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 2014
totalled $90,351 excluding GST (2013: $54,802). A
total of $6,862 including GST was outstanding at 30
June 2014 (2013: Nil).
HLB Mann Judd (SA) Pty Ltd has received professional
fees for accounting, taxation and secretarial services
provided during the year amounting to $97,690
including GST (2013: $96,586). A total of $13,489
including GST was outstanding at 30 June 2014 (2013:
Nil). Donald Stephens, the Company Secretary, is a
consultant with HLB Mann Judd (SA) Pty Ltd.
53
Notes to the Financial Statements
53
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 30 to 53, 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 2014 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.
This declaration is made in accordance with a resolution of the Board of Directors.
Mr Graham Ascough
Chairman
30 September 2014
54
Directors’ Declaration
55
Independent Auditor’s Report
55
56
Independent Auditor’s Report
57
Independent Auditor’s Report
57
ASX Additional
Information
289 holders listed opposite hold an unmarketable
parcel (being defined as a minimum parcel of $500
shares, calculated 10,205 shares using a market value of
$0.049 on 30 September 2014).
Additional information required by the Australian Stock
Exchange Limited and not shown elsewhere in this
Ordinary share capital
report is as follows. The information is current as at 30
• 121,000,000 fully paid ordinary shares are held by
September 2014.
1,144 individual shareholders.
Distribution of equity securities
All issued ordinary shares carry one vote per share and
Number of
shareholders
Unlisted
Options
carry the rights to dividends.
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
11
41
236
671
185
1,144
-
-
-
9
14
23
Options
• 17,025,000 unlisted options are held by 12 option
holders. One holder, Mr Robert Waugh and Mrs Sara
Waugh , holds 5,000,000
unlisted options (equivalent to 29.36% of total
unlisted options).
The number of shareholders, by size of holding, in each class are:
Substantial shareholders
Ordinary shareholders
Mithril Resources Investments Pty Ltd
Independence Group NL
Ordinary shareholders
Mithril Resources Investments Pty Ltd
Independence Group NL
Barrick (Australia Pacific) Limited
Integra Mining Limited
Goldsearch Limited
Mr William Douglas Goodfellow
Allise Pty Ltd
Kimbriki Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Forsyth Barr Custodians Ltd
Mr Chor Leng Tan
58
ASX Additional Information
Fully paid Number
9,283,871
9,027,000
%
7.67%
7.46%
Fully Paid Ordinary Shares
Number
%
9,283,871
9,027,000
6,000,000
5,516,129
3,654,000
1,540,000
1,500,000
1,480,049
1,389,154
1,354,900
1,142,000
7.67%
7.46%
4.96%
4.56%
3.02%
1.27%
1.24%
1.22%
1.15%
1.12%
0.94%
Ordinary shareholders
King Town Holdings Pty Ltd
Amalgamated Dairies Limited
Hipete Pty Limited
Premar Capital Nominees Pty Ltd
Octifil Pty Ltd
Mr Stephen Simunovic + Mr Dragan Simunovic
Citicorp Nominees Pty Limited
Kavalex Pty Limited
Unaval Nominees Pty Ltd
Fully Paid Ordinary Shares
Number
1,095,000
1,000,000
1,000,000
1,000,000
800,000
795,000
704,590
700,000
675,000
%
0.90%
0.83%
0.83%
0.83%
0.66%
0.66%
0.58%
0.58%
0.56%
49,656,693
41.04%
59
ASX Additional Information
59
www.musgraveminerals.com.au
19 Richardson Street, West Perth, Western Australia 6005
Phone: +61 8 9324 1061 - Fax: +61 8 9324 1014