SWAN GOLD MINING LIMITED
ABN 69 100 038 266
FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2014
SWAN GOLD MINING LIMITED
ABN 69 100 038 266
CORPORATE DIRECTORY AND CONTENTS
Corporate Directory........................................... 1
Directors’ report ................................................ 2
Auditor’s independence declaration ................ 16
Consolidated statement of comprehensive
income ............................................................ 17
Consolidated statement of financial position... 18
Consolidated statement of changes in equity . 19
Consolidated statement of cash flows ............ 20
Notes to the financial statements .................... 21
Directors’ declaration ...................................... 60
Independent auditor’s report ........................... 61
Corporate governance statement ................... 64
Tenement schedule ........................................ 69
Annual Mineral Resource Statement .............. 75
ASX additional information.............................. 77
BOARD OF DIRECTORS
Michael Fotios
John Poynton
Craig Readhead
Wayne Zekulich
Executive chairman
Non- Executive director
Non- Executive director
Non- Executive director
COMPANY SECRETARY
Wayne Zekulich
REGISTERED OFFICE
24 Mumford Place
BALCATTA
WA 6021
Telephone: (61-8) 6241 1802
Facsimile: (61-8) 6241 1811
admin@swangoldmining.com.au
Web-site: www.swangoldmining.com.au
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 2, 45 St. George’s Terrace
Perth WA 6000
Telephone: (61-8) 9323 2000
Facsimile:
(61-8) 9323 2033
E-mail: perth.services@computershare.com.au
Web-site: www.computershare.com.au
AUDITORS
Ernst & Young
SOLICITORS
Allion Legal
BANKERS
National Australia Bank Limited
STOCK EXCHANGE LISTING
Shares in Swan Gold Mining Limited are listed on the
Australian Stock Exchange under the trading code
SWA
This financial report covers the consolidated financial statements for the consolidated entity, consisting of
Swan Gold Mining Limited and its subsidiaries.
The annual financial report is presented in Australian dollars.
Swan Gold Mining Limited is a company limited by shares, incorporated and domiciled in Australia.
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
The directors of Swan Gold Mining Limited (previously named Monarch Gold Mining Company Limited) (“Swan Gold”
or “Company”) present their report on the results and state of affairs of the consolidated entity, being the Company
and its controlled entities (“Group”) for the financial year ended 30 June 2014.
DIRECTORS
The names of the directors of Swan Gold in office during the course of the financial year and up to the date of this
report are as follows:
Michael Fotios
John Poynton
Craig Readhead
Wayne Zekulich
Unless otherwise indicated, all directors held their position as a director throughout the entire financial year and up to
the date of this report.
OPERATING AND FINANCIAL REVIEW
This review provides to shareholders an overview of Swan Gold’s 2014 operations, financial position, business
strategies and prospects.
The review also provides contextual information, including the impact of key events that have occurred during 2014
and material business risks faced by the business so that shareholders can make an informed assessment of the
results and prospects of the Group. The review compliments the financial report and has been prepared in
accordance with recently released guidance set out in RG 247.
1. Swan Gold Operations
Core Business
Swan Gold, via its subsidiaries, is the 100% owner of the Davyhurst Gold Project 120km north-west of Kalgoorlie, and
the Mt Ida Gold Project located 200km north-west of Kalgoorlie. Processing infrastructure includes a 1.2Mtpa
processing plant, two camps (Davyhurst Central and Mt Ida), mains power and working bore fields.
The Group also holds a substantial tenement position (1,420 square kilometres, 150km strike length), surrounding the
existing infrastructure.
Principal Activities and Significant Changes in those Activities
The principal activity of the Group during the financial year was mineral exploration and evaluation, and care and
maintenance of its historically producing gold mines being the Davyhurst Gold Project and the Mt Ida Gold Project.
From a corporate perspective, the Company completed a backlog of periodic reports required by ASIC and ASX and
held the 2012 and 2013 AGM’s as it worked towards having its ordinary shares re -admitted to trading on the ASX.
There was no significant change in the nature of this activity during the year.
2. Operating Financial Results
The Company’s financial performance and result is attributable to its ongoing exploration, evaluation and
development costs, project care and maintenance costs and corporate administration costs.
The Groups net loss after tax for the year was $6,469,017 (2013: $24,886,641).
Financial Position
At 30 June 2014 total Group assets were $4,052,617 (2013: $8,836,151) and net deficits were $33,269,842 (2013:
$27,100,825)
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
Liquidity and Capital Resources
Performance
Measures
Net assets/
(liabilities)
Current assets
Cash
FY 2014
FY 2013
FY 2012
FY 2011
$
$
$
$
FY 2010
$
(33,269,842)
(27,098,722)
(5,214,181)
(802,000)
3,761,000
988,457
215,699
5,836,151
235,603
467,444
259,169
455,107
159,450
545,568
15,977
Shareholders’ equity
167,965,331
167,665,331
164,665,331
164,665,331
164,665,331
Accumulated losses
(206,527,787)
(200,101,070)
(175,214,426)
(170,802,000)
(166,239,000)
The increase in net liabilities was primarily driven by the capitalised interest increase relating to the loans and
borrowings and a reduction the security bonds which were recovered during the year.
The write off of historical capitalised exploration costs totalling $21,499,000 and impairment to property, plant and
equipment of $5,222,925 which was partially offset by the reduction in loans payable resulting from the Investmet
Transaction totalling $6,530,000 (refer below to significant changes in the state of affairs).
The increase in shareholders’ equity is the result of issuing 20,000,000 ordinary shares at $0.015 per share to provide
working capital for the Group.
3. Key Developments
Significant Changes in the State of Affairs
On 18 August 2011, Swan Gold executed a conditional agreement with global commodity company DCM DECOmetal
GmbH (“DCM”) to acquire Swan Gold’s subsidiaries that own the Carnegie and Mt Ida gold projects (“DCM
transaction”).
The main conditions of that agreement which was subject to shareholder and regulatory approval, as necessary,
would see:
DCM acquire the debt and associated rights of the Mt Ida Trust for $1,000,000;
DCM pay a total amount of $10,000,000 to the Group Trust with $1,000,000 payable upon signing of the
agreement and $9,000,000 payable within 6 months;
Under separate arrangement DCM acquire the debt and associated rights of the Territory Trust of
$6,700,000;
All debts due by Swan Gold to the Mt Ida Trust, Group Trust, Territory Trust and Stirling Resources Ltd be
extinguished by DCM at settlement;
Amounts to be paid to Swan Gold of $5,000,000 at settlement;
All shareholdings held by Stirling, Territory Resources Limited and DCM in Swan Gold be cancelled at
settlement;
Under this agreement DCM was to fund the ongoing operations of Swan Gold until the transaction was
completed; and
Settlement was due on or before 31 March 2012, subject to subsequent extensions.
With effect from 27 March 2013 this agreement was no longer in place.
On 3 May 2012, the Company announced to the ASX, that following extensive negotiations, a binding Terms Sheet,
and subsequently a Restructure Deed, had been entered into by the Company, DCM and Investmet Limited and/or its
nominees (Investmet), with the execution of a formal agreement, being the Restructure Deed, on 16 May 2012 (“the
Investmet transaction”).
Investmet has advised it intends to recapitalize Swan and provide sufficient funding to complete a review into
recommencement of operations at the Carnegie and Mt Ida gold projects, including amongst other items thorough
geological and economic reviews of resources, project data, exploration activities as required, and mine planning.
The main terms and conditions of the Restructure Deed were as follows:
Swan Gold would conduct a share placement to sophisticated investors to raise working capital of a minimum
of $7,500,000 by the issue of new ordinary shares at $0.02 effective on completion of the transaction
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
(“Completion”). The issue would be fully underwritten by Investmet on terms reasonably satisfactory to
Investmet and the Company;
DCM would transfer 39,849,657 Swan Gold shares to Investmet in consideration for a cash payment by
Investmet to the Trustee of the Territory Trust of $6,700,000 in satisfaction of all claims by the Territory Trust;
The Group Trustee would transfer 134,483,578 Swan Gold shares to Investmet as consideration for the
payment by Investmet to the Group Trust of $10,000,000; the payment would also extinguish all claims by
the Group Trust under the recapitalization deed;
Investmet would pay $144,240 to the Trustee of the Group Trust on behalf of Swan Gold to repay the loan
made by the Trustee to Swan Gold. Swan Gold agreed to repay Investmet on interest free terms $144,240
within two business days of a written demand by Investmet;
Investmet would advance $1,230,000 to DCM in consideration of DCM discharging the existing charge over
the Mt Ida assets. A fresh security would be granted by Swan Gold as required to Investmet;
Under the Restructure Deed DCM were to fund the ongoing operations of Swan Gold until Completion; and
The Conditions of the Restructure Deed were to be satisfied or waived on or before 31 October 2012, with
the exception of shareholder and regulatory approvals, and Loan Syndicate Arrangements which were to be
finalised by 31 December 2012. Beyond these dates an alternative restructure or extension period was to be
negotiated in good faith, but should no agreement be made within 5 Business Days then either party may
terminate the Restructure Deed without incurring any liability.
The conditions for Completion to occur included amongst other items, all necessary shareholder, third party or
regulatory approvals.
This transaction was also conditional on the completion of inter-related transactions between Investmet, DCM and
each of Stirling Resources Limited and Redbank Copper Limited, the terms of which had been finalised but not
released.
On 12 November 2012 the Company announced to the ASX that Stirling had received advice from the ASX that
based on the terms of the Restructure Deed, Stirling would need to re-comply with the full ASX admission criteria.
Consequently it was agreed by all parties to the Investmet Transaction, that as this event was a conditions precent of
the transaction, Stirling would not be able to participate in the proposed transaction.
Swan Gold announced to the ASX on 14 December 2012 that DCM and Investmet had executed an Amended and
Restated Restructure Deed (‘Restructure Deed”) which in effect removed Stirling from the Investmet Transaction.
The terms of the Investmet Transaction, which was previously announced to the ASX, have been varied such that:
1. Stirling no longer forms part of the inter-conditional transaction.
2. The capital raising to be undertaken by Swan Gold will be up to $15,000,000. This amount may increase to
$17,500,000 with prior consent of Stirling. The capital raising is currently expected to be via a placement of
new shares at $0.02 per share. Investmet agrees to underwrite $7,500,000 of the placement.
3. At Completion, $10,664,240 of the $20,664,240 debt to Investmet (“Investmet Debt”) which is expected to
arise from the completion of the Investmet Transaction, will be converted into ordinary Swan Gold shares at a
deemed issue price of $0.02 per share. The Investmet Debt converted comprises $8,074,240 of the trust
debts, and $2,590,000 of debt acquired from Stirling.
4. Under the Loan Syndicate Arrangements Investmet may elect to convert a further $5,000,000 of the balance
of the $10,000,000 Investmet Debt owing. If Investmet elects to convert the additional debt to shares then
Stirling will be entitled to convert a proportionate amount of the $5,000,000 debt owed to Stirling. Stirling may
only convert a maximum amount of $2,500,000 of debt.
5. The proceeds of the capital raising will be used partially to repay debts of $4,200,000 to DCM.
6.
Investmet waived the condition precedent to completion which required any plaint proceedings relating to the
tenements of Swan Gold and its subsidiaries to be discontinued or withdrawn on terms satisfactory to
Investmet. However, should the decision of the Warden in relation to Exemption Hearing No. 371130 not be
in favour of Siberia Mining Corporation Pty Ltd, a wholly owned subsidiary of Swan Gold, Swan Gold will,
subject to shareholder approval, allot and issue 37,500,000 Swan Gold shares to Investmet for nil cost.
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
Swan Gold has also agreed as part of the Investmet Transaction and associated revised terms that:
the Swan Gold Notice of Meeting be lodged for review with the regulatory bodies on 30 November 2012;
the Notice of Meeting must be mailed to Shareholders by 15 December 2012;
the Shareholders’ Meeting to approve the Investmet Transaction must be held by 15 January 2013; and
the Investmet Transaction was to be complete by 28 February 2013 (refer below for further details).
To date, Swan Gold has complied with the above revised terms or as revised through subsequent Amendment
Deeds. A General Meeting of the shareholders’ was held on 15 January 2013 during which resolutions in relation to
the placement of shares under the Investmet Transaction were approved. On 13 February 2013 Swan Gold
announced to the ASX a Prospectus for the placement to sophisticated and professional investors to raise a minimum
of $15,000,000 at $0.02 per share and up to a maximum of $17,500,000 by the issue of up to 875,000,000 shares
before costs of the offer.
A supplementary Prospectus was lodged with the ASIC extending the Closing Date of the placement Offer from 26
February 2013 to 11 April 2013 and extending the Offer to investors who do not fall within an exception to section 708
of the Corporations Act 2001. On 13 May 2013 the placement Offer was further extended to 31 May 2013 subject to
approval from ASIC and ASX.
On 31 May 2013 the Company announced that it had been notified by ASIC that the application for relief to extend the
placement closing was refused. The placement offer was withdrawn as neither the subscription condition of
$15,000,000 nor the 3 month quotation of the Offer was met as required by the Corporations Act 2001. Shares in
Swan were not allotted or issued pursuant to the placement Offer and all application monies have been refunded to
the applicants, in accordance with the terms of the Offer and the Corporations Act. The Company is at present
considering its options moving forward and will provide an update as soon as additional information is available.
In addition to executing the amended Restructure Deed, Swan Gold and Investmet also executed a Deed of
amendment and Restatement to the Loan Agreement (“Amended Loan Agreement”). Investmet and Swan Gold have
agreed to amend the Loan Agreement such that drawdowns will be on an “as required” basis. Investmet has agreed
to provide Swan Gold with a facility for working capital funding up to approximately $3,000,000. Investmet has to date
loaned the Company the full funding of $3,000,000 of this facility.
Investmet and DCM intend to establish syndicated loan arrangements with Swan Gold to include general security
interests over its assets, incorporating a two year moratorium on principal repayments and any accrued interest and
at the end of the two year moratorium, Swan Gold may elect to repay the debt or require conversion at a price to be
agreed between the parties at that time
Investmet will also work with the current board of Swan Gold towards finalizing the application for re-listing of the
shares of Swan Gold on the ASX as soon as possible after completion.
Upon completion of the Investmet transaction, the DCM Share Sale agreement will be terminated and all of the
Company’s liabilities and obligations under the DCM Share Sale agreement and the Recapitalisation Deed will be
discharged.
On 27 March 2013 the Company announced that it had executed agreements to revise the terms of the Swan Gold
Restructure Deed (“Transactions”), to allow for the early debt purchase by Investmet of certain debts owed by Swan
Gold to Stirling, DCM and MGMC Pty Ltd (as trustee for the Group Trust and Territory Trust)(“MGMC”).
Pursuant to the early debt purchase:
MGMC Debt:
1.
Investmet has made payments of $18,074,240 to MGMC. Investmet was required to purchase the debts
owed by Swan Gold to MGMC.
2. The security held by MGMC with respect to the debts owed by Swan Gold to MGMC has been assigned to a
security trustee to be held on behalf of Investmet and other purchasers of that debt.
Stirling Debt:
1.
Investmet has paid $2,590,000 to Stirling and, in turn, Stirling has assigned to Investmet $2,590,000 of the
$7,590,000 debt owed by Swan to Stirling. Swan Gold continues to owe $5,000,000 to Stirling.
2. Stirling has procured Stirling Gold Pty Ltd to transfer to Investmet 88,053,475 shares in Swan Gold.
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
DCM Debt:
1. Swan Gold had intended to pay DCM $4,200,000 out of the proceeds of the current placement. However,
under the early debt purchase agreements, Investmet has now paid $4,200,000 to DCM in consideration of
DCM assigning to Investmet the debt owed by Swan Gold to DCM.
2. Swan Gold will now repay the $4,200,000 to Investmet out of the proceeds of the placement.
3. $1,230,000 to DCM in consideration of DCM discharging or procuring that the Trustee of the Mt Ida Trust
discharges, all security held by the Trustee of the Mt Ida Trust in or over Swan Gold, or any of its subsidiaries
and any of its assets.
4. The security held by MGMC with respect to the Mt Ida trust has been assigned to a security trustee to be
held on behalf of Investmet and other purchasers of that debt.
The inter-conditionality of the Swan Gold and Redbank Copper Limited (“Redbank”) Transactions, being a condition in
each of the Swan Gold and Redbank Restructure Deeds, has been waived by Investmet, who had the sole benefit of
the condition. This means that the Swan Gold and Redbank Transactions can now complete separately.
Following the early debt purchase, completion of the transactions as contemplated in the Restructure Deed remains
outstanding. Accordingly Swan Gold has executed an Amendment Deed to the Swan Gold Restructure Deed with
Stirling, Investmet and DCM. The effect of which is to amend the “Completion Date” for the Transaction to the date
on which settlement of the Swan Gold placement is to occur.
The loan amount of $3,000,000 outstanding as at 31 December 2012, under the Interim Loan Agreement between the
Company and Investmet, has been converted into fully paid ordinary shares in Swan Gold at a price of $0.02 per
share, which has resulted in the Company issuing 150,000,000 shares to Investmet in accordance with shareholder
approval obtained at the recent general meeting of Swan Gold shareholders.
A Deed of Termination and Release for the Recapitalisation Deed dated 21 July 2009 has been executed and was
subject to Investmet making the payments to MGMC referred to above, which has since been completed. A Deed of
Termination and Release for the share sale agreement between Swan Gold and DCM dated 18 August 2011 was
also executed and completed on 27 March 2013.
Loan Facility Agreement
On 14 April 2014, the Company, Investmet, Stirling, the Security Trustee, the Nominee and certain subsidiaries of the
Company who have provided security in relation to the debts, entered into a loan facility agreement to set out the
terms and conditions for the Debt, DCM Debt and Stirling Debt (Facility Agreement). The Nominee entered into the
Facility Agreement on behalf of the Other Lenders in accordance with certain nominee deeds. As at the date of this
report, nominee deeds have been signed by Other Lenders holding more than 80% of the Other Lenders Debt Portion
and the Company understands it is the intention of the Nominee to arrange for the remaining Other Lenders to sign
their respective nominee deeds before the Closing Date.
Under the Facility Agreement, Investmet, Stirling and the Other Lenders agreed to continue to make available the
loan facility (consisting of the Debt, DCM Debt and Stirling Debt) to the Company. The Facility Agreement sets out
the terms and conditions for the loan facility.
The proposed transactions under the Facility Agreement can be summarised as follows:
(a) (Debt conversion) Investmet may elect to convert the Debt (in whole or in part) to Shares. If Investmet elects
to do so, Stirling will be entitled to convert an amount of the Stirling Debt proportionate to the amount of the
Debt that Investmet elects to convert.
If the Company does not have enough unallocated funds upon repayment of the debts and conversion of the
Debt (and Stirling Debt) in order to meet reinstatement requirements of the ASX, Stirling may convert such
amount of the Stirling Debt as would result in the Company being able to meet ASX’s reinstatement
requirements.
Investmet may also elect to convert the DCM Debt (in whole or in part) to Shares.
(b) (Repayment on Equity Raising) Upon the completion of an equity raising by the Company to raise funds to
ensure that the Company has sufficient funds to satisfy any financial condition imposed by the ASX in
connection with the re-quotation of the Company’s securities (Equity Raising):
I.
II.
Investmet must elect to convert part or all of the Debt outstanding at the completion of the Equity
Raising, provided that no more than $5,000,000 of the Debt is subsisting immediately after;
Stirling may elect to convert part or all of the Stirling Debt outstanding at the completion of the Equity
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
Raising, provided that no more than $2,500,000 of the Stirling Debt is subsisting immediately after.
If Stirling does not convert any or all of the Stirling Debt up to $2,500,000 in accordance with the its
right of conversion, Stirling has agreed to act in good faith and convert any such amount of the
Stirling Debt up to $2,500,000 that would result in the Company being able to meet ASX’s
reinstatement requirements; and
Investmet may elect to have the DCM Debt repaid (whole or in part) in cash from the proceeds of the
Equity Raising, or by the issue of Shares, or elect to have all or part of the DCM Debt subsisting
following the Equity Raising.
III.
(c) (Repayment and conversion on Maturity Date) On the maturity date of the loan facility, which was on 1 July
2014 (Maturity Date), the Company was required to repay the Debt and the Stirling Debt (plus interest)
outstanding on the Maturity Date by, at the election of the Company, the issue of Shares or in cash, provided
that:
I.
Investmet had the option to elect for no more than $5,000,000 of the Debt to subsist immediately
after the Maturity Date; and
Stirling had the option to elect for no more than $5,000,000 of the Stirling Debt to subsist
immediately after the Maturity Date.
II.
In addition, Investmet had the option to elect for the DCM Debt (and interest) outstanding on the Maturity
Date to be repaid by, at the election of Investmet, the issue of Shares or in cash. Investmet may also elect
that all or part of the DCM Debt subsists immediately after the Maturity Date.
Repayment of the above debts did not occur on the Maturity Date. However, on 30 July 2014, the Company,
Investmet, the Nominee entered into a letter agreement, pursuant to which Investmet and the Nominee
agreed to repayment of the Debt and the DCM Debt.
In respect of the Stirling Debt, the Company intends to negotiate with Stirling to confirm whether all or part of
the Stirling Debt and its accrued and outstanding interest can be converted into Shares. If such agreement
can be met, Shares will issue to extinguish the debt. If such agreement cannot be met the debt will be
extinguished via a cash payment.
I.
(d) (Loan Syndicate Arrangements) The balance of the Debt, Stirling Debt and DCM Debt subsisting and owing
following the partial conversion of the Debt will be held under loan syndicate arrangements which will include:
general security interests over the Company (and its subsidiaries (if applicable)) and their respective
assets;
a two year moratorium on principal repayments; and
a minimum interest rate of 6% or a rate to be agreed between the Company, Investmet, Stirling and
the Other Lenders.
II.
III.
Upon completion of the moratorium period, the Company may choose to repay the outstanding principal in
cash or convert it into Shares at a price no less than $0.75 per Share or as otherwise agreed by the parties.
Security Trust Deed
On 27 March 2013 the Company, the Security Trustee, Investmet, Stirling and various subsidiaries of the
Company entered into an agreement, pursuant to which MGMC assigned the security held by MGMC (as
trustee for the Group Trust, Territory Trust and Mt Ida Trust) in relation to the secured debt owed by the
Company, to the Security Trustee (Security Trust Deed).
The arrangements under the Security Trust Deed can be summarised as follows:
(a) (Trust) The Security Trustee will hold, among other things, all its right, title and interest in, to and under the
security on trust for Investmet, Stirling, and any other person who becomes a beneficiary under the Security
Trust Deed (including the Other Lenders).
(b) (Security) The security assigned to the Security Trustee includes:
I.
II.
all the shares held by the Company in Mt Ida, Carnegie and Siberia; and
all present and future property, assets and undertakings of Mt Ida, Carnegie and Siberia (excluding
certain assets).
(c) (Payment) If, before the date that the Security Trustee enforces a security, a beneficiary under the Security
Trust Deed directs the Security Trustee to demand payment of secured moneys that are due and payable to
the beneficiary, the Security Trustee must make the demand and the person who has granted a security
must immediately pay the amount demanded to the Security Trustee.
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
(d) (Powers of Security Trustee) The powers of the Security Trustee include:
I.
II.
III.
IV.
V.
VI.
the power to exercise all rights and discretions and do all other things which a party which is not a
trustee would have were it to have entered into the security in place of the Security Trustee;
to make demands and give notices under the security;
to commence and pursue legal proceedings and take action to enforce the security or to protect any
property or its interest in any property subject to the security;
to sell any property in accordance with the security;
to appoint and instruct a receiver or receiver and manager under the security; and
to exercise all other rights under the security exercisable by the party named in that security as
grantee, mortgagee or charge.
These powers are in addition to any powers the Security Trustee may have under any legislation
general law or equity.
or the
The Security Trustee must exercise its powers as directed by a majority of the lenders of the secured
moneys whose lender proportions aggregate more than 60% of the total amount of the secured
moneys.
On 26 June 2014 the Company issued 20,000,000 ordinary fully paid shares to sophisticated investors at a price of
1.5 cents per share raising $300,000.
4. Other Developments
On 31 January 2014, Swan Gold received the recommendation of the Warden that applications for exemption from
expenditure that were heard in August 2012 in respect of M16/262-264 at the Lady Ida project area be refused. The
tenements are held by Siberia Mining Corporation Pty Ltd (“Siberia Mining”), a wholly owned subsidiary of Swan Gold,
and are also the subject of applications for forfeiture. At 30 June 2104 Siberia Mining had lodged an application with
the Supreme Court of Western Australia for judicial review of the Warden’s recommendation.
The ability of the Group to maintain tenure to its tenements is dependent upon it continuing to meet the minimum
expenditures on the tenements or obtaining exemptions for tenements in which the minimum expenditures have not
been met.
In the opinion of the directors, there is no additional information available as at the date of this report on any likely
developments which may materially affect the operations of the consolidated entity and the expected results of those
operations in subsequent years.
Significant Events after Balance Date
Share Placement to Swan Gold Directors’
On 11 July 2014 the Company issued 5,000,000 ordinary fully paid shares to Mr Craig Readhead and Mr John
Poynton at a price of 1.5 cents per share raising $75,000. The placement was approved by an ordinary resolution of
shareholders at the Company’s Annual General Meeting held on 8 July 2014.
1 for 10 Share Consolidation
On 15 July 2014 the Company completed a share consolidation achieved through the conversion of ten fully paid
ordinary shares into one fully paid ordinary share.
The below table summarises the Swan Gold capital structure pre and post the share consolidation:
Class Name
E36
ORD Ordinary fully paid shares 917,820,993
918,487,661
Total issued capital
Escrowed shares
Pre- consolidation Post- consolidation
666,668
66,668
91,783,555
91,850,223
As a result of the share consolidation all references in this Annual Report relating to the number and value of
shares allotted during and since the end of the financial year are stated on a post consolidation basis unless
otherwise stated.
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SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
Lodgement of Prospectus
On 11 August 2014 the Company lodged with the Australian Securities & Investment Commission a prospectus which
is seeking to raise a minimum of $13,500,000 by the issue of up to 67,500,000 Shares at $0.20 per share and a
maximum of $20,000,000 by the issue of up to 100,000,000 shares at $0.20 per Share with the ability to accept over
subscriptions to raise an additional $5 million, in each case, before costs.
4. Business Strategies and Prospects (Incorporating Likely Developments and Expected Results)
Swan Gold is committed to growing its gold inventories through ongoing exploration activities. In addition, the
Company is looking to recommence gold operations at the Davyhurst and Mt Ida Gold Projects.
Over the next 12 months the Company is focussing on:
- Having its ordinary shares readmitted to official quotation on the ASX,
- Recapitalising the Company through:
the conversion of its existing loans payable to ordinary shares,
issuing new shares as part of an equity fund raising exercise, and
o
o
o establishing a debt facility
- Upon recapitalisation, the funds will be applied to further the Groups exploration efforts and to refurbish the
Davyhurst Gold project allowing for the processing of up to 1.2 mtpa of third party ore, Company ore or a
combination of both.
DIVIDENDS
No amounts were paid by way of dividend since the end of the previous financial year. The directors do not
recommend the payment of a dividend.
INFORMATION ON DIRECTORS
Director
Qualifications, experience and special responsibilities
Michael Fotios
Non-Executive
BSc (Hons) MAusIMM
A director since September 2012, Mr Fotios is a Geologist specialising in Economic Geology
with 27 years extensive experience in exploration throughout Australia for gold, base metals,
tantalum, tin and nickel and taking projects from exploration to feasibility. He previously held
positions with Homestake Australia Limited and Sons of Gwalia Limited. He was Managing
Director and a Director with Tantalum Australia NL (now ABM Resources Ltd) from September
1999 to October 2005. His last position was as Managing Director of Galaxy Resources Limited.
Michael Fotios is founder and current Executive Chairman of Investmet and regarded as having
control of Investmet for the purposes of the Corporations Act 2001.
Other current directorships: Northern Star Resources Limited (from September 2009 to October
2013), Pegasus Metals Limited (from December 2009), Horseshoe Metals Limited (from May
2012), General Mining Corporation Limited (from June 2012), Redbank Copper Limited (from
September 2012) and Stirling Resources Limited (from September 2012 to November 2012).
Former directorships in the last three years: Galaxy Resources Limited (from December 2006 to
December 2008).
John Poynton
Non-Executive
Director
AM Cit WA
John is the Chairman of Azure Capital Limited.
He is a Director of the Future Fund Board of Guardians and Crown Perth. In the not-for-profit
arena, John is the Chairman of Council of Christ Church Grammar School, Giving West and
Celebrate WA. He is also a member of Social Ventures Australia.
Previously, John was a Chairman of ASX Perth, Fleetwood, Alinta and the West Australian
Museum Foundation – Deputy Chairman of Austal Limited – Director of Multiplex; Member of
the Higher Education Endowment Fund Advisory Board, Payments System Board of the
Reserve Bank of Australia, EFIC and of the Business School at the University of Western
Australia.
John is a Life Member and Senior Fellow of the Financial Services Institute of Australasia
9
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
(FINSIA), a Fellow of the Australian Institute of Company Directors (AICD) and of the
Australian Institute of Management (AIM).
John is a Member in the General Division of the Order of Australia and is a past recipient of a
WA Citizen of the Year award in the industry and commerce category.
John holds a Bachelor of Commerce and an honorary Doctor of Commerce from the University
of Western Australia.
Craig Readhead
Non-Executive
Director
B Juris Lib
Mr Readhead is one of WA’s leading mining and resource lawyers with over 33 years legal and
corporate advisory experience specialising in the resources sector, including the implementation
of large scale mining projects both in Australia and overseas. In 2009, Craig was identified as
one of the top ten Best Mining Lawyers in Australia published by the Australian Financial
Review. Craig is a Partner of law firm, Allion Legal.
Current directorships: Heron Resources Limited, Beadell Resources Limited, General Mining
Corporation Limited, Western Areas Limited and Redbank Copper Limited.
Former directorships in the last three years: Galaxy Resources Limited to November 2013, Mt.
Gibson Iron Limited to December 2012 and Frankland River Olive Company Limited to
December 2012.
Wayne Zekulich
Non-Executive
Director
BBus, FCA
Wayne is a Consultant and non-executive Director. He has a broad range of experience
covering advice on mergers and acquisitions, arranging and underwriting project financings,
privatisations, and debt and equity capital markets. Most recently Wayne was the Chief Financial
Officer of Gindalbie Metals Ltd and prior to that the Chief Development Officer of Oakajee Port
and Rail. Wayne holds a Bachelor of Business Degree and is a Fellow of the Institute of
Chartered Accountants.
Currently, Wayne is Head of Perth for Deutsche Bank, Chairman of Tesla Corporation, a
Director of Swan Gold Mining Limited, Director of Jaxon Construction. In the Not-for-Profit sector
Wayne Chairman of Celebrate WA, a committee member of the Committee for Economic
Development of Australia (WA Branch), a member of the Curtin Business School of Accounting
Advisory Board and Greater Curtin Project Control Group and a member of the University of
Western Australia Audit Committee.
Interests in the shares and options of Swan Gold
Details of directors’ interests in the securities of Swan Gold as at the date of this report are as follows, which are on
a post share consolidation basis:
Director
Michael Fotios1
John Poynton
Craig Readhead
Wayne Zekulich
Fully paid shares
41,238,671
1,333,334
166,667
-
Unlisted options
-
-
-
-
1 The shares are held by Investmet Limited, a Company which Mr Fotios is a substantial shareholder and Chairman.
COMPANY SECRETARIES
Lind Paini BBus, FCA, FFTP (resigned 15 January 2014)
Wayne Zekulich BBus, FCA, FFTP (appointed 15 January 2014)
MEETINGS OF DIRECTORS
The number of meetings of the Board of Directors held during the year and the number of meetings attended by
each director was as follows:
Michael Fotios
John Poynton
Craig Readhead
Wayne Zekulich
Number held whilst in office
5
5
5
5
10
Number attended
5
5
5
5
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report
Key Management Personnel are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or
otherwise) of the parent company. Unless otherwise indicated, all key management personnel held their position as a
throughout the entire financial year and up to the date of this report.
Details of key management personnel during the year up to the date of this report:
Directors
Michael Fotios
John Poynton
Craig Readhead
Wayne Zekulich1
Executives
Linda Paini2
Executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director and Company Secretary
Chief Financial Officer and Company Secretary
1 Mr Zekulich was appointed Company Secretary on the 15 January 2104
2 Ms Paini resigned as Chief Financial Officer and Company Secretary on 15 January 2014
Principles used to determine the nature and amount of remuneration
Directors and executives remuneration
Overall remuneration policies are determined by the Board of Directors and are adapted to reflect competitive market
and business conditions. Within this framework, the board considers remuneration policies and practices generally,
and determines specific remuneration packages and other terms of employment for executive directors and senior
management. Executives may be provided with longer-term incentives through participation in option schemes,
which serve to align the interests of the executives with those of shareholders. Executive remuneration and other
terms of employment are reviewed annually by the remuneration committee having regard to performance, relevant
comparative information and expert advice.
Non-executive directors’ remuneration
The Company’s Policy is to remunerate non- executive directors (NED’s) at market rates (for comparable companies)
for time commitment and responsibilities. Fee’s for non-executive directors are not linked to the performance of the
company, however to align directors interest with shareholders interest directors are encouraged to hold shares in the
Company. The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is
reviewed annually against fees paid to NED’s of comparable companies.
Payments to non- executive directors reflect the demands that are made on, and the responsibilities of the NED’s.
Non-executive director’s fee and payments are reviewed annually by the remuneration committee. The Company’s
constitution and the ASX listing rules specify that the NED fee pool shall be determined from time to time by a general
meeting.
In accordance with current corporate governance practices, the structure for the remuneration of non-executive
directors and senior executives is separate and distinct. Shareholders approve the maximum aggregate
remuneration for non-executive directors, with the current approved limit being $500,000. The Board determines the
actual payments to directors. The Board approves any consultancy arrangements for non-executive directors who
provide services outside of and in addition to their duties as non-executive directors.
11
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
Details of remuneration
The following table discloses details of the nature and amount of each element of the emoluments of each director of
Swan Gold and each of the officers receiving the highest emoluments for the year ended 30 June 2013.
REMUNERATION REPORT (audited)
30 June 2014
Name
Directors
Michael Fotios
John Poynton
Craig Readhead
Wayne Zekulich
Executives
Linda Paini1
1 Resigned on 15 January 2014
30 June 2013
Name
Directors
Michael Fotios4
John Poynton2
Craig Readhead2
Wayne Zekulich2
Damian Delaney1
Martin Depisch1
Dr Gerhard Kornfeld1
Peter Farris3
Thomas Styblo1
Allan Brown5
Keith Vuleta5
Ian Price5
Executives
Linda Paini
Primary (short-term)
Post-employment
Equity
(share-
based
payments)
Salary and
directors
fees
$
Consulting
fees
$
Non-
monetary
benefits
$
Superannuation
$
$
60,000
40,000
40,000
40,000
38,370
218,370
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,549
3,549
Total
$
60,000
40,000
40,000
40,000
41,919
221,919
-
-
-
-
-
-
Primary (short-term)
Post-employment
Equity
(share-
based
payments)
Salary and
directors
fees
$
Consulting
fees
$
Non-
monetary
benefits
$
Superannuation
$
$
Total
$
-
-
-
-
-
-
-
-
-
5,450
4,360
4,360
-
14,170
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,450
4,360
4,360
-
14,170
1 Ceased being a director on 27 March 2013
2 Commenced being a director on 27 March 2013
3 Ceased being a director on 4 February 2013
4 Commenced being a director on 14 September 2012
5 Ceased being a director on 25 July 2012
There were no proportions of any elements of Key Management Personnel remuneration that related to performance.
Other than directors of Swan Gold, there were no other executive officers of the consolidated entity during the year.
12
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
Option holdings of key management personnel (consolidated)
30 June 2014
Directors
Michael Fotios
John Poynton
Craig Readhead
Wayne Zekulich
Executives
Linda Paini
Balance at
1 July 2013
Granted
as
remuneration
Options
exercised
Net change
other
Balance at
30 June 2014
Balance vested and
exercisable at
30 June 2014
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
There were no options granted to key management personnel during the year (2013: nil).
Shareholdings of key management personnel (consolidated)
30 June 2014
Directors
Michael Fotios1
John Poynton
Craig Readhead
Wayne Zekulich
Executives
Linda Paini
Balance at
1 July 2013
On the
exercise of options
Net change other
Balance at
30 June 2014
412,386,710
10,000,000
-
-
-
422,386,710
-
-
-
-
-
-
-
-
-
-
-
-
412,386,710
10,000,000
-
-
-
422,386,710
1Shares were acquired by Investmet Ltd, a company Mr Fotios is a director of and substantial shareholder of:
150,000,000 – 18 April 2013
39,849,657 – 21 June 2013
222,537,053 – 7 May 2013
412,386,710
No shares were issued during the year as a result of the exercise of options granted as part of remuneration.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
There were no forfeitures during the period.
All equity transactions with key management personnel have been entered into under terms and conditions no
more favourable than those the consolidated entity would have adopted if dealing at arm’s length.
Loans to key management personnel
There were no loans to key management personnel during the financial year.
Other transactions with directors
Transactions during the year between the consolidated entity and directors or their director-related entities are set
out in Note 20.
13
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (audited)
Information on any benefits received by directors of Swan Gold by reason of a contract made by the consolidated
entity with a director or a director-related entity is contained in Note 20 of the financial report.
Service agreements
The terms of employment for executive directors and specified executives were not formalised in service agreements
during the year ended 30 June 2014.
Company performance
The table below shows the performance of the consolidated entity as measured by its earnings per share. In the past
five years the consolidated entity has incurred losses and no dividends have been paid. Any improvement to
earnings is viewed as a long term position that is not yet fully determinable.
30 June
2014
Cents
30 June
2013
Cents
30 June
2012
Cents
30 June
2011
Cents
30 June
2010
Cents
Earnings/(loss) per share
(0.10)
(0.30)
(0.59)
(0.61)
(1.38)
End of Remuneration Report (audited)
14
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
30 JUNE 2014 FULL YEAR REPORT
DIRECTORS’ REPORT
ENVIRONMENTAL REGULATIONS
The consolidated entity is subject to significant environmental regulation in respect to its mineral exploration activities.
These obligations are regulated under relevant government authorities within Australia. The consolidated entity is a
party to exploration and mine development licences. Generally, these licences specify the environmental regulations
applicable to exploration and mining operations in the respective jurisdictions. The consolidated entity aims to ensure
that it complies with the identified regulatory requirements in each jurisdiction in which it operates.
Compliance with environmental obligations is monitored by the Board of Directors. No environmental breaches have
been notified to the consolidated entity by any government agency during the year ended 30 June 2014.
NON-AUDIT SERVICES
Non-audit services provided by Ernst & Young during their period as external auditors for taxation consulting advice
was $32,500 (2013: nil). Further details of remuneration of the auditors are set out at Note 17.
The board has considered the non-audit services provided during the year and is satisfied that the provision of those
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001
and did not compromise the auditor independence requirements of the Corporations Act 2001, for the following
reasons:
- all non-audit services were subject to the corporate governance guidelines adopted by Swan Gold;
- non-audit services have been reviewed by the audit committee to ensure that they do not impact the impartiality or
-
objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence as set
out in Professional Statement F1, Professional Independence, as they did not involve reviewing or auditing the
auditor’s own work, acting in a management or decision making capacity, acting as an advocate for Swan Gold or
jointly sharing economic risks and rewards.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
included immediately following the Directors’ Report and forms part of this Directors’ Report.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into indemnity agreements with each of the directors and officers of the Company. Under
the agreements, the Company will indemnify those officers against certain claims or for any expenses or costs which
may arise as a result of work performed in their respective capacities as officers of the Company or any related
entities.
The Company has taken out an insurance policy insuring Directors and Officers of the Company against any liability
arising from a claim bought by a third party against the Company or its Directors or Officers, and against liabilities for
costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in
their capacity as a Director or Officer of the Company, other than conduct involving a wilful breach of duty in relation
to the Company.
During the year, the Company paid premiums in respect of the above insurance policy. The contract prohibits the
disclosure of the nature of the liabilities and/or the amount of the premium.
Signed in accordance with a resolution of the directors.
Michael Fotios
Executive Chairman
Perth, Western Australia
30 September 2014
15
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the Directors of Swan Gold Mining
Limited
In relation to our audit of the financial report of Swan Gold Mining Limited and its controlled entities for
the financial year ended 30 June 2014, to the best of my knowledge and belief, there have been no
contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable
code of professional conduct.
Ernst & Young
G H Meyerowitz
Partner
30 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GHM:JT:SWAN:006
16
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue
Other income
Employee and directors – remuneration expense
Site care and maintenance costs
Administrative expenses
Other expenses
Finance costs
Depreciation
Exploration expenditure
Impairment of Property, Plant and Equipment
Capitalised exploration write off
Loss before income tax expense
Income tax expense
Loss for the year
CONSOLIDATED
NOTE
2014
$
2013
$
5(a)
43,793
74,117
5(b)
2,152,525
6,718,037
5(c)
5(d)
5(e)
8
6
(438,194)
(88,807)
(1,044,157)
(36,061)
(1,923,206)
-
`
(25,263)
-
(635,832)
(349,045)
(981,022)
(46,375)
(69,134)
(80,614)
(2,794,848)
(5,222,925)
(21,499,000)
(6,469,017)
(24,886,641)
-
-
(6,469,017)
(24,886,641)
Other comprehensive income for the year
-
-
Total comprehensive loss for the year
(6,469,017)
(24,886,641)
Attributable to:
- Members of Swan Gold
- Non-controlling interest
(6,426,717)
(42,300)
(24,886,641)
-
(6,469,017)
(24,886,641)
Basic and diluted loss per share (cents per share)
26
0.07
0.30
The above statement should be read in conjunction with the accompanying notes.
17
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
AS AT 30 JUNE 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED
Notes
2014
$
2013
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventory
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET LIABILITIES
SHAREHOLDERS’ DEFICIT
Contributed equity
Accumulated losses
Reserves
Parent entity interest
Non-controlling interest
25
7
7
8
10
11
12
12
215,699
772,758
-
-
988,457
64,160
3,000,000
3,064,160
4,052,617
1,409,917
31,706,201
58,242
33,174,360
4,148,100
4,148,100
235,603
5,525,343
11,746
63,459
5,836,151
-
3,000,000
3,000,000
8,836,151
1,647,872
30,114,240
26,761
31,788,873
4,148,100
4,148,100
37,322,460
35,936,973
(33,269,842)
(27,100,825)
13
14
167,965,331
(206,527,787)
5,292,614
167,665,331
(200,101,070)
5,292,614
(33,269,842)
(27,143,125)
15
-
42,300
SHAREHOLDERS’ TOTAL DEFICIT
(33,269,842)
(27,100,825)
The above statement should be read in conjunction with the accompanying notes
18
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent entity
Consolidated
equity
$
Contributed
Accumulated
losses
$
Reserves
$
Total
$
Non-
controlling
interests
$
Total
equity
$
At 1 July 2012
164,665,331
(175,214,429)
5,292,614
(5,256,484)
42,300
(5,214,184)
Other comprehensive loss
Loss for the year
Total comprehensive loss for the
year
Issued of ordinary shares
-
-
-
(24,886,641)
-
3,000,000
(24,886,641)
-
-
-
-
-
-
(24,886,641)
(24,886,641)
3,000,000
-
-
-
-
-
(24,886,641)
(24,886,641)
3,000,000
At 30 June 2013
167,665,331
(200,101,070)
5,292,614
(27,143,125)
42,300
(27,100,825)
Other comprehensive loss
Loss for the year
Total comprehensive loss for the
year
Issued of ordinary shares
-
-
-
(6,426,717)
-
300,000
(6,426,717)
-
-
-
-
-
-
(6,426,717)
-
(42,300)
-
(6,469,017)
(6,426,717)
300,000
(42,300)
-
(6,469,017)
300,000
At 30 June 2014
167,965,331
(206,527,787)
5,292,614
(33,269,842)
-
(33,269,842)
The above statement should be read in conjunction with the accompanying notes
19
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for mineral exploration expenditure
Interest received
Interest paid
Net cash outflow used in operating activities
Cash flows from investing activities
Payments for purchase of property, plant and equipment
Payments for rental and security bonds
Proceeds from sale of tenement
Proceeds from return of security bonds
Cash reclassified from security bond
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from share issue
Proceeds from loan
Repayment of loan
Net cash inflow from financing activities
CONSOLIDATED
NOTE
2014
$
2013
$
25
56,764
(1,302,417)
(5,369,054)
43,793
(6,268)
(6,577,182)
(25,262)
-
1,400,000
5,196,700
(64,160)
6,507,278
300,000
85,000
(335,000)
50,000
(146,098)
(568,488)
(2,832,577)
74,117
(16,321)
(3,489,367)
-
(34,200)
-
-
(34,200)
3,000,000
500,000
-
3,500,000
Net increase / (decrease) in cash and cash equivalents
(19,904)
(23,567)
Cash and cash equivalents at the beginning of the financial year
235,603
Cash and cash equivalents at the end of the financial year
25
215,699
259,170
235,603
The above statement should be read in conjunction with the accompanying notes
20
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The financial report of Swan Gold for the year ended 30 June 2014 was authorised for issue in accordance
with a resolution of the Directors on the date of signing of the Directors’ Report. Swan Gold is a for-profit
company limited by shares that is incorporated and domiciled in Australia.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
(b)
Basis of preparation
The financial report is a general-purpose financial report which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations. The financial
report has been prepared on a historical cost basis. The financial report is presented in Australian dollars.
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
(c)
Adoption of New and Revised Standards
The group has adopted all the new revised Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) that are relevant to its operations and effective for the current annual
reporting period. Details of the impact of the adoption of these new accounting standards are set out in the
individual accounting policy notes to follow.
New and revised Standards and amendments thereof and interpretations effective for the current year that
are relevant to the Group include:
AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘ Amendments to Australian
Accounting Standards arising from the consolidation and Joint Arrangements Standard’;
AASB 11 ‘Joint Arrangements’ and AASB 2011-7 ‘ Amendments to Australian Accounting Standards
arising from the consolidation and Joint Arrangements Standard’;
AASB 12 ‘Disclosure of Interests in Other Entities’;
AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian Accounting
Standards arising from AASB 13’; and
AASB 119 (Revised 2011) ‘Amendments to Australian Accountings Standards – Employee Benefits’.
The adoption of these new and revised standards has not resulted in any significant changes to the Group’s
accounting policies or to the amounts reported for the current or prior periods.
As a consequence of the adoption of AASB 2011-4 amendments to AASB 124 ‘Related Party Disclosure’,
certain Key Management Personnel disclosures previously required in notes have been removed and
included in the Remuneration Report.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2014.
Except as otherwise outlined below, the impact of these standards has not yet been determined.
21
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Application
date of
standard*
Application
date for
Group*
1 January
2014
1 July
2014
1 January
2014
1 July
2014
1 January
2018
1 July
2018
Reference
Title
Summary
AASB 2012-3 Amendments to
Australian Accounting
Standards - Offsetting
Financial Assets and
Financial Liabilities
Interpretation
21
Levies
AASB 2012-3 adds application guidance to AASB
132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying
the meaning of "currently has a legally enforceable
right of set-off" and that some gross settlement
systems may be considered equivalent to net
settlement.
This Interpretation confirms that a liability to pay a
levy is only recognised when the activity that
triggers the payment occurs. Applying the going
concern assumption does not create a constructive
obligation.
AASB 9/IFRS
9
Financial Instruments On 24 July 2014 The IASB issued the final version
of IFRS 9 which replaces IAS 39 and includes a
logical model for classification and measurement, a
single, forward-looking ‘expected loss’ impairment
model and a substantially-reformed approach to
hedge accounting.
IFRS 9 is effective for annual periods beginning on
or after 1 January 2018. However, the Standard is
available for early application. The own credit
changes can be early applied in isolation without
otherwise changing the accounting for financial
instruments.
The final version of IFRS 9 introduces a new
expected-loss impairment model that will require
more timely recognition of expected credit losses.
Specifically, the new Standard requires entities to
account for expected credit losses from when
financial instruments are first recognised and to
recognise full lifetime expected losses on a more
timely basis.
The AASB is yet to issue the final version of AASB
9. A revised version of AASB 9 (AASB 2013-9) was
issued in December 2013 which included the new
hedge accounting requirements, including changes
to hedge effectiveness testing, treatment of hedging
costs, risk components that can be hedged and
disclosures.
AASB 9 includes requirements for a simplified
approach for classification and measurement of
financial assets compared with the requirements of
AASB 139.
The main changes are described below.
a. 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; (2) the characteristics of the
contractual cash flows.
22
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
b. 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.
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.
c. 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.
d. Where the fair value option is used for financial
liabilities the change in fair value is to be
accounted for as follows:
► The change attributable to changes in credit
risk are presented in other comprehensive
income (OCI)
► The remaining change is presented in profit
or loss
AASB 9 also removes the volatility in profit or loss
that was caused by changes in the credit risk of
liabilities elected to be measured at fair value. This
change in accounting means that gains caused by
the deterioration of an entity’s own credit risk on
such liabilities are no longer recognised in profit or
loss.
Consequential amendments were also made to
other standards as a result of AASB 9, introduced
by AASB 2009-11 and superseded by AASB 2010-
7, AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2013-3 amends the disclosure requirements
in AASB 136 Impairment of Assets. The
amendments include the requirement to disclose
additional information about the fair value
measurement when the recoverable amount of
impaired assets is based on fair value less costs of
disposal.
AASB 2013-4 amends AASB 139 to permit the
continuation of hedge accounting in specified
circumstances where a derivative, which has been
designated as a hedging instrument, is novated
from one counterparty to a central counterparty as a
consequence of laws or regulations.
These amendments define an investment entity and
require that, with limited exceptions, an investment
entity does not consolidate its subsidiaries or apply
AASB 3 Business Combinations when it obtains
control of another entity.
These amendments require an investment entity to
measure unconsolidated subsidiaries at fair value
23
1 January
2014
1 July
2014
1 January
2014
1 July
2014
1 January
2014
1 July
2014
AASB 2013-3 Amendments to
AASB 136 –
Recoverable
Amount Disclosures for
Non-Financial Assets
AASB 2013-4 Amendments to
Australian Accounting
Standards – Novation
of Derivatives and
Continuation of Hedge
Accounting
[AASB 139]
AASB 2013-5 Amendments to
Australian Accounting
Standards –
Investment Entities
[AASB 1, AASB 3,
AASB 7, AASB 10,
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
AASB 12, AASB 107,
AASB 112, AASB 124,
AASB 127, AASB 132,
AASB 134 & AASB
139]
through profit or loss in its consolidated and
separate financial statements.
These amendments also introduce new disclosure
requirements for investment entities to AASB 12
and AASB 127.
AASB 2013-7 Amendments to AASB
1038 arising from
AASB 10 in relation to
Consolidation and
Interests of
Policyholders
[AASB 1038]
AASB 2014-1
Part A -
Annual
Improvements
2010–2012
Cycle
Amendments to
Australian Accounting
Standards - Part A
Annual Improvements
to IFRSs 2010–2012
Cycle
AASB 2013-7 removes the specific requirements in
relation to consolidation from AASB 1038, which
leaves AASB 10 as the sole source for consolidation
requirements applicable to life insurer entities.
1 January
2014
1 July
2014
1 July
2014
1 July
2014
AASB 2014-1 Part A: This standard sets out
amendments to Australian Accounting Standards
arising from the issuance by the International
Accounting Standards Board (IASB) of International
Financial Reporting Standards (IFRSs) Annual
Improvements to IFRSs 2010–2012 Cycle and
Annual Improvements to IFRSs 2011–2013 Cycle.
Annual Improvements to IFRSs 2010–2012 Cycle
addresses the following items:
► AASB 2 - Clarifies the definition of 'vesting
conditions' and 'market condition' and introduces
the definition of 'performance condition' and
'service condition'.
► AASB 3 - Clarifies the classification requirements
for contingent consideration in a business
combination by removing all references to AASB
137.
► AASB 8 - Requires entities to disclose factors
used to identify the entity's reportable segments
when operating segments have been
aggregated. An entity is also required to provide
a reconciliation of total reportable segments'
asset to the entity's total assets.
► AASB 116 & AASB 138 - Clarifies that the
determination of accumulated depreciation does
not depend on the selection of the valuation
technique and that it is calculated as the
difference between the gross and net carrying
amounts.
► AASB 124 - Defines a management entity
providing KMP services as a related party of the
reporting entity. The amendments added an
exemption from the detailed disclosure
requirements in paragraph 17 of AASB 124 for
KMP services provided by a management entity.
Payments made to a management entity in
respect of KMP services should be separately
disclosed.
AASB 2014-1
Part A -
Annual
Improvements
2011–2013
Amendments to
Australian Accounting
Standards - Part A
Annual Improvements
to IFRSs 2011–2013
Annual Improvements to IFRSs 2011–2013 Cycle
addresses the following items:
► AASB13 - Clarifies that the portfolio exception in
paragraph 52 of AASB 13 applies to all contracts
within the scope of AASB 139 or AASB 9,
1 July
2014
1 July
2014
24
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
Cycle
Cycle
AASB 1031 Materiality
AASB 2013-9 Amendments to
Australian Accounting
Standards –
Conceptual
Framework, Materiality
and Financial
Instruments
Amendments
to
IAS 16 and
IAS 38*****
Clarification of
Acceptable Methods of
Depreciation and
Amortisation
(Amendments to
IAS 16 and IAS 38)
regardless of whether they meet the definitions
of financial assets or financial liabilities as
defined in AASB 132.
► AASB40 - Clarifies that judgment is needed to
determine whether an acquisition of investment
property is solely the acquisition of an
investment property or whether it is the
acquisition of a group of assets or a business
combination in the scope of AASB 3 that
includes an investment property. That judgment
is based on guidance in AASB 3.
The revised AASB 1031 is an interim standard that
cross-references to other Standards and the
Framework (issued December 2013) that contain
guidance on materiality.
AASB 1031 will be withdrawn when references to
AASB 1031 in all Standards and Interpretations
have been removed.
AASB 2014-1 Part C issued in June 2014 makes
amendments to eight Australian Accounting
Standards to delete their references to AASB 1031.
The amendments are effective from 1 July 2014*.
The Standard contains three main parts and makes
amendments to a number Standards and
Interpretations.
Part A of AASB 2013-9 makes consequential
amendments arising from the issuance of AASB CF
2013-1.
Part B makes amendments to particular Australian
Accounting Standards to delete references to AASB
1031 and also makes minor editorial amendments
to various other standards.
Part C makes amendments to a number of
Australian Accounting Standards, including
incorporating Chapter 6 Hedge Accounting into
AASB 9 Financial Instruments.
IAS 16 and IAS 38 both establish the principle for
the basis of depreciation and amortisation as being
the expected pattern of consumption of the future
economic benefits of an asset.
The IASB has clarified that the use of revenue-
based methods to calculate the depreciation of an
asset is not appropriate because revenue generated
by an activity that includes the use of an asset
generally reflects factors other than the
consumption of the economic benefits embodied in
the asset.
The IASB also clarified that revenue is generally
presumed to be an inappropriate basis for
measuring the consumption of the economic
benefits embodied in an intangible asset. This
presumption, however, can be rebutted in certain
limited circumstances.
1 January
2014
1 July
2014
^^
^^
1 January
2016
1 July
2016
AASB 2014-1
Part B
Amendments to
Australian Accounting
AASB 2014-Part B makes amendments in relation
to the requirements for contributions from
1 July
2014
1 July
2014
25
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
Amendments
to AASB 119
Standards - Part B
Defined Benefit Plans:
Employee
Contributions
(Amendments to AASB
119)
employees or third parties that are set out in the
formal terms of the benefit plan and linked to
service.
The amendments clarify that if the amount of the
contributions is independent of the number of years
of service, an entity is permitted to recognise such
contributions as a reduction in the service cost in
the period in which the related service is rendered,
instead of attributing the contributions to the periods
of service.
*
*****
Designates the beginning of the applicable annual reporting period unless otherwise stated.
These IFRS amendments have not yet been adopted by the AASB. In order to claim compliance with IFRS, these amendments should be noted in
the financial statements.
^^
The application dates of AASB 2013-9 are as follows:
Part A –periods ending on or after 20 Dec 2013 Application date for the Group: period ending 30 June 2014
Part B - periods beginning on or after 1 January 2014 Application date for the Group: period beginning 1 July 2014
Part C - reporting periods beginning on or after 1 January 2015 Application date for the Group: period beginning 1 July 2015
(d) Going concern
As at 30 June 2014, the Group’s current liabilities exceeded its current assets by $32,185,903 and the groups
Shareholders’ deficit totalled $33,269,842. The consolidated entity recorded a loss of $6,469,017 for the year
ended 30 June 2014.
The ability of the Group to operate as a going concern and meet its debts as and when they fall due is primarily
dependent upon the Directors meeting the terms and conditions under the Investmet transaction and
successfully recapitalising the Group. Failure to do so may result in the Group being unable to meet its debts
as and when they fall due and realise its assets and settle its liabilities in the ordinary course of business. The
financial report has been prepared on the basis that the consolidated entity will continue to meet their
commitments and can therefore continue normal business activities and the realisation of assets and the
settlement of liabilities in the ordinary course of business.
On 11 August 2014 the Company lodged with the Australian Securities & Investment Commission a prospectus
which is seeking to raise a minimum of $13,500,000 by the issue of up to 67,500,000 Shares at $0.20 per
share and a maximum of $20,000,000 by the issue of up to 100,000,000 shares at $0.20 per Share with the
ability to accept over subscriptions to raise an additional $5 million, in each case, before costs.
The directors believe that at the date of signing the financial report there are reasonable grounds to believe that
having regard to the matters set out above, the consolidated entity will be able meet the terms and conditions
under the Investmet transaction and successfully recapitalise the Group.
Should the consolidated entity not achieve the matters set out above, there is significant uncertainty whether the
consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish
its liabilities in the normal course of business and at the amounts stated in the financial statements.
The financial report does not include any adjustments relating to the recoverability and classification of recorded
asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated
entity not be able to continue as a going concern.
Loan Facility Agreement
On 14 April 2014, the Company, Investmet, Stirling, the Security Trustee, the Nominee and certain subsidiaries of
the Company who have provided security in relation to the debts, entered into a loan facility agreement to set out
the terms and conditions for the Debt, DCM Debt and Stirling Debt (Facility Agreement). The Nominee entered
into the Facility Agreement on behalf of the Other Lenders in accordance with certain nominee deeds. As at the
date of this report, nominee deeds have been signed by Other Lenders holding more than 80% of the Other
Lenders Debt Portion and the Company understands it is the intention of the Nominee to arrange for the
remaining Other Lenders to sign their respective nominee deeds before the Closing Date.
26
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Under the Facility Agreement, Investmet, Stirling and the Other Lenders agreed to continue to make available the
loan facility (consisting of the Debt, DCM Debt and Stirling Debt) to the Company. The Facility Agreement sets
out the terms and conditions for the loan facility.
The proposed transactions under the Facility Agreement can be summarised as follows:
(e) (Debt conversion) Investmet may elect to convert the Debt (in whole or in part) to Shares. If Investmet elects
to do so, Stirling will be entitled to convert an amount of the Stirling Debt proportionate to the amount of the
Debt that Investmet elects to convert.
If the Company does not have enough unallocated funds upon repayment of the debts and conversion of the
Debt (and Stirling Debt) in order to meet reinstatement requirements of the ASX, Stirling may convert such
amount of the Stirling Debt as would result in the Company being able to meet ASX’s reinstatement
requirements.
Investmet may also elect to convert the DCM Debt (in whole or in part) to Shares.
(f)
(Repayment on Equity Raising) Upon the completion of an equity raising by the Company to raise funds to
ensure that the Company has sufficient funds to satisfy any financial condition imposed by the ASX in
connection with the re-quotation of the Company’s securities (Equity Raising):
I.
II.
III.
Investmet must elect to convert part or all of the Debt outstanding at the completion of the Equity
Raising, provided that no more than $5,000,000 of the Debt is subsisting immediately after;
Stirling may elect to convert part or all of the Stirling Debt outstanding at the completion of the Equity
Raising, provided that no more than $2,500,000 of the Stirling Debt is subsisting immediately after.
If Stirling does not convert any or all of the Stirling Debt up to $2,500,000 in accordance with the its
right of conversion, Stirling has agreed to act in good faith and convert any such amount of the
Stirling Debt up to $2,500,000 that would result in the Company being able to meet ASX’s
reinstatement requirements; and
Investmet may elect to have the DCM Debt repaid (whole or in part) in cash from the proceeds of the
Equity Raising, or by the issue of Shares, or elect to have all or part of the DCM Debt subsisting
following the Equity Raising.
(g) (Repayment and conversion on Maturity Date) On the maturity date of the loan facility, which was on 1 July
2014 (Maturity Date), the Company was required to repay the Debt and the Stirling Debt (plus interest)
outstanding on the Maturity Date by, at the election of the Company, the issue of Shares or in cash, provided
that:
I.
Investmet had the option to elect for no more than $5,000,000 of the Debt to subsist immediately
after the Maturity Date; and
Stirling had the option to elect for no more than $5,000,000 of the Stirling Debt to subsist
immediately after the Maturity Date.
II.
In addition, Investmet had the option to elect for the DCM Debt (and interest) outstanding on the Maturity
Date to be repaid by, at the election of Investmet, the issue of Shares or in cash. Investmet may also elect
that all or part of the DCM Debt subsists immediately after the Maturity Date.
Repayment of the above debts did not occur on the Maturity Date. However, on 30 July 2014, the Company,
Investmet, the Nominee entered into a letter agreement, pursuant to which Investmet and the Nominee
agreed to repayment of the Debt and the DCM Debt.
In respect of the Stirling Debt, the Company intends to negotiate with Stirling to confirm whether all or part of
the Stirling Debt and its accrued and outstanding interest can be converted into Shares. If such agreement
can be met, Shares will issue to extinguish the debt. If such agreement cannot be met the debt will be
extinguished via a cash payment.
I.
(h) (Loan Syndicate Arrangements) The balance of the Debt, Stirling Debt and DCM Debt subsisting and owing
following the partial conversion of the Debt will be held under loan syndicate arrangements which will include:
general security interests over the Company (and its subsidiaries (if applicable)) and their respective
assets;
a two year moratorium on principal repayments; and
a minimum interest rate of 6% or a rate to be agreed between the Company, Investmet, Stirling and
the Other Lenders.
II.
III.
27
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Upon completion of the moratorium period, the Company may choose to repay the outstanding principal in
cash or convert it into Shares at a price no less than $0.75 per Share or as otherwise agreed by the parties.
Security Trust Deed
On 27 March 2013 the Company, the Security Trustee, Investmet, Stirling and various subsidiaries of the
Company entered into an agreement, pursuant to which MGMC assigned the security held by MGMC (as
trustee for the Group Trust, Territory Trust and Mt Ida Trust) in relation to the secured debt owed by the
Company, to the Security Trustee (Security Trust Deed).
The arrangements under the Security Trust Deed can be summarised as follows:
(e) (Trust) The Security Trustee will hold, among other things, all its right, title and interest in, to and under the
security on trust for Investmet, Stirling, and any other person who becomes a beneficiary under the Security
Trust Deed (including the Other Lenders).
(f)
(Security) The security assigned to the Security Trustee includes:
I.
II.
all the shares held by the Company in Mt Ida, Carnegie and Siberia; and
all present and future property, assets and undertakings of Mt Ida, Carnegie and Siberia (excluding
certain assets).
(g) (Payment) If, before the date that the Security Trustee enforces a security, a beneficiary under the Security
Trust Deed directs the Security Trustee to demand payment of secured moneys that are due and payable to
the beneficiary, the Security Trustee must make the demand and the person who has granted a security
must immediately pay the amount demanded to the Security Trustee.
(h) (Powers of Security Trustee) The powers of the Security Trustee include:
I.
II.
III.
IV.
V.
VI.
the power to exercise all rights and discretions and do all other things which a party which is not a
trustee would have were it to have entered into the security in place of the Security Trustee;
to make demands and give notices under the security;
to commence and pursue legal proceedings and take action to enforce the security or to protect any
property or its interest in any property subject to the security;
to sell any property in accordance with the security;
to appoint and instruct a receiver or receiver and manager under the security; and
to exercise all other rights under the security exercisable by the party named in that security as
grantee, mortgagee or charge.
These powers are in addition to any powers the Security Trustee may have under any legislation
general law or equity.
or the
The Security Trustee must exercise its powers as directed by a majority of the lenders of the
moneys whose lender proportions aggregate more than 60% of the total amount of the secured
secured
Principles of consolidation
The consolidated financial statements comprise the financial statements of Swan Gold and its subsidiaries (as
outlined in Note 22) (the Group) as at and for the period ended 30 June each year.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from the its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company,
using consistent accounting policies. In preparing the consolidated financial statements, all intercompany
balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends have
been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
Investments in subsidiaries held by Swan Gold are accounted for at cost in the separate financial statements of
the parent entity less any impairment charges. Dividends received from subsidiaries are recorded as a
component of other revenues in the separate income statement of the parent entity, and do not impact the
recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess
whether any indicators of impairment of the carrying value of the investment in the subsidiary exist.
28
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Where such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable
amount, an impairment loss is recognised.
The acquisition of subsidiaries which are businesses is accounted for using the acquisition method of
accounting. The acquisition method of accounting involves recognising at acquisition date, separately from
goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the
acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date
fair values.
The difference between the above items and the fair value of the consideration (including the fair value of any
pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating unit
retained.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive
income and are presented within equity in the consolidated statement of financial position, separately from the
equity of the owners of the parent. Losses are attributed to the non-controlling interest even if that results in a
deficit balance.
A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted for as
an equity transaction.
If the Group loses control over a subsidiary, it:
- Derecognises the assets (including goodwill) and liabilities of the subsidiary
- Derecognises the carrying amount of any non-controlling interest
- Derecognises the cumulative translation differences, recorded in equity
- Recognises the fair value of the consideration received
- Recognises the fair value of any investment retained
- Recognises any surplus or deficit in profit or loss
- Reclassifies the parent's share of components previously recognised in other comprehensive income to
profit or loss, or retained earnings, as appropriate
29
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
(e)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the consolidated
entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received or receivables taking into account contractually defined terms of payment and excluding taxes or duty.
The following specific recognition criteria must also be met before revenue is recognised.
Interest
Revenue is recognised as the interest accrues using the effective interest rate method (which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net
carrying amount of the financial asset).
(f)
Property, plant and equipment
All assets acquired, including property, plant and equipment are initially recorded at their cost of acquisition,
being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.
Property, plant and equipment located on a mine site is included at cost less provision for depreciation and any
impairment in value. All such assets are depreciated over the estimated remaining economic life of the mine,
using a unit of production basis.
All other property, plant and equipment is included at cost less provision for depreciation and any impairment in
value and depreciated on a straight-line basis commencing from the time the asset is held ready for use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the
difference between net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the
year the asset is derecognised.
(g) Other financial assets
Financial assets in the scope of AASB 139 “Financial Instruments – Recognition and Measurement” are
classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity
investments or available for sale investments as appropriate. When financial assets are recognised initially,
they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly
attributable transaction costs. The consolidated entity determines the classification of its financial assets at
initial recognition.
All regular way purchases and sales of financial assets are recognised on the trade date (the date that the
consolidated entity commits to purchase the asset). Regular way purchases or sales are purchases or sales of
financial assets under contracts that require delivery of the assets within the period established generally by
regulation or convention in the market place.
Loans, receivables and security deposits
Loans, receivables and security deposits are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are carried at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are
derecognised or impaired as well as through the amortisation process.
The fair values of investments that are actively traded in organised financial markets are determined by
reference to quoted market bid prices at the close of business on the reporting date. For investments with no
active market, fair values are determined using valuation techniques. Such techniques include: using recent
arm’s length market transactions; reference to the current market value of another instrument that is
substantially the same; discounted cash flow analysis; and option pricing models, making as much use of
available and supportable market data as possible and keeping judgemental inputs to a minimum.
(h)
Deferred exploration and evaluation expenditure
Once the legal right to explore has been acquired, exploration and evaluation costs are expensed to the
Statement of Comprehensive Income as incurred unless the Directors conclude that a future economic benefit
is more likely than not to be realised. Costs incurred during this phase are expensed in the Statement of
Comprehensive Income as ‘exploration and evaluation expenditure’. In evaluating if expenditures meet the
criteria to be capitalised, several different sources of information are utilised. The information that is used to
determine the probability of future economic benefits depends on the extent of exploration and evaluation that
has been performed.
30
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment whenever
facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount.
The recoverable amount of capitalised exploration and evaluation expenditure is the higher of fair value less
costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for
the cash-generating unit to which the asset belongs, unless the asset’s value in use can be estimated to be
close to its fair value.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated
recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. Any
impairment losses are recognised in profit or loss.
(i)
Impairment of non-financial assets
At each reporting date, the consolidated entity assesses whether there is any indication that an asset may be
impaired. Where an indicator of impairment exists, the consolidated entity makes a formal estimate of
recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is
considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an
individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to
sell and it does not generate cash inflows that are largely independent of those from other assets or groups of
assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset
belongs. The estimated future cash flows are discounted to their present value using a pre tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
(j)
Jointly controlled assets
The Group has an interest in a joint arrangement that is a jointly controlled asset. A joint arrangement is a
contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint
control. The Group recognises its interest in the jointly controlled assets by recognising its interest in the
assets and the liabilities of the joint arrangement. The Group also recognises the expenses that it incurs and its
share of the income that it earns from the use and output of the jointly controlled assets.
(k)
Income tax
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilised, except:
31
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
When the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the
extent that is has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax
items are recognised in correlation to the underlying transaction either in other comprehensive income or
directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the
same taxation authority.
(l)
Trade and other receivables
Trade receivables, which generally have 30 to 90 day terms, are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method less an allowance for impairment.
An allowance for doubtful debts is made when there is objective evidence that the consolidated entity will not
be able to collect the debts. Bad debts are written off when identified.
Collectability of trade receivables is reviewed on an ongoing basis. Financial difficulties of the debtor, default
payments or debts more than 180 days overdue are considered objective evidence of impairment. The amount of
the impairment loss is the receivable carrying amount compared to the present value of estimated future cash
flows, discounted at the original effective interest rate.
(m) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when the
consolidated entity becomes obliged to make future payments in respect of the purchase of these goods and
services.
(n)
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of
issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by
taking into account any issue costs, and any discount or premium on settlement. Gains and losses are
recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the
amortisation process.
(o)
Contributed equity
Ordinary share capital is recognised at the fair value of the consideration received. Any transaction costs arising
on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
32
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
(p) Goods and services tax
Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount
of GST incurred is not recoverable. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from
or payable to the tax authority is included as a current asset or liability in the statement of financial position. Cash
flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable from or payable to the tax authority are classified as
operating cash flows.
(q)
Employee benefits
Provision for employee benefits represents the amount which the consolidated entity has a present obligation to
pay resulting from employees’ service provided up to the balance date.
Liabilities arising in respect of employee benefits expected to be settled within twelve months of the balance date
are measured at their nominal amounts based on remuneration rates which are due to be paid when the liability is
settled. All other employee benefit liabilities are measured at the present value of the estimated future cash
outflow to be made in respect of services provided by employees up to the balance date.
(r)
Share based payments
The consolidated entity may provide benefits to employees (including directors) in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (“equity settled
transactions”). The cost of these equity settled transactions with employees is measured by reference to the fair
value at the date they are granted. The value is determined using a binomial model. The cost of equity settled
transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to
the award (“vesting date”). The cumulative expense recognised for equity settled transactions at each reporting
date until vesting date reflects the extent to which the vesting period has expired and the number of awards that,
in the opinion of the directors, will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect of these
conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do
not ultimately vest, except for awards where vesting is conditional upon a market condition. Where an equity-
settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that it is granted, the cancelled and new award are
treated as if they were a modification of the original award, as described in the previous paragraph.
(s)
Leases
Leases are classified at their inception as either operating or finance leases based on the economic substance
of the agreement so as to reflect the risks and benefits incidental to ownership.
Operating leases
The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the
risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis.
Finance leases
Leases which effectively transfer substantially all the risks and benefits incidental to ownership of the leased
item to the consolidated entity are capitalised at the present value of the minimum lease payments and
disclosed as plant and equipment under lease. A lease liability of equal value is also recognised. Capitalised
lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term.
33
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
(t)
Rehabilitation costs
Full provision for rehabilitation costs is made based on the net present value of the estimated cost of restoring
the environmental disturbance that has occurred up to the balance date. Increases due to additional
environmental disturbances are capitalised and amortised over the remaining lives of the operations. These
increases are accounted for on a net present value basis.
Rehabilitation provisions are discounted using a current pre-tax rate that reflects the risks specific to the
liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a
financing cost. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for
changes in legislation, technology or other circumstances.
(u)
(v)
Inventories
Ore and Gold stocks are valued at the lower of cost and net realisable value. Cost comprises direct materials,
direct labour and an appropriate proportion of variable and fixed overhead expenditure relating to mining
activities, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual
items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to
make the sale.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised
as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing
costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Swan
Gold does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with this
asset would be capitalised (including any other associated costs directly attributable to the borrowing and
temporary investment income earned on the borrowing).
(w) Earnings per share
Basic earnings per share is determined by dividing net operating results after income tax attributable to
members of the parent entity, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to potential ordinary shares.
(x)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term
deposits with an original maturity of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to
cash on hand and which are used in the cash management function on a day to day basis, net of outstanding
bank overdrafts.
34
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Refer to Note 21 for details.
4.
(a)
JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Significant accounting judgements
In the process of applying the consolidated entity’s accounting policies, management has made the following
judgements, apart from those involving estimations, which have the most significant effect on the amounts
recognised in the financial statements:
Capitalisation of exploration expenditure
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement
in determining whether it is likely that future economic benefits are likely either from future exploitation or sale
or where activities have not reached a stage which permits a reasonable assessment of the existence of
reserves.
The determination of Joint Ore Reserves Committee (JORC) resource is in itself an estimation process that
requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the
point of deferral of exploration and evaluation expenditure.
The deferral policy requires management to make certain estimates and assumptions about future events or
circumstances, in particular whether an economically viable extraction operation can be established. Estimates
and assumptions made may change if new information becomes available. If, after expenditure is capitalised,
information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is
written off in the statement of comprehensive income in the period when the new information becomes
available.
(b)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting
period are:
Impairment
Assets, including property, plant and equipment, receivables and goodwill, are reviewed for impairment if there
is any indication that the carrying amount may not be recoverable. Where a review for impairment is
conducted, the recoverable amount is assessed by reference to the higher of “value in use” (being the net
present value of expected future cash flows of the relevant cash generating unit) and “fair value less costs to
sell”.
Impairment of deferred exploration expenditure
The future recoverability of deferred exploration expenditure is dependent on a number of factors, including
whether the Group decides to exploit the related tenement itself or, if not, whether it successfully recovers the
related exploration asset through sale.
To the extent that deferred exploration expenditure is determined not to be recoverable in the future, this will
reduce profits and net assets in the period in which this determination is made.
35
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Provision for decommissioning and restoration costs
Decommissioning and restoration costs are a normal consequence of mining and the majority of this
expenditure is incurred as the end of a mine’s life. In determining an appropriate level of provision,
consideration is given to the expected future costs to be incurred, the timing of these expected future costs
(largely dependent on the life of the mine) and the estimated future level of inflation.
The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many
factors including changes to the relevant legal requirements, the emergence of new restoration techniques or
experience at other mine sites. The expected timing of expenditure can also change, for example in response
to changes in reserves or to production rates.
Changes to any of the estimates could result in significant changes to the level of provisioning required, which
would in turn impact future financial results.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is determined using
the binomial model using the assumptions detailed in the financial statements.
36
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
5. REVENUE AND EXPENSES
(a) Revenue
- Interest
(b) Other income
- Management fees
- Gain on loan forgiveness
- Sundry income
- Research and development tax claim
- Profit on sale of tenement
CONSOLIDATED
2014
$
2013
$
43,793
74,117
23,243
-
-
725,622
1,403,660
181,432
6,529,3051
7,300
-
-
2,152,525
6,718,037
1 Swan Gold Mining Ltd owed $13,477,000 to the Territory Trust.
$6,947,000 of the debt was assigned to Investmet and $6,529,305
was forgiven.
(c)
Employee and directors’ benefits expenses
- Wages and salaries
438,194
635,832
(d)
Corporate and administration expenses
- Audit, accounting and tax fees
- Consulting fees
- Legal fees
- Travel and accommodation expenses
- Regulatory
- Insurance
- Management fees
(e)
Finance costs
- Bank fees
- Interest expense
- Interest expense – capitalised against loan
- Cost associated with the capital raising
277,778
291,261
342,525
30,438
71,747
30,408
-
69,134
89,754
269,578
4,160
180,865
225,581
141,950
1,044,157
981,022
8,220
6,268
1,841,961
66,757
1,923,206
52,813
16,321
-
-
69,134
37
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED
2014
$’000
2013
$’000
-
-
-
-
-
-
(1,941)
(7,466)
2,158
-
(217)
-
-
-
-
55,620
256
3,437
1,288
76
60,677
2,975
6,450
(1,959)
-
1
1
-
42,811
256
3,437
1,262
83
47,849
6.
INCOME TAX EXPENSE
The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in statement of
comprehensive income
The prima facie tax benefit on loss from ordinary
activities before income tax is reconciled to the
income tax as follows:
Prima facie tax benefit on loss from ordinary
activities before income tax at 30% (2013: 30%)
Add/(less) tax effect of:
- Losses and other deferred tax balances not
recognised
- Non-allowable items
- Non-assessable items
Income tax expense reported in Statement of
Comprehensive Income
Deferred tax recognised:
Deferred tax liabilities:
Prepayments
Deferred tax assets:
Carry forward revenue losses
Net deferred tax
Unrecognised deferred tax assets:
Carry forward revenue losses
Exploration tenements & rehabilitation
Property, Plant & Equipment
Provisions & accruals
Other
38
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
6.
INCOME TAX EXPENSE (continued)
The tax benefits of the above deferred tax assets will only be obtained if:
- the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the
benefits to be utilised;
- the consolidated entity continues to comply with the conditions for deductibility imposed by law; and
- no changes in income tax legislation adversely affect the consolidated entity in utilising the benefits.
Tax consolidation:
Swan Gold Mining Limited and its wholly owned Australian resident subsidiary have formed a tax consolidated
group. Swan Gold Mining Limited is the head entity of the tax consolidated group.
CONSOLIDATED
2014
$
12,869
-
725,622
34,267
772,758
2013
$
139,476
5,196,700
-
189,167
5,525,343
7. TRADE AND OTHER RECEIVABLES
CURRENT
Trade debtors
Security deposits (1)
R&D tax credits
Other debtors (2)
(1) Security deposits are held in a 90 day term deposit that is rolled over
at each maturity date. The deposit is not available for use until the
consolidated entity has been released from any rehabilitation
obligations in regard to tenements to which the security deposit
relates. During the year the Group applied to the Western Australian
Department of Mines and Petroleum (“DMP”) for the release of the
Group’s environmental bonds. The application was successful and
funds were released to the Group subsequent to year end.
Accordingly, the Group has classified the security deposits as current
as at 30 June 2014.
Reconciliation of security deposits:
Opening balance
Refunded to Company
Transferred from non- current
5,196,700
(5,196,700)
-
-
-
5,196,700
Closing written down value
-
5,196,700
(2) Other debtors relates to GST receivable balances.
At 30 June, the ageing analysis of trade and other receivables is as follows:
2014
Consolidated
772,758
772,758
2013
Consolidated
328,642
328,642
-
-
Total
0-180 Days
+ 181 Days
PDNI *
+ 181 Days
CI **
39
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
* Past due not impaired (PDNI)
** Considered impaired (CI)
Receivables past due but not considered impaired are nil (2013: nil)
NON-CURRENT
Security deposits (1)
Sundry receivables – Joint Venture partner (2)
Allowance for non-recovery (2)
(1) Security deposits are held in a 90 day term deposit that is
rolled over at each maturity date. The deposit is not available
for use until the consolidated entity has been released from
any rehabilitation obligations in regard to tenements to which
the security deposit relates.
Reconciliation of security deposits:
Opening balance
Cash placed on deposit
Reclassified from cash
Transferred to current
Closing written down value
(2) Represents monies owed to the Company from its joint venture
partner. Refer to Note 23.
8. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
2014
$
64,160
6,534,637
(6,534,637)
64,160
2013
$
-
6,534,637
(6,534,637)
-
CONSOLIDATED
2014
$
2013
$
-
-
64,160
-
64,160
5,162,700
34,000
-
(5,196,700)
-
Plant and equipment
At cost
Less accumulated depreciation
Less impairment
14,141,440
(5,893,252)
(5,248,188)
14,116,177
(5,893,252)
(5,222,925)
Total property, plant and equipment
3,000,000
3,000,000
Reconciliation of property, plant and equipment:
Carrying amount at beginning of period
Additions
Transfer from Plant and equipment – under finance lease
Depreciation
Impairment
3,000,000
25,263
-
-
(25,263)
8,170,539
-
133,000
(80,614)
(5,222,925)
Closing written down value
3,000,000
3,000,000
40
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Impairment of Property, Plant and Equipment
is currently held
The processing plant
in care and
maintenance. During the period the Company obtained a
market valuation report from an independent third party. The
report contained an upper, preferred and lower valuation based
on a trade sale. The carrying value of the property, plant and
equipment at year end has been impaired to the lower valuation
contained in the report to ensure the carrying value reflects the
risk of pricing uncertainty due to current second hand market
conditions and to cover costs to sell.
9. DEFERRED EXPLORATION EXPENDITURE
Cost
Less accumulated impairment
33,076,647
(33,076,647)
27,967,000
(27,967,000)
Total deferred exploration and evaluation
-
-
41
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of deferred exploration and evaluation:
Carrying amount at beginning of period
Additions (1)
Transfer from Plant and equipment – under finance lease
Written off to P&L
(1) Represents an increase in the rehabilitation provision
relating to various disturbed project areas held by the
group. Refer to Note 12
10. TRADE AND OTHER PAYABLES
CONSOLIDATED
2014
$
-
5,109,647
-
(5,109,647)
-
2013
$
21,366,000
-
133,000
(21,499,000)
-
Trade payables and accruals (1)
1,409,917
1,647,872
(1) Trade creditors and accruals are non-interest bearing and
generally settled on 60 day terms.
11. LOANS AND BORROWINGS
Investmet Limited – Secured1
Investmet Limited – Unsecured1
Stirling Resources Pty Ltd – Unsecured1
Other - Unsecured
19,189,020
7,208,792
5,308,389
-
-
24,864,240
5,000,000
250,000
31,706,201
30,114,240
42
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Loan Facility Agreement
On 14 April 2014, the Company, Investmet, Stirling, the Security Trustee, the Nominee and certain subsidiaries of the
Company who have provided security in relation to the debts, entered into a loan facility agreement to set out the terms
and conditions for the Debt, DCM Debt and Stirling Debt (Facility Agreement). The Nominee entered into the Facility
Agreement on behalf of the Other Lenders in accordance with certain nominee deeds. As at the date of this report,
nominee deeds have been signed by Other Lenders holding more than 80% of the Other Lenders Debt Portion and the
Company understands it is the intention of the Nominee to arrange for the remaining Other Lenders to sign their
respective nominee deeds before the Closing Date.
Debt names and values
2013
Name
$4,200,000
DCM debt (assigned to Investment Ltd)
Stirling debt
$5,000,000
Syndicated debt (assigned to Investment Ltd) $21,938,765 $20,664,240
$31,706,201 $29,864,240
Total
2014
$4,459,047
$5,308,389
Under the Facility Agreement, Investmet, Stirling and the Other Lenders agreed to continue to make available the loan
facility (consisting of the Debt, DCM Debt and Stirling Debt) to the Company. The Facility Agreement sets out the terms
and conditions for the loan facility.
The proposed transactions under the Facility Agreement can be summarised as follows:
(a) (Debt conversion) Investmet may elect to convert the Debt (in whole or in part) to Shares. If Investmet elects to
do so, Stirling will be entitled to convert an amount of the Stirling Debt proportionate to the amount of the Debt
that Investmet elects to convert.
If the Company does not have enough unallocated funds upon repayment of the debts and conversion of the
Debt (and Stirling Debt) in order to meet reinstatement requirements of the ASX, Stirling may convert such
amount of the Stirling Debt as would result in the Company being able to meet ASX’s reinstatement
requirements.
Investmet may also elect to convert the DCM Debt (in whole or in part) to Shares.
(b) (Repayment on Equity Raising) Upon the completion of an equity raising by the Company to raise funds to
ensure that the Company has sufficient funds to satisfy any financial condition imposed by the ASX in
connection with the re-quotation of the Company’s securities (Equity Raising):
I.
II.
III.
Investmet must elect to convert part or all of the Debt outstanding at the completion of the Equity
Raising, provided that no more than $5,000,000 of the Debt is subsisting immediately after;
Stirling may elect to convert part or all of the Stirling Debt outstanding at the completion of the Equity
Raising, provided that no more than $2,500,000 of the Stirling Debt is subsisting immediately after. If
Stirling does not convert any or all of the Stirling Debt up to $2,500,000 in accordance with the its right
of conversion, Stirling has agreed to act in good faith and convert any such amount of the Stirling Debt
up to $2,500,000 that would result in the Company being able to meet ASX’s reinstatement
requirements; and
Investmet may elect to have the DCM Debt repaid (whole or in part) in cash from the proceeds of the
Equity Raising, or by the issue of Shares, or elect to have all or part of the DCM Debt subsisting
following the Equity Raising.
(c) (Repayment and conversion on Maturity Date) On the maturity date of the loan facility, which was on 1 July
2014 (Maturity Date), the Company was required to repay the Debt and the Stirling Debt (plus interest)
outstanding on the Maturity Date by, at the election of the Company, the issue of Shares or in cash, provided
that:
I.
Investmet had the option to elect for no more than $5,000,000 of the Debt to subsist immediately after
the Maturity Date; and
Stirling had the option to elect for no more than $5,000,000 of the Stirling Debt to subsist immediately
after the Maturity Date.
II.
In addition, Investmet had the option to elect for the DCM Debt (and interest) outstanding on the Maturity Date
to be repaid by, at the election of Investmet, the issue of Shares or in cash. Investmet may also elect that all or
part of the DCM Debt subsists immediately after the Maturity Date.
43
Repayment of the above debts did not occur on the Maturity Date. However, on 30 July 2014, the Company,
Investmet, the Nominee entered into a letter agreement, pursuant to which Investmet and the Nominee agreed
to repayment of the Debt and the DCM Debt.
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
(i)
(Loan Syndicate Arrangements) The balance of the Debt, Stirling Debt and DCM Debt subsisting and owing
following the partial conversion of the Debt will be held under loan syndicate arrangements which will
include:
I.
general security interests over the Company (and its subsidiaries (if applicable)) and their
respective assets;
a two year moratorium on principal repayments; and
a minimum interest rate of 6% or a rate to be agreed between the Company, Investmet, Stirling
and the Other Lenders.
II.
III.
Upon completion of the moratorium period, the Company may choose to repay the outstanding principal in
cash or convert it into Shares at a price no less than $0.75 per Share or as otherwise agreed by the parties.
Security Trust Deed
On 27 March 2013 the Company, the Security Trustee, Investmet, Stirling and various subsidiaries of the
Company entered into an agreement, pursuant to which MGMC assigned the security held by MGMC (as
trustee for the Group Trust, Territory Trust and Mt Ida Trust) in relation to the secured debt owed by the
Company, to the Security Trustee (Security Trust Deed).
The arrangements under the Security Trust Deed can be summarised as follows:
(i)
(Trust) The Security Trustee will hold, among other things, all its right, title and interest in, to and under the
security on trust for Investmet, Stirling, and any other person who becomes a beneficiary under the Security
Trust Deed (including the Other Lenders).
(j)
(Security) The security assigned to the Security Trustee includes:
I.
II.
all the shares held by the Company in Mt Ida, Carnegie and Siberia; and
all present and future property, assets and undertakings of Mt Ida, Carnegie and Siberia (excluding
certain assets).
(k) (Payment) If, before the date that the Security Trustee enforces a security, a beneficiary under the Security
Trust Deed directs the Security Trustee to demand payment of secured moneys that are due and payable to
the beneficiary, the Security Trustee must make the demand and the person who has granted a security
must immediately pay the amount demanded to the Security Trustee.
(l)
(Powers of Security Trustee) The powers of the Security Trustee include:
I.
II.
III.
IV.
V.
VI.
the power to exercise all rights and discretions and do all other things which a party which is not a
trustee would have were it to have entered into the security in place of the Security Trustee;
to make demands and give notices under the security;
to commence and pursue legal proceedings and take action to enforce the security or to protect
any property or its interest in any property subject to the security;
to sell any property in accordance with the security;
to appoint and instruct a receiver or receiver and manager under the security; and
to exercise all other rights under the security exercisable by the party named in that security as
grantee, mortgagee or charge.
These powers are in addition to any powers the Security Trustee may have under any legislation
the general law or equity.
or
The Security Trustee must exercise its powers as directed by a majority of the lenders of the secured
moneys whose lender proportions aggregate more than 60% of the total amount of the secured
moneys.
44
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Investmet
Stirling
Unsecured Unsecure
Secured
Reconciliation of loans and borrowings:
Carrying amount at beginning of period
Advanced
Repaid
Conversion to ordinary shares
Capitalised interest
18,074
-
-
-
1,115
7,040
85
(335)
-
419
d
5,000
-
-
-
308
Total
30,114
85
(335)
-
1,842
Closing written down value
19,189
7,209
5,308
31,706
12. PROVISIONS
CURRENT
Employee benefits
NON-CURRENT
Rehabilitation
Reconciliation of provision for rehabilitation:
Carrying amount at beginning of period
Reversed
Unwinding of discount
CONSOLIDATED
2014
$
2013
$
58,242
26,761
9,822,387
4,148,100
4,148,100
-
-
4,148,100
-
-
Closing written down value
4,148,100
4,148,100
The Group makes full provision for the future cost of
rehabilitating mine sites and related production facilities on a
discounted basis on the development of mines or installation of
those facilities.
The rehabilitation provision represents the present value of
rehabilitation costs relating to mine sites. These provisions have
been created based on Swan Gold’s internal estimates.
Assumptions, based on the current economic environment,
have been made which management believes are a
reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any
material changes to the assumptions. However, actual
rehabilitation costs will ultimately depend upon future market
prices for necessary decommissioning works required which will
reflect market conditions at the relevant time. Furthermore, the
timing of rehabilitation is likely to depend on when the mines
cease to produce at economically viable rates. This, in turn, will
depend upon future gold prices, which are inherently uncertain.
Management is currently undertaking a detailed review of the
consolidated entity’s future rehabilitation obligations in relation
to the mine. The review, which will involve ground truthing the
entire tenement portfolio to confirm exactly what areas have
been disturbed, is expected to be completed by 30 June 2015.
45
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED
2014
$
2013
$
167,965,331
167,665,331
13. CONTRIBUTED EQUITY
(a) Share capital
913,487,661 (2013: 892,820,993) ordinary
fully paid shares
Ordinary shares entitle the holder to participate in dividends
in proportion to the number of and amounts paid on the
shares held. On a show of hands, every holder of ordinary
shares present at a meeting in person or by proxy is entitled
to one vote, and upon a poll each share is entitled to one
vote.
(b) Movements in ordinary share capital
Shares
$’000
Balance 30 June 2012
- Shares issued (1)
Balance 30 June 2013
- Shares issued (2)
Balance 30 June 2014
742,820,993
164,665,331
150,000,000
3,000,000
892,820,993
167,665,331
20,666,668
300,000
913,487,661
167,965,331
(1) During the 2013 financial year Investmet and Swan
Gold entered into an interim loan agreement whereby
Investmet agreed to provide Swan Gold with a facility
for working capital
to approximately
$3,000,000. On 15 April 2013 the loan amount of
$3,000,000 owing from Swan Gold to Investmet was
converted into fully paid ordinary shares in Swan Gold
at a price of $0.02 per share, which resulted in the
Company issuing 150,000,000 shares to Investmet.
funding up
(2) On 26 June 2014 the Company placed 20,666,668 fully
paid ordinary shares at a price of $0.015 per share to a
sophisticated investor raising $300,000
46
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Capital Management
When managing capital, management’s objective is to safeguard the entity’s ability to continue as a going
concern as well as to maintain optimum returns to shareholders and benefits to other stakeholders.
Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the
entity. In order to sustain these objectives the Company executed a Loan Facility Agreement with
Investmet Ltd and Stirling Resources Ltd. The agreement allows Swan Gold to extinguish a large majority of
its debt through the issue of equity rather than a cash settlement. Refer to note 2 d) for key terms of the
agreement
Capital is comprised of shareholders’ equity as disclosed in the statement of financial position.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Management has no current plans to reduce the capital structure through a share buy-back.
The Group is not subject to any externally imposed capital restrictions.
14.
RESERVES
Option premium and share-based payments reserve
5,292,614
5,292,614
CONSOLIDATED
2014
$
2013
$
2014
Number WAEP (1)
2013
Number
-
-
-
$
-
-
-
115,000,000
(115,000,000)
-
WAEP (1)
$
0.07
0.07
-
Movements in share options
On issue at beginning of the year
Expired
On issue at end of the year
(1) Weighted Average Exercise Price
Nature and purpose of reserve
The option premium and share-based
payment reserve represents the premium
the parent entity by option
paid
to
holders,
the value of equity benefits
provided to directors, employees as part
of their remuneration and the value of
services provided to the Group paid for by
the issue of equity.
15.
NON-CONTROLLING INTERESTS
Interest in Share capital
CONSOLIDATED
2014
$
-
2013
$
42,300
47
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
16. KEY MANAGEMENT PERSONNEL
Remuneration by category
- Short-term
- Post-employment
17. REMUNERATION OF AUDITORS
Amounts paid or due and payable to the auditors for:
- Auditing and reviewing the financial reports
- Taxation advisory services
18. EXPENDITURE COMMITMENTS
CONSOLIDATED
2014
$
2013
$
218,370
3,549
221,919
13,000
1,170
14,170
CONSOLIDATED
2014
$
2013
$
30,000
32,500
62,500
30,000
-
30,000
Under the terms of mineral tenement licences held by the consolidated entity, minimum annual expenditure obligations
of $4,511,774 (2013: $4,120,263) may be required to be expended during the forthcoming financial year in order for
the tenements to maintain a status of good standing. This expenditure may be incurred by the consolidated entity or
its joint venture partners and may be subject to variation from time to time in accordance with Department of Industry
and Resources regulations.
48
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
19. SEGMENT INFORMATION
The Group has identified its segments based on the internal management reporting that is used by the executive
management team in assessing performance and allocating resources. Segments have been identified as the
ongoing care and maintenance and mine development work segment and exploration segment. The Group operates
in one geographical segment – Australia.
The accounting policies used by the Group in reporting segment information internally, is the same as those contained
in Note 2 to the financial statements.
The following items and associated assets and liabilities are not allocated to operating segments as management do
not consider these to be part of the core operations of both segments:
Impairment of assets
(i)
(j) Corporate assets and liabilities
(k) Administrative expenses.
Segments
Mine Under Care
and Maintenance
Exploration
Consolidated
Year ended 30 June 2014
$
$
$
Segment revenue
Interest revenue
Other income
Total segment revenue
Unallocated revenue
Total revenue
Segment expense
Impairment of property, plant & equipment
Exploration expenditure
Site care and maintenance costs
Other
Total segment expense
Unallocated expense
Total expense
Segment loss
Unallocated loss
Total loss
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
32,184
1,403,660
1,435,844
11,578
-
11,578
5,674,287
3,301,351
88,807
5,583
9,070,028
-
1,808,296
-
4,517
1,812,813
1,960,396
-
1,960,396
1,801,235
-
1,801,235
3,041,060
8,786
4,359,468
185,170
43,762
1,403,660
1,447,422
748,896
2,196,318
5,674,287
5,109,647
88,807
10,100
10,882,841
3,456,282
14,339,123
3,761,631
2,707,386
6,469,017
3,049,846
1,002,772
4,052,618
4,544,639
32,777,821
37,322,460
Additions to non-current assets
-
-
-
49
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Segments
Year ended 30 June 2013
Segment revenue
Interest revenue
Other income
Total segment revenue
Unallocated revenue
Total revenue
Segment expense
Impairment of property, plant & equipment
Write-off of capitalised exploration expenditure
Exploration expenditure
Other
Total segment expenses
Unallocated expenses
Total expenses
Segment loss
Unallocated gain
Total loss
Segment assets
Unallocated assets
Total assets
Segment liabilities
Other unallocated liabilities
Total liabilities
Mine Under
Care and
Maintenance
$
Exploration
Consolidated
$
$
31,521
7,300
38,821
42,596
-
42,120
5,222,925
8,065,000
1,592,493
672,556
15,552,974
-
13,434,000
1,202,355
35,029
14,671,384
15,514,153
14,629,264
7,294,749
1,149,194
(4,594,603)
(356,063)
74,117
7,300
80,941
6,711,213
6,792,154
5,222,925
21,499,000
2,794,848
707,585
30,224,359
1,454,436
31,678,795
30,143,417
(5,256,777)
24,886,641
8,443,943
392,209
8,836,152
(4,950,666)
(30,986,307)
(35,936,973)
Additions to non-current assets
-
-
-
50
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
20. RELATED PARTY TRANSACTIONS
(a) Subsidiaries of the Company can be found at note 22.
(b) Directors who held office for any time during the period are disclosed in the directors’ report.
(c) Terms and conditions of transactions with related parties:
Transactions with related parties are made at terms equivalent to those that prevail in arm’s length
transactions. Outstanding balances at the year- end are unsecured and interest free and settlement
occurs in cash. There have been no guarantees provided or received for any related party receivables
or payables. For the year ended June 2014, the Group has not recorded any impairment of receivables
relating to amounts owed by related parties. This assessment is undertaken each financial year
through examining the financial position of the related party and the market in which the related party
operates.
(d) Transactions with related parties:
During the period Investmet and Swan Gold executed a Loan Facility Agreement. Refer to note 2 d) for
details of the agreement.
Delta Resources Management Pty Ltd, a Company which Mr Michael Fotios is a substantial
shareholder in, and Chairman of, provided technical and administrative support to the Company and
was paid $506,409.
Whitestone Drilling Pty Ltd, a Company which is 100% owned by Investmet Ltd, a company which Mr
Michael Fotios is a substantial shareholder in, and Chairman of provided drilling services to the
Company and was paid $411,879.
Allion Legal, a firm which Mr Craig Readhead is a Partner, received $376,681 for legal advice provided
to the Company. These fees have not been included in directors’ remuneration as they were not paid
to Mr Readhead in relation to the management of the affairs of the Company.
51
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
21. FINANCIAL INSTRUMENTS
(a) Financial Risk Management Policies and Objectives
The consolidated entity’s principal financial instruments are cash and short term deposits and loans. The main
purpose of these financial instruments is to provide working capital and raise finance for the consolidated entity’s
operations. The consolidated entity has various other financial assets and liabilities such as receivables and trade
payables, which arise directly from its operations. The main risks arising from the consolidated entity’s financial
instruments are interest rate risk and credit risk. The Board reviews and agrees policies for managing each of
these risks.
The Group’s activities expose it to a variety of financial risks: market risk (including commodity risk), credit risk,
liquidity risk, and interest rate risk. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on financial performance
without limiting the Group’s potential upside.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These
include monitoring levels of exposure to gold price risk and assessments of market forecasts for gold prices.
Liquidity risk is measured through the development of rolling future cash flow forecasts at various gold prices.
Risk management is carried out by executive management with guidance from the Audit Committee under
policies approved by the Board. The Board also monitors risk regularly at Board meetings and provides
guidance where necessary for overall risk management, including guidance on specific areas, such as
mitigating commodity price, interest rate and credit risks where applicable.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and
agrees policies for managing each of the risks identified below, including the setting of limits for any hedging
coverage of gold, credit allowances, and future cash flow forecast projections.
(b) Net Fair Values
The carrying amounts of financial assets and financial liabilities recorded in the financial statements represent
their respective amortised costs net of impairment. As at 30 June 2014 the fair value of the Groups financial
assets and financial liabilities approximate their carrying value.
(c) Credit Risk
Credit risk relates to the risk that a counter party will default on its contractual obligations resulting in financial
loss to the consolidated entity. The exposure of the consolidated entity to credit risk at balance date in relation
to each class of recognised financial asset is the carrying amount of the assets as indicated in the statement of
financial position.
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The
Group’s maximum exposure to credit risk at reporting date in relation to each class of financial asset is the
carrying amount of those assets as indicated in the Statement of Financial Position.
In relation to managing potential credit risk exposures, the Group has in place policies that aim to ensure that
cash transactions are limited to high credit quality financial institutions and that the amount of credit exposure to
any one financial institution is limited as far as is considered commercially appropriate.
(d) Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates is minimal and relates primarily to cash and
security deposits held with the Company’s bankers.
Interest rate risk represents the risk that the value of a financial instrument will fluctuate as a result of changes
in market interest rates. The exposure of the consolidated entity to interest rate risk and the effective weighted
average interest rate for classes of financial assets and liabilities is set out below.
52
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
Financial assets
Floating rate
Cash
Fixed rate
Security deposits – current (Note 7)
Security deposits – non- current (Note 7)
Financial liabilities
Fixed rate
Loans and borrowings
CONSOLIDATED
2014
$
2013
$
215,699
235,603
-
64,160
5,196,700
-
31,706,201
30,114,240
The Group’s policy is to manage its exposure to interest rate risk by holding cash on short term, fixed rate
deposits and variable rate deposits with reputable high credit quality financial institutions. The Group
constantly analyses its interest rate exposure. Consideration is given to potential renewals of existing
positions, alternative financing and the mix of fixed and variable interest rates.
(e) Sensitivity Analysis
The following tables summaries the sensitivity of the Group’s financial assets and liabilities to interest rate
risk. Had the interest rates moved, with all other variables held constant, post- tax profit and equity would
have been affected as shown.
CONSOLIDATED
Interest rate risk
Interest rate risk
Interest rate risk
Interest rate risk
30 June 2014
30 June 2013
-1% (1)
+1% (1)
-1% (1)
+1% (1)
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
$
$
$
$
$
$
$
$
Financial assets
Cash
Security deposits
(2,157)
(642)
-
-
Total increase/(decrease)
(2,799)
2,157
642
2,799
-
-
-
(2,356)
(51,967)
(54,323)
-
-
-
2,356
51,967
54,323)
-
-
-
(1) The rate of 1% applied in the above analysis and is based on management’s expected movement for the interest rate over the
next financial year.
53
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
(f)
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use
of loans and other available lines of credit. The Group manages liquidity risk by monitoring forecast cash
flows. The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments
and interest resulting from recognised financial assets and liabilities as of 30 June 2014. Cash flows for
financial assets and liabilities without fixed amount or timing are based on the conditions existing at 30
June 2014.
Subsequent to 30 June 2014, the consolidated entity continued to meet their commitments with funds
provided by Investmet Limited (Investmet) whereby Investmet plans to recapitalise Swan Gold to fund a
review into the recommencement of operations at the Carnegie and Mt Ida gold projects.
Maturity analysis of financial assets and liabilities based on management’s expectations:
Trade payables and other financial liabilities mainly originate from the financing of assets used in our
ongoing operations. These assets are considered in the Group’s overall liquidity risk. To monitor existing
financial assets and liabilities as well as to enable an effective controlling of future risks, the Company has
established comprehensive risk reporting covering its business that reflects expectations of management
of expected settlement of financial assets and liabilities.
CONSOLIDATED
30 June 2014
Financial assets
Trade and other receivables
Financial liabilities
Trade and other payables
Loans and borrowings
Net Maturity
CONSOLIDATED
30 June 2013
Financial assets
Trade and other receivables
Financial liabilities
Trade and other payables
Loans and borrowings
< 6
months
$
6 - 12
months
$
1 - 5
years
$
>5
years
$
Total
$
772,758
1,409,917
31,706,201
(33,343,360)
-
-
-
-
-
-
-
-
< 6
months
$
6 - 12
months
$
1 - 5
years
$
>5
years
$
-
-
5,196,700
1,647,872
-
-
30,114,240
-
-
-
-
-
-
-
-
-
-
772,758
1,409,917
31,706,201
(32,343,360)
Total
$
5,196,700
1,647,872
30,114,240
(26,565,412)
Net Maturity
(1,647,872)
(30,114,240)
5,196,700
54
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
22. INVESTMENTS IN CONTROLLED ENTITIES
Name of entity
Monarch Nickel Pty Ltd
Monarch Gold Pty Ltd
Carnegie Gold Pty Ltd
Siberia Mining Corporation Pty Ltd
Mt Ida Gold Pty Ltd
Mt Ida Gold Operations Pty Ltd
Country of
incorporation
Class
of shares
Equity holding
2013
2014
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
80
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
Controlled entities of Siberia Mining Corporation Pty Ltd
Ida Gold Operations Pty Ltd
Pilbara Metals Pty Ltd
Siberia Gold Operations Pty Ltd
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
23. INTERESTS IN JOINTLY CONTROLLED ASSETS
The consolidated entity entered into a joint arrangement with Kingsday Holdings Pty Ltd for the operation of the Mt
Ida Excluded Area joint venture. Under the agreement Swan Gold retains a 70% interest in the asset. The
consolidated entity contributes 100% of the funding of the joint venture with the other participant’s share repayable
from the gold production of the asset. Swan Gold will be paid interest on the funds used and in relation to the other
participant’s share of costs at a rate of 30% per annum during periods where mining operations are accruing on the
Mt Ida Excluded Area. The face value of the amount receivable as at 30 June 2014 is $6,534,000 with an
applicable notional interest rate of 30%, subject to an interest free period of 20 months when Swan Gold had yet to
recommence mining operations. This balance continues to be fully impaired as at 30 June 2014 as the recovery of
this balance is dependent on gold production and remains uncertain. There are no assets employed by the joint
venture and the Group’s expenditure in respect of the joint venture is brought to account initially as exploration and
evaluation through profit and loss.
The joint venture has no contingent liabilities or capital commitments.
24. CONTINGENT LIABILITIES
There were no contingent liabilities identified as at 30 June 2014.
55
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
25. CASH FLOW STATEMENT
a) Reconciliation of cash
Cash balances comprise:
Cash at bank
For the purpose of the cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.
b) Reconciliation of net cash outflow from operating activities to
loss after income tax
Loss after income tax
Adjusted for non- cash items:
Depreciation
Historic exploration expenditure written off
Forgiveness of Creditors Trust obligations
Impairment of property, plant and equipment
Capitalised interest expense
Reclass proceeds from sale of investment to investing
Changes in operating assets and liabilities:
(Increase)/decrease in receivables
Increase/(decrease) in payables
(Increase)/decrease of prepayments
Increase/(decrease) of provisions
(Increase)/decrease of inventory
CONSOLIDATED
2014
$
2013
$
215,699
235,603
(6,469,017)
(24,886,641)
-
-
-
25,263
1,841,961
(1,400,000)
(444,120)
(237,955)
11,746
31,481
63,459
80,614
21,499,000
(6,529,305)
5,222,925
-
-
(146,098)
1,333,643
(11,746)
(14,029)
(37,729)
Net cash outflow from operating activities
(6,577,182)
(3,489,367)
Non-cash financing and investing activities
During the prior year the consolidated entity entered into non-cash financing and investing transactions which
are not reflected in the statement of cash flows. These related to the recapitalisation of the Group. Refer to
Note 2 d).
56
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED
2014
$
2013
$
26. EARNINGS PER SHARE
Loss used in the calculation of basic earnings per share
6,469,017
24,886,641
Weighted average number of ordinary shares on issue used in
the calculation of basic earnings per share
Effect of dilution:
- Share options
- Effect of share consolidation (1)
Weighted average number of ordinary shares on
adjusted for the effect of dilution
issue
There were no options on issue at balance date.
Number
Number
891,258,928
777,361,209
nil
(804,408,705)
Nil
(699,625,088)
86,850,223
77,736,121
There were no other movements in ordinary shares and options which occurred subsequent to balance date.
(1) On 15 July 2014 the Company completed a share
consolidation which was achieved through the conversion of
ten fully paid ordinary shares into one fully paid ordinary share,
was approved by an ordinary resolution of shareholders
passed at the Company’s Annual General Meeting held on 8
July 2014.
57
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
27. SUBSEQUENT EVENTS
Share Placement to Swan Gold Directors’
On 11 July 2014 the Company issued 5,000,000 ordinary fully paid shares to Mr Craig Readhead and Mr John
Poynton at a price of 1.5 cents per share raising $75,000. The placement was approved by an ordinary resolution of
shareholders at the Company’s Annual General Meeting held on 8 July 2014.
1 for 10 Share Consolidation
On 15 July 2014 the Company completed a share consolidation achieved through the conversion of ten fully paid
ordinary shares into one fully paid ordinary share.
The below table summarises the Swan Gold capital structure pre and post the share consolidation:
Class Name
E36
ORD Ordinary fully paid shares 917,820,993
918,487,661
Total issued capital
Escrowed shares
Pre- consolidation Post- consolidation
666,668
66,668
91,783,555
91,850,223
As a result of the share consolidation all references in this Annual Report relating to the number and value of shares
allotted during and since the end of the financial year are stated on a post consolidation basis unless otherwise
stated.
Lodgement of Prospectus
On 11 August 2014 the Company lodged with the Australian Securities & Investment Commission a prospectus
which is seeking to raise a minimum of $13,500,000 by the issue of up to 67,500,000 Shares at $0.20 per share and
a maximum of $20,000,000 by the issue of up to 100,000,000 shares at $0.20 per Share with the ability to accept
over subscriptions to raise an additional $5 million, in each case, before costs.
In the opinion of the directors there is no additional information available as at the date of this report on any likely
developments which may materially affect the operations of the consolidated entity and the expected results of those
operations in subsequent years.
28. PARENT ENTITY INFORMATION
(a) Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non- Current liabilities
Total liabilities
Equity/(Deficit)
Contributed equity
Accumulated losses
Reserves
Total equity/(deficit)
2014
$
1,002,772
25,936,525
26,939,297
32,777,821
-
32,777,821
2013
$
392,209
27,162,960
27,555,169
6,122,067
24,864,240
30,986,307
167,965,331
167,665,331
(179,096,469)
(176,389,083)
5,292,614
5,838,524
5,292,614
(3,431,138)
58
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
NOTES TO THE FINANCIAL STATEMENTS
(b) Financial performance
Profit/(Loss) for the year
Other comprehensive income
Total loss for the year
(2,707,386)
(5,256,777)
-
-
(2,707,386)
(5,256,777)
Guarantees
Swan Gold and its subsidiaries have entered into a Deed of Cross Guarantee. The effect of the deed is that Swan Gold
has guaranteed to pay any deficiency in the event of winding up of any controlled entity or if they do not meet their
obligations under the terms of loans, leases or other liabilities subject to the guarantee. The controlled entities have
also given a similar guarantee in the event that Swan Gold is wound up or if it does not meet its obligations under the
terms of loans, leases or other liabilities subject to the guarantee.
Tax consolidation
For the purposes of income taxation, Swan Gold and its 100% owned subsidiaries have formed a tax consolidated
group. Swan Gold is the head entity of the tax consolidated group.
(i) Members of the tax consolidated group and the tax sharing agreement
Swan Gold and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect
from 1 July 2002. Swan Gold is the head entity of the tax consolidated group. Members of The Group have
entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. No amounts have been recognised in the
financial statements in respect of this agreement on the basis that the possibility of default is remote.
(ii) Tax effect accounting by members of the tax consolidated group.
The head entity and the controlled entities in the tax consolidated group continue to account for their own
current and deferred tax amounts. The Group has applied The Group allocation approach in determining the
appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.
The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad
principles in AASB 112 Income Taxes.
59
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Swan Gold Mining Limited, I state that:
1. In the opinion of the directors:
a. The financial statements, notes and the additional disclosures included in the directors’ report designed as
audited, of the consolidated entity are in accordance with the Corporations Act 2001, including:
i. Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its
performance for the year ended on that date.
ii. Complying with Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001.
b. The financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note 2(b).
c. Subject to the matters disclosed in Note 2(d), there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2014.
On behalf of the board
Michael Fotios
Executive Chairman
Perth, Western Australia
30 September 2014
60
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Swan Gold Mining
Limited
Report on the financial report
We have audited the accompanying financial report of Swan Gold Mining Limited, which comprises the
consolidated statement of financial position as at 30 June 2014, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GHM:JT:SWAN:004
61
Basis for qualified opinion
Included in the 2014 Non Current Provision balance is an amount of $4,148,100 for the future rehabilitation
obligations for the Davyhurst mine. Management is currently undertaking a detailed review of the
consolidated entity’s future rehabilitation obligations in relation to the mine. This review is expected to be
completed by 30 June 2015. As at the date of our audit we were therefore unable to obtain sufficient
appropriate audit evidence about the carrying value of the rehabilitation provision. Consequently, we were
unable to determine whether any increase or decrease to the provision amount was necessary.
Qualified opinion
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion
paragraph:
a.
the financial report of Swan Gold Mining Limited is in accordance with the Corporations Act 2001
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2014 and
of its performance for the year ended on that date
complying with Australian Accounting Standards and the Corporations Regulations 2001
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Emphasis of matter
Without modification to the opinion expressed above, we draw attention to Note 2 (d) which describes the
principal conditions that raise doubt about the consolidated entities’ ability to continue as a going concern.
These conditions indicate the existence of a material uncertainty that may cast significant doubt about the
consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be
unable to realise its assets and discharge its liabilities in the normal course of business.
Report on the remuneration report
We have audited the Remuneration Report included in pages 11 to 14 of the directors' report for the year
ended 30 June 2014. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GHM:JT:SWAN:004
62
Opinion
In our opinion, the Remuneration Report of Swan Gold Mining Limited for the year ended 30 June 2014
complies with section 300A of the Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
30 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GHM:JT:SWAN:004
63
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CORPORATE GOVERNANCE STATEMENT
The Company has adopted systems of control and accountability as the basis for the administration of
corporate governance. The Board is committed to administering any policies and procedures with openness
and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs. To
the extent they are applicable, the Company has adopted the Corporate Governance Principles and Best
Practice Recommendations with 2010 Amendments (2nd Edition) (Recommendations or Guide) as
published by ASX Corporate Governance Council.
The Company’s corporate governance statement
www.swangoldmining.com.au.
is available on
the Company’s website at
For ease of comparison to the Recommendations, this section addresses each of the Corporate
Governance Principles and, where the Company has not followed a Recommendation, has explained the
reasons for not following the Recommendation. Going forward, the Company will publish its corporate
governance policies in accordance with the ASX Listing Rules disclosing the extent to which it has followed
the Recommendations in the reporting period.
As the Company’s activities develop in size, nature and scope, the size of the Board and the
implementation of additional corporate governance structures will be reviewed and amended as required.
Principle 1 – Lay Solid Foundation for Management and Oversight
Recommendation 1.1: Companies should establish those functions reserved to the board and those
delegated to senior executives and disclose those functions.
(a)
(b)
(c)
The Board of Directors is responsible for guiding and monitoring the Company on behalf
of Shareholders by whom they are elected and to whom they are accountable.
The Board has the following overall responsibilities:
(i)
(ii)
in conjunction with management, establishing the direction and strategies for the
Company and monitoring the implementation of those strategies; and
monitoring compliance with regulatory requirements and setting the tone for ethical
behaviour and standards.
The monitoring and ultimate control of the business of the Company is vested in the
Board. The Board’s primary responsibility is to oversee the Company’s business activities
and management for the benefit of the Company’s shareholders. The specific
responsibilities of the Board include:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
appointment, evaluation, rewarding and if necessary the removal of any Managing
Director;
in conjunction with management, development of corporate objectives and strategy and
approving and appropriately monitoring plans, new investments, major capital and
operating expenditures, capital management, acquisitions, divestitures and major
funding activities;
establishing appropriate levels of delegation to the Managing Director to allow him to
manage the Company’s operations efficiently;
monitoring actual performance against planned performance expectations and
reviewing operating information;
appreciation of areas of significant business risk and ensuring arrangements are in
place to adequately manage those risks;
overseeing the management of safety and occupational health, environmental issues
and community development;
satisfying itself that the financial statements of the Company fairly and accurately set
out the financial position and financial performance of the Company for the period
being reported;
satisfying itself that there are appropriate reporting systems and controls in place to
assure the Board that proper operational, financial, compliance, risk management and
internal control processes are in place and functioning appropriately;
to ensure that appropriate external audit arrangements are in place and operating
effectively;
64
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CORPORATE GOVERNANCE STATEMENT
(x)
having a framework in place to help ensure that the Company acts legally and
responsibly on all matters consistent with the code of conduct; and
(xi)
reporting to shareholders.
(d)
Each Director has the right to seek independent professional advice on matters relating to
his position as a Director of the Company at the Company’s expense, subject to the prior
approval of the Chairman, which shall not be unreasonably withheld.
Recommendation 1.2: Companies should disclose the process for evaluating the performance of
senior executives.
The Company does not comply with Recommendation 1.2. Due to the current nature and scale of the
Company’s activities the Board has not set a process for evaluating the performance of senior executives
and intends to revisit this following completion of the Offer.
Recommendation 1.3: Companies should provide the information indicated in the Guide to
reporting on Principle 1.
The Company’s Corporate Governance statement is available on its website and the Company will disclose
the information required by Recommendation 1.3 in accordance with the Listing Rules.
Principle 2 – Structure the Board to Add Value
Recommendation 2.1: A majority of the board should be independent directors.
The Company comprises 4 directors, 3 of whom are considered independent. The Company intends to
revisit Director independence following completion of the Offer. Details of each Board member’s
experience, expertise and qualifications are set out in section Error! Reference source not found. of the
Prospectus.
Recommendation 2.2: The chair should be an independent director.
Notwithstanding that the current Chairman does not meet the requirements of Recommendation 2.2, the
Board considers that the current Chairman possesses an appropriate level of expertise and can make
quality judgements in the best interests of the Company on all relevant issues.
Recommendation 2.3: The roles of chair and chief executive officer should not be exercised by the
same individual.
The Company does not comply with Recommendation 2.3. The Board considers that the appointment of
Michael Fotios as Chairman and Chief Executive Officer is appropriate for the business, given his level of
expertise and ability to make quality judgements in the best interests of the Company on all relevant issues.
Recommendation 2.4: The board should establish a nomination committee.
The Company does not comply with Recommendation 2.4. Given the current size and composition of the
Board, and given the Company’s stage of development, it has been decided that there are no efficiencies to
be gained and it is not practicable to form a separate nomination committee. The Board as a whole
undertakes the process of reviewing the skill base and experience of existing Directors to enable
identification or attributes required in new Directors. In addition, the Chairman regularly reviews the
composition of the board to ensure the Board continues to have the mix of skills and experience necessary
for the conduct of the Company’s activities.
Recommendation 2.5: Companies should disclose the process for evaluating the performance of
the board, its committees and individual directors.
The Board intends to ratify a process for annual self-assessment of its collective performance and the
performance of individual Directors where the Board is required to meet annually with the purpose of
reviewing the role of the Board, assessing its performance over the previous 12 months and examining
ways in which the Board can better perform its duties. Due to wholesale changes in the composition of the
Board during the period, no formal assessment was undertaken during the year ended 30 June 2013. It is
anticipated this review will take place following completion of the Offer.
Recommendation 2.6: Companies should provide the information indicated in the Guide to
reporting on Principle 2.
The Company will disclose the information required by Recommendation 2.6 in accordance with the Listing
Rules.
65
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CORPORATE GOVERNANCE STATEMENT
Principle 3 – Promote Ethical and Responsible Decision-Making
Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a
summary of the code as to:
the practices necessary to maintain confidence in the company’s integrity;
the practices necessary to take into account their legal obligations and the reasonable
expectations of their stakeholders; and
the responsibility and accountability of individuals for reporting and investigating reports
of unethical practices.
Upon completion of the Offer, the Board will establish a Code of Conduct that sets out the Company’s core
values, responsibilities to and expectations of Shareholders, employees, customers, suppliers, creditors,
consumers and the broader community. The key requirements of the Code of Conduct will be as follows:
(a)
(b)
(c)
(d)
(e)
(f)
Directors, management and employees must deal with the Company's customers,
suppliers, competitors and each other with honesty, fairness and integrity and must
observe the rule and spirit of the legal and regulatory environment in which the Company
operates;
Directors, management and employees must not involve themselves in situations where
there is a real or apparent conflict of interest between them as individuals and the interest
of the Company;
Directors, management and employees are required to respect the Company’s confidential
information;
Directors, management and employees must protect the assets of the Company to ensure
availability for legitimate business purposes;
the Company acknowledges its responsibility to shareholders, the community, and the
individual; and
the Company will use its best endeavours to ensure a safe work place and maintain proper
occupational health and safety practices.
Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the
policy or a summary of that policy. The policy should include requirements for the board to
establish measurable objectives for achieving gender diversity for the board to assess annually
both the objectives and progress in achieving them.
The Company does not currently have a formal gender diversity policy in place. However its recruitment is
fundamentally driven by identifying the best candidate for all positions regardless of gender. The Company
intends to establish a formal diversity policy having regard to the suggestions set out in the ASX
recommendations following completion of the Offer.
Recommendation 3.3: Companies should disclose in each annual report the measurable objectives
for achieving gender diversity set by the board in accordance with the diversity policy and progress
towards achieving them.
Due to the current nature and scale of the Company’s activities, the Board has not established measurable
objectives for achieving gender diversity but will review this position on a regular basis going forward. The
Company will disclose the information required by Recommendation 3.3 in accordance with the Listing
Rules.
Recommendation 3.4: Companies should disclose in each annual report the proportion of women
employees in the whole organisation, women in senior executive positions and women on the
board.
The Company will disclose the information required by Recommendation 3.4 in accordance with the Listing
Rules.
Recommendation 3.5: Companies should provide the information indicated in the Guide to
reporting on Principle 3.
The Company will disclose the information required by Recommendation 3.5 in accordance with the Listing
Rules.
Principle 4 – Safeguard Integrity in Financial Reporting
Recommendation 4.1: The board should establish an audit committee
66
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CORPORATE GOVERNANCE STATEMENT
Recommendation 4.2: The audit committee should be structured so that it:
consists only of non-executive Directors;
consists of a majority of independent directors;
is chaired by an independent chair who is not chair of the board; and
has at least 3 members.
The Company does not comply with Recommendations 4.1 and 4.2. The Board considers that the
Company is not of a size, nor are its financial affairs of such complexity to justify the formation of an audit
committee. The Board as a whole undertakes the selection and proper application of accounting policies,
the integrity of financial reporting, the identification and management of risk and review of the operation of
the internal control systems.
When the Company has grown to a sufficient size to warrant it, the Board intends to establish an audit
committee to assist the Board in monitoring and reviewing any matters of significance affecting financial
reporting and compliance.
Recommendation 4.3: The audit committee should have a formal committee charter.
The Company does not comply with Recommendation 4.3. The Board considers that the Company is not of
a size, nor are its financial affairs of such complexity to justify the formation of an audit committee.
Recommendation 4.4: Companies should provide the information indicated in the Guide to
reporting on Principle 4.
The Company will disclose the information required by Recommendation 4.4 in accordance with the Listing
Rules.
Principle 5 – Make Timely and Balanced Disclosure
Recommendation 5.1: Companies should establish written policies designed to ensure compliance
with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive
level for that compliance and disclose those policies or a summary of those policies.
The Company does not comply with Recommendation 5.1. Following completion of the Offer, the Board
intends to adopt a shareholders communication policy and a continuous disclosure policy outlining
procedures for compliance with ASX continuous disclosure requirements and the Corporations Act, and to
ensure accountability at a senior executive level for that compliance.
Recommendation 5.2: Companies should provide the information indicated in the Guide to
reporting on Principle 5.
The Company will disclose the information required by Recommendation 5.2 in accordance with the Listing
Rules.
Principle 6 – Respect the Rights of Shareholders
Recommendation 6.1: Companies should design a communications policy for promoting effective
communication with shareholders and encouraging their participation at general meetings and
disclose their policy or a summary of that policy.
The Company does not comply with Recommendation 6.1. Following completion of the Offer, the Board
intends to adopt a shareholders communication policy and continuous disclosure policy outlining the
procedures for ensuring compliance with ASX continuous disclosure requirements and the various ways the
Company will communicate with shareholders.
Recommendation 6.2: Companies should provide the information indicated in the Guide to
reporting on Principle 6.
The Company will disclose the information required by Recommendation 6.2 in accordance with the Listing
Rules.
Principle 7 – Recognise and Manage Risk
Recommendation 7.1: Companies should establish policies for the oversight and management of
material business risks and disclose a summary of those policies.
67
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
CORPORATE GOVERNANCE STATEMENT
Recommendation 7.2: The board should require management to design and implement the risk
management and internal control system to manage the company’s material business risks and
report to it on whether those risks are being managed effectively. The board should disclose that
management has reported to it as to the effectiveness of the company’s management of its material
business risks.
While the executives assess, analyse and report to the Board on risk, the Board is yet to establish a formal
risk management and reporting policy. The Board is responsible for approving and reviewing the
Company’s risk management strategy and policy. The Board believes that it has a thorough understanding
of the Company’s key risks and is managing them appropriately.
Recommendation 7.3: The board should disclose whether it has received assurance from the chief
executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration
provided in accordance with Section 295A of the Corporations Act is founded on a sound system of
risk management and internal control and that the system is operating efficiently in all material
respects in relation to financial reporting risks.
The Board has received assurances from the chief executive officer and chief financial officer that the
declaration provided in accordance with section 295A of the Corporations Act was founded on a sound
system of risk management and internal control and that the system is operating efficiently in all material
respects in relation to financial reporting risks.
Recommendation 7.4: Companies should provide the information indicated in the Guide to
reporting on Principle 7.
The Company will disclose the information required by Recommendation 7.4 in accordance with the Listing
Rules.
Principle 8 – Remunerate Fairly and Responsibly
Recommendation 8.1: The board should establish a remuneration committee.
Recommendation 8.2: The remuneration committee should be structured so that it:
consists of a majority of independent directors;
is chaired by an independent chair; and
has at least three members.
The Company does not comply with Recommendations 8.1 and 8.2. The Board considers that the
Company is not currently of a size, nor are its affairs of such complexity to justify the formation of a
remuneration committee. The Board as a whole is responsible for the remuneration arrangements for
Directors and executives of the Company and considers it more appropriate to set aside time at Board
meetings each year to specifically address matters that would ordinarily fall to a remuneration committee.
Recommendation 8.3: Companies should clearly distinguish the structure of non-executive
directors’ remuneration from that of executive directors and senior executives.
The Company complies with Recommendation 8.3. The structure of non-executive Directors’ remuneration
is clearly distinguished from that of executive Directors and senior executives. The total remuneration for all
non-executive Directors is not to exceed $500,000 per annum unless approved by Shareholders at the
Company’s annual general meeting.
Recommendation 8.4: Companies should provide the information indicated in the Guide to
reporting on Principle 8.
The Company will disclose the information required by Recommendation 8.4 in accordance with the Listing
Rules.
Securities Trading Policy
The Board has adopted a formal Securities Trading Policy that complies with Listing Rule 12.12.
68
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
TENEMENT SCHEDULE
Lease
E 16/327
E 16/332
E 16/337
E 16/347
E 16/355
E 16/400
E 16/412
E 16/413
E 16/414
E 16/456
E 29/640
E 29/641
E 29/647
E 29/657
E 29/895
E 30/332
E 30/333
E 30/334
E 30/335
E 30/336
E 30/338
E 30/449
E 30/454
L 15/223
L 15/224
L 16/102
L 16/103
L 16/58
L 16/62
L 16/68
L 16/72
L 16/73
L 16/77
L 24/100
L 24/101
L 24/107
L 24/115
L 24/123
L 24/124
L 24/127
L 24/128
L 24/170
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Application
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Mineral Field
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
15 - Coolgardie
15 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
69
% Ownership
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
TENEMENT SCHEDULE
Lease
L 24/174
L 24/188
L 24/189
L 24/85
L 24/98
L 24/99
L 29/34
L 29/38
L 29/40
L 29/71
L 29/72
L 29/74
L 30/19
L 30/21
L 30/23
L 30/35
L 30/36
L 30/37
L 30/38
L 30/41
L 30/43
L 30/9
M 16/220
M 16/262
M 16/263
M 16/264
M 16/268
M 16/470
M 24/115
M 24/159
M 24/208
M 24/290
M 24/352
M 24/376
M 24/427
M 24/51
M 24/633
M 24/754
M 24/755
M 24/830
M 24/845
M 24/846
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Mineral Field
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
70
% Ownership
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
TENEMENT SCHEDULE
Lease
M 24/847
M 24/848
M 29/165
M 29/2
M 29/422
M 30/1
M 30/100
M 30/102
M 30/103
M 30/106
M 30/107
M 30/108
M 30/109
M 30/111
M 30/122
M 30/123
M 30/126
M 30/127
M 30/129
M 30/131
M 30/132
M 30/133
M 30/135
M 30/137
M 30/148
M 30/150
M 30/157
M 30/159
M 30/16
M 30/178
M 30/182
M 30/187
M 30/21
M 30/34
M 30/39
M 30/42
M 30/43
M 30/44
M 30/48
M 30/5
M 30/59
M 30/60
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Mineral Field
24 - Broad Arrow
24 - Broad Arrow
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
71
% Ownership
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
TENEMENT SCHEDULE
Lease
M 30/63
M 30/7
M 30/72
M 30/73
M 30/74
M 30/75
M 30/80
M 30/84
M 30/97
M 30/98
P 16/2500
P 16/2501
P 16/2502
P 16/2503
P 16/2504
P 16/2505
P 16/2506
P 16/2507
P 16/2514
P 16/2518
P 16/2550
P 16/2551
P 16/2774
P 16/2775
P 16/2809
P 24/4182
P 24/4750
P 24/4751
P 24/4752
P 24/4753
P 24/4754
P 29/1938
P 29/1939
P 29/1940
P 29/1941
P 29/1942
P 29/1943
P 29/1944
P 29/1945
P 29/1946
P 29/1947
P 29/1948
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Mineral Field
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
16 - Coolgardie
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
24 - Broad Arrow
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
72
% Ownership
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
TENEMENT SCHEDULE
Lease
P 29/1949
P 29/1950
P 29/2310
P 29/2311
P 29/2312
P 29/2313
P 29/2314
P 29/2315
P 29/2316
P 29/2317
P 29/2318
P 29/2319
P 29/2320
P 29/2321
P 29/2322
P 29/2323
P 29/2324
P 29/2325
P 29/2326
P 29/2327
P 29/2328
P 30/1012
P 30/1013
P 30/1014
P 30/1015
P 30/1016
P 30/1017
P 30/1018
P 30/1020
P 30/1021
P 30/1023
P 30/1024
P 30/1025
P 30/1026
P 30/1027
P 30/1033
P 30/1034
P 30/1038
P 30/1040
P 30/1042
P 30/1043
P 30/1051
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Mineral Field
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
29 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
73
% Ownership
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
TENEMENT SCHEDULE
Lease
P 30/1055
P 30/1056
P 30/1060
P 30/1074
P 30/1086
P 30/1087
P 30/1107
P 30/1108
P 30/1109
P 30/1110
P 30/1111
P 30/1112
P 30/1113
P 30/1114
P 30/1115
P 30/1116
P 30/1117
P 30/1118
P 30/1119
P 30/1120
P 30/1121
P 30/1122
Status
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Mineral Field
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
30 - North Coolgardie
% Ownership
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
74
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
ANNUAL MINERAL RESOURCE STATEMENT
In accordance with ASX Listing Rule 5.21, the Company reviews and reports its Mineral Resources at least annually.
The date of reporting is 30 June each year, to coincide with the Company’s end of financial year balance date. If there
are any material changes to its Mineral Resources over the course of the year, the Company is required to promptly
report these changes.
The Company has previously reported the following Mineral Resources pursuant to the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code) 2004 Edition:
JORC
Category
Inferred
Indicated
Measured
Total
Million Tonnes g/t Au
8,759
9,962
236
18,957
2.6
2.4
2.8
2.5
The Mineral Resource was first reported to the ASX on June 30 2008 and subsequently in the Company’s Prospectus
dated 11 July 2014. There has been no change to the Resource Statement reported in the Company’s Prospectus to
the review date of 30 June 2014, or to the date of this Annual Report.
In completing the annual review for the year ended 30 June 2014, the historical resource factors were reviewed and
found to be relevant and current. No project area has been converted to an active operation yet and hence no
resource depletion has occurred for the review period.
The Mineral Resource Statement
The current Mineral Resource Statement for the Swan Gold Mining Ltd project areas is shown in Table 1 below.
PIT / PROJECT
CALLION
FEDERAL FLAG
GOLDEN EAGLE
LADY GLADYS
LIGHTS OF ISRAEL UNDERGROUND
MAKAI SHOOT
SALMON GUMS
WAIHI
WALHALLA
WALHALLA NORTH
MT BANJO
MACEDON
SAND KING
MISSOURI
PALMERSTON / CAMPERDOWN
BERWICK MOREING
BLACK RABBIT
THIEL WELL
IGUANA
LIZARD
RIVERINA AREA
FOREHAND
MEASURED
INDICATED
INFERRED
TOTAL MATERIAL
('000t)
(g/t Au)
('000t)
(g/t Au)
('000t)
(g/t Au)
('000t)
(g/t Au)
('000oz.)
0
32
0
0
0
0
0
0
0
0
0
0
0
98
0
0
0
0
0
106
0
0
0.0
2.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.7
0.0
0.0
0.0
0.0
0.0
4.0
0.0
0.0
86
112
345
1,858
74
1,985
199
805
448
94
109
0
516
831
118
0
0
0
690
75
941
386
75
2.8
1.8
2.5
1.9
4.3
2.0
2.8
2.4
1.8
2.4
2.3
0.0
3.1
2.0
2.3
0.0
0.0
0.0
2.1
3.7
2.4
1.7
83
238
311
190
180
153
108
109
216
13
126
186
935
909
174
50
434
18
2,032
13
1,644
436
2.3
2.5
2.6
2.4
4.2
1.7
2.9
2.4
1.4
3.0
1.4
1.8
3.0
2.2
2.4
2.3
3.5
6.0
2.0
2.8
2.5
1.9
169
382
656
2,048
254
2,138
307
914
664
107
235
186
1,451
1,838
292
50
434
18
2,722
194
2,585
822
2.6
2.3
2.5
1.9
4.2
2.0
2.8
2.4
1.7
2.5
1.8
1.8
3.0
2.1
2.4
2.3
3.5
6.0
2.0
3.8
2.5
1.8
14
28
54
128
35
136
28
71
36
9
14
11
142
123
22
4
49
3
177
24
205
48
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
ANNUAL MINERAL RESOURCE STATEMENT
SILVER TONGUE
SUB-TOTAL DAVYHURST
0
236
0.0
2.8
155
9,827
2.7
2.2
19
8,577
BALDOCK
METEOR
WHINNEN
0
0
0
0
0
0
135
18.6
0
0
0
0
0
143
39
1.3
2.4
0
9.3
13.3
174
18,640
135
143
39
317
2.5
2.3
18.6
9.3
13.3
13.8
14
1,372
81
43
17
140
SUB-TOTAL MOUNT IDA
GRAND TOTAL
0
236
0.0
2.8
135
18.6
182
10.2
9,962
2.4
8,759
2.6
18,957
2.5
1,512
Material Changes and Resource Statement Comparison
There have been no material changes to the Mineral Resource during the review period from 1 July 2013 to 30 June
2014, and to and including the date of this report.
Governance Arrangements and Internal Controls
Swan Gold has ensured that the Mineral Resources quoted are subject to good governance arrangements and
internal controls. The Mineral Resources reported have been generated by internal Company geologists’, who are
experienced in best practices in modelling and estimation methods. The competent person has also undertaken
reviews of the quality and suitability of the underlying information used to generate the resource estimation. In
addition, Swan Gold management carry out regular reviews and audits of internal processes and external contractors
that have been engaged by the Company.
Competent Person Statement
The information in this Annual Report that relates to Mineral Resources was prepared and first disclosed under the
‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“JORC Code”) 2004
Edition and has not been updated since to comply with the JORC Code 2012 Edition on the basis that the information
has not materially changed since it was last reported. It was first reported to the ASX on 30 June 2008 and
subsequently in the Company’s Prospectus dated 11 July 2014. The Company is not aware of any new information or
data that materially affects the information as previously released on 11 July 2014 and all material assumptions and
technical parameters underpinning the estimates continue to apply and have not materially changed. The Mineral
Resource released on 11 July 2014 was compiled by Mr Ross Whittle-Herbert, who is a member of the Australian
Institute of Geoscientists (“AIG”). Mr Whittle-Herbert is a full-time employee of Swan Gold Mining Limited. Mr Whittle-
Herbert has sufficient experience that is relevant to the style of mineralisation and type of deposits under
consideration and to the activity being undertaken to qualify as a Competent Person as defined in the JORC Code
2004. Mr Whittle-Herbert has consented to the inclusion in the Annual Report of the matters based on his information
in the form and context in which it appears. The Annual Mineral Resource Statement is based on and fairly represents
information and supporting documentation prepared by competent persons. The Annual Mineral Resource Statement
as a whole has been approved by Mr Whittle-Herbert.
76
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Listing Rules and not disclosed elsewhere in
this report is set out below:
SHAREHOLDINGS (as at 25 September 2014)
Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder
Number of ordinary shares
% of issue capital
Investmet Limited 41,238,671
Stirling Gold Pty Ltd
8,623,822
44.90
9.39
Voting Rights
Each shareholder is entitled to receive notice of and attend and vote at generals meetings of the Company. At a
general meeting every shareholder present in person or by proxy, representative or attorney will have one vote on a
show of hands and on a poll, one vote for each share held.
Distribution of equity security holders
Category
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
On market buy-back
There is not currently any on market buyback.
Securities on issue
Category
Ordinary Shares
Escrowed (indefinitely)
Total shareholders
2,979
1,328
226
253
40
4,826
Number
91,783,555
66,668
91,850,223
77
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SWAN GOLD MINING LIMITED AND CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2014
ASX ADDITIONAL INFORMATION
Twenty largest shareholders – 25 September 2014
Holder
INVESTMET
LIMITED
STIRLING GOLD
PTY LTD
MGMC PTY LTD
MRS SUSAN
KIERNAN
MGMC PTY LTD
HSBC CUSTODY
NOMINEES
BOTSIS
HOLDINGS PTY
LTD
J P MORGAN
NOMINEES
AUSTRALIA
HSBC CUSTODY
NOMINEES
BESPOKEN
PROPERTIES
GMBH
Address
Number of Shares
%
Interest
LEVEL 1 24 MUMFORD PLACE BALCATTA WA 6021
41,238,671
44.90%
PO BOX 870 WEST PERTH WA 6872
C/- PITCHER PARTNERS PO BOX 7191
CLOISTERS SQUARE WA 6850
8,623,822
4,372,339
PO BOX 870 WEST PERTH WA 6872
C/- PITCHER PARTNERS PO BOX 7191
CLOISTERS SQUARE WA 6850
(AUSTRALIA) LIMITED - A/C 3 GPO BOX 5302 SYDNEY
NSW 2001
4,000,000
3,062,539
2,789,019
9.39%
4.76%
4.35%
3.33%
3.04%
PO BOX 463 WEMBLEY WA 6913
2,000,000
2.18%
LIMITED LOCKED BAG 20049 MELBOURNE VIC 3001
(AUSTRALIA) LIMITED GPO BOX 5302 SYDNEY NSW
2001
1,736,365
858,150
17/10 AM MODENAPARK VIENNA 1030 AUSTRIA
749,959
1.89%
0.93%
0.82%
0.72%
662,558
600,000
0.65%
500,564
0.54%
500,000
0.54%
417,129
0.45%
400,000
362,000
342,487
333,334
300,000
0.44%
0.39%
0.37%
0.36%
0.33%
PO BOX Z5153 PERTH WA
6861
AMP LIFE LIMITED PO BOX R209 ROYAL EXCHANGE NSW 1225
WESTNET
HOLDINGS PTY
LTD
JP MORGAN
NOMINEES
AUSTRALIA
MINERAL
RESOURCES
LIMITED
CITICORP
NOMINEES PTY
LIMITED
25 WELLARD STREET BIBRA LAKE WA 6163
LIMITED LOCKED BAG 20049 MELBOURNE VIC 3001
GPO BOX 764G MELBOURNE VIC 3001
PO BOX Z5153 PERTH
WA 6831
NOMINEES PTY LTD LEVEL 3 14 MARTIN PLACE
SYDNEY NSW 2000
CLIFFWAY PTY
LTD
MARTIN PLACE
SECURITIES
ABBOTSLEIGH
PTY LTD
MULLOWAY PTY
LTD
DR LEON EUGENE
PRETORIUS
SUITE 3 51-55 CITY ROAD SOUTHBANK VIC 3006
PO BOX Z5153
PERTH WA 6831
PO BOX 453 SOUTH PERTH WA 6951
78