POTASH WEST NL
A.C.N. 147 346 334
Annual Report
For the period
12 November 2010 to 30 June 2011
1
Potash West NL
A.C.N. 147 346 334
Contents to financial report
Corporate information
Directors’ report
Auditor’s independence declaration
Review of operations and activities
Corporate governance statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report
Additional ASX information
2
Page No.
3
4
14
15
19
31
32
33
34
35
53
54
56
Potash West NL
A.C.N. 147 346 334
Corporate directory
Directors:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Company Secretary:
Amanda Wilton-Heald
Auditor:
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth WA 6000 AUSTRALIA
Telephone (+61 8) 9429 2222
Facsimile (+61 8) 9429 2436
Share Registry:
Advanced Share Registry
150 Stirling Highway
Nedlands WA 6009 AUSTRALIA
Telephone (+61 8) 9389 8033
Facsimile (+61 8) 9389 7871
Registered and Principal Office
Suite 3
23 Belgravia Street
Belmont WA 6104 AUSTRALIA
Telephone (+61 8) 9479 5386
Facsimile (+61 8) 9475 0847
Website www.potashwest.com.au
Email info@potashwest.com.au
Stock Exchange Listing
Potash West NL shares are listed on the Australian Securities Exchange (ASX code: PWN).
Solicitors
Irdi Legal
248 Oxford Street
Leederville WA 6007 AUSTRALIA
Telephone (+61 8) 9443 2544
Facsimile (+61 8) 9444 3808
Bankers
National Australia Bank
Ground Floor
100 St Georges Terrace
Perth WA 6000 AUSTRALIA
Telephone: (+61 8) 9441 9313
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A.C.N. 147 346 334
Directors’ Report
The directors of Potash West NL (“Potash West” or “the Company”) present their report for the period 12
November 2010 (date of incorporation) to 30 June 2011.
Directors
The names and details of the Company’s directors in office during the financial year and until the date of
this report are as follows, directors were in office for the entire period unless otherwise stated.
Adrian Griffin was appointed Non-executive Chairman on 12 November 2010.
Patrick McManus was appointed as Managing Director on 23 November 2010.
George Sakalidis was appointed as Non-executive Director on 12 November 2010.
Gary Johnson was appointed as Non-executive Director on 12 November 2010.
Names, qualifications, experience and special responsibilities
Adrian Griffin (Age 58) Non-Executive Chairman
Adrian Griffin, an Australian-trained mining professional, has had exposure to metal mining and processing
worldwide during a career spanning more than three decades. A pioneer of the lateritic nickel processing
industry, he has helped develop extraction technologies for a range of minerals over the years. Today,
Adrian specialises in mine management and production. He is a former Chief Executive Officer of Dwyka
Diamonds Limited, an AIM- and ASX-listed diamond producer, was a founding director and executive of
Washington Resources Limited and also a founding director of Empire Resources Limited, Ferrum
Crescent Limited and Reedy Lagoon Corporation Limited. Moreover, Mr Griffin was a founding director of
ASX-listed Northern Uranium, of which company he is currently a non-executive director. He is also
managing director of ASX-listed Midwinter Resources NL, an African-focused iron ore project developer.
Other listed company directorships during the last 3 years:
Empire Resources Limited (Director February 2004 – November 2009); Hodges Resources Limited
(Director August 2005 – December 2008); Reedy Lagoon Corporation Limited (Director May 2007 –
November 2009); Washington Resources Limited (Director September 2004 – December 2008); Ferrum
Crescent Ltd (Director January 2010 – September 2010) and Midwinter Resources Ltd (Director February
2011 – Current).
Adrian Griffin is also a member of the Audit Committee, Remuneration Committee (Chairman) and the
Nomination Committee (Chairman).
Patrick McManus (Age 58) Managing Director
Patrick McManus has a degree in mineral processing from Leeds University and an MBA from Curtin
University. A mining professional for more than 30 years, his work has taken him to many sites within
Australia and overseas, including Eneabba and the Murray Basin in Australia, and Madagascar, Indonesia
and the United States. During that time, Patrick has worked in operational, technical and corporate roles for
RioTinto, RGC Limited and Bemax Resources Limited. He was a founding director and, from January 2007
to March 2010, managing director of ASX-listed Corvette Resources Limited.
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A.C.N. 147 346 334
Directors’ Report (continued)
George Sakalidis (Age 54) Non-Executive Director
George Sakalidis is an exploration geophysicist of more than 20 years standing. His career has
encompassed extensive exploration for gold, diamonds, base metals and mineral sands and with others, he
compiled one of Australia’s largest aeromagnetic databases, now held by Image Resources NL. Using this
database, George contributed to a number of discoveries, including such gold discoveries as the Three
Rivers and the Rose deposits in Western Australia. Moreover, he was instrumental in the acquisition of the
Image Resources NL exploration tenements, and the design and interpretation of the magnetic surveys that
led to the discovery of the large mineral sands resources at the Dongara project of Magnetic Minerals NL,
of which he was a founding director. Also previously a director of North Star Resources NL, George is
currently a director of Meteoric Resources NL, Magnetic Resources NL, Emu Nickel Pty Ltd, Image
Resources NL and the unlisted Imperium Minerals Limited.
George Sakalidis is also a member of the Audit Committee (Chariman), Remuneration Committee and the
Nomination Committee.
Gary Johnson (Age 54) Non-Executive Director
Gary Johnson is a metallurgist with more than 30 years of broad experience in all aspects of the mining
industry. In his early career, he gained operational and project expertise with a range of metals in
operations in Africa and Australia. Later, he was a member of the team operating the metallurgical pilot
plant at the giant Olympic Dam copper, gold and uranium project in South Australia.
In 1998, after 10 years as chief metallurgist for a large gold producer, Mr Johnson formed his own
specialised hydrometallurgical consulting company. During this period he worked closely with LionOre
Mining International to develop the Activox® process for treating sulphide concentrates. When, in 2006,
LionOre acquired Gary’s company, he joined LionOre as a senior executive. In 2007, LionOre was taken
over by MMC Norilsk Nickel and in 2009 Mr Johnson became managing director of the latter’s Australian
operations.
Today, Mr Johnson runs his own consulting company, which specialises in high-level metallurgical and
strategic advice. He also holds several patents in the field of hydrometallurgy and is a director of the TSX-
listed Hard Creek Nickel Corporation and ASX listed Antipa Minerals Ltd.
Gary Johnson is also a member of the Audit Committee, Remuneration Committee and the Nomination
Committee.
Company Secretary as at year end
Amanda Wilton-Heald (Age 34)
Amanda Wilton-Heald is a Chartered Accountant with over 13 years of experience in Australia and the UK.
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of the company were:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Number of ordinary
shares
Number of options
over ordinary shares
3,447,181
1,700,000
656,485
250,000
5
Nil
Nil
Nil
Nil
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Dividends
No dividend has been paid or declared since the start of the financial period and the directors do not
recommend the payment of a dividend in respect of the financial period.
Principal activities
The principal activity of the entity during the financial period was the exploration for minerals, namely
potash.
Review of operations and activities
Information on the operations and activities of the Company is set out in the review of operations and
activities on page 15 of this annual report.
The loss after income tax benefit for the period 12 November 2010 to 30 June 2011 was $808,723.
The financial position of the Company is presented in the attached Statement of Financial Position.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the company from 12 November 2010
(date of incorporation) to the date of this report.
Significant events after the balance date
There have not been any matters that have arisen after balance date that have significantly affected, or
may significantly affect, the operations and activities of the Company, the results of those operations, or the
state of affairs of the Company in future financial periods other than disclosed elsewhere in this annual
report.
Likely developments and expected results
Disclosure of information regarding likely developments in the operations of the company in future financial
years and the expected results of those operations is likely to result in unreasonable prejudice to the
company. Therefore, this information has not been presented in this report.
Environmental regulation and performance
The Company’s activities are subject to Australian legislation relating to the protection of the environment.
The Company’s is subject to significant environmental legal regulations in respect to its exploration and
evaluation activities. There have been no known breaches of these regulations and principles.
Indemnification and Insurance of directors and officers
The Company has entered into deeds of access and indemnity with the officers of the Company,
indemnifying them against liability incurred, including costs and expenses in successfully defending legal
proceedings. The indemnity applies to a liability for costs and expenses incurred by the director or officer
acting in their capacity as a director or officer.
Except in the case of a liability for legal costs and expenses, it does not extend to a liability that is:
(a)
(b)
(c)
owed to the Company or a related body corporate of the Company;
for a pecuniary penalty order under section 1317G or a compensation order under section 1317H or
section 1317HA of the Corporations Act 2001; or
owed to someone other than the Company or a related body corporate of the Company where the
liability did not arise out of conduct in good faith.
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A.C.N. 147 346 334
Directors’ Report (continued)
Similarly, the indemnity does not extend to liability for legal costs and expenses:
(d)
(e)
(f)
in defending proceedings in which the officer is found to have a liability described in paragraph (a), (b)
or (c);
in proceedings successfully brought by the Australian Securities and Investments Commission or a
liquidator; or
in connection with proceedings for relief under the Corporations Act 2001 in which the court denies
the relief.
During or since the financial period, the Company has paid premiums in respect of a contract insuring all
the Directors and Officers. The terms of the contract prohibit the disclosure of the details of the insurance
contract and premiums paid.
Share Options
As at the date of this report there were 700,000 unissued ordinary shares under options (nil at the reporting
date).
Option holders do not have any right, by virtue of the option, to participate in any share issue of the
company or any related body corporate.
Non-audit services
The Company may decide to employ the auditor on assignments additional to its statutory audit duties
where the auditor’s expertise and experience with the Company are important.
Details of the amounts paid or payable to the auditor, Ernst & Young, and non-audit services provided
during the year are set out below.
Remuneration of the auditor of the Company for:
-other services; investigating accountant’s report
2011
$
7,725
7,725
Directors’ meetings
Meetings of directors held and their attendance during the financial period were as follows:
Name of director:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Directors’
meeting held
whilst in
office
Directors’
meetings
attended
Audit
Committee
meetings held
Audit
Committee
meetings
attended
5
5
5
5
5
5
5
5
-
-
-
-
-
-
-
-
As at the date of this report no meetings had been held by the remuneration committee and the nomination
committee.
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A.C.N. 147 346 334
Directors’ Report (continued)
Exemption from preparing and lodging half-year financial report.
The financial year of the company since incorporation (12 November 2010) is less than 8 months. The
company pursuant to ASIC Class Order [CO 08/15] claims reporting relief in relation to preparing and
lodging a half-year financial report for the period 12 November 2010 to 12 May 2011 and relies on the class
order for such relief. The class order effectively gives the company relief from preparing and lodging the
half-year financial report.
Remuneration Report (audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Company
in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purpose of
this report, Key Management Personnel (KMP) of the Company are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company,
directly or indirectly, and includes executives of the Company. The information provided in this
remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
Details of Key Management Personnel
(i) Directors:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
(ii) Executives:
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Lindsay Cahill
Amanda Wilton-Heald Company Secretary
Robert Van Der Laan
Chief Financial Officer
Geologist
Remuneration Philosophy
The performance of the Company depends upon the quality of its directors and executives. To prosper, the
Company must attract, motivate and retain highly skilled directors and executives.
To this end, the Company embodies the following principles in its remuneration framework:
Provide competitive rewards to attract high calibre executives;
Link executive rewards to shareholder value; and
Provide significant portions of executive remuneration “at risk” through participation in incentive plans.
Shares and options issued under the incentive plans provide an incentive to stay with the Company. At this
time, shares and options issued do not have performance criteria attached. This policy is considered to be
appropriate for the Company, having regard to the current state of its development.
The Company does not have a policy which precludes directors and executives from entering into contracts
to hedge their exposure to options or shares granted to them as remuneration.
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A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
The Company also recognizes that, at this stage in its development, it is most economic to have only a few
employees and to draw, as appropriate, upon a pool of consultants selected by the directors on the basis of
their known management, geoscientific, engineering and other professional and technical expertise and
experience. The Company will nevertheless seek to apply the principles described above to its directors
and executives, whether they are employees of/or consultants to the Company.
Remuneration Committee Responsibilities
For the period ended 30 June 2011, the Company did not have a separately established Remuneration
Committee. The Board considered that this function would be efficiently achieved with full Board support.
Accordingly, the Board of directors was responsible for determining and reviewing compensation
arrangements for the directors, the Managing Director and the senior management team. A Remuneration
Committee was established on 20 September 2011.
The Committee assesses the appropriateness of the nature and amount of remuneration of directors and
senior executives on a periodic basis by reference to relevant employment market conditions, with the
overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and
executive team.
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive and executive
director remuneration is separate and distinct.
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to
attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non-
executive directors must be determined from time to time by shareholders of the Company in a general
meeting. An amount not exceeding the amount determined is then divided between the non-executive
directors.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it
is apportioned amongst non-executive directors is reviewed annually. The Board may consider advice from
external consultants, as well as the fees paid to non-executive directors of comparable companies, when
undertaking the annual review process.
Each non-executive director receives a fee for being a director of the Company. No additional fee is paid
for participating in the Audit, Remuneration and Nomination Committees.
Non-executive directors are encouraged by the Board to hold shares in the Company (purchased on market
and in accordance with the Company’s approved policies to ensure there is no insider trading). It is
considered good governance for directors of a company to have a stake in that company. The non-
executive directors of the Company may also participate in the share and option plans as described in this
report.
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A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Executive director and senior management remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Company and so as to:
reward executives for Company, business team and individual performance;
align the interests of executives with those of shareholders; and
ensure total remuneration is competitive by market standards.
Structure
At this time, the cash component of remuneration paid to the Executive director, the Company
Secretary and other senior managers is not dependent upon the satisfaction of performance conditions.
It is current policy that some executives be engaged by way of consultancy agreements with the
Company, under which they receive a contract rate based upon the number of hours of service
supplied to the Company. There is provision for yearly review and adjustment based on consumer
price indices. Such remuneration is hence not dependent upon the achievement of specific
performance conditions. This policy is considered to be appropriate for the Company, having regard to
the current state of its development.
Executive director is encouraged by the Board to hold shares in the Company (purchased on market
and in accordance with the Company’s approved policies to ensure there is no insider trading). It is
considered good governance for directors of a company to have a stake in that company. The
Executive directors of the Company may also participate in the share and option plans as described in
this report.
Performance table
The following table details the loss of the Company from continuing operations after income tax, together
with the basic loss per share since the incorporation of the company:
Net loss from continuing operations after income tax
Basic loss per share in cents
Share Price in Cents
Agreements with Non – Executive Directors
2011
$
808,723
1.08
18.00
Mr Adrian Griffin was appointed as Non-Executive Chairman on 12 November 2010. Pursuant to an
agreement dated 18 November 2010, his salary is set at $40,000 per annum inclusive of 9%
superannuation. In the event of termination, there is no notice period required.
Mr George Sakalidis was appointed as a non-executive director on 12 November 2010. Pursuant to an
agreement dated 18 November 2010, his salary is set at $40,000 per annum inclusive of 9%
superannuation. In the event of termination, there is no notice period required.
Mr Gary Johnson was appointed as a non-executive director on 12 November 2010. Pursuant to an
agreement dated 18 November 2010, his salary is set at $40,000 per annum inclusive of 9%
superannuation. In the event of termination, there is no notice period required.
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
The company has also entered into a services agreement with Strategic Metallurgy Pty Ltd for the provision
of Metallurgical Services. Service fees are agreed on an arm’s length transaction basis. Mr Gary Johnson is
a director and shareholder of Strategic Metallurgy Pty Ltd.
Executive director and senior management remuneration
Agreement with Managing Director
Mr Patrick McManus was appointed as Managing Director on 23 November 2010. Pursuant to an
agreement dated 23 November 2010, his salary is set at $250,000 per annum inclusive of 9%
superannuation. The agreement can be terminated by either party by giving three months’ notice or
payment of three months’ salary in lieu of notice.
Agreement with Company Secretary
On 13 May 2011, the company entered into an agreement containing the terms and conditions under which
the services of Company Secretary are provided to the Company.
The agreement involves the payment to the Company associated with Mrs Wilton-Heald of a monthly fee of
$2,500 (excluding GST) and reimbursement of expenses.
Agreement with Chief Financial Officer
Mr Robert Van Der Laan was appointed as Chief Financial Officer, effective on 13 May 2011. On 5 August
2011 the company entered into an agreement containing the terms and conditions under which the services
of Chief Financial Officer are provided. In the event of termination, there is no notice period required.
The agreement involves the payment to the Company associated with Robert Van der Laan of an hourly
fee of $120 and reimbursement of expenses.
Agreement with Exploration Manager
On 25 August 2011, the Company and a company associated with Mr Lindsay Cahill entered into an
agreement containing the terms and conditions under which the services of Mining Services Manager are
provided to the Company. In the event of termination, there is no notice period required.
The agreement involves the payment to the Company associated with Mr Cahill of an hourly fee of $125
and reimbursement of expenses.
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A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Company
Directors’ Remuneration 2011
Executive
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Short-term
Directors’
Salary and
Consulting
Fees
$
Fees
$
Post-
employment
benefits
Share Based
Payments
Superannuation
Termination
Shares
Contribution
Benefits
and options
$
$
$
6,116
2,544
-
6,116
6,116
-
-
-
551
41,667*
551
551
18,348
2,544
43,320
-
-
-
-
-
-
200,000**
-
-
200,000
264,212
Total
$
9,211
241,667
6,667
6,667
*
**
Patrick McManus elected to contribute his remuneration into his nominated superannuation fund.
2,000,000 shares were issued to Patrick McManus at fair value of $0.100001 per share for his services.
$0.000001 was received from Patrick McManus in cash.
Company
Executives’ Remuneration 2011
Short-term
Post-
employment
benefits
Share
based
payment
Consulting
Superannuation
Shares
Executive
Salary
$
Fees
$
Contribution
and options
Total
$
$
$
Lindsay Cahill
Robert Van der Laan
Amanda Wilton-Heald
-
-
-
-
4,437
12,360
4,032
20,829
No remuneration is performance related.
-
-
-
-
-
-
-
-
4,437
12,360
4,032
20,829
Incentive shares and options: Granted and vested during the year
Shares
No shares were issued as part of an incentive plan during the period ended 30 June 2011.
Options
No options were granted or vested as part of an incentive plan during the year ended 30 June 2011.
End of Remuneration Report.
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Potash West NL
A.C.N. 147 346 334
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out on page14 and forms part of this report.
This report is made in accordance with a resolution of directors.
Patrick McManus
Managing Director
Perth
30 September 2011
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A.C.N. 147 346 334
Auditors Independence Declaration
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A.C.N. 147 346 334
Review of Operations and Activities
Corporate
The Company was listed on the Australian Securities Exchange on 13 May 2011, listing under the name
Potash West NL.
Chairman’s Letter
Fellow shareholders,
As a listed company, Potash West was active for 2 months of the financial year. We have quickly
established our exploration and metallurgical programmes and they are now building up to the level of
activity necessary to achieve our corporate objective of completing a scoping study on the Dandaragan
glauconite deposits by the end of 2012.
Investment markets continue to be volatile and I would like to thank you for supporting us in our IPO, and
subsequently. The company has attracted a large amount of interest as one of the few ASX listed
companies looking to develop a potash project.
As we move into 2012 we continue to see economic volatility, however the underlying demand for fertilizer
will, we believe, continue to increase strongly. We will strive to see Potash West take advantage of that
situation.
Adrian Griffin
Chairman
Corporate Review
Potash West has a goal to increase shareholder value by unlocking value in deposits, by applying technical
skills in areas where changing market circumstances enhance project economics. It commenced
operations in late 2010 and was incorporated on 12 November 2010. It has the rights to Potash and
Phosphate in a number of tenements in the Dandaragan Trough in WA ( Fig 1).
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A.C.N. 147 346 334
Review of Operations and Activities (continued)
Figure 1 Potash West Tenure in Dandaragan Trough as at 31 August 2011
Operations Report
ASX Listing
The Company applied for subscriptions in February 2011 and closed its IPO, oversubscribed, on 18 March
2011. It listed on the ASX on 11 May 2011 and commenced trading on 13 May 2011.
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A.C.N. 147 346 334
Review of Operations and Activities (continued)
Dandaragan Trough
The Company has obtained the Potash and Phosphate rights for more than 2,000 sq km of ground within
this geological feature. The trough is known to carry significant deposits of glauconite, within greensand
beds, which are a mixture of quartz and glauconite. Subsequent to year end we have acquired additional
exploration rights, such that we now have the Potash and phosphate rights to an estimated 80% of the
trough. See figure 1.
Immediately after listing we commenced our two main programmes,
process design work to identify, and ultimately cost, the most effective method of producing a
commercially viable potash product from the glauconitic greensands
Exploration to identify areas where the greensands are thicker, closer to the surface and with a
minimum thickness of potassium depleted cover.
Our first drilling programme intersected substantial thicknesses of potassium-bearing material, and
provided samples to commence test work. The key results from the drilling programme are summarized in
table 1.
Hole
Depth
(m)
East
(m)
PWA0001 68
PWA0002 72
PWA0003 68
PWA0005 78
PWA0006 94
PWA0007 78
387966
394013
378123
385961
367702
369898
North
(m)
Surface
Level
(m)
6560365 118
6560209 141
6577610 214
6578253 162
6594711 259
6594940 262
Interval
(m)
From
(m)
To
(m)
K2O%
34
62
10
40
46
34
34
10
10
38
42
44
68
72
20
78
88
78
2.90
3.09
2.61
2.66
2.37
4.21
Table 1: Intercepts above a cut off grade of 2% K2O
We also commenced a detailed mapping exercise, utilizing high resolution digital imagery. This technique
has enabled the mapping of laterite surfaces and low lying topography, both known to have a deleterious
influence on potash grades. It also allowed the mapping of geomorphology and overburden, and features
which are considered to reflect underlying geology. The results from the mapping exercise were received
in August and has allowed planning of drilling programmes, which are expected to commence in the
December quarter.
In tandem with the increased exploration activity we have commenced investigations into processing
options with our partner, Strategic Metallurgy. Work to date has shown that the glauconite does dissolve in
hydrochloric acid, solubilising the iron, aluminium and potassium. This work is ongoing and some
encouraging results were reported to the market on 13 September 2011.
Potash Market
Potassium is one of three elements that are required in very high addition rates ( typically + 100 kg/hectare)
to optimize the growth of food crops, for example typically optimum potash usage for sugar cane is
approximately 1.1 tonne per hectare. The other elements required are phosphorous and nitrogen, both of
which are manufactured in Australia.
Demand for food products continues to grow, driven by population increases and rising standards of living.
As available arable land is not increasing at the same rate as food demand, agricultural intensity must grow
to meet demand, it is anticipated that this will cause an increase in usage of all fertilizers, including potash.
These macro drivers are particularly important in our prime market areas, Australia, India and China, all
major importers of potash.
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A.C.N. 147 346 334
Review of Operations and Activities (continued)
Prices have continued to firm post the sharp decrease in 2009, See Figure 2
Price per tonne muriate of potash,
FOB Vancouver
1000
900
800
700
600
500
400
300
200
100
0
Source: PotashCorp Website Aug 2011
Figure 2: Potash Vancouver Export prices
Potash production is concentrated in four countries, Canada, Russia, Belarus and Germany, between them
they account for 85% of traded potash. Five companies account for 63% of global capacity, controlled by
two marketing companies, Canpotex in Canada and BPC in Russia and Belarus.
Other Opportunities
We will continue to evaluate projects and opportunities that we may become aware of.
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Corporate governance statement
The Company is committed to implementing the highest standards of corporate governance. In
determining what those high standards should involve the Company has considered the ASX Corporate
Governance Council’s Principles of Good Corporate Governance and Recommendations.
In line with the above, the Board has set out the way forward for the Company in its implementation of its
Principles of Good Corporate Governance and Recommendations. The approach taken by the board was
to set a blueprint for the Company to follow as it introduces elements of the governance process. Due to
the current size of the Company and the scale of its operations it is neither practical nor economic for the
adoption of all of the recommendations approved via the board charter. Where the Company has not
adhered to the recommendations it has stated that fact in this Corporate Governance Statement however
has set out a mandate for future compliance when the size of the Company and the scale of its operations
warrants the introduction of those recommendations.
1.
Board of Directors
Role of the Board
1.1
The Board’s role is to govern the Company rather than to manage it. In governing the Company, the
Directors must act in the best interests of the Company as a whole. It is the role of senior management to
manage the Company in accordance with the direction and delegations of the Board and the responsibility
of the Board to oversee the activities of management in carrying out those delegated duties.
In carrying out its governance role, the main task of the Board is to drive the performance of the Company.
The Board must also ensure that the Company complies with all of its contractual, statutory and any other
legal obligations, including the requirements of any regulatory body. The Board has the final responsibility
for the successful operations of the Company.
To assist the Board carry its functions, it has developed a Code of Conduct to guide the Directors. A copy
of the code is available on the Company’s website (www.potashwest.com.au).
Composition of the Board
1.2
To add value to the Company the Board has been formed so that it has effective composition, size and
commitment to adequately discharge it responsibilities and duties. The names of the Directors and their
qualifications and experience have been stated in the prospectus dated 17 February 2011 and will be
stated in the Directors’ Report of future Annual Reports along with the term of office held by each of the
Directors. Directors are appointed based on the specific skills required by the Company and on their
decision-making and judgment.
The Company recognises the importance of Non-Executive Directors and the external perspective and
advice that Non-Executive Directors can offer. There are currently three Non-Executive Directors on the
board of the Company who are also independent directors.
An Independent Director:
1.
2.
is a Non-Executive Director and;
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly
with, a substantial shareholder of the Company;
3. within the last three years has not been employed in an executive capacity by the Company or
another group member, or been a Director after ceasing to hold any such employment;
4. within the last three years has not been a principal of a material professional adviser or a material
consultant to the Company or another group member, or an employee materially associated with
the service provided;
is not a material supplier or customer of the Company or another group member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer;
5.
6. has no material contractual relationship with the Company or other group member other than as a
Director of the Company;
7. has not served on the Board for a period which could, or could reasonably be perceived to,
materially interfere with the Director’s ability to act in the best interests of the Company; and
19
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
8.
is free from any interest and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the Director’s ability to act in the best interests of the
Company.
Materiality for the purposes of points 1 to 8 above is determined on the basis of both quantitative and
qualitative aspects with regard to the independence of directors. An amount over 5% of the Company’s
expenditure or 10% of the particular directors annual gross income is considered to be material. A period
of more than six years as a director would be considered material when assessing independence.
Mr Adrian Griffin is a Non-Executive Director and Chairman of the Company and meets the Company’s
criteria for independence. Although Mr Adrian Griffin has entered into a profit á prendre re mineral interest
rights with the Company, he is still considered to be independent as the agreement is not considered to be
material as the proportion vended in is insignificant to both parties. His experience and knowledge of the
Company makes his contribution to the Board such that it is appropriate for him to remain on the Board and
in his position as Chairman.
Mr Gary Johnson is a Non-Executive Director of the Company, is a material consultant to the Company and
therefore does not meet the Company’s criteria for independence. His experience and knowledge of the
Company makes his contribution to the Board such that it is appropriate for him to remain on the Board and
in his position as a Non-Executive Director.
Mr George Sakalidis is a Non-Executive Director of the Company and meets the Company’s criteria for
independence. Although Image Resources NL, of which Mr George Sakalidis is a director, has entered into
a profit á prendre re mineral interest rights with the Company, Mr George Sakalidis is still considered to be
independent as the agreement is not considered to be material as the proportion vended in is insignificant
to both parties. His experience and knowledge of the Company makes his contribution to the Board such
that it is appropriate for him to remain on the Board and in his position as a Non-Executive Director.
Mr Patrick McManus is an Executive Director of the Company and does not meet the Company’s criteria for
independence. However, his experience and knowledge of the Company makes his contribution to the
Board such that it is appropriate for him to remain on the Board.
Responsibilities of the Board
1.3
In general, the Board is responsible for, and has the authority to determine, all matters relating to the
policies, practices, management and operations of the Company. It is required to do all things that may be
necessary to be done in order to carry out the objectives of the Company.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the
Board include the following.
1. Leadership of the Organisation: overseeing the Company and establishing codes that reflect the
values of the Company and guide the conduct of the Board.
2. Strategy Formulation: to set and review the overall strategy and goals for the Company and
ensuring that there are policies in place to govern the operation of the Company.
3. Overseeing Planning Activities: the development of the Company’s strategic plan.
4. Shareholder Liaison: ensuring effective communications with shareholders through an appropriate
communications policy and promoting participation at general meetings of the Company.
5. Monitoring, Compliance and Risk Management: the development of the Company’s risk
management, compliance, control and accountability systems and monitoring and directing the
financial and operational performance of the Company.
6. Company Finances: approving expenses and approving and monitoring acquisitions, divestitures
and financial and other reporting.
7. Human Resources: reviewing the performance of Executive Officers and monitoring the
performance of senior management in their implementation of the Company’s strategy.
8. Ensuring the Health, Safety and Well-Being of Employees: in conjunction with the senior
management team, developing, overseeing and reviewing the effectiveness of the Company’s
occupational health and safety systems to ensure the well-being of all employees.
20
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
9. Delegation of Authority: delegating appropriate powers to the CEO (Executive Director) to ensure
the effective day-to-day management of the Company and establishing and determining the powers
and functions of the Committees of the Board.
Full details of the Board’s role and responsibilities are contained in the Board Charter. A copy of the
charter is available on the Company’s website (www.potashwest.com.au).
Board Policies
1.4
1.4.1 Conflicts of Interest
Directors must:
disclose to the Board actual or potential conflicts of interest that may or might reasonably be
thought to exist between the interests of the Director and the interests of any other parties in
carrying out the activities of the Company; and
if requested by the Board, within seven days or such further period as may be permitted, take such
necessary and reasonable steps to remove any conflict of interest.
If a Director cannot or is unwilling to remove a conflict of interest then the Director must, as per the
Corporations Act, absent himself or herself from the room when discussion and/or voting occurs on matters
about which the conflict relates.
1.4.2 Commitments
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties
as a Director of the Company.
1.4.3 Confidentiality
In accordance with legal requirements and agreed ethical standards, Directors and key executives of the
Company have agreed to keep confidential, information received in the course of the exercise of their
duties and will not disclose non-public information except where disclosure is authorised or legally
mandated.
1.4.4 Continuous Disclosure
The Board has designated the Company Secretary as the person responsible for overseeing and
coordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance
with the ASX Listing Rules the Company immediately notifies the ASX of information:
1. concerning the Company that a reasonable person would expect to have a material effect on the
2.
price or value of the Company’s securities; and
that would, or would be likely to, influence persons who commonly invest in securities in deciding
whether to acquire or dispose of the Company’s securities.
A copy of the strategy is available on the Company’s website (www.potashwest.com.au).
1.4.5 Education and Induction
It is the policy of the Company that each new Director undergo an induction process in which they are given
a full briefing on the Company. Where possible this includes meetings with key executives, tours of the
premises, an induction package and presentations. Information conveyed to new Directors include:
formal policies on Director appointment as well as conduct and contribution expectations;
details of the roles and responsibilities of a Director;
a copy of the Board Charter;
a copy of the Corporate Governance Statement, Charters, Policies and Memos and
a copy of the Constitution of the Company.
In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo
continual professional development.
21
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
Independent Professional Advice
1.4.6
The Board collectively and each Director has the right to seek independent professional advice at the
Company’s expense, up to specified limits, (that limit is currently set at $2,000), to assist them to carry out
their responsibilities.
1.4.7 Related Party Transactions
Related party transactions include any financial transaction between a Director and the Company. Unless
there is an exemption under the Corporations Act from the requirement to obtain shareholder approval for
the related party transaction, the Board cannot approve the transaction.
1.4.8 Shareholder Communication
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights
the Company is committed to:
1. communicating effectively with shareholders through releases to the market via ASX, information
mailed to shareholders and the general meetings of the Company;
2. giving shareholders ready access to balanced and understandable information about the Company
and corporate proposals;
3. making it easy for shareholders to participate in general meetings of the Company; and
4.
requesting the external auditor to attend the annual general meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the
auditor’s report of future Annual Reports.
The Company also makes available a telephone number and email address for shareholders to make
the Company’s website
the policy
enquiries of
(www.potashwest.com.au).
is available on
the Company.
A copy of
1.4.9 Trading in Company Shares
The Company has a Share Trading Policy which states that Directors, members of senior management,
certain other employees and their associates likely to be in possession of unpublished price sensitive
information may not trade in the Company’s securities prior to that unpublished price sensitive information
being released to the market via the ASX and which include restrictions on trading in closed periods,
complying with the ASX Listing Rule requirements. A copy of the policy is available on the Company’s
website (www.potashwest.com.au). Unpublished price sensitive information is information regarding the
Company, of which the market is not aware, that a reasonable person would expect to have a material
effect on the price or value of the Company’s securities.
1.4.10 Performance Review / Evaluation
It is the policy of the Board to conduct evaluation of its performance. The objective of this evaluation is to
provide best practice corporate governance to the Company. To date, there has been no formal process
put in place for performance evaluation. However, a general review of the Board and executives occurs on
an on-going basis to ensure that structures suitable to the Company's status as a listed entity are in place.
A copy of the policy is available on the Company’s website (www.potashwest.com.au).
1.4.11 Attestations by CEO and CFO
It is the Board’s policy, that the MD and the CFO make the attestations recommended by the ASX
Corporate Governance Council as to the Company’s financial condition prior to the Board signing future
Annual Reports.
1.4.12 Risk Management Policy
The Company’s risk management strategy policy states that the Board as a whole is responsible for the
oversight of the Company’s risk management and control framework. The objectives of the Company’s risk
management strategy are to:
identify risks to the Company;
balance risk to reward;
ensure regulatory compliance is achieved; and
ensure senior executives, the Board and investors understand the risk profile of the Company.
22
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
The Board monitors risk through various arrangements including:
regular Board meetings;
share price monitoring;
market monitoring; and
regular review of financial position and operations.
The Company has developed a Risk Register in order to assist with the risk management of the Company.
The Company’s risk management strategy was formally reviewed by the Board on 23 November 2010 and
was considered a sound strategy for addressing and managing risk. A copy of the strategy is available on
the Company’s website (www.potashwest.com.au).
1.4.13 Diversity Policy
The Company recognises and respects the value of diversity at all levels of the organisation.
The Company is committed to setting measurable objectives for attracting and engaging women at the
Board level, in senior management and across the whole organisation.
As at the date of this report, the Company has the following proportion of women appointed:
to the Board – 0%
to senior management – 13%
to the organisation as a whole – 25%
The Company’s objective is to promote a culture which embraces diversity through ongoing education,
succession planning, director and employee selection and recognising skills are not gender specific. The
Company’s Diversity Policy is located on its website (www.potashwest.com.au).
2.
Board Committees
2.1
The Audit Committee consists of Mr Adrian Griffin, Mr George Sakalidis and Mr Gary Johnson.
Audit Committee
The Committee did not meet formally as the Audit Committee during the financial year however any
relevant matters were discussed on an as-required basis from time to time during regular meetings of the
Board.
2.2 Remuneration Committee
2.2.1.1
The role of a Remuneration Committee is to assist the Board in fulfilling its responsibilities in respect of
establishing appropriate remuneration levels and incentive policies for employees.
Role
The Remuneration Committee consists of three (3) non-executive directors, being Mr Adrian Griffin, Mr
George Sakalidis and Mr Gary Johnson. The Chairman of the Remuneration Committee is Mr Adrian
Griffin, an independent director.
2.2.1.2 Responsibilities
The responsibilities of a Remuneration Committee include setting policies for senior officers’ remuneration,
setting the terms and conditions of employment for the Executive Director, reviewing and making
recommendations to the Board on the Company’s incentive schemes and superannuation arrangements,
reviewing the remuneration of both Executive and Non-Executive Directors, recommendations for
remuneration by gender and making recommendations on any proposed changes and undertaking reviews
of the Executive Director’s performance, including, setting with the Executive Director goals and reviewing
progress in achieving those goals.
2.2.2 Remuneration Policy
2.2.2.1 Non-Executive Director Remuneration Policy
Non-Executive Directors are to be paid their fees out of the maximum aggregate amount approved by
shareholders for the remuneration of Non-Executive Directors.
23
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
2.2.2.2 Executive Director Remuneration
Executive Director remuneration is set by the board with the executive director in question not present.
2.2.3 Current Director Remuneration
Full details regarding the remuneration of Directors has been included in the prospectus dated 17 February
2011 and will be included in the Directors’ Report of future Annual Reports. A copy of the statement is
available on the Company’s website (www.potashwest.com.au).
Nomination Committee
2.3
2.3.1.1 Role
The role of a Nomination Committee is to help achieve a structured Board that adds value to the Company
by ensuring an appropriate mix of skills are present in Directors on the Board at all times.
The Nomination Committee consists of three (3) non-executive directors, being Mr Adrian Griffin, Mr
George Sakalidis and Mr Gary Johnson. The Chairman of the Nomination Committee is Mr Adrian Griffin,
an independent director. The Nomination Committee meets once a year and abides by the Nomination
Committee Charter.
2.3.1.1 Responsibilities
The responsibilities of a Nomination Committee would include devising criteria for Board membership,
regularly reviewing the need for various skills and experience on the Board and identifying specific
individuals for nomination as Directors for review by the Board. The Nomination Committee also oversees
management succession plans including the MD and his/her direct reports and evaluate the Board’s
performance and make recommendations for the appointment and removal of Directors. Currently the
Board as a whole performs this role. Matters such as remuneration, expectations, terms, the procedures
for dealing with conflicts of interest and the availability of independent professional advice are clearly
understood by all Directors, who are experienced public company Directors.
2.3.2 Criteria for selection of Directors
Directors are appointed based on the specific governance skills required by the Company. Given the size
of the Company and the business that it operates, the Company aims at all times to have at least one
Director with experience appropriate to the Company’s target market. In addition, Directors should have
the relevant blend of personal experience in:
Accounting and financial management; and
Director-level business experience.
The Nomination Committee is responsible for implementing a program to identify, assess and enhance
director competencies. In addition, the Nomination Committee puts in place succession plans to ensure an
appropriate mix of skills, experience, expertise and diversity are maintained on the Board. A copy of the
procedure is available on the Company’s website (www.potashwest.com.au).
3.
Company Code of Conduct
As part of its commitment to recognising the legitimate interests of stakeholders, the Company has
established a Code of Conduct to guide compliance with legal and other obligations to legitimate
stakeholders. These stakeholders include employees, clients, customers, government authorities, creditors
and the community as whole. The Company Code of Conduct was adopted by resolution of the Board on
23 November 2010. This Code includes the following:
Responsibilities to Shareholders and the Financial Community Generally
The Company complies with the spirit as well as the letter of all laws and regulations that govern
shareholders’ rights. The Company has processes in place designed to ensure the truthful and factual
presentation of the Company’s financial position and prepares and maintains its financial statements fairly
and accurately in accordance with the generally accepted accounting and financial reporting standards.
24
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
Responsibilities to Clients, Customers and Consumers
The Company has an obligation to use its best efforts to deal in a fair and responsible manner with each of
the Company’s clients, customers and consumers and is committed to providing clients, customers and
consumers with fair value.
Employment Practices
The Company policy is to endeavours to provide a safe workplace in which there is equal opportunity for all
employees at all levels of the Company. The Company does not tolerate the offering or acceptance of
bribes or the misuse of Company assets or resources. As at the date of this Corporate Governance
Statement there are no employees who are not also directors.
Obligations Relative to Fair Trading and Dealing
The Company aims to conduct its business fairly and to compete ethically and in accordance with relevant
competition laws. The Company strives to deal fairly with the Company’s customers, suppliers and
competitors.
Responsibilities to the Community
As part of the community the Company: is committed to conducting its business in accordance with
applicable environmental laws and regulations
Responsibility to the Individual
The Company is committed to keeping private information from employees, clients, customers, consumers
and investors confidential and protected from uses other than those for which it was provided.
Conflicts of Interest
Directors and Employees must avoid conflicts as well as the appearance of conflicts between personal
interests and the interests of the Company.
How the Company Complies with Legislation Affecting its Operations
Within Australia, the Company strives to comply with the spirit and the letter of all legislation affecting its
operations. Outside Australia, the Company will abide by local laws in all countries in which it operates.
Where those laws are not as stringent as the Company’s operating policies, particularly in relation to the
environment, workplace practices, intellectual property and the giving of “gifts”, Company policy will prevail.
How the Company Monitors and Ensures Compliance with its Code.
The Board of the Company is committed to implementing this Code of Conduct and each individual is
accountable for such compliance. Disciplinary measures may be imposed for violating the Code. A copy of
the code is available on the Company’s website (www.potashwest.com.au).
This Corporate Governance Statement sets out Potash West NL's current compliance with the ASX
Corporate Governance Council's Principles of Good Corporate Governance and Recommendations. The
Recommendations are not mandatory.
25
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
RECOMMENDATION
COMMENT
REFERENCE
Lay solid foundations for management and oversight
1
1.1 Companies should establish
the functions reserved to the
board and those delegated
to senior executives and
disclose those functions.
The Company's Corporate Governance Policy
includes a Board Charter, which discloses the
specific responsibilities of the Board.
1.1, 1.3,
Website
1.2 Companies should disclose
the process for evaluating
the performance of senior
executives.
The Board will monitor the performance of
senior management, including measuring actual
performance against planned performance. The
Board has also adopted a policy to assist in
evaluating Board performance.
1.4.10,
Website
1.3 Companies should provide
the information indicated in
the Guide to reporting on
Principle 1.
Structure the board to add value
2
2.1 A majority of
should
directors.
be
The Company has explained any departures (if
any) from recommendations 1.1 and 1.2 in the
Corporate Governance Statement and Policies.
the board
independent
There are four Directors on the Board, of which
Mr Adrian Griffin, Mr George Sakalidis are
independent. Mr Patrick McManus and Mr Gary
Johnson are not considered to be independent.
Both Mr Patrick McManus and Mr Gary Johnson
have a sound knowledge of Potash West NL’s
projects.
is considered
important in enabling the Company to capitalise
on the value of its projects to create shareholder
wealth.
This knowledge
2.2 The chair should be an
independent director.
2.3 The roles of chair and chief
executive officer should not
be exercised by the same
individual.
2.4 The board should establish
a nomination committee.
a
from
remains
departure
There
the
recommendation in relation to a majority of
independent directors due to the small scale
nature of the Company and its limited financial
resources to attract appropriately skilled yet
independent directors. The Board is continually
reviewing the status of independent directors
with a view to engaging further independent
directors when financial resources allow.
The Chairman, Mr Adrian Griffin, is considered
to be independent as his profit á prendre re
mineral interest rights with the Company is not
considered to be material to either party.
The roles of chair and chief executive officer are
not exercised by the same individual.
A
formal nomination committee has been
adopted by the Company , chaired by Mr Adrian
Griffin, consisting of Mr George Sakalidis, Mr
Gary Johnson and the Company Secretary.
26
1.1, 1.3,
1.4.10,
Website
1.2
1.2
1.2
2.3
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
2.5 Companies should disclose
the process for evaluating
the performance of
the
board, its committees and
individual directors.
2.6 Companies should provide
the information indicated in
the Guide to reporting on
Principle 2.
induction appropriate
The Chairman will review the composition of the
Board and the performance of each Director to
ensure that it continues to have a mix of skills
and experience necessary for the conduct of the
Company's activities. A new Director will receive
an
to his or her
experience.
The Company has provided details of each
Director, such as their skills, experience and
expertise relevant to their position, together with
an explanation of any departures (if any) from
recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 in
the Prospectus dated 17 February 2011 and
Corporate Governance Statement and Policies
respectively.
1.4.10, 2.3.2,
1.4.5,
Website
1.2, 2.3,
1.4.10, 2.3.2,
1.4.5, 1.4.6,
Website
Promote ethical and responsible decision-making
3
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
their
into account
legal obligations and the
reasonable expectations
of their stakeholders
responsibility
and
of
accountability
individuals
reporting
for
and investigating reports
of unethical practices
the
3.2 Companies should establish
a policy concerning diversity
and disclose the policy or a
summary of that policy. The
policy
include
should
requirements for the board
establish measurable
to
achieving
objectives
gender diversity
the
to assess annually
board
both
the objectives and
progress in achieving them.
for
for
3.3 Companies should disclose
in each annual report the
measurable objectives
for
achieving gender diversity
in
the
set
accordance
the
diversity policy and progress
towards achieving them.
board
with
by
The Company's Corporate Governance Policy
includes a Code of Conduct for Directors and Key
Executives, which provides a framework for
decisions and actions in relation to ethical
conduct in employment.
3, 1.4.1,
1.4.2, 1.4.3,
Website
The Company has implemented a Diversity
Policy which includes 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.
1.4.13
The measurable objectives for achieving gender
diversity will be disclosed in each annual report.
1.4.13
27
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
3.4 Companies 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 measurable objectives for achieving gender
diversity will be disclosed in each annual report.
1.4.13
4
4.1
3.5 Companies should provide
the information indicated in
the Guide to reporting on
Principle 3.
Safeguard integrity in financial reporting
The board should establish
an audit committee.
The audit committee should
be structured so that it:
consists only of non-
4.2
The Company has explained any departures (if
any) from recommendations 3.1, 3.2, 3.3 and 3.4
in the Corporate Governance Statement and
Policies.
Established 23 November 2010.
Mr George Sakalidis (Non-Executive Director –
Potash West NL) Chairman of Audit Committee
Mr Gary Johnson (Non-Executive Director –
Potash West NL)
Mr Adrian Griffin (Non-Executive Chairman –
Potash West NL)
executive directors
consists of a majority of
independent directors
is
chaired
an
independent chair, who is
not chair of the board
by
has
at
members.
least
three
3, 1.4.1,
1.4.2, 1.4.3,
1.4.9, 1.4.13,
Website
2.1
2.1
2.1
2.1
4.3
The audit committee should
have a formal charter.
4.4 Companies should provide
the information indicated in
the Guide to reporting on
Principle 4.
Make timely and balanced disclosure
5
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
that
level
compliance and disclose
those policies or a summary
of those policies.
for
5.2 Companies should provide
the information indicated in
Guide
to Reporting on
Principle 5.
Respect the rights of shareholders
6
6.1 Companies should design a
communications policy
for
effective
promoting
with
communication
shareholders
and
their
encouraging
participation
general
meetings and disclose their
policy or a summary of that
policy.
at
The Company will explain any departures (if any)
from recommendations 4.1, 4.2 and 4.3 in its
Corporate Governance Statement.
The Company has a continuous disclosure
program in place designed to ensure the
compliance with ASX Listing Rule disclosure and
to ensure accountability at a Board level for
compliance and factual presentation of the
Company's financial position.
1.4.4,
Website
1.4.4,
Website
1.4.8,
Website
The Company will provide an explanation of any
departures (if any) from recommendation 5.1 in
its Corporate Governance Statement.
The Company's Corporate Governance Policy
includes a Shareholder Communications Policy,
which aims to ensure that the shareholders are
informed of all major developments affecting the
Company's state of affairs.
28
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
The Company has provided an explanation of
any departures (if any) from recommendation 6.1
in the Corporate Governance Statement and
Policies.
1.4.8,
Website
The Board determines
the Company's "risk
profile" and is responsible for overseeing and
approving
risk management strategy and
policies, internal compliance and internal control.
The Company’s Corporate Governance Policy
includes a Risk Management Policy which aims
to ensure
that material business risks are
identified and mitigated, through the use of a Risk
Register.
The Board requires that either the individual
performing the role of Chief Executive Officer or
the Chief Financial Officer will design and
implement risk management and internal control
systems and provide a report at the relevant time.
1.4.12,
Website
1.4.11, 1.4.12
Website
The Board will seek this relevant assurance from
the individuals performing the role of Chief
Executive Officer and the Chief Financial Officer.
1.4.11, 1.4.12
Website
6.2 Companies should provide
the information indicated in
the Guide to reporting on
Principle 6.
7
Recognise and manage risk
7.1 Companies should establish
policies for the oversight and
management of material
business risks and disclose
a summary of those policies.
to
7.3
it as
of
7.2 The board should require
management to design and
implement
risk
the
management and
internal
control system to manage
company's material
the
business risks and report to
it on whether those risks are
being managed effectively.
The board should disclose
has
that management
the
reported
to
effectiveness
the
company's management of
its material business risks.
The board should disclose
received
it has
whether
the chief
assurance
from
(or
executive
the chief
equivalent) and
(or
financial
the
equivalent)
in
declaration
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
in all material
effectively
respects
to
relation
in
financial reporting risks.
officer
that
provided
officer
7.4 Companies should provide
the information indicated in
Guide
to Reporting on
Principle 7.
The Company has provided an explanation of
any departures (if any) from recommendations
7.1, 7.2 and 7.3 in the Corporate Governance
Statement and Policies.
1.4.11, 1.4.12
Website
29
2.2.1
2.2.1, 2.2.2,
Website
2.2.2,
Website
2.2.1, 2.2.2,
Website
Potash West NL
A.C.N. 147 346 334
Corporate governance statement (continued)
8
8.1
8.2
Remunerate fairly and responsibly
The board should establish
a remuneration committee.
The
committee
structured so that it:
remuneration
be
should
consists of a majority of
independent directors
is
by
chaired
independent chair
an
A formal remuneration committee has been
adopted by the.
The remuneration committee is chaired by Mr
Adrian Griffin, consisting of Mr George Sakalidis,
Mr Gary Johnson and the Company Secretary.
has
at
least
three
members.
8.3 Companies should clearly
distinguish the structure of
directors'
non-executive
remuneration from that of
executive
and
senior executives.
directors
8.4 Companies should provide
the information indicated in
the Guide to reporting on
Principle 8.
The Board will distinguish the structure of non
executive Director's remuneration from that of
executive Directors and senior executives.
Relevantly, the Company's Constitution provides
that the remuneration of non-executive Directors
will be not be more than the aggregate fixed sum
determined by a general meeting. The Board is
responsible for determining the remuneration of
any Director or senior executives (without the
participation of the affected Director).
The Company has provided an explanation of
any departures (if any) from recommendations
8.1, 8.2 and 8.3 in the Corporate Governance
Statement and Policies.
30
Potash West NL
A.C.N. 147 346 334
Statement of Comprehensive Income
For the period 12 November 2010 to 30 June 2011
REVENUE FROM CONTINUING ACTIVITIES
Note
$
Interest
TOTAL REVENUE
EXPENSES
Administration
Equity based payments
Exploration
Legal
Occupancy
Remuneration
64,769
64,769
144,616
150,000
255,513
5,458
8,000
309,905
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX
(808,723)
Income Tax
4
-
NET LOSS FOR THE PERIOD
OTHER COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD
(808,723)
-
(808,723)
Basic and diluted loss per share (cents per share)
7
(1.08)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
31
Potash West NL
A.C.N. 147 346 334
Statement of Financial Position
As at 30 June 2011
Note
$
8
9
5,432,722
81,289
5,514,011
10
2,500,000
2,500,000
8,014,011
11
12
436,910
2,940
439,850
439,850
7,574,161
13
8,382,884
15
(808,723)
7,574,161
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total Current Assets
NON CURRENT ASSETS
Exploration and Evaluation
Total Non Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Accumulated losses
TOTAL EQUITY
This Statement of Financial Position is to be read in conjunction with the accompanying notes.
32
Potash West NL
A.C.N. 147 346 334
Statement of Changes in Equity
For the period 12 November 2010 to 30 June 2011
Note
Issued
Capital $
Accumulate
d Losses $
Total $
Loss for the period
Other comprehensive income (net of tax)
Total comprehensive loss for the period (net of tax)
-
-
-
(808,723)
(808,723)
-
-
(808,723)
(808,723)
Transactions with owners in their capacity as owners:
Shares issued
Shares issued transaction cost
6,150,028
(617,144)
Share based payments
14
350,000
Shares issued for acquisition of mineral rights
2,500,000
-
-
-
-
6,150,028
(617,144)
350,000
2,500,000
Balance at 30 June 2011
8,382,884
(808,723)
7,574,161
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
33
Potash West NL
A.C.N. 147 346 334
Statement of Cash Flows
For the period 12 November 2010 to 30 June 2011
Note
$
OPERATING ACTIVITIES
Payments to suppliers and employees
Interest Received
NET CASH FLOWS USED IN OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchase of plant and equipment - deposit
NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
FINANCING ACTIVITIES
Proceeds from issue of shares
Share issue costs
NET CASH FLOWS FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the period
(257,011)
64,769
(192,242)
(32,920)
(32,920)
6,150,028
(492,144)
5,657,884
5,432,722
-
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
8
5,432,722
34
Potash West NL
A.C.N. 147 346 334
Notes to financial statements
Note 1: Corporate information
The consolidated financial report of Potash West NL for the period 12 November 2010 (date of
incorporation) to 30 June 2011 was authorised for issue in accordance with a resolution of directors on 30
September 2011.
Potash West NL is a company limited by shares incorporated in Australia whose share are publicly traded
on the Australian Securities Exchange (ASX).
The nature of operations and principal activities of the Group are described in the directors’ report.
Note 2: Statement of significant accounting policies
(a) 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, Accounting Standards and Interpretations and complies with
other requirements of the law.
The accounting policies detailed below have been consistently throughout the period presented unless
otherwise stated.
The financial report has also been prepared on a historical cost basis. Cost is based on the fair values of the
consideration given in exchange for assets.
The financial report is presented in Australian dollars.
The company is a listed public company, incorporated in Australia and operating in Australia. The entity’s
principal activities are mineral exploration.
(b)
Adoption of new and revised standards
Accounting Standards and Interpretations issued but not yet effective.
Australian Accounting Standards and interpretations that have recently been issued or amended but
are not yet effective have not been adopted for the reporting period ended 30 June 2011. These are
outlined in the table below:
AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9
[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and
Interpretations 10 & 12]. (Application date: 1 January 2013, Effective date: 1 July 2013).
AASB 124 (Revised) Related Party Disclosures (December 2009). (Application date: 1 January
2011, Effective date: 1 July 2013).
AASB 2009-12 Amendments to Australian Accounting Standards
[AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 &
1052]. (Application date: 1 January 2011, Effective date: 1 July 2011).
AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual
Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13].
(Application date: 1 January 2011, Effective date: 1 July 2011).
AASB 2010-5 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112,
118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132
& 1042]. (Application date: 1 January 2011, Effective date: 1 July 2011).
AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of
Financial Assets [AASB 1 & AASB 7]. (Application date: 1 July 2011, Effective date: 1 July 2011).
AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December
2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139,
1023, & 1038 and interpretations 2, 5, 10, 12, 19 & 127]. (Application date: 1 January 2013,
Effective date: 1 July 2013).
35
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 2: Statement of significant accounting policies (continued)
AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of
Underlying Assets [AASB 112]. (Application date: 1 January 2012, Effective date: 1 July 2012).
AASB 10 - Consolidated Financial Statements. (Application date: 1 January 2013, Effective date: 1
July 2013).
AASB 11 - Joint Arrangements. Application date: 1 January 2013, Effective date: 1 July 2013).
AASB 12 - Disclosure of Interests in Other Entities. (Application date: 1 January 2013, Effective
date: 1 July 2013).
AASB 13 – Fair value Measurements. (Application date: 1 January 2013, Effective date: 1 July
2013)
AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and
Joint Arrangement Standards (Application date: 1 January 2013, Effective date: 1 July 2013)
AASB 2011-8 Amendments to Australian Accounting Standards arising from the Fair Value
Measurement Standard (Application date: 1 January 2013, Effective date: 1 July 2013)
The Company has not assessed the impact of any new standards or amendments that are issued but
not yet effective.
(c)
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards (IFRS).
(d) Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in
the period in which the estimate is revised if it affects only that period, or in the period of the revision and
future periods if the revision affects both current and future periods.
Share-based payment transactions:
The Group 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 Group measures the cost of cash-settled share-based payments at fair value at the grant date using the
Black and Scholes formula taking into account the terms and conditions upon which the instruments were
granted.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only when management considers
that it is probable that sufficient future tax profits will be available to utilise those temporary differences.
Significant management judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of future taxable profits over the next two years
together with future tax planning strategies.
Impairment of capitalized exploration and evaluation expenditure
The future recoverability of capitalized exploration and evaluation expenditure is dependent on a number of
factors, including whether the Group decides to exploit the related lease itself or, if not, whether it
successfully recovers the related exploration and evaluation asset through sale.
36
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 2: Statement of significant accounting policies (continued)
(e) Going concern
The directors are of the opinion the Company is a going concern as cash balances as at 30 June 2011 for
the Company were well in excess of expected working capital requirements expected for the next 12
months.
(f)
Exploration and evaluation expenditure
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs
which are carried forward where right of tenure of the area of interest is current and they are expected to be
recouped through sale or successful development and exploitation of the area of interest or, where
exploration and evaluation activities in the area of interest have not reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated
acquisition costs in respect of that area are written off in the financial period the decision is made. Each
area of interest is also reviewed at the end of each accounting period and accumulated costs written off to
the extent that they will not be recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development
phase until production commences.
(g) Plant & equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the
asset as follows:
Plant and equipment – over 2 to 15 years
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
If any indication exists of impairment and where the carrying values exceed the estimated recoverable
amount, the assets or cash-generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater 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.
Derecognition
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item) is
included in the statement of comprehensive income in the period the item is derecognised.
37
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
(h)
Income tax
Current tax assets and liabilities for the current period and prior periods are measured at amounts expected
to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The
tax rates and tax laws used for computations are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at balance 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 where the
deferred income tax liability arises from the initial recognition of goodwill 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.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax credits and unused tax losses, 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 assets and unused
tax losses can be utilized except where the deferred income 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.
The carrying amount of deferred income tax assets is reviewed at each balance 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 income tax asset to be utilized.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognized to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the balance date.
Income taxes relating to items recognized directly in equity are recognized in equity and not in the
statement of comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
(i) GST
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognized as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
38
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
(i) GST (continued)
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
(j)
Provisions and employee benefits
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the statement of comprehensive income net
of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required
to settle the present obligation at the balance date. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks
specific to the liability. The increase in the provision resulting form the passage of time is recognized in
finance costs.
Employee leave benefits
i. Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries including non-monetary benefits, annual leave and accumulating sick
leave due to be settled within 12 months of the reporting date are recognized in provisions in respect of
employees’ services up to the reporting date and are measured at the amounts expected to be paid when
the liabilities are settled. Liabilities for non-accumulating sick leave are recognized when the leave is taken
and measured at the rates paid or payable.
ii. Long service leave
The liability for long service leave is recognized and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to the expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
(k) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and
short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flow, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
39
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
(l)
Receivables
Receivables, which generally have 30-90 day terms, are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest rate method, less an allowance for any uncollectible
amounts.
Collectability or receivables are reviewed on an ongoing basis. Debts that are known to be uncollectible are
written off when identified. An allowance for doubtful debts is raised when there is objective evidence that
the Company will not be able to collect the debt.
(m) Revenue recognition
Revenue is recognized and measured at the fair value of the consideration received or receivable to the
extent that it is probable that the economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
Interest Revenue
Revenue is recognized as the interest accrues (using the effective interest 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.
(n) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
(o) Trade and other payables
Trade payables and other payables are carried at amortized costs and represent liabilities for goods and
services provided to the Company prior to the end of the financial year that are unpaid and arise when the
Company becomes obliged to make future payments in respect of the purchase of these goods and
services.
(p) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the Company adjusted to
exclude any costs of servicing equity (other than dividends) divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the Company adjusted for:
costs of servicing equity (other than dividends),
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognized as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
40
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
(q)
Investments and 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 financial assets. When financial assets are recognized 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 Company determines the classification of its financial assets
after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial
year-end.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose
of selling in the near term. Derivatives are also classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on investments held for trading are recognized in profit or
loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as
held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments
intended to be held for an undefined period are not included in this classification. Investments that are
intended to be held-to maturity, such as bonds, are subsequently measured at amortized cost. This cost is
computed as the amount initially recognized minus principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the initially recognized amount
and the maturity amount. This calculation includes all fees and points paid or received between parties to
the contract that are an integral part of the effective interest rate, transaction costs and all other premiums
and discounts. For investments carried at amortized cost, gains and losses are recognized in profit and loss
when the investment are derecognized or impaired, as well as through the amortisation process.
(iii)Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are carried at amortized cost using the effective interest method.
Gains and losses are recognized in profit and loss when the loans and receivables are derecognized or
impaired, as well as through the amortisation process.
(iv)Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-
for-sale or are not classified as any of the three proceeding categories. After initial recognition available-for-
sale investments are measured at fair value with gains or losses being recognized as a separate
component of equity until the investment is derecognized or until the investment is determined to be
impaired, at which time the cumulative gain or loss previously reported in equity is recognized in profit and
loss.
The fair value 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 balance date. For investments with no
active market, fair value is determined using valuation techniques. Such techniques include using recent
arm’s length market transactions; reference to current market value of another instrument that is
substantially the same; discounted cash flow analysis and option pricing models.
41
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
(r)
Impairment of financial assets
The Company assesses at each balance date whether a financial asset or group of financial assets is
impaired.
Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the
difference between its cost and its current fair value, less any impairment loss previously recognised in
profit and loss, is transferred from equity to the statement of comprehensive income. Reversals of
impairment losses for equity instruments classified as available-for-sale are not recognized in profit.
Reversals of impairment losses for debt instruments are reversed through profit and loss if the increase in
an instrument’s fair value can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss.
(s)
Leases
Operating Lease payments are recognised as an operating expense in the statement of comprehensive
income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability
when received and subsequently reduced by allocating lease payments between rental expense and the
reduction of the liability.
Note 3: Segment information
Identification of Reportable Segments
The Company has based its operating segment on the internal reports that are reviewed and used by the
executive management team in assessing performance and in determining the allocation of resources.
The Company currently does not have production and is only involved in exploration. As a consequence,
activities in the operating segment are identified by management based on the manner in which resources
are allocated, the nature of the resources provided and the identity of the manager and country of
expenditure. Information is reviewed on a whole of entity basis.
Based on these criteria the Company has only one operating segment, being exploration, and the segment
operations and results are reported internally based on the accounting policies as described in note 2 for
the computation of the Company’s results presented in this set of financial statements.
Note 4: Income tax
(a) Income tax expense/(benefit)
Current tax
Deferred tax
Adjustments for current tax of prior years
Total tax expense/(benefit)
42
2011
$
-
-
-
-
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 4: Income tax (continued)
(b) Numerical reconciliation of income tax expense to prima
facie tax payable
Loss from continuing operations before income tax expense
Prima facie tax benefit at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income
Share based payment
Non-deductible expenses
Capital raising costs deductible
Deferred Tax Assets not brought to account
Income tax expense/(benefit)
(c) Deferred tax assets
Accrued expenses
Employee entitlement provisions
Tax losses
Deferred tax asset not recognised
Offset against deferred tax liabilities
Net deferred tax assets
(d) Deferred tax liabilities
Exploration tenement
Offset against deferred tax assets
Net deferred tax liabilities
43
2011
$
(808,723)
(242,617)
105,000
335
(29,529)
166,811
-
7,500
882
908,429
916,811
(166,811)
750,000
(750,000)
-
750,000
750,000
(750,000)
-
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 5: Directors’ and executives’ remuneration
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Short-term
Directors’
Salary and
Consulting
Fees
$
Fees
$
Post-
employment
benefits
Share Based
Payments
Superannuation
Termination
Shares
Contribution
Benefits
and options
$
$
$
6,116
2,544
-
6,116
6,116
-
-
-
551
41,667*
551
551
18,348
2,544
43,320
-
-
-
-
-
-
200,000**
-
-
200,000
264,212
Total
$
9,211
241,667
6,667
6,667
*
**
Patrick McManus elected to contribute his remuneration into his nominated superannuation fund.
2,000,000 shares were issued to Patrick McManus at fair value of $0.100001 per share for his services.
$0.000001 was received from Patrick McManus in cash.
Executive
Salary
$
Fees
$
Contribution
and options
Total
$
$
$
Consulting
Superannuation
Shares
Lindsay Cahill
Robert Van der Laan
Amanda Wilton-Heald
-
-
-
-
4,437
12,360
4,032
20,829
-
-
-
-
-
-
-
-
4,437
12,360
4,032
20,829
(a)
Shareholdings
Number of shares held by directors
2011
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Number of Ordinary Shares
Held at 12
November 2010
Net Change
Held at 30 June 2011
3,447,181
1,700,000
656,485
250,000
3,447,181
1,700,000
656,485
250,000
-
-
-
-
44
Short-term
Post-
employment
benefits
Short-term
Post-
employment
benefits
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 6: Auditor’s remuneration
Remuneration of the auditor of the Company for:
-auditing or reviewing the financial report
-investigating accountants report
Ernst & Young
Note 7: Earnings per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Net loss
Loss used in calculating basic and diluted loss per share
Weighted average number of ordinary shares used in the
calculation of basic and diluted (loss)/earnings per share
During the period there were no options that were issued over ordinary share capital.
2011
$
25,000
7,725
32,725
2011
$
1.08
1.08
(808,723)
(808,723)
Number
75,000,000
There have been no transactions involving ordinary shares or potential shares that would significantly
change the number of ordinary shares or potential ordinary shares outstanding between the reporting date
and the date of completion of these financial statements.
Note 8: Cash and cash equivalents
Cash at bank
Cash at the end of the financial year as shown in the statement of cash
flows is reconciled to items in the statement of financial position as
follows:
Cash at bank
2011
$
5,432,722
5,432,722
45
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 9: Receivables
Current
GST receivables
Prepayments
2011
$
48,369
32,920
81,289
(i)
Non-trade debtors are non-interest bearing and are generally on 30-90 days terms. The carrying
amounts of these receivables represent fair value and are not considered to be impaired.
Note 10: Exploration Expenditure
Acquisition of mineral rights
2011
$
2,500,000
The ultimate recoupment of acquisition costs carried forward for exploration and evaluation phases is
dependent on the successful development and commercial exploitation or scale of the respective areas.
Note 11: Trade and other payables
Current
Unsecured liabilities
Trade payables
2011
$
436,910
436,910
Due to short term nature of these payables, their carrying value is assumed to approximate their fair value.
Note 12: Provisions
Employee benefits
Note 13: Contributed equity
Ordinary shares fully paid
46
2011
$
2,940
2011
$
8,382,884
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 13: Contributed equity (continued)
Effective 1 July 1998, the corporations legislation abolished the concepts of authorised capital and par
value shares. Accordingly, the Company does not have authorized capital or par value in respect of its
issued shares. Fully paid ordinary shares carry one vote per share and carry the rights to dividends.
Capital management
When managing capital (which is defined as the Company’s total equity amounting $7,574,161),
management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal
returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital
structure that ensures the lowest cost of capital available to the entity. As the equity market is constantly
changing management may issue new shares to provide for future exploration and development activity.
The Company is not subject to any externally imposed capital requirements.
Movements in ordinary shares on issue of the legal parent are:
At the beginning of reporting period
Ordinary Shares
2011
Note
Number
-
Issue of 25,000,000 shares for the acquisition of mineral rights
13.1.1
25,000,000
Issue of 2,000,000 shares to Patrick McManus
13.2.1
2,000,000
1,500,000 shares issued to promoters
1,500,000 shares issued as seed capital
13.2.2
1,500,000
13.2.3
1,500,000
Issue of 15,000,000 shares of Contingent Entitlement shares
accounted for as reserve shares
13.2.4
15,000,000
Issue of 30,000,000 shares pursuant to Public Offering
13.2.5
30,000,000
At the end of the reporting period
At the beginning of reporting period
75,000,000
2011
Note
$
-
Issue of 25,000,000 shares at $0.100001 to the acquisition of mineral
rights, against which cash was received partly for $0.000001
13.1.1
2,500,025
Issue of 2,000,000 shares at $0.100001 for share based payments
13.2.1
200,002
1,500,000 ordinary shares issued to promoters at $0.100001
13.2.2
150,001
1,500,000 ordinary shares issued as seed capital at $0.10 each
13.2.3
150,000
Issue of 30,000,000 shares at $0.20 pursuant to Public Offering
13.2.5
6,000,000
Equity raising costs
13.2.6
(617,144)
At the end of the reporting period
8,382,884
47
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 13: Contributed equity (continued)
13.1 Shares issued on 12 November 2010
13.1.1 The issue of 25,000,000 shares on 12 November 2010. Consideration receivable included
cash of $0.000001 per share received on incorporation at 12 November 2010 and certain
mineral rights received post 12 November 2010. Full subscription price represents fair
value of 1 $0.100001 per share.
13.2 Shares issued subsequent to 12 November 2010
13.2.1 The issue of 2,000,000 shares at fair value of $0.100001 per share to Patrick McManus, the
managing director, for services. $0.000001 per share was received in cash.
13.2.2 The issue of 1,500,000 shares at fair value of $0.100001 per share for unspecified services
related to the promotion of the Company. $0.000001 per share was received in cash.
13.2.3 The issue of 1,500,000 shares for cash consideration of $0.10 per share as seed capital.
13.2.4 The issue of 15,000,000 shares for the Contingent Entitlement shares held in trust and
accounted for as reserve shares with nil value.
13.2.5 The issue of 30,000,000 shares at $0.20 per share pursuant to Public Offering raising
$6,000,000.
13.2.6 The payment of costs incurred by the Company in relation to equity raising and listing of the
Company’s shares and of $617,143.
Note 14: Share Based Payments
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as
follows:
Shares issued in consideration for services. See note 13.2.1 and 13.2.2.
Note 15: Accumulated losses
Net loss for the reporting period
Accumulated losses at the end of the financial period
Note 16: Commitments
2011
$
350,000
350,000
2010
$
(808,723)
(808,723)
(i) The Company has certain obligations with respect to tenements and minimum expenditure
requirements on areas, as follows:
Within 1 year
1 to 2 years
Total
48
2011
$
770,684
770,684
1,541,368
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 16: Commitments (continued)
The commitments may vary depending upon additions or relinquishments of the tenements, as well as
farm-out agreements. The above figures are based on the mines department Emits reports as at 30 June
2011. These figures are adjusted at the anniversary date of each tenement and therefore the total can
change on a monthly basis.
(ii) The Company has entered into a commercial property sub-lease. The head-lease and sub- lease
expire on 15 August 2014. The amount of $180,000 remains outstanding in relation to the sub-lease.
Within 1 year
1 to 3 years
Total
2011
$
60,000
120,000
180,000
(iii) In addition to the above, the Company has an obligation of $32,920 for the purchase of equipment
within 12 months from 30 June 2011.
(iv) Mr Patrick McManus was appointed as Managing Director on 23 November 2010. Pursuant to an
agreement dated 23 November 2010, his salary is set at $250,000 per annum inclusive of 9%
superannuation. The agreement can be terminated by either party by giving three months’ notice or
payment of three months’ salary in lieu of notice being $62,500.
Note 17: Contingent liabilities
There are no contingent liabilities as at 30 June 2011.
Note 18: Related party transactions
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
During the period the following transactions were undertaken between the Company, executive officers and
director-related entities.
Consulting fees were paid to Strategic Metallurgy Pty Ltd, a company of which Gary
Johnson is a director and shareholder.
34,900
2011
$
49
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 19: Cash flow information
Reconciliation of cash flow from operations with (loss)/profit from ordinary
activities after income tax
Loss from ordinary activities after income tax
Expenses settled via equity issues
Changes in assets and liabilities
(Increase)/decrease in receivables
Increase/(decrease) in payables
Increase/(decrease) in provisions
Cash flows from operations
2011
$
(808,723)
350,000
(48,369)
311,910
2,940
(192,242)
Note 20: Financial risk management objectives and policies
The Company’s principal financial instruments comprise cash and short term deposits. The main purpose of
the financial instruments is to finance the Company’s operations. The Company also has other financial
instruments such as trade debtors and creditors which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk and credit risk. The board
reviews and agrees policies for managing each of these risks and they are summarised below:
(a)
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate
as a result of changes in market interest rates and the effective weighted average interest rate for each
class of financial assets and financial liabilities is set out in the following table. Also included is the effect on
profit and equity before tax if interest rates at that date had been 10% higher or lower with all other
variables held constant as a sensitivity analysis.
The Group has not entered into any hedging activities to manage interest rate risk. In regard to its interest
rate risk, the Group continuously analyses its exposure. Within this analysis consideration is given to
potential renewals of existing positions, alternative investments and the mix of fixed and variable interest
rates.
50
Potash West NL
A.C.N. 147 346 334
Notes to financial statements (continued)
Note 20: Financial risk management objectives and policies (continued)
Weighted
Average
Effective
Interest
Rate
Floating
Fixed
Non
Interest
Interest
Interest
Interest Rate
Risk Sensitivity
-10%
+10%
Rate
Rate
Bearing
Total
Profit
Equity
Profit
Equity
%
$
$
$
$
$
$
$
$
2011
Financial
Assets
Cash
Receivables
Total Financial
Assets
Financial
Liabilities
Trade creditors
Total Financial
Liabilities
4.75
5,064,769
-
5,064,769
-
-
-
-
-
-
-
367,953
48,369
5,432,722
48,369
416,322
5,481,091
436,910
436,910
436,910
436,910
(17,018)
(17,018)
17,018
17,018
A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short
term and long term Australian dollar interest rates. A -10% sensitivity would move short term interest rates
at 30 June 2011 from around 4.75% to 4.27% representing a 48 basis points downwards shift (33.6 basis
points net of tax).
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances is
impacted resulting in a decrease or increase in overall income.
(b) Liquidity Risk
The Company manages liquidity risk by maintaining sufficient cash reserves and marketable securities
required to meet the current exploration and administration commitments, through the continuous
monitoring of actual cash flows.
All payables are due within 30 days.
(c) Fair Values
For financial assets and liabilities, the net fair value approximates their carrying value. No financial assets
and financial liabilities are readily traded on organised markets in standardised form.
(d) Credit Risk
Credit risk arises in the event that counterparty will not meet its obligations under a financial instrument
leading to financial losses. The Company is exposed to credit risk from its operating activities, financing
activities including deposits with banks. The credit risk control procedures adopted by the Company is to
assess the credit quality of the institution with whom funds are deposited or invested, taking into account its
financial position and past experiences.
The maximum exposure to credit risk on financial assets of the Company which have been recognized on
the statement of financial position is generally limited to the carrying amount.
51
Potash West NL
A.C.N. 147 346 334
Note 20: Financial risk management objectives and policies (continued)
Cash is maintained with National Australia Bank.
Note 21: Subsequent events
There have not been any matters that have arisen after balance date that have significantly affected, or
may significantly affect, the operations and activities of the Company, the results of those operations, or the
state of affairs of the Company in future financial periods other than disclosed elsewhere in this annual
report.
52
Potash West NL
A.C.N. 147 346 334
Directors’ Declaration
In the opinion of the directors of Potash West NL
:
(a)
the financial statements and notes set out on pages 31 to 52 are in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the financial position of the Company as at 30 June 2011
and of its performance, as represented by the results of its operations and its cash
flows, for the year ended on that date; and
complying with Accounting Standards in Australia and the Corporations Regulations
2001;
(b)
(c)
the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in Note 2 (c); and
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
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 year ending 30 June 2011.
This declaration is made in accordance with a resolution of the directors.
Patrick McManus
Managing Director
Perth
30 September 2011
53
Potash West NL
A.C.N. 147 346 334
54
Potash West NL
A.C.N. 147 346 334
55
Potash West NL
A.C.N. 147 346 334
Shareholder Information
Distribution schedules of shareholders and statements of voting rights are set out in Table 1, whilst the
Company’s top twenty shareholders are shown in Table 2. Substantial shareholder notices that have been
received by the Company are set out in Table 3.
Table 1
Shareholder spread
Ordinary shares, with right to attend meetings and vote personally or by proxy, through show of
hands and, if required, by ballot (one vote for each share)
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 - and over
Total holder of ordinary shares
Total number of ordinary shares
Table 2
Top twenty shareholders
1,370
683
293
538
134
2,942
75,312,500
Shareholder
1. Barclay Wells Limited
2. Elsinore Energy Pty Ltd
3. UOB Kay Hian Private Limited
4. Citicorp Nominees Pty Limited
5. HSBC Custody Nominees (Australia) Limited
6. Patrick McManus
7. National Nominees Limited
8. Sept Rogues Ltd
9. CIMB Securities (Singapore) PTE Ltd
10. Chaoyang Zheng
11. Pontian Orico Plantations SDN BHD
12. Mr Frederick Denis L’Aime Ribton
13. Clariden Capital Limited
14. WIT Team Enterprises Limited
15. Merrill Lynch (Australia) Nominees Pty Limited
16. Rajendram Chandrika
17. Shao Yu Lu
18. Ossart Holdings Pty Ltd
19. ABN AMRO Clearing Sydney Nominees Pty Ltd
20. Mr John Mandosio & Mrs Elizabeth Mandosio
Number of shares
15,000,000
12,500,000
5,528,328
1,897,673
1,855,054
1,700,000
1,503,658
1,400,000
1,000,000
1,000,000
913,762
906,123
700,000
555,955
500,139
500,000
500,000
460,000
370,658
& Mr James Richard O’Neill
350,000
Percentage
19.92%
16.60%
7.34%
2.52%
2.46%
2.26%
2.00%
1.86%
1.33%
1.33%
1.21%
1.20%
0.93%
0.74%
0.66%
0.66%
0.66%
0.61%
0.49%
0.46%
- 56 -
Potash West NL
A.C.N. 147 346 334
Shareholder Information (continued)
Table 3
Substantial shareholders
Shareholder
1. Barclay Wells Limited
2. Elsinore Energy Pty Ltd
Number of shares
15,000,000
12,500,000
Percentage
19.92%
16.60%
Voting Rights
The voting rights attached to each class of equity securities are set out below.
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
- 57 -
Potash West NL
A.C.N. 147 346 334
Tenement Register
Tenements (Australia)
Projects
License
Number
Holder
Interest/Status
Quinns Hill
E70/3100
Image Resources NL
100% Mineral Rights for Potash
Gin Gin
Bell
Mindara
Mindara
E70/3360
A C Griffin
100% Mineral Rights for Potash
E70/3418
Image Resources NL
100% Mineral Rights for Potash
E70/3635
Richmond Resources Pty Ltd
100% Mineral Rights for Potash
E70/3636
Torbinup Resources Pty Ltd
100% Mineral Rights for Potash
Dinner Hill
E70/3987
Richmond Resources Pty Ltd
100% Mineral Rights for Potash
Dalaroo North
E70/3988
Richmond Resources Pty Ltd
100% Mineral Rights for Potash
Daraloo South
E70/3989
Richmond Resources Pty Ltd
100% Mineral Rights for Potash
Fernview
Dunterry
Whyona
E70/3999
Image Resources NL
Pending
E70/4000
Image Resources NL
100% Mineral Rights for Potash
E70/4001
Image Resources NL
Pending
Mogumber
E70/4124
Potash West NL
Jam Hill
Bald Hill
E70/4137
Potash West NL
E70/4138
Potash West NL
Ingra Hills
E70/4139
Potash West NL
Pending
Pending
Pending
Pending
- 58 -