More annual reports from Peel Mining Limited:
2023 Report2007 Corporate Directory Directors Michael Kiernan - Non-Executive Chairman Robert Tyson - Executive Director Simon Hadfield – Non-Executive Director Company Secretary David Hocking Registered and Principal Office Level 1, 79 Hay St, Subiaco, WA 6008 Telephone: (08) 9382 3955 Facsimile: (08) 9388 1025 Website: www.peelex.com.au Email: rtyson@peelex.com.au Share Registry Computershare investor Services Level 2, 45 St Georges Tce, Perth, WA 6000 Telephone: 1300 557 010 Auditors Bdo Kendalls audit & assurance (Wa) Pty ltd 128 Hay St, Subiaco, WA 6008 Legal Advisors Steinepreis Paganin Level 4, Next Building, 16 Milligan St, Perth, WA 6000 Home Exchange ASX Code: PEX ABN 42 119 343 734 Peel exPloration limited AnnuAl RepoRt 2007 Contents SECTION 1 - Chairman’s Report SECTION 2 - Review of Operations SECTION 3 - Schedule of Tenements SECTION 4 - Directors’ Report SECTION 5 - Income Statement SECTION 6 - Balance Sheet SECTION 7 - Statement of Cash Flows SECTION 8 - Statement of Changes in Equity SECTION 9 - Notes to the Accounts SECTION 10 - Directors’ Declaration SECTION 11 - Auditor’s Independence Declaration SECTION 12 - Independent Auditor’s Report SECTION 13 - Corporate Governance Statement SECTION 14 - Shareholder Information Peel exPloration limited AnnuAl RepoRt 2007 3 5 12 13 18 19 20 21 22 34 35 36 38 42 Trough Gully adit and cut, Dungowan project, NSW. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 1 Chairman’s Report Peel Exploration Limited was formed in April 2006 to prospect for base and precious metal deposits along the Peel Fault in the New England Fold Belt region of north-eastern New South Wales. Peel Exploration listed on the ASX on 17 May 2007 raising $3 million. At present the Company’s tenements are all located in the New England region of New South Wales and comprise a mix of base and precious metals-prospective prospects and projects. A brief description of each of the tenements is given in the Operations Review and greater detail is available in the prospectus. In the five months since listing, Peel Exploration has steadfastly pursued its strategy of “exploring forgotten mineral fields”. As previously stated, Peel Exploration believes that the New England Fold Belt, particularly the portion located in northern New South Wales, represents a unique opportunity for mineral exploration. The area has a rich mining history, yet despite its proven endowment, the Belt remains poorly explored with minimal modern exploration techniques having been utilised. During the brief period since listing, Peel Exploration (through its exploration managers - Geos Mining Mineral Consultants Pty Ltd) has completed the GIS digitisation and interrogation of data for the Dungowan and Barry project areas, and has completed several field reconnaissance trips. Drill target planning for many of Peel Exploration’s projects is now well advanced. Perhaps most importantly for the Company is the recent acquisition of the historic Attunga-Kensington mineral fields, located approximately 30 kilometres north of Tamworth. The Attunga project represents a potential “company-maker” for Peel, and perfectly fits the Intrusive-Related Gold System deposit model. Intrusive-Related Gold Systems can be very large and Peel is rightly excited by the Attunga project’s potential. The Attunga area is known to contain several non-JORC tungsten resources (reported by previous explorers); along with numerous untested surface gold-tungsten geochemical anomalies. Peel has already begun the process of expediting exploration of the area and looks forward to rapidly testing the most obvious targets. I would like to thank my fellow Directors, Rob Tyson and Simon Hadfield, our Company Secretary - David Hocking, and the managers of Peel’s exploration programme - Geos Mining Mineral Consultants, for the hard work and commitment to the Company that they have all made. I would also like to acknowledge the contributions made by the team at Bell Potter whom supported Peel Exploration’s IPO. Lastly, and most importantly, I would like to thank all of Peel Exploration’s shareholders for supporting the Company. Michael Kiernan Chairman 27 September 2007 Peel exPloration limited AnnuAl RepoRt 2007 Peel exPloration’s Project locations Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 2 Review of operations Since listing in May 2007, Peel Exploration has been Geos Mining, headed by veteran geologist Sue Border, logically and efficiently moving forward with its strategy has proven expertise in providing world’s best practice of exploring forgotten mineral fields. exploration and management services in a cost Appointment of Geos Mining A key element in Peel Exploration’s initial exploration effective and transparent manner. The appointment of Geos Mining will help Peel Exploration preserve shareholder capital and obtain maximum return for strategy has been the engagement of Geos Mining each dollar spent. Mineral Consultants Pty Ltd to manage the exploration of the Company’s 700 km2 of existing granted tenements in New South Wales. Geos Mining is a specialist geology Dungowan Project - EL6613 The Dungowan Project covers an area of about 252 km2 consultancy firm based in Sydney and is responsible and is located about 15 km east of Tamworth, in the New for the day-to-day management and exploration of Peel England Fold Belt region of NSW. Exploration’s licences. Dungowan project location and magnetics. Peel exPloration limited AnnuAl RepoRt 2007 Review of operations SeCtion 2 Trough Gully adit entrance. Within the Dungowan Project are two specific areas of During the period since listing, GIS compilation of historic interest: exploration data has been undertaken along with several • numerous historic copper mines/workings in the field visits to the Dungowan project in preparation for drill vicinity of Dungowan; and target definition. • numerous historic gold workings in the vicinity of Limbri. Other upcoming work at Dungowan will include the acquisition of high-resolution airborne magnetic and The licence area is considered prospective for radiometric data, scheduled for November 2007. polymetallic VHMS mineralisation, syngenetic (volcanic- related), exhalative gold mineralisation, and epigenetic structurally controlled gold mineralisation related to regional deformation, metamorphism and granite- intrusive phases. Peel exPloration limited AnnuAl RepoRt 2007 Review of operations SeCtion 2 Barry Project - EL6614 The Barry Project covers an area of about 48 km2 and During the period since listing, GIS compilation of is located about 25 km southeast of Nundle in the New historic exploration data and an initial reconnaissance England Fold Belt region of NSW. field trip have been undertaken in preparation for follow- The Barry Project is centred on a cluster of copper work at Barry will include the acquisition of high-resolution and molybdenum workings. Exploration in the 1970s airborne magnetic and radiometric data, scheduled returned many significant copper values, however no for November 2007. At mid-September 2007, access follow-up work has ever been reported. Peel Exploration negotiations with a key landholder were continuing. up mapping and geochemistry surveys. Other upcoming considers the area to be prospective for polymetallic VHMS mineralisation and intrusive-related precious/base metal mineralisation. Barry Project location and geology. Peel exPloration limited AnnuAl RepoRt 2007 Review of operations SeCtion 2 Waverley Project - EL6719 The Waverley Project covers an area of about 100 km2 No exploration activity has been completed at Waverley during the period since listing. Upcoming exploration and is located about 40 km northeast of Scone in the activity will see the GIS compilation of historic exploration New England Fold Belt region of NSW. data, along with initial reconnaissance field trips. Other The licence encompasses the historic Waverley silver- of high-resolution airborne magnetic and radiometric lead-zinc workings and a large untested magnetic data, scheduled for November 2007. upcoming work at Waverley is to include the acquisition anomaly proximal to the Waverley workings. Prospecting in the mid 1990s returned anomalous values of up to 739 ppm silver, 14.6% zinc and 9.4% lead. The Waverley Project is considered prospective for intrusive- related precious/base metal mineralisation. Waverley Project location and magnetics. Peel exPloration limited AnnuAl RepoRt 2007 Review of operations SeCtion 2 Armidale Project - EL6722 The Armidale Project covers an area of about 300 km2 and is located about 5 km north of Armidale in the New regional exploration tenure. The Armidale Project is considered prospective for precious metals deposits. England Fold Belt region of NSW. No exploration activity has been completed at Armidale during the period since listing. Upcoming exploration The licence encompasses numerous historic precious activity will see the GIS compilation of historic exploration and exotic metals mines and workings, including three data commence, along with initial reconnaissance regionally-significant silver mines. The area also abuts field trips. Straits Resources Ltd’s Hillgrove gold-antimony mine’s Armidale Project location and geology. Peel exPloration limited AnnuAl RepoRt 2007 Review of operations SeCtion 2 Attunga Project location. 0 Peel exPloration limited AnnuAl RepoRt 2007 Review of operations SeCtion 2 Attunga Project - ELA3177 & ELA3182 In June 2007, Peel Exploration lodged applications Peel Exploration engaged Dr Tim Baker, who is widely regarded as an expert in the study of IRGS deposits, to for exploration licences covering the historic Attunga- determine if the characteristics of the Attunga area fit with Kensington gold-tungsten-molybdenum mineral fields, those commonly found associated with IRGS deposits. about 20 km north of Tamworth. ELA3177 and ELA3182, Dr Baker subsequently corroborated Peel Exploration’s referred to as the Attunga Project, cover a combined opinion with regard to the Attunga region stating that area of about 250 km2. “an intrusion-related gold model is readily applicable. Prospects in the region contain metal signatures common The area under application contains numerous historic to IRGS and the wide variety of mineralisation styles is a mines, prospects and workings, and initial investigations common feature of intrusion centred systems.” utilising historic exploration reports coupled with modern datasets indicate that the Attunga-Kensington The Attunga Project has presented Peel Exploration mineralising structure bears the hallmarks of an Intrusive- with an outstanding opportunity to delineate gold and Related Gold System (IRGS). tungsten resources in the near term. Intrusive-Related Gold Systems are an under-recognised With this in mind, the Company has further engaged the and economically important class of gold deposit. services of Geos Mining Mineral Consultants to manage Examples of IRGS deposits include Fort Knox in Alaska, the exploration of the Attunga Project. In anticipation of Kidston in north Queensland, and Timbarra in northern the NSW government granting exploration licences, GIS New South Wales. data compilation has already commenced, as has the fast-tracking of landowner negotiations. Other important aspects of the Attunga-Kensington mineral fields include: • only minor modern exploration; The immediate exploration priority upon approval of the licenses will be to test the validity of certain historic • several historic non-JORC tungsten resources reported exploration results and, if confirmed, move quickly by previous explorers; and to drill test some of the most obvious gold-tungsten • numerous large untested surface geochemical gold- anomalies. tungsten anomalies. Rob Tyson Executive Director The information in this report that relates to Exploration Results is based on information compiled by Mr Robert Tyson and Mrs Sue Border, both of whom are Members of the Australasian Institute of Mining and Metallurgy. Mr Tyson and Mrs Border each have sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Tyson and Mrs Border each consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 3 Schedule of tenements new south Wales Project number Holder ownership expiry Dungowan el6613 peel exploration ltd Barry el6614 peel exploration ltd Waverley el6719 peel exploration ltd Armidale el6722 peel exploration ltd 100% 100% 100% 100% 21 August 2008 21 August 2008 25 February 2009 25 February 2009 Attunga el6883 peel exploration ltd 100% 21 September 2009 Attunga el6884 peel exploration ltd 100% 21 September 2009 Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 4 Directors’ Report Your directors present their report on the Company for the financial period ended 30 June 2007. The following persons hold office as Directors at the date of this report. Their qualifications and experience are: Michael Kiernan – Non-Executive Chairman With more than 30 years experience in the mining David Hocking – Company Secretary Mr Hocking is a qualified Chartered Accountant from the and transport industries, Mr Kiernan brings a wealth United Kingdom. He has more than 20 years commercial of knowledge and experience to the Peel Exploration experience in Australia producing management and board. Mr Kiernan retains the position of Chairman at financial accounts for medium sized businesses in a Monarch Gold Mining Company Ltd, Territory Resources range of industries including publishing, franchising, Ltd, India Resources Ltd, Precious Metals Australia Ltd rural merchandising, financial services and the offshore and Mineral Resources Ltd, and is also a Director of oil industry. Mr Hocking also brings previous experience Matilda Minerals Ltd. as a Company Secretary in a public company. Robert Maclaine Tyson – Executive Director Mr Tyson is a geologist with more than 15 years resources Directors’ Interests in Shares and Options Directors’ interests in shares and options as at 30th industry experience having worked in exploration and June 2007 are set out in the table below. Between the mining-related roles for companies including Cyprus end of the financial period and the date of this report, Exploration Pty Ltd, Queensland Metals Corporation Michael Kiernan purchased 1,622,874 options, Robert NL, Murchison Zinc Pty Ltd, Normandy Mining Ltd and Tyson purchased 1,372,874 options and Simon Hadfield Equigold NL. Mr Tyson has more than five years of senior purchased 1,172,873 options. management experience and retains the position of General Manager at resources industry publisher and conference business, Resource Information Unit Pty Ltd. Mr Tyson is a Member of the Australasian Institute of Mining and Metallurgy. Simon Hadfield – Non-Executive Director Mr Hadfield has more than 30 years experience managing medium and large companies including the holding of directorships at publicly-listed industrial and resource companies. Mr Hadfield is Managing Director of Resource Information Unit Pty Ltd. director Michael Kiernan Robert tyson Simon Hadfield Shares directly and indirectly Held 3,000,000 2,500,000 2,100,000 options 4,000,000 3,750,000 3,550,000 Peel exPloration limited AnnuAl RepoRt 2007 Directors’ Report SeCtion 4 Activities The continuing principal activity of the Company is the Other than as disclosed above there were at the date of this report no matters or circumstances which have arisen exploration for economic deposits of minerals. For the since 30th June 2007 that have significantly affected or period of this report, the emphasis has been on base and may significantly affect: precious metals. Results The loss of the Company for the financial period after providing for income tax amounted to $409,724 (2006: $5,164). i) the operations of the Company; ii) the results of those operations; or iii) the state of affairs of the Company. Likely Developments and Expected Results As the Company’s areas of interest are at an early stage, it is not possible to postulate the likely developments and any Dividends No dividends were paid or proposed during the period. expected results. Review of Operations Peel Exploration Limited successfully completed its IPO Remuneration Report The remuneration report is set out under the following headings: and was admitted to the Official List of the ASX on May a) Principles used to determine the nature and amount of 17, 2007. The Company concentrated on the exploration remuneration (audited); of its various projects located in the New England region of b) Details of remuneration (audited); northern New South Wales. A summary of the Company’s c) Service agreements (audited); activities during the year is contained in the Operations d) Share-based compensation (audited); and Review section of the Annual Report. e) Additional information (unaudited). Corporate Structure Peel Exploration Limited is a limited Company that is a) Principles used to determine the nature and amount of remuneration (audited) incorporated and domiciled in Australia. The objective of the Company’s remuneration framework Employees The Company had three employees as at 30 June 2007 appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives – them being the Directors. The Company uses consultants and the creation of value for shareholders. The Board and contractors as required. believes that executive remuneration satisfies the following is to ensure reward for performance is competitive and Significant Changes The Directors are not aware of any significant changes in • competitiveness and reasonableness • acceptability to shareholders the state of affairs of the Company occurring during the • performance linkage / financial period, other than disclosed in this report. alignment of executive compensation key criteria: Matters Subsequent to the End of the Financial Period On September 21 2007, the NSW government granted • transparency • capital management. These criteria result in a framework which can be used EL6883 & EL6884. These licences are jointly referred to as to provide a mix of fixed and variable remuneration, and the Attunga Project. a blend of short and long-term incentives in line with the Company’s limited financial resources. Since the end of the financial period the Company has issued 15,000,000 options exercisable at 20c each on or before 30 November 2010, at an issue price of 1c each raising $150,000. Peel exPloration limited AnnuAl RepoRt 2007 Directors’ Report SeCtion 4 table 1: Director and senior executive remuneration Directors of Peel Exploration Ltd Directors Fees Salaries Consulting Fees Super- annuation 2007 Directors RM tyson Ml Kiernan S Hadfield nt Hadfield other executives D Hocking total $ - - - - - - $ - - - - - - $ - - - - 9,625 9,625 $ - - - - - - Options $ 107,500 107,500 107,500 - - 322,500 Total $ 107,500 107,500 107,500 - 9,625 332,125 Options do not represent cash payments to Directors and options granted may or may not be exercised by the Directors. Board and Senior Management Fees and payments to the non-executive Directors and c) Service agreements (audited) Remuneration and other terms of employment for the senior executives reflect the demands which are made Directors and executives are not formalised in Service/ on, and the responsibilities of, the Directors and the senior Appointment agreements. Major provisions of employment management. Such fees and payments are reviewed are set out below: annually by the Board. Company policy in relation to issuing options and who received payments and benefits totalling $107,500 in remunerating executives is that Directors are entitled to his role as a Director of the Company. ML KieRnan - There is no written contract for Mr Kiernan, remuneration out of the funds of the Company but the remuneration of the non-executive Directors may not RM TySon - There is no written contract for Mr Tyson, exceed in any year the amount fixed by the Company who received payments and benefits totalling $107,500 in in general meeting for that purpose. The aggregate his role as a Director of the Company. remuneration of the non-executive Directors has been fixed at a maximum of $200,000 per annum to be apportioned S HaDfieLD - There is no written contract for Mr Hadfield, among the non-executive Directors in such a manner as who received payments and benefits totalling $107,500 in they determine (refer below). Directors are also entitled to his role as a Director of the Company. be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at No service agreements had been entered into in the period Board meetings and otherwise in the execution of their since 30 June 2007 to the date of this report. duties as Directors. b) Details of remuneration (audited) At 30 June 2007 the Company had granted options over Details of the nature and amount of each element of the 7,500,000 unissued shares to Directors, all issued in the remuneration of each of the Directors of Peel Exploration 2007 financial year, arising from the listing of the Company d) Share-based compensation (audited) Ltd and those senior executives of the Company who on the ASX. These were: received the highest emoluments during the year ended 30 ML Kiernan – 2,500,000 June 2007 are set out in the following table. RM Tyson – 2,500,000 S Hadfield – 2,500,000 The consolidated entity incurred no Director or senior executive remuneration in 2006. These options were all granted on 8 March 2007 and expire 30 November 2010 with an exercise price of 30 cents per share. They are all escrowed until 17 May 2009. Peel exPloration limited AnnuAl RepoRt 2007 Directors’ Report SeCtion 4 table 2: options granted as part of remuneration 2007 Grant date Grant number Vest date Expiry date Value per option at grant date $ Exercised number Value per option at exercise date $ Value at date option lapsed $ % of remuneration RM tyson 8.3.07 2,500,000 8.3.07 30.11.10 0.043 Ml Kiernan 8.3.07 2,500,000 8.3.07 30.11.10 0.043 S Hadfield 8.3.07 2,500,000 8.3.07 30.11.10 0.043 - - - - - - - - - 100 100 100 The value of the options granted has been recognised The dividend yield reflects the assumption that no as share-based remuneration in the financial statements dividends will be paid out. The expected life of the and are expensed accordingly. options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The Options granted as a part of Director and executive expected volatility reflects the assumption that the remuneration have been valued using a Black and historical volatility is indicative of future trends, which Scholes option-pricing model, which takes account of may also not necessarily be the actual outcome. factors including the option exercise price, the share price at time of grant, volatility of the underlying share Options included in Directors’ and executives’ price, the risk-free interest rate and the expected life of remuneration are treated as follows: the option. Fair Value of Options Model inputs for determining the fair value of options Fair values have been assessed using the Black and Scholes option valuation methodology which takes into account the exercise price, the term of the option, the granted during year end 30 June 2007 included: vesting and performance criteria, the impact of dilution, underlying security spot price $0.125 and expected price volatility of the underlying share, the the non-tradable nature of the options, the current price expected dividend yield and the risk free interest rate for the term of the option. exercise price Dividend rate $0.30 nil Standard deviation of returns (annualised) 70% Risk–free rate 5.85% Valuation date 1 March 2007 expiration date 30 november 2010 expiration period (years) 3.7509 Black Scholes valuation ($ per security) 0.043 Binomial valuation ($ per security) 0.043 Peel exPloration limited AnnuAl RepoRt 2007 Directors’ Report SeCtion 4 Share Options A detailed breakdown of the Company’s options (unquoted options and Directors options) is as follows: Balance 1 July 2006 Issued to Shareholders on 8 March 2007 Issued to Directors on 8 March 2007 Balance 30 June 2007 options - exercisable at 20 cents each on or before 30 november 2010 - exercisable at 30 cents each on or before 30 november 2010 $ - - 322,500 322,500 Options - 7,500,000 7,500,000 15,000,000 7,500,000 7,500,000 15,000,000 Meetings of Directors Directors’ attendance at Directors’ meetings are shown in the following table: Director Number held whilst in office Number attended Ml Kiernan (appointed 15.3.2007) RM tyson S Hadfield nt Hadfield (resigned 15.3.2007) 4 8 8 5 4 8 8 5 Indemnification and Insurance of Directors and Officers During the financial year the Company paid insurance premiums in respect of Directors’ and Officers’ Liability have been no known breaches of the licence conditions. Auditor’s Independence Declaration A copy of the auditor’s independence declaration as Insurance contracts for the current Directors and officers. required under section 307C of the Corporations Act 2001 The Directors have not included details of the nature of the is included at the end of this financial report. liabilities covered or the amount of the premium paid in respect of this insurance, as such disclosure is prohibited under the terms of the contract. Auditor BDO Kendalls Audit & Assurance (WA) Pty Ltd continues in office under section 327 of the Corporations Act 2001. Proceedings on Behalf of the Company No person has applied for leave of Court to bring This report is made in accordance with a resolution of the proceedings on behalf of the company or intervene in Board of Directors: any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. Environmental Performance Peel Exploration Ltd holds exploration licences issued by the NSW Department of Primary Industry which specifies guidelines for environmental impacts in relation to exploration activities. The licence conditions provide for the full rehabilitation of the areas of exploration in accordance with the Department’s guidelines and standards. There Rob Tyson Director Perth, Western Australia Dated on this the 28th day of September 2007. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 5 income Statement For the Year ended 30 june 2007 Note 2007 $ 2006 $ Continuing operations Revenue 3 13,461 Share-based remuneration to employees and directors exploration expenditure written-off (322,500) (56,719) - - - Administration expenses (43,966) (5,164) loss before income tax expense (409,724) (5,164) Income tax expense 4 - - loss for the year (409,724) (5,164) Basic and diluted loss per share (cents per share) 21 (4.0) (0.3) The above income statements should be read in conjunction with the accompanying notes. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 6 Balance Sheet as at 30 june 2007 Note 2007 $ 2006 $ Current assets Cash and Cash equivalents trade and other Receivables total Current assets non-current assets Receivables plant and equipment exploration licences total non-current assets total assets Current liabilities trade and other payables Borrowings total Current liabilities total liabilities net assets / (liabilities) equity Contributed equity Accumulated losses Reserves total equity 5 6 7 8 9 10 11 12 13 13 2,656,920 22,850 2,679,770 40,000 1,676 11,425 53,101 2,732,871 26,197 - 26,197 26,197 2,706,674 2,799,062 (414,888) 322,500 2,706,674 1,088 1,000 2,088 - - 3,220 3,220 5,308 4,000 4,372 8,372 8,372 (3,064) 2,100 (5,164) - (3,064) The above balance sheet statements should be read in conjunction with the accompanying notes. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 7 Statement of Cash Flows For the Year ended 30 june 2007 Note 2007 $ 2006 $ Cash flows from operating activities payments to suppliers and employees Interest received net cash outflow from operating activities 20 Cash flows from investing activities payments for mineral exploration expenditure payment of security deposits payments for purchase of plant and equipment net cash outflow from investing activities Cash flows from financing activities proceeds from issues of shares transaction costs of issue of shares loans to other parties proceeds from borrowings net cash inflow from financing activities net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year (101,338) 13,461 (87,877) (8,205) (40,000) (1,676) (49,881) 3,032,700 (235,738) 1,000 (4,372) 2,793,590 2,655,832 1,088 2,656,920 (1,164) - (1,164) (3,220) - - (3,220) 2,100 - (1,000) 4,372 5,472 1,088 - 1,088 The above cash flow statements should be read in conjunction with the accompanying notes. 0 Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 8 Statement of Changes in equity at 0 april 00 loss for the period Issue of share capital at 0 June 00 loss for the year Issue of share capital Share issue expenses Share-based payments For the Year ended 30 june 2007 Contributed equity $ Accumulated losses $ Reserves $ Total equity $ - - 2,100 2,100 - 3,032,700 235,738 - - (5,164) - (5,164) (409,724) - - - - - - - - - - (322,500) - (5,164) 2,100 (3,064) (409,724) 3,032,700 (235,738) 322,500 at 0 June 00 2,799,062 (414,888) 322,500 2,706,674 The above changes in equity statements should be read in conjunction with the accompanying notes. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 9 notes to the Accounts 1. Statement of Significant Accounting Policies The principal accounting policies adopted in the preparation of the financial report are set out below. These policies attributable to temporary differences and to unused tax losses. have been consistently applied to all the years presented, Deferred income tax is provided on all temporary unless otherwise stated. The financial report includes differences at the balance sheet date between the tax the financial statements for Peel Exploration Limited bases of assets and liabilities and their carrying amounts (“the Company”). for financial reporting purposes. (a) Basis of preparation Deferred income tax assets are recognised for all This general purpose financial report has been prepared deductible temporary differences, carry forward of in accordance with Australian Accounting Standards, unused tax assets and unused tax losses, to the extent other authoritative pronouncements of the Australian that it is probable that taxable profit will be available Accounting Standards Board, Urgent Issues Group against which the deductible temporary differences, and Interpretations and the Corporations Act 2001. the carry-forward of unused tax assets and unused tax Compliance with IFRS losses can be utilised. A deferred income tax asset is not recognised where the deferred income tax asset relating Australian Accounting Standards include Australian to the deductible temporary difference arises from the equivalents to International Financial Reporting Standards initial recognition of an asset or liability in a transaction (AIFRS). Compliance with AIFRS ensures that the financial that is not a business combination and, at the time of statements and notes of Peel Exploration Limited comply the transaction, affects neither the accounting profit nor with International Financial Reporting Standards (IFRS). taxable profit or loss or when the deductible temporary Historical cost convention difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a These financial statements have been prepared under the deferred tax asset is only recognised to the extent that it historical cost convention. is probable that the temporary difference will reverse in (b) Revenue recognition Revenue is recognised to the extent that it is probable that the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. the economic benefit will flow to the company and the The carrying amount of deferred income tax assets is revenue can be reliably measured. The following specific reviewed at each balance date and reduced to the extent recognition criteria must also be met before revenue is it is no longer probable that sufficient taxable profit will be recognised. Interest income available to allow all or part of the deferred income tax to be utilised. Revenue is recognised as the interest accrues using the Deferred income tax assets and liabilities are measured at effective interest rate method. the tax rates that are expected to apply to the year when (c) income tax the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted at the balance The income tax expense or revenue for the period is date. Income taxes relating to items recognised directly the tax payable on the current period’s taxable income in equity are recognised in equity and not in the income based on the national income tax rate for each jurisdiction statement. adjusted by changes in deferred tax assets and liabilities Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 (d) impairment of assets (h) fair value estimation At each reporting date, the company assesses whether The fair value of financial assets and financial liabilities there is any indication that an asset may be impaired. must be estimated for recognition and measurement or for Where an indicator of impairment exists, the company disclosure purposes. makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable The carrying value less impairment provision of trade amount the asset is considered impaired and is written receivables and payables are assumed to approximate down to its recoverable amount. their fair values due to their short-term nature. The fair value Recoverable amount is the greater of fair value less costs discounting the future contractual cash flows at the current to sell and value in use. It is determined for an individual market interest rate that is available to the Company for of financial liabilities for disclosure purposes is estimated by asset, unless the asset’s value in use cannot be estimated similar financial instruments. to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent (i) Plant and equipment of those from other assets or groups of assets, in which All assets acquired, including plant and equipment are case, the recoverable amount is determined for the cash- initially recorded at their cost of acquisition, being the fair generating unit to which the asset belongs. The estimated value of the consideration provided plus incidental costs future cash flows are discounted to their present value directly attributable to the acquisition. using a pre tax discount rate that reflects current market assessments of the time value of money and the risks Plant and equipment is included at cost less provision for specific to the asset. depreciation and any impairment in value and depreciated on a straight-line basis commencing from the time the asset No impairment losses have been recognised for the years is held ready for use. ending 30 June 2007 and 2006. An item of plant and equipment is derecognised upon (e) Cash and cash equivalents disposal or when no future economic benefits are For cash flow statement preparation purposes, cash and expected from its use or disposal. Any gain or loss arising cash equivalents includes cash on hand and deposits on derecognition of the asset (calculated as the difference held at call with financial institutions. Bank overdrafts are between net disposal proceeds and the carrying amount of shown within borrowings in the current liabilities of the the asset) is included in profit or loss in the year the asset balance sheet. is derecognised. (f) Trade and other receivables (j) exploration and evaluation expenditure Trade receivables, which generally have 30 to 90 day terms, Exploration licences are carried at nominal amounts due less an allowance for Exploration licences costs are capitalised on payment. any uncollectible amounts. An allowance for doubtful They are not amortised but are reviewed each financial debts is made when there is objective evidence that the period in respect of each licence being still held by the Company will not be able to collect the debts. Bad debts Company. They are expensed through the profit and loss are written off when identified. where the licence is no longer held and the licence cost is (g) other financial assets Security deposits not recoverable. The company’s policy with respect to exploration Security deposits are non-derivative financial assets with expenditure is to write off all costs as incurred. Accordingly, fixed or determinable payments that are not quoted in an exploration expenditure of $56,719 has been written active market. off during the year. The decision to write off exploration Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 expenditure as incurred does not indicate any change in the net of tax, from the proceeds. Incremental costs directly board’s view of the intrinsic value of the mining leases held attributable to the issue of new shares or options for the by the company. Rather, the decision was taken, as it is the acquisition of a business are not included in the cost of the most prudent treatment available under current accounting acquisition as part of the purchase consideration. standards for such expenditure. If the entity acquires its own equity instruments, e.g. as the The carrying value of exploration and evaluation expenditure result of a share buy-back, those instruments are deducted carried forward in respect of each area of interest is assessed from equity and the associated shares are cancelled. for impairment when facts and circumstances suggest the No gain or loss is recognised in the profit or loss and carrying amount may exceed its recoverable amount. Any the consideration paid including any directly attributable resulting impairment loss is recognised as an expense in the incremental costs (net of income taxes) is recognised income statement. directly in equity. (k) Trade and other payables (n) earnings per share These amounts represent liabilities for goods and services Basic earnings per share is calculated by dividing the profit provided to the Company prior to the end of the financial attributable to equity holders of the Company, excluding any year which are unpaid. The amounts are unsecured and are costs of servicing equity other than ordinary shares, by the usually paid within 30 days of recognition. weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in (l) Borrowings ordinary shares issued during the year. Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently Diluted earnings per share adjusts the figures used in the measured at amortised cost. Any difference between the determination of basic earnings per share to take into account proceeds (net of transaction costs) and the redemption the after income tax effect of interest and other financing amount is recognised in the income statement over costs associated with dilutive potential ordinary shares the period of the borrowings using the effective interest and the weighted average number of shares assumed to method. have been issued for no consideration in relation to dilutive Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled, (o) Goods and services tax potential ordinary shares. or expired. The difference between the carrying amount of Revenues, expenses and assets are recognised net of goods a financial liability that has been extinguished or transferred and services tax (GST), except where the amount of GST to another party and the consideration paid, including incurred is not recoverable from the taxation authority. In any non-cash assets transferred or liabilities assumed, is these circumstances the GST is recognised as part of the cost recognised in other income or other expenses. of acquisition of the asset or as part of the expense item. Borrowings are classified as current liabilities unless the Receivables and payables are stated with the amount Company has an unconditional right to defer settlement of GST included. The net amount of GST recoverable is of the liability for at least 12 months after the balance included as a current asset in the balance sheet. sheet date. (m) Contributed equity Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising Ordinary shares are classified as equity. from investing and financing activities which are recoverable Incremental costs directly attributable to the issue of new from the taxation authority are classified as operating shares or options are shown in equity as a deduction, cash flows. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 (p) new accounting standards and interpretations recognised any impairment losses from inception to date. Certain new accounting standards and interpretations have Application of the interpretation will therefore have no been published that are not mandatory for 30 June 2007 impact on the Company’s financial statements. reporting periods. The Company’s assessment of the impact of these new standards and interpretations is set No initial application of any other issued and effective out below: Australian Accounting Standard has had any significant (i) AASB 7 Financial Instruments: Disclosures and effect on the current period or any prior period. Furthermore, AASB 2005-10 Amendments to Australian Accounting no other new Australian Accounting Standard, which has Standards (AASB 132, AASB 101, AASB 114, AASB 117, been issued but is not yet effective, is expected to have any AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & significant effect on a future reporting period. AASB 1038). AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. 2. Financial Risk Management The net fair values of financial assets and financial liabilities The Company has not adopted the standards early. approximate their carrying values, as disclosed in the Application of the standards will not affect any of the balance sheet. The maximum exposure to credit risk at amounts recognised in the financial statements, but will balance date is the carrying amount of financial assets impact the type of information disclosed in relation to the (i.e., cash and receivables) as disclosed in balance sheet Company’s financial instruments. and notes to the financial statements. The Company’s (ii) AASB-I 10 Interim Financial Reporting instrument’s value will fluctuate as a result of changes in and Impairment market interest rates and the effective weighted average AASB-I 10 is applicable to reporting periods commencing interest rate on classes of financial assets and financial on or after 1 November 2006. The Company has not liabilities, is as follows: exposure to interest rate risk, which is the risk that a financial Financial assets & liabilities 00 Cash and cash equivalents Receivables - current - non-current Creditors & accruals Weighted average interest rate Financial assets & liabilities 00 Cash and cash equivalents Receivables - current - non-current Creditors & accruals Fixed interest rate maturing within 1 year $ Non-interest bearing $ 2,613,460 - - - 2,613,460 6.18% - - - - - 43,460 22,850 40,000 (26,197) 80,113 1,088 1,000 - (8,372) (6,284) Total $ 2,656,920 22,850 40,000 (26,197) 2,693,573 1,088 1,000 - (8,372) (6,284) Weighted average interest rate nil% The Company manages its interest rate risk through the use of fixed term deposits, to manage the unpredictability of financial markets and seek to minimise potential adverse effects on financial performance. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 3. Revenue Interest received 4. Income Tax income tax expense Current tax Deferred tax numerical reconciliation of income tax expense to prima facie tax payable: Accounting loss before income tax At the statutory income tax rate of 30% (2006: 30%) expenditure not allowable for income tax purposes: non-deductible expenses tax losses not brought to account Income tax benefit reported in the income statement 2007 $ 13,461 - - - (409,724) (122,917) 96,750 26,167 - 2006 $ - - - - (5,164) (1,549) - 1,549 - The Company has tax losses arising in Australia of $29,595 (2006: $1,549) that are available indefinitely for offset against future taxable profits of the Company. No deferred tax asset has been recognised in respect of these losses at this point in time as the Company is still engaged in exploration activities. The Company also has an unrecognised deferred tax asset in respect of equity raising costs of $70,721. 5. Cash and Cash Equivalents Cash at bank and in hand term deposit with a financial institution 43,460 2,613,460 2,656,920 1,088 - 1,088 The above figures agree to cash at the end of the financial year as shown in the statement of cash flows. The deposit is bearing a fixed interest rate of 6.18% and has a 30 day term. 6. Trade and Other Receivables GSt recoverable from taxation authority unsecured loans – related parties (note 14) 7. Receivables (Non-current) Security deposits on mining tenements 22,850 - 22,850 - 1,000 1,000 40,000 40,000 - - Peel exPloration limited AnnuAl RepoRt 2007 8. Plant and Equipment Plant and equipment At cost less accumulated depreciation reconciliation Carrying amount at beginning of year Additions Depreciation expense Carrying amount at end of year 9. Exploration Licences opening balance payment of exploration licences Closing balance 10. Trade and Other Payables trade payables other payables 11. Borrowings notes to the Accounts SeCtion 9 2007 $ 2006$ 1,676 - 1,676 - 1,676 - 1,676 3,220 8,205 11,425 23,197 3,000 26,197 - - - - - - - - 3,220 3,220 4,000 - 4,000 unsecured loan – related party (note 14) - 4,372 12. Contributed Equity (a) Share capital 30,000,000 (2006: 2,100,000) ordinary shares fully paid 2,799,062 2,100 (b) Movements in ordinary share capital Balance July 00 Shares issued 20 April 2006 Balance 0 June 00 Shares issued as seed capital 17 July 2006 Shares issued as seed capital 27 February 2007 Shares issued pursuant to Ipo 11 May 2007 transaction costs on share issues Balance 0 June 00 (c) ordinary shares Shares - 2,100,000 2,100,000 2,700,000 10,200,000 15,000,000 - 30,000,000 $ - 2,100 2,100 20,700 12,000 3,000,000 (235,738) 2,799,062 ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. on a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (d) options Information relating to options issued during the year is set out in note 13. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 13. Reserves (i) Accumulated losses Balance 1 July loss for the year Balance 30 June (ii) Share-based payments reserve Balance 1 July option expenses Balance 30 June 2007 $ 2006 $ (5,164) (409,724) (414,888) - 322,500 322,500 - (5,164) (5,164) - - - nature and purpose of reserve the share-based payment reserve represents the fair value of equity benefits provided to Directors and employees as part of their remuneration for services provided to the Company paid for by the issue of equity. Balance July 00 Issued to Shareholders on 8 March 2007 Issued to Directors on 8 March 2007 Balance 30 June 2007 - exercisable at 20 cents each on or before 30 november 2010 - exercisable at 20 cents each on or before 30 november 2010 Model inputs for options granted during the year ended 30 June 2007 included: underlying security spot price exercise price Dividend rate Standard deviation of returns (annualised) Risk free rate Valuation date expiration date expiration period (years) Black Scholes valuation ($ per security) Binomial valuation ($ per security) $ - - 322,500 322,500 Options - 7,500,000 7,500,000 15,000,000 7,500,000 7,500,000 15,000,000 $0.125 $0.30 nil 70% 5.85% 1 March 2007 30 november 2010 3.7509 0.043 0.043 the expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. the expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. no other features of options granted were incorporated into the measurement of fair value. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 14. Key Management Personnel Disclosures Details of key management personnel Executive Director R M Tyson (appointed on 20 April 2006) Non-Executive Directors M L Kiernan (appointed 15 April 2007) S Hadfield (appointed 20 April 2006) n T Hadfield (appointed 20 April 2006 and resigned 15 March 2007) Other key management personnel The following person also had authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly: D Hocking, Company Secretary and Corporate Accountant (appointed 15 March 2007) Key management personnel compensation 2007 $ 2006 $ Short-term employee benefits post-employment benefits long-term benefits Share-based payments - - - 322,500 322,500 - - - - - The Company has taken advantage of relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed remuneration disclosures to the Directors’ Report. The relevant information can be found in the remuneration report in the Directors’ Report. equity instrument disclosures relating to key management personnel Options provided as remuneration and shares issued on exercise of such options Details of options provided as remuneration and share issued on the exercise of such options, together with terms and conditions of the options, can be found in note 13. Option holdings The numbers of options over ordinary shares in the company held during the financial year by each director of Peel Exploration Limited and other key management personnel of the Company, including their personally related parties, are set out below: 30 June 2007 directors R M tyson M l Kiernan S Hadfield n t Hadfield Balance at the start of the year Granted as compensation Granted, non- compensation Exercised Balance at end of the year Vested and exercisable Unvested - - - - 2,500,000 2,500,000 2,500,000 - - 1,250,000 1,500,000 1,050,000 50,000 - - - - - - 3,750,000 3,750,000 4,000,000 4,000,000 3,550,000 3,550,000 50,000 50,000 - - - - - - - other key management personnel D Hocking - option holdings for Mr Kiernan are from date of appointment on 15 March 2007. option holdings for Mr n t Hadfield are subsequent to his date of resignation as a director on 15 March 2007. All vested options are exercisable at the end of the year. there were no options held by or issued to directors for the period ended 30 June 2006. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 share holdings of key management personnel shares in Peel exploration limited (number) Balance at 1 July 2006 Received during the year on the exercise of options Other changes during the year Balance at 30 June 2007 30 June 2007 directors R M tyson M l Kiernan S Hadfield n t Hadfield 1,000,000 - 1,000,000 100,000 - - - - - 1,500,000 3,000,000 1,100,000 - - 2,500,000 3,000,000 2,100,000 100,000 - other key management personnel D Hocking - Shareholdings for Mr M l Kiernan are from date of appointment on 15 March 2007. Shareholdings for Mr n t Hadfield are up to the date of resignation as a director on 15 March 2007. there were no shares issued as compensation during the year. 30 June 2006 directors R M tyson M l Kiernan S Hadfield n t Hadfield Balance at 1 July 2005 Received during the year on the exercise of options Other changes during the year Balance at 30 June 2006 - - - - - - - - 1,000,000 - 1,000,000 100,000 1,000,000 - 1,000,000 100,000 there were no key management personnel other than directors in the period ended 30 June 2006. Other transactions with key management personnel A director, R M Tyson, loaned the Company a total of $57,029 during the year ended 30 June 2007. This amount was repaid during the year. A director, S Hadfield, is a director of Resource Information Unit (RIU). RIU loaned the Company a total of $37,985 during the year ended 30 June 2007. This amount was repaid during the year. A director, S Hadfield, is a director of Salamar Pty Ltd. Salamar Pty Ltd loaned the Company a total of $4,372 during the year ended 30 June 2006. This amount was repaid during the year. A director, S Hadfield, is a director of Resource Information Unit (RIU). RIU charges the Company management fees on a monthly basis. Total fees charged to the Company by RIU for the year ended 30 June 2007 were $3,000. This amount is included on the income statement within administration expenses and on the balance sheet within trade and other payables at year end. The Company Secretary, D Hocking, provides accounting services to the Company. Fees for services rendered during the year ended 30 June 2007 totalled $9,625. This amount has been included on the income statement within administration expenses. A fee payable to D Hocking of $4,625 is included on the balance sheet within trade and other payables for accounting services received but unpaid as at year end. 0 Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 aggregate amounts of each of the above types of other transactions with key management personnel of Peel exploration limited: amounts recognised as expense Management fees Accounting service 2007 $ 2006 $ 3,000 9,625 12,625 - - - aggregate amounts payable to key management personnel or their affiliates at balance date relating to the above types of other transactions: Current liabilities 7,625 - 15. Remuneration of Auditors amounts paid or due and payable to the auditors for: Auditing or reviewing the financial report other services 7,750 - 7,750 4,000 - 4,000 16. Contingencies The Company had no contingent assets or liabilities for the year ended 30 June 2007. 17. Expenditure Commitments Capital expenditure commitments Under the terms of mineral tenement licences held by the Company, minimum annual expenditure obligations are required to be expended during the forthcoming financial year in order for the tenements to maintain a status of good standing. This expenditure may be subject to variation from time to time in accordance with Department of Industry and Resources regulations. capital expenditure commitments contracted for at the reporting date but not recognised as liabilities are as follows: Within one year later than one year but not later than five years later than five years 18. Related Parties Transactions with related parties 2007 $ 196,500 106,500 - 2006 $ 90,000 - - 303,000 90,000 The son of M L Kiernan, a director, is a promoter for Bell Potter. Bell Potter is the brokering agency the Company used to list their shares on the Australian Stock Exchange. Amounts totalling $150,000 were paid to Bell Potter during the year and have been recognised within transaction costs on raising equity in note 14. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 19. Events Occurring After the Balance Sheet Date The Company issued 15,000,000 $0.20 listed options effective 31 July 2007. There has not arisen in the interval between the end of financial year and the date of this report any other item, transaction or event of a material or unusual nature, which is likely in the opinion of the Directors, to affect substantially the operation of the Company, the result of those operations and the state of affairs of the Company in the financial year subsequent to 30 June 2007. 20. Reconciliation of Net Cash Outflow from Operating Activities to Loss After Income Tax net cash outflow from operating activities Share-based payments Depreciation Changes in operating assets and liabilities Increase in receivables Increase in payables loss after income tax 21. Earnings Per Share 2007 $ (87,877) (322,500) - 21,850 (21,197) (409,724) 2006 $ (1,164) - - - (4,000) (5,164) Basic earnings per share loss from continuing operations attributable to the ordinary equity holders of the Company 2007 cents 2006 cents (4.0) (0.3) diluted earnings per share there is no impact of dilutive shares as the Company made a loss for the year, hence any dilution would reduce the loss per share. reconciliation of loss used in calculation of earnings per share Basic earnings per share loss from continuing operations and attributable to the ordinary equity holders of the Company used in calculating basic earnings per share (409,724) (5,164) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 10,200,000 2,100,000 2007 $ 2006 $ There is no impact of dilutive shares as the company made a loss for the year, hence any dilution would increase the weighted average number of shares and reduce the loss per share. Peel exPloration limited AnnuAl RepoRt 2007 notes to the Accounts SeCtion 9 22. Share-based Payments option plan The Company does not have an employee option plan. However, the Board elected to issue 7,500,000 options to Directors for their services to the Company during the year ended 30 June 2007. No consideration was received for options granted. Grant date Expiry date Exercise price 30 June 2007 Balance at start of the year Number Granted during the year Number Exercised during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number 8 March 2007 30 november 2010 $0.30 - 7,500,000 - 7,500,000 7,500,000 there were no options issued prior to 8 March 2007. The remaining contractual life of share options outstanding at the end of the period was 3 years and 5 months. Fair value of options granted The assessed fair value at grant date of options granted during the year ended 30 June 2007 was $0.043 per option. The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the option. Model inputs for the options granted during the year ended 30 June 2007 have been included in note 13. expenses arising from share based-payment transactions Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows: options issued to directors 2007 $ 322,500 2006 $ - 23. Comparatives The comparative figures relate to the period from 20 April 2006 to 30 June 2006. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 10 Directors’ Declaration The Board of Directors of Peel Exploration Limited declares that: (a) the financial statements, associated notes and the additional disclosures included in the Directors’ Report designated as audited of the Company, comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; (b) the financial statements, associated notes and the additional disclosures included in the Directors’ Report designated as audited of the Company, give a true and fair view of the financial position as at 30 June 2007 and performance of the Company for the financial year ended on that date; (c) at the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due; (d) the audited remuneration disclosures set out on pages 13 to 17 of the Directors’ Report comply with Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001. The financial report has been made out in accordance with Australian Accounting Standards and the Corporations Act 2001. This declaration has been made out after the Board of Directors received the declaration by the Executive Director and Chief Financial Officer required by Section 295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors. Rob Tyson Director Perth, Western Australia Dated on this the 28th day of September 2007. Peel exPloration limited AnnuAl RepoRt 2007 Auditor’s independence Declaration SeCtion 11 Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 12 independent Auditor’s Report Peel exPloration limited AnnuAl RepoRt 2007 independent Auditor’s Report SeCtion 12 Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 13 Corporate Governance Statement A description of the Company’s main corporate governance practices is set out below. These practices, unless otherwise stated, were adopted on 20th March 2007. Copies of relevant corporate governance policies are available in the corporate governance section of the Company’s website at www.peelex.com.au. Board of Directors The Board is responsible for guiding and monitoring the Company on behalf of shareholders by whom they are elected and to whom they are accountable. The Board’s primary responsibility is to oversee the Company’s business activities and management for the benefit of shareholders. Day-to-day management of the Company’s affairs and the implementation of corporate strategies and policy initiatives are formally delegated by the Board to the Managing Director and senior executives, as set out in the Company’s Board charter. Board composition The Board charter states that: • the Board is to comprise an appropriate mix of both Executive and Non-Executive Directors. • the roles of Chairman and Managing Director will not be combined. • the Chairman is elected by the full Board and is required to meet regularly with the Managing Director. Board members should possess complementary business disciplines and experience aligned with the Company’s objectives, with a number of Directors being independent and where appropriate, major shareholders being represented on the Board. Consequently, at various times there may not be a majority of directors classified as being independent, according to ASX guidelines. However, where any Director has a material personal interest in a matter, the Director will not be permitted to be present during discussions or to vote on the matter. Directors’ independence The experience, qualifications and term of office of Directors are set out in the Directors’ Report. The Board comprises three Directors none of whom are considered independent under the principles set out below. Having regard to the share ownership structure of the Company, it is considered appropriate by the Board that a major shareholder may be represented on the Board and if nominated, hold the position of Chairman. Such appointment would not be deemed to be independent under ASX guidelines. The Chairman is expected to bring independent thought and judgement to his role in all circumstances. Where matters arise in which there is a perceived conflict of interest, the Chairman must declare his interest and abstain from any consideration or voting on the relevant matter. The Board has adopted ASX recommended principles in relation to the assessment of Directors’ independence. Financial materiality thresholds used in the assessment of independence are set at 10% of the annual gross expenditure of the Company and/or 25% of the annual income or business turnover of the Director. Directors have the right, in connection with their duties and responsibilities, to seek independent professional advice at the Company’s expense, subject to the prior written approval of the Chairman, which shall not be unreasonably withheld. Peel exPloration limited AnnuAl RepoRt 2007 Corporate Governance Statement SeCtion 13 Performance assessment The Board has adopted a formal process for an annual self assessment of its collective performance and the performance of individual Directors. The Board is required to meet annually with the purpose of reviewing the role of the Board, assessing its performance over the previous 12 months and examining ways in which the Board can better perform its duties. A formal assessment was undertaken during the year, using a self-assessment checklist as the basis for evaluation of performance against the requirements of the Board charter. Corporate reporting The Managing Director and Chief Financial Officer provide a certification to the Board on the integrity of the Company’s external financial reports. The Board does not specifically require an additional certification that the financial statements are founded on a sound system of risk management and that compliance and control systems are operating efficiently and effectively. The Board considers that risk management and internal compliance and control systems are sufficiently robust for the Board to place reliance on the integrity of the financial statements without the need for an additional certification by management. Peel exPloration limited AnnuAl RepoRt 2007 Corporate Governance Statement SeCtion 13 Board Committees Whilst at all times the Board retains full responsibility for guiding and monitoring the Company, in discharging its stewardship makes use of committees. To this end the Board has established or may establish the following committees: • Audit Committee; • Nomination Committee; and • Remuneration Committee. At present the Board has deemed that the Company’s current size does not sufficiently warrant the establishment of the above-mentioned committees; however the Board will continually re-evaluate this position as necessary. If or when these committees are established, each will have its own written charter. Matters determined by the committees will be submitted to the full Board as recommendations for Board consideration. If or when an audit committee is established, the committee will oversee accounting and reporting practices and will also be responsible for: • co-ordination and appraisal of the quality of the audits conducted by the Company’s external auditors; • determination of the independence and effectiveness of the external auditors; • assessment of whether non-audit services have the potential to impair the independence of the external auditor; • reviewing the adequacy of the reporting and accounting controls of the Company. If or when a remuneration committee is established, the remuneration committee will review all remuneration policies and practices for the Company, including overall strategies in relation to executive remuneration policies and compensation arrangements for the Managing Director and Non-Executive Directors, as well as all equity based remuneration plans. Details of the Company’s current remuneration policies are set out in the Remuneration Report section of the Directors’ Report. The remuneration policy states that Executive Directors may participate in share option schemes with the prior approval of shareholders. Executives may also participate in employee share option schemes, with any option issues generally being made in accordance with thresholds set in plans approved by shareholders. The Board however, considers it appropriate to retain the flexibility to issue options to executives outside of approved employee option plans in appropriate circumstances. The responsibility for the selection of potential directors and to review membership lies with the full Board of the Company and consequently no separate nomination committee has been established. In circumstances where the size of the Board is expanded as a result of the growth or complexity of the Company, the establishment of a separate nomination committee will be reconsidered. 0 Peel exPloration limited AnnuAl RepoRt 2007 Corporate Governance Statement SeCtion 13 External Auditors The performance of the external auditor is reviewed annually. BDO Kendalls were appointed as the external auditors in 2006. It is both the Company’s and BDO Kendalls’ policy to rotate audit engagement partners at least every five years and the review partner every five years. The external auditors provide an annual declaration of their independence to the Board. The external auditor is requested to attend annual general meetings and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report. Code of Conduct A formal code of conduct for the Company applies to all Directors and employees. The code aims to encourage the appropriate standards of conduct and behaviour of the Directors, officers, employees and contractors of the Company. All personnel are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. Trading in the Company’s securities by Directors and senior executives is not permitted in the two months immediately preceding the release of the Company’s annual and half-year financial results. Any transactions to be undertaken must be notified to the Chairman or Managing Director in advance. Continuous Disclosure and Shareholder Communications The Company has a formal written policy for the continuous disclosure of any price sensitive information concerning the Company. The Board has also adopted a formal written policy covering arrangements to promote communications with shareholders and to encourage effective participation at general meetings. The Managing Director and Company Secretary have been nominated as the Company’s primary disclosure officers. All information released to the ASX is posted on the Company’s website immediately after it is disclosed to the ASX. When analysts are briefed on aspects on the Company’s operations, the material used in the presentation is released to the ASX and posted on the Company’s website. All shareholders receive a copy of the Company’s annual report. In addition, the Company makes all market announcements, media briefings, details of shareholders meetings, press releases and financial reports available on the Company’s website. Peel exPloration limited AnnuAl RepoRt 2007 SeCtion 14 Shareholder information Information relating to shareholders at 28 September 2007. substantial shareholders Holder CRAWleY InVeStMentS ptY ltD MR lAuRenCe JAMeS KIeRnAn MR RoBeRt MAClAIne tYSon MR SIMon HADFIelD MS lISA DupeRouZel MRS lInDA SAlA tennA Distribution of shareholders No. of Holders 0 23 95 327 27 No. Ord Shares 3,000,000 3,000,000 2,500,000 2,100,000 2,100,000 2,075,000 No. Ord Shares 0 67,144 922,826 10,060,020 18,950,010 % 10.00 10.00 8.33 7.00 7.00 6.92 % 0.00 0.22 3.08 33.53 63.17 0.00 0,000,000 00.00 twenty largest shareholders Holder CRAWleY InVeStMentS ptY ltD MR lAuRenCe JAMeS KIeRnAn MR RoBeRt MAClAIne tYSon MS lISA DupeRouZel MRS lInDA SAlA tennA SAlAMAR ptY ltD MR SIMon HADFIelD Blue CRYStAl ptY ltD KAtAnA CApItAl lIMIteD ClASSIC CApItAl ptY ltD No. Ord Shares 3,000,000 3,000,000 2,100,000 1,500,000 1,500,000 1,100,000 1,000,000 600,000 600,000 500,000 Ron & lIZ noMIneeS ptY ltD (RonAlD JAMeS SupeR FunD A/C) 450,000 MR JoRDAn tYSon + MR FlYnn tYSon MR pAul HoDDeR + MR JAMeS RAMSAY + MR DAnIel FoSteR (DeltA Blue InVeStMentS A/C) MR SCott pAul JoneS + MR RoDneY MAlColM JoneS + MISS CARol RoBIn JoneS (SCopA FAMIlY A/C) KB33 CApItAl ptY ltD (CHARItY A/C) WonDeR HolDInGS ptY ltD MAJ ptY ltD (WAllACe SupeR FunD A/C) MR DenIS IVAn RAKICH (tHe RAKICH RetIReMent A/C) SAMS MARKetInG ptY ltD (WAuGH pRoVIDent FunD A/C) HopeRIDGe enteRpRISeS ptY ltD (JoneS FAMIlY A/C) 400,000 300,000 300,000 300,000 290,000 250,000 250,000 250,000 200,000 % 10.00 10.00 7.00 5.00 5.00 3.67 3.33 2.00 2.00 1.67 1.50 1.33 1.00 1.00 1.00 0.97 0.83 0.83 0.83 0.67 1 2 3 4 5 6 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 9,999,999 Rounding total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 At the prevailing market price of $0.28 per Share there were five Shareholders with less than a marketable parcel of ,0,000 . $500 at 28 September 2007. Peel exPloration limited AnnuAl RepoRt 2007 Shareholder information SeCtion 14 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 9,999,999 rounding total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Distribution of optionholders No. of Holders 5 77 154 136 21 Options 3,635 349,051 1,280,571 3,514,500 9,852,243 % 0.02 2.33 8.54 23.43 65.68 0.00 ,000,000 00.00 twenty largest optionholders Holder CRAWleY InVeStMentS ptY ltD MR lAuRenCe JAMeS KIeRnAn MR RoBeRt MAClAIne tYSon MS lISA DupeRouZel MRS lInDA SAlA tennA SAlAMAR ptY ltD MR SIMon HADFIelD ClASSIC CApItAl ptY ltD Blue CRYStAl ptY ltD KAtAnA CApItAl lIMIteD Options 1,622,874 1,622,874 1,172,874 750,000 750,000 672,873 500,000 495,748 300,000 300,000 Ron & lIZ noMIneeS ptY ltD (RonAlD JAMeS SupeR FunD A/C) 225,000 MR JoRDAn tYSon + MR FlYnn tYSon MR pAul HoDDeR + MR JAMeS RAMSAY + MR DAnIel FoSteR (DeltA Blue InVeStMentS A/C) HopeRIDGe enteRpRISeS ptY ltD (JoneS FAMIlY A/C) MR SCott pAul JoneS + MR RoDneY MAlColM JoneS + MISS CARol RoBIn JoneS (SCopA FAMIlY A/C) KB33 CApItAl ptY ltD (CHARItY A/C) WonDeR HolDInGS ptY ltD MAJ ptY ltD (WAllACe SupeR FunD A/C) MR DenIS IVAn RAKICH (tHe RAKICH RetIReMent A/C) SAMS MARKetInG ptY ltD (WAuGH pRoVIDent FunD A/C) 200,000 150,000 150,000 150,000 150,000 145,000 125,000 125,000 125,000 % 10.82 10.82 7.82 5.00 5.00 4.49 3.33 3.30 2.00 2.00 1.50 1.33 1.00 1.00 1.00 1.00 0.97 0.83 0.83 0.83 At the prevailing market price of $0.096 per Option there were eighty-two Optionholders with less than a marketable parcel of $500 at 28 September 2007. ,, . Peel exPloration limited AnnuAl RepoRt 2007 Shareholder information SeCtion 14 At 28 September 2007 there were 472 holders of ordinary shares in the Company. The following shares and options are restricted by ASX: Ordinary fully paid shares, restricted for 24 months from date of quotation (1 June 2006) – 13,890,000 Ordinary fully paid shares, restricted for 12 months from date of quotation (1 June 2006) – 1,000,000 30 November 2010 20c Options restricted for 24 months from date of issue (1 June 2006) – 7,000,000 30 November 2010 20c Options restricted for 12 months from date of issue (1 June 2006) – 500,000 30 November 2010 30c Options restricted for 24 months from date of issue (1 June 2006) – 7,500,000 Voting Rights The voting rights attaching to the ordinary shares, set out in Clause 12.11 of the Company’s Constitution, are: “Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at meetings of Shareholders or classes of Shareholders: (a) each Shareholder entitled to vote may vote in person or by proxy, attorney or Representative; (b) on a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote; and (c) on a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or Representative, have one vote for the Share, but in respect of partly paid Shares, shall have such number of votes being equivalent to the proportion which the amount paid (not credited) is of the total amounts paid and payable in respect of those Shares (excluding amounts credited).” Statement under ASX Listing Rule 4.10.19 From the date of admission of the Company’s shares on ASX (17 May 2007) to the date of this Annual Report, the Company has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. Expenditures have been in line with Prospectus estimates. Peel exPloration limited AnnuAl RepoRt 2007 Peel exPloration limited AnnuAl RepoRt 2007 Exploring forgotten mineral fields peel exploration limited ACN 119 343 734 telephone (08) 9382 3955 level 1, 79 hay street, subiaco, western australia 6008 www.peelex.com.au
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