Annual Report
for the Financial Year ended 30 June 2008
PEEL EXPLORATION LIMITED
& CONTROLLED ENTITIES
ABN 42 119 343 734
Share Registry
Computershare Investor Services
Level 2, 45 St Georges Tce
PERTH WA 6000
Telephone: +61 (0)8 9323 2000
Facsimile: +61 (0)8 9323 2033
Solicitors to the Company
Steinepreis Paganin
Lawyers and Consultants
Level 4, Next Building
16 Milligan Street
PERTH WA 6000
Auditors
BDO Kendalls Audit & Assurance
128 Hay St
SUBIACO WA 6008
Corporate Directory
Directors
Simon Hadfield – Chairman
Rob Tyson – Executive Director
Craig McGown – Non-executive Director
Company Secretary
David Hocking
Registered Office
Level 1, 79 Hay St
SUBIACO WA 6008
Telephone: +61 (0) 8 9382 3955
Facsimile: +61 (0) 8 9388 1025
Website
www.peelex.com.au
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 Changes in Equity
SECTION 8 - Statement of Cash Flows
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
1
2
13
14
22
23
24
25
26
38
39
40
42
45
Peel Exploration Limited Annual Report 2008
Chairman’s Report
Dear Investor,
Since listing in May 2007, Peel Exploration Limited has been fortunate in being able to identify
and acquire several valuable mineral projects in New South Wales, close to excellent
infrastructure.
Standing out amongst these projects are the Attunga Tungsten Deposit (Attunga) and the
Kensington gold-tungsten prospect (Kensington). Over the past 12 months at Attunga, Peel
Exploration has independently identified and verified a JORC-compliant inferred resource of
1.29 Mt grading 0.61% WO and 0.05% molybdenum for 9,400t WO equivalent (using a 0.2%
WO equivalent cutoff).
3
3
3
Recent drilling by Peel Exploration has revealed tungsten-molybdenum mineralisation grading
up to 24% WO . The mineralisation at Attunga is outcropping at surface, extends to a depth of
at least 200m, remains open and includes multiple high-grade zones.
3
Drilling at the Kensington prospect has identified widespread outcropping gold mineralisation
over more than 800m of strike and we believe that this warrants continued exploration.
However, it is Attunga that the company is keen to fast-track. The focus of the company’s
activities will be to complete a scoping study at Attunga and a positive result will see Peel
Exploration move to a full feasibility study.
The Company also owns several highly prospective copper prospects in NSW which it will
continue to explore as funds become available.
The directors of Peel Exploration believe it has achieved a great deal of success in its first year
since being admitted to the ASX and will continue to develop its existing projects while
searching for other opportunities.
I would like to thank my fellow directors Rob Tyson and Craig McGown and Company
Secretary David Hocking for their contribution over the past 12 months. I would also like to
thank Michael Kiernan, who resigned during the year, for his contribution as a director of the
company.
Finally I would like to thank our shareholders for supporting the Company.
Yours sincerely
Simon Hadfield
CHAIRMAN
30 September 2008
th
1
Peel Exploration Limited Annual Report 2008
Review of Operations
Background
Peel Exploration Limited (Peelex) was formed in April 2006 to prospect for base and
precious metal deposits. The Company identified the New England Fold Belt, particularly
the portion located within northern New South Wales, as a highly prospective and under
explored region.
At September 2008, the Company had a portfolio of six 100%-owned exploration licences
and a further two exploration licence applications (see Figure 1), all located in New
South Wales, comprising:
EL6883 & EL6884 - Attunga contains numerous historic gold, tungsten, molybdenum
•
and copper mines/workings/prospects. Peelex has recently outlined a high-grade
tungsten-molybdenum resource at the Attunga Tungsten Deposit (1.29 Mt at 0.61% WO3
and 0.05% Mo), and also identified extensive gold mineralisation at the Kensington gold-
tungsten prospect.
EL6613 - Dungowan contains numerous historic copper mines/workings. High-grade
•
copper mineralisation has been reported from Fishers copper mine, with 2,643t of ore
produced at an average grade of 13.4% copper while at nearby Trough Gully copper
mine, the lode finished in massive sulphide mineralisation.
EL6614 - Barry is centred on a cluster of copper workings. Exploration in 1971
•
returned significant surface copper values, including 27 samples averaging 1.7% copper
and 21 samples averaging 1.9% copper. No follow-up of these results has ever been
reported.
EL6719 - Waverley is centred on the historic Waverley silver-lead-zinc workings.
•
Limited prospecting by Peelex has returned highly anomalous silver, lead and zinc values.
EL6722 - Armidale contains several historic silver mines along with numerous gold,
•
antimony, tungsten and molybdenum workings.
ELA3483 - Boorolong contains the historic Boorolong molybdenum workings and
•
Sutton Creek tin workings. Initial literature searches indicate possible high-grade
molybdenum resources (non-JORC) present at Boorolong with little modern exploration.
ELA3594 - Mt Tennyson East contains the historic Kirk and Wades (Mt Tennyson East)
•
molybdenum-tungsten prospect.
indicate that tungsten-
molybdenum mineralisation at Mt Tennyson East possibly represents an extension to the
current Mt Tennyson molybdenum resource.
literature searches
Initial
2
Peel Exploration Limited Annual Report 2008
Figure 1 - Peelex Project Locations
L
3
Peel Exploration Limited Annual Report 2008
Details on Assets
EL6883 & EL6884 – Attunga (100% Peel Exploration Ltd)
EL6883 and EL6884 - the Attunga project - are located about 20 km north of Tamworth
(pop ~42,000), or about 330 km north of Sydney, New South Wales. The licences cover a
combined area of about 250 km2 and were granted in September 2007.
Within the Attunga project, there are two specific areas of interest: the Attunga Tungsten
Deposit area as defined by exploration in 1968-70, 2006 and 2008; and the Kensington
gold-tungsten prospect area defined by historic workings and exploration between 1970
and 2008. The Attunga Project area is considered prospective for tungsten-molybdenum
type
skarn-type mineralisation, gold
mineralisation, and base/precious metal skarn-type mineralisation.
intrusive-related gold
(+/-tungsten)
system
Figure 2 - Peelex Attunga Project Geology and Prospects
4
Peel Exploration Limited Annual Report 2008
Attunga Tungsten Deposit (aka Attunga Scheelite Deposit, Attunga Prospect 1)
In 1968, the Attunga Mining Corporation Pty Ltd (subsequently taken over by Endurance
Mining Corporation) discovered
the Attunga Tungsten Deposit. Geopeko Ltd
subsequently entered into an option agreement and undertook an intensive, but
confined diamond drilling program. In total 25 diamond drillholes for 4,236m to a
maximum depth of about 290m were drilled, establishing a small high-grade “reserve” of
13,800t @ 2.82% WO3, 0.34% molybdenum. Subsequent explorers considered that a larger
resource of lower grade material was present, and in 1983 Challenger Mining calculated
a (non-JORC) resource of 1.25 Mt at 0.82% WO3 and 0.14% molybdenum. Minimal further
exploration was completed at the Attunga Tungsten Deposit in the ensuing years.
The Attunga Tungsten Deposit can be classified as a skarn deposit formed by the intrusion
of the Inlet Monzonite into sedimentary rocks of the Middle Devonian Tamworth Group.
Tungsten and molybdenum mineralisation occur as fine disseminations and veinlets of
scheelite, molybdenite and, possibly, powellite; primarily within the skarn, monzonite and
a fine-grained contact rock that Geopeko termed “scheelite rock”. Minor mineralisation
also occurs in the hornfels, calc-silicate hornfels and marble.
In September 2007, Peelex commissioned Geos Mining Mineral Consultants to complete
an independent JORC-compliant resource estimation on the Attunga Tungsten Deposit
based on available data. Importantly, all historic drilling relevant to the deposit was still
available, with drilling from 1968-69 held in storage at the New South Wales Department
of Primary Industries (NSW DPI) Londonderry drillcore library, and cuttings from 2006 RC
drillhole ATRC-04 stored on site at the Attunga Tungsten Deposit. Historic exploration
reports relevant to the Attunga Tungsten Deposit were recovered from the NSW DPI’s
interactive database for exploration and geoscience information (DIGS).
unrecognised
In October 2007, during Peelex’s programme of relogging and assaying/reassaying
historic drillcore, previously
tungsten-molybdenum
mineralisation was identified with an interval of 2.44m at 4.3% WO3 and 0.23% Mo from
89.97m downhole returned from historic drillhole ATT-23. Further previously unrecognised
high-grade tungsten-molybdenum mineralisation was identified in early 2008 when RC
drillhole ATRC-04 (drilled in mid-2006) was re-sampled and assayed utilising XRF
methodology. An intersection of 12m at 0.65% WO3 and 0.07% Mo from 84m downhole
was returned.
high-grade
In April 2008, Peelex announced completion of an independent JORC-compliant
resource estimation for the Attunga Tungsten Deposit by Geos Mining. A high-grade
tungsten-molybdenum inferred resource was defined with results including 1.29 Mt at
0.61% WO3 and 0.05% Mo for 9,400t contained WO3 equivalent using a 0.2% WO3
equivalent cutoff.
In July 2008, Peelex completed two RC drillholes (ATP1-D & ATP1-G) as partial fulfillment of
an extensional and infill drilling programme designed by Geos Mining. Completion of the
full drill programme was restricted due to inclement weather, rugged terrain, and drill rig
availability. Peelex’s primary aim was to gain sufficient material to commence early
warning metallurgical testwork and drillhole ATP1-D was designed by Geos Mining for this
purpose. Also in July 2008, Peelex commissioned NAGROM, metallurgical consultants, to
commence early warning metallurgical testwork.
Subsequent to the financial year’s end, in August 2008, Peelex announced high-grade
assay results from drillhole ATP1-D with an intersection of 42m at 2.09% WO3 and 0.17% Mo
from 21m downhole including an extraordinary interval of 2m at 24.21% WO3 and 1.71%
5
Peel Exploration Limited Annual Report 2008
Mo from 22m downhole. Drillhole ATP1-G returned an intersection of 10m at 0.27% WO3
and 0.04% Mo from 39m downhole.
At September 2008, Peelex was awaiting initial metallurgical testwork results and had
for
booked a drill
commencement in November 2008.
infill and extensional drilling scheduled
for additional
rig
Figure 3 - Attunga Tungsten Deposit Section 302560E
Attunga Prospects 2, 3, 4, 5 & 6
Several scheelite-bearing skarn prospects situated around the margin of the Inlet
Monzonite were located by the Attunga Mining Corporation and Geopeko in 1969-70.
Reported tungsten grades in rock chips were generally moderate (maximum rock chip
assays of 1.41% WO3 for Prospect 5) and drill testing was not extensive.
In May 2008, Peelex completed brief investigations of Prospect 5 and 6 utilising a NITON
handheld XRF analyser. Highly-anomalous tungsten-molybdenum mineralisation was
returned from surface rock face sampling and follow-up work is planned.
6
Peel Exploration Limited Annual Report 2008
Kensington gold-tungsten prospect
The Kensington gold-tungsten prospect, located about 5 km north of the Attunga
Tungsten Deposit, comprises a series of historic gold workings (pre-WW1) across 800m
strike with mineralisation outcropping, and covered by a 1,500m long, +100 ppb gold
geochemical anomaly, open in several directions. Peelex believes that Kensington
represents an intrusive-related gold system.
Drilling in 1971 intersected extensive tungsten mineralisation, however the drill samples
were not tested for gold. In 1983, a (non-JORC) resource of 4.2Mt @ 0.174% WO3 was
estimated by Challenger Mining. In 1987 diamond drilling by Challenger Mining
intersected extensive low-grade gold mineralisation, however this work was not tested for
tungsten. Drillholes Ken-7 - 68m (13m at 1.07 g/t gold from 0m) and Ken-6 - 150.9m (108m
at 0.74 g/t gold from 8m) returned the most significant gold mineralisation although all
holes were mineralised to some degree.
Gold mineralisation at Kensington is hosted in a complexly faulted/sheared suite of
dioritic and andesitic breccias, andesitic volcanic greywacke (also described as lithic
arenites) andesitic tuff, carbonaceous shale and lamprophyre.
In March 2008, Peelex reported that resampling and assaying of historic drillcore from
Kensington had validated historic data and confirmed the presence of significant gold
mineralisation. Resample assay results for drillhole Ken-6 yielded an intercept of 109m at
0.69 g/t gold from 8m. Resample assay results also confirmed low-grade tungsten
mineralisation to be present in the area.
Table 1: Summary Challenger 1987 Kensington Diamond Drillcore Results
Northing
Hole
No.
Easting Azimuth
(mag)
Dip
Final
Depth (m)
From
(m)
To (m) Interval
(m)
Au
(g/t)
Comment
Ken-1 6582610
300576
220
-60
145.40
And
And
Ken-2 6582433
300847
Ken-3 6582341
300764
Ken-4 6582420
300749
Ken-5 6582495
300708
040
040
220
220
-45
-45
-45
-45
150
151
49
108
And
Ken-6 6582554
300814
040
-45
150.9
Incl
Incl
Incl
Incl
43
84
122
61
26
33
0
30
8
8
47
61
65
89
127
106
91
39
19
52
22
0.40
Historic
5
5
45
65
6
19
22
0.46
0.73
0.32
0.47
0.60
0.51
0.37
Historic
Historic
Historic
Historic
Historic
Historic
Historic
117
109
0.69
Peelex
31
52
76
23
5
15
10
1.62 >0.5 g/t Au
0.97 >0.5 g/t Au
0.77 >0.5 g/t Au
0.69 >0.5 g/t Au
106
116
Ken-7 6582709
300835
220
-45
68
6
13.2
7.2
1.82
Peelex
In July 2008, Peelex completed an RC drilling programme comprising 10 holes for 1,229m
with an aim of following up the most important historic drill results and also to test along
strike from previous drilling.
7
Peel Exploration Limited Annual Report 2008
Figure 4 – Drilling at Kensington
8
Peel Exploration Limited Annual Report 2008
In September 2008, Peelex announced that RC drilling completed at Kensington had
encountered widespread gold mineralisation. Encouragingly, gold mineralisation was
intersected in all drillholes.
Table 2: Summary Peelex June/July 2008 Kensington RC Drill Results
Hole No. Northing Easting Azimuth
(mag)
Dip Final
Depth
(m)
From
(m)
To (m) Interval
Au (g/t)
Comment
(m)
KENRC-8* 6582528 300849
40
-60 198
incl.
incl.
incl.
KENRC-9 6582395 301143 220
-50 131
And
And
And
And
KENRC-11* 6582711 300917 220
-50
77
KENRC-12* 6582719 300348
40
-50 137
incl.
incl.
174
171
0.32
Bulk intersection
3
29
58
81
15
60
80
83
44
60
83
24
65
81
84
117
121
24
72
90
38
108
98
107
108
11
15
0.93
>0.5 g/t Au cut
2
2
9
5
1
1
4
14
36
8
1
2
0.77
>0.5 g/t Au cut
0.91
>0.5 g/t Au cut
1.40
>0.5 g/t Au cut
2.76
>0.5 g/t Au cut
1.87
>1.0 g/t Au cut
1.87
>1.0 g/t Au cut
1.79
>0.5 g/t Au cut
0.78
Bulk intersection
0.31
Bulk intersection
0.71
>0.25 g/t Au cut
1.78
>1.0 g/t Au cut
0.6
>0.5 g/t Au cut
KENRC-14 6582189 301142 220
-50 126
KENRC-15* 6582733 300951 220
-50 143
KENRC-16* 6582693 300928 220
-50 113
KENRC-17 6582736 300908 220
-50 107
And
And
KENRC-18 6582735 300848 220
-50
96
And
KENRC-19 6582793 300829
9
94
43
35
49
74
1
56
4
143
49
0.32
Bulk intersection
45
39
62
77
6
79
8
2
4
1.06
>0.5 g/t Au cut
0.87
>0.5 g/t Au cut
13
1.07
Bulk intersection
3
5
23
4
0.59
>0.25 g/t Au cut
1.58
>0.5 g/t Au cut
0.71
>0.25 g/t Au cut
0.87
>0.5 g/t Au cut
Results received by Peelex continue to confirm that Kensington represents a significant
gold-tungsten system.
The drilling has highlighted several areas requiring follow-up with a particular focus on the
near-surface gold potential near KENRC-9, and about historic drillholes KENDDH-6 &-7.
Drilling to date has been relatively shallow and Peelex believes that good potential exists
for the discovery of an economic gold system. In addition to the above gold results,
significant tungsten mineralisation in the form of scheelite was also identified via Niton XRF
analyser and UV inspection. Some tungsten anomalous samples were sent for analysis at
ALS Chemex with certain individual metre intervals returning up to 0.21% WO3.
At September 2008, Peelex was planning follow-up drilling at Kensington with a view to
establishing near-surface resources.
9
Peel Exploration Limited Annual Report 2008
Figure 5 - Kensington Drillhole Location Plan
Mt Patterson gold prospect
The Mt Patterson gold prospect is located about 2.5 km southeast of the Attunga
Tungsten Deposit. The prospect was briefly worked in the 1920s for minor gold production.
The deposit comprises low-grade gold mineralisation hosted in brecciated, fractured
andesite with calcite skarn. The breccia trends N-S for a strike length of at least 280m and
is over 100m in width in continuous outcrop.
Previous explorers have returned rock-chips up to 41.7 g/t gold, and also defined a 300m
long +300 ppb gold geochemical anomaly. An IP survey indicated a continuous resistive
body at depth. No drilling has been undertaken.
EL6613 – Dungowan
EL6613 - the Dungowan project - covers an area of about 125 km2,, was granted in
August 2006, and is located about 15 km east of Tamworth, or about 300 km north of
Sydney, New South Wales. There are two specific project areas of interest within the
Dungowan Project; numerous historic copper mines/workings in the vicinity of Dungowan
as well as a number of historic gold workings in the vicinity of Limbri.
The licence area is considered prospective for polymetallic VHMS mineralisation,
syngenetic (volcanic-related), exhalative gold mineralisation, and epigenetic structurally-
controlled gold mineralisation related to regional deformation, metamorphism and
granite-intrusive phases.
10
Peel Exploration Limited Annual Report 2008
The Dungowan project area is host to numerous historic copper mines and workings. The
most significant copper deposits - Fishers (also known as Dungowan), Trough Gully, Mulla
Creek, and Woolomin - were mostly worked about the turn of the 20th Century, and
appear to represent polymetallic VHMS mineralisation. The polymetallic (copper-zinc-
silver-gold) deposits all share common characteristics indicating a common origin. They
are largely conformable with the enclosing sediments and volcanics, occurring as lenses
(either singly or in groups) measuring up to 60m long and up to 4m thick, and extending
down to at least 40m. The sulphide lenses are invariably closely associated with mafic
volcanics, jaspers and cherts. Development of supergene enriched copper zones
(chalcocite) is a feature of the Mulla Creek and Fishers deposits.
Minimal modern exploration has been completed at Dungowan. In late 2007, Peelex
completed site investigations at Dungowan including surface geochemical sampling. In
early 2008, Peelex completed a high-resolution airborne magnetic and radiometric
survey with data interpretation completed mid-2008. Peelex plans to further investigate
high-order geophysical anomalies identified and to drill test the most prospective and
accessible historic workings.
EL6614 – Barry
EL6614 - the Barry project - covers an area of about 24 km2, was granted in August 2006,
and is located about 25 km southeast of Nundle, or about 260 km north of Sydney, New
South Wales. The Barry project area is considered prospective for polymetallic VHMS
mineralisation and intrusive-related precious/base metal mineralisation.
The Barry project area is host to several historic copper and molybdenum workings and
occurrences. The project area at Barry is centred on the highly faulted Barry Igneous
Complex which includes serpentinite, mafic and acid igneous rocks, containing
porphyries, granophyres and trondhjemites.
Exploration conducted in the region in 1971 examining gold, copper and molybdenum
prospects returned “strong traces of copper mineralisation… along an apparent strike of
approximately 2 miles”. Several series of consecutive assay results returned high grade
copper values, which included 27 samples averaging 1.7% copper, 21 samples
averaging 1.92% copper (plus significant silver and gold), 4 samples averaging 1.1%
copper, 3 samples averaging 1.2% copper and 11 samples averaging 3.2% copper. The
sample location map that accompanied the report is missing, along with all statutory
reporting of exploration thereafter (covering a further 18 months). No follow-up
exploration of these results has ever been reported.
In early 2008, Peelex completed a high-resolution airborne magnetic and radiometric
survey with data interpretation completed in mid-2008. In the June quarter 2008, Peelex
completed a site investigation and surface geochemical sampling programme at the
Kasey (Back Barb) prospect. Full exploration at Barry has been hindered while access
negotiations with a key landholder continue. Peelex plans to investigate the historic
copper workings at Barry once access is approved.
EL6719 – Waverley
EL6719 - the Waverley project - covers an area of about 100 km2, was granted in February
2007, and is located about 40 km northeast of Scone, or about 230 km north of Sydney,
New South Wales. The licence encompasses the historic Waverley silver-lead-zinc
workings and
intrusive-related precious-base metal
mineralisation.
is considered prospective for
11
Peel Exploration Limited Annual Report 2008
The Waverley project area hosts the historic Waverley silver-lead-zinc workings which
comprises pits, shafts and adits. Production was undertaken intermittently between 1868
and 1912. Mineralisation at Waverley is associated with a 3 km long NNE trending fault
zone, comprising a series of pods and lenses, with pods reportedly measuring up to a
maximum of 20m long and 3m wide. Prospecting in the mid-1990s returned values up to
739 ppm silver, 14% zinc and 9.4% lead.
During the June 2008 quarter, Peelex completed an investigation of the Waverley silver
prospect with six rock chip samples collected. Several silver-anomalous rock chips were
returned including a best result of 297 ppm silver and 2.02% zinc. Exploration by Peelex
has also included a high-resolution airborne magnetic and radiometric survey flown in
early 2008 with data interpretation completed mid-2008. Peelex is planning follow-up
work at Waverley.
EL6722 – Armidale
EL 6722 – the Armidale project - covers an area of about 300 km2, was granted in
February 2007, and is located 5 km north of Armidale, or about 400 km north of Sydney,
New South Wales. The licence encompasses numerous historic precious and base metals
mines and workings, including three regionally-significant silver mines. The Armidale
project is considered prospective for precious metals deposits.
The Armidale project area covers numerous historic gold, silver, antimony, and tungsten
mines and workings, including the Taits Gully silver-gold mine and the Greengate silver-
lead-zinc mine. The application area also contains the historic Whybatong silver-gold
mine (adjacent to Taits Gully) which remains covered by a small mining lease (not owned
by Peelex). The Taits Gully silver-gold mine is situated 15 km north of Armidale and
comprises workings spread over a 2 km area. The two largest workings, the Mary Ann and
the Endeavour mines, were first worked in 1901 and 1910 respectively. During this time
until 1914 (when the mine ceased owing to World War 1) at least 36,400 oz silver and 400
oz gold were reportedly recovered. Exploration at Taits Gully in 1982 and in 1984
culminated in a small drilling programme with a best result of 7m at 48 ppm silver, 0.6%
zinc, 0.3% lead, and 0.2 ppm gold from 54m returned.
Peelex believes that Taits Gully has not been adequately tested and that potential
remains for the discovery of high-grade silver-gold mineralisation.
ELA3483 – Boorolong
ELA3483 – the Boorolong project - contains the historic Boorolong molybdenum workings
and Sutton Creek tin workings. Initial literature searches indicate possible high-grade
molybdenum resources (non-JORC) present at Boorolong with little modern exploration
having been undertaken.
ELA3594 - Mt Tennyson East
ELA3594 – Mt Tennyson East project - contains the historic Kirk and Wades (Mt Tennyson
East) molybdenum-tungsten prospect. Initial literature searches indicate that tungsten-
molybdenum mineralisation at Mt Tennyson East possibly represents an extension to the
current Mt Tennyson molybdenum resource, with minimal modern exploration having
been undertaken.
12
Peel Exploration Limited Annual Report 2008
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
Attunga
EL6883
Peel Exploration Ltd
Attunga
EL6884
Peel Exploration Ltd
100%
100%
100%
100%
100%
100%
21 August 2010
21 August 2010
25 February 2009
25 February 2009
21 September 2009
21 September 2009
Projects pending approval
Project
Number
Applicant
Boorolong
ELA3483
Peel Exploration Ltd
Mt Tennyson East
ELA3594
Peel Exploration Ltd
Rob Tyson
Executive Director
The information in this report that relates to Exploration Results is based on information compiled by Mr
Robert Tyson, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Tyson has
sufficient experience which is relevant to the styles of mineralisation and types of deposits under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in
the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves.’ Mr Tyson consents to the inclusion in this report of the matters based on the information in the
form and context in which it appears.
13
Peel Exploration Limited Annual Report 2008
Directors Report
Your directors present their report on the Company for the financial year ended 30 June
2008.
Directors
The following persons were directors of Peel Exploration Limited during the financial year
and up to the date of this report.
S Hadfield
R Tyson
C McGown
M Kiernan
(appointed 1 February 2008)
(resigned 20 February 2008)
Directors’ Interests in Shares and Options
Directors’ interests in shares and options as at 30 June 2008 are set out in the table below.
Director
Shares Directly and Indirectly Held
Options
Simon Hadfield
Robert Tyson
Craig McGown
Activities
2,100,000
2,598,750
-
4,722,873
5,122,874
-
The continuing principal activity of the Company is the exploration for economic deposits
of minerals. For the period of this report, the emphasis has been on base and precious
metals.
Results
The loss of the Company for the financial year after providing for income tax amounted
to $757,648 (2007: $409,724).
Dividends
No dividends were paid or proposed during the year.
Review of Operations
A review of the operations of the Company during the financial year and the results of
those operations are contained in pages 2 to 13 in this report.
Corporate Structure
Peel Exploration Limited is a limited Company that is incorporated and domiciled in
Australia.
Employees
The Company had five employees as at 30 June 2008 – in addition to the Directors. The
Company uses consultants and contractors as required.
14
Peel Exploration Limited Annual Report 2008
Significant Changes
The Directors are not aware of any significant changes in the state of affairs of the
Company occurring during the financial year, other than disclosed in this report.
Matters Subsequent to the End of the Financial Period
1,000,000 options have been proposed to be issued to a director, C McGown, subject to
shareholder approval at the AGM.
Other than this matter, there were at the date of this report no other matters or
circumstances which have arisen since 30 June 2008 that have significantly affected or
may significantly affect:
i)
ii)
iii)
the operations of the Company;
the results of those operations; or
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 expected results.
Information on directors
Simon Hadfield – Non-Executive Chairman
Mr Hadfield has more than 30 years company management experience and has held
directorships in publicly-listed industrial and resource companies. Mr Hadfield is Managing
Director of Resource Information Unit Pty Ltd.
Robert Maclaine Tyson – Executive Director
in exploration and mining-related roles for companies
Mr Tyson is a geologist with more than 15 years resources industry experience having
worked
including Cyprus
Exploration Pty Ltd, Queensland Metals Corporation NL, Murchison Zinc Pty Ltd,
Normandy Mining Ltd and Equigold NL. Mr Tyson has more than five years of senior
management experience.
Craig McGown – Non-Executive Director (appointed 1 February 2008)
Mr McGown is an Investment Banker with over 35 years experience consulting to
companies in Australia and internationally, particularly in the natural resource sector. He
holds a Bachelor of Commerce degree, is a Fellow of the Institute of Chartered
Accountants and an Affiliate of the Securities Institute of Australia. Mr McGown is the
former Chairman of DJ Carmichael Pty Limited. He is currently a director of the corporate
advisory business New Holland Capital Pty Limited and a Non-Executive Director of Bass
Metals Ltd and Non-Executive Chairman of Pioneer Nickel Limited and Entek Energy
Limited.
Company secretary
The company secretary is Mr D Hocking who was appointed to the position of company
secretary in March 2007. Mr Hocking is a qualified Chartered Accountant from the United
Kingdom. He has more than 20 years commercial experience in Australia producing
15
Peel Exploration Limited Annual Report 2008
management and financial reports for medium sized businesses in a range of industries
including publishing, franchising, rural merchandising, financial services and the offshore
oil industry. Mr Hocking also brings previous experience as a Company Secretary in a
public company.
Meetings of Directors
Director’s attendance at Directors meetings are shown in the following table:
Director
Number held whilst in office
R Tyson
S Hadfield
C McGown (appointed 1 February 2008)
M Kiernan (resigned 20 February 2008)
Remuneration Report (Audited)
9
9
5
5
The remuneration report is set out under the following headings:
Number
attended
9
9
5
0
a) Principles used to determine the nature and amount of remuneration
b) Details of remuneration
c) Service agreements
d) Share-based compensation and
e) Additional information.
a) Principles used to determine the nature and amount of remuneration
The objective of the Company’s remuneration framework is to ensure reward for
performance is competitive and appropriate for the results delivered. The framework
aligns executive reward with achievement of strategic objectives and the creation of
value for shareholders. The Board believes that executive remuneration satisfies the
following key criteria:
• competitiveness and reasonableness
• acceptability to shareholders
• performance linkage / alignment of executive compensation
• transparency
• capital management.
These criteria result in a framework which can be used to provide a mix of fixed and
variable remuneration, and a blend of short and long-term incentives in line with the
Company’s limited financial resources.
Board and Senior Management
Fees and payments to the non-executive Directors and senior executives reflect the
demands which are made on, and the responsibilities of, the Directors and the senior
management. Such fees and payments are reviewed annually by the Board.
Company policy in relation to issuing options and remunerating executives is that
directors are entitled to remuneration out of the funds of the Company but the
remuneration of the non-executive Directors may not exceed in any year the amount
fixed by the Company in general meeting for that purpose. The aggregate remuneration
of the non-executive directors has been fixed at a maximum of $200,000 per annum to
16
Peel Exploration Limited Annual Report 2008
be apportioned among the non-executive Directors in such a manner as they determine
(refer below). Directors are also entitled to be paid reasonable travel, accommodation
and other expenses incurred in consequence of their attendance at Board meetings and
otherwise in the execution of their duties as Directors.
Remuneration is not linked to past company performance but rather towards generating
future shareholder wealth through share price performance. The company listed on 11
May 2007 at 20c per share and the share price at 30 June 2008 was 19c. The shares
recorded high and low points of 36c and 13c during the year, and are trading at 20c on
19th September 2008. The company has recorded a loss each financial year to date as it
carries out exploration activities on its tenements.
b) Details of remuneration
Details of the nature and amount of each element of the remuneration of each of the
Directors of Peel Exploration Ltd and those senior executives of the Company who
received the highest emoluments during the year ended 30 June 2008 are set out in the
following table.
Table 1: Director and senior executive remuneration
Short-Term Employment Benefits
Post
Employment
Long-Term
Benefits
Bonuses,
other
benefits
Consulting
Fees
Super-
annuation
Long-
service
leave
Share
Based
Payment
Options
Total
% Perfor-
mance
Related
Cash
salary
and
fees
$
57,207
36,656
14,395
26,200
Cash
salary
and
fees
$
-
-
-
-
-
2008
Directors
RM Tyson
S Hadfield
C McGown
ML Kiernan
Other
executives
D Hocking
Total
2007
Directors
RM Tyson
S Hadfield
ML Kiernan
Other
executives
D Hocking
Total
$
$
$
$
$
$
5,149
3,299
1,425
2,358
62,356
39,955
16,753
28,558
0%
0%
0%
0%
0%
134,457
-
34,300
34,300
-
12,231
-
15,000
15,000
49,300
195,988
Short-Term Employment Benefits
Post
Employment
Long-Term
Benefits
Bonuses,
other
benefits
Consulting
Fees
Super-
annuation
Long-
service
leave
Share
Based
Payment
Options
Total
% Perfor-
mance
Related
$
-
-
-
-
-
$
-
-
-
9,625
9,625
$
-
-
-
-
-
$
$
$
107,500
107,500
107,500
107,500
107,500
107,500
-
-
322,500
9,625
332,125
0%
0%
0%
0%
Note: Options do not represent cash payments to Directors and executives and options granted may or
may not be exercised by the Directors and executives.
17
Peel Exploration Limited Annual Report 2008
c) Service agreements
Remuneration and other terms of employment for the Directors and executives are not
formalised in Service/Appointment agreements. Major provisions of employment are set
out below:
R Tyson - There is no written contract for Mr Tyson, who received payments and benefits
totalling $62,356 (2007:$107,500) in his role as executive director of the Company.
S Hadfield - There is no written contract for Mr Hadfield, who received payments and
benefits totalling $39,955 (2007:$107,500) in his role as a director of the Company.
C McGown - There is no written contract for Mr McGown, who received payments and
benefits totalling $16,753 in his role as a director of the Company. Mr McGown was
appointed a director on 1St February 2008.
M Kiernan - There is no written contract for Mr Kiernan, who received payments and
benefits totalling $28,588 (2007: $107,500) in his role as a director of the Company. Mr
Kiernan resigned as a director on 20 February 2008.
d) Share-based compensation
Options over shares in Peel Exploration Limited are granted under the Peel Exploration
Limited Employee Option Plan which was created in June 2008 and is subject to
approval by shareholders at the next annual general meeting. The Employee Option
Plan is designed to provide long-term incentives for employees to deliver long-term
shareholder returns. Under the plan, participants are granted options 50% of which vest
immediately and the remainder vest after twelve months provided the employees are still
employed by the Company at the end of the vesting period. Participation in the plan is
at the Board’s discretion and no individual has a contractual right to participate in the
plan or to receive any guaranteed benefits.
Once vested the options are exercisable at $0.25 up to and including 30 November 2010.
Options granted under the plan carry no dividend or voting rights.
Details of options over ordinary shares in the company provided as remuneration to each
director and key management personnel of Peel Exploration Limited are set out below.
When exercisable, each option is convertible into one ordinary share of Peel Exploration
Limited. Further information on the options is set out in note 13 to the financial statements.
Table 2: Options granted as part of remuneration
Name
Directors
RM Tyson
S Hadfield
C McGown
M L Kiernan
Number
granted during year
of
options
2008
2007
Number of options
vested during year
2007
2008
-
-
-
-
2,500,000
-
2,500,000
-
2,500,000
-
-
2,500,000
2,500,000
-
2,500,000
Other key management personnel
D Hocking
200,000
-
100,000
-
The assessed fair value at grant date of options granted to the individuals is allocated
equally over the period from grant date to vesting date and the amount is included in
18
Peel Exploration Limited Annual Report 2008
the remuneration tables above. Fair values at grant date have been determined using
Black-Scholes option pricing model that takes into account the exercise price, the term
of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk-free interest
rate for the term of the option.
The model inputs for options granted during year end 30 June 2008 included:
Underlying security spot price
Exercise price
Dividend rate
Standard deviation of returns (annualized)
Risk–free rate
Valuation date
Expiration date
Expiration period (years)
Black Scholes Valuation ($ per security)
Binomial Valuation ($ per security)
$0.185
$0.25
Nil
75%
6.97%
23 June 2008
30 November 2010
2.438
0.0750
0.0750
The terms and conditions of each grant of options affecting remuneration in the previous,
this or future reporting period is as follows:
Grant Date
8 March 2007
23 June 2008
Date Vested &
Exercisable
8 March 2007
23 June 2008 (50%)
23 June 2009 (50%)
Expiry Date
30 November 2010
30 November 2010
Exercise
Price
30 cents
25 cents
Value per Option at
Grant Date
4 cents
7 cents
No options were exercised by directors of Peel Exploration Limited or other key
management personnel during the year.
e) Additional Information
Details of remuneration: cash bonuses, options
No cash bonuses have been paid by the Company. For each grant of options included
in the table 2 on page 19, the percentage of grant that vested in the financial year, and
the percentage that was forfeited, is set out below:
Options
Name
RM Tyson
S Hadfield
M L Kiernan
D Hocking
Year
Granted
2007
2007
2007
2008
Vested
%
100%
100%
100%
50%
Forfeited
%
-
-
-
-
Share-based compensation: options
Financial
years in
which
options may
vest
-
-
-
30/06/09
Minimum
total value
of grant yet
to vest
$
nil
nil
nil
nil
Maximum
total value
of grant yet
to vest
$
-
-
-
7,500
Further details relating to options issued as compensation in the current year are set out
below:
19
Peel Exploration Limited Annual Report 2008
Name
D Hocking
A
Remuneration consisting of options
30.4%
B
Value at grant date
15,000
No options were exercised by directors of Peel Exploration Ltd or other key management
personnel during the year.
A =
B =
The percentage of the value of remuneration consisting of options, based on the
value of options expensed during the current year.
The value at grant date calculated in accordance with AASB 2 Share-based
Payment of options granted during the year as part of remuneration.
End of Audited Remuneration Report
Shares under option
Unissued ordinary shares of the Company under option at the date of this report are as
follows:
Date options granted
8.3.2007 (shareholders)
8.3.2007 (directors)
11.9.2007 (shareholders)
23.6.2008 (employees)
Expiry date
30.11.2010
30.11.2010
30.11.2010
30.11.2010
Issue price of shares
20 cents
30 cents
20 cents
25 cents
Total
Number under option
7,500,000
7,500,000
14,973,250
600,000
30,573,250
No option holder has any right under the options to participate in any other share issue of
the company.
Shares issued on the exercise of options
The following ordinary shares of the Company were issued during the year ended 30 June
2008 on the exercise of options:
Exercise date
24 October 2007
Issue price of shares Number of shares issued
20 cents
Total
26,750
26,750
Indemnification and Insurance of Directors and Officers
During the financial year the Company paid a premium to insure the directors and
officers of the Company.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the
company or intervene in any proceedings to which the company is a party for the
purpose of taking responsibility on behalf of the company for all or any part of those
proceedings.
The company was not a party to any such proceedings during the year.
20
Peel Exploration Limited Annual Report 2008
Environmental Performance
Peel Exploration Limited 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
have been no significant known breaches of the licence conditions.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the
Corporations Act 2001 is included at the end of this financial report.
Auditor
BDO Kendalls Audit & Assurance (WA) Pty Ltd continues in office under section 327 of the
Corporations Act 2001.
Non-Audit Services
The company may decide to employ the auditor on assignments additional to their
statutory audit duties where the auditor’s expertise and experience with the company
are important. Please refer to Note 14 in the Financial Report for details of non-audit
services provided.
This report is made in accordance with a resolution of the Board of Directors:
Simon Hadfield
Chairman of Directors
Perth, Western Australia,
Dated on this the 30th day of September 2008.
21
Peel Exploration Limited Annual Report 2008
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
NOTE
2008
$
2007
$
Continuing operations
Revenue
3
164,472
13,461
Share-based remuneration to employees and directors
Exploration expenditure written-off
Administration expenses
(45,000)
(558,920)
(318,200)
(322,500)
(56,719)
(43,966)
Loss before income tax expense
(757,648)
(409,724)
Income tax expense
Loss for the year
4
-
-
(757,648)
(409,724)
Basic and diluted loss per share (cents per share)
21
(0.02)
(0.40)
The above income statements should be read in conjunction with the accompanying notes.
22
Peel Exploration Limited Annual Report 2008
BALANCE SHEET
AS AT 30 JUNE 2008
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Plant and equipment
Exploration licenses
NOTE
2008
$
2007
$
5
6
7
8
9
2,030,930
24,478
2,656,920
22,850
2,055,408
2,679,770
60,000
84,754
-
40,000
1,676
11,425
TOTAL NON-CURRENT ASSETS
144,754
53,101
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL EQUITY
2,200,162
2,732,871
10
88,545
26,197
88,545
26,197
88,545
26,197
2,111,617
2,706,674
2,766,921
(1,172,536)
517,232
2,799,062
(414,888)
322,500
2,111,617
2,706,674
11
12
12
The above balance sheets should be read in conjunction with the accompanying notes.
23
Peel Exploration Limited Annual Report 2008
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
Attributable to equity holders of the company
Contributed
equity
Accumulated
losses
$
$
Reserves
$
Total
equity
$
At 1 July 2006
Loss for the year
Issue of share capital
Share issue expenses
Share-based payments
2,100
-
3,032,700
(235,738)
-
(5,164) -
-
-
-
(409,724)
-
-
-
322,500
(3,064)
(409,724)
3,032,700
(235,738)
322,500
At 30 June 2007
2,799,062
(414,888)
322,500
2,706,674
Loss for the year
Issue of share capital
Issue of share options
Exercise of options
Share issue expenses
Share-based payments
-
5,350
-
268
(37,759)
-
(757,648)
-
-
-
-
-
-
-
150,000
(268)
-
45,000
(757,648)
5,350
150,000
-
(37,759)
45,000
At 30 June 2008
2,766,921
(1,172,536)
517,232
2,111,617
The above statements of changes in equity should be read in conjunction with the accompanying notes.
24
Peel Exploration Limited Annual Report 2008
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
Cash flows from operating activities
Payments to suppliers and employees
Interest received
NOTE
2008
$
2007
$
(799,715)
164,472
(101,338)
13,461
Net cash outflow from operating activities
20
(635,243)
(87,877)
Cash flows from investing activities
Payments for mineral exploration expenditure
Payment of security deposits
Payments for purchase of plant and equipment
-
(20,000)
(88,338)
(8,205)
(40,000)
(1,676)
Net cash outflow from investing activities
(108,338)
(49,881)
Cash flows from financing activities
Proceeds from issues of shares and options
Transaction costs of issue of shares
Loans to other parties
Proceeds from borrowings
155,350
(37,759)
-
-
3,032,700
(235,738)
1,000
(4,372)
Net cash inflow from financing activities
117,591
2,793,590
Net (decrease) increase in cash and cash equivalents
(625,990)
2,655,832
Cash and cash equivalents at the beginning of the financial
year
2,656,920
1,088
Cash and cash equivalents at the end of the financial year
2,030,930
2,656,920
The above cash flow statements should be read in conjunction with the accompanying notes.
25
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1.
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report includes the financial statements for
Peel Exploration Limited (“the Company”).
Basis of preparation
(a)
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act
2001.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial statements and notes of Peel Exploration Limited comply with International
Financial Reporting Standards (IFRS).
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Revenue recognition
(b)
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the company and the revenue can be
is recognised.
reliably measured. The following specific recognition criteria must also be met before revenue
Interest income
Revenue is recognised as the interest accrues using the effective interest rate method.
Income tax
(c)
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets 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 utilised. A deferred income tax asset is not
recognised 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 or when the deductible temporary difference is associated with investments in
subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is
probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which
the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted at the balance date. Income taxes
relating to items recognised directly in equity are recognised in equity and not in the income statement.
Impairment of assets
(d)
At each reporting date, the company assesses whether there is any indication that an asset may be impaired. Where an indicator
of impairment exists, the company makes a formal estimate of recoverable amount. Where the carrying amount of an asset
exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless
the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows
that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined
for the cash-generating unit to which the asset belongs. The estimated future cash flows are discounted to their present value
using a pre tax discount rate reflecting current market assessments of the time value of money and the risks specific to the asset.
An impairment loss of $11,425 (2007: $Nil) has been recognised for the year ending 30 June 2008.
26
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
Cash and cash equivalents
(e)
For cash flow statement preparation purposes, cash and cash equivalents includes cash on hand and deposits held at call with
financial institutions. Bank overdrafts are shown within borrowings in the current liabilities of the balance sheet.
Trade and other receivables
(f)
Trade receivables, which generally have 30 to 90 day terms, are carried at nominal amounts due less an allowance for any
uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Company will not be
able to collect the debts. Bad debts are written off when identified.
(g) Other financial assets – security deposits
Security deposits are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market.
Fair value estimation
(h)
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due
to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.
Plant and equipment
(i)
All assets acquired, including plant and equipment are initially recorded at their cost of acquisition, being the fair value of the
consideration provided plus incidental costs directly attributable to the acquisition. Plant and equipment is included at cost less
provision for depreciation and any impairment in value and depreciated on a straight-line basis commencing from the time the asset
is held ready for use.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
Exploration and evaluation expenditure
(j)
Exploration licences are expensed through the profit and loss.
The company’s policy with respect to exploration expenditure is to write off all costs as incurred. Accordingly,
exploration expenditure of $558,920 (2007: $56,719) has been written off during the year. The decision to write off
exploration expenditure as incurred does not indicate any change in the board’s view of the intrinsic value of the mining
leases held by the company. Rather, the decision was taken, as it is the most prudent treatment available under current
accounting standards for such expenditure.
The carrying value of exploration and evaluation expenditure carried forward in respect of each area of interest is assessed for
impairment when facts and circumstances suggest the carrying amount may exceed its recoverable amount. Any resulting
impairment loss is recognised as an expense in the income statement.
Trade and other payables
(k)
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
(l)
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the
income statement over the period if the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled, or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income
or other expenses.
27
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
(m) 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. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not
included in the cost of the acquisition as part of the purchase consideration.
If the entity acquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted from equity
and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any
directly attributable incremental costs (net of income taxes) is recognised directly in equity.
Earnings per share
(n)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs
of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(o) Goods and services tax
Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is
not recoverable from the taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable is included as a
current asset in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from the taxation authority are classified as operating cash flows.
New accounting standards and interpretations
(p)
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting
periods. The Company’s assessment of the impact of these new standards and interpretations is set out below:
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8
Effective for annual reporting period commencing on or after 1 January 2009. AASB 8 will result in a significant change
in the approach to segment reporting, as it requires adoption of a ‘management approach’ to reporting on financial
performance. The information being reported will be based on what the key decision makers use internally for evaluating
segment performance and deciding how to allocate resources to operating segments. The Company will adopt AASB 8
from 1 January 2009, but, at this stage, application is not expected to affect any amounts disclosed in the financial
statements.
(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from
AASB 123
Applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the option to expense all
borrowing costs and – when adopted – will require the capitalisation of all borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset. There will be no impact on the financial statements of the
Company as it has no borrowings currently.
(iii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian Accounting
Standards arising from AASB 101(Issued September 2007)
Applicable for annual reporting periods beginning on or after 1 January 2009. It requires the presentation of a statement of
comprehensive income and makes changes to the statement of changes in equity, but will not affect any of the amounts
recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified items in the
financial statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the
beginning of the financial period. The Company intends to apply the revised standard from 1 January 2009.
28
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
No initial application of any other issued and effective Australian Accounting Standard has had any significant effect on the
current period or any prior period. Furthermore, no other new Australian Accounting Standard, which has been issued but is not
yet effective, is expected to have any significant effect on a future reporting period.
FINANCIAL RISK MANAGEMENT
2.
The net fair values of financial assets and financial liabilities approximate their carrying values, as disclosed in the
balance sheet. The maximum exposure to credit risk at balance date is the carrying amount of financial assets (i.e., cash
and receivables) as disclosed in balance sheet and notes to the financial statements. The company’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 on classes of financial assets and financial liabilities is as follows:
2008
Financial assets & liabilities
Cash and cash equivalents
Receivables – current
- non-current
Creditors & accruals
Weighted average interest rate
2007
Financial assets & liabilities
Cash and cash equivalents
Receivables – current
- non-current
Creditors & accruals
Weighted average interest rate
Fixed interest rate
maturing within 1 year
$
Non-interest
bearing
$
Total
$
52,998
24,478
60,000
(88,545)
48,931
43,460
22,850
40,000
(26,197)
80,113
2,030,930
24,478
60,000
(88,545)
2,026,863
2,656,920
22,850
40,000
(26,197)
2,693,573
1,977,932
-
-
-
1,977,932
7.20%
2,613,460
-
-
-
2,613,460
6.18%
During the financial years under review, the only financial risks of any significance to which the company was exposed
were:
(cid:131) Cash flow interest rate risk on cash and cash equivalents;
(cid:131) Credit risk on cash and cash equivalents;
(cid:131) Liquidity risk; and
(cid:131) Fair value estimation risk.
Cash flow interest rate risk on cash and cash equivalents
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. If interest rates had been 100
basis points higher/lower during the current year, the loss for the company would have been $22,943 lower/higher.
Credit risk
At all times during the financial years under review the company’s cash and cash equivalents maintained at bank or on
fixed term deposit were invested with the National Australia Bank Limited. The board considers this entity to have
sufficient financial strength to minimise the credit risk exposure of the company and, to date, has not seen fit to diversify
its investments.
Liquidity risk
The company is exposed to liquidity risk to the extent that it has inadequate capital to undertake its business objectives,
or to the extent that the available capital, which is adequate in amount, has been in vested in a manner that precludes the
payment of creditors in a timely fashion. The board constantly monitors the adequacy of capital and the manner in which
it is invested. The company has no financial liabilities maturing greater than 6 months from the reporting date.
Fair value estimation risk
29
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
Fair value estimation risk applies to all receivable and payables balances, plus the plant & equipment held for operational
purposes. In all cases, the carrying values of these assets and liabilities, as disclosed in the balance sheet, approximate
their fair values.
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% (2007: 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
2008
$
164,472
-
-
-
2007
$
13,461
-
-
-
(757,648)
(409,724)
(227,294)
(122,917)
13,500
213,794
-
96,750
26,167
-
The company has tax losses arising in Australia of $138,604 (2007: $29,595) 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 $11,328 (2007: $70,721).
5. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Term deposit with a financial institution
The above figures agree to cash and cash equivalents at the end of the
financial year as shown in the statement of cash flows.
The deposit is bearing a fixed interest rate of 7.20% (2007: 6.18%) and
carries a 30 day term.
52,998
1,977,932
2,030,930
43,460
2,613,460
2,656,920
6. TRADE AND OTHER RECEIVABLES
GST recoverable from taxation authority
7. RECEIVABLES (NON-CURRENT)
Security deposits on mining tenements
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
24,477
22,850
60,000
40,000
90,014
5,260
84,754
1,676
88,338
(5,260)
84,754
1,676
-
1,676
-
1,676
-
1,676
30
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
9. EXPLORATION LICENCES
Opening balance
Payment of exploration licences
Written of during year
Closing balance
10. TRADE AND OTHER PAYABLES
Trade payables
Other payables
11. CONTRIBUTED EQUITY
(a) Share capital
2008
$
11,425
-
(11,425)
-
88,545
-
88,545
2007
$
3,220
8,205
-
11,425
23,197
3,000
26,197
30,026,750 (2007: 30,000,000) ordinary shares fully paid
2,766,921
2,799,062
(b) Movements in ordinary share capital
Balance 1 July 2006
Share issued as seed capital 17 July 2006
Share issued as seed capital 27 February 2007
Share issued pursuant to IPO 11 May 2007
Transaction costs on share issues
Balance 30 June 2007
Shares
2,100,000
2,700,000
10,200,000
15,000,000
-
30,000,000
$
2,100
20,700
12,000
3,000,000
(235,738)
2,799,062
Shares issued as result of exercise of options 24 October
2007
Initial cost of options exercised on 24 October 2007
Transaction costs on share issues
Balance 30 June 2008
26,750
5,350
-
-
30,026,750
268
( 37,759)
2,766,921
(c) Ordinary shares
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 12.
(e) Capital Risk Management
In employing its capital (or equity as it is referred to on the balance sheet) the company seeks to ensure that it
will be able to continue as a going concern and in time provide value to shareholders by way of increased
market capitalisation or dividends. In the current stage of its development, the company has invested its
available capital in acquiring and exploring mining tenements. As is appropriate at this stage, the company is
funded entirely by equity.
As it moves forward to develop its tenements towards a production stage, the company will adjust its capital
structure to support its operational and strategic objectives, by raising additional capital or taking on debt, as is
seen to be appropriate from time to time given the overriding objective of creating shareholder value. In this
regard, the board will consider each step forward in the development of the company on its merits and in the
context of the then capital markets, in deciding how to structure capital raisings.
31
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
12. RESERVES
(i) Accumulated losses
Balance 1 July
Loss for the year
Balance 30 June
(ii) Share-based payments reserve
Balance 1 July
Option expenses (payment on shareholder options)
Option expenses (employee options)
Option expenses (director options)
Balance 30 June
2008
$
(414,888)
(757,648)
(1,172,536)
322,500
149,732
45,000
-
517,232
2007
$
(5,164)
(409,724)
(414,888)
-
-
-
322,500
322,500
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 1 July 2006
Issued to Shareholders on 8 March 2007
Issued to Directors on 8 March 2007
Balance 30 June 2007
Issued to Shareholders on 11 September 2007
Issued to employees on 23 June 2008
Options exercised during year
Balance 30 June 2008
Options
- exercisable at 20 cents each on or before 30 November 2010
- exercisable at 30 cents each on or before 30 November 2010
- exercisable at 20 cents each on or before 30 November 2010
- exercisable at 25 cents each on or before 30 November 2010
$
-
-
322,500
322,500
150,000
45,000
(268)
517,232
Options
-
7,500,000
7,500,000
15,000,000
15,000,000
600,000
(26,750)
30,573,250
7,500,000
7,500,000
14,973,250
600,000
30,573,250
Model inputs for the employee options granted during the year ended 30 June
2008 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)
$0.185
$0.25
Nil
75%
6.97%
23 June 2008
30 November 2010
2.438
0.075
0.075
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.
32
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
13. KEY MANAGEMENT PERSONNEL DISCLOSURES
Details of key management personnel
Executive Director
R Tyson
Non-executive directors
S Hadfield
C McGown (appointed 1 February 2008)
M Kiernan (resigned 20 February 2008)
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 during the financial year:
D Hocking, Company Secretary and Corporate Accountant
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2008
$
168,757
12,231
-
15,000
195,988
2007
$
9,625
-
-
322,500
332,125
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 shares issued on the exercise of such options, together with terms and
conditions of the options, can be found in note 12.
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 2008
Directors
R Tyson
M Kiernan
S Hadfield
C McGown
Other key
management
personnel
D Hocking
Balance at
the start of
the year
Granted as
compensation
Granted,
non-
compensation Exercised
Balance at
end of the
year
Vested and
exercisable Unvested
3,750,000
4,000,000
3,550,000
-
-
-
-
-
1,372,874
1,622,874
1,172,873
-
-
-
-
-
5,122,874
5,622,874
4,722,873
-
5,122,874
5,622,874
4,722,873
-
-
-
-
-
-
200,000
-
-
200,000
100,000
100,000
All vested options are exercisable at the end of the year.
33
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
13. KEY MANAGEMENT PERSONNEL DISCLOSURES (Continued)
30 June 2007
Directors
R Tyson
M Kiernan
S Hadfield
N Hadfield
Other key
management
personnel
D Hocking
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
4,000,000
3,550,000
50,000
3,750,000
4,000,000
3,550,000
50,000
-
-
-
-
-
-
-
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.
Share holdings of key management personnel
Shares in Peel Exploration Limited (number)
30 June 2008
Directors
R Tyson
M Kiernan
S Hadfield
C McGown
Other key management
personnel
D Hocking
Balance at
1 July 2007
2,500,000
3,000,000
2,100,000
-
Received during
the year on the
exercise of options
Other changes
during the year
Balance at
30 June 2008
-
-
-
-
98,750
-
-
-
2,598,750
3,000,000
2,100,000
-
-
-
-
-
Shareholdings for Mr M L Kiernan are up to the date of resignation as a director on 20 February 2008. There were no shares
issued during the year.
Of the balance at 30 June 2008, the amounts held nominally in respect of each director are: R Tyson 2,100,000; M Kiernan
3,000,000 and S Hadfield 1,100,000.
30 June 2007
Directors
R Tyson
M Kiernan
S Hadfield
N Hadfield
Balance at
1 July 2006
1,000,000
-
1,000,000
-
Other key management
personnel
D Hocking
-
Received during
the year on the
exercise of options
Other changes
during the year
Balance at
30 June 2007
-
-
-
-
-
1,500,000
3,000,000
1,100,000
100,000
2,500,000
3,000,000
2,100,000
100,000
-
-
Of the balance at 30 June 2007, the amounts held nominally in respect of each director are: R Tyson 2,100,000; M
Kiernan 3,000,000 and S Hadfield 1,100,000.
34
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
13. KEY MANAGEMENT PERSONNEL DISCLOSURES (Continued)
Other transactions with key management personnel
A director, S Hadfield, is a director of Resource Information Unit Pty Ltd (RIU). RIU provides head office accommodation and
secretarial services and charges the Company management fees on a monthly basis. Total fees charged to the Company by RIU
for the year ended 30 June 2008 were $24,097 (2007: $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 2008 totalled $34,300 (2007: $9,625). This amount has been included on the income statement within
administration expenses. A payable to D Hocking of $10,250 is included on the balance sheet within trade and other payables
for accounting services received but unpaid as at year end.
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 services
2008
$
24,097
34,300
58,397
2007
$
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
10,250
7,625
14. REMUNERATION OF AUDITORS
Amounts paid or due and payable to the auditors BDO Kendalls for:
Auditing or reviewing the financial report
Other services – consulting
15,736
10,463
26,199
7,750
-
7,750
15. CONTINGENCIES
The Company had no contingent assets or liabilities for the years ended 30 June 2008 and 2007.
16. 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.
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
2008
$
154,640
361,740
-
516,380
2007
$
196,500
106,500
-
303,000
17. SEGMENT INFORMATION
The consolidated entity operates predominantly in one business and geographical segment, being mineral exploration in
Australia, and all of the assets of the consolidated entity are deployed for these purposes.
35
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
18. RELATED PARTIES
Transactions with related parties
During the year there were no transactions with related parties other than the transactions shown in note 13.
19. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
The company has proposed, subject to shareholder approval at the AGM, to issue 1,000,000 options to C McGown exercisable
at anytime on or before 30 April 2011 at an exercise price of 30cents.
Other than as disclosed above 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 2008.
20. RECONCILIATION OF NET CASH OUTFLOW FROM
OPERATING ACTIVITIES TO LOSS AFTER INCOME TAX
Net cash outflow from operating activities
(635,243)
(87,877)
2008
$
2007
$
Share-based payments
Depreciation
Exploration licence fees written off
Changes in operating assets and liabilities
Increase in receivables
Increase in payables
Loss after income tax
21. EARNINGS PER SHARE
Basic earnings per share
Loss from continuing operations attributable to the ordinary equity
holders of the Company
(45,000)
(5,260)
(11,425)
(322,500)
-
-
1,628
(62,348)
21,850
(21,197)
(757,648)
(409,724)
2008
Cents
2007
Cents
(0.2)
(4.0)
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 earnings per share
Basic earnings per share
Loss from continuing operations and attributable to the
ordinary equity holders of
in
calculating basic earnings per share
the Company used
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
2008
$
2007
$
(757,648)
(409,724)
2008
2007
30,018,322
10,200,000
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.
36
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
22. SHARE-BASED PAYMENTS
Employee option plan
An employee option plan, designed to provide long-term incentives for senior employees to deliver long-term shareholder
returns, was established in June 2008. The plan will be placed before shareholders for approval at the next annual general
meeting. Under the plan, participants are granted options of which 50% are vested immediately and the remainder after 12
months employment with the Company.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share at an exercise price of 25 cents.
Set out below are summaries of options granted under the plan
30 June 2008
Grant date
Expiry date
Exercise
price
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
23 June 2008
30 November
2010
$0.25
-
600,000
-
600,000
300,000
The remaining contractual life of share options outstanding at the end of the period was 2 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 2008 was $0.075 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 2008 have been included in note 12.
30 June 2007
Grant date
Expiry date
Exercise
price
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
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
Options issued to employees
2008
$
-
45,000
45,000
2007
$
322,500
-
322,500
37
Peel Exploration Limited Annual Report 2008
Notes to the Accounts for the year ended 30 June 2008
Directors’ Declaration
The Board of Directors of Peel Exploration Limited declares that:
(a) the financial statements and associated notes and the additional disclosures 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 2008 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 in the Directors’ Report comply with Accounting Standards AASB 124
Related Party Disclosures and the Corporations Regulations 2001; and
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..
S. Hadfield
Chairman of Directors
Perth
30 September 2008
38
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
PO Box 700
WEST PERTH WA 6872
Phone 61 8 9380 8400
Fax 61 8 9380 8499
aa.perth@bdo.com.au
www.bdo.com.au
ABN 79 112 284 787
24 September 2008
The Directors
Peel Exploration Limited
Level 1, 79 Hay Street
Subiaco, WA 6008
Dear Sirs
DECLARATION OF INDEPENDENCE BY GLYN O’BRIEN TO THE DIRECTORS OF PEEL
EXPLORATION LTD
As lead auditor of Peel Exploration Limited for the year ended 30 June 2008, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
• any applicable code of professional conduct in relation to the audit.
Glyn O’Brien
Director
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Perth, Western Australia.
BDO Kendalls is a national association of
separate partnerships and entities
39
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
PO Box 700
WEST PERTH WA 6872
Phone 61 8 9380 8400
Fax 61 8 9380 8499
aa.perth@bdo.com.au
www.bdo.com.au
ABN 79 112 284 787
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PEEL EXPLORATION LIMITED
We have audited the accompanying financial report of Peel Exploration Limited, which
comprises the balance sheet as at 30 June 2008, and the income statement, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes
establishing and maintaining internal controls relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards ensures that the financial
report, comprising the financial statements and notes, complies with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial report in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
BDO Kendalls is a national association of
separate partnerships and entities
40
Auditor’s Opinion
In our opinion:
(a)
the financial report of Peel Exploration Limited is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the company’s financial position as at 30 June 2008
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including
Accounting Interpretations) and the Corporations Regulations 2001; and
the Australian
(b)
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended
30 June 2008. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations
Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report included in the Directors’ Report of Peel Exploration
Limited for the year ended 30 June 2008, complies with section 300A of the Corporations Act
2001.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Glyn O’Brien
Director
Signed at Perth, Western Australia
Dated this 24th day of September 2008.
41
Peel Exploration Limited Annual Report 2008
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 web-site at www.peel.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 one of whom is 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.
Mr Craig McGown who is a non-executive director and does not hold shares in the Company is
an independent director under the ASX recommended principles in relation to the assessment
of the independence of directors.
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.
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
42
Peel Exploration Limited Annual Report 2008
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.
The company has established policies for the oversight and management of material business
risk.
Board Committees
Whist 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 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 policies.
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.
43
Peel Exploration Limited Annual Report 2008
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.
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 Kendall’s 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 web-
site 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 web-site. 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 web-
site.
44
Peel Exploration Limited Annual Report 2008
Information relating to shareholders at 22 September 2008.
Substantial shareholders
1
2
3
4
5
6
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
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999
Total
No. of Holders
-
19
88
302
27
436
Twenty largest shareholders
Holder
No. Ord Shares
3,000,000
3,000,000
2,598,750
2,100,000
1,500,000
1,500,000
No. Ord Shares
-
54,383
848,593
9,444,544
19,679,230
30,026,750
%
10.0
10.0
8.3
7.0
5.0
5.0
%
-
0.18
2.83
31.45
65.54
100.0
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Crawley Investments Pty Ltd
Laurence James Kiernan
Robert MacLaine Tyson
Lisa Duperouzel
Linda Sala Tenna
Salamar Pty Ltd
Simon Hadfield
ANZ Nominees Limited
Blue Crystal Pty Ltd
Classic Capital Pty Ltd
Ron & Liz Nominees Pty Ltd (Ronald James Super
KB33 Capital Pty Ltd
Jordan and Flynn Tyson
Rodney Malcolm Jones + Carol Robin Jones
(Hoperidge Enterprises Pty Ltd Super a/c)
Paul Hodder + James Ramsay + Daniel Foster (Delta
Blue Investments a/c)
Hoperidge Enterprises Pty Ltd (Jones Family a/c)
Scott Paul Jones + Rodney Malcolm Jones + Carol
Robin Jones (Scopa Family a/c)
Wonder Holdings Pty Ltd
Stephen James Lambert + Ruth Lynette Lambert +
Simon Lee Lambert (Lambert Retirement a/c)
MAJ Pty Ltd (Wallace Super Fund a/c)
No.Ord
Shares
3,000,000
3,000,000
2,100,000
1,500,000
1,500,000
1,100,000
1,000,000
605,010
600,000
500,000
450,000
425,000
400,000
305,000
300,000
300,000
300,000
290,000
275,000
%
10.00
10.00
7.00
5.00
5.00
3.67
3.33
2.01
2.00
1.67
1.50
1.42
1.33
1.02
1.00
1.00
1.00
0.97
250,000
18,200,01
0.83
60.63
45
Peel Exploration Limited Annual Report 2008
At the prevailing market price of $0.20 per Share there were six Shareholders with less than a
marketable parcel of $500 at 22 September 2008.
Distribution of Optionholders
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999
Total
No. of Holders
5
69
130
121
22
No. Ord Shares
3,635
317,135
1,077,071
3,418,161
10,157,248
347
14,973,250
%
0.02
2.12
7.19
22.83
67.84
100.00
Twenty largest Optionholders
1.
2.
3.
4.
5.
6.
7.
8.
9.
10..
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Holder
Crawley Investments Pty Ltd
Laurence James Kiernan
Robert MacLaine Tyson
Lisa Duperouzel
Linda Sala Tenna
Salamar Pty Ltd
Simon Hadfield
Classic Capital Pty Ltd
ANZ Nominees Limited
Blue Crystal Pty Ltd
Hoperidge Enterprises Pty Ltd (Jones Family a/c)
Ron & Liz Nominees Pty Ltd (Ronald James Super
Fund a/c)
KB33 Capital Pty Ltd (Charity a/c)
Jordan + Flynn Tyson
Paul Hodder + James Ramsay + Daniel Foster (Delta
Blue Investments a/c)
Scott Paul Jones + Rodney Malcolm Jones + Carol
Robin Jones (Scopa Family a/c)
Wonder Holdings Pty Ltd
Gratitude Holdings Pty Ltd (Swarts Investment a/c)
MAJ Pty Ltd (Wallace Super Fund a/c)
Dennis Ivan Rakich (The Rakich Retirement a/c)
Options
1,622,874
1,622,874
1,172,874
750,000
750,000
672,873
500,000
495,748
302,505
300,000
265,000
225,000
212,500
200,000
150,000
150,000
145,000
135,000
125,000
125,000
9,922,248
%
10.84
10.84
7.83
5.01
5.01
4.49
3.34
3.31
2.02
2.00
1.77
1.50
1.42
1.34
1.00
1.00
0.97
0.90
0.83
0.83
66.25
At the prevailing price of $0.06 per Option there were one hundred and sixty one Optionholders
with less than a marketable parcel of $500 at 22 September 2008.
At 23 September 2008 there were 436 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 (17 May 2007) -
13,929,950
• 30 November 2010 20c Options restricted for 24 months from date of issue (7 March 2007) –
7,000,000
• 30 November 2010 30c Options restricted for 24 months from date of issue (8 March 2007) –
7,500,000
46
Peel Exploration Limited Annual Report 2008
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 od 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.
47