Annual Report
for the Financial Year ended 30 June 2009
PEEL EXPLORATION LIMITED
& CONTROLLED ENTITIES
ABN 42 119 343 734
1
Peel Exploration Limited Annual Report 2009
Corporate Directory
Directors
Share Registry
Simon Hadfield – Chairman
Rob Tyson – Executive Director
Craig McGown – Non-executive Director
Computershare Investor Services
Level 2, 45 St Georges Tce
PERTH WA 6000
Telephone: +61 (0)8 9323 2000
Facsimile: +61 (0)8 9323 2033
Company Secretary
Solicitors to the Company
Steinepreis Paganin
Lawyers and Consultants
Level 4, Next Building
16 Milligan Street
PERTH WA 6000
Auditors
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
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
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36
37
38
40
42
1
Peel Exploration Limited Annual Report 2009
Chairman’s Report
Dear Fellow Shareholders,
The global financial crisis over the past year has created an extremely challenging
environment for investors and the resources sector in general. Peel Exploration Limited is
fortunate in having a strong core project at our Attunga Tungsten Deposit, in northern
New South Wales.
During the year ended of 30 June 2009 your Company has made excellent progress
advancing the Attunga Tungsten Deposit, identifying a potentially relatively simple
process route for the recovery of scheelite concentrate from ore. Late in the financial
year, additional high-grade tungsten intercepts were returned from drilling offering
further encouragement regarding the exploration potential at Attunga.
Your Company was also buoyed by the significant discovery of copper-gold mineralisation
at the nearby Attunga Copper Mine. The intercept of 75m at 1.02 g/t gold, 0.87% copper,
0.09% molybdenum, 0.06% bismuth and 22 g/t silver from 136m is extremely
encouraging for the longer term prospectivity at Attunga.
Elsewhere, Peel has remained vigilant to exploration opportunities and most recently has
conditionally agreed to acquire the historic May Day gold-base metal deposit near Cobar.
May Day has significant gold-base metal mineralisation immediately below a shallow,
historic open pit. Peel believes that May Day offers a potentially rapid path to
production and cash flow, benefiting from its situation on a granted mining lease
located in one of Australia’s major mining districts.
Whilst it is too early to say that the world is entering a phase of recovery and growth, it is
clear that companies with strong projects in advanced stages of exploration will be in the
best position to benefit from improving economic circumstances. Peel is positioning itself
in anticipation of better times.
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 Oates and Steve Leggett who have helped to manage our exploration
programmes.
Finally I would like to thank our shareholders for their continued support.
Yours sincerely
Simon Hadfield
CHAIRMAN
th
30 September 2009
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Peel Exploration Limited Annual Report 2009
Review of Operations
Background
Peel Exploration Limited is focused on precious, base and specialty metals exploration
predominantly in the New England region of New South Wales, Australia. Since listing in
May 2007, Peel has identified and acquired several valuable mineral projects in New
South Wales, close to excellent infrastructure.
At September 2009, Peel Exploration held five separate mineral projects covering
approximately 470 km2 of granted exploration licences, all located in New South Wales,
Australia. The most advanced of these projects and the focus of the Company is the
Attunga Project, located approximately 20 kms north of Tamworth.
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.
EL6722 - Armidale contains several historic silver mines along with numerous
•
gold, antimony, tungsten and molybdenum workings.
EL7272 - Mt Tennyson East 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.
EL7356 - Yerranderie contains the historic Yerranderie silver field area. Literature
•
searches indicate that substantial amounts of silver-lead-gold mineralisation remain
present in surface waste and tailings dumps at Yerranderie. Peel plans to investigate the
potential to retreat and remediate the Yerranderie environs.
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Peel Exploration Limited Annual Report 2009
Details on Assets
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 three specific areas of interest: the Attunga
Tungsten Deposit area; the Attunga Copper Mine prospect and the Kensington gold-
tungsten prospect. The Attunga Project area is considered prospective for tungsten-
molybdenum skarn-type mineralisation, base/precious metal skarn-type mineralisation,
and gold (+/-tungsten) intrusive-related gold system type mineralisation.
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 tungsten resource. Subsequent
explorers considered that a larger resource of lower grade material was present. 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, powellite and molybdenite; primarily within skarn, monzonite and a
fine-grained contact rock that Geopeko termed “scheelite rock”. Minor mineralisation also
occurs in hornfels, calc-silicate hornfels and marble.
In September 2007, Peel 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 drillcore 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).
In October 2007, during Peel’s programme of relogging and assaying/reassaying historic
drillcore, previously unrecognised high-grade 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 AP1-23. 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.
In April 2008, Peel 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, Peel completed two RC drillholes (ATP1-D & ATP1-G) as partial fulfillment of
an extensional and infill drilling programme designed by Geos Mining. Peel’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.
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Peel Exploration Limited Annual Report 2009
In August 2008, Peel 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 a very
high grade interval of 2m at 24.21% WO3 and 1.71% Mo from 22m downhole. Drillhole
ATP1-G returned an intersection of 10m at 0.27% WO3 and 0.04% Mo from 39m
downhole. Also in August 2008, Peel engaged NAGROM, metallurgical consultants, to
complete Phase 1 metallurgical testwork.
During the March quarter 2009, Phase 1 metallurgical testwork results were finalised with
high grade WO3 concentrate products derived along with a potential process flowsheet.
The key outcomes from the work done are:
•
•
•
•
•
Scheelite grain size at Attunga is predominantly greater than 0.1 mm (100
micron).
Grind size fraction of +75 to -125 micron yielded 80% recovery of WO3 to 16%
of original circuit mass via conventional gravity (spirals) primary concentration.
Magnetic properties of gangue material (garnet) offers additional simple primary
concentration route. The grind size fraction +75 to -125 micron gravity (spirals)
concentrates were successfully upgraded via magnetic rollers to a 47% WO3
grade concentrate with 79% overall recovery of WO3.
Flotation testwork on tails and fines (-75 micron), and cleaner work/ore dressing
of spiral concentrate/magnetic separation products yielded positive upgrade and
recovery of WO3 content.
Molybdenum is predominantly held chemically in scheelite, as powellite solid
solution. Cursory leach work of fine ground concentrate product has shown
potential for the separation of WO3 and molybdenum.
Metalurgical testwork completed to date was derived from RC drill cuttings which are not
considered optimum for metallurgical work. Notwithstanding this fact, Peel is very
encouraged by the results of Phase 1 testwork.
The potential process flow sheet identified would involve staged crushing and grinding,
conventional gravity concentration (spirals), drying of gravity concentrates, removal of
magnetic gangue material via magnetic circuit, and flotation of fine (-75 micron) spiral
tails. Secondary processing/mineral dressing would involve further flotation work.
In June 2009, Peel announced that drilling at Attunga had returned new high grade
tungsten intercepts including 27m at 0.54% WO3 and 0.06% Mo from 19m (including 2m
at 3.38% WO3 and 0.27% Mo) from 22m in RC drillhole AP1-026, and 2m at 0.59% WO3
and 0.03% Mo from 58m in RC drillhole AP1-027.
The true width of the mineralisation encountered in AP1-026 is estimated to be about 25-
30% of the downhole width, and is unknown for AP1-027. Drillhole AP1-026 was one of
three extensional drillholes completed at the Attunga Tungsten Deposit. These holes were
designed to test for northern and down-dip extensions to the current resource. Peel is
encouraged by the mineralisation encountered; particularly the shallow nature as defined
in AP1-026, and believes that good potential exists to delineate additional mineralisation
at the Attunga Tungsten Deposit.
Several scheelite-bearing skarn prospects analogous to the Attunga Tungsten Deposit
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.
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Peel Exploration Limited Annual Report 2009
Peel has 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.
Attunga Copper Mine
The Attunga Copper Mine, located about 800m north of the Attunga Tungsten Deposit
was discovered in 1902 and worked over various periods up until World War 2. The
prospect had been held under licence since 1968 but reverted back to Peel’s tenure in
February 2009.
Total recorded production was about 1,600t ore grading ~6% copper, ~8 g/t gold and
~150 g/t silver. Other significant metals present include bismuth, molybdenum and
tungsten. Workings comprised pits, shafts and levels and extended to about 80m below
surface with sulphide mineralisation including chalcopyrite and chalcocite reported to
occur in the deeper levels.
Mineralisation at the Attunga Copper Mine occurs in a garnet skarn similar to that at the
Attunga Tungsten Deposit indicating that the deposits are genetically-related. Modern
exploration had been very limited, however an IP survey completed in the mid-1980s
defined multiple anomalies with only very shallow airtrac drilling (deepest hole = 14m)
ever completed.
In April 2009, Peel completed a transient electromagnetics (TEM) survey with results
suggesting that the presence of a moderate, shallow conductor, centred approximately
200m north of the historic Attunga Copper Mine workings.
In May 2009, Peel announced the discovery of strong polymetallic (copper-gold
dominant) mineralisation at the Attunga Copper Mine. Drillhole ACM-004 returned 75m at
1.02 g/t gold, 0.87% copper, 0.09% molybdenum, 0.06% bismuth, and 22 g/t silver
from 136m including 27m at 1.60 g/t gold, 1.66% copper, 0.18% molybdenum, 0.1%
bismuth, and 39 g/t silver from 136m. Drillhole ACM-4 is one of six drillholes that Peel
has just completed to test the Attunga Copper Mine area. ACM-4 was designed to test an
historic IP anomaly located to the south of the historic workings and intersected
mineralisation is interpreted to be sub-vertical in geometry. The true width of the above
intervals is construed to be approximately 25% of the downhole intercepts.
Results for other drillholes in the Attunga Copper Mine area yielded significant
mineralisation in several drillholes with several drillholes experiencing difficult drilling
conditions in alteration clays and not reaching target depths.
The discovery at the Attunga Copper Mine supports Peel’s belief that the Attunga skarn
deposits are part of a
including a
porphyry/mineralised granite source.
larger metalliferous system, possibly
Kensington gold prospect
The Kensington gold 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. Peel 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 large low grade tungsten resource was estimated by
a previous explorer. In 1987 diamond drilling by Challenger Mining intersected extensive
low-grade gold mineralisation, however this work was not tested for tungsten. Drillholes
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Peel Exploration Limited Annual Report 2009
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, metasediments and lamprophyre.
In March 2008, Peel 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.
In July 2008, Peel 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.
In September 2008, Peel announced that RC drilling completed at Kensington had
encountered widespread gold mineralisation. Highly anomalous to low-grade gold
mineralisation was intersected in all drillholes.
In May 2009, Peel completed one RC drillhole at the Kensington gold prospect. The
drillhole was designed to test a shallow, chargeable anomaly defined from a recent IP
survey. Ken-10 intercepted wide zones of low grade gold mineralisation within a package
of sediments that included carbonaceous shale.
Peel believes that Kensington holds good potential to host a significant gold system with
mineralisation remaining open.
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.
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
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Peel Exploration Limited Annual Report 2009
with data interpretation completed mid-2008. In 2009, Peelex completed field
investigations of geophysical anomalies. No significant results were returned.
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.
During the year Peelex completed field investigations at Taits Gully including surface
geochemical sampling utilising a field portable XRF (Niton). Only low order results were
returned.
EL7272 - Mt Tennyson East
EL7272 – 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.
No field work was completed during the year
EL7356 - Yerranderie
EL7356 – Yerranderie project - contains the historic Yerranderie silver field area.
Literature searches indicate that substantial amounts of silver-lead-gold mineralisation
remain present in surface waste and tailings dumps at Yerranderie. Peel plans to
investigate the potential to retreat and remediate the Yerranderie environs.
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Peel Exploration Limited Annual Report 2009
Schedule of Tenements
New South Wales
Project
Number
Holder
Ownership
Expiry
Dungowan
EL6613
Peel Exploration Ltd
100%
21 August 2010
Armidale
EL6722
Peel Exploration Ltd
100%
25 February 2009
Attunga
EL6883
Peel Exploration Ltd
100%
21 September 2009
Attunga
EL6884
Peel Exploration Ltd
100%
21 September 2009
Mt Tennyson
East
EL7272
Peel Exploration Ltd
100%
20 January 2011
Yerranderie
EL7356
Peel Exploration Ltd
100%
24 Jun 2011
Rob Tyson
Managing 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.
9
Peel Exploration Limited Annual Report 2009
Directors Report
Your directors present their report on the consolidated entity (referred to hereafter as “the Group”) comprising
Peel Exploration Limited and its 100% owned subsidiary Peel Energy Limited for the financial year ended 30
June 2009.
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
Directors’ Interests in Shares and Options
Directors’ interests in shares and options as at 30 June 2009 are set out in the table below.
Director
Shares Directly and Indirectly Held
Options
Simon Hadfield
Robert Tyson
Craig McGown
2,100,000
2,598,750
-
4,722,873
5,122,874
1,000,000
Activities
The continuing principal activity of the Group 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 Group for the financial year after providing for income tax amounted to $1,334,675 (2008:
$757,648).
Dividends
No dividends were paid or proposed during the year.
Review of Operations
A review of the operations of the Group during the financial year and the results of those operations are
contained in pages 3 to 9 in this report.
Corporate Structure
The Group comprises Peel Exploration Limited, a limited Company incorporated and domiciled in Australia and
its 100% owned subsidiary Peel Energy Limited also incorporated and domiciled in Australia. Peel Energy
Limited was incorporated on 14 January 2009.
Significant Changes
During the financial year the Peel Exploration Limited increased contributed equity by $135,000 through the
issue of 900,000 ordinary shares at $0.15 each. The cash received from the increase in contributed equity was
used principally to continue the company’s exploration program at its Attunga project.
The Directors are not aware of any other significant changes in the state of affairs of the Group occurring during
the financial year, other than disclosed in this report.
Matters Subsequent to the End of the Financial Period
(a) Non-renounceable entitlement issue
A prospectus for a pro-rata non-renounceable entitlement issue of one new share for every three shares held by
shareholders at an issue price of 10 cents to raise approximately $1,030,892 was despatched by the Company
to shareholders on 7 September 2009. The closing date of the offer is 25 September 2009. At that date the
Company had received acceptances for 3,293,400 shares raising $329,340.
10
Peel Exploration Limited Annual Report 2009
(b) Acquisition of new mining lease
The company has announced the details of a conditional agreement to acquire a 100% interest in the May Day
gold and base metal deposit from Imperial Corporation Ltd. The agreement is conditional on completion of due
diligence investigations and the renewal of Mining Lease 1361. Consideration for the acquisition is 2,750,000
fully paid ordinary shares in Peel Exploration Limited.
Other than these matters, there were at the date of this report no other matters or circumstances which have
arisen since 30 June 2009 that have significantly affected or may significantly affect:
i)
ii)
iii)
the operations of the Group;
the results of those operations; or
the state of affairs of the Group.
Likely Developments and Expected Results
As the Group’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
Mr Tyson is a geologist with more than 15 years resources industry experience having worked in exploration
and mining-related roles for companies 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
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 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
Number
R Tyson
S Hadfield
C McGown
9
9
9
attended
9
9
9
Remuneration Report (Audited)
The remuneration report is set out under the following headings:
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.
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Peel Exploration Limited Annual Report 2009
a) Principles used to determine the nature and amount of remuneration
The objective of the remuneration framework of Peel Exploration Limited 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 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 group performance but rather towards generating future shareholder wealth
through share price performance. Peel Exploration Limited listed on 11 May 2007 at 20c per share and the
share price at 30 June 2009 was 16c (2008: 19c). The shares recorded high and low points of 26c and 15c
during the year, and are trading at 9c on 19th September 2009. The company has recorded a loss each financial
year to date as it carries out exploration activities on its tenements. No dividends have been paid.
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 2009 are set out in the following table.
Table 1: Director and senior executive remuneration
Short-Term Employment Benefits
Post
Employment
Long-
Term
Benefits
Share
Based
Payment
Cash
salary
and fees
Bonuses,
other
benefits
Consulting
Fees
Superannuation Long-
Options
Total % Perfor-
service
leave
mance
Related
2009
$
$
$
$
Directors
RM Tyson
S Hadfield
91,925
50,000
C McGown
50,000
Other
executives
D Hocking
62,400
Total
254,325
-
-
-
-
-
-
-
-
-
-
8,273
4,500
4,500
5,616
22,889
$
-
-
-
-
-
$
-
-
$
100,198
54,500
52,290
106,790
0%
0%
0%
-
68,016
0%
52,290
329,504
12
Peel Exploration Limited Annual Report 2009
Short-Term Employment Benefits
Post
Employment
Long-
Term
Benefits
Share
Based
Payment
Cash
salary
and fees
Bonuses,
other
benefits
Consulting
Fees
Superannuation Long-
Options
Total % Perfor-
service
leave
mance
Related
2008
$
$
$
$
$
$
$
Directors
RM Tyson
57,207
S Hadfield
36,656
C McGown
14,395
ML Kiernan
26,200
Other
executives
D Hocking
-
Total
134,457
-
-
-
-
-
-
-
-
-
-
5,149
3,299
1,425
2,358
34,300
-
34,300
12,231
-
-
-
-
-
-
-
-
-
-
62,356
39,955
16,753
28,558
0%
0%
0%
0%
15,000
49,300
0%
15,000
195,988
1. Options do not represent cash payments to Directors and executives and options granted may or may
not be exercised by the Directors and executives.
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 $100,198
(2008:$62,356) 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 $54,500
(2008:$39,955) 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 $106,790
(2008:$16,753) in his role as a director of the Company.
d) Share-based compensation
Directors
During the year options over one million shares in Peel Exploration Limited were granted to a director; Mr Craig
McGown. The options vested immediately and were granted for nil consideration pursuant to approval by
shareholders at the last Annual General meeting. The options are exercisable at 30cents at any time up to 30
April 2011. The assessed fair value of $52,290 is included in 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.
Employees
Options over shares in Peel Exploration Limited may be granted under the Peel Exploration Limited Employee
Option Plan which was created in June 2008 and approved by shareholders at 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.
13
Peel Exploration Limited Annual Report 2009
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
C McGown
Number
granted during year
of
options
Number of options
vested during year
2009
2008
2009
2008
1,000,000
-
1,000,000
-
Other key management personnel
D Hocking
-
200,000
100,000
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 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 terms and conditions of each grant of options affecting remuneration in the previous, this or future
reporting period is as follows:
Grant Date
Date Vested &
Exercisable
Expiry Date
Exercise
Price
Value per Option at
Grant Date
23 June 2008
23 June 2008 (50%)
30 November 2010
25 cents
7 cents
23 June 2009 (50%)
5 December 2008
5 December 2008
30 April 2011
30 cents
5 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 above, 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
D Hocking
C McGown
Year
Granted
2007
2007
2008
2009
Vested
Forfeited
%
100%
100%
50%
100%
%
-
-
-
-
Financial
years in
which
options
may vest
-
-
30/06/09
30/06/09
Minimum
total value
of grant yet
to vest
Maximum
total value
of grant yet
to vest
$
nil
nil
nil
nil
$
-
-
-
-
14
Peel Exploration Limited Annual Report 2009
Share-based compensation: options
Further details relating to options issued as compensation in the current year are set out below:
A
B
Name
C McGown
Remuneration consisting of options
Value at grant date
49.0%
52,290
No options were exercised by directors of Peel Exploration Ltd or other key management personnel in 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:
Issue price of
Number under
Date options granted
Expiry date
shares
8 March 2007 (shareholders)
30 November 2010
20 cents
8 March 2007 (directors)
30 November 2010
30 cents
11 September 2007 (s/holders)
30 November 2010
20 cents
23 June 2008 (employees)
30 November 2010
25 cents
5 December 2009 (director)
30 April 2011
30 cents
option
7,500,000
7,500,000
14,973,250
600,000
1,000,000
_________
31,573,250
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
No ordinary shares of the Company were issued during the year on the exercise of options.
The following ordinary shares of the Company were issued during the previous year ended 30 June 2008 on the
exercise of options.
24 October 2007
Issue price of
Number of shares
shares
20 cents
issued
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 Group.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all
or any part of those proceedings.
The Group was not a party to any such proceedings during the year.
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.
The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which
requires entities to report annual greenhouse gas emissions and energy use. For the first measurement period
1 July 2008 to 30 June 2009 the directors have assessed that there are no current reporting requirements, but
may be required to do so in the future.
15
Peel Exploration Limited Annual Report 2009
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 2009.
16
Peel Exploration Limited Annual Report 2009
Income Statements
for year ended 30 June 2009
Consolidated
Parent Entity
2009
Note
$
2008
$
2009
$
2008
$
Revenue
3
98,750
Depreciation expenses
8
(28,859)
Directors fees
Salaries and employee benefits
(109,000)
(344,713)
Share-based remuneration to employees
22
(52,290)
Exploration expenditure written off
Administration expenses
Loss before income tax
(640,717)
(257,846)
(1,334,675)
Income tax expense
4
-
Loss for the year attributable to the ordinary
equity holders of the company
(1,334,675)
Basic and diluted loss per share (cents per
share)
22
(0.04)
-
-
-
-
-
-
-
-
-
-
-
98,750
164,472
(28,859)
(5,260)
(109,000)
(84,333)
(344,713)
(167,858)
(52,290)
(45,000)
(640,717)
(383,802)
(257,126)
(233,867)
(1,333,955)
(755,648)
-
-
(1,333,955)
(755,648)
The above Income Statements should be read in conjunction with the accompanying notes.
17
Peel Exploration Limited Annual Report 2009
Balance Sheets
as at 30 June 2009
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Security deposits
Plant & equipment
Investments
Total Non-Current Assets
Consolidated
Parent Entity
Note
2009
$
2008
$
2009
$
2008
$
5
6
7
8
10
901,020
31,233
932,253
80,000
55,896
-
135,896
-
-
-
-
-
-
-
901,020
2,030,930
31,233
22,850
932,253
2,053,780
80,000
60,000
55,896
84,754
5,000
-
140,896
144,754
Total Assets
1,068,149
-
1,073,149
2,200,162
Current Liabilities
Trade and other payables
11
103,917
Total Current Liabilities
Total Liabilities
Net Assets
Equity
103,917
103,917
964,232
-
-
-
-
108,197
88,545
108,197
88,545
108,197
88,545
964,952
2,111,617
Contributed equity
12
2,901,921
-
2,901,921
2,766,921
Accumulated losses
(2,507,211)
-
(2,506,491)
(1,172,536)
Option reserve
Total Equity
13
569,522
-
569,522
517,232
964,232
-
964,952
2,111,617
The above Balance Sheets should be read in conjunction with the accompanying notes.
18
Peel Exploration Limited Annual Report 2009
Statement of Changes in Equity
Consolidated
Contributed Accumulated
Reserves
Equity
Losses
$
$
$
Total
Equity
$
Balance at 1 July 2007
2,799,062
(414,888)
322,500
2,706,674
Loss for year
-
(757,648)
-
(757,648)
Total income and expense recognised for the year
2,799,062
(1,172,536)
322,500
1,949,026
Transactions with equity holders in their capacity
as equity holders:
Issue of share capital
Share issue options
Exercise of options
Share issue expenses
Share-based payments
5,350
-
268
(37,759)
-
-
-
-
-
-
5,350
150,000
150,000
(268)
-
-
(37,759)
45,000
45,000
Balance at 30 June 2008
2,766,921
(1,172,536)
517,232
2,111,617
Loss for year
-
(1,334,675)
-
(1,334,675)
Total income and expense recognised for the year
2,766,921
(2,507,211)
517,232
776,942
Transactions with equity holders in their capacity
as equity holders:
Issue of share capital
Share-based payments
135,000
-
-
-
-
135,000
52,290
52,290
Balance at 30 June 2009
2,901,921
(2,507,211)
569,522
964,232
Parent entity
Contributed Accumulated
Reserves
Equity
Losses
$
$
$
Total
Equity
$
At 1 July 2007
Loss for year
2,799,062
(414,888)
322,500
2,706,674
-
(757,648)
-
(757,648)
Total income and expense recognised for the year
2,799,062
(1,172,536)
322,500
1,949,026
Transactions with equity holders in their capacity
as equity holders:
Issue of share capital
Share issue options
Exercise of options
Share issue expenses
Share-based payments
5,350
-
268
(37,759)
-
-
-
-
-
-
-
5,350
150,000
150,000
(268)
-
-
(37,759)
45,000
45,000
Balance at 30 June 2008
2,766,921
( 1,172,536)
517,232
2,111,617
Loss for year
-
(1,333,955)
-
(1,333,955)
Total income and expense recognised for the year
2,766,921
(2,506,491)
517,232
777,662
Transactions with equity holders in their capacity
as equity holders:
Issue of share capital
Share-based payments
135,000
-
-
-
-
135,000
52,290
52,290
Balance at 30 June 2009
2,901,921
(2,506,491)
569,522
964,952
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
19
Peel Exploration Limited Annual Report 2009
Cash Flow Statements
Consolidated
Parent Entity
2009
2008
Note
$
$
2009
$
2008
$
Cash flows from operating activities
Payments to suppliers and employees
(1,343,660)
-
(1,342,940)
(799,715)
Interest received
Net cash outflow from operating
activities
98,750 -
98,750 164,472
20
(1,244,910)
-
( 1,244,190)
( 635,243)
Cash flows from investing activities
Payment of security deposits
Payments for purchase of plant and
equipment
Net cash outflow from investing
activities
Cash flows from investing activities
(20,000)
-
(20,000)
-
-
-
(20,000)
(20,000)
-
(88,338)
(20,000)
(108,338)
Proceeds from issue of shares
135,000
-
135,000
155,350
Transaction costs of issue of shares
Purchase of investment in subsidiary
company
Loan from related company
Net cash inflow from financing
activities
-
-
-
-
-
-
-
(37,759)
(5,000)
4,280
-
-
135,000
-
134,280
117,591
Net decrease in cash and cash
equivalents
Cash and cash equivalents at the start of
year
Cash and cash equivalents at the end of
year
(1,129,910)
-
(1,129,910)
(625,990)
2,030,930
-
2,030,930
2,656,920
901,020
-
901,020
2,030,930
The above Cash Flow Statements should be read in conjunction with the accompanying notes.
20
Peel Exploration Limited Annual Report 2009
Notes to the Accounts
1.
Statement of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial report includes the
financial statements for Peel Exploration Limited as an individual entity and the consolidated entity comprising Peel
Exploration Limited and its subsidiary, Peel Energy Limited.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting 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.
(b) Principles of consolidation
The consolidated financial statements are those of the consolidated entity, comprising Peel Exploration Limited (the
parent entity) and Peel Energy Limited (the controlled entity) which Peel Exploration Limited controlled during the year
and at balance date (“the Group”). A controlled entity is any entity that Peel Exploration Limited has the power to
control the financial and operation policies so as to obtain benefits from its activities.
Information from the financial statements of the subsidiary is included from the date the parent company obtains control
until such time as control ceases. Where there is a loss of control of a subsidiary, the consolidated financial statements
include the results for the part of the reporting period during which the parent company has control.
Subsidiary acquisitions are accounted for using the purchase method of accounting.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent
accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been
eliminated in full. Unrealised losses are eliminated except where costs cannot be recovered.
The investment in the subsidiary is carried at cost in the parent entity.
(c) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the group and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
Interest income
Revenue is recognised as the interest accrues using the effective interest rate method.
(d) Income tax
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.
21
Peel Exploration Limited Annual Report 2009
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.
(e) Impairment of assets
At each reporting date, the group 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.
No impairment losses (2008: $11,425) have been recognised for the year ending 30 June 2009.
(f) Cash and cash equivalents
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.
(g) Trade and other receivables
Trade receivables, which generally have 30 to 90 day terms, are recognised initially at fair and subsequently at
amortised cost less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is
objective evidence that the group will not be able to collect the debts. The allowance for bad debts is recognised in a
separate account. Bad debts are written off when identified.
(h) 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.
(i) Fair value estimation
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 Group for similar
financial instruments.
(j) Plant and equipment
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 de-recognition 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.
(k) Exploration and evaluation expenditure
Exploration licences are expensed through the profit and loss.
Exploration and evaluation expenditure is written off in the year it is incurred. Accordingly, exploration expenditure of
$640,717 (2008: $383,802) 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.
22
Peel Exploration Limited Annual Report 2009
(l) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. They are recognised initially at
fair value and subsequently at amortised cost.
(m) Borrowings
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.
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.
(n) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds. 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.
(o) Earnings per share
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.
(p) Goods and services tax
Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST
incurred is not recoverable 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.
(q) New accounting standards and interpretations
Australian Accounting Standards include AIFRSs. Compliance with AIFRSs ensures that the financial statements of Peel
Exploration Limited comply with International Financial Reporting Standards (IFRSs).
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009
reporting periods. The Group’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 Group will
23
Peel Exploration Limited Annual Report 2009
adopt AASB 8 from 1 July 2009. Application of AASB 8, at this stage, may expand on 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
The revised AASB 123 is 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 Group 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
A revised AASB 101 was issued in September 2007 and is 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 Group intends to apply the revised standard from 1 July 2009.
(iv) AASB 2008-5 Amendments arising from Annual Improvements Project (revised July 2007)
The revised version of this standard provides for a range of presentation, recognition, measurement, terminology
and editorial changes to a wide range of accounting standards. The revised standard is applicable for annual
reporting periods commencing on or after 1 January 2009, and the Group will adopt the revised standard from that
date.
Application should not affect any of the amounts recognised in the financial report, but may require additional levels
of disclosures. The Group will adopt the new standard, together with its consequential changes, for the financial
report dated 30 June 2010.
(v) AASB 127 Consolidated and Separate Financial Statements (reissued March 2008)
The revised standard clarifies that changes in ownership interest which result in control being retained are
accounted for within equity as transactions with owners. The revised standard is applicable for annual reporting
periods commencing on or after 1 July 2009, and the Group will adopt the revised standard from that date.
Application should not affect any of the amounts recognised in the financial report, but may require additional levels
of disclosures. The Group will adopt the new standard, together with its consequential changes, for the financial
report dated 30 June 2010.
(vi) AASB 3 Business Combinations (reissued March 2008)
The revised standard introduces more detailed guidance on accounting for aspects including step acquisitions,
adjustments to contingent consideration, and share-based payments as part of purchase consideration. Also, all
acquisition costs will have to be expensed instead of being recognised as part of goodwill. The revised standard is
applicable for annual reporting periods commencing on or after 1 July 2009, and the Group will adopt the revised
standard from that date.
Application should not affect any of the amounts recognised in the financial report, but may require additional levels
of disclosures. The Group will adopt the new standard, together with its consequential changes, for the financial
report dated 30 June 2010.
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.
24
Peel Exploration Limited Annual Report 2009
2. Financial Risk Management
Overview
The Company and Group have exposure to the following risks from their use of financial instruments:
Credit risk (on cash and cash equivalents, and receivables)
•
•
• Market risk (cash flow interest risk on cash and cash equivalents)
Liquidity risk
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Group’s receivables from customers and cash and cash
equivalents. The Group manages its credit risk on financial instruments, including cash, by only dealing with banks
licensed to operate in Australia with credit ratings of at least ‘A’ rated.
Trade and other receivables
The Group operates in the mining exploration sector and does not have trade receivables. It is not exposed to credit risk
in relation to trade receivables.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Carrying amount –
Consolidated
Carrying amount –
Parent
Note
2009
2008
2009
2008
Trade and other receivables
6
5,198
Cash and cash equivalents
5
901,020
-
-
5,198
-
901,020 2,030,931
Impairment losses
None of Company’s other receivables are past due. At 30 June 2009 the Group does not have any collective
impairments on its other receivables.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s reputation. The Group manages liquidity by maintaining adequate reserves by continuously monitoring forecast
and actual cash flows.
Typically the Group ensures it has sufficient cash on hand to meet expected operational expenses for a period of 180
days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that
cannot reasonably be predicted, such as natural disasters.
Consolidated
Parent Company
Carrying Contractual
6mths
Carrying Contractual
6mths
Amount
Cash flows
or less
Amount
Cash flows
or less
30 June 2009
$
$
$
$
$
$
Trade
payables
and
other
103,917
103,917
103,917
108,197
108,197
108,197
30 June2008
Trade
payables
and
other
-
-
-
88,545
-
88,545
Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s
income or the value of its holdings of financial instruments. The objective of managing market risk is to manage and
control market risk exposures to within acceptable limits, while optimising returns.
Interest rate risk
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in interest rates
that will increase the costs of floating rate debt or opportunity losses that may arise on fixed rate borrowings in a falling
interest rate environment. The Group does not have any borrowings and is, therefore, not exposed to interest rate risk
25
Peel Exploration Limited Annual Report 2009
in this area. Interest rate risk on cash and short term deposits is not considered to be a material risk due to the short
term nature of these financial instruments.
Profile
At the reporting date the interest rate profile of the Group and the Company’s interest-bearing financial instruments
was:
Variable rate instruments
Consolidated
Company
Carrying
Amount Carrying
Amount
2009
2008
2009
2008
$
$
$
Short term
cash
deposits
854,774
-
854,774
1,977,932
Cash flow sensitivity analysis for variable rate instruments
Group
At 30 June 2009 if interest rates had changed +/- 100 basis points from year end rates with all other variables held
constant, equity and post tax profit would have been $8,548 higher/lower (2008: nil).
Parent company
At 30 June 2009 if interest rates had changed +/- 100 basis points from year end rates with all other variables held
constant, equity and post tax profit would have been $8,548 higher/lower (2008: $19,779).
Fair values
The carrying values of all financial assets and financial liabilities, as disclosed in the balance sheets, approximate their
fair values.
3. Revenue
Interest received
Expenditure
Superannuation
Operating lease payments
4. Income tax
Income tax expense
Current tax
Deferred tax
Consolidated
Parent Entity
2009
2008
2009
2008
$
$
$
$
98,750
-
98,750
164,472
19,442
36,000
-
-
-
-
-
-
19,442
6,558
36,000
24,097
-
-
-
-
Numeric reconciliation of income tax expense to prima facie tax
payable:
Accounting loss before income tax
(1,334,675)
- (1,333,955)
(757,648)
At the statutory income tax rate of 30%
(2008:30%)
Expenditure not allowed for income tax
purposes:
(400,403)
-
(400,187)
(227,294)
Non-deductible expenses
Tax loss not brought to account
Income tax benefit reported in the income
statement
15,687
384,716
-
-
-
-
15,687
13,500
384,500
213,794
-
-
26
Peel Exploration Limited Annual Report 2009
The Company has tax losses arising in Australia of $1,283,278 (2008: $898,562 restated) that are available indefinitely
for offset against future 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. In 2008 the Company also had an
unrecognised deferred tax asset in respect of equity raising costs of $28,289 (2008: $11,328).
5. Cash and Cash Equivalents
Cash at bank and in hand
Term deposit with a financial institution
6. Trade and other receivables
GST recoverable from taxation authority
Interest accrued on term deposits
7. Receivables (Non-current)
Security deposits on mining tenements
Consolidated
Parent Entity
2009
2008
2009
2008
$
$
$
$
46,246
854,774
901,020
26,035
5,198
31,233
80,000
80,000
-
-
-
-
-
-
-
-
46,246
52,998
854,774
1,977,932
901,020
2,030,930
26,035
24,477
5,198
-
31,233
24,477
80,000
60,000
80,000
60,000
No fair value estimation has been made for these deposits as they are dependent on the periods for
which the related mining tenements will be held, which is not determinable at this point in time.
8. Plant and equipment
Plant and equipment
At cost
Less accumulated depreciation
Reconciliation
90,014
34,118
55,896
Carrying amount at beginning of year
84,754
Additions
Depreciation expense
Closing balance
9. Exploration licences
Opening balance
Payment of exploration licences
Written off during year
Closing balance
-
(28,859)
55,895
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
90,014
90,014
34,118
5,260
55,896
84,754
84,754
1,676
-
88,338
(28,859)
(5,260)
55,895
84,754
-
-
-
-
11,425
-
(11,425)
-
27
Peel Exploration Limited Annual Report 2009
10. Subsidiary company
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in
accordance with the accounting policy described in note 1(a):
Name
incorporation
shares
2009
2008
Country of
Class of
Equity holding
Peel Energy Limited
Australia
Ordinary
%
100
%
-
11. Trade and other payables
Trade payables
Other payables
Refer Note 2 for information on risk exposures
12. Contributed equity
(a) Share capital
Consolidated
Parent Entity
2009
$
2008
2009
2008
$
$
$
103,917
-
103,917
-
-
-
103,917
88,545
4,280
-
108,197
88,545
Consolidated and Parent Entity
2009
2008
Number of
Number of
shares
$
shares
$
Ordinary shares fully paid
30,926,750
2,901,921
30,026,750
2,766,921
(b) Movements in ordinary share capital
Opening balance, 1 July
30,026,750
2,766,921
30,000,000
2,799,062
Shares issued pursuant to placement
900,000
135,000
-
-
Shares issued as result of exercise of options
Initial cost of options exercised
Transaction costs on share issues
-
-
-
-
-
-
26,750
5,350
-
268
(37,759)
Closing balance, 30 June
30,926,750
2,901,921
30,026,750
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 13.
(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.
28
Peel Exploration Limited Annual Report 2009
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.
13. Reserves
Note
$
$
$
(i) Accumulated losses
Consolidated
Parent Entity
2009
2008
2009
2008
$
Opening balance, 1 July
(1,172,536)
- (1,172,536)
(414,888)
Loss for the year
(1,334,675)
- (1,333,955)
(757,648)
Closing balance, 30 June
(2,507,211)
- (2,506,491)
(1,172,536)
(ii) Share-based payments reserve
Opening balance, 1 July
Option expenses (director options)
Option expenses (payment on shareholder options)
Option expenses (employee options)
517,232
52,290
-
-
Closing balance, 30 June
569,522
-
-
-
-
-
517,232
322,500
52,290
-
-
-
149,732
45,000
569,522
517,232
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.
Share options and reserve movements
2009
2008
Options
$
Options
$
Opening balance, 1 July
30,573,250
517,232
15,000,000
322,500
Issued to director
1,000,000
52,290
-
-
Issued to shareholders
Issued to employees
Options exercised during year
-
-
-
-
15,000,000
150,000
-
-
600,000
45,000
(26,750)
(268)
Closing balance, 30 June
31,573,250
569,522
30,573,250
517,232
- exercisable at 20cents each on or before
30 November 2010
- exercisable at 30cents each on or before
30 November 2010
- exercisable at 25cents each on or before
30 November 2010
- exercisable at 30cents each on or before
30 April 2011
22,473,250
22,473,250
7,500,000
7,500,000
600,000
600,000
1,000,000
-
31,573,250
30,573,250
Model inputs for director options granted during the year ended 30 June 2009
included:
Underlying security spot price
Exercise price
Dividend rate
$0.160
$0.30
Nil
29
Peel Exploration Limited Annual Report 2009
Standard deviation of returns (annualised)
Risk free rate
Valuation Date
Expiry date
Expiration period (years)
Black Scholes valuation ($ per security)
Binomial valuation ($ per security)
75%
6.97%
20-October-2008
30-April-2011
2.53
0.05
0.05
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 nor necessarily be the actual outcome. No other features of options granted were incorporated into the
measurement of fair value.
14. Remuneration of Auditors
Amounts paid or due and payable to the auditors
2009
BDO Kendalls for:
$
2008
$
2009
$
2008
$
Consolidated
Parent Entity
Auditing or reviewing the financial report
39,859
Other services - consulting
-
39,859
-
-
-
39,859
15,736
-
10,463
39,859
26,199
15. Contingencies
The consolidated entity had no contingent assets or liabilities for the years ended 30 June 2009 and 2008.
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:
Consolidated
Parent Entity
2009
2008
2009
2008
$
$
$
$
Within one year
303,000
Later than one year but not later than five years
305,000
Later than five years
-
-
-
-
303,000
154,640
305,000
361,740
-
-
608,000
-
608,000
516,380
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.
18. Related Parties
Transactions with related parties
During the year there were no transactions with related parties other than the transactions shown in note 21.
30
Peel Exploration Limited Annual Report 2009
19. Events occurring after the Balance Sheet date
Non-renounceable entitlement issue
A prospectus for a pro-rata non-renounceable entitlement issue of one new share for every three shares held by
shareholders at an issue price of 10 cents to raise approximately $1,030,892 was despatched by the Company to
shareholders on 7 September 2009. The closing date of the offer is 25 September 2009. At that date the Company had
received acceptances for 3,293,400 shares raising $329,340.
Acquisition of new mining lease
The company has announced the details of a conditional agreement to acquire a 100% interest in the May Day gold and
base metal deposit from Imperial Corporation Ltd. The agreement is conditional on completion of due diligence
investigations and the renewal of Mining Lease 1361. Consideration for the acquisition is 2,750,000 fully paid ordinary
shares in Peel Exploration Limited.
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 consolidated entity, the result of those operations and the state of
affairs of the consolidated entity in the financial year subsequent to 30 June 2009.
20. Reconciliation of the cash flows from operating activities to loss after income tax
Consolidated
Parent Entity
2009
2008
2009
Note
$
$
$
2008
$
Net cash outflow from operating activities
(1,244,910)
- (1,244,190)
(635,243)
Share-based payments
Depreciation
Exploration licence fees written off
Change in operating assets and liabilities
Increase in receivables
Decrease/(increase) in payables
(52,290)
(28,858)
-
6,755
(15,372)
-
-
-
-
-
(52,290)
(45,000)
(28,858)
(5,260)
-
(11,425)
6,755
1,628
(15,372)
(62,348)
Loss after income tax
(1,334,675)
- (1,333,955)
(757,648)
20. Earning per share
Basic earnings per share
Consolidated
2009
$
2008
$
Loss for the year attributable to the ordinary equity holders of the company
(0.04)
(0.02)
Reconciliation of loss used in calculation of earnings per
share
Loss used in calculating basic loss per
share
Weighted average number of shares used as the
denominator
Weighted average number of shares used in calculating basic earnings per
share
$
$
(1,334,675)
(757,648)
Consolidated
Number of
Number of
shares
shares
2009
2008
30,926,750
30,018,322
31
Peel Exploration Limited Annual Report 2009
Effect of dilutive securities
Options on issue at balance date could potentially dilute earnings per share in the future. The effect in the current year
is to reduce the loss per share hence they are considered anti-dilutive. Accordingly diluted loss per share has not been
disclosed.
21. Key Management Personnel Disclosures
(a) Compensation of key management personnel
Consolidated
Parent Entity
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2009
2008
2009
$
$
$
2008
$
254,325
168,757
254,325
168,757
22,889
12,231
22,889
12,231
-
-
-
-
52,290
15,000
52,290
15,000
329,504
195,988
329,504
195,988
(b) Shares issued on exercise of compensation options
There were no shares issued on exercise of compensation options during the year.
(c) Option holdings of key management personnel
Balance at
the start of
the year
Granted as
compensation
Granted as
shareholders Exercised
Balance at
end of the
year
Vested and
exercisable
Unvested
30 June
2009
Directors
R Tyson
5,122,874
S Hadfield
4,722,873
-
-
C McGown
-
1,000,000
Executives
D Hocking
200,000
-
-
-
-
-
All vested options are exercisable at the end of the year.
-
-
-
-
5,122,874
5,122,874
4,722,873
4,722,873
1,000,000
1,000,000
200,000
200,000
-
-
-
-
Balance at
the start of
the year
Granted as
compensation
Granted as
shareholders
Exercised
Balance at
end of the
year
Vested and
exercisable
Unvested
30 June
2008
Directors
R Tyson
3,750,000
M Kiernan
4,000,000
S Hadfield
3,550,000
Executives
-
-
-
1,372,874
1,622,874
1,172,873
D Hocking
-
200,000
-
-
-
-
-
5,122,874
5,122,874
5,622,874
5,622,874
4,722,873
4,722,873
-
-
-
200,000
100,000
100,000
All vested options are exercisable at the end of the year.
32
Peel Exploration Limited Annual Report 2009
(d) Share holdings of key management personnel
Shares in Peel Exploration Limited (number)
Received during
Balance at
the year on the
Other changes
Balance at
30 June 2009
1 July 2008
exercise of options
during the year
30 June 2009
Directors
R Tyson
S Hadfield
Executives
D Hocking
2,598,750
2,100,000
-
-
-
-
46,000
2,644,750
-
2,100,000
-
-
Of the balance at 30 June 2009, the amounts held nominally in respect of each director are: R Tyson 2,100,000 and S
Hadfield 1,100,000.
Received during
Balance at
the year on the
Other changes
Balance at
30 June 2008
1 July 2007
exercise of options
during the year
30 June 2008
Directors
R Tyson
M Kiernan
S Hadfield
Executives
D Hocking
2,500,000
3,000,000
2,100,000
-
-
-
-
-
98,750
2,598,750
-
-
-
3,000,000
2,100,000
-
(e) 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 2009 were $36,000 (2008: $24,097). During the year the Company also
placed an advertisement to the value of $1,510 in a publication owned and operated by RIU. These amounts are
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, provided accounting services to the Company for the previous year ended 30 June
2008 totalling $34,300. This amount has been included on the income statement within administration expenses. An
amount payable to D Hocking at 30 June 2008 of $10,250 is included on the balance sheet within trade and other
payables for accounting services received but unpaid as at that 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
2009
2008
2009
$
$
$
2008
$
Management fees - rental
36,000
24,097
36,000
24,097
Consolidated
Parent Entity
Advertisements
Accounting services
1,510
-
1,510
-
34,300
-
37,510
58,397
37,510
-
34,300
58,397
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
-
10,250
33
Peel Exploration Limited Annual Report 2009
22.
Share–based Payments
The Company has granted Director Options during the year pursuant to approval by shareholders obtained at the last
Annual General Meeting and in the previous year granted options pursuant to an Employee Share Option Plan.
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options granted to directors
Options granted to employees
(a) Director options
Set out below are summaries of Directors options granted.
Consolidated
Parent Entity
2009
2008
2009
$
$
$
2008
$
52,290
-
52,290
-
-
45,000
-
45,000
52,290
45,000
52,290
45,000
30 June 2009
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Balance at end
of the year
Vested and
exercisable at
end of the year
$
Number
Number
Number
Number
Number
8 Mar’07
30 Nov’10
$0.30
5,000,000
-
5 Dec’08
30 April’11
$0.30
-
1,000,000
Total
5,000,000
1,000,000
-
-
5,000,000
5,000,000
1,000,000
1,000,000
6,000,000
6,000,000
30 June 2008
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Balance at end
of the year
Vested and
exercisable at
end of the year
$
Number
Number
Number
Number
Number
8 Mar’07
30 Nov’10
$0.30
-
5,000,000
-
5,000,000
5,000,000
Fair value of director options granted
Options are granted for no consideration. The fair value of options granted during the year was $0.0523 (2008: $0.075).
The value was calculated using the Black-Scholes Binominal Option valuation method applying the following inputs:
Underlying security spot price
Exercise price
Dividend rate
Standard deviation of returns (annualized)
Risk–free rate
Valuation date
Expiration date
$0.160
$0.30
Nil
75%
6.97%
20 October 2008
30 April 2011
Expiration period (years)
Black Scholes Valuation ($ per security)
Binomial Valuation ($ per security)
2.526
0.0523
0.0523
34
Peel Exploration Limited Annual Report 2009
(b) Employee option plan
Options over shares in Peel Exploration Limited may be granted under the Peel Exploration Limited Employee Option
Plan which was created in June 2008 and approved by shareholders at 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.
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 2009
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Balance at end
of the year
Vested and
exercisable at
end of the year
Number
Number
Number
Number
Number
23 Jun’08
30 Nov’10
$0.25
600,000
-
-
600,000
600,000
30 June 2008
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Balance at end
of the year
Vested and
exercisable at
end of the year
Number
Number
Number
Number
Number
23 Jun’08
30 Nov’10
$0.25
-
600,000
-
600,000
300,000
Fair value of director options granted
Options are granted for no consideration. The fair value of options granted was $0.075. The value was calculated using
the Black-Scholes Binominal Option valuation method applying the following inputs:
Underlying security spot price
Exercise price
Dividend rate
Standard deviation of returns (annualized)
Risk–free rate
Valuation date
Expiration date
$0.185
$0.25
Nil
75%
6.97%
23 June 2008
30 November 2010
Expiration period (years)
Black Scholes Valuation ($ per security)
Binomial Valuation ($ per security)
2.438
0.0750
0.0750
35
Peel Exploration Limited Annual Report 2009
Directors’ Declaration
The Board of Directors of Peel Exploration Limited declares that:
(a) the financial statements, comprising the income statement, balance sheet, cash flow statement, statement of
changes in equity, accompanying notes are in accordance with the Corporations Act 2001 and:
(i)
(ii)
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the financial position as at 30 June 2009 and performance for the
financial year ended on that date of the company and the consolidated entity.
(b) In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable;
(c) the remuneration disclosures set out in pages 11 to 15 of the directors’ report (as part of the audited
Remuneration Report), for the year ended 30 June 2009, comply with section 300A of the Corporations Act
2001; and
(d) the Board Of Directors have been given the declaration by the chief executive officer and chief financial officer
required by Section 295A of the Corporations Act 2001
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
directors by:
S. Hadfield
Chairman of Directors
Perth
30 September 2009
36
Peel Exploration Limited Annual Report 2009
37
Peel Exploration Limited Annual Report 2009
38
Peel Exploration Limited Annual Report 2009
39
Peel Exploration Limited Annual Report 2009
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 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.
40
Board Committees
Peel Exploration Limited Annual Report 2009
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.
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.
41
Peel Exploration Limited Annual Report 2009
Shareholder Information
Information relating to shareholders at 22 September 2009
Distribution of shareholders
Range
No. of Holders
No. Ord
%
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 -
9,999,999
Total
Twenty largest shareholders
-
27
91
291
29
438
Shares
-
88,583
872,993
9,221,299
20,743,875
-
0.29
2.82
29.82
67.07
30,027,000
100.0
No.Ord
Shares
%
3,900,000
12.61
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Stirling Tungsten 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
Katana Asset Management Ltd
Ron & Liz Nominees Pty Ltd (Ronald James Super Fund a/c)
KB33 Capital Pty Ltd
Jordan and Flynn Tyson
Rodney M Jones + Carol R Jones (Hoperidge Enterprises Pty Ltd Super a/c)
Hoperidge Enterprises Pty Ltd (Jones Family a/c)
3,000,000
2,100,000
1,600,000
1,487,000
1,100,000
1,000,000
626,010
610,000
500,000
450,000
425,000
400,000
325,000
300,000
Scott Paul Jones + Rodney Malcolm Jones + Carol Robin Jones (Scopa Family a/c)
300,000
Wonder Holdings Pty Ltd
Stephen J Lambert + Ruth L Lambert + Simon L Lambert (Lambert Retirement
a/c)
Paul Hodder + James Ramsay + Daniel Foster (Delta Blue Investments a/c)
MAJ Pty Ltd (Wallace Super Fund a/c)
290,000
275,000
250,000
250,000
9.70
6.79
5.17
4.81
3.56
3.23
2.02
1.97
1.62
1.46
1.37
1.29
1.05
0.97
0.97
0.94
0.89
0.81
0.81
19,188,91
0
62.05
42
Peel Exploration Limited Annual Report 2009
Substantial shareholders
1
2
3
4
5
6
Stirling Tungsten Pty Ltd
Mr Laurence James Kiernan
Mr Robert MacLaine Tyson
Mr Simon Hadfield
Ms Lisa Duperouzel
Mrs Linda Sala Tenna
No. Ord
Shares
%
3,900,000
12.6
3,000,000
2,598,750
2,100,000
1,600,000
1,487,900
9.7
8.4
7.0
5.2
4.8
At the prevailing market price of $0.14 per Share there were seventeen Shareholders with less than a marketable parcel
of $500 at 22 September 2009.
Distribution of Optionholders
Range
No. of Holders
Options
%
1 1
- 1,000
1,001
- 5,000
5,001
- 10,000
10,001
- 100,000
100,001
- 9,999,999
Total
4
68
129
108
23
332
2,750
312,135
1,069,571
3,552,294
17,536,500
0.01
1.39
4.76
15.81
78.03
22,473,250
100.00
Twenty largest Optionholders
1.
2.
3.
4.
5.
6.
7.
8.
9.
Crawley Investments Pty Ltd
Laurence James Kiernan
Robert MacLaine Tyson
Lisa Duperouzel
Linda Sala Tenna
Salamar Pty Ltd
Simon Hadfield
Jordan + Flynn Tyson
KB33 Capital Pty Ltd (Charity a/c)
10.. Hoperidge Enterprises Pty Ltd (Jones Family a/c)
11. Katana Asset Management Ltd
12. Blue Crystal Pty Ltd
13. ANZ Nominees Limited
Paul Hodder + James Ramsay + Daniel Foster (Delta Blue Investments
a/c)
14.
15. Ron & Liz Nominees Pty Ltd (Ronald James Super Fund a/c)
16. Dr Rosemary Elizabeth Anne Green
17. Scott P Jones + Rodney M Jones + Carol R Jones (Scopa Family a/c)
18. Wonder Holdings Pty Ltd
19. Gratitude Holdings Pty Ltd (Swarts Investment a/c)
20. MAJ Pty Ltd (Wallace Super Fund a/c)
Options
3,122,874
3,122,874
2,222,874
1,550,000
1,537,500
1,222,873
1,000,000
400,000
362,500
350,000
350,000
325,000
302,505
300,000
225,000
177,500
150,000
145,000
135,000
125,000
%
13.90
13.90
9.89
6.90
6.84
5.44
4.45
1.78
1.61
1.56
1.56
1.45
1.35
1.33
1.00
0.79
0.67
0.65
0.60
0.56
17,126,500
76.21
43
Peel Exploration Limited Annual Report 2009
At the prevailing price of $0.02 per Option there were two hundred and seventy two Option holders with less than a
marketable parcel of $500 at 22 September 2009.
At 23 September 2009 there were 438 holders of ordinary shares in the Company.
At the date of this report there were no shares or options restricted by the ASX.
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.
44