Regis Resources
Annual Report 2013

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2013 A N N U AL R EP O RT ABN 28 009 174 761 AND ITS CONTROLLED ENTITIES REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013 01 03 Chairman’s Report Highlights 05 Corporate 06 Moolart Well Operations 07 Garden Well Operations 08 09 15 Rosemont Development Reserves and Resources Gold Exploration 19 Gold Reserves 20 Gold Resources 21 Directors’ Report 40 Corporate Governance Statement 45 Financial Statements Chairman’s Report Dear Shareholder, I am pleased to report that 2013 was a good year for Regis as the Company became a multi-operation gold producer. The year was one of significant production growth for Regis resulting in a net profit after tax of $146 million. This record profit allowed the Board to declare a maiden fully franked dividend of 15 cents per share to be paid to shareholders in October 2013. the Garden Well construction team. Although there have been a number of challenges at Garden Well since we commenced operations, the project produced 163,260 ounces of gold for the year at a very competitive pre-royalty cash cost of $562 per ounce. Moolart Well again delivered strong operational performance producing 105,753 ounces of gold at a pre-royalty cash cost of $563 per ounce. The results from Moolart Well again underline the quality of the project and the commendable efforts of the Regis staff and management who make it happen. The commencement of operations at Garden Well in the September 2012 quarter was a significant milestone in the history of the Company. Regis announced practical completion of the 4 million tonne per annum Garden Well processing plant on time and materially in line with budget. This is a great credit to Since commissioning at Garden Well, our construction team have moved on to the Rosemont Gold Project where Stage 1 is nearing completion. The project will move in to operations in the December 2013 quarter. The Stage 1 project is a crushing and grinding circuit at Rosemont with an ore slurry product pumped to the Garden Well processing facility producing around 80,000 ounces of gold per annum. Upon completion of Stage 1, Regis will commence development of Stage 2 of the project being the extension to processing facilities at Garden Well. Development of Stage 2 of the project will increase long term annual production rates at Rosemont to around 100,000 ounces. 01 Finally I would like to thank all Regis employees for their hard work and achievements over the last 12 months and look forward to another successful year in 2014. Nick Giorgetta Chairman The acquisition of the McPhillamys Gold Project in New South Wales late in 2012 further strengthens Regis’ production growth pipeline. Since acquiring the project the Company has completed in excess of 26,000 metres of infill drilling to fully define the McPhillamys resource and allow the estimation of a maiden reserve. With its 2.5 million ounce gold resource, the McPhillamys project represents an excellent medium term development opportunity for Regis and continues the growth of our Australian project portfolio. I believe 2014 will be an exciting year for Regis as we continue to grow the Company’s production base whilst consolidating performance at existing projects. The Company is well placed with its quality projects and people to meet the challenges that an uncertain gold price environment may present. We will continue to strive to create shareholder value as we grow the business. 02 Highlights CORPORATE » Regis Resources Ltd (Regis) achieved a record net profit after tax of $145.7 million for the year to 30 June 2013. » » » » » » » Total gold production for the year was 269,013 ounces at a cash cost (prior to royalties) of $562/oz. Cashflow from operations for the year was $246.9 million. Cash and gold bullion holdings at 30 June 2013 were $80.9 million. Gold sales of 253,090 ounces at average sales price of A$1,599 per ounce. Acquired the McPhillamys Gold Project in New South Wales. Repaid the Company’s $30 million project finance debt in November 2012. Maiden dividend of 15 cents per share declared in relation to the 2013 financial results. MOOLART WELL OPERATIONS » Total gold production of 105,753 ounces for the year at pre-royalty cash cost of A$563 per ounce. » The Moolart Well gold processing plant treated over 2.54 million tonnes of ore during the year, 27% above the design throughput rate of 2.0 million tonnes per annum. GARDEN WELL OPERATIONS » Project completed on time and in line with budget for $113 million, funded wholly from operating cash flow. » Commissioning of the project commenced in August 2012 with first gold poured in September 2012. » Total gold production from commissioning until 30 June 2013 of 163,260 ounces at a pre-royalty cash cost of $562 per ounce. ROSEMONT DEvELOPMENT » Construction of the Rosemont Gold Project commenced during the year with $26.7 million spent to the end of the financial year. » » » First gold production forecast for the December 2013 quarter. Pre-production mining commenced on the project in January 2013 with 3.6 million BCM moved to the end of the year. The Company announced Rosemont Stage 2 development in July 2013 to increase the production capacity of the project to around 100,000 ounces per annum. 03 RESERvES AND RESOURCES » Release of updated JORC compliant Resource at Rosemont for a current estimate of 33.2 Mt at 1.62 g/t Au for 1.73 million ounces of gold. » » » » » » Release of updated JORC compliant Reserve at Rosemont of 12.0 Mt at 1.72 g/t Au for 664,000 ounces of gold. Updated JORC compliant Resource at Garden Well for a current estimate of 86.5 Mt at 1.08 g/t Au for 3.00 million ounces of gold. Updated JORC compliant Reserve at Garden Well of 41.7 Mt at 1.27 g/t Au for 1.7 million ounces of gold. Acquisition of the McPhillamys Gold Project added 57.4 Mt at 1.36 g/t Au for 2.5 million ounces of gold to the Company’s JORC compliant resources Total Regis gold resources, reported in accordance with JORC code, now stand at 10.0 million ounces (281.3MT at 1.10g/t Au for 9.962 million ounces). Total Regis gold reserves, reported in accordance with JORC code, now stand at 2.9 million ounces (65.7MT at 1.39g/t Au for 2.924 million ounces). ExPLORATION » In excess of 129,000 metres of aircore, RC and diamond drilling was completed during the year on various exploration projects in the Duketon project area. » Initial drill programme to infill the current Resource completed at the McPhillamys Gold Project in New South Wales with 26,163 metres drilled during the year. OUTLOOk » Moolart Well gold production for the 2014 financial year has been forecast at between 95,000 – 105,000 ounces at a pre-royalty cash cost of between $560 - $610 per ounce. » » » Garden Well gold production for the 2014 financial year has been forecast at between 190,000 – 210,000 ounces at a pre-royalty cash cost of between $680 - $730 per ounce. First gold pour at the Rosemont Gold Project expected in October 2013 and forecast production for 2014 in the order of 43,000 – 48,000 ounces of gold. Release of updated JORC compliant Mineral Resource and maiden Ore Reserve at McPhillamys expected in the December 2013 quarter. MOOLART WELL GOLD MINE 04 Corporate REGIS ACHIEvED A RECORD NET PROFIT AFTER TAx OF $145.7 MILLION FOR THE YEAR AS A RESULT OF THE COMMENCEMENT OF OPERATIONS AT THE GARDEN WELL GOLD MINE. The Company sold a total of 253,090 ounces of gold during the year at an average price of A$1,599 per ounce. The gold was delivered into a mix of spot prices and forward hedging contracts. At the end of the financial year the Company had a total hedging position of 122,591 ounces, being 116,751 ounces of flat forward contracts with a delivery price of A$1,426 per ounce and 5,840 ounces of spot deferred contracts with a price of A$1,475 per ounce. With the commencement of operations at Garden Well during the year, the Company’s operating cashflow from the two mine sites increased from $102.3 million in 2012 to $246.9 million in 2013. The cashflow generated from Garden Well allowed the Company to repay its $30 million debt facility in November 2012 as well as fund the development of the Rosemont Gold Project. As at 30 June 2013 Regis had $80.9 million in cash and bullion holdings up from $9.7 million in the previous year. The board of Regis declared a 15 cent per share dividend subsequent to the end of the financial year. 05 Moolart Well Operations The Moolart Well Gold Mine is located within the Duketon Gold Project approximately 350 kilometres north, north-east of kalgoorlie in Western Australia. The Company completed development of the Moolart Well Gold Mine during the September 2010 quarter for a final capital cost of $67 million. Since commissioning in July 2010, the processing plant has consistently run at 25% above nameplate throughput design and has produced over 292,000 ounces of gold. The project has a remaining life, based on current reserves, of 5 years with annual gold production expected to average around 100,000 ounces per annum. Total operating results for the year to 30 June 2013 are as follows: Ore mined (t) Ore milled (t) Head grade (g/t) Recovery (%) Gold production (oz’s) Cash cost per ounce (A$/oz) – pre royalties Cash cost per ounce (A$/oz) – incl royalties 2013 2,503,283 2,534,292 1.41 92 105,753 A$563 A$630 2012 2,557,001 2,541,158 1.39 93 105,413 A$512 A$585 Moolart Well completed another consistent year of operations producing 105,753 ounces of gold at a pre-royalty cash cost of $563 per ounce. During the year mining commenced in the Stirling oxide pit as well as continuing in the laterite and Lancaster oxide pits. At the end of the financial year approximately 2.4 million tonnes of laterite ore at 1.163g/t had been exposed ready for mining. Gold production for the 2014 financial year at Moolart Well has been forecast at between 95,000 – 105,000 ounces at a pre-royalty cash cost of between $560 - $610 per ounce. 06 Garden Well Operations The wholly owned Garden Well gold deposit is located approximately 35 kilometres south of the Company’s Moolart Well operation. The Company completed development of the Garden Well Gold Mine on time during the September 2012 quarter for a final capital cost of $113 million which was materially in line with budget. Total operating results for the year to 30 June 2013 are as follows: Ore mined (t) Ore milled (t) Head grade (g/t) Recovery (%) Gold production (oz’s) Cash cost per ounce (A$/oz) – pre royalties Cash cost per ounce (A$/oz) – incl royalties 2013 (10 mONThS) 3,644,193 3,839,125 1.47 90 163,260 $562 $626 As reported during the year operations at Garden Well were adversely affected by a number of issues since commissioning which in turn contributed to lower than forecast production. Initially throughput was impacted by material handling issues associated with the oxide ore in the upper zones of the pit. The clayey nature and high moisture content of this material caused blockages in the crusher and mill feed chutes. Modifications to the crushing circuit resolved this issue with annualised throughput from 1 January 2013 being 23% above the 4 million tonne per annum nameplate design capacity at 4.9 million tonnes per annum. Milled grade was impacted during the year by the ongoing issue of mining reconciliation to the geological reserve, particularly in the oxide zone of the pit. An updated Resource and Reserve estimate was completed in July 2013 which took into account the mining reconciliation to that time. Gold production for the 2014 financial year at Garden Well has been forecast at between 190,000 – 210,000 ounces at a pre-royalty cash cost of between $680 - $730 per ounce. 07 Rosemont Development The Rosemont Gold Project is 100% owned by Regis and is located less than 10 kilometres north west of the Garden Well Gold Project. The Rosemont gold deposit was discovered in the 1980s and was partially mined as a shallow oxide open pit by Aurora Gold Limited in the early 1990s. Reported production was 222kt at 2.65g/t for 18,600 ounces of gold. The Board of Regis made the decision in 2012 to develop the Rosemont deposit as a hybrid project with the crushing and grinding circuit to be built at the Rosemont pit and the ore product pumped to the CIL circuit at Garden Well at the rate of approximately 1.5mtpa for leaching and gold production. The decision to develop the project on this basis was made when the JORC reserve at Rosemont stood at 487,000 ounces. Further drilling along strike to the north of that reserve in 2012 led to the increase of the Rosemont reserve to 664,000 ounces in January 2013. Drilling is planned to the south of the current reserve later in 2013 which is expected to see a further increase in the mining inventory. Subsequent to the end of the financial year the Board reviewed the current strategy with a view to determining the best approach to maximise the return from the project. It was determined that the optimal approach is to build the balance of a full processing plant for the Rosemont project (Rosemont Stage 2) to maximise the plant throughput capacity. The Rosemont Stage 2 development is planned to commence immediately after the completion of the current development (Stage 1) in September 2013 and should be completed in the June 2014 quarter. The Rosemont plant will be operated in the Stage 1 configuration between September 2013 and then. The expected cost of the development of Rosemont Stage 2 is in the order of $20 million. The key benefit of building Rosemont Stage 2 is that it will allow an increase in the throughput of the combined Garden Well and Rosemont projects from the current anticipated capacity of 6.5 million tonnes per annum (Garden Well 5mtpa and Rosemont 1.5mtpa) to around 7.5 – 8 million tonnes per annum (Garden Well 5.5 – 5.8mtpa and Rosemont 2.0 – 2.2mtpa). This should result in long term production rates at Garden Well of over 200,000 ounces per annum and Rosemont production in the order of 100,000 ounces per annum. Pre-production mining commenced in January 2013 at the Rosemont Gold Project. Total waste material moved to the end of June 2013 was 3.6 million bcm. It is expected that a total of 10.5 million bcm of overburden pre-strip will be mined over the life of the project. By the end of the year a total of $40.7 million had been spent on Stage 1 of the project including $26.7 million on plant construction and a further $14.0 million on pre-production mining. ROSEMONT MILL UNDER CONSTRUCTION 08 Reserves and Resources ROSEMONT In January 2013 Regis announced an updated resource (reported in accordance with the JORC code) for the Rosemont Gold Deposit of 1.73 million ounces of contained gold. Regis completed 17,465 metres of infill RC drilling in 2012 with the aim of converting Inferred resources to Indicated category at the northern extremity of the Rosemont deposit. Regis then commissioned independent geological consultants EGRM Consulting Pty Ltd to conduct a re-estimation of its 2011 (1.08 million ounce) mineral resource estimate. This estimate was completed using the Multiple Indicator kriging estimation technique on a block size of 20 m x 20 m x 5 m. Based on the Multiple Indicator kriging, a selective mining estimate above a 0.5 g/t Au cut-off was generated to replicate a SMU size of 5m x 5m x 2.5m. The updated resource is as follows: CATEgORy TONNES gOLD gRADE CONTAINED gOLD Indicated Inferred (Millions) (g/t) (Ounces) 18.9 14.3 33.2 1.64 1.60 1.62 996,400 737,100 1,733,500 Notes: Rounded to two significant figures. Rounding errors may occur. In the estimation study by EGRM Consulting Pty Ltd it was observed that the mineralized quartz dolerite continues south of the known resource from the previous study, although with sparse drilling coverage. This southern portion of the quartz dolerite was included in the current study and added significant Inferred resources. Following the upgrade to the Resource, Regis announced an updated ore reserve (reported in accordance with JORC code) at Rosemont of 664,000 ounces of contained gold. The breakdown of the Reserve is as follows: CATEgORy TONNES gOLD gRADE CONTAINED gOLD Proven Probable (Millions) (g/t) (Ounces) - 12.0 12.0 - 1.72 1.72 - 664,000 664,000 Notes: 0.5 g/t Au lower cut off grade. Rounded to two significant figures. Rounding errors may occur. 09 This reserve has been estimated to a maximum depth of 235 metres below surface, with in excess of 80% of the contained gold within 150 metres of surface. The pit optimisation was completed using a A$1,200 per ounce gold price. The forecast cost of operations in the Reserve study was $33.63 per tonne milled and $640 per gold ounce produced. In addition to the operating costs above there is a capital mining cost of approximately $42 million to mine a 10.5 million bcm overburden pre-strip in the first 20 metres below surface. PRE-PRODUCTION MINING AT ROSEMONT 10 GARDEN WELL During the year, the Company completed an RC and diamond drilling programme designed to fully define the strike extent and down dip continuation of gold mineralisation at the southern end of the Garden Well Gold Deposit. Upon the completion of the drill programme the Company announced in July 2013 that the JORC compliant resource (inclusive of reserves) for the deposit had increased from 2.29 million ounces of contained gold (net of resource mined to May 2013) to 3.00 million ounces, being 86.5 million tonnes at 1.08g/t gold. On a like for like basis prior to deducting mined ounces, the resource had increased from 2.56 million ounces to 3.24 million ounces of gold. This increase was the result of strong drilling results along strike to the south of the previous resource limit. The resource was estimated by independent geological consultants EGRM Consulting Pty Ltd using the estimation technique Multiple Indicator kriging. The estimate is based on a block size of 20 m x 40 m x 5 m and a selective mining unit size of 5 m x 10 m x 2.5 m above a 0.5g/t Au lower cutoff grade. The breakdown of the resource is as follows: CATEgORy TONNES gOLD gRADE CONTAINED gOLD Indicated Inferred (millions) (g/t) (ounces) 76.1 10.4 86.5 1.09 1.02 1.08 2,657,000 341,000 2,998,000 Notes: Rounded to two significant figures. Rounding errors may occur. The updated resource above was estimated to reflect the mining reconciliation achieved in mining operations to that time. This resulted in a 192,000 ounce (12%) reduction to the original (pre mining) 1.66 million ounce Indicated resource contained in the current pit design. On the basis of the upgraded resource, Regis completed an updated ore reserve (reported in accordance with JORC code) at Garden Well. The updated Reserve for Garden Well increased from 1.39 million ounces of contained gold (net of reserve mined to May 2013) to 1.70 million ounces. The breakdown of the reserve is as follows: CATEgORy TONNES gOLD gRADE CONTAINED gOLD Proven Probable (millions) (g/t) (ounces) - 41.7 41.7 - 1.27 1.27 - 1,700,000 1,700,000 Notes: 0.6 g/t Au lower SMU block cut off grade. Contained oz rounded to nearest thousand. 11 The forecast cost of operations in the Reserve Study was $26.50 per tonne milled and $684 per gold ounce produced. In addition to the operating costs above there is a remaining life of mine capital cost of approximately $48 million to mine a 10.8 million bcm overburden pre-strip in the first 25 metres below surface on the balance of yet to be mined stages in the current pit design and the expanded reserve along strike to the south. Importantly, in the event of a lower than current gold price environment, an option is available to mine a smaller practical pit shell within this reserve pit (without compromising the ultimate reserve pit) for 909,000 ounces at a cash cost of $553 per ounce for approximately 4 years. MCPHILLAMYS The McPhillamys Gold Project is located approximately 35 kilometres south east of the town of Orange and 30 kilometres west of the town of Bathurst in the Central West region of New South Wales, Australia. The project is approximately 250 kilometres west of Sydney. The project area consists of four granted exploration permits covering 477 square kilometres in two discrete locations approximately 25 kilometres apart. The Company completed the acquisition of the McPhillamys Gold Project from Newmont Exploration Pty Ltd and Alkane Resources Limited in November 2012. The total consideration paid of $150 million was satisfied by the issue of Regis shares to Newmont and Alkane based on their respective joint venture interests. A total of 35.7 million shares were issued to the vendors based on an issue price of $4.20 per share, being the 45 trading day vWAP of Regis shares ending on the date of the letter of agreement. The McPhillamys Gold Project has a quoted gold resource, at a 0.5g/t lower cut, as follows: RESOURCE CATEgORy TONNES gOLD gRADE Indicated Inferred Total (millions) (g/t) 41.3 16.1 57.4 1.27 1.57 1.36 OUNCES (000’s} 1,685 815 2,500 NB Alkane has previously quoted the McPhillamys Resource using both 0.3g/t and 0.5g/t lower cut off grades and including mineralisation in an outer ore envelope. Regis has chosen to quote the resource at a 0.5g/t lower cut and excluding the outer ore envelope. The quoted resource was drilled by previous project owners on a relatively broad space 100 metre x 100 metre pattern. Regis commenced a drilling programme in January 2013 to reduce the pattern to 50 metres x 50 metres. A total of 87 RC and diamond holes for 26,163 metres were drilled as part of the programme to update the current resource and allow the estimation of a maiden reserve. This drill programme was completed in June 2013 and will form the basis of an updated resource estimation planned to be completed in the December 2013 quarter. Pre-feasibility work is continuing on the Project with base line environmental studies and metallurgical test work commencing. 12 SATELLITE GOLD DEPOSITS In addition to the Moolart Well, Garden Well, Rosemont and Erlistoun projects which already have JORC compliant reserves, Regis’ Duketon project area contains a further 6 known gold deposits with current JORC compliant resources. All of these gold deposits are within 15 kilometres of either the Moolart Well or Garden Well gold processing plants. Work is expected to continue on these deposits with the strategy of converting the reported resource to reserve with a view to converting incremental ore to the mining inventory and extending the mine lives for the two processing facilities. 13 DUkETON PROJECT AREA ROSEMONT MINING FLEET 14 Gold Exploration OvERvIEW Regis controls a significant tenement package, encompassing 237 granted exploration, prospecting and mining licences covering 1,277 square kilometres and 50 general purpose and miscellaneous licences covering 2,210 square kilometres at the Duketon Gold Project. In addition Regis acquired the McPhillamys Gold Project in New South Wales during the year consisting of 4 exploration licences covering 477 square kilometres. Significant exploration activities were undertaken on various prospects within the Duketon Gold Project and the McPhillamys Gold Project during the year. Exploration drilling during the year totalled 155,873 metres (including 16,812 metres of water exploration drilling), broken down as follows: TyPE Aircore RC Diamond Total PeRTH By DRILLINg TyPE By PROjECT NO. hOLES mETRES PROjECT mETRES 379 621 131 1,131 30,152 76,522 49,199 Garden Well Moolart Well Rosemont 155,873 Petra dukeTOn 2.9 moz RESERvE 7.5 moz RESOURCE 2 OPERATINg mINES 1 DEvELOPmENT PROjECT Duketon Regional McPhillamys Total McPHillaMys 2.5 moz RESOURCES 59,404 27,255 11,872 6,305 24,874 26,163 155,873 sydney canbeRRa 1515 MCPHILLAMYS ExPLORATION Resource definition drilling commenced at the McPhillamys Gold Project during the March 2013 quarter to infill the current resource drilling pattern. The current Resource estimate of 57.4 million tonnes at 1.36g/t for 2.5 million ounces of gold is based on 100 metre spaced traverses. The drilling programme was designed to reduce the drill spacing to a 50m x 50m grid to enable an updated resource and maiden reserve estimate to be completed. A total of 87 RC and diamond holes for approximately 26,163 metres were drilled as part of the programme. SECTION 6292400mN 16 Moolart Well During the year Regis continued an ongoing drilling programme designed to test for extensions to and infill of the known mineralisation in and around the oxide gold resources associated with the Moolart Well Gold Project. The Moolart Well deposit has significant Inferred oxide resources north of the Stirling and Lancaster open pits. RC and Aircore infill drilling was conducted during the year on a 25 by 25 metre drill grid to convert inferred resources to indicated category to allow an update of the Moolart Well Reserve. A total of 27,255 metres were drilled in line with the Company’s strategy of annually updating reserves at Moolart Well to replace the depletion of the previous year’s mining activities with a view to maintaining a 5 year life at Moolart Well for as long as possible. Petra The Petra gold deposit is located 15 kilometres east- southeast of the Moolart Well gold plant and has an Inferred gold resource of 400,000 tonnes at 3.12g/t for 42,000 ounces. Previous Aircore drilling has defined a significant quartz lode containing gold mineralisation over a 600 metre strike length. During the year four shallow diamond holes were drilled at Petra to twin existing aircore holes and to obtain samples for bulk densities, metallurgical test work and to conduct RQD studies for open pit optimization design. In addition a total of 4,519 metres of Aircore drilling and 1,222 metres of RC drilling was completed to the end of June 2013 with the strategy of adding to the mining inventory at Moolart Well. Regional A total of 24,874 metres of regional drilling was also conducted during the year. The regional drilling focussed on numerous gold targets identified under shallow paleochannel cover in the Gum Well to Hootanui corridor over a 20-30 kilometre strike north-west of Rosemont. These regional drilling programmes are ongoing. DUkETON ExPLORATION Garden Well The RC and diamond drilling programme to fully define the strike extent and down dip continuation of gold mineralisation at the southern end of the deposit was completed at Garden Well in the June 2013 quarter. A total of 59,404 metres of RC and diamond drilling was completed during the year which allowed the release of updated Resource and Reserve estimates in July 2013 as noted above. Project to date RC drilling at Garden Well totals 369 holes for 82,308 metres on 40 metre spaced east-west traverses over a north-south strike distance of 2,360 metres from 6911000mN to 6913360mN. The drilling to date indicates the most southern extent of significant gold mineralisation is at 6911280mN although grades have significantly weakened at this northing. Generally lower grades and thinner zones of gold mineralisation were encountered from 6911440mN to 6911280mN confirming the southern limit of gold mineralisation lies within this zone. No further drilling is planned in the immediate future. Although gold mineralisation at Garden Well has been defined over a north-south strike length of 2,360m, the deposit has only been drilled to a vertical depth of 300m. Within the top 300m four high grade shoots have been defined by the plus 80 gram-metre gold contour. These shoots plunge moderately to the south and represent potential higher grade ore zones for deeper open cut mining and underground mining. The most southern shoot which is hosted by chert stratigraphy has the highest grade with the best intersection to date in the four high grade shoots. Further diamond drilling is required to fully define the dimensions and grade of these shoots. Rosemont During the year extensional resource drilling was conducted at the Rosemont Gold Deposit. Drilling to the north of the deposit early in the year allowed the Company to update the Resource and Reserve estimate at the deposit. A programme of RC resource drilling commenced south of the main Rosemont open pit in the June 2013 quarter to test the southern continuation of gold mineralisation. A further 20 holes is planned in the September 2013 quarter to complete this programme to the south as well as a programme of RC drilling at the northern end of the Rosemont open pit. A total of 11,872 metres of drilling was conducted on the deposit during the year. 17 MOOLART WELL SITE LAYOUT 18 Gold Reserves PROvEN PROBABLE TOTAL MilliOn TOnnes GRade G/T GOld kOz MilliOn TOnnes GRade G/T GOld kOz MilliOn TOnnes GRade G/T GOld kOz CUT-Off gRADE g/T - 0.4 - 0.82 0.4 0.82 - 9 9 41.2 - 1.26 - 1,670 - 41.2 0.4 1.26 0.82 1,670 9 41.2 1.26 1,670 41.6 1.26 1,679 4.4 0.2 0.1 - 0.1 4.8 - 1.3 6.5 1.26 180 0.7 0.98 2.04 4.20 - 1.28 1.30 - 2.34 13 1 - 3 197 - 95 0.1 3.7 0.1 - 4.6 12.0 1.4 1.56 1.29 1.17 - 1.25 1.72 2.37 22 2 155 2 - 181 664 108 5.1 0.3 3.8 0.1 0.1 9.4 12.0 2.7 1.22 1.96 1.30 1.17 1.28 1.27 1.72 2.36 202 15 156 2 3 378 664 203 1.48 301 59.2 1.38 2,623 65.7 1.39 2,924 0.6 0.6 0.5 0.5 0.4 0.4 0.5 0.5 0.7 PROjECT GARDEN WELL In pit reserves Stockpiles Total Garden Well MOOLART WELL Laterite Other Oxide/ Transitional (i) Stirling Oxide/ Transitional Stirling Fresh Stockpiles Total Moolart Well ROSEMONT ERLISTOUN Total Reserves (i) Other Oxide/Transitional comprises Lancaster, Mid Pit South and Mid Pit North. 19 Gold Resources (INCLUSIvE OF RESERvES) mEASURED INDICATED INfERRED TOTAL RESOURCES PROjECT MilliOn TOnnes GRade G/T GOld kOz MilliOn TOnnes GRade G/T GOld kOz MilliOn TOnnes GRade G/T GOld kOz MilliOn TOnnes GRade G/T GOld kOz CUT- Off gRADE g/T GARDEN WELL In pit resources Stockpiles Total Garden Well MOOLART WELL - - 0.4 0.82 - 9 75.6 1.08 2,632 10.4 1.02 - - - - - 341 - 86.0 1.08 2,973 0.4 0.82 9 0.5 0.6 0.4 0.82 9 75.6 1.08 2,632 10.4 1.02 341 86.4 1.07 2,982 Laterite 4.9 1.23 194 1.0 0.89 29 0.3 0.87 8 6.2 1.16 231 Oxide/ Transitional Fresh Low Grade Stockpiles Total Moolart Well 0.4 - 0.2 0.1 1.42 20 - 0.35 1.28 - 2 3 17.6 0.3 9.1 - 0.96 1.45 0.41 - 546 15 118 - 22.2 3.2 36.4 - 0.66 1.48 0.47 - 472 151 551 - 40.2 0.80 1,038 3.5 45.7 0.1 1.48 0.46 1.28 166 671 3 5.6 1.22 219 28.0 0.79 708 62.1 0.59 1,182 95.7 0.69 2,109 ROSEMONT - - - 18.9 1.64 ERLISTOUN 2.3 1.92 143 3.0 1.88 SATELLITE DEPOSITS Dogbolter - king John - Russells Find - Baneygo - Reichelts Find - Petra - Total satellites - - - - - - - - - - - - - - - - - - - - - - - 0.1 - 3.69 - 0.1 3.69 996 179 - - - - 17 - 17 14.3 1.60 737 33.2 1.62 1,733 - - - 5.3 1.90 322 0.9 0.7 0.4 0.8 - 0.4 3.2 2.91 3.19 3.86 1.67 - 3.12 2.83 87 72 55 43 - 42 0.9 0.7 0.4 0.8 0.1 0.4 2.91 3.19 3.86 1.67 3.69 3.12 87 72 55 43 17 42 299 3.3 2.87 316 0.5 0.4 1.0 0.3 0.5 0.5 0.5 1.0 1.0 1.0 0.5 1.0 2.0 Total duketon 8.3 1.40 371 125.6 1.12 4,532 90.0 0.88 2,559 223.9 1.04 7,462 McPhillamys - - - 41.3 1.27 1,685 16.1 1.57 815 57.4 1.36 2,500 0.5 Total Regis 8.3 1.40 371 166.9 1.16 6,217 106.1 0.99 3,374 281.3 1.10 9,962 Regis share 9,940 20 Directors’ Report YOUR DIRECTORS SUBMIT THEIR REPORT FOR THE YEAR ENDED 30 JUNE 2013 21 Directors The directors of the Company in office since 1 July 2012 and up to the date of this report, unless otherwise stated, are: Mr Nick Giorgetta, (Independent Non-Executive Chairman) Mr Giorgetta joined the board of Regis Resources Limited in May 2009 as Non-Executive Chairman. Prior to this Mr Giorgetta was a founding director of Equigold NL. He is a metallurgist with over 40 years of experience in the mining industry. He began his professional career in various technical roles for a major mining company in Kalgoorlie. He later established his own metallurgical consultancy which designed and commissioned a number of gold treatment plants. From 1988 to 1994 he was Managing Director of Samantha Gold NL. He retired as Managing Director of Equigold in November 2005 and assumed the role of Executive Chairman. He held this position until Equigold’s merger with Lihir Gold Limited in June 2008. During the past three years, Mr Giorgetta has not served as a director of any other ASX listed companies. Mr Giorgetta is a fellow of the Australasian Institute of Mining and Metallurgy. Mr Mark Clark, B.Bus CA (Managing Director) Mr Clark has over 23 years of experience in corporate advisory and public company management. Prior to joining Regis Resources Limited, Mr Clark was the Managing Director of Equigold NL. He joined Equigold in 1995 and originally held the roles of Chief Financial Officer and Company Secretary and was responsible for the financial, administration and legal functions of the company. He was closely involved in the development and operation of Equigold’s projects in both Australia and Ivory Coast. He was a director of Equigold from April 2003 and was Managing Director from December 2005 until Equigold’s merger with Lihir Gold Limited in June 2008. Prior to working at Equigold Mr Clark held a senior position at an international advisory firm, providing financial and corporate advice to clients in the mining industry. During the past three years, Mr Clark has not served as a director of any other ASX listed companies. Mr Clark is a member of the Institute of Chartered Accountants in Australia. Mr Morgan Hart, (Executive Director) Mr Hart is a geologist with over 23 years of experience in the gold mining industry. He joined Regis Resources Limited in May 2009 as the Company’s Chief Operating Officer. Prior to joining Regis Mr Hart was an Executive Director with Equigold NL. He joined Equigold NL in 1994 and held senior management positions in exploration and mining operations, including General Manager at the Mt Rawdon Gold Mine from 2005 to 2007. He was appointed to the position of Chief Operating Officer of Equigold in March 2007 and was appointed a director of the company at the same time. His key responsibility during this period included overseeing the development and operational start up at the Bonikro Gold Mine in Ivory Coast. During the past three years Mr Hart has not served as a director of any other ASX listed companies. Mr Hart is a member of the Australasian Institute of Mining and Metallurgy. Mr Ross Kestel, B.Bus, CA, AICD (Independent Non-Executive Director) Mr Kestel is a Chartered Accountant and was a director of a mid-tier accounting practice for over 25 years and has a strong corporate and finance background. He has acted as a director and company secretary of a number of public companies involved in mineral exploration, mining, mine services, property development, manufacturing and technology industries. Mr Kestel is currently a non-executive director of Beadell Resources Limited. During the past three years he has also served as a non-executive director of the following ASX listed companies: » Xstate Resources Limited (September 2006 to September 2013); » Resource Star Limited (August 2006 to November 2012); » Equator Resources Limited (June 2011 to December 2012); » VDM Group Limited (August 2005 to March 2011); » » Jabiru Metals Limited (August 2003 to May 2011); Jatenergy Limited (September 2007 to May 2012); and » Blackcrest Resources Limited (June 2006 to October 2010). 22 Mr Kestel is a member of the Australian Institute of Company Directors. Dividends After the balance sheet date the following dividends were proposed by the directors: Mr Mark Okeby, LLM (Independent Non-Executive Director) Mr Okeby has over 25 years’ experience in the resources industry as a solicitor and as a director of listed companies. He was admitted to practice law in Western Australia in 1979 and holds a Master of Laws (LLM). He was an executive director of gold producers Hill 50 Limited (1996-2003) and Abelle Limited (2003-2004) before both were taken over by Harmony Gold Ltd in 2002 and 2004 respectively, and was a director of Harmony Gold Australia Ltd until mid 2003. More recently he has been a non-executive director of Lynas Corporation Ltd (2004 -2005), an executive and non-executive director of Metals X Limited (2004- 2009) and a non-executive director of Westgold Resources Limited (2007-2010). During the past three years, Mr Okeby has not served as a director of any other ASX listed companies. Company Secretary Mr Kim Massey, B.Com, CA Mr Massey is a Chartered Accountant with significant experience in financial management and corporate advisory services, particularly in the resources sector, as a corporate advisor and company secretary for a number of ASX and AIM listed companies. Cents per share total amount $000 Final dividends recommended: - Ordinary shares 15.00 74,427 The financial effect of these dividends has not been brought to account in the consolidated financial statements for the year ended 30 June 2013 and will be recognised in subsequent financial reports. Nature of Operations and Principal Activities The principal activities of entities within the consolidated entity during the year were: » production of gold from the Moolart Well and Garden Well gold mines; » construction of the Rosemont gold project; and » exploration, evaluation and development of gold projects in the Eastern Goldfields of Western Australia. The Group completed the acquisition of the McPhillamys Gold Project in November 2012. The project is located in the Bathurst region of New South Wales and Regis commenced exploration and evaluation activities on this project from in January 2013. There have been no other significant changes in the nature of operations and activities. 23 Operating and Financial Review RESULT FOR THE YEAR The Group’s net profit for the year after tax was $145,727,093 (2012: $68,239,534). The increase in the result is due to three quarters of production at Garden Well Gold Mine as discussed in the Review of Operations below. OPERATIONS – MOOLART WELL Moolart Well Gold Mine operating results for the 12 months to 30 June 2013 are as follows: Ore mined Ore milled Head grade Recovery Gold production Cash cost per ounce – pre royalties(i) Cash cost per ounce – incl. royalties(i) 30 June 2013 (12 months) 30 June 2012 (12 months) Tonnes Tonnes g/t % Ounces A$/oz A$/oz 2,503,283 2,534,292 1.41 92 105,753 $563 $630 2,557,001 2,541,158 1.39 93 105,413 $512 $585 (i) Cash cost per ounce is calculated as costs of production relating to gold sales (Note 7(a)), excluding gold in circuit inventory movements divided by gold ounces produced. The calculation is presented both including and excluding the cost of royalties (Note 7(a)). This measure is included to assist investors to better understand the performance of the business. Cash cost per ounce is a non-IFRS measure, and where included in this report, has not been subject to review by the Group’s external auditors. Moolart Well achieved record gold production for the year to 30 June 2013 producing 105,753 ounces of gold at a pre-royalty cash cost of $563 per ounce. Mill through-put exceeded the name-plate design of 2 million tonnes per annum during the year operating at a through-put rate 27% above name-plate capacity of approximately 2.53 million tonnes per annum. Cash costs before royalties were approximately 10% higher than the previous year due to higher diesel costs and reagent costs as well as mining in the Stirling pit which has slightly higher rates in the upper zone of the pit. During the year, 1.2 million bcm of ore and 4.6 million bcm of waste were mined from the Moolart Well open pits for a total material movement of 5.8 million bcm. Of the total material mined, 2.7 million bcm was mined from laterite pits and 3.1 million bcm was mined from the Lancaster and Stirling oxide deposits. At the end of the financial year approximately 2.4 million tonnes of laterite ore at 1.163g/t had been exposed ready for mining. 24 OPERATIONS – GARDEN WELL Construction of the Garden Well Gold Mine was completed in the September 2012 quarter for a total capital cost of $113 million which was materially in line with the budgeted cost of $109 million. Operating results at the Garden Well Gold Mine for the 10 months of operations from the date of commissioning were as follows: Ore mined Ore milled Head grade Recovery Gold production Cash cost per ounce – pre royalties(i) Cash cost per ounce – incl. royalties(i) 30 June 2013 (10 months) 3,644,193 3,839,125 1.47 90 163,260 $562 $626 Tonnes Tonnes g/t % Ounces A$/oz A$/oz (i) Cash cost per ounce is calculated as costs of production relating to gold sales (Note 7(a)), excluding gold in circuit inventory movements divided by gold ounces produced. The calculation is presented both including and excluding the cost of royalties (Note 7(a)). This measure is included to assist investors to better understand the performance of the business. Cash cost per ounce is a non-IFRS measure, and where included in this report, has not been subject to review by the Group’s external auditors. As reported during the year operations at Garden Well were adversely affected by a number of issues since commissioning which in turn contributed to lower than forecast production. Initially throughput was impacted by material handling issues associated with the oxide ore in the upper zones of the pit. The clayey nature and high moisture content of this material caused blockages in the crusher and mill feed chutes. Modifications to the crushing circuit resolved this issue with annualised throughput from 1 January 2013 being 23% above the 4 million tonne per annum nameplate design capacity at 4.9 million tonnes per annum. Milled grade was impacted during the year by the ongoing issue of mining reconciliation to the geological reserve, particularly in the oxide zone of the pit. An updated Resource and Reserve was estimated in July 2013 took into account the mining reconciliation to that time. In addition by the end of the financial year the oxide ore in the current reserve pit had largely been mined. During the year, 2.15 million bcm of ore and 11.27 million bcm of waste were mined from the Garden Well open pit for a total material movement of 13.42 million bcm. Mining has commenced in all five stages of the open pit with ore mined in Stage 1, 2 and 3 of the open pit and pre strip material mined in both stage 4 and 5 of the open pit exposing the top of mineralisation in these stages. DEVELOPMENT - ROSEMONT The Rosemont Gold Project is located approximately 9 kilometres north-west of the Garden Well Gold Mine at Duketon. Construction of the crushing and grinding circuit at the Rosemont pit commenced during the year. Under this configuration the milled ore product will be pumped to the CIL circuit at Garden Well at the rate of approximately 1.5mtpa for leaching and gold production. The decision to develop the project on this basis was made in early 2012 when the JORC reserve at Rosemont stood at 487,000 ounces. Further drilling along strike to the north of that reserve in 2012 led to the increase of the Rosemont reserve to 664,000 ounces in January 2013. Drilling is planned to the south of the current reserve later in 2013 which is expected to see a further increase in the mining inventory. Accordingly the Company announced in July 2013 that the board had reviewed the current strategy with a view to determining the best approach to maximise the return from the project. It was determined that the optimal approach is to build the balance of a full processing plant for the Rosemont project (Rosemont Stage 2) to maximise the plant throughput capacity. The Rosemont Stage 2 development is planned to commence immediately after the completion of the current development (Stage 1) in September 2013 and should be completed in the June 2014 quarter. The Rosemont plant will be operated in the Stage 1 25 configuration between September 2013 and then. The expected cost of the development of Rosemont Stage 2 is in the order of $20 million. The key benefit of building Rosemont Stage 2 is that it will allow an increase in the throughput of the combined Garden Well and Rosemont projects from the current anticipated capacity of 6.5 million tonnes per annum (Garden Well 5mtpa and Rosemont 1.5mtpa) to around 7.5 – 8 million tonnes per annum (Garden Well 5.5 – 5.8mtpa and Rosemont 2.0 – 2.2mtpa). This should result in long term production rates at Garden Well of over 200,000 ounces per annum and Rosemont production in the order of 100,000 ounces per annum. Pre-production mining commenced in January 2013 at the Rosemont Gold Project. Total waste material moved to the end of June 2013 was 3.6 million bcm. It is expected that a total of 10.5 million bcm of overburden pre-strip will be mined over the life of the project. RESERVES AND RESOURCES - ROSEMONT In January 2013 Regis announced an updated resource (reported in accordance with the JORC code) for the Rosemont Gold Deposit of 1.73 million ounces of contained gold. Regis completed 17,465 metres of infill RC drilling in 2012 with the aim of converting Inferred resources to Indicated category at the northern extremity of the Rosemont deposit. Regis then commissioned independent geological consultants EGRM Consulting Pty Ltd to conduct a re-estimation of its 2011 (1.08 million ounce) mineral resource estimate. This estimate was completed using the Multiple Indicator Kriging estimation technique on a block size of 20 m x 20 m x 5 m. Based on the Multiple Indicator Kriging, a selective mining estimate above a 0.5 g/t Au cut-off was generated to replicate a SMU size of 5 m x 5 m x 2.5 m. The updated resource is as follows: Category Indicated Inferred tonnes (Millions) 18.9 14.3 33.2 gold grade (g/t) Contained gold (Ounces) 1.64 1.60 1.62 996,400 737,100 1,733,500 Notes: Rounded to two significant figures. Rounding errors may occur. In the estimation study by EGRM Consulting Pty Ltd it was observed that the mineralized quartz dolerite continues south of the known resource from the previous study, although with sparse drilling coverage. This southern portion of the quartz dolerite was included in the current study and added significant Inferred resources. Following the upgrade to the Resource, Regis announced an updated ore reserve (reported in accordance with JORC code) at Rosemont of 664,000 ounces of contained gold. The breakdown of the Reserve is as follows: Category Proven Probable tonnes (Millions) - 12.0 12.0 gold grade (g/t) Contained gold (Ounces) - 1.72 1.72 - 664,000 664,000 Notes: 0.5 g/t Au lower cut off grade. Rounded to two significant figures. Rounding errors may occur. The updated reserve has been estimated after completion of an open pit mining and Carbon in Leach extraction reserve study which included: 26 » Pit optimisation using wall angles based on » Mining costs based on indicative contractor geotechnical drill holes, independent geotechnical advice; quotation; » 100% mining recovery and 10% mining dilution with a gold grade of 0.45 g/t; » Bulk densities and metallurgical parameters from » Milling and other operating costs based on current known operating costs adapted for ore type and metallurgy. test work; Key results of the reserve study include: physiCal Total pit volume Stripping ratio – tonnes Ore Gold grade Contained gold Milling recovery Recovered gold operating Costs & surplus Mining cost Milling & administration costs Total operating cost per tonne (A$/tonne)(i) Total operating cost per ounce (i) (i) Before royalties bcm w/o tonnes g/t ounces % ounces A$/tonne A$/tonne A$/tonne A$/oz 34,224,025 5.53 12,008,905 1.72 664,200 95 630,990 $24.00 $9.63 $33.63 $640 In addition to the operating costs above there is a capital mining cost of approximately $42 million to mine a 10.5 million bcm overburden pre-strip in the first 20 metres below surface. This reserve has been estimated to a maximum depth of 235 metres below surface, with in excess of 80% of the contained gold within 150 metres of surface. The pit optimisation was completed using a A$1,200 per ounce gold price. RESERVES AND RESOURCES – GARDEN WELL During the year, the Company completed an RC and diamond drilling programme designed to fully define the strike extent and down dip continuation of gold mineralisation at the southern end of the Garden Well Gold Deposit. Upon the completion of the drill programme the Company announced in July 2013 that the JORC compliant resource (inclusive of reserves) for the deposit had increased from 2.29 million ounces of contained gold (net of resource mined to May 2013) to 3.00 million ounces, being 86.5 million tonnes at 1.08g/t gold. On a like for like basis prior to deducting mined ounces, the resource had increased from 2.56 million ounces to 3.24 million ounces of gold. This increase was the result of strong drilling results along strike to the south of the previous resource limit. The resource was estimated by independent geological consultants EGRM Consulting Pty Ltd using the estimation technique Multiple Indicator Kriging. The estimate is based on a block size of 20 m x 40 m x 5 m and a selective mining unit size of 5 m x 10 m x 2.5 m above a 0.5g/t Au lower cutoff grade. The breakdown of the resource is as follows: Category Indicated Inferred tonnes (Millions) 76.1 10.4 86.5 gold grade (g/t) Contained gold (Ounces) 1.09 1.02 1.08 2,657,000 341,000 2,998,000 Notes: Rounded to two significant figures. Rounding errors may occur. 27 The updated resource above was estimated to reflect the mining reconciliation achieved in mining operations to that time. This resulted in a 192,000 ounce (12%) reduction to the original (pre mining) 1.66 million ounce Indicated resource contained in the current pit design. On the basis of the upgraded resource, Regis completed an updated ore reserve (reported in accordance with JORC code) at Garden Well. The updated Reserve for Garden Well increased from 1.39 million ounces of contained gold (net of reserve mined to May 2013) to 1.70 million ounces. The breakdown of the reserve is as follows: Category Proven Probable tonnes (Millions) - 41.7 41.7 gold grade (g/t) Contained gold (Ounces) - 1.27 1.27 - 1,700,000 1,700,000 Notes: 0.6 g/t Au lower SMU block cut off grade. Contained oz rounded to nearest thousand. The updated reserve was estimated after completion of an open pit mining and Carbon in Leach extraction reserve study which included: » pit optimisation using wall angles based on geotechnical drill holes, independent geotechnical advice and allowances for ramps; » 100% mining recovery and 0% mining dilution as mining recovery and dilution factors have been addressed at the resource estimation stage; » Bulk densities and metallurgical parameters from test work previously reported; » Mining costs based on current contractor rates; » Milling and other operating costs based on current known operating costs adapted for ore type and metallurgy. Key results of the reserve study include: physiCal Total pit volume Stripping ratio – tonnes Ore Gold grade Contained gold Milling recovery Recovered gold operating Costs & surplus Mining cost Milling cost Administration cost Total operating cost per tonne (A$/tonne)(i) Total operating cost per ounce (i) (i) Before royalties Note: reserve estimated using a gold price of A$1,000/oz bcm w/o tonnes g/t ounces % ounces A$/tonne A$/tonne A$/tonne A$/tonne A$/oz 83,544,000 4.10 41,683,000 1.27 1,699,700 95 1,614,723 $16.48 $9.19 $0.83 $26.50 $684 28 In addition to the operating costs above there is a remaining life of mine capital cost of approximately $48 million to mine a 10.8 million bcm overburden pre-strip in the first 25 metres below surface on the balance of yet to be mined stages in the current pit design and the expanded reserve along strike to the south. Importantly, in the event of a lower than current gold price environment, an option is available to mine a smaller practical pit shell within this reserve pit (without compromising the ultimate reserve pit) for 909,000 ounces at a cash cost of $553 per ounce for approximately 4 years. GOLD EXPLORATION Significant exploration activities were undertaken on various prospects within the Duketon Gold Project and the recently acquired McPhillamys Gold Project during the year. Exploration drilling during the year totalled 155,873 metres (including 16,812 metres of water exploration drilling), broken down as follows: type Aircore RC Diamond Total By drilling type By proJeCt no. holes metres proJeCt 379 621 131 1,131 30,152 76,522 49,199 155,873 Garden Well Moolart Well McPhillamys Regional Rosemont Petra Total metres 59,404 27,255 26,163 24,874 11,872 6,305 155,873 MCPHILLAMYS GOLD PROJECT (NSW) DUKETON GOLD PROJECT (WA) The Company completed the acquisition of the McPhillamys Gold Project from Newmont Exploration Pty Ltd and Alkane Resources Limited in November 2012. The total consideration paid of $150 million was satisfied by the issue of Regis shares to Newmont and Alkane based on their respective joint venture interests. A total of 35.7 million shares were issued to the vendors based on an issue price of $4.20 per share, being the 45 trading day VWAP of Regis shares ending on the date of the letter of agreement. The project currently has a quoted Resource (reported in accordance with JORC) of 57.4 million tonnes at 1.36g/t for 2.5 million ounces of gold. Regis commenced a drilling programme in January 2013 to increase the density of drilling to allow the estimation of an updated Resource and maiden Reserve. A total of 87 RC and diamond holes for 26,163 metres were drilled as part of the programme to reduce the drill spacing to a 50 metre x 50 metre grid. The RC and diamond drilling programme to fully define the strike extent and down dip continuation of gold mineralisation at the southern end of the deposit was completed at Garden Well in the June 2013 quarter. A total of 59,404 metres of RC and diamond drilling was completed during the year which allowed the release of updated Resource and Reserve estimates in July 2013 as noted above. During the year extensional resource drilling was conducted at the Rosemont Gold Deposit. Drilling to the north of the deposit early in the year allowed the Company to update the Resource and Reserve estimate at the deposit. RC resource drilling was conducted south of the main Rosemont open pit in the June quarter to test the southern continuation of gold mineralisation. A further 20 holes is planned in the September 2013 quarter to complete this programme to the south as well as a programme of RC drilling at the northern end of the Rosemont open pit. Pre-feasibility work is continuing on the Project with base line environmental studies and metallurgical test work commencing. Drilling during the half year was also carried out in the oxide zone of the Moolart Well open pit as part of an ongoing programme designed to test for extensions to 29 Likely Developments and Expected Results There are no likely developments of which the directors are aware which could be expected to significantly affect the results of the Group’s operations in subsequent financial years not otherwise disclosed in the Principal Activities and Operating and Financial Review or the Significant Events after the Balance Date sections of the Directors’ Report. Environmental Regulation and Performance The operations of the Group are subject to environmental regulation under the laws of the Commonwealth and the State of Western Australia and New South Wales. The Group holds various environmental licenses issued under these laws, to regulate its mining and exploration activities in Australia. These licenses include conditions and regulations in relation to specifying limits on discharges into the air, surface water and groundwater, rehabilitation of areas disturbed during the course of mining and exploration activities and the storage of hazardous substances. All environmental performance obligations are monitored by the board of directors and subjected from time to time to Government agency audits and site inspections. There have been no material breaches of the Group’s licenses and all mining and exploration activities have been undertaken in compliance with the relevant environmental regulations. and infill of the known mineralisation with a view to adding to the Reserves of the operation. The Moolart Well deposit has significant Inferred oxide resources north of the Stirling and Lancaster open pits. RC and aircore infill drilling was conducted during the year on a 25 by 25 metre drill grid to convert inferred resources to indicated category to allow an update of the Moolart Well Reserve. A total of 24,874 metres of regional drilling was also conducted during the year. The regional drilling focussed on numerous gold targets identified under shallow paleochannel cover in the Gum Well to Hootanui corridor over a 20-30 kilometre strike north-west of Rosemont. These regional drilling programmes are ongoing. Significant Changes in the State of Affairs There have been no significant changes in the state of affairs other than those listed in the review of operations above. Significant Events after the Balance Date EXERCISE OF OPTIONS Subsequent to year end, 1,880,449 ordinary shares have been issued as a result of the exercise of listed options for proceeds of $931,453, net of transaction costs and 212,571 ordinary shares have been issued upon the conversion of 287,500 employee options for proceeds of $347,000 Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this Report any item, transaction or event of a material and unusual nature which, in the opinion of the directors of the Group, has significantly affected or is likely to significantly affect: » » » the operations of the Group; the results of those operations; or the state of affairs of the Group in future financial years. 30 Share Options UNISSUED SHARES At the date of this report, the Company had the following unissued shares under listed and unlisted options. exerCise priCe numBer outstanding $0.5000 2,113,362 $0.1348 $0.4205 $1.0000 $2.2300 $2.7500 $3.0000 $3.9300 $4.0000 $3.5000 90,000 250,000 1,373,646 600,000 575,000 500,000 250,000 980,000 1,910,000 8,642,008 Director’s Access and Insurance Deed with each of the directors pursuant to which a director can request access to copies of documents provided to the director whilst serving the Company for a period of 10 years after the director ceases to hold office. There are certain restrictions on the directors’ entitlement to access under the deed. In addition the Company will be obliged to use reasonable endeavours to obtain and maintain insurance for a former director similar to that which existed at the time the director ceased to hold office. The Company has, during or since the end of the financial year, paid an insurance premium in respect of an insurance policy for the benefit of the directors, secretaries, executive officers and employees of the Company and any related bodies corporate as defined in the insurance policy. The insurance grants indemnity against liabilities permitted to be indemnified by the Company under Section 199B of the Corporations Act 2001. In accordance with commercial practice, the insurance policy prohibits disclosure of the terms of the policy including the nature of the liability insured against and the amount of the premium. maturity date LISTED OPTIONS 31 January 2014 UNLISTED OPTIONS 4 February 2014 30 June 2014 29 September 2014 29 April 2015 8 November 2015 8 November 2015 2 February 2016 30 June 2016 31 July 2017 Total Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate. Details of options granted to directors and other key management personnel during the year are set out in the remuneration report. SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS During the financial year, 3,726,808 ordinary shares were issued in Regis Resources Limited on the exercise of listed options at a weighted average exercise price of $0.7471 and employees and executives exercised unlisted options to acquire 1,788,854 fully paid ordinary shares in Regis Resources Limited at a weighted average exercise price of $0.8896 per share. Indemnification and Insurance of Directors and Officers The Company has entered into an Indemnity Deed with each of the directors which will indemnify them against liabilities incurred to a third party (not being the Company or any related company) where the liability does not arise out of negligent conduct including a breach of good faith. The Indemnity Deed will continue to apply for a period of 10 years after a director ceases to hold office. The Company has entered into a 31 Directors’ Meetings The number of directors’ meetings held (including meetings of Committees of the Board) and number of meetings attended by each of the directors of the Company during the financial year are: Number of meetings held: Number of meetings attended: N Giorgetta M Clark M Hart R Kestel M Okeby audit and risk management Committee remuneration and nomination Committee Board 9 9 9 9 9 9 3 3 1(i) 1(i) 3 3 2 2 n/a n/a 2 2 (i) Mr Clark and Mr Hart attended at the invitation of the Audit and Rick Management Committee All directors were eligible to attend all meetings held. COMMITTEE MEMBERSHIP As at the date of this report, the Company had an Audit and Risk Management Committee and a Remuneration and Nomination Committee of the board of directors. Members acting on the committees of the board during the year were: Auditor Independence and Non-Audit Services During the year, KPMG, the Company’s auditor, also provided taxation advice over research and development credits. KPMG received or are due to receive the following amounts for the provision of non-audit services: audit and risk management Committee remuneration and nomination Committee R Kestel (Chairman) R Kestel (Chairman) N Giorgetta M Okeby N Giorgetta M Okeby Interests in the Shares and Options of the Company As at the date of this report, the interests of the directors in the shares and options of the Company were unchanged from the holdings as at 30 June 2013 as disclosed in Note 27. Tax advice $ 12,261 A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act is attached to the Directors’ Report. Rounding off The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the Financial Statements and Directors’ Report have been rounded to the nearest thousand dollars, unless otherwise stated. 32 Remuneration Report (Audited) This remuneration report for the year ended 30 June 2013 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. For the purposes of this report, the term “executive” includes the Managing Director, executive directors, senior executives, general managers and company secretaries of the Parent and the Group. Key Management Personnel Details of KMPs of the Company and Group are set out below: DIRECTORS N Giorgetta . Chairman (non-executive) M Clark. . . . . Managing Director M Hart . . . . . Operations Director R Kestel . . . . Director (non-executive) M Okeby. . . . Director (non-executive) KEY MANAGEMENT PERSONNEL J Balkau . . . . General Manager – Exploration M Evans . . . . Projects Manager T Hinkley . . . General Manager – Moolart Well Gold Mine K Massey . . . Chief Financial Officer and Company Secretary R Smith . . . . General Manager – Garden Well Gold Mine (ceased 1 May 2013) B Wyatt . . . . General Manager – Garden Well Gold Mine (appointed 1 May 2013) Principles of Remuneration Remuneration levels for key management personnel of the Group are competitively set to attract and retain appropriately qualified and experienced key management personnel. The Remuneration and Nomination Committee’s decisions on the appropriateness of remuneration packages are based on the competitive state of the employment market for different specific skill sets, independently sourced market surveys related to the resources sector and the need to incentivise personnel to meet the Group’s strategic objectives. Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Group, including directors of the Group and other executives. Key management personnel comprise the directors and executives of the Company and Group. The remuneration structures explained below are designed to attract suitably qualified candidates, reinforce the imperative to meet the strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account: » » » the capability and experience of the key management personnel; the ability of key management personnel to influence the Group’s performance; and the mix of cash and option incentives within each key management personnel’s remuneration package. Remuneration packages include a mix of cash, short- term and longer-term performance based incentives. The executive directors hold significant personal shareholdings in the Company, which aligns their goals and objectives with those of the Company. As such, the Remuneration and Nomination Committee has decided that there is no requirement for further share-based incentives to be offered to the executive directors at this point in time. 33 The Group’s financial performance over the past five years has been as follows: in thousands of aud 2013 2012 2011 2010 2009 Revenue Net profit/(loss) after tax Basic earnings/(loss) per share (cents) Diluted earnings/(loss) per share (cents) 416,834 145,727 30.49 30.11 171,504 68,239 15.51 15.18 108,651 36,281 8.54 8.24 Net assets 539,625 237,934 140,278 777 (18,829) (5.58) (5.58) 81,784 524 (91,845) (36.84) (36.84) 35,969 Historical and current earnings are one of a number of criteria used by the Remuneration and Nomination Committee to assess the performance of directors and executives. Other criteria used in this assessment include gold production and operating costs, execution of development projects, exploration success, growth of business through acquisitions and effectiveness of communications with regulators, shareholders, investors and other stakeholders. Fixed Remuneration Fixed remuneration consists of base remuneration (including any fringe benefit tax charges related to employee benefits), as well as employer contributions to superannuation funds. The Company allows key management personnel to salary sacrifice superannuation for additional benefits (on a total cost basis). Remuneration levels are reviewed annually by the Remuneration and Nomination Committee through a process that considers individual and overall performance of the Group. In addition, external consultants may provide analysis and advice to ensure the key management personnel’s remuneration is competitive in the market place, as required. No external consultants were utilised during the current financial year. Performance-Linked Remuneration Performance linked remuneration includes both long-term and short term incentives and is designed to reward key management personnel for meeting or exceeding their objectives. SHORT-TERM INCENTIVES Each year the executive directors review the performance of the key management personnel and makes recommendations to the Remuneration and Nomination Committee in relation to the awarding of any short-term incentives. In addition, the Remuneration and Nomination Committee assess the actual performance of the Group, the separate departments and the individuals’ personal performance. A cash bonus may be recommended at the discretion of the Remuneration and Nomination Committee where Group and department objectives have been met or exceeded. The Remuneration and Nomination Committee recommends the cash incentive to be paid to the executive directors for approval by the Board. No such bonuses have been recommended this year. LONG-TERM INCENTIVES Options are issued under the Regis Resources Limited 2008 Share Option Plan (the “Plan”). The objective of the Plan is to link the achievement of the Group’s operational targets with the remuneration received by the key management personnel charged with meeting those targets. The total potential long term incentive available is set at a level so as to provide sufficient incentive to the KMP to achieve the operational targets such that the cost to the Group is reasonable in the circumstances. The Plan provides for key management personnel and employees to receive a set amount of options over ordinary shares for no consideration. The ability to exercise the options is conditional upon the employee remaining with the Group throughout the vesting period. There are no other performance criteria that must be met. 34 Service Agreements Mr Mark Clark, the Company’s Managing Director, is employed under a fixed term contract, with the following significant terms: » An initial term of 3 years from 4 May 2009, which Mr Morgan Hart, the Company’s Operations Director, is employed under a fixed term contract, with the following significant terms: » An initial term of 3 years from 4 May 2009, which was extended for a further 3 years effective from 4 May 2012; was extended for a further 3 years effective from 4 May 2012; » Fixed remuneration of $535,000 per annum (2012: $465,000) subject to annual review; and » Fixed remuneration of $550,000 per annum (2012: » Opportunity to earn a performance based bonus $480,000) subject to annual review; and determined by the Company. » Opportunity to earn a performance based bonus determined by the Company. Subsequent to the end of the financial year, the Board completed its annual review of the Managing Director’s remuneration and decided to make no changes. Subsequent to the end of the financial year, the Board completed its annual review of the Operations Director’s remuneration and decided to make no changes. The Managing Director’s and Operations Director’s termination provisions are as follows: Employer initiated termination: - without reason - with reason - serious misconduct Employee initiated termination notiCe period payment in lieu of notiCe 3 months plus 9 months’ salary 12 months Not less than 3 months Not less than 3 months 0 – 1 month 3 months 0 – 1 month Not specified Not specified entitlement to options on termination 1 month to exercise, extendable at Board discretion As above As above Change of control 1 month plus 12 months’ salary The Group has entered into service contracts with each key management person. The service contract outlines the components of remuneration paid to each key management person but does not prescribe how remuneration levels are modified year to year. Remuneration levels are reviewed each year to take into account cost-of-living changes, any change in the scope of the role performed by the key management person and any changes required to meet the principles of the remuneration policy. The key management personnel are also entitled to receive, on termination of employment, statutory entitlements of accrued annual and long service leave, and any accrued superannuation contributions would be paid to their fund. The Company has a Redeployment and Redundancy Policy that is applicable to all employees including executives. Under that policy, in the case of a genuine redundancy, executives would receive a payment of up to six months total remuneration package plus two weeks for each completed year of service, subject to a maximum total payment of twelve months total remuneration. 35 Non-Executive Directors Total remuneration for all non-executive directors, last voted upon by shareholders at the 2011 AGM, is not to exceed $500,000 per annum. At the date of this report, total non-executive directors’ base fees are $268,000 per annum. Non-executive directors’ fees cover all main board activities and membership of board committees. Non-executive directors do not receive any benefits on retirement. From time to time, non-executive directors may provide consulting services to the Company and in these cases they are paid consulting fees in line with industry rates. Subsequent to the end of the financial year, the Board completed its review of the non-executive directors’ base fees and decided to make no changes. Key Management Personnel Remuneration TABLE 1: REMUNERATION FOR THE YEAR ENDED 30 JUNE 2013 short term post employment long term share- Based payment 2013 salary & fees Cash Bonus EXECUTIVE DIRECTORS M Clark M Hart $ 550,000 535,000 NON-EXECUTIVE DIRECTORS N Giorgetta R Kestel M Okeby OTHER KMP J Balkau M Evans(iii) T Hinkley K Massey R Smith(i) B Wyatt(ii) Total 110,000 85,000 73,000 290,000 300,000 283,750 275,000 241,667 48,333 2,791,750 $ - - - - - - - - - - - - non- monetary Benefits* $ super- annuation long serviCe leave $ $ 6,065 5,033 49,500 48,150 11,407 11,116 - - - 5,033 295,774 - 5,033 - - 9,900 7,650 6,570 26,100 27,000 25,538 24,750 21,750 4,350 - - - 6,022 5,824 3,074 5,160 426 92 options total performanCe related $ - - - - - - - - 22,504 219,288 70,117 $ % 616,972 599,299 119,900 92,650 79,570 327,155 628,598 312,362 332,447 483,131 122,892 - - - - - - 45.96% - 6.77% 45.39% 57.06% 316,938 251,258 43,121 311,909 3,714,976 Non-monetary benefits are presented at actual cost plus any fringe benefits tax paid or payable by the Group. * (i) Mr Smith ceased his position as General Manager – Garden Well Gold Mine on 1 May 2013. (ii) Mr Wyatt was appointed to the position of General Manager – Garden Well Gold Mine on 1 May 2013. (iii) Mr Evans was awarded a non-cash bonus for the on-time and on-budget completion of the Garden Well Gold Mine. 36 TABLE 2: REMUNERATION FOR THE YEAR ENDED 30 JUNE 2012 short term post employment long term share- Based payment 2012 salary & fees Cash Bonus non- monetary Benefits super- annuation long serviCe leave $ $ $ $ $ options total performanCe related EXECUTIVE DIRECTORS M Clark M Hart 480,000 465,000 NON-EXECUTIVE DIRECTORS N Giorgetta R Kestel M Okeby OTHER KMP J Balkau M Ertzen M Evans T Hinkley K Massey R Smith(i) Total 101,000 66,000 66,000 280,833 252,083 281,667 249,583 252,083 187,500 2,681,749 - - - - - - - - - - - - 13,930 12,382 5,485 5,485 5,485 12,382 12,382 5,485 5,485 12,382 5,485 $ - - - - - - 75,633 113,450 75,634 89,642 $ % 540,971 522,993 115,575 77,425 77,425 333,132 364,847 428,203 353,887 378,786 388,160 - - - - - - 20.73% 26.49% 21.37% 23.66% 45.93% 43,200 41,850 3,841 3,761 9,090 5,940 5,940 25,275 22,688 25,350 22,463 22,688 16,875 - - - 14,642 2,061 2,251 722 1,991 96,368 241,359 29,269 532,659 3,581,404 - 178,300 (i) Mr Smith commenced with the Company on 1 November 2011 in the role of General Manager – Garden Well Gold Mine. TABLE 3: COMPENSATION OPTIONS - GRANTED AND VESTED DURING THE YEAR granted terms & Conditions for eaCh grant vested fair value per option at grant date grant date exerCise priCe per option expiry date first exerCise date last exerCise date no. % - - - - - - - - - - - - 50,000 50,000 50% 50% 2013 OTHER KMP K Massey Total no. - - 37 TABLE 4: VALUE OF OPTIONS AWARDED, EXERCISED AND LAPSED DURING THE YEAR value of options granted during the year $ value of options exerCised during the year $ value of options lapsed during the year $ remuneration Consisting of share options for the year % OTHER KMP T Hinkley K Massey R Smith(i) B Wyatt(ii) Total - - - - - 747,900 726,598 - - 1,474,498 - - - - - - 6.77% 45.39% 57.06% (i) Mr Smith ceased his position as General Manager – Garden Well Gold Mine on 1 May 2013. (ii) Mr Wyatt was appointed to the position of General Manager – Garden Well Gold Mine on 1 May 2013. There were no options granted to key management personnel during the year. The value of options exercised during the year is calculated as the market price of shares of the Company as at close of trading on the date the options were exercised after deducting the price paid to exercise the option. No options were forfeited during the current or prior year due to performance criteria not being achieved. There have been no alterations to the terms and conditions of options awarded as remuneration since their award date. TABLE 5: SHARES ISSUED ON EXERCISE OF OPTIONS (CONSOLIDATED) 2013 OTHER KMP T Hinkley K Massey Total shares issued no. paid per share (note 27) $ unpaid per share $ 200,000 123,782 323,782 $0.4205 $0.4205 - - Signed in accordance with a resolution of the directors. Mr Mark Clark Managing Director Perth, 16 September 2013 The information in this report that relates to exploration results, estimates of mineral resources and ore reserves in relation to the Duketon Gold Project and the McPhillamys Gold Project is based on and fairly represents information and supporting documentation that has been compiled by Mr Morgan Hart who is a member of the Australasian Institute of Mining and Metallurgy. Mr Hart has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Morgan Hart is a director and full time employee of Regis Resources Ltd and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 38 Auditor’s Independence Declaration Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Regis Resources Limited I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year, ended 30 June 2013 there have been: (i) (ii) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Trevor Hart Partner Perth 16 September 2013 39 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration Corporate Governance Statement The Board of Directors of Regis Resources Limited is responsible for establishing the corporate governance framework of the consolidated entity having regard to the ASX Corporate Governance Council published guidelines as well as its corporate governance principles and recommendations. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. Corporate Governance Disclosures The Board and management are committed to corporate governance and, to the extent that they are applicable to the Company, have followed the “Principles of Good Corporate Governance and Best Practice Recommendations” issued by the Australian Securities Exchange (“ASX”) Corporate Governance Council. PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT The Board’s role is to increase shareholder value within an appropriate framework which safeguards the rights and interests of the Company’s shareholders. It assumes responsibility for overseeing the affairs of the Group by ensuring that they are carried out in a professional and ethical manner and that business risks are effectively managed. The Board meets formally on a regular basis to conduct appropriate business. The primary responsibilities of the Board include the following: » Development of corporate objectives and strategy with management and approving plans, new investments, major capital and operating expenditures and major funding activities proposed by management; » Monitoring actual performance against defined performance expectation and reviewing operating information to understand at all times the state of the health of the Company; » Appointing, evaluating, rewarding and if necessary the removal of the Managing Director and senior management; » Overseeing the management of business risks, safety and occupational health, environmental issues and community development; » Satisfying itself that the financial statements of the Company fairly and accurately set out the financial position and financial performance of the Company for the period under review, including approval of the annual, half yearly and quarterly reports; » Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that proper operational, financial, compliance, risk management and internal control processes are in place and functioning appropriately; » Ensuring that appropriate audit arrangements are in place; » Ensuring that Regis acts legally and responsibly on all matters; and » Reporting to and advising shareholders. A copy of the Board Charter is available on the Company’s website. Those who have the opportunity to materially influence the integrity, strategy and operation of the Company and its financial performance are considered to be senior executives. The role of senior executives is to progress the strategic direction provided by the Board. The matters delegated to senior executives include the following: » To develop and recommend internal control and accountability systems for the Company and if approved, ensure compliance with such systems; » To prepare corporate strategy and performance objectives for approval by the Board; » To prepare systems of risk management and internal compliance and controls, codes of conduct, legal compliance and any other regulatory compliance and if approved, ensure compliance with such systems; » To monitor employees performance, recommend appropriate resources and review and approve remuneration; » To prepare all financial reports, tax returns, budgets and any other appropriate financial reports, meet all statutory deadlines and monitor performance against budgets; 40 » Prepare recommendations on acquisitions and R Kestel divestments of assets; » To implement decisions of the Board on key M Okeby No set term agreed, other than per the Company’s constitution No set term agreed, other than per the Company’s constitution standards of the Company covering such areas as ethical standards, reputation and culture of the Company and influence and provide guidance for employees on these areas; and » To protect the assets of the Company. A copy of the matters reserved for senior executives is available on the Company’s website. The Remuneration and Nomination Committee is responsible for reviewing the performance of senior executives. In addition, the Remuneration and Nomination Committee review the actual performances of the Group and assess the senior executive’s appraisal of separate departments and individuals’ personal performance. The Remuneration and Nomination Committee ratify remuneration recommendations by senior executives. A formal performance review was conducted in July 2013. Under the Company’s Constitution, directors (other than the Managing Director) are required to retire every three years and may submit themselves for re-election. Directors appointed during the year must retire at the next Annual General Meeting of the Company and may submit themselves for re-election. The Board follows a process to select and appoint new directors as required taking into account candidates’ breadth of experience, skills, integrity and willingness to devote time and effort to the Company. REMUNERATION AND NOMINATION COMMITTEE The Board is responsible for determining and reviewing compensation arrangements for the directors themselves, the Managing Director and the executive team. The Board has established a Remuneration and Nomination Committee comprising three (3) independent non-executive directors. PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE The members of the Remuneration and Nomination Committee at the date of this Report are: Directors of Regis are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgment. Independent directors are non-executive directors who are not substantial shareholders of the Company and do not have any material contractual arrangements with the Company. The following directors are considered to be independent: name position N Giorgetta Independent Non-Executive Chairman » R Kestel (Chairman) » N Giorgetta » M Okeby It is the Company’s objective to provide maximum shareholder benefit from the retention of a high quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the Remuneration and Nomination Committee links the nature and amount of executive directors’ and officers’ remuneration to the Company’s financial and operational performance. The expected outcomes of the remuneration structure are: R Kestel Independent Non-Executive Director » Retention and motivation of key executives; M Okeby Independent Non-Executive Director There are procedures in place, agreed by the Board, to enable the directors in furtherance of their duties to seek independent professional advice at the Company’s expense. The term in office held by each director is as follows: name term N Giorgetta No set term agreed, other than per the Company’s constitution M Clark 3 years M Hart 3 years » Attraction of high quality management to the Company; and » Performance incentives that allow executives to share in the success of the Company. For full discussion of the Company’s remuneration philosophy and framework and the remuneration received by directors and executives in the current period please refer to the Remuneration Report, which is contained within the Directors’ Report. The Chairman of the Board is responsible for the evaluation of the Board and, when deemed appropriate, Board committees and individual Directors. Performance evaluation of the Board is carried out by 41 means of ongoing review by the Chairman with reference to the composition of the Board and its suitability to carry out the Company’s objectives. The Chair may carry out the review by various means including, but not limited to: » Meeting with and interviewing each Board member; » Consultation with the Remuneration and Nomination Committee; » Circulation of internal review tools such as formal questionnaires and reports; and » Outsourcing to independent specialist consultants. behaviour in the exercise of their duties. They are required to: » not discriminate against any staff member or potential employee; » » » » carry out their duties in compliance with the law at all times; to use the Group’s assets responsibly; to respect the confidentiality of the Group ‘s business dealings; take responsibility for their own actions and for the consequences surrounding their own actions; A review of the Board’s performance for the financial year ending 30 June 2013 was conducted by the Chairman in August 2013. » not seek, accept or provide gratuities to obtain or retain a business advantage that is not legitimately due; and A copy of the Company’s process for evaluating the performance of the Board, its committees and individual directors is on the Company’s website. There is no scheme to provide retirement benefits to non-executive directors. A copy of the Remuneration and Nomination Committee Charter is available on the Company’s website. PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING The Group operates under a Code of Conduct that sets out the ethical standards under which the Company operates when dealing with internal and external parties. This Code requires all directors, officers, employees and contractors of the Company to respect and comply with all laws and regulations and maintain a high standard of professionalism, ethics, and » not participate in party politics and must not make payments to political parties. A copy of the Code of Conduct can be found at the Company’s website. The Company has established a Diversity Policy which commits Regis to workplace diversity and recognises the benefits arising from employee and Board diversity. Our policy is to recruit and manage on the basis of qualification and performance; regardless of gender, age, nationality, race, religious beliefs, cultural background or sexuality. The Board is responsible for developing measurable objectives and strategies to meet the objectives of gender diversity. The Board reviews the progress of achieving these measurable objectives through monitoring, evaluation, and reporting mechanisms. In accordance with the policy the Board has developed the following measurable objectives to achieve and report on gender diversity: aCtion progress Promote and publish a Diversity Policy. Establish and maintain an effective gender diversity measurement and reporting framework. The Diversity Policy, adopted by the Board, is published on the Company’s website. Regis completes the Equal Opportunity for Women in the Workplace Agency (EOWA) Report annually and publishes the report on its website. Internal reporting procedures have been modified to ensure regular reporting of gender diversity within the organisation to the Board. The provision of suitable working arrangements for employees undertaking maternity and paternity leave and the ongoing engagement with these employees during this period. The Company implemented a paid parental leave policy which endeavours to financially cover a portion of an employee’s leave period. Ensure that when the Board next recruits for an independent non-executive Director, at least one woman must be included in the list of potential candidates. The Board considers that it is currently of sufficient size and diversity of skills to not warrant any additional Directors. The Board will continue to monitor its size and skill requirements on an ongoing basis. 42 The breakdown of gender within the Company is as follows: Board of Directors Other Key Management Personnel Other Employees Total The Company also has a Securities Trading Policy, a copy of which is located on the Company’s website. The key element of the policy is that directors and employees must not deal in any security of the Company whilst in possession of inside information. In addition Restricted Persons as defined by the policy are prohibited from buying or selling Company securities within: » one week prior to the release of the Company’s quarterly reports; » » » two weeks prior to the release of the Company’s half year financial results; two weeks prior to the release of the Company’s full year financial results; and two weeks prior to the release of a disclosure document offering securities in the Company. PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING The Board has established an Audit and Risk Management Committee, which operates under a Charter approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non- financial considerations. The Board has delegated responsibility for establishing and maintaining a framework of internal control and ethical standards to the Audit and Risk Management Committee. The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. The Audit and Risk Management Committee comprises of the following three independent non-executive directors: » R Kestel (Chairman) » N Giorgetta » M Okeby Women men total female representation 0 0 64 64 5 6 173 184 5 6 237 248 0% 0% 27% 26% A copy of the Audit and Risk Management Committee Charter is available on the Company’s website. The Company’s policy is to appoint external auditors who clearly demonstrate independence. The performance of the external auditor is reviewed annually by the Audit and Risk Management Committee. KPMG, who are the current external auditors, have a policy of rotating the audit partner at least every 5 years. The current lead engagement partner was appointed during the 2010 financial year. PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE The Company has a continuous disclosure policy designed to meet its compliance obligations and to ensure that all matters, which may require announcement to the Australian Securities Exchange, are brought to the attention of directors immediately. A copy of the continuous disclosure policy is available on the Company’s website. PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS The Board ensures that shareholders are kept informed of all major developments that affect their shareholding or the Company’s state of affairs through quarterly, half-yearly, annual and ad hoc reports. All shareholders are encouraged to attend the Annual General Meeting to meet the Chairman and directors and to receive the most updated report on Group activities. The external auditor of the Company will be in attendance at the Annual General Meeting to answer shareholders’ questions. The Company maintains a website at http://www. regisresources.com to provide shareholders with up to date information on the Company’s activities. Shareholders may also communicate with the Company through its e-mail address enquiries@regisresources. com. A copy of the Company’s Communication with Shareholders policy can be found on the Regis website. 43 PRINCIPLE 7: RECOGNISE AND MANAGE RISK The Board recognises that the identification and management of risk, including calculated risk taking, is an essential part of creating long term shareholder value. Management reports directly to the Board on the Company’s key risks and is responsible, through the Managing Director, for designing, maintaining, implementing and reporting on the adequacy of the risk management and internal control systems. The Audit and Risk Management Committee monitors the performance of the risk management and internal control systems and reports to the Board on the extent to which it believes the risks are being managed and the adequacy and comprehensiveness of risk reporting from management. The Board must satisfy itself, on a regular basis, that risk management and internal control systems for the Company have been fully developed and implemented. The Company has identified specific risk management areas being strategic, operational and compliance. An internal officer is responsible for ensuring the Company complies with its regulatory obligations. Management also meets regularly to deal with specific areas of risk such as OH&S issues, environmental risk and tenement management. The CEO and CFO also provide written assurance to the Board on an annual basis that, to the best of their knowledge and belief, the declaration provided by them in accordance with Section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in relation to financial reporting risks. The assurances from the CEO and CFO can only be reasonable rather than absolute due to factors such as the need for judgement and possible weaknesses in control procedures. Any material changes in the Company’s circumstances are released to the ASX and included on the Company’s website. A statement of the Company’s existing risk management and internal controls is available on the Regis website. PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY As disclosed under Principle 2, the Company has a Remuneration and Nomination Committee. The details of the directors and executives remuneration policies are provided in the Directors’ Report under the heading “Remuneration Report”. 44 FINANCIAL STATEMENTS 46 47 48 49 Consolidated Statement of Profit or Loss and Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows 50 Notes to the Financial Statements 84 Directors’ Declaration 85 Independent Auditor’s Report 87 Tenement Information 89 ASX Additional Information Consolidated Statement of Profit or Loss and Comprehensive Income for the year ended 30 June 2013 Gold sales Interest revenue Revenue Cost of goods sold Gross profit Other income Investor and corporate costs Personnel costs Share-based payment expense Occupancy costs Other corporate administrative expenses Exploration and evaluation written off Other expenses Finance costs Profit before tax Income tax expense Profit from continuing operations OTHER COMPREHENSIVE INCOME Other comprehensive income for the period, net of tax Total comprehensive income for the period Profit attributable to members of the parent Total comprehensive income attributable to members of the parent Basic earnings per share attributable to ordinary equity holders of the parent (cents per share) Diluted earnings per share attributable to ordinary equity holders of the parent (cents per share) Consolidated 2013 $’000 416,117 717 416,834 (207,247) 209,587 3,737 (1,265) (3,869) (2,616) (498) (454) (1,396) (375) (2,157) 200,694 (54,967) 145,727 - - 145,727 145,727 30.49 30.11 2012 $’000 170,355 1,149 171,504 (85,778) 85,726 1,658 (1,998) (2,906) (2,039) (463) (784) (786) (268) (3,391) 74,749 (6,510) 68,239 - - 68,239 68,239 15.51 15.18 note 7(a) 6 18 7(b) 7(c) 8 9 9 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 46 Consolidated Statement of Financial Position as at 30 June 2013 Consolidated CURRENT ASSETS Cash and cash equivalents Gold bullion awaiting settlement Receivables Inventories Financial assets held-to-maturity Other current assets Total current assets NON-CURRENT ASSETS Deferred mining costs Plant and equipment Exploration and evaluation expenditure Mine properties under development Mine properties Total non-current assets Total assets CURRENT LIABILITIES Trade and other payables Interest-bearing liabilities Provisions Total current liabilities NON-CURRENT LIABILITIES Interest-bearing liabilities Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets EqUITY Issued capital Share option reserve Retained profits/(accumulated losses) Total equity note 10 11 12 13 14 15 16 17 18 19 20 21 22 23 22 8 23 24 25(b) 25(a) 2013 $’000 61,220 19,640 4,359 15,154 154 1,323 101,850 12,192 166,186 204,644 62,301 119,416 564,739 666,589 41,495 10 295 41,800 - 61,477 23,687 85,164 126,964 539,625 428,358 14,032 97,235 539,625 2012 $’000 1,353 8,313 2,686 4,016 10 387 16,765 10,555 55,487 29,293 167,919 38,461 301,715 318,480 28,276 4,883 684 33,843 25,194 6,510 14,999 46,703 80,546 237,934 275,010 11,416 (48,492) 237,934 The above statement of financial position should be read in conjunction with the accompanying notes. 47 Consolidated Statement of Changes in Equity for the year ended 30 June 2013 At 1 July 2012 Profit for the period Other comprehensive income Total comprehensive income for the year issued Capital $’000 275,010 - - - TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS: Share-based payments expense Shares issued, net of transaction costs At 30 June 2013 At 1 July 2011 Profit for the period Other comprehensive income Total comprehensive income for the year - 153,348 428,358 247,632 - - - TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS: Share-based payments expense Shares issued, net of transaction costs At 30 June 2012 - 27,378 275,010 Consolidated retained profits/ (aCCumulated losses) share option reserve total equity $’000 (48,492) 145,727 - 145,727 - - 97,235 (116,731) 68,239 - 68,239 - - (48,492) $’000 11,416 - - - 2,616 - 14,032 9,377 - - - 2,039 - 11,416 $’000 237,934 145,727 - 145,727 2,616 153,348 539,625 140,278 68,239 - 68,239 2,039 27,378 237,934 The above statement of changes in equity should be read in conjunction with the accompanying notes. 48 Consolidated Statement of Cash Flows for the year ended 30 June 2013 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from gold sales Payments to suppliers and employees Option premium income Interest received Interest paid Proceeds from rental income R&D rebate received note Consolidated 2013 $’000 404,790 (164,805) 2,363 560 (1,646) 16 - Net cash from operating activities 10(b) 241,278 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of plant and equipment Payments for exploration and evaluation (net of rent refunds) Payments for exploration assets (net of cash) Proceeds on disposal of held-to-maturity investments Payments for mine properties under development Payments for mine properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payment of transaction costs Payment of finance lease liabilities Repayment of borrowings Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June 10(a) The above statement of cash flows should be read in conjunction with the accompanying notes. (12,780) (30,229) (5,049) (20) (81,318) (25,012) (154,408) 3,413 (68) - (30,348) (27,003) 59,867 1,353 61,220 2012 $’000 168,547 (71,719) 1,370 1,228 (3,342) - 141 96,225 (7,170) (15,755) - 1,165 (114,512) (1,107) (137,379) 15,424 (43) (264) - 15,117 (26,037) 27,390 1,353 49 Notes to the Financial Statements for the year ended 30 June 2013 1. CORPORATE INFORMATION The financial report of Regis Resources Limited (the “Company”) for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the directors on 16 September 2013. » AASB 10 Consolidated Financial Statements establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities. Regis Resources Limited is a for-profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The consolidated financial statements of the Company as at and for the year ended 30 June 2013 comprise the Company and its subsidiaries (collectively referred to as the “Group”). The nature of operations and principal activities of the Group are described in the Directors’ Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis. The financial report is prepared in Australian dollars and all values are rounded to the nearest thousand dollars ($000s) unless otherwise stated. (B) COMPLIANCE WITH IFRS The consolidated financial statements comply with Australian Accounting Standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board. (C) NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. Consequential amendments were also made to other standards via AASB 2011-7. The amendments, which will become mandatory for Group’s 30 June 2014 financial statements, are not expected to have any impact on the financial statements. » AASB 11 Joint Arrangements replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly- controlled Entities – Non-monetary Contributions by Joint Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves are accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. Consequential amendments were also made to other standards via AASB 2011-7 and amendments to AASB 128. The amendments, which will become mandatory for Group’s 30 June 2014 financial statements, are not expected to have any impact on the financial statements. The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2013, but have not been applied in preparing this financial report. » AASB 12 Disclosure of Interests in Other Entities includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgements made by management to determine whether control 50 exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests. The amendments, which will become mandatory for Group’s 30 June 2014 financial statements, are not expected to have any impact on the financial statements. » AASB 119 Employee Benefits includes a revised definition of short-term employee benefits. The distinction between short-term and other long-term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date. Consequential amendments were also made to other standards via AASB 2011-10. The amended standard, which will become mandatory for the Group’s 30 June 2014 financial statements, is not expected to have a material impact on the financial statements. » Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be capitalised as part of an asset, if an entity can demonstrate that it is probable future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of an ore body for which access has been improved. This asset is to be called the “stripping activity asset”. The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied unless another method is more appropriate. Interpretation 20 will become mandatory for the Group’s 30 June 2014 financial statements. The Group has not yet determined the potential effect of the interpretation. » AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle makes amendments resulting from the 2009-2011 Annual Improvements Cycle. The standard addresses a range of improvements, including the clarification of the comparative information requirements when an entity provides a third balance sheet (AASB 101 Presentation of Financial Statements). The amended standards, which will become mandatory for the Group’s 30 June 2014 financial statements, relate to disclosures only and are not expected to have a material impact on the financial statements. » Interpretation 21 Levies confirms that a liability to pay a levy is only recognised when the activity that triggers the payment occurs. Applying the going concern assumption does not create a constructive obligation. Interpretation 21 will become mandatory for the Group’s 30 June 2015 financial statements. The Group has not yet determined the potential effect of the interpretation. (D) BASIS OF CONSOLIDATION The consolidated financial statements comprise the financial statements of Regis Resources Limited and its subsidiaries as at and for the year ended 30 June each year. Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intragroup transactions have been eliminated in full. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising, at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or discount on acquisition. The Company has a 100% interest in all subsidiaries and therefore does not reflect any non-controlling interests. In the Company’s financial statements, investments in subsidiaries are carried at cost less any impairment charge. 51 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) (E) OPERATING SEGMENTS An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors. Operating segments have been identified based on the information provided to the chief operating decision makers, being the executive management team. Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements. Information about other business activities and operating segments that are below the quantitative criteria are combined and disclosed in a separate category for “all other segments”. amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing liabilities in current liabilities on the statement of financial position. (H) BULLION AWAITING SETTLEMENT Bullion awaiting settlement comprises gold that has been received by the refiner prior to period end but which has not yet been delivered into a sale contract. Bullion awaiting settlement is initially recognised at fair value less costs to sell. (I) RECEIVABLES Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. (J) INVENTORIES Gold bullion, gold in circuit and ore stockpiles are physically measured or estimated and valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs of selling the final product. (F) FOREIGN CURRENCY TRANSLATION Functional and presentation currency Both the functional and presentation currency of Regis Resources Limited and its subsidiaries is Australian dollars. Cost is determined by the weighted average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting ore into gold bullion. Transactions and balances Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transactions. The Group does not hold any monetary assets or liabilities denominated in foreign currencies as at the balance date. Foreign currency gains or losses have been recognised in the profit and loss. (G) CASH AND CASH EqUIVALENTS Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of 3 months or less that are readily convertible to known Consumable stores are valued at the lower of cost and net realisable value. (K) INVESTMENTS AND OTHER FINANCIAL ASSETS Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or available- for-sale financial assets. The classification depends on the purpose for which the investments were acquired or originated. Designation is re-evaluated at each reporting date, but there are restrictions on reclassifying to other categories. 52 When financial assets are initially recognised, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. Recognition and derecognition All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial asset has expired or when the entity transfers substantially all of the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets. Subsequent measurement HELD-TO-MATURITY INVESTMENTS Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments that are intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to-maturity such as bonds are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between the parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. (L) DERIVATIVES The Group uses derivative financial instruments such as gold call options to manage the risk associated with commodity price fluctuations. active market is determined using appropriate valuation techniques. Changes in fair value are recognised in the statement of profit or loss and other comprehensive income, net of any transaction costs. (M) PLANT AND EqUIPMENT Items of plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs include the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in profit or loss as incurred. The cost of acquired assets also includes (i) the initial estimate at the time of installation and during the period of use, when relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and (ii) changes in the measurement of existing liabilities recognised for these costs resulting from changes in the timing or outflow of resources required to settle the obligation or from changes in the discount rate. Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment. Depreciation Depreciation of mine specific plant and equipment and buildings and infrastructure is charged to the statement of profit or loss and other comprehensive income on a unit-of-production basis over the economically recoverable reserves of the mine concerned, except in the case of assets whose useful life is shorter than the life of the mine, in which case the straight-line method is used. The unit of account is tonnes of ore milled. Depreciation of non-mine specific plant and equipment is charged to the statement of profit or loss and other comprehensive income and exploration and evaluation assets on a straight-line basis over the estimated useful lives of each part of an item of plant and equipment in current and comparative periods as follows: Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently measured at fair value. The fair value of derivative financial instruments that are traded on an » Plant and equipment: . . . . . . . . . . . . . . . .3 - 10 years » Fixtures and fittings: . . . . . . . . . . . . . . . . 3 - 20 years » Leasehold improvements: . . . . . . . . . . . . . . . 10 years 53 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) Depreciation methods, useful lives and residual values are reviewed at each reporting date. Derecognition An item of plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal. (O) DEFERRED MINING COSTS Stripping costs incurred in the development of a mine before production commences are capitalised as part of the cost of constructing the mine and subsequently amortised over the life of the mine on a units-of- production basis. (N) EXPLORATION AND EVALUATION ASSETS AND EXPENDITURE Exploration and evaluation assets include the costs of acquiring licences, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and evaluation expenditure is capitalised on an area of interest basis. Costs incurred before the Group has obtained the legal rights to explore an area are recognised in the statement of profit or loss and other comprehensive income. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: » the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or » activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit is not larger than the area of interest. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine properties under development. No amortisation is charged during the exploration and evaluation phase. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. Stripping costs incurred subsequently during the production stage of operations are deferred to the extent that the current period strip ratio (i.e. the ratio of waste to ore) exceeds the life of mine strip ratio. Such deferred costs are then charged to the statement of profit or loss and other comprehensive income to the extent that, in subsequent periods, the current period ratio falls short of the life of mine strip ratio. The calculated strip ratio and the remaining life of mine are reassessed by the directors annually. Changes are accounted for prospectively from the date of change. (P) MINE PROPERTIES UNDER DEVELOPMENT Mine properties under development represents the costs incurred in preparing mines for production and includes plant and equipment under construction, stripping and waste removal costs incurred before production commences. These costs are capitalised to the extent they are expected to be recouped through the successful exploitation of the related mining leases. Once production commences, these costs will be amortised using the units-of-production method based on the estimated economically recoverable reserves to which they relate or are written off if the mine property is abandoned. Amortisation of mine properties development expenditure will commence at the point when production from the geological area of interest commences. (q) MINE PROPERTIES Mine properties represents expenditure in respect of exploration, evaluation, feasibility and pre-production operating costs incurred by the Group previously accumulated and carried forward in mine properties under development in relation to areas of interest in which mining has now commenced. Mine properties are stated at cost, less accumulated amortisation and accumulated impairment losses. Amortisation Mine properties are amortised on a unit-of-production basis over the economically recoverable reserves of the mine concerned. The unit of account is tonnes of ore milled. 54 (R) LEASES The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the assets. Group as a lessee Operating lease payments are recognised as an expense in the statement of profit or loss and other comprehensive income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability. (S) IMPAIRMENT 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 Group 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. The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses, other than in respect of goodwill, are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Receivables with a short duration are not discounted in assessing the recoverable amount. Impairment is recognised when objective evidence is available that a loss event has occurred. (T) TRADE AND OTHER PAYABLES Trade and other payables are carried at amortised cost and, due to their short-term nature, they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and generally paid within 30 days of recognition. (U) INTEREST-BEARING LOANS AND BORROWINGS All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed as part of finance costs in the period incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. (V) PROVISIONS A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the provision can be reliably measured. Where the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 55 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) Site rehabilitation The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation is incurred. The nature of rehabilitation activities includes dismantling and removing structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation of affected areas. Typically the obligation arises when the assets are installed at the production location. The provision is the best estimate of the present value of the expenditure required to settle the rehabilitation obligation at the reporting date, based on current legal requirements and technology. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related mining assets. Over time, the liability is increased for the change in the present value based on the discount rates that reflect the current market assessments and the risks specific to the liability. This increase in the provision due to the passage of time is recognised as a finance cost in the statement of profit or loss and other comprehensive income. Additional disturbances or changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation provision when incurred. For closed sites, changes to estimated costs are recognised immediately in the statement of profit or loss and other comprehensive income. (W) EMPLOYEE BENEFITS Wages, salaries and annual leave Liabilities for wages, salaries, superannuation and annual leave are recognised as employee benefits in respect of employees’ services up to the reporting date. They are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay when the liabilities are settled and include related on-costs, such as workers compensation insurance and payroll tax. Long service leave The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (X) SHARE-BASED PAYMENT TRANSACTIONS Equity settled transactions Share-based compensation benefits are provided to directors, officers and employees under the Regis Resources Limited Share Option Plans, which allows participants to acquire shares of the Company, and the Regis Resources Employee Share Plan, which allows for the issue of shares in the Company to eligible employees. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black- Scholes option pricing model, further details of which are given in Note 26. The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). At each subsequent reporting date until vesting, the cumulative charge to the statement of profit or loss and other comprehensive income is the product of: » The grant date fair value of the award; » The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and » The expired portion of the vesting period. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition or non-vesting condition is considered to vest irrespective of whether or not that market or non-vesting is fulfilled, provided that all other conditions are satisfied. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. 56 If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. (Y) CONTRIBUTED EqUITY Ordinary shares are classified as equity. Transaction costs of an equity transaction being those directly attributable to the issue of shares or options are recognised as a deduction from equity, net of any related income tax effects. (z) REVENUE Revenue is recognised and measured at fair value of the consideration received or receivable to the extent that it is probable that the economic benefit will flow to the entity and the revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognised: Gold sales Revenue is recognised when there has been a transfer of risks and rewards from the Group to an external party, no further processing is required by the Group, quality and quantity of the goods has been determined with reasonable accuracy, the selling price is fixed or determinable, and collectability is probable. The point at which risk and rewards passes for the majority of the Group’s commodity sales is upon dispatch of the gold bullion from the mine site. Adjustments are made for variations in commodity price, assay and weight between the time of dispatch and the time of final settlement. Interest Interest income is recognised as it accrues using the effective interest method. (AA) INCOME AND OTHER TAXES Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax balances are determined using the balance sheet method, which provides for temporary differences based on the carrying amounts of assets and liabilities in the statement of financial position. Any current and deferred taxes attributable to amounts recognised in equity are also recognised directly in equity. Deferred tax is not recognised for the following temporary differences: » the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and » differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Tax consolidation The Company and its wholly-owned Australian resident entities became part of a tax-consolidated group on 14 December 2006. As a consequence, all members of the tax-consolidation group are taxed as a single entity from that date. The head entity within the tax- consolidation group is Regis Resources Limited. Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the separate taxpayer within group approach by reference to the carrying amounts of assets and liabilities in the separate financial statement of each entity and the tax values applying under tax consolidation. Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity in the tax-consolidated group and are recognised by the Company as amounts payable (receivable) to/(from) other entities in the tax-consolidated group in 57 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) conjunction with any tax funding arrangement amounts (refer Note 8). Any difference between these amounts is recognised by the Company as an equity contribution or distribution. The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which asset can be utilised. Any subsequent period adjustment to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only. Other taxes Revenue, expenses and assets are recognised net of the amount 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. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian Taxation Office (“ATO”) is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (AB) EARNINGS PER SHARE The Group presents basic and diluted earnings per share (“EPS”) data for ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise listed options and share options granted to employees. 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the financial statements in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. (A) SIGNIFICANT ACCOUNTING JUDGEMENTS Determination of mineral resources and ore reserves The determination of mineral resources and ore reserves impacts the accounting for asset carrying values. Regis Resources Limited estimates its mineral resources and ore reserves in accordance with the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 (the “JORC” Code). The information on mineral resources and ore reserves was prepared by or under the supervision of Competent Persons as defined in the JORC Code. The amounts presented are based on the mineral resources and ore reserves determined under the JORC Code. There are numerous uncertainties inherent in estimating mineral resources and ore reserves, and assumptions that are valid at the time of estimation may change significantly when new information becomes available. 58 Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may ultimately result in reserves being restated. Recovery of deferred tax assets Judgement is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in Australia. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted. Additionally, future changes in tax laws in Australia could limit the ability of the Group to obtain tax deductions in future periods. (B) SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS Impairment of exploration and evaluation assets The future recoverability of capitalised exploration and evaluation expenditure is dependent upon a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact future recoverability include the level of reserves and resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which the determination is made. In addition, exploration and evaluation expenditure is capitalised if activities in an area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which the determination is made. Rehabilitation obligations The Group assesses site rehabilitation liabilities annually. The provision recognised is based on an assessment of the estimated cost of closure and reclamation of the areas using internal information concerning environmental issues in the exploration and previously mined areas, together with input from various environmental consultants, discounted to present value. Significant estimation is required in determining the provision for site rehabilitation as there are many factors that may affect the timing and ultimate cost to rehabilitate sites where mining and/or exploration activities have previously taken place. These factors include future development/exploration activity, changes in the cost of goods and services required for restoration activity and changes to the legal and regulatory framework. These factors may result in future actual expenditure differing from the amounts currently provided. Share-based payments The Group is required to use assumptions in respect of the fair value models used in determining share-based payments to employees in accordance with the requirements of AASB 2 Share–based payment. Further information regarding share-based payments and the assumptions used is set out in Note 26. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. Unit-of-production method of depreciation/amortisation The Group uses the unit-of-production basis when depreciating/amortising life of mine specific assets which results in a depreciation/amortisation charge proportionate to the depletion of the anticipated remaining life of mine production. Each item’s economic life, which is assessed annually, has due regard for both its physical life limitations and to present assessments of economically recoverable reserves of the mine property at which it is located. These calculations require the use of estimates and assumptions. Deferred mining costs The Group defers mining costs incurred during the production stage of its operations which are calculated in accordance with the accounting policy described above. Changes in an individual mine’s design will generally result in changes to the life-of-mine waste to 59 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) ore ratio. Changes in other technical or economic parameters that impact reserves will also have an impact on the life of mine ratio even if they do not affect the mine’s design. Changes to the life of mine are accounted for prospectively. Inventories Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the product based on prevailing spot metals process at the reporting date, less estimated costs to complete production and bring the product to sale. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data, and the estimated recovery percentage. Stockpile tonnages are verified by periodic surveys. 4. FINANCIAL RISK MANAGEMENT Overview The Group has exposure to the following risks from its use of financial instruments: » Credit risk » Liquidity risk » Market risk This note presents information about the Group’s exposure to each of the above risks and its objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this financial report. risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Group’s Audit and Risk Management Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Credit Risk The Group has determined that it currently has no significant exposure to credit risk as at reporting date. 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 always have sufficient liquidity to meet liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to the Group’s reputation. The Group uses daily and monthly cash forecasting monitoring cash flow requirements. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Group’s exposure to movements in the gold price, which it manages through the use of gold forward contracts, is discussed at Note 31(e). The gold forward sale contracts do not meet the criteria of financial instruments for accounting purposes on the basis that they meet the normal purchase/sale exemption because physical gold will be delivered into the contract. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Audit and Risk Management Committee is responsible for developing and monitoring risk management policies. The committee reports regularly to the Board of Directors on its activities. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor » Interest rate risk: The Group’s exposure to interest rate risk has been minimised since the substantial repayment of the secured project loan facility with Macquarie Bank Limited (“MBL”) in November 2012. » Foreign currency risk: The Group is occasionally exposed to foreign currency risk when long lead items are purchased in a currency other than Australian dollars. The Group maintains all of its cash in Australian dollars and does not currently hedge these purchases. 60 » Equity price risk: The Group does not have any exposure to movements in equity prices. 5. SEGMENT INFORMATION Identification of reportable segments The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing Director and his management team (the chief operating decision makers, or “CODMs”) in assessing performance and in determining the allocation of resources. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s results are reviewed regularly by the CODMs to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the CODMs include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), exploration and evaluation assets relating to areas of interest where an economically recoverable reserve is yet to be delineated, head office expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, conduct exploration and evaluation activities and develop mine properties. The Group currently has two reportable segments which comprise the Duketon Gold Project being the Moolart Well Gold Mine and the Garden Well Gold Mine, which incorporates the Rosemont Gold Project. At 30 June 2013, development of the Rosemont Gold Project was ongoing and consequently it has not yet earned any revenues or incurred non-capitalised expenses. Operations commenced at the Garden Well Gold Mine in September 2012, as such there is no comparative financial information for segment revenue and results. Accounting policies and inter-segment transactions The accounting policies used by the Group in reporting segments internally are the same as those contained in Note 2 to the accounts and in the prior period. There have not been any inter-segment transactions in the current or prior years. Unallocated items The following items and associated assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: » Interest revenue and finance costs; » Corporate administrative costs; » Exploration and evaluation expenditure on areas of interest prior to the definition of a reserve and determination of the technical feasibility and commercial viability. The following table presents financial information for reportable segments for the years ended 30 June 2013 and 30 June 2012: 61 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) Continuing operations moolart Well gold mine garden Well gold mine unalloCated $’000 $’000 $’000 30 June 2013 SEGMENT REVENUE Sales to external customers Other revenue Total segment revenue 166,011 - 166,011 Total revenue per the statement of profit or loss and other comprehensive income Interest expense Exploration and evaluation expenditure written off - - 250,106 - 250,106 - - Depreciation and amortisation 19,148 24,151 Depreciation capitalised - 717 717 1,698 1,396 274 Total depreciation and amortisation recognised in the statement of profit or loss and other comprehensive income total $’000 416,117 717 416,834 416,834 1,698 1,396 43,573 (178) 43,395 SEGMENT RESULT Segment net operating profit/(loss) before tax 81,940 126,926 (8,172) 200,694 SEGMENT ASSETS Segment assets Capital expenditure 30 June 2012 SEGMENT REVENUE Sales to external customers Other revenue Total segment revenue 94,222 9,928 170,355 - 170,355 Total revenue per the statement of profit or loss and other comprehensive income Interest expense Exploration and evaluation expenditure written off Depreciation and amortisation Depreciation capitalised - - 24,274 291,831 280,536 666,589 165,879 156,878 332,685 - - - - - - - 1,149 1,149 2,930 786 149 170,355 1,149 171,504 171,504 2,930 786 24,423 (62) 24,361 Total depreciation and amortisation recognised in the statement of profit or loss and other comprehensive income SEGMENT RESULT Segment net operating profit/(loss) before tax 84,577 - (9,828) 74,749 SEGMENT ASSETS Segment assets Capital expenditure 107,854 15,497 168,391 155,773 42,235 17,314 318,480 188,584 62 6. OTHER INCOME Realised gain on gold options Movement in rehabilitation provision Exploration rent refunds Rental income note (i) Consolidated 2013 $’000 2012 $’000 2,363 1,354 4 16 3,737 1,370 285 3 - 1,658 (i) During the financial year, the Group sold a gold call option for 50,000 ounces at A$1,600/oz (2012: 20,000oz at A$1,930/oz). The options expired unexercised and the above gains reflect the premiums received. 7. EXPENSES (A) COST OF GOODS SOLD Costs of production Royalties Depreciation of mine plant and equipment Amortisation of development costs (B) OTHER EXPENSES Gold swap fees Business development Exploration license application fees (C) FINANCE COSTS Interest expense Unwinding of discount on provisions 146,551 17,398 24,717 18,581 207,247 123 204 48 375 1,698 459 2,157 (D) DEPRECIATION, IMPAIRMENT AND AMORTISATION INCLUDED IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Depreciation expense Amortisation expense Less: Amounts capitalised Depreciation and amortisation charged to the statement of profit or loss and other comprehensive income 24,992 18,581 (178) 43,395 (E) LEASE PAYMENTS AND OTHER EXPENSES INCLUDED IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Minimum lease payments – operating lease Less: Amounts capitalised Recognised in the statement of profit or loss and other comprehensive income 342 (103) 239 63 53,863 7,641 13,356 10,918 85,778 53 173 42 268 2,931 460 3,391 13,505 10,918 (62) 24,361 294 (84) 210 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) note (F) EMPLOYEE BENEFITS EXPENSE Wages and salaries Defined contribution superannuation expense Share-based payments expense Employee bonuses Other employee benefits expense Less: Amounts capitalised Employee benefits expense recognised in the statement of profit or loss and other comprehensive income 8. INCOME TAX (A) THE MAJOR COMPONENTS OF INCOME TAX EXPENSE ARE: Current inCome tax Current income tax expense deferred inCome tax Consolidated 2013 $’000 22,241 1,946 2,616 467 1,937 29,207 (7,237) 21,970 2012 $’000 14,648 1,263 2,039 201 1,042 19,193 (8,084) 11,109 10,157 3,625 Relating to the origination and reversal of temporary differences Adjustment in respect of income tax of previous years Income tax losses utilised Income tax expense reported in the statement of profit or loss and other comprehensive income 44,586 224 - 54,967 (B) A RECONCILIATION BETWEEN TAX EXPENSE AND THE PRODUCT OF ACCOUNTING PROFIT BEFORE TAX MULTIPLIED BY THE GROUP’S APPLICABLE INCOME TAX RATE IS AS FOLLOWS: Accounting profit before income tax At the Group’s statutory income tax rate of 30% (2012: 30%) R&D rebate Deductible exploration acquired Share-based payments Share issue costs amortised Other non-deductible items Adjustment in respect of income tax of previous years Deferred tax assets utilised Income tax reported in the statement of profit or loss and other comprehensive income 200,694 60,208 - (6,253) 785 - 3 224 - 54,967 19,285 (184) (16,216) 6,510 74,749 22,425 (116) - 611 (13) 3 (184) (16,216) 6,510 64 (C) DEFERRED INCOME TAX Deferred income tax at 30 June relates to the following: deferred tax liaBilities Receivables Inventories Prepayments Plant and equipment Deferred mining costs Exploration and evaluation expenditure Mine properties under development Mine properties Interest-bearing liabilities Gross deferred tax liabilities Set off of deferred tax assets Net deferred tax liabilities deferred tax assets Plant and equipment Trade and other payables Provisions Expenses deductible over time Tax losses carried forward Gross deferred tax assets Set off of deferred tax assets Unrecognised tax losses Net deferred tax assets Consolidated note 2013 $’000 2012 $’000 3,039 1,197 - - 3,563 39,578 5,667 38,371 - 91,415 (29,938) 61,477 5,633 671 7,195 807 15,632 29,938 (29,938) - - 1,725 214 11 - 3,072 8,788 20,046 11,538 13 45,407 (38,897) 6,510 3,087 473 4,705 1,723 28,909 38,897 (38,897) - - (i) (i) Tax losses are available to carry forward indefinitely. The Group has recognised a deferred income tax asset in relation to these losses to offset deferred tax liabilities. (D) UNRECOGNISED TEMPORARY DIFFERENCES At 30 June 2013 there are no unrecognised temporary differences associated with the Group’s investment in subsidiaries (2012: $nil). (E) TAX CONSOLIDATION nature of tax funding arrangements and tax sharing arrangements The head entity, in conjunction with other members of the tax-consolidated group, have entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax liability/(asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity, resulting in the head entity recognising an inter-entity receivable/(payable) equal in amount to the tax liability/(asset) assumed. The inter-entity receivables/(payables) will be at call. Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities. 65 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) The head entity in conjunction with other members of the tax-consolidated group has also entered into a tax sharing agreement. The tax sharing agreement will provide for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote. Consolidated note 2013 $’000 2012 $’000 9. EARNINGS PER SHARE The following reflects income and share data used in the calculation of basic and diluted earnings per share. (A) EARNINGS USED IN CALCULATING EARNINGS PER SHARE Net profit/ attributable to ordinary equity holders of the parent 145,727 68,239 (B) WEIGHTED AVERAGE NUMBER OF SHARES Weighted average number of ordinary shares used in calculating basic earnings per share EFFECT OF DILUTION: Share options Weighted average number of ordinary shares adjusted for the effect of dilution no. shares thousands no. shares thousands 477,988 440,000 (c) 6,033 484,021 9,464 449,464 There are no instruments excluded from the calculation of diluted earnings per share that could potentially dilute basic earnings per share in the future because they are antidilutive for either of the periods presented. There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between reporting date and the date of completion of these financial statements. (C) INFORMATION ON THE CLASSIFICATION OF SECURITIES Options Options granted to employees (including KMP) as described in Note 26 are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent they are dilutive. These options have not been included in the determination of basic earnings per share. 10. CASH AND CASH EqUIVALENTS (A) CASH AND CASH EqUIVALENTS IN THE STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT Cash at banks and on hand Short-term deposits Total cash and cash equivalents 41,220 20,000 61,220 1,353 - 1,353 Cash at banks earn interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates At 30 June 2013, the Group had nil undrawn committed borrowing facilities available (2012: $49.6 million). Refer to Note 22. 66 (B) RECONCILIATION OF NET PROFIT AFTER INCOME TAX TO CASH FLOWS USED IN OPERATIONS Consolidated note 2013 $’000 2012 $’000 Net profit for the year ADJUSTMENTS FOR: Unwinding of discount on provisions Borrowing costs capitalised to qualifying asset Amortisation of transaction costs recognised against interest-bearing liabilities Employee bonuses (non-cash) Exploration expenditure written off Exploration rent refunds Share-based payments Depreciation and amortisation CHANGES IN ASSETS AND LIABILITIES (Increase)/decrease in receivables (Increase)/decrease in inventories (Increase)/decrease in other current assets (Increase)/decrease in deferred mining costs Increase/(decrease) in trade and other payables Increase/(decrease) in deferred tax liabilities Increase/(decrease) in provisions Net cash from operating activities 145,727 68,239 459 (97) 287 - 1,396 (4) 2,616 43,395 (12,672) (4,607) (933) 248 11,767 54,967 (1,271) 241,278 460 (540) 147 179 786 (3) 2,039 24,361 (2,053) 483 (148) (5,366) 1,382 6,510 (251) 96,225 (C) NON-CASH FINANCING AND INVESTING ACTIVITIES During the year ended 30 June 2013, the Company completed the acquisition of the McPhillamys Gold Project as described in Note 18(a). The consideration payable of $150 million was settled through the issue of 35,714,286 shares. During the year ended 30 June 2012, the Company terminated a royalty over the Garden Well Project through the issue of 4,038,364 shares. 11. GOLD BULLION AWAITING SETTLEMENT (CURRENT) Gold bullion awaiting settlement 19,640 8,313 At balance date, gold bullion awaiting settlement comprised 13,782 ounces at a weighted average realisable value of $1,424.98/oz (2012: 4,602 ounces at $1,806.29/oz) (A) FAIR VALUE AND CREDIT RISK Due to the short-term nature of the bullion awaiting settlement, the carrying value is assumed to approximate fair value. The maximum exposure to credit risk is the fair value. 67 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) Consolidated note 2013 $’000 2012 $’000 12. RECEIVABLES (CURRENT) GST receivable Fuel tax credit receivable Interest receivable Other receivables 3,282 738 170 169 4,359 Balances within receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due. (A) FAIR VALUE AND CREDIT RISK Due to the short-term nature of these receivables, their carrying value is assumed to approximate fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell) receivables to special purpose entities. 13. INVENTORIES (CURRENT) AT COST Ore stockpiles Gold in circuit Bullion on hand Consumable stores 6,119 4,836 2,087 2,112 15,154 2,070 519 16 81 2,686 1,069 1,662 - 1,285 4,016 14. FINANCIAL ASSETS HELD - TO - MATURITY CURRENT Term deposits 154 10 Term deposits are held as security against rehabilitation performance bonds. Term deposits earn a fixed rate of interest which at year end was 3.43% (2012: 4.32%). (A) FAIR VALUE Term deposits generally have a maturity between 30 and 90 days (2012: 30 to 60 days). Due to the underlying short-term nature of term deposits, their carrying value is assumed to approximate fair value. 15. OTHER CURRENT ASSETS Prepayments 1,323 387 16. DEFERRED MINING COSTS (NON-CURRENT) Deferred mining costs 12,192 10,555 These costs represent mining expenses deferred in accordance with the accounting policy disclosed in Note 2(o). 68 Consolidated freehold land leasehold improvements plant and equipment furniture and equipment Buildings and infrastruCture Capital Wip total $’000 $’000 $’000 $’000 $’000 $’000 $’000 17. PROPERTY, PLANT AND EqUIPMENT (NON-CURRENT) (A) RECONCILIATION OF CARRYING AMOUNTS AT THE BEGINNING AND END OF THE PERIOD At 1 July 2012 net of accumulated depreciation Additions Depreciation expense Transfers from mine properties under development Transfers Disposals At 30 June 2013 net of accumulated depreciation AT 30 JUNE 2013 Cost Accumulated depreciation Net carrying amount At 1 July 2011 net of accumulated depreciation Additions Depreciation expense Transfers Disposals At 30 June 2012 net of accumulated depreciation AT 30 JUNE 2011 Cost Accumulated depreciation Net carrying amount AT 30 JUNE 2012 Cost Accumulated depreciation Net carrying amount - 5,028 - - - - 518 70 (70) - - - 35,770 4,962 (17,236) 87,641 60 - 128 284 (96) - 41 - 18,653 4,148 (7,590) 29,019 159 - 418 4,539 - - (260) - 55,487 19,031 (24,992) 116,660 - - 5,028 518 111,197 357 44,389 4,697 166,186 5,028 - 5,028 - - - - - - - - - - - - 687 (169) 518 472 71 (52) 27 - 146,443 (35,246) 111,197 43,597 1,540 (9,482) 115 - 518 35,770 520 (48) 472 618 (100) 518 52,125 (8,528) 43,597 53,780 (18,010) 35,770 826 (469) 357 157 46 (79) 4 - 128 451 (294) 157 501 (373) 128 59,207 (14,818) 44,389 15,483 6,923 (3,892) 139 - 4,697 216,888 - (50,702) 4,697 166,186 291 412 - (285) - 60,000 8,992 (13,505) - - 18,653 418 55,487 18,819 (3,336) 15,483 25,881 (7,228) 18,653 291 - 291 418 - 418 72,206 (12,206) 60,000 81,198 (25,711) 55,487 (B) ASSETS PLEDGED AS SECURITY Macquarie Bank Limited (“MBL”) holds a first ranking, registered fixed and floating charge over all of the assets of Regis Resources Limited and its wholly-owned subsidiary, Duketon Resources Pty Limited as security for the debt facility provided by MBL to fund construction of the Duketon Gold Project, which comprises both the Moolart Well Gold Mine and Garden Well Gold Mine. Refer to Note 22. 69 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) Consolidated note 2013 $’000 2012 $’000 18. EXPLORATION AND EVALUATION ASSETS (NON-CURRENT) Balance at 1 July 29,293 Expenditure for the period Acquisition of McPhillamys mining information Write-offs to the statement of profit or loss and other comprehensive income Transferred to mine properties under development Balance at 30 June (a) 19 31,184 149,680 (1,396) (4,117) 204,644 24,507 17,226 - (786) (11,654) 29,293 The ultimate recoupment of costs carried forward is dependent upon the successful development and commercial exploitation, or alternatively the sale of the respective areas at an amount at least equivalent to the carrying value. (A) ACqUISITION OF THE MCPHILLAMYS GOLD PROJECT On 16 November 2012, the Group acquired the McPhillamys Gold Project, an exploration stage project located in the Bathurst region of NSW, Australia, owned by Newmont Exploration Pty Ltd (51%) and Alkane Resources Ltd (49%) in a joint venture. The property acquired comprises three exploration licenses (including the gold resource), mining information, and two freehold properties overlapping part of the project area. Newmont’s 51% interest was acquired as a straight asset purchase, comprising one of the freehold properties and mining information. Alkane’s 49% interest was acquired through the acquisition by Regis of Alkane’s wholly-owned subsidiary, LFB Resources NL (“LFB”). The total consideration paid and respective values assigned to the assets acquired from each party are detailed below: CONSIDERATION PAID Shares issued Transaction costs capitalised Total consideration paid ASSETS ACqUIRED Cash Security deposits Receivables Freehold properties Exploration and evaluation expenditure Total assets acquired neWmont 51% $’000 alkane 49% $’000 total $’000 76,500 4,614 81,114 - - - 4,235 76,879 81,114 73,500 441 73,941 6 120 2 1,012 72,801 73,941 150,000 5,055 155,055 6 120 2 5,247 149,680 155,055 The acquisition of the McPhillamys Gold Project was not accounted for as a business combination because the set of activities acquired did not meet the definition of a business as required by Accounting Standards. 70 Consolidated note 2013 $’000 2012 $’000 19. MINE PROPERTIES UNDER DEVELOPMENT (NON-CURRENT) (A) GARDEN WELL GOLD MINE Balance at beginning of period Capitalised borrowing costs Transferred from exploration and evaluation assets Newmont royalty termination expense Pre-production expenditure capitalised Rehabilitation provision recognised Construction expenditure Transferred to plant and equipment Transferred to deferred mining costs Transferred to mine properties Balance at end of period (B) ASSETS PLEDGED AS SECURITY 18 17 20 167,919 97 4,117 - 32,497 7,918 46,249 (116,660) (1,885) (77,951) 62,301 Macquarie Bank Limited (“MBL”) holds a first ranking, registered fixed and floating charge over all of the assets of Regis Resources Limited and its wholly-owned subsidiary, Duketon Resources Pty Limited as security for the debt facility provided by MBL to fund construction of the Duketon Gold Project. Refer to Note 22. 20. MINE PROPERTIES (NON-CURRENT) Balance at beginning of period Transferred from mine properties under development 19(a) Additions Amortisation expense Balance at end of period 21. TRADE AND OTHER PAYABLES (CURRENT) Trade payables Accrued expenses Employee entitlements Other payables (A) FAIR VALUE 38,461 77,951 21,586 (18,582) 119,416 17,374 16,825 1,653 5,643 41,495 Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value. 12,275 540 11,654 12,000 37,100 5,527 88,823 - - - 167,919 48,023 - 1,356 (10,918) 38,461 8,504 15,928 1,041 2,803 28,276 71 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) 22. INTEREST-BEARING LIABILITIES CURRENT Secured bank loan NON-CURRENT Secured bank loan (A) SECURED BANK LOAN Consolidated note 2013 $’000 2012 $’000 (a)(b) (a)(b) 10 - 4,883 25,194 During the year ended 30 June 2013, there were no draw downs on the secured bank loan (2012: nil). The debt was substantially repaid in November 2012. The loan attracts a variable interest rate which ranged between 6.575% and 6.920% in the current year (2012: 7.035% to 8.573%). The debt facility also incorporates a performance bond facility whereby MBL provides performance bonds in relation to statutory environmental obligations on certain tenements and guarantees in relation to office lease commitments. At year end, the performance bond facility limit was $20 million (2012: $20 million) and the amount used was $19,397,910 (2012: $14,257,410). The performance bonds are not required to be cash- backed until 30 June 2016. (B) ASSETS PLEDGED AS SECURITY The facility is secured by: » a first ranking, registered fixed and floating charge over all of the assets of Regis Resources Limited and its wholly-owned subsidiary Duketon Resources Pty Limited; » a first ranking, registered Mining Act (WA) mortgage over the Company’s interest in the Duketon Gold Project tenements; » a fixed charge over the Proceeds Account and Gold Account; and » satisfactory security over Regis’ rights under key project documents. (C) FAIR VALUES The carrying amounts of the Group’s current and non-current borrowings approximate their fair value. 23. PROVISIONS CURRENT Rehabilitation NON-CURRENT Long service leave Rehabilitation (a) (b) (a) 295 684 247 23,440 23,687 131 14,868 14,999 72 (A) PROVISION FOR REHABILITATION Balance at 1 July Provisions made during the year Provisions used during the year Provisions reversed during the year Unwinding of discount Balance at 30 June note Consolidated 2013 $’000 15,552 9,131 (53) (1,354) 459 23,735 2012 $’000 8,717 6,660 - (285) 460 15,552 NATURE AND PURPOSE OF PROVISION FOR REHABILITATION The nature of rehabilitation activities includes dismantling and removing structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation of affected areas. Typically the obligation arises when the asset is installed at the production location. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related mining assets. Over time, the liability is increased for the change in present value based on the discount rates that reflect the current market assessments and the risks specific to the liability. Additional disturbances or changes in rehabilitation cost estimates will be recognised as additions or changes to the corresponding asset and rehabilitation liability when incurred. (B) PROVISION FOR LONG SERVICE LEAVE Refer to Note 2(w) for the relevant accounting policy and a discussion of the significant estimates and assumptions applied in the measurement of this provision. 24. CONTRIBUTED EqUITY Ordinary shares – issued and fully paid 428,358 275,010 The holders of ordinary shares are entitled to receive dividends as declared from time to time and, on a poll, are entitled to one vote per share at meetings of the Company. The Company does not have authorised capital or par value in respect of its issued shares. no. shares ’000s 432,073 16,917 4,038 - 453,028 5,343 35,714 - 494,085 10(c) 10(c) $’000 247,632 15,423 12,000 (45) 275,010 3,413 150,000 (65) 428,358 MOVEMENT IN ORDINARY SHARES ON ISSUE At 1 July 2011 Issued on exercise of options Issued for non-cash transactions Transaction costs At 30 June 2012 Issued on exercise of options Issued for non-cash transactions Transaction costs At 30 June 2013 73 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) CAPITAL MANAGEMENT The Board’s policy in relation to capital management is to regularly and consistently monitor future cash flows against expected expenditures for a rolling period of up to 12 months in advance. The Board determines the Group’s need for additional funding by way of either share issues or loan funds depending on market conditions at the time. The Board defines working capital in such circumstances as its excess liquid funds over liabilities, and defines capital as being the ordinary share capital of the Company. There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. Consolidated 2013 $’000 2012 $’000 25. RETAINED PROFITS/(ACCUMULATED LOSSES) AND RESERVES (A) RETAINED PROFITS/(ACCUMULATED LOSSES) At 1 July Net profit for the year At 30 June (B) SHARE OPTION RESERVE At 1 July Share-based payments At 30 June (48,492) 145,727 97,235 11,416 2,616 14,032 (116,731) 68,239 (48,492) 9,377 2,039 11,416 26 (C) NATURE AND PURPOSE OF RESERVES The share option reserve is used to record the value of share-based payments provided to employees, including KMP, as part of their remuneration, as well as non-employees. 26. SHARE-BASED PAYMENTS (A) RECOGNISED SHARE-BASED PAYMENTS EXPENSE Expense arising from equity-settled share-based payment transactions with employees for services received during the year Total expense arising from share-based payment transactions 2,616 2,616 2,039 2,039 The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during the current or prior years. 74 (B) EMPLOYEE SHARE OPTION PLAN (ESOP) The Company has one ESOP, being the Regis Resources Limited 2008 Share Option Plan (the “Plan”). The objective of the Plan is to assist in the recruitment, reward, retention and motivation of eligible persons of the Group. Under the Plan, the board or Remuneration and Nomination Committee may issue to eligible employees options to acquire shares in the future at an exercise price fixed by the board or Remuneration and Nomination Committee on grant of the options. The Plan includes a cashless exercise mechanism which enables the holder, at their election, to exercise their vested options not by way of payment of the applicable exercise price, but rather by choosing to receive the positive difference between the exercise price and share price at exercise in shares, with the number of shares allocated based on the share price at exercise. The cashless exercise mechanism: » does not change the fundamental entitlements of option holders; » » leaves an option holder who chooses to exercise their options in a cashless manner in the same economic position as if they had exercised all of their options, paid the relevant total exercise price, and disposed of the number of shares equal in value to that total exercise price; and results in less shares being issued upon exercise of options. The vesting of all options is subject to service conditions being met whereby the recipient must meet the eligible employee criteria as defined in the Plan. (C) SUMMARY OF OPTIONS GRANTED The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued during the year: Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year (i) Sold during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 2013 no. 6,700,000 300,000 (80,000) (1,788,854) - - 5,131,146 852,500 Waep $1.9477 $4.0000 $4.0000 $0.8896 - - $2.4046 $1.3519 2012 no. 16,390,000 2,310,000 (125,000) (632,500) (11,100,000) (142,500) 6,700,000 840,000 Waep $0.8596 $3.4648 $2.2300 $0.7919 $0.7322 $0.9509 $1.9477 $0.3899 (i) The weighted average share price at the date of exercise was $5.19 (2012: $3.97). (D) WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE The weighted average remaining contractual life for the share options outstanding as at 30 June 2013 is 2.0 years (2012: 2.8 years). (E) RANGE OF EXERCISE PRICES The range of exercise prices for options outstanding at the end of the year was $0.1348 to $4.00 (2012: $0.1348 to $4.00). 75 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) (F) WEIGHTED AVERAGE FAIR VALUE The weighted average fair value of options granted during the year was $1.9738 (2012: $1.7066). (G) OPTION PRICING MODEL The fair value of the equity-settled share options granted under the ESOP is estimated as at the date of grant using a Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the years ended 30 June 2013 and 30 June 2012: Dividend yield (%) Expected volatility (%) Risk free interest rate (%) Expected life of the option (years) Option exercise price ($) Weighted average share price at grant date ($) 2013 esop 2012 esop 0% 0% 63.61 – 80.09 63.61 - 119.25 2.24 – 2.53 2 – 3 years 4.00 4.11 – 4.54 2.53 – 3.92 2 – 3 years 2.75 – 4.00 2.75 – 4.17 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 historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. 27. KEY MANAGEMENT PERSONNEL (A) COMPENSATION FOR KEY MANAGEMENT PERSONNEL Short-term employee benefits Post-employment benefits Long-term employee benefits Termination benefits Share-based payment Total compensation Consolidated 2013 $ 2012 $ 3,108,688 251,258 43,121 - 311,909 3,714,976 2,778,117 241,359 29,269 - 532,659 3,581,404 Regis Resources Limited has applied the option to transfer KMP disclosures required by AASB 124 Related Party Disclosures paragraphs Aus 25.4 to Aus 25.7.2 to the Remuneration Report section of the Directors’ Report. These transferred disclosures have been audited. 76 held at start of period 1 July 2012 granted as remuner- ation options exerCised net Change other held at end of period 30 June 2013 vested at 30 June 2013 total exerCisaBle not exerCisaBle (B) OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL EXECUTIVES M Ertzen(i) M Evans T Hinkley K Massey(ii) R Smith(iii) B Wyatt(iv) 166,667 250,000 200,000 233,333 500,000 - Total 1,350,000 - - - - - - - - - (200,000) (133,333) (166,667) - - - - - - 250,000 250,000 250,000 - - - 100,000 50,000 50,000 - - (500,000) 500,000 (333,333) (166,667) - 500,000 850,000 - - - - 300,000 300,000 - - - - - - - (i) Mr Ertzen ceased to be a KMP on 1 July 2012. “Net change other” represents the number of options held at this date. (ii) Mr Massey exercised options using the cashless exercise mechanism as described in Note 26(b). (iii) Mr Smith ceased his position as General Manager – Garden Well Gold Mine on 1 May 2013. “Net change other” represents the number of options held at this date Mr Wyatt commenced the role of General Manager – Garden Well Gold Mine on 1 May 2013. “Net change other” represents the number of options held at the date of becoming a KMP (iv) held at start of period 1 July 2011 5,000,000 5,000,000 402,500 500,000 750,000 350,000 500,000 DIRECTORS M Clark(i) M Hart(i) EXECUTIVES J Balkau(ii) M Ertzen(iii) M Evans(iii) T Hinkley K Massey(iii) R Smith Total granted as remuner- ation options exerCised net Change other vested at 30 June 2012 total exerCisaBle not exerCisaBle - - - - - - - - - (5,000,000) (5,000,000) (402,500) - - - (333,333) (500,000) (150,000) - (266,667) - - - - - - - - 166,667 250,000 200,000 133,333 - 166,667 250,000 200,000 133,333 - - - - - - - - - - held at end of period 30 June 2012 - - - 166,667 250,000 200,000 233,333 - 500,000 - 500,000 12,502,500 500,000 (552,500) (11,100,000) 1,350,000 750,000 750,000 (i) Mr Clark and Mr Hart each sold 5,000,000 options shown under “net change other” on 20 March 2012 which were then exercised and on sold to Australian institutional and sophisticated investors in a broker managed book build. (ii) Mr Balkau exercised options using the cashless exercise mechanism, as disclosed in Note 26(b). (iii) Mr Ertzen, Mr Evans and Mr Massey sold the number of options shown under “net change other” on 2 April 2012 which were then exercised and on sold to Australian institutional and sophisticated investors in a broker managed book build. 77 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) (C) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL Shares held in Regis Resources Limited (number) directly, indirectly or beneficially by each KMP DIRECTORS N Giorgetta M Clark M Hart M Okeby OTHER KMP J Balkau M Ertzen(i) M Evans T Hinkley K Massey Total held at 1 July 2012 on exerCise of options net Change other held at 30 June 2013 20,529,671 9,460,000 9,389,210 1,200,000 2,163,583 1,000,000 613,188 952,500 16,666 45,324,818 - - - - - - - 200,000 123,782 323,782 - - - - 20,529,671 9,460,000 9,389,210 1,200,000 (638,119) 1,525,464 (1,000,000) - (300,000) (54,523) - 613,188 852,500 85,925 (1,992,642) 43,655,958 (i) Mr Ertzen ceased to be a KMP on 1 July 2012. “Net change other” represents the number of shares held at this date. In all other instances, “net change other” relates to on-market purchases and sales of shares. DIRECTORS N Giorgetta M Clark M Hart M Okeby OTHER KMP J Balkau M Ertzen M Evans T Hinkley K Massey R Smith Total held at 1 July 2011 on exerCise of options net Change other held at 30 June 2012 20,529,671 9,460,000 9,389,210 1,200,000 1,827,231 1,540,900 713,188 852,500 16,666 - - - - - 317,352 - - 150,000 - - - - - - 19,000 (540,900) (100,000) (50,000) - - 20,529,671 9,460,000 9,389,210 1,200,000 2,163,583 1,000,000 613,188 952,500 16,666 - 45,529,366 467,352 (671,900) 45,324,818 “Net change other” relates to on-market purchases and sales of shares. All equity transactions with KMP other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length. (D) LOANS TO KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES There were no loans made to any director, key management personnel and/or their related parties during the current or prior year. (E) OTHER KEY MANAGEMENT PERSONNEL TRANSACTIONS Other than the ordinary accrual of personnel expenses at balance date, there are no other amounts receivable from and payable to key management personnel and other related parties. 78 28. RELATED PARTY DISCLOSURES (A) SUBSIDIARIES The consolidated financial statements include the financial statements of Regis Resources Limited and the subsidiaries listed in the following table: name Duketon Resources Pty Ltd Artane Minerals NL Rosemont Gold Mines Pty Ltd LFB Resources NL (B) ULTIMATE PARENT % equity interest investment $’000 Country of inCorporation Australia Australia Australia Australia 2013 100% 100% 100% 100% 2012 100% 100% 100% 0% 2013 30,575 - - 73,941 104,516 2012 30,575 - - - 30,575 Regis Resources Limited is the ultimate Australian parent entity and the ultimate parent entity of the Group. (C) TRANSACTIONS WITH RELATED PARTIES A loan is made by the Company to Duketon Resources and represents the subsidiary’s share of payments for exploration and evaluation expenditure on commercial joint ventures existing between the Company and Duketon Resources. The loan outstanding between the Company and Duketon Resources has no fixed date of repayment and is non-interest bearing. As at 30 June 2013, the balance of the loan receivable was $15,205,213 (2012: $3,356,437). A loan is made by the Company to LFB Resources and represents the subsidiary’s share of payments for exploration and evaluation expenditure. The loan outstanding between the Company and LFB Resources has no fixed date of repayment and is non-interest bearing. As at 30 June 2013, the balance of the loan receivable was $10,804,993 (2012: nil). 29. PARENT ENTITY INFORMATION The following details information related to the parent entity, Regis Resources Limited, at 30 June 2013. The information presented here has been prepared using consistent accounting policies as presented in Note 2. 2013 $’000 2012 $’000 Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Share option reserve Retained profits/accumulated losses Total equity Net profit for the year Other comprehensive income for the year Total comprehensive income for the year 79 101,660 571,859 673,519 41,738 83,125 124,863 428,358 14,032 106,266 548,656 147,797 - 147,797 16,765 305,565 322,330 33,572 43,863 77,435 275,010 11,416 (41,531) 244,895 76,273 - 76,273 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) The parent entity has not guaranteed any loans of its subsidiaries. There are no contingent assets or liabilities of the Group or parent entity at 30 June 2013 as disclosed at Note 32. All capital commitments disclosed at Note 31 are commitments incurred by the parent entity, except for $1,073,007 (2012: $1,264,798) of the exploration expenditure commitments, and $50,424 of the operating lease commitments (2012: nil). 30. FINANCIAL INSTRUMENTS (A) FINANCIAL GUARANTEE LIABILITIES As at 30 June 2013, the Group did not have any financial guarantee liabilities (2012: Nil). (B) LIqUIDITY RISK The following are the contractual maturities of financial liabilities, including estimated interest payments: 30 June 2013 Trade and other payables Secured loan Total 30 June 2012 Trade and other payables Secured loan Total Carrying amount ContraCtual Cash-floWs 6 mths or less 6-12 mths 1-2 years 2-5 years more than 5 years 39,842 10 39,852 (39,842) (39,842) (10) (10) (39,852) (39,852) - - - - - - - - Carrying amount ContraCtual Cash-floWs 6 mths or less 6-12 mths 1-2 years 2-5 years more than 5 years 27,235 30,077 57,312 (27,235) (34,783) (62,018) (27,235) (1,147) (28,382) - (6,242) (6,242) - (16,873) (16,873) - (10,521) (10,521) - - - (C) INTEREST RATE RISK profile At the reporting date the interest rate profile of the Company’s and the Group’s interest-bearing financial instruments was: Consolidated 2013 $’000 2012 $’000 FIXED RATE INSTRUMENTS Fixed rate instruments Financial assets Financial liabilities VARIABLE RATE INSTRUMENTS Financial liabilities 61,223 - 61,223 1,356 - 1,356 (10) (30,077) 80 fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change at reporting date would not affect profit or loss. Cash floW sensitivity analysis for variaBle rate instruments No significant variable interest rate instruments are held at 30 June 2013 therefore a change in interest rates would not have a material impact on net profit. This analysis was performed in 2012 using a 50 basis points decrease in interest rates at reporting date, which would have resulted in an increase in net profit of $235,453. This analysis assumes that all other variables remain constant. Consolidated 2013 $’000 2012 $’000 31. COMMITMENTS (A) OPERATING LEASE COMMITMENTS – GROUP AS LESSEE The Group leases office premises in Perth, WA and Blayney, NSW under normal commercial lease arrangements. The Perth lease is for a period of 5 years beginning 1 May 2010. The Group is under no legal obligation to renew the lease once the lease term has expired. The Blayney lease is for a period of 3 years beginning 22 February 2013 with an option to renew for a further 3 years. Future minimum rentals payable under non-cancellable operating leases at 30 June are as follows: Within one year Between one and five years Total minimum lease payments (B) CONTRACTUAL COMMITMENTS 334 303 637 305 591 896 On 19 January 2010, the Group entered into an agreement with Pacific Energy (KPS) Pty Ltd (“KPS”) for the supply of electricity to the Moolart Well Gold Mine (part of the Duketon Gold Project). The terms of this agreement commit the Group to purchasing a fixed amount of electricity per month for six years from 7 July 2010 (the “Effective Date”) at a price which will be reviewed annually. As at 30 June 2013, at the current contract price, the Group had commitments to purchase electricity for the remaining term of $4,680,000 (30 June 2012: $6,240,000). On 23 June 2011, the Group entered into an agreement with Pacific Energy (KPS) Pty Ltd (“KPS”) for the supply of electricity to the Garden Well Gold Mine. The terms of this agreement commit the Group to purchasing a fixed amount of electricity per month for 5 years from 1 September 2012 (the “Effective Date”) at a price which will be reviewed annually. As at 30 June 2013, at the current contract price, the Group had commitments to purchase electricity for the remaining term of $11,700,000 (30 June 2012: nil). (C) EXPLORATION EXPENDITURE COMMITMENTS Exploration expenditure commitments represent tenement rentals and expenditure requirements that may be required to be met under the relevant legislation should the Group wish to retain tenure on all current tenements in which the Group has an interest. The terms and conditions under which the Group retains title to its various mining tenements oblige it to meet tenement rentals and minimum levels of exploration expenditure as gazetted by the Department of Mining and Petroleum (“DMP”), Western Australia, as well as Local Government rates and taxes. The exploration commitments of the Group, not provided for in the consolidated financial statements and payable are as follows: Within one year 1,522 1,768 81 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) The tenement commitments shown above represent the minimum required to be spent on all granted tenements as at reporting date. Actual expenditure will vary as a result of ongoing management of the tenement portfolio including reductions and relinquishment of tenements not considered prospective, in whole or in part. Tenement commitments are shown gross of exemptions that are likely to be available in the ordinary course of business as the financial impact of potential exemptions cannot be measured reliably in advance. (D) DUKETON GOLD PROJECT CAPITAL EXPENDITURE COMMITMENTS The outstanding capital commitments relating to the Duketon Gold Project at 30 June are: Within 1 year Consolidated 2013 $’000 2012 $’000 3,193 3,193 7,361 7,361 (E) PHYSICAL GOLD DELIVERY COMMITMENTS Commodity priCe risk The Group is exposed to movements in the gold price. As part of the risk management policy of the Group and in compliance with the conditions required by the Group’s financier, the Group enters into gold forward contracts to manage the gold price of a proportion of anticipated sales of gold. It is management’s intention to settle each contract through physical delivery of gold. The counterparty to the gold forward contracts is Macquarie Bank Limited (“MBL”). The gold forward sale contracts disclosed below do not meet the criteria of financial instruments for accounting purposes on the basis that they meet the normal purchase/sale exemption because physical gold will be delivered into the contract. Accordingly, the contracts will be accounted for as sale contracts with revenue recognised once the gold has been delivered to MBL or its agent. 30 June 2013 Within one year - Spot deferred contracts - Fixed forward contracts Between one and five years - Fixed forward contracts Spot gold price used to calculate mark-to-market 30 June 2012 Within one year - Spot deferred contracts - Fixed forward contracts Between one and five years - Fixed forward contracts Spot gold price used to calculate mark-to-market gold for physiCal delivery ContraCted gold sale priCe value of Committed sales mark-to- market ounCes $/oz $’000 $’000 5,840 24,000 92,751 122,591 44,708 48,000 70,750 163,458 1,474.80 1,460.25 1,417.33 1,536.40 1,340.00 1,441.98 8,613 35,046 131,459 175,118 68,689 64,320 102,020 235,029 743 1,911 (1,215) 1,439 $1,347.536/oz (1,139) (11,936) (14,573) (27,648) $1,561.873/oz 82 Consolidated 2013 $ 2012 $ 32. CONTINGENCIES As at 30 June 2013, the Group did not have any contingent assets or liabilities (30 June 2012: nil) 33. AUDITOR’S REMUNERATION AUDIT SERVICES KPMG Australia Audit and review of financial statements 194,988 135,000 OTHER SERVICES Other assurance services Taxation compliance services Total auditor’s remuneration 12,261 207,249 24,086 159,086 Consolidated 2013 $’000 2012 $’000 34. DIVIDENDS Proposed by the directors after balance date but not recognised as a liability as at 30 June: Dividends on ordinary shares Final dividend for 2013: 15 cents per share (2012: nil) 74,427 - FRANKING CREDIT BALANCE As at 30 June 2013, the Group did not have any franking credits available (2012: nil) and no income tax payable in relation to the current year (2012: nil). The Group expects to pay income tax in relation to the year ended 30 June 2014 and will generate franking credits as a result. The ability to utilise franking credits is dependent upon the ability to declare dividends. 35. SUBSEqUENT EVENTS Exercise of Options Subsequent to year end, 1,880,449 ordinary shares have been issued as a result of the exercise of listed options for proceeds of $931,453, net of transaction costs and 212,571 ordinary shares have been issued upon the conversion of 287,500 employee options for proceeds of $347,000. Dividends On 16 September 2013, the directors proposed a final dividend on ordinary shares in respect of the 2013 financial year. Refer Note 34. Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this Report any item, transaction or event of a material and unusual nature which in the opinion of the directors of the Group, has significantly affected or is likely to significantly affect: » » » the operations of the Group the results of those operations, or the state of affairs of the Group in future financial years. 83 FOR THE YEAR ENDED 30 JUNE 2013Notes to the Financial Statements (continued) Directors’ Declaration In accordance with a resolution of the directors of Regis Resources Limited, I state that: 1. In the opinion of the directors: (a) The financial statements, notes and additional disclosures included in the directors’ report designated as audited, of the Company and the consolidated entity are in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the financial year ended on that date; and (ii) Complying with Accounting Standards and the Corporations Regulations 2001; and (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2013. 3. The directors draw attention to Note 2(b) to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards. On behalf of the board Mr Mark Clark Managing Director Perth, 16 September 2013 84 Independent Auditor’s Report Independent auditor’s report to the members of Regis Resources Limited Report on the financial report We have audited the accompanying financial report of Regis Resources Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2013, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 35 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Group comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 2(b), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements of the Group comply with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group’s financial position and of its performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. 85 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s opinion In our opinion: (a) the financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(b). Report on the remuneration report We have audited the Remuneration Report included in pages 33 to 38 of the directors’ report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards. Auditor’s opinion In our opinion, the remuneration report of Regis Resources Limited for the year ended 30 June 2013, complies with Section 300A of the Corporations Act 2001. KPMG Trevor Hart Partner Perth 16 September 2013 86 Tenement Information granted tenements tenement % interest tenement % interest tenement % interest tenement % interest COLLURABBIE AREA E38/1939 E38/2298 E38/2681 E38/2682 E38/2683 E38/2779 80% 100% 100% 100% 100% 90% DUKETON AREA E38/961 E38/1046 E38/1096 E38/1689 E38/1914 E38/1952 E38/1954 E38/1955 E38/1956 E38/1957 E38/1988 E38/1989 E38/1990 E38/1991 E38/1992 E38/1994 E38/1995 E38/1996 E38/1997 E38/1999 E38/2001 E38/2002 E38/2003 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 97% 70% 100% 51% 100% L38/20 L38/29 L38/47 L38/49 L38/73 L38/85 L38/116 L38/126 L38/127 L38/128 L38/129 L38/131 L38/133 L38/134 L38/135 L38/136 L38/137 L38/138 L38/139 L38/140 L38/141 L38/142 L38/143 L38/155 L38/156 L38/170 L38/181 L38/182 L38/184 L38/189 L38/190 L38/191 E38/2004 Earning 70% L38/192 E38/2005 E38/2006 E38/2243 E38/2723 E38/2808 E38/2809 E38/2810 G38/29 G38/30 G38/31 G38/32 80% 100% 100% 100% 100% 100% 100% 100% 100% 70% 100% L38/193 L38/194 L38/201 L38/202 L38/203 L38/204 L38/212 L38/216 L38/217 L38/219 L38/221 87 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% L38/222 L38/228 M38/114 M38/237 M38/250 M38/262 M38/283 M38/292 M38/302 M38/303 M38/316 M38/317 M38/319 M38/341 M38/343 M38/344 M38/352 M38/354 M38/407 M38/413 M38/414 M38/415 M38/488 M38/498 M38/499 M38/500 M38/515 M38/589 M38/590 M38/600 M38/601 M38/630 M38/802 M38/837 M38/889 M38/939 M38/940 M38/943 M38/1091 M38/1092 M38/1096 M38/1247 M38/1249 M38/1250 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% M38/1251 M38/1257 P38/3159 P38/3377 P38/3378 100% 100% 100% 100% 100% P38/3407 Earning 70% P38/3408 Earning 70% P38/3409 Earning 70% P38/3410 Earning 70% P38/3411 Earning 70% P38/3412 Earning 70% P38/3413 Earning 70% P38/3414 Earning 70% P38/3415 Earning 70% P38/3416 Earning 70% P38/3417 Earning 70% P38/3418 Earning 70% P38/3419 Earning 70% P38/3420 Earning 70% Earning 70% P38/3421 Earning 70% Earning 70% P38/3422 Earning 70% Earning 70% P38/3423 Earning 70% 100% 100% 100% 100% 100% 97% 97% 70% 70% 100% 100% 100% 97% 100% 100% 100% 80% 100% 100% 100% 100% 100% P38/3424 Earning 70% P38/3425 Earning 70% P38/3426 Earning 70% P38/3427 P38/3428 P38/3429 P38/3430 P38/3439 P38/3440 P38/3441 P38/3442 P38/3443 P38/3444 P38/3445 P38/3446 P38/3447 P38/3448 P38/3449 P38/3450 P38/3451 P38/3452 P38/3453 51% 51% 51% 51% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% tenement % interest tenement % interest tenement % interest tenement % interest M38/1264 P38/4073 P38/4074 P38/4075 P38/4076 P38/4104 100% 100% 100% 100% 100% 100% P38/3454 P38/3455 P38/3456 P38/3457 P38/3458 P38/3459 P38/3460 P38/3461 P38/3462 P38/3463 P38/3464 P38/3465 P38/3466 P38/3467 P38/3468 P38/3469 P38/3470 P38/3471 P38/3472 P38/3473 P38/3474 P38/3475 P38/3476 P38/3478 P38/3480 P38/3481 P38/3485 P38/3486 P38/3487 P38/3508 P38/3509 P38/3510 P38/3511 P38/3513 P38/3514 P38/3515 P38/3528 P38/3529 P38/3530 P38/3531 P38/3532 P38/3535 P38/3536 P38/3538 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% P38/3539 P38/3542 P38/3543 P38/3544 P38/3545 P38/3547 P38/3548 P38/3549 P38/3550 P38/3551 P38/3557 P38/3571 P38/3576 P38/3577 P38/3578 P38/3579 P38/3580 P38/3581 P38/3582 P38/3584 P38/3602 P38/3604 P38/3605 P38/3606 P38/3607 P38/3629 P38/3630 P38/3631 P38/3632 P38/3633 P38/3634 P38/3635 P38/3636 P38/3639 P38/3640 P38/3814 P38/3815 P38/3816 P38/3877 P38/3878 P38/3879 P38/3906 P38/3928 P38/3941 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70% 70% 70% 70% 100% 100% 97% 100% 100% 100% 100% 100% 100% 97% 97% 97% 97% 97% 97% 97% 97% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% P38/3942 P38/3943 P38/3944 P38/3949 P38/3950 P38/3953 P38/3954 P38/3996 P38/3997 P38/3998 P38/4027 P38/4038 P38/4039 P38/4040 P38/4052 P38/4053 P38/4062 P38/4063 MCPHILLAMYS EL5760 EL6111 EL7878 EL8120 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% tenements under appliCation COLLURABBIE AREA E38/2830 E38/2870 E38/2871 100% 100% 100% DUKETON AREA E38/2813 E38/2814 E38/2833 E38/2857 L38/226 M38/1258 M38/1259 M38/1260 M38/1261 M38/1262 M28/1263 100% 100% 100% 100% 100% 100% 100% 70% 100% 100% 100% 88 ASX Additional Information As at 17 September 2013 the following information applied: 1. SECURITIES (A) FULLY PAID ORDINARY SHARES The number of holders of fully paid ordinary shares in the Company is 6,107. On a show of hands every holder of fully paid ordinary shares present or by proxy, shall have one vote. Upon a poll, each share shall have one vote. The distribution of holders of fully paid ordinary shares is as follows: Category Holding between Holding between Holding between Holding between 1-1,000 Shares 1,001 - 5,000 Shares 5,001 - 10,000 Shares 10,001-100,000 Shares Holding more than 100,001 Shares Holding less than A marketable parcel numBer of shareholders numBer of shares 1,971 2,138 685 719 163 5,676 431 899,131 5,773,451 5,439,061 22,086,167 461,980,300 496,178,110 14,879 The Company’s fully paid ordinary shares are quoted on the Australian Securities Exchange using the code RRL. The top 20 shareholders are as follows: name Newmont Capital Pty Limited HSBC Custody Nominees (Australia) Limited J P Morgan Nominees Australia Limited National Nominees Limited Citicorp Nominees Pty Limited Rollason Pty Ltd Mr Ross Francis Stanley SHL Pty Ltd Mr Mark John Clark Mr Morgan Cain Hart Rollason Pty Ltd Citicorp Nominees Pty Limited HSBC Custody Nominees (Australia) Limited Mutual Investments Pty Ltd BNP Paribas Noms Pty Ltd JP Morgan Nominees Australia Limited Alkane Resources Ltd Mutual Investments Pty Ltd Piama Pty Ltd Mr Glyn Evans numBer of fully paid ordinary shares held perCentage interest 97,212,729 89,751,324 37,614,711 37,198,372 31,899,616 13,389,671 11,000,000 10,017,087 8,711,112 8,438,098 7,140,000 7,059,398 5,565,990 5,500,000 5,212,335 4,827,691 4,710,000 3,012,179 2,998,401 2,536,111 393,794,825 19.59 18.09 7.58 7.50 6.43 2.70 2.22 2.02 1.76 1.70 1.44 1.42 1.12 1.11 1.05 0.97 0.95 0.61 0.60 0.51 79.37 89 (B) OPTIONS MATURING 31 JANUARY 2014 OVER FULLY PAID ORDINARY SHARES The number of holders of options maturing 31 January 2014 over fully paid ordinary shares issued by the Company is 56. Optionholders may attend and speak at general meetings of the Company. However, they do not have an entitlement to vote upon the business before the meeting either by show of hands or by poll. The distribution of holders of options is as follows: Category Holding between Holding between Holding between Holding between 1-1,000 Options 1,001 - 5,000 Options 5,001 - 10,000 Options 10,001-100,000 Options Holding more than 100,001 Options Holding less than A marketable parcel numBer of option holders numBer of options 31 9 3 10 3 56 0 24,150 26,500 23,950 247,912 1,790,850 2,113,362 0 The Company’s options maturing on 31 January 2014 over fully paid ordinary shares are quoted on the Australian Securities Exchange using the code RRLO. The top 20 optionholders are as follows: name Dalkeith Resources Pty Ltd HSBC Custody Nominees (Australia) Limited – GSCO ECA Farrah Group Pty Ltd Bart Superannuation Pty Limited <4F Investments Superfund A/C> Mr John Stephen Nitschke CR Investments Pty Ltd Dr Ron Ehrlich + Ms Ann Christine Wilson ABN Amro Clearing Sydney Nominees Pty Ltd Mr Erwin John Clayton Mr Pierce Patrick Cody Mr Lian Heo Ding Mr Simon Hammer Andrews SMSF Pty Ltd Mr John Nicholas Welsh + Mrs Lisa Ann Welsh McNess Super Fund Pty Ltd Dr Rick Hans Ulrich Tamaschke Mr Scott John Indian Mr Murray Ranald McKay + Mrs Lesley Robin McKay Mrs Maria Beatrix Sandbach Shiney Pty Ltd numBer of options held perCentage interest 1,333,000 300,000 157,850 62,500 50,000 31,250 20,000 19,591 18,500 12,500 11,800 11,230 10,541 9,500 9,000 5,450 5,000 5,000 5,000 3,500 2,081,212 63.07 14.20 7.47 2.96 2.37 1.48 0.95 0.93 0.88 0.59 0.56 0.53 0.50 0.45 0.43 0.26 0.24 0.24 0.24 0.17 98.48 90 ASX Additional Information (continued) (C) UNLISTED OPTIONS unlisted options over fully paid ordinary shares numBer of option holders numBer of options Expiry 4 February 2014 Expiry 30 June 2014 Expiry 29 September 2014 Expiry 29 April 2015 Expiry 8 November 2015 Expiry 2 February 2016 Expiry 30 June 2016 Expiry 31 July 2017 1 1 24 6 3 1 31 47 90,000 250,000 1,373,646 600,000 1,075,000 250,000 980,000 1,910,000 Optionholders may attend and speak at general meetings of the Company. However, they do not have an entitlement to vote upon the business before the meeting either by show of hands or by poll. (D) RESTRICTED SECURITIES The number of restricted securities on issue at 17 September 2013 are as follows: Class Fully paid ordinary shares numBer esCroW period 18,214,286 To 16 November 2013 2. SUBSTANTIAL SHAREHOLDERS Substantial shareholders disclosed in substantial shareholder notices to the Company: name Newmont Capital Pty Ltd JCP Investment Partners Ltd numBer of fully paid ordinary shares held 97,212,729 39,113,441 91 ABN 28 009 174 761 Directors Nick Giorgetta (Independent Non-Executive Chairman) Mark Clark (Managing Director) Morgan Hart (Executive Director) Ross Kestel (Independent Non-Executive Director) Mark Okeby (Independent Non-Executive Director) Registered Office & Principal Place of Business Level 1, 1 Alvan Street SUBIACO WA 6008 Share Register Computershare Investor Services Pty Limited GPO Box D182 PERTH WA 6840 Bankers Macquarie Bank Limited Level 4, Bishops See 235 St Georges Terrace PERTH WA 6000 Auditors KPMG 235 St Georges Terrace PERTH WA 6000 Company Secretary Kim Massey Regis Resources Limited shares are listed on the Australian Securities Exchange (ASX). Code RRL.

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