ANNUAL REPORT 2014
RESOURCE MINING CORPORATION LIMITED
ABN 97 008 045 083
COMPANY INFORMATION
ABN
Directors
97 008 045 083
William (Bill) Mackenzie (Non-Executive Chairman)
Warwick Davies (Managing Director)
Zhang Chi (Andy) (Non-Executive Director)
Company Secretary
Ann Hadden
Registered Office
702 Murray Street
WEST PERTH, WESTERN AUSTRALIA 6005
Principal Place of Business
702 Murray Street
WEST PERTH, WESTERN AUSTRALIA 6005
Share Registry
Auditor
Bankers
Securities Exchange Listing
Telephone:
Facsimile:
Website:
+61 8 9213 9400
+61 8 9213 9444
www.resmin.com.au
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
PERTH, WESTERN AUSTRALIA 6000
Telephone: +61 8 9323 2000
Facsimile: +61 8 9323 2033
BDO Audit (WA) Pty Ltd
38 Station Street
SUBIACO, WESTERN AUSTRALIA 6008
Telephone:
Facsimile:
+61 8 6382 4600
+61 8 6382 6401
Westpac Bank
116 James Street
NORTHBRIDGE, WESTERN AUSTRALIA 6000
Resource Mining Corporation Limited shares
are listed on the Australian Securities Exchange
(Home Exchange – Perth)
ASX Code: Shares RMI
RMC Annual Report 2014
1
Dear Shareholder
CHAIRMAN’S LETTER
On behalf of the Board of Directors, it is with pleasure that I present Resource Mining Corporation Limited’s (RMC’s)
Annual Report for the year ended 30 June 2014.
We entered the 2013/14 financial year in a less certain state than we left it. Much has happened in the nickel
industry over the past 12 months and the Directors believe RMC is on the cusp of an exciting period in the
Company’s history.
This state of excitement is directly linked to fundamental changes currently underway particularly in the Chinese
nickel and stainless steel industries. The market growth in production of nickel pig iron, now the key raw material for
stainless steel in China, has been dramatic. Information provided in RMC’s regular reports to the ASX during the
year, have provided specific details.
The minerals export ban by the Indonesian Government which took effect on 12 January 2014, is the most significant
event in the change to the nickel market. By implementing this ban, many Chinese nickel pig iron producers face an
uncertain future with regards access to high grade nickel laterite ore. (Indonesia was THE main source of nickel
laterite with Ni content +1.6%).
The effect of the Indonesian Government minerals export ban has been to fundamentally change the availability of
Direct Shipping nickel laterite ore available for export to China. The Directors view this event as a trigger for future
development of the Wowo Gap Project.
On the basis that RMC’s geologist has identified, and independent geologist has confirmed a high grade exploration
target of 40-60 million tonnes of nickel laterite with a nickel target 1.6 to 1.8% at the Wowo Gap Project, RMC’s
activities are focused on confirming the quantum and nickel grade of the exploration target as well as preparing the
Wowo Gap Project for future development.
Activities associated with the requirement for mining lease application, road, power and port developments will all be
addressed in the near future.
Whilst discussions continue with a variety of potential partners regarding interest in the Wowo Gap Project, the
Directors will make any investment decisions that provide the best outcome for all shareholders.
On behalf of the Board, I thank the RMC team for their commitment during the year and my fellow directors for their
support. Most importantly, I thank you, the shareholders, for your continued support.
Yours sincerely
William Mackenzie
Chairman
RMC Annual Report 2014
2
REVIEW OF STRATEGIC INTENT
Resource Mining Corporation Limited (ASX: RMI) (Resource Mining or RMC) is an innovative, Perth-based, mineral
exploration company with a significant mineral deposit in Papua New Guinea (PNG).
The development of the Wowo Gap Nickel Laterite Project in south east PNG remains the key strategic goal of the
Resource Mining Group. Recent developments in the world’s nickel industry have focussed attention on the nickel
laterite projects in the South Pacific.
1. PAPUA NEW GUINEA - WOWO GAP NICKEL LATERITE PROJECT (the Project): EL1165 and EL1980 (RMC
100 per cent interest)
PROJECT OVERVIEW
The Project is located 200 kilometres east of the PNG capital Port Moresby and approximately 35 kilometres from the
town of Wanigela situated on Collingwood Bay. The Project hosts significant nickel-cobalt mineralisation within the
laterite profile overlying an ultramafic plateau.
Drilling to date has outlined mineralisation along the 12 kilometre strike length resulting in a total Indicated and
Inferred Mineral Resource Estimate of 125 million tonnes at 1.06 per cent Nickel (Ni), 0.07 per cent Cobalt (Co), see
Table 1 on page 4 for further details.
Tenement Renewal
Niugini Nickel Limited (Niugini Nickel), a 100 per cent owned subsidiary of Resource Mining, is the sole owner of
Exploration Licence 1165, which covers an area of 95 square kilometres. The Exploration Licence consists of 28 sub-
blocks with an area of 94.40 square kilometres. In addition to EL1165, Niugini Nickel also owns an adjacent
tenement: EL1980 which hosts potential extensions of the nickel bearing ultramafic unit extending from EL1165. The
current tenure for EL1165 expired on 28 February 2014. The renewal process is underway with the Warden’s Court
Hearings completed late March. The tenement remains in good standing with all requirements having been met.
According to the requirements of the Mining Act, the renewal process takes a minimum of nine months to complete.
Tenure remains in place during this renewal process.
Figure 1: Location of the Wowo Gap Project Exploration Licences
RMC Annual Report 2014
3
Geology
Wowo Gap is located at the south eastern end of the Papuan Ultramafic Belt, a complex of peridotite, pyroxenite and
gabbro which form the prominent east-west trending Didana Range.
The most prominent rock types are of the Papuan Ultramafic Belt, which occur as an east trending block through the
Didana Range and are bounded to the east and southeast by the Bereruma Fault. The Bereruma Creek is controlled
by this fault and is positioned in Wowo Gap between the Didana Range to the west and the Goropu Mountains to the
east. In the Didana Range the ultramafic rocks consist of tectonite ultramafics, cumulate ultramafics and gabbro and
granular gabbro.
The tectonite ultramafics crop out at the eastern end of the Didana Range adjacent to and within the western section
of the Wowo Gap Project. The Sivai Breccia, co-host of the Wowo Gap mineralisation, flanks the tectonite ultramafic
at the eastern end of the Didana Range adjacent to the Bereruma Fault.
The ultramafic rocks are flanked by younger clastic sediments and basaltic volcanics of the Pliocene Domara River
Conglomerate, the Musa Volcanics and the Silimidi Conglomerate. In the northern foothills of the Didana Range the
Bonua Porphyry is associated with the Musa Volcanics.
The Project area lies within an erosional regime of an east dipping lateritic profile developed over the underlying
ultramafics. The Project area is the physiographic expression of the northeast trending Bereruma Fault.
A complete lateritic profile is preserved, with partial truncation associated with recent drainage systems. The depth of
weathering varies according to rock type and the degree of brecciation. The lateritic profile is typically 10 to 15 metres
thick, occasionally more than 20 metres proximal to the Sivai Breccia.
The full regolith profile of the Wowo Gap deposit with typical average thicknesses from top to bottom is described in
Table 1 below.
Table 1: Primary Lithology Units
Lithology
Typical Geochemistry
Volcanic Ash
<0.3%Ni
Typical
thickness
1 metre
Description
Volcanic ash – barren overburden
1.2%Ni, 50% Fe2O3, 5%MgO, 20% Si02
5 metres
Limonitic clay; Ni, Co, Fe, Mn enriched
Limonite
Saprolite
1.5%Ni, 30% Fe2O3, 20%MgO, 35% Si02
5 metres
Rocky Saprolite
1.9%Ni, 20% Fe2O3, 30%MgO, 40% Si02
5 metres
Bedrock
<0.3%Ni
NA
Direct Shipped Nickel Laterite
Background
Saprolite clay; Ni, Mg enriched
Saprolite clay within partly weathered UM
rocks;
Ultramafic rocks, peridotite and dunite
China’s demand for nickel laterite ore as feedstock for its nickel pig iron industry is being maintained despite the
Indonesian export ban on the export of nickel laterite ores. Some export of nickel laterite is licenced provided the
exporter has development plans and plant construction for local laterite ore processing. China’s current demand is
being met from existing stockpiles, exports from Philippines and some availability of material from Indonesia.
This is an imperfect situation as Indonesia is the main source of high grade nickel ore (saprolite), whilst the
Philippines is the more significant supplier of the lower nickel grade ore (limonite).
On 12 January 2014, the Indonesian Government’s ban on mineral exports took effect. Nickel laterite ore prices have
since risen significantly as has the price of primary nickel metal.
Market commentators are beginning to become more optimistic regarding the medium to longer term future for nickel
prices and there is an expectation that there will be a significant deficit in nickel laterite availability in 2015.
With the cessation of laterite ore supplies from Indonesia, both Chinese and Japanese end-users have begun to
actively seek alternative supply sources. China’s demand is for raw materials for nickel pig iron production whilst
Japanese consumers seek high grade saprolite for the production of ferro nickel.
The size of the Chinese nickel laterite market is substantial. In 2013, China imported 70 Mt of laterite ore, 40Mt from
Indonesia and 30Mt from the Philippines. Market reports suggest that Philippine exports to China would reach 40Mt
in 2014 but weather and other issues have delayed exports, which are running around the same level as 2013. With
difficulties faced by importers, alternative sources grow in importance.
RMC Annual Report 2014
4
PNG offers a potential solution to the supply availability issue, a matter that will be further emphasised as laterite
nickel prices either continue to rise or remain stable at the current high levels.
RMC is uniquely well positioned to take advantage of this significant recent development in the nickel ore market
dynamics through its 100% ownership of the Wowo Gap Project in PNG and is actively engaging in relation to interest
in supply with East Asian nickel producers who have been directly impacted by enforcement of the Indonesian export
ban.
The Project’s Direct Shipping Ore (DSO) Potential
In pursuit of an opportunity to supply the nickel laterite market, RMC’s geologists investigated and re-analysed
previous drilling results, particularly those holes that ended in the Transition Zone, (ie. interface of limonite and
saprolite) to determine if any high grade potential existed within the resource.
The outcome of this investigation was the identification of a DSO Exploration Target 40 to 60 million tonnes at 1.6%
to 1.8% Ni, with additional metal credits including 0.07 to 0.15% Co, 0.8 to 1.2% Mn, 2 to 3% Cr2O3 and 25 to 35%
Fe2O3.
Historical nickel exploration drilling of the Wowo Gap Project was focussed on the upper clayey limonite material
rather than the lower saprolite ore. The saprolite material lies beneath the limonite ore with the lower portion of the
saprolite comprising of fresh ultramafic rock and interstitial clay typically hosting the higher grade nickel material.
Due to its rocky nature, the saprolite ore requires diamond drilling rather than the simpler auger core drilling method
which was adopted to test the limonite ore zones in 2010 to 2011. The auger core drilling typically ended in the
clayey saprolite material but did not penetrate the lower rocky saprolite layer. The auger core drilling was conducted
on a 200m x 200m hole spacing along the 12km strike length of the Project and a number of holes ended in plus
1.5%Ni within a clayey transitional saprolite material.
This is the section of the ore body that the exploration program is focussed on assessing.
An independent geologist, a specialist in nickel laterites, reviewed the raw drill data, and supported RMC’s
conclusions with respect of the high grade Exploration Targets being identified in the short term. Seven
prospective high grade areas are outlined in Figure 2, on page 6.
Planned Activity
With having identified high grade zones, the development plans are as follows:
Diamond drilling on 100 x 100m spacings to provide resource estimate sufficient for Reserve Estimation for
the Feasibility Study. Additional ground penetrating radar on 25 metre line spacings for mine planning
purposes;
In fill diamond drilling on 50 x 50m spacings for mine planning purposes; and
Work necessary for Mining Lease Application including environmental, social mapping, heritage survey and
social awareness.
The initial 100m spaced ground penetrating radar work has been completed, and the final interpretations of the
laterite profile are awaited.
Additional resources in terms of technical personnel (geologists, environmental scientists, anthropologists, drilling
specialists etc), have or will be engaged to ensure the planned activities proceed efficiently and effectively.
RMC Annual Report 2014
5
Figure 2: Wowo Gap High Grade Exploration Target Areas
As the DSO potential of the Wowo Gap Project is considered significant both to RMC and PNG’s mining industry,
very regular contact has been maintained with the MRA in Port Moresby regarding:
Tenement Renewal Program;
Social Awareness Campaign; and
DSO potential and potentially interested investors.
RMC Annual Report 2014
6
Other Exploration Licence Activity
RMC held EL1979 and holds EL1980 adjacent to EL1165. The two additional licence areas were obtained as there
was indication of extension of the laterite mineralisation across both tenements. Subsequent geological investigation
concluded that EL1979 is poorly prospective and it was subsequently relinquished.
EL1980 Scout Drilling Program
An eight hole drilling program (as shown in Figure 3 below) was conducted across the main ridge line on EL1980 that
was expected to host the extension of the ultramafic unit hosting the laterite mineralisation on EL1165. Four of the
eight holes intersected Ni mineralisation associated with ultramafic lithologies. The other four holes intersected mafic
geology, which is generally not prospective for laterite Ni mineralisation. Table 2 below shows the significant Ni
assays above 0.5% Ni.
Follow up drilling has been planned across the small ridge line to the north of DRDH001 to 005.
Table 2: Significant Ni Assays
Hole_id
AMG_East AMG_North
RL
Depth_from Width
DRDH001
707912
DRDH002
707366
DRDH003
706888
DRDH004
706335
DRDH005
705885
DRDH006
704958
DRDH007
703849
DRDH008
702908
8946392
8946381
8946352
8946666
8946723
8946924
8947222
8947120
1321
1360
1322
1251
1193
1093
1103
1155
2
10
0
4
-
-
-
-
4.4
2
2
8.3
-
-
-
-
Ni %
0.88
0.75
0.83
0.65
NSA
NSA
NSA
NSA
Co %
0.16
0.01
0.02
0.06
-
-
-
-
Figure 3: Location of Drill Holes on EL1980.
RMC Annual Report 2014
7
ELA2337 Wanigela Tenement
Application has been made for an additional tenement to the south-east of EL1165 to cover the area from the current
EL1165 boundary through to the coast.
Figure 4: Location of Proposed New Tenement ELA2337
WA Tenements
St Patrick’s Project: EL37/1064, EL37/1078, EL37/1091, EL37/110 and EL37/1118 (RMC 100% Interest).
Two of the Project tenements E37/1084 and 1092 were peripheral to the main project area and were not considered
prospective following a review of this Project.
Following the disappointing results from the 2013 drilling program, where the holes failed to intersect greenstone
rocks that were interpreted to be lying beneath the thin veneer of surficial granites, a thorough review of the magnetic
data, drill hole geology and geochemistry was undertaken to assess whether any further potential remained within the
tenements. The results of the review were disappointing and no further potential was identified. As a consequence,
the remaining tenements were relinquished.
Blackstone Range Project: EL 69/2108 and EL 69/2109
JV with Redstone Resources Limited, (ASX-RDS). Redstone Resources earned a 90% interest in this project whilst
RMC has a 10%, non-contributory free carried interest.
On 27 March 2014 a letter was received from Redstone Resources Limited advising of the withdrawal from the Farm-
in agreement by Westmin Exploration Pty Ltd. RMC no longer has an active interest in these tenements.
The information in this report that relates to Exploration Results, Mineral Resources is based on information
compiled by Mark Hill, who is a Member of the Australian Institute of Geologists. Mark Hill is an employee of
Exman Consultancy and 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
2004 and 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves”. Mark Hill consents to the inclusion in this report of the matters based on his information in the form
and context in which it appears. Information relating to Exploration was prepared and disclosed in accordance with
JORC 2004 and information relating to Exploration Resources in accordance with JORC 2004.
RMC Annual Report 2014
8
Your Directors present their report on the Consolidated Entity consisting of Resource Mining Corporation Limited
(Company) and its controlled entities for the financial year ended 30 June 2014.
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Entity during the year was mineral exploration in Papua New Guinea and
Australia.
DIRECTORS
The following persons were Directors of Resource Mining Corporation Limited during the whole of the financial year
and up to the date of this report, unless otherwise stated:
William Mackenzie
Warwick Davies
Zhang Chi
Chairman (Non-Executive)
Managing Director (Executive Director)
Director (Non-Executive)
PARTICULARS OF DIRECTORS AND COMPANY SECRETARY
William (Bill) Mackenzie
Chairman (Non-Executive)
Qualifications: Bachelor of Engineering (Mining); MBA; M AusIMM; MAICD
Term: Chairman and Director since December 2008
Experience: Mr Mackenzie is a mining engineer with over 30 years of experience in the resources sector with
involvement in the assessment, development and operation of mineral projects both within Australia and overseas.
Mr Mackenzie's experience has included direct operating, senior project management and executive roles with
responsibility for business development, project and business unit management of various Australian and offshore
ventures and from 2001 was Principal of a consulting group that provided specialised, independent technical and
commercial advice to boards, banks and investors involved in the development of resources, energy and
infrastructure projects worldwide. He served as a non-executive Director of ASX listed OM Holdings Limited from
2005 till 2007 and as Managing Director of a privately owned diversified Australian resource development company
from 2007 till 2013.
Interest in Shares and Options in Resource Mining Corporation Limited: Nil
Special Responsibilities: Mr Mackenzie is a Non-Executive Chairman, and Chairman of the Audit Committee.
Directorships held in other listed entities current or last 3 years; None.
Zhang Chi (Andy)
Director (Non-Executive)
Qualifications: Mr Zhang has an economics degree from Renmin University in China.
Term: Director since April 2006
Experience: Mr Zhang is Managing Director of Sinom (Hong Kong) Limited and has very extensive experience in the
Iron and Steel Industry in China. Prior to becoming involved in Sinom (Hong Kong) Limited, Mr Zhang held several
positions with the BaoSteel Group, (China’s largest steel maker).
Interest in Shares and Options in Resource Mining Corporation Limited: 1,171,026,986 ordinary shares and
206,910,706 listed options held by Sinom (Hong Kong) Limited of which Mr Zhang is a Director and controlling
shareholder.
Special Responsibilities: Mr Zhang is a Non-Executive Director and member of the Audit Committee.
Directorships held in other listed entities current or last 3 years: None.
RMC Annual Report 2014
9
DIRECTORS’ REPORT (Continued)
Warwick Davies
Managing Director
Qualifications: Bachelor of Arts (Economics) and has a Certificate of Chemistry.
Term: Director since August 2004
Experience: Mr Davies has over fifty years’ industry experience in the mining, exploration and manufacturing
industries. He has held a variety of leadership roles in both technical and commercial positions during his extensive
career with BHP, Hamersley Iron, Robe River Mining Co and RMC.
As an independent mining industry consultant since 2001, Mr Davies has worked on a wide variety of assignments
particularly in the Iron Ore Industry with specific emphasis on China. He brings to the Company, a wealth of practical
and international experience, a strong technical background and an extensive potential customer contact network.
Over the past 5 years, Mr Davies has developed detailed knowledge of the conduct of business in Papua New
Guinea as well as the broad Nickel industry.
Interest in Shares and Options in Resource Mining Corporation Limited: 15,502,500 ordinary shares and
1,291,875 listed options held directly 7,453,125 ordinary shares, and 621,094 listed options held by a related party.
Special Responsibilities: Mr Davies is responsible for the day-to-day operations of the Consolidated Entity and in
particular Metallurgy, Marketing and Infrastructure and is a member of the Audit Committee.
Directorships held in other listed entities current or last 3 years:
Current:
Former:
Nil
Alchemy Resources Limited (ceased November 2011)
Ann Hadden
Company Secretary
Qualifications: BA, GradDip Sec St, Dip Law, GradDip ACG
Term: Company Secretary since October 2011
Experience: Ms Hadden was appointed as Company Secretary October 2011 and is a qualified lawyer and
Company Secretary with more than 20 years corporate experience. She has acted as Company Secretary, corporate
lawyer and compliance manager for public listed and unlisted private companies and entities.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Consolidated Entity intends to continue its exploration activities with a view to the commencement of mining
operations as soon as practical.
For further details refer to Review of Strategic Intent on page 3.
DIVIDENDS
The Consolidated Entity did not pay nor declare dividends in the last financial year.
ENVIRONMENTAL REGULATIONS
The Consolidated Entity has conducted exploration activities on mineral tenements. The right to conduct these
activities is granted subject to environmental conditions and requirements. The Consolidated Entity aims to ensure a
high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental
regulations. There have been no known breaches of any of the environmental conditions.
RMC Annual Report 2014
10
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
DIRECTORS’ REPORT (Continued)
In the opinion of the Directors, there were no significant changes in the state of affairs of the Consolidated Entity that
occurred during the financial year under review not otherwise disclosed in this report or in the consolidated accounts.
MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
On the 31 July 2014, the Company entered into a Funding Agreement (“Agreement”) with the Company’s largest
shareholder, Sinom (Hong Kong) Limited (“Sinom”) who currently holds 43.14% of the issued shares in the Company.
Mr Zhang Chi (Andy) is a Non-Executive director of the Company and is a director and controlling shareholder of
Sinom.
Under the terms of the Agreement, Sinom has agreed to provide the Company up to $500,000 for general working
capital purposes as an unsecured loan on the following conditions:
a. Drawings
a.
b.
Interest
a.
b.
Tranche 1 -$300,000 drawn down 29 July 2014
Subsequent Tranches – Available upon giving Sinom 5 business days’ notice
This facility is interest free
c. Repayments
a.
Principal repayable in full on or before 31 October 2014
d. Fees
a.
There are no establishment or other fees payable
Since the end of the financial year under review and the date of this report, other than the above-mentioned matters,
there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to significantly affect the operations of the Consolidated Entity, in subsequent financial
years.
RMC Annual Report 2014
11
DIRECTORS’ REPORT (Continued)
OPERATING AND FINANCIAL REVIEW
Review of Operations
Wowo Gap
Activity at Wowo Gap, primarily on EL1165, has been focussed on the identification of potential high grade nickel
locations across the tenement.
Exploration activity on EL1979 and EL1980 has been concentrated on determining the potential extensions of nickel
laterite mineralisation within these licence areas. EL1979 is considered to be of low potential. However, a recent
drilling program carried out on EL1980, identified continuation of mineralisation.
The ban on the export of nickel laterite from Indonesia, which took effect on 12 January 2014, has focussed industry
interest on alternative sources of supply for high grade nickel laterite ore. Subsequently, Niugini Nickel’s geologist
undertook a detailed review of previous drilling array data to determine high grade potential on EL1165.
As a result of this review, 7 potential high grade areas have been identified. A detailed exploration program was
planned including:
ground penetrating radar survey;
core and diamond drilling program;
resource estimate update; and
scoping and development study.
To support the upturn in exploration activities, additional Papua New Guinea staff and consultants have been
engaged on short-term and casual contracts including; geologists (senior, graduate and students) support and
specialist consultants (environmental, anthropological, and engineers).
A cost effective and an active social engagement policy remains at the core of Niugini Nickel’s activities.
Other Projects
As a part of the on-going review of all tenements, the St Patricks Project was the subject of an independent
geological/geophysical review. The review concluded the project had very limited prospectivity and so the tenements
were relinquished.
The remaining Western Australian asset, 10% free carried share of Redstone Resources Musgrove tenement, was
subject to the withdrawal of one of the JV parties – Westmin Exploration Pty Ltd.
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of the Company’s Directors held during the year ended
30 June 2014, and the number of meetings attended by each Director.
Board
Audit
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Warwick Davies
William Mackenzie
Zhang Chi
2
2
2
2
2
2
2
2
2
2
2
1
RMC Annual Report 2014
12
REMUNERATION REPORT (Audited)
DIRECTORS’ REPORT (Continued)
The directors are pleased to present your Consolidated Entity’s remuneration report which sets out remuneration
information for Resource Mining Corporation Limited’s Non-Executive Directors, Executive Director and other Key
Management Personnel.
Details of Directors and Key Management Personnel disclosed in this report
There are no other Key Management Personnel other than the directors who are:
William (Bill) Mackenzie
Warwick Davies
Zhang Chi (Andy)
Chairman (Non-Executive Director)
Managing Director (Executive Director)
Director (Non-Executive Director)
Remuneration governance
The Board’s policy is to remunerate Directors, officers and employees at market rates for companies of similar size
and industry, for time, commitment and responsibilities. The Board determines payment to the Directors and reviews
their remuneration annually, based on market practice, duties and accountability. Independent external advice is
sought when required. The maximum aggregate amount of Directors’ fees that can be paid is subject to approval by
shareholders in general meeting, from time to time. Fees for Non-Executive Directors are not linked to the
performance of the Consolidated Entity. However, to align Directors’ interests with shareholders’ interests, the
Directors are encouraged to hold securities in the Company.
The remuneration of Non-Executive Directors is set by reference to payments made by other companies of similar
size and industry, and by reference to the Director’s skills and experience, and for the Reporting Period included a
consideration of the financial restrictions in place on the Company.
Use of remuneration consultants
The Consolidated Entity did not use remuneration consultants during the year.
Remuneration policy and framework
The Company's policy on remuneration clearly distinguishes the structure of Non-Executive Directors’ remuneration
from that of executive Directors and senior executives. The remuneration of Non-Executive Directors is set by
reference to payments made by other companies of similar size and industry, and by reference to the Director’s skills
and experience, and for the Reporting Period included a consideration of the financial restrictions in place on the
Company. Given the financial restrictions placed on it, the Company may consider it appropriate to issue unlisted
options to Non-Executive Directors, subject to obtaining the relevant approvals. The Remuneration Policy is subject
to annual review. All of the Directors’ option holdings are fully disclosed. The maximum aggregate amount of fees
(including superannuation payments) that can be paid to Non-Executive Directors is subject to approval by
shareholders at general meeting.
Executive pay and rewards may consist of a base salary and performance incentives. Long term performance
incentives may include options granted at the discretion of the Board and subject to obtaining the relevant approvals.
The grant of options is designed to recognise and reward efforts as well as to provide additional incentive and may be
subject to the successful completion of performance hurdles. Executives are offered a competitive level of base pay
at market rates (for comparable companies) and are reviewed to ensure market competitiveness.
There are no termination or retirement benefits for Non-Executive Directors (other than for superannuation).
Relationship between remuneration and the Consolidated Entity’s performance
The Company does not pay any performance-based component of salaries.
Non-Executive Directors’ Remuneration
No fees, salaries, commissions, bonuses or superannuation were paid or payable to Non-Executive Directors during
the year. The Directors are entitled to reimbursement of out-of-pocket expenses incurred whilst on Company
business.
RMC Annual Report 2014
13
DIRECTORS’ REPORT (Continued)
Voting and comments made at the Company’s 2013 Annual General Meeting
It was resolved by a show of hands that the Remuneration Report as set out in the Company’s Annual Report for the
year ended 30 June 2013 be adopted.
The Company did not receive any specific feedback at the Annual General Meeting or throughout the year on its
remuneration practices.
Details of Remuneration
The total remuneration paid to Key Management Directors/Personnel is summarised below:
2014
Short-term benefit
Name
Salary and
Fees
Cash
Bonus
W Davies (a)
W Mackenzie
Zhang C
Totals
$
183,469
-
-
183,469
$
-
-
-
-
Non-
Monetary
Benefit
$
-
-
-
-
Long term benefits and termination benefits for the year were nil.
Post-
employment
Benefits
Super-
annuation
Share-
based
payments
Options
% of
Remuneration to
Total
Total
Options
Bonus
$
$
-
-
-
-
$
183,469
-
-
183,469
-
-
-
-
%
%
-
-
-
-
-
-
(a)
Mr Davies’ services as Managing Director were provided by Fairstone Holdings Pty Ltd for which the
Company was charged $183,469 (ex GST). Mr Davies is a Director and shareholder of Fairstone Holdings
Pty Ltd.
2013
Short-term benefit
Name
Salary and
Fees
Cash
Bonus
W Davies (b)
W Mackenzie
Zhang C
Totals
$
176,230
-
-
176,230
$
-
-
-
-
Non-
Monetary
Benefit
$
-
-
-
-
Long term benefits and termination benefits for the year were nil.
Post-
employment
Benefits
Super-
annuation
Share-
based
payments
Options
% of
Remuneration to
Total
Total
Options
Bonus
$
$
-
-
-
-
$
176,230
-
-
176,230
-
-
-
-
%
%
-
-
-
-
-
-
(b)
Mr Davies’ services as Managing Director were provided by Fairstone Holdings Pty Ltd for which the
Company was charged $176,230 (ex GST). Mr Davies is a Director and shareholder of Fairstone Holdings
Pty Ltd.
Service Agreements
Warwick Davies
Mr Davies is an Executive Director and as Managing Director, is responsible for the day-to-day operations of the
Consolidated Entity. The Consolidated Entity has an agreement with Fairstone Holdings Pty Ltd* to provide the
management services of Mr Davies to the Company in relation to its corporate activities on normal commercial
terms and conditions, which are detailed as follows:
Terms of Agreement
Agreement commenced 31 August 2011
for 3 years.
Remuneration excluding GST
$172,800 for 216 business days, per annum plus $100
per hour there-after.
Termination benefit
3 months notice
*Mr Davies is a Director and shareholder of Fairstone Holdings Pty Ltd
Until terms of a new service agreement have been negotiated, the terms of the existing Services Agreement
remain in force by agreement between the parties.
RMC Annual Report 2014
14
Details of share based compensation and bonuses
DIRECTORS’ REPORT (Continued)
During the year ended 30 June 2014, no remuneration options or incentive options were granted, vested, exercised
or lapsed. For the year ending 30 June 2014, the Company had no remuneration options or incentive options.
During the year ended 30 June 2013, no remuneration options or incentive options were granted, vested, exercised
or lapsed. For the year ending 30 June 2013, the Company had no remuneration options or incentive options
Directors’ Interests in Shares and Options of the Company
2014
Options Holding
Balance
1 July 2013
Balance at
date of
appointment
Received as
remuneration
Options
exercised
Net change
other
Balance
30 June
2014
Directors
W Davies
W Davies *
W Mackenzie
Zhang C *
1,291,875
621,094
-
206,910,706
Totals
* (Indirect or related party ownership)
208,823,675
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,291,875
621,094
-
206,910,706
208,823,675
2014
Shareholding
Balance
1 July 2013
Balance at
date of
appointment
Received as
remuneration
Options
exercised
Net change
other
Balance
30 June
2014
Directors
W Davies
W Davies *
W Mackenzie
Zhang C *
15,502,500
7,453,125
-
1,171,026,986
Totals
* (Indirect or related party ownership)
1,193,982,611
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,502,500
7,453,125
-
1,171,026,986
1,193,982,611
Loans to key management personnel or Directors
There were no loans to key management personnel or Directors in either the years ending 30 June 2013 or 30 June
2014.
Other transactions with key management personnel or Directors
Other than what is detailed in the remuneration report, there were no other transactions with key management
personnel or Directors in either the years ending 30 June 2013 or 30 June 2014.
This is the end of audited remuneration report.
RMC Annual Report 2014
15
SHARE OPTIONS
DIRECTORS’ REPORT (Continued)
Unlisted Options
As at the date of this report, there are no unlisted options over unissued ordinary shares in the Resource Mining
Corporation Limited.
Listed Options
At 30 June 2014, there were 226,177,905 listed options over unissued ordinary shares in the Resource Mining
Corporation Limited. The listed options are exercisable at $0.006 on or before 31 January 2015.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
During the financial year, the Company has given an indemnity or entered into an agreement to indemnity or paid or
agreed to pay insurance premiums as follows:
The Company has paid premiums to insure each of the Directors and Officers against liabilities for costs and
expenses incurred by them in defending any legal proceedings while acting in the capacity of Director or Officer of
the Company, other than conduct involving a wilful breach of duty in relation to the Company. In accordance with the
confidentially clause under the insurance policy, the amount of the premium paid to the insurers and the limit of
indemnity has not been disclosed. This is permitted under section 300(a) of the Corporations Act 2001.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all
or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
AUDITOR
BDO Audit (WA) Pty Ltd was appointed auditors in November 2012 in accordance with section 327 of the
Corporations Act 2001.
NON-AUDIT SERVICES
The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that
the services disclosed below did not compromise the external auditor’s independence in accordance with APES 110:
Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
There were no fees for non-audit services paid/payable to the external auditors during the year ended 30 June 2014.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration has been received for the year ended 30 June 2014 and commences on
page 50.
Signed in accordance with a resolution of the Directors’ and on behalf of the Directors
Warwick Davies
Managing Director
Dated at Perth 26th day of September 2014.
RMC Annual Report 2014
16
CORPORATE GOVERNANCE STATEMENT
Approach to Corporate Governance
Resource Mining Corporation Limited (Company) has established a corporate governance framework, the key
features of which are set out in this statement. In establishing its corporate governance framework, the Company has
referred to the ASX Corporate Governance Council Principles and Recommendations 2nd edition (Principles and
Recommendations). The Company has followed each recommendation where the Board has considered the
recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's
corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on
the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due
consideration, the Company's corporate governance practices do not follow a recommendation, the Board has
explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the
Company has adopted instead of those in the recommendation.
following
The
http://www.resmin.com.au/investors/corporate-governance, under
Governance":
governance-related
documents
can
be
found
at
the section marked “Investors”, "Corporate
the Company's website
on
Charters
Board
Audit Committee
Nomination Committee
Remuneration Committee
Policies and Procedures
Policy and Procedure for Selection and (Re) Appointment of Directors
Process for Performance Evaluations
Policy on Assessing the Independence of Directors
Diversity Policy
Policy for Trading in Company Securities (summary)
Code of Conduct (summary)
Whistleblower Policy (summary)
Policy on Continuous Disclosure (summary)
Compliance Procedures (summary)
Procedure for the Selection, Appointment and Rotation of External Auditor
Shareholder Communication Policy
Risk Management Policy (summary)
The Company reports below on whether it has followed each of the recommendations during the 2013/2014 financial
year (Reporting Period). The information in this statement is current at 26 September 2014.
Board
Roles and responsibilities of the Board and Senior Executives
(Recommendations: 1.1, 1.3)
The Company has established the functions reserved to the Board, and those delegated to senior executives and has
set out these functions in its Board Charter, which is disclosed on the Company’s website.
The Board is collectively responsible for promoting the success of the Company through its key functions of
overseeing the management of the Company, providing overall corporate governance of the Company, monitoring
the financial performance of the Company, engaging appropriate management commensurate with the Company's
structure and objectives, involvement in the development of corporate strategy and performance objectives, and
reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal
compliance.
Senior executives are responsible for supporting the Managing Director and assisting the Managing Director in
implementing the running of the general operations and financial business of the Company in accordance with the
delegated authority of the Board. Senior executives are responsible for reporting all matters which fall within the
Company's materiality thresholds at first instance to the Managing Director or, if the matter concerns the Managing
Director, directly to the Chair or the lead independent Director, as appropriate.
RMC Annual Report 2014
17
CORPORATE GOVERNANCE STATEMENT (continued)
Skills, experience, expertise and period of office of each Director
(Recommendation: 2.6)
A profile of each Director setting out their skills, experience, expertise and period of office is set out in the Directors'
Report on pages 9-10. The mix of skills and diversity for which the Board is looking to achieve in membership of the
Board is a majority of independent Directors, with resources industry experience, and in particular operational
processing and management experience in foreign jurisdictions, general corporate and commercial and investor
relations experience, and a level of expertise and experience in industrial, regulatory and governmental relations both
domestically and in Papua New Guinea. The qualifications and experience the Board continues to consider to be
particularly relevant to the Company are in the areas of legal, finance, mining exploration and operation, investor
relations and marketing.
Director independence
(Recommendations: 2.1, 2.2, 2.3, 2.6)
The Board does not have a majority of Directors who are independent. The Company has found that with its direction
of operations and the financial climate, it has been difficult to attract Directors. During the Reporting Period, the Board
continued to review its structure and composition, including the balance of independence on the Board. The Board
remains committed to appointing two or more independent Directors to the Board, when the opportunity to do so
arises.
The Board considers the independence of Directors having regard to the relationships listed in Box 2.1 of the
Principles and Recommendations and the Company's materiality thresholds. The Board has agreed on the following
guidelines, as set out in the Company's Board Charter for assessing the materiality of matters:
Statement of Financial Position items are material if they have a value of more than 10% of pro-forma net asset.
Profit and loss items are material if they will have an impact on the current year operating result of 10% or more.
Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are
outside the ordinary course of business, could affect the Company’s rights to its assets, if accumulated would
trigger the quantitative tests, involve a contingent liability that would have a probable effect of 10% or more on
Statement of Financial Position or profit and loss items, or will have an effect on operations which is likely to
result in an increase or decrease in net income or dividend distribution of more than 10%.
Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally
onerous provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative
tests, there is a likelihood that either party will default, and the default may trigger any of the quantitative or
qualitative tests, are essential to the activities of the Company and cannot be replaced, or cannot be replaced
without an increase in cost which triggers any of the quantitative tests, contain or trigger change of control
provisions, are between or for the benefit of related parties, or otherwise trigger the quantitative tests.
The sole independent Director of the Company is Mr Mackenzie who is deemed to be independent by the Board for
the period 1 July 2013 to November 2013 when Mr Mackenzie was an employee and Director of an associate of a
substantial shareholder of the Company. These circumstances meant that Mr Mackenzie did not satisfy paragraph
one of the independence criteria set out in the Board’s Policy on Assessing the Independence of Directors. Mr
Mackenzie satisfied all other aspects of the independence criteria set out in the Board’s Policy on Assessing the
Independence of Directors. The Board considered Mr Mackenzie to be capable of and demonstrated that he
consistently made decisions and took actions which are in the best interests of the Company. Further, the Board
believed that Mr Mackenzie was able to bring independent judgement to his decision making and was aware of his
statutory responsibilities and obligations in relation to conflicts of interests and acted accordingly. Therefore, the
Board considered Mr Mackenzie to be independent.
Mr Mackenzie ceased being an employee and Director of an associate of a substantial shareholder of the Company
in November 2013 and since that time he satisfied all of the independence criteria set out in the Board’s Policy on
Assessing the Independence of Directors.
The non-independent Directors of the Company are Warwick Davies and Zhang Chi.
The independent Chair of the Board is William Mackenzie.
The Managing Director is Warwick Davies who is not Chair of the Board.
RMC Annual Report 2014
18
CORPORATE GOVERNANCE STATEMENT (continued)
Independent professional advice
(Recommendation: 2.6)
To assist Directors with independent judgement, it is the Board's policy that if a Director considers it necessary to
obtain independent professional advice to properly discharge the responsibility of their office as a Director then,
provided the Director first obtains approval from the Chair for incurring such expense, the Company will pay the
reasonable expenses associated with obtaining such advice.
Selection and (Re) Appointment of Directors
(Recommendation: 2.6)
In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed process
whereby it evaluates the mix of skills, experience and expertise of the existing Board. In particular, the Nomination
Committee (or equivalent) is to identify the particular skills that will best increase the Board's effectiveness.
Consideration is also given to the balance of independent Directors. Potential candidates are identified and, if
relevant, the Nomination Committee (or equivalent) recommends an appropriate candidate for appointment to the
Board. Any appointment made by the Board is subject to ratification by shareholders at the next general meeting.
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession
planning. An election of Directors is held each year. Each Director other than the Managing Director, must not hold
office (without re-election) past the third annual general meeting of the Company following the Director's appointment
or three years following that Director's last election or appointment (whichever is the longer). However, a Director
appointed to fill a casual vacancy or as an addition to the Board must not hold office (without re-election) past the
next annual general meeting of the Company. At each annual general meeting a minimum of one Director or one
third of the total number of Directors must resign. A Director who retires at an annual general meeting is eligible for
re-election at that meeting. Re-appointment of Directors is not automatic.
The Company’s Policy and Procedure for the Selection and (Re) Appointment of Directors is disclosed on the
Company’s website.
Board committees
Audit Committee
(Recommendations: 4.1, 4.2, 4.3, 4.4)
The Board has not established a separate Audit Committee and accordingly, it is not structured in compliance with
Recommendation 4.2. Given the current size and composition of the Board, the Board believes that there would be
no efficiencies gained by establishing a separate Audit Committee. Accordingly, the Board performs the role of Audit
Committee. Items that are usually required to be discussed by an Audit Committee are marked as separate agenda
items at Board meetings when required. When the Board convenes as the Audit Committee it carries out those
functions which are delegated to it in the Company’s Audit Committee Charter. The Board deals with any conflicts of
interest that may occur when convening in the capacity of the Audit Committee by ensuring that the Director with
conflicting interests is not party to the relevant discussions.
The full Board in its capacity as the Audit Committee held two meetings during the Reporting Period. Details of
Director attendance at the Audit Committee meetings are set out in the Directors report on page 12.
The Company has adopted an Audit Committee Charter which describes the role, composition, functions and
responsibilities of the full Board in its capacity as the Audit Committee.
Details of each of the Director's qualifications are set out in the Directors' Report on pages 10-11. All of the Directors
consider themselves to be financially literate and have relevant industry experience. Mr Zhang has a degree in
economics and has worked in accounting and finance.
The Company has established a Procedure for the Selection, Appointment and Rotation of External Auditor. The
Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor
when any vacancy arises, as recommended by the Audit Committee (or its equivalent). Candidates for the position of
external auditor must demonstrate complete independence from the Company through the engagement period. The
Board may otherwise select an external auditor based on criteria relevant to the Company's business and
circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit Committee (or its
equivalent) and any recommendations are made to the Board.
The Company’s Audit Committee Charter and Procedure for Selection, Appointment and Rotation of External Auditor
are disclosed on the Company’s website.
RMC Annual Report 2014
19
CORPORATE GOVERNANCE STATEMENT (continued)
Nomination Committee
(Recommendations: 2.4, 2.6)
The Board has not established a separate Nomination Committee. Given the current size and composition of the
Board, the Board believes that there would be no efficiencies gained by establishing a separate Nomination
Committee. Accordingly, the Board performs the role of the Nomination Committee. Items that are usually required to
be discussed by a Nomination Committee are marked as separate agenda items at Board meetings when required.
When the Board convenes as the Nomination Committee it carries out those functions which are delegated to it in the
Company’s Nomination Committee Charter. The Board deals with any conflicts of interest that may occur when
convening in the capacity of the Nomination Committee by ensuring that the Director with conflicting interests is not
party to the relevant discussions.
As noted above, the full Board carries out the role of the Nomination Committee. The full Board did not officially
convene as a Nomination Committee during the Reporting Period, however nomination related matters were
discussed and addressed from time to time during the year, as required.
The Board has adopted a Nomination Committee Charter which describes the role, composition, functions and
responsibilities of the full Board in its capacity as the Nomination Committee.
The Company’s Nomination Committee Charter is disclosed on the Company’s website.
Remuneration Committee
(Recommendations: 8.1, 8.2, 8.3, 8.4)
The Board has not established a separate Remuneration Committee and accordingly, it is not structured in
accordance with Recommendation 8.2. Given the current size and composition of the Company, the Board believes
that there would be no efficiencies gained by establishing a separate Remuneration Committee. Accordingly, the
Board performs the role of Remuneration Committee. Items that are usually required to be discussed by a
Remuneration Committee are marked as separate agenda items at Board meetings when required. When the Board
convenes as the Remuneration Committee it carries out those functions which are delegated to it in the Company’s
Remuneration Committee Charter. The Board deals with any conflicts of interest that may occur when convening in
the capacity of the Remuneration Committee by ensuring that the Director with conflicting interests is not party to the
relevant discussions.
The full Board did not officially meet in its capacity as the Remuneration Committee. Remuneration for the Board and
senior executives did not change during the Reporting Period.
The Board has adopted a Remuneration Committee Charter which describes the role, composition, functions and
responsibilities of the full Board in its capacity as the Remuneration Committee.
Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration
Report” which forms of part of the Directors’ Report and commences on page 13. The Company's policy on
remuneration clearly distinguishes the structure of Non-Executive Directors’ remuneration from that of executive
Directors and senior executives. The remuneration of Non-Executive Directors is set by reference to payments made
by other companies of similar size and industry, and by reference to the Director’s skills and experience, and for the
Reporting Period included a consideration of the financial restrictions place on the Company. Given the financial
restrictions placed on it, the Company may consider it appropriate to issue unlisted options to Non-Executive
Directors, subject to obtaining the relevant approvals. The Remuneration Policy is subject to annual review. All of the
Directors’ option holdings are fully disclosed. The maximum aggregate amount of fees (including superannuation
payments) that can be paid to Non-Executive Directors is subject to approval by shareholders at general meeting.
Executive pay and rewards may consist of a base salary and performance incentives. Long term performance
incentives may include options granted at the discretion of the Board and subject to obtaining the relevant approvals.
The grant of options is designed to recognise and reward efforts as well as to provide additional incentive and may be
subject to the successful completion of performance hurdles. Executives are offered a competitive level of base pay
at market rates (for comparable companies) and are reviewed to ensure market competitiveness.
There are no termination or retirement benefits for Non-Executive Directors (other than for superannuation).
The Company's Remuneration Committee Charter includes a statement of the Company's policy on prohibiting
transactions in associated products which limit the risk of participating in unvested entitlements under any equity
based remuneration schemes.
The Company’s Remuneration Committee Charter is disclosed on the Company’s website.
RMC Annual Report 2014
20
CORPORATE GOVERNANCE STATEMENT (continued)
Performance evaluation
Senior executives
(Recommendations: 1.2, 1.3)
The Managing Director is responsible for evaluating the performance of senior executives. The evaluation of senior
executives comprises an informal interview process, which occurs annually or more frequently, as required and
otherwise takes place as part of the annual salary review under the executives’ employment contracts.
The Chair is responsible for evaluating the Managing Director. The evaluation of the Managing Director comprises an
informal interview process with the Chair which occurs annually, or more frequently at the Chair’s discretion. The
Managing Director’s performance is reviewed against his role description and responsibilities as set out in his
contract with the Company.
During the Reporting Period, an evaluation of the Managing Director and senior executives did not take place,
however the evaluations are scheduled to take place in accordance with the process disclosed in the first quarter of
the 2014/2015 financial year.
Board, its committees and individual Directors
(Recommendations: 2.5, 2.6)
The Chair is responsible for evaluation of the Board and, when deemed appropriate, individual Directors. The
evaluation of the Board and individual Directors comprise informal discussions on an ongoing basis with the Chair.
During the Reporting Period an evaluation of the individual Directors took place in accordance with the process
disclosed.
The Company’s Process for Performance Evaluation is disclosed on the Company’s website.
Ethical and responsible decision making
Diversity
(Recommendations: 3.2, 3.3, 3.4, 3.5)
The Company has established a Diversity Policy. However, the Diversity Policy provides that the Board may establish
measurable objectives for achieving gender diversity. If established, the Board will assess annually both the
objectives and progress towards achieving them. The Board has not set measurable objectives for achieving gender
diversity. The Board is committed to actively supporting and managing diversity as a means of enhancing the
Company’s performance by recognising and utilising the contribution of diverse skills and talent from its Directors,
officers, employees and consultants. However, at this stage of the Company’s operations and the Company’s small
number of employees, the Board has determined that no specific measurable objectives will be established. The
Board will review this position as the Company’s circumstances change.
The proportion of women employees in the whole organisation, women (including consultants) in senior executive
positions in the Company and women on the Board as at 30 June 2014 are set out in the following table:
Employees in whole organisation
Senior Executive positions
Board*
Proportion of women
2 out of 7 (29%)
2 out of 4 (50%)
0 out of 3 (0%)
* The Managing Director has been included in the Board category and the senior executive category.
The Company’s Diversity Policy is disclosed on the Company’s website.
RMC Annual Report 2014
21
CORPORATE GOVERNANCE STATEMENT (continued)
Code of Conduct
(Recommendations: 3.1, 3.5)
The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the
Company's integrity, the practices necessary to take into account its legal obligations and the reasonable
expectations of its stakeholders and the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.
The Board has also adopted a Whistleblower Policy. The aim of the policy is to ensure that Directors, officers and
employees comply with the Company's Code of Conduct. The policy encourages reporting of violations (or suspected
violations) and provides effective protection to those reporting by implementing systems for confidentiality and report
handling.
A summary of the Company’s Code of Conduct and Whistleblower Policy are disclosed on the Company’s website.
Continuous Disclosure
(Recommendations: 5.1, 5.2)
The Company has established written policies and procedures designed to ensure compliance with ASX Listing Rule
disclosure requirements and accountability at a senior executive level for that compliance.
A summary of the Company’s Policy on Continuous Disclosure and Compliance Procedures are disclosed on the
Company’s website.
Shareholder Communication
(Recommendations: 6.1, 6.2)
The Company has designed a communications policy for promoting effective communication with shareholders and
encouraging shareholder participation at general meetings.
The Company’s Shareholder Communication Policy is disclosed on the Company’s website.
Risk Management
Recommendations: 7.1, 7.2, 7.3, 7.4)
The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the
Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself
that management has developed and implemented a sound system of risk management and internal control.
Under the policy, the Board delegates day-to-day management of risk to the Managing Director, who is responsible
for identifying, assessing, monitoring and managing risks. The Managing Director is also responsible for updating the
Company's material business risks to reflect any material changes, with the approval of the Board.
In fulfilling the duties of risk management, the Managing Director may have unrestricted access to Company
employees, contractors and records and may obtain independent expert advice on any matter they believe
appropriate, with the prior approval of the Board.
In addition, the following risk management measures have been adopted by the Board to manage the Company's
material business risks:
the Board has established authority limits for management, which, if proposed to be exceeded, requires
prior Board approval;
the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's
continuous disclosure obligations; and
the Board has adopted a corporate governance manual which contains other policies to assist the
Company to establish and maintain its governance practices.
The Company has developed systems and procedures to manage its material business risks. The system includes
identification by management of the Company’s material business risks and risk management strategies for those
risks, and identification of the risk level, their likelihood and their consequences. The process of management of
material business risks has been allocated to the Managing Director. The risk register is reviewed by the Board
annually, and updated as required. During the Reporting Period, a risk register was not reviewed by the Board.
However, the Managing Director has presented a risk report to the Board in relation to the Company’s material
business risks. The risk register is scheduled to be reviewed by the Board at its October 2014 Board meeting.
RMC Annual Report 2014
22
CORPORATE GOVERNANCE STATEMENT (continued)
Recommendations: 7.1, 7.2, 7.3, 7.4) continued
The categories of risks reported on as part of the Company’s systems and processes for managing material business
risks are: operational; financial reporting; sovereign risk and market-related risks.
The Board has required management to design, implement and maintain risk management and internal control
systems to manage the Company's material business risks. The Board also requires management to report to it
confirming that those risks are being managed effectively. The Board has received a report from management as to
the effectiveness of the Company's management of its material business risks for the Reporting Period.
The Managing Director and the Financial Controller have provided a declaration to the Board in accordance with
section 295A of the Corporations Act 2001 and have assured the Board that such declaration is founded on a sound
system of risk management and internal control and that the system is operating effectively in all material respects in
relation to financial reporting risks.
A summary of the Company’s Risk Management Policy is disclosed on the Company’s website.
RMC Annual Report 2014
23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Revenue
Corporate expenses
Employee and consulting fees
Administration and other expenses
Finance costs
Depreciation and impairment
Exploration expenditure and project costs
Impairment expense
Research and development expenditure
LOSS BEFORE INCOME TAX
INCOME TAX
PROFIT/(LOSS) AFTER INCOME TAX FOR THE YEAR
OTHER COMPREHENSIVE PROFIT/(LOSS)
Items that maybe re-classified to profit and loss
Exchange translation difference
Income tax relating to components of other
comprehensive loss
Note
Consolidated Entity
2
3
3
3
3
5
4
2014
$
2013
$
35,264
1,424,233
(270,475)
(266,366)
(189,883)
(438)
(6,357)
(125,218)
(311,060)
(74,576)
(1,209,109)
(258,917)
(325,900)
(184,202)
(4,744)
(7,450)
(32,946)
(463,311)
(378,729)
(231,966)
(287,990)
287,990
(1,497,099)
56,024
(1,167,422)
-
(34,746)
-
OTHER COMPREHENSIVE LOSS
(1,167,422)
(34,746)
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE
YEAR
(2,664,521)
21,278
PROFIT/(LOSS) PER SHARE FOR THE YEAR ATTRIBUTABLE TO THE MEMBERS OF RESOURCE
MINING CORPORTATION LIMITED
Basic earnings/(loss) per share
(cents per share)
Diluted earnings/(loss) per share
(cents per share)
4
4
(0.06)
0.002
(0.06)
0.002
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying
notes.
24
RMC Annual Report 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
CURRENT ASSETS
Cash and cash equivalents
Trade and other current assets
Total Current Assets
NON CURRENT ASSETS
Plant and equipment
Mineral exploration and evaluation
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Interest bearing liabilities
Total Current Liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
Note
Consolidated Entity
2014
$
2013
$
6
7
8
9
10
11
12
11
16
13
184,771
72,182
1,730,283
203,919
256,953
1,934,202
52,879
10,419,661
62,500
11,190,189
10,472,540
11,252,689
10,729,493
13,186,891
144,620
291,298
-
202,204
13,997
16,276
435,918
232,477
15,689
12,007
15,689
12,007
451,607
244,484
10,277,886
12,942,407
61,942,247
(52,211,018)
546,657
61,942,247
(50,713,919)
1,714,079
10,277,886
12,942,407
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
25
RMC Annual Report 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 30 JUNE 2014
Consolidated Entity
Note
Issued
Capital
Accumulated
Losses
Foreign
Currency
Reserve
$
$
$
Convertible
Notes
Share
Reserve
$
Total
$
Year ended 30 June 2014
Balance at 1 July 2013
Loss for the year
Other comprehensive loss for the
year
Total comprehensive loss for
the year
Transactions with owners in
their capacity as owners
61,942,247
-
(50,713,919)
(1,497,099)
1,714,079
-
-
-
-
(1,167,422)
(1,497,099)
(1,167,422)
Balance at 30 June 2014
61,942,247
(52,211,018)
546,657
-
-
-
-
-
12,942,407
(1,497,099)
(1,167,422)
(2,664,521)
10,277,886
Consolidated Entity
Note
Issued
Capital
Accumulated
Losses
Foreign
Currency
Reserve
$
$
$
Convertible
Notes
Share
Reserve
$
Total
$
Year ended 30 June 2013
Balance at 1 July 2012
Profit for the year
Other comprehensive loss for the
year
Total comprehensive
profit/(loss) for the year
Transactions with owners in
their capacity as owners
Reversal of previous convertible
note share reserve to accumulated
losses
61,942,247
-
(50,947,830)
56,024
1,748,825
-
177,887
-
12,921,129
56,024
-
-
-
-
(34,746)
56,024
(34,746)
-
-
(34,746)
21,278
177,887
-
(177,887)
-
Balance at 30 June 2013
61,942,247
(50,713,919)
1,714,079
-
12,942,407
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
RMC Annual Report 2014
26
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 JUNE 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Payment to suppliers
Interest income received
Other income received
Interest expense paid
Government grant received
Research and development expenditure
Research and development tax concession
Note
Consolidated Entity
2014
$
2013
$
(754,171)
38,607
4,165
(438)
55,000
(120,501)
123,599
(792,452)
69,242
1,629
(4,744)
(11,148)
(321,656)
228,068
Net Cash (Outflow) From Operating Activities
22
(653,739)
(831,061)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure
Proceeds from sale of tenements
Payment for other fixed assets
(851,918)
10,000
(9,447)
(793,982)
1,360,000
(4,441)
Net Cash Inflow/(Outflow) From Investing Activities
(851,365)
561,577
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan
Repayment of borrowings
-
(16,740)
62,145
(59,418)
Net Cash (Outflow)/Inflow From Financing Activities
(16,740)
2,727
Net decrease in cash and cash equivalents
Effect of exchange rate changes on cash holdings
Cash and cash equivalents at beginning of the financial
year
Cash and cash equivalents at the end of this financial
6
year
(1,521,844)
(23,668)
(266,757)
(3,009)
1,730,283
2,000,049
184,771
1,730,283
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
27
RMC Annual Report 2014
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated statements and notes represent those of Resource Mining Corporation Limited (Company) and
controlled entities (the Consolidated Entity). Resource Mining Corporation Limited is a listed public company,
incorporated and domiciled in Australia.
The separate financial statements of the parent entity, Resource Mining Corporation Limited, have not been
presented within this financial report as permitted by the Corporations Act 2001.
The financial report was authorised for issue on 26 September 2014 by the Board of Directors.
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the
Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Consolidated Entity is a for profit
entity for financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial
report containing relevant and reliable information about transactions, events and conditions to which they apply. The
financial statements and notes also comply with International Financial Reporting Standards.
Material accounting policies adopted in the preparation of this financial report are presented below and have been
consistently applied unless otherwise stated.
Except for cash flow information, the financial statements have been prepared on an accruals basis, and based on
historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities
for which the fair value basis of accounting has been applied.
The following is a summary of the material accounting policies adopted by the Consolidated Entity in the preparation
of the financial report.
Going Concern
The financial report has been prepared on a going concern basis, which assumes continuity of normal business
activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Consolidated Entity has incurred a net loss after tax of $1,497,099 (2013: net profit after tax of $56,024) and
experienced net cash outflows from operations of $653,739 (2013: $831,061) for the year ended 30 June 2014.
The directors are satisfied that the going concern basis of preparation is appropriate. Given the Consolidated Entity’s
history of successful capital raising to date, the Directors are confident of the Consolidated Entity’s ability to raise
additional funds as required and to meet the expenditure commitments of tenement leases held.
Notwithstanding the above, the ability of the Consolidated Entity to continue as a going concern is dependent upon
the future successful raising of funding through equity.
The financial report does not include any adjustments relating to the recoverability and classification of recorded
asset amounts nor to the amounts and classification of liabilities that may be necessary should the Company be
unable to continue as a going concern.
RMC Annual Report 2014
28
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting Policies
(a)
Principles of Consolidation
A controlled entity is any entity over which Resource Mining Corporation Limited has the power to govern the financial
and operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and
effect of holdings of actual and potential voting rights are considered.
A list of controlled entities is contained in Note 17 to the financial statements.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company
controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the Consolidated Entity. They are deconsolidated
from the date that control ceases.
All inter-group balances and transactions between entities in the Consolidated Entity, including any unrealised profits
or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those adopted by the parent entity.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated Statement
of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Financial
Position respectively.
(b)
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. The Consolidated Entity
recognises revenue when the amount of revenue can be easily measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for each of the Consolidated Entity’s as described below:
Revenue from the sale of a tenement is recognised at the point of transfer of significant risks and rewards of
ownership;
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets; and
All revenue is stated net of the amount of Goods and Service Tax (GST).
(c)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less and less bank overdraft, if any.
(d)
Income Tax
The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or
disallowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the
reporting date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amount in the financial statements. No deferred
income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except
where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly
against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary difference can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no
adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law.
RMC Annual Report 2014
29
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Plant and Equipment
Each class of plant and equipment is carried at cost, less where applicable, any accumulated depreciation and
impairment losses.
Plant and equipment
Plant and equipment are measured on historical cost basis less depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future consolidated benefits associated with the item will flow to the Consolidated Entity and
the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of
Profit or Loss and Other Comprehensive Income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a reducing balance commencing from the time the asset
is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and Equipment
Depreciation Rate
15 – 50%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are included in the Consolidated Statement of Profit and Loss and Other Comprehensive Income. When
revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained
earnings.
(f)
Exploration, Evaluation and Development Expenditure
Exploration, evaluation and development expenditure incurred is either written off as incurred or accumulated in
respect of each identifiable area of interest. Tenement acquisition costs are initially capitalised. Costs are only carried
forward to the extent that they are expected to be recouped through the successful development of the areas, sale of
the respective areas of interest or where activities in the area have not yet reached a stage, which permits
reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the areas is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of
the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are
expensed as incurred and treated as exploration and evaluation expenditure.
(g)
Impairment of Assets
At each reporting date, the Managing Director reviews the carrying values of the Consolidated Entity’s tangible and
intangible assets to determine whether there is any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the assets, being the higher of the asset’s fair value less costs to sell and
value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the Statement of Profit and Loss and Other Comprehensive Income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
RMC Annual Report 2014
30
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h)
Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not
the legal ownership that is transferred to entities in the Consolidated Entity, are classified as finance leases. Finance
leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the
leased property or the present value of the minimum lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the
period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease
term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
charged as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the
life of the lease term.
(i)
Financial Instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes
a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are
delivered within timeframes established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified
as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit
or loss are expensed to profit or loss immediately.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and
benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either
discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or
transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or
liabilities assumed, is recognised in profit or loss.
Classification and Subsequent Measurement
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are subsequently measured at amortised cost using the effective interest rate method.
(ii) Financial Liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost
using the effective interest rate method.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
Impairment
At each reporting date, the Consolidated Entity assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value
of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the
Statement of Profit and Loss and Other Comprehensive Income.
RMC Annual Report 2014
31
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(j)
Contributed Equity
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share
proceeds received.
(k)
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the
reporting date.
(l)
Trade Receivables
Trade receivables are recognised initially at fair value, less provision for impairment. Trade receivables are generally
due for settlement with 30 days. They are presented as current assets unless collection is not expected for more than
12 months after reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are
written off by reducing the carry amount directly.
The amount of the impairment loss is recognised in profit and loss within other expenses. Subsequent recoveries of
amounts previously written off are credited against other expenses in the profit or loss.
(m)
Provisions
Provisions are recognised where there is a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
(n)
Foreign Currency Transaction and Balances
Functional and presentation currency
The functional currency of each of the entities in the Consolidated Entity is measured using the currency of the
primary economic environment in which the entity operates. The Consolidated Entity’s financial statements are
presented in Australian dollars which is the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date
of the transaction. Foreign currency monetary items are translated at the year-end exchange rate.
Exchange differences arising on the transaction of monetary items are recognised in the Statement of Profit and Loss
and Other Comprehensive Income, except where deferred in equity as a qualifying cash flow or net investment
hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent
that the gain or loss is directly recognised in equity, otherwise the exchange differences are recognised in the
Statement of Profit and Loss and Other Comprehensive Income.
Controlled entities
The financial results and position of foreign operations whose functional currency is different from the presentation
currency are translated as follows:
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the foreign currency
translation reserve in the Statement of Financial Position. These differences are recognised in the Statement of Profit
or Loss and Other Comprehensive Income in the period in which the operation is disposed of.
RMC Annual Report 2014
32
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Comparative Figures
When required by the Australian Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
(p)
Share-based Payments
The Company may operate equity-settled share-based payment employee share and option schemes. The fair value
of the equity to which employees become entitled is measured at grant date and recognised as an expense over the
vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the
market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all
market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each
reporting date such that the amount recognised for services received as consideration for the equity instruments
granted shall be based on the number of equity instruments that eventually vest.
(q)
Earnings Per Share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
(r)
Critical Accounting Estimates and Judgements
Estimates and judgements incorporated into the financial report are continually evaluated and are based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and within the Consolidated Entity.
Key Estimates
Impairment of assets
The Managing Director assesses impairment at each reporting date by evaluating conditions specific to the
Consolidated Entity that may lead to impairment of assets. Where an impairment trigger exists, the recoverable
amount of the asset is determined.
Recoverability of exploration expenditure
The Consolidated Entity reviews annually whether the exploration and evaluation expenditure incurred in identifiable
areas of interest is expected to be recouped through the successful development of the area. In addition it reviews
whether activities in the area have not yet reached a stage that permits reasonable assessment of the existence of
reserves and further work is expected to be performed. All expenditure that does not meet these criteria is expensed
to the Statement of Profit and Loss and Other Comprehensive Income.
(s)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Managing Director.
RMC Annual Report 2014
33
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office in Australia and the Internal Revenue Commission in Papua New
Guinea. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an
item of the expenses.
Receivables and payables in the Statement of Financial Position are shown inclusive of GST. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement
of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(u)
Employee Benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non‑monetary benefits, and annual leave and accumulating sick leave
expected to be settled within 12 months after the end of the period in which the employees render the related service
are recognised in respect of employees’ services up to the end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the
provision for employee benefits. All other short‑term employee benefit obligations are presented as payables.
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end
of the period in which the employees render the related service is recognised in the provision for employee benefits
and measured as the present value of expected future payments to be made in respect of services provided by
employees up to the end of the reporting period using the projected unit credit method. Consideration is given to
expected future wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the end of the reporting period on national government bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the Statement of Financial Position if the entity does not have an
unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual
settlement is expected to occur.
(v)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised costs. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit of loss over the period of the borrowings using the effective interest method. Fees paid
on the establishment of loan facilities are recognised as transaction costs of the loan, capitalised as a prepayment
and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Consolidated Entity has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting period.
(w)
Government Grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received
and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods
necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred
income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis.
RMC Annual Report 2014
34
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 2 REVENUE
Interest received
Proceeds from sale of tenements
Other Income
Consolidated Entity
2014
$
31,141
-
4,123
35,264
2013
$
66,718
1,350,000
7,515
1,424,233
During the 2012/2013 financial year the Consolidated Entity received $1,350,000 from Kimberley Metals Group, being
the contingent purchase price and final payment for the sale of the Argyle Iron Ore tenement in 2009.
NOTE 3 LOSS FOR THE YEAR
Loss for the year is after the following expenses:
Depreciation and impairment
Depreciation – plant and equipment
Depreciation – office furniture and equipment
Impairment of fixed assets
Finance costs
Credit charges
Employee expenses
Wages and salaries
Consultants
Other employee costs
Research and development expenditure
Grant funds received
Research and development expenditure
5,400
546
411
6,357
438
438
140,546
117,135
8,685
266,366
-
74,576
74,576
6,808
642
-
7,450
4,744
4,744
193,229
120,256
12,415
325,900
11,148
367,581
378,729
During the 2012/2013 financial year the sum of $11,148 was returned as unspent in accordance with the agreement
with Commonwealth of Australia represented by its Department of Innovation, Industry, Science and Research.
NOTE 4 EARNINGS PER SHARE
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
(0.06)
(0.06)
0.002
0.002
The following reflects the profit/(loss) and share data used in the calculations of basic and diluted earnings per
shares:
Profit/(losses) attributed to the ordinary equity holders of the Company
For basic earnings/(loss) per share (cents)
For diluted earnings/(loss) per share (cents)
(1,497,099)
(1,497,099)
56,024
56,024
Weighted Average of shares used as a denominator
For basic earnings/(loss) per share (cents)
For diluted earnings/(loss) per share (cents)
2,714,387,147
2,714,387,147
2,714,387,147
2,714,387,147
RMC Annual Report 2014
35
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 5 INCOME TAX
Major components of income tax expense for the years ended 30 June 2014 and 30 June 2013 are:
Income Statement:
Current Income
Current income tax charge (benefit)
Adjustments in respect of previous current income tax
Income tax expense (benefit) reported in income
statement
Consolidated Entity
2014
$
2013
$
-
287,990
(287,990)
-
287,990
(287,990)
A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax
at the statutory income tax rate to income tax expense at the Company’s effective income tax
rate for the years ended 30 June 2014 and 30 June 2013 is as follows:
Accounting profit (loss) before tax from continuing
operations
Accounting profit (loss) before income tax
At the statutory income tax rate of 30% (2013:30%)
Add:
Non-deductible expenses
NANE related expenditure (income)
Research and development claim
Temporary difference and losses not recognised
Adjustments in respect of previous current income tax
Less:
Unrecognised tax losses utiltised
Non-assessable income
Tax amortisation of capital raising costs
Income tax expense reported in income statement
(1,209,110)
(1,209,110)
(362,733)
-
29,710
-
354,545
287,990
-
-
(21,522)
56,022
56,022
16,807
-
23,144
113,619
284,999
-
(406,831)
(287,990)
(31,738)
287,990
(287,990)
287,990
287,990
(287,990)
(287,990)
Other deductible temporary differences not recognised other than the above are immaterial.
Tax Consolidation
The Company and its 100% owned controlled entities have formed a tax consolidated group. Members of the
Consolidated Entity have entered into a tax sharing arrangement in order to allocate income tax expense to the
wholly owned controlled entities on a pro-rata basis. The agreement provides for the allocation of income tax liabilities
between the entities should the head entity default on its tax payment obligations. At balance date, the possibility of
default is remote. The head entity of the tax consolidated group is Resource Mining Corporation Limited.
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement
provides for the allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to
members of the tax consolidated group in accordance with a group allocation approach which is consistent with the
principles of AASB 112 Income Taxes. The allocation of taxes under the tax funding agreement is recognised as an
increase/decrease in the controlled entities intercompany accounts with the tax consolidated group head company,
Resource Mining Corporation Limited.
RMC Annual Report 2014
36
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 5 INCOME TAX (continued)
Unrecognised deferred tax assets/(liabilities)
Deferred assets /(liabilities) have not been recognised in
respect of the following items:
Prepayments
Trade and other payables
Employee benefits
Business Related costs
Capital losses
Tax losses
Consolidated Entity
2014
$
2013
$
(1,335)
6,180
5,334
31,400
465,432
5,507,150
6,014,161
-
-
-
-
465,432
5,882,080
6,347,512
The tax losses do not expire under current legislation. Deferred tax assets have not been recognised in respect of
these items because it is not probable that future taxable profit will be available against which the Company can
utilise the benefits.
On the basis of the formation of the tax consolidated group in 2012, any intra group balances (including loans) of
entities within the tax consolidated group is disregarded for taxation purposes. Previously mentioned deductable
temporary differences in respect of investments in subsidiaries for which no deferred tax has been recognised
($20,311,167 with a potential tax benefit at 30%) are no longer disclosed given that it is eliminated from an Australian
tax view point.
NOTE 6 CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
181,035
3,736
184,771
474,491
1,255,792
1,730,283
Cash not available for use
There is a lien over deposit at call of $3,736 ($8,316 Kina) to secure a Bank Guarantee of $2,246 ($5,000 Kina) to the
Department of Minerals (now Mineral Resources Authority (MRA)) in Papua New Guinea.
Refer to Note 20 for further information on financial Instruments.
NOTE 7 TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Current
Trade receivables
Other receivables
GST receivables
Prepayments
Other current assets
-
121
25,355
46,706
-
72,182
566
136,306
19,083
43,176
4,788
203,919
Trade receivables are considered to be of high credit quality and were received in the subsequent period.
No debts are due past due or impaired.
Refer to Note 20 for further information on risk exposure.
RMC Annual Report 2014
37
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 8 PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Movement in carrying amounts
Opening balance
Additions
Disposal
Written off
Written off capitalised – exploration
Foreign exchange adjustment
Depreciation expense
Depreciation expense capitalised – exploration
costs
Closing balance
NOTE 9 MINERAL EXPLORATION AND EVALUATION
Consolidated Entity
2014
$
2013
$
162,096
(109,217)
52,879
62,500
9,211
-
(411)
(696)
(3,811)
(5,946)
(7,968)
52,879
164,956
(102,456)
62,500
74,989
5,423
-
-
20
(102)
(7,450)
(10,380)
62,500
At cost less impairment brought forward
Foreign exchange adjustment
Expenditure during the year
Exploration expenditure written off
Government Grant
At cost less impairment carried forward
11,190,189
(1,144,129)
734,661
(311,060)
(50,000)
10,419,661
10,926,053
(61,025)
788,472
(463,311)
-
11,190,189
The ultimate recoupment of exploration expenditure carried forward is dependent upon successful development
and commercial exploration, or sale of the respective areas.
Royalties for Regions Co-funded Government – Industry Drilling Program 2013 funding of $50,000 was
recognised during the period.
WOWO Gap Project – EL1165 Renewal
EL1165, the exploration licence for the tenement with a carry value of $10,391,827 (2013:$10,873,092), expired
on the 28 February 2014. An application for its renewal for a period of two years has been lodged by Niugini
Nickel Limited with the Government of Papua New Guinea. Tenure of the tenement remains in good standing
during the renewal process. It is not unusual that the renewal process is lengthy, with a past renewal taking over
18 months to complete.
NOTE 10 TRADE AND OTHER PAYABLES
Trade payables and accruals
Due to Director or Related Party: remuneration
All amounts are expected to be settled within 12 months.
Refer to Note 20 for further information on financial Instruments.
126,305
18,315
144,620
183,375
18,829
202,204
RMC Annual Report 2014
38
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 11 Provisions
Current
Employee benefits
Provision – ATO
All amounts are expected to be settled within 12 months.
Non-Current
Employee benefits
All amounts are not expected to be settled within 12 months.
Consolidated Entity
2014
$
2013
$
3,308
287,990
291,298
15,689
15,689
13,997
-
13,997
12,007
12,007
Employee benefits
The provision for employee benefits relates to the Consolidated Entity’s liability for annual and long service leave.
Australian Taxation Office
The Company submitted an amendment to the 2011/2012 tax return which it is anticipated will result in the
requirement to repayment of $287,990 in R&D tax concession benefit. See Note 5 for further detail.
NOTE 12 INTEREST BEARING LIABILITIES
Current
Loan for Insurance
NOTE 13 RESERVES
-
-
16,276
16,276
(a)
(b)
Foreign Currency Reserve
The foreign currency reserve records exchange differences arising on translation of a foreign
controlled subsidiary.
Convertible Note Reserve
The convertible note reserve records the equity portion of convertible notes after tax.
NOTE 14 CONTINGENT ASSET AND CONTINGENT LIABILITY
(a) Contingent Asset
Resource Mining Corporation Limited and its controlled entities do not have a known material
contingent asset, as at 30 June 2014.
(b) Contingent Liability
Resource Mining Corporation Limited and its controlled entities do not have a known material
contingent liability, as at 30 June 2014.
NOTE 15 RELATED PARTY INFORMATION
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated. Transactions with related parties:
(a)
Ultimate Parent Company
(b)
Resource Mining Corporation Limited is the ultimate Australian parent company.
Controlled Entities
Interests in controlled entities are set out in Note 17.
During the year, funds have been advanced between entities within the Consolidated Entity for the
purposes of working capital requirements only.
RMC Annual Report 2014
39
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 16 CONTRIBUTED EQUITY
(a) Issued Capital
2014: 2,714,387,147 ordinary shares fully paid
(2013: 2,714,387,147 ordinary shares fully paid)
Consolidated Entity
2014
$
2013
$
61,942,247
61,942,247
61,942,247
61,942,247
(b) Movement in ordinary share capital of the Company during the past two years were as follows:
Date
Details
01/07/2012
30/06/2013
30/06/2014
Opening Balance
No activity during the year
Closing Balance
No activity during the year
Closing Balance
(a) Options as at 30 June 2014:
Number of
Shares
No
Issue
Price
Cents
Value
$
2,714,387,147
61,942,247
2,714,387,147
61,942,247
2,714,387,147
61,942,247
226,177,905 listed options remain on issue, exercisable at $0.006 on or before 31 January 2015.
(b) Voting and dividend rights
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion
to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote
when a poll is called, otherwise each shareholder has one vote on a show of hands.
(c)
Ordinary shares have no par value and the Company does not have a limited amount of authorised
capital.
(c) Capital Management
Management controls the capital of the Consolidated Entity in order to maintain a good debt to equity ratio, provide
the shareholders with adequate returns and ensure that the Consolidated Entity can fund its operations and continue
as a going concern.
The Consolidated Entity’s debt and capital includes ordinary share capital, and financial liabilities, supported by
financial assets. There are no externally imposed capital requirements.
Management effectively manages the Consolidated Entity’s capital by assessing the Consolidated Entity’s financial
risks and adjusting its capital structure in response to changes in these risks and in the market. These responses
include the management of debt levels, distributions to shareholders and share issues.
The Director’s have considered the strategy to be adopted by management to control the capital of the Consolidated
Entity during and subsequent to the reporting period. Ongoing operations will be funded by a mix of any or all of:
equity, convertible debt, debt or joint ventures with third parties.
(d) Dividends
The Consolidated Entity did not pay nor declare dividends in the last financial year.
RMC Annual Report 2014
40
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17 INVESTMENT IN CONTROLLED ENTITIES
Class of Shares
Percentage Owned
Resource Minerals Pty Ltd (ABN: 67 145 739 322)
Argyle Iron Ore Pty Ltd (ABN: 77 106 440 564)
Resource Exploration Limited (ABN: 12 074 686 776)
and its controlled entity (d)
Ordinary
Ordinary
Ordinary
2014
100%
100%
100%
2013
100%
100%
100%
(a) All of the above controlled entities are incorporated in Australia and have a place of business in Australia.
(b) All of the above controlled entities principal activities are exploration.
(c) The carrying value of Resource Mining Corporation Limited’s investment in the ordinary shares of
controlled entities, are at cost less provision for impairment which do not exceed the underlying net assets
of each entity.
(d) Niugini Nickel Limited (ABN: 33 071 497 884) is a wholly owned subsidiary of Resource Exploration
Limited. Niugini Nickel Limited’s place of business is Papua New Guinea, and its principal activity is
exploration.
NOTE 18 CAPITAL AND LEASING COMMITMENTS
(a) Mineral Tenement Commitments
In order to maintain current rights of tenure to mining tenements, the Consolidated Entity will be required to
outlay in the year ending 30 June 2015 approximately $62,576 (2014:$262,638), in respect of minimum
tenement expenditure requirements and lease rentals.
The Company has a number of avenues available to continue the funding of its current exploration program
and as and when decisions are made, the Company will disclose this information to shareholders.
(b)
Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements
Payable – minimum lease commitments:
Within 1 Year
Later than 1 year but not later than five years
Later than 5 years
Consolidated Entity
2014
$
66,282
-
-
66,282
2013
$
94,497
89,852
-
184,349
Contingent rental provisions within the lease agreement require that the minimum lease payments be paid one
month in advance and shall be increased by CPI or current market rental on a per annum basis. The lease allows
for subletting.
NOTE 19 REMUNERATION OF AUDITORS
Amount received, or due and receivable, by the auditors for:
Auditing and reviewing of the financial statement of Resource Mining Corporation Limited and its
controlled entities
BDO Audit (WA) Pty Ltd audit services
45,280
44,209
RMC Annual Report 2014
41
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 20 FINANCIAL RISK MANAGEMENT
The Consolidated Entity’s activities expose it to a variety of financial risks, including market risk (including currency
risk), credit risk and liquidity risks. The Consolidated Entity’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the business. To date, the Consolidated Entity has not used derivative financial instruments. The Consolidated Entity
uses different methods to measure different types of risk to which it is exposed.
Risk management is carried out by the Managing Director under policies approved by the Board of Consolidated
Entity’s Directors. The Managing Director and the finance function identifies and evaluates the financial risks in close
co-operation with the Consolidated Entity’s operating units. The Board provides principles for overall risk
management and the finance function provides policies with regard to financial risk management that are defined and
consistently applied.
(a)
Credit Risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or contract, leading
to a financial loss. The maximum exposure to credit risk, excluding the value of any collateral or other security, at
reporting date, is the carrying amount net of any provisions for impairment of debts, as disclosed in the Statement of
Financial Position and notes to the financial statement.
In the case of material cash deposited, credit risk is minimised by depositing with recognised financial intermediaries
such as banks, subject to Australian Prudential Regulation Authority Supervision. For banks and financial institutions,
only independently rated parties with a minimum rating of AA are accepted.
The Consolidated Entity does not have any material risk exposure to any single debtor or consolidated entity of
debtors under financial instruments entered into by it.
(b)
Liquidity and Capital Risk
Capital
The Consolidated Entity’s total capital is defined as the shareholders’ net equity plus net debt, and amounted to
approximately $9.8 million at 30 June 2014 (30 June 2013: $12.7 million). The objectives when managing the
Consolidated Entity’s capital is to safeguard the business as a going concern, to maximise returns to shareholders
and to maintain an optimal capital structure in order to reduce the cost of capital.
The Consolidated Entity does not have a target debt/equity ratio, but has a policy of maintaining a flexible financing
structure so as to be able to take advantage of investment opportunities when they arise.
Cash
The Consolidated Entity has appropriate procedures in place to manage cash flows including continuous monitoring
of forecast and actual cash flows to ensure funds are available to meet commitments.
All material cash holdings are held in Australian Banks with a rating of AA or more.
Financing arrangements
As at 30 June 2014, the Consolidated Entity has sufficient cash and cash equivalent to settle its current liabilities
when they fall due. Interest bearing liabilities and trade payables will be paid in full by the 30 September 2014 (2013:
30 September 2013).
(c)
Net Fair Values
For financial assets and liabilities, the net fair value approximates their carrying value. The Consolidated Entity has
no financial assets or liabilities that are readily traded on organised markets at reporting date and has no financial
assets where the carrying amount exceeds net fair values at reporting date.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the
Consolidated Statement of Financial Position and in the notes to and forming part of the financial statements.
Recurring fair value measurements
The Consolidated Entity does not have any financial instruments that are subject to recurring or non-recurring fair
value measurements.
Fair values of financial instruments not measured at fair value
The Consolidated Entity does not have any financial instruments that are not measured at fair value.
RMC Annual Report 2014
42
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 20 FINANCIAL RISK MANAGEMENT (continued)
(d)
Foreign Exchange Risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are
denominated in a currency that is not the Consolidated Entity’s functional currency. The Consolidated Entity exposure
to foreign exchange risk is the operation of its subsidiary in Papua New Guinea.
At balance date the Consolidated Entity’s exposure to foreign currency movement of 10% would have been
$1,041,966 on its exploration asset.
(e)
Interest Rate Risk
The Consolidated Entity’s exposure to market risk for changes in interest rates relates primarily to interest on
deposits with banking institutions
2014
Floating
interest rate
Fixed interest rate maturing in
Over 1 to 5
years
1 Year or less
More than 5
years
$
$
$
Financial Assets
Cash
Trade Receivables
Weighted average interest rate
Financial Liabilities
Trade Creditors and accruals
Amounts payable related parties
Interest bearing liabilities
Weighted average interest rate
2013
Financial Assets
Cash
Trade Receivables
Weighted average interest rate
Financial Liabilities
Trade Creditors and accruals
Amounts payable related parties
Interest bearing liabilities
Weighted average interest rate
120,296
-
120,296
2.47%
-
-
-
-
-
Floating
interest rate
3,736
-
3,736
3.72%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fixed interest rate maturing in
Over 1 to 5
years
1 Year or less
More than 5
years
$
$
$
391,678
-
391,678
3.15%
1,255,792
-
1,255,792
4.53%
-
-
-
-
-
-
-
16,276
16,276
7.76%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-
interest
bearing
$
Total
$
60,739
79
60,818
184,771
79
184,850
126,305
18,315
-
144,620
126,305
18,315
-
144,620
Non-
interest
bearing
$
Total
$
82,813
136,872
219,685
1,730,283
136,872
1,867,155
183,375
18,829
-
202,204
183,375
18,829
16,276
218,480
The following table summarises the sensitivity of the Consolidated Entity’s and Company’s financial assets to
movements in interest rates of 100 percentage basis points.
Consolidated and Parent
30 June 2014
Financial assets
Deposits at call and term deposits
Consolidated and Parent
30 June 2013
Financial assets
Deposits at call and term deposits
$
$
Interest rate risk
Increase 1%
Decrease 1%
Profit $
Equity $
Profit $
Equity $
181,035
1,810
1,810
(1,810)
(1,810)
Interest rate risk
Increase 1%
Decrease 1%
Profit $
Equity $
Profit $
Equity $
1,647,470
16,475
16,475
(16,475)
(16,475)
RMC Annual Report 2014
43
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 21 KEY MANAGEMENT PERSONNEL
(a) Key management personnel or Director compensation
Short-term benefit
Consolidated Entity
2014
$
2013
$
183,469
183,469
176,230
176,230
Detailed remuneration disclosures are provided in the remuneration report on pages 13 to 15.
(b) Loans to key management personnel or Directors
There were no loans to key management personnel or Directors in either the year ending 30 June 2013 or 30 June
2014.
(c) Other transactions with key management personnel or Directors
There were no other transactions with key management personnel or Directors in either the year ending 30 June
2013 or 30 June 2014.
NOTE 22 NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of profit/(loss) after tax to net operating cash flows
Profit/(loss) from ordinary activities
Sale of tenements
Depreciation
Write down of exploration costs
Exploration costs not capitalised
Government Grant Funds
Movement in assets and liabilities
Receivables
Payables
Provisions
Net cash used in operating activities
Consolidated Entity
2014
$
2013
$
(1,497,099)
-
6,357
311,060
93,266
55,000
157,480
(65,963)
286,160
(653,739)
56,024
(1,360,000)
7,450
463,311
29,557
-
(70,499)
36,822
6,274
(831,061)
During the year there were no non-cash investing or financing activities.
Financing Agreements
No overdraft facilities have been formalised at 30 June 2014 and neither the Company nor any of its Controlled
Entities have lines of credit at 30 June 2014.
RMC Annual Report 2014
44
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23 SEGMENT INFORMATION
For management purposes, the Consolidated Entity has one segment which is exploration activities relating to
minerals and the exploration in 2 countries; Papua New Guinea and Australia.
For the year ended 30 June 2014:
Exploration
Head Office
Total
Segment revenue from external customers
Revenue from external customers
Total revenue from external customers
Reportable segment loss before income tax
Corporate costs (net)
Research and Development expenditure
Loss before income tax
Segment assets
Cash and cash equivalents
Other assets
Total Assets
Segment liabilities
Other liabilities
Total liabilities
For the year ended 30 June 2013:
Segment revenue from external customers
Revenue from external customers
Total revenue from external customers
Reportable segment loss before income tax
Corporate costs (net)
Research and Development expenditure
Loss before income tax
Segment assets
Cash and cash equivalents
Other assets
Total Assets
Segment liabilities
Other liabilities
Total liabilities
Papua New
Guinea
$
1,443
-
1,443
(100,476)
-
-
(99,033)
10,467,059
52,384
-
10,519,443
49,274
-
49,274
Australia
$
-
-
-
(369,701)
-
-
(369,701)
-
-
-
-
-
-
-
$
-
33,821
33,821
-
(699,620)
(74,576)
(740,375)
-
132,387
77,663
210,050
-
402,333
402,333
$
1,443
33,821
35,264
(470,177)
(699,620)
(74,576)
(1,209,109)
10,467,059
184,771
77,663
10,729,493
49,274
402,333
451,607
Exploration
Head Office
Total
Papua New
Guinea
$
5,069
-
5,069
(93,269)
-
-
(88,200)
10,934,842
51,468
-
10,986,310
58,964
-
58,964
Australia
$
1,350,462
-
1,350,462
(458,129)
-
-
892,333
321,060
10,000
-
331,060
2,266
-
2,266
$
-
68,702
68,702
-
(726,072)
(378,729)
(1,036,099)
-
1,668,815
200,706
1,869,521
-
183,254
183,254
$
1,355,531
68,702
1,424,233
(551,398)
(726,072)
(378,729)
(231,966)
11,255,902
1,730,283
200,706
13,186,891
61,230
183,254
244,484
RMC Annual Report 2014
45
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 24 PARENT ENTITY DISCLOSURES
Financial Position
ASSETS
Current assets
Non current assets
Total Assets
LIABILITIES
Current liabilities
Non current liabilities
Total Liabilities
Company
2014
$
2013
$
193,190
16,860
210,050
385,644
15,689
401,333
1,847,462
22,058
1,869,520
171,247
12,007
183,254
NET ASSETS/(LIABILITIES)
(191,283)
1,686,266
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY/(DEFICIENCY IN EQUITY)
Financial Performance
61,942,247
(62,133,530)
-
(191,283)
61,942,247
(60,255,981)
-
1,686,266
Loss for the year
Total comprehensive loss for the year
(1,877,550)
(1,877,550)
(9,031,478)
(9,031,478)
The parent has no further commitments or contingency other than those disclosed in notes 14 and 18.
RMC Annual Report 2014
46
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 25 MATTERS SUBSEQUENT TO THE REPORTNG PERIOD
On the 31 July 2014, the Company entered into a Funding Agreement (“Agreement”) with the Company’s largest
shareholder, Sinom (Hong Kong) Limited (“Sinom”) who currently holds 43.14% of the issued shares in the Company.
Mr Zhang Chi (Andy) who is a Non-Executive director of the Company is a director and controlling shareholder of
Sinom.
Under the terms of the Agreement, Sinom has agreed to provide the Company up to $500,000 for general working
capital purposes as an unsecured loan on the following conditions:
a. Drawings
a. Tranche 1 -$300,000 drawn down 29 July 2014
b. Subsequent Tranches – Available upon giving Sinom 5 business days’ notice
b. Interest
a. This facility is interest free
c. Repayments
a. Principal repayable in full on or before 31 October 2014
d. Fees
a. There are no establishment or other fees payable
Apart from the matters above, since the end of the financial year under review and the date of this report, there has
not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the
Company, to significantly affect the operations of the Consolidated Entity, in subsequent financial years.
RMC Annual Report 2014
47
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 26 NEW ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
New and amended standards adopted by the Consolidated Entity
The Consolidated Entity has applied the following standards and amendments for the first time for their annual
reporting period commencing 1 July 2013:
AASB 10 Consolidated Financial Statements;
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB13; and
AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting
Standards from AASB119 (September 2011).
The adoption of AASB 11, AASB 13 and AASB 119 has had no effect on the financial position or performance of the
Consolidated Entity.
New Standards issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June
2014 reporting periods and have not been early adopted by the Consolidated Entity. The Consolidated Entity’s
assessment of the impact of these new standards and interpretations is set out below.
Title of
standard
AASB 9
Financial
Instruments
Nature of change
Impact
AASB 9 addresses the classification,
measurement and derecognition of
financial assets and financial
liabilities. Since December 2013, it
also sets out new rules for hedge
accounting.
IFRS 15
(issued June
2014)
Revenue from
contracts with
customers
An entity will recognise revenue to
depict the transfer of promised
goods or services to customers in an
amount that reflects the
consideration to which the entity
expects to be entitled in exchange
for those goods or services. This
means that revenue will be
recognised when control of goods or
services is transferred, rather than
on transfer of risks and rewards as is
currently the case under IAS 18
Revenue.
There will be no impact on the Company’s accounting for
financial assets and financial liabilities, as the new
requirements only effect the accounting for available-for-
sale financial assets and the accounting for financial
liabilities that are designated at fair value through profit
or loss and the Company does not have any such
financial assets or financial liabilities.
The new hedging rules align hedge accounting more
closely with the Company’s risk management
practices.As a general rule it will be easier to apply
hedge accounting going forward. The new standard also
introduces expanded disclosure requirements and
changes in presentation.
Due to the recent release of this standard the Company
has not yet made an assessment of the impact of this
standard.
Mandatory application
date / date adopted by
Company
Must be applied for financial
years commencing on or
after 1 January 2017.
Therefore application date
for the Company will be 30
June 2018.
The Company does not
currently have any
hedging arrangements in
place.
Must be applied for annual
reporting periods beginning
on or after 1 January 2017.
Therefore application date
for the Company will be 30
June 2018.
RMC Annual Report 2014
48
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2014
The Directors of the Company declare that:
DIRECTORS’ DECLARATION
1.
the financial statements and notes are in accordance with the Corporations Act 2001 and other mandatory
professional reporting requirements:
a.
b.
comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2014 and of the performance for the
year ended on that date of the Consolidated Entity;
2.
the Managing Director and Financial Controller have each declared that:
a.
b.
c.
the financial records of the Company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view; and
3.
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
Signed in accordance with a resolution of the Board of Directors and on behalf of the Directors.
Warwick Davies
Managing Director
Dated this 26th day of September 2014
RMC Annual Report 2014
49
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 24 SEPTEMBER 2014
Additional information required by the Australian Stock
Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current as at
24 September 2014.
ANALYSIS OF SHAREHOLDING - Ordinary Shares Listed
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – or more
Total on issue
Shareholders holding less than a marketable parcel
Voting Rights
249
146
165
890
841
2,291
2,714,387,147
1,961
Article 15 of the Constitution specifies that on a show of hands every member present in person, by attorney
or by proxy shall have:
(a) for every fully paid share held by him one vote
(b) for every share which is not fully paid a fraction of the vote equal to the amount paid on the share
over the nominal value of the shares.
Substantial Shareholders
The following substantial shareholders have notified the Company in accordance with the Corporations Act
2001.
Sinom (Hong Kong) Limited
1,171,026,986
43.14%
Directors’ Shareholding
Interest of each Director in the share capital of the Company is detailed in the Directors’ report.
RMC Annual Report 2014
50
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 24 SEPTEMBER 2014
TWENTY LARGEST FULLY PAID SHAREHOLDERS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sinom (Hong Kong) Limited
Century Three X Seven Resources Fund Inc
Thunder Luck International Ltd
Nefco Nominees Pty Ltd
Bell Potter Nominees Ltd
Best Venture Development Limited
Tierra De Suenos SA
Classic Roofing Pty Limited
Brispot Nominees Pty Ltd
Ms Nada Saade
Mount Gibson Iron Limited
Century Three X Seven Resource Fund Inc
Mr Dimitrios Graikos
Proridge Pty Ltd
HSBC Custody Nominees (Australia) Ltd
Erceg Enterprises Pty Ltd
Dominant Holdings AG
Swiss Trading Overseas Corp
Corporate Finance (Heidelberg) Pty Ltd
Mr Warwick Jeffrey Davies
No.
Shares
1,171,026,986
105,562,500
95,031,711
91,920,248
90,006,575
84,698,951
58,668,197
51,250,000
41,000,000
36,511,461
34,780,251
31,700,000
31,000,000
28,450,000
21,406,823
20,000,000
18,000,000
16,772,598
16,035,000
% of
Shares
43.14%
3.89%
3.50%
3.39%
3.32%
3.12%
2.16%
1.89%
1.51%
1.35%
1.28%
1.17%
1.14%
1.05%
0.79%
0.74%
0.66%
0.62%
0.59%
15,502,500
0.57%
The largest shareholders listed above own 75.87% of the total issued fully paid ordinary shares.
INTEREST IN MINING TENEMENTS
PAPUA NEW GUINEA
Oro Province – Wowo Gap (Niugini Nickel Limited – 100%)
EL1165
EL1980
RMC Annual Report 2014
51
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Resource Mining Corporation Limited
Report on the Financial Report
We have audited the accompanying financial report of Resource Mining Corporation Limited, which
comprises the consolidated statement of financial position as at 30 June 2014, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory information, and the directors’
declaration of the consolidated entity 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 gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements 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. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about 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 company’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 company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
has been given to the directors of Resource Mining Corporation Limited, would be in the same terms if
given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of Resource Mining Corporation Limited is 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 2014
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates
that the ability of the consolidated entity to continue as a going concern is dependent upon the future
successful raising of necessary funding through equity. This condition, along with other matters as set
out in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about
the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity
may be unable to realise its assets and discharge its liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2014. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Resource Mining Corporation Limited for the year ended 30
June 2014 complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Peter Toll
Director
Perth, 26 September 2014
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF RESOURCE MINING
CORPORATION LIMITED
As lead auditor of Resource Mining Corporation Limited for the year ended 30 June 2014, I declare
that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Resource Mining Corporation Limited and the entities it controlled
during the period.
Peter Toll
Director
BDO Audit (WA) Pty Ltd
Perth, 26 September 2014
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
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702 Murray Street
West Perth, WESTERN AUSTRALIA 6005
Telephone: +61 8 9213 9400 Facsimile +61 8 9213 94444
Email: rmc@resmin.com.au
www.resmin.com.au