Rex Minerals Limited Annual Report 2010

Plain-text annual report

Drill Discover Define annual report 2010 ABN 12 124 960 523 corporate directory DIRECTORS Paul Chapman (Chairperson) Steven Olsen (Managing Director) Richard Laufmann COMPANY SECRETARY Amber Rivamonte PRINCIPAL and REGISTERED OFFICE 209 Dana Street Ballarat Victoria 3350 CONTACT DETAILS Rex Minerals Ltd PO Box 626W Ballarat West Victoria 3350 Telephone 03 5337 4000 Facsimile 03 5331 1776 Email info@rexminerals.com.au SHARE REGISTRARS Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 AUDITORS KPMG 147 Collins Street Melbourne Victoria 3000 BANKERS ANZ Banking Group Limited 927 Sturt Street Ballarat Victoria 3350 LEGAL ADVISORS Baker McKenzie 181 William Sreet Melbourne Victoria 3000 operation location SOUTH AUSTRALIA A A U S T R A L I A Wandearah Pine Point Adelaide SOUTH SOUTH AUSTRALIA A AUSTRALIA NEW SOUTH WALES VICTORIA TABLE OF CONTENTS Rex Minerals Ltd Annual Report for the year ended 30 June 2010 INTRODUCTION, HIGHLIGHTS AND GOALS FOR 2011 ..............................1 LETTER FROM THE CHAIRMAN AND MANAGING DIRECTOR ..................2 REVIEW OF OPERATIONS ...........................................................................3 EXPLORATION PROJECTS......................................................................3-12 TENEMENTS SCHEDULE ..........................................................................12 DIRECTORS’ REPORT............................................................................13-27 STATEMENT OF FINANCIAL POSITION....................................................28 STATEMENT OF COMPREHENSIVE INCOME ...........................................29 STATEMENT OF CHANGES IN EQUITY.....................................................30 STATEMENT OF CASH FLOWS ..................................................................31 NOTES TO THE FINANCIAL STATEMENTS ..........................................32-55 DIRECTORS’ DECLARATION ......................................................................55 LEAD AUDITOR’S INDEPENDENCE DECLARATION ................................56 INDEPENDENT AUDITOR’S REPORT...................................................57-58 ADDITIONAL SHAREHOLDER INFORMATION..........................................59 INTRODUCTION Rex Minerals Ltd (“Rex”) is an Australian minerals exploration and development company with large-scale copper-gold projects on the Yorke Peninsula, South Australia. Rex has made an initial large-scale copper-gold discovery at the Hillside Project and aims to discover multiple large-scale copper-gold deposits underneath shallow cover rocks on the Yorke Peninsula. Rex is progressively expanding on the initial Resource at Hillside and continuing with its regional exploration program to achieve its vision of developing a new large-scale, low-cost and long-life mining operation on the Yorke Peninsula. HIGHLIGHTS First Resource – After six months of dedicated resource deﬁnition drilling to the end of June 2010, Rex announced (28 July 2010) a maiden Inferred Mineral Resource estimate for the Hillside project of 100Mt @ 0.7% copper and 0.2g/t gold for a total of 700,000 tonnes of contained copper and 650,000 ounces of gold. Target Size – Based on drilling to date and a large magnetic anomaly, Rex is targeting a range of 1.5Mt to 2.8Mt of contained copper within a conceptual open pit design at Hillside. Economic Studies – Scoping studies have commenced to identify the mining and processing options at Hillside as the remaining target area at Hillside is drill deﬁned over the next 12 months. Demerger – The Company completed the demerger of the Mt Carrington assets into a new company called White Rock Minerals Ltd (“White Rock”). Rex shareholders received an allocation of White Rock shares (in-species distribution of 1 White Rock share for every 3 Rex shares) in June 2010. An IPO for White Rock is underway with listing on the ASX anticipated in early October. Equity Raising – The Company successfully raised $42 million in October 2009, providing Rex with funding to deliver a new large-scale Resource estimate at Hillside and undertake extensive regional exploration on the Yorke Peninsula. GOALS FOR 2011 > Resource – Complete resource deﬁnition drilling at Hillside, targeting a range of 1.5Mt to 2.8Mt within the constraints of the magnetic anomaly. > New Discovery – Effectively test the highest priority targets generated regionally on the Yorke Peninsula. > Economics – Complete conceptual mining and processing studies to deﬁne the budget and scope of a pre-feasibility and feasibility study, incorporating multiple large-scale copper-gold projects on the Yorke Peninsula. Page 1 A 209 Dana Street Ballarat Victoria 3350 Australia T (03) 5337 4000 F (03) 5331 1776 P PO Box 626W Ballarat West Victoria 3350 Australia E info@rexminerals.com.au W www.rexminerals.com.au minerals ltd ABN 12 124 960 523 LETTER FROM THE CHAIRMAN AND MANAGING DIRECTOR For the year ended 30 June 2010 Dear Fellow Shareholder, Rex Minerals has achieved a great deal in the past 12 months. As strong as these achievements have been, the targets before us and our goals have only just begun. In October 2009, Rex successfully raised $42 million, providing Rex with funding to deliver a new large-scale Resource estimate at Hillside and undertake extensive regional exploration on the Yorke Peninsula. In the space of just 6 months, between January and June 2010, dedicated Resource deﬁnition drilling revealed the Company’s Hillside copper project on the Yorke Peninsula as one of the largest copper discoveries in Australia in recent decades. The reporting of such a large Mineral Resource (100Mt @ 0.7% copper and 0.2g/t gold) is a signiﬁcant milestone for the Company and one that all shareholders can take pride in. The scale and quality of this copper mineralisation exempliﬁes the type of large-scale and long-life mining opportunities the Company intends to replicate along the Pine Point Copper Belt on the Yorke Peninsula. This initial Resource also sets the scene for what we believe will be future signiﬁcant upgrades during the next 6-12 months. Rex has identiﬁed a total target size at Hillside of between 1.5 and 2.8 million tonnes of contained copper. This is based on the broad drilling information gathered across a large magnetic anomaly which deﬁnes the Hillside project area. Of particular signiﬁcance is the fact that this asset is so well situated compared to almost any other new copper development opportunity around the globe. The combination of: > Large scale deposits with access to oxide (secondary) copper; > Low-cost surface mining, utilising economies of scale; and > Infrastructure advantages, providing access to power, water, port facilities, skilled labour and suppliers; distinguish Hillside and surrounding projects from the next generation of copper deposits around the world. It is important to note that the most proﬁtable copper mines in the world today have copper grades less than 1% and utilise large- economies of scale to reduce their cost structure and maximise proﬁtability. Research of all the remaining resources available for both existing and undeveloped open pit mines shows that the average Resource grade for these projects (containing more than 500,000t of copper) is 0.49% copper. With a Resource grade of 0.7% copper, Hillside is in fact in the top quartile of all the remaining open pit copper Resources world-wide. Given the location and grade advantages Hillside possesses, it is for this reason that we can consider large-scale options for Hillside’s development. There is still much to do. Three rigs will continue to run at Hillside on Resource deﬁnition drilling whilst our mining and processing studies will help to complete the story and identify the most favourable economic option for development. This signiﬁcant ﬁnd is far from our ultimate vision of what exploration on the Yorke Peninsula could deliver. Rex’s high-resolution geophysical surveys over the past year have identiﬁed multiple targets that appear just as compelling and in some cases much larger in scale than Hillside. To advance these in the year ahead, Rex will have one diamond drill rig, as a minimum, operating continuously and focused on identifying new discoveries on the Pine Point Copper Belt. Accordingly, Rex provides a unique investment opportunity with a growing resource and development opportunity combined with an exciting exploration program that could discover another large scale mineral deposit. We are very proud to be an important member of the community on the Yorke Peninsula and we look forward to working directly with the community to create a sustainable new mining operation over the coming years. On behalf of the Board, we would like to thank our employees for their efforts and achievements during the year. We would also like to acknowledge the support of our suppliers and our shareholders for their continued conﬁdence in the Company. Yours sincerely, , Paul Chapman Chairman Steven Olsen Managing Director Page 2 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD REVIEW OF OPERATIONS For the year ended 30 June 2010 SUMMARY Rex has completed the following important milestones over the year. October 2009 Capital raising of $42 million at a share price of $1.70. January 2010 Commence resource deﬁnition drilling at Hillside. April 2010 June 2010 June 2010 Announce the demerger of the Mt Carrington assets into a new company called White Rock Minerals Ltd. Complete demerger of White Rock, Rex shareholders receive 1 White Rock share for every 3 Rex shares. Complete resource drilling at Hillside to deliver a maiden Inferred Mineral Resource of 100Mt @ 0.7% copper and 0.2g/t gold (announced on 28 July 2010). REX MINERALS LTD EXPLORATION PROJECTS For the year ended 30 June 2010 PINE POINT COPPER BELT, YORKE PENINSULA, SOUTH AUSTRALIA Rex has 100% ownership over a 60km section of the highly prospective Pine Point Copper Belt (“PPCB”) on the Yorke Peninsula of South Australia (Figure 1), between the townships of Pine Point, Ardrossan and Clinton. Rex has continued a regional exploration program throughout the Pine Point Copper Belt, which has largely been focussed on obtaining extensive geophysical information to test the host rocks of the copper which are hidden underneath a shallow layer of younger cover rocks. Figure 1: Location diagram of the Hillside Project Area and Rex’s exploration licences which host the targets along the Pine Point Copper Belt which lies on the eastern margin of the Yorke Peninsula, South Australia. Page 3 REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 PINE POINT COPPER BELT, YORKE PENINSULA, SOUTH AUSTRALIA (continued) One of the recent geophysical datasets to be collected is a regional gravity survey. Gravity surveys were instrumental in the Prominent Hill and Olympic Dam discoveries and although gravity surveys were not as important in the Hillside discovery, these surveys are still considered to be an important guide as to where the largest IOCG (Iron-Oxide-Copper- Gold) deposits occur in the area. Figure 2 below shows the recent gravity survey completed over the Pine Point Copper Belt with a number of signiﬁcant targets highlighted. Of particular interest is the fact that the Hillside project is comparatively small relative to many of the other untested targets based on this gravity survey. It is also interesting to note that the Parara project contains one of the most signiﬁcant targets in almost all of the geophysical surveys completed to date, including the magnetic surveys, gravity surveys and electromagnetic (EM) surveys. Figure 2: Bouguer gravity image highlighting the location of gravity targets on the Pine Point Copper Belt. Page 4 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT The Hillside project was the ﬁrst target to be effectively drill tested on the Yorke Peninsula by Rex Minerals soon after its listing on the ASX in 2007. Early indications of signiﬁcant copper mineralisation were intersected in June 2008 and the discovery of large-scale copper mineralisation conﬁrmed in January 2009. After the initial discovery of copper mineralisation at Hillside it was shown that the copper had a close relationship with the mineral magnetite, and that as a result, a detailed magnetic survey could be used to effectively “see through” the shallow cover rocks to uncover the extent of the copper mineralisation at Hillside. A detailed magnetic survey was subsequently completed in August 2009, and drill testing of the many detailed magnetic features from this survey at Hillside continued throughout the remainder of 2009. Drill testing of the magnetic anomaly has shown that not only was the magnetic survey very effective in locating the presence of large-scale copper mineralisation, but also that on the eastern margin of the magnetic anomaly, the copper mineralisation was very shallow (starting from only 10m beneath the surface). After broadly conﬁrming that the magnetic survey was the key to uncovering the extent of the copper mineralisation at Hillside, a large resource drilling campaign commenced in early 2010. This signiﬁcant drilling campaign was made possible by the Company’s $42 million capital raising completed in October 2009. On 28 July 2010, Rex announced its maiden Mineral Resource estimate for the Hillside project, which is based on drilling information collected up to the end of June, 2010. The initial Mineral Resource estimate at Hillside of 100Mt @ 0.7% copper and 0.2g/t gold is all classiﬁed as Inferred and reported in accordance with the JORC code. The current Inferred Resource at Hillside contains a total of 700,000t of copper and 650,000ozs of gold. This Resource covers approximately 30% of the total area that has been targeted by Rex as is deﬁned by the detailed magnetic survey which was completed in September, 2009. On the basis of the information gathered to date at Hillside, Rex has commenced conceptual mining studies and has deﬁned a target range of 1.5Mt to 2.8Mt of contained copper down to a depth of approximately 500m, which could exist within a conceptual open pit design.1 (see ﬁgures 4 to 7 – refer to Pages 7 and 8). The total potential and grade is conceptual in nature, there has been insufﬁcient exploration to deﬁne a Mineral Resource in excess of that currently announced, and while Rex has conﬁdence in this target statement, it is uncertain if further exploration will result in the determination of additional Mineral Resources.2 Table 1: Hillside Mineral Resource summary. Type Secondary (supergene) Resource Category Inferred Primary Inferred Tonnes (million tonnes) 23 78 Total Inferred 100 Grade Contained Metal Cu (%) Au (g/t) Copper (tonnes) Gold (ounces) 0.6 0.7 0.7 0.2 0.2 0.2 700,000 650,000 * Copper Resources reported above 0.2% cut-off grade. * Tonnage is rounded to two signiﬁcant ﬁgures and grade is rounded to one signiﬁcant ﬁgure in accordance with the guidance of the JORC Code 2004. Figure 3 (refer to Page 6) identiﬁes the location of the Hillside Mineral Resource relative to the detailed magnetic survey completed to deﬁne the extent of the copper mineralisation. Figures 4 to 7 (refer to Pages 7 and 8) show cross sections throughout the Mineral Resource area along with the location of a conceptual open pit design which captures both the Inferred Resource and exploration potential at Hillside. Highlights from the drilling completed over 2009/2010 ﬁnancial year are shown in Table 2. These drilling results occur both within and beyond the recently reported Minerals Resource at Hillside. 1 On the basis of this study the competent person has formed the opinion that there are “reasonable prospects for eventual economic extraction” of the published resource as required by the JORC Code 2004. 2 This statement is inserted in accordance with the requirements of Clause 18 of the JORC Code 2004. Page 5 REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT (continued) Figure 3: Magnetic map of the Hillside project, showing location of the Inferred Resource, and other drilling highlights deﬁning further extensions to the copper mineralisation at Hillside. The location of four cross-sections (ﬁgures 4-7) are also shown. Additional assay results outside of the maiden Mineral Resource for Hillside include the following*; A: 200m @ 0.4% copper, B: 24m @ 0.9% copper, C: 34m @ 0.7% copper, D: 26m @ 1.0% copper, E: 25m @ 1.1% copper, F: 14m @ 1.6% copper, G: 12m @ 1.1 % copper, H: 56m @ 0.5% copper, I: 15m @ 2.2% copper, J: 11m @ 0.7% copper, K: 10m @ 0.7% copper, L: 20m @ 1.3% copper, M: 15m @ 2.2% copper. *All drill hole intersections quoted are down-hole lengths. Page 6 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT (continued) CROSS SECTIONS Figure 4: Geological section 3900N at Hillside showing drilling results and outline of the Inferred Resource. Figure 5: Geological section 4400N at Hillside showing drilling results and outline of the Inferred Resource. Page 7 REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT (continued) CROSS SECTIONS Figure 6: Geological section 4600N at Hillside showing drilling results and outline of the Inferred Resource. Figure 7: Geological section 5000N at Hillside showing drilling results and outline of the Inferred Resource. Page 8 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT (continued) Page 9 REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT (continued) Table 2: Drilling highlights from the Hillside copper-gold project for the 2009/2010 ﬁnancial year. All drilling results are reported as down-hole lengths. Hole Number From (m) To (m) Interval (m) Copper (%) Gold (g/t) Structure HDD033 HDD033W1 HDD034 HDD037 HDD038 HDD040 HDD048 HDD050 HDD054 HDD057 HDD058 HDD059 280 275 158 244 134 138 101 71 92 149 203 237 301 119 11 89 HDD061 114 HDD070 HDD078 HDD083 HDD084 HDD098 HDD099 HDD100 HDD101 HRC033 HRC060 HRC070 HRC076 62 29 187 235 69 280 169 399 29 57 136 134 340 426 215 297 163 152 172 99 110 167 226 277 380 179 132 104 176 134 129 235 261 94 333 216 438 109 100 150 147 60 151 57 53 29 14 71 28 18 18 23 40 79 60 121 15 62 72 100 48 26 25 53 47 39 80 43 14 13 3.0 1.5 1.4 1.7 1.0 2.7 1.5 1.1 0.7 0.6 0.6 0.6 0.4 0.7 0.6 2.2 0.7 1 0.9 1 1 1 0.7 0.7 0.7 0.6 1 1.6 1.3 0.5 0.3 0.2 0.2 0.2 0.6 0.4 0.6 0.3 0.1 0.3 0.3 0.1 0.4 0.3 0.7 0.3 0.1 0.4 0.3 0.2 0.4 0.4 0.3 0.3 0.4 0.2 0.3 0.7 Zanoni Zanoni Zanoni Zanoni Zanoni Zanoni Songvaar Songvaar Parsee Parsee Parsee Parsee Parsee Songvaar Songvaar Zanoni Songvaar Songvaar Songvaar Songvaar Zanoni Parsee Songvaar Songvaar Parsee Songvaar Songvaar Zanoni Parsee Page 10 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 HILLSIDE COPPER-GOLD PROJECT (continued) Port facility at the township of Ardrossan. Diamond drilling at the Hillside copper-gold Project. Page 11 REX MINERALS LTD EXPLORATION PROJECTS (continued) For the year ended 30 June 2010 WANDEARAH COPPER-GOLD PROJECT, SOUTH AUSTRALIA The Wandearah project in South Australia comprises 2 Exploration Licences which have large scale copper-gold potential. Historical drilling at Wandearah has conﬁrmed the presence of low grade copper mineralisation and iron-oxide alteration similar to that observed at Prominent Hill and Olympic Dam. Although this project exists underneath 300m of cover sediments, combined gravity and magnetic anomalies on the project suggest that a massive mineralised IOCG system could exist in basement rocks. Limited exploration has occurred at Wandearah over the period due to a focus on the Resource drilling campaign at Hillside. However, the intention is to utilise some of the learning’s from the Hillside discovery and additional geophysical surveys to then complete new geophysical surveys at Wandearah. This should provide a greater focus to a subsequent drilling campaign at Wandearah in an effort to reduce the costs of discovery here, given that the project has a thick blanket of cover rocks over the prospective basement rocks. COWELL PROJECT, SOUTH AUSTRALIA The Cowell project in South Australia comprises a single Exploration Licence on the Eyre Peninsula immediately north of the township of Cowell in South Australia. Limited work was completed at the Cowell project over the year, however a renewed focus on this licence is expected to deliver new opportunities for copper-gold and/or uranium targets. As such, the Cowell licence remains an important asset as part of Rex’s exploration portfolio. MT CARRINGTON GOLD-SILVER PROJECT, NEW SOUTH WALES The Mt Carrington project was demerged from the Group during the year into a new company, White Rock Minerals Ltd. This process was initiated to enable the two separate companies to focus on speciﬁc geographic and commodity based aspects of the Rex exploration portfolio, providing for each company to operate with independent Boards and management teams. This has resulted in White Rock emerging with the Mt Carrington gold-silver project as its 100% owned ﬂagship project. Leading up to the demerger, Rex completed a number of activities at Mt Carrington to ensure that White Rock Minerals was in a good position to proceed with issuing its Prospectus in the September quarter 2010, with ASX listing anticipated for early October 2010. Regional exploration work continued at Mt Carrington with various geophysical and geochemical programs completed along with further technical studies. The current work program is designed to advance targets within the central leases and at the White Rock prospect. In addition, low level exploration continued to advance the regional prospects to generate a number of targets for drill testing in 2011. Further environmental management work also commenced, the most signiﬁcant of which is the installation of a Reverse Osmosis (RO) plant to signiﬁcantly improve the water quality and water management on site in line with a Mine Operating Plan completed by Rex in 2009 for the Mt Carrington project. REX MINERALS LTD TENEMENT SCHEDULE For the year ended 30 June 2010 Tenement Locality Lease Status Area Type Current Area Grant Date EL3875 EL3874 EL4514 EL3876 EL3459 EL3418 Moonta South Granted Moonta South Granted Moonta South Granted Wandearah Wandearah Cowell Granted Granted Granted km² km² km² km² km² km² 416 1262 24 127 81 85 02/08/2007 02/08/2007 10/06/2010 02/08/2007 29/11/2005 16/09/2005 Page 12 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT For the year ended 30 June 2010 The Directors present their report together with the ﬁnancial report of Rex Minerals Ltd (“the Company”) and its subsidiaries (the “Group” or “Rex”), and the Group’s interest in associates and jointly controlled entities for the ﬁnancial year ended 30 June 2010 and the auditors’ report thereon. 1. DIRECTORS The Directors of the Company at any time during or since the end of the ﬁnancial year are: Name, qualiﬁcations and independence status Mr Paul Chapman Independent Chairperson (B.Comm, ACA, Grad.Dip. Tax, MAICD, SAFin, MAusIMM) Mr Richard Laufmann Independent Non-Executive Director (B.Eng (Mining), MAusIMM, MAICD) Mr Steven Olsen Managing Director (B.Sc.(Hons), M.Sc.(MinEx), Grad.Dip (F&I), MAusIMM) Experience, special responsibilities and other directorships Mr Paul Chapman is a chartered accountant and has over 25 years resources experience gained in Australia and the US. He has worked in a number of commodity businesses including gold, nickel, manganese, bauxite/alumina and oil/gas. Mr Chapman has held senior management roles in public companies of various sizes and is Chairman of ASX listed explorer Encounter Resources Ltd and listed gold producer Silver Lake Resources Ltd. Director since 2007. Mr Richard Laufmann is a mining engineer with a proven track record in the resources sector both in Australia and overseas. He was Managing Director of Ballarat Goldﬁelds NL from 2002 until 2007, at which time Ballarat Goldﬁelds merged with Lihir Gold Limited. Mr Laufmann also previously led WMC Resources Limited’s Gold Business as General Manager – Operations. His extensive operational experience includes three years as General Manager of St Ives Gold in Western Australia. Mr Laufmann is currently the Managing Director of Indophil Resources, an ASX listed company operating in the Philippines. Director since 2007. Mr Steven Olsen has over 17 years experience in the resources industry with a background of fourteen years working as a mine geologist and exploration geologist, predominantly in Western Australia and Canada, on nickel and gold deposits. Mr Olsen has had continued exploration success for both nickel and gold mineralisation throughout his career. Mr Olsen’s qualiﬁcations include a B.Sc(Hons) from the University of Melbourne, Masters in Mineral Exploration from Queens University, Ontario and a Graduate Diploma of Applied Finance and Investment from the Securities Institute of Australia. Mr Olsen is a Non-Executive Director of White Rock Minerals Ltd. Director since 2007. Mr Brian Phillips (Resigned 15 June 2010) Independent Non-Executive Director (AWASM-Mining (C Eng), FAusIMM, MIMMM) Mr Geoffrey Lowe (Resigned 15 June 2010) Executive Director Exploration (B.Sc, MAusIMM, MAIG) Mr Phillips is a mining engineer with over 40 years experience in the mining industry. Mr Phillips joined MPI Mines Limited in 1992 and was managing director from October 2002 until December 2004, followed by two years as chairman of Leviathan Resources Limited. He was a non-executive director of Perseverance Corporation from January 2007 until February 2008, and was a non-executive director of Tawana Resources NL until July 2009. He is a Non-Executive Director of Panoramic Resources Limited and Chairman of Indophil Resources NL. Appointed Director 12 February 2010, resigned 15 June 2010. Mr Lowe is a geologist with over 23 years experience in both greenﬁelds and near mine exploration for gold and copper in Australia. His career includes 18 years with the Normandy Mining Group and Newmont Australia Limited, followed by two years with Leviathan Resources Ltd and Perseverance Corporation Ltd. Mr Lowe joined Rex Minerals Ltd as Exploration Manager in August 2007, establishing and managing the exploration portfolio and programs for Rex up to June 2010. Appointed Director 12 February 2010, resigned 15 June 2010. 2. COMPANY SECRETARY Ms Amber Rivamonte CPA, B.Bus (Acc) was appointed to the position of Company Secretary and CFO in July 2007. Ms Rivamonte was on 12 months leave during 2009 and returned from this leave in January 2010, to resume her role as Company Secretary. Ms. Rivamonte is a CPA and has over 16 years experience in the ﬁnancial management of publicly listed exploration companies. She has previously held the role of company secretary and chief ﬁnancial ofﬁcer for Ballarat Goldﬁelds NL and company secretary for Indophil Resources NL. Ms Rivamonte is also currently the Company Secretary of White Rock Minerals Ltd. Page 13 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 3. DIRECTORS’ MEETINGS The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company during the ﬁnancial year are: Director Mr Paul Chapman Mr Richard Laufmann Mr Steven Olsen1 Mr Brian Phillips Mr Geoffrey Lowe Board Meetings Audit Committee Meetings A 16 15 17 5 5 B 17 17 17 6 6 A 1 2 2 1 _ B 2 2 2 1 _ A – Number of meetings attended. B – Number of meetings held during the year whilst the Director held ofﬁce. 1 – Mr Olsen is not a member of the Audit Committee, but is invited and attends meetings as appropriate. 4. CORPORATE GOVERNANCE STATEMENT Rex has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with Rex’s needs. To the extent they are applicable, Rex has adopted the Principles of Good Corporate Governance and Recommendations incorporating the 2010 Amendments as published by ASX Corporate Governance Council. As Rex’s activities develop in size, nature and scope, the size of the Board and implementation of additional corporate governance structures will be given further consideration. In addition to this and consistent with ASX Listing Rule requirements, Rex has a policy concerning trading in its shares by Directors and other designated persons. A copy of that Trading Policy is intended to be made available on Rex’s website. The following table summarises Rex’s position in regard to corporate governance. Recommendation Comment 4.1 Lay solid foundations for management and oversight 4.1.1 Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions. The Board recognises the importance of distinguishing between the respective roles and responsibilities of the Board and management. The respective roles and responsibilities of the Board and the Managing Director are set out in the Company’s Board Charter. The primary responsibility of the Board is to protect and advance the interest of shareholders. To fulﬁl this role, the Board has overall responsibility for developing and approving the Company’s corporate strategy and monitoring implementation of the strategy, appointing the Managing Director, monitoring senior executives’ performance and approving the Company’s risk and audit framework. The Board is also responsible for the Company’s general corporate governance matters, including matters such as disclosures and the appointment and monitoring of any committees set up by the Board. Page 14 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation 4.1.1 Continued. 4.1.2 Companies should disclose the process for evaluating the performance of senior executives. Comment The Managing Director has primary responsibility to the Board for the affairs of Rex. The Managing Director’s responsibilities include implementing and monitoring (together with the Board) the strategic and ﬁnancial plans for Rex, managing the appointment of senior executive positions, being the primary channel of communication and point of contact between the senior executives and the Board, providing strong leadership to, and effective management of, Rex and otherwise carrying out the day to day management of Rex. This recommendation is also satisﬁed in as much as should a new Director be appointed, Rex’s Board Charter and other corporate governance documentation together with updated ﬁnancial statements will be given to the new Directors together with a formal letter of appointment which will set out details in respect of, amongst other matters: > Rex’s ﬁnancial, strategic, operational and risk management position; > each Director’s rights, duties and responsibilities; and > the role of the Board and senior executives. Rex’s goals for the year are set out in the Annual Report and these are used as the basis for evaluating performance of senior executives. Performance evaluations are undertaken annually, in June, by the Managing Director. The Managing Director’s performance evaluation is also undertaken annually, in June, by the Board. 4.1.3 Companies should provide the information indicated It is intended that: in the Guide to reporting on Principle 1. > an explanation of any departure from Recommendations 1.1, 1.2 or 1.3 will be included in the corporate governance statement in the Annual Report; and > the Annual Report will disclose whether a performance evaluation for senior executives has taken place in the reporting period and whether it was in accordance with the process disclosed. 4.2 Structure the Board to add value 4.2.1 A majority of the Board should be This recommendation is satisﬁed. independent Directors. 4.2.2 The Chair should be an independent Director. This recommendation is satisﬁed. 4.2.3 The roles of Chair and Chief Executive Ofﬁcer should not be exercised by the same individual. This recommendation is satisﬁed. Page 15 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 4.2.4 The Board should establish a nomination committee. 4.2.5 Companies should disclose the process for evaluating the performance of the Board, its committees and individual Directors. 4.2.6 Companies should provide the information indicated in the Guide to reporting on Principle 2. The Board has not adopted a charter relevant to the speciﬁc functions of a nomination committee. Given the size of Rex and the Board, and the start up nature and straight forward structure of Rex, the Directors consider that any efﬁciencies achieved by the establishment of a nomination committee would be minimal, thereby not making its establishment cost effective. Rex has Board processes in place which raise issues that would otherwise be considered by a nomination committee. The Directors consider that due to the size of Rex and its Board, such a formal review procedure is not appropriate at this point in time and has instead adopted a self evaluation process to measure its own performance. This recommendation is satisﬁed in as much as the details have been included in the Annual Report and the Board Charter. The following material is included in the Annual Report: > the skills, experience and expertise relevant to the position of Director held by each Director in ofﬁce at the date of the Annual Report; > the names of the Directors considered by the Board to constitute independent Directors and Rex’s materiality thresholds; > the existence of any of the relationships listed in Box 2.1 of the Guide (regarding director independence) and an explanation of why the Board considers a Director to be independent, notwithstanding the existence of those relationships; > a statement as to whether there is a procedure agreed by the Board for Directors to take independent professional advice at the expense of Rex; > a statement as to the mix of skills and diversity for which the Board is looking to achieve in membership of the Board; > the period of ofﬁce held by each Director in ofﬁce at the date of the Annual Report; > whether a performance evaluation for the Board, its committees and directors has taken place in the reporting period and whether it was in accordance with the process disclosed; and > an explanation of any departures from Recommendations 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6. The following material is intended to be publicly available on Rex’s website in a clearly marked corporate governance section: > a description of the process for the selection and appointment of new Directors and the re-election of incumbent Directors; and > the Board’s policy for the selection and appointment of directors. Page 16 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 4.3 Promoting ethical and responsible decision making 4.3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to: > the practises necessary to maintain conﬁdence in the Company’s integrity; > the practises necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and > the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. 4.3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress in achieving them. 4.3.3 Companies should disclose in each Annual Report the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity policy and progress towards achieving them. This recommendation is satisﬁed. Rex’s Code of Conduct sets out Rex’s expectations for the conduct of Rex’s Directors, senior executives and employees, including in relation to business conduct, personal and professional conduct (such as conﬁdentiality, personal behaviour and respect for others). This recommendation is satisﬁed. Rex's Code of Conduct sets out Rex's policy concerning diversity. In summary, Rex's policy concerning diversity is as follows: Rex recognises that diversity is an economic driver of competitiveness for companies and it strives to promote an environment and culture conducive to the appointment of well qualiﬁed persons so that there is appropriate diversity to maximise the achievement of corporate goals. The objectives for achieving diversity are included in the corporate governance statement in the Annual Report. In order to promote gender diversity, Rex will engage in reviews and reporting to the Board about the proportion of women at Rex and strategies to address diversity. Rex intends to recruit the most qualiﬁed persons for each position and considers persons from a diverse pool of qualiﬁed candidates. The objectives for achieving diversity are included in the corporate governance statement in the Annual Report. 4.3.4 Companies should disclose in each Annual Report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board. This recommendation is satisﬁed. At 30 June 2010, women made up 29% of the total workforce; and 50% of senior executives. There are currently no women on the Board of Rex. 4.3.5 Companies should provide the information indicated in the Guide to reporting on Principle 3. The following material is intended to be made publicly available on Rex’s website in a clearly marked corporate governance section: > any applicable code of conduct or a summary; and > the diversity policy or a summary of its main provisions. Page 17 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 4.4 Safeguard integrity in ﬁnancial reporting 4.4.1 The Board should establish an Audit Committee. This recommendation is satisﬁed. 4.4.2 The Audit Committee should be structured so that it: > consists only of non-executive Directors; > consists of a majority of independent Directors; > is chaired by an independent Chair who is not chair of the Board; and > has at least 3 members. The members of the Audit Committee are Paul Chapman and Richard Laufmann, who are both independent Directors. Richard Laufmann is an independent Chair of the Audit Committee (and he is not Chair of the Board). Given the size of Rex and the Board, and the start up nature and straight forward structure of Rex, the Directors consider that the Audit Committee is of sufﬁcient size, independence and technical expertise to discharge its mandate effectively. 4.4.3 The Audit Committee should have a formal charter. This recommendation is satisﬁed. 4.4.4 Companies should provide the information indicated in the Guide to reporting on Principle 4. The following material is included in the corporate governance statement in the Annual Report: > the names and qualiﬁcations of those appointed to the audit committee and their attendance at meetings of the committee, or, where a company does not have an audit committee, how the functions of an audit committee are carried out > the number of meetings of the audit committee (contained within the Directors’ Report) > explanation of any departures from Recommendations 4.1, 4.2, 4.3 or 4.4 The following material is intended to be made publicly available on Rex’s website in a clearly marked corporate governance section: > the audit committee charter, including information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners. This recommendation is satisﬁed. Rex has established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability for compliance. Rex’s Continuous Disclose Policy sets out Rex’s policies and procedures with regard to the reporting of material price sensitive information to the ASX subject to conﬁdentiality carve-out aspects and Rex’s procedures in this regard. 4.5 Make timely and balanced disclosure 4.5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies. Page 18 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment An explanation of any departures from Recommendations 5.1 or 5.2 are included in the corporate governance statement in the Annual Report. The policies or a summary of those policies designed to guide compliance with Listing Rule disclosure requirements are intended to be publicly available on Rex’s website in a clearly marked corporate governance section. Rex places a high priority on communications with its Shareholders. Although Rex does not have a standalone communications policy, Rex considers that its Continuous Disclosure Policy, together with disclosure through the following means, should be sufﬁcient to promote effective communications with shareholders: > announcements released through to the ASX company announcements platform; > notices of meetings to shareholders; and > provision of all relevant documentation released on Rex’s website. An explanation of any departure from Recommendations 6.1 or 6.2 are included in the corporate governance statement in the Annual Report. Rex describes its communication policy with Shareholders in the corporate governance statement in the Annual Report. Although there is no standalone risk management policy, the Board Charter provides that it is the Board’s responsibility to approve Rex’s risk and audit framework, systems of risk management and internal control, as well as approving compliance with any risk and audit policies and protocols in place at the time. This recommendation is satisﬁed. 4.5.2 Companies should provide the information indicated in the Guide to reporting on Principle 5. 4.6 Respect the rights of shareholders 4.6.1 Companies should design and disclose a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. 4.6.2 Companies should provide the information indicated in the Guide to reporting on Principle 6. 4.7 Recognise and manage risk 4.7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies. 4.7.2 The Board should require management to design and implement the risk management and internal control system to manage the Company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks. Page 19 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment This recommendation is satisﬁed. 4.7.3 The Board should disclose whether it has received assurance from the chief executive ofﬁcer (or equivalent) and the chief ﬁnancial ofﬁcer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to ﬁnancial reporting risks. 4.7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7. The following material is intended to be included in the corporate governance statement in the Annual Report: 4.8 Remunerate fairly and responsibly 4.8.1 The Board should establish a Remuneration Committee. 4.8.2 The remuneration committee should be structured so that it consists of a majority of independent directors, is chaired by an independent director and has at least three members. 4.8.3 Companies should clearly distinguish the structure of Non-Executive Director’s remuneration from that of Executive Directors and senior executives. 4.8.4 Companies should provide the information indicated in the Guide to reporting on Principle 8. > explanation of any departures from Recommendations 7.1, 7.2, 7.3 or 7.4; > whether management has reported to the Board under Recommendation 7.2; and > whether the Board has received assurance from the chief executive ofﬁcer (or equivalent) and the chief ﬁnancial ofﬁcer (or equivalent) under Recommendation 7.3. This recommendation is not satisﬁed. Given the size of Rex and the Board, and the start up nature and straight forward structure of Rex, the Directors consider that any efﬁciencies achieved by the establishment of a remuneration committee would be minimal, not making its establishment cost effective. The Board has not adopted a charter relevant to the speciﬁc functions of a remuneration committee. Given the size of Rex and the Board, and the start up nature and straight forward structure of Rex, the Directors consider that any efﬁciencies achieved by the establishment of a remuneration committee would be minimal, thereby not making its establishment cost effective. Rex has Board processes in place which raise issues that would otherwise be considered by a remuneration committee. This recommendation is satisﬁed. However, Board members are entitled to options as set out in this Annual Report having regard to the small number of Rex’s management team. The following material or a clear cross-reference to the location of the material is included in the corporate governance statement in the Annual Report or elsewhere in the Annual Report (as appropriate): > the names of the members of the remuneration committee and their attendance at meetings of the committee, or where the company does not have a remuneration committee how the functions of a remuneration committee are carried out; > the existence and terms of any schemes for retirement beneﬁts, other than superannuation, for non-executive directors; and > an explanation of any departures from Recommendations 8.1, 8.2, 8.3 or 8.4. Page 20 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 5. PRINCIPAL ACTIVITIES The principal activity of the Group during the course of the ﬁnancial year was minerals exploration in Australia. There were no signiﬁcant changes in the nature of the Group’s principal activities during the year. Rex has moved from being a diversiﬁed exploration company to a company focussed on the exploration and development of large-scale copper-gold projects on the Yorke Peninsula, South Australia. Rex’s strategy is to discover large-scale copper-gold deposits which can lead to the development of a new long-life and low-cost mining operation on the Yorke Peninsula. Rex applies its extensive technical experience and existing drilling capacity to progress its projects, laying solid foundations for long term growth, enabling Rex to uncover the substantial deposits of copper that Rex interprets to exist under shallow cover rocks on the Yorke Peninsula. 5.1 Objectives The Group’s principal objective is to create value through the discovery, development and mining of mineral resources. To progress with the Group’s primary objective, the following targets have been set for 2011 and later ﬁnancial years. > Expand on the initial Inferred Resource estimate to the level deﬁned as a target size (within 28 July 2010 announcement) of over 1.5Mt of contained copper for the Hillside copper-gold project in South Australia. > Identify the broad economic parameters (capital and operating costs) associated with the Hillside copper-gold project. > Make at least one new copper discovery along the Pine Point Copper Belt. 6. OPERATING AND FINANCIAL REVIEW The income statement shows a proﬁt after tax of $2,327,007 (2009 loss: $1,851,166) for the year. The Group has no bank debt. As at 30 June 2010 the Group had a cash position of $31,474,941 (2009: $12,286,067). Operating activities incurred a cash inﬂow for the year of $273,168 (2009: cash outﬂow of $829,394). 7. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS On 26 October 2009, Rex announced an underwritten equity raising of approximately $42 million, comprising a 3 for 10 accelerated non-renounceable pro-rata entitlement offer at an offer price of $1.70 per share. The offer comprised a non- renounceable entitlement offer to institutional and to retail shareholders. This equity raising was successfully completed in two stages during October and November 2009. On 15 June 2010, White Rock Minerals Ltd was demerged from the Rex Group, following approval by Rex Shareholders at a General Meeting held on 3 June 2010. Existing Rex Shareholders received shares in White Rock on a 1:3 basis. Prior to the demerger being completed, on 15 June 2010, White Rock Minerals acquired Rex Minerals Ltd’s wholly owned subsidiary Rex Minerals (NSW) Pty Ltd (now named White Rock Minerals (MTC) Pty Ltd), which includes the Mt Carrington project in northern NSW. The Mt Carrington project is, as a result, no longer part of the Rex Group. In the opinion of the Directors there were no further signiﬁcant changes in the state of affairs of the Group during the year ended 30 June 2010. 8. DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. 9. EVENTS SUBSEQUENT TO REPORTING DATE Subsequent to 30 June 2010 there has not arisen in the interval between the end of the ﬁnancial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect signiﬁcantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future ﬁnancial years. 10. LIKELY DEVELOPMENTS Likely developments are the continued minerals exploration on the tenements owned or controlled by the Group. Further information about likely developments in the operations of the Group and the expected results of those operations in future ﬁnancial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group. Page 21 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 11. DIRECTORS’ INTERESTS The relevant interest of each Director in the shares or options over such instruments issued by the companies within the Group and other related bodies corporate, as notiﬁed by the Directors to the Australian Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows: Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe 12. SHARE OPTIONS Rex Minerals Ltd Ordinary shares Options over ordinary shares 3,270,000 2,500,000 – 5,500,000 – 250,000 1,000,000 – 500,000 – 12.1 Options granted to Directors and Ofﬁcers of the Company During or since the end of the ﬁnancial year, the Company granted options for no consideration over unissued ordinary shares in the Company to the following Directors and to the following of the ﬁve most highly remunerated Ofﬁcers of the Company as part of their remuneration: Number of options granted Exercise price Expiry date Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe Executives Ms Amber Rivamonte Ms Janet Mason – – – – – – – – – – – – – – – 73,800 73,800 $1.22* $1.22* 24 May 2013 24 May 2013 *The exercise price is shown post the reduction arising from the demerger of White Rock Minerals Ltd. Exercise prices were reduced by $0.148 per share as a result of the demerger. All options were granted during the ﬁnancial year. No options have been granted since the end of the ﬁnancial year. 12.2 Unissued shares under option At the date of this report unissued ordinary shares of the Company under option are: Expiry date 30 June 2011 30 June 2011 30 June 2011 31 May 2012 31 October 2012 24 May 2013 Total Exercise price Number of shares $0.102 $0.152 $0.217 $0.552 $2.052 $1.220 2,250,000 1,000,000 150,000 60,000 240,000 600,000 4,300,000 *All exercise prices are shown post the reduction arising from the demerger. Exercise prices were reduced in accordance with the ASX listing rules by $0.148 per share as a result of the demerger. All options expire on the expiry date, unless the options have not vested and the employee is terminated then options will lapse. Page 22 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 12. SHARE OPTIONS (continued) 12.3 Shares issued on exercise of options During or since the end of the ﬁnancial year the Company issued ordinary shares as a result of the exercise of options as follows (there are no amounts unpaid on the shares issued): Number of shares Amount paid on each share 3,350,000 500,000 30,000 180,000 120,000 100,000 120,000 4,400,000 $0.250 $0.300 $0.365 $0.410 $0.700 $0.102 $0.552 13. INDEMNIFICATION AND INSURANCE OF OFFICERS The Company provides insurance to cover legal liability and expenses for the Directors and Executive Ofﬁcers of the Company. The Directors and Ofﬁcers Liability Insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the Ofﬁcers in their capacity as Ofﬁcers. Disclosure of the nature of the liability cover and the amount of the premium is subject to a conﬁdentiality clause under the insurance policy. The Company has entered into an agreement with the Directors and certain Ofﬁcers to indemnify these individuals against any claims and related expenses, which arise as a result of their work in their respective capacities. The Company has not provided any insurance or indemnity for the auditor of the Company. 14. NON-AUDIT SERVICES During the year KPMG, the Company’s auditor, did not provide any non-audit services to the Company (2009: nil). 15. REMUNERATION REPORT – AUDITED 15.1 Principles of compensation Remuneration is referred to as compensation through this report. Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the Group, including Directors of the Company and other Executives. Key management personnel comprise the Directors of the Company and Executives for the Company and the Group including the ﬁve most highly remunerated Company and Group Executives. Compensation levels for key management personnel of the Group are competitively set to attract and retain appropriately qualiﬁed and experienced Directors and Executives. The Board obtains independent advice of the appropriateness of compensation packages of both the Company and the Group given trends in comparative companies and the objectives of the Company’s compensation strategy. In considering the Group’s performance and beneﬁts for shareholder wealth, the Board has regard to the geological ﬁnds and the following indices in respect of the current ﬁnancial year and previous ﬁnancial years. 2010 2009 2008 IPO Sept 2007 Net proﬁt/(loss) attributable to equity holders of the parent $2,327,007 $(1,851,166) $(857,987) $ – Closing share price $1.250 $0.555 $0.260 $0.250 The compensation structures are designed to attract suitably qualiﬁed candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. Page 23 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 15. REMUNERATION REPORT – AUDITED (continued) 15.1.1 Fixed compensation Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee beneﬁts including motor vehicles), as well as employer contributions to superannuation funds. Compensation levels are reviewed annually by the Board through a process that considers individual and overall performance of the Group. In addition external consultants provide analysis and advice to ensure the Directors’ and Senior Executives’ compensation is competitive in the market place. 15.1.2 Performance linked compensation Performance linked compensation includes both short-term and long-term incentives, and is designed to reward key management personnel for meeting or exceeding their ﬁnancial and personal objectives. 15.1.3 Short-term incentive bonus The short-term incentive (STI) is a discretionary bonus provided in the form of cash, which is calculated based on an assessment of key performance indicators, including share price performance, business growth, exploration success and safety, environment and community issues. 15.1.4 Long-term incentive The long-term incentive (LTI) is provided as options over ordinary shares of the Company. Options granted to employees currently only have service conditions attached to them, due to the nature of the Company at this time; the Board believes this is appropriate. 15.1.5 Service agreements It is the Group’s policy that employment contracts for key management personnel, excluding the Chief Executive Ofﬁcer are unlimited in term but capable of termination on 3 months’ notice and that the Group retains the right to terminate the contract immediately, by making payment equal to 3 months’ pay in lieu of notice. The Group has entered into contracts with each key management person, excluding the Chief Executive Ofﬁcer, that are capable of termination on three month’s notice. The Group retains the right to terminate a contract immediately by making payment equal to three month’s pay in lieu of notice. The key management personnel are also entitled to receive on termination of employment their statutory entitlements of accrued annual and long service leave, together with any superannuation beneﬁts. The employment contract outlines the components of compensation paid to the key management personnel but does not prescribe how compensation levels are modiﬁed year to year. Compensation levels are reviewed each year to take into account cost-of-living changes, any change in the scope of the role performed by the Senior Executive and any changes required to meet the principles of the compensation policy. Mr Steven Olsen, Chief Executive Ofﬁcer, has a contract of employment dated 1 July 2010 with the Company and terminates on the 30 June 2013. The contract speciﬁes the duties and obligations to be fulﬁlled by the Chief Executive Ofﬁcer and provides that the Board and Chief Executive Ofﬁcer will consult and agree objectives for achievement each year. The Chief Executive Ofﬁcer has no entitlement to termination payment in the event of removal for misconduct or gross negligence. Discretionary bonus payments are allowable under the current management employment contracts including the Chief Executive Ofﬁcer for meeting and/or exceeding performance milestones and upon approval by the Board. > Non-Executive Directors Total compensation for all Non-Executive Directors, last voted upon by shareholders at the 2007 AGM, is not to exceed $300,000 per annum and is set based on advice from external advisors with reference to fees paid to other Non-Executive Directors of comparable companies. Directors’ base fees are presently $135,000 per annum. The Chairperson and Non-Executive Directors do not receive performance related remuneration. Directors’ fees cover all main Board activities and membership of committees. Page 24 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 15. REMUNERATION REPORT – AUDITED (continued) 15.2 Directors’ and Executive Ofﬁcers’ remuneration (Group) Details of the nature and amount of each major element of remuneration of each Director of the Company, each of the ﬁve named Company Executives and relevant Group Executives who receive the highest remuneration and other key management personnel are: s n o i t p o f o e u l a V f o n o i t r o p o r P f o n o i t r o p o r p s a n o i t a r e n u m e r n o i t a r e n u m e r e c n a m r o f r e p % % d e t a l e r $ l a t o T e u l a V r i a F s n o i t p O ) B ( $ - m r e T n o i t a n i s t ﬁ e n e b $ - r e p u S n o i t a u n n a $ s t ﬁ e n e b $ l a t o T d e s a b - e r a h S s t n e m y a p - t s o P t n e m y o l p m e m r e t - t r o h S - n o N y r a t e n o m I T S h s a c s t ﬁ e n e b $ s u n o b $ ) A ( - t r o h S m r e t y r a l a S s e e f & $ – – – – – – – – – – – – – – – 5 2 1 8 6 , 0 0 5 4 5 , 5 2 2 , 7 5 0 5 0 9 4 , 4 5 3 2 2 , – 5 9 . 0 7 6 6 1 3 , 0 6 . 0 4 4 0 5 2 , . 7 2 1 3 6 6 6 7 2 , – – – – – – – – – 8 5 . – 6 2 9 7 1 2 , 6 2 6 , 2 1 . 6 9 2 . 7 1 1 . 6 0 1 . 9 7 2 – – 4 1 7 , 9 6 4 6 6 , 0 2 6 6 6 7 0 1 , 6 2 6 , 2 1 8 3 . 7 2 4 5 9 1 , 4 6 6 , 0 2 – 2 2 1 7 2 1 , 0 2 5 , 5 3 , 8 7 1 6 0 0 , 1 3 0 7 6 0 8 , 8 2 3 , 1 4 2 7 7 , 0 6 – – – – – – – – – – – – – – – – 5 2 6 , 5 0 0 5 , 2 6 0 0 5 , 4 0 0 0 , 0 5 5 2 7 , 4 0 0 5 , 2 5 0 5 0 , 4 0 0 0 , 5 4 6 4 8 , 1 8 0 5 , 0 2 – – 0 7 6 , 3 2 0 0 0 , 3 9 2 0 4 4 , 9 1 0 0 0 , 1 3 2 – – – – – – – – 2 0 3 , 8 1 1 6 3 , 8 5 2 0 0 0 , 0 2 0 0 0 , 5 3 1 6 3 , 3 0 2 0 1 0 2 0 0 3 , 5 1 0 0 0 , 0 9 1 0 0 0 , 0 2 – 0 0 0 , 0 7 1 9 0 0 2 0 0 0 , 0 3 0 0 0 , 3 6 2 0 1 0 2 0 0 0 , 5 1 0 0 0 , 6 1 2 9 0 0 2 – – – – – – 0 0 5 , 2 6 0 1 0 2 0 0 0 , 0 5 9 0 0 2 s r o t c e r i D e v i t u c e x E - n o N s r o t c e r i D n a m p a h C l u a P r M ) n o s r e p r i a h C ( – 9 0 0 2 0 0 5 , 2 5 0 1 0 2 n n a m f u a L d r a h c i R r M 0 0 0 , 5 4 9 0 0 2 8 0 5 , 0 2 0 1 0 2 1 s p i l l i h P n a i r B r M s r o t c e r i D e v i t u c e x E – n e s l O n e v e t S r M r o t c e r i D g n i g a n a M 2 n o i t a r o l p x E r o t c e r i D – e w o L y e r f f o e G r M s e v i t u c e x E 0 5 0 , 4 0 0 0 , 5 4 7 4 8 , 7 2 9 1 , 7 8 1 1 8 , 3 1 2 5 9 , 0 6 1 3 6 5 , 7 8 3 0 , 4 8 – – – – 0 0 5 , 7 2 5 4 , 3 5 1 0 1 0 2 r e c ﬁ f O l a i c n a n i F f e i h C – n o s a M t e n a J s M – 8 3 0 , 4 8 9 0 0 2 8 0 0 2 r e b m e c e D d e t n i o p p A – – 0 0 0 , 5 4 0 1 0 2 – e t n o m a v i R r e b m A s M y r a t e r c e S y n a p m o C 2 9 1 , 7 8 9 0 0 2 3 7 0 0 2 y l u J d e t n i o p p A 9 2 0 , 2 7 1 2 8 , 2 9 8 0 0 0 , 0 2 0 0 5 , 2 7 1 2 3 , 0 0 8 0 1 0 2 0 0 7 , 8 5 0 3 2 , 7 8 6 0 0 0 , 0 2 0 0 0 , 5 1 0 3 2 , 2 5 6 9 0 0 2 y e k : n o i t a s n e p m o c l a t o T l e n n o s r e p t n e m e g a n a m 1 Mr Phillips was appointed Director on 12 February 2010 and resigned 15 June 2010. 2Mr Lowe was previously Exploration Manager and was appointed Director on 12 February 2010 and resigned 15 June 2010. 3Ms Rivamonte was on leave for 6 months during 2010 and also 6 months during 2009. Page 25 REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 15. REMUNERATION REPORT – AUDITED (continued) 15.2 Directors’ and Executive Ofﬁcers’ remuneration (Group) (continued) Notes in relation to the table of Directors’ and Executive Ofﬁcers’ remuneration A. B. The short-term incentive bonus is for performance during the respective ﬁnancial year using the criteria set out in the Remuneration Report. The amount was ﬁnally determined after performance reviews were completed and approved by the Board. No amounts vest in future years in respect of the bonuses paid. The fair value of the unlisted options granted has been calculated at the date of grant based upon the Black Scholes option pricing model. The fair value is allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options recognised in this reporting period. The following factors and assumptions were used in determining the fair value of options on grant date: Grant Date Option life Fair value per option Exercise price Price of shares on grant date Expected volatility Risk free interest rate 3rd June 2010 2.81 years $0.28 $1.22 $1.067 40% 4.67% 15.3 Equity Instruments All options refer to options over ordinary shares of Rex Minerals Ltd, which are exercisable on a one-for-one basis. 15.3.1 Options and rights over equity instruments granted as compensation Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details on options that were vested during the reporting period are as follows: Grant date Number of options granted during 2010 Fair value per option at grant date ($) Exercise price per option ($) Expiry date Number of options vested during 2010 Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe Executives – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 200,000 Ms Amber Rivamonte Ms Janet Mason 73,800 73,800 3 June 2010 3 June 2010 $0.28 $0.28 $1.22 $1.22 24 May 2013 273,800 24 May 2013 113,800 Grant date Number of options granted during 2009 Fair value per option at grant date ($) Exercise price per option ($) Expiry date Number of options vested during 2009 Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe Executives Ms Amber Rivamonte – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 200,000 200,000 Ms Janet Mason 120,000 13 Feb 2009 $0.296 $0.41 30 June 2011 80,000 No options have been granted since the end of the ﬁnancial year. The options were provided at no cost to the recipients. Page 26 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD DIRECTORS’ REPORT (continued) For the year ended 30 June 2010 15. REMUNERATION REPORT – AUDITED (continued) 15.3 Equity Instruments (continued) 15.3.2 Modiﬁcation of terms of equity-settled share-based payment transactions As per the ASX Listing rule Clause 7.22.3 which deals with the effect on options from a return of share capital, the exercise price of each Rex option on issue reduced by 14.8 cents on 15 June 2010. This price reduction did not impact on the fair value of the options. No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modiﬁed by the issuing entity during the prior period. 15.3.3 Exercise of options granted as compensation During the reporting period, the following shares were issued on the exercise of options previously granted as compensation: Executives Ms Amber Rivamonte Ms Janet Mason Number of shares Amount paid $/share 600,000 120,000 $0.25 $0.41 Analysis of movements in options 15.3.4 The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key management person, and each of the ﬁve named Company Executives and Group Executives is detailed below: Granted in year $ (A) Value of Options Exercised in year $ (B) Lapsed in year $ (C) Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe Executives Ms Amber Rivamonte Ms Janet Mason - - - - - 20,664 20,664 41,328 - - - - - 72,600 35,520 108,120 - - - - - - - - (A) The value of options granted in the year is the fair value of the options calculated at grant date using the Black Scholes option pricing model as described in note 23. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period. (B) The value of options exercised during the year is calculated at grant date using the Black Scholes option pricing model as described in note 23. (C) No options lapsed during the year. 16. LEAD AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration is set out on page 56 and forms part of the Directors’ report for the year ended 30 June 2010. Dated at Melbourne this 24th day of September 2010. Signed in accordance with a resolution of the Directors: Steven Olsen Managing Director Page 27 REX MINERALS LTD STATEMENT OF FINANCIAL POSITION As at 30 June 2010 Current Assets Cash assets Receivables Other assets Total current assets Non-current assets Other assets Exploration and evaluation expenditure Property, plant and equipment Total non-current assets Total assets Current Liabilities Trade payables Employee beneﬁts Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity The notes on pages 32 to 55 are an integral part of these ﬁnancial statements. Note 7 8 9 9 10 12 13 14 15(i) 15(iii) Group 2010 $ Group 2009 $ 31,474,941 229,478 22,263 31,726,682 1,000,000 22,278,777 373,671 23,652,448 55,379,130 1,808,670 141,989 1,950,659 1,950,659 12,286,067 24,720 1,271,008 13,581,795 – 9,127,523 165,636 9,293,159 22,874,954 228,042 82,938 310,980 310,980 53,428,471 22,563,974 52,948,677 520,080 (40,286) 53,428,471 24,711,046 552,130 (2,699,202) 22,563,974 Page 28 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2010 Finance income Other income Administrative expenses Depreciation expense Employee beneﬁts expense Marketing expenses Proﬁt on demerger of investment Loss on sale of subsidiary Proﬁt/(Loss) before tax Income tax (expense)/beneﬁt Total Proﬁt/(Loss) for the period Total comprehensive loss attributable to members of Rex Minerals Ltd Earnings per share attributable to ordinary equity holders Basic earnings per share (cents) Diluted earnings per share (cents) The notes on pages 32 to 55 are an integral part of these ﬁnancial statements. Note 16 17 18 19 19 20 21 21 Group 2010 $ 1,433,666 85 (727,549) (76,137) (668,928) (155,147) 2,521,017 – 2,327,007 Group 2009 $ 246,809 – (334,667) (39,321) (700,981) (135,189) – (887,817) (1,851,166) – – 2,327,007 2,327,007 (1,851,166) (1,851,166) 2.48 2.36 (3.13) (3.13) Page 29 REX MINERALS LTD STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2010 Attributable to equity holders of the Group Share Capital $ Reserve $ Retained Earnings $ Total Equity $ Balance at 1 July 2008 9,195,395 362,781 (868,535) 8,689,641 Issue of ordinary shares Share based payments compensation Reversal of share based payments reserve Loss for the period 15,515,651 – – – – 209,848 (20,499) – – – 20,499 (1,851,166) 15,515,651 209,848 – (1,851,166) Balance at 30 June 2009 24,711,046 552,130 (2,699,202) 22,563,974 Balance at 1 July 2009 24,711,046 552,130 (2,699,202) 22,563,974 Issue of ordinary shares Share based payments compensation Reversal of share based payments reserve Capital reduction via share distribution Proﬁt for the period 45,212,617 – – (16,974,986) – – 299,859 (331,909) – – – – 331,909 – 2,327,007 45,212,617 (299,859) – (16,974,986) 2,327,007 Balance at 30 June 2010 52,948,677 520,080 (40,286) 53,428,471 The notes on pages 32 to 55 are an integral part of these ﬁnancial statements. Page 30 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD STATEMENT OF CASH FLOWS For the year ended 30 June 2010 Cash ﬂows from operating activities Cash paid to suppliers and employees Interest received Note Group 2010 $ Group 2009 $ (1,059,798) 1,332,966 (1,076,203) 246,809 Net cash from/(used in) operating activities 22 273,168 (829,394) Cash ﬂows from investing activities Exploration and evaluation payments Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Proceeds from sale of investments Cash outﬂow on demerger of White Rock Minerals (13,637,366) (2,260,219) 17,000 – (6,795,404) (2,759,247) (48,719) – 1,411,969 – Net cash from/(used in) investing activities (22,675,989) (1,395,997) Cash ﬂows from ﬁnancing activities Proceeds from issue of share capital Payment of transaction costs Net cash from/(used in) ﬁnancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at period end 7 The notes on pages 32 to 55 are an integral part of these ﬁnancial statements. 43,419,950 (1,828,255) 41,591,695 19,188,874 12,286,067 31,474,941 11,110,000 (475,349) 10,634,651 8,409,260 3,876,807 12,286,067 Page 31 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 1. REPORTING ENTITY Rex Minerals Ltd (the “Company”) is a Company domiciled in Australia. The address of the Company’s registered ofﬁce is 209 Dana Street, Ballarat, Victoria, 3350. The Group ﬁnancial statements as at and for the year ended 30 June 2010 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group primarily is involved in minerals exploration in Australia. 2. BASIS OF PREPARATION (a) Statement of compliance The ﬁnancial report is a general purpose ﬁnancial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The ﬁnancial report of the Group complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB). The ﬁnancial statements were approved by the Board of Directors on 24 September 2010. (b) Basis of measurement The Group ﬁnancial statements have been prepared on the historical cost basis. (c) Functional and presentation currency These Group ﬁnancial statements are presented in Australian dollars, which is the Company’s functional currency and the functional currency of the Group. (d) Use of estimates and judgements The preparation of ﬁnancial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about signiﬁcant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most signiﬁcant effect on the amount recognised in the ﬁnancial statements are described in the following notes: > > > note 23 – measurement of share-based payments notes 14 and 25 – employee beneﬁts, commitments and contingencies note 10 – exploration and evaluation expenditure 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these Group ﬁnancial statements, and have been applied consistently by Group entities. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the ﬁnancial and operating policies of an entity so as to obtain beneﬁts from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The ﬁnancial statements of subsidiaries are included in the Group ﬁnancial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. (ii) Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the Group ﬁnancial statements. Page 32 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Financial instruments (i) Non-derivative ﬁnancial instruments Non-derivative ﬁnancial instruments comprise investments in equity, trade and other receivables, cash and cash equivalents and trade and other payables. Non-derivative ﬁnancial instruments are recognised initially at fair value plus, for instruments not at fair value through proﬁt or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative ﬁnancial instruments are measured as described below. A ﬁnancial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash ﬂows from the ﬁnancial assets expire or if the Group transfers the ﬁnancial asset to another party without retaining control or substantially all risks and rewards of the asset. Sales of ﬁnancial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations speciﬁed in the contract expire or are discharged or cancelled. (i) Receivables – other debtors Other debtors are reviewed on an ongoing basis. An impairment loss is recognised for debts which are known to be uncollectible. An impairment allowance is raised for any doubtful accounts. (ii) Receivables – sale of non-current assets The net gain (loss) on the sale of goods is included as revenue or expense at the date control of the assets passes to the buyer. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal (including incidental costs). (iii) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. (iv) Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods and services provided to the Company prior to the end of the reporting period and are stated at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition. Other non-derivative ﬁnancial instruments are measured at amortised cost using the effective interest method, less any impairment losses. (ii) Share capital Ordinary shares Ordinary shares are classiﬁed as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. (c) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic beneﬁts embodied within the part will ﬂow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in proﬁt or loss as incurred. Page 33 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Property, plant and equipment (continued) (iii) Depreciation Depreciation is recognised in proﬁt or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives for the current and comparative periods are as follows: > plant and equipment 5 – 10 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. (d) Exploration and evaluation Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Group has obtained the legal rights to explore an area are recognised in the income statement. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: > > the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and signiﬁcant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if: > > sufﬁcient data exists to determine technical feasibility and commercial viability; and facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value, accumulated costs carried forward are written off in the period in which that assessment is made. Each area of interest is reviewed at the end of each accounting period and accumulated costs are written off to the extent that they will not be recoverable in the future. (e) Impairment (i) Financial assets A ﬁnancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A ﬁnancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash ﬂows of that asset. An impairment loss in respect of a ﬁnancial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash ﬂows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale ﬁnancial asset is calculated by reference to its fair value. Individually signiﬁcant ﬁnancial assets are tested for impairment on an individual basis. The remaining ﬁnancial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in proﬁt or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For ﬁnancial assets measured at amortised cost, the reversal is recognised in proﬁt or loss. For available-for-sale ﬁnancial assets that are equity securities, the reversal is recognised directly in equity. Page 34 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Impairment (continued) (ii) Non-ﬁnancial assets The carrying amounts of the Group’s non-ﬁnancial assets, and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indeﬁnite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inﬂows from continuing use that are largely independent of the cash inﬂows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to beneﬁt from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in proﬁt or loss. Impairment losses recognised in respect of cash-generating units are allocated ﬁrst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (f) Employee beneﬁts (i) Wages, salaries and annual leave Liabilities for employee beneﬁts for wages, salaries and annual leave that are expected to be settled within twelve months of the reporting date represent obligations resulting from employee’s services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the Company expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax. (ii) Share-based payments Equity-based compensation will be recognised as an expense in respect of the services received, or as capitalised exploration expenditure as appropriate. The fair value of options granted is recognised as an asset or expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees became unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the options, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. (g) Revenue Recognition Revenue is recognised in the income statement when the signiﬁcant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are signiﬁcant uncertainties regarding recovery of the consideration due. Revenues are recognised at fair value of the consideration received net of the amount of GST. Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revaluations. Page 35 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (h) Tax (i) Income taxes Income tax expense comprises current and deferred tax. Income tax expense is recognised in proﬁt or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable proﬁt, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable proﬁts will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax beneﬁt will be realised. (ii) Tax consolidation The Company has formed a tax consolidated group, from 1 July 2008. (iii) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash ﬂows are included in the statement of cash ﬂows on a gross basis. The GST components of cash ﬂows arising from investing and ﬁnancing activities which are recoverable from, or payable to, the ATO are classiﬁed as operating cash ﬂows. (i) Finance income Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in proﬁt or loss, using the effective interest method. (j) Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the proﬁt or loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the proﬁt or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees. Page 36 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (k) Segment reporting The consolidated entity determines and presents operating segments based on the information that internally is provided to the Managing Director, who is the consolidated entity’s chief operating decision maker. An operating segment is a component of the consolidated entity that engages in exploration activities which incurs expenses. An operating segment’s expenditures are reviewed regularly by the Managing Director to make decisions about resources to be allocated to the segment and assess its performance. Segment expenditure that is reported to the Managing Director includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters) and head ofﬁce expenses. Segment capital expenditure is the total cost incurred during the period on exploration and to acquire property, plant and equipment. (l) Demerger accounting treatment (i) Acquisition of entity under common control The acquisition of an entity under common control is completed at carrying value. That is, the assets and liabilities acquired are recognised at the carrying amounts previously recognised in the consolidated ﬁnancial statements. (ii) Demerger of wholly owned subsidiary The demerger of White Rock Minerals Ltd was accounted for in accordance with Interpretation 17 Distributions of Non-Cash Assets to Owners. Per this accounting guidance the distribution to Rex Minerals Ltd shareholders, the ordinary shares of White Rock Minerals Ltd, was measured at fair value at the date of demerger, based upon an independent external valuation. The difference between the book value of the White Rock Minerals assets at the demerger date and the fair value of the distribution to shareholders was recognised in the Income Statement. (m) New standards and interpretations not yet adopted The following standards, amendments to standards and interpretations have been identiﬁed as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2010, but have not been applied in preparing this ﬁnancial report: > > > > > AASB 39 Financial Instruments includes requirements for the classiﬁcation and measurement of ﬁnancial assets resulting from the ﬁrst part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 will become mandatory for the Group’s 30 June 2014 ﬁnancial statements. Retrospective application is generally required, although there are exceptions, particularly if the entity adopts the standard for the year ended 30 June 2012 or earlier. The Group has not yet determined the potential effect of the standard. AASB 24 Related Party Disclosures (revised December 2009) simpliﬁes and clariﬁes the intended meaning of the deﬁnition of a related party and provides a partial exemption from the disclosure requirements for government-related entities. The amendments, which will become mandatory for the Group’s 30 June 2011 ﬁnancial statements, are not expected to have a signiﬁcant impact on the ﬁnancial statements. AASB 2009-5 Further amendments to Australian Accounting Standards arising from the Annual Improvements Process affect various AASBs resulting in minor changes for presentation, disclosure, recognition and measurement purposes. The amendments, which become mandatory for the Group’s 20 June 2011 ﬁnancial statements, are not expected to have a signiﬁcant impact on the ﬁnancial statements. AASB2009-8 Amendments to Australian Accounting Standards – Group Cash-settled Share-based Payment Transactions resolves diversity in practice regarding the attribution of cash-settled share-based payments between different entities within a group. As a result of the amendments, AI 8 Scope of ASB 2 and AI 11 AASB 2 – Group and Treasury Share Transactions will be withdrawn from the application date. The amendments, which become mandatory for the Group’s 30 June 2011 ﬁnancial statements, are not expected to have a signiﬁcant impact on the ﬁnancial statements. AASB 2009-10 Amendments to Australian Accounting Standards – Classiﬁcation of Rights Issue [AASB 132] (October 2010) clarify that rights, options or warrants to acquire a ﬁxed number of an entity’s own equity instruments for a ﬁxed amount in any currency are equity instruments if the entity offers the rights, options or warrants pro-rata to all existing owners of the same class of its own non-derivative equity instruments. The amendments, which will become mandatory of the Group’s 30 June 2011 ﬁnancial statements, are not expected to have any impact on the ﬁnancial statements. Page 37 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (m) New standards and interpretations not yet adopted (continued) > > AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement – AASB 14 make amendments to Interpretation 14 AASB 19 – The Limit on a Deﬁned Beneﬁt Asset, Minimum Funding Requirements removing an unintended consequence arising from the treatment of the prepayments of future contributions in some circumstances when there is a minimum funding requirement. The amendments will become mandatory for the Group’s 20 June 2012 ﬁnancial statements, with retrospective application required. The amendments are not expected to have any impact on the ﬁnancial statements. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments addresses the accounting by an entity when the terms of a ﬁnancial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the ﬁnancial liability. IFRIC 19 will become mandatory for the Group’s 30 June 2011 ﬁnancial statements, with retrospective application required. The Group has not yet determined the potential effect of the interpretation. 4. DETERMINATION OF FAIR VALUES A number of the Group’s accounting policies and disclosures require the determination of fair value for ﬁnancial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes speciﬁc to that asset or liability. (i) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash ﬂows, discounted at the market rate of interest at the reporting date. (ii) Non-derivative ﬁnancial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash ﬂows, discounted at the market rate of interest at the reporting date. (iii) Share-based payments Equity-based compensation will be recognised as an expense in respect of the services received, or as capitalised exploration expenditure as appropriate. The fair value of options granted is recognised as an asset or expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees became unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the options, the vesting and performance criteria, the non- tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. 5. FINANCIAL RISK MANAGEMENT (i) Capital Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to maintain a strong capital base sufﬁcient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, or issue new shares. The Group’s focus has been to raise sufﬁcient funds through equity to fund exploration and evaluation activities and currently has no external borrowings. The Group encourages employees to be shareholders through the Employee Share Option Plan. There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. (ii) Credit risk Credit risk is the risk of ﬁnancial loss to the Group if a customer or counterparty to a ﬁnancial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities. For the Company it arises from receivables due from subsidiaries. Page 38 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 5. FINANCIAL RISK MANAGEMENT (continued) (iii) Guarantees Group policy is to provide ﬁnancial guarantees only to wholly-owned subsidiaries. (iv) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its ﬁnancial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufﬁcient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. (v) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of ﬁnancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. 6. SEGMENT REPORTING The consolidated entity had two reportable segments during the period, as described below, which are the consolidated entity’s areas of exploration focus. The exploration area’s offer different exploration potential and are managed separately due to their physical locations. For each of the exploration area’s the Managing Director reviews internal management reports on at least a quarterly basis. The following summary describes each of the exploration areas: > South Australia: Large scale copper project in South Australia > New South Wales: Copper, gold and silver project in New South Wales (disposed of during the year via the demerger of White Rock Minerals Ltd) Information about reportable segments South Australia New South Wales $ $ $ $ 30 Jun 2010 30 Jun 2009 30 Jun 2010 30 Jun 2009 Reportable segment assets 22,356,629 7,290,332 – 1,837,191 7. CASH ASSETS Bank balances Cash and cash equivalents in the statement of cash ﬂows Group 2010 $ Group 2009 $ 31,474,941 31,474,941 12,286,067 12,286,067 The Group’s exposure to interest rate risk and a sensitivity analysis for ﬁnancial assets and liabilities are disclosed in note 24. 8. RECEIVABLES Current Other receivables Total current receivables Group 2010 $ 229,478 229,478 Group 2009 $ 24,720 24,720 Page 39 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 9. OTHER ASSETS Current Prepayments Drilling contract prepayments (i) Non-current Prepaid deposit (ii) Total other assets Group 2010 $ 22,263 – 1,000,000 1,022,263 Group 2009 $ 9,468 1,261,540 – 1,271,008 (i) The drilling contract prepayment held in 2009 relates to shares that have been issued for drilling days yet to be provided to the Company. These days were fully provided during 2010. (ii) Deposit paid for the purchase of property, plant and equipment. 10. EXPLORATION AND EVALUATION EXPENDITURE Cost Balance at 1 July Acquisitions Additions Disposals Balance at 30 June Amortisation and impairment losses Balance at 1 July Balance at 30 June Carrying amounts At 1 July At 30 June Group 2010 $ 9,127,523 2,895,544 17,636,478 (7,380,768) 22,278,777 – – Group 2009 $ 5,207,774 350,000 5,691,191 (2,121,442) 9,127,523 – – 9,127,523 22,278,777 5,207,774 9,127,523 The recoverability of the carry amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest. 11. UNRECOGNISED DEFERRED TAX ASSETS Group 2010 $ Group 2009 $ Net deferred tax assets have not been recognised in respect of the following Tax losses Total tax assets/(liabilities) not recognised 11,633,257 11,633,257 5,470,741 5,470,741 The tax losses do not expire under current tax 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. Page 40 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 12. PROPERTY, PLANT AND EQUIPMENT Plant and Equipment Cost Balance at 1 July Acquisitions Disposals Balance at 30 June Depreciation and impairment losses Balance at 1 July Depreciation charge for the year Depreciation charged to exploration projects Disposals Balance at 30 June Carrying amounts At 1 July At 30 June 13. TRADE PAYABLES Current Other trade payables and accrued expenses Total current trade and other payables 14. EMPLOYEE BENEFITS Current Liability for annual leave Total employee beneﬁts Group 2010 $ 229,457 1,288,775 (1,022,558) 495,674 63,821 76,137 12,954 (30,909) 122,003 165,636 373,671 Group 2010 $ 1,808,670 1,808,670 Group 2010 $ 141,989 141,989 Group 2009 $ 364,171 48,719 (183,433) 229,457 28,043 39,321 1,545 (5,088) 63,821 336,128 165,636 Group 2009 $ 228,042 228,042 Group 2009 $ 82,938 82,938 Page 41 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 15. ISSUED CAPITAL Date of issue No of shares Issue price $ $ (i) Movements in shares on issue: Opening balance at 1 July 2009 Exercise of Options - funds received Exercise of Employee Options – funds received Issue of Ordinary Shares - Drake Resources Issue of Ordinary Shares - Entitlement Issue Less costs of the Entitlement Issue Issue of Ordinary Shares - Entitlement issue Less costs of the Entitlement Issue Issue of Ordinary Shares - Titeline Exercise of Employee Options – funds received Exercise of Employee Options – funds received Exercise of Founding Options – funds received Issue of Ordinary Shares - Titeline Exercise of Options – funds received Exercise of Employee Options – funds received Exercise of Employee Options – funds received Exercise of Founding Options – funds received Exercise of Founding Options – funds received Capital reduction via demerger 18/09/2009 18/09/2009 21/10/2009 27/10/2009 80,340,000 500,000 30,000 2,000,000 12,444,094 25/11/2009 12,416,906 23/12/2009 29/01/2010 29/01/2010 29/01/2010 5/03/2010 7/05/2010 7/05/2010 20/05/2010 20/05/2010 21/05/2010 1,114,152 120,000 600,000 1,000,000 1,894,308 1,000,000 120,000 60,000 500,000 250,000 Closing balance at 30 June 2010 114,389,460 Opening balance at 1 July 2008 Issue of ordinary shares – Titeline Issue of ordinary shares – Titeline Issue of ordinary shares – Capital Raising Less costs of the Capital Raising 21/10/2008 13/03/2009 13/03/2009 Issue of ordinary shares – Capital Raising 23/04/2009 Less costs of the Capital Raising Issue of ordinary shares – Capital Raising 27/05/2009 Less costs of the Capital Raising Closing balance at 30 June 2009 52,565,000 1,810,000 4,190,000 6,887,500 – 6,887,500 – 8,000,000 – 80,340,000 0.3 0.37 0.76 1.70 1.70 0.70 0.41 0.25 0.25 0.70 0.25 0.70 0.41 0.25 0.25 – – 0.40 – 0.40 – 0.70 – 24,711,046 150,000 10,950 1,515,000 21,154,960 (944,430) 21,108,740 (883,826) 779,907 49,200 150,000 250,000 1,326,016 250,000 84,000 24,600 125,000 62,500 (16,974,986) 52,948,677 9,195,395 1,472,435 3,408,565 2,755,000 (83,427) 2,755,000 (120,020) 5,600,000 (271,902) 24,711,046 Page 42 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 15. ISSUED CAPITAL (continued) Date of issue No of options Exercise price $ Expiry date 0.30 0.37 2.20 0.25 0.41 0.25 0.25 0.70 0.25 0.41 0.25 1.22 30/6/2011 30/6/2011 31/10/2012 30/6/2011 30/6/2011 30/6/2011 30/6/2011 31/5/2012 30/6/2011 30/6/2011 30/6/2011 24/5/2013 0.365 0.365 0.41 0.70 30/06/2011 30/06/2011 30/06/2011 31/05/2012 18/9/2009 18/9/2009 4/12/2009 29/1/2010 29/1/2010 29/1/2010 7/5/2010 7/5/2010 20/5/2010 20/5/2010 21/5/2010 3/6/2010 03/12/2007 03/12/2007 13/02/2009 19/06/2009 (ii) Movements in options on issue: Opening balance as at 1 July 2009 Exercise of Options Exercise of Options - employees Issue of Options – employees Exercise of Options- employees Exercise of Options- employees Exercise of Options – founding Exercise of Options Exercise of Options- employees Exercise of Options – founding Exercise of Options- employees Exercise of Options - founding Issue of Options – employees Closing balance as at 30 June 2010 Opening balance at 1 July 2008 Lapsing of options – to employees (30/08/2009) Lapsing of options – to employees (03/09/2009) Issue of options – to employees Issue of options – to employees Closing balance at 30 June 2009 (iii) Movements in share based payment reserve: Opening balance at 1 July 2009 Employee share based payments – to employees Options issued – for contract drilling services Transferred to Retained Earnings Closing balance at 30 June 2010 Opening balance at 1 July 2008 Employee share based payments – to employees Options issued – for contract drilling services Transferred to Retained Earnings Closing balance at 30 June 2009 7,860,000 (500,000) (30,000) 240,000 (600,000) (120,000) (1,000,000) (1,000,000) (120,000) (500,000) (60,000) (250,000) 600,000 4,520,000 7,500,000 (60,000) (60,000) 180,000 300,000 7,860,000 $ 552,130 271,200 28,659 (331,909) 520,080 362,781 154,315 55,533 (20,499) 552,130 Page 43 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 16. FINANCE INCOME AND EXPENSE Finance income – interest income on bank deposits Finance expense Net ﬁnance income and expense 17. OTHER INCOME Net gain on sale of property, plant and equipment Total other income 18. EMPLOYEE BENEFITS EXPENSE Wages and salaries Share based payments expense Increase in liability for annual leave Total employee beneﬁts expense Group 2010 $ 1,433,666 – 1,433,666 Group 2010 $ 85 85 Group 2010 $ 550,069 59,808 59,051 668,928 Group 2009 $ 246,809 – 246,809 Group 2009 $ – – Group 2009 $ 578,011 69,505 53,465 700,981 Page 44 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 19. CONTROLLED ENTITY DISPOSAL The following controlled entity was disposed of: 2010: On 15 June 2010, White Rock Minerals Ltd was demerged from the Rex Group, following approval by Rex Shareholders at a General Meeting held on 3 June 2010. Existing Rex Shareholders received shares in White Rock on a 1:3 basis. Prior to the demerger being completed, on 15 June 2010, White Rock acquired Rex’s wholly owned subsidiary Rex Minerals (NSW) Pty Ltd (now named White Rock Minerals (MTC) Pty Ltd), which includes the Mt Carrington project in northern NSW. The Mt Carrington project is, as a result, no longer part of the Rex Group. 2009: On 20 November 2008, sale of Rex Minerals (Victoria) Pty Ltd. Consideration Cash Received Disposal Costs Inﬂow/(outﬂow) of cash Other consideration (i) Distribution of White Rock shares Net Consideration Carrying value of net assets of controlled entity disposed of: (ii) Cash assets Property, plant and equipment Exploration and evaluation expenditure Provisions Proﬁt/(Loss) on disposal of controlled entity Group 2010 $ – (98,212) (98,212) 16,974,986 16,876,744 6,795,404 974,985 7,380,768 (795,400) 14,355,757 2,521,017 Group 2009 $ 1,480,000 (68,031) 1,411,969 – 1,411,969 – 178,344 2,121,442 – 2,299,786 (887,817) (i) The distribution of the White Rock shares occurred at fair value, based on an independent valuation undertaken in June 2010 for Rex. (ii) The carrying value of the assets of the controlled entities disposed of, are all recorded at cost. Page 45 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 20. INCOME TAX EXPENSE Numerical reconciliation between tax expense and pre-tax accounting loss. Proﬁt/(Loss) for the period 2,327,007 (1,851,166) Income tax using the domestic corporation tax rate of 30% (2009: 30%) 698,102 (555,350) Group 2010 $ Group 2009 $ Increase in income tax due to: Non-deductible expenses Decrease in income tax expense due to: Non-assessable proﬁt on demerger Effect of tax losses not recognised Total income tax expense (beneﬁt) on pre-tax net proﬁt 21. EARNINGS PER SHARE Earnings Per Share Basic EPS Diluted EPS per share – cents (a) Basic loss per share 91,522 63,289 (785,769) (3,855) – – (492,061) – Group 2010 $ 2.48 2.36 Group 2009 $ (3.13) (3.13) The calculation of basic earnings/(loss) per share (EPS) at 30 June 2010 was based on the proﬁt attributable to ordinary equity holders of $2,327,007 (2009: loss $1,851,166) and a weighted average number of ordinary shares outstanding during the ﬁnancial year ended 30 June 2010 of 93,887,179 (2009 of 59,227,171). (b) Diluted loss per share The calculation of diluted earnings/(loss) per share (EPS) at 30 June 2010 was based on the proﬁt attributable to ordinary equity holders of $2,327,007 (2009: n/a) and a weighted average number of ordinary shares outstanding after adjustment for unexercised options during the ﬁnancial year ended 30 June 2010 of 98,407,179 (2009: n/a). Page 46 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 22. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Cash ﬂows from operating activities Loss for the period Adjustments for non cash items: Depreciation Share based payment transactions Adjustments for other items: Proceeds from sale of property plant and equipment Proﬁt on demerger before disposal costs Loss on sale of subsidiary Operating loss before changes in working capital and provisions (Increase)/decrease in trade and other receivables (Decrease)/increase in trade and other payables (Decrease)/increase in employee beneﬁts Net cash (used in)/from operating activities Group 2010 $ Group 2009 $ 2,327,007 (1,851,166) 76,137 59,808 (17,000) (2,619,229) – (173,276) (30,577) 417,970 59,051 273,168 39,321 69,505 – – 887,817 (854,523) 108,550 (136,886) 53,465 (829,394) During the ﬁnancial year, the Group had the following non-cash investing and ﬁnancing activities which are not reﬂected in the statement of cash ﬂows (refer note 15): (a) (b) (c) Issue of options to employees, some of which have been capitalised as exploration expenditure. Drilling services provided by Titeline drilling for a combination of share and option consideration. Issue of shares to Drake Resources as part of the purchase consideration for the Mt Carrington Project. Page 47 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 23. SHARE BASED PAYMENTS The Company established a share option plan that entitles employees (other than Directors) to purchase shares in the Company. The following options were granted during the ﬁnancial year ending 30 June 2010: Employees entitled Grant date No of options Expiry date Key management personnel (A) Other employees (B) Other employees (A) Total 3/6/2010 3/12/2009 3/6/2010 147,600 240,000 452,400 840,000 24/05/2013 31/10/2012 24/05/2013 The following options were granted during the ﬁnancial year ending 30 June 2009: Employees entitled Grant date No of options Expiry date Key management personnel (C) Other employees (C) Other employees (D) Total 13/02/2009 13/02/2009 19/06/2009 120,000 60,000 300,000 480,000 30/06/2011 30/06/2011 31/05/2012 Key management personnel and employee options (A) are exercisable at a price of $1.22 each, have no vesting period and expire on 24 May 2013. Employee options (B) are exercisable at a price of $2.052 each, have no vesting period and expire on 31 October 2012. Key management personnel and employee options (C) are exercisable at a price of 41 cents each, vesting two thirds immediately, one third on 30 June 2009 and expiring on 30 June 2011. Employee options (D) are exercisable at a price of 70 cents each, have no vesting period and expire on 31 May 2012. Each option entitles the holder to subscribe for 1 ordinary share in the Company. All options vest on the vesting date, unless the options have not vested and the employee is terminated, in which case these options will lapse. These options do not entitle the holder to participate in any share issue of the Company or any other related entity. (a) Fair value of share options and assumptions The fair value of the unlisted options have been calculated at the date of the grant based upon the Black Scholes option pricing model. The fair value is allocated to each reporting evening over the period from grant date to vesting date. The value disclosed below (employee expenses) is the portion of the fair value of the options allocated to this reporting period. Employees entitled Fair value at grant date Share price at date of grant Exercise price Expected volatility Option life (years) Risk free interest rate (A) $0.28 $1.067 $1.22 40% 2.81 4.67% (B) $0.43 $1.84 $2.052 40% 2.66 4.61% (C) $0.2960 $0.51 $0.41 90% 2.37 2.85% (D) $0.2235 $0.57 $0.70 70% 2.50 4.36% The common method for valuing options is the Black Scholes option pricing model. Black Scholes option pricing model looks at the past share price as an indicator of the future share price. Black Scholes option pricing model assumes that high volatility in the share prices is an indicator for a higher valuation as there is a greater chance of the share price moving signiﬁcantly (upwards or downwards). The model also assumes that the options are exercised at or near the expiry date of the options. Page 48 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 23. SHARE BASED PAYMENTS (continued) (b) Employee expenses Share options granted in 2008 – recognised in income statement Share options granted in 2009 – recognised in income statement Share options granted in 2009 – capitalised to exploration projects Share options granted in 2010 – recognised in income statement Share options granted in 2010 – capitalised to exploration projects Total expense recognised as employee costs Group 2010 $ – – – 59,808 211,392 271,200 Group 2009 $ 33,985 35,520 84,810 – – 154,315 (c) Demerger share issue As part of the demerger of White Rock Minerals Ltd from the Rex Group, Rex distributed its investment in White Rock to existing Rex shareholders on a 1:3 basis, resulting in the distribution of 38,130,533 shares on 15 June 2010, at a fair value of $16,974,744. 24. FINANCIAL INSTRUMENTS Exposure to credit risk and interest rate risks arose in the normal course of the Group’s business. (a) Credit risk Management monitors the exposure to credit risk on an ongoing basis. The Company does not require collateral in respect of ﬁnancial assets. At reporting date, cash is held with a reputable ﬁnancial institution. The maximum exposure to credit risk is represented by the carrying amount of each ﬁnancial asset in the balance sheet. (b) Fair value The ﬁnancial assets and ﬁnancial liabilities included in assets and liabilities approximate net fair values. (c) Liquidity risk The following are the contractual maturities of ﬁnancial liabilities excluding derivatives. Financial liabilities Group 2010 Trade and other payables 2009 Trade and other payables Carrying amount $ Contractual cash ﬂows $ 1 year or less $ 1-2 years $ 1,808,670 (1,808,670) (1,808,670) 1,808,670 (1,808,670) (1,808,670) 228,042 (228,042) 228,042 (228,042) (228,042) (228,042) – – – – Page 49 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 24. FINANCIAL INSTRUMENTS (continued) (d) Interest rate risk The Group’s exposure to market interest rates relates primarily to the Group’s short-term deposits. At balance date, the Group had the following ﬁnancial assets exposed to variable interest rate risk: Group 2010 $ Group 2009 $ Cash and cash equivalents 31,474,941 12,286,067 At balance date, the Group has no ﬁnancial liabilities exposed to variable interest rate risks. The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. At 30 June 2010, if interest rates had moved, as illustrated in the table below, with all other variables constant, proﬁt and or loss and equity would have been affected as follows: Group +1% (100 basis points) -1% (100 basis points) > Proﬁt or loss higher/(lower) 2010 $ 2009 $ 336,808 (336,808) 48,021 (48,021) > Equity higher/(lower) 2010 $ – – 2009 $ – – The movements in proﬁt or loss are due to higher/lower interest earnings from variable rate cash balances. The movements in equity are directly linked to movements in the Income Statement. (e) Impairment losses None of the Group’s receivables are post due (2009: nil). 25. EXPLORATION EXPENDITURE COMMITMENTS In order to maintain current rights of tenure to exploration tenements, the Company is required to perform minimum exploration work to meet the minimum expenditure requirements. These obligations are expected to be fulﬁlled in the normal course of operations. Mining interests may be relinquished or joint ventured to reduce this amount. The various State governments have the authority to defer, waive or amend the minimum expenditure requirements. Not later than one year Later than one year but not later than ﬁve years 26. CAPITAL EXPENDITURE COMMITMENTS Not later than one year Later than one year but not later than ﬁve years Group 2010 $ 682,000 2,728,000 Group 2010 $ 3,600,000 – Group 2009 $ 835,000 3,340,000 Group 2009 $ – – Page 50 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 27. CONTINGENCIES The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacriﬁce of economic beneﬁt will be required or the amount is not capable of reliable measurement. There are no other contingent liabilities or assets at the date of this report. 28. KEY MANAGEMENT PERSONNEL DISCLOSURES The following were key management personnel of the Group at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period. Name Non-Executive Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips1 Executive Directors Mr Steven Olsen Mr Geoffrey Lowe2 Executives Ms Amber Rivamonte Ms Janet Mason Position held Appointment detail Chairperson Chairperson – Audit Committee Non-Executive Director Appointed 18 April 2007 Appointed 16 May 2007 Appointed 12 February 2010 Managing Director Executive Director - Exploration Appointed 13 May 2007 Appointed 27 August 2007 Company Secretary CFO Appointed 16 July 2007 Appointed 19 December 2008 1Mr Phillips was appointed Director on 12 February 2010, and resigned on 15 June 2010. 2Mr Lowe was appointed Exploration Manager on 27 August 2007 and subsequently appointed Executive Director – Exploration on 12 February 2010. Resigned on 15 June 2010. There have been no changes to key management personnel between 1 July 2010 and the date of this report. The key management personnel compensation included in “Employee Beneﬁts Expenses” (see note 18) and “Exploration and Evaluation” (see note 10) are as follows: Short term employee beneﬁts Post employment beneﬁts Share based payments Group 2010 $ 800,321 72,500 41,328 914,149 Group 2009 $ 667,230 58,700 60,772 786,702 (a) Key management personnel compensation disclosures Information regarding individual Directors and Executives compensation and some equity instrument disclosures as permitted by Corporation Regulations 2M.3.03 and 2M.6.04 are provided in the Remuneration Report section of the Directors’ Report on pages 23 to 27. No key management personnel has entered into a material contract or related party transactions with the Group since the end of the previous ﬁnancial year and there were no material contracts involving Directors’ interests existing at year end. Page 51 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 28. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued) (b) Options over equity instruments The movement during the reporting period in the number of options over ordinary shares in Rex Minerals Ltd held, directly, indirectly or beneﬁcially, by each key management person, including their related parties, is as follows: Held at Exercised during year 1 July 2009 Granted as compensation Vested during year Held at Vested and 30 June exercisable at 2010 30 June 2010 Note (i) 1,000,000 (ii) 1,000,000 – 1,500,000 600,000 (iii) 750,000 – – 1,000,000 – – – – – – – – – – 200,000 500,000 1,000,000 – 500,000 600,000 250,000 1,000,000 – 500,000 600,000 600,000 120,000 600,000 120,000 73,800 73,800 273,800 113,800 73,800 73,800 73,800 73,800 Held at 1 July 2008 Exercised during year Granted as compensation Vested during year Held at Vested and 30 June exercisable at 2009 30 June 2009 Note 2010 Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe Executives Ms Amber Rivamonte Ms Janet Mason 2009 Directors Mr Paul Chapman Mr Richard Laufmann Mr Steven Olsen (i) (iv) (ii) (iv) (iii) (iv) 1,000,000 1,000,000 1,500,000 Executives Ms Amber Rivamonte Mr Geoffrey Lowe Ms Janet Mason 600,000 600,000 – – – – – – – – – – – – – 1,000,000 1,000,000 1,500,000 1,000,000 1,000,000 1,500,000 – – 120,000 200,000 200,000 80,000 600,000 600,000 120,000 400,000 400,000 80,000 Options over ordinary shares that were held by related parties of key management personnel are disclosed below. (i) Held indirectly through Stone Poneys Nominees Pty Ltd as trustee for the Chapman Superannuation Fund and the Chapman Investment Fund. All of these options were acquired in 2007 as founding options and not granted as compensation to key management personnel. (ii) Held indirectly through Natalie Laufmann. All of these options were acquired in 2007 as founding options and not granted as compensation to key management personnel. (iii) Held indirectly through S&S Olsen Pty Ltd as trustee for the Olsen Family Trust. All of these options were acquired in 2007 as founding options and not granted as compensation to key management personnel. (iv) Interests held are subject to ASX escrow until 24 months after listing (ie 20 September 2009). Page 52 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 28. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued) (c) Movements in shares The movement during the reporting period in the number of ordinary shares in Rex Minerals Ltd held, directly, indirectly or beneﬁcially, by key management person, including their related parties, is as follows: Note (i) (ii) (iii) (iv) 2010 Directors Mr Paul Chapman Mr Richard Laufmann Mr Brian Phillips Mr Steven Olsen Mr Geoffrey Lowe Executives Ms Amber Rivamonte Ms Janet Mason Held at 1 July 2009 Purchases Received on Exercise of options Sales Held at 30 June 2010 2,500,000 2,500,000 311,409 4,500,000 10,000 20,000 – 80,000 – – 750,000 – – 1,000,000 – – – 70,000 – 10,000 3,270,000 2,500,000 321,409 5,500,000 – 250,000 10,000 – – 600,000 120,000 – – 850,000 130,000 Note Held at 1 July 2008 Purchases Received on Exercise of options Sales Held at 30 June 2009 2009 Directors Mr Paul Chapman Mr Richard Laufmann Mr Steven Olsen (i) (ii) (iii) 2,500,000 2,500,000 4,500,000 Executives Ms Amber Rivamonte Mr Geoffrey Lowe Ms Janet Mason 250,000 10,000 10,000 – – – – – – – – – – – – – – – – – – 2,500,000 2,500,000 4,500,000 250,000 10,000 10,000 Shares that were held by related parties of key management personnel are disclosed below. (i) Held indirectly through Stone Poneys Nominees Pty Ltd as trustee for the Chapman Superannuation Fund and the Chapman Investment Fund. 2,500,000 shares are founder shares and were acquired at $0.01 each. (ii) Held indirectly through Natalie Laufmann. 2,500,000 shares are founder shares and were acquired at $0.01 each. (iii) Held indirectly through Thylacine Pty Ltd as trustee for the Brian Phillips Superannuation Fund. (iv) Held indirectly through S&S Olsen Pty Ltd as trustee for the Olsen Family Trust. 4,500,000 shares are founder shares and were acquired at $0.01 each. (d) Director related entities There were no other transactions with Director related entities. Page 53 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 29. RELATED PARTIES (a) Identity of related parties The Group has a related party relationship with its subsidiaries (see note 30), and with its key management personnel (see note 28). (b) Subsidiaries Loans are made by the Company to wholly owned subsidiaries. Loans outstanding between the Company and its subsidiaries have no ﬁxed date of repayment but are repayable at call, and are non-interest bearing. During the year ended 30 June 2010, such loans totalled $22,032,883 (2009: $2,759,247). 30. GROUP ENTITIES Parent entity Rex Minerals Ltd Subsidiaries Rex Minerals (SA) Pty Ltd Rex Minerals (Iron Ore) Pty Ltd Rex Minerals (NSW) Pty Ltd Rex Hillside (Property) Pty Ltd Country of Incorporation Ownership Interest 2009 2010 Australia Australia Australia Australia Australia 100% 100% – 100% 100% 100% 100% – White Rock Minerals Ltd was incorporated on 26 March 2010 as a subsidiary of Rex Minerals Ltd. Prior to the demerger being completed, White Rock acquired Rex Minerals (NSW) Pty Ltd. As a result, when the demerger of White Rock took place on 15 June 2010, Rex no longer has any interest in either White Rock or Rex Minerals (NSW) (refer note 19). The subsidiaries are small proprietary companies and are not required to prepare ﬁnancial statements. Consequently no individual audit reports have been issued for them. 31. PARENT ENTITY DISCLOSURES As at, and throughout, the period ending 30 June 2010 the parent company of the Group was Rex Minerals Ltd. Result of the parent entity Proﬁt for the period Other comprehensive income Total comprehensive income for the period Financial position of the parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising of: Share capital Reserves Retained earnings Total equity Group 2010 $ Group 2009 $ 2,327,007 – 2,327,007 (1,851,816) – (1,851,816) 31,726,682 54,055,415 13,581,795 22,713,896 626,543 626,543 149,522 149,522 51,101,864 520,080 (39,885) 53,428,871 24,711,046 552,130 (2,698,802) 22,564,374 Page 54 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 32. SUBSEQUENT EVENTS On 2 August 2010, Rex Minerals Ltd issued 160,000 fully paid ordinary shares, following the exercise of options. On 3 September 2010, Rex Minerals Ltd issued 60,000 fully paid ordinary shares, following the exercise of options. There have been no additional subsequent events to 30 June 2010 to disclose at the date of this report. 33. AUDITORS’ REMUNERATION Group 2010 $ 34,500 – Group 2009 $ 34,497 – KPMG Australia Audit services Other services REX MINERALS LTD DIRECTORS’ DECLARATION 1 In the opinion of the directors of Rex Minerals Ltd (the Company): (a) the consolidated ﬁnancial statements and notes and the Remuneration report, identiﬁed within the Directors’ report, are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Group’s ﬁnancial position as at 30 June 2010 and of its performance for the ﬁnancial year ended on that date; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2 3 The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive ofﬁcer and chief ﬁnancial ofﬁcer for the ﬁnancial year ended 30 June 2010. The directors draw attention to Note 2 to the consolidated ﬁnancial statements, which includes a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of the directors: Steven Olsen Managing Director Dated at Melbourne this 24th day of September 2010. Page 55 REX MINERALS LTD LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Rex Minerals Limited I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2010 there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Alison Kitchen Partner Melbourne 24 September 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Page 56 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF REX MINERALS LIMITED Independent auditor’s report to the members of Rex Minerals Limited Report on the financial report We have audited the accompanying financial report of the Group comprising Rex Minerals Limited (the Company) and the entities it controlled at the year’s end or from time to time during the financial year, which comprises the consolidated statement of financial position as at 30 June 2010, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a description of significant accounting policies and other explanatory notes 1 to 33 and the directors’ declaration. Directors’ responsibility for the financial report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 2 the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Group’s financial position and of its performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Page 57 REX MINERALS LTD INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF REX MINERALS LIMITED Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion: (a) the financial report of the Group is in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Group’s financial position as at 30 June 2010 and of its performance for the year ended on that date; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2. Report on the remuneration report We have audited the Remuneration Report, identified within the directors’ report, for the year ended 30 June 2010. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards. Auditor’s opinion In our opinion, the remuneration report of Rex Minerals Limited for the year ended 30 June 2010, complies with Section 300A of the Corporations Act 2001. KPMG Alison Kitchen Partner Melbourne 24 September 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Page 58 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < REX MINERALS LTD ADDITIONAL SHAREHOLDER INFORMATION Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. (a) Substantial shareholders lodged with the Company as at 03 September 2010 Name of Ordinary Shareholder Number of Shares % of Shares Held Greenstone Property Pty Ltd Grand South Development Acorn Capital 10,008,460 9,100,000 7,436,708 8.74% 7.94% 6.49% (b) Listing of 20 largest shareholders as at 03 September 2010 Rank Name Designation Number of Shares Held % of Issued Capital J P Morgan Nominees Australia Ltd Grand South Development Limited National Nominees Ltd Greenstone Property Pty Ltd S & S Olsen PL HSBC Custody Nominees Aust Ltd Avoca Resources Ltd Natalie Laufmann Greenstone Property Pty Ltd Stone Poneys Nominees PL Stone Poneys Nominees PL Philippa Jean Laufmann Bond Street Custodians Ltd Brispot Nominees PL Amber Rivamonte RBC Dexis Investor Services Elliott Brian W & LJ Citicorp Nom PL James Ronald Selkirk HSBC Custody Nominees Aust Ltd 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total Chapman S/F A/C Chapman Inv Fund Laufmann Family A/C Macquarie Smaller House Head Nom No BK Cust Account BW Elliott Fam S/F 13,241,196 9,100,000 8,177,472 8,008,460 5,500,000 5,261,592 3,125,218 2,500,000 2,000,000 1,770,000 1,500,000 1,150,000 1,097,777 1,025,000 850,000 849,693 709,475 706,036 700,000 696,611 67,968,530 11.56% 7.94% 7.14% 6.99% 4.80% 4.59% 2.73% 2.18% 1.75% 1.55% 1.31% 1.00% 0.96% 0.89% 0.74% 0.74% 0.62% 0.62% 0.61% 0.61% 59.33% (c) Distribution of shareholders as at 03 September 2010 Range Total Holders Units % of Issued Capital 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 - over Total 436 933 438 708 117 291,309 2,707,314 3,482,613 21,633,777 86,434,447 2,632 114,549,460 0.25% 2.36% 3.04% 18.89% 75.46% 100.00% (d) Number of shareholders holding less than a marketable parcel as at 03 September 2010 32 (e) Voting rights On a show of hands every shareholder of fully paid ordinary shares present in person or by proxy shall have one vote and upon a poll, each share shall have one vote. (f) Stock exchange listing Rex Minerals Ltd is listed on the Australian Stock Exchange. The Company’s ASX code is RXM. Page 59 REX MINERALS LTD NOTES Page 60 R e x M i n e r a l s L t d > A N N U A L R E P O R T 2 0 1 0 < Designed and Produced by Celtink Creative Ballarat. info@celtink.com The internal pages of this Annual Report are Printed on 100% Recycled Paper > FSC Recycled: Manufactured with 100% Recycled Content > Recycled Fibre: 100% Post Consumer Recycled Waste > PCF: Process Chlorine Free Bleaching > ISO 14001: International Environmental Management Certification ABN 12 124 960 523 contact A 209 Dana Street Ballarat Victoria 3350 Australia T (03) 5337 4000 F (03) 5331 1776 P PO Box 626W Ballarat West Victoria 3350 Australia info@rexminerals.com.au E W www.rexminerals.com.au

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