Rex Minerals Limited Annual Report 2011

Plain-text annual report

annual report 2011 Drill Discover Define corporate directory DIRECTORS Paul Chapman (Chairperson) Steven Olsen (Managing Director) Richard Laufmann Alister Maitland COMPANY SECRETARY Amber Rivamonte PRINCIPAL and REGISTERED OFFICE 209 Dana Street Ballarat Victoria 3350 SHARE REGISTRARS Computershare Investor Services Pty Limited Yarra Falls 452 Johnstson Street Abbotsford Victoria 3067 AUDITORS KPMG 147 Collins Street Melbourne Victoria 3000 SITE OFFICES 5A First Street Ardrossan South Australia 5571 86 King William Road Goodwood South Australia 5034 BANKERS ANZ Banking Group Limited 927 Sturt Street Ballarat Victoria 3350 Ord Minett Limited 120 Collins Street Melbourne Victoria 3000 CONTACT DETAILS Rex Minerals Ltd PO Box 626W Ballarat West Victoria 3350 Telephone +61 (0) 3 5337 4000 Facsimile +61 (0) 3 5331 1776 Email info@rexminerals.com.au operation location LEGAL ADVISORS Baker McKenzie 181 William Sreet Melbourne Victoria 3000 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 Drill Discover Define annual report 2011 ABN 12 124 960 523 TABLE OF CONTENTS Rex Minerals Ltd Annual Report for the year ended 30 June 2011 INTRODUCTION LETTER FROM THE CHAIRMAN AND MANAGING DIRECTOR REVIEW OF OPERATIONS EXPLORATION PROJECTS TENEMENTS SCHEDULE DIRECTORS’ REPORT STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION LEAD AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDIT REPORT ADDITIONAL SHAREHOLDER INFORMATION 1 2 3 4 15 16 34 35 36 37 38 60 61 62 64 Introduction Rex Minerals Ltd (“Rex” or “the Company”) is an Australian minerals exploration and development company with large- scale copper-gold projects on the Yorke Peninsula, South Australia. In 2008 Rex discovered the Hillside copper-gold project beneath shallow cover rocks approximately 12 kilometres from the port of Ardrossan. Since then the Company has completed three Mineral Resource estimates and in July 2011 released details of a conceptual two-stage mine development plan with output at stage two reaching 70,000 tonne per annum of copper. A pre-feasibilty study and further inﬁll Resource deﬁnition drilling are now underway at the Hillside project. Hillside is the ﬁrst project in the Company’s plans to discover and develop multiple large-scale copper-gold deposits along the Pine Point Fault on the Yorke Peninsula. Highlights Goals for 2012 Growing Resource – In the space of 18 months, dedicated Resource deﬁnition drilling (with an average of 5 to 6 drill rigs) has produced three Resource updates to the market, with the latest results announced on 27 July 2011. The results recently announced deﬁned an Indicated and Inferred Mineral Resource totalling 217 million tonnes @ 0.7% copper, 0.2g/t gold and 12.4% iron. This equates to 1.5 million tonnes of copper and 1.4 million ounces of gold, which is more than double the maiden Resource estimate which was made 12 months earlier. Target Size – Rex has drilled an estimated 80% of the area deﬁned at Hillside based on the magnetic feature that has been used to target copper mineralisation. The total target size for Hillside now stands at between 1.6 and 2.1 million tonnes of contained copper making it one of Australia’s largest copper projects. Economic Studies – A conceptual study, completed in July 2011, identiﬁed a number of mining options and cost parameters based on the existing Mineral Resource at Hillside. The study shows the potential for a project with a 12 year mine life and copper production increasing to over 70,000 tonnes per annum plus additional gold and magnetite by-products. Equity Raising – The Company successfully raised $87 million in October 2010, providing Rex with funding to deliver both a pre- feasibility, subsequent feasibility study and additional capacity to test the many large-scale copper-gold targets in close proximity to Hillside. > Resource – Complete Resource drilling at Hillside focussing on two key outcomes: (cid:127) Detailed ore deﬁnition for the purpose of upgrading the Minerals Resource into a Reserve; (cid:127) Expand on the existing Resource, targeting a range of 1.6Mt to 2.1Mt. > New Discovery – Effectively test the highest priority targets generated regionally on the Yorke Peninsula. > Economics – Complete the Hillside pre- feasibility study, targeting production of more than 70,000 tonnes per annum of copper and associated by-products of gold and magnetite for a minimum 10 year mine life. > Financing – Commence assessing ﬁnancing options for Hillside. > Organisation – Plan for transition of the organisation from explorer to developer to producer. 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 2011 Dear Fellow Shareholder, Rex Minerals Ltd (“Rex”) has achieved a number of milestones this year which has left the Company strongly placed despite the ﬁnancial volatility and turmoil which has troubled world markets in recent months. Crucially, Rex retains 100% ownership of its ﬂagship projects on South Australia’s Yorke Peninsula and is fully funded all the way through to the bankable feasibility stage. The Hillside conceptual study recently announced by Rex represents the base line against which all future discoveries will be measured and potentially developed. The importance of Rex’s $87 million capital raising in late 2010 has been underscored recently as world equity markets have become more volatile for raising funds. Funding options often change over time and Rex scaled its last capital raising to ensure the Company could ﬁnance its ﬂagship projects all the way through to a development decision. As pre-feasibility studies and subsequent bankable feasibility studies are completed, more ﬁnancing options will become available to the Company. Notwithstanding market volatility, we remain positive about the future for copper and iron ore as these metals are required for growth and gold is increasingly important as a portfolio diversiﬁer. Rex has been drilling out the Hillside deposit for 18 months and in that time has discovered 1.5 million tonnes of copper and 1.4 million ounces of gold. This is a remarkable discovery rate. Maintaining the gruelling work schedule required to deliver this outcome is a credit to the Rex team. It is the substantial Resource base and further exploration targets, which have been deﬁned in the area near Hillside, that give Rex substantial opportunities for growth and development. At Hillside, Rex is now at the stage where decisions regarding the future development plan need to be made. As part of this process, Rex completed a conceptual study, which is the ﬁrst look at the opportunities and issues that need to be addressed before a more detailed mine plan (feasibility studies) can commence. The results from this work were very encouraging and highlighted a number of key features about Rex’s ﬂagship project. The initial mine plan identiﬁed a two stage process to reach over 70,000 tonnes per annum copper with a total mine life of 12 years. The metallurgical test work indicated that the copper- gold and magnetite concentrates which could be produced at Hillside are low in impurities and are potentially attractive to a large number of international customers. The study results also indicated that the Hillside project will have competitive cash costs, estimated to be close to the world average of $1.12 after by-product credits (GFMS Copper Survey 2011 report). It is important to recognise that this preliminary assessment of the mine plan at Hillside is restricted to the information that was available in the early part of 2011. Since that time, Rex has continued to identify further copper extensions at Hillside and already, growth opportunities above and beyond the conceptual study have been identiﬁed. Further exploration results and other opportunities will all become part of the Hillside pre-feasibility study which is due for completion in mid 2012. Aside from the Hillside project, considerable evidence is building for multiple large-scale copper-gold deposits to exist in the region. The regional potential remains an exciting part of the growth opportunity for the Company and Rex will continue to pursue these opportunities whilst advancing the Hillside feasibility studies. We maintain our strategy of delivering value to shareholders with both exploration and development success. 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 Rex. Rex is also proud to be a member of the community on the Yorke Peninsula and we look forward to increasing our contribution to the community and many other businesses and services in the region as the project develops. Yours sincerely, Paul Chapman Chairman Steven Olsen Managing Director REX MINERALS LTD REVIEW OF OPERATIONS – for the year ended 30 June 2011 Rex Minerals Ltd (“Rex”) has completed the following important milestones over the year. October 2010 Capital raising of $87 million at a share price of $2.50. December 2010 Announcement of updated Mineral Resource Estimate of 170Mt @ 0.7% copper and 0.2g/t gold. December 2010 Announcement of metallurgical test work results which show high copper recoveries (94%) for the dominant ore type at Hillside. June 2011 June 2011 Completed Resource deﬁnition drilling for a new Mineral Resource estimate. Updated Inferred and Indicated Mineral Resource estimate of 217Mt @0.7% copper, 0.2g/t gold and 12.4% iron (announced on 27 July 2011). Completed work on conceptual mining studies. Results announced on 27 July 2011 deﬁning a 12 year mine plan with production ramping up to over 70,000 tonnes of copper per annum, 50,000 ounces of gold and 1.3 million tonnes of iron ore. REX MINERALS LTD EXPLORATION PROJECTS – for the year ended 30 June 2011 HILLSIDE COPPER-GOLD PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA The Hillside project (Figure 1) was the ﬁrst target to be drill tested by Rex on the Yorke Peninsula 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. Figure 1: Location diagram of the Hillside Project and Rex’s exploration licences on the Yorke Peninsula, South Australia. Page 3 REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 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. In late 2009 Rex raised $42 million leading to the commencement of a large resource drilling campaign at Hillside. The Resource deﬁnition drilling has been ongoing since January 2010, with the latest Mineral Resource estimate published on 27 July 2011. The current Minerals Resource estimate is summarised in Table 1 below. Table 1: Hillside Inferred and Indicated Mineral Resource summary Zone Supergene Oxide Resource Category Indicated Inferred Supergene Sulphide Indicated Inferred Indicated Inferred Primary Sulphide Total Tonnes (Mt) Copper (%)* 3 15 1 7 31 160 217 0.6 0.6 0.7 0.7 0.6 0.7 0.7 Gold (g/t) 0.2 0.2 0.3 0.2 0.2 0.2 0.2 Iron (%) 11** 12.1 Contained Copper (t) Contained Gold (oz) 18,000 19,290 90,000 96,452 12.9** 7,000 9,645 13.7 49,000 45,011 13.2** 186,000 199,335 12.3 1,120,000 1,028,824 12.4 1,500,000 1,400,000 *Copper Resources reported above 0.2% cut-off grade. *Grade is rounded to one signiﬁcant ﬁgure in accordance with the guidance of the JORC Code 2004. ** Iron component of the Indicated Resource is classiﬁed as an Inferred Resource. Please refer to the competent person's report at the end of this section. Figure 2 shows the growth of the Hillside Resource between July 2010 and July 2011, as well as the total target range for the Hillside project. Average assay results have remained relatively consistent throughout the drilling campaign and the total target size at Hillside lies between 1.6Mt and 2.1Mt of copper (represented by a range of 260Mt to 300Mt at a grade range of 0.6% to 0.7% copper and similar gold grades)1. The range identiﬁed as the total target for the Hillside Project is based on the sum of the existing Resource plus the exploration target range associated with the remaining magnetic anomaly that is yet to be drill tested. Given the signiﬁcant presence of magnetite throughout the Hillside deposit, metallurgical studies were completed to assess the potential for an iron ore product to be produced. The results were favourable and indicated that an iron ore concentrate could be produced cheaply with a high iron content (>65%) and with low impurities. Therefore, in July 2011, an assessment of the iron content for the Hillside deposit was given for the ﬁrst time. However, the iron content itself is not very meaningful without understanding what percentage of iron is actually recoverable into an iron ore concentrate. To give these results some more meaning, an assessment of the copper equivalent grade is shown in Table 2, which allows for the recoverable copper, gold and iron, based on the metallurgical test work completed at Hillside. MinEx Consulting Pty Ltd were engaged to review the copper equivalent grade at Hillside in comparison with the copper equivalent grade for all large scale open pit Resources around the world. This comparison is shown in Figure 3. 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 1 < Page 5 REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 Figure 2: Hillside Resource growth in copper metal (Mt) and total target range1. Table 2: Hillside Mineral Resource, grade, recovery and copper equivalent results Copper Gold Iron Total Tonnes (Mt) 217 217 217 Grade 0.7% 0.2 g/t 12.4% Recovery (%) Copper Equivalent # The iron Resource estimate is recovered iron in an iron ore concentrate 94% 77% 52.9% 0.66 0.08 0.16# 0.9 Price Assumptions: Copper price = 3.20 US$/lb, Gold price = 1200 US$/ounce, Magnetite price = 120 US$/tonne (see Table 4 in Rex Conceptual Study announcement, 27 July 2011 for more detail on price assumptions). Please refer to the competent person's report at the end of this section. 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 1 < Page 7 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 1 < REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 Figure 3: Size and grade of the remaining Resources for operating open pit copper mines in the World*, ranked by copper-equivalent (Cu-Eq) grade. Source: MinEx Consulting July 2011 based on September 2010 Resource data. * Refers to operating mines (and mines currently under construction) with a remaining resource >500kt copper. Copper-equivalent grade based on $3.20/lb copper and assumes 1% copper = 3.27% zinc = 0.32% molybdenum = 0.23% cobalt = 0.54 tonnes iron ore = 2.10 g/t gold = 144 g/t silver. The Hillside project is one of the largest copper discoveries to have been made within Australia in the past decade. The project has a large Resource base that is anticipated to grow over the coming years. The current Hillside Mineral Resource estimate covers approximately 80% of a magnetic anomaly which has been used as the main targeting tool for the deﬁnition of copper at Hillside (Figure 4). Figure 5 shows the size of the current Mineral Resource at Hillside, along with the total target size1 postulated by Rex compared with other major deposits. Page 9 REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 Figure 4: Magnetic map of the Hillside project, showing location of the Inferred and Indicated Resources and remaining area to be drill tested (Target Area). Figure 5: Hillside Total Resource and Total Target Size1 in comparison to other major copper deposits. 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 1 < REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 Hillside Copper-Gold Project – Feasibility Studies In conjunction with the Resource drilling at Hillside, Rex has undertaken a number of research projects that have formed the basis of a conceptual study which is designed to identify the best development options for the Hillside project. The conceptual study is the ﬁrst review of the potential opportunities and risks associated with a new mining operation2. The results from this review provide a guide for a new mining operation, with further scope to optimise the base case estimates as more detail is gathered during the pre-feasibility study stage. A detailed update from the conceptual study was announced by Rex on 27 July 2011 and includes such items as capital and operating infrastructure associated with a mine plan at Hillside. In essence, the optimal production rate identiﬁed during the study is approximately 15Mt per annum. Key metrics for the proposed open pit (Figure 6) at this mining rate are summarised in Table 3. In the concept ual study, Rex considered a number of options for staging the production rate up to this level to minimise the up-front capital. During the pre-feasibility study Rex will further investigate the production schedule identiﬁed in Table 3 along with options which allow for the project to run at the currently interpreted optimal production rate of 15Mt for a minimum of 10 years. Early metallurgical test work identiﬁed that the Hillside deposit can produce a saleable copper-gold concentrate with high copper recoveries (94%), using a conventional ﬂoatation plant. The presence of signiﬁcant magnetite and the proximal location of port facilities also prompted Rex to investigate the potential to produce a saleable iron-ore concentrate from the Hillside deposit. This would be similar to the process at the Ernest Henry copper-gold mine in Queensland. The results indicated that the processing and recovery of a magnetite concentrate could add signiﬁcant value to the project. Therefore, the optimised mining and processing results at Hillside incorporate the ability to recover both a copper-gold concentrate and a magnetite (iron ore) concentrate. Figure 6: Proposed open pit (ﬁnal stage two) deﬁned in the Hillside conceptual study, with the modelled Mineral Resources shown within the open pit design. Page 11 REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 Table 3: Summary results from the conceptual study completed on the Hillside Project. Mine Plan Stage 1 6 years Stage 2 6+ years Copper Production (pa) 40,000 to 45,000 tonnes 70,000 to 80,000 tonnes Gold Production (pa) 35,000 to 45,000 ounces 50,000 to 70,000 ounces Iron Ore Concentrate (pa) 700,000 to 900,000 tonnes 1.3 to 1.6 million tonnes Processing Plant Capacity (pa) 7.5 to 9 million tonnes 15 to 18 million tonnes Pre-Strip Strip Ratio 44 million tonnes 3.9:1 to 4.2:1 69 million tonnes 4.2:1 to 4.8:1 Start up capital costs AUD$650 to $800 million Funded from stage one cash ﬂow Table 4: Summary of operating cost estimates (all in AUD$) based on the Hillside conceptual study. Cost Input Stage 1 Stage 2 Mining Dilution 13% to 15% 13% to 15% Mining cost Processing Cost Administration $2.6/t $11.6/t $2.7/t $2.8/t $9.9/t $1.5/t The options for development identiﬁed in the conceptual study are only a small subset of the total portfolio of copper potential that Rex considers will be available for development in the future. Exploration drilling at Hillside since July 2011 has already identiﬁed signiﬁcant opportunities to increase the level of production in the early stages of mining. In addition, drilling results from regional targets including Equis, Parara and other historical copper mines, indicate that copper mineralisation is extensive underneath the cover rocks throughout the region. It remains the long held belief at Rex that the copper potential in the area could lead to the development of a mining operation that produces over 100,000 tonnes per annum of copper plus associated gold and magnetite for decades into the future. From the time Rex commenced drilling on the Yorke Peninsula in 2007 this has been the vision of the Company and our efforts to date have reinforced the potential to deliver this outcome. Based on the framework established in the conceptual study, Rex has commenced the pre-feasibility study at Hillside. This work program is anticipated to take up to 12 months before progressing into a deﬁnitive feasibility study, where the key details will be deﬁned and the approvals process will commence. Rex anticipates that the approvals process and a deﬁnitive feasibility study will be completed in 2013 before the commencement of development for stage one. Construction is anticipated to take 18 months, with production targeted to commence in 2015. 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 1 < Page 13 REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 PINE POINT COPPER BELT, YORKE PENINSULA, SOUTH AUSTRALIA Rex ﬁrst commenced exploring the Yorke Peninsula with an interpretation that there could be multiple copper-gold deposits underneath a “hidden landscape”. This has initially proven to be correct with the Hillside discovery, which was the ﬁrst effective test of this hypothesis. The research undertaken at Hillside since its discovery has conﬁrmed that it was formed at the same time as the Prominent Hill and Olympic Dam deposits adding further weight to the interpretation that there could be other similar deposit types in the basement rocks on the Yorke Peninsula. These deposits have a very strong relationship with iron, which is typically in the form of either magnetite or haematite. It is for this reason that both magnetic and gravity surveys are a particularly important method of discovering the likely position of the largest deposits in the region. In recognition of this information, Rex completed some high resolution magnetic and gravity surveys in 2009 and 2010 to understand where potentially the largest deposits of this type (typically referred to as an Iron-Oxide-Copper-Gold or IOCG deposits) may occur. The results from this work indicated that there are many targets which have a larger response than Hillside and represent very exciting new targets for Rex, some of which are very close to Hillside, including Equis, Ethel and Ranald (see Table 5 and Figure 7). Based on ranking the targets from the gravity and magnetic anomalies, Hillside would rank approximately sixth. Table 5: Project ranking based on modelled gravity and magnetic information gathered by Rex in 2010. Ranking Target Name Modelled Magnetic Size and Intensity Modelled Gravity Size and Intensity 1 2 3 4 5 6 7 8 9 10 11 12 Equis Central Ethel Target 13 Ranald East Parara North Hillside Parara Central Parara South Ranald 16 Equis South Port Julia Hillside West High High High High Med/High Med/High Med/High Med Med Med Med Med High High Med/High Low Med Med Low Med/High Med Med Med Med/Low As part of the process for gaining access to drill test the targets on the Yorke Peninsula, Rex has been listening to and working with various landholders in the region. As a result, Rex has revised its access and compensation agreement and implemented additional innovative procedures to further reduce the impact that exploration may have on the land. Rex is committed to developing long term relationships in the region and will continue to maintain an open dialogue with landholders to ensure that Rex’s exploration activities will continue to beneﬁt all stakeholders on the Yorke Peninsula. 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 1 < REX MINERALS LTD EXPLORATION PROJECTS (continued) – for the year ended 30 June 2011 Figure 7: High priority copper-gold targets located on the Pine Point Copper Belt, many of which contain more substantial gravity and magnetic anomalies than Hillside. COMPETENT PERSONS REPORT The information in this report that relates to Exploration Results or Mineral Resources is based on information compiled by Mr Patrick Say who is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of Rex Minerals Ltd. Mr Say has sufﬁcient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as deﬁned in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Say consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 1 2 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 range statement, it is uncertain if further exploration will result in the determination of additional Mineral Resources. The results contained within the 27 July 2011 announcement from the Hillside conceptual study contain “forward-looking statements”. All statements other than those of historical facts included in this announcement are forward-looking statements. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper and other metals price volatility, currency ﬂuctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement”. TENEMENT SCHEDULE – for the year ended 30 June 2011 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 *These licences are currently being renewed with the Department of Primary Industries and Resources South Australia (PIRSA). Page 15 DIRECTORS’ REPORT 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 1 < REX MINERALS LTD DIRECTORS’ REPORT – for the year ended 30 June 2011 The Directors present their report together with the ﬁnancial report of Rex Minerals Limited (“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 2011 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, 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 Independent Non-Executive Director (B.Eng (Mining), MAusIMM, MAICD) 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 Managing Director (B.Sc.(Hons), M.Sc.(MinEx), Grad.Dip (F&I), MAusIMM) Mr Steven Olsen has over 18 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 the discovery of nickel, gold and copper 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 Alister Maitland Independent Non-Executive Director (B.Com, FAICD, FAIM, SF Fin) Mr Maitland is a former Executive Director of the ANZ Banking Group. A background in international ﬁnance whose banking experience extended beyond Australasia to cover Asia, the Sub Continent, the Middle East, Europe and America. His professional experience has included global business expansion, internal and external consulting, treasury projects and international political agendas. As Chief Executive of ANZ Bank for New Zealand he was responsible to the local board for the countries operations. He has been a non-executive director of a number of publicly listed ASX companies and Government bodies covering a wide range of activities including property services, mining, banking, asset management and health. He is a former chairman of Ballarat Goldﬁelds NL and director of Lihir Gold Ltd. Currently a Director of Malayan Banking Berhad (Maybank) headquarted in Kuala Lumpur. Director since 2011. 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 18 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 currently the Company Secretary of White Rock Minerals Ltd. Page 17 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 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 Board Meetings Audit Committee Meetings Mr Paul Chapman Mr Richard Laufmann Mr Steven Olsen1 Mr Alister Maitland2 A 12 11 12 – B 12 12 12 – A 2 2 2 – B 2 2 2 – 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. 2 Mr Maitland was appointed Director on 16 September 2011 and was not a Director during the ﬁnancial year. Susequent to year end, a Remuneration Committee has been established following Rex’s entry into the ASX 300, as a result no formal Remuneration Committee meetings were held during the period. However, the Rex Board had processes in place during the period which addressed matters which would otherwise be considered by a Remuneration Committee. 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 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 available on Rex’s website. 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 4. CORPORATE GOVERNANCE STATEMENT (continued) 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 Rex’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 Rex’s corporate strategy and monitoring implementation of the strategy, appointing the Managing Director, monitoring senior executives’ performance and approving Rex’s risk and audit framework. The Board is also responsible for Rex’s general corporate governance matters, including matters such as disclosures and the appointment and monitoring of any committees set up by the Board. 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 4.1.2 Companies should disclose the process for evaluating the performance of 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 in the Guide to reporting on Principle 1. It is intended that: > an explanation of any departure from Recommendations 4.1.1, 4.1.2 or 4.1.3 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. Page 19 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 4.2 Structure the Board to add value 4.2.1 A majority of the Board should be independent Directors. This recommendation is satisﬁed. 4.2.2 The Chair should be an This recommendation is satisﬁed. independent Director. 4.2.3 The roles of Chair and Chief This recommendation is satisﬁed. Executive Ofﬁcer should not be exercised by the same individual. 4.2.4 The Board should establish a nomination committee. The Board has not adopted a charter relevant to the speciﬁc functions of a nomination committee. Given the size of Rex and the Board, 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. 4.2.5 Companies should disclose the process for evaluating the performance of the Board, its committees and individual Directors. 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. 4.2.6 Companies should provide the The following material is included in the Annual Report: information indicated in the Guide to reporting on Principle 2. > 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 4.2.1, 4.2.2, 4.2.3, 4.2.4, 4.2.5 or 4.2.6. The following material is publicly available on Rex’s website in a clearly marked corporate governance section: > the Board’s policy and procedure for the selection and appointment of directors. 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 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 practices necessary to maintain conﬁdence in the Company’s integrity; > the practices 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. 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. 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. This recommendation is satisﬁed. At 30 June 2011, women made up 28% of the total workforce; and 38% 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 publicly available on Rex’s website in a clearly marked corporate governance section: > any applicable code of conduct which incorporates the diversity policy. Page 21 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 4.4 Safeguard integrity in ﬁnancial reporting 4.4.1 The Board should establish an This recommendation is satisﬁed. Audit Committee. 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; > Has at least 3 members The members of the Audit Committee are Alister Maitland, Paul Chapman, and Richard Laufmann, who are all independent Directors. Alister Maitland is an independent Chair of the Audit Committee (and he is not Chair of the Board). 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 This recommendation is satisﬁed. a formal charter. 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 4.4.1, 4.4.2, 4.4.3 or 4.4.4 The following material is 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. 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. 4.5.2 Companies should provide the information indicated in the Guide to reporting on Principle 5. 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. An explanation of any departures from Recommendations 4.5.1 or 4.5.2 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 publicly available on Rex’s website in a clearly marked corporate governance section. 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 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. 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. 4.6.2 Companies should provide the information indicated in the Guide to reporting on Principle 6. An explanation of any departure from Recommendations 4.6.1 or 4.6.2 are included in the corporate governance statement in the Annual Report. Rex describes its communications policy with Shareholders in the corporate governance statement in the Annual Report. 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. 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. Rex Management has reported to the Board under Recommendation 4.7.2 on risk management. 4.7.2 The Board should require This recommendation is satisﬁed. 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. 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. This recommendation is satisﬁed. Page 23 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 4. CORPORATE GOVERNANCE STATEMENT (continued) Recommendation Comment 4.7 Recognise and manage risk (continued) 4.7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7. The following material is included in the corporate governance statement in the Annual Report: > explanation of any departures from Recommendations 4.7.1, 4.7.2, 4.7.3 or 4.7.4; > whether management has reported to the Board under Recommendation 4.7.2; and > whether the Board has received assurance from the chief executive ofﬁcer (or equivalent) and the chief ﬁnancial ofﬁcer (or equivalent) under Recommendation 4.7.3. 4.8 Remunerate fairly and responsibly 4.8.1 The Board should establish a This recommendation is satisﬁed. 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. The members of the Remuneration Committee are Richard Laufmann, Paul Chapman and Alister Maitland, who are all independent Directors. Richard Laufmann is an independent Chair of the Remuneration Committee (and he is not Chair of the Board). The Directors consider that the Remuneration Committee is of sufﬁcient size, independence and technical expertise to discharge its mandate effectively. 4.8.3 Companies should clearly This recommendation is satisﬁed. 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. 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 4.8.1, 4.8.2, 4.8.3 or 4.8.4. 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 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 is 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 has made an initial discovery at the Hillside copper-gold deposit and completed a conceptual study to assess a potential development plan for this deposit. Rex is progressing the Hillside deposit to the level of a pre-feasibility study in conjunction with maintaining a regional exploration program for further discoveries and enhancement of the future mine development plans 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 2012 and later ﬁnancial years. > Resource – Complete drilling at Hillside focussing on two key outcomes: (cid:127) Detailed ore deﬁnition for the purpose of upgrading the Minerals Resource into a Reserve; and (cid:127) Expand on the existing Resource, targeting a range of 1.6Mt to 2.1Mt. > New Discovery – Effectively test the highest priority targets generated regionally on the Yorke Peninsula. > Economics – Complete the Hillside pre-feasibility study targeting production of more than 70,000 tonnes of copper per annum and associated by-products of gold and magnetite for a minimum 10 year mine life. > Financing – Commence assessing ﬁnancing options for Hillside. > Organisation – Plan for the transition of the organisation from explorer to developer to producer. 6. OPERATING AND FINANCIAL REVIEW The income statement shows a proﬁt after tax of $593,266 (2010: $2,327,007) for the year. The Group has no bank debt. As at 30 June 2011 the Group had a cash position of $45,084,267 (2010: $31,474,941) and funds on deposit of $34,000,000 (2010: nil). Operating activities incurred a cash inﬂow for the year of $230,899 (2010: cash inﬂow of $273,168). 7. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS On 13 October 2010, Rex announced an underwritten equity raising of approximately $85 million via a share placement at $2.50 per share. This equity raising was successfully completed in two stages during October and December 2010. At this time a Share Purchase Plan was also announced, with existing shareholders being eligible for up to $5,000 worth of shares, at $2.50 per share. The Share Purchase Plan was completed in November 2010. 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 2011. 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 On 16 September 2011 Mr Alister Maitland was appointed Non-Executive Director of Rex Minerals. Other than the event described above, subsequent to 30 June 2011 there has not arisen in the interval between the end of the ﬁnancial year and the date of this report any other item, any 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. Page 25 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 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. 11. DIRECTO RS’ 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 Alister Maitland Mr Steven Olsen Rex Minerals Limited Ordinary shares Options over ordinary shares 3,524,000 3,500,000 202,000 6,002,000 – – – – 12. SHARE OPTIONS 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: All options were granted during the ﬁnancial year. No options have been granted since the end of the ﬁnancial year. Directors Mr Paul Chapman Mr Richard Laufmann Mr Steven Olsen Executives Ms Amber Rivamonte Ms Janet Mason Mr Patrick Say Number of options granted Exercise price Expiry date – – – 80,000 80,000 80,000 – – – $3.00 $3.00 $3.00 – – – 30 April 2014 30 April 2014 30 April 2014 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 12.2 Unissued shares under option At the date of this report unissued ordinary shares of the Company under option are: Expiry date 31 May 2012 31 October 2012 24 May 2013 30 April 2014 Total Exercise price* Number of shares $0.552 $2.052 $1.220 $3.000 60,000 240,000 561,000 1,600,000 2,461,000 *For options issued prior to 15 June 2010, the 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 been exercised and the employee leaves the Company then the options will lapse if they are not exercised within 60 days of departure. 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 2,350,000 1,000,000 150,000 120,000 39,000 3,659,000 $0.102 $0.152 $0.217 $0.552 $1.222 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 or any of its controlled entities (2010: nil). Page 27 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 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 Senior Executives. Key management personnel comprise the Directors of the Company and Senior 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 Senior Executives. Compensation levels have been determined by considering the number of employees, market capitalisation, net proﬁt and revenue. They are also based on remuneration of Top 500 ASX listed companies. 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. 2011 2010 2009 2008 IPO Sept 2007 Net proﬁt/(loss) attributable to equity holders of the parent $593,266 $2,327,007 $(1,851,166) $(857,987) $ – Closing share price $2.31 $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. 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 vest immediately and only lapse in the event of the employee leaving the Company or the expiry date, whichever occurs earlier. Due to the nature of the Company at this time; the Board believes this is appropriate, having regard to the exercise price of options being set at a premium to the current share price. 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 15. REMUNERATION REPORT – AUDITED (continued) 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 months’ 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. The Chief Executive Ofﬁcer undertakes performance reviews with all key management personnel annually in June. Mr Steven Olsen, Chief Executive Ofﬁcer, has a contract of employment dated 1 July 2010 with the Company which 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 $280,000 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. 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 named Company Executives and relevant Group Executives who receive the highest remuneration and other key management personnel appear in the Table on Page 30. Page 29 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 15.2 Directors’ and Executive Ofﬁcers’ remuneration (Group) (continued) – – – – – – . 0 6 2 . 6 9 2 . 7 2 3 . 6 0 1 . 6 5 1 – – – 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 s a n o i t a r e n u m e r % f o n o i t r o p o r P 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 s t ﬁ e n e b $ I T S h s a c $ 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 & $ – – – – . 3 5 1 5 9 . . 0 5 1 – . 7 2 2 8 3 . 6 3 . – – 5 7 2 6 0 1 , 5 2 1 8 6 , 0 0 3 6 7 , 5 2 2 7 5 , 0 5 9 6 5 4 , 0 7 6 6 1 3 , – – – – – – 0 0 3 6 6 1 , 0 0 2 3 4 , 4 1 7 9 6 , 4 6 6 0 2 , 4 3 2 2 3 1 , 0 0 2 3 4 , 7 2 4 5 9 1 , 4 6 6 0 2 , 0 5 6 6 7 2 , 0 0 2 3 4 , – 4 5 3 2 2 , – – – 0 0 6 9 2 1 , 8 2 3 1 4 , – – – – – – – – – – – – – – – – 5 7 7 , 8 5 2 6 , 5 0 0 3 , 6 5 2 7 , 4 0 0 5 , 7 9 0 0 5 , 2 6 0 0 0 , 0 7 0 0 5 , 2 5 0 5 9 , 1 3 0 0 0 , 5 2 4 0 7 6 , 3 2 0 0 0 , 3 9 2 0 0 1 , 8 0 5 0 , 4 4 7 8 , 4 0 0 0 , 5 1 1 0 0 0 , 5 4 0 6 1 , 4 8 – – 1 1 8 , 3 1 2 5 9 , 0 6 1 0 5 4 , 8 1 0 0 0 , 5 1 2 6 4 8 , 1 8 0 5 , 0 2 – – – – – – – – – – – – – – – – – – – 0 0 5 , 7 9 1 1 0 2 0 0 5 , 2 6 0 0 0 , 0 7 0 0 5 , 2 5 0 1 0 2 1 1 0 2 0 1 0 2 0 0 0 , 0 7 0 0 0 , 5 5 3 1 1 0 2 0 0 0 , 0 3 0 0 0 , 3 6 2 0 1 0 2 0 0 0 , 5 2 0 0 0 , 0 9 1 1 0 2 – 0 0 0 , 5 4 0 1 0 2 0 0 0 , 0 3 0 6 1 , 4 5 1 1 0 2 0 0 5 , 7 2 5 4 , 3 5 1 0 1 0 2 0 0 0 , 0 1 0 0 0 , 5 0 2 1 1 0 2 – 0 1 0 2 1 s r o t c e r i D e v i t u c e x E - n o N n a m p a h C l u a P r M ) n o s r e p r i a h C ( s r o t c e r i D n n a m f u a L d r a h c i R 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 – e t n o m a v i R r e b m A s M 2 y r a t e r c e S y n a p m o C s e v i t u c e x E 3 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 4 r e g a n a M y g o l o e G – y a S k c i r t a P r M r e m r o F . 7 2 1 3 6 6 6 7 2 , , 9 0 7 4 1 2 1 , , 8 7 1 6 0 0 1 , 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 9 4 4 , 8 7 9 2 0 , 2 7 0 6 6 , 6 0 0 , 1 – 0 0 0 , 5 3 1 0 6 6 , 1 7 8 1 1 0 2 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 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 ) p u o r G ( 6 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 8 0 5 , 0 2 0 1 0 2 5 s p i l l i h P n a i r B r M 1 2 3 4 5 6 Mr Alister Maitland was appointed to the Board 16 September 2011. Ms Amber Rivamonte was on leave for 6 months during 2010. Ms Janet Mason was on leave for 7 months during 2011. During this period Ms Rivamonte was Acting Chief Financial Ofﬁcer. Mr Patrick Say was appointed Geology Manager 1 July 2010. Mr Brian Phillips was appointed Director on 12 February 2010 and resigned 15 June 2010. Mr Geoffrey Lowe was previously Exploration Manager and was appointed Director on 12 February 2010 and resigned 15 June 2010. 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 1 < REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 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 6 May 2011 2.49 years $0.54 $3.00 $2.51 38% 4.96% 15.3 Equity Instruments All options refer to options over ordinary shares of Rex Minerals Ltd, which are exercisable on a one-for-one basis. 15.3.1 Options and rights over equity instruments granted as compensation Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details on options that vested during the reporting period are as follows: Number of options granted during 2011 Grant and vesting date Fair value per option at grant date ($) Exercise price per option ($) Expiry date Number of options vested during 2011 Directors Mr Paul Chapman Mr Richard Laufmann Mr Steven Olsen Executives – – – – – – – – – – – – – – – – – – Ms Amber Rivamonte 80,000 6 May 2011 Ms Janet Mason Mr Patrick Say 80,000 6 May 2011 80,000 6 May 2011 $0.54 $0.54 $0.54 $3.00 30 April 2014 $3.00 30 April 2014 $3.00 30 April 2014 80,000 80,000 80,000 Number of options granted during 2010 Grant and vesting date Fair value per option at grant date ($) 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 – – – – – – – – – – – – – – – – – – – – – – – – – Ms Amber Rivamonte 73,800 3 June 2010 Ms Janet Mason 73,800 3 June 2010 $0.28 $0.28 $1.22 24 May 2013 $1.22 24 May 2013 – – – – 200,000 273,800 113,800 No options have been granted since the end of the ﬁnancial year. The options were provided at no cost to the recipients. Page 31 REX MINERALS LTD DIRECTORS’ REPORT (continued) – for the year ended 30 June 2011 15. REMUNERATION REPORT – AUDITED (continued) 15.3.2 Modiﬁcation of terms of equity-settled share-based payment transactions 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 current period. 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. 15.3.3 Exercise of options granted as compensation During the reporting period, there were no shares issued to key management personnel on the exercise of options previously granted as compensation. 15.3.4 Analysis of movements in options 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 Steven Olsen Executives Ms Amber Rivamonte Ms Janet Mason Mr Patrick Say Total – – – 43,200 43,200 43,200 129,600 – – – – – – – – – – – – – – (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 upon grant. (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 61 and forms part of the Directors’ report for the year ended 30 June 2011. Dated at Melbourne this 22nd day of September 2011 Signed in accordance with a resolution of the Directors: Steven Olsen Managing Director 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 1 < FINANCIAL STATEMENTS Page 33 REX MINERALS LTD STATEMENT OF FINANCIAL POSITION – as at 30 June 2011 Group Group 2011 2010 Note $ $ Current Assets Cash and cash equivalents 7(i) 45,084,267 31,474,941 Term deposits 7(ii) 34,000,000 – Receivables 8 884,677 229,478 Other assets 9 9,420 22,263 Total current assets 79,978,364 31,726,682 Non-current assets Other assets 9 – 1,000,000 Exploration and evaluation expenditure 10 51,958,831 22,278,777 Property, plant and equipment 12 11,102,663 373,671 Total non-current assets 63,061,494 23,652,448 Total assets 143,039,858 55,379,130 Current Liabilities Trade payables 13 3,168,171 1,808,670 Employee beneﬁts 14 269,438 141,989 Total current liabilities 3,437,609 1,950,659 Total liabilities 3,437,609 1,950,659 Net assets 139,602,249 53,428,471 Equity Issued capital 15(i) 137,665,189 52,948,677 Reserves 15(iii) 1,137,690 520,080 Retained earnings /(Accumulated losses) 799,370 (40,286) Total equity 139,602,249 53,428,471 The notes on pages 38 to 59 are an integral part of these ﬁnancial statements. 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 1 < REX MINERALS LTD STATEMENT OF COMPREHENSIVE INCOME – for the year ended 30 June 2011 Group Group 2011 2010 Note $ $ Finance income 16 3,816,443 1,433,666 Other income 17 – 85 Administrative expenses (1,502,038) (727,549) Depreciation expense (62,359) (76,137) Employee beneﬁts expense 18 (1,426,162) (668,928) Marketing expenses (232,415) (155,147) Loss on sale of ﬁxed assets (203) – Proﬁt on demerger of investment 19 – 2,521,017 Proﬁt before tax 593,266 2,327,007 Income tax (expense)/beneﬁt 20 – – Total proﬁt for the period after tax 593,266 2,327,007 Total comprehensive income attributable to members of Rex Minerals Ltd 593,266 2,327,007 Earnings per share attributable to ordinary equity holders Basic earnings per share (cents) 21 0.43 2.48 Diluted earnings per share (cents) 21 0.42 2.36 The notes on pages 38 to 59 are an integral part of these ﬁnancial statements. Page 35 REX MINERALS LTD STATEMENT OF CHANGES IN EQUITY – for the year ended 30 June 2011 Attributable to equity holders of the Group Share Retained Capital Reserves Earnings Total Equity $ $ $ $ Balance at 1 July 2009 24,711,046 552,130 (2,699,202) 22,563,974 Issue of ordinary shares 45,212,617 – – 45,212,617 Share based payments compensation – 299,859 – 299,859 Transfer from share based payments reserve – (331,909) 331,909 – Capital reduction via share distribution (16,974,986) – – (16,974,986) Total comprehensive income for the period – – 2,327,007 2,327,007 Balance at 30 June 2010 52,948,677 520,080 (40,286) 53,428,471 Balance at 1 July 2010 52,948,677 520,080 (40,286) 53,428,471 Issue of ordinary shares 84,716,512 – – 84,716,512 Share based payments compensation – 864,000 – 864,000 Transfer from share based payments reserve – (246,390) 246,390 – Total comprehensive income for the period – – 593,266 593,266 Balance at 30 June 2011 137,665,189 1,137,690 799,370 139,602,249 The notes on pages 38 to 59 are an integral part of these ﬁnancial statements. 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 1 < REX MINERALS LTD STATEMENT OF CASH FLOWS – for the year ended 30 June 2011 Group Group 2011 2010 Note $ $ Cash ﬂows from operating activities Cash paid to suppliers and employees (3,159,025) (1,059,798) Interest received 3,389,924 1,332,966 Net cash from/(used in) operating activities 22 230,899 273,168 Cash ﬂows from investing activities Exploration and evaluation payments (27,435,325) (13,637,366) Acquisition of property, plant and equipment (8,511,209) (2,260,219) Proceeds from sale of property, plant and equipment 50 17,000 Investments in term deposits 7(ii) (34,000,000) – Cash outﬂow on demerger of White Rock Minerals – (6,795,404) Net cash from/(used in) investing activities (69,946,484) (22,675,989) Cash ﬂows from ﬁnancing activities Proceeds from issue of share capital 88,235,648 43,419,950 Payment of transaction costs (4,910,737) (1,828,255) Net cash from/(used in) ﬁnancing activities 83,324,911 41,591,695 Net increase in cash and cash equivalents 13,609,326 19,188,874 Cash and cash equivalents at beginning of the period 31,474,941 12,286,067 Cash and cash equivalents at period end 7(i) 45,084,267 31,474,941 The notes on pages 38 to 59 are an integral part of these ﬁnancial statements. Page 37 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 1. REPORTING ENTITY Rex Minerals Limited (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 2011 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 22 September 2011. (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 functional currency of all entities in 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 10 Exploration and evaluation expenditure > note 14 Employee beneﬁts > note 23 Share-based payments > note 25, 26, 27 Commitments and contingencies 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 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 1 < 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 measured at amortised cost using the effective interest method, less impariment losses. 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) Term Deposits Term Deposits comprise cash balances and call deposits with an original maturity of more than three months. (v) Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods and services provided to the Group 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 39 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 > buildings 10 – 20 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. (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”). 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ii) Non-ﬁnancial assets (Continued) 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 revenue. (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. Page 41 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Income taxes (Continued) 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 and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a consequence all members of the tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidated group is Rex Minerals Ltd. (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. (k) Segment reporting The Group 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 Group 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 Limited was accounted for in accordance with Interpretation 17 Distributions of Non-Cash Assets to Owners. Per this accounting guidance the distribution to Rex Minerals Limited shareholders, of ordinary shares in White Rock Minerals Limited, 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. 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) New standards and interpretations not yet adopted The following standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2011, and have not been applied in preparing these consolidated ﬁnancial statements: > > > > AASB 9 Financial Instruments – could change the classiﬁcation and measurement of ﬁnancial assets. The Group does not plan to adopt this standard early, which becomes mandatory for the Group’s 2014 consolidated ﬁnancial statements and the extent of the impact has not been determined. IAS 19 Employee Beneﬁts – is amended focussing on, but is not limited to the accounting for deﬁned beneﬁt plans. In addition, it changes the deﬁnition of short-term and other long term employee beneﬁts and some disclosure requirements. The amendments, which become mandatory for the Group’s 30 June 2013 ﬁnancial statements, are not expected to have a signiﬁcant impact on the ﬁnancial statements. AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements – removes the requirements to include individual key management personnel disclosures in the notes to the ﬁnancial statements. Companies will still need to provide these disclosures in the Remuneration Report under s.300A of the Corporations Act 2001. The amendments, which will become mandatory of the Group’s 30 June 2014 ﬁnancial statements, are not expected to have any impact on the ﬁnancial statements, other than reduced disclosures. AASB 1054 Australian Additional Disclosures – this standard removes many of the additional disclosures previously required under standards to align the requirements of accounting standards for publically accountable for-proﬁt entities in Australia and New Zealand. The amendments will become mandatory for the Group’s 30 June 2012 ﬁnancial statements, with retrospective application required. The amendments are not expected to have any impact on the ﬁnancial statements. 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. Page 43 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 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. (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 operates in one geographical segment, being South Australia and one industry, mineral mining and exploration. 7. CASH ASSETS (i) Cash and cash equivalents Group Group 2011 2010 $ $ Bank balances and short term deposits 45,084,267 31,474,941 Cash and cash equivalents in the statement of cash ﬂows 45,084,267 31,474,941 (ii) Term deposits Group Group 2011 2010 $ $ Term deposits (i) 34,000,000 – Total term deposits 34,000,000 – (i) Term deposits comprise cash balances with an original maturity of more than three months. The Group’s total cash and funds on deposit ($79, 084, 267) is exposed to interest rate risk and a sensitivity analysis for ﬁnancial assets and liabilities are disclosed in note 24. 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 8. RECEIVABLES Group Group 2011 2010 $ $ Current Other receivables 884,677 229,478 Total current receivables 884,677 229,478 9. OTHER ASSETS Group Group 2011 2010 $ $ Current Prepayments 9,420 22,263 Non-current Prepaid deposit (i) – 1,000,000 Total other assets 9,420 1,022,263 (i) Deposit paid for the purchase of property, plant and equipment. 10. EXPLORATION AND EVALUATION EXPENDITURE Group Group 2011 2010 $ $ Cost Balance at 1 July 22,278,777 9,127,523 Acquisitions – 2,895,544 Additions 29,680,054 17,636,478 Disposals – (7,380,768) Balance at 30 June 51,958,831 22,278,777 Carrying amounts At 1 July 22,278,777 9,127,523 At 30 June 51,958,831 22,278,777 The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest. Page 45 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 11. UNRECOGNISED DEFERRED TAX ASSETS Group Group 2011 2010 $ $ Net deferred tax assets have not been recognised in respect of the following Tax losses and exploration deductions 18,697,263 11,633,257 Total tax assets / (liabilities) not recognised 18,697,263 11,633,257 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. 12. PROPERTY, PLANT AND EQUIPMENT Group Group Group Land and Plant and Buildings Equipment Total 2011 $ $ $ Cost Balance at 1 July 2010 16,953 478,721 495,674 Acquisitions 9,961,329 945,228 10,906,557 Disposals – (3,747) ( 3,747) Balance at 30 June 2011 9,978,282 1,420,202 11,398,484 Depreciation and impairment losses Balance at 1 July 2010 114 121,889 122,003 Depreciation charged to the income statement 342 62,017 62,359 Depreciation charged to exploration projects 366 114,587 114,953 Disposals – (3,494) (3,494) Balance at 30 June 2011 822 294,999 295,821 Carrying amounts At 1 July 2010 16,839 356,832 373,671 At 30 June 2011 9,977,460 1,125,203 11,102,663 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Group Group Group Land and Plant and Buildings Equipment Total 2010 $ $ $ Cost Balance at 1 July 2009 2,273 227,184 229,457 Acquisitions 43,725 1,245,050 1,288,775 Disposals (29,045) (993,513) (1,022,558) Balance at 30 June 2010 16,953 478,721 495,674 Depreciation and impairment losses Balance at 1 July 2009 – 63,821 63,821 Depreciation charged to the income statement 114 76,023 76,137 Depreciation charged to exploration projects – 12,954 12,954 Disposals – (30,909) (30,909) Balance at 30 June 2010 114 121,889 122,003 Carrying amounts At 1 July 2009 2,273 163,363 165,636 At 30 June 2010 16,839 356,832 373,671 13. TRADE PAYABLES Group Group 2011 2010 $ $ Current Other trade payables and accrued expenses 3,168,171 1,808,670 Total current trade and other payables 3,168,171 1,808,670 14. EMPLOYEE BENEFITS Group Group 2011 2010 $ $ Current Liability for annual leave 269,438 141,989 Total employee beneﬁts 269,438 141,989 Page 47 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 15. ISSUED CAPITAL (i) Movements in shares on issue: Date of Number Issue Issue of Shares Price $ $ Opening balance at 1 July 2010 114,389,460 52,948,677 Exercise of Employee Options – funds received 02/08/2010 100,000 0.102 10,200 Exercise of Employee Options – funds received 02/08/2010 60,000 0.552 33,120 Exercise of Employee Options – funds received 03/09/2010 60,000 0.552 33,120 Exercise of Employee Options – funds received 01/10/2010 90,000 0.217 19,530 Exercise of Employee Options – funds received 01/10/2010 500,000 0.102 51,000 Issue of Ordinary Shares – Placement 19/10/2010 17,000,000 2.500 42,500,000 Less costs of the Placement (2,340,000) Exercise of Employee Options – funds received 05/11/2010 6,000 1.222 7,332 Issue of Ordinary Shares – Share Purchase Plan 24/11/2010 1,079,000 2.500 2,697,500 Issue of Ordinary Shares – Placement 03/12/2010 17,000,000 2.500 42,500,000 Less costs of the Placement (2,570,736) Exercise of Employee Options – funds received 06/01/2011 12,300 1.222 15,031 Exercise of Employee Options – funds received 13/01/2011 20,700 1.222 25,295 Issue of Ordinary Shares – property purchase 31/03/2011 311,419 2.890 900,000 Exercise of Employee Options – funds received 31/03/2011 60,000 0.217 13,020 Exercise of Founding Options – funds received 14/04/2011 750,000 0.102 76,500 Exercise of Options – funds received 20/05/2011 1,000,000 0.152 152,000 Exercise of Founding Options – funds received 17/06/2011 1,000,000 0.102 102,000 Issue of Ordinary Shares – property purchase 24/06/2011 196,640 2.500 491,600 Closing balance at 30 June 2011 153,635,519 137,665,189 Date of Number Issue Issue of Shares Price $ $ Opening balance at 1 July 2009 80,340,000 24,711,046 Exercise of Options – funds received 18/09/2009 500,000 0.30 150,000 Exercise of Employee Options – funds received 18/09/2009 30,000 0.365 10,950 Issue of Ordinary Shares – Drake Resources 21/10/2009 2,000,000 0.757 1,515,000 Issue of Ordinary Shares – Entitlement Issue 27/10/2009 12,444,094 1.70 21,154,960 Less costs of the Entitlement Issue (944,430) Issue of Ordinary Shares – Entitlement issue 25/11/2009 12,416,906 1.70 21,108,740 Less costs of the Entitlement Issue (883,826) Issue of Ordinary Shares – Titeline 23/12/2009 1,114,152 0.70 779,907 Exercise of Employee Options – funds received 29/01/2010 120,000 0.41 49,200 Exercise of Employee Options – funds received 29/01/2010 600,000 0.25 150,000 Exercise of Founding Options – funds received 29/01/2010 1,000,000 0.25 250,000 Issue of Ordinary Shares – Titeline 05/03/2010 1,894,308 0.70 1,326,016 Exercise of Options – funds received 07/05/2010 1,000,000 0.25 250,000 Exercise of Employee Options – funds received 07/05/2010 120,000 0.70 84,000 Exercise of Employee Options – funds received 20/05/2010 60,000 0.41 24,600 Exercise of Founding Options – funds received 20/05/2010 500,000 0.25 125,000 Exercise of Founding Options – funds received 21/05/2010 250,000 0.25 62,500 Capital reduction via demerger (16,974,986) Closing balance at 30 June 2010 114,389,460 52,948,677 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 15. ISSUED CAPITAL (CONTINUED) (ii) Movements in options on issue: Date of Number Exercise Expiry Issue of Options Price Date $ Opening balance at 1 July 2010 4,520,000 Exercise of Options – founding 06/06/2007 (1,750,000) 0.102 30/06/2011 Exercise of Options – employees 31/07/2007 (600,000) 0.102 30/06/2011 Exercise of Options 12/09/2007 (1,000,000) 0.152 30/06/2011 Exercise of Options – employees 03/12/2007 (150,000) 0.217 30/06/2011 Exercise of Options – employees 19/06/2009 (120,000) 0.552 31/05/2012 Exercise of Options – employees 04/06/2010 (39,000) 1.222 24/05/2013 Issue of Options – employees 06/05/2011 1,600,000 3.000 30/04/2014 Closing balance as at 30 June 2011 2,461,000 Date of Number Exercise Expiry Issue of Options Price Date $ Opening balance as at 1 July 2009 7,860,000 Exercise of Options 18/09/2009 (500,000) 0.30 30/06/2011 Exercise of Options – employees 18/09/2009 (30,000) 0.37 30/06/2011 Issue of Options – employees 04/12/2009 240,000 2.20 31/10/2012 Exercise of Options – employees 29/01/2010 (600,000) 0.25 30/06/2011 Exercise of Options – employees 29/01/2010 (120,000) 0.41 30/06/2011 Exercise of Options – founding 29/01/2010 (1,000,000) 0.25 30/06/2011 Exercise of Options 07/05/2010 (1,000,000) 0.25 30/06/2011 Exercise of Options – employees 07/05/2010 (120,000) 0.70 31/05/2012 Exercise of Options – founding 20/05/2010 (500,000) 0.25 30/06/2011 Exercise of Options – employees 20/05/2010 (60,000) 0.41 30/06/2011 Exercise of Options – founding 21/05/2010 (250,000) 0.25 30/06/2011 Issue of Options – employees 03/06/2010 600,000 1.22 24/05/2013 Closing balance as at 30 June 2010 4,520,000 (iii) Movements in share based payment reserve: $ Opening balance at 1 July 2010 520,080 Employee share based payments – to employees 864,000 Transferred to Retained earnings/(Accumulated losses) (246,390) Closing balance at 30 June 2011 1,137,690 Opening balance at 1 July 2009 552,130 Employee share based payments – to employees 271,200 Options issued – for contract drilling services 28,659 Transferred to Retained earnings/(Accumulated losses) (331,909) Closing balance at 30 June 2010 520,080 16. FINANCE INCOME AND EXPENSE Group Group 2011 2010 $ $ Finance income – interest income on bank deposits 3,816,443 1,433,666 Finance expense – – Net ﬁnance income and expense 3,816,443 1,433,666 Page 49 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 17. OTHER INCOME Group Group 2011 2010 $ $ Net gain on sale of property, plant and equipment – 85 Total other income – 85 18. EMPLOYEE BENEFITS EXPENSE Group Group 2011 2010 $ $ Wages and salaries 1,104,313 550,069 Share based payments expense 194,400 59,808 Increase in liability for annual leave 127,449 59,051 Total employee beneﬁts expense 1,426,162 668,928 19. CONTROLLED ENTITY DISPOSAL 2011: No entities were disposed of during the period. 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. Group Group 2011 2010 $ $ Consideration Cash Received – – Disposal Costs – (98,212) Inﬂow/(outﬂow) of cash – (98,212) Other consideration (i) Distribution of White Rock shares – 16,974,986 Net Consideration – 16,876,774 Carrying value of net assets of controlled entity disposed of: (ii) – – Cash assets – 6,795,404 Property, plant and equipment – 974,985 Exploration and evaluation expenditure – 7,380,768 Provisions – (795,400) – 14,355,757 Proﬁt/(Loss) on disposal of controlled entity – 2,521,017 (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 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 20. INCOME TAX EXPENSE NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX ACCOUNTING PROFIT Group Group 2011 2010 $ $ Proﬁt/(Loss) for the period 593,266 2,327,007 Income tax using the domestic corporation tax rate of 30% (2009: 30%) 177,980 698,102 Increase in income tax due to: Non-deductible expenses 262,186 91,522 Decrease in income tax expense due to: Non-assessable proﬁt on demerger – (785,769) Recognition and consumption of losses not previously recognised (440,166) (3,855) Total income tax expense/(beneﬁt) on pre-tax net proﬁt – – 21. EARNINGS PER SHARE Group Group 2011 2010 cents cents Earnings Per Share Basic EPS 0.43 2.48 Diluted EPS per share – cents 0.42 2.36 (a) Basic earnings per share The calculation of basic earnings/(loss) per share (EPS) at 30 June 2011 was based on the proﬁt attributable to ordinary equity holders of $593,266 (2010: $2,327,007) and a weighted average number of ordinary shares outstanding during the ﬁnancial year ended 30 June 2011 of 137,764,389 (2010: 93,887,179). (b) Diluted earnings per share The calculation of diluted earnings/(loss) per share (EPS) at 30 June 2011 was based on the proﬁt attributable to ordinary equity holders of $593,266 (2010: $2,327,007) and a weighted average number of ordinary shares outstanding after adjustment for unexercised options during the ﬁnancial year ended 30 June 2011 of 140,225,389 (2010: 98,407,179). Page 51 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 22. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Group Group 2011 2010 $ $ Cash ﬂows from operating activities Proﬁt/(Loss) for the period 593,266 2,327,007 Adjustments for non cash items: Depreciation 62,359 76,137 Share based payment transactions 194,400 59,808 Adjustments for other items: Proceeds from sale of property plant and equipment (50) (17,000) Proﬁt on demerger before disposal costs – (2,619,229) Operating proﬁt/(loss) before changes in working capital and provisions 849,975 (173,276) (Increase)/decrease in trade and other receivables (562,969) (30,577) (Decrease)/increase in trade and other payables (183,556) 417,970 (Decrease)/increase in employee beneﬁts 127,449 59,051 Net cash (used in)/from operating activities 230,899 273,168 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) Issue of options to employees, some of which have been capitalised as exploration expenditure. (b) Issue of shares as part of the purchase consideration for land. 23. SHARE BASED PAYMENTS The Company established a share option plan that entitles employees (other than Directors) to options to purchase shares in the Company. The following options were granted during the ﬁnancial year ending 30 June 2011: Grant Number Expiry Employees Entitled Date of Options Date Key management personnel (A) 06/05/2011 240,000 30/04/2014 Other employees (A) 06/05/2011 1,360,000 30/04/2014 Total 1,600,000 The following options were granted during the ﬁnancial year ending 30 June 2010: Grant Number Expiry Employees Entitled Date of Options Date Key management personnel (B) 3/6/2010 147,600 24/05/2013 Other employees (C) 3/12/2009 240,000 31/10/2012 Other employees (B) 3/6/2010 452,400 24/05/2013 Total 840,000 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 23. SHARE BASED PAYMENTS (CONTINUED) Key management personnel and employee options (A) are exercisable at a price of $3.00 each, have no vesting period and expire on 30 April 2014. Key management personnel and employee options (B) are exercisable at a price of $1.22 each, have no vesting period and expire on 24 May 2013. Employee options (C) are exercisable at a price of $2.052 each, have no vesting period and expire on 31 October 2012. Each option entitles the holder to subscribe for 1 ordinary share in the Company. All options vest on the grant date. Options expire on the expiry date, unless the options have not been exercised and the employee leaves the Company then the options will lapse if they are not exercised within 60 days of departure. 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. As the options vest on grant, the fair value of the options is allocated to the reporting period in which they are granted. Employees entitled (A) (B) (C) Fair value at grant date $0.54 $0.28 $0.43 Share price at date of grant $2.51 $1.067 $1.84 Exercise price $3.00 $1.22 $2.052 Expected volatility 38% 40% 40% Option life (years) 2.49 2.81 2.66 Risk free interest rate 4.96% 4.67% 4.61% 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. (b) Employee expenses Group Group 2011 2010 $ $ Share options granted in 2010 – recognised in income statement – 59,808 Share options granted in 2010 – capitalised to exploration projects – 211,392 Share options granted in 2011 – recognised in income statement 194,400 – Share options granted in 2011 – capitalised to exploration projects 669,600 – Total recognised as employee costs 864,000 271,200 Page 53 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 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 Group does not require collateral in respect of ﬁnancial assets. At reporting date, cash is held with a number of reputable ﬁnancial institutions. 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 Carrying Contractual 1 year amount cash ﬂows or less 1–2 years $ $ $ $ 2011 Trade and other payables 3,168,171 (3,168,171) (3,168,171) – 3,168,171 (3,168,171) (3,168,171) – 2010 Trade and other payables 1,808,670 (1,808,670) (1,808,670) – 1,808,670 (1,808,670) (1,808,670) – (d) Interest rate risk The Group’s exposure to market interest rates relates primarily to the Group’s short-term deposits (less than 12 months). At balance date, the Group had the following ﬁnancial assets exposed to interest rate risk: Group Group 2011 2010 $ $ Cash and cash equivalents 45,084,267 31,474,941 Term Deposits 34,000,000 – Total Cash and Term Deposits 79,084,267 31,474,941 At balance date, the Group has no ﬁnancial liabilities exposed to variable interest rate risks. 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 24. FINANCIAL INSTRUMENTS (CONTINUED) The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. At 30 June 2011, 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: Proﬁt or Loss Equity higher/(lower) higher/(lower) 2011 2010 2011 2010 $ $ $ $ Group +1% (100 basis points) 747,097 336,808 – – - 1% (100 basis points) (747,097) (336,808) – – The movements in proﬁt or loss are due to higher/lower interest earnings on cash balances and term deposits. 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 (2010: 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. Group Group 2011 2010 $ $ Not later than one year 682,000 682,000 Later than one year but not later than ﬁve years 2,728,000 2,728,000 26. CAPITAL EXPENDITURE COMMITMENTS Group Group 2011 2010 $ $ Not later than one year – 3,600,000 Later than one year but not later than ﬁve years – – 27. CONTINGENCIES The Directors are of the opinion that there are no matters for which provision is required in relation to any contingencies, 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. Page 55 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 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 Position held Appointment detail Non-Executive Directors Mr Paul Chapman Chairperson Appointed 18 April 2007 Mr Richard Laufmann Chairperson – Audit Committee Appointed 16 May 2007 Executive Director Mr Steven Olsen Managing Director Appointed 13 May 2007 Executives Ms Amber Rivamonte Company Secretary Appointed 16 July 2007 Ms Janet Mason CFO Appointed 19 December 2008 Mr Patrick Say Geology Manager Appointed 1 July 2010 Mr Alister Maitland was appointed to the Board 16 September 2011. There have been no other changes to key management personnel between 1 July 2011 and the date of this report. Mr Brian Phillips and Mr Geoffrey Lowe were key management personnel during the prior period. The key management personnel compensation included in “Employee Beneﬁts Expenses” (see note 18) and “Exploration and Evaluation” (see note 10) are as follows: Group Group 2011 2010 $ $ Short term employee beneﬁts 1,006,660 892,821 Post employment beneﬁts 78,449 72,029 Share based payments 129,600 41,328 1,214,709 1,006,178 (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 17 to 32. 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 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 1 < 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: Vested and Held at Exercised Granted Vested Held at Exercisable 1 July during as comp- during 30 June at 30 June 2011 Note 2010 year ensation year 2011 2011 Directors Mr Paul Chapman (i) 250,000 250,000 – – – – Mr Richard Laufmann (ii) 1,000,000 1,000,000 – – – – Mr Steven Olsen (iii) 500,000 500,000 – – – – Executives Ms Amber Rivamonte 73,800 – 80,000 80,000 153,800 153,800 Ms Janet Mason 73,800 – 80,000 80,000 153,800 153,800 Mr Patrick Say 73,800 – 80,000 80,000 153,800 153,800 Vested and Held at Exercised Granted Vested Held at Exercisable 1 July during as comp- during 30 June at 30 June 2010 Note 2009 year ensation year 2010 2010 Directors Mr Paul Chapman (i) 1,000,000 750,000 – – 500,000 250,000 Mr Richard Laufmann (ii) 1,000,000 – – – 1,000,000 1,000,000 Mr Brian Phillips – – – – – – Mr Steven Olsen (iii) 1,500,000 1,000,000 – – 500,000 500,000 Mr Geoffrey Lowe 600,000 – – 200,000 600,000 600,000 Executives Ms Amber Rivamonte 600,000 600,000 73,800 273,800 73,800 73,800 Ms Janet Mason 120,000 120,000 73,800 113,800 73,800 73,800 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. Page 57 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: Received Held at on Exercise Held at Note 1 July 2010 Purchases of options Sales 30 June 2011 2011 Directors Mr Paul Chapman (i) 3,270,000 4,000 250,000 – 3,524,000 Mr Richard Laufmann (ii) 2,500,000 – 1,000,000 – 3,500,000 Mr Steven Olsen (iii) 5,500,000 2,000 500,000 – 6,002,000 Executives Ms Amber Rivamonte 850,000 – – – 850,000 Ms Janet Mason 130,000 – – – 130,000 Mr Patrick Say 120,000 – – – 120,000 Received Held at on Exercise Held at Note 1 July 2009 Purchases of options Sales 30 June 2010 2010 Directors Mr Paul Chapman (i) 2,500,000 20,000 750,000 – 3,270,000 Mr Richard Laufmann (ii) 2,500,000 – – – 2,500,000 Mr Brian Phillips (iv) 311,409 80,000 – 70,000 321,409 Mr Steven Olsen (iii) 4,500,000 – 1,000,000 – 5,500,000 Mr Geoffrey Lowe 10,000 – – 10,000 – Executives Ms Amber Rivamonte 250,000 – 600,000 – 850,000 Ms Janet Mason 10,000 – 120,000 – 130,000 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 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 (iv) Held indirectly through Thylacine Pty Ltd as trustee for the Brian Phillips Superannuation Fund. (d) Director related entities There were no other transactions with Director related entities. 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 2011, such loans totalled $59,786,815 (2010: $22,032,883). 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 1 < REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (continued) 30. GROUP ENTITIES Country of Incorporation 2011 2010 Ownership Interest Parent entity Rex Minerals Ltd Australia Subsidiaries Rex Minerals (SA) Pty Ltd Australia 100% 100% Rex Minerals (Iron Ore) Pty Ltd Australia 100% 100% Rex Hillside (Property) Pty Ltd Australia 100% 100% 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 2011 the parent company of the Group was Rex Minerals Ltd. Group Group 2011 2010 $ $ Result of the parent entity Proﬁt for the period 593,266 2,327,007 Other comprehensive income – – Total comprehensive income for the period 593,266 2,327,007 Financial position of the parent entity at year end Current assets 79,978,364 31,726,682 Total assets 140,184,642 54,055,415 Current liabilities 581,993 626,543 Total liabilities 581,993 626,543 Total equity of the parent entity comprising of: Share capital 137,665,189 52,948,677 Reserves 1,137,690 520,080 Retained earnings 799,770 (39,885) Total equity 139,602,649 53,428,871 32. SUBSEQUENT EVENTS On 16 September 2011 Mr Alister Maitland was appointed Non-Executive Director of Rex Minerals Ltd. There have been no additional subsequent events to 30 June 2011 to disclose at the date of this report. 33. AUDITORS’ REMUNERATION Group Group 2011 2010 $ $ KPMG Australia Audit services 40,000 34,500 Other services – – Page 59 REX MINERALS LTD DIRECTORS’ DECLARATION 1 In the opinion of the directors of Rex Minerals Limited (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) giving a true and fair view of the Group’s ﬁnancial position as at 30 June 2011 and of its performance for the ﬁnancial year ended on that date; and (ii) 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 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 2011. 3 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 22nd day of September 2011 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 1 < 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 2011 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 22 September 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”) a Swiss entity. Page 61 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 Rex Minerals Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2011, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 33 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Group comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 2 the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements of the Group comply with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group’s financial position and of its performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”) a Swiss entity. Page 62 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 1 < 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) giving a true and fair view of the Group’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2. Report on the remuneration report We have audited the Remuneration Report, identified within the directors’ report, for the year ended 30 June 2011. 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 2011, complies with Section 300A of the Corporations Act 2001. KPMG Alison Kitchen Partner Melbourne 22 September 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”) a Swiss entity. Page 63 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 7 September 2011 Name of Ordinary Shareholder Number of Shares % of Shares Held Grand South Development 11,785,777 7.67% BlackRock Investment Management (Australia) Limited 9,008,313 5.86% JP Morgan Chase & Co 8,846,082 5.76% Greenstone Property Pty Ltd 8,008,460 5.20% b) Listing of 20 largest shareholders as at 7 September 2011 Number of % of Rank Name Designation Shares Held Issued Capital 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 J P Morgan Nominees Australia Ltd 27,018,202 17.59% National Nominees Ltd 20,254,862 13.18% Grand South Development Limited 11,785,777 7.67% HSBC Custody Nominees Aust Ltd 6,098,945 3.97% Greenstone Property Pty Ltd 6,008,460 3.91% S & S Olsen PL 6,002,000 3.91% Natalie Laufmann 3,500,000 2.28% Citicorp Nom PL 2,809,705 1.83% Greenstone Property Pty Ltd 2,000,000 1.30% Stone Poneys Nominees PL Chapman S/F A/C 1,772,000 1.15% Stone Poneys Nominees PL Chapman Inv Fund 1,752,000 1.14% Bond Street Custodians Ltd Macquarie Smaller 1,503,765 0.98% Avoca Resources Ltd 1,000,000 0.65% Philippa Jean Laufmann Laufmann Family A/C 910,000 0.59% James Ronald Selkirk 900,000 0.59% Amber Rivamonte 850,000 0.55% Bond Street Custodians Ltd Macquarie Alpha Op 817,081 0.53% UBS Wealth Mgnt Aust Nom 777,752 0.51% RBC Dexis Investor Services BK Cust Account 577,357 0.38% Elliott Brian W & LJ BW Elliott Fam S/F 553,034 0.36% Total 96,890,940 63.07% c) Distribution of shareholders as at 7 September 2011 % of Range Total Holders Units Issued Capital 1 – 1,000 829 485,497 0.32% 1,001 – 5,000 1,843 5,338,523 3.47% 5,001 – 10,000 803 6,331,308 4.12% 10,001 – 100,000 870 25,090,711 16.33% 100,001 – over 118 116,389,480 75.76% Total 4,463 153,635,519 100.00% d) Number of shareholders holding less than a marketable parcel as at 7 September 2011 188 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 64 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 1 < 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 contact A 209 Dana Street Ballarat Victoria 3350 Australia P PO Box 626W Ballarat West Victoria 3350 Australia ABN 12 124 960 523 T +61 (0) 3 5337 4000 F +61 (0) 3 5331 1776 E info@rexminerals.com.au W www.rexminerals.com.au

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