Rex Minerals Limited Annual Report 2015

Plain-text annual report

ANNUAL REPORT THE NEXT GENERATION HILLSIDE: SOUTH AUSTRALIA ANNUAL REPORT CORPORATE DIRECTORY DIRECTORS David Carland (Chairman) Richard Laufmann (Managing Director and CEO) Alister Maitland (Non Executive Director) Mitchell Hooke (Non Executive Director) COMPANY SECRETARY Rosalie Bolingbroke PRINCIPAL and REGISTERED OFFICE Level 19, 11 Waymouth Street Adelaide South Australia 5000 CONTACT DETAILS Rex Minerals Ltd PO Box 3435 Rundle Mall South Australia 5000 Telephone +61 (0) 8 8299 7100 Facsimile +61 (0) 8 8299 7199 Email rex@rexminerals.com.au Website www.rexminerals.com.au OPERATION LOCATIONS OPERATION LOCATIONS SHARE REGISTRARS Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford Victoria 3067 Telephone +61 (0) 3 9415 4000 (investors) 1300 850 505 (investors within Australia) AUDITORS KPMG 151 Pirie Street Adelaide South Australia 5000 BANKERS ANZ Banking Group Limited Level 21, 11 Waymouth Street Adelaide South Australia 5000 Ord Minnett Limited 120 Collins Street Melbourne Victoria 3000 LEGAL ADVISORS Baker & McKenzie 181 William Sreet Melbourne Victoria 3000 A U S T R A L I A SOUTH AUSTRALIA SOUTH AUSTRALIA Wandearah Cowell Pine Point Adelaide ANNUAL REPORT TABLE OF CONTENTS LETTER FROM THE CHAIRMAN REVIEW OF OPERATIONS TENEMENT SCHEDULE DIRECTORS’ REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION LEAD AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT ADDITIONAL SHAREHOLDER INFORMATION 2-3 4-13 13 14-34 35 36 37 38 39-58 59 60 61-62 63 PAGE 1 HEAD OFFICE A Level 19, 11 Waymouth Street Adelaide South Australia 5000 T (08) 8299 7100 F (08) 8299 7199 P PO Box 3435 Rundle Mall South Australia 5000 E rex@rexminerals.com.au W www.rexminerals.com.au minerals ltd ACN 124 960 523 LETTER FROM THE CHAIRMAN For the year ended 30 June 2015 Dear Fellow Shareholder, The year in review has been a tough one for the minerals industry. The minerals commodity markets headed south in dramatic fashion, some overshooting the underlying fundamentals of the supply- demand balance, driven by ongoing global structural adjustment in the social and economic development of emerging economies. Equity markets have reinforced the “herd mentality” of the pro-cyclical tendencies of our industry. In turn, exploration and mining companies have struggled to realign their strategic positioning and operations in such a challenging environment. This said, I am satisﬁed that Rex Minerals (Rex) moved quickly – in most circumstances moving ahead of the cycle – and we have taken the steps needed to realign every aspect of our Company. We are in the best possible position to leverage our Hillside Project and broader exploration portfolio as the product and capital markets recover and present real opportunities for us to capitalise on our strengths. Rex, founded in 2007 as an exploration company, quickly enjoyed success, discovering the Hillside deposit in South Australia. This set us on a path of planning the development of that resource to determine commercial viability and optimum proﬁtability, to the beneﬁt of shareholders and other stakeholders. While the initial plans appropriately made provision for economic contingencies, we have necessarily had to make even greater adjustments than we envisaged, given the extent and duration of the commodity cycle correction and the corresponding negative sentiment in the equity and commodity markets. There were two major elements to these adjustments. First, we made management changes to ensure we had the necessary skills base within the Company that were suited to the changing circumstances and our need to adapt the Hillside Project’s prospective development parameters. This involved changes at the top. On the departure of the former CEO, I temporarily took on the role as Executive Chairman which concluded when Mr Richard Laufmann was appointed to the position of Managing Director. Mr Steven Olsen took on the important role of Chair of the Advisory Board, and at the completion of this work, he elected to resign from the Board, and he continues to be a valuable contributor though a consultancy agreement. This enabled us to appoint Mr Mitchell Hooke, who has a unique skill set, as a Non-Executive Director which perfectly positions him to add value to the Company. Second, in considering the range of options before us in strategically positioning the Company in such a challenging environment, we undertook an Extended Feasibility Study (EFS) that emphasised a phased approach to the development of the Hillside resource, a markedly reduced start-up capital requirement, a reduced physical and existential community footprint and – relative to the tougher market conditions – a more economically viable and attractive project, with healthier prospects of optimising shareholders’ return on equity. Critically, the EFS parameters and proﬁle were consistent with the existing Mining Lease granted to Rex. To provide market participants with more reliable and relevant information on the carrying values of Exploration and Evaluation (E&E) assets, and to afford greater transparency regarding the Company’s current ﬁnancial performance and position, the Company changed its accounting policy for E&E. The new policy is to charge E&E expenditure, excluding the costs of acquisition, against proﬁt or loss as incurred. Adopting this change also brings Rex into line with the majority of its peers in the global mining industry as the Company transitions into development and production. There will be no impact on Rex’s underlying business activities or on the Company’s cash ﬂow as a result of this change in policy which has been applied to the Company’s audited ﬁnancial statements for the 12 months ended 30 June 2015. As a result of the change in accounting policy, Rex’s Statement of Financial Position as at 30 June 2014 has been restated for comparative purposes. HEAD OFFICE A Level 19, 11 Waymouth Street Adelaide South Australia 5000 T (08) 8299 7100 F (08) 8299 7199 P PO Box 3435 Rundle Mall South Australia 5000 E rex@rexminerals.com.au W www.rexminerals.com.au minerals ltd ACN 124 960 523 In a broader and forward comment on market conditions, our view on commodities continues to be that long-term production to deliver into the world’s expanding economies is constrained and that at some stage this signiﬁcant shortfall will see the copper price revert to levels that make Hillside extremely attractive. Additionally, we recognise that stabilisation of the $US price of copper is required for ﬁnancing. We are also acutely aware of the impact of the $US-$A exchange rate and the outlook for Rex and its shareholders. Market volatility is our immediate concern, and we will monitor this, looking for signs that a recovery is emerging so that we can time our approach to developing the Hillside Project. Now with a smaller development footprint, the Hillside Project should enable the Company to tailor an efﬁcient ﬁnancing package, drawing on a broad range of options. Again with the longer term in mind, the greater the share of equity we retain for shareholders, the more value we believe will be created and retained for Rex and its shareholders. Rex remains debt free, has not given up any of its future offtake and does not have any commercial royalties attached to the Project. All of the Hillside resource remains with the Company. The Hillside Project is one of great importance to both Rex and the State of South Australia. It can create substantial beneﬁts for shareholders, the local community and the South Australian economy. Rex takes its social stewardship responsibilities very seriously, and to give effect to this we are committed to community engagement, working directly with the local community on the Yorke Peninsula and the wider regional and State community to ensure the Project strikes the right balance for all stakeholders. You can be conﬁdent that the Rex Board remains focused on delivering on its vision to position the Company well for the development of the Hillside Project in South Australia, with potential for many decades of production in the region. Our management team continues to progress the development plans, and is now working on development of the Program for Environment Protection and Rehabilitation (PEPR) whilst investigating enhancements to the Project. With a small but highly experienced and skilled team in place, conserving our valuable cash resources and preserving the value of the Company’s assets, we believe we are in a good position to take advantage of improvements in market sentiment. On behalf of the Board, I would like to thank our employees and contractors for their efforts and achievements during the year. We would also like to acknowledge the support of our suppliers. Rex is 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 Hillside Project develops. Yours sincerely, David Carland Chairman REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 Rex Minerals Ltd (Rex or the Company) has achieved the following milestones over the year: September 2014 April 2015 May 2015 Rex announced it had accepted the terms and conditions associated with the offer for a Mining Lease at Hillside and that the South Australian Government had granted Rex the Mining Lease. Mr Richard Laufmann was appointed Managing Director and Chief Executive Ofﬁcer. Rex released results of the Extended Feasibility Study (EFS) and an updated Mineral Resource and Ore Reserve. August 2015 Mr Mitchell Hooke was appointed as a Non Executive Director. HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA Rex’s ﬂagship Hillside Project is situated 12 kilometres south of the township of Ardrossan on the Yorke Peninsula, South Australia (Figure 1). Copper-gold mineralisation was ﬁrst discovered at the Hillside Project by Rex in 2008. Targeting of the Project was based on the presence of a small historical copper mine, a broad magnetic feature and subtle gravity anomalies in the area. The Project was also the ﬁrst test of a larger theory that iron-oxide-copper-gold style mineralisation could exist underneath the thin cover rocks on the Yorke Peninsula. Figure 1: Location of the Hillside Project and Rex’s exploration licences on the Yorke Peninsula 3D rendering of the layout of the proposed open pit at Hillside, showing underground geological structures. PAGE 4 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) Rex’s Hillside Project and the other copper targets on the Yorke Peninsula have a number of key advantages compared to many other new copper development opportunities around the world. These include: > Infrastructure – The Hillside Project is connected by a major highway (within a two-hour drive) to the city of Adelaide (population 1.2 million). > People and Equipment – The Hillside Project has the potential to draw most of the required skilled labour and equipment from the surrounding country towns close to the Project as well as from Adelaide. > Power and Water – The area is connected to South Australia’s main power grid and water network. > Port and Town – The Hillside Project is located very near to the port and town of Ardrossan. Ardrossan is a community familiar with mining, given that a nearby open-cut dolomite mine ships its product through the port. The Project also has ready access to the Port of Adelaide by road, a distance of approximately 160 kilometres. > Freehold Land – Rex has purchased freehold land, which covers all of the known and potential copper mineralisation of the Hillside Project. Following the discovery of the Hillside deposit in 2008, the Company raised the funds required to drill out the Hillside deposit down to a depth of approximately 600 metres (m) and this drilling and associated technical work is the basis for the current Mineral Resource and Ore Reserve for the Hillside Project. The latest Mineral Resource at Hillside was the starting point for the Hillside EFS. > MINERAL RESOURCE AND ORE RESERVE The Mineral Resource for the Hillside Project remains one of Australia’s largest open pit copper Mineral Resources. The Mineral Resource estimate, reported in accordance with the 2012 JORC Code, consists of 337 million tonnes (Mt) @ 0.6% copper and 0.14 grams per tonne (g/t) gold, equating to approximately 2.0Mt (4.3 billion pounds) of copper and 1.4 million ounces (Moz) of gold (see Table 1 below). Of the 2Mt of contained copper classiﬁed as a Mineral Resource, approximately 65% is classiﬁed as Measured and Indicated Resources. The updated Mineral Resource (the seventh for the Hillside Project) includes information from 608 diamond drill holes and 245 RC drill holes for a total of 239,000m. The Mineral Resource remains open at depth and towards the north and south. The Hillside Ore Reserve, announced on 25 May 2015 and reported in accordance with the 2012 JORC Code, stands at 82Mt @ 0.62% copper and 0.16g/t gold, equating to approximately 0.51Mt (1.12 billion pounds) of copper and 0.43Moz of gold (see Table 2 on Page 6). The Hillside Ore Reserve was updated (based on the mine design completed during the EFS) to deliver to the processing plant at a nominal rate of 6Mtpa of ore to produce a copper-gold concentrate. The Proved Ore Reserve of 42Mt represents 51% of the total Ore Reserve, with the remaining 49% in the Probable category. Iron ore has been removed from the Ore Reserve due to prevailing iron ore market conditions. However, Rex may reconsider an iron ore processing stream in the future. Zone Oxide Copper Secondary Sulphide Primary Sulphide Total* Resource Category Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Tonnes (Mt) Copper (%) 16 4 0.2 9 3 0.1 47 144 114 337 0.54 0.51 0.70 0.61 0.55 0.60 0.54 0.59 0.60 0.60 Gold (g/t) 0.23 0.13 0.20 0.20 0.12 0.10 0.16 0.13 0.10 0.14 Contained Copper (t) 86,400 20,400 1,400 54,900 16,500 600 253,800 849,600 684,000 Contained Gold (oz) 118,315 16,718 1,286 57,871 11,574 322 241,774 601,862 366,519 1,976,600 1,416,240 Table 1: Hillside Measured, Indicated and Inferred Mineral Resource Summary Table – May 2015 Copper Resources reported above 0.2% cut-off grade. Measured and Indicated Resources are rounded to two signiﬁcant ﬁgures and Inferred Resources are rounded to one signiﬁcant ﬁgure. *Subject to rounding. PAGE 5 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > MINERAL RESOURCE AND ORE RESERVE (CONTINUED) Category Proved Probable Total* Tonnes (Mt) 42 40 82 Copper (%) 0.55 0.70 0.62 Gold (g/t) 0.19 0.14 0.16 Contained Copper (t) 228,049 281,213 509,262 Contained Gold (oz) 250,454 181,051 431,504 Table 2: Hillside Ore Reserve – May 2015 Ore Reserves are rounded to two signiﬁcant ﬁgures. * Subject to rounding. Figure 2: Schematic long section showing the location of the Measured, Indicated and Inferred Resources. View looking to the west. > FUTURE CONVERSION OF MINERAL RESOURCES TO ORE RESERVES AND IRON ORE The latest Mineral Resource at Hillside was the starting point for the Hillside EFS. A key outcome from the EFS was the generation of a revised Ore Reserve (derived from Indicated and Measured Resources). Furthermore, Rex has noted that there exists 20Mt of oxide resource within the open pit shell, that has the potential to be economic. Testing is underway to determine if this can be converted to an Ore Reserve. Iron ore has been removed from the May 2015 Mineral Resource. Given current market conditions, the removal of iron ore from the Mineral Resource and the Ore Reserve estimates is appropriate. However, as noted, Rex may look to reinstate iron ore as a Mineral Resource in the future, should circumstances change. PAGE 6 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > COMPARISON OF MINERAL RESOURCE AND ORE RESERVE STATEMENT TO THE PRIOR YEAR As required under the ASX Listing Rules, Rex conﬁrms that it is not aware of any new information or data that materially affects the information included in the May 2015 Mineral Resource and Ore Reserve Statement. All material assumptions and technical parameters underpinning the estimates in the May 2015 Mineral Resource and Ore Reserve Statement continue to apply and have not materially changed. The Hillside Mineral Resource and Ore Reserve as reported herein are current as at 30 June 2015 and there have been no changes (material or otherwise) since they were last reported on 25 May 2015. June 2014 June 2015 Mineral Resources Tonnes (Mt) Cu (%) Au (g/t) Fe (%) Tonnes (Mt) Cu (%) Au (g/t) Fe (%) Hillside 337 0.6 0.14 15.7 337 0.6 0.14 NA Table 3: Comparison Table – Mineral Resources June 2014 June 2015 Ore Reserves Tonnes (Mt) Cu (%) Au (g/t) Fe (%) Tonnes (Mt) Cu (%) Au (g/t) Fe (%) Hillside 180 0.52 0.13 14.4 82 0.62 0.16 NA Table 4: Comparison Table – Ore Reserves There have been minor amendments to the reported Mineral Resource from the previous year (stated in the 2014 Annual Report) and these have been based on additional drill hole data and interpretation improvements. Iron ore has been removed from the Mineral Resource. Since the Ore Reserve statement reported in the 2014 Annual Report, there has been a material increase in Ore Reserve grades (from 0.52% copper to 0.62% copper and 0.13g/t gold to 0.16g/t gold). Grade increases resulted from utilising a smaller Selective Mining Unit (SMU), revised mining equipment selection for a 6Mtpa open pit operation and a smaller, higher-grade pit shell. A material decrease in Ore Reserve tonnes (180Mt to 82Mt) from that which was reported in the 2014 Annual Report is a reﬂection of the decision to stage the Project. The staging approach does not prevent any future conversion of Mineral Resources to Ore Reserves, given favourable market conditions. The iron ore has been removed from the Mineral Resource and Ore Reserve Statements due to prevailing iron ore market conditions however, Rex may reconsider an iron ore processing stream in the future. > SUMMARY OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS FOR THE REPORTING OF MINERAL RESOURCES AND ORE RESERVES Mineral Resources and Ore Reserves are estimated by qualiﬁed employees and consultants in accordance with the 2012 JORC Code, using industry standard techniques and internal guidelines for the estimation and reporting of Ore Reserves and Mineral Resources. These estimates and the supporting documentation are then reviewed by qualiﬁed Competent Persons. All Ore Reserve estimates are prepared in conjunction with feasibility studies which consider all material factors. The Mineral Resource and Ore Reserve Statements included in the 2015 Annual Report are reviewed by qualiﬁed Competent Persons from the Company prior to inclusion. An audit and review of sampling techniques, data collection, modelling parameters, geo-statistical evaluation, block-grade creation and grade estimation for the Hillside Mineral Resource was undertaken by AMC Consultants Pty Ltd in May 2013, building on previous progressive audits. No matters were noted that would impair the validity of the June 2013 Mineral Resource estimate. Although this study was completed on the June 2013 Mineral Resource estimate, it is the Competent Person’s view that no material changes have occurred between the June 2013 estimate and the May 2015 estimate used in the EFS and therefore, the conclusions noted remain valid. PAGE 7 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > HILLSIDE PROJECT – EXTENDED FEASIBILITY STUDY In August 2014, following a dramatic drop in commodity prices, particularly for iron ore, the Company changed its focus towards a copper-gold only project, with lower capital investment and higher copper head grades. An Advisory Board of industry experts was engaged by Rex to oversee the alternative development options for the Hillside Project. This work was termed the EFS. The results from the Hillside EFS were announced to the market on 25 May 2015, with the outcomes signiﬁcantly improving the Project’s competitive fundamentals and materially reducing the upfront capital investment. With the objectives of the Advisory Board being met, the Board of Rex Minerals resolved to dissolve the Advisory Board on 30 June 2015. Key outcomes from the EFS included: > A stand-alone copper-gold project with an initial 13+ year mine life at a processing rate of 6Mtpa. > Annual average production over the ﬁrst 12 years of 129,000 tonnes of copper concentrate containing payable metal of: (cid:129) 35,000 tonnes of copper; and (cid:129) 24,000 ounces of gold. > A processing head grade of 0.66% copper and 0.17g/t gold over the ﬁrst 12 years of production. > Pre-production capital investment of A$480 (US$360) million and average operating costs (C1) of US$1.61/lb of copper (includes by-product credits). > NPV(8%) of A$188 million (post tax) and an IRR of 14% under the base case assumptions (see Table 9). > A construction workforce of close to 500-550. The simpliﬁed and streamlined plan delivers a wide range of operational beneﬁts, including: > Smaller start-up footprint; > Signiﬁcant reduction in operating ﬂeet; > Simpler process ﬂowsheet and material handling complexity; > Lower ramp-up rate plus a more manageable production rate that leads to reduced economic risk; and > Signiﬁcantly higher equipment productivities. The following tables summarise the key outcomes of the Hillside EFS. Life of Mine (LOM) Key Metrics Project Revenue Operating Costs Pre-tax project operating cash ﬂows Pre-production capital A$4,264 million A$2,672 million A$1,593 million A$480 million (US$360 million) C1 cash costs (includes by-product credits) US$1.61/lb Estimated average workforce numbers (during production) ~500 Pre-tax Net Present Value (8%) Post-tax NPV (8%) Internal Rate of Return (IRR) Table 5: Life of Mine outcomes from the Hillside EFS A$309 million A$188 million 14% PAGE 8 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > HILLSIDE PROJECT – EXTENDED FEASIBILITY STUDY (CONTINUED) Pre-Production Capital Construction (Plant, Equipment, TSF) Mining Fleet Pre-strip Other Infrastructure and Utilities Owners costs, Surface Works, First Fills, Spares, Other Sub-Total Contingency Total Up-front Capital Table 6: Pre-Production summary Operating Cost Summary Strip Ratio (after initial pre-strip) Average Mining Cost per tonne (LOM) A$206 million A$66 million A$80 million A$21 million A$67 million A$440 million A$40 million A$480 million (US$360 million) 6.7:1 (waste:ore) A$2.24/t Average Mining Cost per ore tonne (LOM) (after initial pre-strip) A$17.75/t Processing Cost per tonne Other Operating (G&A) Costs per tonne Average transport Costs per ore tonne of concentrate Treatment and Reﬁning Costs per ore tonne By-product Credit per tonne Average Total Operating Costs per tonne (after pre-strip) C1 Cash Cost (includes by-product credits) Table 7: Operating Cost Summary > COPPER MARKET AND EFS FINANCIALS A$9.15/t A$1.92/t A$2.07t A$4.34/t (A$6.52/t) A$28.71/t US$1.61/lb Market analysis has identiﬁed that future copper supply will become more reliant on the development of a new generation of copper mines. The average incentive copper price required for the bulk of these new copper mines is reported by some analysts to be in excess of US$3.00/lb. Broad market consensus implies that the under-investment in copper in the immediate future is likely to lead to a shortage in supply from 2017 onwards (see Figure 3 on Page 10). Passing through Rex owned land, with lookout points to the Hillside Project and beyond, a new walking trail has been constructed around the entire Yorke Peninsula coastline. Ultra class equipment being used in a similar method to that proposed for the Hillside Project. PAGE 9 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > COPPER MARKET AND EFS FINANCIALS (CONTINUED) Figure 3: Projected copper supply gap for worldwide copper market Information courtesy of CRU International. Rex considers that these fundamentals will lead to a period of improved copper prices and that the Hillside EFS results place the Company in a strong position to take advantage from any sustained improvement in prices. The results from the Hillside EFS have positioned the Project as one of the more attractive new development projects globally. Rex has completed the Hillside EFS at a time when commodity prices in general are depressed. In this environment, the Hillside EFS indicates that the Project, if developed, could produce positive cash ﬂows. However, the real value of the Project lies in its potential to start producing at a time when copper prices could exceed US$3.50/lb. It is, therefore, worth highlighting the ﬁnancial results from the EFS at both US$3.00/lb (base case assumption) and US$3.50/lb copper prices (Table 8). Life of Mine (LOM) Key Metrics Project Revenue Operating Costs Pre-tax project operating cash ﬂows US$3.00/lb A$4,264 million A$2,672 million A$1,593 million US$3.50/lb A$4,975 million A$2,700 million A$2,275 million Pre-production capital A$480 million (US$360 million) A$480 million (US$360 million) C1 cash costs Estimated average workforce numbers Pre-tax NPV (8%) Post-tax NPV (8%) Internal Rate of Return (IRR) US$1.61/lb ~500 A$309 million A$235 million 14% Table 8: Life of Mine outcomes from the Hillside EFS US$1.61/lb ~500 A$651 million A$433 million 21% PAGE 10 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > HILLSIDE PROJECT – ENVIRONMENTAL, SOCIAL AND COMMUNITY The Department for State Development (DSD) issued Rex a mining lease (ML) 6438 on 16 September 2014 under the South Australian Mining Act 1971. This followed a comprehensive assessment of the environmental and social impacts and beneﬁts of the Hillside Project incorporating an extensive process of community consultation, as detailed in the Mining Lease Proposal (MLP) submitted to DSD in August 2013. The MLP detailed the extent of mining operations, the process and outcome of community consultation, the potential impacts both beneﬁcial and adverse, and the control/remediation measures governing mining and processing operations across the life of the mine to each of the speciﬁc phases of construction, operations, rehabilitation and post mine closure. The Hillside’s Community Reference Group, initiated in 2011, provided the initial platform for community consultation and has now transformed to the Hillside Community Voice (HCV), which will provide the basis for continuing community engagement through the course of the Hillside Project. The key areas of concerns raised throughout this consultative process were dust, noise, potential impacts on adjacent agricultural land and the marine environment, and site rehabilitation measures and post mining land use options. The environmental management plans, closure plan and social management plans, which include the complaints register and resolution process, local employment plan and local business development plan, are currently being developed in consultation with the HCV and other external stakeholders such as the local council, government bodies and other industry and community representative groups. The tangible output from community consultation to date has been a platform of mutual discovery and provided the opportunity to share knowledge and identify skills requirements and capacity building within and external to the community for prospective mutual beneﬁt in the course of the Hillside Project development. For example, impact assessments have been presented and published on all key issues identiﬁed as priorities by the community. This process, encapsulated in Rex’s ‘Community Engagement Plan’ (CEP), which was approved by DSD on 12 June 2015, provides a more developed framework of how Rex will deliver on its commitment to meaningful community engagement through the course of the Hillside Project. The identiﬁed socio-economic beneﬁts of the Hillside Project lie incontrovertibly in the contribution to the region’s and the State’s broader economic development founded in increased direct and indirect employment opportunities, related growth in physical and social infrastructure and business enterprise providing goods and services, stimulus for population growth, and diversiﬁcation of its current agricultural and tourism industries. For example, to date there have been over 1,900 expressions of interest (EOI’s) for employment at Hillside with over 500 of those EOI’s locally based which can be supported by existing and potentially expanded social infrastructure (housing, schools, health and community facilities), and physical infrastructure notably in transport and water and power utilities. Rex and Narungga Nation representatives attend MMC lunch. Rex is committed to working with the local Indigenous community to mutual beneﬁt on a platform of respecting Indigenous culture, heritage, and special connections to lands and waters. Evidence of Indigenous cultural heritage is wide spread throughout the region and within the vicinity of the proposed Hillside Project area. A Native Title Claim has been lodged covering the entire Yorke Peninsula; however, no Native Title agreements are required in relation to the Mining Lease (ML) or Extractive Mineral Lease (EML). PAGE 11 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > EXPLORATION – HILLSIDE AND BEYOND Rex believes that the potential to make another copper discovery on the Yorke Peninsula is high. Rex’s regional exploration strategy is designed to follow through with the theory that the underlying Yorke Peninsula rocks could host multiple large- scale copper-gold ore deposits. The Hillside Project was the ﬁrst test of this theory and the Company considers there could be other similar, or possibly larger, deposits that remain hidden underneath a thin layer of cover rocks. Rex has maintained a focus on target generation within the Company’s tenure on the Yorke Peninsula and beyond the immediate Hillside area, but is of the view that it has only scratched the surface in terms of prospect testing. The regional targeting rationale adopted by Rex has been to break down the many potential targets on the Yorke Peninsula and prioritise those that Rex feels have the potential for near-term growth opportunities that can leverage off the Hillside Project. Figure 4 highlights these priority targets. Figure 4: Priority exploration targets identiﬁed on the Yorke Peninsula PAGE 12 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2015 HILLSIDE PROJECT, YORKE PENINSULA, SOUTH AUSTRALIA (CONTINUED) > NOTES Forward-Looking Statements The results contained within this report 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 statements.” Base Case Assumptions Price and exchange rate assumptions for the life of the operation are shown in Table 9. Quotes for the pre-production capital cost estimates in the EFS assumed an exchange rate of AUD:USD $0.75. A longer-term exchange rate assumption of $0.70 was used for the life of the operation. Commodity and Exchange Rate Copper (US$ real) Gold (US$ real) Exchange Rate (AUD:USD) Assumptions US$3.00/lb US$1,250/oz $0.70 Table 9: Hillside EFS Base Case Assumptions Unless otherwise stated, all dollar amounts given are in Australian dollars and are not subject to inﬂation/escalation factors. Competent Persons’ Report – Ore Reserves The information in this report that relates to Ore Reserves is based on information compiled by Mr Charles McHugh who is a Member of the Australasian Institute of Mining and Metallurgy and is a consultant to Rex Minerals Ltd. Mr McHugh has sufﬁcient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as deﬁned in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr McHugh consents to the inclusion in this report of the matters based on information in the form and context in which it appears. Competent Persons’ Report – Mineral Resources 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 2012 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 information in the form and context in which it appears. TENEMENT SCHEDULE for the year ended 30 June 2015 Tenement Location Lease Status Area Type Current Area Grant Date EL5056 EL5055 EL4514 EL5508 EL5133 EL4779 EL5070 ML6438 EML6439 MPL146 Moonta South Moonta South Moonta South Moonta South Wandearah Wandearah Cowell Hillside Hillside Hillside Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted km² km² km² km² km² km² km² Ha Ha Ha 416 1,262 24 151 96 81 85 2,998 225 94 02/08/2012 02/08/2012 10/06/2010 05/11/2014 01/08/2012 13/10/2011 24/10/2012 16/09/2014 16/09/2014 16/09/2014 PAGE 13 DIRECTORS’ REPORT ANNUAL REPORT PAGE 14 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 The Directors present their report together with the ﬁnancial report of Rex Minerals Ltd (the Company) and its subsidiaries (the Group or Rex), for the ﬁnancial year ended 30 June 2015 and the auditors’ report thereon. 1. DIRECTORS The Board has four members. Non-Executive Directors are considered by the Board to be independent of management and free from any business relationship or other circumstance that could materially interfere with the exercise of objective, unfettered or independent judgement. Further information on the process for assessing independence materiality levels is located in the Board Charter, available on Rex’s website. The Board considers that a diversity of skills, backgrounds, knowledge, experience and gender is required in order to effectively govern the business. The Board and its Committees actively work to ensure that the Executive and Non-Executive Directors have the right balance of skills, experience, independence and Company knowledge necessary to discharge their responsibilities in accordance with the highest standards of governance. The Non- Executive Directors contribute international and operational experience; understanding of the sectors in which the Company operates; knowledge of world capital markets; and an understanding of the health, safety, environmental and community challenges that the Company faces. The Board works together as a whole to oversee strategy for the Group and monitor pursuit of the corporate objectives of the Company. In addition, the Board has extensive access to members of senior management. During the year, the Board completed a self evaluation of its performance, composition, skills, knowledge, experience, independence and diversity to ensure its administers its duties and responsibilities effectively. Due to the departure of the former Managing Director, announced on the 8 August 2014, whilst the search was conducted for the position of Chief Executive, Dr David Carland performed the role of Executive Chairman. This concluded on 23 April 2015, when Mr Richard Laufmann was appointed to the position of Managing Director of the Company. During the period Dr Carland performed in the role of Executive Chairman, he did not receive any further payment in addition to his annual director fee, he did not have a separate employment agreement, nor did he perform the duties associated with day-to-day management of the Company. In light of the circumstances, the Board is of the opinion that Dr Carland’s interim appointment did not compromise his independence as at 30 June 2015. The Directors of the Company at any time during or since the end of the ﬁnancial year are: Name, qualiﬁcations and independence status Dr David Carland Independent Non-Executive Chairman (PhD (Econometrics), MEc, BEc (Hons), MAICD) Experience, special responsibilities and other directorships Dr David Carland has over 30 years of investment banking and commercial experience in both the private sector and government. He is the co-founder and part owner of BurnVoir Corporate Finance Limited (“BurnVoir”), an independent specialist investment banking ﬁrm focusing on the energy, resource and infrastructure sectors. Prior to establishing BurnVoir, Dr Carland was executive vice president and head of energy and power at Bankers Trust and before that he was deputy managing director and head of corporate ﬁnance at UBS Australia. Dr Carland has held senior executive roles with the CRA Group (now Rio Tinto), including management of the commercial arrangements for the purchase of the Gladstone Power Station. His roles have seen him based in the US and London. Dr Carland was previously a non-executive director of Indophil Resources NL. Dr Carland was appointed a Director of Rex Minerals on 12 December 2013 and Chairman on 1 January 2014. He is a member of the Audit and Remuneration Committees. Mr Alister Maitland Independent Non-Executive Director (B.Com, FAICD, FAIM, SF Fin) Mr Alister Maitland is a former Executive Director of the ANZ Banking Group, with a background in international ﬁnance and banking experience that 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 country’s operations. Mr Maitland 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, director of Lihir Gold Ltd and Malayan Banking Berhad (Maybank). Mr Maitland was appointed a Director of Rex Minerals on 16 September 2011, is Chairman of the Audit Committee and a member of the Remuneration Committee. PAGE 15 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 1. DIRECTORS (CONTINUED) Name, qualiﬁcations and independence status Mr Mitchell Hooke Independent Non-Executive Director (B.Rur.Sc., U.N.E., M.A.I.A., MAICD) Mr Richard Laufmann Managing Director and Chief Executive Ofﬁcer (B.Eng (Mining), MAusIMM, MAICD) Experience, special responsibilities and other directorships Mr Mitchell Hooke is globally-recognised for his in-depth knowledge and strategic leadership in Australian and global public policy advocacy as well as delivering on practical operational issues in the development of economic, social and environmental policy and practice across the minerals industry, agriculture and food and grocery industries in Australia and internationally. Mr Hooke was the chief executive ofﬁcer of the Minerals Council of Australia from mid- 2002 until the end of 2013. He is the Chairman of Partners in Performance International and with a long and strong rural background, he is an Independent Director of Grain Producers Australia, the national not-for-proﬁt body representing Australia’s broadacre grain, pulse and oilseed producers. He is also a Non-Executive Director of coal-based technology company GTL Energy Ltd and was formerly a non-executive director of Elgin National Industries – a then private equity minerals resources engineering and construction management and mining equipment company based in the USA. Mr Hooke was appointed a Director of Rex Minerals on 4 August 2015. He is a member of the Audit and Remuneration Committees. Mr Richard Laufmann is a mining engineer with a proven track record in the resources sector both in Australia and overseas. Mr Laufmann is a founding Director of Rex Minerals and was formally a Non-Executive Director (since 2007). He was appointed Managing Director of Rex on 23 April 2015. Mr Laufmann brings to the Rex management team broad experience in the resources sector, both corporate and operational. His most recent engagement was for seven years as CEO of Indophil Resources (until recently, an ASX listed company with a large copper-gold Joint Venture in the Philippines) and prior to that, ﬁve years as CEO of Ballarat Goldﬁelds. Mr Laufmann also previously led WMC Resources Limited’s Gold Business as general manager – operations and has extensive operational experience. Mr Steven Olsen Former Executive Director (B.Sc.(Hons), M.Sc.(MinEx), Grad.Dip (F&I), MAusIMM) Mr Steven Olsen has over 20 years’ experience in the resources industry, with a background of 14 years working as a mine geologist and exploration geologist, (predominantly in Western Australia and Canada) on nickel and gold deposits. Mr Olsen has had considerable exploration success for both nickel and gold mineralisation throughout his career. Mr Olsen was the founding managing director (2007) of Rex until 2012 and continued on the Board until his recent resignation on 30 June 2015. He remains a consultant to Rex Minerals. Mr Mark Parry Mr Parry departed the Company on 8 August 2014. Former Managing Director and CEO (Met Cert, BCom, HBS (AMP), GAICD) PAGE 16 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 2. COMPANY SECRETARY Ms Rosalie Bolingbroke B.Com (Commercial Law), Grad.Dip. (ACG), FGIA, FCIS, AIPA, JP Ms Rosie Bolingbroke has had over 17 years of experience in company secretary roles, is a Fellow of the Governance Institute of Australia and holds a Bachelor of Commerce (Commercial Law) degree. Previously, Ms Bolingbroke was corporate secretary for Australian Central Credit Union Ltd (trading as People’s Choice Credit Union) and prior to that, company secretary for global engineering, construction and services company, KBR’s Australian group of subsidiaries. Her 22 years with KBR included providing corporate governance and para- legal support to its energy, infrastructure, minerals, government services and commercial divisions in Australia and the Asia Paciﬁc region. 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 Remuneration Committee Meetings4 Dr David Carland Mr Richard Laufmann Mr Alister Maitland Mr Mitchell Hooke1 Mr Steven Olsen2 Mr Mark Parry3 A 13 11 13 – 11 1 B 13 13 13 – 12 1 A 2 2 2 – 2 – B 2 2 2 – 2 – A – – – – – – B – – – – – – A – Number of meetings attended. B – Number of meetings held during the year whilst the Director held ofﬁce. 1 Mr Hooke was appointed a Director on 4 August 2015. 2 Mr Olsen resigned from the Board on 30 June 2015. He was not a member of the Audit or Remuneration Committees, but attended meetings as appropriate by invitation. 3 Mr Parry departed the Company on 8 August 2014. 4 Any matters for consideration by the Remuneration Committee were managed directly by the Board and accordingly no separate meetings were held by the Remuneration Committee during the year. 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 3rd Edition of the Corporate Governance Principles and Recommendations 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. PAGE 17 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) The following table summarises Rex’s position in regard to Corporate Governance as at 30 June 2015: Recommendation Comment 1 Lay solid foundations for management and oversight. 1.1 A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management. 1.2 A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. A listed entity should establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated. 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. 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. A copy of Rex’s Board Charter is available on Rex’s website. Given the size and structure of Rex, the Directors have not established a Nominations Committee (see 2.1) however; the Board considers that part of its responsibilities includes overseeing arrangements for the effective appointment of new Directors, including undertaking appropriate checks before appointing a person, or putting forward to shareholders a candidate for election, as a director. The Notice of Meeting for Rex’s AGM provides shareholders with relevant information about each Director standing for election or re-election, including details of relevant skills and experience for each Director, as well as a statement by the Board whether it supports the election or re-election. 1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Rex has a written agreement with each Director and senior executive setting out the terms of their appointment. 1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. The Company Secretary has a direct reporting line to the chair of the Board. PAGE 18 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment 1.5 A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them, and either: (1) (2) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has deﬁned “senior executive” for these purposes); or if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as deﬁned in and published under that Act. 1.6 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 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. In order to promote gender diversity, Rex engages 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 gender diversity are as follows: Maintain female representation at 20% of the total workforce and senior management as Rex progresses through the next stages of Company development. During each Director selection and appointment process, the professional search ﬁrm supporting the Board will provide at least one credible and suitably experienced female candidate. This recommendation is satisﬁed. At 30 June 2015, women made up 38% of the total Rex workforce directly employed by the Company. There are currently no women on the Board of Rex. A copy of the Rex’s Code of Conduct (which sets out Rex’s policy concerning diversity) is available on Rex’s website. 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. The Board has instead adopted a self-evaluation process to measure its own performance, and the performance of its Committees and individual Directors. The Annual Report discloses whether a performance evaluation was undertaken in the reporting period in accordance with that process. As part of the process of continual evaluation of the Board and facilitated by external consultant Swann Global, the Board acted and signiﬁcantly restructured itself and Committees during the reporting period, including: > The departure of the former Managing Director; > Dr Carland performing the role as Executive Chairman for an interim period whilst the search was conducted for the position of Chief Executive; > The appointment of Mr Laufmann as Managing Director and Chief Executive; > Mr Laufmann’s resignation from the Audit and Remuneration Committees on the conclusion of his role as Non-Executive Director; > The resignation of Mr Olsen as Executive Director; and > The new appointment of Mr Hooke as Non-Executive Director and Chairman of the Remuneration Committee. PAGE 19 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment Senior executive performance is assessed annually. Details of the evaluation process is disclosed in the Remuneration Report contained in the Annual Report. A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively. The Board does not have 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 to addresses matters that would otherwise be considered by a nomination committee. 1.7 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 2 Structure the Board to add value. 2.1 The board of a listed entity should: (a) have a nomination committee which: (1) has a least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. The Board adopts an internal process of annually evaluating the performance, skills and knowledge of the Board. Although the Board has not adopted a formal skills matrix in this regard, the following material is included in the Annual Report: > the skills, experience and expertise relevant to the position of Director held by each Director in ofﬁce at the date of the Annual Report; > a statement as to the mix of skills and diversity for which the Board is looking to achieve in membership of the Board; and > 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. PAGE 20 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment 2.3 A listed entity should disclose: The following material is included in the Annual Report: the names of the directors considered by the board to be independent directors; > the names of the Directors considered by the Board to constitute independent Directors and Rex’s materiality thresholds; (a) (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. 2.4 A majority of the board of a listed entity should be independent directors. 2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. 2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. > the existence of any of the relationships listed in Box 2.3 of the ASX Corporate Governance Principles and Recommendations (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; and > the period of ofﬁce held by each Director in ofﬁce at the date of the Annual Report. This recommendation was not satisﬁed for majority of the reporting period. This is because current Non-Executive Chairman Dr David Carland performed the function of Executive Chairman for the interim period between the resignation of Rex’s former CEO Mr Mark Parry, in August 2014 and the appointment of Mr Richard Laufmann as current CEO in April 2015. In April 2015, Dr Carland stepped down as Executive Chairman and resumed the role Non-Executive Chairman. However, although Dr Carland performed in an executive capacity during this interim period, the Board nevertheless considers Dr Carland to be an independent director. The reasons for this view are more fully set out in the Annual Report. Non-Executive Directors Mr Alister Maitland and Mr Mitchell Hooke (recently appointed) are also considered to be independent. Accordingly, Rex is currently compliant with this recommendation. Dr David Carland is currently the Non-Executive Chairman (and he is not the CEO). As noted above, Dr Carland is considered to be an independent director at 30 June 2015. New Directors are provided with a formal letter of appointment which contains information regarding: > The rights, duties and responsibilities of Directors; and > The role of Board Committees. To enable performance of their duties, all Directors (including new Directors): > are provided with appropriate information in a timely manner and can request additional information at any time; > have access to the Company Secretary; and > have access to appropriate continuing professional development opportunities. In particular, the Board regularly receives presentations as part of ongoing Director education, including presentations from internal and external resources. PAGE 21 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment A listed entity should act ethically and responsibly. 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). Rex also has in place a policy concerning trading in Rex securities. The Share Trading policy includes detailed requirements for Directors, ofﬁcers and key management regarding when they can trade Rex securities. Copies of Rex’s Code of Conduct and Share Trading Policy are available on its website. A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting. The Board has an Audit Committee. The members of the Audit Committee are Mr Alister Maitland, Dr David Carland and Mr Mitchell Hooke. Mr 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. See 2.4 regarding independence of directors. The following material is included in the Annual Report: > the names and qualiﬁcations of those appointed to the Audit Committee and their attendance at meetings of the committee; and > the number of meetings of the Audit Committee (contained within the Directors’ Report). > A copy of the Audit Committee Charter is available on Rex’s website. 3 Act ethically and responsibly. 3.1 A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it. 4 Safeguard integrity in corporate reporting. 4.1 The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) (5) the relevant qualiﬁcations and experience of the members of the committee; and in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. PAGE 22 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment 4.2 The board of a listed entity should, before it approves the entity’s ﬁnancial statements for a ﬁnancial period, receive from its CEO and CFO a declaration that, in their opinion, the ﬁnancial records of the entity have been properly maintained and that the ﬁnancial statements comply with the appropriate accounting standards and give a true and fair view of the ﬁnancial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. In accordance with this recommendation, before it approves Rex's ﬁnancial statements for a ﬁnancial period, Rex ensures that it receives from its CEO and Acting CFO a declaration that, in their opinion, the ﬁnancial records of Rex have been properly maintained and that the ﬁnancial statements comply with the appropriate accounting standards and give a true and fair view of the ﬁnancial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. 4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. The external auditor attends Rex’s AGM. Shareholders may submit written questions to the auditor to be considered at the meeting in relation to the conduct of the audit and the preparation of the Audit Report. 5 Make timely and balanced disclosure. 5.1 A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it. 6 Respect the rights of security holders. 6.1 A listed entity should provide information about itself and its governance to investors via its website. A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities. Rex has established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability for compliance. Rex’s Continuous Disclosure Policy sets out Rex’s policies and procedures with regard to complying with its disclosure obligations under the Listing Rules. A copy or Rex’s Continuous Disclosure policy is available on its website. A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively. 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; > proving a copy of its annual report to all requesting shareholders; > notice of meeting documentation to shareholders; > encouraging shareholder participation at AGMs; and > provision of all information regarding Rex and its governance on its website. In particular, Rex uses its website to make available to shareholders information regarding its business, including copies of its Annual Report, market releases and current activities. PAGE 23 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment 6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. Due to the size and complexity of its business, Rex has not established a formal investor relations program. However, Rex seeks to facilitate effective communication with investors though the communication channels described above (see 6.1). 6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. In relation to shareholder meetings, shareholders are invited to submit questions either before or during the meeting, with the Chairman answering as many as practical during the meeting. The Chairman also encourages shareholders at meetings to ask questions regarding Rex’s current activities. These may be responded to directly by the Chairman, or at his discretion, may be referred to another Director or member of the management team. Shareholders have the option of electing to receive all shareholder communication electronically through Rex’s share registry. Rex’s Share Register is managed and maintained by Computershare. Contact details can be found on Rex’s website. A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework. Although there is currently no standalone committee to oversee risk, 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. The Board evaluates all risks relating to Rex at regular intervals throughout the year to ensure that all existing risks are being monitored and managed effectively and that Rex is not being exposed to any new risks. 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. 7 Recognise and manage risk. 7.1 The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. PAGE 24 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment 7.2 The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place. 7.3 A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. The Board reviews the Company’s risk management framework on a regular basis to ensure it continues to be sound. The Annual Report contains details about whether such a review has been taken in the reporting period (see 7.4). The Board does not consider a separate internal audit function is necessary at this stage. One of the Audit Committee responsibilities is to evaluate compliance with Rex’s internal compliance and control systems. While Rex is exposed to a number of general risks, given Rex’s present circumstances and stage of development, Rex does not consider that it currently has material exposure to any economic, environmental or social sustainability risks. However, this may change in the future as Rex moves towards development. During the year, as part of the EFS process, the Company completed a risk management review. The Board considered the following risks: > Economic risks: General economic conditions such as movement in interest and inﬂation rates and currency exchange ﬂuctuations. > Tenement title: Interests in tenements are governed by Federal and State legislation which carries with it expenditure and reporting commitments as well as conditions which, if not met may result in loss of the Company’s interest or title in the tenements. > Commodity price ﬂuctuation: The Company is exposed to ﬂuctuations in the price of commodities and in particular, copper and gold which could impact on its proposed operations. > Upgrading resource categories and conversion of resources to reserves: Reserve and resource estimates are expressions of judgment based on knowledge, experience and industry practice and may be subject to change if new information or techniques become available. > Environmental risks: Risks associated with the operations of the proposed mine are assessed in respect of Australian Federal and State legislation and regulations. > Social sustainability and community inclusion: The Company maintains open communication with the community surrounding the proposed operations to reduce any foreseeable negative impacts on the community. PAGE 25 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 4. CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation Comment A listed entity should pay director remuneration sufﬁcient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders. Rex has a Remuneration Committee. The members of the Remuneration Committee are Mr Mitchell Hooke, Dr David Carland and Mr Alister Maitland. Mr Hooke is an independent Chair of the Remuneration Committee (and he is not Chair of the Board). See 2.4 regarding independence of directors. The Directors consider that the Remuneration Committee is of sufﬁcient size, independence and technical expertise to discharge its mandate effectively. The number of times the Committee sits is disclosed in the Annual Report. Details of Directors’ and executives’ remuneration, including the principles used to determine the nature and amount of remuneration, are disclosed in the remuneration report section of the Annual Report. A copy of Rex’s Remuneration Committee Charter is available on its website. Rex's Share Trading Policy expressly prohibits relevant participants from entering into arrangements that limit the economic risk of participating in the Rex's incentive schemes prior to the relevant securities becoming fully vested. A copy of Rex’s Share Trading Policy is available on its website. 8 Remunerate fairly and responsibly. 8.1 The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director; and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. 8.3 A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. PAGE 26 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 5. PRINCIPAL ACTIVITIES The principal activity of the Group during the course of the ﬁnancial year was minerals exploration and evaluation in Australia. Rex Minerals intends to make the best use of and fully exploit, the Hillside Resource and remains committed to the development of the Hillside Project. There were no signiﬁcant changes in the nature of the Group’s principal activities during the year. 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 2016 and later ﬁnancial years: > Regulatory Approval – Following acceptance of the Mining Lease, continuation of the work on the development of the PEPR and associated environmental and social management plans. > Financing – The Company is working to develop a ﬁnancing package with the goal of maximising shareholder exposure to the future cash ﬂows from the Hillside Project. > Organisation – Plan for an organisational transition from an explorer to a developer to a producer. > Occupational and Community Safety and Health – Develop and adapt safety systems and processes to enable a proactive approach to risk assessment and risk management as the Company transitions into construction and mining-related production. > Infrastructure – Finalise access to and upgrading of, infrastructure required to support the Hillside Project. > Exploration and Evaluation – Maintain near-mine and regional exploration, with the aim of identifying multiple large-scale copper deposits that can complement the Hillside Project on Rex’s tenements on the Yorke Peninsula. 6. OPERATING AND FINANCIAL REVIEW The income statement shows a loss after tax of $8.7 million (2014: loss $17.0 million – restated) for the year. The Group has no bank debt. As at 30 June 2015, the Group had a cash position of $7.9 million (2014: $2.59 million) and funds on deposit of $3.0 million (2014: $19.0 million). Operating activities resulted in a cash outﬂow for the year of $10.7 million (2014: cash outﬂow of $14.5 million – restated). 7. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the Directors, there were no other signiﬁcant changes in the state of affairs of the Group during the year ended 30 June 2015, not otherwise disclosed within this Annual Report. 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 4 August 2015, the Company announced that Mr Mitchell Hooke was appointed as a Non-Executive Director. Other than the event described above, subsequent to 30 June 2015, there has not arisen in the interval between the end of the ﬁnancial year and the date of this report any other item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect signiﬁcantly the operations of the Group, the results of those operations, or the state of affairs of the Group in future ﬁnancial years. 10. LIKELY DEVELOPMENTS Likely developments are the continued minerals exploration on the tenements owned or controlled by the Group and the advancement of the Hillside Project. Other than that which is disclosed throughout the Annual Report, further information about likely developments in the operations of the Group and the expected results of those operations in future ﬁnancial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group. PAGE 27 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 11. DIRECTORS’ INTERESTS The relevant interest of each Director in the shares or options over such instruments issued by the companies within the Group and other related bodies corporate, as notiﬁed by the Directors to the Australian Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows: Dr David Carland Mr Richard Laufmann Mr Alister Maitland Mr Mitchell Hooke 12. SHARE OPTIONS Rex Minerals Limited Ordinary shares Options over ordinary shares 268,330 3,541,666 202,000 105,143 – – – – 12.1 Options granted to Directors and Ofﬁcers of the Company During the ﬁnancial year, the Company did not grant any options over unissued ordinary shares in the Company to the Directors and Key Management Personnel as part of their remuneration. 12.2 Unissued shares under option At the date of this report there were no unissued ordinary shares of the Company under option. 12.3 Shares issued on exercise of options During or since the end of the ﬁnancial year, the Company has not issued any ordinary shares as a result of the exercise of options. 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 Group’s auditor, has performed other services which are listed in the table below in addition to their statutory duties. The Board has considered the non-audit services provided during the year by the auditor and is satisﬁed that the provision of those non-audit services during the year by the auditor is compatible with and did not compromise, the auditor independence requirements of the Corporations Act 2001. The non-audit services provided do not undermine the general principles relating to auditor independence as set out in ‘APES 110 Code of Ethics for Professional Accountants’, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards. Details of amounts paid to the auditor of the Group, KPMG and its related practices for audit and non-audit services during the year, are set out below. 2015 2014 KPMG Australia $ $ Audit and review of ﬁnancial statements 47,500 47,500 Other services Review of Research and Development Claim 103,800 106,535 Assistance with Customs Matters 1,000 37,920 PAGE 28 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 15. REMUNERATION REPORT – AUDITED For the year ended 30 June 2015, any matters for consideration for the Remuneration Committee were managed directly by the Board and accordingly no separate meetings were held by the Remuneration Committee for the year. During the year, Rex implemented a cost reduction plan and has restructured the Company to enable it to focus on its core objectives of delivering the Extended Feasibility Study, new development plan and assessing ﬁnancing alternatives. A formal review of all employee positions was undertaken as part of delivering this cost reduction plan. As a consequence, there was a signiﬁcant reduction in employee positions, no increases to base compensation for employees or executives and no STI cash bonuses were paid or are payable. 15.1 Principles of compensation Remuneration is referred to as compensation throughout this report. Key Management Personnel (KMP) comprise the Directors of the Company and Senior Executives for the Group. KMP have authority and responsibility for planning, directing and controlling the activities of the Company and the Group. Compensation packages may include a mix of ﬁxed and variable compensation and short-term and long-term performance-based incentives. Fixed compensation Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any Fringe Beneﬁts Tax (FBT) charges related to employee beneﬁts including motor vehicles), as well as leave entitlements and employer contributions to superannuation funds. Compensation levels are reviewed annually by the Remuneration Committee through a process that considers individual, segment and overall performance of the Group. Market research provides analysis and guidance to ensure the Directors’ and senior executives’ compensation is competitive in the market place. A senior executive’s compensation is also reviewed on promotion. There have been no changes to base compensation for continuing Executives since 2012. Performance linked compensation Performance linked compensation includes both short-term and long-term incentives and is designed to reward senior executives for meeting or exceeding their ﬁnancial and personal objectives. The short-term incentive (STI) is an ‘at risk’ bonus provided in the form of cash, while the long-term incentive (LTI) is provided as options over ordinary shares of the Company pursuant to the terms and conditions of the options. Short-term incentive bonus The STI is a discretionary bonus provided in the form of cash. At the end of the ﬁnancial year, the Remuneration Committee assesses the performance of the Group and individuals. The Remuneration Committee recommends the cash incentive to be paid to the individuals for approval by the Board. The Board retains the discretion to vary the ﬁnal cash incentive if performance is considered to be deserving of either a greater or lesser amount. During the year, no STI cash bonuses were paid or payable. Long-term incentive The LTI is provided as options over ordinary shares of the Group. Options granted to employees only lapse in the event of the employee leaving the Group or the expiry date, whichever occurs earlier. Due to the nature of the Company at this time, the Board believes this incentive is appropriate, having regard to the exercise price of options being set at a premium to the share price at grant date. During the year, no LTI incentives were granted. Consequences of performance on shareholder wealth The variable components of the Group’s executives’ remuneration (the short and long term incentives) seek to encourage alignment of management performance and shareholders’ interests by linking remuneration to the performance of the Group. Whilst the Remuneration Committee takes into consideration the indices detailed below, the Board acknowledges that as an exploration company, the use of such indices does not fully reﬂect the Group’s performance. Net loss attributable to equity holders of the parent ($000) Closing share price at ﬁnancial year’s end * Restated 2015 2014* 2013* 2012* 2011* (8,734) (17,014) (39,454) (46,690) (29,087) $0.105 $0.305 $0.338 $0.785 $2.31 PAGE 29 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 15. REMUNERATION REPORT – AUDITED (CONTINUED) 15.1 Principles of compensation (Continued) Service agreements The Group has entered into contracts with KMP which are consistent with the Group’s policy. The Group retains the right to terminate a contract immediately by making payment equal to between three and six month’s pay in lieu of notice. The KMP 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 KMP, but does not prescribe how compensation levels are modiﬁed year to year. Compensation levels are reviewed each year and are aligned with market developments, 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 following summarises the service agreements with KMP: Executive Director (cid:129) Mr Richard Laufmann – Managing Director Mr Laufmann has a contract of employment dated 23 April 2015 with the Company which may be terminated by either party by giving two months’ notice. Under the terms of his contract, Mr Laufmann receives a ﬁxed annual salary of $250,000 plus superannuation with no STI plan. It is proposed that Mr Laufmann be issued unlisted options, as an LTI, the details of which will be subject to shareholder approval. Mr Laufmann is a founding Director of Rex Minerals and had been a Non-Executive Director since 2007. Mr Laufmann concluded his Non-Executive Director duties on his appointment as Managing Director on 23 April 2015. Executives (cid:129) Mr Patrick Say – Chief Geologist Mr Say was appointed as Chief Geologist on 1 July 2012. Mr Say may resign from the Company by giving four weeks’ notice and the Group may terminate his employment by providing four weeks’ notice. In the event that Mr Say’s employment is terminated following redundancy, he is entitled to a payment equivalent to three months’ salary. No STI cash bonus was paid or payable for the year ending 30 June 2015. Former Executives (cid:129) Mr Mark Parry – Chief Executive Ofﬁcer Mr Parry departed the Company, effective 8 August 2014. Mr Parry had a contract of employment dated 24 September 2012 with the Company for base remuneration of $550,000 (inclusive of statutory superannuation). Mr Parry was eligible to be considered for a STI of up to 25% of his base remuneration in any given ﬁnancial year. (cid:129) Ms Rachel Rees – Chief Financial Ofﬁcer Ms Rees was made redundant and ﬁnished with the Company on 31 August 2014. Ms Rees was entitled to a payment equivalent to a minimum of six months’ salary as part of her employment contract on redundancy. Non-Executive Directors Total compensation for all Non-Executive Directors, last voted upon by shareholders at the 2011 AGM, is not to exceed $500,000 per annum and is set based on advice from external advisors with reference to fees paid to other Non-Executive Directors of comparable companies. Non-Executive Directors’ base fees are presently $80,000 per annum, while the Chairman’s base fee is $120,000. The Chairman and Non-Executive Directors do not receive performance related remuneration. Directors’ fees cover all main Board activities and membership of committees. PAGE 30 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 15. REMUNERATION REPORT – AUDITED (CONTINUED) 15.2 Directors’ and Executive Ofﬁcers’ remuneration Details of the nature and amount of each major element of remuneration of each Director of the Company and other KMP for 2015 are as follows: s u n o B 5 1 0 2 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 $ 0 0 4 , 1 3 1 0 0 6 , 7 8 6 2 5 1 3 1 , 7 8 3 4 9 2 , 0 0 6 , 7 8 4 7 8 , 2 9 3 7 1 4 , 1 8 2 4 0 8 , 6 0 4 , 1 d e s a b e r a h S s t n e m y a p e u l a V r i a F s n o i t p O $ – – – – – – – – n o i t a n i m r e T s t ﬁ e n e b $ – – – – – 6 5 1 , 6 3 3 ) 4 6 8 , 6 2 ( 0 0 0 , 5 3 2 8 5 , 8 4 1 6 2 , 4 1 2 ) 5 6 3 , 7 ( 7 1 9 , 8 1 4 0 6 , 5 5 7 1 4 , 0 5 5 ) 9 0 1 , 4 2 ( 5 8 0 , 6 1 1 1 1 4 , 4 6 7 7 8 3 , 1 g n o L m r e t e c i v r e s g n o L e v a e l ) C ( $ - t s o P - y o l p m e t n e m - 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 $ - n o N y r a t e n o m s t ﬁ e n e b – – 0 0 4 , 1 1 0 0 6 , 7 0 0 0 , 0 2 1 0 0 0 , 0 8 8 2 3 , 2 7 7 8 , 0 1 1 2 3 , 8 1 1 2 9 7 , 7 1 9 6 , 4 2 4 0 9 , 1 6 2 – 0 0 6 , 7 0 0 0 , 0 8 m r e t t r o h S 5 1 0 2 $ – – – – – 7 2 5 0 6 8 h s a C I T S r o f s u n o b 5 1 0 2 r a e Y l a i c n a n i F ) B ( $ y r a l a S s e e f & ) A ( $ – – – – – – – – 0 0 0 , 0 2 1 0 0 0 , 0 8 1 2 3 , 8 1 1 4 0 9 , 1 6 2 0 0 0 , 0 8 5 5 0 , 8 4 4 4 7 , 4 5 ) n a m r i a h C ( d n a l r a C d i v a D r D s r o t c e r i D e v i t u c e x E - n o N d n a l t i a M r e t s i l A r M – n n a m f u a L d r a h c i R r M 1 O E C / r o t c e r i D g n i g a n a M r o t c e r i D e v i t u c e x E – y a S k c i r t a P r M t s i g o l o e G f e i h C s e v i t u c e x E s e v i t u c e x E r e m r o F 2 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 3 O E C / r o t c e r i D g n i g a n a M – y r r a P k r a M r M 4 r e c ﬁ f O l a i c n a n i F f e i h C – s e e R l e h c a R s M 4 2 0 , 3 6 7 : P M K n o i t a s n e p m o C l a t o T 5 1 0 2 r e h t o h t i w e n i l n i 0 2 8 , 4 6 $ f o s e e f i d e v e c e r d n a r o t c e r i D e v i t u c e x E - n o N a s a w n n a m f u a L r M . 5 1 0 2 l i r p A 3 2 n o r o t c e r i i D g n g a n a M s a t n e m t n o p p a i i s h l i t n u s r o t c e r i D e v i t u c e x E - n o N . 5 1 0 2 e n u J 0 3 e v i t c e f f e d r a o B e h t m o r f d e n g s e r i n e s O l . 4 1 0 2 t s u g u A 8 e v i t c e f f e y n a p m o C e h t d e t r a p e d y r r a P r M r M . 4 1 0 2 t s u g u A 1 3 d e h s n ﬁ i d n a t n a d n u d e r e d a m s a w s e e R s M . 1 . 2 . 3 . 4 n a i l a r t s u A h t i w e c n a d r o c c a n i d e r u s a e m P M K y b i d e v e c e r s t n u o m a s e d u c n l i s e e f d n a y r a a S l t e e m P M K f i h s a c n i i d a p e b l y n o l l i i w h c h w e v a e l i e c v r e s g n o l r o f l a u r c c a t e n e h t s t n e s e r p e R . r a e y l i a c n a n ﬁ 5 1 0 2 e h t o t n o i t a e r l n i l e b a y a p r o d e u r c c a e r e w s e s u n o B o N . s t n e m e l t i t n e e v a e l l a u n n a d e u r c c a d n a y r a a s l h s a c s e d u c n l i i h c h w , s d r a d n a t S g n i t n u o c c A . n o l i t a s g e i l d e s a b e t a t s h t i w e c n a d r o c c a n i s n o i t i d n o c i e c v r e s d e r i u q e r e h t . A . B . C PAGE 31 n o i t a r e n u m e r ’ s r e c ﬁ f O e v i t u c e x E d n a ’ s r o t c e r i D f o e l b a t e h t o t n o i t a l e r n i s e t o N REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 15. REMUNERATION REPORT – AUDITED (CONTINUED) 15.2 Directors’ and Executive Ofﬁcers’ remuneration (Continued) Details of the nature and amount of each major element of remuneration of each Director of the Company and other KMP for 2014 are as follows: s u n o B 3 1 0 2 s u n o B 4 1 0 2 f o n o i t r o p o r P f o n o i t r o p o r P n o i t a r e n u m e r n o i t a r e n u m e r e c n a m r o f r e p e c n a m r o f r e p % d e t a l e r % d e t a l e r l a t o T $ – – – – – – % 4 . 4 1 – % 5 . 5 1 – – – – – – – – – – – 6 5 2 , 0 7 0 0 4 , 7 8 0 0 4 , 7 8 6 2 5 5 8 1 , 3 1 3 0 4 7 , 2 8 6 5 9 2 , 8 4 3 7 4 3 , 0 5 5 , 5 6 2 2 4 , 2 2 3 0 5 7 , 7 3 7 4 6 , 9 3 2 , 2 e r a h S d e s a b s t n e m y a p e u l a V r i a F s n o i t p O $ – – – – – – – – – – – n o i t a n i m r e T s t ﬁ e n e b $ – – – – – – – – g n o L m r e t e c i v r e s g n o L e v a e l ) D ( $ - t s o P - y o l p m e t n e m - r e p u S n o i t a u n n a s t ﬁ e n e b $ m r e t t r o h S l a t o T $ y r a t e n o m s e v i t n e c n I 3 1 0 2 4 1 0 2 $ s t ﬁ e n e b $ l a i c n a n i F l a i c n a n i F - n o N n o n g i S r o f s u n o B r o f s u n o B y r a l a S s e e f & ) A ( $ ) C ( $ r a e Y ) B ( $ r a e Y h s a C I T S h s a C I T S 4 1 0 2 – – – – 8 4 9 , 5 8 0 3 , 4 6 0 0 4 , 7 0 0 4 , 7 0 0 0 , 0 8 0 0 0 , 0 8 5 7 7 , 3 2 1 5 7 , 1 6 1 – – – – – – – – 9 3 7 , 5 1 0 0 0 , 5 2 4 7 5 , 9 9 6 6 8 3 , 2 0 0 0 , 0 5 1 0 0 8 , 9 3 2 ) 9 5 8 , 2 4 ( 5 9 2 , 0 3 6 8 1 , 5 9 – – 7 8 9 , 2 3 6 7 , 4 3 2 9 7 , 7 6 6 6 , 8 2 0 9 8 , 0 1 3 – 0 5 5 , 5 0 0 0 , 0 6 5 6 3 , 7 1 4 5 , 0 2 6 7 7 , 7 6 2 6 8 3 , 2 – – – – – – – – – 0 0 8 , 9 3 2 ) 3 6 9 , 1 1 ( 2 6 5 , 7 5 1 8 4 2 , 4 5 8 , 1 2 7 7 , 4 0 0 0 , 0 5 1 0 0 0 , 0 0 1 – – – – – – 0 0 0 , 0 5 – 0 0 0 , 0 5 – – – – – – – – – – – – 8 0 3 , 4 6 0 0 0 , 0 8 0 0 0 , 0 8 s r o t c e r i D e v i t u c e x E - n o N n n a m f u a L d r a h c i R r M d n a l t i a M r e t s i l A r M – d n a l r a C d i v a D r D 1 ) n a m r i a h C ( 1 5 7 , 1 6 1 2 n e s l O n e v e t S r M 8 8 1 , 7 4 5 0 9 3 , 5 6 2 0 9 8 , 0 6 2 0 0 0 , 0 6 6 8 1 , 5 4 3 6 7 , 4 3 3 O E C / r o t c e r i D g n i g a n a M – y r r a P k r a M r M r o t c e r i D e v i t u c e x E 4 r e c ﬁ f O l a i c n a n i F f e i h C – s e e R l e h c a R s M s e v i t u c e x E – y a S k c i r t a P r M t s i g o l o e G f e i h C – e t n o m a v i R r e b m A s M 6 y r a t e r c e S y n a p m o C 5 n a m p a h C l u a P r M 7 r e l l o r t n o C l a i c n a n i F – n o s a M t e n a J s M r e m r o F 6 7 4 , 9 9 5 , 1 : P M K n o i t a s n e p m o C l a t o T 4 1 0 2 PAGE 32 A N N U A L R E P O R T 2 0 1 5 y n a p m o C e h t d e t r a p e d y r r a P r M . e n o g e r o f s t ﬁ e n e b f o u e i l n i t ﬁ e n e b n o n g s i a s a w 4 1 0 2 n i y r r a P r M o t i d a p t n e m y a p e v i t n e c n i e h T . s r o t c e r i D e v i t u c e x E - n o N r e h t o h t i w e n i l n i , 0 0 0 , 0 6 $ f o s e e f i d e v e c e r . 4 1 0 2 t s u g u A n i t n a d n u d e r e d a m s a w d n a 3 1 0 2 r e b m e t p e S 9 n o y n a p m o C e h t h t i w d e c n e m m o c s e e R s M . 3 1 0 2 r e b m e c e D 1 3 e v i t c e f f e r o t c e r i D e v i t u c e x E - n o N d n a n a m r i a h C s a d e n g s e r i n a m p a h C r M . 4 1 0 2 t s u g u A 8 n o d n a r o t c e r i D e v i t u c e x E - n o N a s a d r a o B e h t h t i w d e n a m e r i . 3 1 0 2 r e b m e c e D 2 1 n o y n a p m o C e h t h t i w d e c n e m m o c d n a l r a C r D t u b , 3 1 0 2 r e b m e t p e S 0 3 n o l e o r e v i t u c e x E i s h d e d u c n o c l n e s O l r M . e t a d t a h t m o r f P M K r e g n o l o n s a w d n a 3 1 0 2 r e b m e t p e S 0 3 n o e c ﬁ f o t a r a l l a B e h t f o e r u s o c l . e t a d t a h t m o r f P M K r e g n o l o n s a w d n a 3 1 0 2 r e b m e t p e S 8 n o r e c ﬁ f O l i a c n a n F i e h t h t i w t n a d n u d e r e d a m s a w e t n o m a v R s M i i f e h C g n i t c A s a l e o r r e h d e h s n ﬁ i n o s a M s M . 1 . 2 . 3 . 4 . 5 . 6 . 7 h s a c s e d u c n l i i h c h w , s d r a d n a t S g n i t n u o c c A n a i l a r t s u A h t i w e c n a d r o c c a n i d e r u s a e m P M K y b t n r a e s t n u o m a s e d u c n l i s e e f d n a . s t n e m e l t i t n e e v a e l l a u n n a d e u r c c a d n a y r a a S l y r a a s l n o i t a r e n u m e R e h t n i t u o t e s a i r e t i r c e h t g n s u i r a e y l i a c n a n ﬁ 3 1 0 2 g n i r u d . d r a o B e h t y b d e v o r p p a d n a l d e t e p m o c e r e w s w e v e r i e c n a m r o f r e p e c n a m r o f r e p r o f s i r e t f a s e v i t u c e x E r o f 4 1 0 2 n i i d a p I T S e h T i d e n m r e t e d s a w t n u o m a e h T . t r o p e R . r a e y l i a c n a n ﬁ 4 1 0 2 e h t o t n o i t a e r l n i l e b a y a p r o d e u r c c a e r e w s e s u n o B o N n i s n o i t i d n o c i e c v r e s d e r i u q e r e h t t e e m P M K f i h s a c n i i d a p e b l y n o l l i i w h c h w e v a e l i e c v r e s g n o l r o f l a u r c c a t e n e h t s t n e s e r p e R . n o l i t a s g e i l d e s a b e t a t s h t i w e c n a d r o c c a . A . B . C . D n o i t a r e n u m e r ’ s r e c ﬁ f O e v i t u c e x E d n a ’ s r o t c e r i D f o e l b a t e h t o t n o i t a l e r n i s e t o N REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 15. REMUNERATION REPORT – AUDITED (CONTINUED) 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 No options over ordinary shares in the Company were granted or vested as compensation to KMP during the reporting period. No options have been granted since the end of the ﬁnancial year. 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 KMP) have been altered or modiﬁed by the issuing entity during the current period. 15.3.3 Exercise of options granted as compensation During the reporting period, there were no shares issued to KMP 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 KMP, is detailed below: Granted in year $ Value of Options Exercised in year $ Lapsed in year No. of Year of Options Grant Directors Dr David Carland Mr Richard Laufmann Mr Alister Maitland Executives Mr Patrick Say Former Mr Steven Olsen Mr Mark Parry Ms Rachel Rees Total – – – – – – – – – – – – – – – – – – – – – – 160,000 2012 – 3,000,000 – 3,160,000 – 2012 – – 15.4 Key management personnel transactions 15.4.1 Other transactions with key management personnel A number of key management personnel hold positions in other entities that result in them having control or joint control over the ﬁnancial or operating policies of those entities. A number of these entities transacted with the Group during the year. The terms and conditions of those transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. PAGE 33 REX MINERALS LTD DIRECTORS’ REPORT for the year ended 30 June 2015 15. REMUNERATION REPORT – AUDITED (CONTINUED) 15.4 Key management personnel transactions (Continued) 15.4.2 Movements in shares The movement during the reporting period in the number of ordinary share in Rex Minerals Ltd held, directly, indirectly or beneﬁcially, by each key management person, including their related parties is as follows: Held at 1 July 2014 or date appointed Received on exercise of options Other changes* Held at 30 June 2015 Directors Dr David Carland Mr Richard Laufmann Mr Alister Maitland Executives Mr Patrick Say Former Mr Steven Olsen Mr Mark Parry Ms Rachel Rees 268,330 3,541,666 202,000 138,667 6,027,000 – 24,727 – – – – – – – – – – – – – – 268,330 3,541,666 202,000 138,667 6,027,000 n/a n/a *Other changes represent shares that were purchased or sold during the year. 16. ROUNDING The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the consolidated ﬁnancial statements and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated. 17. LEAD AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration is set out on page 60 and forms part of the Directors’ Report for the year ended 30 June 2015. Dated at Melbourne this 9th day of September 2015 Signed in accordance with a resolution of the Directors: Richard Laufmann Managing Director PAGE 34 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June Restated* 2015 2014 1 July 2013 Note $000 $000 $000 Current Assets Cash and cash equivalents 8 7,930 2,590 24,816 Term deposits 8 3,000 19,000 – Trade and other receivables 290 491 3,310 Prepayments 51 173 44 Total current assets 11,271 22,254 28,170 Non-current assets Exploration and evaluation expenditure 1,645 1,645 1,645 Property, plant and equipment 10 15,711 16,165 15,668 Water infrastructure 4,076 4,076 3,631 Total non-current assets 21,432 21,886 20,944 Total assets 32,703 44,140 49,114 Current liabilities Trade and other payables 11 884 3,396 3,505 Employee beneﬁts 132 273 404 Provisions 83 36 320 Total current liabilities 1,099 3,705 4,229 Non-current liabilities Trade and other payables 11 576 652 – Employee beneﬁts 80 101 69 Total non-current liabilities 656 753 69 Total liabilities 1,755 4,458 4,298 Net assets 30,948 39,682 44,816 Equity Issued capital 12(i) 189,566 189,566 177,686 Reserves 12(iii) – 890 1,421 Accumulated losses (158,618) (150,774) (134,291) Total equity 30,948 39,682 44,816 The notes on pages 39 to 58 are an integral part of these ﬁnancial statements. *The comparative statement for the year ended 30 June 2014 and opening balance at 1 July 2013 have been restated to show the effects of the voluntary change in accounting policy. Refer to Note 6. PAGE 35 REX MINERALS LTD CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 30 June Restated* 2015 2014 Note $000 $000 Finance income 444 686 Other income 12 – Administrative expenses (1,469) (3,006) Depreciation expense 10 (445) (434) Employee beneﬁts expense 13 (3,432) (5,103) Marketing expenses (347) (510) Exploration and evaluation (3,497) (14,748) Loss on disposal of ﬁxed assets – (9) Loss before tax (8,734) (23,124) Income tax beneﬁt 14 – 6,110 Total loss for the period after tax (8,734) (17,014) Other comprehensive income – – Total comprehensive loss attributable to members of Rex Minerals Ltd (8,734) (17,014) Earnings per share attributable to members of Rex Minerals Ltd Basic earnings per share (cents) 15 (3.96) (8.66) Diluted earnings per share (cents) 15 (3.96) (8.66) The notes on pages 39 to 58 are an integral part of these ﬁnancial statements. *The comparative statement for the year ended 30 June 2014 has been restated to show the effects of the voluntary change in accounting policy. Refer to Note 6. PAGE 36 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June Attributable to equity holders of the Group Share Share Based Accumulated Total Capital Payments losses Equity Note Reserve Restated balance at 1 July 2014 189,566 890 (150,774) 39,682 Transfer from share based payments reserve 12 – (890) 890 – Total comprehensive loss for the period – – (8,734) (8,734) Balance at 30 June 2015 189,566 – (158,618) 30,948 Balance at 1 July 2013 177,686 1,421 (137) 178,970 Effect of accounting policy change 6 – – (134, 154) (134,154) Restated balance at 1 July 2013 177,686 1,421 (134,291) 44,816 Issue of ordinary shares 12 12,645 – – 12,645 Transaction costs on share issue 12 (765) – – (765) Transfer from share based payments reserve 12 – (531) 531 – Restated total comprehensive loss for the period – – (17,014) (17,014) Restated balance at 30 June 2014 189,566 890 (150,774) 39,682 The notes on pages 39 to 58 are an integral part of these ﬁnancial statements. PAGE 37 REX MINERALS LTD CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June Restated* Note 2015 2014 $000 $000 Cash ﬂows from operating activities Cash paid to suppliers and employees (3,799) (6,580) Exploration and evaluation payments (7,448) (17,647) Interest received 566 555 Research and development beneﬁt received – 9,191 Net cash used in operating activities 16 (10,681) (14,481) Cash ﬂows from investing activities Acquisition of property, plant and equipment (1) (242) Payment for water infrastructure – (400) Proceeds from sale of property, plant and equipment 22 17 Investments in term deposits 8(ii) 16,000 (19,000) Net cash from/(used in) investing activities 16,021 (19,625) Cash ﬂows from ﬁnancing activities Proceeds from issue of share capital 12 – 12,645 Payment of transaction costs 12 – (765) Net cash from ﬁnancing activities – 11,880 Net increase /(decrease) in cash and cash equivalents 5,340 (22,226) Cash and cash equivalents at beginning of the period 2,590 24,816 Cash and cash equivalents at period end 8(i) 7,930 2,590 The notes on pages 39 to 58 are an integral part of these ﬁnancial statements. *The comparative statement for the year ended 30 June 2014 has been restated to show the effects of the voluntary change in accounting policy. Refer to Note 6. PAGE 38 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 1. REPORTING ENTITY Rex Minerals Ltd (the “Company”) is a Company domiciled in Australia. The address of the Company’s registered ofﬁce is Level 19, 11 Waymouth Street, Adelaide, South Australia 5000. The Group ﬁnancial statements as at and for the year ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group is a for proﬁt entity primarily 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 9 September 2015. (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. The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all ﬁnancial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated. (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 and their related accounting policies: > notes 19 and 20 Commitments and contingencies (e) Change in accounting policy The Company has made a voluntary change to its accounting policy relating to exploration and evaluation expenditure. The new accounting policy was adopted for the year ended 30 June 2015 with effect from 1 July 2014 and has been applied retrospectively. The new exploration and evaluation expenditure accounting policy is to charge exploration and evaluation expenditure, excluding the costs of acquiring licences, against proﬁt and loss as incurred. The previous accounting policy was to capitalise and carry forward exploration and evaluation expenditure as an asset where the rights to the tenure of the area of interest were current and the expenditures were expected to be recouped or activities in the area of interest had not, at the reporting date, reached a stage that permitted 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 were continuing. The Company is of the view that the change in policy will result in the ﬁnancial report providing more relevant and no less reliable information because capitalisation of costs will only begin once a decision to proceed with development has been made. AASB 6 Exploration for and Evaluation of Mineral Resources allows both the previous and new accounting policies of the Company. Details in relation to the impact of this change in accounting policy on comparative ﬁnancial information are disclosed in Note 6. PAGE 39 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 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. The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to the Group and effective for the current annual reporting period. The adoption of these new and revised Australian Accounting Standards has had no signiﬁcant impact on the Group’s accounting policies. (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. (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. (b) Financial instruments (i) Non-derivative ﬁnancial instruments Non-derivative ﬁnancial instruments comprise investments in equity securities, 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. (A) Receivables – other debtors Other debtors are measured at amortised cost using the effective interest method, less impairment losses. Other debtors are reviewed on an ongoing basis for any indicators of impairment. An impairment loss is recognised for debts which are known to be uncollectible. An impairment allowance is raised for any doubtful accounts. (B) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. (C) Term Deposits Term Deposits comprise cash balances and call deposits with an original maturity of more than three months. (D) 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. PAGE 40 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment (PP&E) 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 PP&E 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 PP&E are recognised in proﬁt or loss as incurred. (iii) Depreciation Depreciation is recognised in the proﬁt or loss for items of PP&E on a straight-line basis over the estimated useful lives of each part of an item of PP&E. The estimated useful lives for the current and comparative periods are as follows: > plant and equipment 3 – 10 years > buildings 10 – 20 years Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (d) Exploration and evaluation Exploration and evaluation expenditure, excluding the costs of acquisition, are expensed within the proﬁt and loss as incurred. Costs incurred in acquiring rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects are capitalised as incurred and assessed for impairment triggers annually. (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. 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. (ii) Non-ﬁnancial assets The carrying amounts of the Group’s non-ﬁnancial 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. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inﬂows from continuing use that are largely independent of the cash inﬂows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to beneﬁt from the synergies of the combination. PAGE 41 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Impairment (Continued) (ii) Non-ﬁnancial assets (Continued) 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) Long term beneﬁts The Group’s obligation in respect of long service leave is measured as the present value of the future beneﬁt expected to be paid to employees that has been earned in return for their service in the current and prior periods. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using Australian corporate bond rates, following the determination that Australia now has a market for high quality corporate bonds. (iii) Share-based payments Equity-based compensation is recognised as an expense in respect of the services received. The fair value of options granted is recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become 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 the 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. PAGE 42 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Tax (Continued) (i) Income taxes (Continued) In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable proﬁts will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax beneﬁt will be realised. Research and development beneﬁts are recognised in the year the claim is lodged. (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. The tax-consolidated group has entered into tax funding and tax sharing agreements. (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. (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. Segment capital expenditure is the total cost incurred during the period on exploration and to acquire property, plant and equipment. PAGE 43 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Restoration and rehabilitation provision Obligations to restore and rehabilitate certain areas of property may arise from time to time as a result of the Group’s activities. A provision for rehabilitation and restoration is recognised in respect of the estimated cost of rehabilitation, decommissioning and restoration of areas of disturbance existing at reporting date, but not yet rehabilitated. Rehabilitation activities include dismantling infrastructure, removal and treatment of waste material, and land rehabilitation, including recontouring, topsoiling and revegetation of the disturbed area. Provisions for the cost of the rehabilitation program are recognised at the time that environmental disturbance occurs (or is acquired). A corresponding asset is recognised in Property, Plant and Equipment or Exploration and Evaluation Assets only to the extent that it is probable that future economic beneﬁts associated with the rehabilitation, will ﬂow to the entity. Determining the cost of rehabilitation and restoration of the area of disturbance requires the use of signiﬁcant estimates and assumptions, including, the timing of the cash ﬂows and expected life of the relevant area of interest, the application of relevant environmental legislation, and the future expected costs of rehabilitation, decommissioning and restoration. Changes in the estimates and assumptions used to determine the cost of rehabilitation, decommissioning and restoration could have a material impact on the carrying value of the site restoration provision and related asset. The provision is reviewed at each reporting date and updated based on the facts and circumstances available at the time. (m) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015, and have not been applied in preparing these consolidated ﬁnancial statements: > > > AASB 9 Financial Instruments becomes mandatory for the Group’s 2016 ﬁnancial statements and could change the classiﬁcation and measurement of ﬁnancial assets and ﬁnancial liabilities. AASB 15 Revenue from Contracts with Customers which will be effective for the Group’s 2018 ﬁnancial statements. Amendments to AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets detail acceptable methods of depreciation and amortisation. These amendments will be effective for the Group’s 2017 ﬁnancial statements. The new standards are not expected to have signiﬁcant 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 values 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 The fair value of options granted to employees as compensation is independently measured using a Black- Scholes option pricing model. Measurement inputs include the exercise price of the options, 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 (based on an evaluation of the Company’s historical volatility, particularly over the historic period commensurate with the expected term), expected term of the instruments (based on historical experience and general option holder behaviour), the expected dividend yield and the risk-free interest rate (based on government bonds) for the term of the option. PAGE 44 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 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 and cash balances. (iii) 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. To this end actual cash ﬂows and forecast future cash ﬂows are reported to and monitored by the Board on a periodic basis. (iv) 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. PAGE 45 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 6. IMPACTS ARISING FROM CHANGE IN ACCOUNTING POLICY The following tables summarise the impacts on the Group’s consolidated ﬁnancial statements of the change to the exploration and evaluation policy set out in Note 2(e). CONSOLIDATED STATEMENT OF FINANCIAL POSITION Increase/ 1 July 2013 1 July 2013 (Decrease) (Restated) $000 $000 $000 Non-current assets Exploration and evaluation expenditure 135,799 (134,154) 1,645 Total non-current assets 155,098 (134,154) 20,944 Total assets 183,268 (134,154) 49,114 Net assets 178,970 (134,154) 44,816 Equity Accumulated losses (137) (134,154) (134,291) Total equity 178,970 (134,154) 44,816 Increase/ 30 June 2014 30 June 2014 (Decrease) (Restated) $000 $000 $000 Non-current assets Exploration and evaluation expenditure 153,344 (151,699) 1,645 Total non-current assets 173,585 (151,699) 21,886 Total assets 195,839 (151,699) 44,140 Net assets 191,381 (151,699) 39,682 Equity Reserves 3,912 (3,022) 890 Accumulated losses (2,097) (148,677) (150,774) Total equity 191,381 (151,699) 39,682 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME – 30 JUNE 2014 Proﬁt 2014 30 June 2014 Adjustment (Restated) $000 $000 $000 Depreciation expense (159) (275) (434) Employee beneﬁts expense (2,581) (2,522) (5,103) Exploration and evaluation expenses – (14,748) (14,748) Others (2,839) – (2,839) Proﬁt/(loss) before tax (5,579) (17,545) (23,124) Income tax (expense)/beneﬁt 6,110 – 6,110 Total proﬁt/(loss) for the period after tax 531 (17,545) (17,014) Total comprehensive income/(loss) attributable to members of Rex Minerals Ltd 531 (17,545) (17,014) Earnings per share attributable to members of Rex Minerals Ltd Basic earnings per share (cents) 0.27 (8.93) (8.66) Diluted earnings per share (cents) 0.27 (8.93) (8.66) PAGE 46 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 6. IMPACTS ARISING FROM CHANGE IN ACCOUNTING POLICY (CONTINUED) CONSOLIDATED STATEMENT OF CASH FLOWS – 30 JUNE 2014 Increase/ 2014 2014 (Decrease) (Restated) $000 $000 $000 Cash ﬂows from operating activities Exploration and evaluation payments – (17,647) (17,647) Net cash from/(used in) operating activities 3,166 (17,647) (14,481) Cash ﬂows from investing activities Exploration and evaluation payments (17,647) 17,647 – Net cash from/(used in) investing activities (37,272) 17,647 (19,625) Net increase /(decrease) in cash and cash equivalents (22,226) – (22,226) Cash and cash equivalents at beginning of the period 24,816 – 24,816 Cash and cash equivalents at period end 2,590 – 2,590 In relation to the current year, the voluntary change in accounting policy has resulted in recognition of an exploration and evaluation expense of $3,496 thousand, employee beneﬁt expense of $1,630 thousand and depreciation expense of $259 thousand. Had the change in accounting policy not been adopted for the current year, the result would have been capitalisation of the $5,385 thousand to the exploration and evaluation asset. 7. SEGMENT REPORTING The consolidated entity operates in one geographical segment, being South Australia and one industry, mineral mining and exploration. 8. CASH ASSETS (i) Cash and cash equivalents 2015 2014 $000 $000 Bank balances and short term deposits 7,930 2,590 Cash and cash equivalents in the statement of cash ﬂows 7,930 2,590 (ii) Term deposits 2015 2014 $000 $000 Term deposits* 3,000 19,000 Total term deposits 3,000 19,000 *Term Deposits comprise cash balances with an original maturity of more than three months. The Group’s total cash and funds on deposit $10,930,000 (2014: $21,590,000) is exposed to interest rate risk and a sensitivity analysis for ﬁnancial assets and liabilities are disclosed in note 17. PAGE 47 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 9. DEFERRED TAX ASSETS (DTA) AND DEFERRED TAX LIABILITIES (DTL) Restated* 2015 2014 $000 $000 Exploration and evaluation assets (494) (494) Property, plant and equipment (181) (284) Provisions 217 222 Equity costs 278 760 Net DTA/DTL (180) 204 Tax losses recognised to the extent of the DTL 180 – DTA not recognised – (204) – – *See Note 2(e) 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. 10. PROPERTY, PLANT AND EQUIPMENT Land and Plant and Buildings Equipment Total 2015 $000 $000 $000 Cost Balance at 1 July 2014 15,084 2,347 17,431 Additions – 1 1 Disposals – (92) (92) Balance at 30 June 2015 15,084 2,256 17,340 Depreciation and impairment losses Balance at 1 July 2014 54 1,212 1,266 Depreciation 88 357 445 Disposals – (82) (82) Balance at 30 June 2015 142 1,487 1,629 Carrying amounts At 1 July 2014 15,030 1,135 16,165 At 30 June 2015 14,942 769 15,711 PAGE 48 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 10. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Land and Plant and Buildings Equipment Total 2014 $000 $000 $000 Cost Balance at 1 July 2013 14,309 2,287 16,596 Additions 775 182 957 Disposals – (122) (122) Balance at 30 June 2014 15,084 2,347 17,431 Depreciation and impairment losses Balance at 1 July 2013 9 919 928 Depreciation 45 389 434 Disposals – (96) (96) Balance at 30 June 2014 54 1,212 1,266 Carrying amounts At 1 July 2013 14,300 1,368 15,668 At 30 June 2014 15,030 1,135 16,165 11. TRADE AND OTHER PAYABLES 2015 2014 $000 $000 Current Trade payables 60 342 Accrued expenses 824 3,054 Total current trade and other payables 884 3,396 Non-current Accrued expenses 576 652 Total non-current trade and other payables 576 652 Total trade and other payables 1,460 4,048 12. EQUITY (i) Movements in shares on issue: Date of Number Issue Issue of Shares Price $ $000 Opening balance at 1 July 2014 220,519,784 189,566 Closing balance at 30 June 2015 220,519,784 189,566 Date of Number Issue Issue of Shares Price $ $000 Opening balance at 1 July 2013 188,907,284 177,686 Capital Raising – Placement 12/03/2014 28,000,000 0.40 11,200 Less costs of Placement (640) Capital Raising – Placement 22/04/2014 3,612,500 0.40 1,445 Less costs of Placement (125) Closing balance at 30 June 2014 220,519,784 189,566 PAGE 49 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 12. EQUITY (CONTINUED) (ii) Movements in options on issue: Date of Number Exercise Expiry Issue of Options Price $ Date Opening balance as at 1 July 2014 3,840,000 Lapse of Options – employees 24/09/2012 (3,000,000) 0.91 31/08/2017 Lapse of Options – employees 24/05/2012 (200,000) 1.20 30/04/2015 Lapse of Options – employees 24/05/2012 (640,000) 1.20 30/04/2015 Closing balance as at 30 June 2015 – Date of Number Exercise Expiry Issue of Options Price $ Date Opening balance as at 1 July 2013 5,040,000 Lapse of Options – employees 06/05/2011 (200,000) 3.00 30/04/2014 Lapse of Options – employees 24/05/2012 (240,000) 1.20 30/04/2015 Lapse of Options – employees 06/05/2011 (640,000) 3.00 30/04/2014 Lapse of Options – employees 24/05/2012 (120,000) 1.20 30/04/2015 Closing balance as at 30 June 2014 3,840,000 (iii) Movements in share based payment reserve: $000 Opening balance at 1 July 2014 890 Employee share based payments – Transferred to Retained earnings (890) Closing balance at 30 June 2015 – Opening balance at 1 July 2013 1,421 Employee share based payments – Transferred to Retained earnings (531) Closing balance at 30 June 2014 890 This share based payment reserve is used to recognise the fair value of options issued to employees for options granted which have not been exercised. 13. EMPLOYEE BENEFITS EXPENSE Restated* 2015 2014 $000 $000 Wages and salaries 3,594 5,202 Increase/(decrease) in liability for annual leave (141) (131) Increase/(decrease) in liability for long service leave (21) 32 Total employee beneﬁts expense 3,432 5,103 * See Note 6 PAGE 50 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 14. INCOME TAX EXPENSE NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX ACCOUNTING PROFIT Restated* 2015 2014 $000 $000 Proﬁt/(Loss) before tax for the period (8,734) (23,124) Income tax using the domestic corporation tax rate of 30% (2014: 30%) (2,620) (6,937) Decrease in income tax due to: Non-deductible expenses 1 6 Research and development beneﬁt – (6,110) Adjustment from prior year – (1,883) Increase in income tax expense due to: Net effect of tax losses not recognised 2,619 8,814 Total income tax expense/(beneﬁt) on pre-tax net proﬁt – (6,110) * See Note 6 15. EARNINGS PER SHARE Restated* 2015 2014 cents cents Earnings Per Share Basic EPS (3.96) (8.66) Diluted EPS (3.96) (8.66) * See Note 6 (a) Basic earnings per share The calculation of basic earnings/(loss) per share (EPS) at 30 June 2015 was based on the loss attributable to ordinary equity holders of $8,734 thousand (2014: $17,014 thousand – restated) and a weighted average number of ordinary shares outstanding during the ﬁnancial year ended 30 June 2015 of 220,519,784 (2014: 196,512,675). (b) Diluted earnings per share The calculation of diluted earnings/(loss) per share (EPS) at 30 June 2015 is the same as basic diluted earnings/(loss) per share. In accordance with AASB 133 – Earning per share, as potential ordinary shares may result in a situation where their conversion results in a decrease in the earnings/(loss) per share, no dilutive effect has been taken into account. PAGE 51 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 16. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Restated* 2015 2014 $000 $000 Cash ﬂows from operating activities Proﬁt/(Loss) before tax for the period (8,734) (23,124) Adjustments for non cash items: Depreciation 445 434 Adjustments for other items: (Proﬁt)/loss on disposal of property plant and equipment (12) 9 Operating loss before changes in working capital and provisions (8,301) (22,681) (Increase)/decrease in trade and other receivables 323 2,690 (Decrease)/increase in trade and other payables (2,588) (216) (Decrease)/increase in employee beneﬁts (162) (99) (Decrease)/increase in provisions 47 (285) Research and development beneﬁt received – 6,110 Net cash (used in)/from operating activities (10,681) (14,481) * See Note 6 17. FINANCIAL INSTRUMENTS Exposure to credit risk and interest rate risks arise in the normal course of the Group’s business. (a) Credit risk Management monitors the exposure to credit risk on an ongoing basis through monitoring the Group’s counterparties. 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 their net fair values. (c) Liquidity risk The following are the contractual maturities of ﬁnancial liabilities. Financial liabilities Carrying Contractual 1 year Group amount cash ﬂows or less 1–2 years $000 $000 $000 $000 2015 Trade and other payables 1,460 (884) (884) (576) 1,460 (884) (884) (576) 2014 Trade and other payables 4,048 (3,396) (3,396) (652) 4,048 (3,396) (3,396) (652) PAGE 52 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 17. FINANCIAL INSTRUMENTS (CONTINUED) (d) Interest rate risk The Group’s exposure to market interest rates relates primarily to the Group’s short-term deposits. At balance date, the Group had the following ﬁnancial assets exposed to interest rate risk: 2015 2014 $000 $000 Cash and cash equivalents 7,930 2,590 Term deposits 3,000 19,000 Total cash and term deposits 10,930 21,590 At balance date, the Group has no ﬁnancial liabilities exposed to variable interest rate risks. The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. At 30 June 2015, 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) 2015 2014 2015 2014 $000 $000 $000 $000 Group +1% (100 basis points) 291 159 – – - 1% (100 basis points) (291) (159) – – 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 Consolidated statement of proﬁt or loss and other comprehensive income. (e) Impairment losses None of the Group’s receivables are past due (2014: nil). 18. OPERATING LEASES At the end of the reporting period, the future minimum lease payments under non-cancellable operating leases are payable as follows: 2015 2014 $000 $000 Not later than one year 380 367 Later than one year but not later than ﬁve years 1,630 1,595 Greater than ﬁve years 1,487 1,902 The Group leases an ofﬁce space under an operating lease. The lease runs for a period of 10 years, with an option to renew the lease after that date. Lease payments are increased by a ﬁxed percentage every year and adjusted to the prevailing market rate after 5 years. During the year an amount of an amount of $424 thousand was recognised as an expense in proﬁt and loss in respect of the ofﬁce lease (2014: $218 thousand). PAGE 53 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 19. EXPLORATION EXPENDITURE COMMITMENTS In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements under the various exploration licences which are held. 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. 2015 2014 $000 $000 Not later than one year 1,095 1,650 Later than one year but not later than ﬁve years 5,023 4,460 20. 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. The Group’s bankers have provided guarantees amounting to $20,000 to certain Government bodies as security over the Group’s performance of rehabilitation obligations on certain tenements. Under the agreement, the Group has indemniﬁed the bank in relation to these guarantees. The guarantees are backed by deposits amounting to $20,000 as at 30 June 2015 (2014: $30,000). The Group’s bankers have provided a guarantee amounting to $198,903 to the Landlord regarding the new ofﬁce at Level 19, 11 Waymouth Street, Adelaide, South Australia as security over the Group’s obligations regarding the lease held. Under the agreement, the Group has indemniﬁed the bank in relation to this guarantee. The guarantee is backed by a deposit amounting to $198,903 as at 30 June 2015 (2014: $198,903). 21. RELATED PARTIES 21.1 Key management personnel (KMP) disclosures The following were KMP of the Group at any time during the reporting period and unless otherwise indicated were KMP for the period ending 30 June 2015. Name Position held Appointment detail Non-Executive Directors Dr David Carland Chairman Appointed Chairman 1 January 2014 Appointed 12 December 2013 Mr Alister Maitland Chairman – Audit Committee Appointed 16 September 2011 Executive Director Mr Richard Laufmann Managing Director Appointed Managing Director 23 April 2015 Chairman – Remuneration Committee and resigned from Remuneration and Audit Committees. Appointed a Director 16 May 2007 Executives Mr Patrick Say Chief Geologist Appointed Chief Geologist 1 July 2012 Former Mr Steven Olsen Executive Director Appointed 13 May 2007 Resigned 30 June 2015 Mr Mark Parry Managing Director/CEO Appointed 15 October 2012 Departed 8 August 2014 Ms Rachel Rees Chief Financial Ofﬁcer Appointed 9 September 2013 Redundant 31 August 2014 On 4 August 2015, Mr Mitchell Hooke was appointed as Non-Executive Director and is the Chairman of the Remuneration Committee. Other than the above, there have been no other changes to KMP between 1 July 2015 and the date of this report. PAGE 54 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 21. RELATED PARTIES (CONTINUED) 21.1 Key management personnel (KMP) disclosures (Continued) The KMP compensation included in “Employee Beneﬁts Expenses” (see note 13) is as follows: 2015 2014 $ $ Short term employee beneﬁts 764,411 1,854,248 Post employment beneﬁts 116,085 157,562 Share based payments – – Other long term beneﬁts (24,109) (11,963) Termination Beneﬁts 550,417 239,800 1,406,804 2,239,647 (a) KMP compensation disclosures Information regarding individual Directors and Executives compensation and some equity instrument disclosures as permitted by Corporation Regulations 2M.3.03 are provided in the Remuneration Report section of the Directors’ Report on pages 29-34. No member of the KMP 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. (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 KMP, including their related parties, is as follows: Vested and Held at Exercised Granted as Vested Lapsed Held at Exercisable 1 July during compen- during during 30 June at 30 June 2015 Note 2014 year sation year the year 2015 2015 Directors Dr David Carland – – – – – – – Mr Richard Laufmann – – – – – – – Mr Alister Maitland – – – – – – – Executives Mr Patrick Say 160,000 – – – 160,000 – – Former Mr Steven Olsen – – – – – – – Mr Mark Parry 3,000,000 – – – 3,000,000 – – Ms Rachel Rees – – – – – – – PAGE 55 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 21. RELATED PARTIES (CONTINUED) 21.1 Key management personnel (KMP) disclosures (Continued) (b) Options over equity instruments (Continued) Vested and Held at Exercised Granted as Vested Lapsed Held at Exercisable 1 July during compen- during during 30 June at 30 June 2014 Note 2013 year sation year the year 2014 2014 Directors Dr David Carland – – – – – – – Mr Richard Laufmann – – – – – – – Mr Alister Maitland – – – – – – – Mr Steven Olsen – – – – – – – Mr Mark Parry 3,000,000 – – – – 3,000,000 3,000,000 Executives Ms Rachel Rees – – – – – – – Mr Patrick Say 240,000 – – – 80,000 160,000 160,000 Former Mr Paul Chapman – – – – – – – Ms Amber Rivamonte 240,000 – – – 80,000 160,000 160,000 Ms Janet Mason 160,000 – – – 80,000 80,000 80,000 (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 KMP, including their related parties, is as follows: Held at 1 July 2014 or date Received appointed as on Exercise Held at Note a director Purchases of options Sales 30 June 2015 (i) 268,330 – – – 268,330 (ii) 3,541,666 – – – 3,541,666 (iii) 202,000 – – – 202,000 (iv) 138,667 – – – 138,6677 (v) 6,027,000 – – – 6,027,000 – – – – n/a (vi) 24,727 – – – n/a 2015 Directors Dr David Carland Mr Richard Laufmann Mr Alister Maitland Executives Mr Patrick Say Former Mr Steven Olsen Mr Mark Parry Ms Rachel Rees PAGE 56 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 21. RELATED PARTIES (CONTINUED) 21.1 Key management personnel (KMP) disclosures (Continued) (c) Movements in shares (Continued) Held at 1 July 2013 or date Received appointed as on Exercise Held at Note a director Purchases of options Sales 30 June 2014 (i) – 268,330 – – 268,330 (ii) 3,541,666 – – – 3,541,666 (iii) 202,000 – – – 202,000 (v) 6,027,000 – – – 6,027,000 – – – – – (vi) – 24,727 – – 24,727 (iv) 138,667 – – – 138,667 (vii) 3,644,833 – – – 3,644,833 850,000 – – – 850,000 130,000 – – – 130,000 2014 Directors Dr David Carland Mr Richard Laufmann Mr Alister Maitland Mr Steven Olsen Mr Mark Parry Executives Ms Rachel Rees Mr Patrick Say Former Mr Paul Chapman Ms Amber Rivamonte Ms Janet Mason Shares that were held by related parties of KMP are disclosed below. (i) 268,330 held indirectly through Program Images Pty Ltd as trustee for The Carland Super Fund. (ii) 3,500,000 held indirectly through Natalie Laufmann. 41,666 held by Laufmann Long Term Investments Pty Ltd. (iii) 202,000 held indirectly through the Alister Maitland Superannuation Fund. (iv) 16,667 held indirectly through Say Family Super Fund. (v) 5,752,000 held indirectly through S&S Olsen Pty Ltd as trustee for the Olsen Family Trust. 275,000 held through SSO Super Pty Ltd as Trustee for the SSO Super fund. (vi) 24,727 held indirectly through Cascade Trading Trust. (vii) 1,876,166 held indirectly through Stone Poneys Nominees Pty Ltd as trustee for the Chapman Superannuation Fund 1,768,667 held indirectly through Stone Poneys Nominees Pty Ltd as trustee for the Chapman Investment Fund. 21.2 Director related entities A number of KMP hold positions in other entities that result in them having joint control over the ﬁnancial or operating policies of those entities. A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with KMP and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-KMP related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances relating to KMP and entities over which they have joint control were as follows: Transaction values Balance outstanding year ended 30 June as at 30 June Key management person Transaction Note 2015 2014 2015 2014 Dr David Carland Corporate Advisory (i) 240,000 280,000 – 40,000 Mr Steven Olsen Management Services (ii) 670,500 450,000 – 45,000 Total and current liabilities – 85,000 (i) (ii) The Group used the advisory services of BurnVoir Corporate Finance Limited in relation to funding options for the project, a company jointly controlled by Dr David Carland. The contract terms are based on normal market rates for this type of service and amounts are payable under normal payment terms. The term of the contact ended on 31 December 2014. The Group used Cedar River Services Pty Ltd, a company of which Mr Olsen is a principal, to provide employees, including Mr Olsen to perform numerous management services. These included the duties associated with day-to-day management of the Company due to the departure of the former Managing Director, announced on 8 August 2014, whilst the search was conducted for the position of Chief Executive. The services provided also included business development, investor relations, ﬁnancial management services, company secretarial and Chair of the Advisory Board to complete the Hillside EFS. This arrangement was no longer required when Mr Richard Laufmann was appointed to the position of Managing Director and the Advisory Board was dissolved on the completion of its core objectives and the EFS. Mr Olsen resigned as an Executive Director on 30 June 2015. The contract terms are based on normal market rates for these types of services and amounts are payable under normal payment terms and the term of the contract ended on 30 June 2015. PAGE 57 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 22. GROUP ENTITIES Country of Incorporation 2015 2014 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% 23. PARENT ENTITY DISCLOSURES As at, and throughout, the period ending 30 June 2015 the parent company of the Group was Rex Minerals Ltd. 2015 2014 $000 $000 Result of the parent entity Proﬁt/(loss) for the period (166,798) 531 Other comprehensive income – – Total comprehensive income/(loss) for the period (166,798) 531 Financial position of the parent entity at year end Current assets 11,271 22,154 Total assets 26,216 193,637 Current liabilities 977 1,503 Total liabilities 1,633 2,256 Total equity of the parent entity comprising of: Share capital 189,566 189,566 Reserves – 890 Retained earnings/(Accumulated losses) (164,983) 925 Total equity 24,583 191,381 Parent entity contingencies The Parent entity’s contingencies are the same as the Group’s contingencies as detailed in Note 20. 24. SUBSEQUENT EVENTS On 4 August 2015, the Company announced that Mr Mitchell Hooke was appointed as a Non-Executive Director. In addition to the above, there has not arisen in the interval between the end of the ﬁnancial year and the date of this report any item, transaction or event of a material 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. 25. AUDITORS’ REMUNERATION 2015 2014 $ $ KPMG Australia Audit services 47,500 47,500 Other services 104,800 144,455 During the current year KPMG, the Company’s auditor, provided non-audit services to the Group in the form of specialist R&D Tax Incentive services to submit the Group’s research and development claims and assistance with customs matters. PAGE 58 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD DIRECTORS’ DECLARATION 1 In the opinion of the Directors of Rex Minerals Ltd (the Company): (a) the consolidated ﬁnancial statements and notes and the Remuneration report, identiﬁed within the Directors’ report, are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Group’s ﬁnancial position as at 30 June 2015 and of its performance for the ﬁnancial year ended on that date; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2 3 The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Ofﬁcer and Acting Chief Financial Ofﬁcer for the ﬁnancial year ended 30 June 2015. The Directors draw attention to Note 2 to the consolidated ﬁnancial statement, which includes a statement of compliance with International Financial Reporting Standards. Dated at Melbourne this 9th day of September 2015 Signed in accordance with a resolution of the Directors: Richard Laufmann Managing Director PAGE 59 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 2015 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 Scott Fleming Partner Adelaide 9 September 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. PAGE 60 A N N U A L R E P O R T 2 0 1 5 REX MINERALS LTD INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF REX MINERALS LTD 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 2015, and consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 25 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. Liability limited by a scheme approved under Professional Standards Legislation. PAGE 61 REX MINERALS LTD INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF REX MINERALS LTD 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 2015 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 included in Section 15 of the directors’ report for the year ended 30 June 2015. 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 2015, complies with Section 300A of the Corporations Act 2001. KPMG Scott Fleming Partner Adelaide 9 September 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. PAGE 62 A N N U A L R E P O R T 2 0 1 5 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 31 July 2015 Name of Ordinary Shareholder Number of Shares % of Shares Held Acorn Capital Ltd 20,380,807 9.24% Grand South Development Ltd 11,785,777 5.34% b) Listing of 20 largest shareholders as at 31 July 2015 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 Total Grand South Development Limited 11,785,777 5.34% J P Morgan Nominees Australia Ltd 10,878,100 4.93% HSBC Custody Nominees Australia 9,797,029 4.44% National Nominees Ltd 8,349,853 3.79% S & S Olsen Pty Ltd 5,752,000 2.61% Greenstone Property Pty Ltd Titeline Property A/C 5,344,531 2.42% Panjeta Investment Group Pty Ltd 4,740,000 2.15% Natalie Laufmann 3,500,000 1.59% Greenstone Property Pty Ltd 2,825,000 1.28% HSBC Custody Nominees NT-Commonwealth (Australia) Ltd Super Corp A/C 2,614,535 1.19% Citicorp Nominees Pty Ltd Colonial First State Inv A/C 2,455,747 1.11% HSBC Custody Nominees Australia 2,165,876 0.98% UBS Wealth Management Australia Nominees Pty Ltd 2,163,061 0.98% Mr Ram Shanker Kangatharan 2,160,000 0.98% Ms Fei Chen 2,106,200 0.96% UOB Kay Hian (Hong Kong) Limited Clients A/C 1,916,979 0.87% Stone Poneys Nominees Pty Ltd Chapman S/F A/C 1,876,166 0.85% Stone Poneys Nominees Pty Ltd Chapman Inv Fund A/C 1,768,667 0.80% United Overseas Service Management Ltd 1,513,399 0.69% James Gardiner 1,300,000 0.59% 85,013,920 38.55% c) Distribution of shareholders as at 31 July 2015 % of Range Total Holders Units Issued Capital 1-1,000 733 356,463 0.16% 1,001-5,000 1,574 4,520,880 2.05% 5,001-10,000 841 6,744,750 3.06% 10,001-100,000 1,484 49,854,572 22.61% 100,001 - over 289 159,043,119 72.12% 4,921 220,519,784 100.00% Total d) Number of shareholders holding less than a marketable parcel as at 31 July 2015 2,121 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 63 REX MINERALS LTD NOTES PAGE 64 A N N U A L R E P O R T 2 0 1 5

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