ABN 42 127 042 773
contents
Section
page
01
company Information
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
chairmans letter
Review of operations
directors’ Report
corporate governance Statement
Auditor’s Independence declaration
Statement of comprehensive Income
Statement of Financial position
Statement of changes in equity
Statement of cash Flows
Notes to the Financial Statements
directors’ declaration
Independent Auditor’s Report
Shareholder details
Interest in exploration leases
company Information - Scotland
photographs contained in this Annual Report
are for illustration purposes only and are not
necessarily assets of the company.
Scotgold ANNuAl RepoRt I 2012
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Company
Information
01
ABN
Directors
Secretary
Registered Office
Share Registry
Auditor
Bankers
42 127 042 773
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Peter Newcomb
24 Colin Street
West Perth, WA 6005
Telephone:
Facsimile:
Email:
Executive Chairman
CEO / Managing Director
Non-Executive Director
Non-Executive Director
+61 8 9222 5850
+61 8 9222 5810
sgz@scotgoldresources.com
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
Perth, WA 6000
Telephone:
Facsimile:
+61 8 9323 2000
+61 8 9323 2033
HLB Mann Judd
Level 4, 130 Stirling Street
Perth, WA 6000
Telephone:
Facsimile:
Bankwest
54 Adelaide Street
Fremantle, WA 6160
+61 8 9227 7500
+61 8 9227 7533
Securities Exchange Listing Scotgold Resources Limited Shares are listed on the Australian
Securities Exchange and on the AIM board of the London Stock
Exchange. The home exchange is Perth, Western Australia
ASX Code
AIM Code
Shares
Shares
SGZ
SGZ
Website
www.scotgoldresources.com
COMPANY INFORMATION
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02
Chairman’s
Letter
Dear Shareholders
The year under review has been an extraordinarily testing one for the global financial markets with the result that
the gold price has maintained a level above $1,500 per ounce albeit down from the high of $1,895 per ounce set
in September last year. Importantly for Scotgold which will incur operating costs in sterling, the sterling price of
gold has largely maintained a level above £1,000 per ounce.
The strength in the gold price has however not translated into stronger stock prices for gold producers and
explorers although Scotgold has performed relatively well as the Company is now poised to become a producer
having received planning permission from its governing authority, the Loch Lomond and Trossachs National Park.
As the Operating Review details, permission was received with a unanimous vote in favour of development from
the Board of the National Park following an intensive process of dialogue and detailed planning undertaken in
collaboration with the National Park’s executive.
Since receiving planning approval we have been concentrating on increasing the confidence level in the gold and
silver resource through infill drilling of the Cononish ore body. Specifically, the intention is to convert a further
10,000 ounces from inferred to measured and indicated resources in order to provide greater debt capacity thereby
limiting the level of equity financing which must be undertaken to provide development funding.
We have recently succeeded in bringing in RMB Resources, a specialist mining finance bank, as the prospective
provider of debt finance to the project. In the first instance they have provided a loan of £1.18m structured as a
convertible loan and they have accepted the mandate to provide a prepayment facility which it is intended may
provide approximately 50% of the capital required for the project.
The endorsement of a bank of RMB Resources’ standing in the mining industry is a significant step forward for
Scotgold in bringing Scotland’s first commercial gold mine into production. We remain confident that the year
to come will see the start of development operations leading to first production of gold in late 2013 / early 2014.
John Bentley
Chairman
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ABOUT SCOTGOLD
Australian Securities Exchange Listed Scotgold Resources Limited (ASX:SGZ) was established in 2007 and listed
on the ASX in January 2008 after raising $A4.9M through an IPO, with the objective of advancing the Cononish
Gold and Silver Project in Scotland’s Grampian Highlands to a production decision and to explore the highly
prospective tenements comprising the Grampian Gold Project for additional deposits.
Scotgold has focused initially on the development of the Cononish Gold and Silver Project and has identified
resources (estimated in accordance with the JORC Code) in the Measured, Indicated and Inferred categories (see
later for breakdown) of 163,000 oz of gold and 596,000oz of silver (at 3.5g/t gold cut-off).
An application for planning permission for the project was submitted in January 2010 and was narrowly refused by
the National Parks Board in August 2010. Based on further discussions with the Planning Authority, the Company
indicated its intention to re-apply for permission in December 2010 and submitted a revised application in July 2011.
On 13th October 2011, the Director of Planning issued a report to the Parks Board recommending approval of
the application and at a special meeting on 25th October 2011, the Board unanimously approved the application
subject to the conclusion of various legal agreements and agreement on a number of outstanding conditions. These
were successfully concluded and on 15th February 2012, the Parks Board issued the Decision Letter granting
planning permission for the development.
The Crown Estate Commissioners unconditional grant of the Crown Lease was confirmed in May 2012.
Production of gold and silver is expected to begin in late 2013 / early 2014 subject to financing, based on the
positive outcome of the updated Cononish Development Study carried out in Q1 2012 by AMC Consultants
uK Limited (AMC) which used a long term gold price of uS$1,100/oz.
The Grampian Gold Project comprises Crown Option agreements of some 4,300km2 surrounding the Cononish
deposit and covers some of the most prospective areas of the Dalradian geological sequence in the uK. This
sequence extends westward from the uK to the eastern seaboard of Canada and the Appalachian belt in the uS,
and eastward into Sweden and Norway, has been identified by the British Geological Survey as being highly
prospective for both significant gold and base metal deposits. On a more local scale, the Dalradian sequence extends
to the south west from Scotland into the north of Ireland where it hosts other gold deposits at Cavancaw (399,800
oz of gold) which has been operating as an open cut mine since 2006, Curraghinalt (2,700,000 oz of gold), and
at Clontibret (1,030,000 oz of gold).
On acquisition of the Cononish Gold and Silver Project, Scotgold accessed significant amounts of historic
exploration information over the Grampian Gold Project area. This information has been assimilated into a GIS
database and forms the basis for ongoing exploration activities which include regional stream sediment sampling,
rock chip sampling over the area and diamond drilling (both shallow surface and deeper drilling) at identified
key prospects.
The company’s shares were admitted to trading on the AIM market of the London Stock Exchange in February 2010.
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Scotgold’s Grampian Gold Project licence area in relation to regional geology and structures, gold deposits and operating gold mines in Scotland and Ireland.
CONONISH GOLD AND SILVER PROJECT
PLANNING
Scotgold submitted an application for planning permission for the Cononish Gold and Silver project in January
2010 after the requisite consultation processes which drew widespread local support. In August 2010, after a
recommendation for refusal by the Director of Planning at the National Parks, the Parks Board narrowly upheld
this recommendation at a special Board meeting.
Subsequent to the decision, Scotgold’s directors met on several occasions with senior representatives of the Parks
Authority and based on the results of these meetings, Scotgold started the process of re-application in December 2010.
During April 2011 the Company announced that it had accepted an offer of a Regional Selective Assistance
(RSA) grant from economic development agency, Scottish Enterprise, of up to £600,000 for the establishment
of mine facilities and job creation, conditional on the firm obtaining planning permission and subject to meeting
certain conditions relating to capital expenditure and job creation.
Scotgold submitted its revised application for planning permission for the Cononish Gold and Silver project on
17th July 2011 and was again encouraged by the widespread support registered from a range of national and local
organisations as well as individuals including local residents, politicians, academia and Scottish based jewellers.
The revised application incorporated a significant reduction in the scale of the Tailings Management Facility
(afforded by a commitment to underground disposal, post the creation of a suitable underground void) and
a revised form for this Facility, in order to minimize the visual impact on the landscape. The application also
incorporated more detailed restoration techniques and a number of additional measures aimed at mitigating
possible impacts of the development.
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SCOTGOLD ANNuAL REPORT I 2012
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At the closure of the ‘formal’ consultation period in September 2011, the Scottish Environment Protection Agency
(SEPA) (as previously) raised no objection to the application and although Scottish Natural Heritage (SNH) raised
a ‘technical’ objection regarding mitigatory works proposed by Scotgold as part of the Greater Cononish Glen
Management Plan, indicated in their response, that it was capable of being resolved through the application of
suitable conditions. The objection was subsequently withdrawn prior to the Board meeting.
On 13th October 2011, the Director of Planning issued a report recommending approval of the application
and this recommendation for approval was upheld unanimously by the National Parks Board at a special board
meeting on 24th / 25th October 2011 subject to the conclusion of a number of legal agreements and finalisation
of outstanding conditions.
These were concluded on 13th February 2012 when the National Parks Authority issued the Decision Letter
formally granting planning permission. The Company continues to work towards purifying the suspensive
conditions required to be met prior to the commencement of development.
Subsequent to the issue of the Decision Letter, and the expiry of the requisite judicial review period of three
months, the Crown Estate confirmed the unconditional grant of the mining lease on 15th May 2012.
PROJECT STUDIES AND FINANCING
In late 2008, Scotgold commissioned Australian Mining Consultants (AMC) to conduct a scoping study on the
Cononish Gold and Silver Project. A summary of the study can be found on the company’s website (Cononish
Scoping Study confirms economic viability – 17th February 2009).
In December 2011, Scotgold commissioned Australian Mining Consultants uK Ltd (“AMC”) to conduct the
Cononish Project Development Study with updated input from Scotgold’s processing, tailings and environmental
consultants and the company. Results from the study were released on 17th April 2012.
A seven year life of mine is currently estimated inclusive of a one year pre production period and total recovered
production to doré and concentrate over the project life is estimated to be 131,600 ounces of gold and 465,000
ounces of silver. Resources considered in the study are shown in Tables 2 and 3 and include Inferred Resources.
A conventional gravity / flotation concentrator is planned which will treat 72,000 tpa. It is intended that about
25% of gold will be recovered by gravity for smelting on site to a doré bar with the balance of the gold reporting
to a sulphide rich concentrate which will be treated through a third party facility remote from the site.
The overall recovery from the processing plant is predicted at 93% for Au and 90% for Ag to doré and concentrate
and recovered production (to doré and concentrate) is estimated at 21,000 ounces of gold and 74,700 ounces of
silver annually.
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Preproduction project expenditure is estimated at £22.3M, with a further sustaining and deferred capital cost of
£2.4M over the life of the project, including an overall 15% contingency allowance.
Overall operating costs (exclusive of smelter, transport and royalty charges) amount to approximately £90 / t
with an average operating cash cost (including smelter, transport and royalty charges) of uS$575 / £360 / oz Au
equivalent. Operating costs are estimated with an overall 16% contingency allowance.
The results from the study demonstrate a robust project at a base case gold price of uS$1,100 per ounce, with
very attractive returns at current spot gold prices.
Key project financial parameters are shown in Table 1 below using a base case gold price of uS$1,100 / oz and the
then current (NY close 13/4/2012) spot prices.
Table 1 - Financial Highlights
Gold Price $ / oz
uS$ : £ exchange rate used
Gold Price £ / oz
Total Pre Production Costs
Net Present Value (at 10% discount )
Free Cashflow
Unit
uS$
£
£
A$
£
A$
£
A$
Pre Tax Internal Rate of Return
Average Operating cash cost
Payback from start of production
%
uS$/oz Au eq
Months
Spot Gold ($)
Base Case Gold
$1,655
1.60
£1,039
£22.3M
$34.1M
£40.5M
$61.9M
£65.9M
$100.7M
62.5%
624
18
$1,100
1.60
£687
£22.3M
$34.1M
£10.6M
$16.2M
£23.4M
$35.7M
25.4%
575
31
At base case prices, the project generates £23.4M pre tax free cashflow with a pre tax Net Present Value (using a
discount rate of 10%) of £10.6M and a pre tax internal rate of return (IRR) of 25.4%.
At the then current spot prices (13/04/2012), the project is highly cash generative with £65.9M pre tax free
cashflow over the life of the project, a pre tax IRR above 60% and payback initial investment within 18 months
of the commencement of production.
Base Case average operating costs are estimated to be uS$575 per ounce Au equivalent after commissioning of
the project.
Notes:
1. Average operating cash cost is calculated from total operating (non capital) costs (including smelter, transport, royalty costs)
divided by recovered Au equivalent ozs – see Note 2
2. Au equivalent ozs. Gold equivalent ozs are calculated: Recovered gold ozs + (Recovered silver ounces / 55) where the number
55 represents the ratio of base gold price used to silver price used. This ratio was calculated using base case prices of US$1100/
oz Au and US$20 / oz Ag
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SCOTGOLD ANNuAL REPORT I 2012
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5 Year Spot Gold in British Pound vs US Dollars
1018.88 GBP
+688.04 (+207.97%)
(Change calculation is from the start of the chart)
1599.00 USD
+942.70 (+143.64%)
1400
1200
1000
800
600
400
200
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P
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2500
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Nov07
Apr08
Oct08
M ar09
Sep09
M ar10
Aug10
Jan11
Jul11
Jan12
Jun12
The Company has recently concluded a pre development funding agreement with RMB Resources (“RMB”)
for a £1.18m financing. This Facility provides funds to allow Scotgold to take the Cononish gold project through
to its final development decision. In particular the Facility enables Scotgold to continue infill drilling at Cononish
(see Resources) with a view to improving confidence in that part of the resource that will be mined in the early
years of the mine life thereby enhancing the debt capacity of the project.
The Facility is a convertible loan structured as a secured corporate loan facility with share options which provides
for RMB to acquire Scotgold shares at a cost equal to the value of the loan if all the options are exercised. The
strike price for the RMB options is £0.045.
The Facility will be repaid on the earlier of the date that equity or debt funds are available or 31 December 2013.
The annual interest rate for the Facility will be Libor plus 5%.
The Facility was arranged by RMB and is provided by RMB Australia Holdings Limited. RMB’s investment
committee approved the Facility subject to the satisfactory completion of legal due diligence which was concluded
on 27th July 2012.
In addition to the Facility agreement, Scotgold has agreed to mandate RMB to arrange a gold pre payment
facility to fund the development of the Cononish gold project. Scotgold has also agreed to mandate LN Metals
International Ltd to market the gold-in-pyrite concentrate which will be produced at Cononish to end consumers.
The company intends to proceed to a development decision as soon as possible and an indicative milestones for
the project are shown below.
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Indicative Key Milestones for Project Development
• October 2012
January 2013
•
• First quarter of 2013
• Second quarter of 2013
Infill drilling completed
Finalised Development Study incorporating updated Resource Estimate
Finalisation of financing arrangements
Commencement of project development
Subject to the successful outcome of these project milestones, Scotgold anticipates first gold production in late
2013 / early 2014.
RESOURCES
In May 2008, Scotgold released the first Mineral Resource Statement on the Cononish gold-silver deposit
reported in accordance with the JORC code, prepared by Snowden Mining Industry Consultants (“Snowden”).
The Measured, Indicated and Inferred Mineral Resource categories totalled 154,000 ounces of gold and 589,000
ounces of silver (using 3.5 g/t gold cut-off).
Snowden subsequently noted “based on our experience of the Cononish vein system, we believe that there is
an Exploration Target around the mine of between 0.5 Mt to 1.0 Mt at a grade of between 10 g/t Au to 15 g/t
Au for up to 320,000 oz Au. Much of this potential is based on the along strike and down dip extensions of the
Cononish vein, but there are indications that other reefs are present in the area too. At this stage, such figures are
highly conceptual and there is no guarantee that further exploration will define additional resources.”
During 2009, the Company identified additional, high grade gold mineralisation in and around the Cononish
gold and silver project, following a thorough search of historic data generated by previous exploration companies.
As a result of these further investigations and exploration by Scotgold during 2008 - 2009, Snowden was asked in
late 2009 to undertake an update on the Cononish resource.
The revised resource for Cononish is shown below.
Table 2 - Cononish Main Vein Gold Mineral Resources (reported at a 3.5 g/t Au cut-off).
Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest
1,000 t or 1,000 oz. Grade rounded to the nearest 0.1 g/t Au. The Inferred Resource grade is reported with a
grade range to indicate the likely upside due to the information effect.
Classification
Tonnes (t)
Measured
Indicated
Inferred
53,000
73,000
311,000
Grade (g/t)
Gold
17.9
10.2
10.8 (10 – 16)
Ounces (oz)
Gold
31,000
24,000
108,000
Scotgold Note: Incorporating the grade range, the Inferred Mineral Resource is estimated to lie between 100,000
oz Au and 160,000 oz Au. It should be noted that any upside may not exist or it may only be present in a portion
of the resource.
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Table 3 - Cononish Main Vein Silver Mineral Resources (reported at a 3.5 g/t Au cut-off).
Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest
1,000 t or 1,000 oz.
Classification
Tonnes (t)
Measured
Indicated
Inferred
53,000
73,000
285,000
Grade (g/t)
Silver
75.0
43.1
40.1
Ounces (oz)
Silver
128,000
101,000
367,000
This gives a total metal inventory of 163,000 oz Au and 596,000 oz Ag.
Snowden noted that there is resource potential in the eastern adit zone and that the estimation of additional
Mineral Resources are likely once further drilling is complete.
Scotgold conducted an initial phase of infill drilling in October 2009. The drilling program also targeted
mineralisation to the east of the previously defined resource envelope (the eastern extension), specifically the
potential down dip continuation of the mineralisation encountered in trenches (up to 16.12 g/t Au over 2.10
metres) surface drill holes (up to 73.10 g/t Au over 1.77 metres) and underground holes (up to 12.35 g/t Au over
1.49 metres).
A limited program of short AQ size diamond drill holes was also conducted from within the Cononish adit to test
for possible extensions to the identified mineralisation in the eastern part of the adit outside the existing resource,
in particular a ‘parasitic’ 1.6 metre-wide quartz vein where high grades (up to 119.9 g/t gold and 97.2g/t silver)
have been reported from historic assays and also possible ‘off adit’ intersections on the Cononish vein.
Results from the initial phase of the infill program were released in July 2010 are shown in Table 4 below.
Table 4 - 2010 Infill Drilling Results.
Hole
Con 09 01
Con 10 02
Con 10 02a
Con 10 05
including
From
(m)
103.95
103.00
126.90
67.24
79.15
To
(m)
106.00
104.50
127.25
83.75
83.00
Downhole
intersection (m)
2.05
1.50
0.35
11.04
3.85
Est. true
thickness (m)
1.98
1.41
0.31
6.16
2.15
Au
g/t
9.84
15.82
0.39
5.09
14.82
Comment
Ag
g/t
41.6 Main Vein intersection
52.5 Main Vein intersection
42.4 Main Vein Sheared, dyke
22.8 Mineralised intersection
55.5 Main vein intersection
Results from the eastern extension program possibly indicated a westerly plunging payshoot extending beyond
the eastern boundary of the previously defined JORC resource, delineated by surface holes EA 01, 02 and 03,
underneath the eastern extension. Further drilling to define this area is hampered by extreme topography and will
be followed up by underground drilling during mine development.
Scotgold commenced a further phase of infill drilling at Cononish in January 2012. This program is designed to
increase the debt capacity for the Project by demonstrating with increased certainty the presence and continuity
in the high grade ore in the section that will be the first to be mined. The holes reported below represent the first
three holes from an eight hole initial program of 1,020 metres.
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Table 5 - 2012 Infill Drilling Results
Hole
CF 12 - 01
CF 12 - 02
CF 12 - 03
From
(m)
112.46
105.05
125.00
To
(m)
114.77
107.67
130.43
Downhole
intersection (m)
2.31
2.62
5.43
Est. true
thickness (m)
2.00
2.42
3.34
Au
g/t
13.95
14.21
27.21
Comment
Ag
g/t
47.6 Main Vein intersection
39.7 Main Vein intersection
44.1 Main Vein Intersection
A further phase comprising 5 holes (approximately 500m) to be drilled to the west of the existing Indicated
resource has been commenced and a subsequent phase of 5 holes (800m) above the East Raise is being investigated.
On completion of the program, the results will be incorporated into a revised Resource Estimate.
Scotgold believes that there is potential to define further resources close to the Cononish mine, subject to appropriate
studies. The extensive gold-in-soil anomalies, mineralisation associated with outcrops and trenching and geophysical
anomalies in close proximity to Cononish clearly warrant further follow up during the development stage.
Recent infill drilling results.
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GRAMPIAN GOLD PROJECT
The Company continues to actively pursue exploration activities on its substantial land position outside the
National Park.
It is noted that 85% of the area currently under option to Scotgold is located outside the National Park.
Regional fieldwork including ongoing stream sediment sampling continues over the Grampian Gold Project
area and a total of 716 samples taken to date. Initial results have been received and interpretation is on-going to
determine areas for future follow up.
The company plans to conduct an airborne geophysical survey over the central portion of the Cononish Glen
Orchy option area though clearance from civil aviation authorities to fly the proposed configuration remains as
yet ungranted.
In addition to ongoing regional exploration, the Company focused on the Beinn udlaidh River Vein and the Sron
Garbh mafic intrusive prospects.
Beinn Udlaidh River Vein.
The River Vein area is located 5km northwest of the Cononish gold and silver deposit and outside the boundaries
of the Loch Lomond and Trossachs National Park.
Outcrop is confined to rivers and burns due to extensive glacial till cover which is, in many places, deeper than 10
metres throughout Glen Orchy.
Previous exploration in this area by Ennex International plc in the 1980s identified high grade boulders, up to
358.9 g/t Au, and which are now thought to be linked to the recently identified veins.
Initial mapping and outcrop sampling in the River Orchy by Scotgold in 2010, following up previous results
returned exceptional values of 383.2 g/t Au, 321.5 g/t Au and 197.3 g/t Au in rock chip samples from the River
Vein area. High grade values were also recorded from rock chip samples at two additional new veins located
upstream of the River Vein including 171.8 g/t Au, 59.0 g/t Au and 1.89 g/t Au.
Subsequent detailed mapping and sampling over the ‘River Vein’ area defined a quartz sulphide vein rich in gold
as well as several aplitic fracture zones, rich in molybdenum.
The gold bearing vein has now been traced from its discovery location, northwest, across the river to the bank
for a distance of 30 metres, where it disappears under several meters of glacial till. The narrow molybdenum
bearing fractures are currently only exposed in the river bed before disappearing under glacial till. They trend
approximately northeast – southwest and are spaced at 1 – 5 metre intervals. The aplitic margins containing the
molybdenum mineralisation vary from 1cm to 20cms wide. Seven samples (from twenty) of the aplitic fractures
reported values of molybdenum in excess 500g/t and were submitted for re-assay at a higher upper calibration
limit – all seven samples returned in excess of 1000 ppm (0.1%) Mo.
In order to quantify the extent and grade of both the gold vein and molybdenite fractures, a program of four
diamond drill holes was laid out, two targeting the gold vein and two targeting the molybdenum fractures.
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A total of 800m drilling was completed and significant results from the initial two holes are shown below.
RV01:
9.7g/t Au, 13.3g/t Ag, 0.6% Pb, 2.1% Zn over 40cms (intersection width) - 70 metres below surface;
and 3.5g/t Au, >200g/t Ag, 1.4%Pb, 100ppm Mo and 34g/t Te over 52 cms (intersection width) - 88
metres below surface.
RV02:
4.39g/t Au, >200g/t Ag, 1.8% Pb, 167ppm Mo, 43g/t Te over 40cms (intersection width) – 87 metres
below surface
The drilling results indicate at least two possible gold and silver bearing structures. Geochemical characteristics are
similar to the Cononish gold/silver vein, with high silver values and elevated levels of lead, zinc and tellurium. Four
narrow molybdenum fractures with values exceeding 0.01% Mo were also intersected in the second hole, RV02.
The intersection widths of the gold bearing sturcutures, while narrow, demonstrate continuity of the River Vein
structure sampled on surface. The host sequences are a mixture of psammites and semi-pelites which appear more
favourable for vein formation and continuity in other Dalradian gold occurrences.
Follow up work to further determine the extent of the mineralisation is planned.
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Map of River Vein Prospect showing latest drilling, mapping and rock chip sampling results.
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Sron Garbh
The Sron Garbh mafic intrusive complex is situated 2km from Tyndrum, outside the border of the National Park
and about 5 km northeast of the Cononish gold and silver deposit.
During 2011, Scotgold mapped the complex and identified a number of differing rock types including ‘gabbroic
/ appinitic’ and dioritic ‘phases’.
Confirmatory rock chip sampling in the vicinity of a high Cu – Ni sulphide occurrence previously sampled,
returned a highly anomalous value of 0.18g/t Au, 4.3 g/t Ag, 0.82% Cu, 0.21%Ni and 0.03% Co.
The sample was re-assayed for Platinum and Palladium and returned values of 1.14g/t Pt and 0.79g/t Pd.
An initial AQ diamond core program was undertaken to examine and sample the differing igneous rock types
found near surface within the complex. Fifteen AQ diamond drillholes were completed and selected results are
shown below.
Selected results best intercepts include
• SQ AQ 16 - 0.22g/t Au, 0.78g/t Pd, 0.58g/t Pt, 0.75% Cu, 0.18% Ni and 0.01% Co over 2 metres
• SQ AQ 15 - 0.08g/t Au, 0.43g/t Pd, 0.35g/t Pt, 0.58%Cu, 0.17% Ni and 0.02% Co over 1.25 metres
• SQ AQ 26 - 0.11g/t Au, 0.31g/t Pd, 0.37g/t Pt, 0.65% Cu, 0.21% Ni and 0.04% Co over 1 metre
• SQ AQ 28 - 0.03g/t Au, 0.29g/t Pd, 0.25g/t Pt, 0.17% Cu, 0.12% Ni and 0.03% Co over 1.5 metres
• SQ AQ 21 - 0.15g/t Au over 20 metres
• SQ AQ 22 - 0.12g/t Au over 22.5 metres
Drilling has intersected highly anomalous grades of Gold, Platinum, Palladium, Copper Nickel and Cobalt,
in and close to the ‘Gabbroic / Appinitic’ zone which appears to form an outer annular ring to the complex.
Mineralisation of pyrrhotite, minor chalcopyrite and pentlandite is seen to be contained in ‘sulphide blebs’ in a
‘leopard rock’ textured zone.
These characteristics are diagnostic of the world - wide ‘magmatic Cu – Ni – PGE – Au’ group of deposits
associated with mafic / ultramafic intrusives such as Aguablanca in Spain, certain parts of the Sudbury mines
in Ontario, Canada; Voisey’s Bay in Labrador Canada and Lac des Isles in Quebec, Canada. Such deposits occur
as sulphide concentrations (massive through to disseminated sulphides) associated with a variety of mafic and
ultramafic magmatic rocks.
Dr Dave Holwell of the university of Leicester’s Department of Geology and contributing author to the recent
Society of Economic Geologists publication “Magmatic Ni – Cu – PGE deposits” visited the site and has reviewed
the current results.
He commented: “This is most certainly an exciting discovery. The mineralisation at Sron Gharbh has the
characteristics of a classic magmatic Cu-Ni sulphide deposit with elevated precious metals. The ratios of sulphur
and selenium indicate that the magma has been contaminated by sulphur-bearing crustal rocks – a key factor in
14
SCOTGOLD ANNuAL REPORT I 2012
Review of
Operations
03
helping to generate deposits of this kind. Intriguingly, the geochemical signatures show that the sulphides cannot
have gained their high precious metal contents without the presence of a much larger magmatic system than is
current exposed. If this has been preserved beneath the current surface (as a larger intrusion or conduit system), it
could represent a potential host for massive sulphide mineralization at depth.”
In addition to the Cu – Ni – PGE – Au mineralization associated with the gabbroic / appinitic rim, a separate low
grade but wide zone of gold mineralisation occurs associated with quartz veinlets in the ‘iron rich’ dioritic core of
the complex. This mineralisation possibly represents a later or earlier phase to the intrusion which in its own right,
warrants further follow up.
A further phase of drilling is planned to further determine the extent of the complex.
Gold/copper in soil anomaly contour, selected rock chip and selected AQ drillhole results.
REVIEW OF OPERATIONS
15
03
Review of
Operations
Competent Persons Statement:
The information in this report that relates to Exploration Results is based on information compiled by Mr David Catterall. Pr Sci
Nat, who is a member of the South African Council for Natural Scientific Professions. Mr Catterall is employed as a consultant to
Scotgold Resources Ltd. Mr Catterall has sufficient experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition
of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Catterall consents to
the inclusion in the report of the matters based on his information in the form and context in which it appears.
The Information in this report that relates to Mineral Resources is based on resource estimates compiled by EurGeol Dr S C
Dominy FAusIMM (CP), FGS (CGeol), FIMMM (CEng), FAIG (RPGeo), Executive Consultant with Snowden based
in the Ballarat, Australia Office. Dr. Dominy has sufficient experience that is relevant to the style of deposit under consideration
and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore reserves. Dr Dominy consents to the inclusion in the
report of the matters based on this information in the form and context in which it appears.
16
SCOTGOLD ANNuAL REPORT I 2012
Directors’ Report
04
Your Directors submit their report on the consolidated entity consisting of Scotgold Resources Limited and its
controlled entities (“Scotgold”) for the financial year ended 30 June 2012.
DIRECTORS
The following persons were Directors of Scotgold Resources Limited during the whole of the financial year and
up to the date of this report unless otherwise stated;
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Executive Chairman
Chief Executive Officer
Non Executive Director
Non Executive Director
17/02/2009
17/10/2007
14/08/2007
12/03/2009
present
present
present
present
In office from
In office to
PARTICULARS OF DIRECTORS AND COMPANY SECRETARY
John Bentley
Executive Chairman
B.Tech (Hons) Brunel University
Qualifications and experience
Mr Bentley has over 40 years of experience in the natural resources sector. He was Managing Director of
Gencor’s Brazilian mining company, Sao Bento Mineracao, from 1988 to 1993 when he became Chief Executive
of Engen’s Exploration & Production division. In 1996 he was instrumental in floating Energy Africa Ltd on the
Johannesburg stock exchange and became Chief Executive for the following five years building it into one of the
leading African independent oil and gas companies.
More recently Mr Bentley was Executive Chairman of FirstAfrica Oil plc and a Non-Executive director of
Adastra Minerals Ltd. He currently serves on the board of a number of resource companies including as Chairman
of Faroe Petroleum plc, Deputy Chairman of Wentworth Resources Ltd and Non-Executive Director of Resaca
Exploitation Inc, Kea Petroleum plc and SacOil Holdings Ltd.
Mr Bentley holds a degree in Metallurgy from Brunel university.
Interest in Shares and Options
Fully Paid Shares
1,462,500
Special Responsibilities
Overall strategic guidance and uK Capital markets.
Directorships held in ASX listed entities
None
DIRECTORS’ REPORT
17
04
Directors’ Report
Christopher Sangster
CEO / Managing Director
BSc (Hons), ARSM, GDE
Qualifications and experience
Mr Sangster is a mining engineer with over 30 years experience in the mining industry. He has a BSc Hons
in Mining Engineering from the Royal School of Mines, Imperial College in London and a GDE in Mineral
Economics from the university of Witwatersrand. He currently lives close to the Company’s exploration licences
at Comrie in Scotland with his wife and family.
Mr Sangster’s career covers extensive production and technical experience at senior levels in both junior and
multi-national companies in gold, diamonds and base metals in Africa, uK and Canada and covers a wide range
of mining applications.
Between 1996 and 1999 Mr Sangster was General Manger for Caledonia Mining Corporation for the Cononish
Gold Project and a Director of Fynegold Exploration, where he was responsible for all aspects of the project
including feasibility study preparation, project due diligence, finance negotiations, exploration initiatives and
planning permission applications.
After 1999, Mr Sangster moved to the Zambian Copperbelt with Anglo American Plc / KCM Plc where he
attained the position of Vice President Mining Services and in 2005 joined Australian Mining Consultants as
a Principal Mining Engineer. More recently, Mr Sangster was employed as General Manager for AIM – listed
company European Diamonds Plc.
Interest in Shares and Option
Fully Paid Shares
6,438,250
Special Responsibilities
Mr Sangster is the CEO / Managing Director and is responsible for the day to day running of the company.
Directorships held in listed entities
None
Phillip Jackson
Non-executive director
BJuris LLB MBA FAICD
Qualifications and experience
Mr Jackson is a barrister and solicitor with over 25 years legal and international corporate experience, especially
in the areas of commercial and contract law; mining law and corporate structuring. He has worked extensively in
the Middle East, Asia and the united States of America. In Australia, he was formerly a managing legal counsel for
Western Mining Corporation, and in private practice specialized in small to medium resource companies.
Mr Jackson was Managing Region Legal Counsel: Asia-Pacific for Baker Hughes Incorporated for 13 years. He
is now Legal Manager for a major international oil and gas company. He has been a director of a number of
Australian public companies, particularly mining companies. He has been Chairman of Aurora Minerals Limited
since it listed in 2004 and Desert Energy Limited, since it listed in August 2007.
18
SCOTGOLD ANNuAL REPORT I 2012
Directors’ Report
04
His experience includes management, finance, accounting and human resources.
Interest in Shares and Options
Fully Paid Shares
2,187,500
Special Responsibilities
Mr Jackson is Chairman of the Audit Committee and is responsible for legal matters.
Directorships held in listed entities
Company Name
Aurora Minerals Limited
Desert Energy Limited
Appointed
24 September 2003
12 December 2006
Shane Sadleir
Non-Executive Director
BSc (Hons), FAusIMM
Mr Sadleir is a soil scientist and geologist with over 30 years experience in exploration, mining and environmental
aspects of the mining industry. He graduated with a BSc (Hons) from the university of Western Australia in 1974
after specialising in the mineralogy and geochemistry of Darling Range bauxite deposits.
After initially gaining extensive mining and exploration experience in bauxite and gold deposits in Western
Australia, Mr Sadleir has continued to be involved in the exploration for gold, uranium, nickel, base metals, bauxite
and mineral sands in Australia and overseas for much of his career. He also has over eleven years experience in
the environmental impact assessment of major industrial, mining and land use projects and the remediation of
contaminated sites in Western Australia working for the Environmental Protection Authority.
In addition to being on the Board of Scotgold Resources, Mr Sadleir is a Non-Executive Director of Robust
Resources Limited.
Interest in Shares and Options
Fully Paid Shares
14,603,48
Special Responsibilities
Mr Sadleir is responsible for Investor and Public Relations.
Directorships held in listed entities
Company Name
Robust Resources Limited
Appointed
3 October 2008
DIRECTORS’ REPORT
19
04
Directors’ Report
Peter Newcomb
Company Secretary
FCA (ICAEW)
Qualifications and experience
Mr Newcomb is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the
Institute of Chartered Accountants in Australia, with over thirty five years professional and commercial experience.
He has worked in a number of industries and locations including London, Scotland, Singapore and Perth. The
majority of his experience over the last fifteen years has been in the Resources industry in Western Australia. Mr
Newcomb is also Finance Director and Company Secretary of Taruga Gold Limited and Company Secretary of
Athena Resources Limited.
OPERATING AND FINANCIAL REVIEW
A review of the operations of the consolidated entity during the financial year is contained in the Review of
Operations section of this Annual Report. The Company’s strategy in Scotland continues to focus on advancing
the 100% owned Cononish Gold and Silver Project to production whilst continuing to explore its large, highly
prospective land position around Cononish and elsewhere in Scotland which extends to some 4,300km2.
PRINCIPLE ACTIVITIES
The principal activity of the consolidated entity during the year was mineral exploration in Scotland.
Operating Results
Consolidated loss after income tax for the financial year is $1,265,173.
Financial Position
At 30 June 2012 the Company has cash reserves of $72,615.
Dividends
No dividends were paid during the year and no recommendation is made as to dividends.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity that
occurred during the financial year under review not otherwise disclosed in this report or in the consolidated accounts.
MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
On 2nd July 2012 the company announced that an agreement had been reached with RMB Resources for a
£1.18m financing facility. This facility is a convertible loan structured as a secured corporate loan with share
options which provides for RMB to acquire 26,222,222 Scotgold shares at £0.045.
During July 2012 the company drew down loan funding of $1.7 million which is expected be to sufficient to
fund the company into early 2013.
20
SCOTGOLD ANNuAL REPORT I 2012
Directors’ Report
04
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company intends to continue its exploration activities with a view to the commencement of mining
operations as soon as possible.
Further information on likely developments in the operations of the consolidated entity and the expected results
of operations have not been included in this report because the Directors believe it would be likely to result in
unreasonable prejudice to the Company.
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30th
June 2012, and the number of meetings attended by each Director. These meetings included matters relating to
the Remuneration and Nomination Committees of the Company.
Number eligible
to attend
2
2
2
2
Number attended
2
2
2
2
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
AUDIT COMMITTEE
The Audit Committee is comprised of Mr Jackson who chaired one meeting of the audit committee during the
year ended 30 June 2012.
REMUNERATION REPORT (audited)
This report details the nature and amount of remuneration for each director and executive of Scotgold Resources
Limited.
The information provided in the remuneration report includes remuneration disclosures that are required under
Accounting Standards AASB 124 “Related Party Disclosures”. These disclosures have been transferred from the
financial report and have been audited.
Remunerations policy
The board policy is to remunerate Directors at market rates for time, commitment and responsibilities. The Board
determines payment to the Directors and reviews their remuneration annually, based on market practice, duties
and accountability. Independent external advice is sought when required. The maximum aggregate amount of
Directors’ fees that can be paid is subject to approval by shareholders in general meeting, from time to time. Fees
for Non-Executive Directors are not linked to the performance of the consolidated entity. However, to align
Directors’ interests with shareholders interests, the Directors are encouraged to hold securities in the company.
The company’s aim is to remunerate at a level that will attract and retain high-calibre Directors and employees.
Company officers and Directors are remunerated to a level consistent with size of the Company.
All remuneration paid to directors and executives is valued at the cost to the company and expensed.
DIRECTORS’ REPORT
21
04
Directors’ Report
Performance-based remuneration
The company does not pay any performance-based component of salaries.
Details of remuneration for year ended 30 June 2012 (audited)
Directors’ Remuneration
No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year.
Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors or
Companies associated with the Directors in accordance with agreements between the Company and those entities.
Details of the agreements are set out below.
Agreements in respect of cash remuneration of Directors:
Executive Directors
Chris Sangster is on a contract dated 28th January 2009 which provides for a fixed salary and benefits, with a
termination period of 6 months. John Bentley (through Ptarmigan Natural Resources Ltd) is on a contract
dated 17th February 2009 which provides for a fixed fee, with a termination period of 6 months. In both cases
the remuneration is reviewed annually. At the date of this report the annual remuneration for Chris Sangster is
£132,000 and for John Bentley is £66,000. In the event of a termination of contract giving less notice than
provided for in these contracts, the remaining notice period will be paid in full.
Non-Executive Directors
The Company’s constitution provides that the Non-Executive Directors may collectively be paid as remuneration
for their services a fixed sum not exceeding the aggregate sum determined by a general meeting. The aggregate
remuneration has been set at an amount of $300,000 per annum. A Director may be paid fees or other amounts
as the Directors determine where a Director performs special duties or otherwise performs services outside the
scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred
as a result of their directorship or any special duties. Executive Directors may be paid on commercial terms as the
Directors see fit.
22
SCOTGOLD ANNuAL REPORT I 2012
Directors’ Report
04
The total remuneration paid to Directors and Executives is summarised below:
Director/Secretary
Associated Company
Year ended 30 June 2011
Fees
Consultancy
Total
John Bentley
Chris Sangster
Phillip Jackson
Edmond Edwards
Shane Sadleir
Adam Davey
Peter Newcomb
Ptarmigan Natural Resources Ltd
Holihox Pty Ltd
Tied Nominees Pty Ltd
Mineral Products Holdings Pty Ltd
Shenton Park Investments Pty Ltd
Symbios Pty Ltd
54,000
-
27,000
31,500
29,000
9,000
-
150,500
-
206,750
-
10,000
28,400
-
144,500
389,650
54,000
206,750
27,000
41,500
57,400
9,000
144,500
540,150
Year ended 30 June 2012
Fees
Consultancy
Total
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Peter Newcomb
Ptarmigan Natural Resources Ltd
Holihox Pty Ltd
Mineral Products Holdings Pty Ltd
Symbios Pty Ltd
24,000
-
42,000
42,000
-
108,000
68,250
297,244
-
-
166,050
531,544
92,250
297,244
42,000
42,000
166,050
639,544
The consolidated entity does not have any full time Executive officers, other than the Managing Director
Chris Sangster.
There were no performance related payments made during the year.
ENVIRONMENTAL ISSUES
The consolidated entity has conducted exploration activities on mineral tenements. The right to conduct these
activities is granted subject to environmental conditions and requirements. The consolidated entity aims to ensure
a high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental
regulations. There have been no known breaches of any of the environmental conditions.
INDEMNIFICATION OF DIRECTORS
During the financial year, the Company has not given an indemnity or entered into an agreement to indemnify
any of the Directors.
AUDITOR
HLB Mann Judd continues in office in accordance with section 327 of the Corporations Act 2001.
NON-AUDIT SERVICES
There were no non-audit services provided during the current year by our auditors, HLB Mann Judd.
DIRECTORS’ REPORT
23
04
Directors’ Report
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration has been received for the year ended 30 June 2012 and forms part of the
Directors’ report.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Signed in accordance with a resolution of the Directors.
CHRIS SANGSTER
Managing Director
Dated at Tyndrum, Scotland, this 30th day of August, 2012.
24
SCOTGOLD ANNuAL REPORT I 2012
Corporate Governance
Statement
05
The Board of Directors of Scotgold Resources Limited is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of Scotgold Resources Limited on behalf of
the shareholders by whom they are elected and to whom they are accountable. This statement reports on Scotgold
Resources Limited’s key governance principles and practices.
1.
COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS
The Company, as a listed entity, must comply with the Corporations Act 2001 and the Australian Securities
Exchange Limited (ASX) Listing Rules. The ASX Listing Rules require the Company to report on the extent
to which it has followed the Corporate Governance Recommendations published by the ASX Corporate
Governance Council (ASXCGC). Where a recommendation has not been followed, that fact is disclosed, together
with the reasons for the departure.
The table below summaries the Company’s compliance with the Corporate Governance Council’s
Recommendations:
ASX Corporate Governance Council Recommendations
Reference
Comply
1
1.1
1.2
1.3
2
2.1
2.2
2.3
2.4
2.5
2.6
Lay solid foundations for management and oversight
Establish the functions reserved to the board and those delegated to
senior executives and disclose those functions.
2(a)
Disclose the process for evaluating the performance of senior
executives.
Provide the information indicated in the Guide to reporting on
principle 1.
2(h), 3(b),
Remuneration
Report
2(a), 2(h), 3(b),
Structure the board to add value
A majority of the board should be independent directors.
The chair should be an independent director.
The roles of chair and chief executive officer should not be exercised
by the same individual.
The Board should establish a nomination committee.
Disclose the process for evaluating the performance of the board, its
committees and individual directors.
Provide the information indicated in the Guide to reporting on
principle 2.
2(e)
2(c), 2(e)
2(b), 2(c)
2(d)
2(h)
2(b), 2(c), 2(d),
2(e), 2(h)
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
CORPORATE GOVERNANCE STATEMENT
25
05
Corporate Governance
Statement
ASX Corporate Governance Council Recommendations
Reference
Comply
3
Promote ethical and responsible decision-making
Establish a code of conduct and disclose the code or a summary as to:
• the practices necessary to maintain confidence in the company’s
integrity;
• the practices necessary to take into account the company’s legal
obligations and the reasonable expectations of its stakeholders; and
• the responsibility and accountability of individuals for reporting
and investigating reports of unethical practices
4(a)
Yes
3.1
3.2
3.3
3.4
3.5
4
4.1
4.2
4.3
4.4
Establish a policy concerning diversity and disclose the policy or a
summary of that policy. The policy should include requirements for
the board to establish measurable objectives for achieving gender
diversity for the board to assess annually both the objectives and
progress in achieving them.
Disclose in each annual report the measurable objectives for achieving
gender diversity set by the board in accordance with the diversity
policy and progress towards achieving them.
Disclose in each annual report the proportion of women employees
in the whole organisation, women in senior executive positions and
women on the board.
4(c)
4(c)
4(c)
Provide the information indicated in the Guide to reporting on
principle 3.
4(a), 4(c)
Safeguard integrity in financial reporting
The Board should establish an audit committee.
The audit committee should be structured so that it:
• consists only of non-executive directors;
• consists of a majority of independent directors;
• is chaired by an independent chair, who is not chair of the Board;
and
• has at least three members.
3(a)
3(a)
The audit committee should have a formal charter
Provide the information indicated in the Guide to reporting on
principle 4.
3(a)
3(a)
5
Make timely and balanced disclosure
Establish written policies designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at
senior executive level for that compliance and disclose those policies
or a summary of those policies.
Provide the information indicated in the Guide to reporting on
principle 5.
5(a), 5(b)
5(a), 5(b)
5.1
5.2
26
SCOTGOLD ANNuAL REPORT I 2012
No
No
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Corporate Governance
Statement
05
ASX Corporate Governance Council Recommendations
Reference
Comply
6
Respect the rights of shareholders
Design a communications policy for promoting effective
communication with shareholders and encouraging their
participation at general meetings and disclose the policy or a
summary of that policy.
5(a), 5(b)
Provide the information indicated in the Guide to reporting on
principle 6.
5(a), 5(b)
Recognise and manage risk
Establish policies for the oversight and management of material
business risks and disclose a summary of those policies.
6(a)
Yes
Yes
Yes
The Board should require management to design and implement
the risk management and internal control system to manage the
company’s material business risks and report to it on whether those
risks are being managed effectively. The Board should disclose that
management has reported to it as to the effectiveness of the company’s
management of its material business risks.
The Board should disclose whether it had received assurance
from the chief executive officer and the chief financial officer that
the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management
and internal control and that the system is operating effectively in all
material respects in relation to financial reporting risks.
6(a), 6(b), 6(d)
Yes
6(c)
Yes
Provide the information indicated in the Guide to reporting on
principle 7.
6(a), 6(b), 6(c), 6(d)
Yes
Remunerate fairly and responsibly
The Board should establish a remuneration committee.
The remuneration committee should be structured so that it:
• consist of a majority of independent directors
• is chaired by the independent chairman
• has at least three members
3(c)
Clearly distinguish the structure on non-executive directors’
remuneration from that of executive directors and senior executives.
3(c),
Remuneration
Report
Provide the information indicated in the Guide to reporting on
principle 8.
3(c),
No
No
Yes
Yes
6.1
6.2
7
7.1
7.2
7.3
7.4
8
8.1
8.2
8.3
8.4
CORPORATE GOVERNANCE STATEMENT
27
05
Corporate Governance
Statement
2.
THE BOARD OF DIRECTORS
2(a) Roles and Responsibilities of the Board
The Board is accountable to the shareholders and investors for the overall performance of the Company
and takes responsibility for monitoring the Company’s business and affairs and setting its strategic direction,
establishing and overseeing the Company’s financial position.
The Board is responsible for:
• Appointing, evaluating, rewarding and if necessary the removal of the Chief Executive Officer
(“CEO”) and senior management;
• Development of corporate objectives and strategy with management and approving plans, new
investments, major capital and operating expenditures and major funding activities proposed by
management;
• Monitoring actual performance against defined performance expectations and reviewing operating
information to understand at all times the state of the health of the Company;
• Overseeing the management of business risks, safety and occupational health, environmental issues and
community development;
• Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
• Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board
that proper operational, financial, compliance, risk management and internal control process are in
place and functioning appropriately;
• Approving and monitoring financial and other reporting;
• Assuring itself that appropriate audit arrangements are in place;
• Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the
Company has adopted a Code of Conduct and that the Company practice is consistent with that
Code; and other policies; and
• eporting to and advising shareholders.
• Other than as specifically reserved to the Board, responsibility for the day-to-day management of the
Company’s business activities is delegated to the Chief Executive Officer and Executive Management.
2 (b) Board Composition
The Directors determine the composition of the Board employing the following principles:
• the Board, in accordance with the Company’s constitution must comprise a minimum of three Directors;
• the roles of the Chairman of the Board and of the Chief Executive Officer should be exercised by
different individuals;
• the majority of the Board should comprise Directors who are non-executive;
• the Board should represent a broad range of qualifications, experience and expertise considered of
benefit to the Company; and
• the Board must be structured in such a way that it has a proper understanding of, and competency
in, the current and emerging issues facing the Company, and can effectively review management’s
decisions.
28
SCOTGOLD ANNuAL REPORT I 2012
Corporate Governance
Statement
05
The Board is currently comprised of two Non-Executive Directors and two Executive Directors. The skills,
experience, expertise, qualifications and terms of office of each director in office at the date of the annual
report is included in the Directors’ Report.
The Company’s constitution requires one-third of the Directors (or the next lowest whole number) to
retire by rotation at each Annual General Meeting (AGM). The Directors to retire at each AGM are those
who have been longest in office since their last election. Where Directors have served for equal periods,
they may agree amongst themselves or determine by lot who will retire. A Director must retire in any event
at the third AGM since he or she was last elected or re-elected. Retiring Directors may offer themselves
for re-election.
A Director appointed as an additional or casual Director by the Board will hold office until the next AGM
when they may be re-elected.
The Chief Executive Officer is not subject to retirement by rotation and, along with any Director appointed
as an additional or casual Director, is not to be taken into account in determining the number of Directors
required to retire by rotation.
2(c) Chairman and Chief Executive Officer
The Chairman is responsible for:
• leadership of the Board;
• the efficient organisation and conduct of the Board’s functions;
• the promotion of constructive and respectful relations between Board members and between the Board
and management;
• contributing to the briefing of Directors in relation to issues arising at Board meetings;
• facilitating the effective contribution of all Board members; and
• committing the time necessary to effectively discharge the role of the Chairman.
The Chief Executive Officer is responsible for:
• implementing the Company’s strategies and policies; and
• the day-to-day management of the Company’s business activities
2(d) Nomination Committee
The Company does not comply with ASX Recommendation 2.4. The Company is not of a relevant size
to consider formation of a nomination committee to deal with the selection and appointment of new
Directors and as such a nomination committee has not been formed.
Nominations of new Directors are considered by the full Board in accordance with the Company’s
“Selection of New Directors Policy”.
2(e)
Independent Directors
The Company recognises that independent Directors are important in assuring shareholders that the Board
is properly fulfilling its role and is diligent in holding senior management accountable for its performance.
The Board assesses each of the directors against specific criteria to decide whether they are in a position to
exercise independent judgment.
CORPORATE GOVERNANCE STATEMENT
29
05
Corporate Governance
Statement
Directors of Scotgold Resources Limited are considered to be independent when they are independent
of management and free from any business or other relationship that could materially interfere with, or
could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent
judgement.
In making this assessment, the Board considers all relevant facts and circumstances. Relationships that the
Board will take into consideration when assessing independence are whether a Director:
• is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a
substantial shareholder of the Company;
• is employed, or has previously been employed in an executive capacity by the Company or another
Company member, and there has not been a period of at least three years between ceasing such
employment and serving on the Board;
• has within the last three years been a principal of a material professional advisor or a material consultant
to the Company or another Company member, or an employee materially associated with the service
provided;
• is a material supplier or customer of the Company or other Company member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer; or
• has a material contractual relationship with the Company or another Company member other than as
a Director.
The Board currently includes one independent non-executive Director.
In accordance with the definition of independence above, and the materiality thresholds set, the following
Directors of Scotgold Resources Limited are considered to be independent:
Name
Phillip Jackson
Position
Non Executive Director
The term in office held by each director in office at the date of this report is as follows:
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
In office since
17/02/2009
17/10/2007
14/08/2007
12/03/2009
2(f) Avoidance of conflicts of interest by a Director
In order to ensure that any interests of a Director in a particular matter to be considered by the Board are
known by each Director, each Director is required by the Company to disclose any relationships, duties or
interests held that may give rise to a potential conflict. Directors are required to adhere strictly to constraints
on their participation and voting in relation to any matters in which they may have an interest.
30
SCOTGOLD ANNuAL REPORT I 2012
Corporate Governance
Statement
05
2(g) Board access to information and independent advice.
Directors are able to access members of the management team at any time to request relevant information.
There are procedures in place, agreed by the Board, to enable Directors, in furtherance of their duties, to
seek independent professional advice at the company’s expense.
2(h) Review of Board performance
The performance of the Board is reviewed regularly by the Chairman. The Chairman conducts
performance evaluations which involve an assessment of each Board member’s performance against specific
and measurable qualitative and quantitative performance criteria. The performance criteria against which
directors and executives are assessed is aligned with the financial and non-financial objectives of Scotgold
Resources Limited. Directors whose performance is consistently unsatisfactory may be asked to retire.
3.
THE BOARD COMMITTEES
3(a) Audit Committee
The audit committee is comprised of one independent non-executive director, Mr Jackson who chaired one
meeting of the audit committee between commencement of the financial year and the date of this report.
The role and responsibilities of the Audit Committee are summarised below.
The Audit Committee is responsible for reviewing the integrity of the Company’s financial reporting and
overseeing the independence of the external auditors. The Board sets aside time to deal with issues and
responsibilities usually delegated to the Audit Committee to ensure the integrity of the financial statements
of the Company and the independence of the auditor.
The Board reviews the audited annual and half-year financial statements and any reports which accompany
published financial statements and recommends their approval to the members. The Board also reviews
annually the appointment of the external auditor, their independence and their fees.
The Board is also responsible for establishing policies on risk oversight and management. The Company has
not formed a separate Risk Management Committee due to the size and scale of its operations.
3(b) External Auditors
The Company’s policy is to appoint external auditors who clearly demonstrate quality and independence.
The performance of the external auditor is reviewed annually and applications for tender of external audit
services are requested as deemed appropriate, taking into consideration assessment of performance, existing
value and tender costs. It is HLB Mann Judd’s policy to rotate engagement Partners on listed companies at
least every five years.
An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is
provided in the notes to the financial statements in the Annual Report. There were no non-audit services
provided by the auditors during the year.
CORPORATE GOVERNANCE STATEMENT
31
05
Corporate Governance
Statement
There is no indemnity provided by the company to the auditor in respect of any potential liability to
third parties.
The external auditor is requested to attend the annual general meeting and be available to answer shareholder
questions about the conduct of the audit and preparation and content of the audit report.
3(c) Remuneration Committee
The role of a Remuneration Committee is to assist the Board in fulfilling its responsibilities in respect of
establishing appropriate remuneration levels and incentive policies for employees.
The Board has not established a separate Remuneration Committee due to the size and scale of its operations.
This does not comply with Recommendation 8.1 however the Board as a whole takes responsibility for
such issues.
The responsibilities include setting policies for senior officers remuneration, setting the terms and conditions
for the CEO, reviewing and making recommendations to the Board on the Company’s incentive schemes
and superannuation arrangements, reviewing the remuneration of both executive and non-executive
directors and undertaking reviews of the CEO’s performance.
The Company has structured the remuneration of its senior executive, where applicable, such that it
comprises a fixed salary, statutory superannuation and participation in the Company’s employee share option
plan. The Company believes that by remunerating senior executives in this manner it rewards them for
performance and aligns their interests with those of shareholders and increases the Company’s performance.
Non-executive directors are paid their fees out of the maximum aggregate amount approved by shareholders
for non-executive director remuneration. The Company does not adhere to Recommendation 8.2 Box
8.2 ‘Non-executive directors should not receive options or bonus payments’. The Company may, in the
future, granted options to non-executive directors. The Board is of the view that options (for both executive
and non-executive directors) are a cost effective benefit for small companies such as Scotgold Resources
Limited that seek to conserve cash reserves. They also provide an incentive that ultimately benefits both
shareholders and the optionholders, as optionholders will only benefit if the market value of the underlying
shares exceeds the option strike price. ultimately, shareholders will make that determination.
The remuneration received by directors and executives in the current period is contained in the
“Remuneration Report” within the Directors’ Report of the Annual Report.
4.
ETHICAL RESPONSIBLE DECISION MAKING
4(a) Code of Ethics and Conduct
The Board endeavours to ensure that the Directors, officers and employees of the Company act with
integrity and observe the highest standards of behaviour and business ethics in relation to their corporate
activities. The “Code of Conduct” sets out the principles, practices, and standards of personal behaviour the
Company expects people to adopt in their daily business activities.
32
SCOTGOLD ANNuAL REPORT I 2012
Corporate Governance
Statement
05
All Directors, officers and employees are required to comply with the Code of Conduct. Senior managers
are expected to ensure that employees, contractors, consultants, agents and partners under their supervision
are aware of the Company’s expectations as set out in the Code of Conduct.
All Directors, officers and employees are expected to:
• comply with the law;
• act in the best interests of the Company;
• be responsible and accountable for their actions; and
• observe the ethical principles of fairness, honesty and truthfulness, including prompt disclosure of
potential conflicts.
4(b) Policy concerning trading in Company securities
The Company’s “Dealings in Company Shares and Options Policy” applies to all Directors, officers and
employees. This policy sets out the restrictions on dealing in securities by people who work for, or are
associated with the Company and is intended to assist in maintaining market confidence in the integrity
of dealings in the Company’s securities. The policy stipulates that the only appropriate time for a Director,
officer or employee to deal in the Company’s securities is when they are not in possession of price sensitive
information that is not generally available to the market.
As a matter of practice, Company shares may only be dealt with by Directors and officers of the Company
under the following guidelines:
• no trading is permitted in the period of 14 days preceding release of each quarterly report, half-yearly
report and annual financial report of the Company or for a period of 2 trading days after the release of
such report;
• guidelines are to be considered complementary to and not replace the various sections of the
Corporations Act 2001 dealing with insider trading; and
• prior approval of the Chairman, or in his absence, the approval of two directors is required prior to any
trading being undertaken.
4(c) Policy concerning gender diversity
Scotgold is committed to establishing a policy concerning diversity and disclosure of the policy. The policy will
include requirements for the board to establish measurable objectives for achieving gender diversity and for the
Board to assess annually the objectives and report in the Annual Report.
As a company with a small market capitalisation, the company has a small board. The company has no established
policy in relation to gender diversity at present but is aware of the principle and will be alert for opportunities
when board changes are contemplated. Given the size of the company and the limited number of employees,
reporting the numbers of employees by gender is not regarded as a meaningful statistic.
CORPORATE GOVERNANCE STATEMENT
33
05
Corporate Governance
Statement
5.
TIMELY AND BALANCED DISCLOSURE
5(a) Shareholder communication
The Company believes that all shareholders should have equal and timely access to material information
about the Company including its financial situation, performance, ownership and governance. The
Company’s “ASX Disclosure Policy” encourages effective communication with its shareholders by
requiring that Company announcements:
• be factual and subject to internal vetting and authorisation before issue;
• be made in a timely manner;
• not omit material information;
• be expressed in a clear and objective manner to allow investors to assess the impact of the information
when making investment decisions;
• be in compliance with ASX Listing Rules continuous disclosure requirements; and
• be placed on the Company’s website promptly following release.
Shareholders are encouraged to participate in general meetings. Copies of addresses by the Chairman or
Chief Executive Officer are disclosed to the market and posted on the Company’s website. The Company’s
external auditor attends the Company’s annual general meeting to answer shareholder questions about the
conduct of the audit, the preparation and content of the audit report, the accounting policies adopted by
the Company and the independence of the auditor in relation to the conduct of the audit.
5(b) Continuous disclosure policy
The Company is committed to ensuring that shareholders and the market are provided with full and
timely information and that all stakeholders have equal opportunities to receive externally available
information issued by the Company. The Company’s “ASX Disclosure Policy” described in 5(a) reinforces
the Company’s commitment to continuous disclosure and outline management’s accountabilities and the
processes to be followed for ensuring compliance.
The policy also contains guidelines on information that may be price sensitive. The Company Secretary
has been nominated as the person responsible for communications with the ASX. This role includes
responsibility for ensuring compliance with the continuous disclosure requirements with the ASX Listing
Rules and overseeing and coordinating information disclosure to the ASX.
6.
RECOGNISING AND MANAGING RISK
The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance and
internal control systems. The Company’s policies are designed to ensure strategic, operational, legal, reputation and
financial risks are identified, assessed, effectively and efficiently managed and monitored to enable achievement
of the Company’s business objectives. A written policy in relation to risk oversight and management has been
established (“Risk Management and Internal Control Policy”). Considerable importance is placed on maintaining
a strong control environment. There is an organisation structure with clearly drawn responsibilities.
34
SCOTGOLD ANNuAL REPORT I 2012
Corporate Governance
Statement
05
6(a) Board oversight of the risk management system
The Board is responsible for approving and overseeing the risk management system. The Board reviews,
at least annually, the effectiveness of the implementation of the risk management controls and procedures.
The principle aim of the system of internal control is the management of business risks, with a view to
enhancing the value of shareholders’ investments and safeguarding assets. Although no system of internal
control can provide absolute assurance that the business risks will be fully mitigated, the internal control
systems have been designed to meet the Company’s specific needs and the risks to which it is exposed.
Annually, the Board is responsible for identifying the risks facing the Company, assessing the risks and
ensuring that there are controls for these risks, which are to be designed to ensure that any identified risk
is reduced to an acceptable level.
The Board is also responsible for identifying and monitoring areas of significant business risk. Internal
control measures currently adopted by the Board include:
• at least quarterly reporting to the Board in respect of operations and the Company’s financial position,
with a comparison of actual results against budget; and
• regular reports to the Board by appropriate members of the management team and/or independent
advisers, outlining the nature of particular risks and highlighting measures which are either in place or
can be adopted to manage or mitigate those risks.
6(b) Risk management roles and responsibilities
The Board is responsible for approving and reviewing the Company’s risk management strategy and policy.
Executive management is responsible for implementing the Board approved risk management strategy and
developing policies, controls, processes and procedures to identify and manage risks in all of the Company’s
activities.
The Board is responsible for satisfying itself that management has developed and implemented a sound
system of risk management and internal control.
6(c) Chief Executive Officer and Chief Financial Officer Certification
The Chief Executive Officer and Chief Financial Officer, or equivalent, provide to the Board written
certification that in all material respects:
• the Company’s financial statements present a true and fair view of the Company’s financial condition
and operational results and are in accordance with relevant accounting standards;
• the statement given to the Board on the integrity of the Company’s financial statements is founded on a
sound system of risk management and internal compliance and controls which implements the policies
adopted by the Board; and
• the Company’s risk management an internal compliance and control system is operating efficiently and
effectively in all material respects.
CORPORATE GOVERNANCE STATEMENT
35
05
Corporate Governance
Statement
6(d)
Internal review and risk evaluation
Assurance is provided to the Board by executive management on the adequacy and effectiveness of
management controls for risk on a regular basis.
7. OTHER INFORMATION
Further information relating to the company’s corporate governance practices and policies has been made publicly
available on the company’s web site at www.scotgoldresources.com
36
SCOTGOLD ANNuAL REPORT I 2012
Auditor’s Independence
Declaration
06
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Scotgold Resources Limited for the year ended 30 June
2012, I declare that to the best of my knowledge and belief, there have been no contraventions of:
a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) any applicable code of professional conduct in relation to the audit.
N G NEILL
Partner, HLB Mann Judd
Perth, Western Australia
30 August 2012
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth 6000 PO Box 8124 Perth BC 6849 Western Australia. Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
AuDITOR’S INDEPENDENCE DECLARATION
37
07
Statement of
Comprehensive Income
for the year ended 30 June 2012
Financial Position
as at 30 June 2012
Revenue
Administration costs
Depreciation and loss on disposal of fixed assets
Employee and consultant costs
Listing and share registry costs
Legal fees
Office and communication costs
Other expenses
LOSS BEFORE INCOME TAX EXPENSE
Income tax benefit
LOSS FOR THE YEAR
Other Comprehensive Income
Notes
2
3
4
CONSOLIDATED
2012
$
29,124
(393,551)
(25,165)
(407,100)
(135,796)
(185,046)
(152,547)
(69,643)
2011
$
33,880
(389,734)
(38,448)
(236,864)
(147,974)
(5,715)
(163,441)
(76,209)
(1,339,724)
(1,033,505)
74,551
123,039
(1,265,173)
(910,466)
Exchange loss on translation of foreign subsidiaries
(1,662)
(44,370)
Comprehensive result for the year
Basic loss per share (cents per share)
(1,266,835)
(954,836)
22
0.67
0.67
These financial statements should be read in conjunction with the accompanying notes.
38
SCOTGOLD ANNuAL REPORT I 2012
Comprehensive Income
for the year ended 30 June 2012
Statement of
Financial Position
as at 30 June 2012
08
CuRRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
NON CuRRENT ASSETS
Trade and other receivables
Plant and equipment
Mineral exploration and evaluation
Total Non Current assets
TOTAL ASSETS
CuRRENT LIABILITIES
Trade and other payables
Other current liabilities
TOTAL LIABILITIES
NET ASSETS
EQuITY
Issued capital
Reserves
Accumulated losses
TOTAL EQuITY
Notes
5
6
7
6
8
9
10
10
12
13
13
CONSOLIDATED
2012
$
72,615
46,731
20,369
2011
$
950,668
196,303
20,076
139,715
1,167,047
76,923
170,721
12,084,602
75,586
173,116
10,526,320
12,332,246
10,775,022
12,471,961
11,942,069
227,147
127,243
354,390
297,566
39,844
337,410
12,117,571
11,604,659
16,079,010
(46,032)
(3,915,407)
14,299,263
(44,370)
(2,650,234)
12,117,571
11,604,659
These financial statements should be read in conjunction with the accompanying notes.
STATEMENT OF FINANCIAL POSITION AS AT 30 JuNE 2012
39
Cash Flows
for the year ended 30 June 2012
09
Statement of
Changes in Equity
for the year ended 30 June 2012
CONSOLIDATED
Issued
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Total
Equity
Year Ended 30 June 2011
$
$
$
$
Balance 1 July 2010
Share Placements
Rights Issue
Option exercise
Share issue expenses
Total comprehensive result for the year
As at 30 June 2011
12,324,019
986,000
1,020,005
29,149
(59,910)
-
14,299,263
(1,739,768)
-
-
-
-
(910,466)
(2,650,234)
-
-
-
-
-
(44,370)
(44,370)
10,584,251
986,000
1,020,005
29,149
(59,910)
(954,836)
11,604,659
Year Ended 30 June 2012
$
$
$
$
Balance 1 July 2011
Rights Issue
Rights Issue Shortfall allocation
Option exercise
Share issue expenses
Total comprehensive result for the year
As at 30 June 2012
14,299,263
1,409,081
203,963
214,747
(48,044)
-
16,079,010
(2,650,234)
-
-
-
-
(1,265,173)
(3,915,407)
(44,370)
-
-
-
-
(1,662)
(46,032)
11,604,659
1,409,081
203,963
214,747
(48,044)
(1,266,835)
12,117,571
These financial statements should be read in conjunction with the accompanying notes.
40
SCOTGOLD ANNuAL REPORT I 2012
Changes in Equity
for the year ended 30 June 2012
Statement of
Cash Flows
for the year ended 30 June 2012
10
CONSOLIDATED
Notes
2012
$
2011
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payment to suppliers
Interest income received
(1,273,624)
28,951
(1,073,130)
32,285
Net Cash Outflow From Operating Activities
18
(1,244,673)
(1,040,845)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure
Payment for other fixed assets
(1,391,102)
(22,769)
(1,524,816)
(11,992)
Net Cash Outflow From Investing Activities
(1,413,871)
(1,536,808)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Share and option issue transaction costs
Hire purchase repayments
Net Cash Inflow From Financing Activities
Net decrease in cash held
1,827,791
(48,044)
-
2,035,154
(59,910)
(7,284)
1,779,747
1,967,960
(878,797)
(609,693)
Effect of exchange rate fluctuations on cash and cash equivalents
744
(32,636)
Cash and cash equivalents at the beginning of this financial year
950,668
1,592,997
Cash and cash equivalents at the end of this financial year
5
72,615
950,668
These financial statements should be read in conjunction with the accompanying notes.
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JuNE 2012
41
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements
of the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the
law. Cost is based on the fair values of the consideration given in exchange for assets.
The financial report has also been prepared on a historical cost basis. The financial report is presented in Australian dollars.
The company is a listed public company, incorporated in Australia and operating in Australia and Scotland. The entity’s
principal activity is mineral exploration.
The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated.
The financial statements are for the consolidated entity consisting of Scotgold Resources and its subsidiaries.
Reporting Basis and Conventions
The financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes
the commercial realisation of the future potential of the Company’s and consolidated entity’s assets and the discharge of
their liabilities in the normal course of business.
The Board considers that the Company is a going concern and recognises that additional funding is required to ensure
that the Company can continue to fund its and the consolidated entity’s operations and further develop their mineral
exploration and evaluation assets during the twelve month period from the date of this financial report. Such additional
funding as occurred during the year ended 30 June 2012 as disclosed in Note 12, can be derived from either one or a
combination of the following:
• The placement of securities under the ASX Listing Rule 7.1 or otherwise;
• An excluded offer pursuant to the Corporations Act 2001; or
• The sale of assets.
Accordingly, the Directors believe the Company will obtain sufficient funding to enable it and the consolidated entity to
continue as going concerns and that it is appropriate to adopt that basis of accounting in the preparation of the financial
report.
Additionally, as disclosed in Note 24, the company drew down loan funding of $1.7 million from RMB Resources
which is expected to be sufficient to fund the company into early 2013.
The financial report has also been prepared on an accruals basis and is based on historical costs modified by the revaluation
of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has
been applied.
Statement of Compliance
The financial report was authorised for issue on 30th August 2012. The financial report complies with Australian
Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies
with International Financial Reporting Standards (IFRS).
42
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
Adoption of new and revised standards
Changes in accounting policies on initial application of Accounting Standards
In the year ended 30 June 2012, the Directors has reviewed all of the new and revised Standards and Interpretations issued
by the AASB that are relevant to its operations and effective for the current annual reporting period.
It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised Standards
and Interpretations on its business and, therefore, no change is necessary to consolidated entity accounting policies.
The Directors also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the
year ended 30 June 2012. As a result of this review the Directors have determined that there is no impact, material or
otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to
consolidated entity accounting policies.
Accounting Policies
(a)
Basis of Consolidation
A controlled entity is any entity controlled by Scotgold Resources Limited. Control exists where Scotgold
Resources Limited has the capacity to dominate the decision-making in relation to the financial and operating
policies of another entity so that the other entity operates with Scotgold Resources Limited to achieve the
objectives of Scotgold Resources Limited. All controlled entities have a 30 June financial year-end.
All inter-company balances and transactions between entities in the consolidated entity, including any unrealised
profit or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed
where necessary to ensure consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the consolidated entity during the year, their operating results have
been included from the date control was obtained or until the date control ceased.
(b)
Income Tax
The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable
or disallowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the
balance date.
Deferred tax is accounted for using the liability method in respect of temporary differences arising between the
tax bases of assets and liabilities and their carrying amount in the financial statements. No deferred income tax will
be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to
items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary difference can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that
no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will
derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of
deductibility imposed by the law.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
43
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
(c)
Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation.
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of
the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows which will be received from the assets employment and subsequent disposal. The expected net cash flows
have been discounted to their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future consolidated benefits associated with the item will flow to the consolidated entity
and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement
of comprehensive income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets, but excluding computers, is depreciated on a
reducing balance commencing from the time the asset is held ready for use. Computers are depreciated on a straight line
basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset:
Depreciation Rate:
Plant and Equipment
15 – 50%
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation
reserve relating to that asset are transferred to retained earnings.
(d)
Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is either written off as incurred or accumulated in respect of each
identifiable area of interest. Tenement acquisition costs are initially capitalised. Costs are only carried forward to the
extent that they are expected to be recouped through the successful development of the areas, sale of the respective
areas of interest or where activities in the area have not yet reached a stage which permits reasonable assessment of
the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the areas is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of
the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are
expensed as incurred and treated as exploration and evaluation expenditure.
44
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
(e)
Impairment of Assets
At each reporting date, the Directors review the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the assets, being the higher of the asset’s fair value less costs to sell and value in use, is compared to
the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the
statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
(f)
Provisions
Provisions are recognised where there is a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
(g)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of change in value.
(h)
Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
(i) Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST or VAT, except where the amount of
GST or VAT incurred is not recoverable from the Australian Tax Office. In these circumstances the GST or VAT
is recognised as part of the cost of acquisition of the asset or as part of an item of the expenses. Receivables and
payables in the statement of financial position are shown inclusive of GST or VAT.
(j) Contributed Equity
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share
proceeds received.
(k)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(l)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of Scotgold Resources
Limited.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
45
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
(m)
Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
Key Estimates – Impairment
The Directors assess impairment at each reporting date by evaluating conditions specific to the consolidated entity that
may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.
Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
No impairment has been recognised in respect of costs carried forward as exploration assets. The ultimate recoupment of
value is dependent on the successful development and commercial exploitation or sale of the respective areas.
(n)
Share based payments – shares and options
The fair value of shares and share options granted is recognised as an expense with a corresponding increase in
equity. Fair value is measured at grant date and recognised over the period during which the grantees become
unconditionally entitled to the shares or share options.
The fair value of share grants at grant date is determined by the share price at that time.
The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the option, any vesting and performance criteria, the share price at
grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free rate
for the term of the option.
upon the exercise of the option, the balance of the share-based payments reserve relating to the option is transferred
to share capital.
(o)
Foreign currency translation
Both the functional and presentation currency of Scotgold Resources Limited and its Australian subsidiaries is
Australian dollars. Each entity in the Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception of
differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These
are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or
loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss.
46
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
The functional currency of the foreign operation, Scotgold Resources is Pounds Sterling (£).
As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of
Scotgold Resources Limited at the rate of exchange ruling at the balance date and income and expense items are
translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during that
period, in which case the exchange rates at the dates of the transactions are used.
The exchange differences arising on the translation are taken directly to a separate component of equity, being
recognised in the foreign currency translation reserve.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular
foreign operation is recognised in profit or loss.
In addition, in relation to the partial disposal of a subsidiary that does not result in the Group losing control over
the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling
interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates
or jointly controlled entities that do not result in the Group losing significant influence or joint control), the
proportionate share of the accumulated exchange differences is reclassified to profit or loss.
NOTE 2 – REVENUE
Revenue
Interest received
Other income
Total revenue
2012
$
29,124
-
29,124
NOTE 3 - LOSS FROM ORDINARY ACTIVITIES BEFORE TAX EXPENSES
Expenses
Borrowing costs expensed
Total borrowing cost expensed
Depreciation of non-current assets
Plant and Equipment
Office furniture and equipment
Motor vehicles
Total depreciation of non-current assets
Profit on disposal of fixed assets
-
-
22,028
42
7,060
29,130
(3,965)
2011
$
33,138
742
33,880
251
251
27,636
54
10,685
38,375
73
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
47
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
NOTE 4 - INCOME TAX
The prima facie tax benefit at 30% on loss from ordinary activities is reconciled to the income tax benefit in the financial
statements as follows:
Loss from ordinary activities
Prima facie income tax benefit at 30%
Tax effect of permanent differences
Share Issue Costs amortised
R & D Tax Offset refund received
Other non-deductible expenses
Income tax benefit adjusted for permanent differences
Deferred tax asset not brought to account
INCOME TAX BENEFIT
2012
$
1,266,835
380,050
66,952
(74,551)
(159)
372,292
(297,741)
74,551
2011
$
954,837
286,451
64,070
(123,039)
(5,658)
221,824
(98,785)
123,039
The directors estimate the cumulative unrecognised deferred tax asset attributable to the company and its controlled
entity at 30% is as follows:
DEFERRED TAX ASSETS
Revenue Losses after permanent differences
Capital Raising Costs yet to be claimed
824,884
96,558
921,442
558,556
149,099
707,655
The potential deferred tax asset has not been brought to account in the financial report at 30 June 2012 as the Directors
do not believe it is appropriate to regard the realisation of the asset as probable. This asset will only be obtained if:
(a)
The company and its controlled entity derive future assessable income of an amount and type sufficient to enable
the benefit from the deductions for the tax losses and the unrecouped exploration expenditure to be realised;
(b) The company and its controlled entity continue to comply with the conditions for deductibility imposed by tax
legislation; and
(c) No changes in tax legislation adversely affect the company and its controlled entity in realising the benefit from
the deductions for the tax losses and unrecouped exploration expenditure.
Franking Credits
No franking credits are available at balance date for the subsequent financial year.
48
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
NOTE 5 – CASH AND CASH EQUIVALENTS
Cash at bank and on hand
NOTE 6 – TRADE AND OTHER RECEIVABLES
Current
GST / VAT Receivable
ATO Research and Development Offset
Other receivables
Non Current
Bond on Tenement
NOTE 7 – OTHER CURRENT ASSETS
Prepaid expenses
NOTE 8 – PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated Depreciation
Movement for the year
Opening balance
Additions
Disposals
Depreciation expensed
Closing balance
2012
$
2011
$
72,615
950,668
42,793
-
3,938
46,731
53,932
124,330
18,041
196,303
76,923
75,586
20,369
20,076
349,150
(178,429)
170,721
329,783
(156,667)
173,116
173,116
38,263
(11,528)
(29,130)
170,721
199,573
20,261
(8,343)
(38,375)
173,116
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
49
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
NOTE 9 – MINERAL EXPLORATION AND EVALUATION
Opening balance
Expenditure during the year
Closing balance
2012
$
10,526,320
1,558,282
12,084,602
2011
$
8,917,502
1,608,818
10,526,320
The ultimate recoupment of exploration expenditure carried forward is dependent upon successful development and
commercial exploitation, or sale of the respective areas.
NOTE 10 – TRADE AND OTHER PAYABLES
Trade creditors
Other accruals
NOTE 11 – INTEREST BEARING LIABILITIES
Financing Agreements
227,147
127,243
354,390
297,566
39,844
337,410
No overdraft facilities have been formalised at 30 June 2012 and neither the company nor its controlled entity have lines
of credit at 30 June 2012.
50
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
NOTE 12 – ISSUED CAPITAL
(a) Issued capital
196,249,629 ordinary shares fully paid (2011: 161,304,411)
16,079,010
14,299,263
(b) Movements in ordinary share capital of the Company were as follows:
2012
$
2011
$
Date
Details
11/11/2010
19/01/2011
19/01/2011
14/02/2011
28/02/2011
21/03/2011
27/04/2011
04/08/2011
24/08/2011
26/08/2011
22/09/2011
17/10/2011
03/11/2011
15/11/2011
15/02/2012
02/04/2012
10/04/2012
17/04/2012
30/04/2012
31/05/2012
Balance at 30 June 2010
Rights Issue
Placement
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Transaction costs arising on share issues
Balance at 30 June 2011
Balance at 30 June 2011
Options conversion
Options conversion
Rights Issue
Rights Issue Shortfall allocation
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Transaction costs arising on share issues
Balance at 30 June 2012
Value
(cents)
No of Shares
117,306,762
29,133,284
14,500,000
15,526
61,166
76,512
65,566
145,595
161,304,411
161,304,411
17,491
7,128
28,181,626
4,079,256
922
270,000
25,721
10,207
253,193
26,937
82,137
1,986,850
3,750
196,249,629
3.5
6.8
8.0
8.0
8.0
8.0
8.0
8.0
8.0
5.0
5.0
8.0
8.0
8.0
8.0
8.0
8.0
8.0
8.0
8.0
$
12,324,019
1,020,005
986,000
1,242
4,893
6,121
5,245
11,648
(59,910)
14,299,263
14,299,263
1,399
570
1,409,081
203,963
74
21,600
2,058
817
20,255
2,155
6,571
158,948
300
(48,044)
16,079,010
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
51
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
(c) Movements in options were as follows:
Date
Details
No of
Options
Issue
Price
Value
$
11/11/2010
19/01/2011
19/01/2011
14/02/2011
28/02/2011
21/03/2011
27/04/2011
04/08/2011
24/08/2011
17/10/2011
03/11/2011
15/11/2011
15/02/2012
02/04/2012
10/04/2012
17/04/2012
30/04/2012
31/05/2012
30/04/2012
Balance at 30 June 2010
Rights Issue (free attaching options)
Placement (free attaching options)
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Balance at 30 June 2011
Balance at 30 June 2011
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Options conversion
Expiry
Balance at 30 June 2012
-
14,566,586
7,250,000
(15,526)
(61,166)
(76,512)
(65,566)
(145,595)
21,452,221
21,452,221
(17,491)
(7,128)
(922)
(270,000)
(25,721)
(10,207)
(253,193)
(26,937)
(82,137)
(1,986,850)
(3,750)
(18,767,885)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(d) Voting and dividend rights
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held.
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder
has one vote on a show of hands.
52
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
NOTE 13 – RESERVES AND ACCUMULATED LOSSES
Accumulated Losses
Foreign Currency Translation Reserve
Accumulated Losses
Balance at beginning of the year
Net Loss from ordinary activities
Balance at end of the year
Foreign Currency Translation Reserve
Balance at beginning of the year
Reserve arising on translation of foreign currency subsidiary
Balance at end of the year
NOTE 14 - COMMITMENTS FOR EXPENDITURE
(a)
Mineral Tenement Leases
2012
$
3,915,407
46,032
3,961,439
2011
$
2,650,234
44,370
2,694,604
2,650,234
1,265,173
3,915,407
1,739,768
910,466
2,650,234
44,370
1,662
46,032
-
44,370
44,370
In order to maintain current rights of tenure to mining tenements, the consolidated entity will be required to outlay in
the year ending 30 June 2012 amounts of $58,250 in respect of minimum tenement expenditure requirements and lease
rentals. The obligations are not provided for in the financial report and are payable as follows :
Not later than one year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
Minimum
expenditure
Licence Fee
27,000
27,000
81,000
135,000
31,250
31,250
93,750
156,250
Total
58,250
58,250
174,750
291,250
The Company has a number of avenues available to continue the funding of its current exploration program and as and
when decisions are made, the Company will disclose this information to shareholders.
NOTE 15 - CONTINGENT LIABILITIES
The Company has entered into a donations agreement with the Strathfillan Community Development Trust (”SCDT”)
pursuant to which the Company will work with SCDT to provide additional facilities and opportunities for the
community served by SCDT and provide funding in respect of the same of up to £350,000. This liability is contingent
upon starting the development as defined under the Planning conditions and Decision letter.
Scotgold Resources Limited and its controlled entities have no other known material contingent liabilities as at 30 June 2012.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
53
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
NOTE 16 - INVESTMENT IN CONTROLLED ENTITY
Registered
Number
Country of
Incorporation
Interest Held
Value of
investment
Parent
Scotgold Resources Limited
42 127 042 773
Australia
100%
N/A
Subsidiary
Scotgold Resources Limited
SC 309525
Scotland
100%
5,491,881
Subsidiary of subsidiary
Fynegold Exploration Limited
SC 084497
Scotland
100%
-
NOTE 17 - SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance
of the operating segments, has been identified as the Board of Directors of Scotgold Resources Limited.
NOTE 18 - NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of loss after income tax to net operating cash flows
Loss from ordinary activities
Depreciation and loss on disposals
Movement in assets and liabilities
Receivables
Other current assets
Payables
Net cash used in operating activities
2012
$
2011
$
(1,265,173)
(910,466)
25,165
38,448
(1,240,008)
(872,018)
141,616
8,738
(155,019)
(1,244,673)
(141,615)
41,760
(68,972)
(1,040,845)
54
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
NOTE 19 - KEY MANAGEMENT PERSONNEL
(a) Directors
The names and positions of Directors in office at any time during the financial year are:
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Executive Chairman
Managing Director
Non Executive Director
Non Executive Director
In office from
17/02/2009
17/10/2007
14/08/2007
12/03/2009
In office to
present
present
present
present
(b) Remuneration Polices
Remuneration policies are disclosed in the Remuneration Report which is contained in the Directors’ Report.
(c) Directors’ Remuneration
No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year.
Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors
or Companies associated with the Directors in accordance with agreements between the Company and those
entities.
The Directors are entitled to reimbursement of out-of-pocket expenses incurred whilst on company business.
The total remuneration paid to directors is summarised below:
Director/Secretary Associated Company
Year ended 30 June 2011
Fees
Consultancy
Total
John Bentley
Chris Sangster
Phillip Jackson
Edmond Edwards
Shane Sadleir
Adam Davey
Peter Newcomb
Ptarmigan Natural Resources Ltd
Holihox Pty Ltd
Tied Nominees Pty Ltd
Mineral Products Holdings Pty Ltd
Shenton Park Investments Pty Ltd
Symbios Pty Ltd
Year ended 30 June 2012
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Peter Newcomb
Ptarmigan Natural Resources Ltd
Holihox Pty Ltd
Mineral Products Holdings Pty Ltd
Symbios Pty Ltd
54,000
-
27,000
31,500
29,000
9,000
-
150,500
24,000
-
42,000
42,000
-
108,000
-
206,750
-
10,000
28,400
-
144,500
389,650
68,250
297,244
-
-
166,050
531,544
54,000
206,750
27,000
41,500
57,400
9,000
144,500
540,150
92,250
297,244
42,000
42,000
166,050
639,544
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
55
11
Notes to the
Financial Statements
for the year ended 30 June 2012
Financial Statements
for the year ended 30 June 2012
(d)
Shareholding
John Bentley
Chris Sangster
Phillip Jackson
Edmond Edwards
Shane Sadleir
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Balance
30 June 2010
Purchase and
Sales
Balance
at date of
resignation
Balance
30 June 2011
900,000
4,500,000
1,750,000
1,847,843
11,582,785
20,580,628
225,000
1,125,000
437,500
-
2,895,696
4,683,196
-
-
-
1,847,843
-
1,847,843
1,125,000
5,625,000
2,187,500
-
14,478,481
23,415,981
Balance 30
June 2011
Purchase and
Sales
Options
exercised
Balance 30
June 2012
1,125,000
5,625,000
2,187,500
14,478,481
23,415,981
225,000
532,000
-
-
757,000
112,500
281,250
-
125,000
518,750
1,462,500
6,438,250
2,187,500
14,603,481
24,691,731
(e) Aggregate amounts payable to Directors and their personally related entities.
Accounts payable
(f) Optionholding
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Consolidated
Entity
2012
$
Consolidated
Entity
2011
$
64,495
16,669
Balance
30 June 2010
Rights Issue
Converted
during
the year
Balance
30 June 2011
-
-
-
-
-
112,500
562,500
218,750
1,447,848
2,341,598
-
-
-
-
-
112,500
562,500
218,750
1,447,848
2,341,598
56
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
John Bentley
Chris Sangster
Phillip Jackson
Shane Sadleir
Balance
30 June 2011
Converted
during
the year
Expired
during the
year
Balance
30 June 2012
112,500
562,500
218,750
1,447,848
2,341,598
112,500
281,250
-
125,000
518,750
-
281,250
218,750
1,322,848
1,822,848
-
-
-
-
-
NOTE 20 - RELATED PARTY INFORMATION
Parent Entity
2012
$
Parent Entity
2011
$
Transactions within the Consolidated Entity
Aggregate amount receivable within the consolidated entities
at balance date
Non-current receivables
12,089,670
10,264,890
NOTE 21 - REMUNERATION OF AUDITORS
Auditing and reviewing of the financial statements of
Scotgold Resources Limited and of its controlled entities.
NOTE 22 - LOSS PER SHARE
27,150
27,150
34,150
34,150
2012
Number
2011
Number
Weighted average number of ordinary shares outstanding during the year
used in the calculation of basic loss per share
189,392,568
142,279,083
There are no potential ordinary shares on issue at the date of this report.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
57
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
NOTE 23 - FINANCIAL INSTRUMENTS
(a)
Financial Risk Management Policies
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts receivable, accounts
payable and hire purchase liabilities.
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst
maintaining potential adverse effects on financial performance. The Group has developed a framework for a
risk management policy and internal compliance and control systems that covers the organisational, financial
and operational aspects of the group’s affairs. The Chairman is responsible for ensuring the maintenance of, and
compliance with, appropriate systems.
Financial Risk Exposures and Management
The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk and
liquidity risk.
Interest Rate Risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate
as a result of change in the market, interest rate and the effective weighted average interest rate on these financial assets,
is as follows:
Financial Assets
Cash at Bank
Total Financial Assets
Weighted Average
Effective Interest Rate
2011
2012
Floating Interest Rate
2011
2012
3.16%
2.70%
72,615
72,615
950,668
950,668
There are no Financial Liabilities subject to interest rate fluctuations.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement
of financial position and in the notes to and forming part of the financial statements.
Interest Rate Sensitivity Analysis
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity analysis
demonstrates the effect on the current year results and equity which could result in a change in these risks.
58
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
At 30 June 2012 the effect on the loss and equity as a result of changes in the interest rate with all other variables
remaining constant is as follows:
Change in Loss
• Increase in interest by 2%
• Decrease in interest by 2%
Change in Equity
• Increase in interest by 2%
• Decrease in interest by 2%
Foreign Currency Risk
2012
$
(18,417)
18,417
18,417
(18,417)
2011
$
(24,524)
24,524
24,524
(24,524)
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date is as follows:
Currency
£ Sterling
Foreign currency
Liabilities
2012
$
Assets
2012
$
Liabilities
2011
$
Assets
2011
$
277,457
104,800
185,865
411,530
Other than translational risk the Group has no significant exposure to foreign currency risk at the balance date.
Liquidity Risk
The group manages liquidity risk by monitoring forecast cash flows.
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the
carrying amount net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes to
the financial statement.
In the case of cash deposited, credit risk is minimised by depositing with recognised financial intermediaries such as banks,
subject to Australian Prudential Regulation Authority Supervision.
The consolidated entity does not have any material risk exposure to any single debtor or group of debtors under financial
instruments entered into by it.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
59
Financial Statements
for the year ended 30 June 2012
11
Notes to the
Financial Statements
for the year ended 30 June 2012
Capital Management Risk
Management controls the capital of the Group in order to maximise the return to shareholders and ensure that the group
can fund its operations and continue as a going concern.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of expenditure
and debt levels and share and option issues.
There have been no changes in the strategy adopted by management to control capital of the Group since the prior year.
Net Fair Values
For financial assets and liabilities, the net fair value approximates their carrying value. The consolidated entity has no
financial assets or liabilities that are readily traded on organised markets at balance date and has no financial assets where
the carrying amount exceeds net fair values at balance date.
NOTE 24 - MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
On 2 July 2012 the company announced that an agreement had been reached with RMB Resources for a £1.18m
financing facility. This facility is a convertible loan structured as a secured corporate loan with share options which
provides for RMB to acquire 26,222,222 Scotgold shares at £0.045.
During July 2012 the company drew down loan funding of $1.7 million which is expected to be sufficient to fund the
company into early 2013.
60
SCOTGOLD ANNuAL REPORT I 2012
Financial Statements
for the year ended 30 June 2012
Notes to the
Financial Statements
for the year ended 30 June 2012
11
NOTE 25 - PARENT ENTITY DISCLOSURES
Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total Current Assets
NON CURRENT ASSETS
Plant and equipment
Investment in subsidiary
Loan to subsidiary
Total Non Current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive income
2012
$
29,661
5,255
34,916
2011
$
604,040
151,477
755,517
7,067
5,491,881
12,089,670
6,473
5,491,881
10,264,890
17,588,618
15,763,244
17,623,534
16,518,761
76,934
76,934
76,934
151,546
151,546
151,546
17,546,600
16,367,215
20,156,501
(2,609,901)
18,376,754
(2,009,539)
17,546,600
16,367,215
600,362
-
600,362
575,287
-
575,287
The parent entity has not entered into any guarantees in relation to debts of its subsidiaries, has no contingent liabilities,
and has no commitments for acquisition of property, plant and equipment.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
61
12
Directors’
Declaration
1.
In the opinion of the Directors of Scotgold Resources Limited (the ‘Company’):
a.
the accompanying financial statements and notes are in accordance with the Corporations Act 2001
including:
i.
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012
and of its performance for the year then ended; and
complying with Australian Accounting Standards, the Corporations Regulations 2001,
professional reporting requirements and other mandatory requirements.
there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable.
the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
b.
c.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2012.
This declaration is made in accordance with a resolution of the Board of Directors.
CHRIS SANGSTER
Managing Director
Dated at Tyndrum, Scotland, this 30th day of August, 2012.
62
SCOTGOLD ANNuAL REPORT I 2012
Independent
Auditor’s Report
13
INDEPENDENT AUDITOR’S REPORT
To the members of Scotgold Resources Limited
Report on the Financial Report
We have audited the accompanying financial report of Scotgold Resources Limited (“the company”), which
comprises the statement of financial position as at 30 June 2012, the statement of comprehensive income, the
statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory information, and the directors’ declaration for
the consolidated entity. The consolidated entity comprises 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 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial
Statements, that the consolidated financial report complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those 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 company’s preparation and fair presentation of the financial
report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company’s internal control.
An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors,
as well as evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth 6000 PO Box 8124 Perth BC 6849 Western Australia. Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
INDEPENDENT AuDITOR’S REPORT
63
13
Independent
Auditor’s Report
Matters relating to the electronic presentation of the audited financial report
This auditor’s report relates to the financial report and remuneration report of Scotgold Resources Limited for the
financial year ended 30 June 2012 included on Scotgold Resources Limited’s website. The company’s directors are
responsible for the integrity of the Scotgold Resources Limited website. We have not been engaged to report on the
integrity of this website. The auditor’s report refers only to the financial report and remuneration report identified
in this report. It does not provide an opinion on any other information which may have been hyperlinked to/from
the financial report. If users of the financial report are concerned with the inherent risks arising from publication
on a website, they are advised to refer to the hard copy of the audited financial report and remuneration report to
confirm the information contained in this website version of the financial report.
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 Scotgold Resources Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2012.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Scotgold Resources Limited for the year ended 30 June 2012
complies with section 300A of the Corporations Act 2001.
HLB MANN JUDD
Chartered Accountants
Perth, Western Australia
30 August 2012
N G NEILL
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth 6000 PO Box 8124 Perth BC 6849 Western Australia. Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
64
SCOTGOLD ANNuAL REPORT I 2012
Shareholder
Details
14
ANALYSIS OF SHAREHOLDING
Number of Shareholders
1
1,001
5,001
10,001
100,001
-
1,000
- 5,000
10,000
-
100,000
-
or more
-
ASX
65
88
159
774
188
1,274
AIM
9
30
21
73
56
189
Total
74
118
180
847
244
1,463
Number of Shares
1
1,001
5,001
10,001
100,001
Total on Issue
-
-
-
-
-
1,000
5,000
10,000
100,000
or more
13,576
314,159
1,341,351
28,591,210
76,825,716
107,086,012
4,728
89,532
166,992
2,563,861
86,338,504
89,163,617
18,304
403,691
1,508,343
31,155,071
163,164,220
196,249,629
Voting Rights
Article 16 of the Constitution specifies that on a show of hands every member present in person, by attorney or
by proxy shall have :
a)
b)
for every fully paid share held by him one vote
for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over
the nominal value of the shares
Substantial Shareholders
The following substantial shareholders have notified the Company in accordance with Corporation Act 2001.
Kenglo One Limited
Mr Shane Beatty Sadleir
Directors’ Shareholding
Shares
15,215,000
14,603,481
%
7.75
7.44
The interest of each director in the share capital of the Company is detailed at Note 19.
SHAREHOLDER DETAILS
65
14
Shareholder
Details
TOP TWENTY SHAREHOLDERS
Name
Shares
% Rank
Mr Shane Beatty Sadleir
Secure Nominees Limited
Giltspur Nominees Limited
Barclayshare Nominees Limited
HSDL Nominees Limited
14,603,481
7.44%
13,745,000
7.00%
6,550,151
3.34%
6,414,921
3.27%
6,151,874
3.13%
TD Direct Investing Nominees (Europe) Limited
5,982,733
3.05%
L R Nominees Limited
Investor Nominees Limited
Tied Nominees Pty Ltd
Transact Nominees Limited
Hargreaves Lansdown (Nominees) Limited <15942>
HSBC Client Holdings Nominee (uK) Limited <731504>
Ms Angela Elizabeth Cusack
Banquest Pty Limited
Hargreaves Lansdown (Nominees) Limited
Investor Nominees Limited
Ms Dorita Thomson
5,081,368
2.59%
4,217,610
2.15%
4,124,449
2.10%
3,757,805
1.91%
3,699,973
1.89%
3,370,857
1.72%
3,035,000
1.55%
2,503,811
1.28%
2,472,230
1.26%
2,372,946
1.21%
2,087,250
1.06%
Robertson Architectural Services Pty Ltd
2,000,000
1.02%
Stonydeep Investments Pty Ltd
1,954,692
1.00%
Share Nominees Ltd
1,838,113
0.94%
95,964,264 48.9%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
ASX
AIM
AIM
AIM
AIM
AIM
AIM
AIM
ASX
AIM
AIM
AIM
ASX
ASX
AIM
AIM
ASX
ASX
ASX
AIM
66
SCOTGOLD ANNuAL REPORT I 2012
Interest in
Exploration Leases
15
Scotland
Location
Cononish Glen Orchy
Cononish Glen Orchy
Glen Lyon
Inverliever
Knapdale
Ochils
Agreement
Grant Date
Landholder Lease
Option Agreement
Option Agreement
Option Agreement
Option Agreement
Option Agreement
23 July 2009
5 November 2011
5 November 2011
5 November 2011
5 August 2011
5 August 2011
Area
20 sq km
975 sq km
1,369 sq km
864 sq km
676 sq km
426 sq km
Mining Leases in Scotland – general information
The mineral rights to gold and silver in most of Britain, including Scotland, are generally held by the Crown, In
order to explore for gold and silver, an option agreement is required to be concluded with the Crown which
entitles the holder to explore for gold and silver (subject to access agreements with the landowner (see below))
and on the grant of planning permission (and other conditions), to take out a lease for exploitation of these metals.
Surface rights (and other minerals rights) are generally held by the landowner with whom access and lease
agreements must separately be obtained.
Mineral developments in Scotland are governed by the Town and Country Planning (Scotland) Act, with
responsibility for planning control exercised by the local Authority. Statutory designations inform as to the
appropriate levels of environmental assessment to be carried out.
INTEREST IN EXPLORATION LEASES
67
16
Company Information
Scotland
Exploration Office
Nominated Adviser (NOMAD)
Share Registry
Auditor
Solicitors
Bankers
Media
upper Tyndrum Station
Tyndrum, Stirlingshire
Scotland
FK20 8RY
Phone +44 (0) 183 840 0306
Westhouse Securities Limited
One Angel Court
London
EC2R 7HJ
Phone +44 (0) 207 601 6100
Computershare Investor Sevices PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Phone +44 (0) 870 703 6300
Scott-Moncrieff
Exchange Place 3
Semple Street
Edinburgh
EH3 8BL
Phone +44 (0) 131 473 3500
McClure Naismith
3 Ponton Street
Edinburgh
EH3 9QQ
Phone +44 (0) 131 228 4994
Bank of Scotland
Shandwick Place
Edinburgh
EH11 1YH
Phone +44 (0) 870 850 1671
Bankside Consultants
6 Middle Street
London
EC1A
Phone +44 (0) 207 367 8888
68
SCOTGOLD ANNuAL REPORT I 2012
AUSTRALIA
24 colin Street, West perth
WeSteRN AuStRAlIA, 6005
p +61 8 9222 5850
F +61 8 9222 5810
e sgz@scotgoldresources.com
W scotgoldresources.com
SCOTLAND
upper tyndrum Station, tyndrum,
Stirlingshire, ScotlANd, FK20 8RY
p +44 1 838 400 306
e sgz@scotgoldresources.com
W scotgoldresources.com
ABN 42 127 042 773