Shree Minerals Ltd
Annual Report 2011

Plain-text annual report

S H R E E M I N E R A L S L I M I T E D ACN 130 618 683 2011 ANNUAL REPORT For personal use only S H R E E M I N E R A L S L T D TABLE OF CONTENTS Corporate Directory Directors’ Report Corporate Governance Statement Auditors’ Independence Confirmation 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 Auditors’ Report Shareholder Information 1 2 19 24 25 26 27 28 29 48 49 52 For personal use only S H R E E M I N E R A L S L T D CORPORATE DIRECTORY DIRECTORS Sanjay Loyalka Mahendra Pal Arun Kumar Jagatramka Andy Lau Amu Shah COMPANY SECRETARY Stephen Ledger (resigned 20 July 2011) Sanjay Loyalka ( appointed 20 July 2011) REGISTERED OFFICE Unit 4 The Pines Business Centre 86 -88 Forrest Street Cottesloe WA 6011 Ph: Fax: (08) 61612068 (08) 93855194 SOLICITORS Steinepreis Paganin Level 4 16 Milligan St Perth WA 6000 AUDITORS Grant Thornton Audit Pty Ltd Lv 1, 10 Kings Park Road West Perth WA 6005 BANKERS Commonwealth Bank of Australia St Georges Tce Perth WA 6000 Page 1 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT The Directors present this report together with the financial report of Shree Minerals Ltd (‘the Company’) for the year ended 30th June 2011 and the auditors' report thereon. DIRECTORS The names of the Directors in office at any time during or since the end of the year are: Mr Sanjay Loyalka (Appointed 14 April 2008) Mr Mahendra Pal (Appointed 26 August 2008) Mr Arun Jagatramka (Appointed 30 June 2009) Mr Andy Lau (Appointed 18 November 2009) Mr Amu Shah (Appointed 4 March 2011) COMPANY SECRETARY Mr Stephen Ledger (Resigned 20 July 2011) Mr Sanjay Loyalka (Appointed 20 July 2011) PRINCIPAL ACTIVITIES The principal activities of the Company during the financial year consisted of mineral exploration and development. There have been no significant changes in these activities during the financial year. OPERATING RESULTS The net loss of the Company after providing for income tax amounted to $335,033 (2010: $308,743). DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. REVIEW OF OPERATIONS AND ACTIVITIES Shree Minerals Ltd’s (the Company or Shree) exploration activities are confined to the State of Tasmania where it has 5 Exploration Licenses. The Company was formed in April 2008 and listed on the Australian Securities Exchange in February 2010. Since inception, the Company has actively explored for iron and gold at its Nelson Bay River and Sulphide Creek tenements respectively and has been examining the remaining tenement lands for their mineral potential. Page 2 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT The Company’s exploration activities over the past year have included: Exploration at Nelson Bay River Iron Project (NBR) The exploration activities included data review, geological reconnaissance, estimation of iron ore resources (based on earlier drilling) for the Nelson Bay River Project, metallurgical studies, drilling, field visits of tenements, statutory reporting, etc. Drilling During the year FY 2010-2011 , drilling of 1568 m (1259 m RC along 23 holes for resource delineation, 236 m RC along 6 holes for ground water studies and 73 m PQ diamond drilling for metallurgical studies) along 32 holes (Table 1 and Figure 2). From the resource, delineation drilling 280 samples were collected and analysed. Additionally, surveying, logging of drill cuttings, magnetic susceptibility reading, weighing a series of samples for density determinations, some geological mapping, significant upgrading of access tracks and preparation of drill sites was under taken. Table 1: NBR 2011 drilling summary Hole_ID East MGA94 North MGA94 RL (m) Azimuth Dip Depth (m) Sectio n Date Commenced Date Completed RC Resource drilling NRC01 310573 5442036 81.0 NRC02 310556 5442023 85.4 NRC03 310541 5442010 88.3 NRC04 310577 5441980 87.7 NRC05 310562 5441968 90.6 NRC06 310612 5441956 85.0 NRC07 310597 5441944 88.8 NRC08 310580 5441931 91.2 NRC09 310620 5441917 90.1 NRC10 310595 5441888 92.8 NRC11 310679 5441815 95.3 NRC12 310661 5441801 95.9 NRC13 310644 5441792 96.1 NRC14 310682 5441708 99.1 NRC15 310712 5441731 99.2 NRC16 310743 5441599 100.4 NRC17 310756 5441612 100.3 NRC18 310771 5441624 100.2 NRC19 310875 5441462 100.2 NRC20 310861 5441451 100.2 NRC21 310993 5441305 99.9 NRC22 310976 5441288 100.0 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 9650 9/03/2011 10/03/2011 9650 10/03/2011 10/03/2011 9650 10/03/2011 11/03/2011 9600 15/03/2011 16/03/2011 9600 16/03/2011 17/03/2011 9550 17/03/2011 17/03/2011 9550 17/03/2011 18/03/2011 9550 18/03/2011 22/03/2011 9500 22/03/2011 22/03/2011 9500 22/03/2011 24/03/2011 9400 24/03/2011 24/03/2011 9400 24/03/2011 25/03/2011 9400 28/03/2011 28/03/2011 9300 29/03/2011 31/03/2011 9300 31/03/2011 31/03/2011 9200 31/03/2011 31/03/2011 9200 9200 9000 9000 8800 8800 0/01/1900 0/01/1900 4/04/2011 4/04/2011 4/04/2011 5/04/2011 5/04/2011 5/04/2011 5/04/2011 6/04/2011 6/04/2011 6/04/2011 27 48 69 55 74 33 55 74 40 74 27 52 64 79 34 82 62 30 41 74 46 67 -45 -45 -45 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 -55 Page 3 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT NRC23 311416 5440759 101.0 50 -55 52 8100 6/04/2011 7/04/2011 Sub Total 1259 RC Hydrological drilling GW1 GW3 GW4 GW5 GW6 311703 5440331 110.3 309894 5441462 80.6 309716 5442199 73.4 309788 5442458 63.0 310487 5441962 89.0 GW6A 310459 5441935 89.3 GW7 311249 5441240 101.4 0 0 0 0 0 0 0 -90 -90 -90 -90 -90 -90 -90 Sub Total 35 35 35 28 35 33 35 236 PQ diamond drilling (metallurgical drilling) 11/04/2011 11/04/2011 14/04/2011 14/04/2011 14/04/2011 14/04/2011 13/04/2011 13/04/2011 9600 14/04/2011 15/04/2011 9600 14/04/2011 14/04/2011 8600 12/04/2011 13/04/2011 NBR12A 310513 5442192 81.2 NBR13A 310462 5442292 82.3 NBR14A 310425 5442389 81.4 50 50 50 -50 -50 -50 Sub Total Total 9800 28/04/2011 29/04/2011 9900 18/04/2011 21/04/2011 10000 26/04/2011 27/04/2011 22.7 28.9 21.3 72.9 1567.9 Figure 1: Nelson Bay River Iron Project drillhole location plan Page 4 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Resource Estimation A Resource estimation based on information from 24 diamond holes drilled for 2,512.96 metres was made by the independent geological consultants Hellman & Schofield Pty Ltd according to the JORC Guidelines. The Resource modelling included the generation of mineral wireframes based on geological logging and nominal iron or magnetite cut off grades. Ordinary Kriging was used on 1m composites from within the wireframes to generate block models. The Resource estimation was carried out prior to drilling in FY2010-11 .The resource estimates for the different ore types are tabulated below (Tables 2 to 4): Table 2: Iron Resource Estimates at Nelson Bay River Iron Project Resource Category Indicated Inferred Total Note: The resource estimate includes the magnetite resource material and is estimated using a 30% Fe cut off and with an average density of 3.5 t/m3; Mass (Mt) 1.8 10.8 12.6 Fe % 38.6 35.6 36.1 Table 3: Magnetite Resources at Nelson Bay River Iron Project Resource Category Mass (Mt) Mag% (DTR) Contained (Mt) Magnetite Indicated Inferred Total Note: The resource estimate is based on 20% magnetite (DTR) cut off and with an average density of 3.71 t/m3. DTR = Davis Tube Recovery 38.5 38.2 38.3 1.7 6.1 7.8 0.7 2.3 3.0 Table 4: Goethite-Hematite Resources at Nelson Bay River Iron Project Area Mass (Mt) NBR South NBR North 0.5 0.7 Grade (%) Remarks Fe 57.8 46.8 SiO2 8.8 23.7 Al2O3 1.4 2.7 P 0.06 0.02 S 0.03 0.07 LOI 6.3 4.7 Fe (Cal) 61.7 49.1 DSO Beneficiable material 1.2 Total 0.04 Note: The resource estimate is estimated at 30% Fe cut off and with an average density of 3 t/m3; The Fe (Cal) grade is the calcined iron grade with the loss on ignition material removed from the block grade value [Fe_Cal = Fe/ (100- LOI)]. The resources are of Inferred Category. 51.0 0.05 53.9 18.0 2.2 5.3 Metallurgical Studies A total of 3 PQ diamond drill holes , namely NBR 12A, 13A, and 14A, for 72.9 m were drilled in the BFO zone defined earlier by 2009 diamond drilling program above the proposed deep magnetite pit (Figures 3 and 5). . From this drilling, based on material characteristics, two composite samples for metallurgical testing were prepared. Composite one consists of cores from drill holes 13A and 14A, while the second composite was made from core of drill hole 12A. The significant results of the tests include that the composite of hole 13A & 14A was upgradeable to 56.1 % Fe by a dry low intensity magnetic separation (LIMS) with recovery of 83.6% (Table 5). Page 5 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Table 5: Significant Metallurgical Test Results Other tenements' status During the year, the company agreed with Mineral Resources Tasmania (MRT) to not apply for renewal of Exploration Licence at Adamsfield (11/2006) which expired in June 2011 as the tenement now falls within World Heritage area and the Australian Government has decided to compensate the Company with an exgratia payment of $76,000 (incl GST) for past exploration expenditure on the tenement. Additionally, several field trips to tenements were made and after detail examination of prospect geological setting and logistics, the Catamaran Coal (EL32/2005) tenement was relinquished. All other Licences continue to remain in good standing. Results The work performed to date, strengthen the Company’s belief that the Nelson Bay River Project has the potential to produce the following: Iron Ore product (Fines & Lump) from Beneficiable goethitic-hematite iron resource. 1. Direct Shipping iron Ore (DSO), with very low deleterious elements 2. 3. Magnetite concentrates suitable for Dense Media separation in coal washery and high-grade Blast Furnace pellets. Recent Davis tube recovery results carried of drilling in 2010 show improved magnetite concentrate grades over previous results. The following is an average of 2010 results Drilling during FY2010-11 has extended presence of goethitic-hematite mineralisation (DSO) across the strike, width and in depth to greater than 60 m at the NBR Project (Figure 2). Page 6 FeSiO2Al2O3CaOMnOPSMgONa2OZnTiO2K2OLOI-1000DRY LIMSFRACTIONWt.FeSiO2Al2O3CaOMnOPSMgONa2OZnTiO2K2OLOI-1000@ 1100 GAUSSWEIGHTDISTn.GradeGradeGradeGradeGradeGradeGradeGradeGradeGradeGradeGradeGrade(Kg)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)Mags14.1783.656.1011.901.720.011.390.0100.0390.400.0190.0070.0510.0482.90COARSE COBBING - DRY LIMS TEST @ P100 1.0mm FeSiO2Al2O3S%%%%70.01.90.20.1For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Figure 2: Cross section showing extent of iron mineralisation Exploration at Sulphide Creek Project (S C) Following encouraging drilling results in 2010, (Table 6) added with the equally encouraging historical information, the Company commissioned consultants Hellman & Schofield Pty Ltd to undertake a data compilation and review of all available information on the Sulphide Creek tenement (EL43/2004) and environs for area’s potential for gold mineralisation. Structurally controlled gold mineralisation within the licence area is intersected at the Coupon and Davie prospects. The mineralisation target for the Sulphide Creek licence is large scale, structurally controlled gold mineralisation associated with major lithological contacts juxtaposed with the Harvey Creek Fault (Figure 3). Figure 3: Geology of Sulphide Creek tenemenet Page 7 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Table 6: Significant gold intersection along drillhole (2010 drilling) Location m (AGD 66) Northing Easting 375689.5 375689.5 375689.4 375689.4 Hole ID SCDDH4 Includes SCDDH5 Includes Location (m) To From 37.5 19 34.5 31.5 51 37 51 39 168 159 167 164 183 181 Intersection (m) Grade g/t 18.5 3 14 12 9 3 2 0.5 1.26 0.53 0.55 0.88 1.29 0.6 Study findings The study involved an exhaustive examination of all available historical information, assessment of Mineral Resources Tasmania (MRT) geophysical data and 3D interpretation of tenement drilling (Figures 4 & 5). Subsequently, drill targets for the Sulphide Creek tenement (Figures 6 -8) were defined. Figure 4: Davie Prospect 3D Interpretation Figure 5: Coupon Prospect 3 D Interpretation Plan Source: H & S Area potential The assumptions from the work done to date are that there is a large zone of diffuse mineralisation including pervasive silica alteration associated with a complex fault pattern (NW, NE and N-S structural interaction) immediately proximal to the Harvey Creek Fault within the Rinadeena Formation and Lower Silurian clastic sediments (Figure 3). The lack of tightly controlled high-grade gold mineralisation and the broad low-grade consistent mineralisation intersected in the historical drilling at Coupon and Shree drilling at Davie prospects suggest that there is exploration potential for a series of low-grade gold deposits within the Sulphide Creek area. Similarities in geological age, setting, and styles of gold mineralisation occurring at the Sulphide Creek and environs can be made with the South Carolina Slate Belt deposits of the Haile and Ridgeway mines. Thus the gross exploration Page 8 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT potential for the Sulphide Creek area could be of the order of 30-50Mt @ 0.75-1g/t gold for approximately between 0.72 to 1 million ounces. (Note: The potential quantity and grade is conceptual in nature, and that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.) The suggested exploration strategy is to continue drilling on the Coupon and Davie prospects, generally following up either significant previous drill intercepts or untested surface geochemical anomalies. The suggested drill targets are aimed to intersect higher-grade gold mineralisation of substantial widths. Target coordinates and their plan positions are given in Figures 5-7 respectively. Figure 6: Prospect 24-28 Target Map Figure 7: Coupon Prospect Target Map Source: H & S Figure 8: Davie Prospect Target Map Source: H & S Page 9 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Outlook 2011/2012 Based on the encouraging exploration results, further to normal ongoing exploration activities, in the coming year following activities will be undertaken: Nelson Bay River Iron Ore Project (EL41/2004 and EL54/2008) Upgrading resource estimates for goethitic-hematite and magnetite within the Nelson Bay River tenement (EL41/2004) using 2010/2011 drilling results Pursuing Approvals to commence the project. Sulphide Creek and Mt Sorell Following Geological Study by Hellman & Schofield of Sulphide Creek, a Geophysical study has been commissioned in FY2011-2012 by Cowan Geodata Services to help plan exploration activities. Mt Bertha In field checking of known geophysical targets, which will include, access, geological mapping, examination of target and tenement regolith, designing of geochemical sampling program. SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the Directors there were no other significant changes in the state of affairs of the Company that occurred during the financial year under review. FINANCIAL POSITION The net assets of the Company are $7,723,202 (2010: $7,721,270) The Directors believe the Company is in a financial position to pursue its current operations. AFTER BALANCE DATE EVENTS On 15th July 2011 two partial underwriting agreements over options expiring on 30 June 2011 were completed and shares were issued. The total proceeds net of underwriting fees raised was $1,092,500 for 5,750,000 shares. In additional 1,437,500 options expiring 30 June 2011 were exercised and issued on 15th July 2011, raising additional capital of $287,500. There has not arisen in the interval between the end of the financial year and the date of this report any other item, transaction or event of a material or unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The Company intends to continue to pursue its goals to acquire and explore mineral deposits and explore prospective tenements. Page 10 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT ENVIRONMENTAL REGULATIONS The Company holds various exploration licences to regulate its exploration activities in the State of Tasmania, Australia. These licences include conditions and regulations with respect to the rehabilitation of areas disturbed during the course of its exploration activities. So far as the Directors are aware there has been no known breach of the Company’s licence conditions and all exploration activities comply with relevant environmental regulations. DIRECTORS’ INTERESTS Mr S Loyalka Mr A Jagatramka Mr M Pal Mr A Lau Mr A Shah ORDINARY SHARES FULLY PAID 25,415,000 15,000,000 300,000 - 7,500,000 INFORMATION ON DIRECTORS Mr Sanjay Loyalka, Executive Director BCom (Hon), CA (Appointed 14 April 2008) Mr Sanjay Loyalka has experience in various functional roles including CEO, General Management and Corporate finance experience in mining and metals, manufacturing and logistics based industries in a multinational environment. Mr Loyalka is the founder of Investment advisory firm IACG Pty Ltd in Australia which has been engaged in cross border M&A, strategic consulting as well as a mineral commodity trading business. As the founding CEO and Managing Director, he was instrumental in the development of the Aditya Birla Group’s operations within Australia. He led the acquisition of Nifty and Mount Gordon Copper mines, successful development of the Nifty Sulphide project (a remote site, 2.5 million tpa underground mine, concentrator plant and associated infrastructure) and operational restructure of Mont Gordon Copper Operations. These led to a successful listing of the Company on the Australian Securities Exchange under an IPO raising $300 million and inclusion in the ASX S&P 300 index. Mr Loyalka has been a member of the Executive Council of Chamber of Minerals & Energy (Western Australia) in 2005 and 2006. Mr Arun Jagatramka, Non Executive Director BCom (Hons), FCA, AIMM (Appointed 30 June 2009) Mr. Arun Kumar Jagatramka is a qualified Chartered Accountant with an all India 1st rank and gold medal. He has an industrial experience of more than 11 years in the production of coal and coke, besides a prior experience of more than 15 years in management consultancy and merchant banking. Widely regarded for his foresight and knowledge, he is an acknowledged expert in matter of coal and coke and has presented papers on the subject at number of International Conferences. Mr. Arun Kumar Jagatramka is the Chairman and Managing Director of Gujarat NRE Coke Limited (India). Under his able guidance, Gujarat NRE Coke Limited has become the largest independent non captive producer of Met Coke in India – the only Indian entity to have moved backward into coal mine ownership in Australia and forward into steel making, coupled with wind energy and upcoming waste heat power generation. The Annual Compounded Growth of the company since inception is to the tune of 42% approx. with present market capitalisation of USD 0.5 Billion. Mr. Arun Kumar Jagatramka is a member of a number of boards, Gujarat NRE Coking Coal Limited (Australia), Pike River Coal Limited (New Zealand), where Gujarat NRE group holds cornerstone stakes. He is also on the Board of Directors of Port Kembla Coal Terminal, Australian Coal Research Ltd, Wollongong Hawks as well as Executive Committee Member of NSW Minerals Council. Page 11 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT He has been appointed as an honorary NSW ‘Sydney Ambassador’ to India. He is associated with the Confederation of Indian Industry (Western Region), an apex representative of Indian Industry, by way of heading sub-committees on ‘Integrity India’, ‘International Affairs’ besides being a member of ’Energy Panel’, and ‘Environment and Conservation’ Sub-Committee. Mr Mahendra Pal, Non Executive Director MSc, MSGAT (India) and FAusIMM (Australia) (Appointed 26 August 2008) Mr Pal has an extensive management experience in the mining and exploration industry, both within Australia and overseas. He has worked across many commodities, including base metals, gold, uranium, iron, coal, oil shale, oil, and gas, among others. In Australia, he started his career with the exploration and mining of uranium with Queensland Mines, a subsidiary of Kathleen Investment, Australia. Mr Pal spent two periods working with Rio Tinto (erstwhile CRA), commencing in 1970. During this time he was Principal Geologist for Hamersley Iron Pty Limited, where he made several iron ore discoveries including, concealed iron ore bodies at the Mount Tom Price and Paraburdoo mines, and also worked in other senior management positions up until 1999. From 1980 to 1984, he worked for ESSO Australia as a Sr. Professional Geologist and Exploration Geologist for the Rundle Oil Shale Project feasibility study. Besides company directorship, Mr Pal runs his own Geological Consultancy business. From 2000 to April 2007, he provided consulting services to several exploration/mining companies including Auiron Energy, Centrex Metals, Rio Tinto Exploration, Hamersley Iron, Consolidated Minerals, Sinosteel Australia, Sinosteel Midwest Corporation, Sumitomo Corporation, Golden West Resources Ltd, Fairstar Resources Ltd, and NEX Metals Exploration Ltd in Australia. Overseas, in India he worked as a Technical Adviser for Rio Tinto Orissa Mining Limited (a Rio Tinto Joint Venture with Orissa Mining Corporation, India) and as a consultant to Tata Iron & Steel, and Mid-West Granite, in Iran as a Consultant to International Minerals Consulting Company, and as a consultant to Oswal Brasil Refinaria de Petróleo, in Brazil. From May 2007 to October 2008 Mr Pal worked for Fairstar Resources Ltd (FAS; an ASX listed company) as an Exploration Adviser/Technical and Executive Director – Exploration/Technical. While with Fairstar, he made two iron discoveries (Mahendra’s Find & Elaine’s Pride), 110 km southeast of Kalgoorlie. These discoveries are the first of this kind in the area previously known for its gold prospectivity. At Shree Minerals, he has identified the Direct Shipping Iron Ore (DSO) at the Company's Nelson Bay River Prospect. Mr Andy Lau, Non Executive Director MBA Mr Andy Lau is a professional engineer and held senior management responsibilities for over 10 years in computer information and financing industry. Mr Lau holds a MBA and graduate majoring in Computer Technology and also held the certificates of MCSE, MCDBA, MCP and CCNA. He worked for a number of large international companies in securities, venture capital and high-tech industries. Mr Lau has been the vice president of China Alliance International Holdings Group Limited since 2005. Mr Amu Shah, Non Executive Director Mr Amu Shah is a director and shareholder in various businesses ranging from retail trade, distribution of office and stationery products, services to the mining industry, manufacturing, and property development and ownership. Mr Amu Shah is currently appointed Honorary Consul for Kenya in Perth. Mr Amu Shah has extensive international and local business experience. Page 12 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) The full Board fulfils the roles of remuneration committee and is governed by the Company’s adopted remuneration policy. The information provided in this remuneration report has been audited as required by Section 308 (3c) of the Corporations Act 2001. Remuneration Policy This policy governs the operations of the Remuneration Committee. The Committee shall review and reassess the policy at least annually and obtain the approval of the Board. General director remuneration Shareholder approval must be obtained in relation to the overall limit set for non-executive directors’ fees. The Directors shall set individual Board fees within the limit approved by shareholders. Shareholders must also approve the framework for any broad based equity based compensation schemes and if a recommendation is made for a director to participate in an equity scheme, that participation must be approved by the shareholders. Executive remuneration The Company’s remuneration policy for executive directors and senior management is designed to promote superior performance and long term commitment to the Company. Executives receive a base remuneration which is market related, and may be entitled to performance based remuneration at the ultimate discretion of the Board. Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive market and business conditions where it is in the interests of the Company and shareholders to do so. Executive remuneration and other terms of employment are reviewed annually by the Remuneration Committee having regard to performance, relevant comparative information and expert advice. The Committee’s reward policy reflects its obligation to align executive’s remuneration with shareholders’ interests and to retain appropriately qualified executive talent for the benefit of the Company. The main principles of the policy are: a. b. reward reflects the competitive market in which the Company operates; individual reward should be linked to performance criteria; and c. executives should be rewarded for both financial and non-financial performance. The total remuneration of executives and other senior managers consists of the following: a. salary - executives director and senior manager receive a fixed sum payable monthly in cash; b. bonus - executive directors and nominated senior managers are eligible to participate in a profit participation plan if deemed appropriate; c. long term incentives - executive directors and nominated senior managers may also participate in employee share option schemes, with any option issues generally being made in accordance with thresholds set in plans approved by shareholders. The Board however, considers it appropriate to retain the flexibility to issue options to executives outside of approved employee option plans in exceptional circumstances; and Page 13 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT d. other benefits - executive directors and senior managers are eligible to participate in superannuation schemes and other appropriate additional benefits. Remuneration of other executives consists of the following: a. salary - senior executive receives a fixed sum payable monthly in cash; b. bonus - each executive is eligible to participate in a profit participation plan if deemed appropriate; c. long term incentives - each senior executive may, where appropriate, participate in share option schemes which have been approved by shareholders; and d. other benefits – senior executive are eligible to participate in superannuation schemes and other appropriate additional benefits. Non-executive remuneration Shareholders approve the maximum aggregate remuneration for non-executive directors. The Remuneration Committee recommends the actual payments to directors and the Board is responsible for ratifying any recommendations, if appropriate. The maximum aggregate remuneration approved for directors is currently $200,000. It is recognised that non-executive directors’ remuneration is ideally structured to exclude equity based remuneration. However, whilst the Company remains small and the full Board, including the non-executive directors, are included in the operations of the Company more intimately than may be the case with larger companies the non-executive directors are entitled to participate in equity based remuneration schemes. All directors are entitled to have their indemnity insurance paid by the Company. Profit participation plan Performance incentives may be offered to executive directors and senior management of the Company through the operation of a profit participation plan at the ultimate discretion of the Board. Page 14 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Details of remuneration The remuneration for each Director and the senior Executive of the Company during the year and the previous year was as follows: 2011 Short-term Employee Benefits Post- employment Benefits Cash, salary, Directors Fees Cash profit share, bonuses Non- cash benefits Allowances Super- annuation Other Long- term Benefits Termination Benefits Share Based Payments Total Mr S Loyalka Executive Director 183,486 Mr A Jagatramka Non Executive Director Mr M Pal3 Non Executive Director Mr Andy Lau Non Executive Director Mr Amu Shah Non Executive Director Mr S Ledger Company Secretary 7,500 70,000 7,500 2,500 24,996 295,982 - - - - - - - - - - - - - - 2010 Short-term Employee Benefits - 16,514 - - - - - 675 - - - - - 17,189 Post- employment Benefits - - - - - - - - - - - - - - - - 200,000 8,175 43,500 113,500 - - 7,500 2,500 - 24,996 43,500 356,671 Cash, salary, Directors Fees Cash profit share, bonuses Non- cash benefits Allowances Super- annuation Other Long- term Benefits Termination Benefits Share Based Payments Total Mr S Loyalka Executive Director 111,162 Mr A Jagatramka Non Executive Director Mr M Pal Non Executive Director Mr Andy Lau Non Executive Director 3,750 47,465 4,375 - - - - - - - - - 10,005 - - - 338 - - - - - - - - - - - - 121,167 4,088 - 47,465 - 4,375 Page 15 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Mr W Harder1 Chief Geological Officer Mr S Ledger2 Company Secretary 7,057 24,677 198,486 - - - - - - 1 M r Ha r de r re s ig ne d e f f e c t iv e 3 1 A u g us t 2 0 0 9 . - - 635 - - 10,978 - - - - - - - - - 7,692 24,677 209,464 2 M r Le d ge r is a D i re c to r o f Le d g e r C o r po ra te P t y L t d. I n a dd i t io n to t he a bo v e re m un e r a t io n , Le d g e r C o r po ra te P t y L t d wa s pa i d$ 2 , 0 2 4. 0 9( 2 0 10: $ 6 ,5 6 0. 2 4 ) i n re la t io n to e xp e ns e re i m b urs e m e n t a n d o f f ic e s e r vic e s . 3 M r P a l wa s pa i d $4 , 3 8 5. 5 5 ( 20 1 0: ni l) i n re la tio n t o e x pe ns e re i m b ur s e me n t i n a d d it io n to th e a bo ve re m u ne ra tio n. Options issued as part of remuneration for the period ended 30 June 20 11 No options were granted as remuneration during the period ended 30 June 2011. Please refer to Note 19 for further information. Options issued as part of remuneration fo r the period ended 30 June 2010 There were 1,000,000 options issued to Mr Mahendra Pal and 500,000 options issued to Mr Steve Ledger as part of remuneration for the year ending 30 June 2010. Shares Issued on Exercise of Compensation Options No options granted as compensation in prior periods were exercised through the period or the previous period. Employment contracts of directors and senior executives The employment conditions of the Executive Director, Sanjay Loyalka, are formalised in a contract of employment. The contract specifies for an amount of $200,000 including superannuation per annum to be paid to Mr Loyalka and may be reduced at Mr Loyalka’s discretion. The agreement commenced on 10 May 2008 and has a term of five years. Mr.Mahendra Pal is an independent Non Executive Director of the company. He has additionally agreed to support the Geological & Technical functions of the company effective March 2010. Accordingly he is paid a total of $75,000 per annum. Meetings of Directors During the financial year, 8 formal meetings of Directors (including committees of directors) were held. Attendances by each Director during the year were as follows: Director Sanjay Loyalka Arun Jagatramka Mahendra Pal Andy Lau Amu Shah Board Meetings Meetings attended 8 5 7 7 1 Meetings held whilst in office 8 8 8 8 3 The full Board fulfils the role of remuneration, nomination and audit committees. Page 16 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Indemnifying Officers or Auditor The company maintains director and officer liability insurance. Options At the date of this report, the unissued ordinary shares of Shree Minerals Limited under option are as follows: Date of Expiry Exercise Price Number under Option 31/10/2012 31/10/2012(in escrow) 12/02/2013( in escrow) $0.20 $0.20 $0.20 500,000 9,000,000 250,000 9,750,000 During the year ended 30 June 2011, nil shares were issued on the exercise of options. There were 8,703,500 options expiring on 30 June 2011, of which the company received applications for 1,437,500 shares which were subsequently issued on 15 July 2011. In addition, partial underwriting agreements were also finalised on 15 July 2011 with the issuance of a further 5,750,000 shares. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. 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 these proceedings. The Company was not a party to any such proceedings during the year. Non-audit Services The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The were no fees (2010: nil) for non-audit services were paid/payable to the external auditors during the year. Page 17 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ REPORT Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2011 has been received and can be found on page 24 of annual report. Signed in accordance with a resolution of the Board of Directors. Sanjay Loyalka Chairman Signed in Perth the 26th day of September 2011. Page 18 For personal use only S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT This statement outlines the main corporate governance practices in place during the financial year. The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a Corporate Governance Charter, which is designed to encourage Directors and other Shree personnel to focus their attention on accountability, risk management and ethical conduct. The Company has adopted the following policies, protocols and corporate governance structures: Structure of Board and Committees Nominations and Remuneration Committee Charter Audit and Risk Management Committee Charter Board Members’ Code of Conduct Conflict of Interest Protocol Group Code of Conduct/Values Risk Management Policy Policy on the Trading of Company’s Shares Release of Price Sensitive Information Board Calendar (Strategic Governance Issues) Board and Management Performance Enhancement Policy The Corporate Governance Charter was prepared with regard to the Principles of Good Corporate Governance and Best Practice Recommendations released by the ASX Corporate Governance Council in March 2003 (as amended) so as to ensure that its practices are largely consistent with those Recommendations from time to time. The Corporate Governance Charter will be reviewed and adjusted, as required, on an on-going basis including in line with the ASX Corporate Governance Council amendments to the Recommendations. The Company is committed to implementing high standards of corporate governance. In determining what those high standards should involve the Company has turned to the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations. The Company is pleased to advise that the Company’s practices are largely consistent with those ASX guidelines. Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied for the entire financial year ended 30 June 2011. Board Composition The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report and their term of office are detailed in the director’s report. Page 19 For personal use only S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT The Board sets out below its “if not why not” report in relation to those matters of corporate governance where the Company’s practices depart from the Recommendations RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE 1.1 1.2 1.3 Companies should establish the functions reserved for the board and those delegated to senior executives and disclose those functions. Companies should disclose the process for evaluating the performance of senior executives. Companies should provide the information indicated in the Guide for reporting on Principle 1 Board Satisfied. at Charter www.shreeminerals.com in the Corporate Governance Statement. available is Satisfied. Board Performance Evaluation Policy is available at www.shreeminerals.com in the Corporate Governance Statement. The Board Satisfied. at www.shreeminerals.com in the Corporate Governance Statement. available Charter is Whilst the performance of management is appraised on an ongoing basis. During the year no formal appraisal of management was conducted. 2.1 A majority of the board should be directors. independent Satisfied. The incumbent are independent directors. 2.2 The chair should be an independent director. Not Satisfied. Due to the size of the company and its operations Mr Sanjay Loyalka is both an Executive Director and Chairman. 2.3 The roles of chair and Chief Executive Officer should not be exercised by the same individual. Not Satisfied. Due to the size of the company and its operations Mr Sanjay Loyalka is both Executive Director and the Chairman. 2.4 The board should establish a nomination committee. Not satisfied. The Board consider that given the current size of the board (5), this function is efficiently achieved with full board participation. Accordingly, the Board has not established a nomination committee. 2.5 2.6 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors. Satisfied. Board Performance Evaluation Policy is available at www.shreeminerals.com in the Corporate Governance Statement. Companies should provide the information indicated in the guide to reporting on Principle 2 Satisfied. Whilst the performance of the Board is appraised on an ongoing basis, during the year no formal appraisal was Page 20 For personal use only S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE conducted. Satisfied. The Code of conduct is available at www.shreeminerals.com in the Corporate Governance Statement. 3.1 Companies should disclose a code of conduct and disclose the code or a summary of the code as to: The practices necessary to maintain confidence in the company’s integrity The practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders The responsibility and accountability of individuals for reporting and investigating reports of unethical practices. 3.2 Companies should establish a policy concerning trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy. The Trading Policy Satisfied. is available at www.shreeminerals.com in the Corporate Governance statement. 3.3 Companies should provide the information indicated in the Guide to reporting on Principle 3 Satisfied 4.1 The board should establish an audit committee. 4.2 The board committee should be structured so that it: Consists only of non-executive directors Consists of a majority of independent directors Is chaired by an independent chair, who is not chair of the board Has at least three members 4.3 The audit committee should have a formal charter. Not satisfied. The Board consider that given the current size of the board (4), this function is efficiently achieved with full board participation. Accordingly, the Board has not established an audit committee. Not satisfied. The company has adopted a policy which includes Executive Directors as audit committee members. Audit Committee charter Satisfied. is available at www.shreeminerals.com in the Corporate Governance statement. 4.4 5.1 Companies should provide the information indicated in the Guide to reporting on Principle 4 Satisfied. Companies should 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 Satisfied. Continuous disclosure policy is available at www.shreeminerals.com in the Corporate Governance statement. Page 21 For personal use only S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE 5.2 6.1 6.2 7.1 7.2 7.3 policies or a summary of those policies. Companies should provide the information indicated in the Guide to reporting on Principle 5 Satisfied Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of their policy. Shareholders communication strategy Satisfied. is available at www.shreeminerals.com in the Corporate Governance statement. Companies should provide the information indicated in the Guide to reporting on Principle 6 Satisfied Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies. Satisfied. Risk management program is available at www.shreeminerals.comin the Corporate Governance statement. Satisfied. The Board, including the Managing Director, routinely consider risk management matters. 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. Satisfied. declaration pursuant to the 2010 financial period. The Board has received a section 295A the chief executive officer financial officer the chief the declaration provided The board should disclose whether it has received (or assurance from (or equivalent) and equivalent) in that 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 relation to financial reporting risks. in all material respects 7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7 Satisfied 8.1 The board should establish a remuneration committee. Not Satisfied. The Board consider that given the current size of the board (4), this function is efficiently achieved with full board participation. Accordingly, the Board has not established a remuneration committee. 8.2 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of The structure of directors’ remuneration is disclosed in Page 22 For personal use only S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE executive directors and senior executives. the remuneration report of the annual report. 8.3 Companies should provide the information indicated in the Guide to reporting on Principle 8 committee Remuneration is available at www.shreeminerals.comin the Corporate Governance statement. charter 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.shreeminerals.com Page 23 For personal use only S H R E E M I N E R A L S L T D A U D I T O R S ’ I N D E P E N D E N C E C O N F I R M A T I O N Page 24 For personal use only S H R E E M I N E R A L S L T D STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDING 30 JUNE 2011 Note 30 June 2011 $ 30 June 2010 $ Revenue from continuing operations Interest Research and development tax concession Other Expenses from continuing operations Finance charges Employee and consulting fees Regulatory costs Occupancy and communication Foreign exchange loss Accounting and Legal Fees Impairment of exploration tenements Other Expenses Loss before income tax Income tax expense Loss for the period Other comprehensive income Comprehensive Loss for the year 176,959 202,125 69,091 (1,727) (316,218) (14,888) (37,882) - (70,482) (281,169) (60,842) (335,033) - (335,033) - (335,033) 4 76,015 - - (2,689) (203,366) (45,479) (38,501) (16,922) (15,866) - (61,935) (308,743) - (308,743) - (308,743) Earnings per share for (loss) attributable to ordinary equity holders of the company: Basic (loss) cents per share 5 (0.38) (0.44) The accompanying notes form part of these financial statements. Page 25 For personal use only S H R E E M I N E R A L S L T D STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011 Note 30 June 2011 $ 30 June 2010 $ 6 7 9 8 10 10 11 12 12 2,557,162 192,428 2,749,590 5,209,739 1,708 5,211,447 3,113,238 105,939 3,219,177 4,556,445 1,036 4,557,481 7,961,037 7,776,658 233,996 3,839 237,835 51,062 4,326 55,388 237,835 55,388 7,723,202 7,721,270 8,500,310 129,145 (906,253) 8,163,345 - (442,075) 7,723,202 7,721,270 Assets Current Assets Cash and cash equivalents Receivables Total Current Assets Non-Current Assets Exploration and evaluation Plant and equipment Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Provisions Total Current Liabilities Total Liabilities Net Assets Equity Contributed equity Reserves Accumulated losses Total Equity The accompanying notes form part of these financial statements. Page 26 For personal use only S H R E E M I N E R A L S L T D STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011 Issued Capital Note $ Accumulated Losses $ Share based option reserve BALANCE AT 1 July 2009 2,581,848 (133,332) Total comprehensive income for the period - (308,743) Shares issued or applied for during the year 11 5,964,500 Capital raising costs (383,003) - - SUB-TOTAL 8,163,345 (442,075) Dividends paid or provided for - - BALANCE AT 30 JUNE 2010 8,163,345 (442,075) BALANCE AT 1 July 2010 8,163,345 (442,075) - - - - - - - Total $ 2,448,516 (308,743) 5,964,500 (383,003) 7,721,270 - 7,721,270 7,721,270 Prior period adjustment 12 (129,145) 129,145 - Total comprehensive income for the period - (335,033) Shares issued or applied for during the year 11 354,000 Capital raising costs (17,035) - - - - - (335,033) 354,000 (17,035) SUB-TOTAL 8,500,310 (906,253) 129,145 7,723,202 Dividends paid or provided for - - - - BALANCE AT 30 JUNE 2011 8,500,310 (906,253) 129,145 7,723,202 The accompanying notes form part of these financial statements. Page 27 For personal use only S H R E E M I N E R A L S L T D STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011 Note 30 June 2011 $ Cash flows from operating activities Payments to suppliers and employees (inclusive of GST) Interest received Research and Development tax concession Finance and borrowing costs paid Net cash inflow from operating activities 15(b) Cash flows from investing activities Payment for plant and equipment Payments for tenement acquisition Net cash outflow from financing activities Cash flows from financing activities Proceeds from issues of shares and other equity securities Payments for share issue costs Repayment of borrowings Net cash outflow from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period (1,220,398) 175,672 202,125 - (842,601) (975) - (975) 287,500 - - 287,500 (556,076) 3,113,238 30 June 2010 $ (1,031,437) 30,915 - (2,689) (1,003,211) (1,045) (550,000) (551,045) 4,764,500 (333,003) - 4,431,497 2,877,241 235,997 Cash and cash equivalents at the end of the financial period 6 2,557,162 3,113,238 The accompanying notes form part of these financial statements. Page 28 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES This financial report includes the financial statements and notes of Shree Minerals Limited, a Company domiciled and incorporated in Australia. Statement of Compliance The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report includes the separate financial statements of the Company. Accounting standards include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial statements and notes thereto comply with International Financial Reporting Standards (“IFRS”). The financial report is presented in Australian currency. Basis of Preparation The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The significant accounting policies set out below have been applied in the preparation and presentation of the financial report for the year ending 30 June 2011 and comparative information. a. Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. 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 assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Page 29 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. b. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. 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 that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. 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 economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation reserve in equity. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the asset’s original cost is transferred from the revaluation reserve to retained earnings. Depreciation The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Plant and equipment Office equipment Depreciation Rate 33% 20% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet 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. Page 30 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. c. Exploration, evaluation and development expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through successful development on the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserve. 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 area is made. When production commences, the accumulated costs for the relevant area of interest area 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. d. Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the economic entity, are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. e. Financial Instruments Recognition and Initial Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations Page 31 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Classification and Subsequent Measurement (i) Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. (v) Financial Liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. Derivative instruments Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the Page 32 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. Impairment of Non Financial Assets f. At each reporting date, the group reviews 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 asset, 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 income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Interests in Joint Ventures g. The Company’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the financial statements. h. Employee Benefits Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. Equity-settled compensation The group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. i. Provisions Provisions are recognised when the group has 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. Page 33 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 j. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 12 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet k. Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). l. Goods and Services Tax (“GST”) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. m. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. n. Critical Accounting Estimates and Judgments The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Key Judgements – Deferred exploration and evaluation expenditure Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs are carried forward in respect of an area that has not at balance sheet date reached a stage that permits reasonable assessment of the existence of economically recoverable reserves, refer to the accounting policy stated in note 1(c). Key Judgement s Share based payment transactions The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model, using the assumptions detailed in note 20. Page 34 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 o. Operating segments Identification and measurement of segments – AASB 8 requires the ‘management approach’ to the identification measurement and disclosure of operating segments. The ‘management approach’ requires that operating segments be identified on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker, for the purpose of allocating resources and assessing performance. This could also include the identification of operating segments which sell primarily or exclusively to other internal operating segments. NOTE 2: KEY MANAGEMENT PERSONNEL COMPENSATION Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are: Sanjay Loyalka Mahendra Pal Arun Kumar Jagatramka Andy Lau Amu Shah Steve Ledger Chairman Director Director Director Director (appointed 4 March 2011) Company Secretary (resigned 20 July 2011) Key management personnel remuneration has been included in the Remuneration Report section of the Directors Report. Number of Shares Held by Key Management Personnel 30 June 2011 Key Management Person Balance 1 July 2010 Received as Compensation Options Exercised Net Change Other Balance on Resignation Balance 30 June 2011 Mr Sanjay Loyalka3 Mr Mahendra Pal 25,415,000 - - 300,000 Mr Arun Jagatramka 15,000,000 Mr Andy Lau Mr Amu Shah Mr Steve Ledger - 7,500,000 20,000 - - - - 47,935,000 300,000 - - - - - - - - - - - - - - - 25,415,000 - - - - - - 300,000 15,000,000 - 7,500,000 20,000 48,235,000 Balance 1 July 2009 Received as Compensation Options Exercised 30 June 2010 Key Management Person Mr Sanjay Loyalka3 Mr Mahendra Pal 32,500,000 - Mr Arun Jagatramka 10,000,000 Mr Andy Lau Mr Steve Ledger - - 42,500,000 Net Change Other (7,085,000) - 5,000,000 - 20,000 (2,065,000) - - - - - - Balance on Resignation - - - - - - Balance 30 June 2010 25,415,000 - 15,000,000 - 20,000 40,435,000 - - - - - - Page 35 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 Number of Options Held by Key Management Personnel 30 June 2011 Key Management Person Mr Sanjay3 Loyalka Mr Mahendra Pal1 Mr Arun Jagatramka Balance 30 June 2010 50,000 1,000,000 - Mr Amu Shah 1,250,000 Mr Andy Lau Mr Steve Ledger2 - 510,000 Granted as compensation Options Exercised Net Change Other Balance 30 June 2011 Total Vested 30 June 2011 Total Exercisable 30 June 2011 Total Unexercisable 30 June 2011 - - - - - - - - - - - - (50,000) - 1,000,000 - - - - - - 1,250,000 1,250,000 1,250,000 - - - (10,000) 500,000 500,000 500,000 - - - - - 1,000,000 - - - - 1,000,000 - 1,750,000 Please refer to Note 19 for further information regarding the fair value of share options and assumptions. 2,750,000 1,750,000 2,810,000 (60,000) - 30 June 2010 Key Management Person Balance 30 June 2009 Mr Sanjay3 Loyalka Mr Mahendra Pal1 Mr Arun Jagatramka Mr Andy Lau Mr Steve Ledger2 Granted as compensation Options Exercised Net Change Other Balance 30 June 2010 Total Vested 30 June 2010 Total Exercisable 30 June 2010 Total Unexercisable 30 June 2010 - - - - - - - 1,000,000 - - 500,000 1,500,000 - - - - - - 50,000 50,000 50,000 50,000 - - - - 1,000,000 - - - - - - - - 10,000 510,000 510,000 510,000 1,000,000 - - - 60,000 1,560,000 560,000 560,000 1,000,000 1. M r P a l w a s gr a nt e d 1 ,0 0 0 , 00 0 o p tio ns p urs ua n t to t h e 2 0 09 a n n ua l ge ne ra l me e t i n g d ur i n g t he y e a r e n d i n g 3 0 J u ne 2 0 1 0. 2. M r Le dg e r w a s gra n te d 5 0 0 , 00 0 o p tio ns p u rs ua n t to t he 2 00 9 a n n ua l g e ne r a l m e e ti n g. M r L e dg e r is a d ire c to r o f Le d ge r C o r po r a t e P t y L t d. T he c o m p a n y a n d i ts a s s o c i a t e d e n t it ie s a c q ui re d 1 0 ,0 0 0 o p t io ns d ur i n g t he ye a r e n d i ng 30 J un e 2 0 10 w hic h s u bs e q ue n tl y e x p ir e d o n 3 0 J u ne 20 1 1. 3. T he di s c lo s u re s f o r t he pe r io d e n di n g 3 0 J u ne 2 0 1 0 h a ve be e n re v is e d to i nc lu d e ho l di n gs o f M r s R a s h mi Lo y a l ka w ho is re la t e d to M r Lo ya lk a a s t he c o m pa n y be li e v e s M r Lo ya l ka ha s a c o n tro l li n g i nf l u e nc e o ve r t he s e s ha re s . M rs R a s h mi Lo ya l ka a c q u ire d 10 0 , 0 00 o rd i n a ry s ha re s a n d 5 0 , 0 00 o pt io ns d u r in g t h e ye a r e n d i ng 30 J u ne 2 0 1 0. Please refer to Note 19 for further information regarding the fair value of share options and assumptions. Page 36 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 NOTE 3: AUDITORS’ REMUNERATION Remuneration paid or payable of the auditor for: – Auditing or reviewing the financial report – Taxation services and corporate services NOTE 4: INCOME TAX a. Income tax expense Current tax Deferred tax Deferred income tax expense included in income tax expense comprises: (a) (Increase) in deferred tax assets (b) Increase in deferred tax liabilities b. Reconciliation of income tax expense to prima facie tax payable The prima facie tax payable on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax expense/(benefit) on operating profit/(loss) at 30% Add / (Less) Tax effect of: 30 June 2011 30 June 2010 $ 15,225 - 15,225 $ 7,666 - 7,666 30 June 2011 30 June 2010 $ - - - $ - - - (195,988) 195,988 - (352,625) 352,625 - 30 June 2011 30 June 2010 $ $ (100,510) (92,623) Deferred tax asset not brought to account Income tax attributable to operating loss 100,510 - 92,623 - The applicable weighted average effective tax rates are as follows: Balance of franking account at year end Nil Nil Nil Nil Page 37 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 c. Deferred tax assets Tax Losses Provisions Other Set-off deferred tax liabilities Net deferred tax assets d. Deferred tax liabilities Exploration expenditure Set-off deferred tax assets Net deferred tax liabilities e. Tax losses - 1,152 194,836 - 1,298 351,327 (195,988) (352,625) - - 195,988 (195,988) - 352,625 (352,625) - Unused tax losses for which no deferred tax asset has been recognised 1,681,997 1,983,741 Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been brought to account at 30 June 2011 because the directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time. These benefits will only be obtained if: i. the company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the loss and exploration expenditure to be realised; ii. the company continues to comply with conditions for deductibility imposed by law; and iii. no changes in tax legislation adversely affect the company in realising the benefit from the deductions for the loss and exploration expenditure. During the year the company obtained research and development tax concessions of $202,125. NOTE 5: EARNINGS PER SHARE a. Earnings used to calculate basic EPS b. Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and in hand Page 38 30 June 2011 30 June 2010 $ $ (335,033) (308,743) Number of Shares Number of Shares 87,620,993 69,824,568 30 June 2011 30 June 2010 $ $ 2,557,162 3,113,238 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 NOTE 7: TRADE AND OTHER RECEIVABLES Interest receivable Security deposits Trade receivables GST and ABN withholding tax receivables 30 June 2011 30 June 2010 $ $ 46,388 19,000 76,000 51,040 192,428 45,101 19,000 - 41,838 105,939 NOTE 8: PROPERTY, PLANT & EQUIPMENT 30 June 2011 30 June 2010 Plant And Equipment Office Equipment – at cost Accumulated depreciation a. Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year Opening balance at 1 July 2010 Additions Depreciation expense Balance at 30 June 2011 $ 2,020 (312) 1,708 Plant and equipment Office Equipment $ - - - - $ 1,036 975 (303) 1,708 $ 1,045 (9) 1,036 Total $ 1,036 975 (303) 1,708 Page 39 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 NOTE 9: EXPLORATION EXPENDITURE 30 June 2011 30 June 2010 Exploration and evaluation phase expenditure capitalised $ 5,209,739 Movements Opening balance at 1 July 2009 Exploration capitalised Balance at 30 June 2010 Opening balance at 1 July 2010 Exploration capitalised Impairment / relinquishment Balance at 30 June 2011 $ 4,556,445 $ 3,381,029 1,175,416 4,556,445 4,556,445 934,463 (281,169) 5,209,739 Impairment during the period relates to lapsed and relinquished exploration licenses for Catamaran (EL32/2005) and Adamsfield (EL11/2006) of $148,634 and $132,535 respectively. The value of Company interest in exploration expenditure is dependent upon the: the continuance of the economic entity rights to tenure of the areas of interest; the results of future exploration; and the recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale. The exploration properties may be subjected to claim(s) under native title, or contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration properties or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum of such claims. Page 40 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 NOTE 10: TRADE AND OTHER PAYABLES Current Trade and other creditors Provisions NOTE 11: CONTRIBUTED EQUITY 30 June 2011 30 June 2010 $ 233,996 3,839 237,835 $ 51,062 4,326 55,388 30 June 2011 30 June 2010 $ $ 87,872,500 (2010: 87,422,500) Fully paid ordinary shares 8,500,310 8,163,345 The Company has issued capital amounting to 87,872,500 (2010: 87,422,500) with no par value Movements Opening balance Shares issued Options exercised and to be allotted Shares issued or applied for during the year Capital raising costs Closing balance (a) Ordinary Shares At the beginning of the reporting period Shares issued during the period – – – – – – 13 July 2008 6 November 2009 16 February 2010 18 February 2010 2 March 2010 21 January 2011 At reporting date Page 41 8,163,345 66,500 287,500 354,000 (17,035) 8,500,310 2,581,848 5,964,500 - 5,964,500 (383,003) 8,163,345 Number of Shares Number of Shares 87,422,500 56,000,000 - - - - - 450,000 - 8,000,000 17,417,500 6,000,000 5,000 - 87,872,500 87,422,500 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 (b) Options At the date of this report, the unissued ordinary shares of Shree Minerals Limited under option are as follows: Date of Expiry Exercise Price Number under Option 31/10/2012 31/10/2012(in escrow) 12/02/2013( in escrow) $0.20 $0.20 $0.20 500,000 9,000,000 250,000 9,750,000 During the year ended 30 June 2011, nil shares were issued on the exercise of options. There were 8,703,500 options expiring on 30 June 2011, of which the company received applications for 1,437,500 shares which were subsequently issued on 15 July 2011. In addition, partial underwriting agreements were also finalised on 15 July 2011 with the issuance of a further 5,750,000 shares. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. (c) Capital risk management The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Company at 30 June 2011 and 30 June 2010 are as follows: Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position NOTE 12: RETAINED LOSSES AND RESERVES a. Retained Losses At the beginning of the reporting period Prior period adjustment Comprehensive loss At reporting date Page 42 2,557,162 192,428 (237,835) 2,511,755 3,113,238 105,939 (55,388) 3,163,789 30 June 2011 30 June 2010 $ $ 442,075 129,145 335,033 906,253 133,332 - 308,743 442,075 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 b. Option Reserve The option reserve records items recognised as expenses on valuation of share based payments including employee options. Please refer note 19 for more information. There were no share based options issued during the current reporting period. During the period, a prior period adjustment was made to revalue the share options on issue. This resulted in an adjustment of $129,145 to share based payment expenditure. A corresponding adjustment was made to the Share based option reserve. NOTE 13: COMMITMENTS a. The Company has tenements rental and expenditure commitments of: Payable: – not later than 12 months – between 12 months and 5 years – greater than 5 years 30 June 2011 30 June 2010 $ $ 203,367 253,584 - - - - b. The Company has other rental and expenditure commitments of $9,792 within the next 12 months. NOTE 14: CONTINGENT LIABILITIES AND CONTINGENT ASSETS On 21st April 2008, the Company entered into a tenement sale agreement with Gujurat NRE Resources NL for the purchase of the right and title to various exploration licenses. Mr Arun Jagatramka is a director of both the company and Gujurat NRE Resources NL. He was appointed to the Board subsequent to this agreement. The company paid consideration in cash and script, however is required to issue a further 10,000,000 shares in the company to Gujurat NRE Resources NL within 30 days of successful completion of; The company completing a bankable feasibility study to be solely funded by the company; i) ii) The company obtaining funding approval for the development and operation of a mine as contemplated by the bankable feasibility; and iii) The Board approving a decision to mine, on the Nelson Bay River tenement. The company has currently met all the expenditure commitments relating to tenement exploration activities as required under the exploration licenses granted by Mineral Resources Tasmania. Other than the above, the Directors are not aware of any other contingent liabilities or contingent assets. Page 43 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 NOTE 15: CASH FLOW INFORMATION (a) Reconciliation of Cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: 30 June 2011 30 June 2010 $ $ Cash 2,557,162 3,113,238 (b) Reconciliation of Cash Flow from Operations with Operating Profit after Income Tax Operating loss after income tax (335,033) (308,743) Non-cash flows: Share based payments Capital raising costs Tenement impairment/relinquishment Depreciation and amortisation Changes in assets and liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in other assets Increase/(decrease) in trade and other payables Net Cash Flow from/(used in) Operating Activities NOTE 16: RELATED PARTY TRANSACTIONS Key Management Personnel 66,500 (17,035) 281,169 302 (86,490) (934,462) 182,448 (842,601) - - - 9 (96,852) (625,417) 27,792 (1,003,211) Disclosures relating to key management personnel compensation are set out in Note 2 to the financial statements, and in the Remuneration Report contained within the Directors Report. Other transactions During the reporting period, Mrs Rashmi Loyalka provided accounts payable services to the company to a value of $20,000. Mrs Loyalka is related to the Chairman, Mr Sanjay Loyalka. NOTE 17: FINANCIAL INSTRUMENTS a. Financial Risk Management The Company’s financial instruments consist mainly of deposits with banks and accounts receivable and payable. The main purpose of non-derivative financial instruments is to raise finance for the Company’s operations. Derivatives are not currently used by the Company for hedging purposes. The Company does not speculate in the trading of derivative instruments. Page 44 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 i. Treasury Risk Management The senior executives of the Company meet on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. ii. Financial Risks The main risks the Company is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. Interest rate risk The Company does not have any debt that may be affected by interest rate risk. Sensitivity analysis At 30 June 2011, if interest rates had changed by -/+ 75 basis points from the weighted average rate for the year with all other variables held constant, post-tax loss for the Company would have been $19,179 lower/higher (2010 - $23,349 lower/higher) as a result of lower/higher interest income from cash and cash equivalents. Liquidity risk The Company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. The Company does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the economic entity. b. Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. All financial assets and financial liabilities of the Company and the parent entity at the balance date are recorded at amounts approximating their carrying amount. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. c. Interest Rate Risk The Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate for each class of financial assets and financial liabilities comprises: Page 45 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 Floating Interest Rate Fixed Interest Rate 1 Year or Less 1 to 5 Years Non Interest Bearing Total Weight Effective Interest Rate 2011 $ 2010 $ 2011 $ 2010 $ 2011 $ 2010 $ 2011 $ 2010 $ 2011 $ 2010 $ 2011 % 2010 % Cash Trade and other receivables 1,930,103 61,371 627,059 3,051,867 - - Total Financial Assets 1,930,103 61,371 627,059 3,051,867 Financial Liabilities Trade and other payables Total Financial Liabilities - - - - - - - - - - - - - - - - - - - - 2,557,162 3,113,238 6.59 - 192,428 105,939 192,428 105,939 N/A N/A 192,428 105,939 2,749,590 3,219,177 (237,835) (55,388) (237,835) (55,388) N/A N/A (237,835) (55,388) (237,835) (55,388) NOTE 18: OPERATING SEGMENTS The company operates predominately in one segment involved in the mineral exploration. Geographically, the consolidated entity is domiciled and operates in one segment being Australia. In accordance with AASB 8 Operating Segments, a management approach to reporting has been applied. The information presented in the Statement of Comprehensive Income and the Statement of Financial Position reflects the sole operating segment. NOTE 19: SHARE-BASED PAYMENTS During the year nil (2010: 18,453,500) options were issued. During this reporting period, a revaluation of the share based options issued in 2010 was performed which resulted in an adjustment to the share based option reserve of $129,145 in the current reporting period (Refer Note 12). Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the Company with full dividend and voting rights. a. Expenses arising from share-based payment transactions There were $66,500 (2010: $nil) expenses arising from share-based payment transactions recognised during the period. These expenses were recognised at the date the share based payments were approved and at the share price applicable at that date. NOTE 20: CHANGE IN ACCOUNTING POLICY Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2011 reporting periods. The company’s assessment of the impact of these new standards and interpretations are set out below. AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013) AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. When adopted the standard could affect the group’s accounting for any financial assets it holds. The company has not yet decided when to adopt AASB9. Page 46 For personal use only S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2011 Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards effective from 1 January 2011) In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The company will apply the amended standard from 1 July 2011. When the amendments are applied, the company will need to disclose any transactions between any subsidiaries and its associates. However, there will be no impact on any of the amounts recognised in the financial statements. AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013) On 30 June 2010 the AASB official introduced a revised differential reporting framework in Australia. Under this framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial statements. The company is not eligible to adopt the new Australian Accounting Standards – Reduced Disclosure Requirements. The two standards will therefore have no impact on the financial statements of the entity. AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets (effective for annual reporting periods beginning on or after 1 July 2011) Amendments made to AASB 7 Financial Instruments: Disclosures in November 2010 introduce additional disclosures in respect of risk exposures arising from transferred financial assets. The amendments will affect particularly entities that sell, factor, securitise, lend or otherwise transfer financial assets to other parties. They are not expected to have a significant impact on the company’s disclosures. The company intends to apply the amendment from 1 July 2011. AASB 2010-8 Amendments to Australian Accounting Standards – Deferred tax: Recovery of Underlying Assets (effective from 1 January 2012) In December 2010, the AASB amended AASB 112 Income Taxes to provide a practical approach for measure deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model. AASB 112 requires the measurement of deferred tax assets or liabilities to reflect the tax consequences that would follow from the way management expects to recover or settle the carrying amount of the relevant assets or liabilities, that is through use or sale. The amendment introduces a rebuttable presumption that investment property which is measured at fair value is recovered entirely by sale. The company will apply the amendment from 1 July 2012. It is currently evaluating the impact of the amendment. No other amendments or interpretations are expected to have an impact on the company or the group. NOTE 21: COMPANY DETAILS The registered office and principal place of business of the Company is: Unit 4 The Pines Business Centre 86 -88 Forrest Street Cottesloe WA 6011 Ph: Fax: (08) 61612068 (08) 93855194 Page 47 For personal use only S H R E E M I N E R A L S L T D DIRECTORS’ DECLARATION 1. In the opinion of the directors of Shree Minerals Limited (‘the Company’): (a) the financial statements and notes as set out on pages 25 to 47, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company as at 30 June 2011 and of its performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date; and (ii) complying with Australian Accounting Standards, the Corporations Regulations 2001, and other mandatory professional reporting requirements; and (b) the audited remuneration disclosures included in the Directors’ report For the year ended 30 June 2011, comply with section 300A of the Corporations Act 2001. (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (d) the Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. 2. There are reasonable grounds to believe that the Company will be able to meet any obligations or liabilities when they become due and payable. 3. The remuneration disclosures in the audited Remuneration Report on pages 12 to 16 in the Directors’ report for the year ended 30 June 2011 complies with Section 300A of the Corporations Act 2001. 4. The directors have been given the declarations required by Section 295A of the Corporations Act from the chief executive officer and chief financial officer for the financial year ended 30 June 2011. Dated at Unit 4,The Pines Business Centre, 86 -88 Forrest Street, Cottesloe, WA 6011 this 26th day of September 2011. Signed in accordance with a resolution of the directors: _______________________ Sanjay Loyalka Director Page 48 For personal use only S H R E E M I N E R A L S L T D INDEPENDENT AUDITORS’ REPORT Page 49 For personal use only S H R E E M I N E R A L S L T D INDEPENDENT AUDITORS’ REPORT Page 50 For personal use only S H R E E M I N E R A L S L T D INDEPENDENT AUDITORS’ REPORT Page 51 For personal use only S H R E E M I N E R A L S L T D SHAREHOLDER INFORMATION ADDITIONAL INFORMATION The following additional information not shown elsewhere in the report is required by the Australian Securities Exchange Ltd in respect of listed public companies only. This information is current as at 5th September 2011. SUBSTANTIAL SHAREHOLDERS The company has received substantial shareholder notices from; – Mr Sanjay Loyalka as trustee for the Loyalka Family Trust (24,500,000 ordinary shares) – Gujurat NRE Resources NL (15,000,000 ordinary shares) – Ullapool Investments Pty Ltd (6,000,000 ordinary shares) – China Alliance International Holdings Group (18,000,000 ordinary shares) ISSUED SECURITIES Refer note 11 of the financial statements. VOTING RIGHTS The voting rights attached to the Fully Paid Ordinary shares of the Company are: 1. At a meeting of members or classes of members each member entitled to vote may vote in person or by proxy or by attorney; and 2. On a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or attorney has one vote for each ordinary share held. There are no voting rights attached to any Options on issue. DISTRIBUTION SCHEDULE – OPTIONS AS AT 5th SEPTEMBER 2011 Holdings Ranges 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 99,999,999,999 Holders 0 0 0 0 4 4 Total Units 0 0 0 0 9,750,000 9,750,000 % 0.000 0.000 0.000 0.000 100.000 100.000 DISTRIBUTION SCHEDULE – SHAREHOLDINGS AS AT 5th SEPTEMBER 2011 Holdings Ranges 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 99,999,999,999 Holders 0 17 207 189 47 460 Total Units 0 62,698 2,046,665 7,200,015 85,750,622 95,060,000 % 0.000 0.066 2.153 7.574 90.207 100.000 UNMARKETABLE PARCELS There are eight unmarketable parcels as at 5th September 2011 totalling 20,667 ordinary shares. Page 52 For personal use only S H R E E M I N E R A L S L T D SHAREHOLDER INFORMATION 20 LARGEST SHAREHOLDERS AS AT 5th SEPTEMBER 2011 Holder Name MR SANJAY KUMAR LOYALKA CHINA ALLIANCE INTERNATIONAL HOLDINGS GROUP LIMITED GUJARAT NRE RESOURCES NL ULLAPOOL INVESTMENTS PTY LTD ROSECLIFF HOLDINGS PTY LTD ME GAWILD ENTERPRISES PTY LTD CHINA ALLIANCE INTERNATIONAL HOLDINGS GROUP LIMITED MEGAWILD ENTERPRISES PTY LTD MR AMRIK SINGH HEER EXPORT MARKETING (BVI) LTD DR DEEPAK NARAN MR ASOK KUMAR & MRS RENU KUMAR IACG PTY LTD TANDON SUPERANNUATION SERVICES PTY LTD MS EMMA HALL BRIAN EDWARD VON BERGHEIM PTY LTD MR LINDSAY HAMILTON-SMITH & MRS ANDREA MARTINA HAMILTON-SMITH RANGEWELL PTY LTD DEPAK DOLATHRAI NARAN MR HARDEEP SINGH HEER MR RAY HISLOP 20 LARGEST OPTION HOLDERS AS AT 5th SEPTEMBER 2011 Holder Name CHINA ALLIANCE INTERNATIONAL HOLDINGS GROUP LIMITED MAHENDRA PAL MR STEVE LEDGER ZURICH SECURITIES PTY LTD Balance 24,500,000 16,000,000 15,000,000 6,000,000 4,375,000 2,500,000 2,000,000 1,875,000 1,500,000 1,250,000 1,000,000 820,000 750,000 500,000 500,000 500,000 500,000 475,000 375,000 300,000 300,000 81,020,000 % 25.773 16.831 15.780 6.312 4.602 2.630 2.104 1.972 1.578 1.315 1.052 0.863 0.789 0.526 0.526 0.526 0.526 0.500 0.394 0.316 0.316 85.230 Balance 8,000,000 1,000,000 500,000 250,000 % 82.052 10.256 5.128 2.564 9,750,000 100.000 Page 53 For personal use only 

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