2011 ANNUAL REPORT
STRIKE RESOURCES
ANNUAL REPORT 2011
CORPORATE DIRECTORY
Strike Resources Limited ACN 088 488 724
BOARD
Malcolm Richmond
Ken Hellsten
William Johnson
Matthew Hammond
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
COMPANY SECRETARY
Stephen Gethin
HEAD OFFICE
Level 8, The Forrest Centre,
221 St George’s Terrace,
Perth, Western Australia 6000
+61 8 9324 7100
+61 8 9324 7199
Telephone:
Facsimile:
Local telephone: 1300 974 700
Email:
Internet:
info@strikeresources.com.au
www.strikeresources.com.au
SHARE REGISTRY
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Suite 2, 150 Stirling Highway,
Nedlands, Western Australia 6009
Telephone:
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Email:
Internet:
AUDITOR
+61 8 9389 8033
+61 8 9389 7871
admin@advancedshare.com.au
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STOCK EXCHANGE
Australian Securities Exchange (ASX)
Perth, Western Australia
ASX Code:
SRK
ii
CONTENTS
Chairman’s Letter
Review of Operations
Directors’ Report
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
2
4
30
49
50
51
52
Notes to the Financial Statements 53
Independent Audit Report
Corporate Governance
Mineral Tenements
Securities Information
87
89
102
106
www.strikeresources.com.au
Visit our website for:
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1
STRIKE RESOURCES ANNUAL REPORT 2011
CHAIRMAN’S LETTER
Dear Shareholder,
The last year has primarily been one of consolidation for the
Company with the restructure of the Board and Management,
along with strengthening our position in our key iron-ore assets
in Peru.
The Board restructure in early 2011 saw the number of directors
reduced to four in order to facilitate the appointment of additional
independent directors, in accordance with sound corporate
governance practice. We are well advanced in the recruitment
process and anticipate the new Board member(s) will be in place
by late this year. I wish to thank Messrs Madan, Khan, Moshiri and
Horn for their valuable contributions and high level of commitment
during their time on the Board.
The appointment of an experienced and extremely capable CEO
for Apurimac Ferrum (AF) in Tom Kelly has allowed day-to-day responsibilities to move primarily to Lima, with a
resultant improvement in operational efficiency and effectiveness. In addition, the strengthening of the management
team in Peru with the appointments of Luis Orihuela (Community Relations Manager) and Ian Cullen (Exploration
Manager) has enhanced the ability of both AF and Strike to identify and respond to opportunities. This is most
notably demonstrated by the recent transactions with Cuervo Resources and IAC where Strike secured the option
to acquire up to 49.2% of Cuervo and moved from 44% to a 50% shareholding in AF.
During our strategic review in April this year the Board recognised the opportunity to leverage off AF’s strong
resource and concession holdings to strengthen its position and consolidate iron-ore projects within the Apurimac
and Cusco regions of southern Peru. Through AF’s ownership of the largest and best quality iron-ore resources in
the region and Strike’s strong cash position, we are uniquely positioned to play a leading role in this consolidation
and I am very heartened by the excellent progress made by the management team in recent months. The move to
at least 50% of AF simplifies the structure and operation of our key operating company in Peru and we look forward
to making further significant steps with our valued Peruvian partner, the D&C Group.
Optimisation studies completed by AF during 2010 and early 2011 outlined several opportunities to add further
value to the Apurimac and Cusco Iron-Ore Projects and these will be pursued during the next study phase. The
high-quality resources at Opaban provide a number of competitive advantages over most magnetite deposits and
an ideal basis for a low-cost iron-ore operation. The current focus for the AF team is the delineation of sufficient
resources to support an operation of at least 15Mtpa for a minimum of 15 years and they are gearing up for an
aggressive exploration program over the next year to achieve this outcome.
While the regional and presidential elections over the past 12 months have significantly impacted on the timing of
approvals, it is most pleasing to see the recent flow of approvals for both the Apurimac and Cusco Projects. These
have enabled AF to commence exploration activities at several of the priority concession areas. We anticipate the
flow of approvals to continue during the coming year, allowing the further acceleration of exploration programs
including drilling at both project areas, including the Opaban prospect.
I believe the Company is now well positioned to realise the latent value in our Peruvian iron-ore assets and we will
see significant progress over the next 12 months. Cuervo also anticipates drilling commencing at their exciting Bob
1 prospect later this year and we look forward with some anticipation to those results.
2
I am also most encouraged by the opportunities for further consolidation of iron-ore projects within the region along
with the prospectivity of our concessions for copper and gold deposits. The AF and Cuervo properties lie within
the world’s premier copper-producing belt and the AF geological team has identified several exciting target areas
with strong indications of mineralisation within their concessions. Drilling of the high-priority targets is planned for
the first half of 2012.
Despite significant efforts by the management team we have been unable reach agreement with our Indonesian
partner in the Berau Coal Project on the restructure of our Cooperation Agreement or the appropriate development
structure. Accordingly we have been forced to consider other options including legal action and we will continue to
work to extract the best possible outcome for shareholders from this project.
Strike’s stake in the Apurimac Iron-Ore Project represents an excellent opportunity to develop a major, low-cost
iron-ore project in a favourable jurisdiction. With a strong and committed team, A$27 million in cash and CAN$5.25
million in loans to Cuervo, Strike is well positioned to deliver value to shareholders and I am looking forward to
working with my team in taking substantial steps towards this goal over the next 12 months.
Yours sincerely
Prof. Malcolm R. Richmond
Chairman
3
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
COMPANY OVERVIEW
Strike Resources is an Australian-listed resources company with two principal projects in the attractive bulk
commodities market.
The Apurimac and Cusco Projects are large-scale iron-ore projects in southern Perú, with Apurimac the most
advanced with a high-quality Concept-level Study completed in 2008. The Company is seeking to establish a 15 –
20 million tonne per annum (Mtpa) operation based on current JORC Indicated and Inferred Resources of 270Mt1
at its Opaban concessions located at Apurimac.
The Company has strengthened its resource and exploration position in Perú through the acquisition of an additional
6% of Apurimac Ferrum S.A. (AF) - taking Strike to 50% of AF2 - and entering into a strategic option to acquire
a major stake in Cuervo Resources Inc. (Cuervo) which holds high-quality exploration concessions in the Cusco
district of southern Perú, and which are complimentary to Strike’s own concession interests in the same area.
Strike holds 100% of the rights to mine coal at the Berau Thermal Coal Project in Indonesia, subject to a royalty
to the concession owner, through a Co-operation Agreement. The Company is in dispute with the owner over the
terms of the agreement and dispute resolution proceedings are likely.
Table 1 - Strike Resources’ projects summary
Project
Location
Apurimac Iron Ore
Apurimac District, Perú
Cusco Iron Ore
Cusco District, Perú
Cuervo Resources
Cusco District, Perú
Strike’s Interest
50%3
50%3
Option to acquire 49.2%4
Berau Thermal Coal
Berau Regency, East Kalimantan, Indonesia (subject to
payment of a royalty to the concession owner)
Paulsens East Iron Ore West Pilbara, Western Australia (Strike has farmed out
iron-ore rights in this project and will receive a royalty on
any iron ore produced)
100%
Royalty
AF geologist mapping Cusco
4
OPERATIONAL HIGHLIGHTS
Operational Highlights of the 2010-2011 financial year, and to the date of this Report, include:
(cid:115) Strong cash position with $34 million in cash reserves as at 30 June.
(cid:115)
Increased position in Apurimac Ferrum S.A. from 44% to 50%2.
(cid:115) Strategic option secured to acquire up to 49.2% of Cuervo Resources Inc4.
(cid:115) Strong, Perú-based management team established in AF.
(cid:115) Constructive relationships established with communities with approvals flowing.
(cid:115) Board restructure involving the retirement of the former chairman and two non-executive directors, with the
appointment of one or more additional independent non-executive directors pending.
PERÚVIAN PROJECTS
Apurimac and Cusco Iron-Ore Project (SRK 50%)2
The Company holds a direct interest of 50%2 in Apurimac Ferrum S.A. (AF), the owner of the Apurimac and Cusco
project concessions located in Perú. Strike is currently funding AF through a loan agreement with AF and Mr
Hellsten, Strike’s Managing Director, is President of AF. These loans will be capitalised in mid-2012 under the 2009
Settlement Agreement between the AF shareholders (Capitalisation Date), unless Strike exercises the “shoot-out”
provision of the agreement. Assuming Strike does not exercise the “shoot-out”, at the Capitalisation Date the other
AF shareholder, D&C Group, has the right to make a top-up capital contribution to AF. Depending on the amount
contributed, this will result in D&C holding between 25% and 50% of AF.
1 Comprised of an Indicated Resource of 142.5Mt at 57.84% Fe and an Inferred Resource of 127.5Mt at 56.7% Fe.
2 At the date of this Report Strike in fact holds 56% of AF, having acquired the 12% stake formerly held by Iron Associates Corporation in July 2011, increasing
Strike’s holding from 44% to 56%. This acquisition was subject to an option for D&C to acquire 6% of AF from Strike. D&C has since given notice of exercise
of that option, but the option shares have not yet been transferred to D&C. After the transfer D&C and Strike will each hold 50% of AF.
3 The percentage of Strike’s shareholding in Apurimac Ferrum S.A., the company which holds these concessions, and see footnote 2.
4 On an undiluted basis. On a fully-diluted basis, which assumes the exercise of all Strike warrants in Cuervo and all Cuervo options and warrants held by third
parties, Strike would hold approximately 46% of Cuervo.
5 Under the “Shootout” provisions of the AF Settlement Agreement Strike may, but is not obliged to, make an offer to buy D&C’s AF. If Strike makes an offer D&C
must either accept the offer or buy Strike’s shares for a higher price per share.
Opaban 1 concession: outcropping massive haematite and magnetite mineralisation
5
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
Strike has continued to progress the Apurimac and Cusco Projects in the Southern Andes region of Perú. The
Apurimac Project comprises 72 concessions totalling approximately 59,000 hectares6 and the Cusco Project
covers 17,500 hectares, approximately 150 kilometres to the south-east of Apurimac.
Following a detailed review of the projects’ resource inventory and study programs in late 2010, the focus of
activities has moved from detailed project studies to exploration and resource expansion. The current mineral
resources at Opaban are high quality and form a sound basis for a potential iron-ore operation, however, additional
resources are required to justify the significant infrastructure costs and deliver a robust iron-ore business. The
Company’s geological team believe that the existing AF concessions hold strong potential for additional iron ore,
and has identified opportunities to acquire additional prospective ground within the region.
The principal activities undertaken during the year have been:
(cid:115) Establishment of a strong Perú-based management team within AF.
(cid:115) Development of constructive, sustainable relationships and programs with communities affected by the project
to facilitate approvals in line with exploration plans.
(cid:115)
Identify and pursue opportunities to consolidate the Company’s strong strategic position in iron ore and to
expand resources and exploration potential, with a view to outlining sufficient iron-ore mineralisation to support
a 15 – 20Mtpa iron-ore business through:
o Review and appraisal of the iron-ore potential within AF’s existing concessions and identification of priority
target areas.
o Acquiring additional shares in AF from minority shareholder Iron Associates Corporation.
o Development of alliances, partnerships and/or acquisitions with other concession holders in the region.
(cid:115) Completion of alternate production rate and project configuration studies to determine the preferred parameters.
These studies included:
o Production rates of 10Mtpa and 15Mtpa to complement the original 20Mtpa study.
o Additional metallurgical studies to determine product and processing options.
o Transport alternatives of rail and rope conveyor to supplement the original slurry pipeline option.
o Water supply and management studies.
o Scenario and financial modelling.
Initial Mineral Resource estimate for the Santo Tomas concessions at Cusco.
Initial appraisal of the base-metal and gold potential of the AF concessions, given their position within a major
copper, gold and silver province which extends into Chile, the world’s largest copper producer.
(cid:115)
(cid:115)
Locals and contractors – Apurimac Project
6
Strengthened AF Management Team
A key step in strengthening the AF team was completed in March 2011 with the appointment of Mr Thomas Kelly
as AF Chief Executive Officer. Mr Kelly reports to Mr Hellsten who is President of AF and Managing Director of
Strike. Mr Kelly is based in AF’s Lima office in Perú and has overall responsibility for the preparation and delivery of
the business plans for AF.
Mr Kelly holds a Masters degree in Mining Engineering from the Colorado School of Mines and has 35 years’
experience in mineral exploration, mine production, mineral industry consulting and corporate management. He has
worked in CEO and senior management positions with both large multi-national and smaller resource companies
in various countries. In these roles he has managed several large exploration projects and feasibility studies and
has held senior management positions in operating mines. His experience includes 12 years in senior roles in Latin
America, with the three years prior to joining AF based in Perú.
Mr Kelly is experienced in managing government and community relations for mining project development in Perú,
which makes him ideally suited to lead AF through the current resource expansion phase and into the feasibility
study and operational stages.
AF also added Australian geologist, Ian Cullen, to its Lima-based team. Mr Cullen has over 30 years’ experience
as a geologist, specialising in iron ore and gold. He has worked in leading roles with some of the world’s largest
producers of these minerals. Mr Cullen’s achievements include heading up exploration programs which resulted in
producing mines. His principal focus will be to advise on the regional iron-ore exploration potential and priorities for
AF’s Apurimac concessions and manage the exploration programs.
These appointments substantially complete the process of transferring day-to-day control of AF’s operations to
Lima and strengthening its Perúvian team, which is resulting in significant operational efficiencies for the Company.
Since joining AF Mr Kelly and Mr Cullen have undertaken management and operational changes which include
the further strengthening the local AF team. These changes are delivering significant benefits for AF and Strike,
including the identification and appraisal of the Cuervo Resources opportunity. In addition, their expertise, along
with that of AF’s other senior managers, has seen the advancement of the community and government relations
programs and a material improvement in the outlook for timely approvals for AF’s exploration programs.
6 Strike’s Apurimac Project comprises concessions held by AF and Strike Resources Perú S.A.C (SRP). AF holds an option to acquire the SRP concessions for
close to nominal value.
Opaban 1 concession: looking west
7
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
Perúvian Presidential Elections
Perú’s presidential elections were concluded in June 2011, resulting in the election of Mr Olanta Humala as Perú’s
President. Mr Humala formally took office on 28 July and has been providing progressive up-dates on his planned
programs and key cabinet appointments.
While Mr Huamala’s election had initially caused concerns about Perú’s ability to continue on its path of successful
economic growth, to date these concerns have largely been dispelled by Mr. Huamala’s actions subsequent to his
election. This has been borne out to date through his open support for the current macro-economic settings which
have led to Perú being the best performing economy in Central and South America over the past decade. He has
recently re-appointed the head of the Central Bank for a further 5 year term and established an experienced and
respected team of senior cabinet ministers.
Mr Humula has announced his main social programs will focus on the reduction of poverty and he intends to fund
much of this through the implementation of a mining tax.
Accordingly, the Board maintains the view that the medium- and long-term outlook for Perú is strong and it
represents an attractive jurisdiction for both exploration and operations in the resources industry.
Community Relations and Approvals
The approval processes for exploration and drilling programs in Perú are extensive and highly structured. These
processes are mandated by law and include both environmental and community approvals. While most government
approvals have a mandated time frame, community approvals are largely in the hands of the community authorities
and the General Assembly process which involves a formal meeting of the entire community.
The political climate in Perú associated with the lead up to the Presidential elections added complexity to AF’s
activities in the local communities. This impacted AF’s ability to engage with communities during the entire year,
initially during the lead up to the local and regional elections in late 2010 and then through the period of the
Presidential elections from April to June 2011. Since the election of Mr Humala as President the communities have
tended to refocus on local issues and the level of engagement has increased, with the AF community relations
team holding discussions with numerous communities regarding access to land for reconnaissance exploration and
drilling. Approvals have been received from a number of communities in both Apurimac and Cusco regions since
June 2011 and further approvals are expected going forward.
During the year AF played a lead role in the establishment of the Apurimac Working Group, a cooperative organisation
for resources companies to share learning points and experiences in their community programs. This group is
proving most valuable in assisting companies to ensure consistency of approach across the region and developing
Government Palace, Lima.
8
improved relationships with regional government. Founding members along with AF include Xstrata, Hothschild,
Buenaventura (Perú’s largest gold producer) and various other juniors.
AF established a comprehensive series of community programs at the Colcabamba Community during the drilling
programs from late 2010. These programs were designed as a template for all community programs and act as a
reference for other communities, to display AF’s professionalism and commitment to developing and implementing
community enhancement programs and becoming a valued partner of the communities.
The programs are all jointly agreed and developed with each community to ensure that they provide maximum
value and the best practical outcomes for the community. One key element of these programs is working with the
communities to develop and enhance the community’s ability to access existing government and other programs
and to establish their own community development plan.
Programs implemented at Colcabamba during the year included:
(cid:115) Knitting workshops for women to assist them to develop this into an economic activity.
(cid:115) Establishment of a facility for the elderly women of the community.
(cid:115) A visual health campaign with the support of the “Monseñor Enrique Pelach” Eyecare Centre, a part of the
Abancay Bishopric. Over a hundred people from the Colcabamba community attended the visual health
campaign, with several being sent on to Abancay for more specialised treatment.
(cid:115) Assistance with the development of the Colcabamba Community Development Plan.
AF anticipates that it will be granted access for initial reconnaissance geological and geophysical programs at the
majority of its Apurimac and Cusco concessions during the coming year. Geological teams and contractors have
been established to enable the commencement of these exploration programs shortly after approvals are received
and results are expected to flow progressively from the September 2011 quarter.
Formal discussions have commenced regarding exploration and drilling approvals for the Opaban deposits with
three communities. One of these communities, Antapata, has approved access for exploration, and work in this
area is expected to commence shortly. The discussions with the Huinchos and Huancabamba communities
are expected to proceed over the coming months. Following community access approvals AF will undertake
environmental studies required for the formal environmental approval from the central government and the local
community, which is expected to take in the order of 6 months, with drilling planned to commence during the first
half of 2012.
In the interim period AF anticipates drilling commencing at the Santo Tomas project in Cusco and at a number of
satellite concessions in Apurimac following completion of initial geological and geophysical targeting programs.
Apurimac Ferrum community initiative
9
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
Consolidation and Acquisition Programs
Consistent with its objective to expand its iron-ore resources, the Company has actively pursued a number of
opportunities to consolidate and expand its equity in prospective concessions within both the Apurimac and
Cusco regions. Successful transactions were competed with IAC, a shareholder in AF and Cuervo Resources
Inc., a Perúvian-focused Canadian mineral explorer, with several further opportunities actively being appraised. This
process is expected to continue over the coming year.
Purchase of AF shares from IAC
Strike executed an agreement with Iron Associates Corporation (IAC) to purchase IAC’s 12% interest in AF, the
Perúvian company through which Strike holds its interest in the Apurimac and Cusco projects in Perú. As a result
of this strategic transaction SRK’s shareholding in AF increased temporarily from 44% to 56% but will move back
to 50% in the short term, as detailed below.
Strike has been in discussions with the other AF shareholders over the past year to explore opportunities to increase
its shareholding in AF. This transaction forms part of the Company’s strategy to simplify the AF shareholding structure
and increase and consolidate its presence in the prospective Apurimac and Cusco regions of Perú.
The key terms of the IAC agreement are:
(cid:115) Strike has acquired IAC’s 12% shareholding in AF.
(cid:115)
IAC assigned to Strike a loan of US$5.245 million, including interest (AF-IAC Debt) owed by AF to IAC. This
loan is convertible to shares in AF in 2012 under the terms of the Settlement Agreement between the AF
shareholders.
(cid:115)
IAC held a right, in certain circumstances, to convert its AF shareholding to a royalty from AF’s future production.
This royalty right has now been extinguished.
(cid:115) Strike paid IAC US$1.2m in cash on the execution of the agreement and issued IAC 9 million Strike shares as
consideration under the agreement. These shares represent 6.3% of Strike’s issued capital.
The Company believes that this provides significant benefits for shareholders in both the short and longer term.
Initially, the simplification of the AF shareholding structure will improve operational efficiency and reduce risks during
the exploration and project execution phases. In addition, over the longer term it enhances Strike’s ability to attract
strategic partners to develop the Apurimac and Cusco Iron-Ore Projects.
IAC buy-out option and exclusivity agreement
Strike also signed an agreement with the other major AF shareholder, the D&C Group, giving Strike negotiating
exclusivity for 90 days (Exclusivity Period). Under this agreement the parties agreed to negotiate in good faith
AF prize donations to agricultural fair
10
the potential acquisition by Strike of D&C’s share in AF on pro-rata terms to the IAC acquisition. This agreement
provided that if D&C and Strike did not agree on the sale of D&C’s AF shares within the Exclusivity Period, D&C had
the option, exercisable within a further 10 days, to buy half of the AF shares which Strike acquired from IAC (i.e. 6%
of AF) plus half the AF-IAC debt. Negotiations for Strike to acquire D&C’s AF shares were unsuccessful and D&C
exercised the option, however, the option shares have not yet been transferred. Once that transfer is complete,
Strike and D&C will each own 50% of AF. D&C will pay Strike US$1.9 million for exercising the option.
Cuervo transaction
Strike entered into an agreement with Cuervo Resources Inc. (Cuervo) in July 2011 which gives Strike the option
to purchase up to 49.2% of Cuervo7 in return for Strike providing Cuervo with up to C$15m in debt funding.
Cuervo Resources Inc. (CNSX code: FE) is a mineral explorer listed on the Canadian National Stock Exchange
(CNSX) and also trades on the Frankfurt Stock Exchange. Cuervo is active in exploration for iron ore in Perú, most
particularly at its wholly-owned Cerro Ccopane project, located 65 km south of Cusco in southern Perú (see Figure
1 below) where it has delineated four zones of magnetite mineralisation. These zones host the prospects of Aurora,
Orcopura, Huillque and Bob 1 (see Figure 2, below).
The Cerro Ccopane property covers 14,000 ha (140 square kilometres) of largely contiguous mineral concessions.
At Cerro Ccopane (Figure 2) drilling in 167 holes in three zones has identified high-grade magnetite mineralisation.
No drilling has been undertaken at Bob 1 to date.
Figure 1 - Regional plan showing Cuervo (blue) and AF (red) concessions and major Cu/Au deposits.
11
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
The Orcopura Zone has a reported JORC-Code-compliant mineral resource estimate of 106.4 million tonnes at
45.3% Fe, details of which can be found in Table 2 below.
Table 2 – Cerro Ccopane Iron-Ore Project – resource inventory as at April 2009
Prospect
Orcopura
Orcopura
Orcopura
Orcopura
Orcopura
Classification
Measured
Indicated
Sub-total (Measured + Indicated)
Inferred
Total
Mt
19.7
35.9
55.6
50.8
106.4
Fe%
48.3
45.9
46.8
43.7
45.3
S%
2.4
2.6
2.5
3.1
2.8
The mineral resource estimate has used a database consisting of the assay results of sampled intervals from 121
diamond-drill holes totalling 15,725 metres. The Orcopura mineralisation has been tested over a strike length of
approximately 800 metres and remains open along strike and down dip in several areas.
The Orcopura resources exhibit a clear geophysical expression with strong magnetic and gravity anomalies
coincident with the iron-ore mineralisation.
Figure 2 - Magnetic image of Cerro Ccopane Project showing existing drilling, prospects and targets
7 On an undiluted basis. On a fully-diluted basis, which assumes the exercise of all Strike warrants in Cuervo and all Cuervo options and warrants held by third
parties, Strike would hold approximately 46% of Cuervo.
12
In addition, limited initial drill testing of the magnetic anomalies at the Huillque and Aurora prospects has intersected
broad zones of iron-ore mineralisation, however insufficient drilling has been undertaken to deliver a resource
estimate at this time. Better results from drilling at these zones include:
Table 3 – Selected intercepts from Huillque and Aurora prospects
Hole ID
Interval (m)
Width (m)
HDH – 01
62.7 – 138.5
HDH – 03
129.80 – 228.50
HDH – 12
130.25 – 181.10
78.85
98.70
50.85
HDH – 17
21.20 – 132.30
110.60
ADH – 01
8.70 – 87.20
ADH – 01
17.70 – 59.70
ADH – 06
35.50 – 114.00
78.50
42.00
78.50
True
Width
53
69
35
55
29
68
Fe%
S%
P%
Prospect
62.09
54.55
53.66
49.92
50.77
58.73
51.05
0.80
4.14
1.51
2.27
3.64
3.71
3.46
0.03
0.04
0.05
0.05
0.03
0.02
0.03
Huillque
Huillque
Huillque
Huillque
Aurora
Aurora
Aurora
Ground geophysical surveys (magnetic and gravity) have also identified two additional target zones on the property.
These are known as Bob 1 and Huillque Norte (see Figure 2) both of which are considered high-priority drilling
targets, with the following significant features:
(cid:115) At Bob 1 coincident magnetic and gravity anomalies have been identified over 6 kilometres (km) of strike with
strong indications of at least 10 km of strike potential. This compares with the Orcopura magnetic anomaly
(1.5km) and the approximately 600 metre strike length of the current resource. The strength and extent of the
geophysical anomalies are very impressive and the presence of outcropping massive magnetite ironstones
above the anomaly means this represents an exciting drilling target. Bob 1 will be the initial focus for Cuervo’s
Stage 1 drilling program.
(cid:115) Huillque Norte has a strong gravity anomaly with sporadic magnetic highs which lies immediately north of the
Huillque mineralised zone. Further detailed surveying and mapping is required prior to drill testing. At this time
Cuervo believes this area has potential for copper and gold mineralisation as well as iron ore but further work is
required to define specific drilling targets.
Cuervo has also completed high-quality studies on the Cerro Ccopane Project including metallurgical testwork,
transport studies and concept-level project assessment. The results are consistent with the outcomes from similar
work by AF on its Apurimac and Cusco concessions and indicate the potential to establish a robust 15 – 20 million
tonnes per year operation if sufficient resources can be outlined.
Aurora prospect magnetite outcrop, Cerro Ccopane Project (Cuervo)
13
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
Mineral processing studies have shown that standard grinding and magnetic separation will produce a high-grade
(i.e. 67% to 71% Fe) magnetite ore concentrate containing acceptable levels of impurities in the majority of samples.
Iron recoveries to the concentrate are very high, with average mass recoveries of 75%, which is similar to that seen
for AF’s high-quality Opaban deposit. Similarly to AF’s projects, there is evidence the coarse-grained nature of the
mineralisation will enable good-quality concentrates to be delivered with grind sizes up to <1mm. Further work
is planned to determine the best way to capitalise on this characteristic. Coarse grinding provides potential for
significant operating and capital cost savings relative to iron-ore projects that require energy-intensive, fine grinding
prior to beneficiation.
As the Orcopura iron ore contains sulphur and copper, typically present at concentrations of 2.5% S and 0.10%
Cu, these must be removed to deliver an attractive product for the steel industry. In some concentrate samples the
copper and sulphur levels were higher than the target range, therefore sighter tests were undertaken to determine
the best way to reduce these elements to acceptable levels. Initial tests indicate this can be achieved by further
grinding and either magnetic or floatation separation. Additional studies carried out by Cuervo have also shown the
resulting concentrates are amenable to the production of commercial-grade pellets.
Two transportation studies to date have shown that there are no unique logistical challenges that would prevent the
conceptual development of a mining project. The construction of a direct slurry pipeline to tidewater was identified
as the most cost-effective alternative for bulk transport.
Preliminary concept-level studies for a 20Mtpa operation have produced capital and operating cost estimates
similar to those from AF’s studies for Apurimac and indicate a robust business can be established based on 15 – 20
years’ operational life.
The Cerro Ccopane Iron-Ore Project overlies the contact zone between the Tertiary-age Apurimac Pluton and an
older outlier of limestones belonging to the Arcurquina Formation of Cretaceous age. This geological setting is
highly prospective for the discovery of additional iron skarn mineralisation along the geological contact as well as
hydrothermal iron mineralisation within host intrusives.
Ground geophysical surveys (magnetic and gravity) have been successful in the targeting of the magnetite
mineralisation. The three mineralised zones delineated by drilling to date at the Cerro Ccopane property all exhibit
the same geophysical expression with strong magnetic and gravity highs. While caution must be used in interpreting
gravity data in steep terrain such as seen in the Perúvian Andes, the mineralisation identified to date also has a
strong magnetic signature (see Figure 2, above). Cuervo intends to continue to use both magnetic and gravity data
to screen their concessions and identify drilling targets.
To date exploration and diamond drilling has been undertaken at the Aurora, Orcopura and Huillque prospects;
however resource estimates have only been completed at the Orcopura Prospect. Successful drilling campaigns
targeting the geophysical anomalies have been completed at the Aurora and Huillque prospects, where significant
Diamond drilling at Orcopura, Cerro Ccopane Project (Cuervo)
14
intervals of magnetite mineralisation have been intersected. The Aurora prospect is defined by a geophysical
anomaly similar in size to the Orcopura Prospect. The magnetite mineralisation at Aurora and Huillque prospects
remains open along strike and down dip. At both prospects there is good potential to extend the mineralisation
targeting the untested portions of the geophysical anomalies. Further drilling is scheduled to improve the geological
understanding of these prospects.
Of particular interest is the significant geophysical magnetic and gravity anomaly located in the northern portion of
the property, which delineates the Bob 1 target zone. This geophysical anomaly is over 6 km long and remains
open to the south (see Figure 2, above) with strong indications of at least 10 km of strike potential. Recent field
work has mapped extensive magnetite outcrops at Bob 1 typical of the known zones of mineralisation at Orcopura,
Huillque and Aurora.
In addition, regional appraisals based on satellite imagery and regional geology have highlighted several areas in
the western half of the Cuervo concessions which warrant detailed exploration including geological mapping and
ground geophysics.
In addition to the Cerro Ccopane property Cuervo holds several concessions within Northern and Southern Perú.
The Northern group of concessions have access to excellent infrastructure, being located close to the Pacific coast
and the Pan-American Highway. They are also located at relatively low altitudes in arid areas, which allows for
year-round access. Small-scale mining operations have occurred on some of these concessions in the past. Iron
mineralisation consists of massive magnetite, hematite or goethite. The most advanced of the Cuervo properties
in northern Perú is the Chimbote concession group. These concessions are located approximately 40 km from the
steel foundry of Siderperú located at Chimbote, Ancash.
Cuervo continues to carry out reconnaissance field activities to evaluate these concessions.
Further information on Cuervo can be found on its website at www.cuervoresources.com.
Project Optimisation Studies
As part of its exploration and project assessment programs, AF completed a number of project optimisation studies
during 2010 and early 2011 to determine the optimum configuration for a potential iron-ore business in southern
Perú. These programs assisted in the establishment of the exploration target and key drivers for success.
Alternative mine production study
Building on the initial Pre-feasibility Study into a 20Mtpa iron-ore operation completed in 2008, AF undertook studies
to determine if lower production options would provide benefits for the Apurimac project. Ausenco Engineers were
appointed to undertake the studies on the alternatives of producing 10 and 15Mtpa as a concentrate or combined
lump and fines products.
Looking east to Opaban 1
15
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
The key outcomes were:
(cid:115) Strip ratios at Opaban of between 1.2 and 1.8 when a practical mine design is applied.
(cid:115) A high conversion ratio (>80%) of resources to economically-recoverable material (design pit) is likely based on
current operating costs8.
(cid:115) Mine sensitivity analysis indicates a robust project, relatively insensitive to mining costs, pit design parameters
and operating costs.
(cid:115) A potential mine life based on an optimised pit on current Indicated and Inferred Resources of 18 yrs for 10Mtpa,
12yrs for 15Mtpa and 9 yrs for 20Mtpa production rates.
(cid:115) The process plant and port facility for the 10 and 15Mtpa options study offer advantages in reduced sizing of
equipment and, for the lump and fines option, a considerably simplified process circuit resulting in reduced
capital and operating costs.
(cid:115) A rope conveyor (Rope-Con by Doppelmayr) was identified as a potentially superior ore and product transport
option to rail or a slurry pipeline. A rope conveyor requires lower capital expenditure than rail. Rope conveyors
also offer the ability to transport multiple product types which, like rail, would facilitate the more conventional,
lower-cost lump and fines iron-ore product options. Rope conveyors offer large distances between supports
and are currently used in similar downhill material transport applications over large distances in rugged terrains,
specifically bauxite ore transport in the Caribbean. Opportunities have also been identified for more favourable
locations for some of the process plant.
Rail option study
AF commissioned Ausenco Sandwell to conduct a pre-feasibility level study to determine whether transporting an
alternative product mix of lump and sinter feed by rail is preferable to transporting slurry via a pipeline. The rail study
considered the options of transporting 20Mtpa, 15Mtpa and 10Mtpa – the same options being considered by the
alternative mine production study. Key outcomes are:
(cid:115) A final aligned track distance of 574km.
(cid:115) The rail option requires 120 tunnels with a total distance of approximately 77km.
(cid:115) 18 major bridges are required with spans ranging from 45m to 980m.
(cid:115) The estimated time required to design and construct the rail line is 4 years.
(cid:115) The total capital cost for a rail line with 20Mtpa capacity is US$3 billion +20%.
(cid:115) The operating cost is $5.90 per tonne +/- 20% for 20Mtpa of product.
8 The mining study by SRK Consulting includes both Inferred and Indicated Resources. Although the pit optimisations and preliminary design pits are indicative
of the potential economically-recoverable material, they do not represent Ore Reserves and further drilling is required to confirm the results.
Panoramic view of Cusco project
16
This option is unlikely to be attractive due to the high capital cost and project execution risk and could not be
supported by the AF project alone.
Rope conveyor (Ropecon) concept study
AF commissioned a study on a Doppelmayr rope conveyor with Ausenco and Doppelmayr. This program was
completed in late 2010 with the key outcomes being:
(cid:115) A Ropecon option is suitable for the transport of 10 to 20Mtpa of crushed ore, lump and fines or concentrate
products from the mine site to the port.
(cid:115) The route length of the conveyor is approximately 288km, requiring 31 Ropecon sections.
(cid:115) The total installed cost estimate for the Ropecon transport system is US$2.1B +/-35%.
(cid:115) The operating cost estimate for the Ropecon transport system is $1.1/t +/-35%. This includes a credit associated
with the impact of power generation on the downhill sections.
Importantly, the capital and operating costs for the Ropecon option are significantly lower than for the rail transport
system. Accordingly, it is expected to deliver a material improvement in the project economics compared to the
rail transport option.
The Ropecon is capable of transporting both crushed ore and all of the product alternatives (lump, fines and
coarse concentrate) to the port. This potentially provides operational flexibility as well as allowing alternative project
configurations such as locating all of the processing facilities, or simply the more complex concentrator portion of
the project, at the coast. In addition, this may enable the deferral of the capital costs for the concentrator until after
the high-grade material is mined and processed. These options are expected to deliver capital and operating cost
savings for the project.
This alternative also has the potential to significantly reduce the water requirements of the project when compared
to the slurry pipeline option. As water is a key factor in community sentiments in Perú, the Ropecon has the
potential to simplify the community approvals process for the project.
The Ropecon is expected to provide the preferred ore transport option from satellite deposits to a processing facility
at Opaban due to its suitability for traversing rugged terrain and its low operating cost.
The Ropecon study is only at concept level at present and a large volume of additional work is necessary to confirm
that it is feasible from both the construction and operational perspectives. One key risk area for the Ropecon
option is the fact that multiple-unit Ropecon facilities are not yet operational on a commercial scale. While this risk is
expected to be addressed during the remaining exploration and study phase of the project, AF believes it is prudent
to retain the slurry option as the project base case at this point in time.
Example of a rope conveyor in use in hilly terrain in Papua New Guinea
17
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
Transport option analysis
AF completed preliminary analysis of the potential transport options available for Apurimac Project late in 2010.
This process compared project configurations available with each of the transport options, specifically the slurry
pipeline, rope conveyor and railway, at a range of production rates. The following points summarise the outcomes
from this review:
(cid:115) Slurry pipeline remains the preferred base case, with the best financial and risk profile.
(cid:115) A Ropecon system offers attractive project configurations if a lump and fines product is feasible for AF ores. This
option carries an elevated risk profile due to the length of the rope conveyor and the high number of transfer
points required.
(cid:115) The high capital costs of the railway project configurations lead to these offering the poorest financial returns.
A railway alternative cannot be supported by the AF project alone.
(cid:115)(cid:0) A production rate of 15 to 20Mtpa is required to provide robust financial returns using current long-term iron-ore
price forecasts. To achieve a mine life of 15 - 20 years at least 500Mt of iron-ore feed is required.
The option analysis provided the basis for the strategic review undertaken during the first half of 2011 which led to
the focus on resource expansion and exploration and deferral of further major studies until AF has outlined sufficient
iron ore to support a 15 – 20Mtpa operation.
Detailed water study
Given the sensitivity in Perú to the use for mining of large quantities of water, AF commissioned Golder Associates,
Perú to complete a review of the water supply options and options for managing filtrate from the Apurimac Project’s
slurry pipeline (base case) alternative. Phase 1 of the Water Study involved a desktop review of the existing supply
and discharge options, development of potential alternatives and the recommendation of preferred options.
Key outcomes from the Phase 1 Water Study are:
(cid:115) Multiple options exist for the collection and storage of surface water to meet the Project’s water supply
requirements. The capture and storage of surface water is the lowest capital and operating cost option for
water supply to the Project.
(cid:115) Re-use of waste water from the city of Andahualyas has the potential to supplement or offset a small amount of
the Project’s water requirements.
(cid:115) Recycling of filtrate from the port to the mine site is technically feasible, although this is clearly the highest capital
and operating cost option available.
18
(cid:115)
Irrigation of trees planted for this purpose is the best option to manage the discharge of filtrate at the port site,
from both a capital and operating cost perspective, based on an assumed mine life of 20 years.
(cid:115) Further investigation of evaporation basins near the port site, as either support or replacement for irrigation, is
recommended once more information on the likely filtrate quality becomes available. If no additional treatment
of filtrate is necessary this would be the best option.
Phase 2 of the study, which involves a detailed assessment and preliminary engineering for the most attractive
options, would be undertaken as part of a detailed Pre-feasibility Study work program.
Preliminary metallurgical testwork program
In the December 2010 quarter AF commenced a preliminary metallurgical testwork program to explore the potential
to generate suitable direct-shipping ore or DSO (lump and fines) products from high-grade ores at the Opaban
concessions. This testwork program was completed by Transmin Metallurgical Consultants in Lima, using historical
core samples from previous drilling campaigns at Opaban. The preliminary program also included a number of
Davis Tube (DTR) tests on magnetite ores of varying iron and sulphur grades and coarse grind sizes of P80 at 250
and 500μm to explore the performance of lower-grade ores.
In summary, the results are:
(cid:115) DSO products from high-grade ores:
o High-grade samples (predominately Fe> 61%) performed very well and, on average, generated a lump
(+6.3mm) split of approximately 88% by mass after a -30mm crush. The performance of the high-grade
lump and fines samples is shown in Figure 3 below.
o Segregation of SiO2 and Al2O3 to the finer fractions was also observed and this trend generally increased with
the level of these impurities in each sample. This trend is shown in Figure 3 below and supports previous
testwork completed on Opaban ores.
o While no lump degradation work is planned as a part of the preliminary campaign the initial results from the
high-grade DSO product testwork are positive. Further work will be completed as a part of the Pre-feasibility
Study, to explore potential value creation options associated with the initial production of lump and fines
products. Further DSO product test work will also be carried out when new samples can be generated from
the proposed Opaban drilling program.
Figure 3 – High-grade samples: Potential DSO product results
19
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
(cid:0)(cid:0)(cid:115) DTR testwork on magnetite ores:
o Samples were divided into high- and low-sulphur groupings, with 10 low-sulphur and 6 high-sulphur samples
tested at 2 grind sizes: P80 of 250 and 500μm.
Table 4 – High-level summary of DTR results
Characteristics
Head Grade (Calc) % Concentrate Grade Fe% Mass Recovery %
Low-sulphur magnetite - 250μm 40.6 to 65.9%
Low-sulphur magnetite - 500μm 41.5 to 64.6%
High-sulphur magnetite - 250μm 48.1 to 65%
High-sulphur magnetite - 500μm 49.8 to 66.4%
60 to 68%
60 to 68%
62 to 68%
62 to 68%
62 to 93.7%
61 to 92.8%
70 to 92.6%
72.5 to 95.4%
o Overall, the DTR performance across the range of samples tested was very good, with average mass
recovery for the low- and high-sulphur magnetite samples of 79% and 72% respectively. Iron recoveries
were also very good, with an average of 90% and 81% respectively for the low- and high-sulphur samples.
o DTR mass and iron recoveries were similar for the low- and high-sulphur samples at the two grind sizes
tested.
o DTR results support previous testing completed on Opaban ores for the 2008 Study. Initial indications
suggest there may be potential to increase the grind size to a P80 of 500μm to generate an initial concentrate
and potentially reduce the grinding power requirements for Opaban ores.
Resource Estimate, Cusco (SRK 50%)
During the June quarter Strike released the initial resource estimate for the Santo Tomas concessions located in the
Cusco Project area. This resource estimation was undertaken by SRK Consulting in conjunction with AF geologists
and resulted in a JORC-Code-compliant Inferred Resource of 104.4 million tonnes of iron-ore (refer Table 5 below).
The database used to calculate the iron mineral resources at Santa Tomas comprised of 168 diamond core and
reverse circulation drill holes totalling 16,935 metres.
Table 5 – Santo Tomas Project – Inferred Resource estimate – 0% Fe cut-off
Tonnes (MT)
104.4
Fe %
32.62
S (%)
0.53
Al2O3 (%)
3.19
LOI (%)
0.21
P (%)
0.035
SiO2 (%)
21.66
AF geologists mapping in the field
20
The style of the mineralisation is similar to that seen at Opaban, being coarse grained and dominated by magnetite.
Preliminary metallurgical tests indicate a concentrate grade of >65%Fe can be produced using conventional grinding
and magnetic separation processes.
Higher-grade, haematite-rich zones have been identified in the logging in the upper portions of the deposits and
further work is planned to fully delineate this material. Most of the resource zones remain open along strike and at
depth and further drilling is planned in these areas during the 2011/12 financial year.
In addition to the above resource, the drilling campaign at Santo Tomas identified iron mineralisation which is not
sufficiently well defined to be included in the initial Inferred Resource estimate due to the relatively broad spacing of
some of drill holes. This potential is estimated at 23 – 26Mt at 30 – 35%Fe.
Further to this, a review undertaken on the Santo Tomas geophysical and geological data has also identified several
areas with potential to increase the current iron resource through additional drilling. These target areas are shown
in Figure 4 (below) and represent untested magnetic and gravity anomalies as well as extensions to the known
mineralisation.
(The potential quantity of the target iron-ore mineralisation is conceptual in nature. There has been insufficient
exploration to define an additional Mineral Resource in relation to that target iron ore. It is uncertain whether further
exploration will result in the determination of an additional Mineral Resource in relation to that target iron ore.)
Figure 4 – Total magnetic field image showing mineralisation envelopes (inferred and potential) and
target areas (circled) to be drilled.
Colcabamba Project (SRK 50%)
A diamond drilling program comprising eight (8) diamond drill holes for a total of 2,336 metres was undertaken
at the Colcabamba Project approximately 30 kilometres south of Opaban to test several zones of outcropping
magnetite ironstone associated with a large magnetic anomaly. The objective was to outline additional iron-ore
mineralisation which could supplement the resources defined at the Opaban Project.
All drill holes intersected several zones of magnetite ironstones at depth with the best results of a composite iron-
ore interval of 57m at 49%Fe in two zones in COL 010. These zones were separated by an interval of less than 5
metres thickness containing lower-grade iron which was not assayed. Taking a conservative approach of assigning
20%Fe to the lower-grade zones the combined interval is 61.4metres at an average grade of 47.8%Fe. Likewise
a composite interval of 36 metres at an average grade of 56%Fe was intersected within 3 separate zones in COL
007. Using 20%Fe for the lower-grade zones results in a combined interval of 46.9 metres at an average grade of
48%Fe. Better results from the drilling program are provided in Table 5.
21
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
The mineralisation style is similar to that seen at Opaban, being coarse grained and dominated by magnetite. While
no metallurgical testwork has been undertaken to date it is expected this material would have similar characteristics
to Opaban and produce high-grade iron concentrates at coarse grind sizes (0.5 – 1 mm). Similar to the Santo
Tomas mineralisation the iron ore at Colcabamba contains elevated sulphur levels which would require additional
processing to produce a high-quality concentrate.
Overall the results at Colcabamba indicate that, while good-quality iron ore is present, the width of these zones at
depth is narrower than seen in the surface outcrops and the likelihood of outlining significant tonnages of iron ore is
low. Further work on this prospect is likely to focus on the assessment of the base metal potential.
Table 5 – Colcabamba drilling results (extract)
Drill hole
From (m)
To (m)
Interval (m)
Fe%
COL-001
COL-002
COL-003
COL-003
COL-007
COL-007
COL-007
COL-010
COL-010
124.6
150.3
45.8
2.60
56.0
8.60
12.60
19.50
125.60
134.60
139.60
152.30
158.20
172.45
81.00
106.20
110.30
142.40
25.7
10.2
6.0
6.9
9.00
12.70
14.25
25.20
32.10
47.8
56.9
59.7
46.9
48.7
59.7
58.5
50.9
49.0
Al2O3 (%) SiO2 (%)
7.24
1.54
1.35
1.70
3.40
1.90
0.82
0.86
2.03
1.45
8.55
7.89
17.6
10.48
4.99
6.27
12.64
8.33
S (%)
P (%)
3.7
2.6
0.04
0.06
5.49
6.18
4.98
6.22
6.36
0.017
0.003
0.02
0.03
0.035
0.024
0.012
0.022
0.021
Regional Assessment for Iron and Copper-Gold Potential
A regional assessment of the potential for iron ore, base metals and precious metals across the Apurimac and
Cusco Project areas was completed during the June quarter. This program was aimed at establishing the key
controls for iron-ore and base-metal mineralisation within the region as well as the review of previous exploration
data by AF and others. This work was designed to enable priorities to be established for exploration as well as
specific target areas where more detailed work and drill testing is warranted.
Key findings include:
(cid:115) The region contains several high-grade magnetite deposits, with Opaban being the largest and highest quality
resource identified to date. Exploration potential for additional “satellite” iron-ore deposits within 50 kilometres
of Opaban is considered very high.
Environmental remediation works
22
(cid:115) The AF concessions lie within the Andahuaylas-Yauri copper-iron belt which hosts major copper deposits
including Las Bambas and Tintaya as well as several major base- and precious-metal projects.
(cid:115) The broad geological, alteration and geochemical signatures recognised within the AF concession areas are
typical of Andean porphyry copper systems and iron skarn systems.
The review also highlighted several areas representing high-priority exploration targets for both iron ore and base
metals which warrant further detailed exploration and drill testing. The key target areas identified to date are
outlined below.
The Santo Tomas prospect (SRK 50%)
The prospectivity of these concessions for iron ore has been well established for some time and a preliminary
resource estimate has been undertaken as reported above. The drilling programs to date have tested 30 – 40%
of the target area for iron ore and further drilling is planned over the next 6 – 12 months to test the remaining high-
priority target areas.
In addition, the database review highlighted significant intervals of elevated copper and silver from previous drilling
completed during 2008 testing iron-ore targets. These intersections include:
(cid:115) CQ 0027; 77.45 – 112 metres (34.55m) at 0.22%Cu and 102.6 – 106.6 metres (4m) at 60g/t Ag
(cid:115) CQ 0031; 61.8 – 96 metres (34.2m) at 0.31%Cu
(cid:115) CQ 0048; 32.7 – 42.7 metres (10m) at 72g/t Ag
(cid:115) PIS 0150; 28 – 46 metres (18m) at 1.0%Cu.
Accordingly, the results from a reconnaissance ground IP survey completed on the Santo Tomas concession group
in August 2006 were reassessed. Three regional lines were surveyed at 1km line spacing and station spacing
of 500 metres. While the data is broadly spaced it identified a strong north-south trending chargeability high
coincident with the western ironstone outcrops. This anomaly remains open to the south and north.
IP is commonly used as the key exploration tool for copper mineralisation in South America as it can locate
disseminated sulphide occurrences which typically occur as part of large porphyry copper systems.
Figure 5 – Santo Tomas summary plan with drill holes, magnetic (purple) and IP (yellow) anomalies
23
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
The initial drilling of this zone was targeted at testing the iron-ore potential and hence the holes were relatively
shallow (generally less than 100 metres’ total depth) therefore the source of the anomaly is unlikely to have been
intersected by this drilling. Nevertheless PIS 0150, which lies on the southernmost line of the original survey,
intersected 18m at 1.0%Cu from 28 metres and was completed at only 50 metres depth. No deep drilling has
been undertaken south of this hole.
Figure 5 shows the locations of the IP anomaly and the elevated copper results. Significantly there is a cluster
of high copper and silver values and old gold workings to the south of the existing IP survey. AF is planning field
checking of the target area and additional IP surveying of the concessions prior to drill testing of the best targets.
While the results are early stage and significant follow-up is required, the combination of location within a world-
class copper province, attractive geophysical signatures, prospective geology and widespread, strongly anomalous
copper results with some potential economic-grade copper and/or silver is considered most encouraging.
Coriminas prospect (SRK 50%)
At the Coriminas concession group located approximately 50 km south of the Company’s Opaban Project, a similar
review of previous AF drilling results identified significant iron intersections in the northern portion of the concessions
over a strike length of 500m. Significant intersections include:
(cid:115) COR 0001; 0 – 65.4 metres (65.4m) at 52.2%Fe
(cid:115) COR 0004; 0 – 33.5 metres (33.5m) at 56.5%Fe
(cid:115) COR 0012; 0 – 38.3 metres (38.3m) at 61.2%Fe
(cid:115) COR 0013; 0 – 28.8 metres (28.8m) at 60.9%Fe and 33.0 – 74.50 metres (41.5m) at 51.4%Fe.
The iron mineralisation consists of massive magnetite interpreted as an iron skarn and remains open at depth and
along strike. Further field work is planned to determine if the potential of this area is at least 50 million tonnes
of iron mineralisation with an average grade of at least 45%Fe, which is the minimum considered attractive as a
satellite mine for a potential operation at either Apurimac or Cusco. If this potential is confirmed, further drilling will
be undertaken to outline the extent of the mineralised system. Significant intersections and geophysical targets are
shown in Figure 6 below.
Figure 6 – Coriminas Project summary plan
The review also identified a large area in the southern
portion of
the concession containing anomalous
copper and silver results in scout drilling. These results
are complimented by elevated gold results (up to 4 g/t
Au) from costean sampling in the same area and are
coincident with a strong IP chargeability anomaly which
remains open and is strengthening to the south east.
Better results from the scout drilling include:
(cid:115) COR 0023: 0 – 8.1metres (8.1m) at 0.16% Cu and
3.7g/t Ag.
(cid:115) COR 0023:14.1 – 32.4 metres (18.3m) at 0.19%Cu
and 7.6g/t Ag.
AF plans to extend the IP survey to the south and east
and conduct field checking prior to drill testing of the IP
anomaly and extension drilling at the iron-ore target, if
warranted following the assessment of the potential.
Regional satellite imagery
To assist with the regional analysis a broad regional study
was completed using medium resolution LANDSAT and
ASTER satellite imagery. This approach used interpreted
structural and alteration mapping to outline a number
of target areas of interest and has been successful in
outlining zones of hydrothermal alteration and iron-oxide
abundance associated with skarns, epithermal-style
mineralization and/or volcanic centres.
Future work planned to commence during the September
quarter includes:
24
(cid:115) Ground checking of target areas by geological mapping and surface sampling.
(cid:115) Acquiring geochemical and geophysical data over interpreted alteration anomalies.
(cid:115) Acquiring high-resolution topographic data to assist in the interpretation of geomorphological features.
(cid:115) Examine the suitability and acquisition of hyper-spectral airborne data over target areas to assist in defining in
detail the alteration and mineralogy of target areas.
A review of the current AF geophysical database was also undertaken in support of the regional appraisal. The
work consisted of a re-interpretation of the GPR helicopter magnetic survey which was completed in 2008 over a
portion of the Apurimac concessions and an evaluation of the ground magnetic and IP surveys on prospects in both
the Apurimac and Cusco regions.
The review made a number of recommendations which include:
(cid:115) Completing additional high-resolution ground magnetic surveys at Santo Tomas and Coriminas to assist in
defining extensions of existing mineralisation and to define drill targets.
(cid:115) Ground magnetics over target areas defined by the remote sensing work.
(cid:115)
IP surveys at the Coriminas, Santo Tomas and Colcabamba prospects to close off the existing IP anomalies and
to generate drill targets for porphyry copper mineralisation.
These activities have been included in the work program and budget for the 2011/12 financial year.
AF Dispute with Millenium
On 8 October 2010 AF commenced arbitration proceedings against Perúvian company Millenium Trading SAC
(Millenium) to settle the terms on which Millenium may conduct a small-scale mining operation on an AF concession.
Under a 2006 agreement under which AF acquired certain mineral concessions (Option Termination Agreement)
AF agreed to permit Millenium to mine up to 400,000 tonnes of iron ore per annum for 5 years on an unspecified AF
concession, on terms to be agreed by subsequent negotiations (Mining Agreement). In return Millenium agreed
with a third party, Minera los Andes y el Pacifico (MAPSA), to relinquish options over certain mineral concessions
to enable MAPSA to sell them to AF.
AF and a Millenium-appointed party subsequently commenced negotiations for a Mining Agreement. The Millenium
party ceased negotiating in 2007 with no agreement having been reached. In late 2010 Millenium re-asserted
its right to enter into the Mining Agreement with AF but also rejected AF’s approaches to enter into good-faith
negotiations for that purpose.
Opaban Project outcropping massive magnetite mineralisation
25
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
The Option Termination Agreement provides that either party may appoint arbitrators to resolve the terms of the
Mining Agreement if the parties have not resolved the matter by negotiation. AF considered that it was appropriate
to refer the matter to arbitration given that the terms of the Mining Agreement were not resolved by negotiation in
2007 and given Millenium’s refusal to re-open good-faith negotiations in 2010.
After AF commenced arbitration Millenium commenced court proceedings claiming that the Option Termination
Agreement should be set aside. AF has had legal advice that it has good prospects of defeating Millenium’s claim.
AF has asked the court to decline jurisdiction over Millenium’s claim on the basis that arbitration is the proper forum
for that dispute according to the Option Termination Agreement. A decision on that question is pending.
A mining operation of the type contemplated by the any Mining Agreement will not materially affect AF’s own
proposed mine.
JORC Code Competent Person Statements
The information in this document which relates to Mineral Resources at the Apurimac, Cusco and Cerro Ccopane
projects has been reviewed and confirmed by Mr Ian Cullen, B.Sc. (Geology), who is an employee of Strike
Resources Ltd and is a member of the Australasian Institute of Mining and Metallurgy. Mr Cullen has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity
which he is undertaking, to qualify as Competent Persons as defined in the 2004 Edition of the “Australasian Code
for Reporting of Mineral Resources and Ore Reserves (the JORC Code).” Mr Cullen consents to the inclusion in this
document of the matters based on this information in the form and context in which it appears.
The information in this document which relates to exploration results at Colcabamba, Santo Tomas and other AF
concessions has been compiled by Mr Ian Cullen, B.Sc. (Geology), who is a member of the Australasian Institute
of Mining and Metallurgy and is an employee of Strike Resources Limited. Mr Cullen has sufficient experience
which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which
he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for
Reporting of Mineral Resources and Ore Reserves (the JORC Code).” Mr Cullen consents to the inclusion in this
document of the matters based on this information in the form and context in which it appears.
BERAU THERMAL COAL PROJECT (EAST KALIMANTAN, INDONESIA)
Overview of previous studies (2009 – 2010)
The Berau Project is located 40 kilometres south-west of Tanjungredeb (Berau) and 350 kilometres north of
Balikpapan, East Kalimantan, Indonesia. Strike has a 100% interest in the rights to mine a mineral concession (IUP)
and sell the product, subject to payment of a royalty to the IUP owner.
The project straddles the Kelai River with the focus for both exploration and studies being initially the Nyapa West area
on the western side of the river which hosts over 50% of the resources and has simpler access (see Figure 7 below).
Berau
26
Figure 7 – Berau drilling and geology map
A series of feasibility level studies were completed by Strike in 2009 based on mining and transporting run-of-
mine coal by truck approximately 30 km along a proposed haul road to a barge port to be constructed on the
Segah River, where it will be crushed and stockpiled prior to loading on barges. Barges will then transport the coal
approximately 90km to the coast and then on to a trans-shipment point 30km offshore, where it will be off-loaded
to ships for delivery to customers.
The target production was 1.5 Mt of coal in the first year, expanding to produce at a rate of up to 3 Mtpa in
subsequent years. The run-of-mine coal product is expected to have a medium calorific value of approximately
5,550 kcal/kg (gar) with low sulphur (0.66%S as received), ash of 7.3% and total moisture of 16.6%.
The development timetable is assessed at approximately 8 months from receipt of development approvals to
production with first shipment of product 2 months after completion of construction.
The study results indicated the project is relatively simple technically and delivers robust financial returns with an
estimated capital cost of approximately US$20 million and operating costs estimated at US$40 – 45 per tonne
based on a production rate of 3 Mtpa.
Project approvals
The Project’s Environmental Impact Analysis (Analisis Mengenai Dampak Lingkungan or AMDAL) was approved by
the Regent of Berau in January 2010.
In February 2010 the Berau project coal concession was converted to a Mining Production Operations Licence
(Izin Usaha Pertambangan Operasi Produksi or IUP Production Operations) under Indonesia’s new Mining Law.
Obtaining the IUP Production Operations is a key pre-requisite for the conduct of mining activities. This licence
allows the mining and sale of coal, subject to final approval of the first year’s annual budget and work plan by the
Regent of Berau.
Other granted approvals include the Special Area Port License.
Central Forestry approval for the alignment of the proposed mine-site to barge-port haul road and Regional Forestry
approval of logging of trees in the area that will be disturbed by the mining operation have been granted, subject to
completion of cataloguing tree species and quantities in the area of disturbance.
27
STRIKE RESOURCES ANNUAL REPORT 2011
REVIEW OF OPERATIONS
Analysis of tenders was undertaken in 2010 along with a second round of mining contract proposals. This work
confirmed the key capital and operating cost components of the project determined during the 2009 feasibility study.
Current status
During the year management held extensive discussions with Strike’s Indonesian partner with a view to reaching
agreement on the restructure of the existing Cooperation Agreement to ensure it complies with the new Indonesian
Mining Laws. Despite these efforts the partner has refused to negotiate in good faith and dispute resolution
proceedings are under consideration.
Given the uncertainties regarding the timing and outcomes of the dispute resolution processes the Company has
taken a conservative view with regard to the carrying value of the Berau asset.
PAULSENS EAST IRON ORE PROJECT (WEST PILBARA, WESTERN AUSTRALIA)
The Paulsens East Project tenements are located approximately 140 kilometres west of Tom Price (close to transport
infrastructure) and eight kilometres east-northeast of the Paulsens Gold mine in the northwest of Western Australia.
Under a farm-out agreement between Strike and Process Minerals International Pty Ltd (PMI) - a subsidiary of ASX-
listed Mineral Resources Limited - PMI has exclusive rights to explore for and mine iron ore from Paulsens East.
Strike retains the rights to other minerals. If PMI mines iron ore at this project it will pay Strike a royalty of A$ 3.20
per tonne, subject to variations in line with movements in an iron ore benchmark price.
In the September Quarter 2010 PMI completed field validation of Strike’s previous drilling.
PMI has developed a 35-hole, strategic resource expansion drilling program with a view to extending the projected
life of its proposed open-pit mine by extending and better defining the current assessment of iron ore on the
tenements and provide geotechnical data for mining studies. PMI’s current exploration target is for an additional
9 - 11 million tonnes of iron ore at a grade of 54 – 56% Fe and above.
(The potential quantity and grade of the target iron ore is conceptual in nature. There has been insufficient exploration
to define a Mineral Resource in relation to the target iron ore. It is also uncertain whether further exploration will
result in the determination of a Mineral Resource in relation to the target iron ore.)
PMI is well advanced in discussions with the Traditional Owners regarding approvals for the planned drilling
program. PMI is also awaiting feedback from the Commonwealth Department of Sustainability, Environment, Water,
Population and Communities (SEWPaC) on the northern quolls present in the area prior to commencing drilling.
Drilling commencement is accordingly not expected before the December 2012 quarter.
SEWPaC and the WA Departments of the Environment and Conservation (DEC) and Minerals and Petroleum
(DMP) are developing a new set of guidelines for exploration and mine development in areas containing northern
quolls. PMI will be required to conduct a quoll survey under the new guidelines before conducting further work on
Paulsens East
28
site. A quoll trapping program required for the survey will commence in October, 2011 subject to obtaining the
necessary trapping licence and weather conditions.
PMI has carried out an initial internal analysis of potential mine plans, mine cost models and export options for the
iron ore with a view to determining the optimum configuration for the project. Further work is required, including the
strategic drilling program, to complete this activity.
Discussions with service providers and infrastructure owners are continuing in parallel with the exploration program.
CORPORATE MATTERS
Board Restructure
As part of a strategic review of its structure and operations, Strike Resources determined in February 2011 to
restructure the composition of its Board of Directors in a move to bring it into line with current leading practice in
corporate governance. Specifically, the representation of major shareholders was reduced and the Board will move
to a majority of independent Directors.
To facilitate the restructure Non-Executive Directors Messrs Farooq Khan and Farhad Moshiri (together with his
alternate Director Mr Mark Horn) retired from the Strike Board, effective 3 February.
In addition, Strike’s Chairman, Mr Shanker Madan, announced his retirement effective 3 February 2011 in order to
concentrate on his role as Managing Director of ASX-listed resource company, Alara Resources Ltd.
Professor Malcolm Richmond, independent Non-Executive Director, was appointed Acting Chairman on 3 February
2011. After considering alternatives, the Board appointed Prof. Richmond Chairman on 27 July.
The Company has commenced an international search for at least one additional independent, Non-Executive
Director.
Strategic Review of Operations
The Strike Board conducted a strategic review of operations in two rounds, held in April and July 2011. Key
outcomes from the review were:
(cid:115) confirming the aim of becoming the most significant iron-ore producer in Perú through establishment of a 15 –
20Mtpa iron-ore business based on the Apurimac and Cusco assets and the assets of Cuervo Resources.
(cid:115) utilising the firm’s strong cash position, strategic strengths and AF’s experienced team in Perú to consolidate its
landholding and strong iron-ore resource position.
(cid:115) undertaking vigorous exploration programs through AF and Cuervo Resources to materially increase iron-ore
resources over the next 2 years.
(cid:115)
leveraging from our location in the world’s largest copper producing belt to establish a strong base metals
project portfolio.
Examining drill core at Santo Tomas, Cusco
29
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
The Directors present their report on Strike Resources Limited (Company or Strike) and its controlled entities
(Consolidated Entity) for the financial year ended 30 June 2011. This report is current to 23 September 2011.
Strike is a company limited by shares which is incorporated in Western Australia and has been listed on the
Australian Securities Exchange (ASX) since 7 March 2000 (ASX Code: SRK).
Strike has prepared a consolidated financial report incorporating the entities which it controlled during the financial
year. Details of Strike’s controlled entities during the financial year can be found at Note 12 to the Financial
Statements.
No entities became controlled entities after the end of the financial year.
OVERVIEW
The 2011 financial year has seen the Company continue with the implementation of the findings from its strategic
review. During the year the Board of Directors underwent further restructuring with the aim of moving towards best
practice corporate governance, while also meeting the Company’s requirements at the present phase of the its
operations. The Board restructure saw the departure of Messrs Farooq Khan, Shanker Madan and Farhad Moshiri
and the appointment of Professor Malcolm Richmond as Acting Chairman in February 2011. In July 2011, Prof.
Malcolm Richmond’s appointment as Chairman was made permanent.
During the year Apurimac Ferrum appointed Mr. Thomas Kelly as its Chief Executive Officer following a decision
by the AF shareholders to enhance the Perúvian-based management team. Mr. Kelly holds a degree in Mining
Engineering from the Colorado School of Mines and has over 35 years’ experience in mineral exploration, mine
production, mineral industry consulting and corporate management. This process also involved the appointment
of Mr Luis Orihuela as the Community Relations Manager and Mr Ian Cullen as Exploration Manager. The extensive
experience and knowledge of Mr Orihuela and Mr Cullen are seen as a major benefit to the Company in accelerating
AF’s exploration activities at its Opaban and Cusco projects. In December 2011 AF recommenced drilling in Perú
after ceasing major exploration activities in 2009 due to a dispute between AF’s shareholders. Since settling the
dispute in July 2009, Strike and AF’s other shareholder, D&C Group, have been working to re-establish relations
with the communities located on AF’s concession holdings. This process resulted in the first exploration drilling
program since the dispute was settled, at the Colcabamba concessions, and is seen as a major step forward for
the progress of the Company’s exploration activities. Details of Strike’s operations over the past year can be found
in the “Review of Operations” section above.
The optimisation studies conducted during 2010 identified a number of opportunities to enhance the Apurimac
Iron-Ore Project including the production of lump and fines products as an alternative to a slurry concentrate, and
the use of a rope conveyor for both ore and product transport. While these are positive steps the key conclusion
from the studies was that a production rate of at least 15Mtpa for more than 15 years is required to deliver robust
economic returns based on long-term projected iron-ore prices. Accordingly AF is re-focussing on exploration to
outline sufficient iron ore to support such an operation. This will remain the focus in 2011/12.
During the year Strike commenced negotiations with Cuervo Resources Incorporated (Cuervo), a Perú-focused
Canadian iron-ore explorer, with the aim of building its interest in quality iron ore exploration concessions within
Perú. Subsequent to the reporting period Strike and Cuervo entered into a financing arrangement giving Strike
the option to purchase up to 49% of Cuervo’s shares through the exercise of share warrants. More details of this
agreement can be found in the “Events Subsequent to Reporting Date” section below.
Unfortunately for both management and shareholders, despite significant efforts by management, during the year
little progress was made on the resolution of disputes with Strike’s partner in the Berau Thermal Coal Project.
Due to the position adopted by the Company’s partner, there is some uncertainty about whether negotiations will
succeed and dispute resolution proceedings are now likely.
On 30 June 2011, Strike entered into an agreement with Iron Associates Corporation (IAC) to purchase IAC’s 12%
shareholding in AF for US$1.2m and 9,000,000 shares in Strike. As a result of this agreement Strike’s shareholding
in AF increased from 44% to 56% on the reporting date. Management see this transaction as a positive step as
it reduces the risks associated with the execution of AF’s exploration activities. Details of this transaction can be
found in the “Significant Changes in the State of Affairs” section of this report below.
With a strong cash balance and with exploration and evaluation work recommenced in Perú on AF’s iron ore
projects, the Company is poised to make significant progress on its Perúvian iron-ore concession interests over the
coming year.
30
Principal Activities
The principal activities of the Consolidated Entity during the financial year consisted of the ongoing exploration and
evaluation of the Consolidated Entity’s interest in the Apurimac and Cusco Iron-Ore Projects located in Perú, South
America and its Berau Thermal Coal Project in Indonesia.
Significant Changes in the State of Affairs
During the year the Consolidated Entity continued to implement changes which were the result of a strategic review
of the Company’s operations. In February 2011, several long-serving members of Strike’s Board of Directors retired
from their position with the Company to facilitate the restructuring of the Board’s composition to bring it in line with
industry best practice. The Company announced that it had begun a search for a new Chairman and an additional
independent Non-Executive Director. In July 2011, the Board of Directors appointed Professor Malcolm Richmond
to the position of Chairman. Prof. Richmond had held the position of Acting Chairman since the Board restructuring
which commenced in February 2011.
On 30 June 2011 Strike entered into an agreement with Iron Associates Corporation (IAC) to purchase IAC’s 12%
share holding in Apurimac Ferrum S.A. (AF). Key terms of the agreement are as follows:
(cid:115) Strike acquired IAC’s 12% shareholding in AF.
(cid:115)
(cid:115)
IAC assigned to Strike a loan of US$ 5.245 million owed by AF to IAC. This loan is convertible to AF shares in
July 2012 under the terms of the Settlement Agreement between the AF shareholders.
IAC held a right, in certain circumstances, to convert its AF shareholding to a royalty from AF’s future production.
This royalty right was extinguished as a result of the IAC share purchase transaction.
(cid:115) Strike paid IAC US$1.2m in cash on the execution of the agreement and issued IAC 9 million Strike shares as
consideration under the agreement. These shares represent 6.3% of Strike’s issued capital.
The Company believes this transaction will provide significant benefits for shareholders in both the short and longer
term. Initially, the simplification of the AF shareholding structure will improve operational efficiency and reduce risks
during the exploration and project execution phases. Strike also believes that over the longer term the simplified
ownership structure enhances the ability to attract strategic partners to develop the Apurimac and Cusco Iron-Ore
Projects if required.
Strike also signed an exclusivity agreement with AF’s remaining shareholder, the D&C Group, giving Strike 90 days
to negotiate in good faith the potential acquisition by Strike of D&C’s 44% shareholding in AF on pro rata terms to
the IAC transaction described above. If Strike and D&C Group are successful in negotiating a deal Strike will move
to 100% ownership and control of AF. If however the parties are unable to agree on the terms of the proposed
share sale, then D&C Group has 10 business days to exercise an option to purchase from Strike, 50% of the AF
shares Strike acquired from IAC on equivalent terms to the IAC deal. Under this transaction both Strike and D&C
Group would hold 50% of the Shares in AF.
In June 2011 Strike announced the initial JORC mineral resource for the Cusco Iron Ore Project in Perú (details of
which can be found in the Review of Operations section above). The Cusco mineral resource, which is located on
AF’s Santo Tomas concessions, is the second of the Company’s two JORC iron-ore Mineral Resources located
in Perú. The Cusco Iron-Ore Project is located in the southern highlands of Perú within the highly prospective
Andahuaylas-Yauri copper/iron belt. A review of historical drill samples has identified broad zones of anomalous
copper, silver and molybdenum values which the Company plans to incorporate in a further review of the polymetallic
potential for the region.
Towards the end of the financial year Strike entered into negotiations with Canadian iron-ore explorer, Cuervo
Resources Inc. (Cuervo) for Strike to provide financing to Cuervo in return for the option for Strike to purchase up
to 49% of Cuervo through the exercise of Cuervo Share Warrants. Cuervo is a Perú-focused iron ore explorer which
has concession within the Cusco geological region which are complementary to Strike’s own concession interests.
This transaction forms part of Strike’s strategy of consolidating its position of as a major holder of high-quality iron
ore concessions in the Apurimac and Cusco regions of Perú. These negotiations were successfully concluded in
July 2011 and the key terms of the financing agreement can be found in the “Events Subsequent to the Reporting
Date” section below and Note 25 to the Financial Statements.
31
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
During the year, Strike, through its interest in AF, continued to progress development studies in relation to the Apurimac
Iron-Ore Project, including product optimisation studies and transport trade-off analysis. As a part of the geological
review a decision was made to continue the Company’s focus on increasing the resource inventory at both the
Apurimac and Cusco Projects. This will principally comprise a major drilling campaign with the objectives of:
(cid:115)
Increasing the current iron-ore resources at Apurimac from the current 269 Mt at 57.3% Fe Resource to at least
500Mt, at a similar grade; and
(cid:115)
Increasing the Measured and Indicated Resource within the total Resource, at a similar grade.
In June, Perú’s Presidential election resulted in the election of Ollanta Humala, a former army officer. Mr. Humala’s
election cast doubt over Perú’s ability to continue its strong growth seen over the past years, due to his perceived
left-wing political views. However, subsequent to the election and appointment of key government ministers the
economic outlook for Perú is viewed favourably.
Other Matters
Other than those mentioned above, there were no other material changes in the state of affairs of the Consolidated
Entity during the financial year.
Events Subsequent to the Reporting Date
Subsequent to the Reporting Date Strike entered into a financing arrangement with Canadian iron-ore exploration
company, Cuervo Resources Incorporated (Cuervo). Under this agreement Strike Resources Ltd has agreed
to lend Cuervo up to 15m Canadian dollars, for the consideration of potentially earning up to 49.2% in Cuervo
through the issue of share warrants to Strike. The funds loaned by Strike are to be used by Cuervo to advance
exploration work on Cuervo’s Perúvian iron-ore concessions which are located in the same geological region as
Strike’s concession interests in the Cusco region of Perú. Details about the financing arrangement can be found in
Note 25 to the Consolidated Financial Statements.
Operations Review
A detailed review of the operations of the Consolidated Entity can be found on pages 4 to 29 of this Annual Report.
Other Matters
The Directors are not aware of any other matters or circumstances at the date of this Directors’ Report, other than
those referred to elsewhere in this Directors’ Report or the Financial Statements, that have significantly affected or
may significantly affect the operations, the results of operations or the state of affairs of the Consolidated Entity in
subsequent financial years.
Operating Results
The Consolidated Entity made an operating loss for the financial year of $24,891,619 (2010: profit $19,961,626).
Gain/Loss per Share
Consolidated
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
2011
2010
(18.95)
(18.95)
15.35
14.95
Weighted-average number of ordinary shares outstanding during the
year used in the calculation of basic earnings/(loss) per share
131,367,145
130,034,268
Dividends
No dividends have been paid or declared during the financial year. At the date of this Report no dividend has been
recommended for payment in respect of the reporting period.
Capital Raisings
No capital raisings were undertaken during the current reporting period.
32
Summary of share capital changes during the reporting period
Date
Description
30/06/2009 Opening balance
Issue
price
No.
shares
Value of
issue
Running
balance of
issued share
capital
(No.)
130,034,268
Movement in current period
N/A
-
-
-
30/06/2010
Closing balance
130,034,268
Movement in current period
N/A 3,500,000
789,667
133,534,268
30/06/2011
Closing balance
133,534,268
Options
Unlisted Directors’ and Employees options
During the financial year no unlisted Directors’ or Employees’ Options were exercised.
The following unlisted employee’s options were issued during the financial year:
Date of
issue
Description of unlisted options
6 May 2011
Employee options
Exercise
price
Expiry
Date
23 March
2013
$1.30
$1.50
$1.75
No. of
options
1,200,000
Vesting
criteria
All options
vested at grant
date
Future Developments
During the reporting year, the Australian government proposed legislating a new tax that was to place an additional
tax burden on certain resource mining companies with producing resource projects within Australia. At the date of
this Report it is unclear if the proposed tax or a variant of the tax will be imposed on Australian resource projects.
As the final structure of the proposed resource tax is unknown, the Company is unable to quantify how the tax will
affect the Consolidated Entity’s Australian project including its future financial performance.
The Australian Government has proposed the introduction of a “Carbon Tax” which places a price on “carbon”
emissions. At the date of this report the proposed legislation has not been enacted, therefore the Company is
unable to quantify how the proposed emissions pricing scheme will affect the Consolidated Entity’s future financial
performance.
Environmental Regulation and Performance
The Consolidated Entity notes the reporting requirements of both the Energy Efficiency Opportunities Act 2006
(EEOA) and the National Greenhouse and Energy Reporting Act 2007 (NGERA). The Energy Efficiency Opportunities
Act 2006 requires an affected company to assess its energy usage, including the identification, investigation and
evaluation of energy saving opportunities and to report publicly on the assessments undertaken, including what
action the company intends to take as a result.
The National Greenhouse and Energy Reporting Act 2007 requires affected companies to report their annual
greenhouse gas emissions and energy use. The Consolidated Entity has determined that it does not operate a
recognised facility requiring registration and reporting under the NGERA and, in any event, it would fall under the
threshold of greenhouse gas emissions required for registration and reporting. Similarly, the Consolidated Entity’s
energy consumption would fall under the threshold required for registration and reporting under the EEOA.
The Consolidated Entity is not otherwise subject to any particular or significant environmental regulation under either
Commonwealth or State legislation. To the extent that any environmental regulations may have an incidental impact
on the Consolidated Entity’s operations, the Directors are not aware of any breach by the Consolidated Entity of
those regulations.
33
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
Directors and Company Secretary
On 3 February 2011, Strike’s then Chairman, Mr Shanker Madan retired from his position as a Director of the
Company to focus on his other business interest. Mr Farooq Khan and Mr Farhad Moshiri (along with his alternate
Director, Mr Mark Horn) also resigned from their positions on Strike’s Board with the aim of moving the Board’s
composition into line with current leading practice in corporate governance.
Information concerning Directors who held office at the reporting date or during the reporting period can be found
below.
Current members of the Board of Directors and Company Secretary
Malcolm Richmond
Chairman
Appointed
13 July 2011
Previous positions held Acting Chairman (3 February 2011 to 13 July 2011)
Non-Executive Director (25 October 2006 to 3 February 2011)
Qualifications
B. Science Hons (Metallurgy) and B. Commerce Merit (Econs) (New South Wales)
Experience
Professor Richmond has 30 years experience with the Rio Tinto and CRA Groups in
a number of positions including: Vice President, Strategy and Acquisitions; Managing
Director, Research and Technology; Managing Director Development (Hamersley Iron Pty
Limited) and Director of Hismelt Corporation Pty Ltd. He was formerly Deputy Chairman
of the Australian Mineral Industries Research Association and Vice President of the
WA Chamber of Minerals and Energy. Professor Richmond also served as a Member
on the Boards of a number of public and governmental bodies and other public listed
companies.
He is a qualified metallurgist and economist with extensive senior executive and board
experience in the resource and technology industries both in Australia and internationally.
His special interests include corporate strategy and the development of markets for
internationally traded minerals and metals - particularly in Asia.
Professor Richmond is a nominee director on the Board of Cuervo Resources Inc. for
Strike Resources Ltd.
Professor Richmond is currently a Visiting Professor at the Graduate School of
Management and School of Engineering, University of Western Australia, a Fellow of
the Australian Academy of Technological Sciences & Engineering, a Fellow of Australian
Institute of Mining and Metallurgy and a Member of Strategic Planning Institute (US).
Special responsibilities Chairman of the Remuneration and Nomination Committee and member of the Audit
Committee
Relevant interest in
securities
Shares
Unlisted director options
100,000 (indirectly)
1,700,000
Other current
directorships in
listed entities
Former directorships
in other listed entities
in past 3 years
Non-Executive Director of:
MIL Resources Limited (MGK) (appointed August 2001)
Advanced Braking Technology Ltd (ABV) (appointed August 2006)
Cuervo Resources Incorporated (appointed 29 July 2011)
Structural Monitoring Systems Plc (SMN) (17 October 2006 to 10 November 2010)
34
Ken Hellsten
Managing Director
Appointed
24 March 2010
Qualifications
B. Sc Geology Hons (Monash University)
Experience
Relevant interest in
securities
Other current
directorships in listed
entities
Former directorships
in other listed entities
in past 3 years
Mr. Hellsten is a geologist with over 30 years experience in the resources industry. He has
been employed in senior executive roles ranging from exploration to development and
operations with both large multi-national and smaller resources companies, including BHP
Billiton, Centaur Mining, Ironclad Mining and Polaris Metals. During the past 20 years Mr.
Hellsten has lead teams responsible for the definition and development of significant gold
and nickel projects. Prior to his appointment to Strike, he served as Managing Director of
Polaris Metals NL, where he added significant value for shareholders by progressing that
company’s iron-ore assets towards development and leading a strategic partner search,
which ultimately resulted in the acquisition of Polaris by Mineral Resources Limited in
January 2010.
Mr. Hellsten is a nominee director on the Board of Cuervo Resources Inc. for Strike
Resources Ltd.
Mr. Hellsten is a fellow of the Australasian Institute of Mining and Metallurgy and a
member of the Australian Institute of Company Directors. He has previously served on
the Executive Councils of the Association of Mining and Exploration Companies and the
Northern Territory Chamber of Mines.
Shares
217,083
Non-Executive Director of:
Heron Resources Ltd (HRR) (appointed December 2006)
Brierty Limited (BYL) (appointed February 2010)
Cuervo Resources Incorporated (appointed July 2011)
Polaris Metals NL (18 March 2009 to 7 January 2010)
Matthew Hammond
Non-Executive Director
Appointed
25 September 2009
Qualifications
BA (Hons) (Bristol)
Experience
Mr. Hammond is the Group Managing Director of Mail.ru, one of the largest European
internet businesses. Prior to that he was Group Strategist at Metalloinvest Holdings,
where he had responsibility for part of the non-core asset portfolio. Prior to joining
Metalloinvest, Mr. Hammond was a director at Credit Suisse, where he worked for 12
years as an investment analyst. During his time with Credit Suisse Mr. Hammond was
ranked number one 8 times in the Extell, Institutional Investor and Reuters surveys.
Special responsibilities Member of the Audit and Remuneration and Nomination Committees
Relevant interest in
securities
Nil
Other current
directorships in listed
entities
Mail.ru. (appointed April 2011)
Nautilus Minerals (appointed Oct 2009)
Puricore Inc. (appointed May 2010)
Former directorships
in other listed entities
in past 3 years
Nil
35
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
William Johnson
Non-Executive Director
Appointed
30 April 2010
Previous position held
Executive Director (14 July 2006 to 30 April 2010)
Qualifications
MA (Oxon), MBA
Experience
Mr. Johnson commenced his career in resource exploration and has held senior
management and executive roles in a number of public companies in Australia, New
Zealand and Asia. Most recently, Mr. Johnson has acted as an executive and non-
executive director of a number of ASX listed resource exploration and development
companies and brings a considerable depth of experience in business strategy,
investment analysis, finance and execution.
Special responsibilities Chairman of the Audit Committee and member of the Remuneration and Nomination
Relevant interest
in securities
Other current
directorships in
listed entities
Former directorships
in other listed entities
in past 3 years
Committee
Unlisted Directors’ Options
1,240,000
Executive Director of:
Orion Equities Limited (appointed February 2003)
Bentley Capital Limited (appointed March 2009)
Alara Resources Limited (appointed October 2009)
Drillsearch Energy Limited (24 October 2006 to 11 August 2008)
Scarborough Equities Limited (29 November 2004 to 13 March 2009)
Company Secretary
Stephen Gethin
Company Secretary
Appointed
30 April 2010
Qualifications
Barrister and Solicitor of the Supreme Court of Western Australia, GradCert Tax (Curtin)
Experience
Mr. Gethin previously served as Company Secretary and General Counsel for ERG
Limited from 2006 to 2008, when he joined Strike Resources as General Counsel. Mr.
Gethin worked in the Corporate and Finance practice group in a national law firm from
2001 to 2004. He has extensive experience in capital raisings, corporate transactions
and project agreements in Australia and overseas.
Directors ceasing to hold office during the year
Farooq Khan
Past Non-Executive Director (ceased as a Director on 3 February 2011)
Appointed
30 April 2010
Previous position held
Executive Director (3 September 1999 to 30 April 2010)
Qualifications
BJuris, LLB. (Western Australia)
Experience
Mr. Khan is a qualified lawyer having previously practised principally in the field of
corporate law. Mr. Khan has extensive experience in the securities industry, capital
markets and the executive management of ASX-listed companies. In particular, Mr.
Khan has guided the establishment and growth of a number of public listed companies
in the investment, mining and financial services sectors. He has considerable experience
in the fields of capital raisings, mergers and acquisitions and investments.
Special responsibilities Member of the Audit Committee
Member of the Remuneration and Nomination Committee
Relevant interest in
securities at the date
ceased being a director Unlisted director options
Shares
Shares
530,010 (directly)
16,890,800 (indirectly)
3,050,000 (directly)
36
Other current
directorships in listed
entities
Chairman and Managing Director of:
Queste Communications Ltd (QUE) (since 10 March 1998)
Chairman of:
Orion Equities Limited (appointed October 2006)
Bentley Capital Limited (appointed December 2003)
Executive Director of:
Alara Resources Limited (AUQ) (appointed May 2007)
Former directorships
in other listed entities
in past 3 years
Interstaff Recruitment Limited (27 April 2006 to 18 March 2011)
Scarborough Equities Limited (29 November 2004 to 13 March 2009)
H. Shanker Madan
Former Chairman (ceased as Chairman and Director on 3 February 2011)
Appointed
24 March 2010
Previous position held Managing Director (26 September 2005 to 24 March 2010)
Qualifications
Honours and Masters Science degrees in Applied Geology
Experience
Mr. Madan has had world-wide experience in the exploration and evaluation of mineral
deposits for various commodities. Mr. Madan has been a Manager with Hamersley Iron,
Group Leader with BHP Minerals, Chief Geologist with Hancock and Wright Prospecting
and a Senior Geological Consultant to the Rio Tinto Group.
Mr. Madan has managed a range of mineral evaluation studies in Iran, Brazil and Western
Australia for BHP, Rio Tinto and Hamersley Iron. He has also acted as a consultant to
Rio Tinto, Ashton Mining and others on mineral projects in Brazil, South Africa, India, the
Philippines, Fiji and the United States, working on a range of iron ore, diamond, gold,
copper and chromate deposits.
Mr. Madan has been involved in the discovery of 3 world-class iron deposits in Western
Australia for Texas Gulf and BHP Minerals. From 1997 to 2001, Mr. Madan managed
the evaluation of resource projects for Hamersley Iron and completed a resource due
diligence study of the billion-dollar West Angelas project in the Pilbara region of Western
Australia. Mr. Madan is a member of The Australian Institute of Mining and Metallurgy.
Special responsibilities Chair of the Board
Member of the Audit Committee
Shares
Unlisted director options
496,343
6,130,000
Managing Director of:
Alara Resources Limited (appointed May 2007)
Nil
Relevant interest in
securities at the date
ceased being a director
Other current
directorships in listed
entities
Former directorships
in other listed entities
in past 3 years
37
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
A. Farhad Moshiri
Past Non-Executive Director (ceased as a Director on 3 February 2011)
Appointed
29 July 2008
Qualifications
B.Econ (Hons), FCCA
Experience
Farhad Moshiri graduated from the University of London with an honours degree in
Economics and Statistics and subsequently qualified as a Chartered Certified Accountant
(FCCA). He worked for a number of the major accounting firms, latterly focusing on
financial services. He joined Global Natural Energy, a London-listed company with energy
and commodity interests, where he was the Chief Executive for eight years. He helped
set up Gallagher Holdings Limited, where he has been instrumental in developing and
acquiring its various interests in mining and metals, including its holding in Metalloinvest,
a leading Russian mining and metals group where he is Executive Chairman. Farhad
Moshiri sits on a number of other boards.
Relevant interest
in securities
Other current
directorships in listed
entities
Former directorships
in other listed entities
in past 3 years
Nil
Nil
Nil
Mark P. M. Horn
Past Alternate Director for A. Farhad Moshiri (ceased as a Director on
3 February 2011)
Appointed
Qualifications
Experience
29 July 2008
B.A. (Hons) (First Class), M.A. (Rhodes), LLB (Hons) (London), Dip.B.Admin (Manchester),
and an FSI (Dip)
Mark Horn holds a B.A. (Hons) (First Class), M.A. (Rhodes), LLB (Hons) (London),
Dip.B.Admin (Manchester), FSI (Dip). He is also qualified as a Barrister of the Honourable
Society of Lincoln’s Inn. He is the CEO of M. Horn & Co., an FSA authorised corporate
finance boutique based in the UK specialising in international mining and energy. He
has worked in the City of London since 1987 as a fund manager, analyst and corporate
financier, and a mining and oil analyst.
Relevant interest
in securities
Nil
Special responsibilities Chairman of the Audit Committee
Other current
directorships in listed
entities
Nil
Former directorships in Nil
other listed entities in
past 3 years
38
Directors’ Meetings
The following table sets out the number of meetings of the Company’s Directors and Board Committees held
during the financial year (excluding Directors’ circulating resolutions) and the number of meetings attended by each
Director of the Company:
Name of Director
Board Meetings
Committee Meetings
(Audit)
Committee Meetings
(Remuneration/
Nomination)
Attended
Meetings
held1
Attended
Meetings
held1
Attended
Meetings
held1
7
7
7
4
4
4
7
Hammond, M.
Hellsten, K.
Johnson, W.
Khan, F.2
Madan, H.S.3
Moshiri, A. F. 4
(represented by Mark
Horn as his Alternate
Director)
Richmond, M.
5
7
7
4
4
4
6
1 Meetings held while the Director was a member.
2 Mr Khan ceased as a Director on 3 February 2011.
3 Mr Madan ceased as a Director on 3 February 2011.
4 Mr Moshiri ceased as a Director on 3 February 2011.
* Not a member of the relevant committee
Board Committees
1
*
1
1
1
1
2
1
*
1
1
1
1
2
1
*
-
1
*
*
1
1
*
-
1
*
*
1
In addition to the Board of Directors the Company has an Audit Committee and a Remuneration and Nomination
Committee. Each Committee consisted of three Non-Executive Directors.
The Audit Committee was established to assist the Board in overseeing the Consolidated Entity’s financial reporting
and risk management systems. In addition to these matters, the Audit Committee Charter states that the Audit
Committee assists the Board in overseeing the Consolidated Entity’s external audit function. The Audit Committee
reports to the Board on these matters at least twice a year and more frequently if required.
The Remuneration and Nomination Committee was established to assist the Board in the selection and retention of
suitably-qualified directors and senior executives. Amongst its duties, the Remuneration and Nomination Committee
is responsible for reviewing the performance and remuneration of the Board members and senior management of
the Company. As part of the process of selecting and retaining suitable senior executives, the Remuneration and
Nomination Committee is charged with the setting of goals for senior executives and the establishment of incentive
schemes.
Remuneration Report (Audited)
This report details the nature and amount of remuneration for each Director and executive, being a company
secretary or senior manager with authority and responsibility for planning, directing and controlling the major
activities of the Consolidated Entity, directly or indirectly (Key Management Personnel or KMP).
The information provided under headings (1) to (5) below has been audited as required under section 308(3C) of
the Corporations Act 2001.
(1) Remuneration Policy
The Board, with guidance from the Remuneration and Nomination Committee, determines the remuneration
structure of all Key Management Personnel having regard to the Consolidated Entity’s strategic goals, scale
and scope of operations and other relevant factors, including experience and qualifications, length of service,
market practice (including available data concerning remuneration paid by other listed companies, in particular
companies of comparable size and nature) and the duties and responsibilities of the Key Management
Personnel.
39
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
Fixed cash short-term employment benefits: The Key Management Personnel of the Company are paid
a fixed amount per annum plus applicable employer superannuation contributions, where applicable. The
Non-Executive Directors of the Company are paid a maximum aggregate base remuneration of $500,000
per annum inclusive of employer superannuation contributions where applicable, to be divided as the Board
determines appropriate.
During the year the aggregate fees paid to Non-Executive Directors of the Company were as follows:
Director
Office held
Gross salary/fees and superannuation for the period
Special
exertions
Super-
annuation
Hammond, M.
Non-Executive Director
Horn, M.3
Alternate Director for
Farhad Moshiri
Johnson, W.
Executive/Non-Executive Director
Khan, F.1
Executive/Non-Executive Director
Madan, H.S.2
Non-Executive Chairman
Moshiri, F.3
Non-Executive Director
Fees
40,635
-
45,000
61,602
35,821
22,404
Richmond, M. Non-Executive Director/ Chairman
-
5,600
33,600
14,000
32,000
14,000
-
-
Total
205,462
99,200
1. Mr. Khan ceased as a Director on 3 February 2011.
2. Mr. Madan ceased as a Director on 3 February 2011.
3. Mr. Moshiri ceased as a Director on 3 February 2011.
-
-
5,310
8,424
4,483
-
55,436
73,653
Total fees
46,235
33,600
64,310
102,026
54,304
22,404
55,436
378,315
Special exertions and reimbursements: Pursuant to the Company’s Constitution, each Director is also entitled
to receive:
(cid:115) Payment for the performance of extra services and the undertaking of any executive or other work for the
Company beyond his or her general duties; and
(cid:115) Payment for travelling and other expenses properly incurred by a Director in attending meetings of the Company
or the Board or in connection with the Company’s business.
Long-term benefits: Other than termination benefits disclosed in the section titled “Service Agreements” below,
Key Management Personnel have no right to termination payments save for payment of accrued unused leave.
Post-employment benefits: Other than the legislated contributions to nominated complying superannuation
funds of employees, the Company does not presently provide retirement benefits to Key Management Personnel.
Performance-related benefits: Details of performance-related benefits provided to Key Management Personnel
can be found in the section below titled “Service Agreements”.
Financial performance of the Company: There is no relationship between the Company’s current remuneration
policy and the Company’s financial performance other than the exercise price of options issued to Key Management
Personnel being priced at values higher than the trading price of the underlying shares at the time the options are
granted. The exercise price of these options are structured to incentivise KMP to generate value for shareholders
through the increase in the value of the Company.
Equity-based benefits: Eligible Key Management Personnel are offered equity-based remuneration where the
Board decides that it is appropriate to do so.
(2) Details of Remuneration of Key Management Personnel
Amounts of remuneration
Details of the remuneration of the Directors, the Key Management Personnel of the Group (as defined in AASB 124
Related Party Disclosures) and the five highest-paid executives of Strike Resources Limited and the Consolidated
Entity are set out in the following tables.
40
The Key Management Personnel of the Group are the Directors of Strike Resources Limited (see pages 34 to 38
above) and those executives that report directly to the Managing Director during the year being:
(cid:115) Stephen Gethin
Company Secretary & General Counsel
(cid:115) David Lim
Chief Financial Officer
(cid:115) Michael Lowry
General Manager – Berau
(cid:115) Andrew Napier
Principal Process Engineer
The above-listed Key Management Personnel are also among the 5 highest remunerated Group and/or Company
executives as must be disclosed by the Corporations Act 2001.
Key Management Personnel of the Group and other executives of the Company and the Group
Key
Management
Personnel
Short-term
benefits
Post-
employ-
ment
benefits
Other
long-
term
benefits
Termi-
nation
benefits
Equity-
based
benefits
Total
Options
as a %
of total
remun-
eration
Cash
salary
and
fees
$
Cash
bonus
$
Non-
cash
benefit
$
Super-
annuation
$
Long
service
leave
$
Options
$
$
$
%
2011
Non-
Executive
Directors:
Hammond, M.
46,235
33,600
59,000
93,602
49,821
22,404
-
Horn, M.3
Johnson, W.
Khan, F.1
Madan, H.S.2
Moshiri, F.3
Richmond, R.
Executive
Director:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,310
8,424
4,483
-
55,436
Hellsten, K.
325,000 25,000
41,230
29,250
Other key
management
personnel:
Gethin, S.
Lim, D.
Lowry, M.4
Napier, A.
131,738
193,211
295,973
3,431
3,600
7,016
-
-
13,324
160,655
2,050
1,456
67,550
17,713
21,181
14,481
Total
1,411,239 34,081
63,026
223,828
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46,235
33,600
64,310
102,026
54,304
22,404
55,436
420,480
12,197
221,932
12,197
226,721
-
-
330,478
178,642
24,394 1,756,568
-
-
-
-
-
-
-
-
5%
5%
-
-
41
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
Key
Management
Personnel
Short-term
benefits
Post-
employ-
ment
benefits
Other
long-
term
benefits
Termi-
nation
benefits
Equity-
based
benefits
Total
Options
as a %
of total
remun-
eration
Cash
salary
and
fees
$
Cash
bonus
$
Non-
cash
benefit
$
Super-
annuation
$
Long
service
leave
$
Options
$
$
$
%
2010
Non-
Executive
Directors:
Hammond, M.
22,962
Ho, V.
Horn, M.
Khan, F.
99,629
36,400
244,580
Johnson, W.
95,725
Madan, H.S.
312,435
Moshiri, F.
30,000
Richmond, M.
53,200
Stephenson, J.
42,054
Executive
Director:
Hellsten, K.
85,000
Other key
management
personnel:
Gethin, S.
Hobson, M.
Lim, D.
Lowry, M.
Total
121,965
231,651
101,077
230,942
1,707,620
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,445
-
-
-
-
-
9,097
21,848
-
-
22,203
61,196
8,589
42,631
-
33,706
3,785
74
7,650
6,575
-
926
19,236
31,256
65,343
20,849
9,097
51,071
-
-
-
-
-
-
-
-
-
-
22,962
130,574
36,400
327,979
104,314
-
-
-
-
-
- 423,719
783,230
54%
-
-
-
-
-
-
-
-
-
-
-
-
30,000
86,906
45,839
92,724
193,883
405,405
111,100
-
-
-
-
-
-
-
5,729
306,978
2%
-
-
-
-
-
-
-
- 152,905
-
-
-
-
274,021
83,044 152,905 429,448 2,678,294
1.
2.
3.
4.
Mr. Khan ceased as a Director on 3 February 2011.
Mr. Madan ceased as a Director on 3 February 2011.
Mr. Moshiri ceased as a Director on 3 February 2011 (Mr. Horn was Mr. Moshiri’s alternate).
Mr. Lowry ceased as an employee of the Company on 30 April 2011.
Cash fees paid to the Non-Executive Directors during the year include payments for additional services or the
undertaking of any executive or other work for the Consolidated Entity beyond their general Non-Executive Director’s
duties.
The value of equity-based benefits are based on the fair value of KMP’s options (vested and unvested as at the
reporting date). This is described in more detail in section three (3) of this Remuneration Report.
The relative proportions of remuneration received during the year that are linked to performance and those that are
fixed are as follows:
42
Name
Executive Directors
Hellsten, K.
Other Key Management Personnel
Gethin, S.
Lim, D.
Lowry, M.
Napier, A.
Fixed
remuneration
At risk – STI
At risk – LTI#
93%
93%
93%
100%
99%
7%
2%
2%
-
1%
-
5%
5%
-
-
# Long-term incentives relate to options issued to Key Management Personnel and the percentages disclosed are based on the value of the options expensed
during the reporting period.
Service agreements: Details of the material terms of Service Agreements with Key Management Personnel are
as follows:
(cid:115) Mr S. Gethin’s service agreement does not contain any incentive bonuses. Details of Mr Gethin’s service
agreement are as follows:
- Commencement date – 4 March 2008
- Base salary - $206,422 p.a.
(cid:115) Mr K. Hellsten’s service agreement contains incentive bonuses linked to the successful increase in the
Consolidated Entity’s resource inventory, completion of feasibility studies and the successful development of
the Consolidated Entity’s projects. These bonuses are designed to incentivise Mr Hellsten to advance the
Consolidated Entity’s projects to the production phase. Details of Mr Hellsten’s service agreement are as follows:
- Commencement date – 24 March 2010
- Base salary - $325,000 p.a.
- Performance incentives:
o Gross cash bonus of $100,000 or 30% of base salary per year. In the first year the bonus will be up to
$100,000 in 3 tranches as outlined below:
(cid:115) $50,000, payable if Apurimac Ferrum S.A. (AF) increases the JORC iron ore Resource at its Apurimac
Project to 400 million tonnes (Mt) within 12 months of his commencement date;
(cid:115) $25,000 payable if AF commences a bankable feasibility study into an iron ore mine on its Apurimac
Project concessions within 12 months of his commencement date; and
(cid:115) $25,000 payable if Strike develops or disposes of its interest in the Berau coal project within 6-9
months from his commencement date.
During the reporting period the above cash bonuses were forfeited by Mr. Hellsten as the performance criteria
were not met.
- Options – Mr Hellsten is to be issued the following options over the shares of Strike Resources, subject to
shareholder approval.
o 333,334 options, with an exercise price of $2.25, vesting on shareholder approval of the issue of the
options;
o 333,333 options, with an exercise price of $2.50, vesting on shareholder approval of the issue of the
options; and
o 333,333 options, with an exercise price of $2.75, vesting on shareholder approval of the issue of the
options.
At the date of this report no options have been granted to Mr Hellsten.
- Termination Benefit – 6 months gross base salary on termination other than for termination due to:
o Misconduct;
o Breach of contract; or
o Removal as a Director by shareholders.
43
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
(cid:115) Mr D. Lim’s service agreement does not contain any incentive bonuses. Details of Mr Lim’s service agreement
are as follows:
- Commencement date – 9 December 2009
- Base salary - $206,422 p.a.
(cid:115) All contracts with Key Management Personnel may be terminated by each party, with notice periods from 1 - 3
months. No specific termination benefits are payable on termination of the service agreements other than those
payable to Mr Hellsten.
(cid:115) Other than those listed above, no other members of Key Management Personnel have entitlements to cash
bonuses included in their service agreements.
(cid:115) Members of the Consolidated Entity’s Key Management Personnel are entitled to participate in the Consolidated
Entity’s employee share option plan.
(3) Unlisted Directors’ and employees’ options
During the year 1,200,000 options over ordinary shares of the Company were granted to members of the
Consolidated Entity’s Key Management Personnel for no consideration. Key inputs for the valuation of the granted
options are contained in the following table:
Grant
date
6/5/11
6/5/11
6/5/11
Description of
unlisted options
Exercise
price
Share
price at
grant
date
Risk-free
rate
Vesting
date/
condition
Expected
volatility of
Company’s
share price
Dividend
yield
$1.30 (23 March
2013) Employee
Options
$1.50 (23 March
2013) Employee
Options
$1.75 (23 March
2013) Employee
Options
$1.30
$0.365
5.090% Vested on
68%
issue
$1.50
$0.365
5.090% Vested on
68%
issue
$1.75
$0.365
5.090% Vested on
68%
issue
nil
nil
nil
The fair value of Director and employee options are expensed on a pro rata basis, from their grant date, over their
vesting period. Fair values are determined as at grant date using a Black-Scholes option valuation model that takes
into account conditions such as the exercise price, the term of the option, the underlying share price as at grant
date, dividends paid, the expected price volatility of the underlying shares and the risk-free interest rate for the term
of the option.
Details of options over ordinary shares in the Company provided as remuneration to each member the Consolidated
Entity’s Key Management Personnel are set out below. When exercisable, each option is convertible into one
ordinary share of Strike Resources Ltd.
Name
Gethin, S.
Lim, D.
Total
Number
of options
granted
Value of
options at
grant date1
Number of
options vesting
during the year
Number of
options lapsed
during the year
Value of lapsed
options
600,000
600,000
1,200,000
$12,197
$12,197
$24,394
600,000
600,000
1,200,000
-
-
-
-
-
-
1. The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part of remuneration.
There were no shares issued as a result of the exercise of Director or employee options which were issued as part
of remuneration, during the current year (2010: nil).
For each cash bonus and grant of options included in the tables on pages 41-42 and 44, the percentage of the
available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited
because the person did not meet the service or performance criteria is set out below. No part of the bonus is
payable in a future periods.
44
Bonus
Share-based compensation benefits (options)
Name
Gethin, S.
Hellsten, K.
Lim, D.
Paid
%
Forfeited
%
Year
granted
Vested
%
Forfeited
%
100%
20%
100%
-
80%
-
2011
-
2011
100%
-
100%
-
-
-
Financial
years in
which the
options
may vest
Maximum
total
value of
grant yet
to vest
$
-
-
-
-
-
-
Unlisted options held by Key Management Personnel as at the reporting date are as follows:
No.
Granted Grant date Vested
Vest date &
exercisable
Expiry
date
Directors
Value
per
option
at grant
date
$
Fair
value at
grant
date
$
Exercise
price
$
Johnson, W.
390,000 03/12/2007 195,000 03/12/2007 02/12/2012
3.978
0.9541 186,050
500,000 13/09/2006 150,000 13/09/2006 12/09/2011
0.938
0.5580
83,700
195,000 03/12/2008 02/12/2012
3.978
0.9541 186,050
150,000 13/09/2007 12/09/2011
0.938
0.5580
83,700
200,000 13/09/2008 12/09/2011
2.788
0.5580 111,600
350,000 07/09/2007 105,000 07/03/2007 06/03/2012
2.788
1.1357 119,249
105,000 07/03/2008 06/03/2012
2.788
1.1357 119,249
140,000 07/03/2009 06/03/2012
2.788
1.1357 158,998
Richmond, M. 600,000 03/12/2007 300,000 03/12/2007 02/12/2012
3.978
0.9541 286,230
500,000 07/03/2007 150,000 07/03/2007 06/03/2012
2.078
1.3628 204,426
300,000 03/12/2008 02/12/2012
3.978
0.9541 286,230
150,000 07/03/2008 06/03/2012
2.078
1.3628 204,426
200,000 07/03/2009 06/03/2012
2.078
1.3628 272,568
600,000 07/03/2007 180,000 07/03/2007 06/03/2012
2.788
1.0626 191,265
180,000 07/03/2008 06/03/2012
2.788
1.0626 191,265
240,000 07/03/2009 06/03/2012
2.788
1.0626 255,020
Other Key Management Personnel
Gethin, G.
250,000 04/06/2008
83,334
04/03/2008 05/03/2013
2.880
1.2865 107,213
83,333
04/09/2008 05/03/2013
2.880
1.2865 107,212
83,333
04/03/2009 05/03/2013
2.880
1.2865 107,212
600,000 06/05/2011 200,000 06/05/2011 23/03/2013
1.300
0.0232
200,000 06/05/2011 23/03/2013
1.500
0.0217
200,000 06/05/2011 23/03/2013
1.750
0.0161
Lim, D.
600,000 06/05/2011 200,000 06/05/2011 23/03/2013
1.300
0.0232
200,000 06/05/2011 23/03/2013
1.500
0.0217
200,000 06/05/2011 23/03/2013
1.750
0.0161
4.632
4,349
3,216
4.632
4,349
3,216
45
STRIKE RESOURCES ANNUAL REPORT 2011
DIRECTORS’ REPORT
(4) Other benefits provided to key management personnel
No Key Management Personnel member has, during or since the end of the 30 June 2011 financial year,
received or become entitled to receive a benefit, other than a remuneration benefit as disclosed above by
reason of a contract made by the Company or a related entity or with a firm of which the Key Management
Personnel is a member, or with a company in which they have a substantial interest.
(5) Securities trading policy
The Company’s Share Trading Policy regulates Key Management Personnel’s dealings in the Company’s
securities. The Policy prohibits:
(a)
subscribing for, purchasing or selling Company securities or entering into an agreement to do any of
those things; and
(b) advising, procuring or encouraging another person (including a family member, friend, associate,
colleague, family company or family trust) to trade in Company securities,
whilst in possession of market-sensitive information, prior to disclosure of that information to the market and
thereafter until adequate time has elapsed for this to be reflected in the security’s price, in accordance with
the Corporations Act. The Policy also prohibits communicating inside information to any other person when
the Key Management Personnel should reasonably know that they may deal in the Company’s securities or
encourage another person to do so.
In order to further reduce the risk of inappropriate securities dealing, Key Management Personnel must not
deal in Company securities without the written consent of the “Trading Officers” nominated in the Company’s
Share Trading Policy. Consent will not be given during certain “Prohibited Periods” before key reporting
dates or while inside information exists. Key Management Personnel must inform the Company Secretary
of all transactions they enter into involving the Company’s securities to enable disclosure to the market,
where required.
A copy of Strike’s Share Trading Policy can be found on the Company’s website at www.strikeresources.com.au
This concludes the audited remuneration report.
46
DIRECTORS’ AND OFFICERS’ INSURANCE
The Directors have not included details of the nature of the liabilities covered or the amount of premiums paid in
respect of a Directors’ and Officers’ liability and legal expenses insurance contract, as such disclosure is prohibited
under the terms of the contract.
DIRECTORS’ DEEDS
In addition to the rights of indemnity provided under the Company’s Constitution (to the extent permitted by the
Corporations Act) the Company has also entered into a deed with each of the Directors (other than Matthew
Hammond and Ken Hellsten) to regulate certain matters between the Company and each Director. The deeds
cover the periods whilst the Director holds office with the Company and subsequent to the Director ceasing to be
an officer of the Company. Matters dealt with by the deeds include the following:
(i) The Company’s obligation to indemnify a Director for liabilities or legal costs incurred as an officer of the Company
(to the extent permitted by the Corporations Act); and
(ii) Subject to the terms of the deed and the Corporations Act, the Company may advance monies to the Director to
meet any costs or expenses of the Director incurred in circumstances relating to the indemnities provided under
the deed and prior to the outcome of any legal proceedings brought against the Director.
PAYMENTS TO AUDITORS
Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd) and to other parties for work
performed on behalf of the auditor, for audit and non-audit services provided during the financial year are set out
below:
Audit & Review Fees – BDO Audit (WA) Pty Ltd
Fees for non-audit services
Other affiliated practices of the BDO International Network
Total
51,934
795
7,187
59,916
The Board is satisfied that the provision of non-audit services by the auditor during the year is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The Board is satisfied that
the nature of the non-audit services disclosed above did not compromise the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing
the auditor’s own work, acting in a management or decision making capacity for the Company, acting as advocate
for the Company or jointly sharing economic risk and rewards.
BDO Audit (WA) Pty Ltd continues in office in accordance with section 327B of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001
forms part of this Directors’ Report and is set out on the following page.
LEGAL PROCEEDINGS (DERIVATIVE ACTIONS) ON BEHALF OF COMPANY
No person has applied for leave of a court to bring proceedings on behalf of the Consolidated Entity or intervene in
any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of the
Consolidated Entity for all or any part of such proceedings. The Consolidated Entity was not a party to any such
proceedings during and since the financial year ended 30 June 2011.
Signed for and on behalf of the Directors in accordance with a resolution of the Board.
Malcolm Richmond
Chairman
23 September 2011
Ken Hellsten
Managing Director
47
STRIKE RESOURCES ANNUAL REPORT 2011
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
23 September 2011
The Directors
Strike Resources Limited
Level 8, The Forrest Centre
221 St George’s Terrace
PERTH WA 6000
Dear Sirs,
DECLARATION OF INDEPENDENCE BY BRAD MCVEIGH TO THE DIRECTORS OF
STRIKE RESOURCES LIMITED
As lead auditor of Strike Resources Limited for the year ended 30 June 2011, I declare that, to the
best of my knowledge and belief, there have been no contraventions of:
(cid:135)
(cid:135)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Strike Resources Limited and the entities it controlled during the
period.
Brad McVeigh
Director
BDO Audit (WA) Pty Ltd
Perth, Western Australia
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
48
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2011
Revenue from continuing operations
Other income
Operating expenses
Personnel costs
Other corporate costs
Net gain on financial instruments held as fair value
through profit and loss
Impairment expense
Gain on loss of control of subsidiaries
Profit on sale of as available-for-sale financial assets
Loss on sale of fixed assets
Foreign exchange loss
Profit/(loss) before income tax
Income expense tax
Profit/(loss) for the year
Profit/(loss) is attributable to:
Equity holders of Strike Resources Limited
Other comprehensive losses
Exchange differences on translation of foreign operations
Other comprehensive losses net of tax
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
is attributable to:
Equity holders of Strike Resources Limited
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
Note
2
2
2
3
6
6
Consolidated Entity
2011
$
2,663,221
1,704,408
4,367,629
(346,057)
(2,210,535)
(1,682,301)
-
(22,644,435)
-
1,785,620
(85,665)
(3,636,311)
(24,452,055)
(439,564)
(24,891,619)
2010
$
2,191,586
1,797,640
3,989,226
(392,261)
(3,400,012)
(3,020,361)
440,295
(6,315,256)
28,659,995
-
-
-
19,961,626
-
19,961,626
(24,891,619)
19,961,626
(271,626)
(271,626)
(25,163,245)
(4,669,610)
(4,669,610)
15,292,016
(25,163,245)
15,292,016
(18.95)
(18.95)
15.35
14.95
This consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
49
STRIKE RESOURCES ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2011
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit and loss
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Available-for-sale financial assets
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
7
8
11
8
10
11
13
14
15
14
16
17
Consolidated Entity
2011
$
34,176,329
688,261
-
34,864,590
97,806
849,460
-
8,239,883
9,187,149
2010
$
41,445,175
890,338
327,190
42,662,703
539
1,237,714
1,096,500
21,129,916
23,464,669
44,051,739
66,127,372
2,785,485
56,545
2,842,030
132,999
132,999
564,586
118,335
682,921
14,631
14,631
2,975,029
697,552
41,076,710
65,429,820
145,632,412
12,149,433
(116,705,135)
144,846,669
12,632,008
(92,048,857)
41,076,710
65,429,820
This consolidated statement of financial position should be read in conjunction with the accompanying notes.
50
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51
STRIKE RESOURCES ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2011
Cash flows from operating activities
Payments to suppliers and employees
Tax paid
Note
Consolidated Entity
2011
$
2010
$
(3,188,005)
(439,564)
(5,464,554)
(188)
Net cash outflow from operating activities
7a
(3,627,569)
(5,464,742)
Cash flows from investing activities
Exploration and evaluation expenditure
Payments for property, plant and equipment
Proceeds from sale of investments
Proceeds from sale of fixed assets
Investment in associate
Interest received
Loan to associate – Apurimac Ferrum
Loan to others
(713,279)
(114,215)
3,209,309
37,140
(1,149,115)
1,956,266
(7,578,294)
(97,751)
(2,396,344)
(726,684)
-
-
(1,138,786)
1,886,613
(6,519,966)
-
Net cash outflow from investing activities
(4,449,939)
(8,895,167)
Cash flows from financing activities
Proceeds from exercise of share options
Payments for share issue cost
Net cash inflow from financing activities
789,667
(3,924)
785,743
-
-
-
Net increase/(decrease) in cash and cash equivalents
(7,291,765)
(14,359,909)
Cash and cash equivalents at beginning of the year
Effect of exchange rate changes on cash balance
41,445,175
22,919
55,726,752
78,332
Cash and cash equivalents at year end
7
34,176,329
41,445,175
This consolidated statement of cash flows should be read in conjunction with the accompanying notes.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the material accounting policies adopted by the Consolidated Entity in the preparation
of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.
The financial statements presented are for the Consolidated Entity consisting of Strike, its subsidiaries and its
interest in associate entities. Separate financial statements for Strike Resources Limited the entity are no longer
presented as a consequence of a change to the Corporations Act 2001 and Australian Accounting Standards,
however summary financial information for the Company as a separate entity is included in Note 19.
Strike Resources Limited is a company limited by shares, incorporated and domiciled in Australia.
a) Basis of Preparation
The financial statements have been prepared on the going-concern basis which contemplates continuity of normal
business activities and realisation of assets and settlement of liabilities in the ordinary course of business. The
going concern status of the Consolidated Entity is dependent upon it maintaining sufficient funds for its operations
and commitments. The Directors continue to monitor the ongoing funding requirements of the Consolidated Entity.
The Directors are confident that sufficient funding can be secured if required to enable the Consolidated Entity to
continue as a going concern and as such are of the opinion that the financial statements have been appropriately
prepared on a going-concern basis.
The financial statements (comprising the financial statements and notes thereto) are general-purpose financial
statements that have been prepared in accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board (AASB), Australian Accounting Interpretations and
the Corporations Act 2001.
b) Compliance with IFRS
The consolidated financial statements of Strike Resources Ltd also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
c) Basis of Measurement
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of
financial assets, financial liabilities and capitalised exploration expenditure to their fair value.
d) Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Consolidated
Entity’s accounting policies. These estimates and underlying assumptions are reviewed on an ongoing basis.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are:
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including the Consolidated Entity’s ability to develop the relevant area of interest itself or, if not, whether it can
successfully recover the capitalised exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the grade and quantity of mineral resources, future
technological changes which impact the cost of mining, future legal changes (including changes to environmental
restoration obligations), changes to commodity prices and right of tenure.
The Consolidated Entity, through a co-operation agreement with the concession holder PT KJB, holds a coal
mining right over the Berau coal concession. As a result of changes to the Indonesian mining law which
resulted in inconsistencies between the enacted legislation and the Co-operation Agreement, both parties
to the agreement are in the process of negotiating to resolve the issues that have arisen. The Co-operation
Agreement provides that if any of its provisions conflict with any law the parties must negotiate in good faith to
agree on amendments to address the issue(s). Due to drawn out nature of the negotiations and the failure to
date of Strike and PT KJB to resolve the dispute over the future development of the Berau Thermal Coal Project,
management has deemed it prudent to impair the carrying value of the capitalised exploration and evaluation
expenditure in relation to this project.
The impairment charge against the value of the capitalised exploration and evaluation expenditure in relation to the
Berau Project has been expensed through the Consolidated Statement of Comprehensive Income in the calculation
53
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
of profit or loss in the current period. Management continues to monitor the status of negotiations with PT KJB in
relation to the Berau Project and will review the carrying value of the exploration and evaluation asset accordingly.
Share-based payment transactions
The Consolidated Entity measures the cost of equity-settled transactions with Directors and employees by reference
to the fair value of the equity instruments at the date at which they are granted, and applying an estimated probability
that they will vest. The fair value is determined using a Black-Scholes option valuation model, with the assumptions
detailed in Note 22. The accounting estimates and assumptions relating to equity-settled, share-based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but
may impact expenses and equity.
Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment if there is any indication that the carrying amount may
not be recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference
to the higher of ‘value in use’ (being the net present value of expected future cash flows of the relevant cash-
generating unit) and ‘fair value less costs to sell’.
In determining value in use, future cash flows are based on:
(cid:115) Economic benefits derived from the use of the asset;
(cid:115) Estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence
of economic extraction;
(cid:115) Future production levels;
(cid:115) Future commodity prices; and
(cid:115) Future cash costs of production and capital expenditure.
Variations to the expected future cash flows and timing thereof could result in significant changes to any impairment
losses recognised, if any, which could in turn impact future financial results.
Fair value of investment in associate
On the reclassification of a subsidiary to an associate and due to the “loss of control”, the Consolidated Entity
is required to fair-value the investment in the associate on initial recognition. Where the investment relates to an
investment in an entity with quoted securities the Consolidated Entity values the investment with reference to the
bid price of the securities on the day the control is lost. Where there is no active market in the securities of the fair-
valued financial asset the Consolidated Entity determines the fair value of the investment by reference to, among
other things, the following:
(cid:115) Current market conditions;
(cid:115) Expected future cash flows; and
(cid:115) Fair value of similar financial instruments or entities based on arm’s length market transactions between
knowledgeable willing parties.
When determining the fair value of an investment for which there is no active market the Consolidated Entity uses
valuation techniques that best suit the financial asset being valued. Valuations are inherently subjective and the
Consolidated Entity makes critical judgements and estimates when determining both the type and quantum of
inputs used in the valuation model.
During a prior reporting period the Consolidated Entity engaged an “Independent Expert” to fair-value its investment
in an associate entity (Apurimac Ferrum S.A.). As the value of the associate was deemed to be represented by the
value of the underlying exploration projects held by the entity and, due to the early exploration phase of the project,
it was determined that the empirical/yardstick valuation method would be the most appropriate method to use in
determining a fair value.
After receiving an initial independent valuation of the investment, due to the inherently uncertain nature of the inputs
used in the valuation model, including the uncertainty surrounding the global economic climate, at the reporting
date the Board of the Consolidated Entity exercised its discretion and decided that for financial reporting purposes,
it would be prudent to maintain a full impairment of the value of its shareholding in Apurimac Ferrum S.A. (2010:
$nil). The Board and management of the Consolidated Entity continue to pursue the development of the iron ore
projects held by Apurimac Ferrum S.A., along with its partners, and expect to re-evaluate the carrying value of the
asset when a more robust valuation model is able to be used.
54
Treatment of investment in Apurimac Ferrum S.A. as an associate
On 30 June 2011 Strike Resources Ltd increased its shareholding in Apurimac Ferrum S.A. (AF) from 44% to 56%.
Pursuant to AASB 127 Consolidated and Separate Financial Statements control is defined as “the power to govern
the financial and operating policies so as to obtain a benefit from those activities”, and is normally presumed for
a shareholding of greater than 50%. However, in the case of Strike’s investment in AF, the voting rights of AF’s
shareholders are governed by the terms of the “AF Settlement Agreement”, which was executed in July 2009, until
July 2012. This agreement requires unanimous support from all AF shareholders for a motion to be carried at a
shareholders meeting. As a result of this requirement the Board of Strike has determined that “control” does not
exist and therefore Strike doesn’t consolidated AF when presenting its consolidated financial statements.
e) Principles of Consolidation
A controlled entity is any entity the Company has the power to control the financial and operating policies of so as
to obtain benefits from its activities. A list of controlled entities is contained in Note 12 to the financial statements.
All inter-company balances and transactions between entities in the consolidated group, including any unrealised
profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with those policies applied by the Company.
Changes in ownership interests
The Consolidated Entity treats transactions with non-controlling interests that do not result in a loss of control
as transactions with the equity owners of the Consolidated Entity. A change in ownership interest results in an
adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative
interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and
any consideration paid or received is recognised in a separate reserve with equity attributable to owners of Strike
Resources Limited.
When the Consolidated Entity ceases to have control, joint control or significant influence, any retained interest
in the entity is remeasured to its fair value with the change in carrying value recognised in profit or loss. The fair
value is the initial carrying value amount for the purposes of subsequently accounting for the retained interest as
an associate, joint controlled entity or financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the
related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are
reclassified to profit or loss.
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant
influence is retained, only a portion of the share of the amounts previously recognised in other comprehensive
income are reclassified to profit or loss where appropriate.
f) Investments in Associates
Associates are all entities over which the Group has significant influence but not control or joint control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are
accounted for in the parent entity financial statements using the cost method, or at fair value on transition from a
subsidiary, and in the consolidated financial statements using the equity method of accounting after initially being
recognised at cost, or at fair value on transition from a subsidiary.
The Consolidated Entity’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and
its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment. Dividends received from
associates are recognised in the parent entity’s profit or loss, while in the consolidated financial statements they
reduce the carrying amount of the investment.
When the Consolidated Entity’s share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured long-term receivables, the Consolidate Entity does not recognise any further losses,
unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Consolidated Entity and its associate are eliminated to the extent of
the Group’s interest in the associate.
The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on
acquisition (refer Note 9).
Accounting for Strike’s investment in Apurimac Ferrum S.A.
On 30 June 2011 Strike Resources entered into an agreement with Iron Associates Corporation (IAC) to purchase
55
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
IAC’s 12% shareholding in Apurimac Ferrum S.A. (AF). As a result of this transaction Strike’s shareholding in AF
increased from 44% to 56%. Management has considered whether the increase of Strike’s shareholding in AF
to more than 50% has resulted in Strike moving to a position of control as defined by AASB 127 Consolidated
and Separate Financial Statements. Management has determined that due the certain terms contained in the
“AF Settlement Agreement” to which Strike and AF’s other shareholder, D&C Group, are parties, Strike does not
have the power to govern the financial and operating policies of AF is therefore not required to consolidated AF for
financial reporting purposes.
g) Mineral Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is initially capitalised in respect of each identifiable area of interest
where the Company has right of tenure. These costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area or where activities in the area have not yet reached
a stage that permits reasonable assessment of the existence or otherwise of economically-recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the area is made.
Under AASB 6 Exploration for and Evaluation of Mineral Resources, if facts and circumstances suggest that the
carrying amount of any recognised exploration and evaluation assets may be impaired, the Company must perform
impairment tests on those assets and measure any impairment in accordance with AASB 136 Impairment of
Assets. Any impairment loss is to be recognised as an expense. 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.
h) Operating Segments
The Group determines and presents operating segments based on the information which is provided to the
Managing Director internally, who is the Group’s chief operating decision maker.
An operating segment is a component of the Consolidated Entity which engages in business activities from which
it may earn revenues and incur expenses, including revenues and expenses which relate to transactions with any
of the Group’s other components. An operating segment is identified as a segment whose operating results are
reviewed regularly by the Managing Director to make decisions about resources to be allocated to the segment,
assess its performance, and for which discrete financial information is available.
Segment results which are reported to the Managing Director include items directly attributable to a segment as
well as those which can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets
(primarily the Company’s headquarters), head office expenses, foreign exchange movements and gain on loss of
control of subsidiaries.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment
and intangible assets other than goodwill.
i) Revenue Recognition
Revenue is measured as the fair value of the consideration received or receivable. Revenue is recognised to the
extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be
reliably measured. All revenue is stated net of the amount of value added taxes (VAT). The following specific
recognition criteria must also be met before revenue is recognised:
(i) Sale of goods and disposal of assets
Revenue from the sale of goods and disposal of other assets is recognised when the Consolidated Entity has
passed control and the risks and rewards of ownership of the goods/assets to the buyer.
(ii) Interest revenue
Interest revenue is recognised using the effective interest method, whereby interest is recognised on a proportional
basis taking into account the interest rates applicable to the financial assets.
(iii) Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been established. The Consolidated
Entity brings dividend revenue to account on the applicable ex-dividend entitlement date.
(iv) Other revenues
Other revenues are recognised on a receipts basis.
56
j) Foreign Currency Transaction and Balances
Functional and presentation currency
The functional currency of each entity within the Consolidated Entity is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented in
Australian dollars, which is the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated at the reporting date exchange rate.
Exchange differences arising on the translation of monetary items are recognised in the Consolidated Statement
of Comprehensive Income, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the
extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the
Consolidated Statement of Comprehensive Income.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
(a) assets and liabilities are translated at exchange rates prevailing at the reporting date;
(b) income and expenses are translated at average exchange rates for the period; and
(c) retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the Consolidated
Entity’s foreign currency translation reserve in the Consolidated Statement of Financial Position. These differences
are recognised in the Consolidated Statement of Comprehensive Income in the period in which the operation is
disposed.
k) Income Tax
The income tax expense or income for the period is the tax payable or receivable on the current period’s taxable
income based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and for unused tax losses (if applicable).
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose in a transaction, other than a business combination, which at
the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. The amount of
deferred tax assets brought to account or which may be realised in the future is based on the assumption that
no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity will
derive sufficient future assessable income to enable the benefit to be realised, and will comply with the conditions
of deductibility imposed by the law.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities, and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
57
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
l) Value Added Taxes (including GST) (VAT)
Revenues, expenses and assets are recognised net of the amount of any VAT, except where the amount of VAT
incurred is not recoverable from the taxation authority. In these circumstances the VAT is recognised as part of the
cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the Consolidated
Statement of Financial Position are shown inclusive of VAT where applicable. Cash flows are presented in the
Statement of Cash Flows on a gross basis, except for the VAT component of investing and financing activities,
which are disclosed as operating cash flows.
m) Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to
the reporting 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, plus related on-costs. Employee benefits payable later
than one year hence have been measured at the present value of the estimated future cash outflows to be made
for those benefits. Employer superannuation contributions are made by the Consolidated Entity in accordance with
statutory obligations and are charged as an expense when incurred.
n) Director/Employee Options
The fair value of options granted by the Company to Directors and employees are recognised as an employment
expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the
period during which the Directors/employees become unconditionally entitled to the options (vesting period). The
fair value at grant date is determined using the Black-Scholes option valuation model that takes into account the
exercise price, term of the option, vesting criteria, share price at grant date, dividends, expected price volatility of
the underlying shares in the Company and the risk-free interest rate for the term of the option. Upon the exercise
of options, the balance of the reserve relating to those options is transferred to share capital.
o) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term, highly-liquid
investments with original maturities of six months or less and bank overdrafts. Bank overdrafts (if any) are shown
within short-term borrowings in current liabilities on the Consolidated Statement of Financial Position.
p) Receivables
Trade receivables are recognised and carried at original invoice amount less any provision for impairment.
A provision for impairment of trade receivables is made when there is objective evidence that the Consolidated
Entity will not be able to collect debts. Indicators of impairment would include financial difficulties of the debtor,
likelihood of the debtor’s insolvency and default in payment. Any impairment is recognised in the Consolidated
Statement of Comprehensive Income.
q) Investments and Other Financial Assets
Recognition
The Consolidated Entity recognises receivables on the date that they originate. All other financial assets are
recognised initially on the trade date at which the Consolidated Entity becomes a party to the contractual provisions
of the instrument.
Financial assets are classified based on the objective of the Consolidated Entity’s business model for managing the
financial assets and the characteristics of the contractual cash flows.
The Consolidated Entity derecognises a financial asset when the contractual cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows such that substantially all the risks and rewards of
ownership of the financial asset are transferred.
Financial assets at fair value are measured initially at fair value plus, in the case of financial assets not at fair value
through profit or loss, transaction costs directly attributable to the acquisition of the financial asset. Subsequent
movements in fair value are recognised in profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Assets in this category are
classified as current assets.
58
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for those with maturities greater than 12 months
after the reporting period, in which case they are classified as non-current assets.
Available-for-sale financial assets
Available-for-sale financial assets comprising principally marketable equity securities are non-derivatives that are
either designated in this category or not classified in any of the other categories. They are included in non-current
assets unless the investment matures or management intends to dispose of the investment within 12 months of the
end of the reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and
fixed or determinable payments and management intends to hold them for the medium to long term.
Profit or loss arising on the sale of equity investments is recognised in profit or loss
Impairment
Impairment losses on financial assets at fair value are recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or
loss in subsequent periods
r) Financial Liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments
and amortisation.
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.
At each reporting date, the Consolidated Entity assesses 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 instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in
the Consolidated Statement of Comprehensive Income.
s) Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly-traded
derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date.
The quoted market price used for financial assets held by the Consolidated Entity is the current bid price, the
appropriate quoted market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market (for example over-the-counter
derivatives) is determined using valuation techniques. The Consolidated Entity may use a variety of methods and
makes assumptions that are based on market conditions existing at each reporting date. Other techniques, such
as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate
their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Consolidated Entity for similar
financial instruments.
t) Property, Plant and Equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
The carrying amount of property, 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 assets employment and subsequent disposal. The expected net cash
flows have been discounted to their present value in determining recoverable amount.
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 Consolidated Entity
and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated
59
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Statement of Comprehensive Income during the financial period in which they are incurred.
The depreciation rates used for each class of depreciable assets are:
Furniture & fittings
Computer equipment
Plant & equipment
Leasehold improvements
15% to 66.67%
33.33% to 66.67%
20%
15%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An
asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing consideration received with carrying amount. These
are included in the Consolidated Statement of Comprehensive Income in the period in which the disposal occurs.
u) Impairment of Assets
At each reporting date the Consolidated Entity 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 Consolidated Statement of Comprehensive Income. 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 Consolidated Entity estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
v) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of
the financial year, which remain unpaid at reporting date. The amounts are unsecured and are usually paid within
30 days of invoice date.
w) Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the
issue of new shares or options for the acquisition of a business are included in the cost of the acquisition as part of
the purchase consideration.
x) Earnings per Share
Basic earnings per share are determined by dividing the operating result after income tax by the weighted average
number of ordinary shares on issue during the financial period.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise
of dilutive options outstanding during the financial period.
y) Discontinued Operations
A discontinued operation is a component of the Consolidated Entity’s business that represents a separate major
line of business that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to
resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to
be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative
Consolidated Statement of Comprehensive Income is restated as if the operation had been discontinued from the
start of the comparative period.
z) Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Consolidated
Entity as lessee are classified as operating leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the Consolidated Statement of Comprehensive Income on a straight-line
basis over the period of the lease.
aa) Parent Entity Financial Information
The financial information for the parent entity, Strike Resources Limited, disclosed in Note 19 has been prepared on
60
the same basis as the consolidated financial statements.
ab) Business Combinations
The acquisition method of accounting is used to account for all business combinations regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and
the fair value of any pre-existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred to the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of
the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference
is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
ac) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Consolidated Entity’s share of
the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions
of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments
in associates. Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating
to the entity sold.
ad) Rehabilitation and Restoration Costs
Long-term environmental obligations are based on the Consolidated Entity’s environmental management plans, in
compliance with current environmental and regulatory requirements.
Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance
that has occurred up to the reporting date. Increases due to additional environmental disturbances, relating to the
development of an asset, are capitalised and amortised over the remaining life of the relevant project.
Annual increases in the provision relating to the change in the net present value of the rehabilitation and restoration
costs are accounted for in the Consolidated Statement of Comprehensive Income as borrowing costs.
The estimated cost of rehabilitation is reviewed annually and adjusted as appropriate for changes in legislation,
technology or other circumstances. Cost estimates are not reduced by potential proceeds from the sale of assets.
ae) New Standards and Interpretations Released but not yet Adopted
The following new standards and amendments to standards are mandatory for the first time for the financial year
beginning 1 July 2010:
(cid:115) AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements
Project;
(cid:115) AASB 2009-8 Amendments to Australian Accounting Standards - Group Cash-Settled, Share-Based Payment
Transactions;
(cid:115) AASB 2009-10 Amendments to Australian Accounting Standards - Classification of Rights Issues; and
(cid:115) AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project.
61
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The adoption of these standards did not have any impact on the current period or any prior period and is not likely
to affect future periods.
(i) New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2011 reporting periods and have not yet been applied in the financial report. The Group’s assessment of the impact
of these new standards and interpretations is set out below.
(cid:115) 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 are not expected to have any significant impact on the
Group’s disclosures. The Group intends to apply the amendment from 1 July 2011.
(cid:115) AASB 10 Consolidated Financial Statements (effective for the annual reporting periods commencing on or after
1 January 2013). AASB 10 introduces certain changes to the consolidation principles, including the concept of
de facto control and changes in relation to the special purpose entities. Strike is continuing to assess the impact
of the standard.
(cid:115) AASB 11 Joint Arrangements (effective for the annual reporting periods commencing on or after 1 January
2013). AASB 11 introduces certain changes to the accounting for joint arrangements. Joint arrangements will
be classified as either joint operations (where parties with joint control have rights to assets and obligations for
liabilities) or joint ventures (where parties with joint control have rights to the net assets of the arrangement).
Joint arrangements structured as a separate vehicle will generally be treated as joint ventures and accounted for
using the equity method. Strike is continuing to assess the impact of the standard.
(cid:115) AASB 13 Fair Value Measurement (effective for annual reporting periods commencing on or after 1 January
2013). AASB 13 establishes a single framework for measuring fair value of financial and non-financial items
recognised at fair value on the Consolidated Statement of Financial Position or disclosed in the notes to the
financial statements. Strike is continuing to assess the impact of the standard.
(cid:115)
IAS 1 Presentation of Financial Statements (effective for annual reporting periods commencing on or after 1
July 2013). IAS 1, amended in June 2011, introduces amendments to align the presentation items of other
comprehensive income with US GAAP. Strike will apply the amended standard from 1 July 2013. When
the standard is first adopted, there will be changes to the presentation of the Consolidated Statement of
Comprehensive Income. However, there will be no impact on any of the amounts recognised in the financial
statements.
(cid:115) AASB 1054 Australian Additional Disclosures (effective for annual reporting periods beginning on or after 1
July 2011). AASB 1054, issued in May 2011, moves additional Australian specific disclosure requirements for
for-profit entities from various Australian Accounting Standards into this Standard as a result of Trans-Tasman
Convergence Project. AASB 1054 Australian Additional Disclosures removes the requirement to disclose each
class of capital commitments contracted for at the end of the reporting period (other than commitments for the
supply of inventories). When the standard is adopted for the first time for the financial year ending 30 June 2012,
the financial statements will no longer include disclosures about capital and other expenditure commitments as
these are no longer required by AASB 1054.
(cid:115) Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting
Standards (effective for annual reporting periods beginning on or after 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. Strike will apply the amended standard from 1 July 2011. When the amendments
are applied, Strike will need to disclose any transactions between its subsidiaries and its associates. However,
there will be no impact on any of the amounts recognised in the financial statements.
(cid:115) 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 officially 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. Strike is listed on the ASX and 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.
(cid:115) AASB 2010-8 Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets
62
(effective from 1 January 2012). In December 2010, the AASB amended AASB 112 Income Taxes to provide
a practical approach for measuring 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 and 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, which is through use or through sale. The amendment
introduces a rebuttable presumption that investment property which is measured at fair value is recovered
entirely by sale. The amendment is not expected to have any significant impact on Strike’s financial statements.
Strike intends to apply the amendment from 1 July 2012.
(cid:115) AASB 119 - employee benefits “expected to be settled” (as opposed to “due to settled” under the current standard)
within 12 months after the end of the reporting period are short-term benefits, and therefore not discounted when
calculating leave liabilities. Annual leave not expected to be used within 12 months of the end of the reporting
period will in future be discounted when calculating leave liability. This standard has no impact, as there are no
annual leave provision amounts that are non-current. Strike will apply this standard from 1 July 2013.
2. PROFIT/(LOSS) FOR THE YEAR
(a) Revenue
Revenue from continuing operations
Interest received – other
Other income
Foreign exchange gain
Consulting fees
Other income
Consolidated Entity
2011
$
2,663,221
-
1,655,546
48,862
1,704,408
2010
$
2,191,586
1,797,640
-
-
1,797,640
Total revenue and other income
4,367,629
3,989,226
(b) Expenses
Operating expenses
Occupancy costs
Finance costs
Borrowing costs – interest paid
Personnel costs
Cash remuneration
Directors’ and employees’ options
Administration costs
Consultancy fees
Professional fees
Depreciation
Other corporate expenses
Impairment losses
Resource projects
Investment in associate entity
Loans to associated entity
327,309
18,748
-
346,057
2,186,141
24,394
2,210,535
229,255
417,507
146,629
888,910
1,682,301
13,467,910
3,399,115
5,777,410
22,644,435
353,840
38,254
167
392,261
2,970,564
429,448
3,400,012
501,352
1,515,062
56,893
947,054
3,020,361
-
-
6,315,256
6,315,256
63
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fair value adjustment – financial assets held
as fair value through profit or loss
Profit on sale of shares
Loss on disposal of property, plant and equipment
Foreign exchange loss
Gain on deconsolidation of subsidiary
(Apurimac Ferrum S.A.)
Loss on deconsolidation of subsidiary –
Iron Associates Corporation
3. INCOME TAX EXPENSE
(a) Income tax expense
Current tax
Deferred tax
Consolidated Entity
2011
$
-
1,785,620
85,665
3,636,311
2010
$
(440,295)
-
-
-
-
(29,802,852)
-
1,936,356
1,142,857
(29,100,290)
28,819,684
(15,972,400)
439,564
-
439,564
-
-
-
(b) Numerical reconciliation between tax expense and pre-tax net profit/(loss)
Profit/(loss) before income tax
(24,452,055)
19,961,626
Income-tax expense/(benefit) on above at 30%
Increase in income tax due to:
Non-deductible expenses and foreign losses
Movement in unrecognised temporary differences
Capital gains
Decrease in income tax expenses due to:
Non assessable income
Utilisation of prior year tax losses
Deductible equity raising costs
Net gain on loss of control of AF and IAC
Effect of current-year revenue losses not recognised
Under provision for prior year taxable income
Foreign jurisdiction withholding tax
Income-tax expense attributable to operating profit
(c) Deferred tax assets not brought to account
On Income-Tax Account
Carry-forward tax losses
Other
On Capital Account
Carry-forward tax losses
Unrealised capital losses
Total deferred tax assets not brought to account
(d) Deferred tax liabilities
Timing differences
Offset by deferred tax assets recognised
64
(7,335,616)
5,988,488
4,320,752
-
731,811
1,096,202
(731,811)
(328,368)
-
2,247,029
653
438,911
439,564
7,448,146
-
7,448,146
-
-
-
7,448,146
628,619
(628,619)
-
2,891,995
(2,559)
-
-
-
(335,240)
(8,597,999)
55,315
-
-
-
6,096,618
760,920
6,857,538
64,676
-
64,676
6,922,214
1,568,372
(1,568,372)
-
(e) The deferred tax asset not brought to account for the 2011 and 2010 years will only be obtained if:
(i) the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable
the benefit to be realised;
(ii) the Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation;
and
(iii) in relation to Australian carry-forward income tax losses the Consolidated Entity is able to meet the continuity
of ownership and/or continuity of business tests.
(f) The Company and controlled entities of the Company have not elected to consolidate for taxation purposes and
have not entered into a tax sharing and funding agreement in respect of such arrangements.
4. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Details of Key Management Personnel during the financial year:
Current
Stephen Gethin
Matthew Hammond
Ken Hellsten
William Johnson
David Lim
Malcolm Richmond
Past
Mark Horn
Farooq Khan
Mike Lowry
H. Shanker Madan
Farhad Moshiri
Andrew Napier
Company Secretary & General Counsel
Non-Executive Director
Managing Director
Non-Executive Director
Chief Financial Officer
Acting Chairman/Non-Executive Director
Alternate Director for Mr. F. Moshiri (resigned 3 February 2011)
Non-Executive Director (resigned 3 February 2011)
General Manager – Berau (resigned 30 April 2011)
Non-Executive Chairman (resigned 3 February 2011)
Non-Executive Director (resigned 3 February 2011)
Process Engineer (resigned 29 April 2011)
(b) Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Consolidated Entity
2011
$
1,508,346
223,828
-
-
24,394
1,756,568
2010
$
1,738,876
274,021
83,044
152,905
429,448
2,678,294
Detailed remuneration disclosures are provide in the remuneration report on pages 39 to 46.
65
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(c) Number of Shares Held by Key Management Personnel
Balance at
beginning of
year
Received
during the
year on the
exercise of
options
-
-
187,083
-
-
13,941,605
38,100
-
496,343
-
-
100,000
14,763,131
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
beginning of
year
Received
during the
year on the
exercise of
options
-
-
-
-
-
24,751,791
-
-
610,838
-
-
102,460
25,465,089
-
-
-
-
-
-
-
-
-
-
-
-
-
Net change
other
-
-
-
-
-
(13,941,605)
-
-
(496,343)
-
-
-
(14,437,948)
Net change
other
-
-
187,083
-
-
(10,810,186)
38,100
-
(114,495)
-
-
(2,460)
Balance
at the
end of
year
-
-
187,083
-
-
-
38,100
-
-
-
-
100,000
325,183
Balance
at the
end of
year
-
-
187,083
-
-
13,941,605
38,100
-
496,343
-
-
100,000
(10,701,958)
14,763,131
2011
Gethin, S.
Hammond, M.
Hellsten, K.
Horn, M.4
Johnson, W.
Khan, F.1
Lim, D.
Lowry, M.2
Madan, H.S.4
Moshiri, F.5
Napier, A.6
Richmond, R.
Total
2010
Gethin, S.
Hammond, M.
Hellsten, K.
Horn, M.
Johnson, W.
Khan, F.
Lim, D.
Lowry, M.
Madan, H.S.
Moshiri, F.
Napier, A.
Richmond, R.
Total
1. Mr. Khan ceased as a Director on 3 February 2011.
2. Mr. Lowry ceased as a member of Key Management Personnel on 30 April 2011.
3. Mr. Madan ceased as a Director on 3 February 2011.
4. Mr. Moshiri ceased as a Director on 3 February 2011. (Mr. Horn was alternate Director for Mr. Moshiri).
5. Mr. Napier was deemed to be a member of Key Management Personnel from 7 July 2010 to 29 April 2011.
Options provided as remuneration and shares issued on exercise of such options.
Details of options provided as remuneration are disclosed in the Remuneration Report section of the Directors’
Report. There were no shares issued on the exercise of these options during the financial year.
66
(d) Number of Options Held by Key Management Personnel
Balance at
1 July 2010
Balance at
appointment compensation other7
Granted as Net change Balance at Vested and
30 June 2011 exercisable
2011
Gethin, S.
Hammond, M.
Horn, M1
Hellsten, K.
Johnson, W.
Khan, F.2
Lim, D.
Lowry, M.3
Madan, H.S.4
Moshiri, F.5
Napier, A.
Richmond, M.
Total
250,000
-
-
-
1,240,000
3,050,000
-
250,000
6,130,000
-
-
1,700,000
12,620,000
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
-
-
-
-
-
600,000
-
-
-
-
-
1,200,000
-
-
-
-
-
(3,050,000)
-
(250,000)
(6,130,000)
-
-
-
(9,430,000)
850,000
-
-
-
1,240,000
-
600,000
-
-
-
-
1,700,000
4,390,000
850,000
-
-
-
1,240,000
-
600,000
-
-
-
-
1,700,000
4,390,000
1. Mr. Horn ceased as an alternate Director on 3 February 2011.
2. Mr. Khan ceased as a Director on 3 February 2011.
3. Mr. Lowry ceased being a member of Key Management Personnel on 30 April 2011.
4. Mr. Madan ceased as a Director on 3 February 2011.
5. Mr. Moshiri ceased as a Director on 3 February 2011.
6. Mr. Napier was deemed to be a member of Key Management Personnel from 7 July 2010 to 29 April 2011.
7. Figures in “net change other” column represent final holding when the individual ceased being a KMP.
Balance at
1 July 2009
Balance at
appointment compensation other7
Granted as Net change
Balance at Vested and
30 June 2010 exercisable
2010
Gethin, S1
Hammond, M.
Ho, V.2
Hobson, M.
Horn, H.
Hellsten, K.3
Johnson, W.
Khan, F.
Lim, D.
Lowry, M.
Madan, H.S.
Moshiri, F.
Richmond, M.
Stephenson, J.4
Total
-
-
1,380,000
-
-
-
1,240,000
3,050,000
-
-
3,880,000
-
1,700,000
1,650,000
12,900,000
250,000
-
-
-
-
-
-
-
-
250,000
-
-
-
-
500,000
-
-
-
-
-
-
-
-
-
-
2,250,000
-
-
-
2,250,000
-
-
(1,380,000)
-
-
-
-
-
-
-
-
-
-
(1,650,000)
(3,030,000)
250,000
-
-
-
-
-
1,240,000
3,050,000
-
250,000
6,130,000
-
1,700,000
-
12,620,000
250,000
-
-
-
-
-
1,240,000
3,050,000
-
250,000
6,130,000
-
1,700,000
-
12,620,000
1. Mr. Gethin was deemed to be a member of Key Management Personnel from 1 May 2010.
2. Mr. Ho ceased holding the office of Director on 25 September 2010 and ceased holding the office of Company Secretary on 30 April 2010.
3. Mr. Hellsten commenced as Managing Director on 24 March 2010.
4. Mr. Stephenson ceased holding office as a Director on 19 February 2010.
5. Figures in “net change other” column represent final holding when the individual ceased being a KMP.
(e) Loans to Key Management Personnel
There were no loans to Key Management Personnel (or their personally-related entities) during the financial year.
(f) Other Transactions with Key Management Personnel
Fees for services provided by Mr. Mark Horn, Alternate Director for Mr. Farhad Moshiri, are paid to M. Horn and Co,
a business of which Mr. Horn is a principal.
There were no other transactions with Key Management Personnel (or their personally-related entities) during the
financial year.
67
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. AUDITORS’ REMUNERATION
Auditors of the Consolidated Entity
Audit and review of financial statements
- BDO Audit (WA) Pty Ltd
Other services – technical updates
- BDO (WA) Pty Ltd
Auditors of the Perúvian subsidiaries
Audit and review of financial statements
- BDO Pazos, Lopez de Romana S.C
6. EARNINGS PER SHARE
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Net profit/(loss)
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic earnings/(loss) per share
Weighted average number of ordinary shares outstanding
during the year used in calculation of diluted earnings/(loss) per share
Consolidated Entity
2011
$
2010
$
51,934
72,450
795
-
7,187
59,916
8,334
80,784
Consolidated Entity
2011
cents
(18.95)
(18.95)
2010
cents
15.35
14.95
$
$
(24,891,619)
19,961,626
Number
Number
131,367,145
130,034,268
131,367,145
133,534,268
Under AASB 133 Earnings per share, potential ordinary shares such as options will only be treated as dilutive
when their conversion to ordinary shares would decrease/increase the earning/(loss) per share from continuing
operations.
Diluted earnings/(loss) per share is not disclosed if it does not increase the basic loss per share.
7. CASH AND CASH EQUIVALENTS
Consolidated Entity
2011
$
1,651,165
32,525,164
2010
$
6,069,121
35,376,054
34,176,329
41,445,175
Cash at bank
Term deposits
68
(a) Reconciliation of Profit/(Loss) after Tax to Net Cash Flows from Operations
Operating profit/(loss) after tax
Interest income
Non cash flows in profit/(loss) from ordinary activities:
Depreciation - plant & equipment
Adjustment for movement in foreign exchange
Adjustment on deconsolidation of subsidiary
Fair value adjustments
Loans
Fair value through profit and loss financial assets
Available-for-sale financial assets
Investment in associate
Exploration and evaluation projects
Directors’ and employee options
Loss on sale of fixed assets
Loss on sale of investments
Decrease/(increase) in assets:
Receivables
Increase/(decrease) in liabilities:
Trade creditors and accruals
Provisions
Net cash outflows from operating activities
8. TRADE AND OTHER RECEIVABLES
Current:
Amounts receivable from sundry debtors
Provision for doubtful debts
Goods and service tax (GST) recoverable in Australia
Prepayments
Non-Current:
Amounts receivable from sundry debtors
Loans to associated entity
Provision for impairment*
Loans
Consolidated Entity
2011
$
2010
$
19,961,626
(2,191,586)
(24,891,619)
(2,663,221)
146,629
3,979,521
-
5,777,410
-
(2,268,015)
1,149,115
13,467,910
24,394
85,665
482,395
56,893
147,548
6,338,417
-
(440,295)
-
-
-
429,448
-
-
(897,206)
5,752,527
2,640,742
(661,289)
(3,627,569)
(24,270,023)
(11,249,297)
(5,464,742)
697,759
(32,675)
665,084
9,152
14,025
688,261
853,680
-
853,680
13,109
23,549
890,338
55
20,675,505
(20,675,505)
97,751
97,806
539
14,874,697
(14,874,697)
-
539
* 2010 - $8,559,441of this loan was provided for while the entity was a subsidiary.
Refer to Note 21 for the Consolidated Entity’s exposure to credit risk, foreign exchange risk and interest rate risk.
69
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Apurimac Ferrum S.A. (AF) is a company incorporated and domiciled in Perú, South America. During the financial
year Strike Resources Limited’s shareholding in AF increased from 44% as at 30 June 2010 to 56% on 30 June
2011. Due to the operation of an agreement between the AF shareholders executed on 5th of August 2009 Strike
is not deemed to control AF pursuant to AASB 127 Consolidated and Separate Financial Statements and therefore
does not consolidated the accounts of AF.
Summarised financial information of associate entity:
The Consolidated Entity’s share of the results of its associate and it’s aggregate assets and liabilities are as follows:
Apurimac Ferrum S.A.
2011
2010
Ownership interest1 Assets
56%
44%
$
11,441,652
9,832,629
Liabilities
$
12,108,636
4,148,281
1. Strike Resources Ltd increased its shareholding in Apurimac Ferrum to 56% from 44% on 30 June 2011.
Consolidated Entity’s share of associate losses not bought to account:
Opening share of carry-forward associate losses
Current year share of associate loss
Closing share of carry-forward associate losses
2011
$
800,515
941,005
1,741,520
Loss
$
941,005
800,515
2010
$
-
800,515
800,515
The Consolidated Entity’s share of the associate’s loss has not been brought to account as the investment in the
associate is fully impaired, refer Note 1(f).
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70
10. PROPERTY, PLANT AND EQUIPMENT
2011 Consolidated
$
$
$
$
Capital WIP
Land
Plant and
equipment
Leasehold
improvements
Carrying value at 1 July 2010
Adj. to opening balance
Additions to CWIP
Transfers out of CWIP
Transfers from CWIP
Depreciation expense
Cost of asset disposals
Accumulated depreciation
on disposed assets
Carrying value at 30 June 2011
At 1 July 2010
Cost or fair value
Accumulated depreciation
and impairment
Net carrying amount
At 30 June 2011
Cost or fair value
Accumulated depreciation
and impairment
Net carrying amount
2010 Consolidated
Carrying value at 1 July 2009
Additions
Additions from capital WIP
Disposal of asset
Transfers to property, plant
and equipment
Depreciation expense
Accumulated depreciation on
disposed assets
Foreign exchange adjustment
Carrying value at 30 June 2010
At 1 July 2009
Cost or fair value
Accumulated depreciation
and impairment
Net carrying amount
At 30 June 2010
Cost or fair value
Accumulated depreciation
and impairment
Net carrying amount
218,856
(102,891)
35,252
(150,257)
-
-
-
678,267
(37,628)
-
-
-
-
273,957
-
-
-
30,853
(125,103)
(217,518)
66,634
-
-
-
119,070
(21,526)
(93,262)
Total
$
1,237,714
(140,519)
35,252
(150,257)
149,923
(146,629)
(310,780)
-
960
-
640,639
143,046
105,235
31,710
102,626
174,756
849,460
218,856
678,267
510,068
95,935
1,503,126
-
218,856
-
678,267
(236,111)
273,957
(29,301)
66,634
(265,412)
1,237,714
960
640,639
219,755
121,743
983,097
-
960
-
640,639
(114,520)
105,235
(19,117)
102,626
(133,637)
849,460
$
-
381,043
-
-
(162,187)
-
-
-
218,856
-
-
-
$
627,474
15,955
-
-
-
-
-
34,838
678,267
$
312,736
27,870
159,514
(286,745)
-
(46,637)
104,534
2,685
273,957
$
37,138
37,079
2,673
-
$
977,348
461,947
162,187
(286,745)
-
(10,256)
(162,187)
(56,893)
-
-
66,634
104,534
37,523
1,237,714
627,474
501,663
56,183
1,185,320
-
627,474
(188,927)
312,736
(19,045)
37,138
(207,972)
977,348
218,856
678,267
510,068
95,935
1,503,126
-
218,856
-
678,267
(236,111)
273,957
(29,301)
66,634
(265,412)
1,237,714
71
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. FINANCIAL ASSETS
Investments comprise:
Financial assets at fair value through profit and loss
Shares in listed companies – at cost
Add: net change in fair value
Available-for-sale financial assets
Shares in listed companies – at cost
Less: provision for impairment
Fair value of shares in listed companies
Consolidated Entity
2010
$
2011
$
-
-
-
-
-
-
-
575,182
(247,992)
327,190
2,188,160
(1,091,660)
1,096,500
1,423,690
Changes in fair value of financial assets at fair value through profit and loss are recorded as an expense in the current
reporting period (Note 1(q)). The fair value of listed shares in financial assets at fair value through profit and loss
and available-for-sale financial assets have been determined directly by reference to bid prices in an active market.
Information about the Consolidated Entity’s exposure to market and price risk is provided in Note 21(d).
All financial assets categorised as financial assets through profit and loss and available-for-sale financial assets were
disposed of during the current financial year.
12. INVESTMENT IN CONTROLLED ENTITIES
Country of
incorporation
Percentage of
Ownership
Strike Finance Pty Ltd
Strike Australian Operations Pty Ltd
Strike Operations Pty Ltd (SOPL)
PT Indo Batubara (100% beneficially owned by SOPL)
Strike Indo Operations Pty Ltd (SIOPL)
PT Orion Indo Mining (100% beneficially owned by SIOPL)
Ferrum Holdings Limited
Strike Resources Perú S.A.C.
Australia
Australia
Australia
Indonesia
Australia
Indonesia
British Anguilla
Perú
13. EXPLORATION AND EVALUATION EXPENDITURE
Balance at the beginning of the year
Exploration and evaluation expenditure additions
Impairment loss – exploration and evaluation (Note 2(b))
Foreign exchange adjustment
Balance at the end of the year
2011
100%
100%
100%
100%
100%
100%
100%
100%
2010
100%
100%
100%
100%
100%
100%
100%
100%
Consolidated Entity
2011
$
21,129,916
577,877
(13,467,910)
-
8,239,883
2010
$
18,642,548
2,301,920
-
185,448
21,129,916
The ultimate recoverability of deferred exploration and evaluation expenditure is dependent on the successful
development or sale of the relevant area of interest. Refer to Note 1(d) & (g).
72
14. TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accruals
Tax payable
Non Current
Loan from associate
(a) Risk exposure
Consolidated Entity
2011
$
504,781
2,254,934
25,770
2,785,485
2010
$
326,323
136,296
101,967
564,586
132,999
14,631
Details of the Consolidated Entity’s exposure to risks arising from current payables are set out in Note 21.
15. PROVISIONS
Current
Provision for employee entitlements – annual leave
Other
16. ISSUED CAPITAL
133,534,268 (2010: 130,034,268)
fully-paid ordinary shares
Consolidated Entity
2011
$
56,545
-
56,545
2010
$
110,160
8,175
118,335
145,632,412
144,846,669
Each fully-paid, ordinary share carries one vote per share and the right to participate in dividends.
Movement in ordinary share capital
At 1 July 2009
At 30 June 2010
Shares issued on exercise of options
Share issue expenses
At 30 June 2011
Capital risk management
Date of movement
No.
$
11 Feb 2011
130,034,268
130,034,268
3,500,000
-
133,534,268
144,846,669
144,846,669
789,667
(3,924)
145,632,412
The Consolidated Entity’s objectives when managing capital are to safeguard their ability to continue as a going
concern so that they can continue to provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure the Consolidated Entity may return capital to shareholders, issue
new shares or sell assets to reduce debt. The Consolidated Entity’s non-cash investments can be realised to meet
accounts payable arising in the normal course of business.
73
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17. RESERVES
Foreign currency translation reserve
Share-based payments reserve
Foreign Currency Translation Reserve
Nature and purpose of reserve
Consolidated Entity
2011
$
(630,900)
12,780,333
12,149,433
2010
$
(359,274)
12,991,282
12,632,008
Exchange differences arising on translation of a foreign controlled entity are taken to the foreign currency
translation reserve as described in Note 1(j). The reserve is recognised in profit and loss when the net investment
is disposed of.
Share-Based Payment Reserve
Nature and purpose of reserve
The share-based payments reserve records the consideration (net of expenses) received by the Company on the
issue of options. In relation to options issued to Directors and employees for nil consideration, the fair values of
these options are included in the share-based payments reserve.
Grant date
Consolidated Entity
$
No.
2011 - Movement in share-based payment reserve
The number of unlisted options outstanding over unissued
ordinary shares at the reporting date is as follows:
Opening balance at 1 July 2010
Granted options
Employee Options
Unlisted options exercisable at $1.30; expiring 23 Mar 13
Unlisted options exercisable at $1.50; expiring 23 Mar 13
Unlisted options exercisable at $1.75; expiring 23 Mar 13
Exercised options
Other Options
Unlisted options exercised at $0.178
Unlisted options exercised at $0.278
Lapsed options
Other Options
Lapsed options exercisable at $0.178; expired 30 Jun 08
Closing balance at 30 June 2011
20,086,404
12,991,282
6 May 11
6 May 11
6 May 11
400,000
400,000
400,000
13 Feb 07
13 Feb 07
(1,833,333)
(1,666,667)
9,264
8,698
6,432
-
-
-
17,786,404
(235,343)
12,780,333
74
Grant date
Consolidated Entity
$
No.
2010 - Movement in share-based payment reserve
The number of unlisted options outstanding over unissued
ordinary shares at the reporting date is as follows:
Opening balance at 1 July 2009
Granted options
Directors’ Options
Unlisted options exercisable at $2.50; expiring 24 Nov 12 25 Nov 09
Unlisted options exercisable at $2.75; expiring 24 Nov 12 25 Nov 09
Unlisted options exercisable at $3.25; expiring 24 Nov 12 25 Nov 09
Employees’ Options
Lapsed options
Employee Options
Unlisted options exercisable at $2.75; expiring 13 Oct 13
Lapsed options exercisable at $2.878; expiring 1 May 12
Lapsed options exercisable at $1.178; expiring 3 Oct 11
Lapsed options exercisable at $2.878; expiring 5 Sep 12
Closing balance at 30 June 2010
14 Oct 08
8 May 07
6 Oct 06
5 Sep 07
Equity-based Remuneration
18,286,404
12,561,834
750,000
750,000
750,000
155,197
143,759
124,763
-
(100,000)
(150,000)
(200,000)
20,086,404
5,729
-
-
-
12,991,282
On 6 May 2011 the Company granted 1,200,000 unlisted Employee Options with exercise prices of $1.30 (400,000),
$1.50 (400,000) and $1.75 (400,000) and a term of 1.9 years, vesting immediately. The expiry date of these options
is 23 March 2013.
The fair value of these options are expensed over the period from their date of grant to each respective vesting date,
fair value is calculated using a Black-Scholes options valuation model with an assumed volatility rate of 68% for the
underlying SRK shares (Note 22).
18. RELATED-PARTY DISCLOSURES
(a) Subsidiaries
Interests in subsidiaries are set out in Note 12.
During the year $6,232,056 (2010: $8,391,752) was loaned to subsidiaries to fund exploration activities.
(b) Associates
Apurimac Ferrum S.A. is an associate as set out in Note 9.
On 21 July 2009, through the AF Settlement Agreement, Strike Resources entered into a replacement loan
agreement with Apurimac Ferrum S.A.(AF) in which US$21 million may be advanced to AF to undertake exploration
on the Apurimac and Cusco Iron Ore projects. This loan is interest bearing (USD Monthly LIBOR rate + 2% per
annum) as provided for under the AF Settlement Agreement.
Loans to associates - Apurimac Ferrum
Balance on recognition of investment in associate
Loans advanced
Interest charged
Loan revalued due to foreign exchange movements
Balance at 30 June
Less provision for impairment
Carrying value
2011
$
14,930,769
8,901,390
347,692
(3,504,348)
20,675,503
20,675,503
-
2010
$
8,615,492
6,571,038
123,736
(379,497)
14,930,769
(14,930,769)
-
75
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(c) Transactions with Related Parties
Fees for services provided by Mr. Mark Horn,
Alternate Director for Mr. Farhad Moshiri,
are paid to M. Horn and Co, a business of which
Mr. Horn is a principal.
Amounts payable at year end to related parties:
M. Horn & Co
19. PARENT ENTITY INFORMATION
2011
$
2010
$
33,600
36,400
-
-
The following details information related to the parent entity, Strike Resources Limited, at 30 June 2011. The
information presented here has been prepared using consistent accounting policies as presented in Note 1(a).
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Accumulated losses
Option reserve
Total equity
Profit/(loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
The parent entity does not have any contingent assets or liabilities.
20. SEGMENT REPORTING
2011
$
34,670,794
19,023,382
53,694,176
2,793,974
-
2,793,974
50,900,202
145,632,412
(107,502,540)
12,780,330
50,910,202
(27,831,217)
-
(27,831,217)
2010
$
41,458,968
37,159,607
78,618,575
697,290
-
697,290
77,921,285
144,846,669
(79,916,666)
12,991,282
77,921,285
15,830,109
-
15,830,109
The Consolidated Entity is based in Australia but has investment exposure to resource projects in Indonesia
and Perú.
2011
Depreciation and amortisation
Total segment results
Total segment assets
Total segment liabilities
2010
Depreciation and amortisation
Total segment results
Total segment assets
Total segment liabilities
Indonesia
(Coal)
15,729
(13,802,875)
8,663,617
36,387
Indonesia
(Coal)
5,170
(357,192)
21,577,500
-
Perú
(Iron Ore)
2,158
1,407,120
391,028
140,297
Perú
(Iron Ore)
7,257
(386,543)
899,439
14,631
Total
17,887
(12,395,755)
9,054,645
176,684
Total
12,427
(743,735)
22,476,939
14,631
76
Profit and loss
Segment profit/(loss)
Interest revenue
Other income
Other corporate costs
Foreign exchange gain/(loss)
Impairment losses
Fair-value adjustments
Depreciation
Gain/(loss) on control of subsidiaries
Loss on disposal of available-for-sale financial assets
Loss on disposal of fixed assets
Tax expense
Profit and loss
Assets
Segment assets
Unallocated
Cash and cash equivalents
Trade and other debtors
Other receivables
Property, plant & equipment
Exploration expenditure
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Total assets as per the consolidated
Statement of Financial Position
Liabilities
Segment liabilities
Unallocated
Trade & other payables
Accruals and provisions
Total liabilities as per consolidated Statement of Financial Position
21. FINANCIAL RISK MANAGEMENT
Financial Risk Management Objectives and Policies
2011
$
(12,395,757)
2,314,822
151,083
(3,733,952)
(3,636,975)
(9,197,356)
2,268,015
(128,741)
-
(482,395)
(49,710)
(653)
(24,891,619)
2011
$
9,054,645
34,101,109
589,692
97,751
208,542
-
-
-
2010
$
(743,735)
2,191,586
-
(6,023,780)
1,796,986
(6,315,256)
440,295
(44,465)
28,659,995
-
-
-
19,961,626
2010
$
22,476,939
41,445,175
317,404
-
482,651
(18,487)
1,096,500
327,190
44,051,739
66,127,372
2011
$
176,684
2,382,615
415,730
2,975,029
2010
$
14,631
682,921
-
697,552
The Consolidated Entity’s financial instruments mainly consist of deposits with banks, accounts receivable and
payable and loans to related parties. The main risks arising from the Consolidated Entity’s financial instruments are
interest rate risk, foreign currency risk, credit risk, equity price risk and liquidity risk.
The Board of Directors is responsible for the overall internal control framework (which includes risk management)
but no cost-effective internal control system will preclude all errors and irregularities. The system is based, in
part, on the appointment of suitably-qualified management personnel in conjunction with a range of policies and
procedures, which incorporate monitoring and reporting mechanisms, to assist in the management of the various
risks to which the business is exposed. The effectiveness of the system is continually reviewed by management
and at least annually by the Board.
The financial receivables and payables of the Consolidated Entity in the table below are due or payable within 30
days. The financial investments are held for trading and are realised at the discretion of the Board of Directors.
77
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Variable interest rate
Fixed interest rate Non-interest bearing
Total
Consolidated
Entity
Financial assets
Cash
Receivables
Financial
assets
2011
$
1,152,637
-
-
1,152,637
2010
$
2011
$
4,695,190 32,525,164
-
-
2010
$
35,376,064
-
2011
$
498,528
786,067
2010
$
2011
$
1,373,921 34,176,329
786,067
854,219
2010
$
41,445,175
854,219
-
-
4,695,190 32,525,164
-
-
35,376,064 1,284,595
1,423,690
1,423,690
3,651,830 34,962,396 43,723,084
-
Financial
liabilities
Payables
Net financial
assets
-
-
-
- (2,703,170)
(462,619)
(2,703,170)
(462,619)
1,152,637
4,695,190 32,525,164
35,376,064 (1,418,575)
3,189,211 32,259,226 43,260,465
(a) Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest
rates. The Consolidated Entity’s exposure to market risk for changes in interest rates relate primarily to investments
held in interest-bearing cash deposits.
Cash at bank
Term deposit
Weighted average interest rates
(b) Foreign Currency Risk
Consolidated Entity
2011
$
1,651,165
32,525,164
34,176,329
2010
$
6,069,121
35,376,054
41,445,175
6.04%
5.55%
The Consolidated Entity is exposed to foreign currency risk on cash held by the Company and its controlled foreign
entities, foreign resource project investment commitments and exploration and evaluation expenditure on foreign
resource projects. The currencies giving rise to this risk are primarily US dollars (USD) and Indonesian Rupiah
(IDR). The Consolidated Entity has a policy of not hedging foreign currency risk and therefore has not entered into
any hedging against movements in foreign currencies against the Australian dollar, including forward exchange
contracts, as at the reporting date and is currently fully exposed to foreign exchange risk. The Consolidated Entity’s
exposure to foreign currency risk expressed in Australian dollars at the reporting date was as follows:
Consolidated Entity
Financial assets
Cash at bank
Receivables
Financial liabilities
Payables
(c) Credit Risk
USD
CAD
IDR
2011
2010
2011
2010
2011
2010
350,179 1,161,900
12,296
-
-
97,750
(174,719)
-
175,460 1,174,196
(149,145)
(51,395)
-
-
-
-
23,566
-
39,196
-
(36,090)
(12,524)
-
39,196
Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on
its contractual obligations resulting in financial loss to the Consolidated Entity. Concentrations of credit risk are
minimised primarily by undertaking appropriate due diligence on potential investments, carrying out all market
transactions through approved brokers, settling non-market transactions with the involvement of suitably qualified
legal and accounting personnel (both internal and external), and obtaining sufficient collateral or other security
(where appropriate) as a means of mitigating the risk of financial loss from defaults. This financial year there was
no necessity to obtain collateral.
The credit quality of the financial assets are neither past due nor impaired and can be assessed by reference
78
to external credit ratings (if available with Standard & Poor’s) or to historical information about counterparty
default rates:
Consolidated Entity
Cash and cash equivalents
AA
A+
A
BB
BBB+
No external credit rating available
Receivables
AA
A+
A
BB
BBB+
No external credit rating available
2011
$
27,466,469
6,300,000
403,717
-
-
6,143
34,176,329
474,692
92,032
-
-
-
219,343
34,962,396
2010
$
27,894,767
-
1,212,399
6,001
12,276,064
55,944
41,445,175
171,690
-
-
-
36,478
646,051
42,299,394
The Consolidated Entity measures credit risk on a fair-value basis. The carrying amount of financial assets recorded
in the financial statements, net of any provision for losses, represents the Consolidated Entity’s maximum exposure
to credit risk.
All receivables noted above, except interest on term deposits, are due within 30 days. None of the above receivables
are past due.
(d) Equity Price Risk
Equity-price risk represents the risk that the value of a financial instrument will fluctuate as a result of changes in
market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or
factors affecting all instruments in the market. Market risk is minimised through ensuring that investment activities
are undertaken in accordance with Board-established mandate limits and investment strategies.
Equity-securities price risk arises on the financial assets at fair value through profit or loss and available-for-sale
financial assets.
At the share investment portfolio level, the Consolidated Entity is not overly exposed (by majority of its net assets)
to one company or one particular industry sector of the market.
(e) Liquidity Risk
Liquidity risk is the risk that the Consolidated Entity will encounter difficulty in meeting obligations associated with
financial liabilities. The Consolidated Entity’s non-cash investments can be realised to meet accounts payable
arising in the normal course of business.
The financial liabilities disclosed have the following maturity obligations:
Consolidated Entity
Non-interest bearing
less than 6 months
6 to 12 months
Interest-bearing
between 1 & 2 years
between 2 & 5 years
2011
$
2,785,485
-
2,785,485
132,999
-
132,999
2010
$
462,619
-
564,586
14,631
-
14,631
79
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(f) Net Fair Value of Financial Assets and Liabilities
The carrying amounts of financial instruments recorded in the financial statements represent their fair value
determined in accordance with the accounting policies disclosed in Note 1(s). The aggregate fair value and carrying
amount of financial assets at the reporting date are set out in Notes 8 and 11. The carrying amount of the financial
liabilities at the reporting date as set out in Note 14 approximates the current fair value.
(g) Fair Value Measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
As of 1 July 2009, Strike Resources Limited has adopted the amendment to AASB 7 Financial Instruments:
Disclosures that requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the Consolidated Entity’s assets and liabilities measured and recognised at fair value.
2011
Total
Level 1
Level 2
Level 3
$
$
$
$
Assets
Financial assets at fair value through profit and loss
Trading securities
Available-for-sale financial assets
Equity securities
Total assets
2010
-
-
-
-
-
-
-
-
-
-
-
-
Level 1
$
Level 2
$
Level 3
$
Total
$
Assets
Financial assets at fair value through profit and loss
Trading securities
Available-for-sale financial assets
Equity securities
Total assets
327,190
1,096,500
1,423,690
-
-
-
-
-
-
327,190
1,096,500
1,423,690
All financial assets categorised as financial assets through profit and loss and available-for-sale were disposed of
during the current reporting period.
(h) Sensitivity Analysis
Interest rate risk analysis
The Consolidated Entity has performed a sensitivity analysis on its exposure to interest rate risk at the reporting
date. The management assessment is based upon an analysis of current and future market conditions, in particular
comments from the Reserve Bank of Australia on the likely movement of interest rates. The analysis demonstrates
the potential effect on the current year results and equity which could result from a change in these risks.
Change in profit
increase by 25bps (2010: 25bps)
decrease by 25bps (2010: 25bps)
Change in equity
increase by 25bps (2010: 25bps)
decrease by 25bps (2010: 25bps)
80
Consolidated Entity
2011
$
81,438
(81,438)
2010
$
115,103
(115,103)
81,438
(81,438)
115,103
(115,103)
Equity price risk analysis
The Consolidated Entity has performed a sensitivity analysis on its exposure to market price risk at the reporting
date. The management assessment is based upon an analysis of current and future market positions. The analysis
demonstrates the effect on the current-year results and equity which could result from a change in these risks.
The All Ordinaries Index was utilised as the benchmark for the listed share investments categorised as at fair value
through profit or loss and available-for-sale financial assets.
Change in profit
increase by 15%
decrease by 15%
Change in equity
increase by 15%
decrease by 15%
Foreign currency risk analysis
Consolidated Entity
2011
$
-
-
-
-
2010
$
213,553
(213,553)
213,553
(213,553)
The Consolidated Entity has performed a sensitivity analysis on its exposure to currency risk. The management
assessment is based upon an analysis of current and future market position. The analysis demonstrates the effect
on the current-year results and equity when the Australian dollar strengthened or weakened by 10% (2010: 5%)
against the foreign currencies detailed in Note 21(b), with all the other variables held constant.
Change in profit
increase by 5%
decrease by 5%
Change in equity
increase by 5%
decrease by 5%
Consolidated Entity
2011
$
(17,397)
(4,298)
(17,397)
(4,298)
2010
$
(55,914)
61,800
(55,914)
61,800
22. SHARE-BASED PAYMENTS
A total of 1,200,000 Employee Options were granted during the year (Note 17). These options were issued as part
of Strike’s employee share scheme. The reasons for the grant of these options to the employees are as follows:
(a) The options issue was designed to act as an incentive for the recipients to strive to achieve the Company’s goals
with the aim of enhancing shareholder value.
(b) The options provide an equity holding opportunity for the recipients which is linked to the Company’s share price
performance.
(c) Based on the option exercise price and the rate at which the options vest, the exercise of the options by the
recipient is potentially only likely to occur if there is sustained upward movement in the Company’s share price.
(d) The number of options issued to recipients has been determined having regard to the level of Directors’ fees
and employees’ salaries being paid and is a cash-free, effective and efficient way of providing an appropriate
level of remuneration as well as providing ongoing equity-based incentives for the recipients to remain with the
Company with a view to improving the future growth of the Company.
(e) As a relatively-small company, with much of its available funds dedicated or committed to its resource projects
(and also in seeking opportunities in relation to the same), and in financing its day-to-day working capital
requirements, the Company is not always in a position to maintain competitive cash salary ranges for its Directors
and employees within the industry in which it operates.
Directors’ and employees’ options carry no dividend or voting rights.
81
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Share-based payments expense
Consolidated Entity
2011
$
24,394
2010
$
429,448
Vested
and
Exercise
price
$
Balance at
start of
year
Granted
during
the year
Exercised Forfeited
during
the year
during
the year
Balance exercisable
at end of at end of
the year
year
Grant
date
Expiry
date
Consolidated entity - 2011
21 Jul 06
13 Sep 06
07 Mar 07
07 Mar 07
03 Dec 07
04 Jun 08
14 Oct 08
25 Nov 09
25 Nov 09
25 Nov 09
6 May 11
6 May 11
6 May 11
20 Jul 11
12 Sep 11
06 Mar 12
06 Mar 12
02 Dec 12
03 Mar 13
13 Oct 13
25 Nov 12
25 Nov 12
25 Nov 12
23 Mar 13
23 Mar 13
23 Mar 13
Weighted-average exercise price
0.938
0.938
2.078
2.788
3.978
2.878
2.750
2.500
2.750
3.250
1.300
1.500
1.750
3,200,000
-
500,000
-
500,000
-
2,600,000
-
3,070,000
-
250,000
-
250,000
-
750,000
-
750,000
-
750,000
-
-
400,000
-
400,000
400,000
-
12,620,000 1,200,000
1.52
2.28
- (3,200,000)*
-
-
- (1,650,000)*
- (2,080,000)*
-
-
-
-
-
-
-
-
-
-
-
- 500,000 500,000
- 500,000 500,000
950,000 950,000
990,000 990,000
- 250,000 250,000
-
-
-
-
-
-
-
-
- 400,000 400,000
- 400,000 400,000
- 400,000 400,000
(9,430,000) 4,390,000 4,390,000
2.42
(250,000)*
(750,000)*
(750,000)*
(750,000)*
2.12
2.42
* options issued to individuals who ceased employment with Strike Resources Ltd during the year, these options were not forfeited and did not
lapse during the year.
Grant
date
Expiry
date
Consolidated entity - 2010
21 Jul 06
13 Sep 06
06 Oct 06
07 Mar 07
07 Mar 07
01 May 07
05 Jun 07
03 Dec 07
04 Mar 08
04 Jun 08
14 Oct 08
24 Nov 10
24 Nov 10
24 Nov 10
20 Jul 11
12 Sep 11
05 Oct 11
06 Mar 12
06 Mar 12
01 May 12
01 May 12
02 Dec 12
04 Sep 12
03 Mar 13
13 Oct 13
23 Mar 13
23 Mar 13
23 Mar 13
Exercise
price
$
Balance at
start of
year
Granted
during
the year
Exercised Forfeited
during
the year
during
the year
Balance exercisable
at end of
the year
at end of
year
Vested
and
0.938
0.938
1.178
2.078
2.788
2.878
2.878
3.978
2.878
2.878
2.750
1.300
1.500
1.750
-
4,600,000
-
500,000
-
150,000
-
500,000
-
3,300,000
-
100,000
-
33,000
-
4,000,000
-
200,000
-
250,000
-
250,000
750,000
-
750,000
-
750,000
-
13,883,000 2,250,000
-
-
(150,000)
- (1,400,000)* 3,200,000 3,200,000
500,000
- 500,000
-
-
-
-
-
500,000
- 500,000
(700,000)* 2,600,000 2,600,000
-
-
(100,000)
-
-
-
(33,000)*
(930,000)* 3,070,000 3,070,000
-
-
(200,000)
-
-
250,000
-
- 250,000
250,000
-
- 250,000
750,000
-
- 750,000
750,000
-
- 750,000
-
750,000
- 750,000
(3,513,000) 12,620,000 12,620,000
-
Weighted-average exercise price
2.41
1.52
2.31
2.28
2.28
* options issued to individuals who ceased employment with Strike Resources Ltd during the year, these options were not forfeited and did not
lapse during the year.
No options were exercised during the period.
The weighted-average remaining contractual life of share options outstanding at the end of the period was 1.14
years (2010: 1.82 years).
82
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 30 June 2011 was $0.023 for $1.30
options, $0.022 for $1.50 options and $0.016 for $1.75 options (2010: $0.21 for $2.50 options, $0.19 for $2.75
options and $0.17 for $3.25 options). The fair value at grant date is independently determined using the Black-
Scholes option pricing model which takes into account the exercise price, the term of the option, the share price at
grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest
rate for the term of the option.
The model inputs for options granted during the year ended 30 June 2011 included:
(a) options are granted for no consideration and vest immediately. Vested options are exercisable for a period of
three years after vesting.
(b) exercise prices of $1.30, $1.50 and $1.75 (2010: $2.50, $2.75 and $3.25)
(c) grant date: 6 May 2010 (2010: 25 November 2009)
(d) expiry date: 23 March 2013 (2010: 24 November 2012)
(e) share price at grant date: $0.365 (2010: $0.77)
(f) expected price volatility of the Company’s shares: 68% (2010: 80%)
(g) expected dividend yield: 0% (2010: 0%)
(h) risk-free interest rate: 5.145% (2010: 4.97%)
The expected price volatility is based on the historic volatility adjusted for any expected changes to future volatility
due to publicly available information.
23. COMMITMENTS
a) Lease Commitments
Non-cancellable operating lease commitments:
not longer than one year
between 1 year and 5 years
Consolidated Entity
2011
$
220,365
675,212
895,577
2010
$
230,372
957,338
1,187,710
The Consolidated Entity leases offices in Perth, Australia and Jakarta, Indonesia under non-cancellable operating
leases with expiry dates between 2 and 4 years. Significant terms of each lease are as follows:
Perth office lease
The lease rent is subject to a fixed 4% increase on the anniversary of the commencement date. Strike is required to
pay a portion of the annual outgoings incurred by the lessor. This figure is reviewed on an annual basis. The lease
does not contain an option to renew the lease at expiry date.
Jakarta office lease
The lease does not contain an option to renew the lease on expiry.
b) Mineral Tenement/Concession/Mining Rights - Commitments for Expenditure
Australian tenements
In order to maintain current rights of tenure to exploration tenements, the holders of Australian mineral tenements
are required to outlay lease rentals and meet minimum expenditure commitments. In the financial year ended 30
June 2010 the Consolidated Entity entered into a farm-in agreement with Process Minerals International Pty Ltd
(PMI), a subsidiary of ASX-listed Mineral Resources Limited. Under this agreement PMI is required to meet the
minimum expenditure commitments over the Australian tenements in which Strike holds an interest. Financial
commitments for subsequent periods are contingent upon the continuity of the farm-in arrangement with PMI,
future exploration and evaluation results, and as such cannot be reliably estimated.
83
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Perúvian concessions
The Consolidated Entity is required to pay annual licence fees by 30 June of each year, at rates which vary on
an amount per-hectare basis. The total amount of this commitment will depend upon the area of concessions
relinquished (if any) and the area of new concessions granted (if any) and therefore cannot be reliably estimated. As
a result of finalising the arbitration process with the shareholders of Apurimac Ferrum S.A.(AF), the Consolidated
Entity granted on option over Perúvian tenements held by its subsidiary, Strike Resources Perú S.A.C. Under the
terms of the AF Settlement Agreement AF is obliged to make all necessary payments to keep the concessions in
good standing. Financial commitments for subsequent periods are contingent upon the continuity of the agreement
with AF, future exploration and evaluation results, and as such cannot be reliably estimated.
Australian heritage protection agreements
These agreements facilitate the preservation of Aboriginal heritage through the protection of Aboriginal sites and
objects upon the grant of mining tenements in Western Australia. The Heritage Protection Agreements require the
Consolidated Entity to conduct Aboriginal heritage surveys prior to conducting exploration that is not low-impact in
nature and detail procedures to be followed if an Aboriginal site is identified.
Agreements with Perúvian landowners and community groups
The Company notes that holding a mineral concession in Perú does not grant automatic access to the surface land.
Notwithstanding an easement procedure is contemplated in Perúvian law, in practice, mining companies have to
negotiate and enter into private agreements with landowners/community groups in order to have access to their
land for the purposes of conducting mining activities (exploration, evaluation, development and mining). Multiple
landowners/community groups are affected by the Consolidated Entity’s proposed mining activities on a majority of
the Consolidated Entity’s Perúvian concessions. To date, approvals have been sought and obtained for drilling on
a programme by programme basis.
Obtaining approvals from landowners/community groups can be a complicated and lengthy process. The
Consolidated Entity will have to commit funds to community groups and/or landowners to secure land access
agreements to develop its Perúvian projects. There can be no guarantees that such approvals will be obtained, or
as to the terms upon which they will be obtained. At this stage it is not possible to quantify the potential financial
obligation of the Consolidated Entity in this regard.
24. CONTINGENT ASSETS AND LIABILITIES
(a) Strike Resources Perú S.A.C. Option
Strike Resources Perú S.A.C. (the Company’s Perúvian subsidiary) granted Apurimac Ferrum S.A. an option over
its mining concessions exercisable for US$1.75 million.
(b) Cristoforo Agreement
On 15 June 2010, Strike Resources Perú S.A.C. (Strike Perú) entered into an assignment of mining rights and
option agreement with the Perúvian owner of three mineral concessions in the Apurimac District totalling 1,900
hectares, being the Cristoforo 14, Cristoforo 28 and Ferroso 29 concessions (Cristoforo Agreement). The
consideration paid (and payable) under the agreement was US$31,250 (paid on execution), US$50,000 payable
within 12 months and 15 business days from execution, US$50,000 payable within 6 months thereafter and a
further US$1.05 million is payable if Strike Perú exercises the option to acquire the concessions. The option may be
exercised on or before 14 June 2012. Under the terms of the AF Settlement Agreement Strike Perú was required
to assign the Cristoforo Agreement to Apurimac Ferrum S.A. (AF) for no consideration (other than reimbursement
of the money paid by Strike Perú to the Cristoforo vendor). Accordingly, Strike Perú is currently in the process of
executing the assignment.
(c) Native Title
The Consolidated Entity’s tenements in Australia may be subject to native title applications in the future. At this
stage it is not possible to quantify the impact (if any) that native title may have on the operations of the Consolidated
Entity.
(d) Government Royalties
The Consolidated Entity is liable to pay royalties on production obtained from its mineral tenements/concessions. For
example, the applicable Government royalties in Perú are between 1% to 3% based on the value of production. At
this stage it is not possible to quantify the potential financial obligation of the Consolidated Entity under Government
royalties.
84
(e) Berau Coal Project Royalties
The Consolidated Entity is liable to pay a royalty to PT Kaltim Jaya Bara (KJB), the owner of the mining concession
on which the Consolidated Entity’s Berau Coal Project is located. As a result of changes to the Indonesian mining
law it is unclear if Strike would legally be able to pay this royalty should it commence production at Berau. Due to
uncertainty created by the mining law changes and issues concerning the estimation of such a royalty at this stage
of the project, it is not possible to quantify the potential financial obligation of the Consolidated Entity to pay a royalty
to KJB.
(f) Directors’ Deeds
The Consolidated Entity has entered into deeds of indemnity with certain Strike Resources Limited Directors,
indemnifying them against liability incurred in discharging their duties as Directors/officers of the Consolidated Entity.
As at the reporting date, no claims have been made under any such indemnities and, accordingly, it is not possible
to quantify the potential financial obligation of the Consolidated Entity under these indemnities.
(g) Paulsens East Royalty
The Consolidated Entity entered into a farm-in agreement with Process Minerals International Pty Ltd (PMI), a
subsidiary of ASX listed Mineral Resources Limited for the potential mining of iron ore from Strike’s Paulsens East
project (EL47/1328 and PL47/1170) located in the Pilbara. Under this agreement PMI will pay Strike A$ 3.20 per
dry tonne of ore mined. As this royalty is contingent on the successful development of a mine and due to the
uncertain nature of mine production it is not possible to quantify the potential financial benefit to the Consolidated
Entity of this royalty.
25. EVENTS AFTER THE REPORTING DATE
During July 2011 Strike entered into an agreement with Canadian explorer, Cuervo Resources Inc (Cuervo), to
potentially earn up to 49.2% in Cuervo in return for Strike loaning Cuervo up to $15m Canadian dollars (C$).
These funds are to be used by Cuervo to undertake advanced exploration activities on their Perúvian iron-ore
concessions. The program of work to be undertaken has been agreed by both parties and is included in the terms
of the financing agreement. Cuervo is a junior iron-ore explorer with concessions in Perú that are complementary
to AF’s concessions in the Apurimac and Cusco regions in southern Perú. Cuervo’s main project area, Cerro
Ccopane, is 65km south of the city of Cusco and hosts four (4) zones of magnetite mineralisation being the Aurora,
Orcopura, Huillque and Bob 1 prospects.
Financing Arrangement
Key terms agreed by Strike and Cuervo are as follows:
(cid:115) Strike to loan Cuervo up to C$15m by way of zero-coupon secured promissory notes in two tranches.
(cid:115) Tranche 1 loan of C$5.25m will be advanced on the pre-registration of the mortgage and will have a term of 3
years from the execution date of the financing agreements
(cid:115) Tranche 2 loan of C$9.75m is to be advanced at Strike’s election. This loan will be in the form of a zero coupon
secured promissory note with a term of 3 years from the execution date of the financing agreement.
(cid:115) Security for the loans is in the form of a mortgage over Cuervo’s Perúvian concessions and a pledge over the
shares of Cuervo’s 100% owned Perúvian subsidiary and holder of Cuervo’s interest in its Perúvian concessions.
(cid:115) As interest consideration for the loans Cuervo granted Strike two warrants9 to purchase common shares of Cuervo.
If both warrants are exercised Strike will own over 49% of Cuervo’s issued common shares (approximately 46%
of Cuervo on a fully diluted basis).
(cid:115) The Tranche 1 Warrant gives Strike the right to purchase 17,500,000 common shares in Cuervo (32.5% of
Cuervo, undiluted) at an exercise price of C$0.30 and have a term of 3 years, subject to adjustment in certain
circumstances. This warrant was issued on the advance of the Tranche 1 loan.
(cid:115) The Tranche 2 Warrant gives Strike the right to purchase up to 17,727,273 common shares in Cuervo (49.2%
of Cuervo cumulative on the Tranche 1 Warrant, undiluted) at an exercise price of C$0.55 and have a term of
3 years. This Warrant was issued on the advance of the Trance 1 loan and will terminate if Strike elects not to
advance the Tranche 2 Loan (C$9.75m) to Cuervo.
9 A warrant is in all material respects identical to an option – giving the holder the right, but not the obligation, to buy shares at a specified price dur-
ing a specified period.
85
STRIKE RESOURCES ANNUAL REPORT 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(cid:115) The Warrants will be required to be exercised on the occurrence of any of the following events:
o Cuervo’s shares trade for 20 consecutive days above C$1.00, with a minimum 20 day trading volume of 1.5
million shares; or
o Cuervo files a Canadian National Instrument 43-101 compliant mineral resource estimate of at least 700Mt
of iron ore with a grade of 40% Fe or above.
(cid:115)
If the Loans are outstanding the Warrants may be exercised by offsetting the outstanding loan amount with the
amount due on the exercise of the warrants.
(cid:115) During the term of the Tranche 1 Loan, Strike has the right to nominate 2 Directors to Cuervo’s Board and will
have the right to nominate a further Director if Strike advances the Tranche 2 Loan or exercises the Tranche
2 Warrant. Strike’s Chairman, Prof. Malcolm Richmond and Managing Director, Mr. Ken Hellsten, have been
appointed to Cuervo’s Board.
DIRECTORS’ DECLARATION
In the Directors’ opinion:
1. The Financial Statements, comprising the Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Statement of
Cash Flows and accompanying notes as set out on pages 49-86 above, are in accordance with the Corporations
Act 2001, and:
(a) comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2011 and its performance
for the year ended on that date;
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
3. The remuneration disclosures set out in the Directors’ Report on pages 39-46 (as the audited Remuneration
Report) comply with section 300A of the Corporations Act 2001;
4. The Directors have been given the declarations by the Managing Director (the person who performs the chief
executive function) and the Chief Financial Officer as required by section 295A of the Corporations Act 2001;
and
5. Note 1 confirms that the Financial Statements also comply with the International Financial Reporting Standards
as issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors and is signed for and on behalf of the
Directors by:
Malcolm Richmond
Chairman
23 September 2011
Ken Hellsten
Managing Director
86
AUDITOR’S REPORT
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF STRIKE RESOURCES LTD
Report on the Financial Report
We have audited the accompanying financial report of Strike Resources Ltd, which comprises the
consolidated balance sheet as at 30 June 2011, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors’ declaration of the consolidated entity comprising
the company and the entities it controlled at the year’s end or from time to time during the
financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that is free from material misstatement, whether due to fraud or error. In
Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting
Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation of the financial report that gives a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Strike Resources Ltd, would be in the same terms if given
to the directors as at the time of this auditor’s report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
87
STRIKE RESOURCES ANNUAL REPORT 2011
AUDITOR’S REPORT
Opinion
In our opinion:
(a) the financial report of Strike Resources Ltd is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2011 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(b) the financial report also complies with International Financial Reporting Standards as disclosed
in Note 1.
Emphasis of Matter
Without qualifying our audit opinion, we draw attention to the matter disclosed in Note 1 (d). There
remains a dispute as to the mining rights of the Berau coal concession. Given this dispute there
may be uncertainty as to the recoverability of the deferred exploration, evaluation and
development expenditure assets of Strike Resources Limited. The recoverability of the deferred
exploration and evaluation expenditure asset is dependent upon successful resolution of this dispute
and the successful development and commercialisation of the underlying areas of interest or their
sale. This material uncertainty may cast doubt about the company’s ability to realise the asset at
the values stated in the balance sheet. Our opinion is not qualified in respect of this matter.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30
June 2011. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Strike Resources Ltd for the year ended 30 June 2011
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Brad McVeigh
Director
Perth, Western Australia
Dated this 23rd day of September 2011
88
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE COMPLIANCE MATRIX
The following matrix sets out, in summary form, the extent to which the Company has implemented the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles). The
Corporate Governance Statement (CGS), which appears in the next section of this Report, sets out in detail the
way in which the Principles have been implemented.
Corporate Governance Principle
Compliance and
Comments
References
Principle 1: Lay solid foundations for management and
oversight
1.1 Companies should establish the functions reserved to the
Yes
board and those delegated to senior executives and disclose
those functions.
CGS 2.1 &
3.4
1.2 Companies should disclose the process for evaluating the
Yes
CGS 7.2
performance of senior executives.
1.3 Companies should provide:
(cid:115)(cid:0)(cid:0)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:65)(cid:82)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:50)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:17)(cid:14)(cid:17)(cid:12)(cid:0)(cid:17)(cid:14)(cid:18)(cid:0)
No departures
or 1.3.
(cid:115)(cid:0)(cid:0)(cid:0)(cid:87)(cid:72)(cid:69)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:65)(cid:0)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:69)(cid:86)(cid:65)(cid:76)(cid:85)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:83)(cid:69)(cid:78)(cid:73)(cid:79)(cid:82)(cid:0)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)
taken place in the reporting period and whether it was in
accordance with the process disclosed.
(cid:115)(cid:0)(cid:0)(cid:0)(cid:65)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:77)(cid:65)(cid:84)(cid:84)(cid:69)(cid:82)(cid:83)(cid:0)(cid:82)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:68)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)
charter or the statement of areas of delegated authority to
senior executives should be made publicly available, ideally
by posting it to the company’s website in a clearly-marked
corporate governance section.
Principle 2: Structure the board to add value
2.1 A majority of the board should be independent directors.
Yes
Yes
No. (Note, however,
that the Board has a
majority of Non-Executive
Directors and is seeking
to appoint at least 1
additional independent
Director.)
2.2 The chair should be an independent director.
2.3 The roles of chair and chief executive officer should not be
exercised by the same individual.
2.4 The board should establish a nomination committee.
2.5 Companies should disclose the process for evaluating the
performance of the board, its committees and individual directors.
2.6 Companies should provide the following information in the
corporate governance statement in the annual report:
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director held by each director in office at the date of the annual
report.
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independent directors and the company’s materiality thresholds.
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:72)(cid:73)(cid:80)(cid:83)(cid:0)(cid:65)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)
listed in Box 2.1 and an explanation of why the board considers a
director to be independent, notwithstanding the existence of these
relationships.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
CGS 7.2
Website
CGS 2.1
CGS 3.2
CGS 3.2
CGS 3.2, 3.3
& 3.4
CGS 6.2
CGS 2.3
CGS 3
(refers to this
material in
the Directors’
Report)
CGS 3.2
CGS 3.2
89
STRIKE RESOURCES ANNUAL REPORT 2011
CORPORATE GOVERNANCE STATEMENT
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board for directors to take independent professional advice at the
expense of the company.
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the annual report.
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attendance at meetings of the committee.
Yes
Yes
Yes
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and directors has taken place in the reporting period and whether
it was in accordance with the process disclosed.
Yes
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2.3, 2.4, 2.5 or 2.6.
No departures
The following material should be made publicly available, ideally by
posting it to the company’s website in a clearly-marked corporate
governance section:
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of new directors and the re-election of incumbent directors.
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role, rights, responsibilities and membership requirements for that
committee.
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:79)(cid:65)(cid:82)(cid:68)(cid:7)(cid:83)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:79)(cid:77)(cid:73)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)
directors.
Principle 3: Ethical and responsible decision making
Yes
Yes
Yes
3.1 Companies should establish a code of conduct and disclose
the code or a summary of the code as to:
Yes
3.1.1 the practices necessary to maintain confidence in the
company’s integrity.
3.1.2 the practices necessary to take into account their
legal obligations and the reasonable expectations of their
stakeholders.
3.1.3 the responsibility and accountability of individuals for
reporting and investigating reports of unethical practices.
3.2 Companies should establish a policy concerning diversity and
disclose the policy or a summary of that policy.
The policy should include requirements for the board to establish
measurable objectives for achieving gender diversity for the board
to assess annually both the objectives and progress in achieving
them.
3.3 Companies should disclose in each annual report the
measurable objectives for achieving gender diversity set by the
board in accordance with the diversity policy and progress towards
achieving them.
3.4 Companies should disclose in each annual report the
proportion of women employees in the whole organisation, women
in senior executive positions and women on the board.
Yes
Yes
No
Yes
90
CGS 5.4
CGS 4.1
CGS 6.2
(Names)
Director’s
Report (All
info)
CGS 2.3
CGS 4.2 &
6.2
Website
CGS 4.2
CGS 10.
CGS 8
CGS 8
CGS 8
CGS 8
3.5 Companies should provide an explanation of any departures
from Recommendations 3.1 to 3.4 in the corporate governance
statement in the annual report.
Yes
The following material should be made publicly available, ideally by
posting it to the company’s website in a clearly-marked corporate
governance section:
(cid:115)(cid:0)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:67)(cid:79)(cid:68)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:79)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:89)(cid:14)
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:73)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:84)(cid:89)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:14)
Principle 4: Safeguard integrity in financial reporting
4.1 The board should establish an audit committee.
4.2 Structure the audit committee so that it:
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(cid:115)(cid:0)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:73)(cid:83)(cid:84)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:0)(cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:14)
(cid:115)(cid:0)(cid:0)(cid:73)(cid:83)(cid:0)(cid:67)(cid:72)(cid:65)(cid:73)(cid:82)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:65)(cid:78)(cid:0)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0)(cid:67)(cid:72)(cid:65)(cid:73)(cid:82)(cid:12)(cid:0)(cid:87)(cid:72)(cid:79)(cid:0)(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:67)(cid:72)(cid:65)(cid:73)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
board.
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4.3 The audit committee should have a formal charter.
4.4 The following material should be included in the corporate
governance statement in the annual report:
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to the audit committee and their attendance at meetings of the
committee.
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:85)(cid:77)(cid:66)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:65)(cid:77)(cid:69)(cid:83)(cid:0)
of the attendees.
(cid:115)(cid:0)(cid:0)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:65)(cid:82)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:50)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:20)(cid:14)(cid:17)(cid:12)(cid:0)(cid:20)(cid:14)(cid:18)(cid:12)(cid:0)
4.3 or 4.4.
The following material should be made publicly available, ideally by
posting it to the company’s website in a clearly marked corporate
governance section:
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(cid:115)(cid:0)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:68)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:69)(cid:76)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
external auditor, and for the rotation of external audit engagement
partners.
Yes
Yes
Yes
Yes
No. (Not possible on
present Board composition,
however, the Company
will seek to comply upon
appointing an additional
independent Director.)
Partial (The Committee
Chair is not the Chair
of the Board but is not
independent.)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
CGS 10
CGS 10
CGS 8
CGS 6.1
CGS 6.1
CGS 6.3
CGS 6.3
CGS 6.1
Website
CGS 6.1
(Names)
Directors’
Report (All
info)
Directors’
Report
CGS 6.3
Website
Audit
Committee
Charter
91
STRIKE RESOURCES ANNUAL REPORT 2011
CORPORATE GOVERNANCE STATEMENT
Principle 5: Make timely and balanced disclosure
5.1 Companies should establish written policies designed to ensure
compliance with ASX Listing Rule disclosure requirements and to
ensure accountability at a senior executive level for that compliance
and disclose those policies or a summary of those policies.
Yes
5.2 Companies should:
(cid:115)(cid:0)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:65)(cid:82)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:50)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
5.1 or 5.2 in the corporate governance statement in the annual
report.
No departures
(cid:115)(cid:0)(cid:0)(cid:77)(cid:65)(cid:75)(cid:69)(cid:0)(cid:80)(cid:85)(cid:66)(cid:76)(cid:73)(cid:67)(cid:76)(cid:89)(cid:0)(cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:73)(cid:69)(cid:83)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:79)(cid:83)(cid:69)(cid:0)
policies designed to guide compliance with Listing Rule disclosure
requirements, ideally by posting it to the company’s website in a
clearly marked corporate governance section.
Principle 6: Respect the rights of shareholders
6.1 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 that policy.
Yes
Yes
6.2 Companies should provide:
(cid:115)(cid:0)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:65)(cid:82)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:66)(cid:69)(cid:83)(cid:84)(cid:0)(cid:80)(cid:82)(cid:65)(cid:67)(cid:84)(cid:73)(cid:67)(cid:69)(cid:0)
recommendations 6.1 or 6.2 in the corporate governance
statement in the annual report.
No departures
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:83)(cid:72)(cid:79)(cid:85)(cid:76)(cid:68)(cid:0)(cid:68)(cid:69)(cid:83)(cid:67)(cid:82)(cid:73)(cid:66)(cid:69)(cid:0)(cid:72)(cid:79)(cid:87)(cid:0)(cid:73)(cid:84)(cid:0)(cid:87)(cid:73)(cid:76)(cid:76)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:67)(cid:65)(cid:84)(cid:69)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)
shareholders publicly, ideally by posting the information on the
company’s website in a clearly-marked corporate governance
section.
Yes
(cid:115)(cid:0)(cid:0)(cid:65)(cid:0)(cid:68)(cid:69)(cid:83)(cid:67)(cid:82)(cid:73)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:82)(cid:82)(cid:65)(cid:78)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:80)(cid:82)(cid:79)(cid:77)(cid:79)(cid:84)(cid:69)(cid:0)
communication with shareholders.
Yes
Yes
Yes
Principle 7: Recognise and manage risk
7.1 Companies should establish policies for oversight and
management of material business risks and disclose a summary of
those policies.
7.2 The board should require management to design and
implement the risk management and internal control system to
manage the company’s material business risks and report to
it on whether those risks are being managed effectively. The
board should disclose that management has reported to it as to
the effectiveness of the company’s management of its material
business risks.
7.3 The board should disclose whether it has received assurance
from the chief executive officer (or equivalent) and the chief
financial officer (or equivalent) that the declaration provided in
accordance with section 295A of the Corporations Act is founded
on a sound system of risk management and internal control and
that the system is operating effectively in all material respects in
relation to financial reporting risks.
7.4 Companies should include the following material in the
corporate governance section of the annual report:
92
CGS 12.2
Website
CGS 12.2
CGS 12.1
Website
CGS 12.1 &
12.2
CGS 12.1 &
12.2
CGS 11.1
CGS 11.1
Yes
CGS 11.1
(cid:115)(cid:0)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:68)(cid:69)(cid:80)(cid:65)(cid:82)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:23)(cid:14)(cid:17)(cid:12)(cid:0)(cid:23)(cid:14)(cid:18)(cid:12)(cid:0)
7.3 or 7.4.
No departures
(cid:115)(cid:0)(cid:0)(cid:87)(cid:72)(cid:69)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)
under Recommendation 7.2.
(cid:115)(cid:0)(cid:0)(cid:87)(cid:72)(cid:69)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:0)(cid:65)(cid:83)(cid:83)(cid:85)(cid:82)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:67)(cid:72)(cid:73)(cid:69)(cid:70)(cid:0)
executive officer (or equivalent) and the chief financial officer (or
equivalent) under Recommendation 7.3.
Companies should make publicly available a summary of the
company’s policies on risk oversight and management of material
business risks, ideally by posting it to the company’s website in a
clearly-marked corporate governance section.
Principle 8: Remunerate fairly and responsibly
8.1 The board should establish a remuneration committee.
8.2 Companies should clearly distinguish the structure of non-
executive directors’ remuneration from that of executive directors
and senior executives.
8.2 The remuneration committee should be structured so that it:
(cid:115)(cid:0)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:73)(cid:83)(cid:84)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:0)(cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)
CGS 11.1
CGS 11.1
Website
CGS 11.1
CGS 6.2
Remuneration
Report
CGS 6.3
Yes
Yes
Yes
Yes
Yes
No. (Not possible on
present Board composition,
however, the Company
will seek to comply upon
appointing an additional
independent Director.)
(cid:115)(cid:0)(cid:0)(cid:73)(cid:83)(cid:0)(cid:67)(cid:72)(cid:65)(cid:73)(cid:82)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:65)(cid:78)(cid:0)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0)(cid:67)(cid:72)(cid:65)(cid:73)(cid:82)
(cid:115)(cid:0)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:76)(cid:69)(cid:65)(cid:83)(cid:84)(cid:0)(cid:84)(cid:72)(cid:82)(cid:69)(cid:69)(cid:0)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:83)
Yes
Yes
CG 6.2
CG 6.2
8.3 Companies should provide the following material or a clear
cross-reference to the location of the material in the corporate
governance statement in the annual report:
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:65)(cid:77)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
their attendance at meetings of the committee.
Yes
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:69)(cid:82)(cid:77)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:83)(cid:67)(cid:72)(cid:69)(cid:77)(cid:69)(cid:83)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:82)(cid:69)(cid:84)(cid:73)(cid:82)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:66)(cid:69)(cid:78)(cid:69)(cid:108)(cid:84)(cid:83)(cid:12)(cid:0)
other than superannuation, for non-executive directors.
Yes
(cid:115)(cid:0)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:65)(cid:82)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:50)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:24)(cid:14)(cid:17)(cid:12)(cid:0)
8.2 or 8.3.
(cid:115)(cid:0)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:67)(cid:72)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:69)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
role, rights, responsibilities and membership requirements for that
committee.
The Company should make publicly available a summary of the
company’s policy on prohibiting entering into transactions in
associated products which limit the economic risk of participating
in unvested entitlements under any equity-based remuneration
schemes, ideally by posting it to the company’s website in a clearly
marked corporate governance section.
Yes
Yes
Yes
CGS 6.2
(Names)
Directors’
Report
(Attendance)
CGS 9
Remuneration
Report
CGS 6.3
Website
CGS 9
Security
Trading Policy
- Website
93
STRIKE RESOURCES ANNUAL REPORT 2011
CORPORATE GOVERNANCE STATEMENT
1.
STRIKE’S CORPORATE GOVERNANCE APPROACH
The Strike Resources’ Board is committed to maintaining a high standard of corporate governance. Good corporate
governance involves the Directors and Company personnel having and living by a set of core values and behaviours
which underpin the Company’s activities and ensure transparency, fair dealing and protection of stakeholders’ interests.
The Board of Directors strongly supports the Corporate Governance Principles and Recommendations. Strike’s
practices are consistent with the Principles, subject to the exception that there is not an independent majority on
the Board or on Board Committees. It is not considered appropriate to move to an independent Board majority
immediately due to the scale of the Company’s activities, however, the Board supports moving to that position
as the Company’s activities expand. At the date of this Statement, the Company is seeking to appoint at least
one additional independent Director, and will continue to monitor the potential to further increase the number of
independents on the Board going forward. When the first new appointment is made it will present Strike with the
opportunity to ensure that at least one - and potentially both - of its Board Committees have independent majorities.
Strike Resources has a majority of non-Executive Directors, with the Managing Director being the only Executive
on a four-member Board. A Board majority which is independent of management, lead by a strong, independent
Chairman, is an important protection for shareholders.
2.
BOARD RESPONSIBILITIES
2.1
Areas of Responsibility
In general the Board is responsible for, and has the authority to determine, all matters relating to the policies,
practices, management and operations of the Company. The Board is also responsible for overall corporate
governance and recognises the need for the highest standards of behaviour and accountability for all personnel.
The Board also ensures that the Company complies with all of its contractual, statutory and social obligations. The
Board has the final responsibility for the successful operation of the Company.
Where the Board considers that particular expertise or information is required which is not available from within its
ranks, appropriate external advice may be taken before a decision is made.
Without intending to limit the general role of the Board, the Board’s principal functions and responsibilities include
the matters set out below, subject to delegation as specified elsewhere in this CGS or as otherwise appropriate:
(cid:115)(cid:0)
(cid:70)(cid:79)(cid:82)(cid:77)(cid:85)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:65)(cid:76)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:73)(cid:67)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:12)(cid:0)(cid:79)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:71)(cid:79)(cid:65)(cid:76)(cid:83)(cid:27)
(cid:115)(cid:0) (cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:82)(cid:65)(cid:73)(cid:83)(cid:73)(cid:78)(cid:71)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:83)(cid:83)(cid:85)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:27)
(cid:115)(cid:0) (cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:65)(cid:76)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)(cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:85)(cid:68)(cid:71)(cid:69)(cid:84)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:79)(cid:83)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:65)(cid:76)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:73)(cid:71)(cid:78)(cid:73)(cid:108)(cid:67)(cid:65)(cid:78)(cid:84)(cid:12)(cid:0)(cid:79)(cid:85)(cid:84)(cid:13)(cid:79)(cid:70)(cid:0)
budget expenditure items;
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0) (cid:80)(cid:82)(cid:85)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:0) (cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0) (cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0) (cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)
performance;
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:73)(cid:78)(cid:71)(cid:12)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:27)
(cid:115)(cid:0) (cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:65)(cid:68)(cid:69)(cid:81)(cid:85)(cid:65)(cid:84)(cid:69)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:68)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:84)(cid:72)(cid:69)(cid:83)(cid:69)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)
and procedures is maintained;
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:108)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:73)(cid:71)(cid:78)(cid:73)(cid:108)(cid:67)(cid:65)(cid:78)(cid:84)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:83)(cid:69)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:65)(cid:68)(cid:69)(cid:81)(cid:85)(cid:65)(cid:84)(cid:69)(cid:76)(cid:89)(cid:0)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:68)(cid:27)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:84)(cid:73)(cid:77)(cid:69)(cid:76)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:12)(cid:0)(cid:65)(cid:67)(cid:67)(cid:85)(cid:82)(cid:65)(cid:67)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:79)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:12)(cid:0)
including approving financial and operational reports; and
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:69)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:0)(cid:69)(cid:84)(cid:72)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:83)(cid:14)
The Board takes advice from the Audit Committee and the Remuneration and Nomination Committee on matters
within their respective Charters, however the Board retains final decision-making authority on those matters.
2.2 Board Meetings
The Board holds regular meetings, approximately monthly, and holds additional meetings whenever necessary to
deal with specific matters requiring attention. Circulating Directors’ resolutions are also used, where appropriate,
in addition to formal meetings.
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a
Director of the Company.
94
It is recognised and accepted that Non-Executive Directors may also concurrently serve on other boards, either in
an executive or non-executive capacity.
2.3
Performance Review and Evaluation
The Company is not of a size to warrant the development of formal processes for evaluating the performance of
Non-Executive Directors, however there is on-going monitoring of Board performance by the Chairman and self
review by the Board. It is the Board’s policy to ensure that the Company’s Directors and Executives demonstrate
the skills and experience which they need to discharge their responsibilities effectively.
The Remuneration and Nomination Committee is scheduled to formally review the Managing Director’s performance
in the December Quarter, 2011 and annually thereafter. A formal review of the Managing Director’s performance did
not occur during the Reporting Period.
3.
BOARD COMPOSITION AND STRUCTURE
The Board has been formed so that it has the composition, size and commitment to adequately discharge its
responsibilities and duties given its current size and the scale and nature of the Company’s activities.
The names of the Directors in office during the 2010-2011 financial year and their qualifications and experience are
stated in the Directors’ Report for that year in the Company’s Annual Report.
3.1
Skills, Knowledge and Experience
Directors are appointed based on the specific corporate and governance skills and experience required by the
Company. The Board recognises the need for Directors with a relevant blend of personal experience in mining,
accounting, law, finance, capital markets, public company administration and chief-executive business experience,
having regard to the scale and nature of the Company’s activities. A Director is initially appointed by the Board. All
Directors (other than the Managing Director) retire at the next Annual General Meeting after their appointment and
may stand for re-election. Once elected at an AGM, Directors hold office for three years, with the right to stand for
re-election for successive terms.
3.2
Independent Directors
An independent Director, according to the Principles, is a Non-Executive Director who:
(cid:115)(cid:0)
(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:65)(cid:0)(cid:83)(cid:85)(cid:66)(cid:83)(cid:84)(cid:65)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:0)(cid:79)(cid:70)(cid:108)(cid:67)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:12)(cid:0)(cid:79)(cid:82)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:87)(cid:73)(cid:83)(cid:69)(cid:0)(cid:65)(cid:83)(cid:83)(cid:79)(cid:67)(cid:73)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:76)(cid:89)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:12)(cid:0)(cid:65)(cid:0)(cid:83)(cid:85)(cid:66)(cid:83)(cid:84)(cid:65)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:0)
shareholder of the Company;
(cid:115)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:66)(cid:69)(cid:69)(cid:78)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:65)(cid:78)(cid:0)(cid:37)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:67)(cid:65)(cid:80)(cid:65)(cid:67)(cid:73)(cid:84)(cid:89)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:71)(cid:82)(cid:79)(cid:85)(cid:80)(cid:0)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:82)(cid:69)(cid:86)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)
3 years;
(cid:115)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:66)(cid:69)(cid:69)(cid:78)(cid:0)(cid:65)(cid:0)(cid:80)(cid:82)(cid:73)(cid:78)(cid:67)(cid:73)(cid:80)(cid:65)(cid:76)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:0)(cid:77)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:80)(cid:82)(cid:79)(cid:70)(cid:69)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0)(cid:65)(cid:68)(cid:86)(cid:73)(cid:83)(cid:69)(cid:82)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)(cid:77)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:85)(cid:76)(cid:84)(cid:65)(cid:78)(cid:84)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)
group member, or an employee materially associated with the provision of material professional or consulting
services, within the previous 3 years;
(cid:115)(cid:0)
(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:65)(cid:0)(cid:77)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:83)(cid:85)(cid:80)(cid:80)(cid:76)(cid:73)(cid:69)(cid:82)(cid:0)(cid:79)(cid:82)(cid:0)(cid:67)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:71)(cid:82)(cid:79)(cid:85)(cid:80)(cid:0)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:12)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:0)(cid:79)(cid:70)(cid:108)(cid:67)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:79)(cid:82)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:87)(cid:73)(cid:83)(cid:69)(cid:0)
associated directly or indirectly with a material supplier or customer;
(cid:115)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0)(cid:78)(cid:79)(cid:0)(cid:77)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:85)(cid:65)(cid:76)(cid:0)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:72)(cid:73)(cid:80)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)
(cid:115)(cid:0)
(cid:73)(cid:83)(cid:0)(cid:70)(cid:82)(cid:69)(cid:69)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:79)(cid:82)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:72)(cid:73)(cid:80)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:67)(cid:79)(cid:85)(cid:76)(cid:68)(cid:0)(cid:8)(cid:79)(cid:82)(cid:0)(cid:67)(cid:79)(cid:85)(cid:76)(cid:68)(cid:0)(cid:82)(cid:69)(cid:65)(cid:83)(cid:79)(cid:78)(cid:65)(cid:66)(cid:76)(cid:89)(cid:0)(cid:66)(cid:69)(cid:0)(cid:80)(cid:69)(cid:82)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:0)
to) materially interfere with the Director’s ability to act in the Company’s best interests.
Within the current Board, Chairman Professor Malcolm Richmond is regarded as an Independent Director. Ken
Hellsten, the Managing Director is not regarded as independent as he is an Executive Director. William Johnson is
a Director of a substantial shareholder of the Company and also served as an Executive Director of the Company
from July 2006 until 1 May 2010. Accordingly he is not regarded as independent. Matthew Hammond holds a
senior management position with a substantial shareholder of the Company and is not regarded as Independent.
The Company is actively seeking to appoint at least one additional, Independent, Non-Executive Director. This
process is well advanced as at the date of this Annual Report going to press. The Board, on advice from the
Remuneration and Nomination Committee, will monitor the desirability of adding further Independent Directors on
an ongoing basis.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity, to justify
appointing a majority of independent Directors. Non-Executive Directors who do not satisfy the full criteria for
95
STRIKE RESOURCES ANNUAL REPORT 2011
CORPORATE GOVERNANCE STATEMENT
independence are, nevertheless, independent of management. The Board believes that the individuals on the Board
can and do make independent and appropriate judgments in the Company’s best interests on all relevant issues.
3.3 Chairman
The Chairman leads the Board and has responsibility for ensuring that the Board receives accurate, timely and clear
information to enable Directors to perform their duties. The Chairman of the Company is Prof. Malcolm Richmond,
whose qualifications and experience are stated in the Directors’ Report for the year ended 30 June 2011.
3.4 Managing Director
The Managing Director is responsible - and accountable to the Board - for the Company’s day-to-day management.
The Managing Director of the Company is Mr Ken Hellsten, whose qualifications and experience are stated in the
Directors’ Report for the year ended 30 June 2011.
3.5 Company Secretary
The Company Secretary is appointed by the Board and is responsible for developing and maintaining the information
systems and processes that are appropriate for the Board to fulfil its role. The Company Secretary is responsible
to the Board for ensuring compliance with Board procedures and governance matters. The Company Secretary is
also responsible for overseeing and coordinating disclosure of information to the ASX as well as communications
with the ASX. The Company Secretary is Mr Stephen Gethin, who is also the Company’s General Counsel. Mr
Gethin has extensive company secretarial experience in listed companies and in the practice of corporate and
resources law.
4.
DIRECTORS: TENURE AND NOMINATIONS
4.1 Directors’ Tenure
The Managing Director, Mr Ken Hellsten, has a contract of employment with no fixed term and a notice period of
two months.
The Non-Executive Directors have not been appointed for fixed terms. The Company’s constitution provides that
a Director (other than any Managing Director) may not retain office for more than three calendar years or beyond
the third Annual General Meeting following their election, whichever is longer, without submitting himself or herself
for re-election. One third of the Directors (save for any Managing Director) must retire each year and are eligible for
re-election. The Directors who retire by rotation at each Annual General Meeting are those with the longest length
of time in office since their appointment or last election.
The initial appointment and last re-election dates of each Director are listed below.
Director
Malcolm Richmond
Ken Hellsten
William Johnson
Matthew Hammond
4.2 Board Nominations
Appointed
25 October 2006
24 March 2010
14 July 2006
25 September 2009
AGM Last Re-elected
25 November 2010
(As Managing Director Mr Hellsten is not
subject to re-election)
25 November 2009
25 November 2009
The Remuneration and Nomination Committee (Committee) is responsible for advising the Board on the desirable
mix of skills which Directors of the Company should have and for making recommendations to the Board on
potential new appointees, having regard to the corporate and governance skills which the Company requires. The
Board takes into account the Committee’s advice when appointing Directors. When considering the appointment
of a new Director, the Committee and the Board have regard to:
(cid:84)(cid:72)(cid:69)(cid:0)(cid:77)(cid:73)(cid:88)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:75)(cid:73)(cid:76)(cid:76)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:82)(cid:73)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:12)(cid:0)(cid:84)(cid:65)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:78)(cid:84)(cid:79)(cid:0)(cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:84)(cid:65)(cid:71)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
Company’s projects;
(cid:84)(cid:72)(cid:69)(cid:0)(cid:77)(cid:73)(cid:88)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:75)(cid:73)(cid:76)(cid:76)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:82)(cid:73)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:80)(cid:82)(cid:69)(cid:83)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:27)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:68)(cid:73)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:84)(cid:89)(cid:0)(cid:8)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:71)(cid:69)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:68)(cid:73)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:84)(cid:89)(cid:9)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:85)(cid:73)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:67)(cid:65)(cid:78)(cid:68)(cid:73)(cid:68)(cid:65)(cid:84)(cid:69)(cid:83)(cid:12)(cid:0)(cid:65)(cid:67)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:68)(cid:86)(cid:73)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:0)(cid:69)(cid:88)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0)(cid:83)(cid:69)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:85)(cid:76)(cid:84)(cid:65)(cid:78)(cid:84)(cid:14)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
96
5.
KEY BOARD POLICIES
5.1 Conflicts of Interest
Directors must:
(cid:115)(cid:0) (cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:69)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:65)(cid:67)(cid:84)(cid:85)(cid:65)(cid:76)(cid:0)(cid:79)(cid:82)(cid:0)(cid:80)(cid:79)(cid:84)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:109)(cid:73)(cid:67)(cid:84)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:77)(cid:65)(cid:89)(cid:0)(cid:79)(cid:82)(cid:0)(cid:77)(cid:73)(cid:71)(cid:72)(cid:84)(cid:0)(cid:82)(cid:69)(cid:65)(cid:83)(cid:79)(cid:78)(cid:65)(cid:66)(cid:76)(cid:89)(cid:0)(cid:66)(cid:69)(cid:0)(cid:84)(cid:72)(cid:79)(cid:85)(cid:71)(cid:72)(cid:84)(cid:0)(cid:84)(cid:79)(cid:0)(cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:0)
between the Director’s interests or their duties to any other parties and the Company’s interests in carrying out
its business; and
(cid:115)(cid:0)
(cid:73)(cid:70)(cid:0)(cid:82)(cid:69)(cid:81)(cid:85)(cid:69)(cid:83)(cid:84)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:12)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0)(cid:23)(cid:0)(cid:68)(cid:65)(cid:89)(cid:83)(cid:0)(cid:79)(cid:82)(cid:0)(cid:83)(cid:85)(cid:67)(cid:72)(cid:0)(cid:70)(cid:85)(cid:82)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:65)(cid:83)(cid:0)(cid:77)(cid:65)(cid:89)(cid:0)(cid:66)(cid:69)(cid:0)(cid:80)(cid:69)(cid:82)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:68)(cid:12)(cid:0)(cid:84)(cid:65)(cid:75)(cid:69)(cid:0)(cid:83)(cid:85)(cid:67)(cid:72)(cid:0)(cid:78)(cid:69)(cid:67)(cid:69)(cid:83)(cid:83)(cid:65)(cid:82)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
reasonable steps to remove any actual conflict of interest.
If a Director is unwilling or unable to remove a conflict of interest then the Director must, under the Corporations Act,
absent themself from the room when Board discussion and/or voting occurs on matters to which the conflict relates
(save with the approval of the remaining Directors where the Corporations Act permits).
5.2 Related-Party Transactions
Related party transactions include any financial transaction, as defined in the Corporations Act or the ASX Listing
Rules, between a Director and the Company. A related-party transaction requires shareholders’ approval unless it
is within one of the exemptions in the Corporations Act. The Company also discloses related party transactions in
its financial report as required under relevant Accounting Standards.
5.3
Share Dealings and Disclosures
On 30 December 2010 the Company adopted a new Share Trading Policy. This Policy is available on the Company’s
website and will be sent to interested persons on request. The Company’s policy in effect prior to the adoption of
the new policy was based on the same principles as those underpinning the new policy.
5.4
Independent Professional Advice
Subject to prior consultation with the Chairman, each Director has the right to seek independent legal and other
professional advice at the Company’s expense concerning any aspect of the Company’s operations or undertakings
in order to fulfil their duties and responsibilities as Directors.
5.5 Company Information and Confidentiality
All Directors have the right of access to all relevant Company books and access to the Company’s executives. In
accordance with legal requirements and agreed ethical standards, Directors and executives of the Company have
agreed to keep confidential all information received in the course of the exercise of their duties and will not disclose
non-public information except where disclosure is authorised or legally mandated.
5.6 Directors’ Indemnities
The Company enters into standard-form deeds with its Directors and the Company Secretary to regulate certain
matters between the Company and those officers and to indemnify Directors against liabilities incurred in the course
of their duties as directors. A summary of the terms of the deed is contained in the Company’s notice of the Annual
General Meeting held on 25 November 2009. This notice is available on the Company’s website.
6.
BOARD COMMITTEES
The Strike Board has established an Audit Committee and a Remuneration and Nomination Committee, with the
respective functions set out below. Due to the size of the Company and the nature and scale of its activities, there
is no process to review the performance of Committees.
6.1
Audit Committee
The Audit Committee is chaired by Non-Executive Director William Johnson. The other Audit Committee members
are Non-Executive Company Chairman, Prof. Malcolm Richmond and Non-Executive Director Matthew Hammond.
The Board has adopted an Audit Committee Charter. The Charter sets out the Committee’s responsibilities, which
include:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:69)(cid:68)(cid:0)(cid:72)(cid:65)(cid:76)(cid:70)(cid:13)(cid:89)(cid:69)(cid:65)(cid:82)(cid:76)(cid:89)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:83)(cid:27)
(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:69)(cid:88)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0) (cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:79)(cid:82)(cid:12)(cid:0) (cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0) (cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:67)(cid:69)(cid:12)(cid:0) (cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:0) (cid:70)(cid:69)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:65)(cid:78)(cid:89)(cid:0) (cid:81)(cid:85)(cid:69)(cid:83)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0)
97
STRIKE RESOURCES ANNUAL REPORT 2011
CORPORATE GOVERNANCE STATEMENT
resignation or dismissal of the auditor; and
(cid:115)(cid:0) (cid:79)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:71)(cid:72)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:14)
6.2 Remuneration and Nomination Committee
Professor Malcolm Richmond, the independent, Non-Executive Company Chairman also chairs the Remuneration
and Nomination Committee. The other Committee members are Non-Executive Directors William Johnson and
Matthew Hammond.
The Board has adopted a Remuneration and Nomination Committee Charter. The Charter sets out the Committee’s
responsibilities, which include:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:27)
(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:46)(cid:79)(cid:78)(cid:13)(cid:37)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:27)
(cid:115)(cid:0) (cid:83)(cid:69)(cid:84)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)(cid:69)(cid:81)(cid:85)(cid:73)(cid:84)(cid:89)(cid:13)(cid:66)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:27)(cid:0)
(cid:115)(cid:0) (cid:83)(cid:69)(cid:84)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:67)(cid:82)(cid:73)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:83)(cid:72)(cid:73)(cid:80)(cid:12)(cid:0)(cid:82)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:82)(cid:76)(cid:89)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:69)(cid:69)(cid:68)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:83)(cid:75)(cid:73)(cid:76)(cid:76)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:82)(cid:73)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)
and identifying specific individuals for nomination as Directors; and
(cid:115)(cid:0)
(cid:73)(cid:77)(cid:80)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:37)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:83)(cid:85)(cid:67)(cid:67)(cid:69)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:14)
6.3
Independent Majorities
Neither the Audit Committee nor the Remuneration and Nomination Committee have a majority of independent
Directors at present, as the Company only has one Director who satisfies all the criteria for independence. The
Company is presently seeking to appoint at least one additional independent Director. The Board will review the
composition of these Committees once the appointment(s) is made, in light of the principle that they should have a
majority of independent Directors.
7.
MANAGEMENT
7.1 Composition
Please refer to Section 3.4 for details of the Company’s Managing Director. The Company’s other Executives are:
(cid:115)(cid:0) (cid:51)(cid:84)(cid:69)(cid:80)(cid:72)(cid:69)(cid:78)(cid:0)(cid:39)(cid:69)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0)(cid:13)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:51)(cid:69)(cid:67)(cid:82)(cid:69)(cid:84)(cid:65)(cid:82)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:39)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:35)(cid:79)(cid:85)(cid:78)(cid:83)(cid:69)(cid:76)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)
(cid:115)(cid:0) (cid:36)(cid:65)(cid:86)(cid:73)(cid:68)(cid:0)(cid:44)(cid:73)(cid:77)(cid:0)(cid:13)(cid:0)(cid:35)(cid:72)(cid:73)(cid:69)(cid:70)(cid:0)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:47)(cid:70)(cid:108)(cid:67)(cid:69)(cid:82)(cid:14)
7.2
Performance Reviews
The Managing Director’s performance review is referred to in Section 2.3, above. The Managing Director reviews
the performance of the Company’s senior executives annually. The performance of the senior executives were
reviewed during the 2010-11 financial year according to this process.
8.
DIVERSITY
The Company recognises the positive benefits workplace diversity and has adopted a Diversity Policy to further
this objective.
8.1 Board and Senior Executives
As at the date of the 2011 Annual Report, Strike has no female directors or senior executives. The Diversity Policy
contains measurable objectives for achieving gender diversity. Changing the gender make-up of the Board and
the executive team is an organic process, dependent on vacancies arising and the availability of suitably-qualified
candidates whose appointment will contribute to meeting that objective. No appointments were made to the Strike
Board or the executive team between the date when the Principles were amended to promote gender diversity (1
January 2011) and the date this Statement was prepared. Accordingly there has been no opportunity to implement
the diversity objectives in the Policy. At the date of this Statement, Strike is in the process of seeking to appoint at
least one additional Director and one additional senior executive. The objective of promoting gender diversity is an
important consideration in the search for the people to fill these roles.
98
8.2 Other Personnel
As at the date of preparation of this document, 24 October 2011, 50% of the Company’s employees are female,
with the workforce representing a diverse mix of cultures. Historically, the degree of gender and cultural diversity in
Company staff has been broadly consistent with present levels.
9.
REMUNERATION POLICY
Details of the Company’s remuneration policy are contained in the Remuneration Report in the Director’s Report for
the year ended 30 June 2011.
The Company does not currently have any unvested options on issue to Directors. If any options are issued to
Directors in future which do not vest immediately, Company policy requires the option holder not to enter into
transactions in associated products which limit the economic risk of holding unvested options, as required by the
Corporations Act.
There are no retirement benefit schemes for Non-Executive Directors, other than contributions to their superannuation
funds. These contributions do not exceed the statutory minimum superannuation contributions for Australian
employees plus the whole or any part of a Director’s fees which they may choose to sacrifice into superannuation.
10. CODE OF CONDUCT AND ETHICAL STANDARDS
Strike Resources has adopted a formal code of conduct, which may be viewed in the Corporate Governance
section on the Company’s website: www.strikeresoruces.com.au. The purpose of the Code of Conduct is to seek
to ensure that the Company and its personnel are fair and ethical in all their dealings, respecting the rights of all
stakeholders; to secure the Company’s reputation as a good corporate citizen, a trusted business partner and a
desirable employer.
11.
INTERNAL CONTROL, RISK MANAGEMENT AND AUDIT
11.1
Internal Control and Risk Management
The Board of Directors is responsible for the overall internal control framework (including risk management) and
oversight of the Company’s policies on and management of risks which have the potential to significantly affect its
operations, financial performance or reputation.
The Board recognises that no cost-effective internal control system will preclude all errors and irregularities. The
system is based, in part, on the appointment of suitably-qualified and experienced service providers and suitably-
qualified and experienced management personnel. The effectiveness of the system is continually reviewed by
management and at least annually by the Board.
On a day-to-day basis, managing the various risks inherent in the Company’s operations is the responsibility of the
Managing Director, supported by the senior executives.
Risks facing the Company can be divided into the four broad categories se out below.
Health and safety
Health and safety risk is one of the most important risks faced by a resources company. Apart from the inherent
unacceptability of threats to life or health, safety incidents have the potential to seriously damage the Company’s
reputation and ability to operate its business. The Company takes a “zero tolerance” approach to any situation
which might compromise the health or safety of staff, contractors or members of the community. This risk is
addressed by comprehensive safety policies and training and a requirement that any safety incident or “near
miss” is reported to the Board.
Operations
Operations risk refers to risks arising from day-to-day operational activities which may result in direct or indirect
loss from inadequate or failed internal processes, people or systems or external events. The Managing Director,
with the assistance of the senior executives, holds delegated responsibility from the Board for the identification
of operations risks generally, for putting processes in place to mitigate them and monitoring compliance with
those processes. The Company has clear accounting and internal control systems to manage risks to the
accuracy of financial information and other financial risks.
99
STRIKE RESOURCES ANNUAL REPORT 2011
CORPORATE GOVERNANCE STATEMENT
Compliance
Compliance risk is the risk of failure to comply with applicable legal and regulatory requirements and industry
standards and the corresponding impact on the Company’s business, reputation and financial condition.
The Company’s compliance risk management strategy ensures compliance with key legislation affecting the
Company’s activities.
A key principle of the Company’s compliance risk management strategy is to foster an integrated approach
where senior executives are responsible and accountable for compliance within their job descriptions.
The Company’s compliance strategy is kept current with advice from senior external professionals and the
ongoing training of executives and other personnel involved in compliance management. The Company
operates principally in Perú, and retains leading local lawyers, accountants and other consultants to ensure that
its Perúvian operations are in compliance with local laws.
The Company has policies on responsible business practices and ethical behaviour, including the Code of
Conduct and Conflict of Interest, Anti-Corruption and Share Trading Policies to maintain confidence in the
Company’s integrity and ensure legal compliance.
Market risk
Market risk encompasses risks to the Company’s performance from changes in resource prices, currency
exchange rates, capital markets and economic conditions generally. The Board regularly assesses the
Company’s exposure to these risks, including seeking external specialist advice and sets the strategic direction
for managing them.
The Company’s approach to risk management is not stationary; it evolves constantly in response to developments
in operations and changing market conditions.
The Board has determined that the Managing Director is the appropriate person to make the Chief Executive Officer
equivalent declaration on the risk management and internal compliance and control systems recommended by
the Corporate Governance Council.
The Board has received assurances from the Managing Director and the Chief Financial Officer that the declaration
provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk
management and internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks.
Management has reported to the Board as to the effectiveness of the Company’s management of its material
business risks.
11.2 Audit
The Company’s external auditor is selected for its professional competence, reputation and the provision of value
for professional fees. Within the audit firm, the partner responsible for the conduct of the Company’s audits (Audit
Partner) is rotated every five years. The Audit Partner is invited to Annual General Meetings to answer shareholder
questions about the conduct of the audit and the preparation and content of the auditor’s report.
12. COMMUNICATIONS
12.1 Market and Shareholder Communications
The Company’s key mission is to maximise the value of the shareholders’ investment by developing resource
tenements. Shareholders must receive timely and accurate information about the Company’s operations to enable
them to understand how the Company is fulfilling that mission. As the Shareholder’s representatives, Directors
need be aware of shareholders’ views on their performance to enable them to properly perform their role.
The Board, therefore, considers it vital to ensure that shareholders are informed of all material developments affecting
the Company and have the opportunity to communicate their views to the Board. The Company actively promotes
communication with shareholders through a variety of means, including the use of the Company’s website and
email. The Company’s reports and ASX announcements may be viewed and downloaded from its website: www.
strikeresources.com.au or the ASX website: www.asx.com.au under ASX stock code “SRK”. The Company also
maintains an email list for the distribution of announcements in a timely manner.
100
The Company communicates information to shareholders through various means including:
(cid:115)(cid:0) (cid:33)(cid:78)(cid:0) (cid:79)(cid:86)(cid:69)(cid:82)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0) (cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:86)(cid:73)(cid:68)(cid:69)(cid:79)(cid:0) (cid:65)(cid:68)(cid:68)(cid:82)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0) (cid:70)(cid:82)(cid:79)(cid:77)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0) (cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0)
available on the on the Company’s website;
(cid:115)(cid:0) (cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:12)(cid:0) (cid:38)(cid:85)(cid:76)(cid:76)(cid:13)(cid:57)(cid:69)(cid:65)(cid:82)(cid:12)(cid:0) (cid:40)(cid:65)(cid:76)(cid:70)(cid:13)(cid:57)(cid:69)(cid:65)(cid:82)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:76)(cid:89)(cid:0) (cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:65)(cid:78)(cid:78)(cid:79)(cid:85)(cid:78)(cid:67)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:76)(cid:79)(cid:68)(cid:71)(cid:69)(cid:68)(cid:0) (cid:79)(cid:78)(cid:0) (cid:33)(cid:51)(cid:56)(cid:0) (cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0) (cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:79)(cid:85)(cid:83)(cid:0)
disclosure rules are available on the ASX website under ASX stock code “SRK” and on the Company’s website
and are emailed to shareholders who subscribe to a mailing list;
(cid:115)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0)(cid:65)(cid:68)(cid:68)(cid:82)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:39)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:45)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:8)AGM), updating them on the
Company’s activities and future direction; and
(cid:115)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:77)(cid:65)(cid:73)(cid:76)(cid:0)(cid:65)(cid:68)(cid:68)(cid:82)(cid:69)(cid:83)(cid:83)(cid:0)(cid:69)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:69)(cid:68)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:68)(cid:69)(cid:76)(cid:73)(cid:86)(cid:69)(cid:82)(cid:0)(cid:81)(cid:85)(cid:69)(cid:83)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
enquiries.
Shareholders communicate with Directors through various means including:
(cid:115)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0) (cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0) (cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0) (cid:82)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:82)(cid:76)(cid:89)(cid:0) (cid:108)(cid:69)(cid:76)(cid:68)(cid:83)(cid:0) (cid:69)(cid:77)(cid:65)(cid:73)(cid:76)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:84)(cid:69)(cid:76)(cid:69)(cid:80)(cid:72)(cid:79)(cid:78)(cid:69)(cid:0) (cid:81)(cid:85)(cid:69)(cid:83)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)
performance from shareholders. Issues raised by shareholders are regularly circulated to the full Board;
(cid:115)(cid:0) (cid:39)(cid:73)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:80)(cid:79)(cid:82)(cid:84)(cid:85)(cid:78)(cid:73)(cid:84)(cid:89)(cid:0)(cid:84)(cid:79)(cid:0)(cid:65)(cid:83)(cid:75)(cid:0)(cid:81)(cid:85)(cid:69)(cid:83)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:7)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:84)(cid:84)(cid:69)(cid:78)(cid:68)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:88)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:33)(cid:39)(cid:45)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:65)(cid:75)(cid:69)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:0)(cid:81)(cid:85)(cid:69)(cid:83)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:73)(cid:83)(cid:83)(cid:85)(cid:69)(cid:0)(cid:82)(cid:69)(cid:76)(cid:69)(cid:86)(cid:65)(cid:78)(cid:84)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
audit.
12.2 Continuous Disclosure
The Board has designated the Company Secretary the person responsible for overseeing disclosure of information
to ASX and communications with ASX.
In accordance with the Corporations Act and ASX Listing Rule 3.1 the Company immediately notifies ASX of
information concerning the Company which a reasonable person would expect to have a material effect on the
price or value of the Company’s securities, subject to the permitted exceptions. A reasonable person is taken to
expect information to have a material effect on the price or value of the Company’s securities if the information
would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose
of the Company’s securities.
All staff are required to inform a senior executive of any potentially price-sensitive information concerning the
Company as soon as they become aware of it. The senior executives are in turn required to inform the Managing
Director of such information. One key source of potentially price-sensitive information is the Company’s 50%-owned
Perúvian joint venture vehicle Apurimac Ferrum S.A. (AF) which holds the great majority of Strike’s interests in
mineral tenements. Strike’s Managing Director also serves as AF President and the AF CEO reports to him. The AF
CEO is required to promptly report price-sensitive information to the Strike Managing Director.
In general, the Company will not respond to market speculation or rumours unless required to do so by law or by
the ASX listing rules.
Only the Managing Director has general responsibility to speak to the media, investors and analysts on the
Company’s behalf. Other Directors or senior executives may be given a brief to do so on particular occasions.
The Company will consider requesting a trading halt from ASX to prevent trading in its securities pending the
announcement of planned events which are particularly price-sensitive.
:
101
STRIKE RESOURCES ANNUAL REPORT 2011
MINERAL TENEMENTS
APURIMAC FERRUM S.A. CONCESSIONS
(Strike Resources has a 50% interest in the Apurimac Ferrum S.A. (AF) concessions at Apurimac and Cusco,
through its 50% interest in AF.)
Apurimac Project, Peru - AF
Concession
Name
(1) Opaban I
(2) Opaban III
(3) Los Andes I
Area
(Ha)
999
990
999
Province
Code
Title
Andahuaylas
05006349X01
No 8625-94/RPM Dec 16, 1994
Andahuaylas
05006351X01
No 8623-94/RPM Dec 16, 1994
Andahuaylas
05006372X01
No 0134-95-RPM Jan 31, 1995
(4) Pitumarca II
1,000
Andahuaylas
05006385X01
No 8686-94-RPM Dec 22, 1994
(5) Lucrecia Esperanza
66
Andahuaylas
01-00649-99
No 00623-2001-INACC/J Jul 26, 2001
(6) Nueva Oropampa 6
(7) Mapsa 2001
400
800
Andahuaylas
01-00860-99
No 04043-2000-RPM Oct 13, 2000
Andahuaylas
01-01204-01
No 00590-2002-INACC/J Apr 8, 2002
(8) Coriminas II
1,000
Andahuaylas
01-01624-99
No 02760-2000-RPM Jul 25, 2000
(9) Coriminas V
1,000
Andahuaylas
01-01626-99
No 0936-00-RPM Mar 16, 2000
(10) Ferrum 1
(11) Ferrum 2
(12) Ferrum 3
(13) Ferrum 4
(14) Ferrum 5
(15) Ferrum 7
(16) Ferrum 8
965
Andahuaylas
01-02983-04
No 00228-2005-INACC/J Jan 19, 2005
1,000
Andahuaylas
01-02984-04
No 00227-2005-INACC/J Jan 19, 2005
1,000
Andahuaylas
01-02985-04
No 00229-2005-INACC/J Jan 19, 2005
1,000
Andahuaylas/
Aymaraes
01-02986-04
No 00230-2005-INACC/J Jan 19, 2005
959
437
900
Aymaraes
01-02987-04
No 00323-2005-INACC/J Jan 25, 2005
Aymaraes
01-02989-04
No 00396-2005-INACC/J Jan 27, 2005
Andahuaylas
01-02990-04
No 00232-2005-INACC/J Jan 19, 2005
(17) Ferrum 9
1,000
Aymaraes
01-02991-04
No 00324-2005-INACC/J Jan 25, 2005
(18) Ferrum 10
1,000
Aymaraes
01-02992-04
No 00325-2005-INACC/J Jan 25, 2005
(19) Ferrum 11
1,000
Aymaraes
01-02993-04
No 02512-2005-INACC/J Jun 12, 2005
File
Number
20001465
20001464
200001481
20001478
11032475
11032603
11032600
11032965
20003140
11053798
11053836
11053807
11053810
11053816
11053822
11053827
11053830
11053833
11053835
11061068
(20) Ferrum 13
(21) Ferrum 26
600
827
Andahuaylas
01-03139-06
No 4416-2006-INACC/J Oct 16, 2006
Andahuaylas
01-02274-07
No 000853-2007-INGEMMET/PCD/PM Sept 7, 2007
11073793
(22) Ferrum 27
1,000
Andahuaylas
01-02629-07
No 000581-2007-INGEMMET/PCD/PM Sept 5, 2007
11073799
(23) Ferrum 36
1,000
Andahuaylas
10553307
RP 0176-2008-INGEMMET/PCD/PM Feb 29, 2008
11075418
(24) Cristoforo 22
379
Andahuaylas
01-01656-02
RP2849-2007-INGEMMET/PCD/PM Dec 13, 2007
11067786
(25) Ferrum 28
1,000
Andahuaylas
10507407
RP0601-2008-INGEMMET/PCD/PCM Mar 07, 2008
11075423
(26) Ferrum 29
1,000
Andahuaylas
10507507
RP0365-2008-INGEMMET/PCD/PM Mar 07, 2008
11075419
(27) Ferrum 30
(28) Ferrum 31
(29) Ferrum 32
(30) Ferrum 33
(31) Ferrum 34
963
327
900
900
800
Andahuaylas
10525907
PP 1024-2008-INGEMMET/PCD/PM May 05, 2008
11076757
Andahuaylas
10552807
RP 1266-2008-INGEMMET/PCD/PM May 12, 2008
11076509
Andahuaylas
10552907
RP0402-2008-INGEMMET/PCD/PM Mar 07, 2008
11075425
Andahuaylas
10553007
RP0547-2008-INGEMMET/PCD/PM Mar 07, 2008
11075421
Andahuaylas
10553107
RP0764-2008-INGEMMET/PCD/PM Apr 17, 2008
11075427
(32) Ferrum 35
1,000
Andahuaylas
10553207
RP0347-2008-INGEMMET/PCD/PCM Mar 07, 2008
11075426
(33) Ferrum 37
695
Andahuaylas
10621507
RP 1164-2008-INGEMMET/PCD/PM May 12, 2008
11076534
(34) Ferrum 56
1,000
Andahuaylas
10133508
RP 1971-2008-INGEMMET/PCD/PM Jun 19, 2008
11077123
(35) Ferrum 57
1,000
Andahuaylas
10133608
RP 3279-2008-INGEMMET/PCD/PM Sept 9, 2008
11081417
(36) Ferrum 58
1,000
Andahuaylas
10133708
RP 2206-2008-INGEMMET/PCD/PM 27 Jun, 2008
11077127
(37) Ferrum 59
1,000
Andahuaylas
10133808
RP 2272-2008-INGEMMET/PCD/PM 27 Jun, 2008
11077122
(38) Ferrum 61
1,000
Aymaraes
10073308
-
in process
(39) Pacunco 1
(40) Minas Huaycco
800
800
Andahuaylas
10019508
RP 1806-2008-INGEMMET/PCD/PM May 29, 2008
11076523
Abancay
10168708
RP 2541-2008-INGEMMET/PCD/PM Aug 08, 2008
11081416
102
Cusco Project, Peru - AF
Concession
Name
Area
(Ha)
Province
Code
Title
(1) Flor de María
907
Chumbivilcas
05006521X01 No 7078-95-RPM Dec 29, 1995
(2) Delia Esperanza
1,000 Chumbivilcas
05006522X01 No 0686-95-RPM Mar 31, 1995
(3) Julia Clara
1,000 Chumbivilcas
05006523X01 No 4600-95/RPM Sept 26, 1995
(4) El Pacífico I
618
Chumbivilcas
05006536X01 No 7077-95/RPM Dec 29, 1995
(5) El Pacífico II
1,000 Chumbivilcas
05006524X01 No 7886-94/RPM Nov 25, 1994
(6) Ferrum 14
(7) Ferrum 15
(8) Ferrum 17
(9) Ferrum 18
268
992
500
800
Chumbivilcas
01-03047-05
No 05032-2005-INACC/J Nov 30, 2005
Chumbivilcas
10494906
RJ 0753-2007-INACC/J Mar 05, 2007
Chumbivilcas
10026607
RP 1815-2007-INGEMMET/PCD/PM Oct 30, 2007
Chumbivilcas /
Cotabambas
10026707
RP 1761-2008-INGEMMET/PCD/PM May 29, 2008
File
Number
20001742
20001743
20001744
20001785
20001746
11053842
11073796
11073794
11076514
STRIKE RESOURCES LIMITED CONCESSIONS
(The concessions at Apurimac and Cusco listed in the tables below are 100% owned by Strike Resources, subject
to an option for AF to acquire those concessions.)
Apurimac Project, Peru – Strike Resources
Concession
Name
Area
(Ha)
Province
Code
Title
(1) Ferrum 38
800
Andahuaylas
10015205
RP1288-2008-INGEMMET/PCD/PM May 12, 2008
(2) Ferrum 39
1,000
Andahuaylas
10047605
RP 1573-2008-INGEMMET/PCD/PM May 29, 2008
(3) Ferrum 40
1,000
Andahuaylas
10623507
RP 2905-2008-INGEMMET/PCD/PM Aug 19, 2008
(4) Ferrum 41
1,000
Andahuaylas
10131408
RP 1965-2008-INGEMMET/PCD/PM Jun 19, 2008
(5) Ferrum 42
1,000
Andahuaylas
10131508
RP 1975-2008-INGEMMET/PCD/PM Jun 19, 2008
(6) Ferrum 43
1,000
Andahuaylas
10131608
RP 3243-2008-INGEMMET/PCD/PM Sept 9, 2008
(7) Ferrum 44
1,000
Andahuaylas
10131908
RP 1934-2008-INGEMMET/PCD/PM Jun 19, 2008
(8) Ferrum 45
1,000
Andahuaylas
10132008
RP 2283-2008-INGEMMET/PCD/PM Jun 27, 2008
(9) Ferrum 46
1,000
Andahuaylas
10132108
RP 2523-2008-INGEMMET/PCD/PM Aug 08, 2008
(10) Ferrum 47
1,000
Andahuaylas
10132208
RP 1908-2008-INGEMMET/PCD/PM Jun 18, 2008
(11) Ferrum 48
1,000
Andahuaylas
10132308
RP 1756-2008-INGEMMET/PCD/PM May 29, 2008
(12) Ferrum 49
1,000
Andahuaylas
10132408
RP 2000-2008-INGEMMET/PCD/PM Jun 19, 2008
(13) Ferrum 50
900
Andahuaylas
10132508
RP 1922-2008-INGEMMET/PCD/PM Jun 19, 2008
(14) Ferrum 51
1,000
Andahuaylas
10132608
RP 1893-2008-INGEMMET/PCD/PM Jun 18, 2008
(15) Ferrum 52
1,000
Andahuaylas
10132708
RP 2803-2008-INGEMMET/PCD/PM Aug 18, 2008
(16) Ferrum 53
1,000
Andahuaylas
10132808
RP 2550-2008-INGEMMET/PCD/PM Aug 08, 2008
Andahuaylas
10132908
RP 2899-2008-INGEMMET/PCD/PM Aug 19, 2008
Andahuaylas
10133408
RP 2951-2008-INGEMMET/PCD/PM Aug 19, 2008
(17) Ferrum 54
(18) Ferrum 55
(19) Ferrum 60
(20) Ferrum 62
(21) Ferrum 63
(22) Pichirhua 1
(23) Pichirhua 2
700
800
200
900
300
800
400
Abancay
Abancay
Grau
Abancay
Abancay
10073208
RP 2986-2008-INGEMMET/PCD/PM Aug 19, 2008
10073408
RP 3177-2008-INGEMMET/PCD/PM Sept 8, 2008
TBA
10073008
RP 3040-2008-INGEMMET/PCD/PM Aug 28, 2008
10151708
RP 2638-2008-INGEMMET/PCD/PM Aug 11, 2008
10151808
RP 3183-2008-INGEMMET/PCD/PM Sept 8, 2008
(24) Colcabamba 1
600
Aymaraes
10212308
RP 2986-2008-INGEMMET/PCD/PM Aug 19, 2008
(25) Colcabamba 2
500
Aymaraes
10212408
RP 3177-2008-INGEMMET/PCD/PM Sept 8, 2008
(26) Colcabamba 3
900
Aymaraes
10217208
RP 3040-2008-INGEMMET/PCD/PM Aug 28, 2008
(27) Sillaccassa 1
(28) Sillaccasa 2
700
400
Andahuaylas
10212608
RP 5088-2008-INGEMMET/PCD/PM Nov 19, 2008
Andahuaylas
10212508
RP 3183-2008-INGEMMET/PCD/PM Sept 8, 2008
File
Number
11064280
11064281
11076528
11076755
11077114
11077113
11077115
11077116
11079784
11077117
11076584
11077118
11077120
11077121
11079786
11079787
11079788
11079789
11084879
11076586
11079794
11081445
11079780
11081451
11079781
11079791
11081449
103
STRIKE RESOURCES ANNUAL REPORT 2011
MINERAL TENEMENTS
Concession
Name
Area
(Ha)
Province
Code
Title
(29) Cristoforo 14*
1000
Andahuaylas
01-02327-99
No 02693-2000 RPM Jul 24, 2000
File
Number
11034702
11064280
11064281
(30) Cristoforo 28*
(31) Ferroso 29*
(32) Helimag 1
500
400
900
Aymaraes
01-00152-05
No 01824-2005 INACC/J May 4, 2005
Andahuaylas
01-00473-05
No 01709-2005 RPM Apr 21, 2004
Andahuaylas
01-00152-05
No 000741-2010 INGEMMET/PCD/PM Mar 22, 2010
11064280
*Strike Resources holds an option to acquire these concessions. Under the terms of the AF Settlement Agreement,
Strike’s rights under the option are being transferred to AF.
Cusco Project, Peru – Strike Resources
Concession
Name
Area
(Ha)
Province
Code
Title
File
Number
(1) Ferrum 72
1,000
Paruro
10408208
RP 4435-2008-INGEMMET/PCD/PM Oct 21, 2008 11084851
(2) Ferrum 73
1,000
Paruro
10409608
RP 5050-2008-INGEMMET/PCD/PM Nov 19, 2008 11084874
(3) Ferrum 74
1,000
Paruro
10408208
RP 5006-2008-INGEMMET/PCD/PM Nov 19, 2008 11084871
(4) Ferrum 75
(5) Ferrum 76
303
974
Paruro
10409808
RP 5130-2008-INGEMMET/PCD/PM Nov 19, 2008 11084873
Chumbivilcas
10409908
RP 4323-2008-INGEMMET/PCD/PM Oct 20, 2008 11084870
(6) Ferrum 77
1,000
Paruro
10408108
RP 5227-2008-INGEMMET/PCD/PM Nov 19, 2008 11084868
(7) Ferrum 65
1,000
Paruro
010580008
RP 0337-2009-INGEMMET/PCD/PM Feb 19, 2009 TBA
(8) Ferrum 66
(9) Ferrum 67
100
100
Paruro
010580208
RP 1613-2009-INGEMMET/PCD/PM Jun 4, 2009
Chumbivilcas
010579908
RP 5849-2008-INGEMMET/PCD/PM Dec 17, 2008
TBA
TBA
(10) Ferrum 68
1,000
Acomayo
010579808
RP 1185-2009-INGEMMET/PCD/PM Mar 31, 2009 TBA
(11) Ferrum 69
1,000
Acomayo
010579608
RP 1633-2009-INGEMMET/PCD/PM Jun 4, 2009
(12) Ferrum 70
1,000
Acomayo
010579608
RP 1848-2009-INGEMMET/PCD/PM Jun 11, 2009
TBA
TBA
(13) Ferrum 71
1,000
Acomayo
010579508
RP 1120-2009-INGEMMET/PCD/PM Mar 31, 2009 TBA
(14) Colcabamba 4
400
Acomayo
010580108
RP 1117-2009-INGEMMET/PCD/PM Mar 31, 2009 TBA
Paulsens East Project – Western Australia
(These concessions are 100% beneficially owned by Strike Resources, subject to the farm-out agreement detailed
under the section on the Paulsens East Project in this Report above.)
Tenement No
Status
Grant Date
Expiry Date
Area (block/ha) Area (km2)
(1) EL 47/1328
(2) PL 47/1170
Granted
Granted
(3) M 47/1437+
Pending
05/10/06
27/03/06
N/A
04/10/11
26/03/11
N/A
6 blocks
164 hectares
164 hectares
18
1.64
1.64
* Subject to the farm-out referred to in the Paulsens East Project section of this report.
+ Representing an application to convert PL 47/1170 into a mining lease.
104
SECURITIES INFORMATION
The information in this section is current as at 10 October, 2011.
ISSUED CAPITAL
Class of Security
Quoted
on ASX
Not Quoted
on ASX
Total
Fully-paid, ordinary shares
142,534,268
$2.078 (6 March 2012) director options
$2.788 (6 March 2012) director options
$1.30 (23 March 2013) employee options
$1.50 (23 March 2013) employee options
$1.75 (23 March 2013) employee options
$2.878 (30 April 2012) employee options
$3.978 (2 December 2012) director options
$2.878 (3 March 2013) employee options
$2.75 (13 October 2013) employee options
$2.50 (24 November 2012 director options
$2.75 (24 November 2012 director options
$3.25 (24 November 2012 director options
-
-
-
-
-
-
-
-
-
-
-
-
500,000
2,950,000
400,000
400,000
400,000
33,000
142,534,268
500,000
2,950,000
400,000
400,000
400,000
33,000
3,500,000
3,500,000
250,000
250,000
750,000
750,000
750,000
250,000
250,000
750,000
750,000
750,000
Total
142,534,268
10,933,000
153,467,268
DISTRIBUTION OF FULLY-PAID, ORDINARY SHARES
Spread of Holdings
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,000 - and over
Total
UNMARKETABLE PARCELS
Spread of Holdings
1 - 1,923
1,924 - over
Total
Number of
Holders
Number of
Units
% of Issued
Capital
489
1,209
466
635
95
230,612
3,817,241
3,819,675
20,190,714
114,476,026
2,894
142,534,268
0.16
2.68
2.68
14.16
80.32
100%
Number of
Holders
Number of
Units
% of Issued
Capital
711
2,183
2,894
555,030
141,979,238
142,534,268
0.4
99.60
100%
105
STRIKE RESOURCES ANNUAL REPORT 2011
SECURITIES INFORMATION
TOP 20 HOLDERS OF FULLY-PAID, ORDINARY SHARES
Rank
Shareholder
Total Shares
% of Capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Ltd
Orion Equities Limited
Database Systems Ltd
National Nominees Ltd
Iron Associates Corporation
Ferrous Resources Ltd
J P Morgan Nominees Australia Ltd
Nefco Nominees Pty Ltd
Citicorp Nominees Pty Ltd
Alara Resources Limited
Pater Investments Pty Ltd
Mr George Macfie
Mr Gordon Anthony
Empire Holdings Pty Ltd
Aliana Pty Ltd
M&M Holdings Pty Ltd
Renmuir Holdings Limited
Mr Andrew Craig Leeson
Mr Matthew Norman Bull
Mr Nicholas Kenos & Mrs Pauline Kenos
26,079,440
16,690,802
9,377,090
9,331,609
9,000,000
6,370,000
5,268,681
4,331,760
4,006,456
3,573,889
1,125,000
800,000
800,000
700,000
700,000
606,000
487,439
457,800
421,700
400,000
18.31
11.71
6.58
6.55
6.31
4.47
3.7
3.04
2.81
2.51
0.79
0.56
0.56
0.49
0.49
0.43
0.34
0.32
0.30
0.28
Total
100,527,666
70.55
SUBSTANTIAL SHAREHOLDERS*
Last Substantial
Holder Notice
Substantial
Shareholder (s)
Registered Holder (s)
4 Mar 2009
Gallagher Holdings
HSBC Custody Nominees
(Australia) Ltd & NEFCO Nominees
Farooq Khan and
Associates
Orion Equities Limited Farooq
Khan
18 Feb 2011
12 Aug 2008
Total
Shares
% of
Issued
Capital
25,825,909
19.86
17,220,812
12.9
Database Systems Ltd,
Ambreen Chaudhri
Database Systems Ltd
9,377,090
7.78
* This disclosure is made under ASX LR 4.10.4 As required by that rule, information is taken from substantial shareholding notices filed by
shareholders.
106
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107
STRIKE RESOURCES ANNUAL REPORT 2011
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109