SYLVANIA RESOURCES
LIMITED
A.C.N. 091 415 968
ANNUAL REPORT
30 JUNE 2005
SYLVANIA RESOURCES LIMITED
(A.C.N. 091 415 968)
ANNUAL REPORT
30 JUNE 2005
I N D E X
COMPANY PARTICULARS
OPERATIONS AND FINANCIAL REVIEW
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT
STATEMENTS OF FINANCIAL PERFORMANCE
STATEMENTS OF FINANCIAL POSITION
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
AUDITORS’ DECLARATION OF INDEPENDENCE
INDEPENDENT AUDIT REPORT
SHAREHOLDER INFORMATION
2
3
5
11
17
18
19
20
38
39
40
42
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
COMPANY PARTICULARS
Directors
Edward FG Nealon – Executive Chairman
(Appointed 7 December 2004)
Terrence Michael McConnachie – Chief Operations Officer
(Appointed 22 June 2005)
Grant Michael Button – Executive Director
Kevin Scott Huntly – Non-executive Director
Melissa Sturgess – Non-Executive Director
(Appointed 7 December 2004))
Dr Evan Kirby - Non Executive Director
Secretary
Michael James Langoulant
Registered Office and
Principal Place of Business
Level 4, HPPL House
28 – 42 Ventnor Avenue
WEST PERTH WA 6005
Share Register
Auditor
Solicitors
Telephone: (08) 9481 8711
Facsimile: (08) 9324 2977
Website: www.sylvaniaresources.com
Computershare Investor Services Pty Limited
Reserve Bank Building
Level 2
45 St George’s Terrace
Perth WA 6000
HLB Mann Judd
Chartered Accountants
15 Rheola Street
West Perth WA 6005
Clayton Utz
QV1
250 St Georges Terrace
Perth WA 6000
Stock Exchange Listings
Sylvania Resources Limited shares are listed on the Australian
Stock Exchange Ltd (ASX) under the SLV code.
2
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
OPERATIONS AND FINANCIAL REVIEW
SOUTH AFRICAN OPERATIONS
Chromite Tailings Retreatment Consortium (formerly RK1)
Sylvania owns a 25% interest in a Consortium led by Aquarius Platinum Limited. During the year, the Consortium changed its
name from the RK1 Project to the Chrome Tailings Retreatment Project (CTRP). The Consortium treats chromite tailings
through a purpose built plant on Aquarius Platinum Limited’s Kroondal Mine property, in order to extract platinum group
metals (platinum, palladium, rhodium and gold)(PGM’s). Current tailings from the Xstrata owned Kroondal Chrome Mine are
pumped to the plant whilst old chrome tailings from the Bayer and Xstrata operations are trucked to the plant.
The construction of the Plant commenced in May 2004 and was substantially complete by December 2004. The first
concentrate production from the CTRP was shipped on 21 January 2005.
During the first six months of ramp-up of operations, 55,000 tonnes of material were fed to the CTRP plant at an average
grade of about 3 grams per tonne. The average basket price received for the six months was over US$800 per ounce and total
revenue was ZAR 8.5 million. As ramp up technical issues are resolved, tonnes processed through the plant are expected to
increase, along with an increased head grade due to higher grade tailings being processed.
With the Plant performing well, the Consortium has turned its focus to increasing the tonnes available to be processed through
the Plant. The Consortium is confident of achieving the first level of ramp up, being 20,000 tonnes per month, over the next
few months. The Consortium is further considering a technical proposal to increase tonnages to 40,000 tonnes per month by
the implementation of Capital Expenditure proposals.
The Directors of Sylvania see participation in this consortium as a rare opportunity to gain access to PGM cashflow, with
relatively low risk.
Everest North PGM Project
On 26th May 2005, the Company announced that it had entered into an Agreement between Sylvania South Africa (Pty) Ltd (a
100% controlled entity of Sylvania), and Aquarius Platinum (SA) Ltd (Aquarius), whereby Sylvania will take control of the
exploration/mining of the Everest North Project in South Africa.
The Everest North project lies on the Farm Vygenkoek in the eastern Bushveld of South Africa, and is prospective for PGMs.
Previous work has outlined an inferred resource of 7.4 million tonnes grading 3.38 g/t PGM, for an inferred resource of
796,000 ounces of PGMs. Sylvania will test the ground to assess the viability of delivering dense medium separation sinks to
Aquarius at their Everest South Mine, which is currently under construction.
Sylvania has initially paid to Aquarius R2 million, and will become a contractor to Aquarius. Sylvania will then, at its cost,
prospect the Everest North Project area. Upon proof of the project viability, Sylvania will assist Aquarius to obtain a mining
right which may subsequently be transferred to Sylvania. Sylvania will pay a further R6 million to Aquarius upon grant of the
mining right to Sylvania.
Aquarius and Sylvania shall, for a period of three months from the date of the grant of a mining right for the project, negotiate
on an exclusive basis, to conclude a written agreement to regulate the terms upon which Sylvania shall supply to Aquarius all
PGM bearing ore produced from the property, or in circumstances where Sylvania has constructed a concentrator plant to
process PGM bearing ore from the property to produce PGM concentrate, any such PGM concentrate.
A desktop feasibility study has shown that this is a robust project, and drilling will commence shortly.
3
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
OPERATIONS AND FINANCIAL REVIEW
AUSTRALIAN OPERATIONS
Exploration by Sylvania within Australia has been focused on the Archean Sylvania Inlier, situated in Western Australia.
Within this area the Company still retains mineral exploration projects known as Copper Knob and Jimblebar. The projects lie
east and south of Newman and are located within the Peak Hill Mineral Field. Exploration on these tenements has targeted
gold, copper-zinc, nickel and platinum group element mineralisation.
During the year, Sylvania entered into an Option agreement with Warwick John Flint (Flint) over all of its Australian
tenements at Jimblebar and Copper Knob. Under the terms of the Option Agreement, Flint had the right to exercise the Option
at any time up until 16 August 2005, to acquire Sylvania’s interests in its Australian tenements for the consideration of
A$55,000, and the issuance to Sylvania of fully paid ordinary shares in a listed entity to the value of A$200,000. Flint has the
obligation to maintain the tenements in good standing during the life of the Option Agreement.
Subsequent to year end Flint has exercised his right to extend the Option Agreement for a further 12 months until 16 August
2006 through the payment of A$10,000. Under the terms of the Option extension, the share consideration component of the
exercise price of the Option has increased to A$300,000.
Entering into this Option Agreement is consistent with the Board’s intention of focusing its attention on the activities of the
CTRP Consortium, and other opportunities in Southern Africa.
Jimblebar Copper/Gold
The Jimblebar tenements lie immediately south east of the currently operating Jimblebar iron ore mine. Sylvania’s interests
now relate to two prospecting licences, with one associated with a mining lease application, covering an area of approximately
200 hectares.
The main area of interest for copper in the Jimblebar tenements is a prospective sequence of metamorphosed felsic and
intermediate volcanics containing magnetite outcrops as well as several occurrences of outcropping secondary copper
mineralisation.
Copper Knob
The Mining Lease 52/211 at Copper Knob, covers a very large body of disseminated low grade sulphide copper mineralisation
with some gold values that have been drilled by previous explorers. This mineralization lies within a sequence of felsic and
intermediate volcanic rocks that extend for over 9 km forming the Jimblebar copper area. The Copper Knob mining lease has
untested potential for an oxide copper resource and for discrete massive copper bearing sulphide bodies.
OPERATING RESULTS
During the year under review the Company significantly increased its cash assets via both a placement to London based
institutions and from the exercise of June 2005 options. At year end the consolidated entity’s cash balances were in excess of
$AUD10 million.
The consolidated loss of the consolidated entity for the year after income tax expense was $954,744 (2004 - $469,793).
4
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
Your Directors present their report on the Company and its controlled entities for the financial year ended 30 June 2005.
Directors
The names and particulars of the Directors of the Company who held office during or since the end of the financial year are:
Name
Qualifications
Particulars
Edward FG Nealon
Executive Chairman
BSc Geol
(Hons),
MSc Geol,
MAusIMM
Terrence McConnachie
Chief Operations Officer
Grant M Button
Executive director
B.Bus.(Acc),
CPA
Melissa M Sturgess
BSc, MBA
Non-executive director
Kevin S Huntly
GDE MSc (Eng)
Non-executive director
Appointed December 2004. Aged 54, Mr Nealon is a qualified
geologist with over 25 years experience in the mining and exploration
industry. He has worked around the world with major companies such
as Anglo-America Corporation, Rio Tinto and Aquarius Platinum. He
founded his own consulting company in 1983. He is a non-executive
director of Dwyka Diamonds Limited (since 2001) and Tanzanite One
Limited (since 2004). From 1997 to 2002 he acted as both executive
and non-executive director of Aquarius Platinum Limited.
Appointed June 2005. Aged 49, Mr McConnachie has over 25 years of
experience in mining, beneficiation of ferroalloys and precious metals.
He was the founder of Merefe Resources Limited (formerly South
African Chrome & Alloys Ltd), a successful chrome mining company;
black empowered and listed on the Johannesburg Stock Exchange with
assets worth in excess of a billion rand ($350 million). He is well
known for identifying mining opportunities and has started many new
green-field operations in gold, manganese, aluminium, graphite and
tantalite. He has been CEO of a number of mining, mining services
and smelting companies in South Africa. From 1998 to 2004 he was
managing director of Merefe Resources Ltd. He has held no other
listed public company directorships in the past 3 years.
Appointed December 2002. Aged 43, Mr Button has 15 years
experience at a senior management level in the resources industry. He
has acted as an Executive Director, Finance Director, CFO and
Company Secretary of a range of publicly listed companies. He has
held no other public company directorships in the past 3 years.
Appointed in December 2004. Aged 39, Ms Sturgess has over 10 years
experience in corporate development and promotion with an emphasis
institutional shareholders for a range of public
on attracting
companies,
including Aquarius Platinum Limited and Dwyka
Diamonds Limited. She is Executive Chairman of Dwyka Diamonds
Limited (since 2001) and a non-executive director of Churchhill
Mining plc (since 2005). She has held no other listed public company
directorships in the past 3 years.
Appointed December 2002. Aged 43, Mr Huntley has 25 years
experience in the South African mining industry. He operates his own
consultancy business advising a number of international mining
companies. He has held no other listed public company directorships
in the past 3 years.
5
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
Directors (con’t)
Name
Evan Kirby
Non-executive director
Qualifications
Particulars
BSc(Hons)
Metallurgy, PhD
Metallurgy,
MAusIMM,
MSthAfrIMM
Appointed in November 2003. Aged 54 Dr Kirby has worked for
major companies such as Impala Platinum, Rand Mines, Rustenburg
Platinum Mines, Minproc Engineers and Bechtel before starting his
own consulting business in 2002. He has broad experience with the
development of a wide range of mining and minerals processing
projects particularly in Africa and Australia. He is also Chief
Operations Officer of Dwyka Diamonds Limited (since 2002) and a
non-executive director of Wedgetail Exploration NL (since 2004). He
has held no other public company directorships in the past 3 years.
Adrian S Paul
B.Bus (Acc)
Non-executive director – resigned 22 June 2005. He has held no other
public company directorships in the past 3 years.
Non-executive director
Company secretary
The company secretary is Michael Langoulant, B.Com, CA. Mr Langoulant was appointed to the position of company
secretary in February 2005. Mr Langoulant operates a corporate consulting business that specialises in public company
corporate secretarial/administration and fundraising. After 10 years with large international accounting firms he has acted as
CFO, Company Secretary and non-executive director with a number of publicly listed companies.
Principal activities
The principal activity of the consolidated entity during the financial year was investment in mineral exploration and mineral
treatment projects.
Dividends
No dividend has been paid or declared during the financial year. The Directors do not recommend the payment of a
dividend.
Subsequent Events
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in
subsequent financial years.
Likely developments and expected results of operations
Additional comments on expected results of certain operations of the consolidated entity are included in the Operations and
Financial Review; any other comments are likely to result in unreasonable prejudice to the entity or any entity in the
consolidated entity.
Environmental regulation
The consolidated entity is subject to significant environmental legal regulations in respect to its exploration and evaluation
activities in Australia and South Africa. There have been no known breaches of these regulations and principles.
6
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
Directors’ shareholdings
The following table sets out the number of shares owned by each Director, directly or indirectly, at the date of this Report.
Director
Edward Nealon
Terrence McConnachie
Grant Button
Melissa Sturgess
Kevin Huntly
Evan Kirby
Fully paid ordinary shares
Nil
Nil
500,000
65,000
Nil
14,300
Significant changes in the state of affairs
Significant changes in the state of affairs of the consolidated entity during the financial year were:
•
In May 2005, the Company completed a placement of 7,780,000 ordinary shares at a price of $0.45 (GBP0.185) per share
to raise $3,395,970 after capital raising costs; and
• During May and June 2005, 32,015,390 ordinary shares were issued following the exercise at $0.20 each of 32,015,390
June 2005 options. This raised $6,403,078 in additional working capital.
Share and option schemes
There are no share and/or option schemes in existence at the date of this Report.
Shares under option
There are no share options in existence at the date of this Report.
Meetings of directors
During the financial year there were five formal directors’ meetings and five meetings of a sub-committee established to
issue new shares following the exercise of options. All other matters that required formal board resolutions were dealt with
via circulating written resolutions. In addition the Directors met on an informal basis at regular intervals during the year to
discuss the Company’s affairs. Given the number of directors and nature of the Company’s operations there are no separate
committees of the Board of Directors. The number of meetings of the Company’s Board of Directors attended by each
Director were:
E Nealon
T McConnachie
G Button
M Sturgess
Evan Kirby
S Huntley
A Paul
Directors’ meetings held
whilst in office
3
Nil
5
3
5
5
5
Directors’ meetings
attended
3
Nil
5
3
4
5
5
7
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
Remuneration report
Details of directors and executives remuneration are set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation.
A Principles used to determine the nature and amount of remuneration
The objective of the company’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aims to align executive reward with the creation of value for
shareholders. The key criteria for good reward governance practices adopted by the Board are:
•
•
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance incentives
transparency
capital management.
The framework provides a mix of fixed fee, consultancy agreement based remuneration, and share based incentives.
The broad remuneration policy for determining the nature and amount of emoluments of board members and senior
executives of the Company is governed by a Board Remuneration Committee. At present the full Board acts as the
remuneration committee in accordance with a written Remuneration Committee Charter. The Remuneration Committee’s
aim is to ensure the remuneration packages properly reflect director’s and executive’s duties and responsibilities. The
Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit
from the retention and motivation of a high quality Board and executive team.
The current remuneration policy adopted is that no element of any director/executive package be directly related to the
company’s financial performance. Indeed there are no elements of any director or executive remuneration that is
dependent upon the satisfaction of any specific condition. The overall remuneration policy framework however is
structured in an endeavour to advance/create shareholder wealth. This policy has not changed over the past 4 financial
years.
Non-executive directors
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non-executive directors’ fees and payments are reviewed annually by the Board and are intended to be in line
with the market. Directors are not present at any discussions relating to determination of their own remuneration.
Directors’ fees
All of the directors perform at least some executive or consultancy services. However, each of the directors receives a separate
fixed fee for their services as directors, as the Board considers it important to distinguish between the executive and non-
executive roles held by those individuals.
Retirement allowances for directors
Apart from superannuation payments paid on base director fees there are no retirement allowances for directors.
Executive pay
The executive pay and reward framework has four components:
•
•
•
base pay and benefits such as superannuation
short-term performance incentives; and
long-term incentives through participation in the Employee Share/Option Plan.
8
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
Base pay
All directors currently receive a fixed monthly retainer as agreed with the Company. These arrangements are in the process
being formalised into written consulting service agreements with the Company.
Benefits
Apart from superannuation paid on directors fees there are no additional benefits paid to directors.
Short-term incentives
There are no current short term incentive remuneration arrangements.
Employee share/option plan
There is no existing employee share/option plan however it is proposed that shareholders vote on adopting such a plan at
the forthcoming annual general meeting of shareholders.
B Details of remuneration
Amounts of remuneration
Details of the remuneration of the directors and executives of the Company and the consolidated entity for the year ended
30 June 2005 are set out in the following table. There are no elements of remuneration that are directly related to
performance. The remuneration shown for E Nealon and M Sturgess includes fees paid to them as consultants prior to their
appointment as directors of the Company.
Directors
E Nealon
T McConnachie
G M Button
M Sturgess
K S Huntly
E Kirby
A S Paul
Executives
M Langoulant
(Company secretary)
Base
salary
$
-
-
-
-
-
-
-
Primary benefits
Consulting fee
$
99,600
-
110,000
99,600
17,020
40,000
-
Director’s
fees
$
11,370
493
20,000
11,370
20,000
20,000
19,506
Post employment
Equity
Superannuation
$
1,023
-
1,800
1,023
-
1,800
1,756
Options
$
-
-
-
-
-
-
-
Total
$
111,993
493
131,800
111,993
37,020
61,800
21,262
-
18,160
-
-
-
18,160
No cash bonuses or shares/options were issued to directors or executives during the year.
There are no other executive officers of the consolidated entity
Service agreements
C
Formal service agreements will be entered into with all directors during the forthcoming financial year.
Share-based compensation
D
It is proposed that shareholders approve an employee share and option plan at the forthcoming annual general meeting. The
aim of the employee share and option plan will be to provide long term incentives to directors and executives to create and
enhance shareholder wealth and to provide a mechanism to assist the Company in its endeavours to retain key executives.
9
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
Indemnifying officers or auditors
During the year the Company has paid premiums in respect of a contract insuring all Directors and officers of the Company
against liabilities incurred as Directors or officers to the extent permitted by the Corporations Act 2001. Due to
confidentiality clause in the contract the amount of the premium has not been disclosed. The Company has no insurance
policy in place that indemnifies the Company’s auditors.
Non-audit services and auditors’ independence declaration
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor HLB Mann Judd for audit and non-audit services provided during the
year are set out below.
Audit fees
General taxation advice
Secretarial services
$15,453
$1,280
$2,331
The full Board of Directors (as the audit committee) has considered the position and is satisfied that the provision of the
non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001. The nature and scope of the non-audit service provided means that auditor independence was not compromised.
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 39.
Proceedings on behalf of Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of
the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
Edward Nealon
Executive Chairman
Perth, Western Australia
22 September 2005
10
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
CORPORATE GOVERNANCE STATEMENT
Introduction
Since the introduction of the ASX Principles of Good Corporate Governance and Best Practice Recommendations ("ASX
Guidelines"), Sylvania Resources Ltd ("Company") has made it a priority to adopt systems of control and accountability as
the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this report.
Commensurate with the spirit of the ASX Guidelines, the Company has followed each Recommendation where the Board has
considered the Recommendation to be an appropriate benchmark for corporate governance practices, taking into account
factors such as the size of the Company and the Board, resources available and activities of the Company. Where, after due
consideration, the Company's corporate governance practices depart from the Recommendations, the Board has offered full
disclosure of the nature of, and reason for, the adoption of its own practice.
Further information about the Company's corporate governance practices is set out on the Company's website at
www.sylvaniaresources.com. In accordance with the recommendations of the ASX, information published on the Company's
website includes charters (for the Board and its sub-committees), codes of conduct and other policies and procedures relating
to the Board and its responsibilities.
Explanations for departures from best practice recommendations
During the Company's 2004/2005 financial year ("Reporting Period"), the Company has complied with each of the Ten
Essential Corporate Governance Principles1 and the corresponding Best Practice Recommendations2 as published by the ASX
Corporate Governance Council ("ASX Principles and Recommendations"), other than in relation to the matters specified in
the table below.
1 A copy of the Ten Essential Corporate Governance Principles is set out on the Company’s website under the Section entitled "Corporate
Governance".
2 A copy of the Best Practice Recommendations is set out on the Company’s website under the section entitled "Corporate Governance".
11
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
CORPORATE GOVERNANCE STATEMENT
Principle
Ref
1
Recommendation
Ref
1.1A
2
2.1
Notification of Departure
Explanation for Departure
Formalisation and disclosure of the functions reserved for the
Board and those delegated to management occurred on 23
September 2004.
Two of the five directors are considered to be independent, for
the reasons provided in the section headed "Identification of
Independent Directors".
As from 23 September 2004 the Company achieved compliance. Prior to this
time the functions were delegated as now disclosed but without formalisation
and disclosure.
The Board considers that its current composition is adequate for the Company's
current size and operations, and includes an appropriate mix of skills and
expertise, relevant to the Company's business and for securing appropriate
strategic growth.
2
2.2
2
3
2.4
3.1
The chairman does not satisfy the test of independence as set
out in Box 2.1 of the ASX Principles of Good Corporate
Governance and Best Practice Recommendations Independence
Test ("Independence Test").
From 23 September 2004, the full Board will act as the
nomination committee, in accordance with a nomination
committee charter.
A Code of Conduct was formalised and adopted by the
Company on 23 September 2004.
12
Significant changes were made to the Board during the financial year including
the appointment of Mr Terry McConnachie as Chief Operations Officer, Mr Ed
Nealon to the role of Executive Chair and Ms Melissa Sturgess a Non-Executive
Director.
The Board takes the responsibility of best practice of corporate governance
seriously, and intends to reconsider its composition as the Company's operations
grow however it considers that each of the non-independent directors possess
skills and experience suitable for advancing the Company’s strategic direction.
While the Board recognises the importance of independence in decision
making, it does not comply with best practice recommendation 2.2 as Mr
Nealon, the current Chairman does not satisfy paragraph 3 of the Independence
Test. The Board believes that Mr Nealon, as Executive Chairman, is the most
appropriate person for the position of chairman as this position will best allow
him to pursue strategic opportunities and relationships for the consolidated
entity.
The role of the nomination committee is carried out by the full Board in
accordance with the Nomination Committee Charter. The Board considers that
at this stage, no efficiencies or other benefits would be gained by establishing a
separate nomination committee. Prior to 23 September 2004, the full Board
reviewed and considered the selection and appointment of directors on an as
required basis.
Prior to 23 September 2004 the Board considers that its business practices, as
led by the example of Board and key executives, were the equivalent of a code
of conduct. These practices are now reflected in the Code of Conduct adopted
by the Company on 23 September 2004.
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
CORPORATE GOVERNANCE STATEMENT
Notification of Departure
Explanation for Departure
The Company adopted a written securities trading policy on
23 September 2004.
Principle
Ref
3
Recommendation
Ref
3.2
4
5
6
7
8
4.2, 4.3, 4.4
During the reporting period there was no separate audit
committee.
5.1
6.1
7.1
8.1
Until 23 September 2004 there were no written policies and
procedures designed to ensure compliance with ASX Listing
Rule disclosure requirements and accountability for
the
compliance.
The Company’s shareholder communication strategy was
designed and disclosed in a formal way on 23 September 2004.
The Company did not have a formal framework of risk
oversight and management policy and internal compliance and
control system until 23 September 2004.
During the Reporting Period there was no formal performance
evaluation of the Board, its committees and individual directors.
13
Although prior to 23 September 2004 there was no written policy, there was an
understanding as to when it was appropriate for trading in securities to occur. This
understanding has been formulated into the Company’s written securities trading
policy.
The Company's financial statements are prepared by the Company Secretary
and reviewed in detail by the full Board. The Board considers that it has an
adequate balance of independent representation and financial experience to
operate the audit committee in this manner.
Informal procedures were in place prior to 23 September 2004 which have been
formulated into the written policies and procedures.
The Company has a positive strategy to communicate with shareholders,
identify the expectations of shareholders and actively promote shareholder
involvement in the Company. These strategies have now been documented and
disclosed on 23 September 2004.
The Company has developed a framework for risk management, which the
Company intends to enhance as the Company's operations grow.
The Board has undergone continuous performance evaluation, which has
resulted in significant changes to the composition of the Board in the last two
financial years. The Board will consider whether such procedures should be
more formalised in its 2005/6 financial year.
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
CORPORATE GOVERNANCE STATEMENT
Notification of Departure
Explanation for Departure
Principle
Ref
Recommendation
Ref
9
9.2
The Company does not have a separate remuneration committee
having adopted a formal remuneration policy on 23 September
2004.
The Board considers that due to its small size, all members should be involved
in determining remuneration levels. Accordingly, time is set aside at one Board
meeting each year specifically to address the matters usually considered by a
remuneration committee and function in accordance with the Remuneration
Committee Charter. Executive directors absent themselves during discussion of
their remuneration.
All arrangements for the provision of professional services by directors will be
formalised into written service contracts during the forthcoming financial year.
To the extent that additional executives are appointed in the future and the
scope of the Company's activities expands the Company will reconsider whether
a change in the structure of executive remuneration is appropriate.
Although until 23 September 2004 there was no code of conduct documented or
disclosed, the Board considered its business practices, as led by the example of
the Board and key executives, were the equivalent of a code of conduct. The
Company has now documented these practices and principles into a written
code of conduct.
10
10.1
A code of conduct was adopted on 23 September 2004.
14
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
CORPORATE GOVERNANCE STATEMENT
Nomination Committee
There is no formal nomination committee. However, the full Board carries out responsibilities similar to that which would be
conducted by a nomination committee. In carrying out these actions the full Board is guided by the Nomination Committee Charter
as set out on its website.
Names of Directors and their attendance at meetings at which nomination matters were discussed
Name
Mr Grant Button
Mr Kevin Huntly
Dr Evan Kirby
Mr Adrian Paul
Mr Edward Nealon
Ms Melissa Sturgess
Mr Terry McConnachie
No. of relevant meetings held
No. of relevant meetings attended
3
3
3
3
1
1
0
3
3
3
3
1
1
0
Audit Committee
There is no formal audit committee. However, the full Board carries out a review similar to that which would be conducted by an
audit committee. In carrying out these actions the full Board is guided by the Audit Review Guidelines as set out on its website.
The Board did not meet formally as the audit committee during the reporting period, but discussed any relevant matters as-
required during regular meetings of the Board.
Names of Directors and their attendance at meetings at which audit matters were discussed
Name
Mr Grant Button
Mr Kevin Huntly
Dr Evan Kirby
Mr Adrian Paul
Mr Edward Nealon
Ms Melissa Sturgess
Mr Terry McConnachie
No of relevant meetings held
No of meetings relevant attended
2
2
2
2
1
1
0
2
2
2
2
1
1
0
Remuneration Committee
The Company’s remuneration policies are discussed in depth in the Remuneration report section of the Directors’ Report.
From 23 September 2004 the full Board has carried out the function of the remuneration committee in accordance with a
Remuneration Committee Charter.
15
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
CORPORATE GOVERNANCE STATEMENT
Names of Directors and their attendance at meetings at which remuneration matters were discussed
Name
Mr Grant Button
Mr Kevin Huntly
Dr Evan Kirby
Mr Adrian Paul
Mr Edward Nealon
Ms Melissa Sturgess
Mr Terry McConnachie
Other
No of relevant meetings held
No of meetings relevant attended
1
1
1
1
0
0
0
1
1
1
1
0
0
0
Skills, experience, expertise and term of office of each director
A profile of each director containing the applicable information is set out in the Directors' Report.
Identification of independent directors
The independent directors of the Company are Kevin Huntly and Evan Kirby.
Merrs Huntly and Kirby are considered independent directors in accordance with the criteria of independence as set out in Box
2.1 of the commentary that supplements the Principles of Good Corporate Governance and Best Practice Recommendations as
published by the ASX Corporate Governance Council ("Independence Criteria").
Statement concerning availability of independent professional advice
If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her
office as a director, then, provided the director first obtains approval for incurring such expense from the chairperson, the
Company will pay the reasonable expenses associated with obtaining advice.
Confirmation whether performance evaluation of the Board and its members have taken place and how conducted
During the reporting period the composition and functioning of the Board as a whole was discussed from time to time at
regular meetings of the Board. The Board considers that more formal procedure is not warranted at present in view of the
small size, and overlap of many of the key functions, of the Board and management.
Existence and terms of any schemes for retirement benefits for non-executive directors
There are no retirement benefit schemes for non-executive directors.
16
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated
Parent entity
Notes
2005
$
2004
$
2005
$
2004
$
Revenue from ordinary activities
2
114,720
50,912
114,720
50,912
Exploration expenditure written off
Foreign exchange loss
Write down of non-current assets
Other expenses from ordinary activities
Provision for non-recovery of loan to
controlled entity
Share of net profit of joint ventures
accounted for on an equity basis
Loss from ordinary activities before
income tax expense
Income tax expense
Loss from ordinary activities after
income tax expense
Net loss
Total revenues, expenses and valuation
adjustments attributable to members of
Sylvania Resources Limited recognised
directly in equity
Total changes in equity other than
those resulting from transactions with
owners as owners
(10,705)
(3,365)
(1,783)
(1,196,690)
-
143,079
(25,323)
-
(9,633)
(485,749)
(19,926)
(59,995)
(1,783)
(1,184,285)
(12,738)
-
(9,633)
(485,749)
-
-
9,221
(12,585)
-
-
(954,744)
-
(469,793)
-
(1,142,048)
-
(469,793)
-
3
3
4
(954,744)
(469,793)
(1,142,048)
(469,793)
(954,744)
(469,793)
(1,142,048)
(469,793)
10
(105,030)
(369,086)
(105,030)
(369,086)
(1,059,774)
(838,879)
(1,247,078)
(838,879)
Basic earnings per share (cents)
Diluted earnings per share (cents)
19
19
(1.81)
(1.81)
(1.46)
(1.46)
The accompanying notes form part of these financial statements.
17
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2005
Consolidated
Parent entity
Notes
2005
$
2004
$
2005
$
2004
$
Current assets
Cash assets
Receivables
Total current assets
Non-current assets
Investments accounted for using
the equity method
Other financial assets
Mining tenements
Plant and equipment
Receivables
5
6
7
8
5
10,133,474
319,491
4,023,120
7,493
10,131,243
569,491
4,023,120
257,493
10,452,965
4,030,613
10,700,734
4,280,613
4,617,660
19,736
638,576
4,003
-
2,530,828
21,519
250,000
-
-
-
19,736
-
4,003
4,819,190
-
21,519
-
-
2,530,828
Total non-current assets
5,279,975
2,802,347
4,842,929
2,552,347
Total assets
15,732,940
6,832,960
15,543,663
6,832,960
Current liabilities
Payables
9
244,876
189,200
242,903
189,200
Total current liabilities
244,876
189,200
242,903
189,200
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
244,876
189,200
242,903
189,200
15,488,064
6,643,760
15,300,760
6,643,760
10
11
12
22,042,204
-
(6,554,140)
11,957,781
285,375
(5,599,396)
22,042,204
-
(6,741,444)
11,957,781
285,375
(5,599,396)
Total equity
15,488,064
6,643,760
15,300,760
6,643,760
The accompanying notes form part of these financial statements.
18
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2005
Cash flows from operating activities
Inflows from operations
Payments to suppliers and employees
Interest received
Net cash inflow/(outflow) from operating
activities
Cash flows from investing activities
Loans from/(to) controlled entity
Loan to other party
Purchase of plant & equipment
Exploration & evaluation expenditure
Purchase of exploration projects
Purchase of equity accounted investments
Net cash inflow/(outflow) from investing
activities
Cash flows from financing activities
Repayment of loan from other party
Proceeds from issue of shares
Capital raising costs
Consolidated
Parent entity
Notes
2005
$
2004
$
2005
$
2004
$
111,391
(1,270,047)
114,720
31,568
(639,563)
50,912
44,840
(1,249,694)
114,720
-
(635,901)
50,912
17 (1,043,936)
(557,083)
(1,090,134)
(584,989)
-
(297,721)
(4,003)
(10,705)
(388,576)
(1,943,753)
-
-
-
(25,323)
-
(731,621)
(2,279,141)
(297,721)
(4,003)
(19,926)
-
-
(715,507)
-
-
(12,738)
-
(793)
(2,644,758)
(756,944)
(2,600,791)
(729,038)
-
9,904,078
(105,030)
(290,215)
5,404,571
(288,531)
-
9,904,078
(105,030)
(290,215)
5,404,571
(288,531)
Net cash inflow from financing activities
9,799,048
4,825,825
9,799,048
4,825,825
Net increase/(decrease) in cash held
Cash at the beginning of the financial year
6,110,354
4,023,120
3,511,798
511,322
6,108,123
4,023,120
3,511,798
511,322
Cash at the end of the financial year
10,133,474
4,023,120
10,131,243
4,023,120
The accompanying notes form part of these financial statements.
19
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance with Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus
Views and the Corporations Act 2001.
The financial report covers the consolidated entity of Sylvania Resources Limited and controlled entities, and
Sylvania Resources Limited as an individual parent entity. Sylvania Resources Limited is a listed public company
registered and domiciled in Australia.
The financial report has been prepared on an accruals basis and is based on historical costs, except for certain
assets that, as noted, are at valuation. Unless otherwise stated, the accounting policies adopted are consistent with
those of the previous year.
The following is a summary of the material accounting policies adopted by the consolidated entity in the
preparation of the financial report.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by
Sylvania Resources Limited ("Company" or "parent entity") as at 30 June 2005 and the results of all
controlled entities for the year then ended. Sylvania Resources Limited and its controlled entities together are
referred to in this financial report as the Consolidated Entity. The effects of all transactions between entities
in the Consolidated Entity are eliminated in full.
Where control of an entity is obtained during a financial year, its results are included in the consolidated
statement of financial performance from the date on which control commences.
(b) Income tax
Tax effect accounting procedures are followed whereby the income tax expense in the statements of financial
performance is matched with the accounting profit/loss after allowing for permanent differences. The future
tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of
realisation. Income tax on cumulative timing differences is set aside to the deferred income tax or the future
income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.
(c) Acquisitions of assets
The purchase method of accounting is used for all acquisitions of assets regardless of whether equity
instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares
issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the
acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their market
price as at the acquisition date. Transaction costs arising on the issue of equity instruments are recognised
directly in equity.
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 the acquisition. The discount rate used is the incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
20
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d) Recoverable amount of non-current assets
The carrying amounts of non-current assets valued on the cost basis, other than exploration and evaluation
expenditure carried forward (note 1(i)), are reviewed to determine whether they are in excess of their
recoverable amount at balance date. If the carrying amount of a non-current asset exceeds its recoverable
amount, the asset is written down to the lower amount. The write-down is recognised as an expense in the
net profit or loss in the reporting period in which it occurs.
Where a group of assets working together supports the generation of cash inflows, recoverable amount is
assessed in relation to that group of assets.
In assessing recoverable amounts of non-current assets the relevant cash flows have not been discounted to
their present value, except where specifically stated.
(e) Investments
Interests in listed and unlisted securities, other than controlled entities and associates in the consolidated
financial statements are brought to account at the lower of cost or market value. Dividend income is
recognised in the statement of financial performance when receivable. Controlled entities and associates are
accounted for in the consolidated financial statements as set out in note 1(a).
(f) Payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end
of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days
of recognition.
(g) Revenue
Revenue from the sale of assets is recognised upon the transfer of asset title to the purchaser. Interest revenue
is recognised on a proportionate basis taking into account the interest rates applicable to the financial assets.
(h) Earnings per share
(i) Basic earnings per share
Basic earnings per share is determined by dividing net profit/loss attributable to members, adjusted to
exclude costs of servicing equity (other than dividends) and preference share dividends, by the weighted
average number of ordinary shares, adjusted for any bonus element.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking
into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
21
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(i) Exploration and evaluation expenditure
The Consolidated Entity’s policy with respect to exploration and evaluation expenditure is to use the “area of
interest” method. Under this method, exploration and evaluation costs are carried forward on the following
basis:
(i)
Each area of interest is considered separately when deciding whether and to what extent to carry
forward or write off exploration and evaluation costs.
(ii) Exploration and evaluation costs related to an area of interest are carried forward provided that rights
to tenure of the area of interest are current and provided further that one of the following conditions are
met:
•
•
such costs are expected to be recouped through successful development and exploitation of the
area of interest or alternatively, by its sale; or
exploration and/or evaluation activities in the area of interest have not yet reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves and active and significant operations in relation to the area are continuing.
Exploration and evaluation costs accumulated in respect to each particular area of interest includes
only net direct expenditure.
(iii) The carrying values of exploration and evaluation costs are reviewed by Directors where results of
exploration and/or evaluation of an area of interest are sufficiently advanced to permit a reasonable
estimate of the costs expected to be recouped through successful development and exploitation of the
area of interest or by its sale. Expenditure in excess of this estimate is written off to the statements of
financial performance in the year in which the review occurs.
(j) Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST is
not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of
the cost of the acquisition of the asset or as part of an item of the expense. Receivables and payables in the
Statement of Financial Position are shown exclusive of GST.
(k) Cash
For purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to
cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.
(l) Interests in joint ventures
The consolidated entity’s interests in joint venture entities are brought to account using the equity method of
accounting in the consolidated financial statements. The parent entity’s interests in joint venture entities are
brought to account using the cost method. Where the consolidated entity acquires an interest in a joint
venture entity, the acquisition cost is amortised on a basis consistent with the method of amortisation used by
the joint venture in respect to assets to which the acquisition costs relate.
22
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Foreign Currencies
Translation of foreign currency transactions
Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at
the rate of exchange ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date are translated using the spot rate at
the end of the financial year.
Except for certain specific hedges, all resulting exchange differences arising on settlement or re-statement are
recognised as revenues and expenses for the financial year. Any gains or costs on entering a hedge are deferred
and amortised over the life of the contract.
Translation of financial reports of overseas operations
The assets and liabilities of foreign operations that are integrated are translated using the temporal method.
Monetary assets and liabilities are translated into Australian currency at rates of exchange current at balance
date, while non-monetary items and revenue and expense items are translated at exchange rates current when
the transactions occurred.
Exchange differences arising on translation are brought to account in the Statements of Financial Performance.
For integrated operations the translated amounts for non-monetary assets, other than inventory, are compared
to recoverable amounts translated at spot rates at reporting dates and any excess is expensed, unless a
revaluation reserve balance exists for non-current assets carried at fair value.
(n) Impact of adopting of Australian Equivalents to International Financial Reporting Standards
The Company is in the process of transitioning its accounting policies and financial reporting from current
Australian Accounting Standards (AGAAP) to Australian equivalents of International Financial Reporting
Standards (AIFRS) which will be applicable for the financial year ending 30 June 2006. In 2004, the
Company allocated resources to conduct impact assessments to identify key areas that would be impacted by
the transition of AIFRS. The consolidated entity is expected to be in a position to fully comply with the
requirements of AIFRS for the 30 June 2006 financial year.
The key areas where it is believed that accounting policies may change are:
Impairment of assets
The Consolidated Entity currently determines the recoverable amount of an asset on the basis of undiscounted
net cash flows that will be received from the assets’ use and subsequent disposal. In terms of AASB 136:
Impairment of Assets, the recoverable amount of an asset will be determined as the higher of fair value less
costs to sell and value in use. This change in accounting policy may lead to impairments being recognised
more often than under the existing policy.
Share-based payment
Although share based compensation does not form part of the remuneration of directors/employees of the
Consolidated Entity the Consolidated Entity currently does not recognise an expense for any share-based
compensation granted. Under AASB 2: Share-Based Payments, the Consolidated Entity will be required to
recognise an expense for such share-based compensation. Share-based compensation is measured at the fair
value of the share options determined at grant date and recognised over the expected vesting period of the
options. A reversal of the expense will be permitted to the extent that non-market based vesting conditions
such as service are not met.
23
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(n) Impact of adopting of Australian Equivalents to International Financial Reporting Standards
Income tax
Currently, the Consolidated Entity adopts the liability method of tax-effect accounting whereby the income
tax expense is based on the accounting profit adjusted for any permanent differences. Timing differences are
currently brought to account as either a provision for deferred income tax or future income tax benefit. Under
AASB 112: Income Taxes, the Consolidated Entity will be required to adopt a balance sheet approach under
which temporary differences are identified for each asset and liability rather than the effects of the timing and
permanent differences between taxable income and accounting profit.
The Consolidated Entity also has carried forward income tax losses which have not been recognised as
deferred tax assets as they do not satisfy the “virtually certain” test under current Australian Accounting
Standards. Under AASB 112, it will be easier to recognise these tax losses as deferred tax assets due to the
recognition test being based on whether it is “probable” that the losses will be recovered.
Foreign currency – Financial statements of foreign operations
Under current Australian GAAP, the assets and liabilities of foreign operations that are integrated are
translated using the temporal method. Monetary assets and liabilities are translated into Australian currency
at rates of exchange current at balance date, while non-monetary items and revenue and expense items are
translated at exchange rates current when the transactions occurred. Exchange differences arising on
translation are brought to account in the Statements of Financial Performance.
Under AIFRS, each entity in the consolidated entity determines its functional currency, the currency of the
primary economic environment in which the entity operates, reflecting the underlying transactions, events
and conditions that are relevant to the entity. The entity maintains its books and records in its functional
currency.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
consolidation, are translated from the entity’s functional currency to the consolidated entity’s presentation
currency of Australian dollars at foreign exchange rates ruling at reporting date. The revenues and expenses
of foreign operations are translated to Australian dollars at the exchange rates approximating the exchange
rates ruling at the date of the transactions. Foreign exchange differences arising on translation are recognised
directly in a separate component of equity.
Set out below are the directors’ best estimates of the quantitative impact of the changes as at the date of
preparing the 30 June 2005 financial report. The actual effects of transition to AIFRS may differ from the
estimates disclosed due to (a) ongoing work being undertaken; (b) potential amendments to AIFRS and
Interpretations thereof being issued by the standard-setters and IFRIC; and (c) emerging accepted practice in
the interpretation and application of AIFRS and UIG Interpretations:
(i) Reconciliation of equity as presented under AGAAP to that under AIFRS
Subject to the impact of the change described above in relation to foreign currency, no material impacts are
expected to the net result presented under AGAAP on adoption of AIFRS.
(ii) Reconciliation of net result under AGAAP to that under AIFRS
Subject to the impact of the change described above in relation to foreign currency, no material impacts are
expected to the net result presented under AGAAP on adoption of AIFRS.
(iii) Restated AIFRS Statement of Cash Flows for the year ended 30 June 2005
No material impacts are expected to the cash flows presented under AGAAP on adoption of AIFRS.
24
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 2 – REVENUE
Operating activities
Sale of goods
Interest received
Total revenue
NOTE 3 - OPERATING LOSS
Loss from ordinary activities before income tax expense
includes the following specific net gains and expenses:
Expenses
Provision for non-recovery of loan to controlled entity
Provision for diminution of equity investment
Tenement exploration expenses written off
Foreign exchange loss
Other expenses from ordinary activities includes the
following:
Administration costs
Compliance cost
Consulting fees
Directors’ fees
Employee costs
Legal fees
Office rental
Project generation costs
Travel
Consolidated
Parent entity
2005
$
2004
$
2005
$
2004
$
-
114,720
114,720
-
50,912
50,912
-
114,720
114,720
-
50,912
50,912
-
1,783
10,705
3,365
-
9,633
25,323
-
(9,221)
1,783
19,926
59,995
12,585
9,633
12,738
-
100,941
41,022
483,559
102,739
29,964
125,767
26,942
-
286,006
38,322
66,507
110,456
32,931
-
36,445
15,034
115,111
53,752
100,371
36,537
474,147
102,739
29,964
125,767
26,942
-
286,006
23,288
66,507
110,456
32,931
-
36,445
15,034
115,111
53,752
25
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 4 - INCOME TAX
Consolidated
Parent entity
2005
$
2004
$
2005
$
2004
$
a) The income tax expense for the financial year differs from the prima facie tax applicable to the loss for the year
as follows:
Loss from ordinary activities before income tax expense
(1,142,048)
(469,793)
(954,744)
(469,793)
Income tax calculated @ 30%
(286,423)
(140,938)
(342,614)
(140,938)
Tax effect of permanent differences:
Non deductible expenses
Tax benefit not recognised
60,080
226,343
38,358
102,580
128,305
214,309
38,358
102,580
Income tax expense
-
-
-
-
b) The directors estimate that the potential future income
tax benefit in respect of tax losses not brought to account
calculated at 30% is:
510,871
1,059,973
This benefit for tax losses 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 from the deductions for the losses to be realised;
(ii) the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation,
and
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the
deductions for the losses.
c) Tax consolidation
Sylvania Resources Limited and its 100% owned Australian subsidiary intend to form a tax consolidated group with
effect from 1 July 2003. The head entity of the tax consolidated group is Sylvania Resources Limited.
Members of the group intend to enter into a tax funding arrangement in order to allocate income tax expense to the
wholly owned subsidiaries on a pro-rata basis. In addition the members intend to enter into a tax sharing agreement
which provides for the allocation of income tax liabilities between the entities should the head entity default in its
tax payment obligations.
NOTE 5 – RECEIVABLES
Current
Sundry loan to unrelated party
Net GST receivable
Amount receivable from controlled entity
Provision for non-recovery of loan to controlled entity
297,721
21,770
-
-
-
7,493
-
-
297,721
21,770
557,914
(307,914)
-
7,493
567,135
(317,135)
319,491
7,493
569,491
257,493
26
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 5 – RECEIVABLES (CONT)
Non-current
Amount receivable from controlled entity
NOTE 6 – INVESTMENTS ACCOUNTED FOR
USING THE EQUITY METHOD
Consolidated
Parent entity
2005
$
2004
$
2005
$
2004
$
-
-
4,819,190
2,530,828
Interest in joint venture entity
4,617,660
2,530,828
-
-
NOTE 7 – OTHER FINANCIAL ASSETS
Listed investments – at valuation
Investment in controlled entity
Provision for diminution in value of investment in
controlled entity
NOTE 8 – MINING TENEMENTS
Acquisition, exploration and evaluation expenditure at
written down recoverable amount in respect of areas of
interest in the exploration phase
Movements:
Opening balance
Direct expenditure for the year
Cost of tenements acquired
Amounts written off
Balance at end of financial year
19,736
-
-
21,519
-
-
19,736
1,500,004
(1,500,004)
21,519
1,500,004
(1,500,004)
19,736
21,519
19,736
21,519
638,576
250,000
-
-
250,000
10,705
388,576
(10,705)
638,576
250,000
25,323
-
(25,323)
250,000
-
19,926
-
(19,926)
-
-
12,738
-
(12,738)
-
Ultimate recovery of exploration and evaluation expenditure carried forward is dependent upon the re-coupment of
costs through successful development and commercial exploitation, or alternatively by sale of the respective areas.
NOTE 9 – CURRENT LIABILITIES
Payables - sundry creditors
244,876
189,200
242,903
189,200
Of the payables $101,972 (2004: $50,074) is denominated and payable in South African rand.
27
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated
Parent entity
2005
$
2004
$
2005
$
2004
$
NOTE 10 - CONTRIBUTED EQUITY
a) Ordinary shares
91,679,273 fully paid ordinary shares (2004: 51,883,883)
Movements in share capital:
Balance at the beginning of the financial year
7,780,000 ordinary shares issued at $0.45 each
32,015,390 June 2005 options exercised at $0.20 each
16,677,652 ordinary shares issued at an average price of
$0.324 each
Option Issue reserve transferred to share capital following
June 2005 options being exercised
6,000,000 ordinary shares issued at $0.30 each to acquire a
interest in a joint venture entity
Capital raising costs
Balance at the end of the financial year
22,042,204
11,957,781
11,957,781
3,501,000
6,403,078
-
5,122,296
-
-
5,404,571
285,375
-
-
1,800,000
(105,030)
(369,086)
22,042,204
11,957,781
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at shareholders’ meetings. In the event of winding up of the parent entity, ordinary shareholders rank
after all creditors and are fully entitled to any proceeds on liquidation.
b) Options
During the year there were 32,015,390 June 2005 options exercised to acquire ordinary fully paid shares at $0.20. A
further 272,133 June 2005 options lapsed as they were not exercised by 30 June 2005.
NOTE 11 – RESERVES
Option reserve
-
285,375
-
285,375
During the year the option reserve was transferred to share capital following the exercise/expiry of June 2005
options.
NOTE 12 – ACCUMULATED LOSSES
Accumulated losses at the beginning of the financial year
Net loss for the year
5,599,396
954,744
5,129,603
469,793
5,599,396
1,142,048
5,129,603
469,793
Balance at the end of the financial year
6,554,140
5,599,396
6,741,444
5,599,396
28
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 13 - FINANCIAL INSTRUMENTS
(a) Credit risk exposures
Credit risk relates to the risk that counterparties will default on its contractual obligations resulting in
financial loss to the consolidated entity. The consolidated entity has adopted a policy of only dealing with
credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a
means of mitigating the risk of financial loss from any defaults.
The exposure of the consolidated entity to credit risk in relation to each class of recognised financial asset is
the carrying amount as indicated in the statements of financial position.
(b) Net fair values
The fair values of all financial assets and liabilities approximate their carrying values as indicated in the
statements of financial position.
(c) Interest rate risk
All cash balances attract a floating rate of interest. The unsecured loan to another party does not attract
interest. The consolidated entity’s exposure to interest rate risk and the effective interest rate by maturity
periods is set out below.
Non-
Interest
Bearing
Floating
interest rate
Fixed interest :
1 year
Or less
Over 1
to 5
years
Weighted
Average
Interest
Rate
4.9%
2005
Financial assets
Cash and deposits
Receivables
Investments
Financial liabilities
Payables
140
319,491
19,736
339,367
10,133,334
-
-
10,133,334
(244,875)
-
Net financial assets/(liabilities)
94,492
10,133,334
Weighted
Average
Interest
Rate
4.3%
2004
Financial assets
Cash and deposits
Receivables
Investments
Financial liabilities
Payables
-
7,493
21,519
29,012
4,023,120
-
-
4,023,120
(189,200)
-
Net financial assets/(liabilities)
(160,188)
4,023,120
29
Total
10,133,474
319,491
19,736
10,472,701
(244,875)
10,227,826
Total
4,023,120
7,493
21,519
4,052,132
(189,200)
3,862,932
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fixed interest :
Non-
Interest
Bearing
Floating
interest rate
1 year
Or less
Over 1
to 5
years
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 14 – REMUNERATION OF DIRECTORS AND EXECUTIVES
(a) Names and positions held of parent entity directors and specific executives in office at any time during
the financial year were:
Parent Entity Directors
Mr. E Nealon
Mr. T McConnachie
Mr. G Button
Ms M Sturgess
Mr. E Kirby
Mr. S Huntley
Mr. A Paul (resigned 22 June 2005)
Specified executives
Chairman
Chief Operating Officer
Director
Director
Director
Director
Director
Executive
Executive
Executive
Non-executive
Non-executive
Non-executive
Non-executive
Due to the size of the company and its current level of operations, there are no executives other than
the company secretary.
(b)
Parent Entity Directors’ remuneration
2005
Mr E Nealon*
Mr McConnachie
Mr Button
Ms Sturgess*
Mr Kirby
Mr Huntley
Mr Paul
Primary Benefits
Directors fees
11,370
493
20,000
11,370
20,000
20,000
19,506
102,739
Consulting fees
99,600
-
110,000
99,600
40,000
17,020
-
366,220
Post employment
Superannuation
1,023
-
1,800
1,023
1,800
-
1,756
7,402
Total
111,993
493
131,800
111,993
61,800
37,020
21,262
476,361
*The consulting fees paid to E Nealon and M Sturgess include fees paid prior to their appointment as
directors.
2004
Mr Button
Mr Paul
Mr Huntley
Mr Kirby
Mr G Nealon
20,000
20,000
20,000
12,931
-
72,931
-
-
26,064
-
17,500
43,564
-
-
-
-
-
-
20,000
20,000
46,064
12,931
17,500
116,495
There has been no equity based compensation paid to directors in the last two financial years.
30
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 14 – REMUNERATION OF DIRECTORS AND EXECUTIVES
(c) Specified executive remuneration
2005
Mr M Langoulant
(Company Secretary)
Primary Benefits
Base fees
Consulting fees
Post employment
Superannuation
Total
-
18,160
-
18,160
There were no specified executives in the year ended 30 June 2004.
(d) Shares held by Parent Entity Directors and specified executives
Fully paid ordinary shares
Director
Balance at 1 July 2004
Net changes*
Balance at 30 June 2005
E Nealon
T McConnachie
G Button
M Sturgess
E Kirby
K Huntly
Executive
M Langoulant
Nil
Nil
250,000
Nil
14,300
Nil
100,000
-
-
250,000
65,000
-
-
-
Nil
Nil
500,000
65,000
14,300
Nil
100,000
* Refers to shares acquired on exercise of June 2005 options during the year.
(e) Remuneration practices
Refer to the Remuneration report section of the Directors’ Report.
31
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated
Parent entity
2005
$
2004
$
2005
$
2004
$
NOTE 15 – REMUNERATION OF AUDITORS
Audit and review services
Other services – tax and secretarial services
15,453
3,612
12,300
4,495
13,300
1,281
12,300
4,495
19,065
16,795
14,581
16,795
NOTE 16 - INVESTMENTS IN CONTROLLED ENTITIES
(a) Investment in controlled entities
Name of entity
Country of
registration
Class of
shares
Equity
holding
Book value of parent
entity’s investment
2005
%
2004
%
2005
$
2004
$
Twinloop Nominees Pty Ltd
Australia
Ordinary
100
Sylvania South Africa (Pty) Ltd
South Africa Ordinary
100
100
100
Nil
Nil
Nil
Nil
(b) Transactions between wholly-owned group
The wholly owned group consists of Sylvania Resources Limited and its wholly owned controlled entities,
Twinloop Nominees Pty Ltd and Sylvania South Africa (Pty) Ltd. The ownership interest in these controlled
entities is set out above. Transactions between Sylvania Resources Limited and its controlled entities during the
year consisted of loans advanced by Sylvania Resources Limited.
Aggregate amounts receivable from entities in the wholly-
owned group at balance date:
Current receivables (loans)
Provision for non-recovery of loans
Non-current receivables (loans)
Parent entity
2005
$
2004
$
557,914
(307,914)
567,135
(317,135)
250,000
250,000
4,819,190
2,530,828
32
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated
Parent entity
2005
$
2004
$
2005
$
2004
$
NOTE 17 - CASH FLOW INFORMATION
a) Reconciliation of loss from ordinary activities
after income tax to net cash outflow from
operating activities
Loss from ordinary activities after income tax
(954,744)
(469,793)
(1,142,048)
(469,793)
Equity accounted net profit from joint venture
entity
Write down of other non-current assets to
recoverable amount
Mining tenement expenditure written off
Write down of loan to controlled entity
(Increase) / Decrease in receivables
Increase/(Decrease) in payables
(143,079)
-
-
-
1,783
10,705
-
(14,277)
55,676
9,633
25,323
-
27,906
(150,152)
1,783
19,926
(9,221)
(14,277)
53,703
9,633
12,738
12,585
(3,662)
(146,490)
Net cash outflow from operating activities
(1,043,936)
(557,083)
(1,090,134)
(584,989)
b) Non-cash financing and investing activities
During the 2004 financial year the following non-cash financing or investing activities occurred:
• 6,000,000 ordinary shares were issued at a deemed issue price of $0.30 each as part consideration for
the acquisition of a 25% interest in the CTRP joint venture entity.
NOTE 18 – COMPANY DETAILS
Sylvania Resources Limited is a publicly listed company limited by shares, registered and domiciled in Australia.
At reporting date, the consolidated entity had one employee.
Consolidated
2005
$
2004
$
NOTE 19 - EARNINGS PER SHARE
a) Earnings used in the calculation of earnings per share
(954,744)
(469,793)
b) Weighted average number of ordinary shares used in the calculation
of basic earnings per share
Number
Number
52,738,939
32,174,713
33
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated
2005
$
2004
$
NOTE 20 – INTEREST IN JOINT VENTURE ENTITY
The consolidated entity has a 25% interest in an un-incorporated joint venture, CTRP, that operates a chrome tailings
re-treatment plant at Kroondal in South Africa for the purpose of extracting platinum group metals. The consolidated
entity has accounted for this interest on an equity accounting basis.
(a) Retained earnings attributable to interest in joint venture
Balance at beginning of financial year
Share of joint venture’s profit from ordinary activities after income
tax
Balance at end of financial year
(b) Reserves attributable to interest in joint venture
(c) Carrying amount of investment in joint venture entity
Joint venture interest acquisition cost
Accumulated amortisation
Contributions to the joint venture:-
Balance at beginning of the financial year
Additional investment made during year
Share of joint venture’s profit from ordinary activities after income
tax
Balance at end of financial year
-
143,079
143,079
-
2,530,828
-
2,530,828
-
1,943,753
143,079
2,086,832
-
-
-
-
2,530,828
-
2,530,828
-
-
-
-
4,617,660
2,530,828
(d) Share of joint venture entity’s results and financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Revenue
Expenses
Profit from ordinary activities before income tax
Income tax expense
Profit from ordinary activities after income tax
34
434,565
1,768,815
2,203,380
177,034
143,086
320,120
456,954
(313,875)
143,079
-
143,079
-
-
-
-
-
-
-
-
-
-
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 21 – COMMITMENTS
Exploration expenditure commitments
Under the terms of tenement licences granted by the relevant Australian State Department, minimum annual
expenditure obligations must be met in order for mining tenements to maintain a status of good standing. These
obligations totalling $25,000 have been transferred to a third party under the an option agreement whereby that party
has until 16 August 2006 to exercise the option to acquire Sylvania’s interests in its Australian tenements by the
payment of A$55,000 and the issuance to Sylvania of fully paid ordinary shares in a listed entity to the value of
A$300,000. However Sylvania may be required to be expend the minimum annual exploration should that party not
fulfil its obligations.
CTRP joint venture entity expenditure commitments
As at 30 June 2004 the consolidated entity had certain obligations to fund a portion of the CTRP joint venture entity
capital costs to be incurred. The consolidated entity was committed to fund GBP615,000 of the initial capital
construction costs plus 25% of any capital expenditure in excess of budget. As at 30 June 2005 there were no
existing expenditure commitments.
The above obligations are not provided for in the financial report and are payable as set out below:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
2005
$
-
-
-
2004
$
1,615,000
-
-
Parent entity
2004
$
-
-
-
2005
$
-
-
-
35
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 22 – SEGMENT REPORTING
The consolidated entity has mineral exploration and production and investment interests in both Australia and South Africa.
Australia
South Africa
Elimination
Consolidated
REVENUE
External sales
Total sales revenue
Other revenue
Share of net profits of equity accounted
associates and joint venture entities
Total segment revenue
Unallocated revenue
Total revenue
RESULT
Segment result
Unallocated expenses net of unallocated
revenue
Loss from ordinary activities
Income tax expense
Net profit
ASSETS
Segment assets
Unallocated assets
Total assets
2005
$
-
2004
$
-
114,720
50,912
-
-
-
-
143,079
114,720
50,912
143,079
2005
$
2004
$
2005
$
2004
$
2005
$
2004
$
-
-
-
-
-
-
-
-
-
-
-
-
50,912
-
50,912
114,720
50,912
143,079
257,799
-
257,799
(803,480)
(341,944)
(147,899)
(127,849)
-
-
(951,379)
(469,793)
10,426,753
4,302,132
5,306,187
2,530,828
-
-
36
(3,365)
(954,744)
-
(954,744)
-
(469,793)
-
(469,793)
15,732,940
-
15,732,940
6,832,960
-
6,832,960
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 22 – SEGMENT REPORTING (Cont’d)
LIABILITIES
Segment liabilities
Unallocated liabilities
Total liabilities
OTHER
Write down of non-current assets
recoverable amount
to
Carrying amount of investment accounted for
on an equity basis
Australia
South Africa
Elimination
Consolidated
2005
$
2004
$
2005
$
2004
$
2005
$
2004
$
129,078
139,126
115,798
50,074
1,783
9,633
-
-
-
-
-
2005
$
244,876
-
244,876
2004
$
189,200
-
189,200
-
1,783
9,633
-
-
4,617,660
2,530,828
-
-
4,617,660
2,530,828
37
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
DIRECTORS’ DECLARATION
The directors declare that:
1. The financial statements and notes set out on pages 17 to 37 are in accordance with the Corporations Act 2001
and:
(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(b) give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2005
and of their performance, as represented by the results of their operations and their cash flows, for the
financial year ended on that date.
2. In the directors’ opinion 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 directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Edward Nealon
Executive Chairman
Perth, Western Australia
22 September 2005
38
Auditors’ Independence Declaration
As lead auditor for the audit of the financial report of Sylvania Resources Ltd for the
year ended 30 June 2005, I declare that to the best of my knowledge and belief, there
have been:
a)
b)
no contraventions of the auditor
Corporations Act 2001 in relation to the audit; and
independence requirements of the
no contraventions of any applicable code of professional conduct in relation
to the audit.
This declaration is in respect of Sylvania Resources Ltd.
Perth, Western Australia
22 September 2005
WM Clark
Partner, HLB Mann Judd
39
HLB Mann Judd (WA Partnership)
15 Rheola Street West Perth 6005. PO Box 263 West Perth 6872 Western Australia. DX 238 (Perth) Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686.
Email: hlb@mjwa.com.au. Website: http://www.hlb.com.au
Partners: Ian H Barsden, Terry M Blenkinsop, Litsa Christodulou, Wayne M Clark, Lucio Di Giallonardo, Colin D Emmott, Trevor G Hoddy, Norman G Neill, Peter J Speechley
HLB Mann Judd (WA Partnership) is a member of
International and the HLB Mann Judd National Association of independent accounting firms
INDEPENDENT AUDIT REPORT
To the members of
SYLVANIA RESOURCES LIMITED
Scope
The Financial Report and Directors' Responsibility
The financial report comprises the statement of financial position, statement of financial
performance, statement of cash flows, accompanying notes to the financial statements, and the
directors' declaration for the year ended 30 June 2005 for both Sylvania Resources Limited
(“the company”) and the consolidated entity as set out on pages 17 to 38. The consolidated
entity comprises both the company and the entities it controlled during the year.
The directors of the company are responsible for the preparation and true and fair
presentation of the financial report in accordance with the Corporations Act 2001. This
includes responsibility for the maintenance of adequate accounting records and internal
controls that are designed to prevent and detect fraud and error, and for the accounting
policies and accounting estimates within the financial report.
Audit Approach
We conducted an independent audit in order to express an opinion to the members of the
company. Our audit was conducted in accordance with Australian Auditing Standards in
order to provide reasonable assurance as to whether the financial report is free of material
misstatement. The nature of an audit is influenced by several factors such as the use of
professional judgement, selective testing, the inherent limitations of internal control, and the
availability of evidence which may be persuasive rather than conclusive. Accordingly, an
audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects, the financial report
presents fairly, in accordance with the Corporations Act 2001, including compliance
Accounting Standards and other mandatory professional reporting requirements in Australia,
a view which is consistent with our understanding of the company's financial position, and of
its performance as represented by the results of its operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
• examining, on a test basis, information to provide evidence supporting the amounts and
disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the
reasonableness of significant accounting estimates made by the directors.
When determining the nature and extent of our procedures we considered the effectiveness of
management's internal controls over financial reporting. Our audit was not designed to
provide assurance in relation to internal controls.
40
HLB Mann Judd (WA Partnership)
15 Rheola Street West Perth 6005. PO Box 263 West Perth 6872 Western Australia. DX 238 (Perth) Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686.
Email: hlb@mjwa.com.au. Website: http://www.hlb.com.au
Partners: Ian H Barsden, Terry M Blenkinsop, Litsa Christodulou, Wayne M Clark, Lucio Di Giallonardo, Colin D Emmott, Trevor G Hoddy, Norman G Neill, Peter J Speechley
HLB Mann Judd (WA Partnership) is a member of
International and the HLB Mann Judd National Association of independent accounting firms
Independence
In conducting our audit, we followed applicable independence requirements of Australian
professional ethical pronouncements and the Corporations Act 2001.
The Directors Report attached to the financial statements includes a copy of the
Independence Declaration dated 22 September 2005 given to the Directors by the lead
auditor for the audit. That Declaration would be in the same terms if it had been given to the
Directors at the time this audit report was made.
Audit Opinion
In our opinion, the financial report of Sylvania Resources Limited is in accordance with:
(a) the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the financial position of Sylvania Resources Limited
and the consolidated entity as at 30 June 2005 and of their performance for the
year then ended; and
complying with Accounting Standards in Australia and the Corporations
Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
HLB MANN JUDD
Chartered Accountants
Perth, Western Australia
22 September 2005
W M CLARK
Partner
41
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The shareholder information set out below was applicable as at 31 August 2005.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Class of equity security
Ordinary shares
4
51
78
247
95
475
Ordinary shares
No. held
16,745,830
10,761,980
10,296,195
4,275,000
2,050,000
1,970,000
1,900,000
1,750,000
1,450,000
1,300,000
1,250,000
1,140,000
1,100,000
980,000
950,000
879,955
852,000
849,703
690,000
679,101
61,869,764
% of issued
shares
18.27
11.74
11.23
4.66
2.24
2.15
2.07
1.91
1.58
1.42
1.36
1.24
1.20
1.07
1.04
0.96
0.93
0.93
0.75
0.74
67.49
1,000
1 −
1,001 −
5,000
5,001 − 10,000
10,001 − 100,000
100,001 and over
There were 5 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest quoted equity security holders – ordinary shares
Name
ANZ Nominees Limited
Sunshore Holdings Pty Ltd
National Nominees Limited
Westpac Custodian Nominees Limited
Bell Potter Nominees Pty Ltd
Blackmort Nominees Pty Ltd
Victoria Global Holdings Limited
Fisherstreet Management Limited
Flue Holdings Pty Ltd
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Ltd
Dr Salim Cassin
Mr Christopher Robert Rogerson Almondbury
Walthamstow Pty Ltd
Timriki Pty Ltd
Fortis Clearing Nominees P/L
Four P Investment Company Pty Ltd
WB Nominees Limited
Citicorp Nominees Pty Limited
Sunshore Holdings Pty Ltd
42
SYLVANIA RESOURCES LIMITED
(ACN 091 415 968)
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
C. Substantial shareholders
Substantial shareholders in the Company are set out below:
Ordinary shares
Sunshore Holdings Pty Ltd
FRM Corp
Number
Held
Percentage
11,750,000
5,145,679
12.82
5.64
D. Voting rights
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
E. Tenement schedule
Project
Tenement details
% Held
Copper Knob
M52/211
100 (subject to option to sell 100%)
Jimblebar
P52/869
80 (subject to option to sell 100%)
MLA52/739
P52/972
80 (subject to option to sell 100%)
100 (subject to option to sell 100%)
Everest North
Mineral Area 2 on farm Vygenhoek
No 10 JT measuring 180 hectares
Right to acquire 100%
43