A NN UA L REP ORT 2 0 0 7
operations
Contents
Corporate information
Company highlights
Review of operations and activities
Directors’ report
Auditor’s independence declaration
Corporate governance statement
Income statements
Balance sheets
Statements of changes in equity
Cash fl ow statements
Notes to the fi nancial statements
Directors’ declaration
Independent auditor’s report
Additional information for listed public companies
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1 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Company highlights
Future outlook and funding
• The Company is well positioned to further develop its operations in South Africa
and pursue future strategic opportunities
• Cash and liquid assets as at 30 June 2007 equate to A$57.7m
Construction and commissioning of recovery plants
on time and in budget
• Completion of construction and commissioning of the Millsell PGM Recovery
Plant (“PRP”)
• Construction and commissioning of an integrated Chromite Washing Plant
(“CWP”) and PRP at Steelpoort
• Upgrade of the CWP achieves reliable operations
Signifi cant increases in platinum revenue
and production
• Revenue and production have increased by 56% and 19% respectively from
the Company’s 25% interest in CTRP when compared to the year ended 30
June 2006
Resource base extensions and enhancements bode
well for the future
• Addendum to Samancor Services and Supply Agreement allows the Company
to bring forward the development of its PRPs
• Good progress with the Everest North PGM Project, with exploration results
being developed to a Resource Estimate
BEE partner agreement fi nalised
• Finalisation of agreements with a self funding broad based BEE partner to
ensure compliance with South African legislation and to provide additional
development capital for projects in South Africa
AIM listing and share placements secures funding
and balance sheet strength
• At the beginning of the fi nancial year, the Company listed on AIM in London
with a placement of 40,000,000 shares to raise A$29.6 million
(before expenses)
• A further placement of 22,900,000 ordinary shares was completed in June
2007 to raise A$44.0 million (before expenses)
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 3
Corporate information
Directors
T M McConnachie – Chief Executive Offi cer
R D Rossiter – Non-Executive Chairman
Dr E Kirby – Chief Operating Offi cer
L M Carroll – Finance Director
Dr A P Ruiters – Non-Executive Director
Company secretary
M J Langoulant
Principal registered
offi ce in Australia
98 Colin Street
West Perth
Western Australia
6005 Australia
Share register
Auditors
Solicitors
Nominated Advisor
and Broker
Stock exchange listings
Telephone: (08) 9481 8711
Facsimile: (08) 9324 2977
Website: www.sylvaniaresources.com
Computershare Investor Services Pty Limited
Reserve Bank Building
Level 2
45 St Georges Terrace
Perth Western Australia
6000 Australia
HLB Mann Judd
Chartered Accountants
15 Rheola Street
West Perth
Western Australia
6005 Australia
Clayton Utz
QV1
250 St Georges Terrace
Perth Western Australia
6000 Australia
Ambrian Partners Limited
2nd Floor, Angel Court
London, EC2R 7HP
United Kingdom
Sylvania Resources Limited is listed on the
Australian Stock Exchange (Shares: SLV) and
on the AIM sub-market of the London Stock
Exchange (Shares: SLV)
2 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
2 SYLVANIA RECOURCES LIMITED ANNUAL RERPORT 2006-2007
Review of operations and activities
SOUTH AFRICAN OPERATIONS
Sylvania Millsell Plant Construction and Operations
During the previous fi nancial year, the Company had constructed a CWP at
the Samancor Millsell Mine near Kroondal. This plant produces metallurgical
grade (44% Cr2O3) chrome concentrates from a feed of Millsell tailings dam
and current arisings tailings. The original plant was built at minimum cost using
second-hand equipment and structural steel. Over the past year, the design
of the plant has evolved and additions have been made to increase throughput
and boost recovery. New equipment (particularly pumps and screens) has been
introduced as necessary to improve the reliability of the overall installation.
During the current year, the Millsell dam has been mined by an innovative
scraper winch method pioneered by the Company. This involves a number of
anchor blocks and small winches around the dam which are used to position
the return pulley of a scraper. A 75kW electrically powered mining winch
is then used to drive the scraper and pull dam material into the plant feed
hopper. The scraper and return pulley are standard items commonly used in
underground mining operations. This mining method is proving much cheaper
than alternatives such as truck and shovel operations. It also has the advantage
that the plant is fed with a blend of fi ne material from the centre of the dam and
coarser material from the wall region of the dam.
At the beginning of the current fi nancial year, Matomo Projects (Pty) Ltd
(“Matomo”) was awarded the contracts for additions to the CWP as well as
the construction of a PRP at Millsell. Matomo has broad experience with small
minerals processing plants and their core team of engineers were involved with
the design and construction of CTRP. Operation of the processing facilities
was contracted out to Tailings Technology Pty Ltd, a South African Company
with extensive experience in plant operations and PGM recovery by fl otation.
The Company also appointed Metallicon Consultants, a specialist process
consultancy with both chromite and PGM recovery experience, to advise on
processing plant design and operations. Detailed process and mechanical
designs for future CWPs and the Millsell PRP were developed in conjunction
with these experienced contractors and long lead items, for Millsell PRP plus an
additional two CWPs and PRPs, were ordered.
Samancor Agreement
During the previous fi nancial year Sylvania Resources Limited (the “Company”)
signed a Services and Supply Agreement with Samancor Limited (“Samancor”)
in relation to the retreatment of chromite mine tailings for the extraction of
chrome and Platinum Group Metals (“PGMs”). Full details of the Agreements
were disclosed in the AIM Listing document dated 17 July 2006. On 9 January
2007, the Company signed an Addendum to the Services and Supply Agreement
with Samancor (“Addendum”). The amendments contained in the Addendum
are considered to be signifi cant to the Company as they streamline a number of
operational issues.
Key aspects of the Addendum are as follows:
• The duration of the agreement has been extended to incorporate current
arisings for the duration of the Samancor rights in respect of the specifi ed
mining areas;
• The Company may now construct its PRPs within the Samancor Mining Area;
• The Company is no longer obliged to remove tailings created after the PGM
recovery process from the Samancor Mining Area and can now utilize existing
Samancor tailings facilities as directed by Samancor. The fi nal rehabilitation
responsibility rests with the Company; and
• A number of amendments to and clarifi cations of, clauses that address
operational and functional issues that had been identifi ed between the parties
since the original Agreement was signed.
The major signifi cance of these amendments has been the reduction of the time
delays associated with negotiating and acquiring land, and the negotiating of
the necessary environmental and other approvals for the establishment of the
plant and tailings storage facilities. Signifi cantly, the Addendum has enabled the
Company to amend its business plan to bring forward the establishment of
its PRPs.
The Company originally planned to construct a total of six CWPs and four PRPs
to treat both current tailings arisings and stockpiled dump tailings from the
Samancor mines. The six CWPs were originally scheduled for completion by
July 2007, whilst the four PRPs would only be completed by October 2008.
As a result of the amendment, business plans were changed to delay the
construction of some of the CWPs and bring forward the construction of two of
the PRPs (Millsell and Steelpoort) for completion in 2007.
4 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Sylvania Millsell Plant Construction and Operations (continued)
Construction of the Millsell PRP commenced in January according to an
aggressive fast-track schedule that had been agreed with Matomo. In practice,
there were delays caused by late delivery of some equipment items and the
refurbishment of the second hand ball mill taking longer than anticipated.
Nevertheless, mechanical completion was achieved on 25 May 2007, only
103 days after commencing work and the Board considers this a remarkable
achievement in view of the complexity of the project.
The Millsell PRP has been operating since Sunday 10 June 2007.
Commissioning and early operations went well with relatively few problems
being experienced. In spite of later than anticipated completion, production has
been very close to budget. Cumulative production to end July 2007 was 186 oz
4E PGM versus the budget of 212 oz 4E PGM. Production is presently ramping
up with the full design level of 590 oz 4E PGM per month expected prior to the
end of November. At the time of preparation of this report, only minor issues
remained to be resolved as part of the commissioning process.
Sylvania Steelpoort Plant Construction
Construction of an integrated CWP and PRP at Samancor’s Steelpoort mine
commenced in January 2007 under Matomo’s direction. Good progress has
been made although there were some delays due to late deliveries of equipment
and the diffi culty in fi nding sub-contractors in the Steelpoort region. Mechanical
completion was achieved on 31 July 2007 and the fi rst feed of slurry went
through the chromite recovery section of the plant on Saturday 11 August 2007
whilst fi rst operations of the PGM recovery section commenced on Sunday 26
August 2007. The entire plant is now running well, on a feed of current arisings
tailings from the Samancor Steelpoort Chrome Plant, and is producing both
chromite and PGM concentrate.
Future CWP and PRP Developments
Some preparatory work for a CWP and PRP at Samancor’s Elandsdrift Chrome
Mine was undertaken during January and February 2007. This installation
was to have been fed with a mixture of dump material from Elandsdrift and
current arisings from Samancor’s Mooinooi Mine. This work has subsequently
been placed on hold to allow the Company’s resources to be focussed on the
construction work at Millsell and Steelpoort. Steelwork and equipment deliveries
for the project have been placed in storage.
Black Economic Empowerment
The Company has fi nalised two agreements with a self funding, broad based
BEE partner, to ensure compliance with South Africa’s Broad Based Economic
Empowerment Act No. 53 of 2003 and the codes of good practice published
in terms of the South African Mining Charter. On completion of the two
agreements the Company will hold a 74% interest in each of the CWPs and
PRPs, with the remaining 26% being held and funded by the BEE partner.
Details of the agreements were given in the Company’s announcement of 13
February 2007.
The shareholder agreements with Ehlobo Metals Pty Ltd (“Ehlobo”) relate to
the Company’s South African subsidiaries, Sylvania Metals (Pty) Limited (“SLV
Metals”) and Sylvania Minerals (Pty) Limited (“SLV Minerals”). SLV Metals holds
the Company’s CWPs and SLV Minerals holds the Company’s PRPs.
Under the terms of the agreements, Ehlobo will acquire a 26% interest in
both SLV Metals and SLV Minerals upon the contribution of specifi ed funds. A
condition of the agreements is that Ehlobo’s shareholders will remain historically
disadvantaged South Africans (“HDSAs”). Satisfaction of this condition will
enable the Company to satisfy the requirements of the South African Legislation
and the South African Mining Charter aimed at encouraging the participation of
HDSAs in the mining industry in South Africa. The Company will in turn provide
the skills and expertise to manage the operational and commercial affairs of
SLV Metals and SLV Minerals. The Company will retain Board and management
control of both companies.
Under the terms of the agreements, Ehlobo has committed to contribute
amounts of not more than ZAR25 million and ZAR39 million towards the initial
capital requirements of SLV Metals and SLV Minerals respectively, which
amounts are calculated to equate to 26% of the initial capital requirements to
construct CWPs and PRPs. The Company has committed to contribute the
remaining 74% of the initial capital requirements and to assist Ehlobo to raise
their required capital contributions.
Should Ehlobo be unsuccessful in securing the necessary funding to meet the
capital commitment, the Company will retain sole discretion to terminate the
agreements. Ehlobo is restricted in transferring its shareholding until at least 31
December 2009 and there is a reciprocal right of fi rst refusal for the Company and
Ehlobo to purchase each others shares if one party decides to sell their shares.
Ehlobo is owned by Ehlobo Resources (“ER”). ER is headed by Dr Alistair
Ruiters and Mr Rafi que Bagus. Both have had long and distinguished careers
in the South African government. Dr Ruiters was the Director General of the
Department of Trade and Industry (“DTI”) from 1999 to 2005. Mr Bagus was
the CEO of Trade and Industry of South Africa from 1987 to 2002. ER was
established in 2005 and has since grown its interests in resources.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 5
Review of operations and activities
Prior to the current drilling campaign, the Company estimated an inferred
‘in-situ’ resource of 4.2 million tonnes grading 5.87g/t for approximately
790,000 ounces of 4E PGM (Pt, Pd, Rh, and Au) based on earlier work by
Impala Platinum. The current drilling results have now allowed the Company’s
consulting geologists to geostatistically model the UG2 horizon at Everest North.
After allowance for geological losses due to dykes and potholes, the result
is an indicated ‘in-situ’ resource of 5,265,925 tonnes grading 4.92 g/t for
approximately 832,760 ounces of 4E PGM. The assayed metal split is Pt
54%, Pd 34%, Rh 11%, and Au 1%. The overall resource estimate comprises
3,842,365 tonnes on the ‘main seam’ grading 6.04 g/t 4E PGM, and 1,423,560
tonnes on the ‘leader seam’ grading 1.90 g/t 4E PGM. The results to date are
very encouraging and in line with expectations.
AUSTRALIAN OPERATIONS
The Company announced on 16 February 2007 that it had concluded the sale
of its interests in its Australian tenements. The consideration received for the
sale of the interest in the tenements was 1.5 million fully paid ordinary shares
of A$0.20 each in the ASX listed entity, Warwick Resources Limited (“Warwick
Resources”) plus A$55,000 in cash. The sale was completed pursuant to the
option agreement with Warwick John Flint for the sale of the Company’s interest
in its Australian tenements at Jimblebar and Copper Knob dated 16 August
2004 and as extended on 16 August 2006.
CORPORATE
In July 2006 the Company’s ordinary shares were admitted to trading on AIM.
As part of this process the Company completed a placement of 40,000,000
ordinary shares at £0.30 (A$0.74) per share to raise £12 million (A$29.6
million) (before expenses).
In accordance with a Co-operation and Facilitation Agreement dated 7
December 2005, the Company, in July 2006 issued 5,275,000 ordinary shares,
and in December 2006 issued 1,825,000 ordinary shares, to Portpatrick Ltd for
securing the prospecting rights to prospective tailings dumps.
A placement of 22,900,000 ordinary shares at an issue price of £0.80 (A$1.92)
per share raised £18.3 million (approximately A$44.0 million) in June 2007.
The technical exploration and mining information contained in this report was
compiled by Mr Ed Nealon, a former Sylvania Resources Ltd director. Mr Nealon
provides consulting services via his company Athlone International Pty Ltd. Mr
Nealon is a member of the Australasian Institute of Mining and Metallurgy and is
considered to be a Competent Person in his respective area of expertise pursuant
to the Australasian Code for Reporting of Mineral Resources and Ore Reserves.
Mr Nealon consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Black Economic Empowerment (continued)
Today ER has a presence in coal, chrome and metal trading. Through their
operational involvement in mining companies, both Dr Ruiters and Mr Bagus
have developed a sound understanding of the mining environment and a good
working knowledge of mining operations. On 15 August 2007, the Company
announced that Dr Ruiters joined the board of directors of the Company as a
non-executive director.
Chromite Tailings Retreatment Project (Sylvania 25%)
Sylvania South Africa (Pty) Limited, a wholly owned subsidiary of the
Company has a 25% interest in a consortium which owns the Chrome Tailings
Retreatment Project (“CTRP”) which is managed by Aquarius Platinum Limited
(“Aquarius”). The CTRP operation had a positive year with PGM production
increasing 19% to 7,408 PGM ounces (1,851 PGM ounces attributable to the
Company).
CTRP: Metal in concentrate produced (PGM ounces)
Year
Ended
2007
2006
2005
Pt
Pd
Rh
Au
4,512
1,629
1,252
3,799
1,378
1,044
1,321
439
353
15
13
4
PGM
(4E)
7,408
6,234
2,117
PGM (4E)
attributable to
the Company
1,851
1,558
529
Over the year recoveries reduced to 31%, due to the unsatisfactory blending of
arisings and dump materials. However the head grade increased in grade to
4.32 g/t for the year compared to 3.21 g/t in the previous year, and the tonnes
processed increased 12% to 182,000 tons. The overall effect was to increase
production by 19% to 7,408 PGM ounces (of which 1,851 PGM ounces are
attributable to the Company).
The average PGM basket price received for the year increased by an average
41% to US$1,704 per PGM ounce. As a result of the increased production
levels and basket prices, revenue increased to R77 million (R19.25 million
attributable to the Company). The cash operating margin for the year increased
to 77% from 63% in the previous year.
Everest North PGM Project
The Everest North project lies on the Farm Vygenkoek JT 10 in the eastern
Bushveld of South Africa, and is prospective for PGMs. A diamond drilling
programme and an Environmental Impact Assessment study associated with a
full feasibility study commenced in the fi nal quarter of the previous fi nancial year.
By the end of June 2007, 19 holes had been drilled and logged, each with two
defl ections; all holes intersected well developed UG2 reef. Hole 11 (reported as
abandoned in the December 2006 quarterly) was repositioned and was being
re-drilled; hole 21 was delayed by a series of machine breakdowns but was
close to completion. Six surface trenches on the outcrop had also been dug,
mapped, sampled and assayed.
6 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Directors’ report
Your directors present their report on the consolidated entity (referred to
hereafter as the “Group”) consisting of Sylvania Resources Limited (the
“Company”) and the entities it controlled at the end of, or during, the fi nancial
year ended 30 June 2007.
Signifi cant changes in the state of affairs
There have been no signifi cant changes in the state of affairs of the Group to
the date of this report other than share placements to private and institutional
investors as detailed in the review of operations and activities.
Directors
The following persons were directors of the Company during the whole of the
fi nancial year and up to the date of this report:
T M McConnachie
Dr E Kirby
R D Rossiter, Dr A P Ruiters and L M Carroll were appointed as directors on the
15 August 2007 and all continue in offi ce at the date of this report.
G M Button was a director from the beginning of the fi nancial year until his
resignation on 21 June 2007.
Matters subsequent to the end of the fi nancial year
There has not been any matter or circumstance that has arisen after balance
date that has signifi cantly affected, or may signifi cantly affect, the operations of
the Group, the results of those operations, or the state of affairs of the Group in
future fi nancial periods other than as disclosed on pages 4 to 6 of this
Annual Report.
Likely developments and expected results
Additional comments on expected results of certain operations of the Group are
included in the review of operations and activities.
E F G Nealon, M J Sturgess and K S Huntly were directors from the beginning of
the fi nancial year until their resignation on 15 August 2007.
Environmental legislation
The Group is subject to signifi cant environmental legal regulations in respect to
its exploration and evaluation activities in South Africa. There have been no
known breaches of these regulations and principles.
Principal activities
The principal activity of the Group during the fi nancial year was investment in
mineral exploration and mineral treatment projects.
Dividends
No dividend has been paid or declared since the start of the fi nancial year and
the directors do not recommend the payment of a dividend in respect of the
fi nancial year.
Review of operations
Information on the operations of the Group is set out in the review of operations
and activities on pages 4 to 6 of this annual report.
Operating result for the year
The consolidated loss of the Group for the year after income tax expense was
$11,116,675 (2006: $8,981,807).
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 7
Directors’ report
Information on directors
T M McConnachie. Chief Executive Offi cer. Age 51
Experience and expertise
Appointed as a director in June 2005 and subsequently Chief Executive Offi cer
in March 2006. Mr McConnachie has over 25 years of experience in mining,
benefi ciation 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-fi eld 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.
Other current directorships
Director of Dwyka Resources Limited (since 2007).
Former directorships in the last 3 years
None.
Special responsibilities
Chief executive offi cer.
Interests in shares and options
500,000 options over ordinary shares in Sylvania Resources Limited.
R D Rossiter BSc (Hons) MSc. Non-Executive Chairman. Age 50
Experience and expertise
Appointed in August 2007. Mr Rossiter joined the Board as non-executive
Chairman. He will lead the Board in implementing its strategy of becoming
a signifi cant platinum group metal producer. He has had a distinguished
career as an international resource sector specialist. He was most recently
Director–Metals & Mining/Private Equity Asia at Standard Bank Plc (Australia)
based in Sydney. In earlier years, he performed geological, mine management
and business development roles at General Mining Union Corporation (later
Gengold) in South Africa.
Other current directorships
None.
Former directorships in the last 3 years
None.
Special responsibilities
Chairman of the Board and Chairman of the Audit committee.
Interests in shares and options
32,000 ordinary shares in Sylvania Resources Limited.
Dr E Kirby BSc (Hons) Metallurgy, PhD Metallurgy,
MAusIMM, MSAIMM. Chief Operating Offi cer. Age 56
Experience and expertise
Appointed in November 2003. Dr Kirby has worked for major Companies
including 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.
8 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Other current directorships
Non-executive director of Dwyka Resources Limited (since 2002), non-executive
director of Wedgetail Mining Limited (since 2004) and non-executive director of
China Gold Mines Limited (since 2005).
Former directorships in the last 3 years
None.
Special responsibilities
Chief operating offi cer.
Interests in shares and options
764,300 ordinary shares in Sylvania Resources Limited.
L M Carroll B Com. Finance Director. Age 61
Experience and expertise
Appointed in August 2007. Mr Carroll joined the Board as Finance Director
having worked for the Company over the past two years in its South African
operations, principally in structuring fi nancial reporting and systems. He has
over 40 years experience in various industries, including property, manufacture,
contracting, processing, printing and mining and at Board level in private and
publicly listed entities.
Other current directorships
None.
Former directorships in the last 3 years
None.
Special responsibilities
Finance Director.
Interests in shares and options
200,000 options over ordinary shares in Sylvania Resources Limited.
Dr A P Ruiters BA (Hons), PhD (D.Phil).
Non-Executive Director. Age 42
Experience and expertise
Appointed in August 2007. Dr Ruiters joined the Board as non-executive
director and will give guidance on project procurement, development and
funding. Dr Ruiters is one of the founders of Ehlobo Holdings Limited, the
Company’s Black Economic Empowerment Partner in its tailings retreatment
projects in South Africa. Dr Ruiters joined the Public Service in May 1994, after
completing a PHD at Oxford University. He has held numerous positions in both
the private and public sector, including that of Special Advisor to Trevor Manuel,
South Africa’s fi rst Competition Commissioner and Director General of the DTI.
Other current directorships
None.
Former directorships in the last 3 years
None.
Special responsibilities
None.
Interests in shares and options
None.
Information on directors (continued)
Remuneration Report
Company secretary
The Company secretary is M J 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 fi rms he has acted as CFO,
Company secretary and non-executive director with a number of publicly listed
companies.
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 Consultancy agreements
D Share-based compensation
A Principles used to determine the nature and amount
of remuneration
Meetings of directors
During the fi nancial year there were 11 formal directors’ meetings. All other
matters that required formal Board resolutions were dealt with via written
circular resolutions. In addition, the directors met on an informal basis at
regular intervals during the year to discuss the Group’s affairs.
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:
The number of meetings of the Company’s board of directors attended by each
director were:
• competitiveness and reasonableness
• acceptability to shareholders
Directors’ meetings
held whilst in offi ce
Directors’ meetings
attended
• performance incentives
T M McConnachie
R D Rossiter
Dr E Kirby
L M Carroll
Dr A P Ruiters
E F G Nealon
M J Sturgess
K S Huntly
G M Button
11
-
11
-
-
11
11
11
11
10
-
9
-
-
11
10
9
11
Indemnifi cation and insurance of directors and offi cers
During the year the Company paid premiums in respect of a contract insuring
all directors and offi cers of the Company against liabilities incurred as directors
or offi cers to the extent permitted by the Corporations Act 2001. Due to
confi dentiality clauses in the contract the amount of the premium has not been
disclosed. The Company has no insurance policy in place that indemnifi es the
Company’s auditors.
• transparency
• capital management
The framework provides a mix of fi xed 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. The remuneration committee
acts in accordance with a written Remuneration Committee Charter. The
Remuneration Committee’s aim is to ensure the remuneration packages
properly refl ect directors and executives duties and responsibilities. The
Committee assesses the appropriateness of the nature and amount of
emoluments of such offi cers on a periodic basis by reference to relevant
employment market conditions with the overall objective of ensuring maximum
stakeholder benefi t 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 fi nancial performance.
Indeed there are no elements of any director or executive remuneration that
are dependent upon the satisfaction of any specifi c 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
fi ve (5) fi nancial years.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 9
Directors’ report
Remuneration Report (continued)
Employee share and option plan
A
Principles used to determine the nature and amount of
remuneration (continued)
Non-Executive directors
Fees and payments to non-executive directors refl ect 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
To ensure that the Company has appropriate mechanisms in place to continue
to attract and retain the services of suitable directors and employees, the
Company has established the Share Plan and the Option Plan, which were
approved by the Shareholders on 30 November 2005 at the Company’s Annual
General Meeting. The number of Ordinary Shares or Options that may be
offered to a Participant is entirely within the discretion of the Board.
The Company does not intend to offer more than 6,000,000 securities (being
a combination of Ordinary Shares under the Share Plan and Options under
the Option Plan) under the current Share and Option Plan, which represented
approximately 4.1% of the Ordinary Shares in issue at the time of approval.
Some of the directors perform at least some executive or consultancy services.
However, each of the directors receives a separate fi xed 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.
B
Details of remuneration
Amounts of remuneration
The maximum aggregate remuneration for the directors was last determined at
the Annual General Meeting held on 30 November 2005, when shareholders
approved an aggregate remuneration of $300,000 per year. The amount
of aggregate remuneration sought to be approved by shareholders and the
manner in which it is apportioned amongst directors is reviewed annually. The
Board considers advice from external shareholders as well as the fees paid to
non-executive directors of comparable companies when undertaking the annual
review process.
Retirement allowances for directors
Details of the remuneration of the directors and key management personnel (as
defi ned in AASB 124 Related Party Disclosures) of the Company and the Group
for the year ended 30 June 2007 and 2006 are set out in the following tables.
There are no elements of remuneration that are directly related to performance.
The key management personnel of the Group are the directors of the Company
and those executives that report directly to the Chief Executive Offi cer. The
executives are:
• M J Langoulant – Company Secretary
• R A Jarvis – Group Financial Controller
Apart from superannuation payments paid on base director fees there are no
retirement allowances for directors.
• M L Burchnall – Manager - Strategic Development
• J Meyer – Managing Director, Sylvania Metals (Pty) Limited and
Sylvania Minerals (Pty) Limited
• Z Marinkovic – Director, Sylvania Metals (Pty) Limited
• C De Vos – Internal Legal Advisor
• P R Carter – Managing Director, Sylvania Mining (Pty) Limited
Executive pay
The executive pay and reward framework has the following components:
• base pay and benefi ts such as superannuation
• short-term performance incentives
• long-term incentives through participation in the Employee Share
and Option Plan
Base pay
All executives are either full time employees or consultants that currently
receive a fi xed monthly retainer as agreed with the Company. The provision
of Consultancy Services has been formalised in individual Consultancy
Agreements.
Benefi ts
Apart from superannuation paid on directors’ fees and executive salaries there
are no additional benefi ts paid to executives.
Short-term incentives
There are no current short term incentive remuneration arrangements.
10 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Remuneration Report (continued)
B
Details of Remuneration (continued)
Table 1: Key Management Personnel
2007
Primary benefi ts
Post-employment benefi ts
Sharebased payment
Name
T M McConnachie
R D Rossiter
Dr E Kirby
L M Carroll
Dr A P Ruiters
E F G Nealon
M J Sturgess
K S Huntly
G M Button
Key management personnel
M J Langoulant
R A Jarvis
M L Burchnall
J Meyer
Z Marinkovic
C De Vos
P R Carter
Cash Salary and
Consulting Fees
$
Directors’
Fees
$
Superannuation
$
274,602
-
200,004
158,074
-
198,000
99,600
81,512
120,000
51,000
77,095
158,786
171,626
149,285
113,043
169,565
35,000
-
35,000
-
-
35,000
35,000
35,000
34,137
-
-
-
-
-
-
-
-
-
3,150
-
-
3,150
3,150
-
3,072
-
3,158
14,291
-
-
-
-
Equity
Shares/Options
$
TOTAL
$
183,880
493,482
-
60,620
34,685
-
60,620
60,620
91,941
60,620
20,206
17,899
8,949
34,685
65,968
34,685
34,685
-
298,774
192,759
-
296,770
198,370
208,453
217,829
71,206
98,152
182,026
206,311
215,253
147,728
204,250
T M McConnachie was paid a cash bonus of $61,446 during the year. This is included within cash salary and consultancy fees. No other cash bonuses were paid
to directors or executives during the year.
L M Carroll was appointed a director on 15 August 2007. Before this appointment he was the Finance Director of Sylvania South Africa (Pty) Limited, a wholly
owned subsidiary of the Company. Amounts shown above include Mr Carroll’s remuneration during the reporting period in this capacity.
Table 2: Key Management Personnel
Primary benefi ts
Post-employment benefi ts
Sharebased payment
Cash Salary and
Consulting Fees
$
Directors’
Fees
$
Superannuation
$
Equity
Shares/Options
$
2006
Name
T M McConnachie
E F G Nealon
G M Button
Dr E Kirby
M J Sturgess
K S Huntly
103,167
169,600
120,000
54,167
99,600
27,830
35,000
35,000
25,000
35,000
35,000
35,230
Key management personnel
M J Langoulant
36,000
-
-
3,150
13,150
3,150
3,150
-
-
TOTAL
$
179,268
259,138
209,538
143,705
189,138
83,611
41,101
51,388
51,388
51,388
51,388
20,551
17,129
53,129
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 11
Directors’ report
Remuneration report (continued)
C
Consultancy agreements
Formal Consultancy Agreements are made with the Company and all of its directors.
The details of the Chief Executive Offi cer’s Consultancy Agreement are
summarised below:
• Engagement
The Company engages the Consultant to provide the Company with the
Consultancy Services during the Term, on and subject to the terms of the
Agreement, and the Consultant accepts the Engagement.
• Term
The initial term of the engagement commences on 14 June 2006 and continues
for two years, unless that period is extended or terminated in accordance with
the following summarised terms:
Extension of Term
Following the completion of the term indicated above, if the parties agree, the
engagement will be extended for rolling periods of one year thereafter.
Termination by Company
The Company may immediately terminate this agreement by giving written notice
to the Consultant.
Entitlements on termination
Upon termination of the Agreement the Consultant (pursuant to additional clauses)
is entitled to the Consultancy Fee up to and including the date of termination.
Termination by notice by Company or Consultant
The Agreement may be terminated without cause by either the Company or the
Consultant upon giving the other party notice in writing for a period of 6 months
or the Company paying 6 months Consultancy Fee in lieu of notice.
• Remuneration
In consideration for the Consultancy Services, the Company will pay the
Consultancy Fee to the Consultant in monthly instalments in arrears at the
end of each month. In addition, the Company may, if the Board (following a
recommendation by the Remuneration Committee) so resolves, offer to the
Consultant or the Nominated Executive, securities in accordance with the
Company’s share or option incentive plan.
D Share-based compensation
Options
Options are granted under the Employee Share and Option Plan (the “plan”) which
was approved by shareholders at the 2005 annual general meeting.
Participants of the plan are determined by the Board and can be employees and
directors of, or consultants to, the Company or a controlled entity. The Board
considers length of service, seniority, responsibilities, potential contribution and any
other relevant matters in determining eligibility of potential participants. The Board
has sole responsibility to determine the number of options and terms and conditions
of options granted to any participant.
Options are granted under the plan for no consideration. Options are granted for
a three year period, and 50% of each tranche vests and is exercisable on each
anniversary of the grant date.
The terms and conditions of each grant of options affecting remuneration in the
previous, this or future reporting periods are as follows:
Grant
date
Expiry
date
Exercise
price
Value per
option at
grant date
Date
exercisable
20-Apr-06
30-Jun-09
$0.50
$0.56
17-Oct-06
30-Jun-10
$0.75
$0.33
50% after 21
April 2007;
50% after 21
April 2008
50% after 18
October 2007;
50% after 18
October 2008
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share. The
exercise price of options is based on the weighted average price at which the
Company’s shares are traded on the Australian Stock Exchange during the fi ve
trading days immediately before the options are granted.
Details of options over ordinary shares in the Company provided as remuneration
to each director of the Company and each of the key management personnel
of the Group are set out below. Further information on the options is set out in
note 16 to the fi nancial statements.
Number of options
granted during the year
Number of options
vested during the year
2007
2006
2007
2006
T M McConnachie
K S Huntly
L M Carroll
J Meyer
Z Marinkovic
C De Vos
P R Carter
-
-
500,000
250,000
250,000
125,000
200,000
200,000
200,000
200,000
200,000
-
-
-
-
-
-
-
200,000
-
-
-
-
-
-
-
-
-
12 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Remuneration report (continued)
• The Company will have a lien over the shares in respect of which a loan
D Share-based compensation (continued)
The assessed fair value at grant date of options granted to individuals is
allocated equally over the period from grant date to vesting date, and the
amount is included in the remuneration tables above. Fair values at grant date
are independently determined using a black and scholes option pricing model
that takes into account the exercise price, the term of the option, the impact
of dilution, 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 2007 included:
(a) options are granted for no consideration, have a three year life, and 50%
of each tranche vests and is exercisable on each anniversary of the date of
grant
(b) share price at grant date: $0.87
(c) expected price volatility of the Company’s shares: 48.5%
(d) expected dividend yield: Nil
(e) risk-free interest rate: 5.5%
Ordinary Shares
Ordinary shares are issued under the plan which was approved by shareholders
at the 2005 annual general meeting.
Participants of the plan are determined by the Board and can be employees and
directors of, or consultants to, the Company or a controlled entity. The Board
considers length of service, seniority, responsibilities, potential contribution and
any other relevant matters in determining eligibility of potential participants.
The issue price for the shares issued under the plan are not less than the
weighted average share price for the last fi ve trading days immediately
preceding the offer to the participant.
A participant who is invited to subscribe for shares under the plan may also be
invited to apply for a loan up to the amount payable in respect of the shares
accepted by the participant. These loans are to be made on the following terms:
• Applied directly against the issue price of the shares to be acquired under the plan;
• For a term to be determined by the Board;
• Repayable to the extent of the lesser of the issue price of the relevant shares
issued, less any cash dividends applied against the outstanding principal; and
the last market sale price of the shares on the date of repayment of the loan;
• The loan must be repaid in full prior to expiry of the loan;
is outstanding;
• Shares issued under the plan are not transferable while a loan amount in
respect of those shares remains payable; and
• Shares issued under the share plan will not be quoted on a publicly traded
stock market while a loan amount in respect of those shares remains payable.
The market value of the option implicit in the share issued under the plan
(funded by way of a loan on the conditions noted above), measured using the
black and scholes option pricing model, is recognised in the fi nancial statements
as employee equity benefi t reserve and as employee benefi t costs in the period
the shares are vested.
Details of employee shares affecting remuneration in the previous, this or future
reporting periods are as follows:
Grant date
Issue price
Fair value of option
implicit in share at
grant date
Vesting period
21-Dec-05
$0.50
$0.165
20-Dec-06
$0.90
$0.227
50% after 21 December
2006; 50% after 21
December 2007
50% after 20 December
2007; 50% after 20
December 2008
Details of ordinary shares in the Company provided as remuneration to each
director of the Company and each of the key management personnel of the
Group are set out below. Further information on the shares is set out in note 16
to the fi nancial statements.
Number of shares
granted
during the year
Number of shares vested
during the year
2007
-
-
-
-
-
2006
750,000
750,000
750,000
750,000
250,000
200,000
100,000
-
-
2007
375,000
375,000
375,000
375,000
125,000
-
-
2006
-
-
-
-
-
-
-
E F G Nealon
G M Button
Dr E Kirby
M J Sturgess
M J Langoulant
R A Jarvis
M L Burchnall
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 13
Directors’ report
Remuneration report (continued)
Shares under option
At the date of this report, the only unissued shares of the Company under option
were those issued under the plan. Outstanding share options at the date of this
report are as follows:
Grant Date
Date of expiry
Exercise price
20-Apr-06
17-Oct-06
30-Jun-09
30-Jun-10
$0.50
$0.75
Number of
options
750,000
800,000
No option holder has any right under the options to participate in any other
share issue of the Company or any other controlled entity, with the exception of
Ehlobo, who will acquire a 26% interest in SLV Metals and SLV Minerals on the
contribution of specifi ed funds as detailed in the review of operations and activities.
Shares issued on the exercise of options
The following ordinary shares of the Company were issued during the year ended
30 June 2007 on the exercise of options granted under the plan. No amounts
are unpaid on any of the shares issued upon the exercise of options.
Grant Date
Issue price of share
Number of shares
issued
17-Oct-06
$0.75
200,000
Auditor independence and non-audit services
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann
Judd, to provide the directors of the Company with an Independence Declaration
in relation to the audit of the annual report. This Independence Declaration is
set out on page 15 and forms part of this directors’ report for the year ended
30 June 2007.
Non-audit services
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.
During the year the following fees were paid or payable for services provided by
the auditor of the parent entity, its related practices or other auditors:
Assurance services
HLB Mann Judd Australian fi rm:
Audit and review of fi nancial statements
Related practices of HLB Mann Judd (HLB Barnett Chown
Inc.)
Non-HLB Mann Judd fi rm (LA Gambale)
Total remuneration for audit services
Advisory services
HLB Mann Judd Australian fi rm:
Services in respect to AIM Listing
Attendance at AGM and site visit to
South African Operations
Total remuneration for advisory services
Total auditors’ remuneration
Total auditors’ remuneration
Consolidated
2007
$
63,000
10,663
12,767
86,430
25,000
4,750
29,750
116,180
The audit committee has considered the position and is satisfi ed 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.
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.
T M McConnachie
Chief Executive Offi cer
Johannesburg, South Africa
4 September 2007
14 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Auditor’s independence declaration
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 15
Corporate governance statement
Introduction
Principle:
2
Since the introduction of the ASX Principles of Good Corporate Governance
and Best Practice Recommendations (“ASX Guidelines”), Sylvania Resources
Limited (the “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 ASX Principles and Recommendations, 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
Principle:
2
Recommendation:
2.1 – A majority of the Board should be
independent directors.
Notifi cation of departure:
One of the fi ve directors is considered to
be independent.
Explanation for departure:
The Board considers that its structure has
been, and continues to be, appropriate in the
context of the Company’s recent history and
that each of the non-independent directors
possess skills and experience suitable for
building the Company.
Recommendation:
2.4 – The Board should establish a Nomination
Committee.
Notifi cation of departure:
A separate nomination committee has not
been formed.
Explanation for departure:
The full Board considers those matters
that would usually be the responsibility of a
nomination committee. The composition of the
Board does not make the establishment of a
separate nomination committee practicable.
The Board has adopted a Nomination
Committee Charter, which it applies when
convening as the nomination committee.
Principle:
4
Recommendation:
4.3 – Structure the Audit Committee
so that it consists of only non-executive
directors; a majority of independent directors;
an independent chairperson, who is not
chairperson to the Board; and at least 3
members.
Notifi cation of departure:
The composition of the Audit Committee is not
as recommended.
Explanation for departure:
The Chairman of the Company is also the
Chairman of the Audit Committee as he is the
only independent director on the Board. The
structure of the audit committee is therefore
not as recommended. The audit committee
consists of one independent director and one
non-independent director.
16 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
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 offi ce as a director, then,
provided the director fi rst obtains approval for incurring such expense from the
chairperson, the Company will pay the reasonable expenses associated with
obtaining such advice.
Confi rmation whether performance evaluation of the Board and its
members have taken place and how conducted
During the reporting period a formal evaluation of the non-executive members
of the Board was not carried out, as it was not considered to be a benefi cial
procedure given the size and composition of the Board and the nature of the
Company’s operations. However, the composition of the Board and its suitability
to carry out the Company’s objectives is discussed on an as-required basis
during regular meetings of the Board and any adjustments made accordingly.
Introduction (continued)
Nomination committee
During the year there were no meetings of the full Board, in its capacity as the
Nomination Committee.
Audit committee
During the reporting period, there were two Audit Committee meetings. The
members during the reporting period were M J Sturgess (Chair) and M J
Langoulant (Company Secretary) who attended both meetings and K S Huntly
and Dr E Kirby who attended one meeting. The Audit Committee now consists of
R D Rossiter (Chair), M J Langoulant (Company Secretary) and L M Carroll.
Remuneration committee
Company’s remuneration policies
The Company’s remuneration policies are discussed in the “Remuneration
Report” section of the Directors’ Report.
The Remuneration Committee did not meet during the reporting period.
Other
Skills, experience, expertise and term of offi ce of each Director
A profi le of each director in offi ce at the date of this report containing the
applicable information is set out in the Directors’ Report.
Identifi cation of independent directors
In considering independence of directors, the Board refers to the criteria for
independence as recommended by the ASX. To the extent that it is necessary for
the Board to consider issues of materiality, the Board refers to the thresholds for
qualitative and quantitative materiality as adopted by the Board and contained in
the Statement of Board and Management Functions, which is disclosed in full on
the Company’s website.
Applying the independence criteria during the reporting period, the Board
considered that M J Strugess and K S Huntly were independent.
Of the current board R D Rossiter is considered to be independent.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 17
Income statements
For the year ended 30 June 2007
Revenue from continuing operations
Other income
Share of net profi t of joint venture entity accounted for on an equity
basis
Notes
2 (a)
2 (b)
20 (d)
Raw materials and consumables used
Depreciation
Exploration expenditure written off
Finance charges
Foreign exchange gain / (loss)
Project generation costs
Impairment of loans to controlled entity
Other expenses
Loss before income tax expense
Income tax benefi t
Loss after income tax expense from continuing operations
Net loss for the period
Net loss attributable to members of parent
Basic loss per share (cents)
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
389,402
-
-
-
2,156,481
439,220
2,291,330
429,220
1,649,511
(608,769)
(405,645)
1,148,649
-
-
-
-
-
(5,633)
(12,155)
(2,673)
-
(251,855)
(6,082)
-
-
-
-
-
(2,657,846)
135,209
(2,654,795)
135,209
2(c)
(5,546,000)
(7,294,461)
(5,546,000)
(7,200,000)
-
-
(2,451,453)
(706,693)
(6,439,619)
(3,311,065)
(3,793,234)
(2,510,945)
(11,468,567)
(9,139,936)
(12,166,307)
(9,855,882)
351,892
158,129
-
-
(11,116,675)
(8,981,807)
(12,166,307)
(9,855,882)
(11,116,675)
(8,981,807)
(12,166,307)
(9,855,882)
(11,116,675)
(8,981,807)
(12,166,307)
(9,855,882)
(7.59)
(9.40)
3
2
2
2
4
The above income statements should be read in conjunction with the accompanying notes.
18 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Available-for-sale fi nancial assets
Investments accounted for using
the equity method
Other fi nancial assets
Deferred exploration expenditure
Plant and equipment
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Balance sheets
As at 30 June 2007
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
Notes
6
7
8
9
10
11
12
3
13
14
14
15
15
15
56,225,793
5,945,746
51,760,438
5,850,676
838,747
208,942
92,188
36,108
57,064,540
6,154,688
51,852,626
5,886,784
1,516,290
322,779
1,516,290
322,779
4,692,320
4,761,496
-
-
-
114,731
25,966,119
7,016,919
1,322,596
490,693
-
-
15,864,198
1,404,044
24,203
15,811
470,440
158,129
-
-
23,865,844
7,251,872
27,506,612
7,355,509
80,930,384
13,406,560
79,359,238
13,242,293
3,295,481
569,221
731,299
385,156
21,988
-
-
-
3,317,469
569,221
731,299
385,156
91,055
91,055
-
-
-
-
-
-
3,408,524
569,221
731,299
385,156
77,521,860
12,837,339
78,627,939
12,857,137
105,950,221
29,242,204
105,950,221
29,242,204
(1,719,109)
(812,288)
1,441,351
212,259
(26,709,252)
(15,592,577)
(28,763,633)
(16,597,326)
77,521,860
12,837,339
78,627,939
12,857,137
The above balance sheets should be read in conjunction with the accompanying notes.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 19
Statements of changes in equity
For the year ended 30 June 2007
Consolidated
Balance at 1 July 2005
Shares issued during the year
Loss for the period
Share based compensation reserve
Net gains revaluation reserve
Currency translation differences
Balance as at 30 June 2006
Shares issued during the year:
Options exercised
Employee share plan
loan repaid - proceeds
Share based payment reserve transferred to contributed equity
Placement
Less: Capital raising costs
Loss for the period
Share based compensation reserve
Net gains revaluation reserve
Currency translation differences
Balance at 30 June 2007
Parent entity
Balance at 1 July 2005
Shares issued during the year
Loss for the period
Share based compensation reserve
Net gains revaluation reserve
Balance as at 30 June 2006
Shares issued during the year:
Options exercised
Employee share plan
loan repaid - proceeds
Share based payment reserve transferred to contributed equity
Placement
Less: Capital raising costs
Loss for the period
Share based compensation reserve
Net gains revaluation reserve
Balance at 30 June 2007
Issued capital
$
22,042,204
7,200,000
-
-
-
-
Accumulated
losses
$
Reserves
$
Total equity
$
(6,610,770)
(512,730)
14,918,704
-
(8,981,807)
-
-
-
-
-
325,441
(113,182)
(511,817)
7,200,000
(8,981,807)
325,441
(113,182)
(511,817)
29,242,204
(15,592,577)
(812,288)
12,837,339
150,000
25,000
73,325
80,849,412
(4,389,720)
-
-
-
-
-
-
-
-
-
(11,116,675)
-
-
(73,325)
-
-
-
-
-
-
795,177
507,240
(2,135,913)
105,950,221
(26,709,252)
(1,719,109)
22,042,204
7,200,000
-
-
-
(6,741,444)
-
(9,855,882)
-
-
29,242,204
(16,597,326)
-
-
-
-
-
(12,166,307)
150,000
25,000
73,325
80,849,412
(4,389,720)
-
-
-
-
-
-
325,441
(113,182)
212,259
-
-
(73,325)
-
-
-
150,000
25,000
-
80,849,412
(4,389,720)
(11,116,675)
795,177
507,240
(2,135,913)
77,521,860
15,300,760
7,200,000
(9,855,882)
325,441
(113,182)
12,857,137
150,000
25,000
-
80,849,412
(4,389,720)
(12,166,307)
795,177
507,240
-
-
795,177
507,240
105,950,221
(28,763,633)
1,441,351
78,627,939
The above statements of changes in equity should be read in conjunction with the accompanying notes.
20 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Cash fl ow statements
For the year ended 30 June 2007
Cash fl ows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other revenue
Consolidated
Parent entity
Notes
2007
$
2006
$
2007
$
2006
$
1,978,172
262,531
-
97,141
(8,479,793)
(3,040,050)
(3,360,808)
(2,332,403)
1,082,727
2,263,560
429,763
-
985,494
2,975
429,763
-
Net cash (outfl ow) from operating activities
25
(3,155,334)
(2,347,756)
(2,372,339)
(1,805,499)
Cash fl ows from investing activities
Payments for plant & equipment
Payments for available-for-sale
fi nancial assets
Payments for exploration and evaluation
Loans to related parties
Loans to controlled entities
Proceeds from sale of plant and equipment
Proceeds from sale of available-for-sale
fi nancial assets
Repayment of loan from related party
(16,618,770)
(1,405,674)
(55,132)
(14,481)
(574,877)
(875,019)
921,933
-
1,233,163
(435,961)
(113,903)
(114,731)
(574,877)
(435,961)
-
(4,000)
-
(57,347)
-
-
(20,568,221)
(2,427,547)
34,500
-
591,098
114,731
19,193
297,721
591,098
212,560
19,193
305,866
Net cash (outfl ow) from investing activities
(15,207,741)
(1,753,355)
(20,364,072)
(2,610,277)
Cash fl ows from fi nancing activities
Proceeds from issue of shares
Capital raising costs
Net cash infl ow from fi nancing activities
75,478,412
(4,177,444)
71,300,968
-
-
-
75,478,412
(4,177,444)
71,300,968
-
-
-
Net increase/(decrease) in cash held
52,937,893
(4,101,111)
48,564,557
(4,415,776)
Foreign exchange movement
(2,657,846)
(86,617)
(2,654,795)
135,209
Cash at the beginning of the fi nancial year
5,945,746
10,133,474
5,850,676
10,131,243
Cash at the end of the fi nancial year
6
56,225,793
5,945,746
51,760,438
5,850,676
The above cash fl ow statements should be read in conjunction with the accompanying notes.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 21
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 1: Statement of signifi cant accounting policies
(a)
Basis of preparation
The fi nancial report is a general-purpose fi nancial report, which has been prepared in accordance with the requirements of the Corporations Act 2001,
Accounting Standards and Interpretations and complies with other requirements of the law. The fi nancial report has also been prepared on a historical cost
basis, except for derivative fi nancial instruments and available-for-sale investments, which have been measured at fair value. The Company is registered and
domiciled in Australia.
(b)
Adoption of new and revised standards
In the year ended 30 June 2007, the Group has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its
operations and effective for annual reporting periods beginning on or after 1 July 2006. It has been determined by the Group that there is no
impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group
accounting policies.
(c)
Statement of compliance
The fi nancial report was authorised by the Board of directors for issue on 4 September 2007.
The fi nancial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards
(AIFRS). Compliance with AIFRS ensures that the fi nancial report, comprising the fi nancial statements and notes thereto, complies with International
Financial Reporting Standards (IFRS).
(d)
Basis of consolidation
The consolidated fi nancial statements comprise the fi nancial statements of Sylvania Resources Limited and its controlled entities as at 30 June each year
(the Group)
The fi nancial statements of the controlled entities are prepared for the same reporting period as the parent Company, using consistent accounting policies.
In preparing the consolidated fi nancial statements, all intercompany balances and transactions, income and expenses and profi t and losses resulting from
intra-group transactions have been eliminated in full. Controlled entities are fully consolidated from the date on which control is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the Company has the power to govern the
fi nancial and operating policies of an entity so as to obtain benefi ts from its activities.
(e)
Signifi cant accounting judgements estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and
assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
Share-based payment transactions:
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they
are granted. The fair value is determined by using a black and scholes model, using the assumptions detailed in Note 16.
22 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 1: Statement of signifi cant accounting policies (continued)
(f)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. The
following specifi c recognition criteria must also be met before revenue is recognised:
(i) Sale of goods
Revenue is recognised when the signifi cant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in
respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods
to the customer.
(ii) Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the fi nancial asset.
(g)
Borrowing costs
Borrowing costs are recognised as an expense when incurred except those that relate to the acquisition, construction or production of qualifying assets
where the borrowing cost is added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.
(h)
Leases
Leases are classifi ed as fi nance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other
leases are classifi ed as operating leases.
Assets held under fi nance leases are initially recognised at their fair value or, if lower, the present value of the minimum lease payments, each determined at
the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a fi nance lease obligation.
Lease payments are apportioned between fi nance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are
capitalised in accordance with the general policy on borrowing costs - refer Note 1(g).
Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more
representative of the time pattern in which economic benefi ts from the leased asset are consumed.
(i)
Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignifi cant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defi ned above, net of outstanding bank
overdrafts.
(j)
Trade and other receivables
Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectable amounts. An allowance for doubtful debts is
made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identifi ed.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 23
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 1: Statement of signifi cant accounting policies (continued)
(k)
Foreign currency translation
Both the functional and presentation currency of the Company and its Australian controlled entity is Australian dollars. Each entity in the Group determines
its own functional currency and items included in the fi nancial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.
All exchange differences in the parent Company’s fi nancial report are taken to profi t or loss with the exception of differences on foreign currency borrowings
that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they
are recognised in profi t or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
The functional currency of the foreign operations is South African Rand (ZAR).
As at the reporting date the assets and liabilities of these controlled entities are translated into the presentation currency of the Company at the rate of
exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profi t or loss.
(l)
Interest in jointly controlled entities
The Group’s interests in jointly controlled entities are brought to account using the equity method of accounting in the consolidated fi nancial statements. The
parent entity’s interests in jointly controlled entities are brought to account using the cost method. Where the Group acquires an interest in a jointly controlled
entity, the acquisition cost is amortised on a basis consistent with the method of amortisation used by the jointly controlled entity in respect to assets to
which the acquisition costs relate.
(m)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying
amounts for fi nancial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination and that, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; or
• when the taxable temporary difference is associated with investments in controlled entities, associates or interests in joint ventures, and the timing of the
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
24 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 1: Statement of signifi cant accounting policies (continued)
(m)
Income tax (continued)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent
that it is probable that taxable profi t will be available against which the deductible temporary differences and the carry-forward of unused tax credits and
unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; or
• when the deductible temporary difference is associated with investments in controlled entities, associates or interests in joint ventures, in which case a
deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profi t
will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
suffi cient taxable profi t will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that
future taxable profi t will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profi t or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and
the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
(n)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Cash fl ows are included in the Cash Flow Statement on a gross basis and the GST component of cash fl ows arising from investing and fi nancing activities,
which is recoverable from, or payable to, the taxation authority are classifi ed as operating cash fl ows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(o)
Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts
that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised
in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 25
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 1: Statement of signifi cant accounting policies (continued)
(o)
Plant and equipment (continued)
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Plant and equipment – 10% to 37%
Fixtures and fi ttings – 7.5%
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each fi nancial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or
changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the
risks specifi c to the asset.
For an asset that does not generate largely independent cash infl ows, recoverable amount is determined for the cash-generating unit to which the asset
belongs, unless the asset’s value in use can be estimated to be close to its fair value.
Impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit
is then written down to its recoverable amount.
For plant and equipment, impairment losses are recognised in the income statement in the cost of sales line item.
(ii) Revaluations
Where applicable, fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a
knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date.
Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the balance sheet, except to the extent that it reverses
a revaluation decrease of the same asset previously recognised in profi t or loss, in which case the increase is recognised in profi t or loss.
Any revaluation decrease is recognised in profi t or loss, except that a decrease offsetting a previous revaluation increase for the same asset is debited
directly to the asset revaluation reserve to the extent of the credit balance existing in the revaluation reserve for that asset.
An annual transfer from the asset revaluation reserve to retained earnings is made for the difference between depreciation based on the re-valued carrying
amounts of the assets and depreciation based on the assets’ original costs.
Additionally, any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are
restated to the re-valued amounts of the assets.
Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.
(iii) De-recognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic benefi ts are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset)
is included in profi t or loss in the year the asset is derecognised.
26 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 1: Statement of signifi cant accounting policies (continued)
(p)
Investments and other fi nancial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classifi ed as either fi nancial assets at fair value through
profi t or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When fi nancial assets are recognised
initially, they are measured at fair value, plus, in the case of investments not at fair value through profi t or loss, directly attributable transactions costs. The
Group determines the classifi cation of its fi nancial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each
fi nancial year-end.
(i) Loans and receivables
Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. Such assets
are carried at amortised cost using the effective interest method. Gains and losses are recognised in profi t or loss when the loans and receivables are
derecognised or impaired, as well as through the amortisation process.
(ii) Available-for-sale investments
Available-for-sale investments are those non-derivative fi nancial assets that are designated as available-for-sale or are not classifi ed in any other category.
After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity
until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in
equity is recognised in profi t or loss.
The fair value of investments that are actively traded in organised fi nancial markets is determined by reference to quoted market bid prices at the close of
business on the balance sheet date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include
using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash
fl ow analysis and option pricing models.
(q)
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of
its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash infl ows that are largely
independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the
asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market
assessments of the time value of money and the risks specifi c to the asset. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless the asset is carried at re-valued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist
or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profi t or loss unless the
asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 27
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 1: Statement of signifi cant accounting policies (continued)
(r)
Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end
of the fi nancial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and
services.
(s)
Provisions
Where applicable, provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any
reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that refl ects the risks specifi c to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
(t)
Employee leave benefi ts
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefi ts, annual leave and accumulating sick leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to
be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid
or payable.
(u)
Share-based payment transactions
Equity settled transactions:
The Group provides benefi ts to employees and consultants (including senior executives) of the Group in the form of share-based payments, whereby
employees render services in exchange for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions with employees and consultants is measured by reference to the fair value of the equity instruments at the date
at which they are granted. The fair value is determined by using the black and scholes model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the
Company (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or
service conditions are fulfi lled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date refl ects (i) the extent to which the vesting period
has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge
or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
28 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 1: Statement of signifi cant accounting policies (continued)
(u)
Share-based payment transactions (continued)
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modifi ed, as a minimum an expense is recognised as if the terms had not been modifi ed. In addition, an expense
is recognised for any modifi cation that increases the total fair value of the share-based payment arrangement, or is otherwise benefi cial to the employee, as
measured at the date of modifi cation.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modifi cation of the original award, as described in the previous paragraph.
The dilutive effect of outstanding shares and options issued is refl ected as additional share dilution in the computation of earnings per share (see Note 4).
(v)
Issued capital
Ordinary shares are classifi ed 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.
(w)
Earnings per share
Basic earnings per share is calculated as net profi t attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than
dividends) and preference share dividends, divided by the weighted average number of ordinary shares.
Diluted earnings per share is calculated as net profi t attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares, divided by the
weighted average number of ordinary shares and dilutive potential ordinary shares.
(x)
Exploration and evaluation expenditure
The Group’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)
(ii)
Each area of interest is considered separately when deciding whether and to what extent to carry forward or write off exploration
and evaluation costs.
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 signifi cant 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 suffi ciently 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 income statement in the year in which the review occurs.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 29
Notes to the fi nancial statements
For the year ended 30 June 2007
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
389,402
-
-
-
429,763
1,015,748
429,763
1,112,982
350,000
(85)
7,500
-
-
10,000
291,098
(543)
-
394,986
-
-
-
(85)
-
291,098
984,569
-
-
-
-
(543)
-
-
2,156,481
439,220
2,291,330
429,220
1,123,316
405,645
982,521
5,633
955,383
12,155
955,973
2,673
2,657,846
(135,209)
2,654,795
(135,209)
5,546,000
7,294,461
5,546,000
7,200,000
-
-
795,177
-
2,451,453
706,693
251,855
325,441
-
-
795,177
325,441
10,527,984
8,724,702
12,414,963
9,055,571
Note 2: Revenue and expenses
(a)
Revenue from continuing operations
Sales revenue
Sale of goods
(b)
Other income
Interest received
Sale of mining tenements
Net gain / (loss) on disposal of non-current assets
Tenement option funds
Net capital gain / (loss) on sale of available-for-sale
fi nancial assets
Administration recovery
Management fee received
(c)
Expenses
Loss from ordinary activities before income tax expense includes the following
specifi c expenses:
Consulting
Depreciation
Foreign exchange (gain) / loss
Project generation costs
Impairment of loans to subsidiaries
Tenement exploration expenses written off
Share based payments expense
30 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 3: Income tax
Major components of income tax expense for
the years ended 30 June 2007 and 2006 are:
Income statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences
Tax losses not previously recognised now brought to account
Current year tax losses not recognized in the current period
Income tax (benefi t) reported in income statement
Unrecognised deferred tax balances
Unrecognised deferred tax assets - Losses
Unrecognised deferred tax assets - Capital losses
Unrecognised deferred tax assets - Temporary differences
Unrecognised deferred tax liabilities
Net unrecognised deferred tax assets
Reconciliation to income tax benefi t on accounting loss
Accounting loss
Tax expense (revenue) at the statutory income tax rate of 30%
Sundry non-deductible(deductible) expenses
Share issue costs taken to equity
Over-provision of tax in prior year
Tax losses not previously recognised now brought to account
Benefi t of tax losses and timing differences not brought to account
Income tax (benefi t)
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
(1,572,628)
53,556
(187,698)
(10,428)
(534,826)
53,556
(62,046)
(10,428)
379,333
-
787,847
(351,892)
1,985,797
455,608
1,155,670
-
(132,907)
(158,129)
331,033
(158,129)
792,126
13,898
801,287
(49,222)
(266,353)
-
747,623
-
1,243,780
455,608
1,155,670
-
3,597,075
1,558,089
2,855,058
(11,468,569)
(3,440,571)
2,247,275
-
53,556
-
787,848
(351,892)
(9,139,936)
(2,741,981)
2,448,142
(26,766)
(10,428)
(158,129)
331,033
(158,129)
(12,166,305)
(3,649,891)
2,848,712
-
53,556
-
747,623
-
(132,907)
-
205,381
-
577,174
13,898
184,921
(49,222)
726,771
(9,855,882)
(2,956,765)
2,788,577
(26,766)
(10,428)
-
205,382
-
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 31
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 3: Income tax (continued)
Deferred tax asset
The balance comprises temporary differences attributable to:
Amounts recognised in profi t and loss:
Share raising costs expensed
Unredeemed capital expenditure
Current year tax loss
Unrealised foreign exchange loss
Set-off against deferred tax liability
Deferred tax liability
The balance comprises temporary differences attributable to:
Amounts recognised in profi t and loss:
Unrealised foreign exchange gain
Plant and equipment
Accrued interest
Amounts recognized directly in equity:
Asset revaluation reserve movement
Set-off against deferred tax assets
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
-
49,222
4,906,233
372,514
9,076
5,287,823
(4,817,383)
470,440
-
158,129
-
207,351
(49,222)
158,129
-
39,161
4,808,306
9,077
-
-
4,817,383
39,161
-
4,817,383
10,061
49,222
(4,817,383)
(49,222)
-
-
-
-
-
9,076
9,076
(9,076)
-
-
-
9,077
9,077
-
9,077
(9,077)
-
49,222
-
-
-
49,222
(49,222)
-
39,161
-
-
39,161
10,061
49,222
(49,222)
-
At 30 June 2007, there is no recognised or unrecognised deferred income tax liability for taxes that would be payable on the unremitted earnings of certain of the
Group’s controlled entities, associate or joint venture, as the Group has no liability for additional taxation should such amounts be remitted.
Tax Consolidation
Sylvania Resources Limited and its 100% owned Australian resident controlled entity have formed a tax consolidated group with effect from 1 July 2003. Sylvania
Resources Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate income tax
expense to the wholly owned controlled entity on a pro-rata basis. In addition the agreement provides for the allocation of income tax liabilities between the entities
should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote.
32 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 4: Earnings per share
Total basic loss per share
The loss and weighted average number of ordinary shares used in the calculation
of basic loss per share is as follows:
Consolidated
2007
Cents per
share
2006
Cents per
share
(7.59)
(9.40)
Net loss for the period
(11,116,675)
(8,981,807)
The weighted average number of ordinary shares
146,497,424
95,564,205
The diluted loss per share is not refl ected as the result is anti-dilutive.
Note 5: Segment reporting
Segment Information
The Group’s primary segment reporting format is geographical segments.
Geographical segments
The following table presents revenue, results and certain asset and liability information regarding geographical segments for the years ended 30 June 2007 and
30 June 2006.
30 June 2007
Segment revenue
Sale of goods
Other revenue
Share of net profi t from jointly controlled entity accounted
for on an equity basis
Total segment revenue
Segment results
Segment assets
Segment liabilities
Continuing operations
Australia
$
South Africa
$
Inter-segment
eliminations
$
Total
operations
$
-
2,648,830
389,402
524,005
-
389,402
(1,016,354)
2,156,481
-
1,649,511
-
1,649,511
2,648,830
2,562,918
(1,016,354)
4,195,394
(11,805,883)
(3,901,724)
4,590,932
(11,116,675)
79,359,238
27,066,826
(25,495,680)
80,930,384
731,299
31,542,714
(28,865,489)
3,408,524
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 33
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 5: Segment reporting (continued)
30 June 2006
Segment revenue
Other revenue
Share of net profi t from jointly controlled entity accounted
for on an equity basis
Total segment revenue
Segment results
Segment assets
Segment liabilities
Note 6: Cash and cash equivalents
Cash at bank and on hand
Short term deposits
Continuing operations
Australia
$
South Africa
$
Inter-segment
eliminations
$
Total
operations
$
439,220
-
-
1,148,649
439,220
1,148,649
-
-
-
(10,097,737)
(104,670)
1,220,600
13,242,293
7,123,838
(6,959,571)
385,156
184,065
-
439,220
1,148,649
1,587,869
(8,981,807)
13,406,560
569,221
Consolidated
Parent entity
2007
$
2006
$
2007
$
46,635,252
250,382
46,108,863
9,590,541
5,695,364
5,651,575
2006
$
155,312
5,695,364
56,225,793
5,945,746
51,760,438
5,850,676
(a)
Reconciliation to Cash Flow Statement
The above fi gures agree to cash at the end of the fi nancial year as shown in the cash fl ow statements.
(b)
Cash at bank and on hand
These are bearing interest rates of between 4.75% and 5.75% (2006: 3.75% and 5.25%)
(c)
Deposits at call
The deposits are bearing fl oating interest rates between 5.00% and 5.20% (2006: 4.45% and 5.73%). These deposits have a maturity of between 30 and 90 days.
(d)
Cash balances not available for use
As at 30 June 2007, an amount of R600,000 (A$99,897) was held in trust with Phillip Silver Sweidan Inc (Attorneys, Notaries and Conveyancers) based in
Johannesburg. The amount was lodged as a security deposit against a claim that has been made against the Company by an external creditor. On the 13 July 2007,
subsequent to the year end the matter was settled in full and fi nal settlement of all claims which either party may have against the other. In terms of the settlement, an
amount of R300,000 was refunded to the Company and the balance together with all interest accrued from the investment of the R600,000 deposit was paid out to
Latilla Mineral Marketing (BOP) (Pty) Limited. Each party being liable for their own legal costs.
As at 30 June 2007, an amount of R7,699,686 (A$1,281,921) was held on behalf of a related party and is included in the cash at bank and on hand balance above.
Funds were relinquished subsequent to the year end.
34 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 7: Trade and other receivables
Trade receivables
Other receivables
Prepayments
Note 8: Available-for-Sale fi nancial assets
At fair value
Listed shares
Listed options
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
391,434
424,058
23,255
838,747
172,834
36,108
-
208,942
-
82,462
9,726
92,188
-
36,108
-
36,108
1,365,380
150,910
1,516,290
272,476
50,303
322,779
1,365,380
150,910
1,516,290
272,476
50,303
322,779
Available-for-sale investments consist of investments in ordinary shares and options, and therefore have no fi xed maturity date or coupon rate.
Note 9: Investments accounted for using the equity method
Interest in joint venture (Refer to Note 20)
4,692,320
4,761,496
Note 10: Other fi nancial assets
Non interest-bearing loans
Loan receivable from subsidiary
Impairment of loan to subsidiary
Investment in subsidiary
Impairment of investment in subsidiary
-
-
-
-
-
-
-
-
28,882,410
(2,916,291)
-
57,347
7,424,410
(464,838)
1,500,004
1,500,004
(1,500,004)
(1,500,004)
114,731
-
-
-
-
114,731
25,966,119
7,016,919
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 35
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 11: Deferred exploration expenditure
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
Acquisition, exploration and evaluation expenditure at cost in respect of areas of interest in
the exploration phase
1,322,596
490,693
Costs carried forward in respect of:
Exploration and evaluation phase – at cost
Balance at beginning of fi nancial year
Foreign currency movements
Direct expenditure for the year
Expenditure written off
Balance at end of fi nancial year
490,693
(56,246)
888,149
-
1,322,596
644,400
(15,755)
113,903
(251,855)
490,693
-
-
-
-
-
-
-
-
-
-
-
-
Ultimate recovery of exploration and evaluation expenditure carried forward is dependent upon the recoupment of costs through successful development and
commercial exploitation, or alternatively by sale of the respective areas.
Note 12: Plant and equipment
Consolidated
Construction in
progress
$
Plant and
equipment
$
Computer
equipment
$
Furniture
and fi ttings
$
Offi ce
equipment
$
Motor
vehicles
$
At 1 July 2005
Cost or fair value
Accumulated depreciation
Net book value
Year ended 30 June 2006
Opening net book value
Exchange differences
Additions
Disposals
Re-allocation between asset classes
Depreciation charge
Closing net book value
At 30 June 2006
Cost or fair value
Accumulated depreciation
Net carrying amount
-
-
-
-
-
1,271,554
-
-
-
1,271,554
1,271,554
-
1,271,554
-
-
-
-
-
-
-
-
-
-
-
-
36 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Total
$
4,003
-
4,003
4,003
-
-
-
-
-
-
-
-
-
-
-
4,003
-
4,003
4,003
-
-
-
-
-
-
14,570
11,558
16,804
90,910
1,405,396
-
-
(1,207)
13,363
14,570
(1,207)
13,363
-
-
-
-
(866)
(3,282)
-
-
-
10,692
17,525
90,910
11,558
(866)
20,807
90,910
(3,282)
-
10,692
17,525
90,910
-
-
(5,355)
1,404,044
1,409,399
(5,355)
1,404,044
Note 12: Plant and equipment (continued)
Consolidated
Construction
in progress
$
Plant and
equipment
$
Computer
equipment
$
Furniture
and fi ttings
$
Offi ce
equipment
$
Motor
vehicles
$
At 1 July 2006
Cost or fair value
Accumulated depreciation
Net book value
Year ended 30 June 2007
Opening net book value
Exchange differences
Additions
Disposals
1,271,554
-
1,271,554
1,271,554
(145,753)
15,993,601
(1,190,353)
-
-
-
-
-
-
-
Re-allocation between asset classes
(3,481,592)
3,481,592
-
(337,678)
12,447,457
3,143,914
Depreciation charge
Closing net book value
At 30 June 2007
Cost or fair value
14,570
(1,207)
13,363
13,363
(1,598)
33,113
(3,971)
-
(9,674)
31,233
11,558
(866)
10,692
10,692
(933)
25,423
-
-
20,807
90,910
(3,282)
-
17,525
90,910
17,525
90,910
(732)
(10,419)
23,101
178,905
-
-
(34,585)
-
(4,762)
(8,972)
(44,559)
30,420
30,922
180,252
36,048
(5,628)
43,176
224,811
(12,254)
(44,559)
Accumulated depreciation
-
(337,678)
(10,881)
12,447,457
3,481,592
42,114
Net carrying amount
12,447,457
3,143,914
31,233
30,420
30,922
180,252
Parent entity
At 1 July 2005
Cost or fair value
Accumulated depreciation
Net book value
Year ended 30 June 2006
Opening net book value
Exchange differences
Additions
Disposals
Re-allocation between asset classes
Depreciation charge
Closing net book value
At 30 June 2006
Cost or fair value
Accumulated depreciation
Net carrying amount
Construction
in progress
$
Plant and
equipment
$
Computer
equipment
$
Furniture
and fi ttings
$
Offi ce
equipment
$
Motor
vehicles
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,003
-
4,003
4,003
-
9,674
-
-
-
-
-
-
-
-
-
-
-
-
2,217
2,590
-
-
(107)
2,110
2,217
(107)
2,110
-
-
(29)
(2,537)
2,561
11,140
2,590
(29)
2,561
13,677
(2,537)
11,140
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
1,409,399
(5,355)
1,404,044
1,404,044
(159,435)
16,254,143
(1,228,909)
-
(405,645)
15,864,198
16,275,198
(411,000)
15,864,198
Total
$
4,003
-
4,003
4,003
-
14,481
-
-
(2,673)
15,811
18,484
(2,673)
15,811
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 37
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 12: Plant and equipment (continued)
Parent entity
Construction
in progress
$
Plant and
equipment
$
Computer
equipment
$
Furniture
and fi ttings
$
Offi ce
equipment
$
Motor
vehicles
$
At 1 July 2006
Cost or fair value
Accumulated depreciation
Net book value
Year ended 30 June 2007
Opening net book value
Exchange differences
Additions
Disposals
Re-allocation between asset classes
Depreciation charge
Closing net book value
At 30 June 2007
Cost or fair value
Accumulated depreciation
Net carrying amount
Note 13: Trade and other payables
-
-
2,217
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(107)
2,110
2,110
-
1,934
-
-
(1,189)
2,855
4,151
(1,296)
2,855
2,590
(29)
2,561
13,677
(2,537)
11,140
2,561
11,140
-
-
-
-
-
-
-
3,775
10,499
38,924
-
-
(381)
5,955
6,365
(410)
5,955
-
-
(34,585)
-
(6,246)
(4,339)
15,393
24,176
(8,783)
15,393
-
-
-
-
Total
$
18,484
(2,673)
15,811
15,811
-
55,132
(34,585)
-
(12,155)
24,203
34,692
(10,489)
24,203
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
1,677,754
1,617,727
491,437
77,784
3,295,481
569,221
571,213
160,086
731,299
307,372
77,784
385,156
21,988
91,055
-
-
-
-
-
-
Trade payables
Other payables
Note 14: Borrowings
Secured
Current liabilities
Lease liabilities (Refer to Note 19)
Non-current liabilities
Lease liabilities (Refer to Note 19)
38 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 15: Contributed equity and reserves
(a)
Ordinary shares issued
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
176,029,273 ordinary shares (2006: 105,529,273)
105,950,221
29,242,204
105,950,221
29,242,204
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)
Date
Movements in ordinary share capital:
Details
1 July 2006
21 July 2006
26 July 2006
25 October 2006
20 December 2006
22 December 2006
6 June 2007
Opening balance
Placement proceeds
Share issue
Share issue
Shares issued under share plan
Employee share plan loan repaid - proceeds
Transfer from share-based payments reserve
Exercise of 2006 options under employee share plan
Proceeds received
Transfer from share-based
payments reserve
Notes
Number of
shares
Issue
price
$
(i)
(ii)
(ii)
(iii)
105,529,273
40,000,000
5,275,000
$0.74
1,825,000
$0.90
300,000
$0.90
-
-
-
-
29,242,204
29,487,840
3,903,500
1,642,500
-
25,000
7,357
200,000
$0.75
150,000
-
-
65,968
15 June 2007
Placement proceeds
(iv)
22,900,000
Less: Transaction costs arising on share issue
45,815,572
(4,389,720)
176,029,273
105,950,221
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 39
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 15: Contributed equity and reserves (continued)
(b)
Movements in ordinary share capital (continued):
Notes
(i)
(ii)
(iii)
(iv)
(c)
40,000,000 placing shares in the Company were issued at a deemed issue price of £0.30 and the Company commenced trading its shares on the AIM.
5,275,000 and 1,825,000 shares in the Company were issued at a deemed issue price of $0.74 and $0.90 respectively for services rendered in securing
opportunities to participate in eligible projects involving the re-treatment of Samancor’s tailings for the extraction of chrome at Samancor’s tailing dumps at
its Western and Eastern Chrome mines.
300,000 shares in the Company were issued at a deemed issue price of $0.90 in accordance with the Company’s Employee Share Plan funded by way of
a limited recourse loan repayable in 2 years from the date of issue. The equity contribution from these shares will be recognised upon receipt of funds by
the Company at the later of the loan being repaid by the employee or from funds recovered at the termination of the loan in accordance with the Share Plan
terms and conditions. Refer Note 16.
22,900,000 placing shares in the Company were issued at an issue price of £0.80 per issue.
Options
The Company has established an Employee Option Plan (“Option Plan”), which was approved by Shareholders at the Company’s Annual General Meeting on
the 30 November 2005.
On the 20 April 2006 the Company issued 750,000 options exercisable at $0.50 on or before the 30 June 2009 in accordance with the terms and
conditions of the Option Plan. Refer Note 16.
On the 17 October 2006 the Company issued 1,000,000 options exercisable at $0.75 on or before 30 June 2010 in accordance with the terms and
conditions of the Option Plan. Refer Note 16.
40 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 15: Contributed equity and reserves (continued)
(d)
Accumulated Losses
Balance as at 1 July 2006
Net loss for the year
Balance as at 30 June 2007
(e)
Reserves
Nature and purpose of reserves
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
15,592,577
6,610,770
16,597,326
6,741,444
11,116,675
8,981,807
12,166,307
9,855,882
26,709,252
15,592,577
28,763,633
16,597,326
Net unrealised gains reserve
This reserve records fair value changes on available-for-sale investments.
Employee equity benefi ts reserve
This reserve is used to record the value of equity benefi ts provided to employees, consultants and directors as part of their remuneration. Refer Note 16.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements of foreign controlled
entities. It is also used to record the foreign exchange effect of net investments in foreign operations.
Reserves
Consolidated
Parent
At 1 July 2005
Unrealised gain/(loss) on
available-for-sale fi nancial assets
Currency translation differences
Share and option-based payments
Net Unrealised
Gains Reserve
$
-
(113,182)
-
-
Equity
Benefi ts
Reserve
$
Currency
Translation
Reserve
$
Total
$
Net Unrealised
Gains Reserve
$
Equity
Benefi ts
Reserve
$
Currency
Translation
Reserve
$
(512,730)
(512,730)
-
-
(113,182)
(113,182)
(511,817)
(511,817)
325,441
-
325,441
At 30 June 2006
(113,182)
325,441
(1,024,547)
(812,288)
(113,182)
325,441
Unrealised gain/(loss) on
available-for-sale fi nancial assets
507,240
Currency translation differences
Share and option-based payments
-
-
-
507,240
507,240
(2,135,913)
(2,135,913)
721,852
-
721,852
-
-
-
325,441
-
-
721,852
-
-
-
-
Total
$
-
(113,182)
-
325,441
212,259
507,240
-
721,852
-
-
-
-
-
-
-
-
-
-
-
-
-
At 30 June 2007
394,058
1,047,293
(3,160,460)
(1,719,109)
394,058
1,047,293
-
1,441,351
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 41
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 16: Share based payments
(a)
Employee option plan
An employee incentive option plan was approved at the 2005 annual general meeting.
Participants of the option plan are determined by the Board and can be employees and directors of, or consultants to, the Company or a controlled entity. The Board
considers length of service, seniority, responsibilities, potential contribution and any other relevant matters in determining eligibility of potential participants. The
Board has sole responsibility to determine the number of options and terms and conditions of options granted to any participant.
The options issued under the option plan will be granted free of charge. The exercise price for the options is to be not less than the weighted average share price for
the last fi ve trading days immediately preceding the options being offered to the participant.
The expiry date of the options will be determined by the Board and will also lapse within one month of the participant ceasing to be a director, employee or consultant
of the Company or a controlled entity (subject to certain exceptions). The Board at its discretion may apply certain vesting conditions upon any options issued under
the plan.
The options are not transferable without prior written approval from the Board. The options will not be quoted on a publicly traded stock market; however application
will be made for ASX/AIM quotation of the shares issued upon the exercise of the options.
Set out below are summaries of options granted under the plan:
Consolidated and parent entity - 2007
Grant date
Expiry date
Exercise price
Balance at start
of year
Number
Granted during
the year
Number
Balance at end
of the year
Number
Exercisable at
end of the year
Number
20 April 2006
17 October 2006
30 June 2009
30 June 2010
$0.50
$0.75
750,000
-
-
1,000,000
750,000
800,000
375,000
-
Weighted average exercise price
$0.50
$0.75
$0.63
$0.50
750,000
1,000,000
1,550,000
375,000
Consolidated and parent entity - 2006
Grant date
20 April 2006
Expiry date
Exercise price
30 June 2009
$0.50
Weighted average exercise price
No options were forfeited during the periods covered by the above tables.
Balance at start
of year
Number
Granted during
the year
Number
Balance at end
of the year
Number
Exercisable at
end of the year
Number
-
-
-
750,000
750,000
750,000
750,000
$0.50
$0.50
-
-
-
42 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 16: Share based payments (continued)
(a)
Employee option plan (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 30 June 2007 was 33 cents per option. The fair value at grant date is independently
determined using a black and scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, 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 2007 included:
(a) options are granted for no consideration, have a three year life, and 50% of each tranche vests and is exercisable on each anniversary of the date of grant
(b) share price at grant date: $0.87
(c) expected price volatility of the Company’s shares: 48.5%
(d) expected dividend yield: Nil
(e) risk-free interest rate: 5.5%
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to
publicly available information.
(b)
Employee share plan
An employee incentive share plan was approved at the 2005 annual general meeting.
Participants of the plan are determined by the Board and can be employees, consultants and directors of, or consultants to, the Company or a controlled entity. The
Board considers length of service, seniority, responsibilities, potential contribution and any other relevant matters in determining eligibility of potential participants.
The issue price for the shares issued under the plan are not less than the weighted average share price for the last fi ve trading days immediately preceding the offer
to the participant.
A participant who is invited to subscribe for shares under the plan may also be invited to apply for a loan up to the amount payable in respect of the shares accepted
by the participant. These loans are to be made on the following terms:
• Applied directly against the issue price of the shares to be acquired under the plan;
• For a term to be determined by the Board;
•
Repayable to the extent of the lesser of the issue price of the relevant shares issued, less any cash dividends applied against the outstanding principal; and the
last market sale price of the shares on the date of repayment of the loan;
• The loan must be repaid in full prior to expiry of the loan;
• The Company will have a lien over the shares in respect of which a loan is outstanding;
• Shares issued under the plan are not transferable while a loan amount in respect of those shares remains payable; and
• Shares issued under the share plan will not be quoted on a publicly traded stock market while a loan amount in respect of those shares remains payable.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 43
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 16: Share based payments (continued)
(b) Employee share plan (continued)
All shares issued under the employee share plan with non-recourse loans are considered to be options and are accounted for in accordance with note 1(u).
On 21 December 2005, 3,850,000 shares were issued at $0.50 to directors, consultants and employees under the plan. The shares were paid for by way of a loan
payable on or before 21 December 2007 (as provided by the plan).
On 20 December 2006, 300,000 shares were issued at $0.90 to consultants and employees under the plan. The shares were paid for by way of a loan payable on
or before 20 December 2008 (as provided by the plan).
For details of the shares issued to directors and executives refer to note 23.
(c) Expenses relating to share based payment transactions
Options issued under employee option plan
Shares issued under employee share plan
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
480,529
61,651
480,529
61,651
314,648
263,790
314,648
263,790
795,177
325,441
795,177
325,441
Note 17: Financial risk management objectives and policies
The Group’s principal fi nancial instruments comprise of cash and short-term deposits.
The main purpose of these fi nancial instruments is to raise fi nance for the Group’s operations. The Group has various other fi nancial assets and liabilities such as
trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group’s policy that no
trading in fi nancial instruments shall be undertaken. The main risks arising from the Group’s fi nancial instruments are interest rate risk and credit risk. The Board
reviews and agrees policies for managing each of these risks and they are summarised below.
Interest rate risk
All cash balances attract a fl oating rate of interest. The unsecured loan to another party does not attract interest. The Group’s exposure to interest rate risk and the
effective interest rate by maturity periods is set out below.
Credit risk
Credit risk relates to the risk that counterparties will default on their contractual obligations resulting in fi nancial loss to the Group. The Group has adopted a policy of
only dealing with credit worthy counterparties and obtaining suffi cient collateral or other security where appropriate, as a means of mitigating the risk of fi nancial loss
from any defaults.
The exposure of the Group to credit risk in relation to each class of recognised fi nancial asset is the carrying amount as indicated in the balance sheet.
44 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 18: Financial instruments
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s fi nancial instruments recognised in the fi nancial statements.
Market values have been used to determine the fair value of listed available-for-sale investments.
The fair values of all fi nancial assets and liabilities approximate their carrying values as indicated in the balance sheet.
Weighted
average
interest rate
Non-interest
bearing
$
Floating
interest rate
$
1 year
or less
$
Over 1
to 5 years
$
Total
$
2007
Financial assets
Cash and deposits
Receivables
Investments
Financial liabilities
Trade and other payables
Borrowings
2006
Financial assets
Cash and deposits
Receivables
Investments
Loans
Financial liabilities
Trade and other payables
4.77%
150
56,225,643
838,747
1,516,290
-
-
2,355,187
56,225,643
(3,295,481)
-
12.55%
-
(113,043)
(3,295,481)
(113,043)
(940,294)
56,112,600
5.05%
140
5,945,606
208,942
322,779
114,731
-
-
-
646,592
5,945,606
(569,221)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,225,793
838,747
1,516,290
58,580,830
(3,295,481)
(113,043)
(3,408,524)
55,172,306
5,945,746
208,942
322,779
114,731
6,592,198
(569,221)
6,022,977
Net fi nancial assets/(liabilities)
77,371
5,945,606
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 45
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 19: Commitments and contingencies
Operating lease commitments
Offi ce premises
The Group entered into commercial lease arrangements during the period to lease its current offi ce premises, both in Perth and Johannesburg.
Future minimum lease payments (net of GST) as at 30 June are as follows:
Within one year
After one year but not more than fi ve years
More than fi ve years
Consolidated
Parent entity
2007
$
80,891
41,937
-
122,828
2006
$
111,749
120,997
-
232,746
2007
$
71,892
41,937
-
113,829
2006
$
71,892
110,834
-
182,726
Offi ce equipment
Sylvania South Africa (Propriety) Limited entered into a number of lease agreements during the period in respect to offi ce equipment.
Future minimum lease payments (net of GST) as at 30 June are as follows:
Within one year
After one year but not more than fi ve years
More than fi ve years
Finance lease commitments
Motor vehicles
5,458
12,736
-
18,194
9,020
30,067
-
39,087
Sylvania South Africa (Propriety) Limited entered into two lease agreements during the period in respect to motor vehicles.
Future minimum lease payments (net of GST) as at 30 June are as follows:
Within one year
After one year but not more than fi ve years
More than fi ve years
21,988
91,055
-
113,043
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 20: Interest in joint venture
Sylvania South Africa (Pty) Limited, a wholly owned subsidiary of the Company has a 25% interest in an un-incorporated joint venture, CTRP, which operates a
chrome tailings re-treatment plant at Kroondal in South Africa for the purpose of extracting platinum group metals. The Group has accounted for this interest on an
equity accounting basis.
(a) Retained earnings attributable to interest in jointly controlled entity
Balance at beginning of fi nancial period
Distribution received from jointly controlled entity
Share of jointly controlled entity’s profi t from ordinary activities after income tax
Balance at end of fi nancial period
Consolidated
2007
$
2006
$
1,136,338
143,079
(1,534,253)
(155,390)
1,649,511
1,148,649
1,251,596
1,136,338
(b) Reserves attributable to interest in jointly controlled entity
-
-
(c) Carrying amount of investment in jointly controlled entity
Balance at beginning of the fi nancial period
Management fees raised in period
Distribution received from jointly controlled entity
Share of jointly controlled entity’s profi t from ordinary activities, after income tax
Balance at end of fi nancial period
Foreign currency translation movements
Balance at beginning of the fi nancial period
Movement during the fi nancial period
Balance at end of fi nancial period
(d) Share of joint venture entity’s results and fi nancial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Revenue
Expenses
Profi t from ordinary activities before income tax Income tax expense
Profi t from ordinary activities after income tax
4,761,496
4,617,660
394,986
-
(1,534,253)
(155,390)
1,649,511
1,148,649
5,271,740
5,610,919
(849,423)
(575,185)
270,003
(274,238)
(579,420)
(849,423)
4,692,320
4,761,496
2,597,933
929,472
1,315,026
2,460,045
3,912,959
3,389,517
2,174,959
2,085,687
-
177,918
2,174,959
2,263,605
3,512,510
2,257,982
(1,862,999)
(1,109,333)
1,649,511
1,148,649
-
-
1,649,511
1,148,649
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 47
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 21: Events after the balance sheet date
There has not been any matter or circumstance that has arisen after balance date that has signifi cantly affected, or may signifi cantly affect, the operations of the
Group, the results of those operations, or the state of affairs of the Group in future fi nancial periods.
Note 22: Auditors’ remuneration
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
63,000
21,640
63,000
21,640
10,663
28,032
12,767
-
-
-
-
-
86,430
49,672
63,000
21,640
-
-
-
3,958
1,626
5,584
-
-
-
3,958
-
3,958
25,000
16,600
25,000
16,600
-
2,400
-
2,400
4,750
-
4,750
-
29,750
19,000
29,750
19,000
116,180
74,256
92,750
44,598
Assurance services
HLB Mann Judd Australian fi rm:
Audit and review of fi nancial statements
Related practices of HLB Mann Judd
(HLB Barnett Chown Inc.)
Non-HLB Mann Judd practice (LA Gambale)
Total remuneration for audit services
Taxation services
HLB Mann Judd Australian fi rm:
Tax compliance services, including review of Company
income tax returns
Related practices of HLB Mann Judd
(HLB Barnett Chown Inc.)
Total remuneration for taxation services
Advisory services
HLB Mann Judd Australian fi rm:
Services in respect to AIM Listing
Advice regarding Share and Options valuations
Other
Total remuneration for advisory services
Total auditors’ remuneration
Total auditors’ remuneration
48 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 23: Key management personnel disclosures
(a)
Directors
(i)
(ii)
Chairman –Non-Executive
R D Rossiter
Executive Directors
T M McConnachie
Dr E Kirby
L M Carroll
Chief Executive Offi cer
Chief Operating Offi cer
Finance Director
(iii) Non-Executive Directors
Dr A P Ruiters
On 21 June 2007, Mr G M Button resigned as a director of the Company effective from the close of business on that day. Mr Button previously held the title of
Executive Director of the Company and was based in Australia.
Furthermore, on 15 August 2007, the Company announced a re-organisation of its executive team in response to expanding activities in South Africa. Mr R D
Rossiter was appointed as non-executive Chairman, Dr A P Ruiters was appointed as non-executive director and Mr L M Carroll was appointed as Finance Director.
As a result of the above appointments Mr E F G Nealon (formerly non-executive Chairman), Ms M J Sturgess (formerly non-executive director) and Mr K S Huntly
(formerly non-executive director) resigned from their positions on the Board. They will all remain closely involved with the Company in a consulting capacity.
Other than the above re-organisation, there were no other changes of the key management personnel after the reporting date and the date the fi nancial report was
authorised for issue.
(b) Key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly during the year:
Name
Position
M J Langoulant
R A Jarvis
M L Burchnall
J Meyer
Z Marinkovic
C De Vos
P R Carter
Company Secretary
Group Financial Controller
Manager - Strategic Development
Managing Director, Sylvania Metals (Pty) Ltd and Sylvania Minerals (Pty) Ltd
Director, Sylvania Metals (Pty) Limited
Internal Legal Advisor
Managing Director, Sylvania Mining (Pty) Ltd
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 49
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 23: Key management personnel disclosures (continued)
(c) Key management personnel compensation
Short-term
Post employment
Share-based payments
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
2,231,329
810,594
1,043,622
29,971
22,600
29,971
770,063
284,333
289,534
679,597
22,600
222,681
3,031,363
1,117,527
1,363,127
924,878
The Company has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration disclosures to the directors’
report. The relevant information can be found in sections A-D of the remuneration report.
(d) Compensation options: Granted under the Employee Option Plan
Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in
section D of the remuneration report.
(e) Compensation shares: Issued under the Employee Share Plan
Shares provided as remuneration
Details of shares provided as remuneration can be found in section D of the remuneration report.
(f) Shares issued on Exercise of Compensation Options
2007
Name
Z Marinkovic
Shares
issued
No.
Paid per
share
(note 16)
$
Unpaid
per
share
$
200,000
$0.75
-
No shares were issued on exercise of Compensation Options during the year ended 30 June 2006.
50 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Note 23: Key management personnel disclosures (continued)
(g)
Option holdings of Key Management Personnel (Consolidated)
2007
Name
Director
T M McConnachie
Dr A P Ruiters
L M Carroll
K S Huntley
Other key management personnel
J Meyer
Z Marinkovic *
C De Vos
P R Carter
* refer to note 23(f)
2006
Name
Director
T M McConnachie
K S Huntley
Balance at
the start of
the year
Granted during
the year
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at
the end of the
year
500,000
-
-
-
-
200,000
250,000
-
-
-
-
-
200,000
200,000
200,000
200,000
-
-
-
-
-
(200,000)
-
-
-
-
-
-
-
-
-
-
500,000
250,000
-
200,000
250,000
200,000
-
200,000
200,000
-
-
125,000
-
-
-
-
Balance at the
start of
the year
Granted during
the year
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at
the end of the
year
-
-
500,000
250,000
-
-
-
-
500,000
250,000
-
-
(h)
Shareholdings of Key Management Personnel (Consolidated)
The number of shares in the Company held during the year by each director of the Company and key management personnel of the Group, including their personally
related parties, are set out below
2007
Name
Director
R D Rossiter
Dr E Kirby
E F G Nealon
G M Button
M J Sturgess
K S Huntly
Key management personnel
M J Langoulant
R A Jarvis
M L Burchnall
Balance at the start
of the year
Issued under share
and option plan
Other changes
during the year
Balance at the end of the
year
32,000
764,300
750,000
1,250,000
815,000
-
350,000
-
-
-
-
-
-
-
-
-
200,000
100,000
-
-
-
(500,000)
(62,400)
-
-
-
-
32,000
764,300
750,000
750,000
752,600
-
350,000
200,000
100,000
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 51
Notes to the fi nancial statements
For the year ended 30 June 2007
Note 23: Key management personnel disclosures (continued)
(h)
Shareholdings of Key Management Personnel (Consolidated)
2006
Name
Director
E F G Nealon
G M Button
Dr E Kirby
M J Sturgess
K S Huntly
Key management personnel
M J Langoulant
Balance at
the start of the year
Issued under share
and option plan
Other changes during
the year
Balance at the end of
the year
-
500,000
14,300
65,000
-
750,000
750,000
750,000
750,000
-
100,000
250,000
-
-
-
-
-
-
750,000
1,250,000
764,300
815,000
-
350,000
All equity transactions with key management personnel other than those arising under the Group’s Incentive Option Plan (Note 23(d)) and Incentive Share Plan (Note
23(e)) have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length.
Note 24: Related party disclosure
The consolidated fi nancial statements include the fi nancial statements of Sylvania Resources Limited and the controlled entity listed in the following table:
Name of entity
Country of incorporation
Class of shares
Equity holding
Sylvania Holdings Limited
Twinloop Nominees Pty Ltd
Sylvania South Africa (Pty) Ltd
Sylvania Metals (Pty) Ltd
Sylvania Minerals (Pty) Ltd
Sylvania Mining (Pty) Ltd
Mauritius
Australia
South Africa
South Africa
South Africa
South Africa
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2007
%
100
100
100
100
100
100
2006
%
-
100
100
100
100
100
Sylvania Resources Limited is the ultimate Australian parent entity and the ultimate parent of the Group. Transactions between Sylvania Resources Limited and its
controlled entities during the year consisted of loans advanced by Sylvania Resources Limited.
Related parties
The following table provides details of advances to/(from) related parties during the year and outstanding balances at balance date:
Magnum Gold NL
Tameka Shelf Company Four
Pty Ltd (refer note 6(d))
Dannyland Limited
Alumicor Maritzburg (Pty) Ltd
52 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
-
114,731
(1,281,921)
5,951
5,004
-
-
-
-
-
-
-
57,347
-
-
-
Note 24: Related party disclosure (continued)
Joint venture in which the entity is a venturer
The Group has a 25% interest in the assets, liabilities and output of an un-incorporated joint venture, CTRP, which operates a chrome tailings re-treatment plant at
Kroondal in South Africa (2006: 25%).
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made in arm’s length transactions both at normal market prices and on normal commercial terms.
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
Note 25: Reconciliation of profi t after income tax to net cash outfl ow from operating activities
a) Reconciliation of loss from ordinary activities after income tax to net cash outfl ow from
operating activities
Loss from ordinary activities after income tax
Administration fee charged to controlled entities
Equity accounted net profi t from joint venture
Joint venture cash distribution
Project generation costs
Depreciation
Non-cash employee benefi ts expense –
share-based payments
Net exchange differences
Net (gain) / loss on sale of
available-for-sale fi nancial assets
Capital (gain) on sale of non-current assets
Diminution in value of loans
Impairment of loan to controlled entity
Mining tenement expenditure written off
(Increase) / decrease in trade and other debtors
(Increase) / decrease in deferred tax asset
Increase / (decrease) in trade creditors
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
(11,116,675)
(8,981,807)
(12,166,307)
(9,855,882)
-
-
(984,569)
(177,672)
(1,649,511)
(1,148,649)
1,534,253
155,390
-
-
-
-
5,546,000
7,200,000
5,546,000
7,200,000
405,645
5,633
12,155
2,673
795,177
325,441
795,177
325,441
2,657,846
(135,209)
2,654,795
(135,209)
(291,098)
(299,915)
-
-
-
(687,065)
(351,892)
301,901
543
(291,098)
85
(360,424)
2,451,453
-
543
-
-
706,693
-
(9,726)
(14,339)
-
-
(19,880)
142,253
-
-
-
251,855
(187,170)
(158,129)
324,346
Net cash outfl ow from operating activities
(3,155,334)
(2,347,756)
(2,372,339)
(1,805,499)
b) Non-cash fi nancing and investing activities
During the 2007 fi nancial year 5,275,000 and 1,825,000 shares in the Company were issued at a deemed issue price of $0.50 and $0.90 respectively for services
rendered in securing opportunities to participate in eligible projects involving the re-treatment of Samancor’s tailings for the extraction of chrome at Samancor’s
tailing dumps at its Western and Eastern Chrome mines.
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 53
Directors’ declaration
1.
In the opinion of the directors:
a.
the fi nancial statements and notes of the Company and of the consolidated entity are in accordance with the Corporations Act 2001 including:
i. giving a true and fair view of the Company’s and consolidated entity’s fi nancial position as at 30 June 2007 and of their performance for the year
then ended; and
ii. complying with Accounting Standards and Corporations Regulations 2001; and
b.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations
Act 2001 for the fi nancial year ended 30 June 2007.
This declaration is signed in accordance with a resolution of the Board of Directors.
T M McConnachie
Chief Executive Offi cer
Johannesburg, South Africa
4 September 2007
54 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Independent auditor’s report
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 55
Independent auditor’s report
56 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
The shareholder information set out below was applicable as at 31 August 2007.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
-
-
-
-
and over
1,000
5,000
10,000
100,000
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
Computershare Clearing Pty Ltd
ANZ Nominees Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Mellon Nominees (UK) Ltd
HSBC Custody Nominees (Australia) Limited
Feta Nominees Pty Limited
Mr Christopher Robert Rogerson
HSBC Custody Limited
Mr Grant Button
Mr Evan Kirby
Mr Ed Nealon
M/S Melissa Sturgess
UOB Kay Hian (Hong Kong) Limited
JP Morgan Nominees Australia Limited
Mr Adrian Paul
Mrs Tracy Andrea Howell
Flue Holdings Pty Ltd
Citicorp Nominees Pty Limited
Additional information
for Listed Public Companies
Class of equity security
Ordinary shares
82
206
115
160
46
609
Ordinary shares
No. held
% of issued
shares
116,880,392
66.35
12,237,550
11,240,362
5,417,889
5,015,863
2,447,500
1,098,717
1,052,882
875,000
792,308
750,000
750,000
750,000
750,000
725,000
518,592
500,000
488,500
433,550
408,710
6.95
6.38
3.08
2.85
1.39
0.62
0.6
0.5
0.45
0.43
0.43
0.43
0.43
0.41
0.29
0.28
0.28
0.25
0.23
163,132,815
92.63
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 57
Additional information
for Listed Public Companies
C. Substantial shareholders
Substantial shareholders in the Company are set out below:
Ordinary shares
FMR Corp and FIL
JP Morgan Chase & Co
D. Voting rights
Number Held
17,404,525
13,988,300
Percentage
11.38
7.95
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
Everest North
Tenement details
% Held
Mineral Area 2 on farm Vygenhoek
No 10 JT measuring 180 hectares
Right to acquire 100%
58 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Notes
SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007 59
Notes
60 SYLVANIA RESOURCES LIMITED ANNUAL REPORT 2006-2007
Sylvania Resources Limited
ACN 091 415 968
98 Colin Street
West Perth WA 6005
Telephone: (08) 9481 8711
(08) 9324 2977
Facsimile:
www.sylvaniaresources.com
Website: