A n n u a l R e p o r t 2 0 0 8
C o r p o r a t e d i r e c t o r y
Directors
T M McConnachie
R D Rossiter
L M Carroll
Dr A P Ruiters
J Cooke
Company Secretary
M J Langoulant
Managing Director
Non-executive Chairman
Financial Director
Non-executive Director
Non-executive Director
Principal registered office in Australia
Suite 2, 5 Ord Street • West Perth, Western Australia, 6005 • Australia
Telephone:
Facsimile:
(08) 9324 2955
(08) 9324 2977
Registrar
Computershare Investor Services Pty Limited • Reserve Bank Building • Level 2, 45 St George’s Terrace
Perth, Western Australia, 6000 • Australia
Auditors
HLB Mann Judd • Chartered Accountants • 15 Rheola Street • West Perth, Western Australia, 6005 • Australia
Solicitors
Clayton Utz • QV1, 250 St George’s Terrace • Perth, Western Australia, 6000 • Australia
Nominated advisor and broker
Ambrian Partners Limited • 2nd Floor, Angel Court • London, EC2R 7HP • United Kingdom
Stock exchange listings
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)
Website address
www.sylvaniaresources.com
C o n t e n t s
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Vision and highlights
Corporate profile
Review by the Chairman and Managing Director
Key management personnel
Directors’ Report
Auditor’s independence declaration
Corporate governance statement
Directors’ declaration
Independent auditor’s report
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the Financial Statements
Additional information for listed public companies
Glossary of terms
Sylvania Resources Annual Report 2008 Page 1
V i s i o n
Sylvania’s vision is to become the pre-eminent, South African
mid-tier PGM producer as measured by its stakeholders, using its
metallurgical and engineering expertise to acquire and develop
low-risk tailings and shallow mining assets.
H i g h l i g h t s
• PGM production reaches 16,690oz (3E+Au)
-
reflects successful ramp-up at Millsell and Steelpoort plants;
• Sylvania Dump Operations (SDO) produces 14,224oz,
85% of total production
-
Feed grade averages 2.26g/t
- Recovery rate is 40%
• Low cost PGM producer
- Average site cash cost of A$408/oz
• Underlying earnings before interest and tax (EBIT) totals
A$14.3million
• Net profit after tax and minority interest totals A$9.9million
• Well placed for further growth
-
-
-
strong cash balance of A$43.6million
good prospects for further surface resources
near-surface exploration pipeline
Syl vani a Reso urces -
Qu ar terly p rodu ct i o n o f 3 E+Au (ounce s)
7 000
6 000
5 000
4 000
3 000
2 000
1 000
-
Jun 2007
Sept 2007
Dec 2007
Mar 2008
Jun 2008
Sylvania Resources Annual Report 2008 Page 2
Sylvania Resources Annual Report 2008 Page 3
C o r p o r a t e p r o f i l e
Sylvania Resources Limited is a fast-growing platinum group
metals (PGMs) producer with tailings retreatment operations
and shallow mining exploration interests located in South
Africa’s PGM-rich Bushveld Igneous Complex.
Well-resourced
in respect of both metallurgical and
engineering expertise, the company’s medium-term focus on
surface tailings retreatment and shallow mining in the longer
term, positions it strongly as a low-risk,
low-cost and high-
margin PGM producer compared with its underground peers.
Sylvania’s tailings retreatment business has:
• a 74% interest in Sylvania Dump Operations (SDO), which,
in terms of a service and supply agreement with Samancor
Chrome (Pty) Limited (Samancor Chrome), treats chrome
tailings from Samancor Chrome’s mines on the Western
and Eastern Limbs of the Bushveld Igneous Complex to
recover PGMs;
• a 25% interest in the Chrome Tailings Retreatment Project
(CTRP) at Kroondal on the Western Limb, managed by
Aquarius Platinum Limited, which treats the Xstrata and
Beyer chrome tailings to recover PGMs.
To service Sylvania’s Samancor Chrome agreement, two plants
– Millsell and Steelpoort – became fully operational during the
2007-2008 financial year. Process improvement projects at
involving the addition of bead mills and extra
both plants,
cleaner flotation cells, are under way.
Construction of two additional plants, Lannex and Mooinooi, is
under way, with commissioning and ramp-up of production at
both scheduled to begin in the first quarter of 2009. In terms
of an addendum to the Samancor Chrome agreement, a right
has been secured to treat an estimated annual 300,000t of run
of mine (ROM) from Samancor Chrome’s Broken Hill,
Spitzkop and Buffelsfontein East chrome mines to win PGMs.
ROM from Broken Hill and Spitzkop will report to the Lannex
plant for treatment and those from Buffelsfontein East to the
Mooinooi plant.
Sylvania’s near-surface mining exploration interests comprise:
• The Everest North UG2 exploration project on the eastern
limb, which has a measured resource of 5.1Mt at 4.7g/t. In
terms of an agreement, notice has been served on Aquarius
Platinum (South Africa) (Pty) Ltd (AQPSA) that the project
is viable and Sylvania intends to mine the property. At the
same time, discussions are progressing with Eastern Platinum
Limited for a possible joint venture in respect of Vygenhoek
and Mareesburg;
• The Harriet’s Wish, Cracouw and Aurora exploration
project is situated on the Northern Limb of the Bushveld
Igneous Complex.The company is reviewing its options and
an announcement will be made in due course;
• A stake in ASX-listed Great Australian Resources Limited
(GAR), which has the near-surface Merensky Reef
platinum/nickel exploration project, Mooiplats.
Long-term Environmental Benefits
The nature of Sylvania’s business makes it less dependent on,
and demanding of, scarce national resources, such as power
and water. In addition, its deposition of retreated tailings is to
the highest and most modern standards, with consequent
long-term benefits for the environment.
The company is committed to the spirit and intent of South
Africa’s Mining Charter.
Its chosen black economic
empowerment (BEE) partner, Ehlobo Metals (Pty) Limited,
headed by former South African Director-General of the
Department of Trade and Industry, Alistair Ruiters, owns 26%
of the Sylvania Dump Operations.
Sylvania is listed on the Australian Securities Exchange Limited
(ASX: SLV) and was recently admitted to the S&P/ASX300
Index. It is also listed on the AIM Market of the London Stock
Exchange (AIM: SLV).
The company has some 180,012,273 shares on issue and
numbers amongst its top shareholders Audley Capital,
JP Morgan, Credit Suisse, Henderson Global and JO Hambro.
Sylvania Resources Annual Report 2008 Page 4
Sylvania Resources Annual Report 2008 Page 4
SOUTH AFRICA
Bushveld
Complex
Johannesburg
Cape Town
O p e r a t i o n s a n d p r o j e c t s
Harriet’s Wish/Cracouw
Northern Limb
SOUTH AFRICA
Western Limb
Thabazimbi
Great Australian
Resources
Bela Bela
Mooinooi
Rustenburg
Brits
Polokwane
Eastern Limb
Groblersdal
CTRP
Millsell
Pretoria
Johannesburg
Witbank
Steelpoort
Lannex
Everest North
Chrome tailings
Near-surface
exploration
Sylvania Resources Annual Report 2008 Page 5
R e v i e w b y t h e C h a i r m a n a n d M a n a g i n g D i r e c t o r
O v e r v i e w
We are very pleased to be able to reflect on an outstanding year that has seen your company make
low-risk, high-margin,
enormous strides towards fulfilment of its objective to become a fast-growing,
cash-generative producer of PGMs from surface and near-surface sources at the world’s premier PGM
address, South Africa’s Bushveld Igneous Complex. During the year, two plants within our newly created
Sylvania Dump Operations Division (SDO) – Millsell and Steelpoort – became fully operational and
construction of two others – Lannex and Mooinooi – got under way.
S a f e t y , h e a l t h a n d t h e e n v i r o n m e n t
Concurrently with production ramp-up at Millsell and Steelpoort and the start of construction at Lannex and
Mooinooi, we have paid considerable attention to safety, health and environmental (SHE) management.
A focus has been appropriate training in these critical areas for a new workforce, all of whom are new to
the Company, indeed many of whom are new to the mining environment. While accidents have been few
and far between and in the lowest quartile of the industry, SDO’s Lost Time Injury Frequency Rate (LTIFR)
averaged 3.37 for the year under review. A LTIFR of less than 0.50 has been set as a short-term target.
The Disabling Injury Frequency Rate (DIFR) for the year was nil and the Lost Time Injury Frequency
all were of a minor nature requiring
Rate was 1.00. Three environmental incidents were recorded,
minimal remediation.
The Chromite Tailings Retreatment Plant – 25% owned by Sylvania and operated by AQPSA –
recorded a DIFR of 5.62 for the year, due to the first injury since operations began.
In terms of the environment, in pursuing our core business of tailings retreatment, we are
destined to make a positive, permanent environmental impact of major proportion in the
longer term, particularly in respect of air quality and water utilisation. Of the total waste
material recovered and re-treated from old, de-commissioned tailings dumps, 30% is removed
permanently as chromite and PGM product.The remaining 70% waste is re-deposited in new
tailings dumps, constructed, managed and rehabilitated to the highest modern standards, with
strict adherence to all regulatory requirements.
During the year, an independent audit of rehabilitation funding for SDO’s current
operations was conducted.This indicated a current total obligation of A$355,158 and
that this amount is currently fully funded.
M a r k e t s
In the year under review, markets for our PGM products – platinum (58% of total
production), palladium (27%) and rhodium (15%) – were firm, resulting in an
average basket price received of US$2,626/oz.
Uncertainty regarding future Southern African PGM supplies persisted for
much of Sylvania’s financial year, fuelled particularly in the second half by
speculation on the possible negative impact on South African producers of
continuing electricity restrictions imposed by power utility Eskom.
Some volatility in the PGM markets has been experienced post our financial
year-end due generally to tougher economic conditions in key western markets,
and more specifically to lower automotive and jewellery consumption in
Sylvania Resources Annual Report 2008 Page 6
Richard Rossiter
Non-Executive Chairman
these markets. However, we believe the fundamentals for PGMs are likely to remain strong due to increasing
automotive and industrial consumption particularly in emerging markets and continuing lower-than-anticipated
supplies from South Africa.
F i n a n c i a l a n d o p e r a t i n g p e r f o r m a n c e
Sylvania had an outstanding year, delivering on its objectives and establishing itself as a highly profitable PGM
producer in South Africa. The commissioning and ramp-up of the first two tailings retreatment facilities
(Millsell and Steelpoort) exceeded expectations and yielded profits within the first month of start up.
Significant progress was also achieved with the ongoing construction of our next two tailings retreatment
facilities (Lannex and Mooinooi), the feasibility study for the hard rock mine Everest North and growing our
exploration portfolio.
Our underlying earnings before interest and tax (EBIT) rose significantly to A$14.3million, as did our net
operating cash flows (A$11.9million) and net profit after tax and minority interest (A$9.9million), reflecting
the ramp up in PGM production and strong PGM market conditions. Our low costs, high operating margins,
strong cash flows and balance sheet (A$43.6million cash at 30 June 2008) underpin our ability to fund our
future growth and pursue other options as they may arise.
Total PGM production for the year totalled 16,690oz (3E+Au), reflecting the successful commissioning and
ramp up of the Millsell and Steelpoort plants.
Revenue totalled A$32.8million. Attributable pre-tax profit totalled A$17.0million after accounting for
a negative exchange rate variance of A$4.6million and a reduction of A$2.6million in the value of the
company’s equity investments to take account of the general downturn in international markets.
Sylvania Dump Operations
In its inaugural year, SDO – comprising the Millsell and Steelpoort plants – produced 14,224oz,
85% of Sylvania’s total production for the year, from total plant throughput of 507,262t.
Reflective of progress made towards full operation at both plants during the year, the average
head grade for the year was 2.26 grams per ton (g/t) and recovery was 40%. A robust
average basket price for our products of US$2,626/oz and effective cash cost reduction
– the average site cash cost for the year was A$408/oz – contributed to a gross cash
margin for the year of 65%.
The first slurry was processed at the Millsell plant during June 2007. Commissioning
progressed well and the plant’s first PGM concentrate was sold during July 2007.
Capital expenditure on Millsell totalled A$7.1million.
Construction of the integrated chrome washing and PGM recovery plant at
Steelpoort was completed early in the year under review at a cost of
A$6.5million. Commissioning took one month and the first PGM concentrate
was sold in September 2007.
A range of process improvement projects at Millsell and Steelpoort is
nearing completion at a capital cost of A$4.0million. An extra cleaner
flotation cell installed at Millsell is delivering the expected process
improvements and commissioning of a similar installation at Steelpoort is
almost concluded. Bead mills at both plants, held up by late delivery of
components, became operational during October 2008.
Sylvania Resources Annual Report 2008 Page 7
Terry McConnachie
Managing Director
R e v i e w b y t h e C h a i r m a n a n d M a n a g i n g D i r e c t o r ( c o n t i n u e d )
It is pleasing to note that, due to Sylvania’s generally lower-risk
profile, the surface retreatment operations remained virtually
immune to ‘load-shedding’ power outages by State utility
Eskom during the year, and to growing skills shortages and
stricter imposition of penalties for safety infringements
experienced by the South African resources sector as a whole.
During the year, an addendum to the Services and Supply
Agreement with Samancor Chrome was signed, in terms of
which additional rights were secured to treat all ROM from
Samancor Chrome’s Broken Hill, Spitzkop and Buffelsfontein
East mines for the life of those mines.
Construction is in progress on two new SDO plants, Lannex
and Mooinooi. Commissioning and the start of production
ramp-up at both are scheduled for the first quarter of calendar
2009. The A$18.4million Lannex PGM plant feed will be
23,000tpm from a feed consisting of tailings, current arisings
and ROM from Samancor Chrome’s Broken Hill and Spitzkop
mining operations.
Following a capital construction project planning review during
it was decided to postpone the
the fourth quarter,
construction of the Elandsdrift chrome feed plant originally
intended to treat Elandsdrift chrome tailings, pending the
outcome of an environmental impact assessment of an
opencast mining operation based on the M1 surface outcrops
at the Elandsdrift mine. In this way, the economy of scale of
processing both dump and opencast material can be achieved
by increasing feed to the plant.
The chrome concentrator plant at the Mooinooi mine
purchased from Samancor Chrome in February 2008 is being
expanded and upgraded at a cost of A$13.2million to create a
plant equal in size and of similar modular design to the Lannex
plant. The Mooinooi plant will treat those chrome tailings for
which rights have been secured as well as ROM feed from its
Buffelsfontein East section. Negotiations are under way with
Lonmin to acquire additional feed. PGM plant feed is planned
to be 21,000tpm.
Synergies with the Lannex plant suggest that the Mooinooi
plant can be fast-tracked. Delaying the Elandsdrift plant in
favour of the larger Mooinooi plant is expected to result in a
faster build-up in SDO production than initially planned. Should
an opencast mining operation at Elandsdrift prove to be
unviable, and plans for the Elandsdrift plant abandoned as a
consequence, the Elandsdrift tailings will be transported to the
Mooinooi plant for treatment.
Chromite Tailings Retreatment Plant (CTRP)
CTRP’s production for the year increased by 33% to 9,849oz
(2,466oz attributable to Sylvania).While total plant throughput
rose by 51% to 274,000t and the average head grade was
steady at 4.2g/t, recoveries declined by 4% to 27%.
Revenue more than doubled to A$20.1million (A$5.0million
attributable to Sylvania), reflecting higher production and an
average PGM basket price 31% higher at US$2,224/oz. Cash
operating costs increased by 12% to A$353/oz, and the cash
margin rose to 83% from 77%.
G r o w t h
Our strategy is to build strong cash generative businesses that
can fund our future growth in the PGM sector.We continue to
expand our existing low risk chrome tailings retreatment
business while accelerating our move into shallow mining
projects. During the year we expanded our base case PGM
production forecast by around 30-40% through a combination
of improved metallurgical recoveries and additional agreements,
with Samancor Chrome, to treat ROM for PGMs. Importantly,
we have further strengthened our strategic relationship and
agreements with Samancor Chrome during the year.
On the exploration front, we continued to progress our
Everest North project and expand our portfolio via strategic
acquisitions. In addition, we continue to assess merger and
acquisition opportunities in the Bushveld Igneous Complex
and elsewhere as industry consolidation gathers pace. We
remain encouraged by the range of high-growth opportunities
in the pipeline.
Everest North
Discussions are continuing with AQPSA on options for an
equitable joint venture in respect of the Everest North project.
If agreement cannot be reached in the short term however,
Sylvania will proceed independently with plans to develop an
opencast PGM mine at Everest North, in accordance with its
binding contract with AQPSA. Work preparatory to an
application to the Department of Minerals and Energy for a
mining right has been substantially completed.
Sylvania and Eastern Platinum are continuing meantime with
negotiations on an Everest North joint venture based on
combining the former’s Vygenhoek farm and the latter’s
contiguous Mareesburg farm.
Towards year-end, a further off-take agreement was finalised. In
terms of this, concentrate from the Steelpoort and Lannex
plants will be delivered to the smelter,
together with
concentrate produced from the Tweefontein tailings.
Exploration
During the year, Sylvania acquired an interest in Great
Australian Resources Limited (GAR), a company listed on the
Australian Stock Exchange.
Sylvania Resources Annual Report 2008 Page 8
Sylvania Resources Annual Report 2008 Page 9
R e v i e w b y t h e C h a i r m a n a n d M a n a g i n g D i r e c t o r ( c o n t i n u e d )
GAR has the near-surface Merensky Reef platinum/nickel
exploration project, Mooiplats, on the Eastern Limb of the
Bushveld Igneous Complex.
Also during the year, Sylvania acquired the Northern Limb
near-surface prospects, Harriet’s Wish, Cracouw and Aurora
from Rustenburg Platinum Mines Limited (RPM), a subsidiary
of Anglo Platinum Limited. Sylvania is currently considering its
options regarding these prospects, which contains PGMs with
associated base metals.
C o r p o r a t e m a t t e r s
A significant development during the year was a restructuring
of Sylvania’s executive management structure to achieve
better focus on the company’s core business activities and
delivery on growth objectives. The finance and administration
team has been suitably strengthened with qualified and
experienced people.
We have spent some time in devising attractive remuneration
and incentive schemes to ensure we attract and retain the
qualified and experienced people we need to continue our
growth trajectory into the future. Corporate communications
have been a further focus of attention with the appointment
of Russell and Associates to improve investor relations in
particular, and it is pleasing to report that four institutions were
publishing research on the company by year-end.
B o a r d c h a n g e s
There have been a number of board changes. Early in the year,
Richard Rossiter joined as Non-Executive Chairman, Louis
Carroll as Financial Director and Dr Alistair Ruiters as a Non-
executive Director. After year-end, John Cooke was appointed
as a Non-Executive Director and Chairman of the Audit
Committee. These changes have ensured that the company is
ASX compliant. Ed Nealon, Melissa Sturgess and Dr Evan Kirby
resigned from the board but continue to provide consulting
services to the company.
A c k n o w l e d g e m e n t s
We are grateful to fellow board members past and present, to
executive management and to employees who have
contributed towards Sylvania’s exciting yet very demanding
development and growth achievements during the year. Whilst
plant construction, commissioning and fine-tuning have been a
major focus, much energy and expertise has been given to
identifying and pursuing growth opportunities, honing the
company’s financial and reporting systems, health, safety and
environmental management
corporate
governance structures and customer and investor relations.
procedures,
L o o k i n g a h e a d
In the short term we remain focused on delivering our next
two tailings retreatment plants – Lannex and Mooinooi – by
early 2009. We expect SDO production to stabilise at around
6,500oz for the first two quarters of the new financial year and
then to start rising again as the two new plants are
commissioned and their ramp-up gets under way. We believe
we are firmly on track to attain our stated production goal of
70,000 PGMoz (3E+Au) by 2010. In the medium to longer
term, we are committed to deploying our healthy cashflows
into value-adding projects – both surface and near-surface –
that will ensure the company’s continued growth well into the
future. We are confident that – notwithstanding price volatility
in the PGM market at the time of writing – the fundamental
outlook for our basket of products remains strong, and will
continue to support our self-funding growth objectives.
T M McConnachie
Managing Director
Richard Rossiter
Non-executive Chairman
Sylvania Resources Annual Report 2008 Page 10
R e s o u r c e b a s e
Tailings dump estimates
Tonnes
4E Grade
(g/t)
Dump estimated ore
Processed
Balance
Eastern Bushveld
Tweefontein
Lannex
Steelpoort
Doornbosch
Montrose
Groothoek
Onverwacht
Mooihoek
Western Bushveld
Waterkloof
Buffelsfontein
Elandsdrift Total
Millsell Total
Mooinooi*
Total
909,120
1,222,590
341,789
83,256
165,150
157,990
12,215
7,776
248,065
165,721
316,265
973,100
1,593,000
6,196,037
–
–
115,740
–
–
–
–
–
–
–
–
310,316
–
426,056
909,120
1,222,590
226,049
83,256
165,150
157,990
12,215
7,776
248,065
165,721
316,265
662,784
1,593,000
5,769,981
4.6
3.0
2.6
9.1
4.8
5.1
9.4
5.0
1.1
1.1
2.0
2.0
1.2
* Subject to final negotiations on terms and price with interested parties.
Sylvania Resources Annual Report 2008 Page 11
K e y m a n a g e m e n t p e r s o n n e l
Zoran Marinkovic – Director of Sylvania Metals (Pty) Ltd
BSc (Chem Eng), University of Belgrade
Zoran Marinkovic, who is from Serbia (formerly Yugoslavia), has
worked in a number of industries, including the petrochemical,
shipping and mining sectors in Europe. Among the senior
positions he has held are those of site director and special
adviser for Mostec Limited, where he was based at a shipyard
in the Ukraine; production director at the High Density
PolyEthylene Plant (HDPE) at the Petrochemical Complex of
Pancevo in Yugoslavia; and, most recently, co-owner and
director of ABM International Limited, a Belgrade-based
company trading in chrome and other metals on the European
and Russian markets as well as undertaking research and
consulting in the area of chromium waste and tailings.
Since January 2006, Zoran has been responsible for developing
and controlling chromium and PGM projects in terms of
Sylvania’s contract with Samancor Chrome. He is currently
working on extending the existing contract with new projects
that will expand Sylvania’s supply of PGM base material.
Phil Carter – General Manager: Capital Projects
BSc (Mining Eng), University of the Witwatersrand
Phil Carter, who holds a Mine Manager’s Certificate of
Competency, has been in the mining industry for 30 years. At
different stages of his career he has worked for De Beers,
AngloGold and SA Chrome and he has experience at a senior
management level in diamond, deep-level gold and chrome
mines. His particular field of expertise is in mine and project
management. At SA Chrome, he started the Horizon Chrome
mine as a greenfields project and was responsible for the design,
construction and management of the chrome concentrator
plant, as well as the opencast and underground mines.
The project was completed to full production in 18 months.
well as parts for the steel industry. During his career he has
held the positions of production manager, production director
and operating director. At one stage he managed up to three
factories at the same time. Most recently he was managing
director of his own consulting company, Metsult (Pty) Ltd.
Gerbrand’s achievements include turning around an aluminium
casthouse from 100,000 to 200,000 tonnes a year while
reducing costs to reach world benchmark figures; turning
around a ceramics/plastics company which consistently
delivered a return on investment of 40%; and developing
world-class, high-purity vanadium chemicals.
Johan Meyer – General Manager: Business Development
BEng (Mech) (Hons), University of Stellenbosch; GDE (Indus
Eng), University of Witwatersrand
Johan Meyer started his career in the mining industry as a
project engineer, working first for Rio Tinto and afterwards for
Anglo American and Gold Fields.
He then moved into the manufacturing industry where he held
several senior management positions. He has extensive
knowledge of business start-up as he was a key member of the
team that led an aluminium company through an expansion in
which the business quadrupled in size. During this period, he
acquired a sound understanding of base metals and metals
trading as it relates to the London Metal Exchange.
After joining Sylvania, Johan designed and constructed the first
two plants which are now operating at design capacity.
Currently, he is heading growth projects for the group, focusing
on the re-treatment of chrome and platinum. He is also
responsible for all commercial aspects of the business.
At Sylvania, Phil is heading up the development of the
Everest North mine project and the Capital Construction
expansion programme.
Christo de Vos – Internal Legal Adviser
BComm, University of the Free State; LLB, Unisa
Gerbrand Haasbroek – General Manager: Operations
BEng (Metallurgy) Hons, University of Pretoria
Gerbrand Haasbroek has broad experience across the mining
industry in the fields of coal, iron ore, vanadium, magnesite and
aluminium. He has also been involved in the manufacturing of
products in the clay, ceramic, enamel and plastics sectors as
Christo De Vos is admitted as an attorney, notary and
conveyancer in South Africa. He was a senior partner at
Wessels & Smith, a law firm in Welkom, South Africa for
28 years, specialising in commercial and mining law, trust law,
estate planning and tax law, before being appointed by
Sylvania Resources Limited as legal and commercial
executive adviser.
Sylvania Resources Annual Report 2008 Page 12
Christo has vast experience
in black empowerment
transactions, and acts as a trustee for several black
empowerment trusts and employee incentive schemes.
Dr Peter Cox – Strategic Planner
BSc (Mining Eng) University of the Witwatersrand; MSc, PhD
(Mining Eng) Harrington; Dip (Civil Eng), University of Natal
Dr Peter Cox started his career in the mining industry 30
years ago as a learner surveyor. After studying mining
engineering as a JCI bursar, he worked for that company in
various positions at gold and platinum mines, ending as a
senior section manager. Peter joined a privately owned
mining and exploration company, Severin Southern Sphere
Mining, as consulting engineer and general manager. Since
mid-1991 he has been the managing director of Goldline
Global Consulting (Pty) Ltd, an engineering consulting
company which serves the mining industry worldwide.
Peter holds a Mine Surveyor’s and a Mine Manager’s
Cer tificate of Competency. He has a number of
including being the youngest
achievements to his name,
certificated surveyor in South African mining history and
designing the country’s narrow reef opencast mining method.
Esther Johnson – Financial Manager
BCompt (Hons) Unisa, CA (SA)
in
Esther Johnson started her career in finance in 1986, and has
research and academic,
the
gained experience
conservation, health and fast-moving consumer goods
(FMCG) sectors. She was Director of Finance for Africa at
Conservation International, reporting directly to the head
office in Washington, before she joined The Careways Group
as Chief Financial Officer. Esther was also a director of
companies at the Council for Scientific and Industrial
the
Research (CSIR), where she was
commercialising of intellectual property.
involved
in
Ben Kruger – Management Accountant
NHD (Cost and Management Accounting), Technikon RSA
Ben Kruger has spent 17 years in the field of cost and
financial accounting, working in the mining, manufacturing,
printing and services industries. His responsibilities have
included general accounting, finance, project accounting and
costing.While employed by De Beers and Gold Fields, he was
exposed to opencast, shallow underground and deep-level
mining. This experience included his involvement in a
feasibility study for Gold Fields’ South Deep mine. He joined
Sylvania in October 2007.
Sylvania Resources Annual Report 2008 Page 13
D i r e c t o r s ’ r e p o r t
Your directors present their report on the consolidated entity
consisting of Sylvania Resources Limited and the entities it
controlled at the end of or during the financial year ended
In order to comply with the provisions of the
30 June 2008.
Corporations Act 2001, the directors report as follows:
Directors
T M McConnachie was a director of the Company during the
whole of the financial year and up to the date of this report.
The following persons were appointed as directors on
15 August 2007 and all continue in office at the date of
this report:
R D Rossiter
Dr A P Ruiters
L M Carroll
The following persons were directors from the beginning of the
financial year until their resignation on 15 August 2007:
E F G Nealon
M J Sturgess
K S Huntly
Dr E Kirby was a director from the beginning of the financial
year until his resignation on 18 August 2008.
J Cooke was appointed as a director on 18 August 2008.
I n f o r m a t i o n o n d i r e c t o r s
T M McConnachie – Managing Director
Age 53
Experience and expertise
Mr McConnachie has over 25 years of experience in mining,
benefication of ferroalloys and precious metals. He was the
founder of Merafe Resources Limited (formerly South African
Chrome & Alloys Limited), a successful chrome mining
company, black empowered and listed on the Johannesburg
Stock Exchange with assets worth in excess of a billion rand
($350m). He is well known for identifying mining opportunities
and has started many new green-field operations in gold,
manganese, aluminium, graphite and tantalite. He has been
CEO of a number of mining, mining services and smelting
companies in South Africa.
Other current directorships
Director of Dwyka Resources Limited (since 2007).
Former directorships in the last three years
None.
Special responsibilities
Managing Director
Sylvania Resources Annual Report 2008 Page 14
R Rossiter – Non-Executive Chairman
BSc (Hons) MSc – Age 51
Experience and expertise
Mr Rossiter was appointed in August 2007 and acts as Non-
Executive Chairman. He leads the Board in implementing its
strategy of becoming a significant PGMs producer. He began
his career as a geologist with General Mining Union
Corporation in South Africa. He subsequently qualified in mine
management and held various production management and
business development roles. He later joined the financial sector
as a mining analyst and then moved to Australia where he later
was responsible for corporate advisory, mergers and
acquisitions and divestments.
Other current directorships
Morning Star Holdings (Australia) Limited
Former directorships in the last three years
None.
Special responsibilities
Chairman of the Board.
L M Carroll – Financial Director
B Com, MAP, H. Dip. Corporate Law, H. Dip. Property
Management, Dip Business Management – Age 62
Experience and expertise
Mr Carroll was appointed in August 2007 and acts as Financial
Director having worked for the Company previously in its
South African operations, principally in developing and
structuring financial reporting and systems. He has over
40 years experience in the Resources industry and has served
as executive and non-executive director on a number of
private and publicly listed companies. He also served as COO
in an oil and gas listed company.
Other current directorships
None
Special responsibilities
Financial Director.
Dr A P Ruiters – Non-Executive Director
BA (Hons), PhD (D.Phil) – Age 43
Experience and expertise
Dr Ruiters was appointed in August 2007 and joined the
Board as non-executive director and provides 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 first Competition Commissioner
and Director General of the DTI.
Other current directorships
None.
Former directorships in the last three years
None
Special responsibilities
Non-Executive Director with special portfolio:Transformation.
J Cooke – Non-Executive Director
FCA, ACIS – Age 64
Experience and expertise
Mr John Cooke was appointed in August 2008 and has 40
years experience in accounting, auditing,
taxation and
administration of public companies involved in natural
resources. He continues as a Chartered Accountant in
practice. He is a fellow of the Institute of Chartered
Accountants in Australia and an associate of the Institute of
Chartered Secretaries and Administrators.
Other current directorships
None.
Former directorships in the last three years
None
Special responsibilities
Chairman of the audit committee.
C o m p a n y S e c r e t a r y
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 firms he has
acted as CFO, Company Secretary and Non-Executive
Director with a number of publicly listed companies.
I n t e r e s t s i n s h a r e s a n d o p t i o n s
P r i n c i p a l a c t i v i t i e s
The principal activity of the Group during the financial year was
investment in mineral exploration and mineral treatment
projects. As new mineral treatment plants become operational,
focus will be concentrated on operations.
D i v i d e n d s
No dividend has been paid or declared since the start of the
financial year and the directors do not recommend the
payment of a dividend in respect of the financial year.
R e v i e w o f o p e r a t i o n s
Information on the operations of the Group is set out in the
review of operations and activities on pages 6 to 11 of this
annual report.
O p e r a t i n g r e s u l t f o r t h e y e a r
The consolidated profit of the Group for the year after income
interest was A$9,862,186
tax expense and minority
(2007: consolidated loss A$11,116,675).
Operational highlights during the year included:
• Operations at Millsell and Steelpoort plants started during
the year;
• Production from these plants was 14,224 PGM ounces;
• CTRP contribution was 2,466 PGM ounces;
• Construction of the Lannex and Mooinooi plants
commenced.
Financial results:
• The average 3E+Au basket price was US$2,626/oz;
• Revenue from ordinary activities for the year rose from
A$0.4million in 2007 to A$32.8million;
• The cash balance at 30 June 2008 was A$43.6million;
• Consolidated earnings per share for the year ended 30 June
2008 – 5.64 cents
2008
T M McConnachie
R D Rossiter
L M Carroll
A P Ruiters
2007
T M McConnachie
R D Rossiter
L M Carroll
Dr E Kirby
Common
shares
–
500,000
–
–
–
32,000
–
764,300
Options
exercisable
at A$0.50
500,000
–
–
–
500,000
–
–
–
Options
exercisable
at A$0.75
–
–
200,000
–
–
–
200,000
–
Options
exercisable
at A$2.89
–
–
–
200,000
Sylvania Resources Annual Report 2008 Page 15
D i r e c t o r s ’ r e p o r t ( c o n t i n u e d )
S i g n i f i c a n t c h a n g e s i n t h e s t a t e
o f a f f a i r s
L i k e l y d e v e l o p m e n t s a n d
e x p e c t e d r e s u l t s
There have been no other significant changes in the state of
affairs of the Group to the date of this report other than the
matters explained in the review of the Chairman and the
Managing Director.
M a t t e r s s u b s e q u e n t t o t h e e n d
o f t h e f i n a n c i a l y e a r
On 22 August 2008, 950,000 ordinary shares were issued
in terms of the Company’s employee share plan at an issue
price of $1.63 per share.
In addition 3,383,000 options
in terms of the Company’s employee option plan were issued
to employees and consultants of the Company that are
exercisable at $1.63 each on or before 30 June 2011.
There has not been any other matter or circumstance that has
arisen after balance date that has significantly affected, or may
significantly affect, the operations of the Group, the results of
those operations or the state of affairs of the Group in future
financial periods.
Additional comments on expected results of certain
operations of the Group are included in the review of
operations and activities.
E n v i r o n m e n t a l l e g i s l a t i o n
The Group is subject to significant 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 by the Group.
M e e t i n g s o f d i r e c t o r s
During the financial year there were 13 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 number of meetings of the Company’s Board of Directors
attended by each director were:
Board meetings
Audit Committee meetings
Number of
meetings
eligible to
attend
Number of
meetings
attended
Number of
meetings
eligible to
attend
Number of
meetings
attended
T M McConnachie
R D Rossiter (appointed 15 August 2007)
L M Carroll (appointed 15 August 2007)
Dr A P Ruiters (appointed 15 August 2007)
J Cooke (appointed 18 August 2008)
Dr E Kirby (resigned 18 August 2008)
E F G Nealon (resigned 15 August 2007)
M J Sturgess (resigned 15 August 2007)
K S Huntly (resigned 15 August 2007)
13
11
11
11
–
13
2
2
2
13
11
11
9
–
10
2
2
1
–
2
2
–
–
–
–
–
–
–
2
2
–
–
–
–
–
–
R e m u n e r a t i o n R e p o r t
( A u d i t e d )
A - Principles used to determine the
nature and amount of remuneration
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.
The objective of the Company’s executive reward framework
is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aims to
align executive reward with the creation of value for
shareholders. The key criteria for good reward governance
practices adopted by the Board are :
• Competitiveness and reasonableness;
• Acceptability to shareholders;
• Performance incentives;
• Transparency;
• Capital management.
Sylvania Resources Annual Report 2008 Page 16
The framework provides a mix of fixed fee, consultancy
agreement based remuneration and share based incentives.
The broad remuneration policy for determining the nature and
amount of emoluments of Board members and senior
executives of the Company is governed by a Board
Remuneration Committee.
The Remuneration committee acts in accordance with a
written Remuneration Committee Charter. The Remuneration
Committee’s aim is to ensure the remuneration packages
properly reflect directors’ and executives’ duties and
responsibilities. The Committee assesses the appropriateness
of the nature and amount of emoluments of such officers on a
periodic basis by reference to relevant employment market
conditions with the overall objective of ensuring maximum
stakeholder benefit from the retention and motivation of a high
quality Board and executive team.
The current remuneration policy adopted is that no element
of any director/executive package be directly related to the
Company’s
financial performance. The Remuneration
Committee is currently investigating this policy and will make
recommendations to the Board for the 2009 financial year.
Indeed there are no elements of any director or executive
remuneration that are dependent upon the satisfaction of any
specific condition. The overall remuneration policy framework
however is structured in an endeavour to advance/create
shareholder wealth.
This policy has not changed over the past five financial years.
N o n - e x e c u t i v e d i r e c t o r s
Fees and payments to non-executive directors reflect the
demands which are made on, and the responsibilities of, the
directors. Non-executive directors’ fees and payments are
reviewed annually by the Board and are intended to be in line
with the market. Directors are not present at any discussions
relating to determination of their own remuneration.
D i r e c t o r s ’
f e e s
Some of the directors perform at least some executive or
consultancy services. However, each of the directors receives
a separate fixed fee for their services as directors, as the Board
considers it important to distinguish between the executive
and non-executive roles held by those individuals.
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.
Sylvania Resources Annual Report 2008 Page 17
D i r e c t o r s ’ r e p o r t ( c o n t i n u e d )
R e t i r e m e n t a l l o w a n c e s f o r
d i r e c t o r s
Apart from superannuation payments paid on base director
fees, there are no retirement allowances for directors.
E x e c u t i v e p a y
The executive pay and reward framework has the following
components:
• Base pay and benefits such as superannuation;
• Short-term performance incentives;
• Long-term incentives through participation in the Employee
Share and Option Plan.
B a s e p a y
E m p l o y e e s h a r e a n d o p t i o n p l a n
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 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 plans, which represented approximately 4.1% of the
ordinary shares in issue at the time of approval.
All executives are either full time employees or consultants
that currently receive a fixed monthly retainer as agreed with
the Company. The provision of consultancy services has been
formalised in individual Consultancy Agreements.
B - Principles used to
determine the nature and
amount of remuneration
B e n e f i t s
Apart from superannuation paid on directors’
fees and
executive salaries there are no additional benefits to executives.
S h o r t t e r m i n c e n t i v e s
There are no current short term incentive remuneration
arrangements, however the remuneration committee is
currently reviewing this as an incentive for employees and have
proposals to be submitted to the Board of Directors.
The key management personnel of the Group are the
directors of the Company and those executives that report
directly to the Chief Executive Officer.
The executives are :
• M J Langoulant – Company Secretary;
• J Meyer – General Manager: Business Development;
• Z Marinkovic – Director, Sylvania Metals (Pty) Limited;
• P R Carter – General Manager: Capital Projects;
• G Haasbroek – General Manager: Operations;
• Dr P J Cox – Strategic Planner;
• C De Vos – Internal Legal Advisor.
Sylvania Resources Annual Report 2008 Page 18
Table 1: Key management personnel 2008
2008
Name
Directors
T M McConnachie
R D Rossiter
L M Carroll
Dr A P Ruiters
Dr E Kirby
E F G Nealon
M J Sturgess
K S Huntly
M J Langoulant
J Meyer
Z Marinkovic
C De Vos
P R Carter
G Haasbroek
P J Cox
Total
Cash salary/
consulting fees
$
229,028
224,003
154,602
–
172,920
24,484
11,203
69,077
54,000
173,565
183,422
154,600
182,428
149,962
180,083
Key management personnel
Primary benefits
Post-
employment
benefits
Share-based
payment
Options as %
of total
remuneration
Total
Bonus
$
38,341
–
28,756
–
–
–
–
–
–
28,756
22,695
28,987
28,755
24,736
28,756
Directors’
fees
$
Super-
annuation
$
35,000
30,733
30,733
30,733
35,000
4,411
4,411
4,411
–
–
–
–
–
–
–
–
2,766
–
–
3,150
397
397
–
–
–
–
–
–
–
–
Equity
shares /
options
$
56,872
117,114
26,364
46,846
16,359
16,359
16,359
28,436
5,453
26,364
–
26,364
26,364
49,002
46,845
$
359,241
374,616
240,455
77,579
227,429
45,651
32,370
101,924
59,453
228,685
206,117
209,951
237,547
223,700
255,684
15.8%
31.3%
11.0%
60.4%
7.2%
35.8%
50.5%
27.9%
9.2%
11.5%
–
12.6%
11.1%
21.9%
18.3%
17.5%
1,963,377
229,782
175,432
6,710
505,101
2,880,402
Sylvania Resources Annual Report 2008 Page 19
D i r e c t o r s ’ r e p o r t ( c o n t i n u e d )
Table 2: Key management personnel 2007
Primary benefits
Cash salary
and
consulting fees
$
Post-
employment
benefits
Share-based
payment
Options as %
of total
remuneration
Total
Super-
annuation
$
Equity
shares /
options
$
$
2007
Name
Directors
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
Total
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
Bonus
$
35,000
–
35,000
–
–
35,000
35,000
35,000
34,137
–
–
–
–
–
–
–
–
–
3,150
–
–
3,150
3,150
–
3,072
–
3,158
14,291
–
–
–
–
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
37.7%
–
20.3%
18.0%
–
20.4%
30.6%
44.1%
27.8%
28.4%
18.2%
4.9%
16.8%
30.6%
23.5%
17.0%
25.4%
2,022,192
209,137
29,971
770,063
3,031,363
L M Carroll was appointed as a director of Sylvania South Africa (Pty) Limited on 10 October 2007. Before this appointment he was a
Financial Officer 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.
Sylvania Resources Annual Report 2008 Page 20
Option holding of key management personnel (Consolidated)
2008
Name
Directors
Balance at
start of
year
Granted
during year
Exercised
during
year
Other
changes
during year
Balance at
end of
the year
Vested and
exercisable at
the end of
the year
T M McConnachie
500,000
–
Dr A P Ruiters
L M Carroll
K S Huntly
Key management personnel
J Meyer
C De Vos
P R Carter
–
200,000
200,000
250,000
200,000
200,000
200,000
–
–
–
–
–
G Haasbroek
–
200,000
–
–
–
(250,000)
(100,000)
(100,000)
–
–
–
–
–
–
–
–
–
–
500,000
200,000
200,000
–
100,000
100,000
200,000
200,000
500,000
–
100,000
–
–
–
100,000
–
2007
Name
Directors
Balance at
start of
year
Granted
during year
Exercised
during
year
Other
changes
during year
Balance at
end of
the year
Vested and
exercisable at
the end of
the year
T M McConnachie
500,000
–
L M Carroll
K S Huntly
–
200,000
250,000
–
Key management personnel
J Meyer
Z Marinkovic
C De Vos
P R Carter
–
–
–
–
200,000
200,000
200,000
200,000
–
–
–
–
(200,000)
–
–
–
–
–
–
–
–
–
500,000
200,000
250,000
200,000
–
200,000
200,000
250,000
–
125,000
–
–
–
–
Sylvania Resources Annual Report 2008 Page 21
D i r e c t o r s ’ r e p o r t ( c o n t i n u e d )
S h a r e h o l d i n g o f k e y m a n a g e m e n t p e r s o n n e l ( C o n s o l i d a t e d )
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 :
2008
Name
Directors
R D Rossiter
Dr E Kirby
E F G Nealon
G M Button
M J Sturgess
Balance at
start of
year
32,000
764,300
750,000
750,000
752,600
Key management personnel
M J Langoulant
350,000
Issued
share and
option plan
500,000
–
–
–
–
–
Other
changes
during year
Balance at
end of
the year
–
(375,000)
(750,000)
(750,000)
(750,000)
532,000
389,300
-
-
2,600
(100,000)
250,000
2007
Name
Directors
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
start of
year
Issued
share and
option plan
Other
changes
during year
Balance at
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 Annual Report 2008 Page 22
C - C o n s u l t a n c y a g r e e m e n t s
Formal Consultancy Agreements are made with the Company
and all of its directors.
The details of the Managing Director’s Consultancy Agreement
are summarised below:
E n g a g e m e n t
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.
Te r m
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 the Agreement
by giving written notice to the Consultant;
notice in writing for a period of 6 months or the Company
paying 6 months consultancy fee in lieu of notice.
R e m u n e r a t i o n
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
securities in
Consultant or the nominated executive,
accordance with the Company’s share or option incentive plan.
D - S h a r e - b a s e d c o m p e n s a t i o n
E m p l o y e e O p t i o n P l a n
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.
• 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.
Options are granted under the plan for no consideration.
Options are granted for a three year period and 50% of each
tranche vests and are exercisable on each anniversary of the
grant date.
• 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
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
20 April 2006
30 June 2009
17 October 2006
30 June 2010
17 March 2008
30 June 2011
17 March 2008
30 June 2012
$0.50
$0.75
$2.89
$2.67
Options granted under the plan carry no dividend or voting rights.
$0.56
$0.33
$1.08
$1.14
Date exercisable
50% after 21 Apr 2007
50% after 21 Apr 2008
50% after 18 Oct 2007
50% after 18 Oct 2008
50% after 18 Mar 2009
50% after 18 Mar 2010
50% after 18 Mar 2009
50% after 18 Mar 2010
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 five trading days immediately before the
options are granted.
Sylvania Resources Annual Report 2008 Page 23
D i r e c t o r s ’ r e p o r t ( c o n t i n u e d )
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 20 to the
financial statements.
T M McConnachie
R D Rossiter
L M Carroll
J Meyer
Z Marinkovic
P R Carter
K S Huntly
A P Ruiters
Number of shares granted
during the year
Number of shares vested
during the year
2008
–
–
–
–
–
–
–
200,000
2007
–
–
200,000
200,000
200,000
200,000
–
–
2008
–
–
100,000
100,000
–
100,000
–
–
2007
250,000
–
–
–
200,000
–
125,000
–
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.
(i) 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.
(ii) share price at grant date
(iii) expected price volatility of the Company’s shares
(iv) expected dividend yield
(v) risk-free interest rate
Options
granted at
$2.89
per share
Options
granted at
$2.67
per share
$2.80
63.33%
Nil
6.39%
$2.80
63.33%
Nil
6.39%
The expected price volatility is based on the historic
The issue price for the shares issued under the plan are not
volatility (based on the remaining life of the options),
less than the weighted average share price for the last five
adjusted for any expected changes to future volatility due to
trading days immediately preceding the offer to the participant.
publicly available information.
E m p l o y e e S h a r e P l a n
An Employee Incentive Share Plan was approved at the 2007
Annual General Meeting. The Company’s existing share plan,
which was approved by shareholders on 30 November 2005,
has expired.
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;
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,
• 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
responsibilities, potential contribution and any other relevant
price of the shares on the date of repayment of the loan;
matters in determining eligibility of potential participants.
• The loan must be repaid in full prior to expiry of the loan;
Sylvania Resources Annual Report 2008 Page 24
• 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.
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 financial statements as
equity benefits reserve and as employee benefit costs over the
period the shares vest.
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
21 December 2005
20 December 2006
17 March 2008
17 March 2008
$0.50
$0.90
$2.89
$2.67
$0.17
$0.23
$1.08
$1.14
Vesting period
50% after 21 Dec 2006
50% after 21 Dec 2007
50% after 20 Dec 2007
50% after 20 Dec 2008
50% after 18 Mar 2009
50% after 18 Mar 2010
50% after 18 Mar 2009
50% after 18 Mar 2010
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 27 to the financial statements.
E F G Nealon
G M Button
Dr E Kirby
M J Sturgess
M J Langoulant
R A Jarvis
M L Burchnall
R D Rossiter
Number of shares granted
during the year
Number of shares vested
during the year
2008
–
–
–
–
–
–
–
500,000
2007
–
–
–
–
–
200,000
100,000
–
2008
750,000
–
–
–
250,000
100,000
50,000
–
2007
375,000
375,000
375,000
375,000
125,000
–
–
–
S h a r e s u n d e r o p t i o n
At the date of this report, the only unissued shares of the Company under option were those issued under the share option plan.
Outstanding share options at the date of this report are as follows :
Grant date
20 April 2006
17 October 2006
17 March 2008
17 March 2008
Date of expiry
Exercise price
Number of options
30 June 2009
30 June 2010
30 June 2011
30 June 2011
$0.50
$0.75
$2.89
$2.67
500,000
600,000
400,000
600,000
No option holder has any right under the options to participate in any other share issue of the Company or any controlled entity.
S h a r e s i s s u e d o n t h e e x e r c i s e o f o p t i o n s
The following ordinary shares of the Company were issued during or since the end of the year ended 30 June 2008 on the exercise of
options granted under the share option plan. No amounts are unpaid on any of the shares issued upon the exercise of options.
Sylvania Resources Annual Report 2008 Page 25
D i r e c t o r s ’ r e p o r t ( c o n t i n u e d )
Issuing entity
Sylvania Resources Limited
Sylvania Resources Limited
Number of
shares issued
250,000
250,000
Class
Ordinary
Ordinary
Amount paid
for shares
$0.50
$0.75
I n d e m n i f i c a t i o n a n d i n s u r a n c e o f d i r e c t o r s a n d o f f i c e r s
During the year the Company paid premiums in respect of a contract insuring all directors and officers of the Company against liabilities
incurred as directors or officers to the extent permitted by the Corporations Act 2001. Due to confidentiality clauses in the contract the
amount of the premium has not been disclosed. The Company has no insurance policy in place that indemnifies the Company’s auditors.
P r o c e e d i n g s o n b e h a l f o f t h e c o m p a n y
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.
A u d i t o r i n d e p e n d e n c e a n d n o n - a u d i t s e r v i c e s
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 Declarations is set out on page 28 and forms
part of this directors’ report for the year ended 30 June 2008.
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
with the Company and/or the consolidated entity is 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:
Sylvania Resources Annual Report 2008 Page 26
* The Auditors of the parent entity is HLB Mann Judd
Assurance services
HLB Mann Judd Australian firm:
Audit and review of financial statements
Non-HLB Mann Judd firm (LA Gambale)
Total remuneration for audit services
Taxation and advisory services
HLB Mann Judd Australian firm:
Non-HLB Mann Judd firm (LA Gambale)
Total remuneration for taxation services
Other
HLB Mann Judd Australian firm:
Non-HLB Mann Judd firm (LA Gambale)
Total remuneration for taxation and advisory services
Total auditors’ remuneration
Consolidated
2008
$
40,000
59,501
99,501
–
739
739
–
3,726
3,726
103,966
The audit committee has considered the position and is satisfied that the provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of the non-audit service provided
means that auditor independence was not compromised.
Signed in accordance with a resolution of the directors.
TM McConnachie
Managing Director
Johannesburg, South Africa
30 September 2008
Sylvania Resources Annual Report 2008 Page 27
Sylvania Resources Annual Report 2008 Page 28
Sylvania Resources Annual Report 2008 Page 29
C o r p o r a t e g o v e r n a n c e s t a t e m e n t
In accordance with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice
Recommendations ("ASX Principles and Recommendations")1, Sylvania Resources Limited ("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 statement. Commensurate with the spirit of the ASX Principles and Recommendations, 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 ASX Principles and Recommendations,
the Board has offered full disclosure of the nature of and reason for the adoption of its own practice.
The Company has undertaken a review of its governance documentation as a consequence of the revision to the ASX Principles and
Recommendations.The Company will be reporting against the revised ASX Principles and Recommendations in its next annual report.
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 committees), the Company's code of conduct and other policies and procedures relating
to the Board and its responsibilities.
E x p l a n a t i o n s f o r d e p a r t u r e s f r o m b e s t p r a c t i c e r e c o m m e n d a t i o n s
During the Company's 2008 financial year ("Reporting Period") the Company has followed with each of the ASX Principles and
Recommendations, other than in relation to the matters specified below.
Principles 1 to 9
Recommendations:
Notification of departure:
Explanation for departure:
Principle 2
Recommendation:
Notification of departure:
Explanation for departure:
Principle 2
Recommendation:
Notification of departure:
Explanation for departure:
1.1, 2.5, 3.3, 4.5, 5.2, 6.2, 7.3, 8.1 and 9.5
Specific material was not regularly updated on the Company's website, in accordance with
the ASX Principles and Recommendations.
Although the Company had in place corporate governance documentation,
the
recommended website disclosure had not been updated to reflect certain changes.
However, shortly after the completion of the Reporting Period and a review of its
governance structure the Company now has full website disclosure in accordance with the
ASX Principles and Recommendations.
2.1: A majority of the board should be independent directors.
The board does not have a majority of independent directors. Currently the board
comprises five directors of which two are considered independent.
During the Reporting Period, there were substantial changes to the Board. Three new
appointments were made and consideration was given to, among other things, the
Company’s development as a South African platinum producer.The operational focus of the
Company being increasingly South African based, the Company appointed appropriate Board
members to enhance the areas of strategy, development and finance.The Board is aware of
the importance of independence and shortly after the completion of the Reporting Period
made a further appointment of an independent director.The Board therefore considers that
its present composition is suitable given the Company’s circumstances.
2.2: The chairperson should be an independent director.
For a portion of the reporting period, the chair was not an independent director.
From the beginning of the Reporting Period until 15 August 2007, the Board did not have
an independent Chair. However, as a result of the compositional changes to the Board, as
discussed above, Mr Rossiter, an independent director, was appointed Chair and therefore,
for the majority of the Reporting Period the Company followed the recommendation.
1 A copy of the ASX Principles and Recommendations is set out on the Company’s website under the Section entitled "Corporate Governance".
Sylvania Resources Annual Report 2008 Page 30
Principles 2
Recommendations:
Notification of departure:
Explanation for departure:
Principle 4
Recommendation:
Notification of departure:
Principles 9
Recommendations:
Notification of departure:
Explanation for departure:
2.4: The board should establish a Nomination Committee
The full board performs the role of a Nomination Committee.
The full Board considers those matters that would usually be the responsibility of a
nomination committee. The Board considers that no efficiencies or other benefits would be
gained by establishing a separate committee. The Board has adopted a Nomination
Committee Charter to assist it with its function as a nomination committee.
4.3: Structure the Audit Committee so that it consists only of non-executive directors, a
majority of independent directors and an independent chairperson, who is not chairperson
to the board.
The composition of the Board was not suitable for the formation of an Audit Committee in
accordance with the recommendation. However, shortly after the Reporting Period, Mr
Cooke was appointed to the Board and as Chairman of the Audit Committee. Mr Cooke's
qualifications and experience enabled him to bring expertise and independence to the Audit
Committee and as a consequence the Company now follows the recommendation.
9.2: The board should establish a Remuneration Committee
The full board performs the role of a Remuneration Committee.
The full Board considers those matters that would usually be the responsibility of a
remuneration committee. The Board considers that no efficiencies or other benefits would
be gained by establishing a separate committee. The Board has adopted a Remuneration
Committee Charter to assist it with its function as a remuneration committee.
N o m i n a t i o n C o m m i t t e e
The full Board, in its capacity as the Nomination Committee, held one meeting during the Reporting Period. All Board members attended
the meeting.
A u d i t C o m m i t t e e
During the Reporting Period, the Audit Committee composition changed.The following table identifies those directors who were or are
members of the Audit Committee and shows their attendance at committee meetings:
Name
1 July 2007 – 15 August 2007
M J Sturgess (independent Chair)
K S Huntly (independent)
Dr E Kirby
15 August 2007 – 29 July 2008
R Rossiter (independent Chair)
L M Carroll
No. of meetings attended
No. of meetings held
–
–
–
2
2
–
–
–
2
2
The changes to the Board composition following the end of the Reporting Period allowed the Company to form an Audit Committee
in accordance with the ASX Principles and Recommendations recommended structure. Currently the Audit Committee comprises
J Cooke (independent Chair), Richard Rossiter (independent) and Alistair Ruiters.
Details of each of the director's qualifications are set out in the Director's Report. Of the current Audit Committee members, all possess
industry knowledge and consider themselves to be financially literate. Mr Cooke is a Chartered Accountant and therefore brings financial
expertise to the Audit Committee.
Sylvania Resources Annual Report 2008 Page 31
C o r p o r a t e g o v e r n a n c e s t a t e m e n t ( c o n t i n u e d )
R e m u n e r a t i o n C o m m i t t e e
Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms of
part of the Directors’ Report.
The full Board, in its capacity as the Remuneration Committee, held one meeting during the Reporting Period. All Board members
attended the meeting.
O t h e r
Skills, experience, expertise and term of office of each director
A profile of each director containing the skills, experience, expertise and term of office of each director is set out in the Directors' Report.
Identification of independent directors
In considering the independence of directors, the Board refers to the criteria for independence as set out in Box 2.1 of the ASX Principles
and Recommendations ("Independence Criteria"). 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 Board Charter,
which is disclosed in full on the Company’s website.
Applying the Independence Criteria, the independent directors of the Company are Richard Rossiter and John Cooke.
In the interest of disclosure, through his consultancy company, Richard Rossiter provides expertise and know-how in relation to the
Company's business, which services are provided at normal commercial rates. The Board does not consider however, the contractual
relationship Mr Rossiter has with the Company to be material. Further, Mr Rossiter does not consider the contract to be material to
himself personally.
Statement concerning availability of independent professional advice
If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her office as
a director, then, provided the director first obtains approval for incurring such expense from the chairperson, the Company will pay the
reasonable expenses associated with obtaining such advice.
Confirmation whether performance evaluation of the board and its members has taken place and how conducted
During the Reporting Period an informal evaluation of the overall structure and composition of the Board was carried out.The evaluation
process comprised round table discussions. Given the Company's future objectives, compositional changes were considered necessary,
particularly considering the Company’s development as a South African platinum producer. Further, through informal internal procedures,
the senior executives were evaluated by the Managing Director.
Existence and terms of any schemes for retirement benefits for non-executive directors
There are no termination or retirement benefits for non-executive directors.
Sylvania Resources Annual Report 2008 Page 32
D i r e c t o r s ’ d e c l a r a t i o n
1. In the opinion of the directors :
(a) the financial 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 financial position as at 30 June 2008 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 financial year ended 30 June 2008.
This declaration is signed in accordance with a resolution of the Board of Directors.
T M McConnachie
Managing Director
Johannesburg, South Africa
30 September 2008
Sylvania Resources Annual Report 2008 Page 33
Sylvania Resources Annual Report 2008 Page 34
Sylvania Resources Annual Report 2008 Page 35
I n c o m e s t a t e m e n t s
For the year ended 30 June 2008
Revenue from continuing operations
Other income
Share of net profit of jointly controlled entity
accounted for using the equity method
Raw materials and consumables used
Depreciation
Finance costs
Foreign exchange loss
Project generation costs
Impairment of available-for-sale financial assets
Impairment of loans to subsidiary
Share based payment expense
Other expenses
Consolidated
Parent entity
Notes
2008
$
2007
$
2008
$
2007
$
2(a)
2(b)
24
2(c)
2(c)
2(c)
2(c)
2(c)
2(c)
2(c)
32,789,608
2,260,834
389,402
2,156,481
–
4,274,929
–
2,291,330
5,021,508
(7,632,258)
(1,505,716)
(12,847)
(4,594,987)
–
(2,567,345)
–
(673,815)
(6,051,324)
1,649,511
(608,769)
(405,645)
(6,082)
(2,657,846)
(5,546,000)
–
–
(795,177)
(5,644,442)
–
–
(8,848)
–
(4,594,987)
–
(2,567,345)
2,916,291
(673,815)
(2,730,850)
–
–
(12,155)
–
(2,654,795)
(5,546,000)
–
(2,451,453)
(795,177)
(2,998,057)
Profit / (loss) before income tax expense
17,033,658
(11,468,567)
(3,384,625)
(12,166,307)
Income tax (expense) / benefit
3
(5,346,659)
351,892
–
–
Profit / (loss) after income tax expense from continuing
operations
11,686,999
(11,116,675)
(3,384,625)
(12,166,307)
Net profit / (loss) for the year
11,686,999
(11,116,675)
(3,384,625)
(12,166,307)
Profit attributable to minority interest
(1,824,813)
–
–
–
Net profit attributable to members of the parent
9,862,186
(11,116,675)
(3,384,625)
(12,166,307)
Earnings / (loss) per share for profit / (loss) from continuing
operations attributable to the ordinary equity holders
of the Company:
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
4
4
2008
Cents
2007
Cents
5.64
5.57
(7.59)
(7.59)
The above income statements should be read in conjunction with the accompanying notes.
Sylvania Resources Annual Report 2008 Page 36
B a l a n c e s h e e t s
For the year ended 30 June 2008
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Available-for-sale financial assets
Investments accounted for using the equity method
Other financial assets
Deferred exploration expenditure
Property, plant & equipment
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liability
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Consolidated
Parent entity
Notes
2008
$
2007
$
2008
$
2007
$
6
7
8
9
24
11
12
13
3
14
15
3
15
3
16
43,623,564
15,886,145
227,440
56,225,793
838,747
–
32,938,264
743,690
–
51,760,438
92,188
–
59,737,149
57,064,540
33,681,954
51,852,626
2,252,098
4,404,466
–
1,728,310
29,578,317
–
1,516,290
4,692,320
–
1,322,596
15,864,198
470,440
2,252,098
–
50,329,422
–
22,009
–
1,516,290
–
25,966,119
–
24,203
–
37,963,191
23,865,844
52,603,529
27,506,612
97,700,340
80,930,384
86,285,483
79,359,238
2,654,108
78,074
1,024,695
3,295,481
21,988
–
3,756,877
3,317,469
170,544
–
–
170,544
731,299
–
–
731,299
251,298
3,543,998
355,158
4,150,454
91,055
–
–
91,055
–
–
–
–
–
–
–
–
7,907,331
3,408,524
170,544
731,299
89,793,009
77,521,860
86,114,939
78,627,939
17
18
19
117,274,097
(12,458,835)
(16,847,066)
105,950,221
(1,719,109)
(26,709,252)
117,274,097
989,100
(32,148,258)
105,950,221
1,441,351
(28,763,633)
Capital and reserves attributable to equity holders of
Sylvania Resources Limited
Minority interest
87,968,196
1,824,813
77,521,860
–
86,114,939
–
78,627,939
–
Total equity
89,793,009
77,521,860
86,114,939
78,627,939
The above balance sheets should be read in conjunction with the accompanying notes.
Sylvania Resources Annual Report 2008 Page 37
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
equity
$
12,837,339
150,000
25,000
–
80,849,412
(4,389,720)
(11,116,675)
795,177
507,240
(2,135,913)
77,521,860
77,521,860
8,760,000
275,000
1,614,500
–
(57,632)
11,686,999
673,815
(394,058)
(10,287,475)
S t a t e m e n t s o f c h a n g e s i n e q u i t y
For the year ended 30 June 2008
Consolidated
Issued
capital
Accumulated
losses
Reserves
Minority equity
interests
$
$
$
Balance as at 1 July 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
29,242,204
(15,592,577)
(812,288)
150,000
25,000
73,325
80,849,412
(4,389,720)
–
–
–
–
–
–
–
–
–
–
–
(11,116,675)
–
–
–
(73,325)
–
–
–
795,177
507,240
(2,135,913)
Balance at 30 June 2007
105,950,221
(26,709,252)
(1,719,109)
105,950,221
(26,709,252)
(1,719,109)
Balance as at 1 July 2007
Shares issued during the year:
Shares issued
Options exercised
Employee share plan loan repaid – proceeds
Share based payment reserve transferred to
contributed equity
Less: Capital raising costs
Profit for the period
Share based compensation reserve
Net gains revaluation reserve
Currency translation differences
8,760,000
275,000
1,614,500
732,008
(57,632)
–
–
–
–
–
–
–
–
–
–
–
–
9,862,186
–
–
–
(732,008)
–
–
673,815
(394,058)
(10,287,475)
–
–
1,824,813
–
–
–
Balance at 30 June 2008
117,274,097
(16,847,066)
(12,458,835)
1,824,813
89,793,009
Sylvania Resources Annual Report 2008 Page 38
Parent entity
Issued
capital
Accumulated
losses
Reserves
Minority equity
interests
Balance as at 1 July 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
$
$
$
29,242,204
(16,597,326)
212,259
150,000
25,000
73,325
80,849,412
(4,389,720)
–
–
–
–
–
–
–
–
(12,166,307)
–
–
–
–
(73,325)
–
–
–
795,177
507,240
Balance at 30 June 2007
105,950,221
(28,763,633)
1,441,351
Balance at 1 July 2007
Shares issued during the year:
Shares issued
Options exercised
Employee share plan loan repaid – proceeds
Share based payment reserve transferred to
contributed equity
Less: Capital raising costs
Profit for the period
Share based compensation reserve
Net gains revaluation reserve
105,950,221
(28,763,633)
1,441,351
8,760,000
275,000
1,614,500
732,008
(57,632)
–
–
–
–
–
–
–
–
(3,384,625)
–
–
–
–
–
(732,008)
–
–
673,815
(394,058)
Balance at 30 June 2008
117,274,097
(32,148,258)
989,100
The above statements of changes in equity should be read in conjunction with the accompanying notes.
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
equity
$
12,857,137
150,000
25,000
–
80,849,412
(4,389,720)
(12,166,307)
795,177
507,240
78,627,939
78,627,939
8,760,000
275,000
1,614,500
–
(57,632)
(3,384,625)
673,815
(394,058)
86,114,939
Sylvania Resources Annual Report 2008 Page 39
C a s h f l o w s t a t e m e n t s
For the year ended 30 June 2008
Consolidated
Parent entity
Notes
2008
$
2007
$
2008
$
2007
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other revenue
26,158,124
(18,508,729)
2,323,557
560,826
1,978,172
(8,479,793)
1,082,727
2,263,560
–
(3,443,842)
1,942,134
101,822
–
(3,360,808)
985,494
2,975
Net cash inflow / (outflow) from operating activities
22
10,533,778
(3,155,334)
(1,399,886)
(2,372,339)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for available-for-sale financial assets
Payments for exploration and evaluation
Payments for mineral rights
Loans to related parties
Loans to subsidiaries
Proceeds from sale of plant and equipment
Proceeds from sale of available-for-sale financial assets
Repayment of loan from related party
(12,085,962)
(4,715,559)
(375,006)
(303,474)
(1,314,311)
–
–
345,000
–
(16,618,770)
(574,877)
(875,019)
–
921,933
–
1,233,163
591,098
114,731
(12,162)
(4,715,559)
–
–
–
(10,201,448)
–
345,000
–
(55,132)
(574,877)
–
–
(4,000)
(20,568,221)
34,500
591,098
212,560
Net cash (outflow) from investing activities
(18,449,312)
(15,207,741)
(14,584,169)
(20,364,072)
Cash flows from financing activities
Proceeds from issue of shares
Capital raising costs
1,814,500
(57,632)
75,478,412
(4,177,444)
1,814,500
(57,632)
75,478,412
(4,177,444)
Net cash inflow from financing activities
1,756,868
71,300,968
1,756,868
71,300,968
Net (decrease) / increase in cash held
(6,158,666)
52,937,893
(14,227,187)
48,564,557
Foreign exchange movement
(6,443,563)
(2,657,846)
(4,594,987)
(2,654,795)
Cash at the beginning of the financial year
56,225,793
5,945,746
51,760,438
5,850,676
Cash at the end of the financial year
6
43,623,564
56,225,793
32,938,264
51,760,438
The above cash flow statement should be read in conjunction with the accompanying notes.
Sylvania Resources Annual Report 2008 Page 40
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s
For the year ended 30 June 2008
1 .
(a)
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law.The financial
report has also been prepared on a historical cost basis, except for available-for-sale investments, which have been measured at fair
value.The Company is a listed public company incorporated and domiciled in Australia, and operating in South Africa.The financial
statements are presented in Australian dollars and were authorised for issue by the directors on 30 September 2008.
(b)
Adoption of new and revised standards
Changes in Accounting Policies on Initial Application of Accounting Standards
In the year ended 30 June 2008, the Group has adopted 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 2007. Details of the impact of
the adoption of these new accounting standards are set out in the individual accounting policy notes set out below.The Group has also
adopted the following Standards as listed below which only impacted on the Group's financial statements with respect to disclosure:
• AASB 101 'Presentation of Financial Instruments' (revised October 2006);
• AASB 7 'Financial Instruments: Disclosures';
The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended
30 June 2008. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and
revised Standards and Interpretations on its business and, therefore, no change necessary to Group accounting policies.
(c)
Statement of compliance
The financial report was authorised by the Board of directors for issue on 30 September 2008.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial
Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes
thereto, complies with International Financial Reporting Standards (AIFRS).
(d)
Basis of consolidation
The consolidated financial statements comprise the financial statements of Sylvania Resources Limited and its subsidiaries as at 30 June
each year (the Group).
The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent
accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and
losses resulting from intra-group transactions have been eliminated in full. Subsidiaries 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 financial and operating policies of an entity so as to obtain benefits
from its activities.
(e)
Significant 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 significant risk of causing a material adjustment to the carrying amounts of certain assets
and liabilities within the next annual reporting period are:
(i)
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 20.
Sylvania Resources Annual Report 2008 Page 41
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
1 .
(e)
(ii)
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Significant accounting judgements estimates and assumptions (continued)
Provision for restoration and rehabilitation and dismantling plant and equipment
Provision for restoration and rehabilitation and dismantling plant and equipment is estimated taking into account estimates of
expenditure based on information available at the balance sheet date.The estimate is based on the expenditure required to
undertake the rehabilitation and dismantling, after taking into account the time value of money.
(f)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured.The following specific recognition criteria must also be met before revenue is recognised:
(i)
Sale of goods
Revenue is recognised when the significant 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 financial 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 classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
Assets held under finance 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 lesser is included in the balance sheet as a finance
lease obligation.
Lease payments are apportioned between finance 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 benefits 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 insignificant 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 defined above, net of
outstanding bank overdrafts.
Sylvania Resources Annual Report 2008 Page 42
1 .
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Trade and other receivables
(j)
Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible 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 identified.
Foreign currency translation
(k)
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 financial statements of each entity are measured using that
functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the
balance sheet date.
All exchange differences in the parent Company's financial report are taken to profit or loss with the exception of differences on
foreign currency borrowings that provide a hedge against a net investment in a foreign entity.These are taken directly to equity until
the disposal of the net investment, at which time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
The functional currency of the foreign operations is South African Rand (ZAR).
As at the reporting date the assets and liabilities of these subsidiaries 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 profit or loss.
Interest in jointly controlled entities
(l)
The Group's interests in jointly controlled subsidiaries are brought to account using the equity method of accounting in the
consolidated financial 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.
Income tax
(m)
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 financial 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 profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, 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.
Sylvania Resources Annual Report 2008 Page 43
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
1 .
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Income tax (continued)
(m)
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 profit 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 profit nor
taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, 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 profit 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 sufficient taxable profit 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 profit 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 profit 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.
Other taxes
(n)
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 flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authorities are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Property, plant and equipment
(o)
The costs of acquiring mining properties are capitalised in the balance sheet as incurred. Mining properties are, upon commencement
of production, amortised over the remaining life of respective assets on a unit of production basis.The net carrying amounts of mining
properties are reviewed for impairment either individually or at the cash-generating unit level when events and changes in
circumstances indicate that the carrying amount may not be recoverable.To the extent to which these values exceed their recoverable
amounts, that excess is fully provided for in the financial year in which this is determined.
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 Annual Report 2008 Page 44
1 .
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Property, plant and equipment (continued)
(o)
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Plant and equipment – 10% to 37%
Furniture and fittings – 7.5%
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
The useful lives of plant have been reviewed and subsequently changed from 5 years to 10 years.
(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 flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, 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 profit or loss, in which
case the increase is recognised in profit or loss.
Any revaluation decrease is recognised in profit 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 benefits 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 profit or loss in the year the asset is derecognised.
Sylvania Resources Annual Report 2008 Page 45
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
1 .
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Investments and other financial assets
(p)
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at
fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transactions costs.The Group determines the classification of its financial assets after initial recognition
and, when allowed and appropriate, re-evaluates this designation at each financial year end.
(i)
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit
or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not
classified 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 profit or
loss.
The fair value of investments that are actively traded in organised financial 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 flow analysis and option pricing
models.
Impairment of assets
(q)
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 inflows 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 flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific 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 profit 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.
Trade and other payables
(r)
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 financial 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.
Sylvania Resources Annual Report 2008 Page 46
1 .
(s)
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
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 outflow of resources embodying economic benefits 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 reflects the risks specific
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 benefits
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, 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 benefits 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 fulfilled, 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 reflects (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.
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 modified, as a minimum an expense is recognised as if the terms had not been modified. In
addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is
otherwise beneficial to the employee, as measured at the date of modification.
Sylvania Resources Annual Report 2008 Page 47
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
1 .
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Share-based payment transactions (continued)
(u)
Equity settled transactions (continued)
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 modification of the
original award, as described in the previous paragraph.
The dilutive effect of outstanding shares and options issued is reflected as additional share dilution in the computation of earnings per
share (see Note 4).
Issued capital
(v)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Earnings per share
(w)
Basic earnings per share is calculated as net profit 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 are calculated as net profit 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.
Inventories
(x)
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition is accounted for as follows:
Raw materials – purchase cost on a first-in, first-out basis; and
Finished goods and work-in-progress – cost of direct materials and labour and a proportion of manufacturing overheads based on
normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Interest-bearing loans and borrowings
(y)
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction
costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised.
Sylvania Resources Annual Report 2008 Page 48
1 .
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s ( c o n t i n u e d )
Provision for restoration and rehabilitation
(z)
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities
undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the
provision can be measured reliably.The estimated future obligations include the costs of abandoning sites, removing facilities and
restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the
restoration obligation at the reporting date. Future restoration costs are reviewed annually and any changes in the estimate are
reflected in the present value of the restoration provision at each reporting date.
The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the
same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the
amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation
are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost
rather than being capitalised into the cost of the related asset.
Exploration and evaluation expenditure
(aa)
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 exploration of the area of interest or
alternatively, by its sale;
• exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation
to the area are continuing.
Exploration and evaluation costs accumulated in respect to each particular area of interest include only net direct expenditure.
(iii)
The carrying values of exploration and evaluation costs are reviewed by directors where results of exploration and/or
evaluation of an area of interest are sufficiently advanced to permit a reasonable estimate of the costs expected to be
recouped through successful development and exploitation of the area of interest or by its sale. Expenditure in excess of this
estimate is written off to the income statement in the year in which the review occurs.
Sylvania Resources Annual Report 2008 Page 49
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
32,789,608
389,402
–
–
2,729,211
–
(5,508)
–
(503,267)
–
40,398
1,112,982
350,000
(85)
7,500
291,098
–
394,986
2,347,788
–
(5,508)
–
(503,267)
2,435,916
–
1,015,748
–
(85)
–
291,098
984,569
–
2,260,834
2,156,481
4,274,929
2,291,330
1,298,940
1,505,716
12,847
4,594,987
281,837
–
2,567,345
–
673,815
18,565
1,123,316
405,645
6,082
2,657,846
–
5,546,000
–
–
795,177
–
839,437
8,848
–
4,594,987
134,997
–
2,567,345
(2,916,291)
673,815
18,565
955,383
12,155
–
2,654,795
–
5,546,000
–
2,451,453
795,177
–
10,954,052
10,534,066
5,921,703
12,414,963
1,332,607
(1,572,628)
141,709
(534,826)
(36,729)
53,556
(42,340)
53,556
2 .
R e v e n u e a n d e x p e n s e s
Revenue from continuing operations
(a)
Sales revenue
Sale of goods
Other income
(b)
Interest received
Sale of mining tenements
Net gain / (loss) on disposal of non-current asset
Tenement option funds
Net capital gain / (loss) on sale of available-for-sale
financial assets
Administration recovery
Management fee received
Expenses
(c)
Profit / (loss) from ordinary activities before income tax
expense includes the following specific expenses:
Consulting
Depreciation
Finance costs
Foreign exchange loss
Operating lease payments
Project generation costs
Impairment of available-for-sale financial asset
Impairment of loans to subsidiaries
Share based payments expense
Superannuation expense
3 .
I n c o m e t a x
Major components of tax expense for the years
ended 30 June 2008 and 2007
Income statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of
previous year
Sylvania Resources Annual Report 2008 Page 50
3 .
I n c o m e t a x ( c o n t i n u e d )
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 recognised in the
current period
Income tax expense/ (benefit) reported in the
income statement
Unrecognised deferred tax balances
Unrecognised deferred tax assets/losses
Unrecognised deferred tax assets/capital losses
Unrecognised deferred tax assets/temporary
differences
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
3,336,967
379,333
(1,661,665)
(266,353)
47,102
–
–
–
666,712
787,847
1,562,296
747,623
5,346,659
(351,892)
–
–
1,197,060
611,624
1,985,797
455,608
1,144,410
611,624
1,243,780
455,608
2,650,113
1,155,670
2,650,113
1,155,670
Net unrecognised deferred tax assets
4,458,797
3,597,075
4,406,147
2,855,058
Reconciliation to income tax benefit on
accounting loss
Accounting profit/(loss)
Tax expense (revenue) at statutory rate of 30%
Sundry non-deductable expenses
– Impairment of loan
– Share based payments
– Non-deductable foreign expenditure
– Other
Over provision of tax in prior year
Benefit of tax losses and timing differences not
brought to account
17,033,658
(11,468,567)
(3,384,625)
(12,166,307)
5,110,098
(3,440,571)
(1,015,388)
(3,649,891)
–
202,145
178,683
(808,865)
(49,216)
–
238,553
2,015,269
(6,547)
53,556
(874,887)
202,145
178,683
1,978
(54,827)
735,436
238,553
2,015,269
(140,546)
53,556
713,814
787,848
1,562,296
747,623
Income tax expense/(benefit)
5,346,659
(351,892)
–
–
Deferred tax asset
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Unredeemed capital expenditure
Current year tax loss
Other
Unrealised foreign exchange loss
Set off against deferred tax liability
–
2,463,176
33,121
23,048
130,772
–
4,906,233
372,514
–
9,076
–
–
–
–
130,772
2,650,117
(2,650,117)
5,287,823
(4,817,383)
130,772
(130,772)
–
470,440
–
–
–
–
–
9,076
9,076
(9,076)
–
Sylvania Resources Annual Report 2008 Page 51
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
3 .
I n c o m e t a x ( c o n t i n u e d )
Deferred tax liability
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
–
–
–
–
Plant, mining and equipment
Deferred exploration expenditure
Accrued interest
Set off against deferred tax assets
5,738,533
324,810
130,772
6,194,115
(2,650,117)
3,543,998
4,808,306
–
9,077
4,817,383
(4,817,383)
–
–
(130,772)
(130,772)
130,772
–
–
–
–
9,077
9,077
(9,077)
–
At 30 June 2008, 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 subsidiaries, 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.
Consolidated
2008
Cents per share
2007
5.64
5.57
(7.59)
(7.59)
4 .
E a r n i n g s p e r s h a r e
Basic loss per share – cents per share
Diluted earnings / (loss) per share
Sylvania Resources Annual Report 2008 Page 52
Consolidated
2008
$
2007
$
4 .
E a r n i n g s p e r s h a r e ( c o n t i n u e d )
Reconciliations of earnings /(loss) used in calculating earnings / (loss) per share
Profit / (loss) attributable to the ordinary equity holders of the company used in calculating
basic earnings / (loss) per share
9,862,186
(11,116,675)
Profit / (loss) attributable to the ordinary equity holders of the company used in calculating
diluted earnings / (loss) per share
9,862,186
(11,116,675)
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings / (loss) per share
174,879,972
146,497,424
Adjustment for calculation of diluted earnings per share
2,260,882
–
Weighted average number of ordinary shares and potential ordinary shares used as
the denominator in calculating diluted earnings / (loss) per share
177,140,854
146,497,424
5 .
S e g m e n t R e p o r t i n g
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 2008 and 2007.
Consolidated
2008
Continuing operations
South Africa
Australia
Inter-segment
eliminations
Total
operations
$
$
$
$
Segment revenue
Sale of goods
Other revenue
Share of net profit from jointly controlled entity accounted
for on an equity basis
–
4,274,929
32,789,608
2,813,342
–
(4,827,437)
32,789,608
2,260,834
–
5,021,508
–
5,021,508
Consolidated revenue
4,274,929
40,624,458
(4,827,437)
40,071,950
Sylvania Resources Annual Report 2008 Page 53
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
5 .
S e g m e n t R e p o r t i n g ( c o n t i n u e d )
2008
Segment results
Profit before tax
Income tax expense
Profit for the year
Segment assets and liabilities
Segment assets
Segment liabilities
Other segment information
Depreciation and amortisation
Finance costs
Foreign exchange losses
Impairment of available-for-sale financial asset
Impairment of loans to subsidiaries
Management fees
Share based payment expenses
Investment in jointly controlled entity
Continuing operations
South Africa
Australia
Inter-segment
eliminations
Total
operations
$
$
$
$
(3,384,625)
–
13,025,713
(2,817,253)
7,392,570
(2,529,406)
17,033,658
(5,346,659)
(3,384,625)
10,208,460
4,863,164
11,686,999
86,285,483
170,544
11,441,046
5,933,349
(26,189)
1,803,438
97,700,340
7,907,331
8,848
–
4,594,987
2,567,345
(2,916,291)
(2,435,916)
673,815
–
1,496,868
12,847
9,995,707
–
–
2,749,070
–
4,404,466
–
–
(9,995,707)
–
2,916,291
(313,154)
–
–
1,505,716
12,847
4,594,987
2,567,345
–
–
673,815
4,404,466
2007
$
$
$
$
Segment revenue
Sale of goods
Other revenue
Share of net profit from jointly controlled entity accounted for on
an equity basis
–
2,648,830
389,402
524,005
–
(1,016,354)
389,402
2,156,481
–
1,649,511
–
1,649,511
Consolidated revenue
2,648,830
2,562,918
(1,016,354)
4,195,394
Segment results
Profit for the year
Segment assets and liabilities
Segment assets
Segment liabilities
(11,805,883)
(3,901,724)
4,590,932
(11,116,675)
79,359,238
731,299
27,066,826
31,542,714
(25,495,680)
(28,865,489)
80,930,384
3,408,524
Sylvania Resources Annual Report 2008 Page 54
6 .
C a s h a n d c a s h e q u i v a l e n t s
Cash at bank and on hand
Short term deposits
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
11,873,179
31,750,385
46,635,252
9,590,541
1,187,879
31,750,385
46,108,863
5,651,575
43,623,564
56,225,793
32,938,264
51,760,438
Reconciliation to cash flow statement
(a)
The above figures agree to cash at the end of the financial year as
shown in the cash flow statement
43,623,564
56,225,793
32,938,264
51,760,438
Cash at bank and on hand
(b)
These are bearing interest rates of between 4.25% and
6.5% (2007: 4.75% and 5.75%).
Deposits at call
(c)
The deposits are bearing floating interest rates between
5.75% and 6.85% (2007: 5.99% and 5.20%).These deposits
have a maturity between 30 and 90 days.
Cash balances not available for use
(d)
As at 30 June 2007, an amount of A$99,997 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 13 July 2007 the matter was settled in full and final
settlement of all claims which either party may have against
the other. In terms of the settlement, an amount of
A$49,949 was refunded to the Company and the balance
together with all interest accrued from the investment of
the A$99,897 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 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
during the current financial year.
7 .
T r a d e a n d o t h e r r e c e i v a b l e s
Trade receivable
Other receivables
Prepayments
No trade receivables are past their contractual terms at
30 June 2008.
14,602,935
1,257,520
25,690
15,886,145
391,434
424,058
23,255
838,747
–
738,312
5,378
743,690
–
82,462
9,726
92,188
Sylvania Resources Annual Report 2008 Page 55
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
34,109
193,331
227,440
–
–
–
–
–
–
–
–
–
2,252,098
–
1,365,380
150,910
1,972,435
279,663
1,365,380
150,910
2,252,098
1,516,290
2,252,098
1,516,290
4,404,466
4,692,320
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,500,004
(1,500,004)
1,500,004
(1,500,004)
–
–
–
–
50,329,422
–
28,882,410
(2,916,291)
50,329,422
25,966,119
50,329,422
25,966,119
8 .
I n v e n t o r i e s
Finished goods stock
Stores and materials
Finished stock
Concentrate in holding tank awaiting despatch.
Store materials
Strategic spares held in stock for engineering breakdowns.
9 .
A v a i l a b l e f o r S a l e F i n a n c i a l
A s s e t s
At fair value
Listed shares
Listed options
Available for sale financial assets consist of investments in
ordinary shares and options, and therefore have no fixed
maturity date or coupon rate.
1 0 .
I n v e s t m e n t s a c c o u n t e d f o r
u s i n g t h e e q u i t y m e t h o d
Interest in jointly controlled entity
(refer to note 24)
1 1 . O t h e r f i n a n c i a l a s s e t s
Investments in subsidiaries
Investment in subsidiaries
(refer to note 28)
Impairment of investment in subsidiaries
Loans carried at amortised cost
Non interest-bearing loans
Loans receivable from subsidiaries
(refer to note 28)
Impairment of loan to subsidiaries
Total other financial assets
Sylvania Resources Annual Report 2008 Page 56
1 2 . D e f e r r e d e x p l o r a t i o n e x p e n d i t u r e
Consolidated
2008
Balance at beginning of financial year
Foreign currency movements
Direct expenditure for the year
Expenditure written off
Balance at end of financial year
2007
Balance at beginning of financial year
Foreign currency movements
Direct expenditure for the year
Expenditure written off
Balance at end of financial year
Mineral
rights
Deferred
exploration
expenditure
$
$
Total
$
333,600
(68,800)
303,474
–
988,996
(203,966)
375,006
–
1,322,596
(272,766)
678,480
–
568,274
1,160,036
1,728,310
$
$
$
490,693
7,968
(165,061)
–
–
(64,214)
1,053,210
–
490,693
(56,246)
888,149
–
333,600
998,996
1,322,596
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.
1 3 . P r o p e r t y , p l a n t a n d e q u i p m e n t
Con-
struction
in
progress
Plant
and
equip-
ment
Mining
property
Equip-
ment
Lease-
hold
improve-
ments
Computer
equip-
ment
and
software
Furniture
and
fittings
Office
equip-
ment
Motor
vehicles
Total
Consolidated
2008
$
$
$
At 1 July 2007
Cost or fair value
Accumulated depreciation
– 12,447,457
–
–
3,481,592
(337,678)
Net book value
– 12,447,457
3,143,914
$
–
–
–
$
–
–
–
$
$
$
$
$
42,114
(10,881)
36,048
(5,628)
43,176
(12,254)
224,811 16,275,198
(411,000)
(44,559)
31,233
30,420
30,922
180,252 15,864,198
Year ended 30 June 2008
Opening net book value
Exchange differences
Additions
Disposals
Relocations between
asset classes
Depreciation charge
At 30 June 2008
Cost or fair value
Accumulated depreciation
– 12,447,457
(2,410,776)
7,650,203
–
(74,658)
8,760,000
–
3,143,914
(3,001,150)
3,829,674
–
–
(41,200)
276,276
–
–
(5,616)
41,629
–
31,233
(12,319)
55,556
–
30,420
(9,869)
32,751
(5,508)
30,922
(5,661)
29,356
–
180,252 15,864,198
(5,626,126)
(64,877)
176,024 20,851,469
(5,508)
–
– (10,875,379) 10,875,379
(1,400,938)
–
–
–
(15,119)
–
(5,735)
–
(19,738)
–
(8,241)
–
(13,128)
–
(42,817)
–
(1,505,716)
8,685,342
6,811,505 13,446,879
219,957
30,278
54,732
39,553
41,489
248,582 29,578,317
8,685,342
–
6,811,505 15,185,495
(1,738,616)
–
235,076
(15,119)
36,013
(5,735)
85,351
(30,619)
53,422
(13,869)
66,871
(25,382)
335,958 31,495,033
(1,916,716)
(87,376)
8,685,342
6,811,505 13,446,879
219,957
30,278
54,732
39,553
41,489
248,582 29,578,317
Sylvania Resources Annual Report 2008 Page 57
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
1 3 . P r o p e r t y , p l a n t a n d e q u i p m e n t ( c o n t i n u e d )
Consolidated
2007
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
Relocations between
asset classes
Depreciation charge
At 30 June 2007
Cost or fair value
Accumulated depreciation
Parent
2008
At 1 July 2007
Cost or fair value
Accumulated depreciation
Net book value
Year ended 30 June 2008
Opening net book value
Exchange differences
Additions
Disposals
Relocations between
asset classes
Depreciation charge
At 30 June 2008
Cost or fair value
Accumulated depreciation
Con-
struction
in
progress
$
1,271,554
–
1,271,554
Mining
property
$
–
–
–
1,271,554
–
–
(145,753)
– 15,993,601
(1,190,353)
–
$
–
–
–
–
–
–
–
–
–
(3,481,592)
–
3,481,592
(337,678)
– 12,447,457
3,143,914
– 12,447,457
–
–
3,481,592
(337,678)
– 12,447,457
3,143,914
Plant
and
equip-
ment
Equip-
ment
Lease-
hold
improve-
ments
Computer
equip-
ment
and
software
Furniture
and
fittings
Office
equip-
ment
Motor
vehicles
Total
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
$
$
$
14,570
(1,207)
11,558
(866)
20,807
(3,282)
90,910
–
1,409,399
(5,355)
13,363
10,692
17,525
90,910
1,404,044
13,363
(1,598)
33,113
(3,971)
–
(9,674)
10,692
(933)
25,423
–
–
(4,762)
17,525
(732)
23,101
–
1,404,044
90,910
(10,419)
(159,435)
178,905 16,254,143
(1,228,909)
(34,585)
–
(8,972)
–
(44,559)
–
(405,645)
31,233
30,420
30,922
180,252 15,864,198
42,114
(10,881)
36,048
(5,628)
43,176
(12,254)
224,811 16,275,198
(411,000)
(44,559)
31,233
30,420
30,922
180,252 15,864,198
Con-
struction
in
progress
Plant
and
equip-
ment
Mining
property
Equip-
ment
Lease-
hold
improve-
ments
Computer
equip-
ment
and
software
Furniture
and
fittings
Office
equip-
ment
Motor
vehicles
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
$
4,151
(1,296)
6,365
(410)
24,176
(8,783)
2,855
5,955
15,393
2,855
–
1,781
–
–
(1,300)
3,336
5,932
(2,596)
3,336
5,955
–
–
(5,508)
–
(447)
–
–
–
–
15,393
–
10,381
–
–
(7,101)
18,673
34,557
(15,884)
18,673
$
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
34,692
(10,489)
24,203
24,203
–
12,162
(5,508)
–
(8,848)
22,009
40,489
(18,480)
22,009
Sylvania Resources Annual Report 2008 Page 58
1 3 . P r o p e r t y , p l a n t a n d e q u i p m e n t ( c o n t i n u e d )
Con-
struction
in
progress
Plant
and
equip-
ment
Mining
property
Equip-
ment
Lease-
hold
improve-
ments
Computer
equip-
ment
and
software
Furniture
and
fittings
Office
equip-
ment
Motor
vehicles
Parent
2007
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
Relocations between asset classes
Depreciation charge
At 30 June 2007
Cost or fair value
Accumulated depreciation
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
$
2,217
(107)
2,110
2,590
(29)
13,677
(2,537)
2,561
11,140
$
–
–
–
–
–
Total
$
18,484
(2,673)
15,811
15,811
–
–
(12,155)
24,203
34,692
(10,489)
24,203
2,110
–
1,934
–
–
(1,189)
2,561
11,140
–
–
3,775
10,499
38,924
55,132
–
(34,585)
(34,585)
–
–
(381)
–
(6,246)
–
(4,339)
2,855
5,955
15,393
4,151
(1,296)
6,365
(410)
24,176
(8,783)
2,855
5,955
15,393
–
–
–
–
Leased assets
(a)
Equipment and motor vehicles include the following amounts
where the Group is a lessee under a finance lease:
Equipment
Cost
Accumulated Depreciation
Foreign exchange differences
Motor vehicles
Cost
Accumulated Depreciation
Foreign exchange differences
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
106,251
(3,542)
–
102,709
233,384
(33,808)
–
199,576
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Sylvania Resources Annual Report 2008 Page 59
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
1 3 . P r o p e r t y, p l a n t a n d e q u i p m e n t
( c o n t i n u e d )
Non-current assets pledged as security
(b)
Leased assets are pledged as security for the related finance
lease liability. No other non-current assets are pledged as
security for any liabilities.
Change in useful lives
(c)
The useful life of plant has been revised from 5 years in 2007 to
10 years in 2008.
1 4 . T r a d e a n d o t h e r p a y a b l e s
Trade payables
Other payables
1 5 . B o r r o w i n g s
Secured
Current liabilities
Payable within one year (Refer to Note 23)
Non-current liabilities
Payable within 1-5 years (Refer to Note 23)
1 6 . P r o v i s i o n s
Provision for rehabilitation
Movement in provision
Balance at beginning of financial year
Arising during the year
Balance at end of financial year
1,405,985
1,248,123
1,677,754
1,617,727
2,654,108
3,295,481
127,157
43,387
170,544
571,213
160,086
731,299
78,074
21,988
251,298
91,055
355,158
–
355,158
355,158
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Provision is made for close down, restoration and for environmental rehabilitation costs (which include the dismantling and demolition
of infrastructure, removal of residual materials and remediation of disturbed areas) in the financial period when the related
environmental disturbance occurs, based on the estimated future costs using information available at the balance sheet date.
Rehabilitation is performed and paid for on an on-going basis as mining properties are depleted.The majority of the rehabilitation will
be undertaken progressively over the life of the mine during the depletion of each respective mining property. It is expected that the
life of each mine could very between 5 and 50 years.
Sylvania Resources Annual Report 2008 Page 60
1 7 .
I s s u e d c a p i t a l
Share Capital
(a)
Ordinary shares
Ordinary shares fully paid
Employee share plan shares
Consolidated and parent
Consolidated and parent
2008
No of shares
2007
No of shares
2008
$
2007
$
178,584,273
1,428,000
171,929,273
4,100,000
117,274,097
–
105,950,221
–
180,012,273
176,029,273
117,274,097
105,950,221
Holders of ordinary shares are entitled to receive dividends as declared from 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)
Movements in ordinary share capital
Date
Details
Number of shares
Issue price
$
1 July 2007
27 August 2007
31 August 2007
03 September 2007
02 November 2007
16 November 2007
21 December 2007
31 December 2007
30 January 2008
25 February 2008
29 February 2008
17 March 2008
17 March 2008
Opening balance
Exercise of 2006 options
Proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Exercise of 2007 options:
Proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Exercise of 2006 options:
Proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Employee share plan loan – proceeds received
Transfer from share-based payment reserve
Exercise of 2007 options:
Proceeds received
Transfer from share-based payment reserve
Placement in lieu of services rendered
Less:Transaction costs arising on share issue
171,929,273
105,950,221
125,000
200,000
750,000
100,000
375,000
800,000
125,000
500,000
30,000
550,000
100,000
3,000,000
$0.50
–
$0.50
–
$0.50
–
$0.75
–
$0.50
–
$0.50
–
$0.50
–
$0.50
–
$0.90
–
$0.50
$0.75
–
$2.92
62,500
70,463
100,000
29,429
375,000
110,358
75,000
32,983
187,500
55,179
400,000
146,417
62,500
70,463
250,000
82,541
27,000
6,808
275,000
94,383
75,000
32,984
8,760,000
(57,632)
On issue at the end of the year
178,584,273
117,274,097
Sylvania Resources Annual Report 2008 Page 61
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
1 7 .
I s s u e d c a p i t a l ( c o n t i n u e d )
(c)
Movements in Employee Share Plan Shares issued with Limited Recourse Employee Loans
Date
Details
Number of shares
Issue price
1 July 2007
On issue at beginning of the year
4,100,000
31 August 2007
Employee share plan loan repaid – shares transferred to ordinary share capital
(200,000)
3 September 2007
Employee share plan loan repaid – shares transferred to ordinary share capital
(750,000)
16 November 2007
Employee share plan loan repaid – shares transferred to ordinary share capital
(375,000)
21 December 2007
Employee share plan loan repaid – shares transferred to ordinary share capital
(800,000)
30 January 2008
Employee share plan loan repaid – shares transferred to ordinary share capital
(500.000)
25 February 2008
Employee share plan loan repaid – shares transferred to ordinary share capital
(30,000)
29 February 2008
Employee share plan loan repaid – shares transferred to ordinary share capital
(550,000)
17 March 2008
Employee Share Plan issue
17 March 2008
Employee Share Plan issue
On issue at the end of the year
33,000
500,000
1,428,000
$0.50
$0.50
$0.50
$0.50
$0.50
$0.90
$0.50
$2.67
$2.89
Information relating to the employee share plan, including details of shares issued under the plan, is set out in note 20.
Share options
Employee option plan options exercisable (refer note 20)
– at $0.50 per share on or before 20 June 2008
– at $0.75 per share on or before 30 June 2010
– at $2.89 per share on or before 30 June 2011
– at $2.67 per share on or before 30 June 2011
Number of options
2008
2007
500,000
600,000
400,000
600,000
750,000
800,000
–
–
2,100,000
1,550,000
Information relating to the employee option plan, including details of options issued, exercised and lapsed during the financial year and
options outstanding at the end of the financial year, is set out in note 20.
Sylvania Resources Annual Report 2008 Page 62
1 8 . R e s e r v e s
Consolidated
At 30 June 2006
Unrealised gain / (loss) on available-for-sale financial assets
Currency translation differences
Share and option-based payments
At 30 June 2007
Unrealised gain / (loss) on available-for-sale financial assets
Currency translation differences
Share and option-based payments
At 30 June 2008
Parent
At 30 June 2006
Unrealised gain / (loss) on available-for-sale financial assets
Currency translation differences
Share and option-based payments
At 30 June 2007
Unrealised gain / (loss) on available-for-sale financial assets
Currency translation difference
Share and option-based payments
At 30 June 2008
Nature and purpose of reserves
Net unrealised gains reserve
This reserve records fair value changes on available for sale investments.
Net
unrealised
gains
reserve
Equity
benefits
reserve
Currency
translation
reserve
$
$
$
Total
$
(812,288)
507,240
325,441
(1,024,547)
–
–
–
(2,135,913)
(2,135,913)
721,852
–
721,852
1,047,293
(3,160,460)
(1,719,109)
–
–
–
(394,058)
(10,287,475)
(10,287,475)
(58,193)
–
(58,193)
989,100
(13,447,935)
(12,458,835)
$
325,441
–
–
721,852
1,047,293
–
–
(58,193)
989,100
$
–
–
–
–
–
–
–
–
–
$
212,259
507,240
–
721,852
1,441,351
(394,058)
–
(58,193)
989,100
(113,182)
507,240
–
–
394,058
(394,058)
–
–
–
$
(113,182)
507,240
–
–
394,058
(394,058)
–
–
–
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements
of foreign controlled entities.
Employee equity benefits reserve
This reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of their
remuneration. Refer Note 27
Sylvania Resources Annual Report 2008 Page 63
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
(26,709,252)
(15,592,577)
(28,763,633)
(16,597,326)
9,862,186
(11,116,675)
(3,384,625)
(12,166,307)
(16,847,066)
(26,709,252)
(32,148,258)
(28,763,633)
1 9 . A c c u m u l a t e d L o s s e s
Balance as at 1 July 2007
Net profit / (loss) for the year
Balance as at 30 June 2008
2 0 . S h a r e B a s e d P a y m e n t s
(a)
Employee Option Plan
An employee incentive option plan was approved at the 2007 annual general meeting.The Company's existing option plan, which was
approved by shareholders on 30 November 2005, has expired.
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 five 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 can only be exercised after the expiry of the following periods:
– after 12 months have lapsed from the acceptance date, in respect of not more than one half of the total number of options; and
– after 24 months have lapsed from the acceptance date, in respect to the balance of those options.
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.
Sylvania Resources Annual Report 2008 Page 64
2 0 . S h a r e B a s e d P a y m e n t s
Set out below are summaries of options granted under the plan:
Consolidated and parent entity – 2008
Grant date
20 Apr 2006
17 Oct 2006
17 Mar 2008
17 Mar 2008
Total
Expiry
date
Exercise
price
Balance at
start of
the year
Granted
during
the year
Exercised
during
the year
Balance at
Vested and
the end exercisable at
end of year
of the year
Number
Number
Number
Number
Number
30 Jun 2009
30 Jun 2010
30 Jun 2011
30 Jun 2011
$0.50
$0.75
$2.89
$2.67
750,000
800,000
–
–
–
–
400,000
600,000
(250,000)
(200,000)
–
–
500,000
600,000
400,000
600,000
500,000
300,000
–
–
1,550,000
1,000,000
(450,000)
2,100,000
800,000
Weighted average exercise price
$0.63
$2.76
$0.61
$1.65
$0.59
Consolidated and parent entity – 2007
Grant date
20 Apr 2006
17 Oct 2006
Total
Expiry
date
Exercise
price
Balance at
start of
the year
Granted
during
the year
Exercised
during
the year
Balance at
Vested and
the end exercisable at
end of year
of the year
Number
Number
Number
Number
Number
30 Jun 2009
30 Jun 2010
$0.50
$0.75
750,000
–
–
1,000,000
–
(200,000)
750,000
800,000
375,000
–
750,000
1,000,000
(200,000)
1,550,000
375,000
Weighted average exercise price
$0.50
$0.75
$0.75
$1.65
$0.50
No options were forfeited during the periods covered by the above tables.
The weighted average share price at the date of exercise of options during the year ended 30 June 2008 was $2.82
(2007: not applicable).
The assessed fair values at grant date at options granted during the year ended 30 June 2008 was $1.09 and $1.14 respectively 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.
Sylvania Resources Annual Report 2008 Page 65
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 0 . S h a r e b a s e d p a y m e n t s ( c o n t i n u e d )
The model inputs for options granted during the year ended 30 June 2008 included:
(i)
(ii)
(iii)
(iv)
(v)
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
Share price at grant date
Share price volatility of the Company's shares
Expected dividend yield
Risk-free interest rate
Options
granted
at $2.89
per share
Options
granted
at $2.67
per share
$2.80
63.33%
Nil
6.39%
$2.80
63.33%
Nil
6.39%
Employee share plan
(b)
An employee incentive share plan was approved at the 2007 Annual General Meeting.The Company's existing share plan, which was
approved by shareholders on 30 November 2005, has expires.
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 five 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.
The shares can only be transferred or otherwise dealt with until after the expiry of the following periods:
• After 12 months have lapsed from the acceptance date, in respect of not more than one half of the total number of shares; and
• After 24 months have lapsed from the acceptance date, in respect to the balance of those shares.
Sylvania Resources Annual Report 2008 Page 66
2 0 . S h a r e b a s e d p a y m e n t s ( c o n t i n u e d )
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).
Set out below are summaries of shares issued under the plan:
Consolidated and parent entity – 2008
Grant date
21 Dec 2005
20 Dec 2006
17 Mar 2008
17 Mar 2008
Total
Expiry
date
Exercise
price
Balance at
start of
the year
Granted
during
the year
Exercised
during
the year
Balance at
Vested and
the end exercisable at
end of year
of the year
Number
Number
Number
Number
Number
21 Dec 2009
20 Dec 2010
30 Jun 2011
30 Jun 2001
$0.50
$0.90
$2.89
$2.67
3,800,000
300,000
–
–
–
–
500,000
33,000
(3,175,000)
(30,000)
–
–
625,000
270,000
500,000
33,000
635,000
120,000
–
–
4,100,000
533,000
(3,205,000)
1,428,000
755,000
Consolidated and parent entity – 2007
Expiry
date
Exercise
price
21 Dec 2009
20 Dec 2010
$0.50
$0.90
Balance at
start of
the year
Number
3,850,000
–
Granted
during
the year
Number
–
300,000
Exercised
during
the year
Balance at
Vested and
the end exercisable at
end of year
of the year
Number
(50,000)
–
Number
3,800,000
300,000
Number
1,925,000
–
Grant date
21 Dec 2005
20 Dec 2006
Total
Options issued under employee option plan
Shares issued under employee share plan
3,850,000
300,000
(50,000)
4,100,000
1,925,000
Consolidated
Parent entity
2008
$
464,641
209,174
673,815
2007
$
480,529
314,648
795,177
2008
$
464,641
209,174
673,815
2007
$
480,529
314,648
795,177
Sylvania Resources Annual Report 2008 Page 67
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
2 1 . F i n a n c i a l I n s t r u m e n t s
Capital risk management
(a)
The Company has no debt facilities outside of normal creditor
trading terms and thus the board does not deem it necessary
for a formal Capital Risk Management Charter.
Categories of financial instruments
(b)
Financial assets
Loans and receivables
Cash and cash equivalents
Available for sale financial assets
Financial liabilities
Financial liabilities
15,886,145
43,623,564
2,252,098
838,747
56,225,793
1,516,290
743,690
32,938,264
2,252,098
92,188
51,760,438
1,516,290
61,761,807
58,580,830
35,934,052
53,368,916
2,983,480
3,408,524
2,983,480
3,408,524
170,544
170,544
731,299
731,299
Financial risk management objectives
(c)
The Group is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and
cash flow interest rate risk.
Market risk
(d)
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates, commodity prices and
exchange rates.
There has been no change at the reporting date to the Group's exposure to market risks or the manner in which it manages and
measures the risk from the previous period.
(i)
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the denomination in
which metal prices are determined and year end assets and liabilities are converted.
Year-end cash balances in British Pounds
A variance of 10% on the exchange rate of the Australian Dollar to the British Pound would result in a gain of $2,970,695
(2007: gain of $4,681,574) or a loss of $2,970,695 (2007: loss of $4,681,574) to the parent entity and on a Group level.
(ii)
Price risk
Trade receivables at year-end
Commodity prices are set in US Dollars. A variance of 10% in commodity prices or the exchange rate of the US$ to the
South African Rand, in which commercial activity is undertaken, will result in a gain of A$1,095,402 or a loss of the same
amount on a Group level.
Sylvania Resources Annual Report 2008 Page 68
2 1 . F i n a n c i a l I n s t r u m e n t s ( c o n t i n u e d )
(d)
(iii)
Market risk (continued)
Interest rate risk
All cash balances attract a floating rate of interest.The unsecured loan to another party does not attract interest.
The Group's exposure to interest rate risk arises from long term borrowings, relating to finance leases on motor vehicles and
equipment.
30 June 2008
30 June 2007
Weighted
average
interest
rate
%
Weighted
average
interest
rate
%
Balance
$
Balance
$
Cash balances
Borrowings (finance leases)
6.71
16.65
43,623,564
329,372
4.77
12.55
32,938,264
113,043
Foreign currency risk management
(e)
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.
The carrying amount of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date is as
follows:
Liabilities
Assets
2008
$
2007
$
2008
$
2007
$
Great British Pounds (GBP)
South African Rand (ZAR)
–
(5,933,349)
–
(2,206,786)
32,677,647
11,441,046
51,497,317
5,951,759
Foreign currency sensitivity analysis
(f)
The Group is exposed to Great British Pound (GBP) and South African Rand (ZAR) currency fluctuations.
The following table details the Group's sensitivity to a 10% increase and decrease in the Australian Dollar (AD) against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and
represents management's assessment of the possible change in foreign exchange rates.The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency
rates.The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of
the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit or
loss and other equity where the Australian Dollar strengthens against the respective currency. For a weakening of the Australian Dollar
against the respective currency there would be an equal and opposite impact on the profit and other equity and the balances below
would be negative.
Sylvania Resources Annual Report 2008 Page 69
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 1 . F i n a n c i a l I n s t r u m e n t s ( c o n t i n u e d )
(f)
Foreign currency sensitivity analysis (continued)
Profit or loss (i)
Other equity
GBP Impact
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
2,970,695
–
4,681,574
–
2,970,695
–
4,681,574
–
(i)
This is mainly attributable to the exposure outstanding on GBP cash balances at year end.
Profit or loss (i)
Other equity
ZAR impact
Consolidated
Company
2008
$
2007
$
1,737,440
–
(407,535)
–
2008
$
–
–
2007
$
–
–
(i)
This is mainly attributable to the exposure outstanding on ZAR receivables and payables at year end.
Interest rate risk management
(g)
The Company and the Group are exposed to interest rate risk as entities in the Group maintain funds at both fixed and floating
interest rates.The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate liquid funds.
The Company and Group's exposure to interest rate on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
Interest rate risk sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates at the reporting date and the stipulated
change taking place at the beginning of the financial year and held constant throughout the reporting period. A 50 basis point increase
or decrease is used when reporting interest rate risk internally to key management personnel and represents management's
assessment of the change in interest rates.
At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group's:
• Net profit after tax and equity would increase by approximately $142,358 and decrease by $142,358 (2007: $191,234).This is mainly
attributable to the Group's exposure to interest rate fluctuations on cash balances and lease liabilities.
Credit risk management
(h)
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral here appropriate, as
a means of mitigating the risk of financial loss from defaults.This information is supplied by independent rating agencies where available
and, if not available, the Group uses publicly available financial information and its own trading record to rate its major customers.
The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions
conducted is spread amongst approved counterparties.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics.The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group's
maximum exposure to credit risk.
Sylvania Resources Annual Report 2008 Page 70
2 1 . F i n a n c i a l I n s t r u m e n t s ( c o n t i n u e d )
Liquidity risk management
(i)
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk
management framework for the management of the Group's short, medium and long term funding and liquidity management
requirements.
The following tables detail the Company's and the Group's remaining contractual maturity for its financial liabilities.These are based on
the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.The table
includes both interest and principal cash flows.
Consolidated
2008
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
2007
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
Parent
2008
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
2007
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
Weighted
average effective
interest rate
Less
than 1
month
%
–
14.65
–
–
–
%
–
12.55
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
1 – 3
months
3 months
– 1 year
$
$
2,654,108
–
–
–
–
121,118
–
–
1 – 5
years
$
–
307,757
–
–
2,654,108
121,118
307,757
$
$
$
3,295,481
–
–
–
3,295,481
–
35,205
–
–
35,205
–
110,711
–
–
110,711
5+
years
$
–
–
–
–
–
$
–
–
–
–
–
Weighted
average effective
interest rate
Less
than 1
month
1 – 3
months
3 months
– 1 year
1 – 5
years
5+
years
%
–
–
–
–
–
%
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
$
170,544
–
–
–
170,544
$
731,299
–
–
–
731,299
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
Sylvania Resources Annual Report 2008 Page 71
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 1 . F i n a n c i a l I n s t r u m e n t s ( c o n t i n u e d )
(i)
Liquidity risk management (continued)
Consolidated
2008
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
2007
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
Consolidated
2008
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
2007
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
Weighted
average effective
interest rate
Less
than 1
month
1 – 3
months
3 months
– 1 year
1 – 5
years
%
–
–
6.71
–
%
–
–
4.77
–
$
$
–
–
42,555,925
–
15,886,145
–
1,077,482
–
42,555,925
16,963,627
$
$
–
–
50,705,801
–
838,747
–
5,566,437
–
50,705,801
6,405,184
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
Weighted
average effective
interest rate
Less
than 1
month
1 – 3
months
3 months
– 1 year
1 – 5
years
%
–
–
5.82
–
%
–
–
4.77
–
$
$
–
–
31,870,625
–
743,690
–
1,077,482
–
31,870,625
1,821,172
$
$
–
–
46,240,446
–
92,188
–
5,566,437
–
46,240,446
5,658,625
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
5+
years
$
2,252,098
–
–
–
2,252,098
$
1,516,290
–
–
–
1,516,290
5+
years
$
2,252,098
–
–
–
2,252,098
$
1,516,290
–
–
–
1,516,290
Fair value of financial instruments
(j)
For financial assets and liabilities, the net fair value approximates their carrying value. No financial assets and financial liabilities are
readily traded on organised markets in standardised form, other than listed investments.The Company has no financial assets where
carrying amount exceeds net fair value at balance sheet date.
Sylvania Resources Annual Report 2008 Page 72
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
2 2 . R e c o n c i l i a t i o n o f p r o f i t a f t e r
t a x t o n e t c a s h o u t f l o w f r o m
o p e r a t i n g a c t i v i t i e s
Reconciliation of profit/(loss) from ordinary activities
(a)
after income tax to net cash inflow / (outflow) from
operating activities
Profit / (Loss) from ordinary activities
Administration fee charged to controlled entities
Depreciation
Joint venture cash distribution
Equity accounted net profit from joint venture
Capital (gain) on sale of non-current assets
Net (gain) / loss on sale of available-for-sale financial assets
Write off of investment
Impairment of available for sale assets
Diminution in value of loans
Net foreign exchange differences
Project generation costs
Share-based compensation
Impairment of loan to controlled entity
(Increase)/decrease in prepayments & other debtors
(Increase)/decrease in debtors
(Increase)/decrease in accrued interest
(Increase)/decrease in GST/VAT recoverable
(Increase)/decrease in inventories
(Increase)/decrease in deferred tax asset
(Increase)/decrease in other operating assets
Net exchange differences on payment to suppliers and employees
Increase/(decrease) in trade creditors
Increase/(decrease) in accruals and other creditors
Increase/(decrease) in GST/VAT recoverable
Increase/(decrease) in group tax clearing
Increase/(decrease) in income tax expense
11,686,999
–
1,505,716
3,478,500
(4,282,226)
5,508
503,267
58,687
2,567,345
–
4,594,987
–
673,815
–
(327,525)
(14,378,302)
(405,654)
172,372
(265,575)
–
–
(1,368,165)
(160,374)
833,415
340,514
(46,185)
5,346,659
(11,116,675)
–
405,645
1,534,253
(1,649,511)
(299,915)
(291,098)
–
–
–
2,657,846
5,546,000
795,177
–
(687,065)
–
–
–
–
(351,892)
–
–
–
301,901
–
–
–
(3,384,625)
(2,435,916)
8,848
–
–
5,508
503,267
58,687
2,567,345
–
4,594,987
–
673,815
(2,916,291)
(170,848)
–
–
–
–
–
(49,550)
–
–
(855,113)
–
–
–
(12,166,307)
(984,569)
12,155
–
–
85
(291,098)
–
–
(360,424)
2,654,795
5,546,000
795,177
2,451,453
(9,726)
–
–
–
–
–
–
–
–
(19,880)
–
–
–
Net cash inflow/(outflow) from operating activities
10,533,778
(3,155,334)
(1,399,886)
(2,372,339)
Non-cash financing and investing activities
(b)
During the 2008 financial year 3,000,000 shares in the company were issued at a deemed issue price of $2.89 to Portpatrick Inc as
consideration for the facilitation to treat all run of mine fines from Samancor Chrome's Broken Hill, Spitzkop and Buffelsfontein East
sites, pursuant to the Co-operation Agreement with Portpatrick Inc dated 9 December 2005.
Sylvania Resources Annual Report 2008 Page 73
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
2 3 . C o m m i t m e n t s a n d
c o n t i n g e n c i e s
Operating lease commitments
(a)
Office premises
The Group entered into commercial lease arrangements during
the period to lease its current office premises, both in Perth and
Johannesburg.
Future minimum lease payments (net of GST) as at 30 June 2008
are as follows:
Within 1 year
After 1 year but not more than 5 years
More than 5 years
Office equipment
Sylvania South Africa (Pty) Limited entered into a number of lease
agreements during the period in respect to office equipment.
Future minimum lease payments (net of GST) as at 30 June 2008
are as follows:
Within 1 year
After 1 year but not more than 5 years
More than 5 years
Finance lease commitments
Motor vehicles
Sylvania Metals (Pty) Limited entered into five lease agreements
during the period in respect of four motor vehicles and one heavy
duty forklift.
Future minimum lease payments (net of GST) as at 30 June 2008
are as follows:
Within 1 year
After 1 year but not more than 5 years
More than 5 years
Sylvania Resources Annual Report 2008 Page 74
101,137
301,752
–
402,889
80,891
41,937
–
122,828
25,348
–
–
25,348
71,892
41,937
–
113,829
10,644
42,505
–
53,149
5,458
12,736
–
18,194
78,074
301,752
–
379,826
21,988
91,055
–
113,043
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2 3 C o m m i t m e n t s a n d
c o n t i n g e n c i e s ( c o n t i n u e d )
Commitments for plant construction
At 30 June 2008 commitments were signed for construction of
Lannex and Mooinooi plants.
Within 1 year
After 1 year but not more than 5 years
More than 5 years
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
6,884,800
–
–
6,884,800
–
–
–
–
–
–
–
–
–
–
–
–
Additional costs to complete the plants before 30 June 2009 are estimated to the $25,553,200.
(b)
(i)
(ii)
Contingencies
Contingent liabilities
The parent entity and Group had no contingent liabilities as at 30 June 2008.
Contingent assets
On 10 January 2007, the directors of the Company signed two Shareholder Agreements (the “Agreements”) with Ehlobo
Metals (Pty) Limited (“Ehlobo”).The agreements relate to the Company's subsidiaries, Sylvania Metals (Pty) Limited (“SLV
Metals”) and Sylvania Minerals (Pty) Limited (“SLV Minerals”).
Under the terms of the agreements, Ehlobo acquired a 26% interest in both SLV Metals and SLV Minerals on the condition
that Ehlobo's shareholders will be and thereafter will remain historically disadvantaged South Africans (“HDSA's”) such that
SLV Metals and SLV Minerals continue to satisfy the requirements of the South African Legislation and the South African Mining
Charter aimed at encouraging the participation of HDSA's in the mining industry in South Africa.
Under the terms of the agreements, Ehlobo committed to contribute $8.5million (ZAR64million) towards the initial capital
requirements of SLV Metals and SLV Minerals.This amount was estimated to equate to 26% of the initial capital requirements
of SLV Metals.The Company having committed to contribute the remaining 74% of the initial capital requirements (which it has
done) and to assist Ehlobo to raise its required capital contributions. It was originally anticipated that Ehlobo would have made
its initial capital contribution by August 2007.
As at the date of this report the Company continues to assist Ehlobo in their endeavours to obtain finance to enable Ehlobo
to contribute their committed initial capital. Under the original agreement the Company may at its sole discretion terminate
the agreement with Ehlobo's 26% interest in SLV Metals and SLV Minerals being returned to Sylvania should Ehlobo not be
able to fund its original commitment as per the agreements. Commercial discussions between Sylvania and Ehlobo have
commenced which may result in an amendment/replacement of the mechanism by which Ehlobo meets its initial capital
contribution obligations.
As a result of the above position the contingent asset, being the initial capital contribution due from Ehlobo amounting to
$8.5million (ZAR64million), has not been recognised as a receivable in the Group accounts at 30 June 2008.
Sylvania Resources Annual Report 2008 Page 75
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 4 .
I n t e r e s t i n j o i n t v e n t u r e
Retained earnings attributable to interest in jointly controlled entity
Balance at beginning of financial period
Distribution received from jointly controlled entity
Share of jointly controlled entity's profit from ordinary activities after income tax
Balance at end of financial period
Reserves attributable to interest in jointly controlled entity
Carrying amount of investment in jointly controlled entity
Balance at beginning of the financial period
Management fees raised in period
Other
Distribution received from jointly controlled entity
Distribution received in respect of management fees
Share of jointly controlled entity's profit from ordinary activities, after income tax
Balance at end of financial period
Foreign currency translation movements
Balance at beginning of financial period
Movement during the financial period
Balance at end of financial period
Share of joint venture entity's results and financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Revenue
Expenses
Management fees
Profit from ordinary activities before income tax
Income tax expense
Profit from ordinary activities after income tax
Sylvania Resources Annual Report 2008 Page 76
Consolidated
2008
$
2007
$
1,251,596
(3,478,500)
5,021,508
1,136,338
(1,534,253)
1,649,511
2,794,604
1,251,596
–
–
–
–
5,271,740
–
839,560
(3,478,500)
(739,282)
5,021,508
4,761,496
394,986
–
(1,534,253)
–
1,649,511
6,915,025
5,271,740
(579,420)
(1,931,138)
(849,423)
270,003
(2,510,558)
(579,420)
4,404,467
4,692,320
2,808,520
906,185
2,597,933
1,315,026
3,714,705
3,912,959
407,829
6,019
2,174,959
–
413,848
2,174,959
6,164,053
(1,881,827)
739,282
5,021,508
–
3,512,510
(1,862,999)
–
1,649,511
–
5,021,508
1,649,511
2 4 .
I n t e r e s t i n j o i n t v e n t u r e ( c o n t i n u e d )
Contingencies and commitments
The jointly controlled entity does not have any contingencies or capital commitments.
2 5 . E v e n t s a f t e r t h e b a l a n c e s h e e t d a t e
On 22 August 2008 – 950,000 ordinary shares were issued in terms of the Company's employee share plan at an issue price of
$1.63 per share. In addition 3,383,000 options in terms of the Company's employee option plan were issued to employees and
consultants of the Company that are exercisable at $1.63 each on or before 30 June 2011.
There have not been any further matters or circumstances that have arisen after balance date that has significantly affected, or may
affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
2 6 . A u d i t o r s ' r e m u n e r a t i o n
The auditors of the parent entity are HLB Mann Judd
Assurance services
HLB Mann Judd Australian firm:
Audit and review of financial 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 firm:
Tax compliance services, including review of Company
income tax returns
Related practices of HLB Mann Judd:
(HLB Barnett Chown Inc)
Non-HLB Mann Judd practice (LA Gambale)
Total remuneration for taxation services
Advisory services
HLB Mann Judd Australian firm:
Services in respect of AIM Listing
Other
Total remuneration for advisory services
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
40,000
63,000
40,000
63,000
–
59,501
99,501
10,663
12,767
86,430
–
–
–
–
40,000
63,000
–
–
739
739
–
3,726
3,726
–
–
–
–
25,000
4,750
29,750
–
–
–
–
–
–
–
–
–
–
–
25,000
4,750
29,750
92,750
Sylvania Resources Annual Report 2008 Page 77
Total auditors' remuneration
103,966
116,180
40,000
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 7 . K e y M a n a g e m e n t P e r s o n n e l D i s c l o s u r e
Directors
(a)
The following persons were directors of Sylvania Resources Limited during the financial year:
Chairman – non-executive
R D Rossiter
Executive directors
T M McConnachie
L M Carroll
Non-executive directors
Dr AP Ruiters
J Cooke
Managing Director
Financial Director (appointed 15 August 2007)
(appointed 18 August 2008)
The following persons were directors from the beginning of the financial year until their resignation:
E F G Nealon
M J Sturgess
K S Huntly
Dr E Kirby
(resigned 15 August 2007)
(resigned 15 August 2007)
(resigned 15 August 2007)
(resigned 18 August 2008)
Other key management personnel
(b)
M J Langoulant
J Meyer
Z Marinkovic
C De Vos
P R Carter
G Haasbroek
(c)
Key management personnel compensation
Company Secretary
General Manager: Business Development
Director: Sylvania Metals (Pty) Limited
Internal Legal Advisor
General Manager: Capital Projects
General Manager: Operations
Short-term
Post employment
Share-based payments
Consolidated
Parent entity
2008
$
2,368,591
6,710
505,100
2007
$
2,231,329
29,971
770,063
2008
$
556,898
3,560
202,130
2007
$
1,043,622
29,971
289,534
2,880,401
3,031,363
762,588
1,363,127
The Group has applied the exemption available under Corporations Amendments Regulation 2006 to transfer key management
personnel remuneration disclosures required by Accounting Standard AASB 124 Related Party Disclosures' paragraphs Aus 25.4 to
Aus 25.7.2 to the Remuneration Report section of the Directors' report.These transferred disclosures have been audited.
Compensation options: granted under the Employee Option Plan
(d)
Options provide 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.
Sylvania Resources Annual Report 2008 Page 78
2 7 . K e y m a n a g e m e n t d i s c l o s u r e ( c o n t i n u e d )
Compensation shares: issued under the Employee Share Plan
(e)
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
2008
Name
K S Huntly
J Meyer
C De Vos
2007
Name
Z Marinkovic
(g)
Option holding
Name
2008
Director
T M McConnachie
Dr A P Ruiters
L M Carroll
K S Huntly
Key management personnel
J Meyer
C De Vos
P R Carter
G Haasbroek
Shares
issued
Number
250,000
100,000
100,000
Shares
issued
Paid per
share
(note 20)
Unpaid per
share
(note 20)
$
$0.50
$0.75
$0.75
$
–
–
–
Paid per
share
(note 20)
Unpaid per
share
(note 20)
Number
$
200,000
$0.75
$
–
Balance
at start of
the year
Granted
during the
year
Exercised
during the
year
Other
changes
during
the year
Balance
at end of
the year
Vested and
exercisable
at end of
the year
500,000
–
200,000
250,000
200,000
200,000
200,000
–
–
200,000
–
–
–
–
–
200,000
–
–
–
(250,000)
(100,000)
(100,000)
–
–
–
–
–
–
–
–
–
–
500,000
200,000
200,000
–
100,000
100,000
200,000
200,000
500,000
–
100,000
–
–
–
100,000
–
Sylvania Resources Annual Report 2008 Page 79
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 7 . K e y m a n a g e m e n t d i s c l o s u r e ( c o n t i n u e d )
(g)
Option holding (continued)
Balance
at start of
the year
Granted
during the
year
Exercised
during the
year
Other
changes
during
the year
Balance
at end of
the year
Vested and
exercisable
at end of
the year
500,000
–
250,000
–
–
–
–
–
200,000
–
200,000
200,000
200,000
200,000
–
–
–
–
–
–
200,000
–
–
–
–
–
–
–
500,000
200,000
250,000
200,000
200,000
200,000
–
250,000
–
125,000
–
–
–
–
Name
2007
Director
T M McConnachie
L M Carroll
K S Huntly
Key management personnel
J Meyer
C De Vos
P R Carter
Z Marinkovic
(Refer to note 27(f))
Shareholding of key management personnel (consolidated)
(h)
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.
Name
2008
Director
R D Rossiter
Dr E Kirby
E F G Nealon
G M Button
M J Sturgess
Key management personnel
M J Langoulant
2007
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 Jarvis
M L Burchnall
Sylvania Resources Annual Report 2008 Page 80
Balance at
the start of
the year
Issued under Other changes
during
the year
share and
option plan
Balance at
the end of
the year
32,000
764,300
750,000
750,000
752,600
350,000
32,000
764,300
750,000
1,250,000
815,000
–
350,000
–
–
500,000
–
–
–
–
–
(375,000)
(750,000)
(750,000)
(750,000)
532,000
389,300
–
–
2,600
–
–
–
–
–
–
–
–
200,000
100,000
(100,000)
250,000
–
–
–
(500,000)
(62,400)
–
–
–
–
32,000
764,300
750,000
750,000
752,600
–
350,000
200,000
100,000
2 7 . K e y m a n a g e m e n t d i s c l o s u r e ( c o n t i n u e d )
All equity transactions with key management personnel other than those arising under the Group's Incentive Option Plan (Note 27(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).
2 8 . R e l a t e d p a r t y d i s c l o s u r e
The consolidated financial statements include the financial statements of Sylvania Resources Limited and the controlled
(a)
entities listed in the following table:
Name of entity
Country of
incorporation
Class of
shares
Equity
Balance at the
Holding end of the year
Twinloop Nominees (Pty) Ltd
Sylvania Holdings Limited
Aralon Holdings Limited
Sylvania South Africa (Pty) Ltd
Sylvania Metals (Pty) Ltd
Sylvania Minerals (Pty) Ltd
Sylvania Mining (Pty) Ltd
Australia
Mauritius
Mauritius
South Africa
South Africa
South Africa
South Africa
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2008
%
100
100
100
100
74
74
100
2007
%
100
100
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 loan advances by Sylvania Resources Limited.
Loans to/from related parties
(b)
The following table provides detail of advances to/(from) related parties during the year and outstanding balances at balance date:
Consolidated
Consolidated
Parent entity
2008
Maximum
balance
outstanding
$
150
27,076
2,021
–
174,328
2,648
2,607
208,830
2008
Year
end
balance
$
150
8,226
2,038
291,280
11,009
368
2,607
2007
Year
end
balance
$
5,004
5,951
–
166,800
–
(1,281,921)
–
315,678
(1,104,166)
2008
Year
end
balance
$
2007
Year
end
balance
$
–
–
–
–
–
100
–
100
–
–
–
–
–
–
–
–
Loans to related parties
Alumicor Maritzburg (Pty) Ltd
Danyland Mining SA (Pty) Ltd
Dwyka Resources Ltd
Ehlobo Metals (Pty) Ltd
Magnum Tantalite (Pty) Ltd
Tameka Shelf Company Four (Pty) Ltd
Washington Resources Ltd
The nature of these transactions represents payments made in South Africa on behalf of the above companies.
Sylvania Resources Annual Report 2008 Page 81
N o t e s t o t h e f i n a n c i a l s t a t e m e n t s ( c o n t i n u e d )
For the year ended 30 June 2008
2 8 . R e l a t e d p a r t y d i s c l o s u r e ( c o n t i n u e d )
No provision for doubtful debts have been raised in relation to any outstanding balances as amounts were either repaid after balance
sheet date, or full payment is expected where balances are still outstanding.
Terms and conditions
All loans were granted on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the
repayment of loans between related parties. No interest is charged on these loans as outstanding balances are normally settled within
30 – 60 days.
The loan to Ehlobo is a long term loan, and no interest is charged on this loan.
Outstanding balances are unsecured and are repayable in cash.
Joint venture in which the entity is a venture
(c)
The Group has a 25% interest in the assets, liabilities and output of an un-incorporated joint venture, CTRP, which operates a chrome
tailings retreatment plant at Kroondal in South Africa (2007: 25%).
Terms and conditions with related parties
Payments made on behalf of 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.
Sylvania Resources Annual Report 2008 Page 82
A d d i t i o n a l i n f o r m a t i o n f o r l i s t e d p u b l i c c o m p a n i e s
Shareholder s profile as at 24 September 2008
A
I s s u e d c a p i t a l
Employee Share Plan
The issued share capital figure includes 1,428,000 shares to be allocated to employees under the Company's share incentive plan.
Employee Option Plan
There are currently 2,100,000 options over ordinary shares in issue held by the directors and employees of the Company.
B . D i s t r i b u t i o n o f s h a r e h o l d e r s
1 –
1,000
1,001 –
5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Total number of fully paid shares on issue
180,962,273
Percentage holding of 20 largest holders
60.55%
C .
S u b s t a n t i a l s h a r e h o l d e r s
Shareholder
Audley Capital Advisors LLP
Credit Suisse Asset Management Australia Ltd
Credit Suisse Asset Management Limited (ODEY)
JP Morgan Asset Management U.K. Limited
Henderson Global Investors Ltd
J O Hambro Capital Management Ltd
Number of
shareholders
84
162
136
198
112
692
Number of
shares
Percentage
fully paid
shares
fully paid
shares
34,810,332
15,624,787
15,624,784
13,988,300
6,326,200
6,115,560
92,489,963
19.24
8.63
8.63
7.73
3.50
3.38
Sylvania Resources Annual Report 2008 Page 83
A d d i t i o n a l i n f o r m a t i o n f o r l i s t e d p u b l i c c o m p a n i e s ( c o n t i n u e d )
Shareholder s profile as at 24 September 2008
D .
Tw e n t y l a r g e s t h o l d e r s o f f u l l y p a i d s h a r e s
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Audley Capital Advisors LLP
Credit Suisse Asset Management Australia Ltd
Credit Suisse Asset Management Limited (ODEY)
JP Morgan Asset Management U.K. Limited
Henderson Global Investors Ltd
J O Hambro Capital Management Ltd
DWS Investments
Colonial First State Global Asset Management (Core)
J O Hambro Investment Management Ltd
Majedie Asset Management Ltd
New City Investment Managers Ltd
Elysian Fund Management Ltd
Almondbury (Christopher Robert Rogerson)
Baker Steel Capital Managers LLP
Standard Bank Jersey Ltd
Wilson Asset Management (International) Pty Ltd
Kirby (Evan)
Deutsche Bank Private Wealth Management Ltd
Odey Asset Management LLP
Newton Investment Management Ltd
34,810,332
15,624,787
15,624,784
13,988,300
6,326,200
6,115,560
3,343,500
2,970,090
2,414,589
2,050,000
1,700,000
1,000,000
875,000
580,000
500,000
456,187
389,300
300,000
265,300
230,000
109,563,929
19.24
8.63
8.63
7.73
3.50
3.38
1.85
1.64
1.33
1.13
0.94
0.55
0.48
0.32
0.28
0.25
0.22
0.17
0.15
0.13
E .
V O T I N G R I G H T S
The voting rights attaching to each class of equity securities are set out below:
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.
Sylvania Resources Annual Report 2008 Page 84
G l o s s a r y o f t e r m s
The following definitions apply throughout the annual financial statements:
AIM
ASX
AUD
GBP
JSE
LSE
PGM
Alternative Investment Market of the London Stock Exchange
Australian Stock Exchange
Australian Dollar
Great British Pound
JSE Limited
London Stock Exchange
Platinum group metals comprising mainly platinum, palladium, rhodium and gold
Sylvania
Sylvania Resources Limited, a company incorporated in Australia
USD
ZAR
United States Dollar
South African Rand
Russell and Associates 1637/08