ANNUAL
REPORT
2 0 1 3
ABN: 87 145 011 178
CORPORATE DIRECTORY
BOARD OF DIRECTORS
AUDITORS
Mr Thomas Sanders
Executive Chairman
Mr Mark Edwards
Non-Executive Director
Mr Michael Kitney
Non-Executive Director
SENIOR MANAGEMENT
Mr Alastair Barker
Exploration Manager
Miss Michelle Simson
Manager Corporate Affairs/Company Secretary
Rothsay Chartered Accountants
Level 1, 4 Ventnor Avenue
West Perth, Western Australia 6005
SOLICITORS
Steinepreis Paganin
Level 4, 16 Milligan Street
Perth, Western Australia 6000
SHARE REGISTRY
Advanced Share Registry Services
150 Stirling Highway
Nedlands, Western Australia 6009
Tel: +61 8 9389 8033
Fax: +61 8 9389 7871
PRINCIPAL PLACE OF BUSINESS
Website: www.advancedshare.com.au
& REGISTERED OFFICE
12 Walker Avenue
West Perth, Western Australia 6005
Tel: +61 8 9226 3666
Fax: +61 8 9226 3668
Email: breaker@breakerresources.com.au
SECURITIES EXCHANGE LISTING
Shares and Listed Options in Breaker Resources
NL are quoted on ASX Limited (codes: BRB and
BRBO respectively). The Home Exchange is Perth,
Western Australia.
Website: www.breakerresources.com.au
ABN 87 145 011 178
CONTENTS
Chairman’s Letter
Review of Activities
Tenement Schedule
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
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BREAKER RESOURCES NL 2013 ANNUAL REPORT
CHAIRMAN’S LETTER
Dear Shareholder,
Over the last year Breaker Resources NL (Breaker or Company) has been actively targeting large new gold discoveries
in Western Australia’s Eastern Goldfields Superterrane (EGST), one of the world’s richest gold provinces.
The year has been a successful one and the Company is positioned for near-term discovery as a direct result. Surprisingly,
the eastern half of the EGST is largely unexplored but this is changing in the wake of new discoveries, new research
and new technology that is able to cost-effectively see through transported cover. Breaker is at the forefront of these
developments by positioning itself early and pegging key structural targets and retaining a strategic tenement holding on
the largest geological faults in the region.
After completing aeromagnetic surveys to enable detailed structural evaluation in mid-2012, Breaker undertook modern
multi-element auger soil surveys over all of its Projects to screen for large gold deposit signatures. These soil surveys
were effective in seeing through the sand cover and led to the identification of seven new large +10-20km gold-in-soil
anomalies on seven of the eight projects that formed the basis of the Company’s IPO. Encouragingly, the larger gold-in-
soil anomalies are coherent and associated with identifiable structures and gold pathfinder metals.
The size and magnitude of the gold-in-soil anomaly at the Dexter Project has not previously been documented in an
area of similar transported cover in Western Australia; it follows that the bedrock gold source may also be large. To have
this many large undrilled gold-in-soil anomalies in a major gold province is uncommon and has resulted in an enviable
portfolio of high-priority gold targets for Breaker to explore in its own right, or joint venture where beneficial, as it builds
an innovative gold business.
To evaluate the main gold-in-soil anomaly at the Dexter Project, Breaker undertook 23,073m of aircore drilling and
identified two discrete areas of secondary gold enrichment in the weathered zone (peak grades of 3m at 7.5g/t gold).
Initial reverse circulation (RC) drilling (8,426m) to test below the secondary mineralisation indicates that gold in the
weathered zone has moved geochemically downslope from the bedrock source(s). Scout RC drilling at the Three Bears
Prospect has confirmed that pyrite, gold and alteration all increase to the south along the Dexter Shear Zone, suggesting
the bedrock source responsible for shedding the large amounts of secondary gold is to the south. The Company has
planned drilling to follow the gold southwards and discovery may be one drill program away.
Our main focus in the upcoming year is on discovery at the Dexter Project. We will also evaluate high priority gold-in-soil
targets at the Attila West and Mt Gill Projects where the transported cover is thin. From a risk management perspective,
Breaker uses modern exploration tools that can identify gold alteration systems quickly and cheaply using wide drill hole
spacing. In recent years, these tools have revolutionised exploration under transported cover and Breaker is well poised
to benefit.
In closing, the Breaker team has laid the foundations for an innovative gold business and on behalf of the Board I would like
to thank Breaker’s staff and management for their professionalism and dedication in making this happen. I encourage you
to share in our excitement as we unlock the gold potential of the forgotten eastern half of Australia’s premier gold province.
Yours sincerely
Tom Sanders
Chairman
BREAKER RESOURCES NL 2013 ANNUAL REPORT
3
REVIEW OF ACTIVITIES
Project Overview
Breaker Resources NL is an Australian explorer focused on the discovery of new gold deposits in the largely unexplored
eastern half of Western Australia’s Eastern Goldfields Superterrane, which accounts for 75% of Australia’s gold
endowment. Breaker is one of the largest tenement holders in the EGST and currently has a 100% interest in seven
exploration projects with a total area of ~4,055km2. In the course of the year, Breaker applied for six new tenements to
cover newly-identified gold-in-soil anomalies.
The Company’s projects target key structural positions on major crustal faults known to be instrumental in the formation
of world class gold deposits in the well-explored western part of the EGST. Breaker’s primary focus is on the Dexter,
Attila West and Mt Gill Projects on the Yamarna Shear Zone. The Company’s main exploration tool is the drill rig guided
by modern, multi-element geochemistry and infrared reflectance technology that enables cost-effective identification of
large gold alteration systems on a wide drill hole spacing.
During 2012/13 Breaker completed multi-element auger soil sampling over all of its Projects to screen for large gold
deposit signatures. These programs successfully identified seven new +10-20km gold-in-soil anomalies on seven
projects, validating the Company’s structural targeting approach and confirming the ability of Breaker’s geochemical
techniques to see through sand cover.
The gold-in-soil anomaly at the Dexter Project is particularly robust and large (up to 0.3g/t gold, 17g/t silver). Aircore drilling
completed to scope the anomaly identified two discrete zones of sub-surface, secondary (redox) gold mineralisation at
the Three Bears and Tallows Prospects with a peak grade of 3m at 7.5g/t gold.
RC drilling (8,426m) to test the prospects established that gold in the weathered zone has moved downslope from
the bedrock source(s). Follow-up RC drilling at the Three Bears Prospect, aimed at locating the bedrock source
upslope of the initial area tested, encountered enhanced pyrite, gold and alteration on the Dexter Shear Zone which
increases in intensity to the south. Breaker now plans follow-up drilling to trace the gold south to where the main
bedrock source is believed to be located. Other works completed at the Company’s projects during 2012/13 include an
aeromagnetic/radiometric survey, a trial ground electromagnetic survey and considerable data interpretation and analysis.
Heritage surveys were completed at the Attila West, Mt Gill and Kurrajong Projects.
Dexter Gold Project
The 1,360km2 Dexter Gold Project is located 140km
south-southeast of Laverton in the southern part of the
Burtville and Yamarna Terranes, 80km northwest of
the Tropicana gold deposit. The Project straddles the
intersection of the Yamarna and Dexter Shear Zones and
includes 27km of the Yamarna Shear Zone and 60km of
the Dexter Shear Zone. Thin aeolian sand and transported
weathered Permian sediment overly the prospective
Archean basement rocks and prior to Breaker’s activities,
the Project was essentially unexplored.
The Dexter Gold Project is Breaker’s main focus due to
the size and magnitude of the gold-in-soil anomaly which
to the Company’s knowledge has not been documented
in similar areas of transported cover in Western Australia.
Activities at Dexter during the reporting period included
infill multi-element auger soil
reconnaissance and
sampling, aircore drilling and RC drilling, together with
interpretation of aeromagnetic data.
Subsequent to year end, two new exploration licence
applications were submitted to secure prospective ground
along the western boundary of the Project, and to cover
a discrete magnetic feature identified 15km to the west
(ELA 39/1744 and ELA 39/1745).
Breaker Resources’ Project Locations
4
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Auger Soil Sampling
The reconnaissance (1,600m x 400m) auger soil sampling identified a previously unknown gold trend with peak soil values
up to 50ppb gold in several coherent anomalies over a 25km-long strike length with associated pathfinder gold elements
including mercury, copper, zinc and silver. The strike length of the anomaly was subsequently increased to 32km following
extension of the auger sampling to the north into the newly granted E38/2695, whilst remaining open to the south.
An infill (400m x 100m) auger soil program, targeting the northern half of the 32km-long soil anomaly, defined two priority
prospects, each with different and distinct auriferous element signatures consistent with an Archean bedrock source. The
Three Bears Prospect, situated adjacent to the Dexter Shear Zone, comprises three anomalies up to 6km long in total with
peak values of 298ppb gold and 17,415ppb silver. The Tallows Prospect, situated adjacent to the Yamarna Shear Zone,
comprises a 14km-long anomaly with peak values of 130ppb gold.
In June/July 2013, reconnaissance auger soil sampling (1,600m x 400m) was extended to the south on the Dexter Shear
Zone for a distance of 35km, and to as yet unsampled parts of E38/2695 to the north.
Tallows
Prospect
Tallows
Prospect
Three
Bears
Prospect
Three
Bears
Prospect
D
e
x
t
e
r
S
h
e
a
r
D
e
x
t
e
r
S
h
e
a
r
Tallows
Prospect
Tallows
Prospect
Y
a
m
a
r
n
a
Y
a
m
a
r
n
a
Three
Bears
Prospect
Three
Bears
Prospect
Gold-in-soil
(outer)
Gold-in-soil
(outer)
Legend
(ppb x m)
THESE
ARE
THE
SECOND
OF
THE
FIGURES
FOR
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5
THESE
ARE
THE
SECOND
OF
THE
FIGURES
FOR
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5
Dexter Project: Gold-in-soil Image
Image of Redox Gold in Drill Holes
(subsurface, fossil water table-related gold)
Legend
(ppb x m)
D
e
x
D
t
e
e
r
x
t
S
e
h
r
e
S
a
h
r
e
a
r
Three
Bears
Prospect
Three
Bears
Prospect
Tallows
Prospect
Tallows
Prospect
Sb – vector south
Sb – vector south
Au
Au
Te – vector south
Te – vector south
THESE
ARE
THE
CAPTIONS:
Bedrock Sulphur in RC Drill Holes
Bedrock Sulphur in RC Drill Holes on Gold-in-Soil Image
THESE
ARE
THE
CAPTIONS:
on Gold-in-Soil Image
Bedrock Sulphur in RC Drill Holes on Gold-in-Soil Image
3D Perspective of Drilling at Three Bears
Prospect showing Antimony (Sb), Tellurium
(Te) and Gold (Au) increasing to the south
3D Perspective of Drilling at Three Bears Prospect showing
along Dexter Shear Zone
Antimony (Sb), Tellurium (Te) and Gold (Au) increasing to the
south along Dexter Shear Zone
3D Perspective of Drilling at Three Bears Prospect showing
Antimony (Sb), Tellurium (Te) and Gold (Au) increasing to the
south along Dexter Shear Zone
BREAKER RESOURCES NL 2013 ANNUAL REPORT
5
REVIEW OF ACTIVITIES CONTINUED
Aircore Drilling
A 23,073m aircore drill program, comprising 8,626m at
the Three Bears Prospect and 14,447m at the Tallows
Prospect, was completed in March 2013 with the objective
of scoping the prospects’ anomalies in preparation for RC
drilling. The drilling was conducted on a line spacing of
400m to 1,200m and a vertical drill hole spacing of 80m,
closing to 40m in selected areas. Permian cover varied
from 25m to 75m in thickness with approximately 65%
of the drill holes reaching definitive bedrock. Penetration
of fresh Archean bedrock was limited (generally <1m)
and bottom-of-hole samples assaying up to 0.9g/t gold
typically included some weathered material.
The aircore program identified two discrete zones of
secondary (redox) gold enrichment in the weathered zone
at the Three Bears and Tallows Prospects with a peak grade
of 3m at 7.5g/t gold developed at a depth of 30m to 70m.
These areas of redox gold enrichment occur in discrete
areas within a larger coherent “channel” of gold-in-soil
enrichment adjacent to the Dexter and Yamarna Shear
Zones, suggesting restricted (Archean) bedrock sources
consistent with recent research models. Bottom-of-hole
bedrock geochemistry indicates anomalous levels of gold
pathfinder elements including arsenic, tungsten, selenium
and tellurium. Hematite- and sericite-altered syenite rocks
were encountered at both prospects confirming a deep
mantle link, considered a prerequisite in the formation of
many large gold deposits.
Reverse Circulation Drilling
Aircore Drilling at Dexter
An 8,426m RC drill program was completed in early July 2013 to test the bedrock below sub-surface redox gold
enrichment identified in the weathered zone in the aircore program. The drill program consisted of 39 completed drill
holes at the Three Bears Prospect (5,513m) and a further 13 drill holes (2,659m) at the Tallows Prospect. The RC drilling
was partly funded by a grant from the WA Government’s Exploration Incentive Scheme.
At the Three Bears Prospect, initial drilling below areas of sub-surface redox gold intersected sericite- and hematite-
altered syenite and granodiorite rocks. However, anomalous gold was restricted to the zone of weathering, indicating that
the redox gold enrichment has moved geochemically downhill from the inferred bedrock source.
To assist in locating the bedrock source of the gold, 25 vertical “stratigraphic” drill holes (2,307m) were also completed
upslope to the west of the initial area drilled in order to obtain a broader footprint of the redox gold enrichment, and
to clarify the extent and nature of bedrock alteration. This drilling identified a 400m-wide zone of sheared and altered
amphibolite on the Dexter Shear Zone with pyrite increasing noticeably to the south. A further seven angled RC drill holes
(1,486m) were then drilled tracing the 400m-wide zone of sulphide-altered amphibolite along the Dexter Shear Zone to
the south.
The final RC drill hole at Three Bears situated on the southern-most RC/aircore drill traverse intersected narrow 1m zones
of anomalous gold assaying up to 0.3g/t in fresh pyrite-rich bedrock, suggesting that the inferred bedrock gold source is
further south. This is consistent with elevated redox gold enrichments along the Dexter Shear, and converging tungsten
and sulphur trends from bottom-of-hole aircore geochemistry. Gold and silver soil anomalies also converge in the area.
At the Tallows Prospect, 13 broadly spaced RC drill holes (2,659m) were completed over a 4km strike length to test the
bedrock below areas of redox gold enrichment, developed at a depth of 30m to 60m over a 7km distance. These holes
intersected hematite-altered granodiorite and syenite with localised areas of pyrite and sericite alteration. Anomalous
gold was found to be restricted to the weathered zone suggesting that the redox gold enrichment is displaced from the
inferred bedrock source, which is interpreted to be close to the area drilled, potentially in the Yamarna Shear Zone.
6
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Due to the large dimensions of the target areas involved, a decision was made to focus most of the RC drilling on the
Three Bears Prospect where a tighter drill density enabled more detailed analysis.
Further RC drilling is planned at the Three Bears Prospect to trace the bedrock gold to the south, and at the Tallows
Prospect to test the Yamarna Shear Zone.
RC Drilling at Dexter
Attila West Gold Project
The Attila West Project is located 130km east-northeast of Laverton and approximately 2km west of the 1Moz Attila
Trend gold resource. The Project comprises three tenements with an overall area of 792km2.
Attila West has a favourable setting for gold mineralisation based on the interaction between a large domal granite
intrusion in the central part of the Project, the Yamarna Shear Zone and the Mt Venn and Isolated Hills greenstone belts in
the footwall of the Yamarna Shear Zone. Several large east-west structures, known to have a spatial association with gold
in the area, are also apparent. The Attila West Project is dominated by thin wind-blown sand cover over residual Archean
basement in the northern half of the Project, and thin Permian cover in the southern half (generally <10m). Historical
exploration is limited and the vast majority of the Project is unexplored.
Breaker flew a detailed aeromagnetic/radiometric survey in mid-2012 and, to scan for large gold deposits, subsequently
completed a multi-element reconnaissance auger soil program, comprising 1,375 samples on a 1,600m x 400m pattern.
The soil program successfully identified a series of large, coherent gold-in-soil anomalies which cluster around the margin
of the large granite in the central Project area. The anomalies are associated with elevated gold pathfinder elements,
including molybdenum, arsenic, bismuth and silver, which enhance their prospectivity.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
7
REVIEW OF ACTIVITIES CONTINUED
The largest (northern) soil anomaly extends over a distance of 20km and is up to 2.5km in width with peak values of 12ppb
gold and 2,068ppb silver (2g/t). This anomaly is partially coincident with the northern margin of the magnetic granite and
the Mt Venn greenstone belt, and trends to the north along the greenstone belt in the vicinity of several east-west faults.
The southern soil anomalies are smaller in size but locally higher in magnitude (maximum dimension of 12km x 2km; up to
73ppb gold). These anomalies are typically associated with magnetic discontinuities, including east-west trending faults
and low magnetic zones marginal to the magnetic granite, interpreted as partially consumed remnants of the Isolated
Hills greenstone belt.
The Attila West soil anomalies identified are potentially significant as they are large and cohesive, despite the sand
dune country, and are associated with elevated gold pathfinder metals in good structural setups. The soil anomalies are
comparable in magnitude to those encountered in similar settings at other early stage exploration projects in the region
that led to subsequent gold discovery.
Subsequent to year end, areas of low prospectivity were surrendered based on the results of the auger soil program.
Ground follow-up is in progress in preparation for heritage clearance and drilling. Selective infill (400m x 100m) auger soil
sampling will be completed as required to assist drill targeting.
In June 2013 Breaker was awarded a grant of $150,000 for co-funding of drilling at the Attila West Project under the WA
Government’s Exploration Incentive Scheme. Breaker will be required to match the funding grant on a dollar-for-dollar
THESE
ARE
THE
FIGURES
FOR
PAGE
8
basis on direct drilling costs.
THESE
ARE
THE
FIGURES
FOR
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8
1Moz
1Moz
THESE
ARE
THE
CAPTIONS:
Attila West: Interpreted Geology
Attila West: Interpreted Geology
THESE
ARE
THE
CAPTIONS:
Imaged Gold-in-Soil…20km-long Anomaly on Granite Contact
Imaged Gold-in-Soil…20km-long Anomaly on Granite Contact
Attila West: Interpreted Geology
Imaged Gold-in-Soil…20km-long Anomaly on Granite Contact
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BREAKER RESOURCES NL 2013 ANNUAL REPORT
Mt Gill Gold Project
The Mt Gill Project, located 135km northeast of Laverton, comprises two exploration licences situated 12km along strike
from the Khan North gold deposit and 30km along strike from the Attila-Alaric-Central Bore gold deposits. The Project
includes 35km of the Yamarna Shear Zone and 17km of the Yamarna greenstone belt. The regolith is dominated by
extensive thin aeolian sand overlying Archean bedrock; mixed outcrop, colluvium and sand cover are present to the east
of the Yamarna Shear.
During 2012/13 Breaker completed a multi-element reconnaissance auger soil program, comprising 770 samples on a
1,600m x 400m pattern, to scan for large gold deposits. The soil program successfully identified multiple gold-in-soil
anomalies in four distinct areas associated with variably anomalous arsenic, copper, silver and antimony. The results
are potentially significant and display reasonable continuity on known structures on a wide sample spacing in a regolith
dominated by wind-blown sand. The results highlight the unexplored gold potential in the footwall area of the Yamarna
Shear as well as in more obvious areas to the east of the Yamarna Shear.
The southern area gold-in-soil anomalies are associated with an arcuate magnetic low in sand dune country in the footwall
of the Yamarna Shear. At +3ppb gold, the soil anomaly extends over 25km with smaller areas of +6 ppb gold, and a peak
value of 25ppb gold. The arcuate magnetic low separates a mafic complex to the west, from granite gneiss to the east.
The inferred mafic complex was identified from strongly anomalous chrome and nickel values obtained in the soil survey.
The northern area soil anomalies are also in sand dune
country in the footwall of the Yamarna Shear. Although lower
in magnitude (peak value of 8ppb gold), the soil anomalies
have a spatial association with a domal granite intrusion.
The eastern area soil anomalies are located on the Yamarna
Shear and Yamarna greenstone belt along strike from the
Khan North and Attila gold deposits. The Yamarna Shear
anomalies have an overall strike length of 14km with a
peak value of 57ppb gold. The Yamarna greenstone belt
anomalies have an overall strike length of 7km with a peak
value of 63ppb gold. Residual soils to the east of the
Yamarna Shear are more widespread and as a result, the
background gold values are higher.
Aircore and RC drilling of higher priority gold-in-soil
anomalies is planned to evaluate the soil results. Selective
infill (400m x 100m) auger soil sampling will be completed
as required to assist drill targeting.
Based on the results of the auger soil program, and
subsequent to year end, parts of the Project considered
title
unprospective
sensitivities) were surrendered, reducing the overall area
of the Project from 518km2 to 445km2.
inaccessible due
to native
(or
Mt Gill: Interpreted Geology with Historical Drilling,
Soil Sampling & Gold Geochemistry
BREAKER RESOURCES NL 2013 ANNUAL REPORT
9
REVIEW OF ACTIVITIES CONTINUED
Duketon North Gold Project
The Duketon North Project, located 160km north-northwest of Laverton, is situated 50km north of the 10Moz Moolart
Well/Garden Well/Rosemont gold camp. The Project comprises three granted tenements and three tenement applications
with an overall area of 627km2. The Project targets gold associated with a 42km strike length of the Hootanui Shear, a
major fault zone that separates the Kurnalpi and Burtville Terranes.
Outcrop is limited and the regolith is dominated by thin (<2m) wind-blown sand cover overlying Archean basement.
Geochemistry has not previously been undertaken and historical drilling is limited to a single line of drill holes on a 3km
spacing undertaken by BHP Minerals Pty Ltd in the mid-1990s.
The Company completed a detailed +6,000 line km aeromagnetic/radiometric survey in July 2012 to provide baseline
data for structural interpretation. To scan for large gold deposit signatures, Breaker then undertook a reconnaissance
multi-element auger soil sampling program, comprising 932 samples on a 1,600m x 400m pattern over the entire Project.
The reconnaissance soil program successfully identified 17 gold-in-soil anomalies many of which have a spatial association with
a number of prominent structural positions. The gold-in-soil anomalies have a peak value of 10ppb gold which is comparable to
soil anomalies associated with the Moolart Well (3 to 7ppb gold) and Garden Well (3 to 25ppb gold) deposits. The anomalies
have a spatial association with a number of prominent structural features, including the Hootanui Shear Zone, and are
locally associated with gold pathfinder elements including tungsten, antimony, arsenic and tellurium.
A program of infill auger soil sampling commenced in late-May 2013, targeting higher priority soil anomalies identified by
the reconnaissance soil sampling. The program comprised 2,130 samples on a 400m x 100m pattern and was completed
in late-July 2013. Aircore and RC drilling is scheduled to be undertaken during 2013/14 subject to assay results.
Duketon North & De La Poer Projects: Interpreted Geology with Historical Drilling
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BREAKER RESOURCES NL 2013 ANNUAL REPORT
De La Poer Gold Project
The 455km2 De La Poer Project is located in the Burtville Terrane, 130km northeast of Laverton and 50km east of the
10Moz Moolart Well/Garden Well/Rosemont gold camp. The Project targets gold adjacent to the De La Poer Fault and
includes the Deleta greenstone belt, initially identified in 1999. The De La Poer Project is largely unexplored and is
dominated by thin sand cover over Archean basement.
Reconnaissance auger soil sampling completed in February 2013 identified seven gold-in-soil anomalies of potential
interest. The anomalies are up to 10km in length with gold values up to 8ppb which is comparable to early stage soil
results in the area which have led to discovery. The anomalies are potentially significant based on tenor, coherence
and location with respect to structural features and the presence of locally elevated gold pathfinder elements, including
arsenic, molybdenum and bismuth.
Planned activities for 2013/14 include scout aircore drilling of selected gold-in-soil anomalies to assess bedrock alteration
followed by selective infill auger soil sampling as required to facilitate drill targeting.
In May 2013, one new exploration licence application was made to cover potential extensions of a gold-in-soil anomaly
outlined by the reconnaissance soil sampling and in July 2013, selected parts of the Project deemed unprospective, or
inaccessible due to environmental concerns, were surrendered.
Kurrajong Gold Project
The Kurrajong Project is located in the Yamarna Terrane, 175km east-northeast of Laverton and consists of one granted
tenement with an overall area of 217km2. The Project targets the intersection of a domal granite intrusion and a major
fault in the southern part of the Dorothy Hills greenstone belt. The geomorphology is dominated by wind-blown sand
dunes in an area of Permian cover. Historical gold-in-soil values of up to 45ppb gold were identified in sand by WMC Ltd
in 1997 but no drilling was undertaken.
Breaker completed a reconnaissance (1,600m x 400m) multi-element auger soil sampling program in the north-western
part of the Project in December 2012. The soil program successfully identified a coherent 12km gold-in-soil anomaly
associated with elevated mercury, silver, molybdenum and copper (peak value of 24ppb gold, 1,574 ppb silver). The soil
anomaly is coincident with the apex of a domal granite intrusion and extends to the northwest adjacent to a major fault.
Planned activities for 2013/14 include an initial wide-spaced aircore or RC drilling program to test for alteration of
Archean bedrock below areas of anomalism followed by selective infill auger soil sampling as required to facilitate
detailed RC drill targeting.
Subsequent to year end, the eastern part of the Kurrajong Project was surrendered based on an assessment of the
thickness of transported cover by an independent geophysicist. The Kurrajong North Prospect was surrendered in April
2013 as native title heritage sensitivities precluded field access.
Mt Sefton Gold Project
The 211km2 Mt Sefton Project is located 80km east-northeast of Laverton and 50km along strike from historic gold
mineralisation at Cosmo Newberry. The Mt Sefton Project targets gold mineralisation in a small, previously undrilled
greenstone belt situated within a large zone of deformation termed the Sefton Lineament.
In May 2013, a reconnaissance multi-element auger program was conducted on a 1,600m x 400m pattern to scan for
large gold deposit signatures. Several gold-in-soil anomalies were identified, the largest of which extends for 20km at
+4ppb gold and 3,075ppb silver. Pathfinder elements including arsenic and molybdenum are locally anomalous. Analysis
of the results is continuing however likely activities in 2013/14 include a heritage survey and aircore drilling.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
11
REVIEW OF ACTIVITIES CONTINUED
Mt Sefton Landscape
Breaker Field Activities
Kingston Gold Project
The Kingston Project in located in the Yamarna Terrane, 200km north-northeast of Laverton and targets gold and nickel
mineralisation in a previously undrilled 35km-long Archean greenstone belt near the northern margin of the Yilgarn Craton.
Historical exploration indicated Paleoproterozoic and Permian cover rocks up to 200m in thickness.
A trial ground electromagnetic survey undertaken in July 2012 determined that ground or airborne time-domain
electromagnetic methods would not be viable due to the thickness of cover rocks. Results from a selective program of
multi-element auger soil sampling in May 2013 did not identify any significant geochemical signatures. Given the auger
results, and the considerable depth of cover, no future work could be justified and the Kingston Project was surrendered
in July 2013.
Competent Person Statement
The information contained in this report that relates to exploration results and geological information is based on information compiled
by Mr Tom Sanders, an officer of Breaker Resources NL whose services have been engaged by Breaker on an 80% of full time basis.
Mr Sanders is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the activities which he is undertaking to qualify as a Competent
Person as defined in the December 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves’ (JORC Code). Mr Sanders consents to the inclusion in this report of the information based on his work in the form and
context in which it appears.
12
BREAKER RESOURCES NL 2013 ANNUAL REPORT
TENEMENT SCHEDULE
The following is a summary of tenements held by Breaker Resources NL as at 30 June 2013.
Project
Attila West
De La Poer
Dexter
Duketon North
Kingston
Kurrajong
Mt Gill
Mt Sefton
Tenement
Number
E38/2530
E38/2532
E38/2598
E38/2604
E38/2516
E38/2517
E38/2518
E38/2519
E38/2520
E38/2853
E38/2695
E39/1611
E39/1614
E39/1744
E39/1745
E38/2511
E38/2512
E38/2852
E38/2854
E38/2855
E53/1592
Status
Granted
Granted
Granted
Application(i)
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Application
Application
Granted
Granted
Application
Application
Application
Granted
E38/2521
Granted(ii)
E38/2531
E38/2537
E38/2513
E38/2529
E38/2514
Granted
Application(iii)
Granted
Granted
Granted
Percentage
Held/Earning
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(i)
(ii)
(iii)
Application withdrawn 19 July 2013
Tenement surrendered 19 July 2013
Application withdrawn 23 July 2013
14
BREAKER RESOURCES NL 2013 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
Breaker Resources NL has made it a priority to adopt systems of control and accountability as the basis for the
administration of corporate governance. The goals of the corporate governance process are to:
• maintain and increase shareholder value;
• ensure a prudential and ethical basis for the Company’s conduct and activities; and
• ensure compliance with the Company’s legal and regulatory objectives.
Further information about the Company’s corporate governance practices including the relevant information on the
Company’s charters, Code of Conduct and other policies and procedures is set out on the Company’s website at
www.breakerresources.com.au.
The Board of Directors
Role of the Board
The Board’s primary role is to represent shareholders and to promote and protect the interests of the Company. To fulfil
this role, the Board is responsible for:
• developing initiatives for profit and asset growth, setting strategic operational and financial objectives and monitoring
progress against these objectives;
• acting on behalf of, and being accountable to, the shareholders;
• identifying business risks and implementing actions to manage those risks and corporate systems to assure quality;
• reviewing the corporate, commercial and financial performance of the Company on a regular basis; and
• ensuring that there are effective corporate governance policies and practices in place.
The Company is committed to the circulation of relevant materials to directors in a timely manner to facilitate directors’
participation in the Board discussions on a fully informed basis.
Composition of the Board
Election of directors is substantially the province of shareholders in general meeting however subject thereto, the Company
is committed to the following principles:
• the Board is to comprise persons with a blend of skills, experience and attributes appropriate to the Company and
its business; and
• the principal criterion for the appointment of new directors is their ability to add value to the Company and its business.
It is a priority of the Board to achieve an appropriate balance between independent and non-independent representation.
The Board will endeavour to ensure that there is a majority of independent directors at any time. In determining whether
or not directors are independent, the Board applies the criteria as set out in the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations with 2010 Amendments (Recommendations).
In light of the Company’s size and nature, the Board considers that the current composition is a cost effective and
practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope,
the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed.
The Constitution of the Company allows for a Board of between three (3) and 10 directors. A director (other than the
managing director) may not retain office for more than three (3) years without submitting for re-election. At each annual
general meeting a minimum of one (1) director must retire by rotation and be re-elected by shareholders if they are
to continue as a director of the Company. Directors appointed during a year must seek re-election at the next annual
general meeting.
The Board meets on an “as required” basis, but generally four (4) times a year in person with additional meetings being
held by telephone conference.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
15
CORPORATE GOVERNANCE STATEMENT CONTINUED
Appointments to Other Boards
Directors are required to take into consideration any potential conflicts of interest when accepting appointments to
other boards.
Independent Professional Advice
The Board has determined that individual directors have the right, in connection with their duties and responsibilities as
directors, to seek independent professional advice at the Company’s expense. With the exception of expenses for
legal advice in relation to the director’s rights and duties, the engagement of an outside adviser is subject to prior
approval of the chairman and this will not be withheld unreasonably.
Corporate Governance
Continuous Review of Corporate Governance
Directors consider, on an ongoing basis, how management information is presented to them and whether such information
is sufficient to enable them to discharge their duties as directors of the Company. Such information must be sufficient to
enable the directors to determine operating and financial strategies from time to time in light of changing circumstances
and economic conditions. The directors recognise that gold exploration is an inherently risky business and that operational
strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.
ASX Corporate Governance Principles
Commensurate with the spirit of the Recommendations, the Company has followed each Recommendation where the
Board has considered the Recommendation to be an appropriate benchmark for its corporate governance practices.
The table below lists each of the Recommendations and whether the Company was in compliance with the
Recommendations as at 30 June 2013. Where the Company considers that it is divergent from the Recommendations,
or that it is not practical to comply, there is an explanation of the Company’s reasons provided.
Principle
Complied
Comment
1. Lay solid foundations for management and oversight
1.1 Companies should establish the
functions reserved to the Board
and those delegated to senior
executives and disclose those
functions
1.2 Companies should disclose the
process for evaluating the
performance of senior executives
1.3 Companies should provide the
information indicated in the
Guide to Reporting on Principle 1
The Company’s Corporate Governance Manual
(CGM) includes a Board charter which discloses the
specific responsibilities of the directors (available
on the Company’s website). The Board delegates
responsibility for the day-to-day operations and
administration of the Company to the Managing
Director (or equivalent – ie. Executive Chairman (EC)).
The Company’s CGM includes a section on
performance evaluation practices adopted by the
Company. The remuneration committee is charged
with the periodic review of the job description
and performance of the EC according to agreed
performance parameters. The committee also reviews
the performance and remuneration of senior staff
following recommendations from the EC.
No formal performance evaluation of senior executives
has taken place to date, due to their relatively short
tenure with the Company.
The Company is not aware of any departure from
Recommendations 1.1, 1.2 and 1.3.
16
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Principle
Complied
Comment
2. Structure the Board to add value
2.1 A majority of the Board should be
independent directors
2.2 The chair should be an independent
director
2.3 The roles of the chair and chief
executive officer (or equivalent)
should not be exercised by the
same individual
2.4 The Board should establish a
nomination committee
2.5 Companies should disclose the
process for evaluating the
performance of the Board, its
committees and individual directors
2.6 Companies should provide the
information indicated in the
Guide to Reporting on Principle 2
The Board comprises three (3) directors, of whom two
(2) are independent (Mark Edwards and Mike Kitney).
The chair is currently a non-independent director (Tom
Sanders). Given the Company’s background, nature
and size in the current stage of development, the Board
believes that the existing structure is acceptable.
It is the Company’s intention to comply with this
Recommendation at a time when warranted by the size
of the Company and its activities.
The role of chair and chief executive officer is currently
exercised by the same individual. The Company will
appoint an independent director to assume the role of
chair when the chair is unable to act in that capacity as
a result of a lack of independence.
A nomination committee is in place and comprises
Tom Sanders, Mark Edwards and Mike Kitney. A
copy of the committee charter is available on the
Company’s website, together with the Company’s
policy for the selection of directors.
The Company’s CGM includes a section on
performance evaluation practices adopted by the
Company. The chair reviews the performance of the
Board, its committees and individual directors to
ensure that the Company continues to have a mix of
skills and experience necessary for the conduct of
its activities.
The skills, experience and expertise of each director,
and their respective periods of office, are set out in
the Directors’ Report contained within this Annual
Report, as are details of directors’ attendance at Board
and committee meetings.
A statement as to the Company’s materiality
threshold is disclosed in the Board charter (available
on the Company’s website). No formal performance
evaluation of the Board, its committees and individual
directors has taken place to date.
The Company is not aware of any departure from
Recommendations 2.1, 2.4, 2.5 and 2.6. Explanations
relating to Recommendations 2.2 and 2.3 are provided.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
17
CORPORATE GOVERNANCE STATEMENT CONTINUED
Principle
Complied
Comment
3. Promote ethical and responsible decision making
3.1 Companies should establish a code
of conduct and disclose the code
3.2 Companies should establish a
policy concerning diversity and
disclose the policy
3.3 Companies should disclose in
each annual report the measurable
objectives for achieving gender
diversity set by the Board in
accordance with the diversity policy
and progress towards achieving them
3.4 Companies should disclose in
each annual report the proportion
of women employees in the whole
organisation, women in senior
executive positions and women on
the Board
3.5 Companies should provide
the information indicated in the
Guide to Reporting on Principle 3
A code of conduct is incorporated within the
Company’s CGM and is available on the website. The
code provides a framework for decisions and actions
promoting ethical conduct in employment.
The Company’s CGM includes a diversity policy
(available on the Company’s website) which has the
objective of providing a fair and equitable workplace,
free from discrimination related to age, gender,
ethnic, cultural or other personal factors, in which
diversity enhances the Company’s performance and
shareholder value.
Given the Company’s size and stage of development as
an exploration company, the Board does not think it is yet
appropriate to include measurable objectives in relation
to gender. As the Company grows and requires more
employees, the Company will review this policy
and amend as appropriate.
As at 30 June 2013, 17% of employees and 33% of
senior executives were female. There are no
female directors on the Company’s Board.
The Company is not aware of any departure
from Recommendations 3.1, 3.2, 3.4 and 3.5. An
explanation relating to Recommendation 3.3 is
provided.
18
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Principle
Complied
Comment
4. Safeguard integrity in financial reporting
4.1 The Board should establish an
audit committee
4.2 The audit committee should be
structured so that it:
consists only of non-executive
•
directors;
consists of a majority of
•
independent directors;
is chaired by an independent
•
chair, who is not chair of the Board;
•
has at least three (3) members
4.3 The audit committee should have
a formal charter
4.4 Companies should provide the
information indicated in the
Guide to Reporting on Principle 4
5. Make timely and balanced disclosure
5.1 Companies should establish
written policies designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to
ensure accountability at a senior
executive level for that compliance
and disclose those policies
5.2 Companies should provide the
information indicated in the
Guide to Reporting on Principle 5
An audit committee is in place and comprises
Mark Edwards, Mike Kitney and Tom Sanders.
There are only three (3) directors in total on the
Company’s Board, two (2) of whom are non-executive
directors. The cost of sourcing alternative directors
to strictly comply with this Recommendation is
considered to outweigh the potential benefits.
The Board believes the current composition of the
audit committee is both appropriate and acceptable at
this stage of the Company’s development.
The audit committee comprises three (3) members,
a majority of whom are independent directors and it
is chaired by an independent director who is not the
chair of the Board.
A copy of the audit committee charter is available on
the Company’s website, together with the policy for
the selection of external auditor.
The names and qualifications of each audit committee
member and details of their attendance at committee
meetings are included in the Directors’ Report of this
Annual Report.
The Company is not aware of any departure from
Recommendations 4.1, 4.3 and 4.4. An explanation
relating to Recommendation 4.2 is provided.
A continuous disclosure policy is incorporated within
the Company’s CGM and is available on the website.
The Company is not aware of any departure from
Recommendations 5.1 and 5.2.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
19
CORPORATE GOVERNANCE STATEMENT CONTINUED
Principle
Complied
Comment
6. Respect the rights of shareholders
6.1 Companies should design
a communications policy
for promoting effective
communication with shareholders
and encouraging their participation
at general meetings and disclose
their policy
6.2 Companies should provide the
information indicated in the
Guide to Reporting on Principle 6
7. Recognise and manage risk
7.1 Companies should establish
policies for the oversight and
management of material business
risks and disclose a summary of
those policies
7.2 The Board should require
management to design and
implement the risk management
and internal control system to
manage the company’s material
business risks and should disclose
that management has reported to
it as to the effectiveness of the
company’s management of its
material business risks
7.3 The Board should disclose whether
it has received assurance from
the chief executive officer (or
equivalent) and the chief financial
officer (or equivalent) that the
declaration provided in accordance
with section 295A of the
Corporations Act is founded on a
sound system of risk management
and internal control and that the
system is operating effectively in
all material respects in relation to
financial reporting risks
7.4 Companies should provide the
information indicated in the
Guide to Reporting on Principle 7
A shareholder communication policy is incorporated
within the Company’s CGM and is available on the
website. The Board encourages the attendance of
shareholders at shareholders’ meetings and sets the
time and place of each shareholders’ meeting to allow
maximum attendance by shareholders.
The Company is not aware of any departure from
Recommendations 6.1 and 6.2.
The Company has established a risk committee
which is responsible for overseeing and approving
risk management strategy and policies, internal
compliance and non-financial internal control. A copy
of the risk committee charter is available on the
Company’s website, together with the Company’s risk
management policy.
The Company’s risk management policy provides
a framework for the risk management and internal
control system. Senior executives are responsible for
the establishment and maintenance of a risk register
which is reviewed regularly by the risk committee and
of reporting to the committee as to the effectiveness
of the Company’s management of its material business
risks.
The Company’s chief executive officer (or equivalent)
and chief financial officer (or equivalent) have provided
the Board with assurances in compliance with this
Recommendation.
The Company is not aware of any departure from
Recommendations 7.1, 7.2, 7.3 and 7.4.
20
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Principle
Complied
Comment
8. Remunerate fairly and responsibly
8.1 The Board should establish a
remuneration committee
8.2 The remuneration committee
should be structured so that it:
•
•
•
consists of a majority of
independent directors
is chaired by an independent
director
has at least three (3) members
8.3 Companies should clearly
distinguish the structure of non-
executive directors’ remuneration
from that of executive directors
and senior executives
8.4 Companies should provide the
information indicated in the
Guide to Reporting on Principle 8
A remuneration committee is in place and comprises
Mike Kitney, Mark Edwards and Tom Sanders. A copy
of the remuneration committee charter is available on
the Company’s website, together with the Company’s
remuneration policy.
The remuneration committee comprises three (3)
members, a majority of whom are independent
directors and is chaired by an independent director
who is not the chair of the Board.
The structure of non-executive director remuneration
is clearly distinguishable from that of executive
directors and other senior executives. The level of
remuneration packages and policies applicable to
directors are detailed in the Remuneration Report
which forms part of the Directors’ Report in this
Annual Report.
The names of each remuneration committee member
and details of their attendance at committee meetings
are included in the Directors’ Report of this Annual Report.
Non-executive directors are entitled to statutory
superannuation. There are no other schemes for
retirement benefits for non-executive directors.
Directors are prohibited from entering into
transactions which limit the risk of participating
in unvested entitlements under any equity based
remuneration scheme.
The Company is not aware of any departure from
Recommendations 8.1, 8.2, 8.3 and 8.4.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
21
DIRECTORS’ REPORT
The directors of Breaker Resources NL (Breaker) herewith submit the financial report for the year ended 30 June 2013.
In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
Information about Officeholders
Directors
The names of the directors of the Company during or since the end of the financial year and up to the date of this report
are provided below. All of the directors held their positions for the entire financial year period unless otherwise stated.
Mr Thomas Sanders BSc (Geology); MSc (Mineral Economics); MAusIMM; FAICD
Executive Chairman (appointed 2 July 2010)
Tom Sanders is a geologist with 35 years’ experience in the Australian mining industry including project generation,
exploration, mining and corporate management with a strong emphasis on gold and nickel in Western Australia. Mr
Sanders has published works on nickel and gold in WA, in addition to regional mineralisation studies on the East Kimberley
region in WA under contract to the Geological Survey of Western Australia.
Following experience in nickel mining and exploration with Metals Exploration Limited, in 1983 Mr Sanders established
a geological consultancy firm in WA’s Eastern Goldfields. During his time in the Kalgoorlie region (until 2001) he worked
with many ASX-listed companies and obtained mining experience on several underground and open pit gold and nickel
operations. He has managed a large number of exploration projects, several of which he progressed into production.
In 1996, Mr Sanders founded Navigator Resources Limited and guided that company from initial project acquisition
to ASX listing. He then oversaw the building of a two million ounce gold resource inventory through discovery and
acquisition and established the Cummins Range rare earth resource. Subsequently, Mr Sanders was responsible for
identifying and acquiring Breaker’s projects.
During the past three (3) years Mr Sanders served as a non-executive director of Navigator Resources Limited
(resigned 10 November 2009).
Mr Mark Edwards BJuris; LLB
Non-Executive Director (appointed 2 July 2010)
Mark Edwards is a solicitor with over 25 years of experience in resources and corporate law. He has advised a
number of ASX-listed companies active in the resources sector and on a range of resources projects in Australia
and overseas, including significant nickel, gold and iron ore projects. His professional work has involved him in
many facets of the resources industry ranging from ASX listings, exploration and mining joint ventures to project
development agreements and project financing.
During the past three (3) years, Mr Edwards has not served as a director on any other listed company.
Mr Michael Kitney Assoc. Met; Post Grad Dip (Extractive Metallurgy); MSc (Mineral Economics); MAusIMM
Non-Executive Director (appointed 2 July 2010)
Mike Kitney is an experienced process engineer with over 40 years’ experience in the mining industry. He has participated
in the development and construction of projects throughout Australia, Africa, SE Asia and the former Soviet Union.
Mr Kitney’s particular strengths are in production and mineral processing management, all aspects of environmental
management, project evaluation and assessment and management of interdisciplinary project teams. He brings to the
Company vast project development expertise and practical experience in commissioning new projects.
Mr Kitney has previously held senior technical and project management positions with Alcoa Australia, Minproc Engineers
Limited, Property Company of London plc, British Phosphate Commissioners, Nelson Gold Corporation Limited and
Avocet Mining plc. He is currently the Chief Operating Officer of ASX-listed Kasbah Resources Limited.
During the past three (3) years, Mr Kitney has not served as a director on any other listed company.
22
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Company Secretary
The names of the company secretary of the Company during or since the end of the financial year and up to the date of
this report, and the term of their appointment, are provided below.
Mr Graeme Smith BEc; MBA; MComLaw; FCPA; FCSA; MAusIMM
Company Secretary (appointed 2 July 2010; resigned 1 December 2012)
Graeme Smith is a finance professional with over 20 years’ experience in accounting and company administration. He
graduated from Macquarie University with a Bachelor of Economics degree and has since received a Master of Business
Administration and a Master of Commercial Law. He is a Fellow of both the Australian Society of Certified Practicing
Accountants and the Chartered Institute of Secretaries and Administrators.
Mr Smith has held chief financial officer and company secretary positions with various Australian mining and service
companies. During the past three (3) years, Mr Smith has served as a non-executive director of ASX-listed Buxton
Resources Limited (resigned 29 November 2010) and Genesis Minerals Limited (resigned 21 March 2012).
Miss Michelle Simson EMBA (Dist.)
Company Secretary (appointed 22 October 2012)
Michelle Simson has 18 years’ administration experience, including the last 10 years in the mining industry working in
both exploration and mining companies in the commodities of gold and uranium. She has previously held positions with
Agincourt Resources Limited, Nova Energy Limited and Navigator Resources Limited and has completed an Executive
Master of Business Administration with Distinction at the University of Western Australia. She is currently undertaking a
Graduate Diploma in Applied Corporate Governance.
During the past three (3) years, Miss Simson has not served as a director on any other listed company.
Board Committee Membership
As at the date of this report, the Board has an Audit Committee, Nomination Committee, Remuneration Committee
and a Risk Committee. All directors currently comprise membership of each of the committees and the chairmen of the
respective committees are:
• Audit Committee: Mark Edwards
• Nomination Committee: Tom Sanders
• Remuneration Committee: Mike Kitney
• Risk Committee: Tom Sanders
Directors’ Meetings
The number of meetings of directors (including meetings of committees of directors) held during the year and the number
of meetings attended by each director is as follows:
Board of Directors
Committee Meetings
Audit
Nomination
Remuneration
Risk
Director
Held
Present
Held
Present Held
Present Held Present
Held
Present
Tom Sanders
Mark Edwards
Mike Kitney
4
4
4
4
4
4
2
2
2
2
2
2
1
1
1
1
1
1
2
2
2
2
2
2
1
1
1
1
1
1
BREAKER RESOURCES NL 2013 ANNUAL REPORT
23
DIRECTORS’ REPORT CONTINUED
Directors’ Interests
The follow table sets out each director’s relevant interest in shares and options in shares of the Company or a related body
corporate as at the date of this report.
Fully paid ordinary shares
Listed share options
Unlisted share options
Director
Tom Sanders
Mark Edwards
Mike Kitney
Number
11,770,004
1,050,000
1,075,000
Number
635,000
-
12,500
Number
5,000,000
500,000
500,000
During and since the end of the financial year no share options have been granted to directors of the Company as part of
their remuneration (2012: 6,000,000).
Directors’ and Officers’ Insurance
During the financial year, Breaker Resources NL paid a premium of $10,713 to insure the directors and secretary of the
Company. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the
improper use by the officers of their position or of information to gain advantage for themselves or someone else or to
cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance
against legal costs and those relating to other liabilities.
Corporate Structure
Breaker Resources NL is a no liability public company limited by shares, domiciled and incorporated in Australia.
Principal Activities
During the year the Company carried out exploration activities on its tenements with the objective of identifying gold and
other economic mineral deposits.
Operational Review
Activities Review
A review of the exploration activities undertaken during the year is provided earlier in this report.
Financial Review
During the year total exploration expenditure incurred by the Company amounted to $3,951,995 (2012: $1,719,990). In
line with the Company’s accounting policies, all exploration expenditure is written off as it is incurred. Net administration
expenditure incurred amounted to $645,805 (2012: $344,474). The Company’s operating loss after income tax for the
year ended 30 June 2013 is $4,597,800 (2012: $2,064,464).
At year end the Company held cash or similar reserves of $2,250,187 (2012: $6,981,610).
24
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Operating Results for the Year
Summarised operating results are as follows:
Revenues and loss from ordinary activities before income tax expenses
314,418
(4,597,800)
Revenues
$
Results
$
Shareholder Return
Summarised shareholder return is as follows:
Basic loss per share
Dividends
2013
cents
(8.3)
2012
cents
(9.8)
No dividends were paid or declared during the year. No recommendation for payment of dividends has been made.
Share Options
As at the date of this report, there are 29,650,000 unissued ordinary shares of Breaker Resources NL in respect of which
options are outstanding. This number comprises:
Type of Option
Listed (ASX: BRB)
Unlisted
Unlisted
Unlisted
Number
21,250,000
3,000,000
3,000,000
2,400,000
Exercise Price
$0.25
$0.25
$0.30
$0.50
Expiry Date
31 December 2014
30 June 2016
30 June 2016
31 December 2016
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any
share issue of any other body corporate.
Share Options Issued
The following options were issued by Breaker Resources NL during the financial year:
Type of Option
Unlisted
Number
Exercise Price
Expiry Date
Comment
2,500,000
$0.50
31 December 2016
Employee options
Shares Issued on Exercise of Options
There were Nil shares issued due to the exercise of options during the financial year.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
25
DIRECTORS’ REPORT CONTINUED
Share Options that Expired/Lapsed
The following options expired or lapsed during the financial year:
Type of Option
Unlisted
Number
100,000
Exercise Price
Expiry Date
Comment
$0.50
31 December 2016
Lapse – cessation of
employment
Significant Changes in State of Affairs
During the financial year there were no significant changes in the state of affairs of the Company other than those referred
to in the Financial Statements and notes thereto.
Subsequent Events
Subsequent to the balance sheet date, the Company surrendered approximately 1,166km2 of the tenement area of its
exploration projects. The exploration commitment has therefore reduced from $1.71 million (refer to Note 16) to $1.23 million.
Other than as stated above, there were no matters or circumstances arising since the end of the reporting period that
have significantly affected, or may significantly affect the operations of the Company and the results of those operations
or the state of the affairs of the Company in the financial period subsequent to 30 June 2013.
Likely Developments and Expected Results
The Company expects to maintain the present status and level of activities and hence there are no likely developments
in the entity’s operations.
Environmental Regulations and Performance
Breaker is subject to significant environmental regulation in respect to its exploration activities. The Company aims to
ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance
with all environmental legislation. The directors of the Company are not aware of any breach of environmental legislation
for the year under review.
Proceedings on Behalf of the Company
No persons have applied for leave pursuant to section 237 of the Corporations Act 2001 to bring, or intervene in,
proceedings on behalf of Breaker Resources NL.
Non-Audit Services
There were no non-audit services performed during the year by the auditors for the Company (or by another person or
firm on the auditor’s behalf).
Auditor’s Independence Declaration
The Auditor’s Independence Declaration is included on page 32 and forms part of the Directors’ Report for the financial
year ending 30 June 2013.
26
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Remuneration Report
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration of
Breaker Resources NL’s key management personnel for the financial year ended 30 June 2013. The information provided
in this report has been audited as per the requirements of section 308(3C) of the Corporations Act 2001.
The report is set out under the following main headings:
• Key management personnel;
• Principles used to determine the components and amount of compensation;
• Details of remuneration;
• Details of share-based compensation; and
• Details of service agreements and employment contracts.
Key Management Personnel
For the purposes of this report, key management personnel of the Company are defined as those persons having authority
and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly. The key
management personnel during the year included:
• Tom Sanders - Executive Chairman
• Mark Edwards - Non-Executive Director
• Mike Kitney - Non-Executive Director
• Alastair Barker - Exploration Manager
• Michelle Simson - Manager Corporate Affairs/Company Secretary (appointed 22 October 2012)
Principles Used to Determine the Components and Amount of Compensation
Remuneration Committee
The role of the Remuneration Committee is to assist the Company in fulfilling its corporate governance responsibilities
relating to remuneration by reviewing and making appropriate recommendations on:
• remuneration packages of executive directors, non-executive directors and officers;
• employee incentive and equity-based plans including the appropriateness of performance hurdles and total
payments proposed;
• recruitment, retention and termination policies and procedures for senior executives; and
• superannuation arrangements.
Remuneration Policy
The remuneration policy of Breaker Resources NL has been designed to align key management personnel objectives
with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term
incentives based on key performance areas affecting the Company’s financial results. The Board of Breaker Resources NL
believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management
personnel to run and manage the Company.
The policy for determining the nature and amount of remuneration for senior executives of the Company is summarised below:
• The remuneration policy, setting the terms and conditions for the executive directors and other senior executives,
was developed by the Board. The Board reviews executive packages annually by reference to the Company’s
performance, executive performance and comparable information from industry sectors and other listed companies
in similar industries.
• The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to
attract and retain the highest calibre of executives and reward them for performance that results in long-term growth
in shareholder wealth.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
27
DIRECTORS’ REPORT CONTINUED
• Executives are also entitled to participate in the employee share and option arrangements.
• Where applicable, executives receive a superannuation guarantee contribution required by the government, which
during the reporting period was 9% and since year end has increased to 9.25%. Some individuals may choose to
sacrifice part of their salary to increase payments towards superannuation.
• All remuneration paid to key management personnel is valued at the cost to the Company and expensed. Shares
given to key management personnel are valued as the difference between the market price of those shares and the
amount paid by the key management personnel. Options are valued using the Black-Scholes methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment
and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders
at the annual general meeting. The remuneration pool limit is $300,000 and is currently utilised to a level of $80,000 per
annum. The base fee paid to non-executive directors is $40,000 per annum.
Fees for non-executive directors are not linked to the performance of the Company however to align directors’ interests
with shareholder interests, the directors are encouraged to hold shares in the Company and are able to participate in
the employee option plan, although any allocation must be approved by shareholders in general meeting. There is no
retirement benefit plan for directors.
Performance Based Remuneration
The Company currently has no individual performance based remuneration component built into key management
personnel remuneration packages.
Company Performance, Shareholder Wealth and Key Management Personnel Remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment
objectives and key management personnel performance. Currently, this is facilitated through the issue of options to key
management personnel to encourage the alignment of personal and shareholder interests. The Company believes this
policy will be effective in increasing shareholder wealth.
Use of Remuneration Consultants
The Company did not employ the services of any remuneration consultants during the financial year ended 30 June 2013.
Details of Remuneration
The key management personnel of the Company are disclosed above. Remuneration packages contain the following
elements:
• Short-term employee benefits - cash salary and fees, cash bonuses, non-monetary benefits and other;
• Post-employment benefits - including superannuation and termination; and
• Share-based payments - shares and options granted.
28
BREAKER RESOURCES NL 2013 ANNUAL REPORT
The remuneration for each director and each of the other key management personnel of the Company during the year
was as follows:
Key
Management
Personnel
Tom Sanders
•
•
2013
2012
Mark Edwards
•
•
2013
2012
Mike Kitney
•
•
2013
2012
Alastair Barker
•
•
2013
2012
Michelle Simson
•
•
2013(i)
2012
Short-term
Post-employment
Share-based
payments
Salary &
Fees
$
Non-
Monetary
$
Superannuation
$
Retirement
Benefits
$
Options
$
Total
$
280,199
57,375
40,111
7,778
40,111
7,778
234,487
45,833
139,732
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,926
-
-
-
-
-
-
-
-
-
-
-
-
103,200
280,199
160,575
-
11,550
-
11,550
85,000
-
40,111
19,328
40,111
19,328
319,487
45,833
201,340
358,998
-
-
Notes
(i) Appointed 22 October 2012
No director or executive appointed during the year received a payment as part of his or her consideration for agreeing to
hold the position.
Details of Share-Based Compensation
This section only refers to those shares and options issued as part of remuneration. As a result they may not indicate all
shares and options held by directors or other key management personnel.
Shares
No shares in the Company were issued to key management personnel as part of their remuneration during the year (2012: Nil).
Options
Options were issued at no cost to key management personnel as part of their remuneration to align the interests of
executives, directors and shareholders (2012: 6,000,000). The following options over ordinary shares of the Company
were granted by Breaker Resources NL to key management personnel:
Key
Management
Personnel
Grant Date
Options
Granted
Number
Expiry Date
Alastair Barker
10 July 2012
1,000,000
31 December 2016
Michelle Simson
20 November 2012
1,000,000
31 December 2016
Exercise
Price
$
Options’
Value at
Grant
$
Proportion of
Remuneration
as Options
%
0.50
0.50
85,000
201,340
26.6
56.1
BREAKER RESOURCES NL 2013 ANNUAL REPORT
29
DIRECTORS’ REPORT CONTINUED
Fair values at grant date are determined using a Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at the grant date, the expected price volatility of the
underlying shares, the expected dividend yield and the risk free interest rate for the term of the option. The model inputs
for options granted during the period have been included in Note 19 of the Financial Statements.
There were no options exercised, sold or lapsed by key management personnel during the year (2012: Nil).
During the year, the following share-based payment arrangements for key management personnel were in existence:
Option Series
Grant Date
Expiry Date
Fair Value per
Option at Grant
cents
60502
60503
60510
60511
1 August 2011
1 August 2011
30 June 2016
30 June 2016
10 July 2012
31 December 2016
20 November 2012
31 December 2016
2.31
1.90
8.52
20.13
Vesting Date
5 August 2011
9 August 2011
11 July 2012
27 November 2012
Details of Service Agreements and Employment Contracts
Service agreements are in place between the Company and Executive Chairman Tom Sanders and Exploration Manager
Alastair Barker. Manager Corporate Affairs/Company Secretary Michelle Simson is employed via contract. Details of
these arrangements are provided below:
Service Agreement: Tom Sanders – Executive Chairman
• Term of agreement – Minimum two (2) years subject to termination provisions; commenced 18 April 2012 (subject
to ASX listing).
• Annual consultancy fees of $270,000 (inclusive of superannuation, plus GST, indexed to CPI as a minimum every
calendar year) are paid to Goldfields Geological Associates, an entity controlled by Mr Sanders, for the provision of
services by Mr Sanders on a minimum of 80% of fulltime basis.
• The agreement continues until terminated by either Goldfields Geological Associates or the Company. Subject to the
Corporations Act 2001 and the ASX Listing Rules, Mr Sanders is entitled to a minimum notice period of 12 months
and the Company is entitled to a minimum notice period of three (3) months.
• Goldfields Geological Associates will be reimbursed for Breaker-related expenses, including office leasing and
maintenance costs at cost, and other out-of-pocket expenses incurred on the Company’s behalf.
Service Agreement: Alastair Barker – Exploration Manager
• Term of agreement – Minimum two (2) years subject to termination provisions; commenced 18 April 2012 (subject
to ASX listing).
• Annual consultancy fees of $220,000 (inclusive of superannuation, plus GST, indexed to CPI as a minimum every
calendar year) are paid to Horizon Resources Pty Ltd, an entity controlled by Mr Barker, for the provision of services
by Mr Barker on a minimum of 80% of fulltime basis.
• The agreement continues until terminated by either Horizon Resources Pty Ltd or the Company. Subject to the
Corporations Act 2001 and ASX Listing Rules, Mr Barker is entitled to a minimum notice period of 12 months (or six
(6) months after the initial term). The Company is entitled to a minimum notice period of three (3) months.
30
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Employment Contract: Michelle Simson – Manager Corporate Affairs/Company Secretary
• Base salary of $220,000 per annum (inclusive of superannuation entitlements).
• Payment of termination benefit on early termination by the employer, other than for gross misconduct, equals three
(3) months’ salary.
• Notice period of three (3) months.
Signed in accordance with a resolution of directors made pursuant to section 298(2) of the Corporations Act 2001.
On behalf of the directors
Tom Sanders
Executive Chairman
Perth, 2 September 2013
BREAKER RESOURCES NL 2013 ANNUAL REPORT
31
32
BREAKER RESOURCES NL 2013 ANNUAL REPORT
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2013
Revenue
Government grant
Interest income
Total Revenue
Expenses
Administration expenses
Depreciation expenses
Employee benefits expenses
Exploration and evaluation expenses
Share-based payment expenses
Interest expenses
Total Expenses
Loss before income tax
Income tax expense
Loss for the year
4
4
4
4
4
4
6
Note
2013
$
120,000
194,418
314,418
2012
$
-
45,572
45,572
(357,840)
(79,189)
(178,803)
(228,611)
(10,666)
(24,469)
(3,951,995)
(1,719,990)
(343,233)
(126,300)
(1,158)
-
(4,912,218)
(2,110,036)
(4,597,800)
(2,064,464)
-
-
(4,597,800)
(2,064,464)
Other comprehensive income
-
-
Total comprehensive expenses for the year
(4,597,800)
(2,064,464)
Loss attributable to owners of the Company
(4,597,800)
(2,064,464)
Total comprehensive expenses attributable to owners
of the Company
(4,597,800)
(2,064,464)
Basic and diluted loss per share attributable to the ordinary equity
holders of the Company (cents per share)
15
(8.3)
(9.8)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
33
STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2013
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Plant and equipment
Other financial assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Non-Current Liabilities
Borrowings
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of the Company
Note
2013
$
2012
$
7
8
9
10
11
12
12
2,250,187
104,356
2,354,543
6,981,610
164,611
7,146,221
285,877
49,410
335,287
200,471
-
200,471
2,689,830
7,346,692
857,975
15,211
873,186
1,280,817
-
1,280,817
5,336
5,336
-
-
878,522
1,280,817
1,811,308
6,065,875
13
8,323,675
8,323,675
469,533
126,300
(6,981,900)
(2,384,100)
1,811,308
6,065,875
Total Equity
1,811,308
6,065,875
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
34
BREAKER RESOURCES NL 2013 ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2013
Attributable to owners of the Company
Balance at 30 June 2011
Loss for the year
Total comprehensive expenses for the year
Shares issued during the year
Share issue transaction costs
Note
Contributed
Equity
$
3,500
-
-
9,060,000
(739,825)
Share-
based
Payments
Reserve
$
-
-
-
-
-
Recognition of share-based payments
-
126,300
Accumulated
Losses
$
Total
$
(319,636)
(316,136)
(2,064,464)
(2,064,464)
(2,064,464)
(2,064,464)
-
-
-
9,060,000
(739,825)
126,300
Balance at 30 June 2012
8,323,675
126,300
(2,384,100)
6,065,875
Loss for the year
Total comprehensive expenses for the year
Recognition of share-based payments
19
-
-
-
-
-
(4,597,800)
(4,597,800)
(4,597,800)
(4,597,800)
343,233
-
343,233
Balance at 30 June 2013
8,323,675
469,533
(6,981,900)
1,811,308
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
35
STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2013
Cash flows from operating activities
Payments to suppliers and employees
Payments for exploration and evaluation expenditure
Government grant received
Interest received
Interest paid
Note
2013
$
2012
$
(856,603)
(3,994,621)
120,000
194,418
(1,158)
(194,730)
(680,704)
-
45,572
-
Net cash outflow from operating activities
18
(4,537,964)
(829,862)
Cash flows from investing activities
Payments for plant and equipment
Payments for other financial assets
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Payments of share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
(164,595)
(49,410)
(214,005)
(188,286)
-
(188,286)
-
-
30,250
(9,704)
20,546
8,556,446
(739,825)
311,726
(132,039)
7,996,308
Net (decrease)/increase in cash and cash equivalents
(4,731,423)
6,978,160
Cash and cash equivalents at the beginning of the period
6,981,610
3,450
Cash and cash equivalents at the end of the period
7
2,250,187
6,981,610
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
36
BREAKER RESOURCES NL 2013 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2013
1. General information
Breaker Resources NL is a public company listed on the Australian Securities Exchange, incorporated in Australia and
operating in Australia. The Company’s registered office and its principal place of business is 12 Walker Avenue, West
Perth WA 6005. Breaker Resources NL’s principal activity is mineral exploration and it is a for-profit entity for the purposes
of preparing the Financial Statements.
These Financial Statements are for Breaker Resources NL as an individual entity and are presented in the Australian
currency. The Financial Statements were authorised for issue by the directors on 2 September 2013. The directors have
the power to amend and reissue the Financial Statements.
2. Significant accounting policies
The principal accounting policies adopted in the preparation of the Financial Statements are set out below.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001
(Corporations Act) and Australian Accounting Standards and Interpretations (Standards) issued by the Australian
Accounting Standards Board (AASB). The Financial Statements and notes of the Company also comply with International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
These Financial Statements have been prepared under the historical cost convention, except for certain non-current
assets, which are measured at revalued amounts or fair values. Historical cost is generally based on the fair values of
the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.
Going Concern
The Financial Statements have been prepared on the basis of going concern which assumes continuity of normal business
activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Company
has incurred a net loss of $4,597,800 and experienced net cash outflows from operating and investing activities of
$4,751,969 for the year ended 30 June 2013. These conditions indicate a material uncertainty that may cast doubt about
the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon additional funding to provide adequate
working capital for a further 12 months from the date of signature of the Financial Statements. The directors intend to
undertake equity fundraising and are satisfied that the going concern basis of preparation is appropriate. Should the
Company be unable to seek funding, there is a material uncertainty whether it will be able to continue as a going concern
and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the
amounts stated in the Financial Statements.
The Financial Statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts or to the amounts and classification of liabilities that may be necessary should the Company be unable to
continue as a going concern.
(b) Adoption of new and revised accounting standards
(i) Standards affecting amounts reported in the current year and prior year
The following new and revised Standards have been adopted in the current year and have affected the amounts reported
in these Financial Statements.
Standards affecting presentation and disclosure
Amendments to AASB 101: Presentation of Financial Statements
The amendments (part of AASB 2011-9: Amendments to Australian Accounting Standards – Presentation of Items of
Other Comprehensive Income), introduce new terminology for the Statement of Comprehensive Income and Income
Statement. Under the amendments to AASB 101, the Statement of Comprehensive Income is renamed as a Statement of
Profit or Loss and Other Comprehensive Income and the Income Statement is renamed as a Statement of Profit or Loss.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
37
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
The amendments to AASB 101 retain the option to present profit or loss and other comprehensive income in either a
single statement or in two (2) separate but consecutive statements. The amendments to AASB 101 require items of other
comprehensive income to be grouped into two (2) categories in the other comprehensive income section: (a) items that
will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss
when specific conditions are met.
As the Company did not have any other comprehensive income in its previous and current years, other than the above
mentioned change of the terminology, the application of the amendments to AASB 101 does not result in any impact on
profit or loss, other comprehensive income and total comprehensive income.
The amendments (part of AASB 2012-5: Further Amendments to Australian Accounting Standards arising from Annual
Improvements 2009-2011 Cycle) require an entity that changes accounting policies retrospectively, or makes a retrospective
restatement or reclassification to present a Statement of Financial Position as at the beginning of the preceding period
(third Statement of Financial Position), when the retrospective application, restatement or reclassification has a
material effect on the information in the third Statement of Financial Position. The related notes to the third Statement of
Financial Position are not required to be disclosed.
Standards affecting the reported results or financial position
There are no new and revised Standards adopted in these Financial Statements affecting the reporting results or financial position.
(ii) Standards in issue not yet adopted
Certain new accounting Standards have been published that are not mandatory for 30 June 2013 reporting periods.
The Company’s assessment of the impact of these new Standards is set out below. New Standards not mentioned are
considered unlikely to impact on the financial reporting of the Company.
AASB 9: Financial Instruments and AASB 2009-11/AASB 2010-7 (applicable for annual reporting periods commencing on or
after 1 January 2015)
AASB 9: Financial Instruments amends the requirements for classification and measurement of financial assets.
The available-for-sale and held-to-maturity categories of financial assets in AASB 139 have been eliminated. It requires
that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of
changes in the liability’s credit risk are recognised in other comprehensive income.
The Company has not yet determined any potential impact on the Financial Statements.
AASB 10: Consolidated Financial Statements (applies to periods beginning on or after 1 January 2013)
This Standard establishes a new control model that applies to all entities. It replaces parts of AASB 127: Consolidated and
Separate Financial Statements dealing with the accounting for consolidated financial statements and Interpretation 112:
Consolidation – Special Purpose Entities.
The new control model broadens the situations when an entity is considered to be controlled by another entity and
includes new guidance for applying the model to specific situations, including when acting as a manager may give control,
the impact of potential voting rights and when holding less than majority voting rights may give control.
This Standard is not expected to impact on transactions and balances recognised in the Financial Statements as the
Company does not have any subsidiaries or special purpose entities.
AASB 11: Joint Arrangements (applies to periods beginning on or after 1 January 2013)
This Standard replaces AASB 131: Interests in Joint Ventures and Interpretation 113: Jointly-Controlled Entities – Non-
monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and
therefore the determination of whether joint control exists may change. In addition, AASB 11 removes the option to
account for jointly controlled entities using proportionate consolidation. Instead, accounting for a joint arrangement is
dependent on the nature of the rights and obligations arising from the arrangement.
Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by
recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is
accounted for using the equity method.
This Standard is not expected to impact on transactions and balances recognised in the Financial Statements as the
Company does not have any joint arrangements.
38
BREAKER RESOURCES NL 2013 ANNUAL REPORT
AASB 12: Disclosures of Interests in Other Entities (applies to periods beginning on or after 1 January 2013)
This Standard includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and
structured entities. New disclosures have been introduced about the judgements made by management to determine
whether control exists, and to require summarised information about joint arrangements, associates and structured
entities and subsidiaries with non-controlling interests.
This Standard is not expected to impact on the disclosure in the Financial Statements because the Company does not
have any subsidiaries, joint arrangements and structured entities.
AASB 13: Fair Value Measurement (applies to periods beginning on or after 1 January 2013)
This Standard establishes a single source of guidance under AASB for determining the fair value of assets and liabilities.
AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine
fair value under AASB when fair value is required or permitted by AASB.
AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information
about the assumptions made and the qualitative impact of those assumptions on the fair value determined.
When the Standard is firstly adopted in the year ending at 30 June 2014, the application of the new Standard may affect
the amounts reported in the Financial Statements and result in more extensive disclosures in the Financial Statements.
AASB 119: Employee Benefits (applicable for annual reporting periods commencing on or after 1 January 2013)
The main change introduced by this Standard is to revise the accounting for defined benefit plans. The amendment
removes the options for accounting for the liability, and requires that the liabilities arising from such plans is recognised
in full with actuarial gains and losses being recognised in other comprehensive income. It also revises the method of
calculating the return on plan assets.
The definition of short-term benefits has been revised, meaning some annual leave entitlements may become long-term
in nature with a revised measurement. Similarly the timing for recognising a provision for termination benefits has been
revised, such that provisions can only be recognised when the offer cannot be withdrawn. Consequential amendments
were also made to other Standards via AASB 2011-10.
When the Standard is firstly adopted in the year ending at 30 June 2014, annual leave liabilities will be recalculated, as
long-term benefits that are not expected to be settled wholly within 12 months after the end of the reporting period
will be discounted. This Standard is not expected to impact on transactions and balances recognised in the Financial
Statements because the Company had no annual leave liability on 1 July 2013.
AASB 2011-4: Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements (applies to periods beginning on or after 1 July 2013)
The amendments remove individual key management personnel disclosure requirements from AASB 124 to eliminate
duplicated information required under the Corporations Act.
When the Standard is firstly adopted in the year ending at 30 June 2014, the disclosure under the key management
personnel note to the Financial Statements will be reduced.
AASB 2012-2: Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial
Liabilities (applies to periods beginning on or after 1 January 2013)
The amendments to AASB 7 require entities to disclose information about rights of offset and related arrangements
(such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or
similar arrangement.
The application of the amendments is not expected to have an impact on the disclosure in the Financial Statements as
the Company does not have any such arrangements.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
39
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
AASB 2012-3: Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities
(applies to periods beginning on or after 1 January 2014)
The amendments to AASB 132 clarify existing application issues relating to the offset of financial assets and financial
liabilities requirements. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of
set-off’ and ‘simultaneous realisation and settlement’.
The application of the amendments is not expected to have impact on the disclosure in the Financial Statements as the
Company does not have any such arrangements.
AASB 2012-5: Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle
(applies to periods beginning on or after 1 January 2013)
The annual improvements to AASBs 2009-2011 cycle includes a number of amendments to various AASBs including:
• amendments to AASB 116: Property, Plant and Equipment; and
• amendments to AASB 132: Financial Instruments: Presentation.
The amendments to AASB 116 clarify that spare parts, stand-by equipment and servicing equipment should be classified
as property, plant and equipment when they meet the definition of property, plant and equipment in AASB 116 and as
inventory otherwise.
The amendments to AASB 116 are not expected to have impact on the transactions and balances in the Financial
Statements as the Company does not have the abovementioned equipment.
The amendments to AASB 132 clarify that income tax relating to distributions to holders of an equity instrument and to
transaction costs of an equity transaction should be accounted for in accordance with AASB 112: Income Taxes.
The amendments to AASB 132 are not expected to have impact on the transactions and balances in the Financial
Statements as the Company does not have any distributions to holders.
(c) Segment reporting
An operating segment is defined as a component of an entity that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating decision
maker to make decisions about resources to be allocated to the segment and assess its performance, and for which
discrete financial information is available.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The Company’s chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors.
(d) Government grants
Government grants are not recognised until there is reasonable assurance that the Company will comply with the
conditions attaching to them and that the grants will be received. Government grants that are receivable as compensation
for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no
future related costs are recognised in profit or loss in the period in which they become receivable.
(e) Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable.
(f) Income tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject
to interpretation. It creates provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
40
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the Financial Statements. However, the deferred tax income is not
accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise these temporary differences and losses. The carrying amount of
deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(g) Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s 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 which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation increase.
(h) Cash and cash equivalents
For Statement of Cash Flows presentation purposes, cash and cash equivalents include cash on hand, deposits held at
call with financial institutions, other short term highly liquid investments with original maturities of three (3) months or
less that are readily convertible to known amounts of cash and which are subject to significant risk of changes in value,
and bank overdrafts.
(i) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate
for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
(j) Financial assets
Classification
The Company classifies all of its financial assets as loans and receivables. Management determines the classification of
its financial assets at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinate payments that are not quoted in an
active market. They are included in current assets, except for those with maturities greater than 12 months after the
reporting date which are classified as non-current assets.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
41
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
Collectability of loans and receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are
written off by reducing the carrying amount directly. An allowance account (provision for impairment) is used where
there is objective evidence that the Company will not be able to collect all amounts due according to the original terms
of the receivables or in an otherwise timely manner. The amount of the impairment allowance is the difference between
the asset’s carrying amount and the estimated future cash flows. None of the Company’s loans and receivables has an
applicable interest rate hence the cash flows are not discounted.
The amount of the impairment loss is recognised in the Statement of Profit or Loss and Other Comprehensive Income
within impairment expenses. When a loan or receivable for which an impairment allowance has been recognised
becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against other expenses in the Statement of Profit or Loss and Other
Comprehensive Income.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Company
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the Company has transferred
substantially all of the risks and rewards of ownership.
Impairment
The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of
financial assets is impaired. If there is any evidence of impairment for any of the Company’s financial assets carried at
amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted
at the financial asset’s original effective interest rate. The loss is recognised in the Statement of Profit or Loss and Other
Comprehensive Income.
(k) Plant and equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other
repairs and maintenance are charged to the Statement of Profit or Loss and Other Comprehensive Income during the
reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the straight line method to allocate their cost or revalued amounts,
net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased
plant and equipment, the shorter lease term. All plant and equipment is depreciated at the rate of 25% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s
carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (refer to Note 2(g)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
Statement of Profit or Loss and Other Comprehensive Income.
(l) Exploration and evaluation costs
Exploration and evaluation costs are written off in the year they are incurred.
(m) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year
which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
42
BREAKER RESOURCES NL 2013 ANNUAL REPORT
(n) Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, and annual leave are recognised in other payables in
respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
(o) Share-based payments
The Company provides benefits to employees (including directors and contractors) of the Company in the form of share-
based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity-
settled transactions) (refer to Note 19).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (vesting date).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
• the extent to which the vesting period has expired; and
• the number of options that, in the opinion of the directors of the Company, will ultimately vest.
This opinion is formed based on the best available information at balance date. 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. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where 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.
Options over ordinary shares have also previously been issued as consideration for other services. These options have
been treated in the same manner as employee options described above, with the expense being included as part of
exploration expenditure.
(p) Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of
a business are not included in the cost of the acquisition as part of the purchase consideration.
(q) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of
Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
43
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
(r) Critical accounting judgements, estimates and assumptions
The preparation of these Financial Statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial
Statements are:
Environmental issues
Balances disclosed in the Financial Statements and notes thereto are not adjusted for any pending or enacted environmental
legislation, and the directors’ understanding thereof. At the current stage of the Company’s development and its current
environmental impact, the directors believe such treatment is reasonable and appropriate.
Taxation
Balances disclosed in the Financial Statements and the notes thereto related to taxation are based on the best estimates
of the directors. These estimates take into account both the financial performance and position of the Company as they
pertain to current income taxation legislation, and the directors’ understanding thereof. No adjustment has been made for
pending or future taxation legislation. The current income tax position represents the directors’ best estimate, pending an
assessment by the Australian Taxation Office.
3. Financial risk management
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company.
Risk management is carried out by the full Board via the audit and risk committees as the Company believes that it is crucial for
all directors to be involved in this process. The Executive Chairman, with the assistance of senior management as required, has
responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk management.
(a) Market risk
Foreign exchange risk
As all operations are currently within Australia the Company is not exposed to foreign exchange risk.
Interest rate risk
The Company is exposed to movements in market interest rates on cash and cash equivalents. The Company policy is to
monitor the interest rate yield curve out to six (6) months to ensure a balance is maintained between the liquidity of cash
assets and the interest rate return. The entire balance of cash and cash equivalents for the Company of $2,250,187 (2012:
$6,981,610) is subject to interest rate risk. The weighted average interest rate received on cash and cash equivalents by
the Company was 2.49% (2012: 1.1%).
Sensitivity analysis
At 30 June 2013, if interest rates had changed by -/+ 100 basis points from the weighted average rate for the year with
all other variables held constant, post-tax loss for the Company would have been $46,159 lower/higher (2012: $42,950)
as a result of lower/higher interest income from cash and cash equivalents.
(b) Credit risk
The Company has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the
carrying amount of those assets as disclosed in the Statement of Financial Position and Notes to the Financial Statements.
As the Company does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal
credit risk management policy is not maintained.
(c) Liquidity risk
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient
cash and marketable securities are available to meet the current and future commitments of the Company. Due to the
nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities,
with the primary source of funding being equity raisings.
44
BREAKER RESOURCES NL 2013 ANNUAL REPORT
The Board constantly monitors the state of equity markets in conjunction with the Company’s current and future funding
requirements, with a view to initiating appropriate capital raisings as required.
The financial liabilities of the Company are confined to trade and other payables as disclosed in the Statement of Financial
Position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. All financial assets and financial liabilities of the Company at the balance date are recorded at
amounts approximating their carrying amount due to their short term nature.
4. Revenue and expenses
(a) Revenue from continuing operations includes the following revenue items:
Government grant (i)
Interest income
2013
$
120,000
194,418
314,418
2012
$
-
45,572
45,572
(i): The amount represents funds received from the Department of Mines and Petroleum under the Royalties for Regions
Co-funded Government – Industry Drilling Program 2012-2013.
(b) Loss for the year includes the following specific expenses:
Depreciation
Exploration and evaluation expenses
(c) Employee benefit expenses:
Wages and superannuation
Directors’ fees
Equity-settled share-based payments
Others
2013
$
79,189
3,951,995
4,031,184
2013
$
74,869
80,222
343,233
23,712
522,036
2012
$
10,666
1,719,990
1,730,656
2012
$
567
23,902
126,300
-
150,769
BREAKER RESOURCES NL 2013 ANNUAL REPORT
45
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
5. Operating segments
For management purposes, the Company has identified only one (1) reportable segment as exploration activities
undertaken in Australia. This segment includes activities associated with the determination and assessment of the
existence of commercial economic reserves, from the Company’s mineral assets in this geographic location.
Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance
with the Company’s accounting policies.
Segment revenue
Reconciliation of segment revenue to total revenue before tax:
Government grant
Interest revenue
Total revenue
Segment results
Reconciliation of segment result to net loss before tax:
Depreciation expense
Other corporate and administration expenses
Net loss before tax
2013
$
2012
$
120,000
194,418
314,418
-
45,572
45,572
(3,951,995)
(1,719,990)
(79,189)
(566,616)
(10,666)
(379,380)
(4,597,800)
(2,064,464)
Segment operating assets
340,033
318,752
Reconciliation of segment operating assets to total assets:
Other corporate and administration assets
Total assets
Total assets includes additions to non-current assets
2,349,797
2,689,830
144,747
7,027,940
7,346,692
-
Segment operating liabilities
773,686
1,186,621
Reconciliation of segment operating liabilities to total liabilities:
Other corporate and administration liabilities
Total liabilities
104,836
878,522
94,196
1,280,817
46
BREAKER RESOURCES NL 2013 ANNUAL REPORT
6. Income tax
Income tax expense
Current tax
Deferred tax
Numerical reconciliation of income tax expense to prima facie
tax payable
Loss from continuing operations before income tax expense
Prima facie tax benefit at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Share-based payments
Entertainment
2013
$
2012
$
-
-
-
-
(4,597,800)
(1,379,340)
(2,064,464)
(619,339)
102,970
248
37,890
-
(1,276,122)
(581,449)
Movements in unrecognised temporary differences
(71,110)
(44,390)
Tax effect of current year tax losses for which no deferred tax
asset has been recognised
Income tax expense
1,347,232
625,839
-
-
Unrecognised temporary differences
Deferred tax assets (at 30%) on income tax account
Accruals
Capital raising costs
Carry forward tax losses
8,700
133,168
2,116,027
2,257,895
1,500
177,558
720,230
899,288
Deferred tax liabilities (30%)
-
-
Net deferred tax assets have not been brought to account as it is not probable within the immediate future that tax profits
will be available against which deductible temporary differences and tax losses can be utilised. The Company’s ability to
use losses in the future is subject to the Company satisfying the relevant tax authority’s criteria for using these losses.
7. Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents as shown in the Statement of
Financial Position and the Statement of Cash Flows
2013
$
2012
$
2,250,187
6,981,610
2,250,187
6,981,610
Short-term deposits are made for varying periods of between one (1) day and three (3) months depending on the
immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
47
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
8. Trade and other receivables
Prepayments
GST receivable
9. Plant and equipment
Cost
Accumulated depreciation
Net book amount
Opening net book amount
Additions
Depreciation charge
Closing net book amount
10. Other financial assets
Long-term deposits
11. Trade and other payables
Trade creditors
Other payables and accruals
12. Borrowings
Current
Non-current
2013
$
20,480
83,876
104,356
2013
$
376,380
(90,503)
285,877
200,471
164,595
(79,189)
285,877
2013
$
49,410
49,410
2013
$
807,107
50,868
857,975
2013
$
15,211
5,336
20,547
2012
$
12,982
151,629
164,611
2012
$
211,785
(11,314)
200,471
4,987
206,150
(10,666)
200,471
2012
$
-
-
2012
$
846,052
434,765
1,280,817
2012
$
-
-
-
The Company entered into a finance loan agreement to purchase a Niton XL3t 950+ Mining Analyzer during the year. The
term of the loan is two (2) years with a fixed rate of 7.7% per annum.
48
BREAKER RESOURCES NL 2013 ANNUAL REPORT
13. Contributed equity
(a) Share capital
Ordinary shares fully paid
Total issued capital
(b) Movements in ordinary share capital
Beginning of the year
Issued during the year:
•
•
•
Issued to seed investors
Issued at IPO
Transaction costs
2013
2012
Note
13(b)
Number
$
Number
$
55,100,004
8,323,675
55,100,004
8,323,675
55,100,004
8,323,675
55,100,004
8,323,675
2013
2012
Number
$
Number
55,100,004
8,323,675
7,000,004
$
3,500
-
-
-
-
-
-
5,600,000
560,000
42,500,000
8,500,000
-
(739,825)
End of the year
55,100,004
8,323,675
55,100,004
8,323,675
(c) Movements in options on issue
Beginning of the year
•
•
•
•
•
Issued, exercisable at 25 cents on or before 31 December 2014
Issued, exercisable at 25 cents on or before 30 June 2016
Issued, exercisable at 30 cents on or before 30 June 2016
Issued, exercisable at 50 cents on or before 31 December 2016
Lapsed
End of the year
2013
2012
Number
Number
27,250,000
-
-
-
-
21,250,000
3,000,000
3,000,000
2,500,000
(100,000)
-
-
29,650,000
27,250,000
At 30 June 2013, directors and employees held options over 9,047,500 ordinary shares of the Company (2012: 6,647,500).
Share options granted under the Company’s employee share option plan carry no rights to dividends and no voting rights.
Further details of the employee option plan are provided in Note 19.
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one (1) vote,
and upon a poll each share is entitled to one (1) vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
49
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
(e) Capital risk management
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it may
continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to
credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of capital risk management
is the current working capital position against the requirements of the Company to meet exploration programs and
corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated
operating requirements, with a view to initiating appropriate capital raisings as required.
The working capital position of the Company at 30 June 2013 and 30 June 2012 is as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Borrowings
Working capital position
2013
$
2012
$
2,250,187
6,981,610
104,356
164,611
(857,975)
(1,280,817)
(15,211)
-
1,481,357
5,865,404
14. Dividends
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
15. Loss per share
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in
calculating basic and diluted loss per share
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic and diluted loss per share
2013
$
2012
$
(4,597,800)
(2,064,464)
2013
$
2012
$
55,100,004
20,982,791
(c) Information on classification of options
As the Company has made a loss for the year ended 30 June 2013, all options on issue are considered antidilutive and
have not been included in the calculation of diluted earnings per share. These options could potentially dilute basic
earnings per share in the future.
50
BREAKER RESOURCES NL 2013 ANNUAL REPORT
16. Commitments
(a) Exploration Commitments
The Company must maintain current rights of tenure to tenements, which requires outlays of expenditure in 2013/2014.
Under certain circumstances these commitments are subject to the possibility of adjustment to the amount and/or timing
of such obligations however they are expected to be fulfilled in the normal course of operations.
Estimated expenditure on mining, exploration and prospecting leases for 2013/2014:
2013
$
2012
$
1,712,000
1,775,250
(b) Capital Commitments
There are no capital expenditure commitments for the Company as at 30 June 2013.
(c) Lease Commitments: Company as Lessee
The Company leases its office under a non-cancellable operating lease expiring within three (3) years. Commitments for
minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one (1) year but not later than five (5) years
2013
$
74,000
129,500
203,500
2012
$
-
-
-
17. Contingencies
Pursuant to a mineral exploration and land access agreement (MELA Agreement) with the Cosmo Newberry (Aboriginal
Corporation) and Yilka Native Title Group (WAD297/08) (together the Indigenous Party), the Company, whilst it holds
certain tenement licences, must pay the following consideration to the Indigenous Party:
• $200,000 within seven (7) days of each of the first and second anniversary of the date of the MELA Agreement;
• $200,000 within seven (7) days of the third anniversary and each subsequent anniversary of the date of the MELA
Agreement indexed for CPI (All Groups) until the termination of the MELA Agreement; and
in addition to the above, within 28 days of the Company filing exploration expenditure reports with the Department of
Mines and Petroleum, the Company must pay the Indigenous Party 10% of its overall exploration expenditure in relation
to the Agreement Area1 for the previous year less the relevant amount payable for that year under any of the above, where
10% of its overall exploration expenditure for the previous year is greater than the relevant amount payable for that year
under any of the above.
(1) “Agreement Area” means the Aboriginal reserves the subject of that agreement (reserves 22032, 25050, 20396 and 25051) and the
area of the Yilka native title claim.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
51
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
18. Reconciliation of loss after income tax to net cash outflow from operating activities
Reconciliation of net loss after income tax to net cash outflow
from operating activities
Net loss for the year
Non-cash items
Depreciation of non-current assets
Share-based payments expense
Change in operating assets and liabilities
(Increase) in trade and other receivables
Increase in trade and other payables
Net cash outflow from operating activities
19. Share-based payments
(a) Employee share options
2013
$
2012
$
(4,597,800)
(2,064,464)
79,189
343,233
10,666
126,300
60,254
(160,317)
(422,840)
1,257,953
(4,537,964)
(829,862)
The Company provides benefits to employees (including directors) and contractors of the Company in the form of share-
based payment transactions, whereby employees render services in exchange for options to acquire ordinary shares.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one (1) ordinary share
of the Company with full dividend and voting rights.
The table below summarises the share-based payment options granted by Breaker Resources NL:
2013
2012
Weighted
average
exercise
price
cents
27.5
50.00
50.00
-
-
34.5
34.5
Number
-
6,000,000
-
-
-
6,000,000
6,000,000
Weighted
average
exercise
price
cents
-
27.5
-
-
-
27.5
27.5
Number
6,000,000
2,500,000
(100,000)
-
-
8,400,000
8,400,000
Outstanding at the beginning of the year
Granted
Forfeited/cancelled
Exercised
Expired
Outstanding at year end
Exercisable at year end
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 3.0
years (2012: 4.0 years) and the exercise prices ranged from 25 cents to 50 cents (2012: 25 cents to 30 cents). The
weighted average fair value of the options granted during the year was 14.44 cents (2012: 2.18 cents). The price was
calculated by using the Black-Scholes European Option Pricing Model applying the following inputs:
52
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Weighted average risk free interest rate
2013
50.00
3.0
30.0
85.0%
2.72%
2012
27.5
4.9
10.0
50.0%
4.35%
Historical volatility has been used as the basis for determining expected share price volatility as it is assumed that this
is indicative of future trends, which may not eventuate. The life of the options is based on historical exercise patterns,
which may not eventuate in the future.
(b) Expenses arising from share-based payment transactions
Total expenses arising from shared-based payment transactions recognised during the year were as follows:
Share-based payment expenses recognised for options granted
Share-based payment expenses reversed for options lapsed
20. Key management personnel transactions
(a) Key management personnel compensation
Short term benefits
Post-employment benefits
Share-based payments
2013
$
363,367
(20,134)
343,233
2013
$
734,640
17,926
286,340
1,038,906
2012
$
126,300
-
126,300
2012
$
65,153
-
126,300
191,453
Detailed remuneration disclosures are provided in the Remuneration Report on page 27.
(b) Equity instrument disclosures relating to key management personnel
Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of options, together with terms and
conditions of the options, are provided in the Remuneration Report on page 27.
Options holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of Breaker
Resources NL and other key management personnel of the Company, including their personally related parties, are
detailed below:
BREAKER RESOURCES NL 2013 ANNUAL REPORT
53
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
Balance
at start of
year
Granted
as
compensation
Exercised
Other
changes
Balance
at year
end
Vested and
exercisable
Number
Number
Number
Number
Number
Number
Key
Management
Personnel
Tom Sanders
•
•
2013
2012
Mark Edwards
•
•
2013
2012
Mike Kitney
•
•
2013
2012
Alastair Barker
•
•
2013(i)
2012
Michelle Simson
•
•
2013(ii)
2012(ii)
5,635,000
-
-
5,000,000
500,000
-
-
500,000
512,500
-
-
n/a
n/a
n/a
-
500,000
1,000,000
-
1,000,000
-
-
-
-
-
-
-
-
-
-
5,635,000
635,000
5,635,000
635,000
635,000
-
-
-
12,500
-
-
-
500,000
500,000
512,500
512,500
-
-
12,500
12,500
1,000,000
1,000,000
-
-
1,000,000
1,000,000
n/a
n/a
n/a
n/a
n/a
Notes
(i) Commenced 18 April 2012
(ii) Commenced 22 October 2012
A total of 6,000,000 options held by directors are escrowed until 20 April 2014.
54
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Shareholdings
The numbers of ordinary shares in the Company held during the financial year by each director of Breaker Resources
NL and other key management personnel of the Company, including their personally related parties, are detailed below.
There were no shares granted during the reporting period as compensation:
Key
Management
Personnel
Tom Sanders
•
•
2013
2012
Mark Edwards
•
•
2013
2012
Mike Kitney
•
•
2013
2012
Alastair Barker
•
•
2013(i)
2012
Michelle Simson
•
•
2013(ii)
2012(ii)
Balance
at start of year
Received
during the year
on exercise of options
Other changes
Balance at year
end
Number
Number
Number
Number
11,770,004
5,000,004
1,050,000
1,000,000
1,075,000
1,000,000
-
n/a
n/a
n/a
-
-
-
-
-
-
-
-
-
n/a
-
6,770,000
11,770,004
11,770,004
-
50,000
-
75,000
-
-
-
n/a
1,050,000
1,050,000
1,075,000
1,075,000
-
-
-
n/a
Notes
(i) Commenced 18 April 2012
(ii) Commenced 22 October 2012
(c) Loans to/from key management personnel
There were no loans to/from key management personnel during the year.
(d) Other transactions with key management personnel
• Pursuant to a Service Agreement dated 31 October 2011 between the Company and Goldfields Geological Associates
(GGA), the Company paid a total of $280,199 during the year to GGA. The fees were for the provision of technical
and management services provided to the Company by Mr Thomas Sanders and the use of his vehicle. Mr Thomas
Sanders is a partner of GGA.
• During the year the Company paid Mr Mark Edwards $40,111 as directors’ fees.
• During the year the Company paid Emdale Family Trust $40,111 in exchange for Mr Michael Kitney’s service as a
director. Mr Michael Kitney is a beneficiary of the Emdale Family Trust.
• Pursuant to a Service Agreement dated 22 February 2012 between the Company and Horizon Resources Pty Ltd
(Horizon), the Company paid a total of $234,487 during the year to Horizon. The fees were for the provision of
technical and operational services provided to the Company by Mr Alastair Barker and the use of his vehicle. Mr
Alastair Barker is the sole shareholder and sole director of Horizon.
• During the year the Company paid Miss Michelle Simson, $139,732 as salary and $17,926 as superannuation.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
55
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 30 JUNE 2013
21. Related party transactions
The Company had no transactions with related parties during the year except for payments to the key management
personnel disclosed in Note 20.
There were no guarantees provided to the related parties during the year.
22. Remuneration of auditor
During the year the following fees were paid or payable for services provided by the auditor of the Company, its related
practices and non-related audit firms:
(a) Audit services
Rothsay Chartered Accountants – audit and review of financial reports
Total remuneration for audit services
(b) Non-audit services
Rothsay Chartered Accountants – independent accountants report
Total remuneration for non-audit services
23. Subsequent events
2013
$
20,500
20,500
2013
$
-
-
2012
$
8,000
8,000
2012
$
8,800
8,800
Subsequent to the balance sheet date, the Company surrendered approximately 1,166km2 of the tenement area of
its exploration projects. The exploration commitment has therefore reduced from $1.71million (refer to Note 16) to
$1.23million.
Other than as stated above, there were no matters or circumstances arising since the end of the reporting period that
have significantly affected, or may significantly affect the operations of the Company and the results of those operations
or the state of the affairs of the Company in the financial period subsequent to 30 June 2013.
56
BREAKER RESOURCES NL 2013 ANNUAL REPORT
DIRECTORS’ DECLARATION
The directors declare that:
• the Financial Statements comprising the Statement of Profit or Loss and Other Comprehensive Income, Statement
of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and accompanying notes set out on
pages 37 to 56 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the Company’s financial position as at 30 June 2013 and of its performance for the
financial year ended on that date;
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
• a statement that the attached financial statements are in compliance with International Financial Reporting Standards
has been included in the Notes to the Financial Statements.
Signed in accordance with a resolution of the directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the directors
Tom Sanders
Executive Chairman
Perth, 2 September 2013
BREAKER RESOURCES NL 2013 ANNUAL REPORT
57
58
BREAKER RESOURCES NL 2013 ANNUAL REPORT
BREAKER RESOURCES NL 2013 ANNUAL REPORT
59
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is provided
below. The information is current as at 30 September 2013.
Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
Fully paid ordinary shares
Listed options
Number of holders Number of shares Number of holders Number of options
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Holding less than a
marketable parcel
2
24
60
121
33
240
7
7
87,747
581,563
4,207,445
50,223,242
55,100,004
8,073
0
116
37
98
17
268
116
0
569,474
309,454
2,472,375
17,898,697
21,250,000
569,474
Top 20 Shareholders
The names of the 20 largest holders of quoted ordinary shares are:
Shareholder
Ordinary shares
Equity held
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
Thomas Stephen Sanders & Helen Sanders
Kurraba Investments Pty Ltd
JP Morgan Nominees Australia Limited
Mr Thomas Stephen Sanders & Mrs Helen Sanders
National Nominees Limited
Mr Thomas Stephen Sanders & Mrs Helen Sanders
Mark Robert Edwards
Michael John Kitney & Dale Jayne Kitney
Mr Wilhelm Schroder
Colbern Fiduciary Nominees Pty Ltd
TT Nicholls Pty Ltd
Jasper Hill Resources Pty Ltd
Alderhaus Pty Ltd
Jemaya Pty Ltd
Southern Terrain Pty Ltd
Tecca Pty Ltd
Cornela Pty Ltd
Mr Michael Frank Manford
The Constantine Family Foundation Pty Ltd
60
BREAKER RESOURCES NL 2013 ANNUAL REPORT
Number
17,110,000
7,750,004
5,000,000
4,965,109
2,750,000
2,500,000
1,250,000
1,050,000
1,050,000
982,500
960,000
700,000
370,000
340,000
300,000
300,000
299,744
291,810
265,000
250,000
%
31.053
14.065
9.074
9.011
4.991
4.537
2.269
1.906
1.906
1.783
1.742
1.270
0.672
0.617
0.544
0.544
0.544
0.530
0.481
0.454
48,484,167
87.993
Top 20 Optionholders
The names of the 20 largest holders of quoted options are:
Shareholder
Listed options
Equity held
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Kurraba Investments Pty Ltd
National Nominees Limited
Talex Investments Pty Ltd
Mr Thomas Stephen Sanders & Mrs Helen Sanders
Mr Wilhelm Schroder
Mr Murray Leslie Siviour
West Trade Enterprises Pty Ltd
TT Nicholls Pty Ltd
Jasper Hill Resources Pty Ltd
McAlister Pty Ltd
Tecca Pty Ltd
Mrs Belinda Poznik
Mr Michael Frank Manford
Mrs Jennifer Ann Jones & Mr Kevin Michael Jones
Mr Chee Chin
Kahala Holdings Pty Ltd
Future Super Pty Ltd
Cypress Securities Pty Ltd
Number
8,125,000
2,800,000
2,500,000
1,250,000
664,657
625,000
570,000
344,000
235,000
200,000
125,000
125,000
125,000
115,497
112,500
107,043
82,500
80,000
80,000
75,000
%
38.235
13.176
11.765
5.882
3.128
2.941
2.682
1.619
1.106
0.941
0.588
0.588
0.588
0.544
0.529
0.504
0.388
0.376
0.376
0.353
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations
Act are:
Shareholder
Ordinary shares
Equity held
18,341,197
86.312
1
2
3
4
5
Mr Thomas Stephen Sanders & Mrs Helen Sanders
Geologic Resource Fund
CQS Asset Management Limited
HSBC Custody Nominees Limited (Altus Resource
Capital Limited)
Nestor Investment Management SA
Number
11,750,004
6,250,000
5,000,000
5,000,000
3,249,999
%
21.36
11.34
9.07
9.07
5.90
Voting Rights
All ordinary shares (whether fully paid or not) carry one (1) vote per share without restriction. Listed options carry no attaching
voting rights.
BREAKER RESOURCES NL 2013 ANNUAL REPORT
61
ASX ADDITIONAL INFORMATION CONTINUED
Restricted Securities
The number of restricted securities on issue is:
Class
Ordinary fully paid shares
Unlisted 25 cent options, exercisable on or before 30 June 2016
Unlisted 30 cent options, exercisable on or before 30 June 2016
Securities
Number
9,800,000
3,000,000
3,000,000
Escrow period ends
Date
20 April 2014
20 April 2014
20 April 2014
Unquoted Securities
Details of unquoted securities on issue are:
Class
Ordinary fully paid shares
Unlisted 25 cent options, exercisable on or before 30 June 2016
Unlisted 30 cent options, exercisable on or before 30 June 2016
Unlisted 50 cent options, exercisable on or before 31 December 2016
Holders of 20% or more of the class
Details of holders of 20% or more of a class of unquoted securities are:
Securities
Number
9,800,000
3,000,000
3,000,000
2,400,000
Holders
Number
3
3
1
4
Class
Ordinary fully paid shares
Unlisted 25 cent options, exercisable on
or before 30 June 2016
Unlisted 30 cent options, exercisable on
or before 30 June 2016
Unlisted 50 cent options, exercisable on
or before 31 December 2016
Unlisted 50 cent options, exercisable on
or before 31 December 2016
Use of Funds
Holder
Securities
Held
Mr Thomas Stephen Sanders &
Mrs Helen Sanders
Mr Thomas Stephen Sanders &
Mrs Helen Sanders
Mr Thomas Stephen Sanders &
Mrs Helen Sanders
Mr Alastair Barker
Miss Michelle Simson
Number
7,750,000
2,000,000
%
79
67
3,000,000
100
1,000,000
1,000,000
42
42
The Company has, during the reporting period, used the funds that it had at the time of admission to the Official List of
the Australian Securities Exchange in a way consistent with its initial business objectives.
62
BREAKER RESOURCES NL 2013 ANNUAL REPORT
NOTES
BREAKER RESOURCES NL 2013 ANNUAL REPORT
63
NOTES
64
BREAKER RESOURCES NL 2013 ANNUAL REPORT
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