Company Directory: AAR, Anglo Australian Resources LTD
Company Directory: AAR, Anglo Australian Resources LTD
Company Directory: AAR, Anglo Australian Resources LTD
COMPANY DIRECTORY
Directors
John Load Cecil Jones (Chairman)
Denis Edmund Clarke
Christopher Hugh Fyson
Angus Claymore Pilmer
Company Secretary
Angus Claymore Pilmer
Operations Office
Level 1
44 Ord Street
WEST PERTH WA 6005
Telephone (08) 9322 5811
Facsimile (08) 9322 5301
Registered Office
C/- A C Pilmer & Co
Level 2
44 Ord Street
Telephone (08) 9322 1788
Facsimile (08) 9322 1744
Bankers
National Australia Bank Ltd
1232 Hay Street
WEST PERTH WA 6005
Auditors
KPMG
Level 31, Central Park
152-158 St George’s Terrace
PERTH WA 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 2
45 St George’s Terrace
PERTH WA 6000
Telephone (08) 9323 2000
Facsimile (08) 9323 2033
Other Information
The Company is a listed company limited by shares, incorporated and domiciled in
Australia.
Company Directors
John Load Cecil Jones (Chairman)
Denis Edmund Clarke
Christopher Hugh Fyson
Angus Claymore Pilmer
REVIEW OF OPERATIONS
OVERVIEW
Anglo Australian Resources NL has been listed on the ASX as a junior explorer since
1986. The company has now in place a strategy in place to move the company from a
junior exploration company to a mid tier miner. In the last three years we have advanced
Mandilla from an exploration project to a producing mine. This mine, while lasting only
nine months, will provide the company with cash flow to fund exploration and
development work on the company’s key project Koongie Park. If the current high
demand for base metals is maintained, development of this project has the potential to
provide substantial revenue for the company.
The Koongie Park project, an advanced base metals project consisting of 6 mining leases,
is located 25km south-west of Halls Creek in the Kimberley region of Western Australia.
The project area covers several base metal prospects, which occur along a 15km contact
of a volcano-sedimentary sequence. The area has been explored since 1972, with the
discovery of several zinc-copper-lead-silver deposits, the main prospects being Sandiego
and Onedin. Other known identified prospects include Atlantis, Gosford and Rockhole.
Upwards of $7 million has been spent by explorers on the project. Anglo Australian
Resources has been associated with the property since 1989 and it is now wholly
owned. In 1996-1997 Lachlan Resources N L, in joint venture with the Company, carried
out extensive resource-definition type drilling and developed excellent geological and
structural interpretations for both deposits.
The Sandiego deposit is a steeply plunging tabular mineralised zone that has been drilled
on 40m sections over a strike length of 120m to a depth of 500m, and remains open at
depth (Figure 2). Its substantial potential is illustrated by the 1996 drillhole SRCD 7
roughly in the middle of the deposit which intersected
77m @ 1.65% Cu, 1.48% Pb. 9.7% Zn, 60.7 g/t Ag and 0.54 g/t Au (200-277m) and
20m @ 3.2% Cu, 0.05% Pb, 0.14% Zn, 16 g/t Ag and 0.31 g/t Au (292-312m).
Zinc Zone - 1.3 Mt @ 0.6% Cu, 1.3% Pb, 9.1%Zn, 72 g/t Ag and 0.34 g/t Au Copper
Zone - 0.92Mt @ 2.9% Cu
These estimates were based on diamond and RC drill holes spaced at 40m x 40m. Careful
cross sectional methodology was used by competent geologists. It is anticipated that
following a careful review of the geological models and minor conformation drilling,
these resources will be converted to JORC compliancy.
In 2003 a detailed and independent study of the economics of mining at both deposits
found them to be marginal. Copper and Zinc prices have nearly quadrupled since the
conclusion of this study (see Figure 3). The current record commodity prices profoundly
change the economics of the project and make the Koongie Park project one of the best
undeveloped base metal projects in Australia.
Recognising the changed economic conditions for base metals, Anglo Australian
Resources.NL commissioned Rupert Crowe of CSA Australia Pty Ltd to undertake a
review of options available and to define parameters for the company to move the project
forward. CSA has a 22 year history of exploration and development of base-metal
projects both internationally and in Australia. CSA concluded that while there were a
complex range of options available for the project, AAR needs to undertake a drilling
program prior to commencement of a feasibility study. This program, which commenced
in July and consisting of 8 diamond and RC drill holes, was designed to provide
sufficient samples of the representative ore types at both Onedin and Sandiego to enable
definitive metallurgical testing to be carried out on the two prospects. In addition,
potential strike extensions of mineralisation were tested at Sandiego and testing of a new
mineralised shoot is planned at Onedin. CSA provided geological support to manage the
drilling program and have undertaken reappraisal of the geological modelling of the
deposits and commenced all the necessary due diligence required prior to undertaking a
JORC compliant resource calculation.
All metallurgical test holes successfully intersected the target mineralisation. At Onedin,
ORCD45 drilled down the plunge of the mineralisation (see Figure 4), intersected a semi-
continuous zone of mineralisation over 335m. The upper 130m is extremely weathered,
gossanous and contains occasional zones of malachite, chrycocolla and minor galena.
Within the partially oxidised zone (to 189m down hole) semi-massive sphalerite and
chalcocite were intersected. The remaining mineralised intersection contained sulphide
mineralisation of up to 20% sphalerite and 15% chalcopyrite and 1% galena. Assay
results are summarised below:
At Sandiego 3 holes were drilled for metallurgical purposes. Two holes SRCD21 and
SRCD22 intersected up to 25% massive sulphides consisting of sphalerite, chalcopyrite,
pyrite, pyrrhotite and galena. Assays from these holes were not available at the time of
reporting.
Ore resource calculation and metallurgical testing is expected to be completed before the
end of the calendar year. Anglo Australian Resources NL will then have sufficient
information with which to evaluate its development options.
GOLD PROJECTS
EASTERN GOLDFIELDS
MANDILLA
Anglo Australian Resources NL 100% gold rights
The Mandilla project consists of 100% interest gold rights attached to two mining leases
located 70km south of Kalgoorlie and 20km south east of Kambalda. The project is
located on the contact of a sequence dominated by mafics and ultramafics with a
sequence of felsic volcanoclastics and metasediments of the Mandilla Formation. The
sedimentary sequence is intruded by the Emu Rocks Granite (a high level stock of
porphyritic monzogranite). The western contact of the granite is faulted by an interpreted
southern extension of a splay fault off the Zuleika Shear Zone, which hosts 1 million
ounce deposits at Raleigh (Kundana) and Mt Marion (Ghost Crab).
While most of our exploration effort has been focused on the palaeochannel, bedrock
targets remain a high priority for the company. Bedrock exploration this year consisted of
a ten hole RC drilling program of 1051m. Targets included Selene and East Mandilla. At
East Mandilla, the drilling program tested the potential for a number of very shallow
south dipping lodes, which are flat lying in cross section. This new model has been
developed which has highlighted the potential for a target open pittable resource of
130,000t @ 6g/t Au for a total of 25,000 ounces (to 60m below surface).
The Feysville Project consists of all mineral rights attached to two mining leases located
16km SSE of Kalgoorlie. The project is situated in the geological / structural corridor
bounded by the Boulder Lefroy Fault that hosts the world class deposits of Kalgoorlie
and St Ives, as well as other substantial deposits in the New Celebration, Kambalda and
Hannans South areas. The project also contains an extensive strike length of an ultramafic
unit, which may correlate with the ultramafic horizon that hosts nickel sulphide deposits
at Kambalda 30km to the south.
The Feysville geology is complex, with regional mapping identifying a double plunging
northwest trending antiformal structure known as the Feysville Dome, which is bounded
to the west by the Boulder Lefroy Fault and to the south by the Feysville Fault. The
Feysville fault, located on the southern margin of the tenement, is interpreted to represent
thrusting of underlying mafic/ultramafic volcanic and intrusive rocks over a younger
felsic metasedimentary sequence to the south. Intermediate and felsic porphyries have
extensively intruded the sequence.
There are a number of historical gold workings on the project and drilling has identified
strong alteration associated with primary gold mineralisation. Gold mineralisation is
typically located at the sheared contacts of intrusive porphyry units, within pyrite sericite
altered porphyries, and also associated with chalcopyrite magnetite / epidote altered
breccia zones within ultramafic units.
Previous exploration by WMC Resources Limited targeted gold and nickel with initial
focus on the ultramafic unit for nickel sulphides, with best results of 2m @ 1% Ni and
4m @ 0.65%Ni. Exploration has consisted of a comprehensive soil survey,
reconnaissance ground EM surveying, 264 RAB / Aircore holes, 444 RC holes and 5
diamond holes. The soil survey defined an area of extensive gold anomalism clustered in
the SE corner of the project area. Follow-up drilling confirmed the gold potential of the
area with intersections such as 7m @ 2.47g/t Au at Empire Rose, 10m @ 9.1g/t Au at
Ethereal, 8m @ 2.08g/t at Kamperman and 8m @ 3.26g/t Au at Rogan Josh. Most
prospects are at early stages with mineralisation open along strike and at depth. Much of
the drilling elsewhere has been to shallow depths. However, the substantial secondary
gold mineralisation defined by these shallower holes provides targets for deeper drilling.
Previous exploration programs for nickel sulphides at Feysville defined three ground
electromagnetic (“EM”) anomalies, interpreted to be located near the basal contact of the
ultramafic unit with underlying basalt (see Figure7). Exploration this year tested these
anomalies with four RC holes totalling 492m.
At the Michelangelo Prospect (Anomaly J) two holes tested an interpreted steeply south-
dipping conductor. Both intersected a sulphidic silicified black shale unit which
correlates well with the interpreted conductor. A copper-rich zone in one hole intersected
8m @ 2.87%Cu, 26.5g/t Ag and 0.31g/t Au. This intersection correlates with significant
pyrite chalcopyrite alteration intersected in previous drilling which returned a best
intersection of 3m @ 1.83%Cu, 13.4g/t Ag and 0.26g/t Au. The mineralised zone remains
open along strike and at depth.
At the Raphael Anomaly one hole tested an intense south-dipping conductor. The hole,
drilled entirely in basalt, contained a zone of elevated nickel (22m @ 0.15%Ni) at the end
of the hole. No sulphides were visible. Interpretation of down-hole EM results suggests
that, despite the drill hole exceeding planned depth, the target conductor was not
intersected and is located off the end of the hole.
CARNILYA
Anglo Australian Resources NL 100% gold rights
The Carnilya project consists of the gold mining rights only attached to four mining
leases located 45km southeast of Kalgoorlie. The geology is dominated by two east-west
trending ultramafic units which host known occurrences of nickel sulphide mineralisation
(Carnilya Hill, Zone 29, and Dunlop). The ultramafic unit, interbedded with sediments,
overlies tholeitic basalt and forms a south dipping recumbent fold. The gold potential of
the project has been poorly tested as a result of past exploration focusing on the nickel
potential. Only 10% of all holes drilled on the project were assayed for gold. Gold
exploration targets include two partially tested gold in soil anomalies (SUB and Laterite
Hill). Drilling incidental to the SUB soil anomaly, targeting nickel sulphides, obtained
values up to 4m @ 2.14g/t Au. No field work has been conducted on this project this
year.
MAYNARDS DAM
Anglo Australian Resources NL 100%
The project is located 35km southeast of St Ives and 4km northeast of the Paris gold
workings. Geologically, the project is located 5km east of the Boulder Lefroy Fault Zone
and contains a sequence of gabbro and basalt, faulted against a volcano-sedimentary
sequence. Late northeastly trending faults, which control some of the gold mineralisation
in the St Ives area, are interpreted to crosscut the stratigraphy. The project is
predominately alluvium covered.
Reconnaissance RAB drilling failed to intersect significant gold values. Subsequently, the
tenements were relinquished.
AUSTIN PROJECT WA
Anglo Australian Resources NL 100%
The project, located 12 km east and southeast of Cue in the Murchison District of
Western Australia, covers granite and greenstone terrain between million ounce deposits
Big Bell and Golden Crown. Eastern tenements cover strike extensions of stratigraphy
which host the Cuddingwarra mineralisation and contain untested soil geochemical
anomalies. Prospectors using metal detectors in the area of the geochemical anomalies
have located small nuggets.
Exploration on the project this year consisted of a RAB drilling program which tested
gold soil anomalies previously defined by Anglo Australian Resources NL. No
significant intersections were obtained and the central tenement was relinquished. Two
other tenements held by the company in the project area are still to be granted.
Anglo Australian Resources considers the Murchison District, which contains five plus
one million ounce gold deposits, to be an under-explored and highly prospective part of
the Yilgarn province. This belief in its prospectivity, backed up by in-house research, has
resulted in the submission of tenement applications for three separate areas in the
Murchison District during June quarter 2002. Two of these areas are located on the
highly prospective Big Bell Shear which hosts the plus one million ounce Big Bell
deposit. Negotiations with native title land claimants represented by the Yamatji Land
Council have been completed and a regional heritage agreement has been signed. Most
tenements were granted this year and exploration is expected to commence shortly.
Project details are summarised below.
Barloweerie
This exploration licence of 98sq km, located 50km west of Meekatharra and 70km north
northeast of Big Bell, covers approximately 33km of the extension of the Big Bell shear.
Previous exploration has not targeted the main structural corridor.
Dalgaranga
This project, located 60km northwest of Mt Magnet and 60km southwest of Big Bell and
consisting of three exploration licences and nine prospecting licences, covers 350 sq km
of the Dalgaranga greenstone belt. The tenements also cover the northern and southern
strike extensions of the structure that hosts the Gibleys (Dalgaranga) gold deposit. Until
recently, Gibleys (Dalgaranga) was successfully mined by the Equigold NL / WRF
Securities Ltd joint venture.
Within the application area, extensive exploration by Hunter Resources and Equigold
defined a lag anomaly over 150x100m containing a maximum of 1g/t Au. Follow up
RAB drilling produced best results of 4m @ 5g/t Au and 2m @ 0.83g/t Au at shallow
depths. Rock chips of a quartz vein produced anomalous values of up to 3.1g/t Au. Anglo
Australian Resources NL plans to compile the previous exploration data with a view of
defining drill targets.
The project also contains a scheelite prospect at Duffy Bore where rock chip values of
values up to 110ppm tungsten have been recorded.
Pinnacles
The exploration licence, located 20km east of Cue, consists of a small area of 4 sub-
blocks immediately east of the Pinnacle workings.
The project area is interpreted to contain the fault bounded felsic unit which hosts most of
the mineralisation at Tuckabianna. A magnetic anomaly within this felsic unit could
reflect magnetite alteration (often associated with gold mineralisation within this rock
type c.f. Carosue Dam) or a BIF unit.
AAR has reached a joint venture agreement with recently listed company Alloy
Resources Limited. Alloy can earn 60% of the tenement by exploration expenditure of
$150,000 over a three year period.
PETER KOMYSHAN
General Manger – Exploration
29th September 2006
Western Australia
Koongie Park MLs 80/276, 277 100% Anglo Australian
MLAs 80,585, 586, 587
ELAs 80/3494, 3495
Austin ELA 21/114, 100% Anglo Australian
E 20/510
Barloweerie ELA 51/1015 100% Anglo Australian
Dalgaranga Ps 59/1625-1630, 100% Anglo Australian
1643-1645, E 59/1107,
ELAs 59/1127, 1204
Pinnacles ELA21/115, 20/599 100% Anglo Australian
Feysville MLs 26/290,291 100% Anglo Australian
Carnilya MLs 26/47-49, 100% (gold rights) Carey Mining (2
26/453
Mandilla M15/96 100% (gold rights) Australian Nicke
ML15/633 100% Anglo Australian
Es 15/789, 891 100% Anglo Australian
Northern Territory
Victoria River ELAs 25420, 25422, 100% Anglo Australian
Downs 25423, 25424, 25425
DIRECTORS’ REPORT
The Directors present their report together with the financial report of Anglo Australian
Resources NL ("the Company") for the year ended 30 June 2006 and the auditors' report
thereon.
1. DIRECTORS
The Directors of the Company at any time during or since the end of the financial year
are:
COMPANY SECRETARY
2. PRINCIPAL ACTIVITIES
The principal activities of the Company during the financial year were the acquisition and
investigation of mineral tenements and mineral exploration. There has been no change in
the nature of these activities during the financial year.
3. RESULTS
The net loss of the Company for the financial year, after provision for income tax was
$528,500 (2005 $1,588,596).
4. DIVIDENDS
No dividends have been paid by the Company during the financial year ended 30 June
2006, nor have the Directors recommended that any dividends be paid.
5. REVIEW OF OPERATIONS
A review of the operations for the financial year, together with future prospects which
form part of this report are set out on pages 2 to 5.
Significant changes in the state of affairs of the Company that occurred during the
financial year were: (a) The paid up capital was increased from $19,483,385 to
$22,750,723 as a result of the issue of the following: 40,000,000 shares of 2.5 cents fully
paid by placement at a cost of $62,596 in February 2006.
93,568,000 shares of 2.5 cents fully paid by placement at a cost of $9,266 in May 2006.
7. SUBSEQUENT EVENTS
There has not arisen in the interval between the end of the financial year and that date of
this report any items, transaction or event of a material and unnatural nature likely, in the
opinion of the Directors of the Company, to affect the operations of the Company, the
results of those operations, or the state of affairs of the Company in financial years after
the financial year.
a) the Company commenced mining operations at its Mandilla Gold Mine project
located 70km south of Kalgoorlie in Western Australia and this new activity is
expected to contribute revenue and profits in the next financial year.
8. LIKELY DEVELOPMENTS
The Company intends to continue its mining operations and its exploration programs on
existing tenements and to acquire further suitable tenements for exploration.
9. PARTICULARS OF DIRECTORS
The particulars of the qualifications and experience of the Directors are detailed below:
Mr Jones has been a director of the Company since February 1990 is a Kalgoorlie
pastoralist and businessman formerly associated with North Kalgurli Mines NL and was a
founding director of Jones Mining Limited.
Other current directorships
None
Special responsibilities
Dr Clarke has been a director of the Company since March 1999 and has a PhD in
geology from Stanford University (California) and has more than 37 years’ experience in
exploration and mining, principally in Australia and North America, including 15 years
with Plutonic Resources Limited, which rapidly developed from a small explorer/non-
producer into one of Australia’s largest gold producers operating five mines.
Special responsibilities
Mr Fyson has been a director of the Company since December 1985 has 28 years’
experience in real estate and development in the Goldfields Region of Western Australia
and is a past president of the Kalgoorlie Boulder Chamber of Commerce. Mr Fyson
initiated the Goldfields Mining Expo of which he was Chairman for its first three years.
He is a State and National Director of the Professionals Real Estate Group and has
Chaired both Boards for four years each.
None
None
Special responsibilities
Mr Pilmer has been a director of the company since December 1985 and was engaged in
public practice as a chartered accountant from 1971 until 1992 in Perth, Western
Australia and Hong Kong. He is experienced in corporate management and financial
control
None
Former directorships in last three years
Special responsibilities
Company Secretary
Financial Director
Key management personnel have authority and responsibility for planning, directing and
controlling the activities of the Company, including Directors of the Company and other
executives. Key management personnel includes specified Directors and specified
executives for the Company.
The Board is responsible for determining and reviewing the remuneration for Directors
and Executive management. The Board assesses the appropriateness of the nature and
amount of emoluments of such Directors and Officers on an annual basis by reference to
market and industry conditions. The Board takes into account the Company’s financial
and operational performance and status in determining the nature and amount of
emoluments.
Due to the nature of the Company’s operations, ie. mineral exploration, Directors and
Executive remuneration do not include performance-based incentives.
Total remuneration for all non-executive directors during the year was $70,850. Non-
executive directors do not receive bonuses, nor have they been issued options on
securities. Directors’ fees cover all Board activities.
The following table discloses the remuneration of the key management personnel (as
defined in AASB 124 Related Party Disclosures) of Anglo Australian Resources NL.
The key management personnel of Anglo Australian Resources NL includes the directors
and the following executive officers, who are also the five highest paid executives of the
Company:
2006: Post
Director Employment Equity O
Salary,
Fees & Superanuation Cash Non-Cash
Commission Contributions Bonus Benefits Options
$ $ $ $ $
J L C Jones 20,000 1,800
D E Clarke 15,000 1,350
C H Fyson 15,000 1,350
A C Pilmer 15,000 1,350
65,000 5,850
Exploration Manager
P Komyshan 112,500 24,375
2005: Post
Director Employment Equity O
Salary,
Fees & Superanuation Cash Non-Cash
Commission Contributions Bonus Benefits Options
$ $ $ $ $
J L C Jones 17,500 - - - -
D E Clarke 12,500 - - - -
C H Fyson 12,500 - - - -
A C Pilmer 12,500 - - - -
55,000 - - - -
Exploration Manager
P Komyshan 105,425 22,575 - - -
Service agreements
Remuneration and other terms of employment for other key management personnel are
formalized in service agreements.
The relevant interest of each director in the share capital of the Company as notified by
the Directors to the Australian Stock Exchange in accordance with Section 205 G (1) of
the Corporations Act 2001 at the date of this report, is as follows:
No of Shares
Directly
J.L.C. Jones 2,291,250
D.E. Clarke 825,000
C.H. Fyson 1,658,000
A.C. Pilmer 2,100,000
6,874,250
During the year there were 5 Directors’ meetings held and the number of meetings
attended by each Director are detailed below:
The Company has agreed to indemnify the following current directors of the Company, J
L C Jones, D E Clarke, C H Fyson and A C Pilmer and the General Manager Exploration
Mr Peter Komyshan against all liabilities to another person (other than the Company or
related body corporate) that may arise from their position as officers of the Company,
except where the liability arises out of conduct involving lack of good faith. The
agreement stipulates that the Company will meet the full amount of any such liabilities,
including costs and expenses.
The Company has not entered into an agreement with their current auditors, KPMG,
indemnifying them against any claims by third parties arising from their report on the
annual financial report.
As at the date of this repot the Company does not have insurance in relation to Directors’
and Officers’ indemnity.
During the financial year, the Auditor was not engaged on any non-audit services.
Details of amounts payable to the Auditor for audit services paid during the year are set
out in Note 3.
A copy of the Auditors’ Independence Declaration, as required under section 370C of the
Corporations Act 2001, is set out on page 14.
This statement outlines the main Corporate Governance practices that were in place
throughout the financial year, unless otherwise stated. These practices are dealt with
under the following headings: Composition of the Board, Independent Professional
Advice, Remuneration, Risk Management and Ethical Standards.
The following outlines the main corporate governance practices established to ensure the
board is equipped to discharge its responsibilities.
The composition of the Board is determined in accordance with the following principles
and guidelines:
The Board will review its composition on an annual basis to ensure that the Board has the
appropriate mix of expertise and experience. Where a vacancy exists, for whatever
reason, or where it is considered that the Board would benefit from the services of a new
Director with particular skills, the Board will select appropriate candidates with relevant
qualifications, skills, and experience.
The performance of all Directors will be reviewed by the Chairman each year. Directors
whose performance is unsatisfactory will be asked to retire.
Each Director will have the right to seek independent professional advice at the
Company’s expense. However, prior approval by the Chairman will be required, which
will not be unreasonably withheld.
Where necessary the Board will obtain independent advice on the appropriateness of
remuneration packages for directors and senior executives.
Remuneration
The Board reviews the remuneration packages and policies applicable to senior
executives and non-executive Directors on an annual basis. Remuneration levels are
competitively set to attract qualified and experienced directors and senior executives.
Risk Management
The Board will monitor and receive advice on areas of operational and financial risk and
consider strategies for appropriate risk management arrangements.
Specific areas of risk which are identified will be regularly considered at Board Meetings
including foreign currency and commodity price fluctuations, tenement management,
human resources, the environment and continuous disclosure obligations.
Financial Reporting
The Chairman of the Board and the Company Secretary (who performs the Chief
Executive Officer’s and the Chief Financial Officers’ function) have declared, in writing
to the Board that the Company’s financial reports are founded on a sound system of risk
management and internal compliance and control which implements the policies adopted
by the Board.
Details of the progress of the AIFRS implementation and the expected impact of
transition to AIFRS on the financial report for the year ended 30 June 2006 are included
in Note 17.
The Board of Directors aims to ensure that the shareholders are informed of all major
developments affecting the Company's state of affairs. Information is communicated to
shareholders as follows:-
The Board encourages full participation of shareholders at the Annual General Meeting to
ensure a high level of accountability and identification with the Company's strategy and
goals. Important issues are presented to the shareholders as single resolutions.
The auditor is invited to attend the Annual General Meeting of shareholders. The
Chairman will permit shareholders to ask questions about the conduct of the audit, and
the preparation and content of the audit report.
Ethical Standards
The Board’s policy for the Directors and management is to conduct themselves with the
highest ethical standards. All Directors and employees will be expected to act with
integrity and objectivity, striving at all times to enhance the reputation and performance
of the Company.
Environmental Regulations
A C PILMER
Director
Note 2006
$
Revenue -
Other income
Rental income 3,750
The above Income Statement is to be read in conjunction with the accompanying notes.
BALANCE SHEET
As at 30 June 2006
Note 2006
$
Current Assets
Cash and equivalents 2,999,151
Receivables 5 124,761
Equity
Issued capital 10 22,750,723
Accumulated Losses (17,535,442)
Total Equity 5,215,281
The above Balance Sheet is to be read in conjunction with the accompanying notes.
Issued Accumulated
Capital Losses
$ $
At 1 July 2004 18,282,531 (15,418,346)
Loss for the year - (1,588,596)
Issue of shares capital 1,280,000 -
Issue expenses (79,146) -
At 30 June 2005 19,483,385 (17,006,942)
At 1 July 2005 19,483,385 (17,006,942)
Loss for the year - (528,500)
Issue of share capital 3,339,200 -
Issue expenses (71,862) -
At 30 June 2006 22,750,723 (17,535,442)
The Statement of Changes in Equity is to be read in conjunction with the notes to the
Financial Statements.
Note 2006
$
Cash Flows from Operating Activities
Cash payments in the course of operations (165,928)
The above Statement of Cash Flows is to be read in conjunction with the accompanying
notes.
The financial report was authorised for issue by the directors on 29 September 2006
The financial report is a general purpose financial report which has been prepared in
accordance with Australian Accounting Standards ("AASBs") adopted by the Australian
Accounting Standards Board ("AASB") and the Corporations Act 2001.
International Financial Reporting Standards ("IFRS") form the basis of Australian
Accounting Standards adopted by the AASB, and for the purposes of this report are
called Australian equivalents to IFRS ("AIFRS") to distinguish from previous Australian
GAAP. The financial reports of the Company also comply with IFRSs and interpretations
adopted by the International Accounting Standards Board.
This is the Company’s first AIFRS consolidated financial report for the year covered by
the first AIFRS annual financial report and AASB 1 First time adoption of Australian
equivalents to International Financial Reporting Standards.
An explanation of how the transition to AIFRSs has affected the reported financial
position, financial performance and cash flows of the company is provided in note 17.
The financial report, which is presented in Australian dollars, has been prepared on the
basis of historical costs except that derivative financial instruments and financial
instruments classified as available for sale are stated at their fair value.
The entity has elected to early adopt the following accounting standards and
amendments:
The following standards and amendments were available for early adoption but have not
been applied by the Company in these financial statements:
The Company plans to adopt AASB 7, AASB 2005-9 and AASB 2005-10 in the 2007
financial year.
The initial application of AASB 7, AASB 2005-9 and AASB 2005-10 is not expected to
have an impact on the financial results of the Company as the standard and the
amendment are either only concerned with disclosures or are not applicable to the
Company.
Except for the change in accounting policy relating to the classification and measurement
of financial instruments, the accounting policies set out below have been applied
consistently to all periods presented in the consolidated financial report and in preparing
an opening AIFRS balance sheet at 1 July 2004 for the purposes of the transition to
Australian Accounting Standards – AIFRS.
The Company made a loss of $528,500 (2005:$1,588,596) during the year. The financial
statements have been prepared on a going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and settlement of liabilities in
the ordinary course of business.
The Company has net current assets of $2,725,428 (2005: $773,819) at 30 June 2006
which includes cash and cash equivalents of $2,999,151 (2005:$867,062). The Directors
consider that there are reasonable grounds to believe that the Company will able to meet
its expenditure commitments for the foreseeable future.
Revenue from rental income is recognised over the period of the lease.
Financial Income
Interest income is recognised in the income statement as it accrues, using the effective
interest method.
Financial expenses
Borrowing costs are expensed as incurred and included in net financing costs.
1.6 Taxation
Income tax on the income statement for the periods presented comprises current and
deferred tax. Income tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantially enacted at the balance sheet date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit. The amount of deferred tax provided is based on
the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised
as exploration and evaluation assets on an area of interest basis. Costs incurred before the
consolidated entity has obtained the legal rights to explore an area are recognised in the
income statement.
Exploration and evaluation assets are only recognised if the rights of the area of interest
are current and either:
(i) the expenditures are expected to be recouped through successful development and
exploitation of the area of interest; or
(ii) activities in the area of interest have not at the reporting date, reached a stage
which permits a reasonable assessment of the existence or other wise of
economically recoverable reserves and active and significant operations in, or in
relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists
to determine technical feasibility and commercial viability, and (ii) facts and
circumstances suggest that the carrying amount exceeds the recoverable amount (see
impairment accounting policy (1.10)) . For the purposes of impairment testing,
exploration and evaluation assets are allocated to cash-generating units to which the
exploration activity relates. The cash generating unit shall not be larger than the area of
interest.
Once the technical feasibility and commercial viability of the extraction of mineral
resources in an area of interest are demonstrable, exploration and evaluation assets
attributable to that area of interest are first tested for impairment and then reclassified
from intangible assets to mining property assets within property, plant and equipment.
Items of property, plant and equipment are stated at their cost less accumulated
depreciation (see below) and impairment losses (see accounting policy 1.10) .
Acquisitions of assets
All assets acquired, including property, plant and equipment, are initially recorded at
their cost of acquisition, being the fair value of the consideration provided plus incidental
costs directly attributable to the acquisition. When equity instruments are issued as
consideration, their market price at the date of acquisition is used as fair value.
Transaction costs arising on the issue of equity instruments are recognised directly in
equity subject to the extent of proceeds received, otherwise expensed.
Mining property and development assets include costs transferred from exploration and
evaluation assets once technical feasibility and commercial viability of an area of interest
are demonstrable and subsequent costs to develop the mine to the production phase.
Where parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items of property, plant and equipment.
Subsequent costs
The Company recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred if it is
probable that the future economic benefits embodied within the item will flow to the
consolidated entity and the cost of the item can be measured reliably. All other costs are
recognised in the income statement as an expense as incurred.
Depreciation
With the exception of mining property, depreciation is charged to the income statement
on a straight-line basis over the estimated useful lives of each part of an item of property,
plant and equipment. Mining property is depreciated on a units of production basis over
the life of the economically recoverable reserves.
Depreciation rates and methods are reviewed annually for appropriateness. When
changes are made, adjustments are reflected prospectively in current and future periods
only. Depreciation is charged to the income statement.
The depreciation rates used for each class of asset are as follows:
2006
Plant and equipment 13% to 40%
Office furniture and equipment 17%
Motor Vehicle 22.5%
1.9 Receivables
Trade and other recoverables are carried at invoice amounts. The collectibility of debts is
assessed at reporting date and specific provision is made for any doubtful accounts. Bad
debts are written off as incurred.
1.10 Impairment
The carrying amounts of the Company’s assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated (see below).
An impairment loss is recognised whenever the carrying amount of an asset or its cash
generating unit exceeds its recoverable amount. Impairment losses are recognised in the
income statement unless the asset has previously been revalued, in which case the
impairment loss is recognised as a reversal to the extent of that previous revaluation with
any excess recognised through the income statement.
The recoverable amount of other assets is the greater of their fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
Impairment losses are reversed when there is an indication that the impairment loss may
no longer exist and there has been a change in the estimate used to determine the
recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired
• the Company retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to a third party;
or
• the Company has transferred its rights to receive cash flows from the asset and
either has transferred substantially all the risks and rewards of the asset, or (b) has
neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability is discharged,
cancelled or expired. When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of
the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in profit and loss.
The carrying amounts of non-current financial assets valued on the cost basis were
reviewed to determine whether they are in excess of their recoverable amount at reporting
date. If the carrying amount of a non-current financial asset exceeded its recoverable
amount (i.e. was not considered probable of recovery), the financial asset was written
down to the lower amount. The write-down was expensed in the reporting period in
which it occurred.
Where a group of assets working together supported the generation of cash inflows,
recoverable amount was assessed in relation to that group of assets.
In assessing recoverable amounts of non-current financial assets, the relevant cash flows
were discounted to their present value.
Impairment losses were reversed through the profit and loss but only to extent of original
cost.
An asset was derecognised when the contractual right to receive or exchange cash no
longer existed. A liability was derecognised when the contractual obligation to deliver or
exchange cash no longer existed
Cash and cash equivalents comprise cash balances, and call deposits.
Transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity,
net of any related income tax benefit.
Transaction costs
Transaction costs arising on the issue of equity instruments are recognised directly in
equity subject to the extent of proceeds received, otherwise expensed.
Liabilities for employee benefits for wages, salaries, annual leave and sick leave
represent present obligations resulting from employees' services provided to reporting
date, calculated at undiscounted amounts based on remuneration wage and salary rates
that the consolidated entity expects to pay as at reporting date including related on-costs,
such as workers compensation insurance and payroll tax.
Long Service Leave
The provision for employee benefits to long service leave is the amount of future benefit
that employees have earned in return for their services in the current and prior periods.
The provision is calculated using expected future increases in wage and salary rates
including related on-costs and expected settlement dates based on turnover history and is
discounted using the rates attaching to Commonwealth government bonds at reporting
date which most closely match the terms of maturity of the related liabilities.
1.14 Provisions
A provision is recognised in the balance sheet when the Company has a present legal or
constructive obligation as a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, when
appropriate, the risks specific to the liability.
Restoration
Provisions are made for estimated costs relating to the remediation of soil, groundwater
and untreated waste as soon as the need is identified.
Mine rehabilitation
Provisions are made for the estimated cost of rehabilitation relating to areas disturbed
during the mine’s operation up to reporting date but not yet rehabilitated. Provision has
been made in full for all disturbed areas at the reporting date based on current estimates
of costs to rehabilitate such areas, discounted to their present value based on expected
future cashflows. The estimated cost of rehabilitation includes the current cost of
recontouring, topsoiling and revegetation employing legislative requirements. Changes in
estimates are dealt with on a prospective basis as they arise.
If the change in the liability results in a decrease in the liability that exceeds the carrying
amount of the asset, the asset is written-down to nil and the excess is recognised
immediately in the income statement. If the change in the liability results in an addition to
the cost of the asset, the recoverability of the new carrying amount is considered. Where
there is an indication that the new carrying amount is not fully recoverable, an
impairment test is performed with the write-down recognised in the income statement in
the period in which it occurs.
Trade and other payables are stated at their amortised cost. Trade payables are non-
interest bearing and are normally settled on 60-day terms.
Trade and other payables are carried at cost which is the fair value of the consideration to
be paid in the future for goods and services received, whether or not billed to the
company.
Revenues, expenses and assets are recognised net of the amount of goods and services tax
(GST), except where the amount of GST incurred is not recoverable from the Australian
Tax Office (ATO). In these circumstances the GST is recognized as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current
asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which are
recoverable from, or payable to, the ATO are classified as operating cash flows.
2006
$
2. OTHER EXPENSES
3. AUDITORS’ REMUNERATION
2006
$
4. TAXATION
Current tax expense -
Deferred tax expense -
(a) Numerical reconciliation between tax benefit and pre tax loss
Loss before tax (528,500)
(a) Income tax using the corporate tax rate of 30% (2005: 30%) 158,550
Timing differences and tax losses not brought
to account as future income tax benefits (158,550)
Income tax benefit on pre tax loss -
(b) Unrecognised Deferred Tax Assets
Tax losses 3,215,875
The tax losses do not expire under current tax legislation. Deferred tax assets have not
been recognised in respect of these items because it is not probable that future taxable
profit will be available against which the consolidated entity can use the benefits
5. RECEIVABLES
Current
Other Debtors 124,761
124,761
6. PROPERTY, PLANT & EQUIPMENT
Mine property at cost 1,158,800
Less: Accumulated depreciation -
1,158,800
Plant & equipment at cost 75,182
Less: Accumulated depreciation 54,542
20,640
Office furniture & fittings at cost 21,074
Less: Accumulated depreciation 20,570
504
Motor Vehicle 44,459
Less: Accumulated amortisation 21,675
22,784
Total property, plant & equipment 1,202,728
2006
$
Reconciliations
Mine property
Balance at 1 July -
Transferred from exploration and evaluation expenditure 818,740
Additions 340,060
Balance at 30 June 1,158,800
Plant & Equipment
Balance at 1 July 19,344
Additions 4,239
Depreciation (2,943)
Balance at 30 June 20,640
Office Furniture
Balance at 1 July -
Additions 504
Depreciation -
Balance at 30 June 504
Motor Vehicle
Balance at 1 July 29,400
Depreciation (6,616)
Balance at 30 June 22,784
7. EXPLORATION AND EVALUATION EXPENDITURE
Deferred exploration and acquisition expenditure
Balance at 1 July 1,653,880
Add: Expenditure during the year 672,954
2,326,834
Amounts written off during the year 220,969
Amounts transferred to Mine Property 818,740
Balance at 30 June 1,287,125
The Company’s exploration properties may be subjected to claim(s) under native title, or
contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration
properties or areas within the tenements may be subject to exploration restrictions,
mining restrictions and/or claims for compensation. At this time it is not possible to
determine whether such claims exist or the quantum of such claims, if any.
2006
$
8. PAYABLES
Current
Trade creditors and accrued operating expenses 390,984
9. EMPLOYEE BENEFITS
Current
Annual leave 7,500
February 2006 - 40,000,000 shares were issued at 2.5 cents. Transaction costs of
$62,596 were recognised as a reduction of the proceeds of issue.
(ii) May 2006 – 93,568,000 shares were issued at 2.5 cents. Transaction costs of
$9,266 were recognised as a reduction of the proceeds of issue.
Share Options
There are 7,500,000 options which were issued on 10 December 2003 to St Ives Gold
Mining Company Pty Ltd exercisable within 3 years from the date of issue at 5c a share.
These options were issued as a consequence of a contract to acquire the interest in certain
mineral tenements and have an exercise price of 5c a share.
11. COMMITMENTS
The Company has minimum expenditure obligations in pursuance of the terms and
conditions of tenement licences in the forthcoming year of approximately $531,040
(2005: $601,713). The aforementioned expenditure obligations can be subject to variation
to a lesser amount as a result of: reduction in tenement areas; relinquishment of
tenements; and/or farm out of project areas to third party joint venture partners who
assume responsibility for the expenditure obligations. These obligations are expected to
be fulfilled in the normal course of operations of the company. If the current status of the
tenements is maintained, which in the nature of exploration progress is unlikely, then for
one year or later and not more that five years the total obligations are approximately
$3,754,160 (2005: $2,410,000) and for later than five years the total obligations are $NIL
(2005: $NIL).
The Company operates in Australia and in one industry classification being mineral
exploration.
Executive
2006
$
Salary, fees and commissions 177,500
Superannuation contributions 20,225
207,725
Out of the total compensation, an amount of $148,520 (2005: $144,941) was capitalized
in mine property and exploration and evaluation expenditure.
The following fees for the provision of storage, administrative accounting and secretarial
services were paid on normal commercial terms and conditions to the following Director
related entities: $2,450 (2005 – $8,389) was paid to companies which Mr J L C Jones is a
director of for the rent of offices and storage of drill core samples; and $127,415 (2005 -
$87,378) was paid to A C Pilmer & Co, a firm of which Mr A C Pilmer is the Principal.
Movement in shares
The movement during the reporting period in the number of ordinary shares in Anglo
Australian resources NL held directly, indirectly or beneficially by each key management
person, and including their related parties is as follows:
2006
Balance at Granted as Received on Net Other Balance at
1.7.05 Remuneration Exercise of Change * 30.6.06
Options
No. No. No. No. No.
Directors
J L C Jones 12,281,866 - - 3,301,009 15,582,875
D E Clarke 1,185,000 - - 2,525,000 3,710,000
C H Fyson 9,437,899 - - 1,375,000 10,812,899
A C Pilmer 6,315,000 - - 4,686,047 11,001,047
2005
Balance at Granted as Received on Net Other Balance at
1.7.04 Remuneration Exercise of Change * 30.6.05
Options
No. No. No. No. No.
Directors
J L C Jones 12,281,866 - - - 12,281,866
D E Clarke 1,185,000 - - - 1,185,000
C H Fyson 9,437,899 - - - 9,437,899
A C Pilmer 6,315,000 - - - 6,315,000
For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank
and short term deposits, net of outstanding bank overdrafts. Cash as at the end of the
financial year, as shown in the Statement of Cash Flows is reconciled to the related items
in the balance sheet as follows:
2006
$
Cash 8,783
Short term deposits 2,896,932
Cash at Bank 97,836
2,999,151
(346,408)
Add/(less) change in assets and liabilities:
Increase/(Decrease) in accounts payable 296,772
Increase in provisions -
Decrease/(Increase) in receivables (116,292)
Exposure to interest rate and credit risk arises in the normal course of the Company’s
business
Weighted
average Floating
interest interest
rate rate
$
2006
Financial Assets
Cash assets 4.25% 2,999,151
2005
Financial Assets
Cash assets 3.7% 867,062
Credit risk represents the loss that would be recognised if counterparties failed to perform
as contracted. The credit risk on financial assets of the Company which have been
recognised on the balance sheet is the carrying amount, net of any allowance for doubtful
debts.
For receivables/payables with a remaining life of less than one year, the notional amount
is deemed to reflect the fair value. The carrying values of financial investments
approximate their net fair values.
2006
$
16. LOSS PER SHARE
Loss for the year (528,500)
2006
Number of Shares Nu
Weighted average number of ordinary shares
Issued ordinary shares at 1 July 360,000,000
Effect of shares issued in February 2005 -
Effect of shares issued in February 2006 13,333,333
Effect of shares issued in May 2006 15,594,666
388,927,999
As stated in note 1.1, these are the entity’s first interim financial statements for part of the
period covered by the first AIFRS annual financial statements prepared in accordance
with Australian Accounting Standards – AIFRSs.
The accounting policies in note 1 have been applied in preparing the financial statements
for the year ended 30 June 2006, the comparative for the year ended 30 June 2005 and the
preparation of an opening AIFRS balance sheet at 1 July 2004 (the entity’s date of
transition).
The company has elected to apply the exemption under AASB 1 First time adoption of
Australian Equivalents to International Financial Reporting Standards and to expense any
options that were granted and vested prior to 1 January 2005.
In preparing its opening AIFRS balance sheet, comparative information for the year
ended 30 June 2005, the entity has not had any adjustments to amounts reported
previously in financial statements prepared in accordance with its old basis of accounting
(previous GAAP). There was no effect of adoption of AIFRSs on the entity’s financial
position, financial performance and cash flows.
DIRECTORS’ DECLARATION
a) The financial statements and notes (and the remuneration disclosures that are
contained in section 10, “Remuneration Report” in the Directors’ Report), set out on
pages 15 to 34 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Company and of its
performance, as represented by the results of its operations and its cash flows, for
the year ended on that date; and
c) For the reasons set out in note 1.3, there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the
Corporations Act 2001 from the Chairman and Company Secretary (who performs the
Chief Executive Officer’s and Chief Financial Officer’s function) for the financial year
ended 30 June 2006.
A C PILMER
Director