RNS Number:9755O
Investika Ltd
29 February 2008
INVESTIKA LTD
Final Results for the year ended 31 December 2007
Investika Ltd ('Investika' or the 'Company') announces its final audited results
for the period ended 31 December 2007.
The annual report has been posted to shareholders and is available on the
Company's website at www.investika.com.
All references in this announcement to "$" refer to Australian dollars
REVIEW OF OPERATIONS AND STATE OF AFFAIRS
Puquios Copper Project, Chile : SRK Consultants of Santiago, Chile was retained
to provide an independent resource estimate of the Puquios (formerly Las
Pascualas) Copper Project and the following information is an extract therefrom,
compiled by Mr. Roger Shakesby.
"The mineralization comprises an enrichment blanket of secondary sulphides
overlain by oxides.
At 0.2% Copper cutoff grade the resource (including Inferred Resources) is
estimated to be:
Secondary sulphides 20.974 million tonnes @ 0.68% Copper
Green oxides 8.090 million tonnes @ 0.37% Copper
Black oxides 0.863 million tonnes @ 0.38% Copper
Total 29.927 million tonnes @ 0.58% Copper
The classification of the resource, which confirms to the JORC code, is as
follows:
Secondary Sulphides Green Oxides Black Oxides
Resource Classification Tonnage Copper Grade Tonnage Copper Grade Tonnage Copper Grade
(Kilotonnes) (Percent) (Kilotonnes) (Percent) (Kilotonnes) (Percent)
Measured 5745.6 0.79 7183.0 0.36 132.9 0.32
Indicated 9713.6 0.68 906.8 0.41 303.1 0.37
Total measured and 15459.2 0.72 8089.8 0.37 436.0 0.35
Indicated
Inferred 5514.8 0.56 - - 427.4 0.40
The information set out above that relates to Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by Roger Shakesby,
who is a Member of the Australasian Institute of Mining and Metallurgy, the
Geological Society of Australia and is a qualified person.
The pre-feasibility study completed during the year indicated that the project
was robust. The feasibility study commenced in the fourth quarter of 2007 with
the appointment of Idesol Ingenieros SA, an experienced Santiago based
consultancy firm, as the principal engineers. The target completion date for
the feasibility study is the third quarter of 2008.
Good progress has been made with the environmental approvals with final approval
expected early in 2008.
A contract was let for the re-drilling of the water well that is proposed as the
major source of project water supply. This programme of drilling and the
associated pump tests has commenced.
Exploration continued in the vicinity, and at Las Nipas a significant
copper-molybdenum-gold geochemical anomaly was located, detailed geological
mapping was completed and drill sites prepared for a drilling programme to
commence in March 2008.
The Company increased its interest in the Puquios Copper Project to 93.3%
through increasing its holding in Tarquin Resources plc from 32.57% to 86.84%.
The Company acquired an interest of 43.6% of Tarquin through issuing 1,166,987
ordinary shares with a fair value of $5,134,742 and acquired an interest of
10.67% of Tarquin through acquiring shares on- and off-market at a cost of
$1,060,876.
Over the year the Company advanced $2,995,644 to the project being its share of
project related expenditure.
Berong Nickel Project, Philippines (direct and indirect interest 24.7%): Total
shipments from the Company's Berong Nickel Project amounted to 474,721 wet
metric tons at an average grade of 1.53% Ni (approximately 5,098 tonnes
contained nickel on a dry basis). The Company's share of the profit generated
over the year by the project amounted to $3,537,491. The Company advanced
$635,224 to the project to fund working capital and subsequently $2,459,676 of
funds previously advanced to the project was recovered.
Agreement was reached with BHP Billiton for the long term supply of laterite ore
to the Yabulu plant in Queensland, Australia. The agreement is for the supply
of up to 500,000 wet metric tons of ore per year, and runs for 5 years with BHP
Billiton having the option to extend this for a further 5 years. Berong has the
ability to supply to BHP Billiton more ore than the contracted quantities.
The Company entered into a Mineral Production Sharing Agreement (MPSA) with the
Philippine Government covering the 288 hectare Berong Nickel Project. The
current Direct Shipping Operation falls under the MPSA and the associated
Special Mines Permit. The Feasibility Study Report for the life-of-mine
operations was completed and submitted to the Department of Environment and
Natural Resources to enable the "Declaration of Mining Feasibility" for this
MPSA area.
A JORC compliant mineral resource was prepared by Snowdens Mining Industry
Consultants. The measured, indicated and inferred resource within the 288 ha
MPSA area is estimated at 9.92 million tonnes at an average grade of 1.55% Ni
using a 1% nickel cut-off grade. Drilling within the MPSA area is ongoing and
is aimed at delineating additional tonnage.
The information set out above that relates to Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by George Bujtor, CEO
of the Berong Nickel Project, a member of the Australasian Institute of Mining &
Metallurgy and a qualified person.
Construction activities completed include the coastal stockpile drying pad area
and associated siltation management system, potable water systems, permanent
mine office, accommodation facilities for the workforce, assay laboratory,
crusher and batch plant facilities, and the pedestrian footbridge over the
Berong River. Construction also commenced on the heavy equipment workshops and
maintenance facilities.
Permit approvals continue to delay the start of construction of the Dangla Road,
a dedicated haul road without community development along its route.
Rehabilitation of the first area initially mined was completed. Berong has
already met in full its obligations for the trees cut in the initial 13 hectares
cleared. Approximately 130,000 endemic trees, 350,000 strands of vetiver
grasses and thousands of fruit trees and seedlings have been planted. Berong is
obligated to plant 50 trees for every tree cut. International certification for
ISO 14001 (Environmental Management Systems) and ISO 18001 (Occupational Health
and Safety Systems) is planned to be completed in 2008.
The assessment of processing options to add value to the large lateritic
resources at Berong continued. Samples of the various ore types have been sent
to SGS Lakefield testing laboratory in Perth, Australia. A test work programme
has been developed in conjunction with SNC Lavalin, covering:
* Ore characterisation
* Agitation atmospheric leach
* High Pressure Acid leach
* Bottle roll simulation of heap leach
In addition to the above test work, a preliminary simulation of the nickel pig
iron blast furnace operation has been completed to assess the mass balance,
product quality and consumables. Metallurgical leach test work on samples from
Berong shows very good recoveries for both nickel and cobalt. Whilst at an
early stage of testing, more complete results are expected to become available
during 2008.
Belitung Zinc/Lead Project, Indonesia : A 10-hole diamond core drilling
programme was completed and the following significant assays were identified:
Hole From - To Width Ag Cd Pb Zn
(m) (ppm) (ppm) (%) (%)
BH-7 233.4-238.4 5.0 121 418 5.83 6.56
BH-8 246.40-255.15 8.75 52.67 399.47 3.29 6.90
BH-9 201.50-203.90 2.40 15.78 268.75 1.65 3.75
BH-10 288.5-292.6 4.1 132 531 7.79 8.49
The information set out above that relates to Exploration Results is based on
information compiled by Roger Shakesby.
$8 The Company increased its interest in the Belitung Zinc/Lead Project to 100%
through increasing its holding in Beliting Zinc Corporation plc (BZC) from 42.5%
to 100%. The Company acquired an interest of 57.5% of BZC through issuing
1,150,000 ordinary shares with a fair value of $5,060,000.
Following this acquisition a decision was made to undertake a re-assessment of
the Belitung geological model. Field activities have reverted to surface
mapping and validation of various geophysical and soil geochemical anomalous
zones that were reported by prior exploration campaigns. This mapping programme
and the geological model re-assessment should be completed by March/April 2008.
Further, given the Company's range of projects and limited human and financial
resources, it was resolved to place the Belitung Zinc/Lead Project up for sale.
As there is currently no clear expectation that costs incurred to date will be
recouped through the sale or successful development of the project, the
directors have taken a prudent view and fully impaired this asset in the
operating result for the year, giving rise to an expense of $4,985,868.
Morondava Uranium Project, Madagascar : Exploration activities which comprised a
drilling programme on the Folakara leases and an airborne survey of the Makay
leases were completed in late November with the onset of the wet season. It is
intended to finalise the assay and analysis of these results during the first
quarter of 2008. This assessment will form the basis for planning future
exploration programmes over the tenement areas.
The Company increased its interest in the Morondava Uranium Project to 16.32%
through increasing its holding in UMC Energy plc from 11.69% to 20.4% by issuing
500,000 ordinary shares with a fair value of $2 million and through acquiring
shares on-market at a cost of $225,293.
During the 2007 financial year the Company:
* Sold its interest in AIM listed Xtract Energy plc (formerly Cambrian
Oil and Gas plc) for proceeds of 92,432.
* Sold its interest in AIM listed Cambrian Mining plc for proceeds of
$21,723.
* Advanced $3,597,145 to Tarquin Resources plc. The funds were used by
Tarquin to meet that company's working capital requirements and in particular
its share of project costs of the Puquios Copper Project.
Other than the matters referred to above, in the opinion of the Directors, there
were no significant changes in the state of affairs of the consolidated entity
that occurred during the financial year under review that are not otherwise
disclosed in this report or the consolidated financial statements.
Enquiries to:
Investika Ltd
Chrisilios Kyriakou, Chief Executive Officer
Telephone: 020 7514 1480
WH Ireland Limited
James Joyce/ Sarang Shah
Telephone: 020 7220 1666
INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2007
Consolidated The Company
2007 2006 2007 2006
Note $ $ $ $
Total revenue from services - 133,063 - 133,063
Financial income 2 965,997 387,767 568,476 387,767
Personnel costs 3 (2,580,666) (749,202) (2,560,793) (749,202)
Exploration expenditure (12,164) (5,927) (12,164) (5,927)
Costs associated with placement, rights
issue and AIM admission
(34,411) (1,144,100) (34,411) (1,144,100)
Depreciation and amortisation 3 (12,819) (9,438) (12,819) (9,438)
Impairment losses on intangibles 3 (4,985,868) - - -
Impairment losses on investments 3 - - (2,414,431) -
Finance expenses 2 (77,899) - (39,405) -
Other administrative expenses (582,434) (484,663) (566,716) (484,664)
Results from operating activities 3 (7,320,264) (1,872,500) (5,072,263) (1,872,501)
Gain on dilution of subsidiary 9 - 3,045,125 - -
Share of net profit / (loss) of 9 2,632,834 (823,577) - -
associates
(Loss) / profit before tax 3 (4,687,430) 349,048 (5,072,263) (1,872,501)
Income tax expense 5 - - - -
(Loss) / profit for the year (4,687,430) 349,048 (5,072,263) (1,872,501)
Attributable to :
Equity holders of the Company (4,707,643) 349,048 - -
Minority interest 20,213 - - -
(Loss) / profit for the year (4,687,430) 349,048 - -
Basic (loss) / earnings per share 6 (33.1) 3.2
(cents)
Diluted (loss) / earnings per share
(cents) 6 (33.1) 3.0
STATEMENTS OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER 2007
Consolidated The Company
2007 2006 2007 2006
Note $ $ $ $
Change in fair value of equity
securities available for sale net of tax 16 6,983,531 351,739 2,319,147 1,077,844
Foreign currency translation differences
for foreign operations 16 (679,670) - - -
Net income recognised directly in equity 6,303,861 351,739 2,319,147 1,077,844
(Loss) / profit for the year 17 (4,687,430) 349,048 (5,072,263) (1,872,501)
Total recognised income and expense for
the year 18 1,616,431 700,787 (2,753,116) (794,657)
Attributable to :
Equity holders of the Company 1,596,218 700,787 (2,753,116) (794,657)
Minority interest 20,213 - - -
Total recognised income and expense for
the year 1,616,431 700,787 (2,753,116) (794,657)
BALANCE SHEETS
AS AT 31 DECEMBER 2007
Consolidated The Company
2007 2006 2007 2006
Note $ $ $ $
ASSETS
Current Assets
Cash and cash equivalents 3,281,342 2,054,098 328,576 2,054,098
Trade and other receivables 7 82,935 29,978 16,460 29,978
Total Current Assets 3,364,277 2,084,076 345,036 2,084,076
Non-Current Assets
Trade and other receivables 7 693,751 371,296 6,964,074 371,296
Exploration and evaluation expenditure
- intangible 8 17,351,281 - - -
Investments in equity accounted
investees 9 9,684,102 6,298,654 - -
Other financial assets 10 19,364,776 16,076,047 34,454,932 20,741,070
Plant and equipment 11 124,201 17,762 9,071 17,762
Total Non-Current Assets 47,218,111 22,763,759 41,428,077 21,130,128
Total Assets 50,582,388 24,847,835 41,773,113 23,214,204
LIABILITIES
Current Liabilities
Trade and other payables 12 1,568,767 211,662 516,274 211,659
Loans and borrowings 13 3,200,000 - 4,400,000 -
Provisions 14 2,235 2,235 2,235 2,235
Total Current Liabilities 4,771,002 213,897 4,918,509 213,894
Non-Current Liabilities
Deferred tax liabilities 5 3,320,450 330,904 3,253,990 575,237
Total Non-Current Liabilities 3,320,450 330,904 3,253,990 575,237
Total Liabilities 8,091,452 544,801 8,172,499 789,131
NET ASSETS 42,490,936 24,303,034 33,600,614 22,425,073
EQUITY
Issued capital 15 31,962,733 19,767,990 31,962,733 19,767,990
Reserves 16 10,475,577 1,610,194 6,233,367 2,180,306
(Accumulated loss) / Retained earnings 17 (1,782,793) 2,924,850 (4,595,486) 476,777
Total equity attributable to equity
holders of the Company 40,655,517 24,303,034 33,600,614 22,425,073
Minority interest 1,835,419 - - -
TOTAL EQUITY 18 42,490,936 24,303,034 33,600,614 22,425,073
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2007
Consolidated The Company
2007 2006 2007 2006
Note $ $ $ $
Cash flows from operating activities
Cash receipts in the course of operations 577,908 430,720 411,300 430,720
Cash paid to suppliers and employees (1,482,716) (1,998,759) (1,414,863) (1,998,759)
Net cash used in operating activities 23(ii) (904,808) (1,568,039) (1,003,563) (1,568,039)
Cash flows from investing activities
Proceeds from sale of equity investments 914,164 225,345 914,164 225,345
Purchase of:
- equity investments - (11,598,257) - (11,598,257)
- interest in associates (1,018,020) (2,199,777) (1,018,020) (2,199,777)
- interest in subsidiaries, net of cash
acquired 4,750,427 - (268,148) -
Payments for:
- exploration and evaluation expenditure (1,018,173) - - -
- purchases of plant and equipment (4,128) (20,502) (4,128) (20,502)
Loans and advances:
- to associates (7,039,901) (371,296) (7,039,901) (371,296)
- to subsidiaries - - (188,102) -
- to other entities - (2,500,000) - (2,500,000)
- repaid by associates 2,459,676 - 2,459,676 -
- repaid by other entities 22,500 2,500,000 22,500 2,500,000
Net cash used in investing activities (933,455) (13,964,487) (5,121,959) (13,964,487)
Cash flows from financing activities
Net proceeds from the issue of share capital - 16,435,202 - 16,435,202
Loans received
- related parties 3,200,000 - 3,200,000 -
- from subsidiaries - - 1,200,000 -
Net cash from financing activities 3,200,000 16,435,202 4,400,000 16,435,202
Net increase / (decrease) in cash and cash
equivalents 1,361,737 902,676 (1,725,522) 902,676
Cash and cash equivalents at 1 January 2,054,098 1,151,422 2,054,098 1,151,422
Effect of exchange rate fluctuations on cash
held (134,493) - - -
Cash and cash equivalents at 31 December 23(i) 3,281,342 2,054,098 328,576 2,054,098
Notes to the financial statements
1. SIGNIFICANT ACCOUNTING POLICIES
Investika Ltd (the "Company") is a company domiciled in Australia. The
consolidated financial report of the Company as at and for the year ended 31
December 2007 comprises the Company and its subsidiaries (together referred to
as the "consolidated entity") and the consolidated entity's interest in
associates.
The financial report was authorised for issue by the directors on 28 February
2008.
a. Statement of compliance
The financial report is a general purpose financial report which has been
prepared in accordance with Australian Accounting Standards ("AASBs") (including
Australian Interpretations) adopted by the Australian Accounting Standards Board
("AASB") and the Corporations Act 2001. The consolidated financial report of the
consolidated entity and the financial report of the Company comply with
International Financial Reporting Standards (IFRSs) and interpretations adopted
by the International Accounting Standards Board (IASB).
b. Basis of preparation
The financial report is presented in Australian dollars which is the Company's
functional currency.
The financial report is prepared on the historical cost basis except that
financial instruments classified as available-for-sale are stated at their fair
value.
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates. These accounting policies have been
consistently applied by each entity in the consolidated entity.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Judgements made by management in the application of Australian Accounting
Standards that have significant effect on the financial report and estimates
with a significant risk of material adjustment in the next year are discussed in
note 8.
The accounting policies have been applied consistently to all periods presented
in the consolidated financial report by consolidated entities.
c. Basis of consolidation
Subsidiaries
The financial statements of subsidiaries are included in the consolidated
financial statements from the date control commences until the date control
ceases. Control exists when the Company has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses
arising from intragroup transactions are eliminated in preparing the
consolidated financial statements.
d. Goodwill
Goodwill, representing the excess of the purchase consideration plus incidental
costs over the fair value of the identifiable net assets acquired on the
acquisition of a subsidiary or an associate, is stated at cost less any
accumulated impairment losses. Goodwill is allocated to cash-generating units
and is no longer amortised but is tested annually for impairment (see accounting
policy s). In respect of associates, the carrying amount of goodwill is included
in the carrying amount of the investment in the associate.
e. Investments
Subsidiaries
Investments in subsidiaries are carried in the Company's financial statements at
the cost of acquisition less impairment losses.
Associates
An associate is an entity, other than a partnership, over which the consolidated
entity exercises significant influence, but not control, over financial and
operating policies.
In the Company's financial statements, investments in associates are carried at
fair value, with resulting revaluation gains and losses recognised in equity.
The fair value of investments in listed shares of associates is their quoted bid
price at the balance sheet date and the fair value of investments in unlisted
shares of associates is cost.
The consolidated financial statements includes the consolidated entity's share
of the total recognised gains and losses of associates on an equity accounted
basis, from the date that significant influence commences until the date that
significant influence ceases. When the consolidated entity's share of losses
exceeds its interest in an associate, the consolidated entity's carrying amount
is reduced to nil and recognition of further losses is discontinued except to
the extent that the consolidated entity has incurred legal or constructive
obligations or made payments on behalf of an associate.
Unrealised gains arising from transactions with associates are eliminated to the
extent of the consolidated entity's interest in the entity with adjustments made
to the "Investment in associates" and "Share of associates net profit / (loss)"
accounts.
When an associate makes a new issue of capital, changing the consolidated
entity's percentage ownership, changes in the share of retained profits are
reflected in the net profit or loss and changes in the share of reserves are
reflected as direct adjustments to the specific equity accounts.
Equity securities
Other investments held by the consolidated entity are classified as being
available-for-sale and are measured at fair value, with any resultant gain or
loss recognised directly in equity, except for impairment losses. Where these
investments are derecognised, the cumulative gain or loss previously recognised
directly in equity is recognised in profit or loss. Where these investments are
interest-bearing, interest calculated using the effective interest method is
recognised in the income statement.
The fair value of listed financial instruments classified as available-for-sale
is their quoted bid price at the balance sheet date.
Financial instruments classified as available-for-sale investments are
recognised / derecognised by the consolidated entity on the date it commits to
purchase / sell the investments. Securities held to maturity are recognised /
derecognised on the day they are transferred to / by the consolidated entity.
Gains / (losses) on derecognition
Gains and (losses) from the sale of investments represents the proceeds from the
sale of equity investments less the original cost or fair value to the
consolidated entity, adjusted for any impairment losses previously recognised in
relation to the investments.
f. Income tax
Income tax on the profit or loss for the year 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 substantively 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: goodwill not deductible
for tax purposes, the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. 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.
g. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
consolidated entity's cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
h. Plant and equipment
Acquisition of assets
Items of plant and equipment are initially recorded at their cost of acquisition
at the date of acquisition, being the fair value of the consideration provided
plus incidental costs attributable to the acquisition. Subsequently, they are
measured at cost less accumulated depreciation / amortisation and impairment
losses.
Depreciation and amortisation
Items of plant and equipment are depreciated / amortised using the straight-line
method over their estimated useful lives.
The depreciation / amortisation rates and methods are reviewed annually for
appropriateness and the rates used for each class of asset in both the current
and prior years are as follows:
- Leasehold improvements 27% (or the life of the lease if shorter)
- Office furniture and computer
equipment 27%
Assets are depreciated or amortised from the date of acquisition or, in respect
of internally constructed assets, from the time an asset is completed and held
ready for use.
Gains / (losses) on derecognition
Sales of current assets and non-current assets are included as revenue at the
date control of the asset passes to the buyer. The gain or loss on disposal is
calculated as the difference between the carrying value of the asset at the time
of disposal and the net proceeds on disposal.
i. Leased plant and equipment
Leases of plant and equipment under which the Company or its subsidiaries do not
assume substantially all the risks and benefits of ownership are classified as
operating leases. Lease payments are accounted for as described in accounting
policy j.
j. Expenses
Operating lease payments
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense and spread over the lease term.
k. Exploration, evaluation and development expenditure
Exploration and evaluation
Pre-licence costs are recognised in the income statement as incurred.
Exploration and evaluation costs, including the costs of acquiring licences, are
capitalised as exploration and evaluation assets on a project-by-project basis
pending determination of the technical feasibility and commercial viability of
the project. The capitalised costs are presented as either tangible or
intangible exploration and evaluation assets according to the nature of the
assets acquired. When a licence is relinquished or a project abandoned, the
related costs are recognised in the income statement immediately.
Tangible / intangible exploration and evaluation assets that are available for
use are depreciated / amortised on a units of production basis over the life of
the economically recoverable reserve.
Expenditure deemed to be unsuccessful is recognised in the income statement
immediately.
Development
Development costs are capitalised upon the consolidated entity demonstrating:
(i) the technical feasibility of completing the development so that it will be
available for use; and (ii) how the development costs will generate probable
future economic benefits.
Exploration, evaluation and development assets are depreciated on a straight
line basis over the life of the area of interest according to the rate of
depletion of the economically recoverable reserves.
l. Trade and other receivables
Trade and other receivables are carried at amortised cost less impairment
losses.
m. Trade and other payables
Trade and other payables are stated at amortised cost.
n. Foreign currency transactions and balances
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
Australian dollars at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated to Australian
dollars at foreign exchange rates ruling at the dates the fair value was
determined.
o. Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on acquisition, are translated to Australian dollars
at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations, excluding foreign operations in
hyperinflationary economies, are translated to Australian dollars at rates
approximating the foreign exchange rates ruling at the dates of the
transactions. The revenues and expenses of foreign operations in
hyperinflationary economies are translated to Australian dollars at the foreign
exchange rates ruling at the balance sheet date. Foreign exchange differences
arising on retranslation are recognised directly in a separate component of
equity.
p. Employee benefits
Salaries, annual leave and sick leave
The provisions for employee benefits to salaries, annual leave and sick leave
represent present obligations resulting from employees' services provided up to
the balance date that are expected to be settled within twelve months are
calculated at undiscounted amounts based on salary rates that the consolidated
entity expects to pay as at the balance date including related on-costs.
Long service leave
The provision for employee benefits to long service leave represents the present
value of the estimated future cash outflows to be made resulting from employees'
services provided up to balance date.
The provision is calculated using estimated future increases in salary rates
including related on-costs and expected settlement dates based on turnover
history and is discounted using the rates attaching to national government
securities at balance date which most closely match the terms of maturity of the
related liabilities.
Share based payment transactions
The Company's Participants' Option Incentive Scheme Number 1, approved at the
2005 Annual General Meeting allows directors, employees and consultants to
acquire shares in the Company. The principal terms of the options are that they
have an exercise price of $2.50 each and are exercisable at any time on or
before the earlier of 30 June 2010 and 90 days after the date the participant
ceases to be employed by the Company. During the year ended 31 December 2007 nil
(2006 : 50,000) options were granted under the Scheme.
The Company's Participants' Option Incentive Scheme Number 2, approved at a 2007
General Meeting allows directors, employees and consultants to acquire shares in
the Company. The principal terms of the options are that they have an exercise
price of $3.80 each and are exercisable at any time on or before the earlier of
31 December 2012 and 90 days after the date the participant ceases to be
employed by the Company. During the year ended 31 December 2007 575,000 (2006 :
nil) options were granted under the Scheme.
The fair value of services received in return for share options granted to
employees and others is measured by reference to the fair value of the share
options granted. The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at
grant date and spread over the period during which the participants become
unconditionally entitled to the options. The fair value is measured using the
Black-Scholes option pricing model, taking into account the terms and conditions
upon which the options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of share options that vest except where
the forfeiture is only due to the share price not achieving the threshold for
vesting.
Superannuation plan
The Company and its subsidiaries contribute to several defined contribution
plans. Obligations for contributions to defined contribution plans are
recognised as an expense in the income statement as incurred.
q. Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except where the amount of GST is not recoverable from the
Australian Taxation Office (ATO). In these circumstances the GST is recognised
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 balance sheet.
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.
r. Revenue recognition
Revenue from services comprises management fees that are charged to related
parties and investees and are recognised as the service is rendered.
s. Impairment
The carrying amount of the consolidated entity's assets are reviewed at each
balance date to determine whether there is any indication of impairment. If such
indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset
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.
Impairment of receivables is not recognised until objective evidence is
available that a loss event has occurred. Receivables are individually assessed
for impairment.
When a decline in the fair value of an available-for-sale financial asset has
been recognised directly in equity and there is objective evidence that the
asset is impaired, the cumulative loss that had been recognised directly in
equity is recognised in profit or loss even though the financial asset has not
been derecognised. The amount of the cumulative loss that is recognised in the
profit or loss is the difference between the acquisition cost and current fair
value, less any impairment loss on that financial asset previously recognised in
profit or loss.
t. Segment reporting
A segment is a distinguishable component of the consolidated entity that is
engaged either in providing products or services (business segment), or in
providing products or services within a particular economic environment
(geographical segment), which is subject to risks and rewards that are different
from those of other segments. The consolidated entity's primary format for
segment reporting is based on business segments.
u. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to issue of ordinary shares and share options are recognised as a
deduction from equity, net of any tax effects.
v. Finance income and expenses
Finance income comprises interest income on funds invested (including
available-for-sale financial assets) and gains on disposal of available-for-sale
financial assets. Interest income is recognised as it accrues in profit or loss,
using the effective interest rate method.
Finance expenses comprise interest expense on borrowings, unwinding of the
discount on provisions, changes in the fair value of financial assets at fair
value through profit or loss and impairment losses recognised on financial
assets. All borrowing costs are recognised in profit and loss using the
effective interest method.
Foreign currency gains and losses are reported on a net basis.
w. New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been
identified as those which may impact the entity in the period of initial
application. They are available for early adoption at 31 December 2007 but have
not been applied in preparing the financial report:
* AASB 8 Operating Segments introduces the "management approach' to segment
reporting. AASB 8, which becomes mandatory for the consolidated entity's 31
December 2009 financial statements, will require the disclosure of segment
information based on the internal reports regularly reviewed by the consolidated
entity's Chief Operating Decision Maker in order to assess each segment's
performance and to allocate resources to them. Currently the consolidated entity
presents segment information in respect of its business and geographical
segments (see note 20). The consolidated entity has not yet determined the
potential effect of the revised standard on the consolidated entity's
disclosure.
* Revised AASB 101 Presentation of Financial Statements introduces as a
financial statement (formerly "primary" statement) the "statement of
comprehensive income". The revised standard does not change the recognition,
measurement or disclosure of transactions and events that are required by AASBs.
The revised AASB 101 will become mandatory for the consolidated entity's 31
December 2009 financial statements. The consolidated entity has not yet
determined the potential effect of the revised standard on the consolidated
entity's disclosure.
* Revised AASB 123 Borrowing Costs removes the option to expense borrowing
costs and requires that an entity capitalise borrowing costs directly
attributable to the acquisition, construction or production of a qualifying
asset as part of that asset. The revised AASB 123 will become mandatory for the
consolidated entity's 31 December 2009 financial statements and will constitute
a change in accounting policy for the consolidated entity. In accordance with
the transitional provisions the consolidated entity will apply the revised AASB
123 to qualifying assets for which capitalisation of borrowing costs commences
on or after the effective date.
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
2. FINANCE INCOME AND EXPENSE
Interest income on bank deposits and loans 164,204 297,657 180,387 297,657
Net gain on disposal of available-for-sale
financial assets transferred from equity 388,089 90,110 388,089 90,110
Net foreign exchange gain 413,704 - - -
Finance income 965,997 387,767 568,476 387,767
Interest expense on financial liabilities measured
at amortised cost (77,899) - (39,405) -
Finance expense (77,899) - (39,405) -
Net finance income and expense 888,098 387,767 529,071 387,767
3. (LOSS) / PROFIT BEFORE INCOME TAX EXPENSE
Operating (loss) / profit before tax has been
arrived at after charging / (crediting) the
following items:
Personnel costs
- wages and salaries 781,775 645,908 761,902 645,908
- contributions to defined contribution funds 13,038 2,841 13,038 2,841
- equity-settled share-based payment transactions 1,733,914 87,401 1,733,914 87,401
- other 51,939 13,052 51,939 13,052
2,580,666 749,202 2,560,793 749,202
Operating lease rentals 64,961 63,250 63,250 63,250
(Reversal of) / impairment losses on:
- trade and other receivables (28,723) (64,772) (28,723) (64,772)
(Reversal of) / impairment losses on trade and other receivables relates to an advance made during 2005 which was
provided for in that year as impaired and which was then recovered in 2006 and 2007.
4. AUDITORS' REMUNERATION
Amounts received or due and receivable for audit
services by:
KPMG Australia - Audit and review of financial
reports 70,000 116,762 70,000 116,762
Amounts received or due and receivable for other
services by:
KPMG Australia - Taxation services 21,220 19,880 21,220 19,880
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
5. TAXATION
(a) Income Tax expense
Current year benefit (1,698,067) (449,359) (1,001,505) (449,359)
Current year deferred tax assets not recognised 1,698,067 449,359 1,001,505 449,359
Income tax expense / (benefit) in income statement - - - -
Numerical reconciliation between income tax expense
and pre tax net profit / (loss)
(Loss) / profit before tax (4,687,430) 349,048 (5,072,263) (1,872,501)
Income tax benefit using the domestic corporation
tax rate of 30% (2006 : 30%). Prima facie income
tax benefit on pre-tax accounting profit:
- at Australian tax rate of 30% (1,406,229) 104,714 (1,521,679) (561,750)
- adjustment for difference between Australian and
overseas tax rates (22,162) - - -
Increase in income tax due to:
Share based payments expense 520,174 112,392 520,174 112,392
Non-taxable gain arising on dilution of subsidiary - (913,538) - -
Decrease in income tax due to:
Share of net profits of associate (789,850) - - -
Deferred tax asset not recognised 1,698,067 696,432 1,001,505 449,359
Income tax expense / (benefit) on pre-tax net - - - -
result
(b) Deferred tax liabilities recognised in equity
Deferred tax assets and (liabilities) are
attributable to the following:
Equity securities available-for-sale (3,320,450) (330,904) (3,253,990) (575,237)
Unused tax losses - - - -
Net tax liability (3,320,450) (330,904) (3,253,990) (575,237)
Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable
profit will be available against which the consolidated entity can utilise the benefits.
(c) Deferred tax assets not recognised
Deferred tax assets not recognised because it is
not probable that the benefits will be utilised
against future taxable profits comprise:
Unused tax losses 13,045,364 11,347,297 12,348,802 11,347,297
(d) Franking credits
The Company has no franking credits available.
6. (LOSS) / EARNINGS PER SHARE
Basic (loss) / earnings per share (33.1c) 3.2c
Diluted (loss) / earnings per share (33.1c) 3.0c
(Loss) / profit attributable to ordinary (4,707,643) 349,048
shareholders
Weighted average number of ordinary shares used in
the calculation of basic and diluted loss per share 14,209,675 10,959,689
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
7. TRADE AND OTHER RECEIVABLES
Current
Trade debtors 18,670 24,893 18,670 24,893
Less : Impairment (18,670) (24,893) (18,670) (24,893)
Advances to other entities 67,500 90,000 67,500 90,000
Less : Impairment (67,500) (90,000) (67,500) (90,000)
Proceeds due from sale of investments - 21,461 - 21,461
Other debtors 82,935 8,517 16,460 8,517
82,935 29,978 16,460 29,978
Non-current
Advances to associates - 371,296 - 371,296
Value added tax recoverable 693,751 - - -
Loans to subsidiaries - - 6,964,074 -
693,751 371,296 6,964,074 371,296
8. EXPLORATION AND EVALUATION EXPENDITURE -
INTANGIBLE
Opening balance - 1 January - 2,405,553 - 2,405,553
Acquired through business combination 21,318,976 - - -
Acquisitions - internally developed 1,018,173 - - -
Impairment loss (4,985,868) - - -
Transferred to unlisted equity securities on
conversion to equity interest - (2,405,553) - (2,405,553)
Closing balance - 31 December 17,351,281 - - -
Following a decision to place the Belitung zinc/lead project up for sale and as
there is currently no clear expectation that costs incurred to date will be
recouped through the sale or successful development of the project, a prudent
view has been taken and the intangible asset relating this project has been
fully impaired, giving rise to an expense of $4,985,868.
Critical accounting judgements in applying the consolidated entity's accounting
policies Exploration and evaluation expenditure has been incurred in respect of
projects which have yet to reach a stage of development where a determination of
the technical feasibility and commercial viability of the project can be
assessed on a comprehensive basis. In these circumstances, the directors have
used their experience to determine whether there is any indication that the
asset has been impaired and have concluded that there are currently no such
indications.
9. INVESTMENTS IN ASSOCIATES
(a) The consolidated entity has the following investments in associates:
Reporting Ownership
Principal Activities Country Date 2007 2006
Berong Nickel Mining exploration and evaluation on the Philippines 31 Dec 24.8% 24.8%
Corporation - unlisted Berong nickel project in the Philippines
China Nickel Marketing support for the Berong nickel BVI 31 March 24.8% -
Corporation - unlisted project in the Philippines
Belitung Zinc Mining exploration and evaluation on the UK 30 June 100.0% 42.5%
Corporation plc * Kelapa Kampit zinc/lead project in
Indonesia
- unlisted
Tarquin Resources plc Mining exploration and evaluation on the UK 31 Dec 86.8% 32.6%
* Puquios copper project in Chile
Tommy SA * Mining exploration and evaluation on the Chile 31 Dec 93.3% 65.6%
Puquios copper project in Chile
- unlisted
UMC Energy plc Mining exploration and evaluation on the UK 31 Dec 20.4% 11.7%
Morondava uranium project in Madagascar
Metak Ltd - unlisted Mining exploration and evaluation UK 30 June 50.0% 50.0%
* As at 31 December 2007, Belitung Zinc Corporation plc, Tarquin Resources plc and Tommy SA are accounted for as
controlled entities
Share of Net assets Share of
associates as associates
net profit / reported net assets
Profit/ (loss) Total Total by equity
Revenues (loss) recognised assets liabilities associates accounted
(100%) (100%) (100% ) (100%) (100%)
2007
Berong Nickel
Corporation 42,106,152 17,678,759 3,305,928 26,520,745 4,655,545 21,865,200 4,088,792
China Nickel
Corporation 1,832,154 1,238,307 231,563 1,364,611 17,827 1,346,784 251,849
Belitung Zinc
Corporation plc * 246,143 (668,815) - * * * *
Tarquin Resources
plc * 121,856 (1,205,328) (441,183) * * * *
Tommy SA * - (261,658) - * * * *
UMC Energy plc 182,543 (2,271,931) (463,474) 10,496,298 412,959 10,083,339 2,057,001
Metak Ltd - - - - - - -
44,488,848 14,509,334 2,632,834 38,381,654 5,086,331 33,295,323 6,397,642
* As at 31 December 2007, Belitung Zinc Corporation plc, Tarquin Resources plc and Tommy SA are accounted for as
controlled entities
2006
Belitung Zinc
Corporation plc 230,933 (982,365) (200,171) 14,913,863 231,228 14,682,635 3,045,125
Tarquin Resources
plc 231,460 (2,010,710) (623,406) 10,104,693 3,064,768 7,039,925 3,253,529
Tommy SA 1,458 (535,125) - 4,884,073 5,408,015 (523,942) -
Metak Ltd - - - - - - -
463,851 (3,528,200) (823,577) 29,902,629 8,704,011 21,198,618 6,298,654
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
9. INVESTMENTS IN ASSOCIATES (continued)
(b) Equity accounting for investments in associates
Movements in carrying amount of investments
Opening balance - 1 January 6,298,654 1,771,019 - -
Investments in associates made during year, net
of amounts transferred to investment in
subsidiaries 752,614 2,306,087 - -
Gain on dilution of subsidiary becoming an
associate - 3,045,125 - -
Share of net profit / (loss) of associates 2,632,834 (823,577) - -
Closing balance - 31 December 9,684,102 6,298,654 - -
Share of associates' capital commitments
contracted but not provided for or payable:
Within one year - - - -
One year or later and no later than five years - - - -
- - - -
Summary financial position of associates
The consolidated entity's share of aggregate
assets and liabilities of associates is as
follows:
Current assets 1,861,243 3,365,672 - -
Non-current assets 5,494,563 8,660,044 - -
Total assets 7,355,806 12,025,716 - -
Current liabilities 857,420 402,367 - -
Non-current liabilities 100,744 3,344,945 - -
Total liabilities 958,164 3,747,312 - -
Net assets - as reported by associate 6,397,642 8,278,404 - -
Adjustments arising from equity accounting
Goodwill 3,286,460 1,215,245 - -
Impairment loss - (3,194,995) - -
Net assets - equity adjusted 9,684,102 6,298,654 - -
10. OTHER FINANCIAL ASSETS
Non-current
Shares in subsidiaries at cost - - 10,735,976 13,696,449
Less: Impairment loss - - - (13,696,449)
- - 10,735,976 -
Equity securities available for sale:
Investment in equity accounted investees:
- listed shares - - 1,720,151 4,464,852
- unlisted shares - - 2,634,029 200,171
Other shares:
- listed 19,364,776 11,617,565 19,364,776 11,617,565
- unlisted - 4,458,482 - 4,458,482
Total other financial assets 19,364,776 16,076,047 34,454,932 20,741,070
As at 28 February 2008, the consolidated value of the other investments is $9,880,221 and the Company value of the
other investments is $23,617,378 but in the opinion of the directors the change does not represent a permanent
diminution in value.
10. OTHER FINANCIAL ASSETS (continued)
Sensitivity analysis - equity price risk
All of the consolidated entity's listed equity investments are listed on the London Stock Exchange's AIM market.
For such investments classified as available-for-sale, a five percent increase in the market price of the shares at
reporting date would have increased equity by $678,940 (2006 : $433,450); an equal change in the opposite direction
would have decreased equity by $678,940 (2006 : $433,450). The analysis is performed on the same basis for 2006.
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
11. PLANT AND EQUIPMENT
Office furniture and computer equipment
At cost 123,251 34,999 39,127 34,999
Accumulated depreciation (30,056) (17,237) (30,056) (17,237)
93,195 17,762 9,071 17,762
Plant and equipment
At cost 31,006 - - -
Accumulated depreciation - - - -
31,006 - - -
Leasehold improvements
At cost 61,419 61,419 61,419 61,419
Accumulated amortisation (61,419) (61,419) (61,419) (61,419)
- - - -
Total plant and equipment net book value 124,201 17,762 9,071 17,762
Reconciliations
Reconciliations of the carrying amount for each
class of plant and equipment are set out below:
Office furniture and computer equipment
Cost
Opening balance - 1 January 34,999 59,660 34,999 59,660
Additions 4,128 20,503 4,128 20,503
Acquired through business combination 84,124 - - -
Disposals - (45,164) - (45,164)
Closing balance - 31 December 123,251 34,999 39,127 34,999
Accumulated depreciation
Opening balance - 1 January (17,237) (52,963) (17,237) (52,963)
Disposals - 45,164 - 45,164
Depreciation (12,819) (9,438) (12,819) (9,438)
Closing balance - 31 December (30,056) (17,237) (30,056) (17,237)
Plant and equipment
Cost
Opening balance - 1 January - - - -
Additions - - - -
Acquired through business combination 31,006 - - -
Disposals - - - -
Closing balance - 31 December 31,006 - - -
Accumulated depreciation
Opening balance - 1 January - - - -
Disposals - - - -
Depreciation - - - -
Closing balance - 31 December - - - -
There have been no movements in leasehold improvements in the current or prior year in the consolidated entity or
Company.
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
12. TRADE AND OTHER PAYABLES
Non-trade payables and accruals 1,568,767 211,662 291,584 211,659
Deferred revenue - - 224,690 -
1,568,767 211,662 516,274 211,659
13. LOANS AND BORROWINGS
Current
Loan from related entity 3,200,000 - 3,200,000 -
Loan from subsidiary - - 1,200,000 -
3,200,000 - 4,400,000 -
14. EMPLOYEE BENEFITS
Employee leave entitlements
Opening balance - 1 January 2,235 2,235 2,235 2,235
Provision used during the year - - - -
Closing balance - 31 December 2,235 2,235 2,235 2,235
15. CAPITAL
Issued and paid-up capital
16,351,696 (2006 : 13,534,709) ordinary
shares, fully paid 31,962,733 19,767,990 31,962,733 19,767,990
Consolidated and The Company
2007 2006 2007 2006
Ordinary share capital Number Number $ $
Opening balance - 1 January 13,534,709 571,062,475 19,767,990 3,332,788
Shares issued:
Issued for cash - 732,862,475 - 16,435,202
To increase interest in Tarquin Resources
plc, Belitung Zinc Corporation plc and UMC
Energy plc 2,816,987 - 12,194,743 -
Consolidation of share capital on the basis
of 1 : 100 in accordance with shareholders'
resolution at 2006 AGM and as announced to
the ASX on 18 May 2006 - (1,290,390,241) - -
Closing balance - 31 December 16,351,696 13,534,709 31,962,733 19,767,990
Holders of ordinary shares are entitled to
receive dividends as declared from time to
time and are entitled to one vote per share
at shareholders' meetings. In the event of
the winding up of the Company, ordinary
shareholders rank after creditors and are
fully entitled to any net proceeds on
liquidation.
15. CAPITAL (continued)
Consolidated and The Company
2007 2006 2007 2006
Options Number Number $ $
Option holders are not entitled to
participate in any share issue of the
Company or to receive dividends.
30 June 2010 $2.50 options over ordinary
shares
Opening balance - 1 January 620,000 57,000,000
Granted during the year - 5,000,000
Consolidation of share capital on the basis
of 1 : 100 in accordance with shareholders'
resolution at 2006 AGM and as announced to
the ASX on 18 May 2006 - (61,380,000)
Closing balance - 31 December 620,000 620,000
21 August 2009 $3.15 options over ordinary
shares
Opening balance - 1 January 136,547 -
Granted during the year - 136,547
Closing balance - 31 December 136,547 136,547
31 December 2012 $3.80 options over ordinary
shares
Opening balance - 1 January - -
Granted during the year 575,000 -
Closing balance - 31 December 575,000 -
These options are not considered to be
dilutive at 31 December 2006 as the option
strike price exceeded the average share
price of the Company during the period.
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
16. RESERVES
Fair value reserve
Opening balance - 1 January 694,135 342,396 1,264,247 186,403
Change in fair value of equity securities
available for sale net of tax 6,983,531 351,739 2,319,147 1,077,844
Closing balance - 31 December 7,677,666 694,135 3,583,394 1,264,247
Equity compensation reserve
Opening balance - 1 January 916,059 541,420 916,059 541,420
Equity settled transactions 1,733,914 374,639 1,733,914 374,639
Closing balance - 31 December 2,649,973 916,059 2,649,973 916,059
Revaluation reserve
Opening balance - 1 January - - - -
Revaluation arising on acquisition of
subsidiary 827,608 - - -
Closing balance - 31 December 827,608 - - -
Foreign currency translation reserve
Opening balance - 1 January - - - -
Foreign currency translation adjustments (679,670) - - -
Closing balance - 31 December (679,670) - - -
Total reserves - 31 December 10,475,577 1,610,194 6,233,367 2,180,306
Fair value reserve
The fair value reserve includes the cumulative net change in the fair value of
available-for-sale investments net of tax until the investment is derecognised.
Equity compensation reserve
The equity compensation reserve includes the fair value of options granted under
the Company's Participants' Option Incentive Schemes.
Revaluation reserve
The revaluation reserve comprises the valuation adjustment resulting from the
step-acquisition of subsidiaries.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency
differences arising from the translation of the financial statements of foreign
operations.
17. (ACCUMULATED LOSS) / RETAINED EARNINGS
Opening balance - 1 January 2,924,850 2,575,802 476,777 2,349,278
Profit / (loss) for the period (4,707,643) 349,048 (5,072,263) (1,872,501)
Closing balance - 31 December (1,782,793) 2,924,850 (4,595,486) 476,777
18. TOTAL EQUITY RECONCILIATION
Total equity at beginning of year 24,303,034 6,792,406 22,425,073 6,409,889
Equity settled transactions (net of tax) 1,733,914 374,639 1,733,914 374,639
Total recognised income / (expense) for the
year 1,616,431 700,787 (2,753,116) (794,657)
Contributions of equity 12,194,743 16,435,202 12,194,743 16,435,202
Minority interest arising on acquisition of
subsidiary 645,820 - - -
Total equity at end of year 40,493,942 24,303,034 33,600,614 22,425,073
Consolidated
and the Company
19. CONTROLLED ENTITIES Interest Interest
Parent entity - Investika Ltd Place of 2007 2006
Subsidiaries Note incorporation % %
Tarquin Resources plc (i) UK 86.7 32.6
Tommy SA (ii) Chile 93.3 49.0
Belitung Zinc Corporation plc (iii) UK 100.0 42.5
Kidz.net National Pty Ltd (iv) NSW - 99.95
(i) Tarquin Resources plc became a subsidiary on 22 November 2007 following the Company increasing its holding in that
company to 83.86% following making an off-market scrip for scrip offer to the larger shareholders in that company.
(ii) Tommy SA is a subsidiary of Tarquin Resources plc and accordingly became a subsidiary of the Company on 22 November
2007 (refer note i).
(iii) Belitung Zinc Corporation plc became a subsidiary on 22 November 2007 following the Company increasing its holding
in that company to 100% following making an off-market scrip for scrip offer to the shareholders in that company. Prior
to 31 December 2005, Belitung Zinc Corporation plc was dormant and on 20 January 2006, it became an associate following
the Company's equity interest in that entity diluting to 42.5%.
(iv) Kidz.Net National Pty Ltd was deregistered on 15 January 2007.
There were no acquisitions or disposals in 2006.
Pre-acquisition Recognised
Carrying amounts Fair value values on
adjustments acquisition
Tarquin Resources plc Group $ $ $
Property, plant and equipment 115,130 - 115,129
Intangible assets 13,937,201 4,244,770 18,181,971
Investments 69,820 - 69,820
Trade and other receivables 619,203 - 619,204
Cash and cash equivalents 1,823,375 - 1,823,375
Trade and other payables (2,425,221) - (2,425,221)
Loans and borrowings (8,561,351) - (8,561,351)
Net identifiable assets and liabilities 5,578,157 4,244,770 9,822,927
Share of net identifiable assets and liabilities owned by the
Company and minority interests as at 22 November 2007 (4,688,184)
Consideration paid, satisfied in shares (i) 5,134,743
Cash acquired 1,823,375
Net cash inflow 1,823,375
(i) 1,166,987 ordinary shares allotted with a value of $4.40 each, based on the market price of the Company's ordinary
shares as quoted on the ASX on 22 November 2007.
Belitung Zinc Corporation plc
Intangible assets 7,772,440 (4,635,435) 3,137,005
Trade and other receivables 2,033,337 - 2,033,337
Cash and cash equivalents 3,195,200 - 3,195,200
Trade and other payables (260,417) - (260,417)
Net identifiable assets and liabilities 12,740,560 (4,635,435) 8,105,125
Share of net identifiable assets and liabilities owned by the
Company and minority interests as at 22 November 2007 (3,045,125)
Consideration paid, satisfied in shares (i) 5,060,000
Cash acquired 3,195,200
Net cash inflow 3,195,200
(i) 1,150,000 ordinary shares allotted with a value of $4.40 each, based on the market price of the Company's ordinary
shares as quoted on the ASX on 22 November 2007.
20. SEGMENT INFORMATION
Investment Mining Total
Primary segments Services
$ $ $
Business Segments
2007
Revenue from services - - -
Financial income 965,997 - 965,997
Total revenue and financial income 965,997 - 965,997
Segment result (2,515,159) (12,164) (2,527,323)
Share of net (loss) / profit of associates (904,657) 3,537,491 2,632,834
Interest income 164,204 - 164,204
Reversal of impairment losses 28,723 - 28,723
Impairment losses - (4,985,868) (4,985,868)
(Loss) for the period (3,226,889) (1,460,541) (4,687,430)
Depreciation and amortisation (12,819) - (12,819)
Segment assets 27,963,744 22,618,644 50,582,388
Segment liabilities 6,996,187 1,095,265 8,091,452
Capital expenditure 4,128 1,018,173 1,022,301
2006
Revenue from services 133,063 - 133,063
Financial income 387,767 - 387,767
Total revenue and other income 520,830 - 520,830
Segment result 816,103 (5,927) 810,176
Share of net profit / (loss) of associates (823,557) - (823,557)
Interest income 297,657 - 297,657
Reversal of impairment losses 64,772 - 64,772
Profit / (loss) for the period 354,975 (5,927) 349,048
Depreciation and amortisation 9,438 - 9,438
Segment assets 20,389,354 4,458,481 24,847,835
Segment liabilities 544,801 - 544,801
Capital expenditure 11,714,125 2,052,928 13,767,053
Secondary segments South United
Australia Asia America Kingdom Total
$ $ $ $ $
Geographic Segments
2007
Total revenue and financial income 70,176 - - 482,117 552,293
Segment Assets 354,106 2,634,029 17,018,041 30,576,212 50,582,388
2006
Total revenue and financial income 8,063 - - 512,767 520,830
Segment Assets 2,080,376 4,458,481 371,296 17,937,682 24,847,835
Investment services represent the consolidated entity's activities in investing
in, and contributing to the management of, other companies, and cash held on
deposit. Mining represents the Company's interest in prospective mining
ventures.
21. DIRECTOR AND KEY MANAGEMENT PERSONNEL DISCLOSURES
Remuneration of Directors and Specified Executives
Remuneration of senior management personnel is determined by a Remuneration Committee comprised of the
non-executive directors. The Board as a whole is responsible for making recommendations on remuneration policies
and packages applicable to the Board members of the consolidated entity. The broad remuneration policy is to ensure
the remuneration package properly reflects the person's duties and responsibilities, and that remuneration is
competitive in attracting, retaining and motivating people of the highest quality; taking into account information
obtained via reputable industry remuneration surveys and / or independent consultant reports. This also includes
responsibility for share option schemes, incentive performance packages, retirement and termination entitlements,
fringe benefits policies and professional indemnity and liability insurance policies. For the current year all
packages comprised fixed remuneration elements and equity based remuneration only; no bonuses were paid.
Equity holdings and transactions : Ordinary shares
Held at Acquired as Acquired Disposed Held at
2007 1.1.2007 share based on market on market 31.12.2007
payment
Directors
J.A. Landels 100,000 - - - 100,000
C. Kyriakou 4,574,298 13,799 13,000 - 4,601,097
M.R. Arnesen - - - - -
S. Borg 56,259 - 1,676 - 57,935
R.A. Cleary - - - - -
J.R. Reynolds 6,000 - - - 6,000
Executives
J.B. Maguire 144,000 - - - 144,000
K.P. Heywood - - - - -
Held at Acquired in Acquired Disposed Held at
2006 1.1.2006 * Rights issue on market on market 31.12.2006
Directors
J.A. Landels 34,000 50,000 16,000 - 100,000
C. Kyriakou 1,849,762 2,220,000 504,536 - 4,574,298
M.R. Arnesen - - - - -
S. Borg 23,053 33,206 - - 56,259
R.A. Cleary - - - - -
J.R. Reynolds 2,000 4,000 - - 6,000
Executives
J.B. Maguire 120,000 24,000 - - 144,000
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
Equity holdings and transactions : Options over ordinary shares
Held and Held and
Vested at Vested at
2007 1.1.2007 Granted 31.12.2007
Specified directors
J.A. Landels 50,000 25,000 75,000
C. Kyriakou 150,000 70,000 220,000
M.R. Arnesen - 50,000 50,000
S. Borg 15,000 35,000 50,000
R.A. Cleary 120,000 70,000 190,000
J.R. Reynolds 30,000 70,000 100,000
Specified executives
J.B. Maguire 80,000 20,000 100,000
K.P. Heywood - - -
21. DIRECTOR AND KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
Held and Held and
Vested at Vested at
2006 1.1.2006 * Granted 31.12.2006
Specified directors
J.A. Landels 50,000 - 50,000
C. Kyriakou 150,000 - 150,000
M.R. Arnesen - - -
S. Borg 15,000 - 15,000
R.A. Cleary 120,000 - 120,000
J.R. Reynolds 30,000 - 30,000
Specified executives
J.B. Maguire 80,000 - 80,000
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
All options vested on date of grant.
Information regarding individual directors and executives compensation and some
equity instruments disclosures as permitted by Corporations Regulations 2M.3.03
and 2M.6.04 are provided in the Remuneration Report section of the Directors'
Report.
Apart from the details disclosed in this note or in note 25, no director has
entered into a material contract with the Company or the consolidated entity
since the end of the previous financial year and there were no material
contracts involving directors' interests existing at year-end.
Other transactions with the Company or its subsidiaries
A number of specified directors and specified executives, or their personally
related entities, hold positions in other entities that result in them having
control or significant influence over the financial or operating policies of
those entities.
A number of these entities transacted with the Company or its subsidiaries in
the reporting period. The terms and conditions of those transactions were no
more favourable than those available, or which might reasonably be expected to
be available, on similar transactions to unrelated entities on an arm's length
basis.
The aggregate amounts recognised during the year relating to key management
personnel and their related parties, were total revenue of $334,900 and total
expense of $618,944. Details of the transactions are as follows:
2007 2006
Key management Transaction Note $ $
personnel
C. Kyriakou Management fee (ix), (x) - 8,063
R.A. Cleary Management fee (ix), (x) - 8,063
C. Kyriakou Facility fees (viii) 334,900 -
R.A. Cleary Facility fees (viii) 334,900 -
C. Kyriakou Consultancy fees and rent (i), (ii) 294,224 281,432
R.A. Cleary Consultancy (iii) 112,480 104,030
J.R. Reynolds Consultancy (iv) 20,744 68,352
J.B. Maguire Consultancy (v) 144,000 144,000
K.P. Heywood Consultancy (vi) 45,187 -
S. Borg IT support and equipment (vii) 4,488 24,015
(i) Management consultancy fees of $230,974 (2006: $218,182) were paid by the
Company to a company in which a Director, Mr Kyriakou, has an interest. These
services were charged at commercial rates. The amount of management consulting
fees is included in the remuneration disclosure set out in this note 21.
21. DIRECTOR AND KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(ii) Rent of $63,250 (2006: $63,250) was paid by the Company to a company in
which a Director, Mr. Kyriakou, has an interest. This rent was charged at
commercial rates.
(iii) Consultancy fees of $112,480 (2006: $104,030) were paid by the Company to
a company in which a Director, Mr Cleary, has an interest. These services were
charged at commercial rates. The amount of consulting fees is included in the
remuneration disclosure set out in this note 21.
(iv) Consultancy fees of $20,744 (2006: $68,352) were paid by the Company to a
business in which a Director, Mr Reynolds, has an interest. These services were
charged at commercial rates. The amount of consulting fees is included in the
remuneration disclosure set out in this note 21.
(v) Consultancy fees of $144,000 (2006: $144,000) were paid by the Company to a
company in which the Company Secretary, Mr Maguire, has an interest. These
services were charged at commercial rates. The amount of consulting fees is
included in the remuneration disclosure set out in this note 21.
(vi) Consultancy fees of $45,187 (2006: $nil) were paid by the Company to a
company in which the Chief Operating Officer, Mr Heywood, has an interest. These
services were charged at commercial rates. The amount of consulting fees is
included in the remuneration disclosure set out in this note 21.
(vii) IT equipment amounting to $2,179 (2006: $17,233) was purchased by the
Company from, and IT services of $2,309 (2006: $6,782) were supplied to the
Company by, a company in which a Director, Mr. Borg, has an interest.
(viii) Facility fees of $334,900 (2006: $nil) were charged by the Company to
Tarquin Resources plc of which Mr Kyriakou is and Mr Cleary was a director.
These services were charged at commercial rates. By the balance date, the total
amount had been paid.
(ix) Management fees of $nil (2006: $4,838) were charged by the Company to
Toledo Mining Corporation plc of which Mr Kyriakou and Mr Cleary are directors.
These services were charged at commercial rates. By the balance date, the total
amount had been paid.
(x) Management fees of $nil (2006: $3,225) were charged by the Company to UMC
Energy plc of which Mr Kyriakou and Mr Cleary are directors. These services were
charged at commercial rates. By the balance date, the total amount had been
paid.
(xi) Expenses incurred in sourcing the Kelapa Kampit project amounting to $nil
(2006 : $288,261) were recovered from Belitung Zinc Corporation plc of which Mr
Kyriakou and Mr Reynolds are directors. By the balance date, the total amount
had been paid.
(xii) The Company acquired shares in Tarquin Resources plc in off-market offers
made to the public on commercial terms. The Company made a share based payment
with a fair value of $60,716 to Mr Kyriakou and a cash payment of $1,403 to Mr
Reynolds in relation to these offers.
(xi) A short term loan of $3,200,000 (2006: $nil) was received by the Company
from a company in which a Director, Mr Kyriakou, has an interest. The loan is
unsecured, bears interest at 9.5% per annum is repayable either via
capitalization into the January 2008 Convertible Note raising or within twenty
business days of the closing of the January 2008 Convertible Note raising, at
the lender's option. The loan was capitalized into the January 2008 Convertible
Note.
(xii) A loan of $1,200,000 (2006: $nil) was received by the Company from
Belitung Zinc Corporation plc of which Mr Kyriakou and Mr Reynolds are
directors. The loan is unsecured, interest-free and has no fixed terms of
repayment.
21. DIRECTOR AND KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
2007 2006
Assets and liabilities arising from the above transactions $ $
Current assets
Trade debtors and advances - -
Current liabilities
Trade and other payables - -
Loans and borrowings 4,400,000 -
(4,400,000) -
Subsidiaries
Details of interests in subsidiaries are set out in note 19. Details of dealings
with these entities are set out below. These transactions are in the normal
course of business and on normal terms and conditions.
The loan to Tommy SA has no specified term and does not bear interest. The loans
to Tarquin Resources plc are repayable by 31 July 2008, are secured by negative
pledge and bear interest at 8.5% pa and 9.5% pa respectively. The loan to
Kidz.Net National Pty Ltd amounting to $9,696,448 was capitalised into share
capital during 2006. The loan from Belitung Zinc Corporation plc has no
specified term and does not bear interest. The total value of the loans
receivable at 31 December 2007 is $6,964,074 (2006: $ nil). These amounts have
been provided for to the extent of $nil (2006: $nil). The total value of the
loans payable at 31 December 2007 is $1,200,000 (2006: $nil).
22. FINANCIAL INSTRUMENTS
Overview
The Company and consolidated entity have exposure to the following risks from their use of financial instruments:
* Credit risk
* Liquidity risk
* Market risk
This note presents information about the Company's and consolidated entity's exposure to each of the above risks, their
objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative
disclosures are included throughout this financial report.
The board of directors has overall responsibility for the establishment and oversight of the risk management framework.
Risk management policies are established to identify and analyse the risks faced by the Company and consolidated entity,
to set appropriate limits and controls, to monitor risks and adherence to limits.
Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Company's and consolidated
entity's receivables from customers, government agencies and investment securities. For the Company it arises, in
addition, for receivables due from subsidiaries.
Trade and other receivables
The Company's and consolidated entity's exposure to credit risk is influenced mainly by the individual characteristics
of each customer.
The Company and consolidated entity have established an allowance for impairment that represents their estimate of
incurred losses in respect of trade and other receivables and investments. This allowance represents specific losses
that relate to individually significant exposures.
Investments
The Company and consolidated entity limits its exposure to credit risk by only dealing with brokers who are members of a
recognised stock exchange and management does not expect any counterparty to fail to meet its obligations.
22. FINANCIAL INSTRUMENTS (continued)
Credit risk (continued)
Financial risk factors
The carrying amounts of financial assets recognised in the balance sheet, and disclosed in more detail in note 7
best represent the Company's and consolidated entity's maximum exposure to credit risk at the reporting date. In
respect of those financial assets and the credit risk embodied within them, the Company and consolidated entity
holds no significant collateral as security and there are no other significant credit enhancements in respect of
these assets. The credit quality of all financial assets that are neither past due nor impaired is appropriate and
is consistently monitored in order to identify any potential adverse changes in credit quality. There are no
significant financial assets that have had renegotiated terms that would otherwise, without that renegotiation,
have been past due or impaired.
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they
fall due. The consolidated entity's approach to managing liquidity risk is to ensure, as far as possible, that it
will always have sufficient liquidity to meet it liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the consolidated entity's reputation.
Typically the consolidated entity ensures it has sufficient cash on demand to meet expected operational expenses
for a period of more than 60 days, including the servicing of financial obligations; this excludes the potential
impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
The following are the contractual maturities of financial liabilities,
including estimated interest payments:
Consolidated
Contract
Carrying -ual Cash 6 mths or
amount flows less
$ $ $
31 December 2007
Non-derivative financial liabilities
Trade and other payables 1,568,767 1,568,767 1,568,767
Loans and borrowings 3,200,000 3,200,000 3,200,000
4,768,767 4,768,767 4,768,767
31 December 2006
Trade and other payables 211,662 211,662 211,662
211,662 211,662 211,662
The following are the contractual maturities of
financial liabilities, including estimated interest
payments: Company
Contract No
Carrying -ual Cash 6 mths or Fixed
amount flows less term
$ $ $ $
31 December 2007
Non-derivative financial liabilities
Trade and other payables 516,274 516,274 516,274 -
Loans and borrowings 4,400,000 4,400,000 3,200,000 1,200,000
4,916,274 4,916,274 3,716,274 1,200,000
31 December 2006
Trade and other payables 211,659 211,659 211,659 -
211,659 211,659 211,659 -
22. FINANCIAL INSTRUMENTS (continued)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the consolidated entity's income or value of its holdings in financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
Currency risk
The consolidated entity is exposed to currency risk on loans, cash holdings, project exploration and development
activities and commitments that are denominated in a currency other than the respective functional currencies of
the consolidated entities, primarily the Australian dollar (AUD), but also Sterling (GBP), the United States
dollar (USD) and Chilean Peso (CLP). The currencies in which these transactions are primarily denominated are
AUD, USD and GBP.
The Company's investments in subsidiaries are not hedged as those currency positions are considered to be
long-term in nature.
The consolidated entity's exposure to foreign currency
risk at balance date was as follows:
Consolidated
AUD GBP USD CLP
In AUD $ $ $ $
31 December 2007
Cash and cash equivalents 154,674 1,915,775 1,393,653 (182,760)
Trade and other receivables 16,460 38,958 - 721,268
Other investments - 19,364,776 - -
Trade and other payables (291,588) (392,166) (840,217) (44,796)
Loans and borrowings (3,200,000) - - -
Gross and net exposure (3,320,454) 20,927,343 553,436 493,712
31 December 2006
Cash and cash equivalents 2,054,098 - - -
Trade and other receivables 8,517 21,461 371,296 -
Other investments 26,714 11,590,851 4,458,482 -
Trade and other payables (211,662) - - -
Gross and net exposure 1,877,667 11,612,312 4,829,778 -
The Company's exposure to foreign currency risk at
balance date was as follows:
Company
AUD GBP USD CLP
In AUD $ $ $ $
31 December 2007
Cash and cash equivalents 154,674 - 173,902 -
Trade and other receivables 16,460 3,597,145 3,366,929 -
Other investments - 31,820,903 2,634,029 -
Trade and other payables (516,282) - - -
Loans and borrowings (4,400,000) - - -
Gross and net exposure (4,745,140) 35,418,048 6,174,860 -
31 December 2006
Cash and cash equivalents 1,248,875 - 805,223 -
Trade and other receivables 8,517 21,461 371,296 -
Other investments 26,714 16,255,874 4,458,482 -
Trade and other payables (211,659) - - -
Gross and net exposure 1,072,447 16,277,335 5,635,001 -
The following significant exchange Average rate Reporting date spot rate
rates applied during the year:
AUD 2007 2006 2007 2006
GBP 1 0.42684 0.40 0.43845 0.4024
USD 1 0.82184 n/a 0.87573 0.7884
CLP 1 0.00230 n/a 0.00230 n/a
22. FINANCIAL INSTRUMENTS (continued)
Market risk (continued)
Currency risk (continued)
Sensitivity analysis
A 10 percent strengthening of the Australian dollar against the following currencies at 31 December would have
increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2006.
Effect in AUD Consolidated Company
Profit or Profit or
loss loss
31 December 2007 Equity Equity
GBP (1,634,133) - (2,318,919) (359,715)
USD (85,301) (17,390) - (354,083)
CLP (1,322,246) - - -
Profit or Profit or
loss loss
31 December 2006 Equity Equity
GBP (813,596) - (1,126,136) -
USD - (117,652) - (117,652)
CLP - - - -
A 10 percent weakening of the Australian dollar against the above currencies at 31 December would have had the
equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other
variables remain constant.
Interest rate risk
The Company and consolidated entity limits its exposure to interest rate risk by entering into fixed rate
agreements as far as possible, other than in respect of cash holdings where the consolidated entity's interest
earnings are subject to interest rate risk.
Profile
At the reporting date the interest rate profile of the Company's and the consolidated entity's interest-bearing
financial instruments was:
Consolidated Company
Carrying amount Carrying amount
Fixed rate instruments 2007 2006 2007 2006
Financial assets - - 3,597,145 -
Financial liabilities (3,200,000) - (4,400,000) -
(3,200,000) - (802,855) -
Variable rate instruments
Financial assets 3,281,342 2,054,098 328,576 2,054,098
Financial liabilities - - - -
3,281,342 2,054,098 328,576 2,054,098
Fair value sensitivity analysis for fixed rate instruments
The consolidated entity does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or
loss.
A change of 100 basis points in interest rates would have increased or decreased the consolidated entity's equity
by $nil (2006 : $nil) and the Company's equity by $nil (2006 : $nil).
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased or decreased the
consolidated entity's equity and profit and loss by $7,017 (2006 : $29,735) and the Company's equity and profit
and loss by $7,017 (2006 : $29,735). The analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same basis for 2006.
22. FINANCIAL INSTRUMENTS (continued)
Market risk (continued)
Commodity price risk
The consolidated entity is exposed to commodity price risk on sales of nickel ore generated by its associates.
The consolidated entity does not enter into commodity price hedging arrangements.
Other market price risk
Equity price risk arises from available-for-sale equity securities held for investment purposes. The Board
monitors the equity securities in the Company and consolidated entity's investment portfolio on an individual
basis and all buy and sell decisions are made by management within limits approved by the Board.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business.
There were no changes to the consolidated entity's approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance
sheet are as follows:
Consolidated
Carrying Net fair Carrying Net fair
amount value amount Value
2007 2007 2006 2006
$ $ $ $
Cash and cash equivalents 3,281,342 3,281,342 2,054,098 2,054,098
Trade and other receivables 776,686 776,686 401,274 401,274
Equity securities available for sale 19,364,767 19,364,767 16,076,047 16,076,047
Trade and other payables (1,568,771) (1,568,771) (211,662) (211,662)
Loans and borrowings (3,200,000) (3,200,000) - -
18,654,037 18,654,037 18,319,757 18,319,757
Company
Carrying Net fair Carrying Net fair
Amount value Amount Value
2007 2007 2006 2006
$ $ $ $
Cash and cash equivalents 328,576 328,576 2,054,098 2,054,098
Trade and other receivables 6,980,534 6,980,534 401,274 401,274
Equity securities available for sale 19,364,776 19,364,776 16,076,047 16,076,047
Trade and other payables (516,274) (516,274) (211,659) (211,659)
Loans and borrowings (4,400,000) (4,400,000) - -
21,757,612 21,757,612 18,319,760 18,319,760
Consolidated The Company
2007 2006 2007 2006
$ $ $ $
23. NOTES TO THE STATEMENTS OF CASH FLOWS
(i) Reconciliation of cash
For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short-term deposits.
Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the balance
sheet as follows:
Classified as cash 3,281,342 2,054,098 328,576 2,054,098
3,281,342 2,054,098 328,576 2,054,098
(ii) Reconciliation of cash flows from operating
activities
(Loss) / profit for the period (4,687,430) 349,048 (5,072,263) (1,872,501)
Adjustments for:
Depreciation 12,819 9,438 12,819 9,438
Gain on sale of shares (388,089) (90,110) (388,089) (90,110)
Gain on dilution of subsidiary - (3,045,125) - -
Impairment losses on investments 4,985,868 - 2,414,431 -
(Reversal of) impairment losses (28,723) - (28,723) -
Share of net (profit) / loss of associates (2,632,834) 823,577 - -
Equity-settled share-based payment expenses 1,733,914 374,639 1,733,914 374,639
Operating cash flow before changes in working
capital and provisions (1,004,475) (1,578,533) (1,327,911) (1,578,534)
(Increase) / decrease in trade and other
receivables 19,740 (25,358) 19,740 (25,358)
Increase in deferred income - - 224,690 -
Increase in trade and other payables 79,927 35,852 79,918 35,853
Net cash used in operating activities (904,808) (1,568,039) (1,003,563) (1,568,039)
(iii) Non-cash financing and investing activities
During the year, the Company issued 2,816,987 shares with a fair value of $12,194,743 to increase its interests in
Tarquin Resources plc to 86.8%; in Belitung Zinc Corporation plc to 100% and UMC Energy plc to 20.4%.
In 2006, $2,405,553 relating to intangible exploration and evaluation expenditure was transferred to unlisted
equity securities.
24. COMMITMENTS AND CONTINGENT LIABILITIES
Under the three year option arrangement entered into in respect of the Puquios
project, the consolidated entity has a commitment for (and the Company is
responsible for its 49% share of) the US$5,200,000 option fee which is payable
in November 2008. Accordingly, the consolidated entity's commitment in respect
of the option fee is $5.9 million and Company's share is $2.9 million.
The Company has provided a �1.3 million loan facility to Tarquin Resources plc.
The loan bears interest at 9.5% per annum on funds drawn, is secured by a
negative pledge over Tarquin's equity interest in the Puquios copper project and
is repayable by 31 July 2008, either in cash or convertible into shares in
Tarquin at 25p per share, at the Company's option. The facility bears a
facility fee of �65,000. During the period, �65,000 (A$148,250) has been drawn
by Tarquin.
Other than the item referred to above, the Company and consolidated entity have
no commitments for capital or revenue purchases other than those entered into in
the ordinary course of business.
The Company and the consolidated entity have no commitments under
non-cancellable leases.
The Company and the consolidated entity have no contingent liabilities.
25. SUBSEQUENT EVENTS
Between 1 January 2008 and the date of this report the following material
transactions have occurred. The Company has:
* raised $12.9 million in new equity through the placement of 3
million shares at $4.30 each.
* issued a Convertible Note to raise $9 million to Capma Pty
Ltd, a company in which a Director, Mr. Kyriakou, has an interest. The Note
expires on 16 January 2012 and at that time, or if exercised earlier (but not
before 16 January 2010) under the terms of the Note, must be exercised into
fully paid Ordinary Shares in the Company at the lower of $5.50 or 80% of the
weighted average market price at the conversion date.
* advanced �389,145 ($857,876) by way of loan to Tarquin Resources plc.
* advanced US$656,632 ($732,352) by way of loan to Tommy SA.
* advanced $183,897 by way of loan to UMC Energy plc, under a
$500,000 loan facility entered into with that company.
* borrowed $1.2 million by way of interest-free, unsecured loan
from Belitung Zinc Corporation plc.
* purchased 100,000 shares in Toledo Mining Corporation plc at a cost of
$405,971.
* granted options over 500,000 ordinary shares to its financial
adviser. The exercise price of the options is $5.50 each and they expire on
9 January 2013.
The financial effects of the above transactions have not been brought to account
in the financial statements for the year ended 31 December 2007.
SHAREHOLDER INFORMATION AS AT 4 FEBRUARY 2008
A. STATEMENT OF ISSUED SHARES
(i) The total number of shareholders is 1,383 on the Australian register and
72 on the UK register. Each shareholder is entitled to one vote per share held.
(ii) There are 19,251,696 ordinary fully paid shares quoted on the Australian
Securities Exchange Ltd and the London Stock Exchange's AIM market.
(iii) The twenty largest shareholders hold 86.6% of the Company's issued
capital.
B. DISTRIBUTION OF SECURITIES ON THE AUSTRALIAN REGISTER
Number of Number of
Shareholders Optionholders
1 - 2,000 1,279 -
2,001 - 5,000 53 -
5,001 - 10,000 18 -
10,001 - 100,000 22 10
100,001 and over 11 4
1,383 14
C. ON-MARKET BUYBACK
There is no current on-market buyback.
D. SUBSTANTIAL SHAREHOLDERS
Substantial shareholders are as follows: Good Hope Finance & Investment Pty Ltd 4,601,097 shares
RAB Special Situations (Master Fund) Ltd 1,518,993 shares
E. VOTING RIGHTS
Ordinary shares - refer note 14
Options over ordinary shares - there are no voting rights attached to the
options over ordinary shares.
F. UNQUOTED SECURITIES
The Company has on issue 1,831,547 options over ordinary shares.
These options are held by 14 holders. One holder has 500,000 options which is
27% of the class of securities.
G. TOP 20 SHAREHOLDERS APPEARING ON THE REGISTER:
No. of % of
Shareholder's Name Shares held Capital held
Good Hope Finance & Investment Pty Ltd 4,601,097 23.9
ANZ Nominees Ltd. 3,092,491 16.1
T. Hoare Nominees Ltd. 2,033,500 10.5
Credit Suisse Client Nominees (UK) Ltd 1,830,000 9.5
HSBC Custodian Nominees (Australia) 972,178 5.1
HSBC Global Custody Nominee (UK) Ltd 933,952 4.8
BBHISL Nominees Ltd 446,900 2.3
Kewdale International Corp 400,000 2.1
National Nominees Ltd. 395,595 2.1
Mustoni Ltd. 262,000 1.4
Goldman Sachs Securities (Nominees) Ltd 255,000 1.3
Barclayshare Nominees Ltd. 193,735 1.0
Vidacos Nominees Ltd. 188,373 1.0
Mellon Nominees (UK) Ltd. 185,887 1.0
Pershing Keen Nominees Ltd. 166,919 0.9
Fitel Nominees Ltd. 153,477 0.8
Citicorp Nominees Pty Ltd 149,793 0.8
Potos Services Pty Ltd 143,828 0.7
JP Morgan Nominees Australia Ltd. 140,049 0.7
Man Financial Ltd. 131,644 0.6
Top 20 Total 16,676,418 86.6%
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BSGDDIGDGGII
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