RNS Number:4237J
AuIron Energy Ld
4 September 2001
PART 2
Directors' Report
During the financial year the Company has paid premiums to insure the
Directors and Officers (D&O) against liabilities and costs and expenses
incurred by them in defending any legal proceedings arising out of their
conduct while acting in the capacity of officer of the Company, other than
conduct involving a wilful breach of duty in relation to the Company. The
amount of the premium was $113,778.
ISSUES OF SECURITIES
During the year ended 30 June 2001 the Company issued 44,712,524 ordinary
shares as detailed below:
* 26,150,000 issued under December 2000 Rights Issue.
* 5,975,024 shares issued to Teck Corporation.
* 7,000,000 shares issued in placement.
* 1,225,000 shares issued upon conversion of 25/10/2000 options.
* 2,200,000 shares issued upon conversion of 30/06/2000 options.
* 500,000 shares issued upon conversion of 30/11/2003 options.
* 950,000 shares issued upon conversion of 950,000 partly paid
shares to fully paid shares.
* 712,500 shares issued pursuant to the 1999 Rights Offer.
Subsequent to the financial year the company issued 65,157,846 new shares in
completion of the 1:4 Rights Offer.
Signed at Sydney on the third day of September 2001 in accordance with a
resolution of the Directors.
-------------------------------------------------
N F ARTHUR
Managing Director & Chief Executive Officer
Statements of Financial Position
as at 30 June 2001
CONSOLIDATED THE COMPANY
Note 2001 2000 2001 2000
$ $ $ $
CURRENT ASSETS
Cash 6 6,180,544 12,747,759 5,909,838 1,937,382
Receivables 7 664,157 29,690 109,553 28,856
Other 8 113,441 19,265 113,441 19,265
TOTAL CURRENT
ASSETS 6,958,142 12,796,714 6,132,832 1,985,503
NON-CURRENT ASSETS
Receivables 9 - - 35,218,618 17,640,788
Investments 10 - - 15,343,072 15,343,072
Property, plant
and equipment 11 538,841 573,038 362,253 394,855
Demonstration
plant 11 26,472,111 8,943,331 - -
Exploration and
evaluation 12 27,043,651 18,595,506 4,710,826 4,698,357
expenditure
Intangible assets 13 5,415,416 5,708,141 - -
TOTAL NON-CURRENT
ASSETS 59,470,019 33,820,016 55,634,769 38,077,072
TOTAL ASSETS 66,428,161 46,616,730 61,767,601 40,062,575
CURRENT LIABILITIES
Payables 5,011,501 5,251,641 1,496,597 86,318
Interest bearing
liabilities 14 31,068 30,465 31,068 30,465
Provisions 16 1,002,448 131,338 1,002,448 131,338
TOTAL CURRENT
LIABILITIES 6,045,017 5,413,444 2,530,113 248,121
NON-CURRENT LIABILITIES
Government grant 15 6,205,713 5,830,842 - -
Interest bearing
liabilities 14 208,495 239,149 208,495 239,149
Provisions 16 77,247 - 77,247 -
TOTAL NON-CURRENT
LIABILITIES 6,491,455 6,069,991 285,742 239,149
TOTAL LIABILITIES 12,536,472 11,483,435 2,815,855 487,270
NET ASSETS 53,891,689 35,133,295 58,951,746 39,575,305
EQUITY
Contributed
equity 17 89,110,335 65,217,089 89,110,335 62,617,089
Reserves 19 6,760,385 3,098,988 4,285,363 4,285,363
Accumulated
losses 19 (42,665,619) (34,320,387)(34,443,952) (27,327,147)
PARENT EQUITY
INTEREST 53,205,101 33,995,690 58,951,746 39,575,305
OUTSIDE EQUITY
INTEREST IN 20 686,588 1,137,605 - -
CONTROLLED ENTITIES
TOTAL EQUITY 53,891,689 35,133,295 58,951,746 39,575,305
The accompanying notes form part of the financial statements.
Statements of Financial Performance
for the year ended 30 June 2001
CONSOLIDATED THE COMPANY
Note 2001 2000 2001 2000
$ $ $ $
Revenue from ordinary
activities 2 806,891 409,157 2,236,977 1,094,035
Occupancy expenses (123,947) (96,000) (81,264) (49,549)
Administration expenses (6,410,945) (2,838,123) (5,365,579) (2,356,227)
Borrowing costs expense 3 (15,215) (35,576) (15,215) (35,576)
Other expenses from
ordinary activities 3 (2,795,889) (11,088,647) (3,891,724) (11,088,647)
Loss from ordinary
activities before income
tax (8,539,105) (13,649,189) (7,116,805) (12,435,964)
Income tax expense 4 - - - -
Loss from ordinary
activities after income tax (8,539,105) (13,649,189) (7,116,805) (12,435,964)
Outside equity interests
in operating loss after 193,873 80,609 - -
income tax
Net (loss) after income
tax attributable to the 19(b)(8,345,232) (13,568,580) (7,116,805) (12,435,964)
members of the group
Non-owner transaction changes in equity
Net exchange difference on
translation of
financial statements of
self-sustaining foreign
operations 19(a) 3,661,397 398,943 - -
Total revenues, expenses
and valuation
adjustments attributable
to members of the
parent entity recognised
directly in equity 3,661,397 398,943 - -
Total changes in equity
other than those
resulting from transactions
with owners as owners (4,683,835) (13,169,637) (7,116,805) (12,435,964)
The only movement in accumulated losses is the net loss after income tax
attributable to the members of the group in the period.
The accompanying notes form part of the financial statements.
Statements of Cash Flows
for the year ended 30 June 2001
CONSOLIDATED THE COMPANY
Note 2001 2000 2001 2000
$ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments for exploration
expenditure and to
suppliers and employees (11,037,326) (6,153,616) (3,634,758) (3,125,977)
Grant from SA Government - 750,000 - -
Interest paid (15,215) (30,114) (15,215) (30,114)
Interest received 780,922 409,157 641,325 104,035
Cash receipts in the course
of operations 10,038 - - -
NET CASH USED IN
OPERATING ACTIVITIES 21 (10,261,581) (5,024,573) (3,008,648) (3,052,056)
CASH FLOWS FROM INVESTING ACTIVITIES
Security deposit received - 750,000 - 750,000
Net funds acquired in SASE
Pty Ltd - 1,090,745 - -
Payments for equity investment - - - (7,870,126)
Advances to controlled entities - - (15,997,830) (910,613)
Payments for demonstration
plant, property,
plant and equipment (19,716,869) (3,181,664) (44,364) (115,352)
NET CASH USED IN
INVESTING ACTIVITIES (19,716,869) (1,340,919)(16,042,194)(8,146,091)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from
issue of shares 23,053,349 13,374,888 23,053,349 13,374,888
Loan repayments (30,051) (1,500,000) (30,051)(1,500,000)
Grant from Federal Government 374,871 5,830,842 - -
NET CASH PROVIDED BY
FINANCING ACTIVITIES 23,398,169 17,705,730 23,023,298 11,874,888
Net (decrease)/increase
in cash (6,580,281) 11,340,238 3,972,456 676,741
Cash at 1 July 12,747,759 1,407,059 1,937,382 1,260,641
Effect of exchange rate
changes on the balances
of cash held in foreign
currencies at the
beginning of the financial
year 13,066 462 - -
CASH AT 30 JUNE 6 6,180,544 12,747,759 5,909,838 1,937,382
The accompanying notes form part of the financial statements
Notes to the financial statements
for the year ended 30 June 2001
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance with
Australian Accounting Standards, Urgent Issues Economic Entity Consensus
Views, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act.
The financial report covers the economic entity of AuIron Energy Limited and
controlled entities, and AuIron Energy Limited as an individual parent entity.
AuIron Energy Limited is a listed public company, incorporated and domiciled
in Australia.
It is prepared on the basis of historical costs and except where stated does
not take into account changing money values or current valuations of
non-current assets. The accounting policies adopted are consistent with those
of the previous year. Comparative information is reclassified where
appropriate to enhance comparability.
The directors have elected to apply revised Australian Accounting Standard
AASB 1041 Revaluation of Non-Current Assets before its mandatory application
date, in accordance with subsection 334(5) of the Corporations Act 2001.
The following is a summary of the material accounting policies adopted by the
consolidated entity in the preparation of the financial report.
a) Principles of consolidation
The consolidated financial statements comprise the accounts of AuIron Energy
Limited and its controlled entities. A list of controlled entities appears in
note 5. All intercompany balances and transactions between entities in the
group, including any unrealised profits or losses, have been eliminated on
consolidation.
Where an entity either began or ceased to be controlled during the year, the
results are included only from the date control commenced or up to the date
control ceased.
b) Investments
Investments in controlled entities are carried in the Company's financial
statements at the lower cost and recoverable amount.
Investments in Associated Companies are recognised in the financial statements
applying the equity method of accounting.
c) Foreign currency transactions and balances
Foreign currency transactions are initially translated into Australian
currency at the rate of exchange applicable at the dates of the transactions.
Amounts payable and receivable in foreign currencies at balance date are
translated at rates of exchange ruling on that date.
Exchange differences relating to amounts payable and receivable in foreign
currencies are brought to account as exchange gains or losses in the statement
of financial performance in the financial year in which the exchange rates
change.
The assets and liabilities of foreign operations that are self-sustaining are
translated at the rates of exchange ruling at balance date. Equity items are
translated at historical rates. The statement of financial performance is
translated at a weighted average rate for the year. Exchange differences
arising on translation are taken directly to the foreign currency translation
reserve.
The balance of the foreign currency translation reserve relating to a foreign
operation that is disposed of is transferred to retained earnings in the year
of disposal.
Notes to the financial statements
d) Property, plant and equipment
The cost of each item of machinery and equipment is depreciated over its
expected useful life using the straight-line method from the date of
acquisition, or in respect of internally constructed assets, from the time an
asset is completed and ready for use. Depreciation is expensed.
The expected useful lives are as follows:
Machinery and equipment 2 - 10 years depending on the nature of the asset.
Buildings 20 years.
Total net carrying value of machinery and equipment at each exploration
property is reviewed regularly and, to the extent to which these values exceed
their recoverable amounts, that excess is fully provided against/written down
in the financial year in which this is determined.
Land and buildings are recorded at cost.
e) Income tax
The financial statements are prepared using the income statement liability
method of tax effect accounting.
Income tax expense is calculated on the operating result adjusted for
permanent differences between taxable and accounting income. The tax effect
of timing differences, which arise from items being brought to account in
different periods for income tax and accounting purposes, is carried forward
in the statement of financial position as a future income tax benefit or a
provision for deferred income tax.
At the present time cumulative tax losses and timing differences give rise to
a possible future income tax benefit. The extent to which the benefit may be
realised in future years is uncertain, being conditional upon:
i) the ability of the consolidated entity to derive future assessable
income of a nature and of sufficient amount to enable the benefit to be
realised;
ii) the ability of the consolidated entity to continue to comply with
the conditions for deductibility imposed by law; and
iii) an expectation that legislation will not change in a manner which
would adversely affect the consolidated entity's ability to realise the
benefit.
Due to the nature of the consolidated entity's activities, it is not
considered appropriate to increase assets by the possible benefit, details of
which are set out in note 4.
f) Employee entitlements
Wages, salaries and annual leave
The provisions for employee entitlements to wages, salaries and annual leave
represent present obligations resulting from employees' services provided up
to the balance date, calculated at undiscounted amounts based on current wage
and salary rates including related on-costs.
Long service leave
The provision for employee entitlements 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.
Notes to the financial statements
g) Advances to controlled entities
Advances by the Company to controlled entities (refer note 9) are principally
contributions toward the SASE Demonstration Plant and exploration expenditure.
The value and recoverability of these amounts is related to the Company's
policies on the Demonstration Plant and exploration and evaluation expenditure
as described in notes 1(h) and 1(l). Should the underlying asset values be
insufficient to recover the advances the amounts are written down or written
off.
h) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of
each separate identifiable area of interest. These costs are only carried
forward where right of tenure of the area of interest is current and to the
extent that they are expected to be recouped through successful development
and commercial exploitation or, alternatively, sale of the area or where
activities in the area have not yet reached a stage which permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in the
period in which the decision to abandon the area is made.
Government Grants received relating to exploration activities are offset
against exploration and evaluation expenditure.
i) Goodwill
Goodwill represents the excess of the purchase consideration plus incidental
costs over the fair value of identifiable net assets acquired on the
acquisition of a controlled entity.
Goodwill associated with the purchase of equity in SASE Pty Ltd is amortised
on a straight line basis over 20 years. The policy regarding amortisation
will be reviewed on a regular basis as the project is in a developmental
phase.
j) Cash
For the purpose of the statements of cash flows, cash includes:
i) cash on hand and at call deposits with banks or financial
institutions, net of bank overdrafts; and
ii) investments in money market instruments with less than 14 days to
maturity.
k) Revenue
Revenue from the sale of goods is recognised when control of the goods passes
to the customer.
Interest revenue is recognised as it accrues.
Revenue from the rendering of a service is recognised upon the delivery of the
service.
l) Demonstration Plant
Costs associated with the construction and operation of the iron ore smelting
demonstration plant are capitalised until such time as an assessment of the
commercial viability of the plant is determined. If a decision is made to
proceed to commercial development of smelting operations, the accumulated
costs will be amortised against future revenue streams.
Notes to the financial statements
m) Leases
Leases where substantially all the risks and benefits incidental to the
ownership of the asset, but not the legal ownership, are transferred to
entities in the consolidated entity are classified as finance leases. Finance
leases are capitalised, recording an asset and a liability equal to the
present value of the minimum lease payments, including any guaranteed residual
values at the inception of the lease. Lease payments are allocated between
the reduction of the lease liability and the lease interest expense for the
period. Leased assets are amortised on a straight line basis over their
estimated useful lives where it is likely that the consolidated entity will
obtain ownership of the asset or over the term of the lease.
Lease payments for operating leases, where substantially all the risks and
benefits remain with the lessor, are charged as expenses in the periods in
which they are incurred.
n) Payables
Liabilities are recognised for amounts to be paid in the future for goods or
services received, whether or not billed to the Company or consolidated
entity. Trade accounts payable are normally settled within 60 days.
o) 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 incurred is not recoverable
from the Australian Tax 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 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.
p) Recoverable amount of non-current assets valued on cost basis
The carrying amounts of non-current assets valued on the cost basis, other
than exploration and evaluation expenditure carried forward (refer note 1(h)),
are reviewed to determine whether they are in excess of their recoverable
amount at balance date. If the carrying amount of a non-current asset exceeds
its recoverable amount, the asset is written down to the lower amount. The
write-down is recognised as an expense in the net profit or loss in the
reporting period in which it occurs.
Where a group of assets working together supports the generation of cash
inflows, recoverable amount is assessed in relation to that group of assets.
In assessing recoverable amounts of non-current assets the relevant cash flows
have not been discounted to their present value, except where specifically
stated.
q) Government Grants
Grants received by the consolidated entity in respect of its exploration and
development activities in South Australia are offset against the asset to
which they relate unless the grant provides for repayment whereby it is
recognised as a liability (refer note 15).
Notes to the financial statements
r) Reclassification of financial information
Some line items and sub-totals reported in the previous financial year have
been reclassified and repositioned in the financial statements as a result of
the first time application on 1 July 2000 of the revised standards AASB 1018
Statement of Financial Performance, AASB 1034 Financial Report Presentation
and Disclosures and the new AASB 1040 Statement of Financial Position.
Adoption of these standards has resulted in the transfer of the reconciliation
of opening to closing accumulated losses from the face of the statement of
financial performance to note 19 (b).
Revenue and expense items previously disclosed as abnormal have been
reclassified and are now disclosed as individually significant items in note
3.
These items are no longer identified separately on the face of the
statement of financial performance.
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
2. REVENUE FROM ORDINARY ACTIVITIES
Revenue from operating activities
Sales revenue * 10,038 - - -
Other revenue
- management fees - - 1,580,000 990,000
- interest received 796,853 409,157 656,977 104,035
806,891 409,157 2,236,977 1,094,035
* Sales revenue represents Pig Iron scrap sales.
3. LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX
Loss from ordinary activities before income tax
has been determined after charging/(crediting)
the following:
Borrowing costs expense:
Finance lease charges 15,215 5,462 15,215 5,462
Interest paid to third
parties - 30,114 - 30,114
15,215 35,576 15,215 35,576
Provision for annual leave 56,883 54,021 56,883 54,021
Provision for long service
leave 246,474 51,526 246,474 51,526
Provision for employee
bonuses 420,000 - 420,000 -
Provision for directors'
retirement allowance 225,000 - 225,000 -
Depreciation of plant and
equipment 40,492 16,788 38,576 16,307
Depreciation of buildings 718 - - -
Net loss on disposal of plant
and equipment 5,233 - 5,233 -
Amortisation of leased motor
vehicles 33,157 13,829 33,157 13,829
Amortisation of goodwill 292,725 146,363 - -
Rental expense on operating
leases 58,628 49,549 58,628 49,549
Unrealised foreign exchange
gains (13,066) (462) - -
Individually significant items included in loss
from ordinary activities before income tax
Write-off of expenditure on
exploration areas in
Indonesia and associated
expenses 212,724 10,338,647 212,724 -
Write off inter-company
advance - - - 10,338,647
Write-off Indonesian
Investment 2,583,165 - 3,679,000 -
Fee paid for cancellation
of options - 750,000 - 750,000
2,795,889 11,088,647 3,891,724 11,088,647
Notes to the financial statements
On 4 December 2000, AuIron Energy Limited completed negotiations for its
withdrawal from its Indonesian gold and copper exploration projects (except
Kukusan Zeolite - see note 12) through the sale of all shares in its
subsidiary MM Gold Pty Ltd, the holding company for all the Indonesian
projects. The company's Indonesian office was closed in October 2000.
Expenditures in the year related primarily to the closure of the office and
totalled $212,724.
Consideration for the sale is the cash payment of US $250,000 payable on the
earlier of either 4 September 2002 or commencement of construction of the Way
Linggo gold mine, and 2 per cent net smelter royalties on MM Gold's share of
any future production from the Tapaktuan and Salawati exploration projects
located in Sumatra and Irian Jaya.
The consideration has not been recognised in the financial statements due to
the current political uncertainty in the region. The amount will be
recognised at the time of receipt.
In 1997 the Company concluded discussions with Teck Corporation (a former
joint venture partner), whereby Teck Corporation ("Teck") would acquire 9 per
cent of the capital of MM Gold Pty Ltd ("MMG") for CDN $3 million. However,
in the event that AuIron Energy Limited decided not to float Pacific Goldfield
Limited ("PGL") or MMG by 9 July 2000, AuIron Energy Limited would purchase
the Teck interest in MMG by the issue of shares in AuIron Energy Limited to
the value of CDN $3 million.
Under the terms of the agreement with Teck Corporation set out above and by
reason of the fact that there was no float of MMG or PGL within the specified
timeframe, AuIron Energy Limited was required to purchase the Teck interest in
MMG by the issue of shares in AuIron Energy Limited (see note 17).
As a result of the issue of AuIron shares pursuant to the agreement with Teck
and the subsequent sale of all of the shares in MMG on 4 December 2000 the
group recognised a loss of $2,583,165.
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
4. INCOME TAX EXPENSE
a) The prima facie tax on operating loss from
ordinary activities is reconciled to the income
tax provided in the accounts as follows:
Prima facie income tax
attributable to
operating loss from
ordinary activities at 34%
(2000: 36 per cent) (2,903,296) (4,913,708) (2,419,714) (4,476,947)
Add: tax effect of
permanent differences 1,182,174 4,146,069 1,454,032 4,120,101
Add: future income tax
benefit of timing
differences and tax
losses not brought to
account (note 1(e)) 1,721,122 767,639 965,682 356,846
- - - -
Future income tax benefits
b)
As explained in note 1(e) it is not considered
appropriate to carry forward the possible
income tax benefit arising from
- tax losses 9,276,488 2,948,424 5,064,719 2,297,199
- other timing
differences 323,909 39,401 323,909 39,401
In addition to the above
future income tax
benefits, there is a benefit
relating to capitalised
exploration expenditure in
Australia which may be offset
against future mining revenue
derived in Australia.
(Included in tax losses
for year 2001.) - 2,859,496 - 1,885,485
Notes to the financial statements (continued)
Future income tax benefits detailed above have been restated at 30% tax rate.
The amount of tax losses for 2001 income year incorporates the prior
consolidated capitalised exploration expenditure of $2,859,496 (parent entity
$1,885,485).
As a result of the Ralph Review of Business Taxation and consequent changes to
Division 330 of the Income Tax Assessment 1997, there have been amendments to
the tax treatment of unrecouped brought forward allowable capital expenditure
relating to mining and exploration expenditure. Such deductions as at June
2000 have been converted to a tax loss. The recoupment of these losses is
dependent on the company deriving future assessable income and satisfying the
loss recoupment tests.
Country of Owned Investment at
Incorporation cost
2001 2000 2001 2000
% % $ $
5. CONTROLLED ENTITIES
The Company:
AuIron Energy Limited Australia
Controlled Entities:
Auriada Limited+ Northern Ireland 100 100 5 5
(formerly Ballymoney Power
Company Limited)
Ballymoney Power Limited+ Northern Ireland 100 100 5 5
(formerly Meekatharra (NI)
Limited)
Balhoil Nominees Pty
Limited Australia 100 100 838,928 838,928
South Australian Coal
Corp Pty Australia 100 100 2 2
Limited
SASE Pty Ltd Australia 90 90 14,504,131 14,500,628
Pacific Goldfields Ltd+ Canada 100 100 1 1
MM Gold Pty Limited * Australia - 91 - 2
MM Gold (S) Pte Limited* Singapore - 100 - 3,501
Natarang Offshore Pty
Limited * Australia - 100 - -
Paragon Resources
(Hong Kong) Ltd* Hong Kong - 100 - -
PT Natarang Mining * Indonesia - 85 - -
PT Paragon Perdana Mining* Indonesia - 70 - -
PT Mineralindo MAS
Salawati * Indonesia - 90 - -
PT Mineralindo MAS
Tapaktuan * Indonesia - 90 - -
PT Mineralindo MAS Aceh * Indonesia - 90 - -
15,343,072 15,343,072
All current controlled entities have 30 June balance dates.
All controlled entities are vehicles for the ownership of exploration and
development activities for the consolidated entity.
* No longer controlled entities as a result of disposal described in
note 3.
+ Audited by BDO affiliate
Notes to the financial statements (continued)
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
6. CASH
Cash at bank and on hand 563,469 258,231 292,763 83,884
Short-term deposits 5,617,075 12,489,528 5,617,075 1,853,498
6,180,544 12,747,759 5,909,838 1,937,382
7. RECEIVABLES (CURRENT)
Other debtors 664,157 29,690 109,553 28,856
8. OTHER (CURRENT)
Prepayments 113,441 19,265 113,441 19,265
9. RECEIVABLES (NON-CURRENT)
Advances to controlled
entities (note 1 (g) ) - - 35,218,618 17,640,788
Advances to controlled entities include contributions to SASE Demonstration
Plant and exploration expenditure incurred on exploration in Northern Ireland
and South Australia.
10. INVESTMENTS (NON-CURRENT)
The investments included in the accounts
comprise:
Controlled entities at cost (note 5) - - 15,343,072 15,343,072
Notes to the financial statements
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
11. PROPERTY PLANT AND EQUIPMENT
Plant & Equipment - at cost 211,544 448,767 205,396 250,584
Less: Accumulated depreciation (80,336) (144,900) (79,157) (124,900)
131,208 303,867 126,239 125,684
Land & Buildings - at cost 172,337 - - -
Less: Accumulated depreciation (718) - - -
171,619 - - -
Leased Motor Vehicles 283,000 283,000 283,000 283,000
Less: Accumulated amortisation (46,986) (13,829) (46,986) (13,829)
236,014 269,171 236,014 269,171
Total Property, Plant & Equipment 538,841 573,038 362,253 394,855
SASE Demonstration Plant - at cost 26,472,111 8,943,331 - -
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and
equipment at the beginning and end of the current financial year are set out
below.
SASE Freehold Plant and Leased motor Total
demonstration land and equipment vehicles
plant buildings
Consolidated
Carrying amount at 1 8,943,331 - 303,867 269,171 9,516,369
July 2000
Additions 17,528,780 172,337 44,364 - 17,745,481
Disposals - - (176,531) - (176,531)
Depreciation/ - (718) (40,492) (33,157) (74,367)
amortisation expense
(note 3)
Carrying amount at 30 26,472,111 171,619 131,208 236,014 27,010,952
June 2001
The Company
Carrying amount at 1 - - 125,684 269,171 394,855
July 2000
Additions - - 44,364 - 44,364
Disposals - - (5,233) - (5,233)
Depreciation/ - - (38,576) (33,157) (71,733)
amortisation expense
(note 3)
Carrying amount at 30 - - 126,239 236,014 362,253
June 2001
Notes to the financial statements
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
12. EXPLORATION EXPENDITURE
Exploration expenditure carried forward in
respect of mining areas of interest:
Expenditure relating to
projects at
beginning of period 18,595,506 27,179,891 4,698,357 4,690,628
- exploration & development
phases 6,443,126 2,293,534 12,469 163,812
- Grants - (750,000) - -
- expenditure written off during the - (10,544,730) - (156,083)
year
- exchange difference on
translation of
opening balances 2,005,019 416,811 - -
Expenditure carried forward at
30 June 27,043,651 18,595,506 4,710,826 4,698,357
The above exploration and evaluation expenditure has been incurred largely in
respect of coal deposits in Australia and Northern Ireland. Specifically the
costs relate to drilling, extraction of the trial pit coal sample, the
completion of reports dealing with geological, hydrological, geotechnical and
environmental studies, together with mine plans and capital and operating cost
studies.
The ultimate recoupment of this expenditure is dependent on the successful
development and commercial exploitation or, alternatively, sale of these areas
of interest.
30 June 2001 30 June 2000
Interest Interest
% %
TENEMENTS
a) Indonesia
Natarang Mining Project (1) Sumatra - 85
Kukusan Project (2) Sumatra 70 70
Ciemas Project * West Java - 55
Banda Aceh * Sumatra - 45
Tapaktuan * Sumatra - 45
Kepala Burung * Irian Jaya - 45
(1) The Company's interest was subject to the payment of a 1.85 per cent
net smelter return royalty which was capped at US $3,500,000 of which US
$250,000 had been prepaid.
(2) The Company's interest is subject to a 10 per cent net profit royalty.
* During the year the consolidated entity disposed of its Indonesian
interests, other than its interest in the Kukusan Zeolite Project,
further details of which are included in note 3 above. Under the Share
Sale Agreement, AuIron will continue to be entitled to the benefit, and
subject to the burden, of the shareholding in Paragon Resources (Hong
Kong) Limited, the 70 per cent owner of the Kukusan Zeolite Project.
Minimum exploration expenditure commitments to satisfy the mineral tenements
have been met until 2002.
b) South Australia
Under the terms of an agreement between AuIron Energy Limited and Kumagai
Australia Pty Ltd, Kumagai has an interest of 8.34% in the total Arckaringa
Project (not including the Phillipson or SASE Projects).
Minimum expenditure requirements to retain all South Australian current rights
of tenure are approximately $305,000 over the next 12 months.
Notes to the financial statements
c) Northern Ireland
Minimum expenditure requirements to retain current rights of tenure are GBP
60,000 per annum until expiry of the licence on 30 June 2002. These
expenditure requirements have been met to date.
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
Note $ $ $ $
13. INTANGIBLES
Goodwill on the purchase
of SASE Pty
Ltd (at cost) 5,854,504 5,854,504 - -
Less: Accumulated
amortisation (439,088) (146,363) - -
5,415,416 5,708,141 - -
14. INTEREST BEARING LIABILITIES (CURRENT)
Finance leases 24(b) 31,068 30,465 31,068 30,465
INTEREST BEARING LIABILITIES
(NON-CURRENT)
Finance leases 24(b) 208,495 239,149 208,495 239,149
15. GOVERNMENT GRANT (NON-CURRENT)
Grant from Federal
Government 6,205,713 5,830,842 - -
The terms of the Federal Government Research & Development Grant require that
upon successful completion of the Demonstration Plant Project, an independent
evaluation of the market value of the plant will be undertaken, of which 50%
of such value will be repayable with applicable interest to the Commonwealth
over a maximum 2 year period. Should the plant not prove commercially
feasible the Commonwealth may require repayment of the Grant with applicable
interest.
16. PROVISIONS (CURRENT)
Employee entitlements 1,002,448 131,338 1,002,448 131,338
PROVISIONS (NON-CURRENT)
Employee entitlements 77,247 - 77,247 -
Number of employees at
year end 12 9 12 9
Directors' retirement allowance
The AuIron Energy Limited Directors' Retirement Allowance provides retiring
directors with a maximum of four (4) times average annual remuneration over
the three years prior to retirement.
The Company's liability for directors' retirement benefits, which is based on
the number of years service provided at the balance date, has been included in
employee entitlements.
Notes to the financial statements
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
17. CONTRIBUTED EQUITY
Issued and paid up
capital 261,381,386
(2000: 216,668,862) 89,110,335 65,207,589 89,110,335 62,607,589
ordinary shares
950,000 ordinary
shares paid to one
cent - 9,500 - 9,500
89,110,335 65,217,089 89,110,335 62,617,089
Movement in Share Capital
2001 2000 2001 2000
No. No. No. No.
Number of shares at beginning
of the financial
period 216,668,862 119,727,404 216,668,862 119,727,404
Shares issued during the year
44,712,524 96,941,458 44,712,524 96,941,458
Number of shares on issue at
the end of the financial
period 261,381,386 216,668,862 261,381,386 216,668,862
Balance of share capital at
the beginning of the
financial period 65,217,089 45,842,201 62,617,089 43,242,201
Proceeds of shares issued 25,231,398 13,808,114 25,231,398 13,808,114
Value, at date of issue, of
shares issued to Teck
Corporation 3,679,000 - 3,679,000 -
Value, at date of issue, of
shares issued to Ausmelt - 6,000,000 - 6,000,000
Issue costs * (2,417,152) (433,226) (2,417,152) (433,226)
Share premium of former
subsidiary no longer
consolidated (2,600,000) - - -
Balance of share capital at
the end of the financial
period 89,110,335 65,217,089 89,110,335 62,617,089
* Issue costs include $626,230 relating to the 2001 Rights Offer, the
capital for which will be recognised in the 30 June 2002 financial year.
Details of significant movements in share capital:
During the year 30 June 2001, the Company issued 26,150,000 shares at 25 pence
sterling (A$0.65) per share raising net funds of $14,922,302.
5,975,024 shares were issued to Teck Corporation and a placement of 7,000,000
shares at 90 cents was made in April 2001.
Share capital included 950,000 ordinary shares paid to 1 cent, which were
issued to Meekatharra (ESIP) Pty Limited. To rank pari passu with other
ordinary shares, the shares required calls to be made by the Company and
payment by the holders of $1,018,500. Voting rights of these shares were
restricted to the percentage of the paid up value. During the year, the
outstanding payments were received and the shares fully paid up. As a result
the holders were entitled to the benefit of a previous bonus issue. In
addition, the holders took up their rights under the Company's December 1999
Rights Issue.
Notes to the financial statements
As at As at
30 June 30 June
2001 2000
Details of options: Number Number
The Company has granted the following options over Ordinary
fully paid shares exercisable:
@ $0.36 on or before 25 October 2000 (1) - 1,225,000
@ $0.24 on or before 30 June 2001 (2) - 2,200,000
@ $0.30 on or before 30 November 2003 (3) 500,000 1,000,000
@ $0.30 on or before 18 October 2005 1,060,000 1,060,000
@ $0.45 on or before 31 October 2002 or
@ $0.90 on or before 31 October 2004 7,500,000 7,500,000
@ $0.77 on or before 8 September 2005 (4) 5,500,000 -
@ $1.10 on or before 8 September 2005 (5) 150,000 -
(1) 1,225,000 options due to expire on 25 October 2000, were
exercised at 36 cents during the year ended 30 June 2001.
(2) 2,200,000 options convertible on or before 30 June 2001 were
exercised at 24 cents during the year ended 30 June 2001.
(3) In December 2000, 500,000 shares were issued to option holders
who exercised the 30 November 2003 options at $0.30 each. The total amount
received was $150,000.00.
(4) In September 2000, 5,300,000 options were issued, which are
exercisable on or before 8 September 2005 at $0.77. A further 200,000 were
issued on the same terms in February 2001.
(5) In February 2001, 150,000 options were issued, which are
exercisable on or before 8 September 2005 at $1.10.
2001 2000
18. EARNINGS PER SHARE
Basic earnings / (loss) per share (cents) (3.4) (7.47)
Diluted earnings / (loss) per share (cents) (3.2) (6.97)
Weighted average number of ordinary
shares on issue used in the calculation of
basic earnings per share 247,497,237 180,586,573
As at 30 June 2001, the Company has issued options over unissued capital
detailed in note 17 above.
The EPS calculation does not take into account shares issued subsequent to
balance date as disclosed in note 31.
Notes to the financial statements
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
19. RESERVES AND ACCUMULATED LOSSES
(a) Composition
Capital profits 4,285,362 4,285,362 4,285,363 4,285,363
Foreign currency
translation 2,475,023 (1,186,374) - -
6,760,385 3,098,988 4,285,363 4,285,363
Movement
Foreign currency translation
Balance at beginning
of financial period (1,186,374) (1,585,317)
Translation of assets
and liabilities of
foreign operations
and de-recognition of
translation reserve as
a result of disposal of
Indonesian interests 3,661,397 398,943
Balance at end of
financial period 2,475,023 (1,186,374)
(b) Accumulated Losses
Accumulated losses at
the beginning of
the financial year (34,320,387)(20,751,807) (27,327,147) (14,891,183)
Net loss attributable
to members of AuIron
Energy Limited (8,345,232)(13,568,580) (7,116,805) (12,435,964)
Accumulated losses at
the end of the
financial year (42,665,619)(34,320,387) (34,443,952) (27,327,147)
20. OUTSIDE EQUITY INTEREST IN CONTROLLED
ENTITIES
Interest in:
Share capital 961,070 961,070
Reserves - 257,144
Accumulated losses (274,482) (80,609)
686,588 1,137,605
Notes to the financial statements
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
21. CASH FLOW INFORMATION
(a) Reconciliation of cash flow from
operations with operating loss after
income tax
Operating loss after
income tax (8,539,105) (13,649,189) (7,116,805) (12,435,964)
Cash flows in operating activities but not
in operating result:
- Capitalised
exploration
expenditure (5,643,126) (1,781,845) (12,469) (21,115)
Non-cash flows in operating result:
- Exploration
expenditure
written-off - 10,338,647 - -
- Write off
intercompany
advance - - - 10,338,647
- Write off
Indonesian
investment 2,583,165 - 3,679,000 -
- Amortisation of
leased motor
vehicles 33,157 13,829 33,157 13,829
- Depreciation 41,210 16,788 38,576 16,307
- Charges to
provisions 948,357 105,547 948,357 105,547
- Management fees - - (1,580,000) (990,000)
- Net unrealised
exchange (gain) (13,066) (462) - -
- Goodwill
amortisation 292,725 146,363 - -
Changes in assets and liabilities:
- Decrease/(Increase)
in debtors (634,467) (12,905) (80,697) (18,604)
- Decrease/(Increase)
in prepayments (94,176) 58,254 (94,176) (19,265)
- (Decrease)/Increase
in trade creditors
and accruals 763,745 (259,600) 1,176,409 (41,438)
Net cash used in
operating
activities (10,261,581) (5,024,573) (3,008,648) (3,052,056)
(b) Non cash financing and investing activities
The Company issued 5,975,024 shares to acquire Teck Corporation's 9 per
cent holding in MM Gold Pty Limited (see notes 3 and 17).
Notes to the financial statements
22. RELATED PARTY TRANSACTIONS
(a) Transactions between related parties are on normal commercial terms
and conditions unless otherwise stated.
(b) The parent company provides finance and certain management services
to its controlled entities.
In respect of SASE Pty Ltd (90% interest), AuIron Energy Limited
during the year charged SASE Pty Ltd a management fee of $1,580,000 (2000:
$780,000). The fee primarily represents the cost of management time
directed to the SASE Project. At 30 June 2001 the amount receivable by
AuIron Energy Limited from SASE Pty Ltd was $12,012,046 (2000: $689,987).
Ausmelt Limited is a substantial shareholder of AuIron Energy
Limited, which holds a 90% interest in SASE Pty Ltd. During the year
Ausmelt Pty Limited provided goods and services on commercial terms to SASE
totalling $3,596,200 (2000: $734,644) of which $637,377 (2000: $493,266) was
payable at 30 June 2001.
(c) The aggregate number of shares and share options held by directors
of the Company and the consolidated entity and their director-related
entities at balance date are detailed below:
CONSOLIDATED
Number
2001 2000
Ordinary Shares 2,209,159 1,159,159
Options
October 2000 - 950,000
November 2003 500,000 1,000,000
September 2005 4,150,000 -
October 2005 800,000 800,000
Directors and their related entities were granted 4,150,000 options to acquire
ordinary shares in AuIron Energy Limited during the financial year, exercised
950,000 October 2000 options, 500,000 November 2003 options and sold 400,000
ordinary shares.
The relevant interest of each director in the share capital of the companies
within the consolidated entity as at 30 June 2001 is detailed in the
Director's Report.
23. CONTINGENT LIABILITIES
The bankers of the consolidated entity have provided guarantees
amounting to $300,000 (2000: $51,000) on behalf of the consolidated entity.
The consolidated entity has contractual agreements which provide for success
fees to third parties that will only be payable upon reaching financial close
of the SASE Pig Iron project.
Notes to the financial statements
CONSOLIDATED THE COMPANY
2001 2000 2001 2000
$ $ $ $
24. COMMITMENTS FOR EXP
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