RNS Number:5737Q
Ballarat Goldfields N.L.
30 August 2005
Ballarat Goldfields advises it has lodged the ANNUAL REPORT for the
period ending 30 June 2005.
The formatted Annual Report lodged with the Australian Stock Exchange as a PDF
including pictures is available at our website:
www.ballarat-goldfields.com.au
Paste the following URL into your Web Browser to view the formatted Annual
Report
http://www.ballarat-goldfields.com.au/documents/AnnualReport2005ASXRelease30August2005.pdf
BALLARAT GOLDFIELDS N.L.
-------------------------
A.C.N. 006245441
ANNUAL REPORT 2005
Company Particulars
-------------------
Directors
Colin Smith - Chairman
Richard Laufmann - Managing Director
Mike Etheridge
Alister Maitland
Company Secretary and Financial Controller
Amber Rivamonte
Registered Office
10 Woolshed Gully Drive Mt Clear Victoria 3350 Australia
Telephone: (03) 5327 1111 Facsimile: (03) 5331 7927
www.ballarat-goldfields.com.au
Share Registry
Computershare Investor Services Pty Ltd
GPO Box 2975 Melbourne Victoria 3001 Australia
Investor Enquiries Telephone: 1300 850 505
Telephone: (03) 9415 5000 Facsimile: (03) 9473 2500
www.computershare.com
Auditor
PricewaterhouseCoopers Chartered Accountants
GPO Box 1331L Melbourne Victoria 3001 Australia
Bankers
Investec Bank (Australia) Limited
Level 31 The Chifley Tower 2 Chifley Square
Sydney New South Wales 2000 Australia
Australia and New Zealand Banking Group Limited
927 Sturt Street Ballarat Victoria 3350 Australia
Lawyers
Baker & McKenzie Solicitors
Rialto Level 39 525 Collins Street
Melbourne Victoria 3000 Australia
Nomad
RFC Corporate Finance Ltd
Level 14 19-31 Pitt Street
Sydney New South Wales 2000 Australia
UK Broker
Numis Securities Ltd
Cheapside House 138 Cheapside
London EC2V 6LH United Kingdom
UK Share Registry
Computershare Investor Services PLC
PO Box 82 The Pavilions Bridgwater Road
Bristol BS99 7NH United Kingdom
Stock Exchange Listing
Ballarat Goldfields NL is listed on the Australian Stock Exchange and the
Alternative Investment Market (AIM) of the London Stock Exchange
Stock Exchange Codes
ASX and AIM Code for Shares: BGFASX and AIM Code for Listed Options: BGFO
Contents - Page
Company Particulars - Inside Cover
Chairman and Managing Director's Statement - 2-3
Directors' Report - 4-20
Auditors' Independence Declaration - 21
Corporate Governance Statement - 22-24
Financial Report - 25
Statements of Financial Performance - 26
Statements of Financial Position - 27
Cash Flow Statements - 28
Notes to the Financial Statements - 29-40
Directors' Declaration- 41
Independent Audit Report to the Members - 42
Shareholder Information - 43
Tenement Information - 44
Ballarat Goldfields N.L.
A.C.N. 006 245 441
> Chairman and Managing Director's Statement
--------------------------------------------
Vision
To become a major Australian gold producer.
To the Shareholders of Ballarat Goldfields NL;
This year's annual report emphasises the continued success your Company has had in developing the geological
understanding of the Ballarat field. Whilst much has happened, and the pace and breadth of our project has intensified,
it is the geological assets and our understanding of them that provides the key to future value.
We closed the financial year and embark upon the next one with $8.9m cash on hand, a $17m finance facility and $32.5m
in underwritten listed options due to be exercised before 30 September 2005.
As a Board we have also evolved, first with the appointment of Dr Mike Etheridge in August last year and the
appointment of Mr Alister Maitland in July this year. Whilst still a small Board, we are increasingly focused on
those areas we believe have the greatest potential to develop the Company.
With the current focus well and truly on the underground development which began in December 2004, and the continued
drilling success evident in our resource upgrade, there have been a number of other equally significant events to
highlight this year:
> listing on the Alternative Investment Market (AIM) of the London Stock Exchange,
> acquiring the mining licences to the Ballarat South, and
> securing bridging finance.
These initiatives have been important and visible indicators that the Company has the plans, support, and initiative
to grow.
We have consistently stated, to unlock the value of the Ballarat field, we must systematically and methodically
develop our geological understanding. This has been and continues to be the fundamental focus of the Company.
Following a substantial increase in our gold resources and positive indications from the optimisation studies,
we made a decision to bring construction of the process plant forward and to begin production in the December
quarter of 2005 This will enable the Company to develop key information about the mining method, nugget effect and
process recoveries. This data is crucial to our ability to refine the development plan. The early start up will enable
us to assimilate real information into an extended ramp up phase, further reducing the risk of the project as we
develop the production areas.
Development on all fronts is now firmly underway, with three main decline headings, and the ventilation shaft well
advanced. Earthworks on the plant site have commenced. The design of stage 1 plant has been finalised and
construction committed.
As has become our way, we believe it is desirable to restate our key assumptions. These provide a framework for our
decision making, and give context to our planning:
> We believe the medium term outlook for the global economy is uncertain and that gold, and un-hedged gold stocks,
will be seen as an attractive investment.
> Project debt, encumbered with the customary hedge contracts, will limit a company's upside in this climate.
> Large prospective gold resources, in politically stable (low sovereign risk) countries are increasingly valuable.
> Ballarat is a region that has distinguished itself in the past as a host to large scale economic mineralisation.
> Limited drilling and comprehensive geological modeling have confirmed the presence of a meaningful inferred resource
and more importantly an exploration potential of world class dimensions.
> The key to maximizing value is in the systematic and methodical development of our geological understanding and our
resource base.
> We believe the key to long term sustained value creation for the company lies in our ability to bring the Ballarat
East project into profitable production, thereby providing a source of funds to define the resource of the larger
Ballarat field and to grow the production rate to its theoretical maximum.
> Successful development of the Ballarat field will provide the platform from which the Company can expand within
the Australian and International gold industry.
In addition to the Ballarat East project, we have a project portfolio at Ballarat which is the envy of many.
To leave this unattended would be very short sighted. We will continue our progressive exploration of these projects,
as combined they provide significant potential upside to the company's future.
BGF is a quickly evolving company. As a junior explorer, we have made real and quantifiable progress towards our
stated vision. We have maintained our independence and this year will push the project toward a set of important
milestones.
We trust the above gives you a framework within which you can assess our performance and understand the context in
which we make decisions. We enter our next phase excited and optimistic about the future of BGF.
Finally, we would like to note the incredible support our company has received during the year. The Ballarat
community, our suppliers, contractors and employees, have all made substantial contributions to ensure we
continue to forge ahead.
Colin Smith
Chairman
Richard Laufmann
Managing Director
> Directors' Report
--------------------
Your Directors present their report on the consolidated entity consisting of Ballarat Goldfields NL (BGF) and the
entities it controlled at the end of, or during, the year ended 30 June 2005.
Review of Operations
During the year, the Company successfully raised $27.2 million (before costs) by way of an institutional placement
of 73.3 million fully paid ordinary shares at 9.5 cents per share and a fully underwritten renounceable 2 for 5 rights
issue at 9.0 cents per share.
We outlined the primary use of these funds as:
> To carry out a combination of exploration and resource definition drilling on geological targets identified on the
First Chance Line and the Sulieman Line. Advance exploration of the Berringa prospect and improve our understanding of
Ballarat West initially via drilling the Yarrowee Creek targets.
> Extending the existing decline a further 1km along strike, including associated development for return ventilation
and construction of a ventilation shaft.
> Provide working capital to support the company during the next stage including the completion of a final Feasibility
Study on the Ballarat East Project.
Progress in line with these objectives was extremely pleasing. On 23 February 2005 we announced a significant upgrade
in our inferred resource and exploration potential. This was followed with the announcement of a bridging finance
facility, effectively allowing work to continue uninterrupted ahead of the exercise of the listed options due to
expire in September. As a consequence of the finance and the early availability of access to mineralisation we
have also brought forward the construction of a process plant.
Exploration
As we have stated, the Directors believe "The key to maximising value is in the systematic and methodical
development of our geological understanding and our resource base".
During the year, BGF increased its Inferred Mineral Resources at Ballarat East by over 400,000 ounces to 1.1
million ounces. In addition we published an increase in our total Exploration Potential to 9.2 million ounces.
This is the result of additional drilling and the acquisition of mining lease MIN4847. The Inferred Mineral
Resources have been reported in accordance with the 2004 JORC Code.
Key features of the new resource estimate at Ballarat East included:
> The top cut grade has been reduced from 145g/t to 85g/t.
> BGF's interpretation of the assay data is that the 85g/t cut off grade excludes the very coarse gold
(i.e. gold particles >1.2mm) in the estimate.
> Significantly, metallurgical test work by BGF and historical data indicate that up to 50% of the total
gold recovered is very coarse (i.e. gold particles >1.2mm). BGF in its projections has taken a conservative
approach and add back 20% to account for the coarse gold either top cut or not sampled by drilling.
> On this basis the estimated Inferred Resource based on drilling to December 2004 is 3.1Mt @ 11g/t for 1.1
million ounces.
Possible grade ranges depending on assumptions of the very coarse gold content are:
> 3.1Mt @ 9g/t for 0.9 million ounces (0% very coarse gold)
> 3.1Mt @ 18g/t for 1.8 million ounces (50% very coarse gold)
BGF has continued to refine its geological model in light of new information from drilling at both Ballarat East
and Ballarat West and the data from the acquisition of mining lease MIN4847 (Ballarat South). The latter has given
BGF access to the southern extension of the mineralised trends from the Ballarat East project.
The results of current drilling have improved BGF's confidence in the Exploration Potential of the Ballarat field,
as key geological features associated with the gold mineralisation are confirmed. Ballarat Goldfields and its entities
control 100% of the Ballarat and Berringa licences.
The expanded Ballarat portfolio is divided into three project areas: Ballarat East (based on the existing
pre-feasibility study area and further extensions), Ballarat South and Ballarat West.
The Exploration Potential for BGF on its Ballarat licences has been upgraded to 8.3 million ounces as follows:
> Ballarat East - 4.5 million ounces
> Ballarat West - 1.1 million ounces
> Ballarat South - 2.7 million ounces
BGF has published its definition of Exploration Potential, determined by discounting a much larger target inventory
for risk and uncertainty. The Exploration Potential for the Ballarat field of 8.3 million ounces has a 90% confidence
range of 2.8 million ounces to 14.4 million ounces.
A summary of the Inferred Resources and Exploration Potential of BGF are provided in the table below. The total
portfolio has increased from 6.7 million ounces in June 2003 to 10.3 million ounces at December 2004.
It is clear that the projects in the Ballarat portfolio provide genuine exploration opportunities, based on
geological insights and drill data that is significantly advanced compared to traditional greenfields targets.
In order to unlock this value, BGF will present a plan for their progressive development during the coming year.
CategoryProject Tonnes Grade Dec 04 Dec 04 June 03 oz (M)Range oz (M)oz (M)
Inferred ResourceBallarat East3,000,00011g/t1.10.9 - 1.80.7
Exploration Potential
Ballarat East4.51.9 - 7.44.0
Ballarat West1.1*0.15 - 2.31.5
Ballarat South2.70.7 - 4.70.5
Berringa0.90.5 - 1.30.0
TOTAL Exploration Potential9.26.0
*The lower Ballarat West value reflects a reclassification of the Yarrowee Creek target from Ballarat West to Ballarat
East due to recent drilling results.
Ballarat East Underground Development
The objective of the underground development plan at Ballarat East is to simultaneously develop a drilling platform
for the 3.5km strike length of the project identified in the pre feasibility, which converts to the operation decline
when mining begins.
In doing so, the underground infrastructure is being developed at a size and with a layout to support the future
production requirements of the project.
The decline is being developed on three fronts. To the north the Sulieman decline will serve as a drilling platform,
and be converted in time to a return ventilation drive. We are also developing the First Chance decline,
the main access and haulage horizon for internal development to the north. This twin decline arrangement,
will allow the company to develop under the City of Ballarat without the need for exhaust ventilation shafts
within the City.
To the south the Woah Hawp decline provides access to the southern extension of the field. In addition a
ventilation drive is being established to connect to the North Prince Extended ventilation shaft.
The North Prince Extended ventilation shaft was developed to a total depth of 54.5m, as at 30 June 2005.
The design depth of this shaftis 127m.
The combined development during the year in these headings was over 1,000m.
Ground conditions encountered have been as expected. However, mine decline development rates were lower than
targeted when traversing four cross cutting structures (between 3 and 12m wide) and one fault system (12m wide).
The company is progressively developing new procedures to deploy when poor ground is encountered.
Additional equipment has been mobilised to accelerate the development rate, as this controls the rate of production.
Process Plant
The commissioning of the gravity concentration circuit and production of first gold will occur in the December
quarter 2005.
Gekko Systems which is recognised as a global leader in gravity separation technology, is headquartered in Ballarat
and has been engaged to design and construct the key elements of the process plant.
The nature of the coarse gold distribution makes the ore particularly amenable to gravity recovery.
In order to capitalise on this characteristic, the design has eliminated any form of conventional grinding
(SAG or ball mills) which flattens the coarse gold and reduces the effectiveness of gravity recovery.
The design now incorporates 2 stage crushing, with a 3rd stage vertical shaft impact crusher replacing
conventional milling. Provision has been made for high pressure rolling to be deployed in the future.
The initial plant capacity is 600,000 tonnes per annum with an estimated stage 1 cost of $22 million.
A major feature of the design is its upside flexibility. The design brief has been to build a plant that will
provide maximum gravity recovery, whilst incorporating the design and layout flexibility to accommodate other ore
sources, and incremental expansion as mine production increases. The crushing circuit has a much higher capacity, and
will only operate on dayshift during stage 1.
Safety
BGF's health and safety policy, sets the foundation for our approach and commitment to Occupational Health and
Safety (OH&S).
As our operations evolve, the number of people employed by the company and its contractors, and the range of
activities we undertake, is growing rapidly. In line with this, our OH&S systems are being developed to be
consistent with the requirements of the Australian Standards AS/NZS ISO 4801.
We regret to report a total of 4 lost time injuries during the year.
Environment
BGF is committed to balancing economic, environmental and social values in all areas of our operations.
A range of environmental laws and regulations apply to BGF's operations. All exploration and development is
conducted in accordance with our Environmental Effects Statement (EES) and work plans, approved by the Victorian
Department of Primary Industries.
As part of our ongoing commitment to improving our performance in this area BGF is developing its Environmental
Management System which is consistent with the guidelines set out in the Australian Standard AS/NZ ISO 14001.
The Company regularly monitors a range of environmental effects such as water discharge, noise, dust and blast
vibration. An important aspect of this monitoring is the feedback to the community. This is achieved in various
ways including:
> Review of activities by the Environmental Review Committee which includes community representatives
> Newsletters posted to neighbours and interested parties
> Visits to immediate neighbours
Mine water is discharged from the site into Yarrowee Creek, in accordance with the licence conditions issued by the
Victorian Environmental Protection Authority (EPA). During the year the company upgraded its monitoring and installed
"new technology" stream gauging and discharge monitoring stations.
Community
BGF is maturing from a relatively small employer to a much larger entity, with a total work force at the time of
writing in excess of 100 people.
Our community policy reflects our desire to continually improve our relationships, based on mutual understanding.
To achieve this we strive to:
> Communicate in an open and transparent manner
> Engage and consider differing opinion
> Respect diversity and protect cultural heritage
> Conduct ourselves in a manner consistent with our stated values.
For more details on the project, its location and description, as well as copies of our community newsletters,
please visit the company website.
Sustainability
Ballarat is an historical city, built on the gold rushes of the late 19th and early 20th century. The city is a
thriving testament to the definition of sustainability.
BGF has adopted 'The World Commission on Environment and Development (the Brundtland Commission)'
definition of sustainable development:
"Development that meets the needs of the present without compromising the ability of future generations
to meet their own needs."
In other words, development is essential to satisfy human needs and improve the quality of human life.
At the same time, development must be based on the efficient, responsible use of society's scarce and
fragile natural resources.
Directors
The following persons were Directors of Ballarat Goldfields NL (BGF) during the whole of the financial year
and up to the date of this report:
> Colin Smith
> Richard Laufmann
> Nicholas Mather - was a Director from the beginning of the financial year until his resignation on 27 August 2004.
> Mike Etheridge - was appointed a Director on 18 August 2004 and continues in office at the date of this report.
> Alister Maitland - was appointed a Director on 22 July 2005 and continues in office at the date of this report.
Principal activities
During the year the principal undertaking of the consolidated entity continued to be its investment in surface and
underground gold exploration and decline development.
Significant changes in the state of affairs
In the opinion of the Directors, other than matters reported in the Directors' Report and in the Chairman and
Managing Director Statement, there were no significant changes in the state of affairs of the consolidated entity
during the year ended 30 June 2005.
Likely developments and expected results of operations
The operations of the consolidated entity are anticipated to be the continuation of surface and underground
exploration and underground operations.
Dividends - Ballarat Goldfields NL
BGF is in a development phase. The Directors do not recommend that a dividend be paid.
Since the end of the previous financial year, no dividend has been declared or paid.
Loss per share
2005 2004
Cents Cents
Basic loss per share(2.89) (1.02)
Diluted loss per share(2.14) (0.99)
Matters subsequent to the end of the financial year
Since 30 June 2005, BGF has entered into an Underwriting Agreement with RFC Corporate Finance Limited with regard
to the listed options which are due to expire on 30 September 2005. These options, which were issued to shareholders
as part of BGF's Rights Issue in July 2004, are underwritten to an amount of A$32.55 million. An underwriting and
management fee totaling 5% of the underwritten amount is payable to the underwriter.
Alister Maitland was appointed a Director on 22 July 2005.
Except for the matters described above, no other matter or circumstance has arisen since 30 June 2005 that has
significantly affected, or may significantly affect:
(a)the consolidated entity's operations in future financial years, or
(b)the results of those operations in future financial years, or
(c)the consolidated entity's state of affairs in future financial years.
Information on Directors
See table below:
DirectorSpecial responsibilitiesDirectors' interests
Ordinary sharesOptions
Colin Smith Non-Executive Chairman and member9,820,0085,805,717
Dip. Mining, WASM, FAusIMMof the audit and remuneration committees
Richard Laufmann Managing Director4,777,1648,000,000
B. Eng. (Mining), MAusIMM, MAICD
Mike Etheridge Non-Executive Director and member300,0001,000,000
PhD, FTSE, FAIG, FAICDof the remuneration committee
Alister Maitland Non-Executive Director and Chairman--
B Com, FAICD, FAIM, FAIBof the audit committee and member of
the remuneration committee
Information on Directors (Continued)
> Colin Smith (Age 68) Dip. Mining, WASM,FAusIMM
Chairman
Colin has more than 40 years' experience in the minerals industry and resides in Victoria. He has extensive general
management, corporate and directorship experience in the manganese, gold, iron-ore, lead-zinc, nickel and uranium
industries. His experience includes overall responsibility for substantial surface and underground gold mining
operations. He has had extensive involvement as a consultant in the technical and management appraisal of
perations and projects for corporate and financing purposes.
Colin is also the Chairman of Consolidated Minerals Limited, an ASX listed manganese and chromite mining company
and Monarch Resources Limited, an ASX listed gold exploration company. Colin is also a Non-Executive Director of
Titan Resources Ltd in which Consolidated Minerals Ltd has a 20% interest.
Colin joined the Board on 15 October 2002
> Richard Laufmann (Age 42) B. Eng. (Mining), MAICD, MAusIMM
Managing Director
Richard has worked in the resources sector both in Australia and overseas. Prior to joining BGF, Richard headed
WMC's Gold Business as General Manager - Operations. With an operational background in both surface and
underground mining at an operational and planning level his extensive experience includes 3 years as
General Manager of St Ives Gold in Western Australia.
Richard is also a Non-Executive Director of Indophil Resources, an ASX listed company operating in the Philippines.
Richard joined the Board on 15 October 2002.
> Mike Etheridge (Age 59) PhD, FTSE, FAIG, FAICD
Director
Mike is a geologist with over 30 years' experience in exploration, mining, consulting and research.
He has specialised in the structural controls on the localisation of mineral deposits, and has been
involved with Victorian gold deposits since the mid-1970's. Until recently he was Chairman of SRK
Consulting (Australasia), having co-founded its predecessor Etheridge Henley Williams in 1990.
Mike is Chairman of TSX-V listed Geoinformatics Exploration Inc, a Director of the AIM listed Ariana
Resources Ltd and the unlisted geothermal energy company, Scopenergy Ltd. He has been a member of BGF's
External Review Panel since 2003, and has had a similar role at Bendigo Mining since 2000. He chairs the boards
of two Commonwealth research bodies in geoscience - the Predictive Mineral Discovery Cooperative Research Centre
and the Australian Centre for Earth Systems Simulation. Mike is also an Adjunct Professor at Macquarie University,
where he leads an industry collaborative research project into improving the management of risk and value in mineral
exploration. He is a Fellow of the Australian Institute of Company Directors and of the Australian Academy of
Technological Sciences and Engineering.
Mike joined the board on 18 August 2004.
> Alister Maitland (Age 64) B Com, FAICD, FAIM, FAIB
Director
Alister is a former Executive Director of the ANZ Banking Group Ltd and served in New Zealand, the United Kingdom and
Australia. Amongst other positions, he was Chief Economist and Managing Director of New Zealand and Executive
Director International.
He is the Chairman of Folkestone Ltd, the Eastern Health Network and a Director of Pengurusan Danaharta Nasional
Berhad in Malaysia. Alister is also an Adjunct Professor and Council member of Global Sustainability at RMIT.
Previous directorships held in the last three years include Chairman of ComLand Limited and Healthcorp Group Pty
Ltd and Director of The International Panel Pty Ltd.
Alister joined the Board in July 2005 and is Chair of the Audit Committee.
Company Secretary
The company secretary is Ms Amber Rivamonte, B.Bus (Acc), CPA. Amber was appointed to the position of company
secretary in 2003. Amber has over 10 years experience in the financial management of public listed exploration
companies.
Meetings of Directors
The number of meetings of the company's board of Directors and of each board committee held during the year
ended 30 June 2005, and the numbers of meetings attended by each Director were:
Full MeetingRemuneration
of DirectorsCommittee
Number of meetings held83
Number of meetings attended by:
C Smith83
R Laufmann8- (a)
N Mather1 (c)- (c)
M Etheridge7 (b)3
A Maitland- (d)- (d)
(a)Not a member of the relevant committee
(b)Appointed to the Board on 18 August 2004 of which there were seven meetings held during the time the
Director held office.
(c)Resigned from the Board on 27 August 2004 of which there was only one meeting held during the time
the Director held office.
(d)Appointed to the Board on 22 July 2005 of which there were no meetings held during the time the
Director held office.
The Audit Committee was established on 1 July 2005 and accordingly there were no meetings held in the period
ending 30 June 2005.
Retirement, election and continuation in office of Directors
Mr Maitland was appointed to the Board on 22 July 2005.
Mr Maitland offers himself for election at the next Annual General Meeting. Dr Etheridge was appointed to the
Board on 18 August 2004 and was officially elected at the 2004 AGM. Mr Mather resigned from the Board on 27 August
2004.
Remuneration Report
-------------------
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service agreements
D. Share-based compensation
A.Principles used to determine the nature and amount of remuneration
The remuneration committee makes recommendations to the full board on remuneration packages and other terms of
employment for the Chairman, Non-Executive Directors and the Managing Director and Chief Executive Officer.
The committee also reviews and ratifies the CEO recommendations on the remuneration of key management and talent.
The company remuneration policy strives to ensure remuneration packages properly reflect each persons duties and
responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the
highest caliber.
Executive and staff remuneration is reviewed annually, effective January 1 each year.
Individual reviews are based on the following criteria:
> Individual performance (measured against key performance and behavioral indicators).
> Company performance against stated objectives.
> Market parity.
> CPI movements.
Non-Executive Directors
Remuneration of Non-Executive Directors, including the issuance of options, is determined by the board within
the maximum approved by shareholders from time to time. The current maximum amount of Directors fees payable is
fixed at $250,000 in total, for each twelve month period commencing 1 July each year, until varied by ordinary
resolution of shareholders.
The previous base remuneration for Non-Executive Directors was approved at the AGM held 31 October 2003 with effect
from 1 January 2004. Subsequent to this, on 7 June 2005, the Board approved, on recommendation of the Remuneration
Committee, an increase in the level of remuneration, or base fees, for Non-Executive Directors and Non-Executive
Chairman, effective from 1 July 2005.
Directors Fees
Remuneration for Non-Executive Directors was increased from $40,000 to $50,000 per annum, effective from 1 July 2005.
Remuneration for the Non-Executive Chairman was increased from $100,000 to $125,000 per annum, effective from 1 July
2005. Superannuation contributions are also paid by the company, at a rate of 9% of base fees.
Non-Executive Directors do not participate in any cash bonus or share plans that may be developed for Executives.
From 1 July 2005, additional fees of $8,000 per annum are payable to Non-Executive Directors for participation on
Board Committees.
There are no retirement benefits for Non-Executive Directors.
Managing Director and Chief Executive Officer Remuneration
The remuneration package consists of two components, a base salary and short term incentive scheme.
The base salary is $275,000 inclusive of superannuation. In addition to the base salary, the Managing Director
can potentially earn up to 40% of his base salary on fulfilling certain goals and hurdles, formulated by the
Chairman in conjunction with the Board and the Managing Director annually.
BGF has a contingent liability for the salary of the Managing Director, who has been engaged until 31 December
2005 at a minimum of $275,000 per annum. The contract has a renewal clause which extends the current contract
provisions for an additional 2 years and negotiations are currently underway to put in place a new contract
for the Managing Director.
Executive Pay
Executive remuneration, including the issuance of options, and other terms of employment, are reviewed annually
by the Remuneration
Committee having regard to performance against goals set for the forthcoming year, relevant comparative information
and independent expert advice where applicable. As well as base salary, remuneration includes superannuation and
termination entitlements, performance-related bonuses and fringe benefits. Remuneration and other terms of
employment for company Executives are formalised in employment agreements.
Executive salaries are to be reviewed with effect from 1 January in each year and may not be reduced.
B.Details of remuneration
Amounts of remuneration
Directors of Ballarat Goldfields NL
The following persons were Directors of the parent entity during the financial year:
> Mr C SmithNon-Executive Chairman
> Mr R LaufmannManaging Director
> Dr M EtheridgeNon-Executive Director and was appointed a Director on 18 August 2004
> Mr N MatherNon-Executive Director and resigned as a Director on 27 August 2004
Directors of Ballarat Goldfields NL
Amounts owing at balance date to Director and Director related entities:
ConsolidatedParent Entity
2005200420052004
$$$$
Current Liabilities
Directors' fees 25,000 35,000 25,000 35,000
Amounts payable21,663 14,207 21,663 14,207
Details of the nature and amount of each element of the emoluments to which each Director and Executives of BGF is
entitled for the period ending 30 June 2005 are set out in the following tables.
2005PrimaryPost EmploymentEquity
Cash SalaryNon MonetaryCashSuperannuationOptions IssuedTOTAL
& FeesbenefitsBonus
Name$$$$$$
Colin Smith100,000--9,000-109,000
Chairman
Richard Laufmann225,117-80,73427,527-333,378
Managing Director
Mike Etheridge*35,000--3,15063,033101,183
Nicholas Mather*6,727--606-7,333
* Mike Etheridge was appointed a Director on 18 August 2004.
* Nicholas Mather resigned as a Director on 27 August 2004.
* Alister Maitland was appointed a Director on 22 July 2005.
2004PrimaryPost EmploymentEquity
Cash SalaryNon MonetaryCashSuperannuationOptions IssuedTOTAL
& FeesbenefitsBonus
Name$$$$$$
Colin Smith62,500--5,625205,300273,425
Chairman
Richard Laufmann191,950-80,00016,992479,033767,975
Managing Director
Nicholas Mather31,000--2,79068,433102,223
Executives (other than Directors) with the greatest authority for strategic direction and management
The following persons were the five Executives with the greatest authority for the strategic direction and
management of the consolidated entity (Specified Executives) during the financial year:
> Ms A RivamonteCompany Secretary
> Mr S OlsenGeology Manager
> Mr J ForwoodManager of Corporate and Markets
> Mr C FinchMine Manager
> Mr A VaseyEnvironment and Community Manager
All of the aforementioned persons are employed by Ballarat Goldfields NL and were Specified Executives during the
year ended 30 June 2004, except for Mr J Forwood who commenced employment with the group on 4 October 2004, and
Mr C Finch who commenced employment with the group on 1 December 2004.
Specified Executives of Ballarat Goldfields NL
The remuneration for the five highest paid Executives of the company who had any authority for the strategic
direction and management of the consolidated entity (Specified Executives) during the financial year, were as
follows (see tables below):
2005PrimaryPost EmploymentEquity
Cash SalaryNon MonetaryCashSuperannuationOptions IssuedTOTAL
& FeesbenefitsBonus
Name$$$$$$
Amber Rivamonte103,337--9,300-112,637
Company Secretary
Joel Forwood 1124,030--11,16371,200206,393
Manager Corporate
& Markets
Steven Olsen127,73420,000-11,496-159,230
Geology Manager
Chris Finch 276,60114,740-6,89435,600133,835
Mine Manager
Alan Vasey109,49016,548-9,85435,600171,492
E & C Manager
1 Joel Forwood commenced employment on 4 October 2004.
2 Chris Finch commenced employment on 1 December 2004.
2004PrimaryPost EmploymentEquity
Cash SalaryNon MonetaryCashSuperannuationOptions IssuedTOTAL
& FeesbenefitsBonus
Name$$$$$$
Steven Olsen114,3255,39410,00010,11932,100171,938
Geology Manager
Amber Rivamonte95,411--8,43921,400125,250
Company Secretary
Cash bonuses and options
Cash bonuses and options
For each cash bonus and options granted to Directors and Specified Executives, the percentage of the available bonus
or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because
the person did not meet the service and performance criteria is set out below. No part of the bonuses or grants
of options are payable in future years.
Cash bonusOptions
NamePaid%ForfeitedVested % *Forfeited
Richard Laufmann100-33-
Amber Rivamonte--33-
Steven Olsen--33-
Joel Forwood--33-
Chris Finch--33-
Alan Vasey--33-
* For vesting period details see section - Shares under option
C.Service agreements
Remuneration and other terms of employment for the Managing Director and other Specified Executives are formalised
in service agreements. The contractual arrangements contain certain provisions typically found in contracts
of this nature. Other major provisions of the agreements relating to remuneration are set out below.
S Olsen, Geology Manager
> Term of agreement - no specified term with current contract provisions commencing 1 January 2004.
> Base salary, inclusive of superannuation, of $150,000, to be reviewed annually by the remuneration committee.
> On termination of the contract, entitlement of salary as per the severance pay standard.
A Rivamonte, Company Secretary
> Term of agreement - no specified term with current contract provisions commencing 1 January 2004.
> Base salary, inclusive of superannuation, of $122,719 to be reviewed annually by the remuneration committee.
> On termination of the contract, entitlement of salary as per the severance pay standard.
C Finch, Mine Manager
> Term of agreement - no specified term with current contract provisions commencing 1 December 2004.
> Base salary, inclusive of superannuation, of $150,000 to be reviewed annually by the remuneration committee.
> On termination of the contract, entitlement of salary as per the severance pay standard.
A Vasey, Environment and Community Manager
> Term of agreement - no specified term with current contract provisions commencing 1 January 2004.
> Base salary, inclusive of superannuation, of $120,000 to be reviewed annually by the remuneration committee.
> On termination of the contract, entitlement of salary as per the severance pay standard.
J Forwood, Manager Corporate and Markets
> Term of agreement - no specified term with current contract provisions commencing 4 October 2004.
> Base salary, inclusive of superannuation, of $190,000, to be reviewed annually by the remuneration committee.
> On termination of the contract, entitlement of salary as per the severance pay standard.
D.Share-based compensation
Options provided as remuneration
There were 1 million options over unissued ordinary shares of BGF granted to the Directors and 2 million share
options granted to the most highly remunerated Executives of the company and consolidated entity as part of their
remuneration during the period ending 30 June 2005. The terms and conditions of options affecting remuneration in
this or future reporting periods are as follows:
Grant DateNumber ofExerciseExpiryGrant DateRemuneration
options grantedPriceDateValuationconsisting of
Nameduring the yearoptions 3
Mike Etheridge11/11/041,000,000230/09/07$63,03362%
Joel Forwood1/12/041,000,000$0.1725 130/09/07$71,20034%
Chris Finch1/12/04500,000$0.1725 130/09/07$35,60026%
Alan Vasey1/12/04500,000$0.1725 130/09/07$35,60021%
1 Of the options issued, one third are exercisable at any time, one third are exercisable after 30 September 2005 and
one third are exercisable after 30 September 2006.
2 Of the options issued, one third are exercisable at any time at an exercise price of 12 cents, one third are
exercisable at any time at an exercise price of 13 cents and one third are exercisable from 30 September 2005 at an
exercise price of 15 cents.
3 The percentage of the value of remuneration consisting of options, based on the value at grant date.
The amounts disclosed for emoluments relating to options above is the assessed fair value at grant date of options
granted to Directors and other Executives. Fair values at grant date are independently determined using a Black-Scholes
option pricing model that takes into account the exercise price, the term of the option, the vesting and performance
criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and the
expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the
term of the option.
Shares provided on the exercise of remuneration options
There were no ordinary shares of Ballarat Goldfields NL issued on the exercise of options by Directors or Specified
Executives of the consolidated entity.
No amounts are unpaid on any shares issued on the exercise of options.
Equity instrument disclosures relating to Directors and Executives
During the financial year, Directors and entities in which the Directors have a substantial interest acquired a total
of 4,105,717 fully paid shares and 4,805,717 options in the parent entity. During the financial year, Directors
disposed of nil ordinary shares/options in the parent entity. As at 30 June 2005, current Directors and entities
in which the Directors have a substantial interest held a total of 14,897,172 fully paid shares and a total of
14,805,717 options in the capital of the parent entity.
Share Holdings
The number of shares in the company held during the financial year by each Director and each of the five
Specified Executives of the consolidated entity, including related entities, are set out below:
Balance at the startExercise ofOther changesBalance at the end
of the yearoptionsduring the yearof the year
Name
Directors
Colin Smith7,014,291-2,805,7179,820,008
Richard Laufmann3,777,164-1,000,0004,777,164
Mike Etheridge--300,000300,000
Alister Maitland----
Specified Executives
Steven Olsen120,000-48,000168,000
Amber Rivamonte118,100-(118,100)-
Joel Forwood--50,00050,000
Chris Finch----
Alan Vasey----
Option Holdings
The number of options over ordinary shares in the company held during the financial year by each Director and
each of the five Specified Executives of the consolidated entity, including related entities, are set out below:
Balance atExercise ofGranted duringOther changesBalance atVested and
the start ofoptionsthe year asduring the year*the end ofexercisable
at the
Namethe yearremunerationthe yearend of the year
Directors
Colin Smith3,000,000--2,805,7175,805,7174,805,717
Richard Laufmann7,000,000--1,000,0008,000,0005,666,666
Mike Etheridge--1,000,000-1,000,000666,666
Alister Maitland------
Specified Executives
Steven Olsen1,500,000---1,500,0001,000,000
Amber Rivamonte1,000,000---1,000,000666,666
Joel Forwood--1,000,000-1,000,000333,333
Chris Finch--500,000-500,000166,666
Alan Vasey--500,000-500,000166,666
* Mr Laufmann and Mr Smith options were issued during the period as part of their entitlements for participating in
the July 2004 Rights Issue prospectus.
There were no shares issued upon the exercise of options for Directors or Specified Executives of the consolidated
entity during the financial year.
Loans to Directors and Executives
There were no loans or related party transactions with Directors or Specified Executives, including related entities,
during the financial year.
Shares under option
There are 228,865,247 unissued ordinary shares of BGF under option at the date of this report.
Date options grantedExpiry DateIssue price of sharesNumber under option
10 October 200230 September 20063.45c5,000,000
1 July 200330 September 2006 1 4.72c2,668,668
31 October 200330 September 2007 2 2 10,000,000
9 August 200430 September 200515.0c203,196,579
11 November 200430 September 2007 2 21,000,000
1 December 200430 September 2007 3 17.25c2,000,000
2 December 200402 December 2007 15.0c5,000,000
1 Of the options issued, one third are exercisable at any time, one third are exercisable after 30 September 2004
and one third are exercisable after 30 September 2005.
2 Of the options issued, one third are exercisable at any time at an exercise price of 12 cents, one third are
exercisable after 30 September 2004 at an exercise price of 13 cents and one third are exercisable from
30 September 2005 at an exercise price of 15 cents.
3 Of the options issued, one third are exercisable at anytime, one third of the options exercisable after
30 September 2005, and one third of the options exercisable after 30 September 2006.
Shares issued on the exercise of options
The following ordinary shares of BGF were issued during the year ended 30 June 2005 on the exercise of options.
No amounts are unpaid on any of the shares.
Date options grantedIssue price of sharesNumber under option
1 July 20034.72c333,332
9 August 200415.0c6,431,474
Insurance of officers
During the financial year, BGF paid a premium of $48,400 to insure the Directors and Secretary of the company
and related bodies corporate.
The liabilities insured include costs and expenses that may be incurred in defending civil or criminal
proceedings that may be brought against the officers in their capacity as officers of the Company and related
bodies corporate. The Company's Directors' and Officers' Insurance policy expires on 31 January 2006.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of
taking responsibility on behalf of the company for all or part of those proceedings.
No proceedings have been brought or intervened in or on behalf of the company with leave of the Court under
section 237 of the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor's expertise and experience with the Company and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year
are set out in note 19 to the financial statements.
A copy of the auditors' independence declaration as required under section 307C of the Corporation Act 2001 is
set out on the following page.
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
Richard Laufmann
Managing Director
Ballarat
29 August 2005
PricewaterhouseCoopers
abn 52 780 433 757
Freshwater Place
2 Southbank Boulevard
southbank vic 3006
gpo Box 1331L
melbourne vic 3001
dx 77
Website www.pwc.com/au
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
Auditors' Independence Declaration
-----------------------------------
As lead auditor for the audit of Ballarat Goldfields NL for the year ended 30 June 2005, I declare that, to the
best of my knowledge and belief,
there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Ballarat Goldfields NL and the entities it controlled during the period.
Tim Goldsmith
Partner PricewaterhouseCoopers
Melbourne
29 August 2005
Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW)
> Corporate Governance Statement
---------------------------------
Ballarat Goldfields NL has adopted a detailed corporate governance statement which when read in conjunction with
its constitution, provides the basis on which BGF can conduct corporate governance practices of a high standard.
Each Director has agreed to observe the guidelines contained in the detailed corporate governance statement, w
hich utilises the framework set out by the ASX Corporate Governance Council as a basis for its preparation. This
is a brief summary of that statement and should be read in conjunction with the information contained in the
Directors report.
There is no obligation for all of the ASX Corporate Governance Council Standards to be adopted, as they apply on
an "if not, explain why not" basis. There is one particular difference from the ASX Corporate Council Governance
Standards which has not been adopted by BGF, namely the non-establishment of a nomination committee for new
Directors to the Board. BGF is a small company with a small number of Directors and a small management team.
It is not considered appropriate for a company of BGF's nature to establish a nomination committee in these
circumstances. The matters typically considered by a nomination committee in a large company context are generally
considered by the Board as a whole. Except for this difference, BGF follows the substance of the ASX Corporate
Governance Council Standards.
Role and Responsibilities of Board and Management
The role of the Board is to effectively lead the Company by working with executive management, determining key
business strategies and direction with the primary objective of enhancing long term shareholder value. Oversight
of the management and the overall corporate governance of the Company including strategic direction, establishing
goals for management and the monitoring of the achievements against these goals.
The Managing Director has been delegated overall authority and responsibility for the management of BGF and is
required to report to the Board with all information necessary to enable it to discharge its responsibilities.
Board Charter
In addition to the roles and responsibilities referred to above and those matters determined by law, the Board
reserves to itself various powers and authorities. This includes, for example, appointing and removing the
Managing Director and Company Secretary, reviewing governance systems, as well as a range of other responsibilities.
Board Composition and Independence
The composition of the Board is established utilising various guidelines. At least half of the Board should
be Non-Executives and should be independent Directors. The Board will determine if a Director is independent
in a manner consistent with the ASX Corporate Governance Principles and will regularly assess the independence
of those Directors. The Chairman of the Board must be an independent Director. The role of Chairman and
Managing Director will not be exercised by the same individual. All of these requirements are complied
with as at the date of publication of the Company's 2005 Annual Report, and all of the Company's Non-Executive
Directors are independent Directors.
Remuneration Committee Charter
BGF has adopted a remuneration committee charter which lays out the remuneration and performance evaluation
responsibilities delegated to the remuneration committee by the Board and outlines its structure, duties
(including implementing the ASX Corporate Governance Council recommendations as to remuneration policies)
and membership requirements.
The remuneration committee comprises of at least two Non-Executive Directors as proposed by the Chairman of
the Board and approved by the Board. The remuneration committee has an advisory role to the Board and has a
range of responsibilities relating to the remuneration levels for key Executives and Directors including the
Managing Director.
Audit Committee Charter
BGF has adopted an Audit Committee Charter which lays out the framework for the oversight of the external
audit and internal audit arrangements and outlines its structures, duties and membership requirements. In
accordance with ASX Corporate Council Governance Standards requirements, the Audit Committee comprises of at
least two Non-Executive Directors who are financially literate, at least one member has financial expertise
and some members have an understanding of the industry in which BGF operates. It is chaired by a
Non-Executive Director who is not the Chairman. The Audit Committee has an advisory role to the Board and
has a range of responsibilities relating to reliable management and financial reporting and maintenance of an
effective and efficient audit.
Code of Conduct for Directors
The Directors are required to achieve high standards in the discharge of their responsibilities and duties.
A Director must take responsible steps to avoid conflicts between material personal interests and the interests
of BGF. Directors must not participate in activities that will discredit the Board or BGF.
Code of Conduct for Trading Securities
BGF has adopted a code of conduct for trading securities. No Directors or key Executives may trade securities
whilst they are in the possession of price sensitive information or during one-off trading embargo periods.
Subject to this, Directors or key Executives are permitted to trade securities with the exception of eight
weeks prior to annual reports, four weeks prior to the issue of quarterly reports and other expected formal
announcements when no such trading should occur. Each Director or key Executive must disclose to the
Managing Director or Company Secretary in advance any intention to trade securities and they must confirm
at that time they are not in position of price sensitive information.
Policy on Financial Reporting
At the time of presenting financial reports to the Board, the Managing Director and the Chief Financial Officer
are required to advise the Board in writing that such reports represent a true and fair view of BGF's financial
position and performance and that the reports have been prepared to conform with relevant accounting standards
together with the compliance and control systems adopted by the Board.
The Managing Director and Chief Financial Officer are required to advise the Board at that time in writing of
any material matters which have arisen to their knowledge regarding BGF's risk profile and internal compliance systems.
Continuous Disclosure Policy
The Board has adopted a formal policy in relation to continuous disclosure which has been made known to all
key Executives. The Board has implemented a standing procedure so that continuous disclosure is a specific item
considered at each Board meeting. It is BGF's policy that all price sensitive information should be disclosed to
ASX on a timely basis subject to the permitted exceptions to such disclosure. Information disclosed to the ASX
is posted on BGF's website after it is disclosed to the ASX. BGF's policy on continuous disclosure is extensive
and covers the nature of price sensitive information, preventing selective disclosure, developing disclosure
procedures, etc.
Responsibility Statement
BGF's overriding responsibility is to the shareholders. It recognises that others are affected by, or can influence,
BGF's activities or have power to influence BGF's activities and that it has a responsibility to actively consider
and interact with those parties in order to ensure that shareholder wealth is maximised. The Company encourages
effective communications with shareholders and others within the community through ASX announcements, the C
ompany's website, shareholder communications and the Company's Annual Report.
> Financial Report
------------------
30 June 2005
The financial report covers both Ballarat Goldfields NL as an individual entity and the consolidated entity
consisting of Ballarat Goldfields NL and its controlled entities.The financial report is presented in the
Australian currency.
Ballarat Goldfields NL is a public company listed on the Australian Stock Exchange incorporated and domiciled
in Australia and the Alternative Investment Market (AIM) of the London Stock Exchange. Its registered office
and principal place of business is:
Ballarat Goldfields NL
10 Woolshed Gully Drive
Mt Clear Victoria 3350 Australia
A description of the nature of the consolidated entity's operations and its principal activities is included
in the review of operations in the Directors' report, which are not part of this financial report.
The financial report was authorised for issue by the Directors on 29 August 2005. The company has the power
to amend and reissue the financial report.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available
globally at minimum cost to the company. Information is available on our website: www.ballarat-goldfields.com.au
For information in relation to our reporting please call +61 (3) 5327 1111
or email info@ballarat-goldfields.com.au
> Financial Report 2004 > 2005 Statements of Financial Performance For the year ended 30 June 2005
Consolidated Parent Entity
Notes 2005 2004 2005 2004
$ $ $ $
Revenue from ordinary activities 2 915,313 105,567 915,313 105,567
Other expenses from ordinary activities
Marketing (199,585) (245,644) (199,585) (245,644)
Administration (2,629,099) (1,054,736) (3,009,099) (1,054,736)
Borrowing costs expense (595,000) - (595,000) -
Exploration (17,876,464) (3,682,764) (17,418,130) (3,535,388)
Loss from ordinary
activities before income tax expense (20,384,835) (4,877,577) (20,306,501) (4,730,201)
Income tax expense 4 - - - -
Net loss attributable to members
of Ballarat Goldfields NL (20,384,835) (4,877,577) (20,306,501) (4,730,201)
Total changes in equity other than those resulting
from transactions with owners as owners (20,384,835) (4,877,577) (20,306,501) (4,730,201)
Cents Cents
Basic loss per share 24 (2.89) (1.02)
Diluted loss per share 24 (2.14) (0.99)
The above statements of financial performance should be read in conjunction with the accompanying notes.
> Financial Report 2004 > 2005 Statements of Financial Position As at 30 June 2005
Consolidated Parent Entity
Notes 2005 2004 2005 2004
$ $ $ $
Current Assets
Cash 8,937,340 1,343,055 8,937,340 1,343,055
Receivables 5 520,225 10,734 520,225 10,734
Inventory 6 - 458 - 458
Total Current Assets 9,457,565 1,354,247 9,457,565 1,354,247
Non Current Assets
Receivables 7 - - 550,511 729,194
Investments 8 - - 70,005 450,005
Property, plant and equipment 9 4,911,052 392,858 4,660,779 141,218
Exploration 10 10,317,947 10,348,596 10,145,102 9,540,101
Total Non Current Assets 15,228,999 10,741,454 15,426,397 10,860,518
Total Assets 24,686,564 12,095,701 24,883,962 12,214,765
Current Liabilities
Accounts payable 11 6,783,589 614,962 6,783,589 614,962
Borrowings 12 50,868 29,192 50,868 29,192
Provisions 13 215,445 117,336 215,445 117,336
Other 14 45,182 45,182 45,182 45,182
Total Current Liabilities 7,095,084 806,672 7,095,084 806,672
Non Current Liabilities
Borrowings 15 139,780 90,198 139,780 90,198
Provisions 16 379,500 174,500 379,500 174,500
Total Non Current Liabilities 519,280 264,698 519,280 264,698
Total Liabilities 7,614,364 1,071,370 7,614,364 1,071,370
Net Assets 17,072,200 11,024,331 17,269,598 11,143,395
Equity
Parent entity interest
Share capital 17 108,750,280 82,317,576 108,750,280 82,317,576
Accumulated losses 18 (91,678,080) (71,293,245) (91,480,682) (71,174,181)
Total Equity 17,072,200 11,024,331 17,269,598 11,143,395
The above statements of financial position should be read in conjunction with the accompanying notes.
> Financial Report 2004 > 2005 Cash Flow Statements For the year ended 30 June 2005
Consolidated Parent Entity
Notes 2005 2004 2005 2004
$ $ $ $
Cash flows from operating activities
Receipts from customers
(inclusive of goods and services tax) - - - -
Exploration expenditure (15,440,474) (3,358,212) (15,154,213) (3,212,097)
Payments to suppliers and employees
(inclusive of goods and services tax) (2,109,409) (1,246,974) (2,109,409) (1,246,974)
(17,549,883) (4,605,186) (17,263,622) (4,459,071)
Interest received 915,313 96,931 915,313 96,931
Borrowing costs - - - -
Net cash outflow from operating activities 27 (16,634,570) (4,508,255) (16,348,309) ( 4,362,140)
Cash flows from investing activities
Payments for property, plant and equipment (2,003,849) (32,698) (2,003,849) (32,698)
Exploration expenditure (200,000) - (400,000) -
Loans to controlled entities - - (286,261) (146,115)
Repayment of loans to controlled entities - - 200,000 -
Proceeds from sale of property, plant and equipment - 9,500 - 9,500
Net cash outflow from investing activities (2,203,849) (23,198) (2,490,110) (169,313)
Cash flows from financing activities
Proceeds from the issue of ordinary shares 27,204,300 5,219,000 27,204,300 5,219,000
Proceeds from the exercise of options 980,455 - 980,455 -
Costs of Issue (1,752,051) (197,053) ( 1,752,051) ( 197,053)
Net cash inflow from financing activities 26,432,704 5,021,947 26,432,704 5,021,947
Net increase (decrease) in cash held 7,594,285 490,494 7,594,285 490,494
Cash at the beginning of the financial year 1,343,055 852,561 1,343,055 852,561
Cash (overdraft) at the end of the financial year 8,937,340 1,343,055 8,937,340 1,343,055
The above statements of cash flows should be read in conjunction with the accompanying notes.
> Financial Report 2004 > 2005 Notes to the Financial Statements 30 June 2005
NOTE 1 > SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general-purpose financial report has been prepared in accordance with Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views,
and the Corporations Act 2001. It is anticipated that Ballarat Goldfields NL, as an exploration entity, will
be required to raise additional capital in the future to continue its development.
It is prepared in accordance with the historical cost convention. Unless otherwise stated, the accounting
policies adopted are consistent with those of the previous year.
a Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by
Ballarat Goldfields NL as at 30 June 2005 and the results of all controlled entities for the year then ended.
Ballarat Goldfields NL and its controlled entities together are referred to in this financial report as the
consolidated entity. The effects of all transactions between entities in the consolidated entity are
eliminated in full.
b Exploration and evaluation expenditure
In respect of areas of interest where the rights to tenure are current, exploration and evaluation expenditure
is charged to the Statement of Financial Performance as incurred except where:
o it is expected that the expenditure will be recouped by future exploitation or sale; or
o substantial exploration and evaluation activities have identified a mineral resource but these activities have
not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves,
in which case the expenditure is capitalised.
Identifiable exploration assets acquired from another mining company are recognised as assets at their cost of
acquisition, as determined by the requirements of AASB 1015 Accounting for the Acquisition of Assets.
Exploration assets acquired are carried forward provided at least one of the conditions outlined above is met.
Exploration and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset
acquired, is accounted for in accordance with the policy outlined above for exploration expenditure incurred
by or on behalf of the consolidated entity.
Each area of interest is reviewed annually and accumulated costs are written off to the statement of financial
performance to the extent that they will not be recoverable in the future. If it is established subsequently
that economically recoverable reserves exist in a particular area of interest, resulting in the decision to
develop a commercial mining operation, then in that year the accumulated expenditure attributable to that area,
to the extent that it does not exceed the recoverable amount for the area concerned, will be transferred to
mine development. As such it will be subsequently amortised against production from that area.
c Acquisitions of assets
The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments
or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or
liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition.
d Income tax
Tax effect accounting has been adopted, whereby tax expense is calculated on pre tax accounting profits after
adjusting for permanent taxation differences. The income tax benefit relating to tax losses is not carried
forward as an asset unless the benefit is virtually certain of being realised (Note 4). Income tax on
cumulative timing differences is set aside to the deferred income tax or future income tax benefit accounts at
the rates which are expected to apply when those timing differences reverse.
e Depreciation/amortisation
Depreciation is applied in respect of all fixed assets excluding freehold land and is calculated using the straight
line method. Capitalised exploration expenditure is not amortised until production commences. Leased assets are
depreciated over the period of the lease or estimated useful life, whichever is shorter, using the straight
line method. The expected useful lives are as follows:
Buildings- 40 years
Plant and equipment - 5 - 15 years
f Inventories
Raw materials and stores, work in progress and finished goods are valued at the lower of cost and net realisable
value. Costs comprise direct materials, direct labour and an appropriate proportion of variable and fixed overhead
expenditure which are assigned to inventory on hand by the method most appropriate to each particular class of
inventory. The majority of costs are assigned to individual items of stock on the basis of weighted average costs.
g Recoverable amount of non current assets
The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows
arising from its continued use and subsequent disposal.
Where the carrying amount of a non current asset is greater than its recoverable amount, the asset is written down
to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable
amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is
recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down
occurs.
The expected net cash flows included in determining recoverable amounts of non current assets are not discounted
to their present values.
Potential capital gains tax is not taken into account in determining revaluation amounts unless there is an
intention to sell the assets concerned.
h Investments
A provision is raised against the cost of investments where, in the Directors' opinion, a significant or permanent
diminution in value has occurred. Controlled entities are accounted for in the consolidated financial statements
as set out in note 1(a).
i Hire purchase and finance of non current assets
Where non current assets are acquired by means of hire purchase agreements or chattel mortgage the cost price of
that equipment is established as an asset and amortised on a straight line basis over its useful life. A corresponding
liability is also established and each hire purchase repayment is allocated between such liability and interest
expense.
j Cash
For the purposes of the statement of cash flows, cash includes deposits at call, which are readily converted to
cash on hand and are subject to insignificant risk of changes in value.
k Employee benefits
Wages, salaries and annual leave
Liabilities for wages and salaries and annual leave are recognised, and are measured at the amounts expected to
be paid when the liabilities are settled. No provision is made for sick leave.
Long Service Leave
A liability for long service leave is recognised, and is measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service and appropriate discounting
of future payments.
l Equity-based compensation benefits
Equity-based compensation benefits are provided to employees as part of their remuneration. No accounting entries
are made in relation to the grant of these options until the options are exercised, at which time the amounts
receivable from employees are recognised in the statement of financial position as share capital. The amounts
disclosed for remuneration of Directors and Executives in the Directors' Report, include the assessed fair values
of options at the date they were granted.
m Restoration, rehabilitation and environmental expenditure
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are
accrued at the time of those activitiesand treated as exploration and evaluation expenditure.
Restoration, rehabilitation and environmental obligations recognised include the costs of reclamation, site closure
and subsequent monitoring ofthe environment.
Costs are estimated on the basis of current undiscounted costs, current legal requirements and current technology.
n Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing net loss after income tax attributable to members by the weighted
average number of ordinary shares outstanding during the financial year.
Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into
account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
o Trade and other creditors
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end
of the financial year and which are unpaid.
p Receivables
Receivables are recognised as amounts outstanding on various contracts as at balance date. Settlement of such
amounts occurs within the terms of the contracts and in the case of trade debtors occurs within 30 days of recognition.
q Revenue recognition
Interest revenue is recognised on an accrual basis.
r Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include
interest on bank overdrafts and short term and long term borrowings, finance lease charges and certain exchange
rate differences arising from foreign currency borrowings.
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 2 > REVENUE
Revenue from outside the operating activities:
Proceeds from the sale of non current assets
Interest received
-
915,313
8,636
96,931
-
915,313
8,636
96,931
Revenue from ordinary activities 915,313 105,567 915,313 105,567
NOTE 3 > LOSS FROM ORDINARY ACTIVITES
Loss from ordinary activities before income tax expense includes the following specific net gains and expenses:
Expenses
Depreciation & amortisation
Land and Buildings
Plant and equipment
Leased assets
Total depreciation & amortisation expense
Borrowing costs
Adjustment to leave provisions
Loss/(Profit) on sale of plant and equipment
Write down of loans to controlled entities
Write down of exploration expenditure
Write down of investment in controlled entities
3,956 1,262
31,931 3,632
44,747 14,754
2,589 -
31,931 3,632
44,747 14,754
80,634 19,648 79,267 18,386
595,000 - 595,000 -
98,109 (48,900) 98,109 (48,900)
- 8,636
- -
435,650 -
- -
- 8,636
264,943 -
- -
380,000 -
NOTE 4 > INCOME TAX
Loss from ordinary activities before income tax expense (20,384,835)
Prima facie tax expense @ 30% (6,115,451)
Tax effect of permanent differences
Debt forgiveness -
Prima facie tax credit adjusted for
permanent differences (6,115,451)
Future income tax benefit not brought to account 6,115,451
Income tax expense -
(4,877,577) (20,306,501) (4,730,201)
(1,463,273) (6,091,950) (1,419,060)
- 264,943 -
(1,463,273) (5,827,007) (1,419,060)
1,463,273 5,827,007 1,419,060
- - -
At 30 June 2005, the consolidated entity had accumulated revenue tax losses of $39.2 million (2004: $18.8 million)
resulting from its operations.
The parent entity has accumulated revenue tax losses of approximately $35.3 million (2004: $15.3 million) resulting
from its operations.
In addition, the consolidated entity has capital tax losses of approximately $30 million (2004: $30 million).
The future income tax benefit of approximately $11.76 million (2004: $5.64 million), based on a corporate tax
rate of 30%, attributed to revenue tax losses, has not been brought to account but may be realised if:
(i)
the economic entity derives future profits of a nature and amount sufficient to enable the benefit of losses to
be realised;
(ii)
the economic entity continues to comply with the conditions of deductibility imposed by tax legislation; and
(iii) legislation does not change in a manner which would adversely affect the realisation of the benefit of
losses by the economic entity.
Tax Consolidations
The economic entity has made no decision on whether to implement the tax consolidations legislation.
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 5 > CURRENT ASSETS - RECEIVABLES
Other debtors 520,225 10,734 520,225 10,734
520,225 10,734 520,225 10,734
NOTE 6 > CURRENT ASSETS - INVENTORY
Other inventory - at cost - 458 - 458
- 458 - 458
NOTE 7 > NON CURRENT ASSETS RECEIVABLES
Unsecured loans - controlled entities - - 550,511 729,194
- - 550,511 729,194
NOTE 8 > NON CURRENT ASSETS -
INVESTMENTS
Ballarat Goldfields NL shares in controlled entities which are unquoted and comprise:
Share Class Equity Holding Cost
Ordinary 2005 2004 2005 2004
% % $ $
Controlled Entities:
New Resources Pty Ltd 100 100 3 3
Berringa Resources Pty Ltd 100 100 2 2
Ballarat West Goldfields Pty Ltd 100 100 450,000 450,000
Corpique 21 Pty Ltd 100 100 27,242,760 27,242,760
Investment at cost 27,692,765 27,692,765
Provision for diminution (27,622,760) (27,242,760)
70,005 450,005
All controlled entities are incorporated in Australia.
Ballarat West Goldfields Pty Ltd, Corpique 21 Pty Ltd, Berringa Resources Pty Ltd and New Resources Pty Ltd
are small proprietary companies and are not required to prepare financial statements. Consequently no individual
audit reports have been issued for them.
The ultimate parent entity in the wholly owned group is Ballarat Goldfields NL.
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 9 > PROPERTY, PLANT & EQUIPMENT
Land and Buildings
Land and buildings at cost 835,774 259,501 576,274 -
Accumulated depreciation (11,816) (7,861) (2,589) -
Total land and buildings 823,958 251,640 573,685 -
Plant and Equipment
Plant and equipment at cost 263,305 83,826 263,305 83,826
Accumulated depreciation (87,646) (55,715) (87,646) (55,715)
175,659 28,111 175,659 28,111
Assets under construction - cost 3,745,986 - 3,745,986 -
3,921,645 28,111 3,921,645 28,111
Plant and equipment under lease 228,224 131,135 228,224 131,135
Accumulated depreciation (62,775) (18,028) (62,775) (18,028)
165,449 113,107 165,449 113,107
Total plant and equipment 4,087,094 141,218 4,087,094 141,218
Total property, plant & equipment 4,911,052 392,858 4,660,779 141,218
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.
Land & Plant & Leased plant Total
buildings equipment & equipment
Consolidated $ $ $ $
Carrying amount at 1 July 2004 251,640 28,111 113,107 392,858
Additions 576,274 3,925,465 97,089 4,598,828
Depreciation (3,956) (31,931) (44,747) (80,634)
Carrying amount at 30 June 2005 823,958 3,921,645 165,449 4,911,051
Land & Plant & Leased plant Total
buildings equipment & equipment
Parent entity $ $ $ $
Carrying amount at 1 July 2004 - 28,111 113,107 141,218
Additions 576,274 3,925,465 97,089 4,598,828
Depreciation expense (2,589) (31,931) (44,747) (79,267)
Carrying amount at 30 June 2005 573,685 3,921,645 165,449 4,660,779
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 10 > NON CURRENT ASSETS EXPLORATION
Carrying value of exploration and evaluation 10,317,947 10,348,596 10,145,102 9,540,101
10,317,947 10,348,596 10,145,102 9,540,101
These amounts reflect, to the best of the Company's knowledge, a cost of acquisition of the exploration and
evaluation properties.
NOTE 11 > CURRENT LIABILITIES ACCOUNTS
PAYABLE
Trade creditors
Other creditors
6,673,586
110,003
613,572
1,390
6,673,586
110,003
613,572
1,390
6,783,589 614,962 6,783,589 614,962
NOTE 12 > CURRENT LIABILITIES BORROWINGS
Hire purchase liability (Note 21(c)) 50,868 29,192 50,868 29,192
50,868 29,192 50,868 29,192
Credit standby arrangements:
Total finance facilities 17,000,000 - 17,000,000 -
Used at balance date - - - -
Unused at balance date 17,000,000 - 17,000,000 -
The finance facility may be drawn each month in line with the loan facility agreement dated 10 June 2005.
As a bridging facility, fifty percent of any moneys drawn down on 15 October 2005 will be repaid to the lender.
After 15 October 2005, the company can advise the lender of its intention to repay the full facility or the
lender can elect to convert the remaining balance into BGF shares. Should the Company and the lender agree,
any outstanding balance is to be repaid by no later than 15 October 2007.
Interest on the finance facility is payable at an interest rate of 8.41%. The facility does not require BGF
to enter into any hedging arrangements and is not subject to any specific liquidity, gearing or profitability
financial ratios. The facility includes a fixed and floating charge over BGF's assets.
NOTE 13 > CURRENT LIABILITES - PROVISIONS
Annual leave
Long service leave
NOTE 14 > CURRENT LIABILITIES - OTHER
Unclaimed monies
NOTE 15 > NON CURRENT LIABILITIES BORROWINGS
Hire purchase liability (Note 21(c))
NOTE 16 > NON CURRENT LIABILITES PROVISIONS
Rehabilitation
158,644
56,801
215,445
45,182
45,182
139,780
139,780
379,500
379,500
69,924
47,412
117,336
45,182
45,182
90,198
90,198
174,500
174,500
158,644
56,801
215,445
45,182
45,182
139,780
139,780
379,500
379,500
69,924
47,412
117,336
45,182
45,182
90,198
90,198
174,500
174,500
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
NOTE 17 > EQUITY - SHARE CAPITAL
Issued capital
793,907,022 ordinary shares
fully paid (2004: 488,944,440)
2005
$
108,750,280
2004
$
82,317,576
108,750,280 82,317,576
Movements in ordinary share capital:
Opening balance at 1 July 2003
Issue of Ordinary shares:
Issue of Ordinary shares:
Less Issue Costs:
Number of Shares
407,754,440
21/07/2003 58,000,000
13/10/2003 23,190,000
-
Issue Price $
0.050
0.100
$
77,295,629
2,900,000
2,319,000
(197,053)
Balance at 30 June 2004
Issue of Ordinary shares:
Issue of Ordinary shares:
Less Issue Costs:
Exercise of Options:
Exercise of Options:
Exercise of Options:
Exercise of Options:
Exercise of Options:
Exercise of Options:
Exercise of Options:
Exercise of Options:
Closing balance at 30 June 2005
07/07/2004
09/08/2004
06/09/2004
06/09/2004
12/10/2004
10/11/2004
01/02/2005
01/02/2005
12/04/2005
30/06/2005
488,944,440
73,300,000
224,897,776
-
166,666
66,965
27,235
4,704
166,666
73,849
356,659
5,902,062
793,907,022
0.095
0.090
-
0.047
0.150
0.150
0.150
0.047
0.150
0.150
0.150
82,317,576
6,963,500
20,240,800
(1,752,051)
7,867
10,045
4,085
706
7,867
11,077
53,499
885,310
108,750,280
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company
in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
entitled to one vote.
Options
At 30 June 2005, there were 244,132,970 issued options outstanding (2004: 19,000,000).
Movements in options: Number of Options Exercise Price Expiry Date
Opening balance at 1 July 2003 5,000,000 0.035 30/09/2006
Issue of Options: 01/07/2003 3,000,000 0.047 30/09/2006
Issue of Options: 31/10/2003 11,000,000 # 30/06/2007
Balance at 30 June 2004 19,000,000
Issue of Options: 09/08/2004 224,897,776 0.150 30/9/2005
Issue of Options: 27/10/2004 1,000,000 # 30/9/2007
Lapse of Options: 27/10/2004 (1,000,000) # 30/9/2007
Issue of Options: 01/12/2004 2,000,000 0.173 30/9/2007
Issue of Options: 02/12/2004 5,000,000 0.150 2/12/2007
Exercise of Options: ^ (333,332) 0.047 30/9/2006
Exercise of Options: ^ (6,431,474) 0.150 30/9/2005
Closing balance at 30 June 2005 244,132,970
# One third each at $0.12; $0.13; and $0.15 respectively.
^ Various exercised dates, see reconciliation of movements in ordinary share capital.
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 18 > RESERVES
Accumulated losses
Accumulated losses at the beginning of the financial year
Net loss attributable to members of BGF
(71,293,245)
(20,384,835)
(66,415,668)
(4,877,577)
(71,174,181)
(20,306,501)
(66,443,980)
(4,730,201)
Accumulated losses at the end of the financial year (91,678,080) (71,293,245) (91,480,682) (71,174,181)
NOTE 19 > REMUNERATION OF AUDITORS
Total amount receivable by the auditors
PricewaterhouseCoopers Australian Firm, for:
a) audit of the consolidated statutory financial statements 22,350 20,000 22,350 20,000
b) review of statutory half yearly ASX report 10,500 10,000 10,500 10,000
c) Other audit related work - 14,200 - 14,200
32,850 44,200 32,850 44,200
NOTE 20 > CONTINGENT LIABILITIES AND CONTINGENT ASSETS
BGF's bankers have guaranteed $379,500 (2004: $174,500) in the event that the Company is called upon to
rehabilitate any of the entity's exploration sites. This amount has been fully provided for (refer note 16).
The guarantee is secured against land and buildings.
As part of the Company's objective to refocus on gold, its technology subsidiary Oztrak has been sold in January 2003.
The terms of the sale entitles BGF to 55% (less costs up to 15%) of the proceeds recovered from the substantial
claim against BSK GmbH Germany which is yet to be settled.
As a result of the sale of Highlake Resources NL which held tenements at Campbelltown, Maryborough and Dunnolly
during the prior year, BGF is entitled to receive a 1% royalty of any gold recovered from these tenements at no
future cost to BGF.
BGF has a contingent liability for the salary of the Managing Director, Mr Richard Laufmann, who has been engaged
until 31 December 2005 at a minimum of $275,000 per annum.
There are no other contingent liabilities or assets at the date of this report.
NOTE 21 > COMMITMENTS TO FUTURE EXPENDITURE
(a) Superannuation
The Company complies with the requirements of the superannuation guarantee scheme.
(b) Lease Commitments
The Company has no finance leases outstanding at 30 June 2005 (2004: Nil).
(c) Commercial Financial Commitments
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
Total hire purchase expenditure contracted for at balance date:
Not later than one year 67,985 21,971 67,985 21,971
Later than one year but not later than five years 153,529 116,108 153,529 116,108
Minimum lease payments 221,514 138,079 221,514 138,079
Less future finance charges (30,866) (18,689) (30,866) (18,689)
Recognised as a liability 190,648 119,390 190,648 119,390
Representing hire purchase liabilities:
Current (Note 12) 50,868 29,192 50,868 29,192
Non current (Note 15) 139,780 90,198 139,780 90,198
190,648 119,390 190,648 119,390
Commercial finance agreements include five commercial hire purchase agreements.
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
NOTE 21 > COMMITMENTS TO FUTURE EXPENDITURE (CONTINUED)
(d) Mineral Tenement Leases
In order to maintain current rights of tenure to mining tenements, BGF will be required to outlay the following
amounts in respect of tenement lease rentals and to meet the minimum expenditure requirements of the Department
of Primary Industries. These obligations are expected to be fulfilled in the normal course of operations. Mining
interests may be relinquished or joint ventured to reduce this amount. The Department of Primary Industries has
the authority to defer, waive or amend the minimum expenditure requirements.
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
Not later than one year 1,553,100 855,600 1,490,400 705,500
Later than one year but not later than five years 6,212,400 3,422,400 5,961,600 2,822,000
NOTE 22 > EMPLOYEE BENEFITS
Employee Benefit and related on-costs liabilities
Included in accounts payable - current (note 11) 131,877 53,740 131,877 53,740
Provision for employee benefits - current (note 13) 215,445 117,336 215,445 117,336
347,322 171,076 347,322 171,076
Employee Numbers
The number of company employees as at the
end of reporting date 30 14 30 14
NOTE 23 > FINANCIAL INSTRUMENTS
(a) Net Fair Value
The net fair value of cash and cash equivalents and financial liabilities of the consolidated entity
approximates their carrying amounts.
The net fair value of other monetary financial assets and financial liabilities is based upon market
prices where a market exists or by discounting the expected future cash flows by the current interest
rates for assets and liabilities with similiar risk profiles.
(b) Credit Risk
The credit risk on financial assets of the consolidated entity which have been recognised on the balance
sheet is generally the carrying amount, net of any provision for doubtful debts.
(c) Interest Rate Risk
The consolidated entity's exposure to interest rate risk only applies to hire purchase liabilities of
$190,648 (2004: $119,390) and term deposits of nil (2004: $1,343,054). The effective interest rate on the
hire purchase liabilities is a fixed rate of 8.25% (2004: 8.25%) over the life of the hire purchase agreements
and term deposits is a fixed rate of 0% maturing monthly (2004: 4.99%). All other financial instruments of the
consolidated entity are non-interest bearing. The weighted average interest rate of fixed interest financial
liabilities expiring within 1 year or less is 8.25%
(2004: 8.25%).
2005
NOTE 24 > LOSS PER SHARE
Basic loss per share (cents per share) (2.89)
Diluted loss per share (cents per share) (2.14)
Weighted average number of ordinary shares on
issue used in the calculation of basic loss per share. 706,432,379
Weighted average number of ordinary shares and
potential ordinary shares used in calculating diluted earnings per share. 950,565,349
2004
(1.02)
(0.99)
479,158,796
494,482,084
The earnings used in the calculation of basic loss per share is the net loss for the year of $20,384,835
(2004: loss of $4,877,577). As at 30 June
2005, the Company had on issue 244,132,970 (2004: 19,000,000) options over unissued capital exercisable
(refer note 17) and no partly paid shares (2004: nil). The options have not been included in the determination
of basic loss per share and have been included in the determination of diluted loss per share.
NOTE 25 > FINANCIAL REPORTING BY SEGMENTS
The consolidated entity operates predominantly in the mineral exploration industry. Details of the group's
mineral exploration activities are set out in the Review of Operations. Each company within the consolidated
entity operates within the one geographic area, being Victoria, Australia.
NOTE 26 > DIRECTOR AND EXECUTIVE DISCLOSURES
All Director and Executive disclosures are included in the Directors' Report.
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
NOTE 27 > RECONCILIATION OF OPERATING LOSS AFTER INCOME TAX TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
Consolidated Parent Entity
2005 2004 2005 2004
$ $ $ $
Operating Loss after income tax
Depreciation and amortisation
(Increase) decrease in receivables
Write down of property plant & equipment
Write down of loans to controlled entities
Write down of investment in controlled entities
Write down exploration expenditure
(Gain) loss on sale of plant & equipment
(Increase) decrease in inventory
Increase (decrease) in provisions
(Decrease) increase in operating trade creditors
(20,384,835)
80,634
(509,491)
-
-
-
435,650
-
458
98,109
3,644,906
(4,877,577)
19,648
-
2,667
-
-
-
(8,636)
-
48,900
306,744
(20,306,501)
79,267
(509,491)
-
264,943
380,000
-
-
458
98,109
3,644,906
(4,730,201)
18,386
-
2,667
-
-
-
(8,636)
-
48,900
306,744
Net cash outflow from operating activities (16,634,570) (4,508,255) (16,348,309) (4,362,140)
NOTE 28 > RELATED PARTIES TRANSACTIONS
Related parties of the consolidated entity fall under the following categories:
(a) Controlled Entities
During the year Ballarat Goldfields NL, in the normal course of business, entered into transactions with controlled
entities in the Ballarat Goldfields NL group (refer note 8 for details of controlled entities). The transactions and
balances fall into the following categories:
i. Aggregate amounts receivable from and payable to controlled entities, including amounts advanced or received by
the parent entity -
refer note 7.
ii. External payments - Ballarat Goldfields NL also administers and settles most of the payments external to the
group, including salaries paid on behalf of the group companies via a shared services arrangement. These transactions
are recovered from the respective entities on a cost basis, and are settled through the intercompany accounts
described above.
(b) Directors and Specified Executives
There were no related party transactions or loans with Directors or Specified Executives including related
entities during the financial year.
Disclosures relating to Directors and Specified Executives are set out in the Directors' Report.
NOTE 29 > EVENTS OCCURING AFTER BALANCE DATE
Since 30 June 2005, BGF entered into an Underwriting Agreement with RFC Corporate Finance Limited. These options,
which were issued to shareholders as part of BGF's Rights Issue in July 2004, are underwritten to an amount
of A$32.55 million. An underwriting and management fee totaling 5% of the underwritten amount is payable to the
underwriter. The financial impacts of these transactions have not been reflected within the financial statements.
NOTE 30 > RECONCILIATION OF AUSTRALIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO
UNITED KINGDOM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The financial statements are prepared in accordance with Australian Generally Accepted Accounting Principles
("A GAAP"), which differs in certain respects from United Kingdom Generally Accepted Accounting Principles ("UK GAAP").
The approximate effect of applying UK GAAP for the two years ended 30 June 2005, where the impact of applying
UK GAAP is materially different to A GAAP, is set out below.
Consolidated
2005 2004
$ $
Net (loss) attributable to members of the Company under A GAAP (20,384,835) (4,877,577)
Adjustments required under UK GAAP (205,433) (816,967)
Net (loss) according to UK GAAP (20,590,268) (5,694,543)
> Financial Report Notes to the Financial Statements
2004 > 2005 30 June 2005
NOTE 30 > RECONCILIATION OF AUSTRALIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO
UNITED KINGDOM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
Accounting for Share Based Compensation
Under UITF abstract 17 Employee share schemes the cost of awards to employees that take the form of shares or
rights to shares is required to be recognised over the period to which the employee's performance relates. The amount
of the award recognised is based on the fair value of the shares at the date the award is made, being the
difference between:
o the fair value of the shares at the date the award is made to participants in the scheme; and
o the amount of the consideration, if any, that participants may be required to pay for the shares.
Ballarat Goldfields issued options to employees during the financial period. The fair value of these options
at award date was $205,433 which is required to be treated as an expense for UK GAAP purposes. As a result of
this treatment both the consolidated entity and parent entity have recorded an additional expense for the year
ended 30 June 2005. This adjustment has no impact on the net assets of the consolidated entity.
NOTE 31 > IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS
For reporting periods beginning on or after 1 January 2005, the consolidated entity must comply with Australian
equivalents to International Financial Reporting Standards (AIFRS) as issued by the Australian Accounting
Standards Board.
The financial report has been prepared in accordance with Australian Accounting Standards and other financial
reporting requirements (Australian GAAP) applicable for reporting periods ended 30 June 2005.
The consolidated entity has reviewed the transition to Australian equivalents to IFRS. The project is the
responsibility of the Company Secretary who reports to the Managing Director and the board of Directors.
The Company Secretary will be managing the transition to IFRS to achieve compliance with AIFRS reporting for
the financial year commencing 1 July 2005.
The impact of transition to AIFRS, including transitional adjustments disclosed are based on AIFRS standard that
management expect to be in place, or where applicable, early adopted, when preparing the first complete AIFRS
financial report (being half-year ending 31 December 2005).
Only a complete set of financial statements and notes together with comparative balances can provide a true and
fair presentation of theCompany's and consolidated entity's financial position, results of operations and cash
flows in accordance with AIFRS. This note only provides a summary, therefore, further disclosure and explanations
will be required in the first complete AIFRS financial report for a true and fair view to be presented under AIFRS.
There is a significant amount of judgment involved in the preparation of the reconciliations from current
Australian GAAP to AIFRS, consequently the final reconciliation presented in the first financial report
prepared in accordance with AIFRS may vary materially from the reconciliations provided in this Note.
Revisions to the selection and application of the AIFRS accounting policies may be required as a result of:
o changes in financial reporting requirements that are relevant to the Company's and consolidated entity's first
complete AIFRS financial report arising from new or revised accounting standards or interpretations issued by
the Australian Accounting Standards Board
subsequent to the preparation of the 30 June 2005 financial report.
o Additional guidance on the application of AIFRS in a particular industry or to a particular transaction
o Changes to the Company's and consolidated entity's operations.
Where the applicable interpretation of an accounting standard is currently being debated, the accounting
policy adopted reflects management's current assessment of the likely outcome to those deliberations.
The rules for first adoption of AIFRS are set out in AASB 1 First time adoption of Australian Equivalents to
International Financial Reporting Standards. In general, AIFRS accounting policies must be applied retrospectively
to determine the opening AIFRS balance sheet as at transition date, being 1 July 2004. The Standard allows a
number of exemptions to this general principle to assist in the transition to reporting under AIFRS.
The accounting policies note includes details of the AASB 1 elections adopted.
The significant changes in accounting polices expected to be adopted in preparing the AIFRS reconciliations and
the elections expected to be made under AASB1 are set out below.
1.
Exploration and Evaluation - AASB6 Exploration and Evaluation of Mineral Resources has now been released which
grandfathers accounting treatments which have previously been adopted by AASB1022. No material change is expected
from the implementation of this standard.
2.
Impairment of Assets - The recoverable amount of non-current assets will be assessed as the higher of net
selling price and value in use, on a discounted basis. BGF currently assesses recoverable amounts of non-current
assets based on undiscounted future net cash flows. No impact of this change is expected to occur.
3.
Restoration, rehabilitation and environmental expenditure - Environmental obligations associated with the retirement
or disposal of long lived assets will be recognised when the disturbance occurs and is based on the extent of
damage incurred. The provision is measured as the present value of the future expenditure and a corresponding
rehabilitation asset is also recognised. On an ongoing basis, the rehabilitation liability will be re-measured
in line with the changes in the time value of money (recognised as an expense in the statement of financial
performance and an increase in the provision), and additional disturbances will be recognised as additions to
a corresponding asset and rehabilitation liability. The rehabilitation asset will be accounted for in accordance
with the accounting policy applicable to the asset to which it relates (ie. Exploration and Evaluation).
BGF will be required to remeasure the existing environmental rehabilitation provision to the present value
of the future expenditure and recognise a related rehabilitation asset. It is expected that there will be no
material difference to the liability and therefore no material impact is expected to the accounts.
4.
Income Tax - Under the Australian equivalent to AASB 12 Income Taxes, deferred tax balances are determined using the
balance sheet method which calculates temporary differences based on the carrying amounts of an entity's assets and
liabilities in the statement of financial position and their associated tax bases. In addition, current and deferred
taxes attributable to amounts recognised directly in equity are also recognised directly in equity.
This will result in a change to the current accounting policy, under which deferred tax balances are determined using
the income statement method, items are only tax-effected if they are included in the determination of pre-tax
accounting profit or loss and/or taxable income or loss and current and deferred taxes cannot be recognised
directly in equity. Under AIFRS deferred tax assets will be recognised for the carry forward of unused tax
losses to the extent that future taxable profit is probable rather than virtually certain. No impact of this
change is expected to occur.
5.
Equity-based compensation benefits - Under the Australian equivalent to AASB 2 Share-based Payment, equity-based
compensation to employees will be recognised as an expense in respect of the services received.
This will result in a change to the current accounting policy, under which no expense is recognised for
equity-based compensation.
Share options granted before 7 November 2002 and/or vested before 1 January 2005
No expense is recognised in respect of these options. The shares are recognised when the options are exercised
and the proceeds received allocated to share capital.
Share options granted after 7 November 2002 and vested after 1 January 2005
The fair value of options granted is recognised as an employee benefit expense with a corresponding increase
in equity. The fair value is measured at grant date and recognised over the period during which the employees
become unconditionally entitled to the options.
The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the options, the vesting and performance criteria, the impact of
dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
The impact of this change in the year ended 30 June 2005 would be an additional expense of $348,240.
The financial statements are prepared in accordance with Australian Generally Accepted Accounting Principles
("AGAAP"), which differs in certain respects from Australian Equivalents to International Financial Reporting Standards
("AIFRS"). The approximate effect of applying AIFRS for the year ended 30 June 2005, where the impact of applying
AIFRS is materially different to AGAAP, is set out below.
Consolidated
2005 2004
$ $
Net (loss) attributable to members of the Company under AGAAP (20,384,835) (4,877,577)
Adjustments required under AIFRS (348,240) (520,983)
Net (loss) according to AIFRS (20,733,075) (5,398,560)
The above adjustment relates to equity-based compensation benefits via the granting of employee share options.
> Financial Report 2004 > 2005 Director's Declaration
------------------------------------------------------
In the Directors' opinion:
(a)the financial statements and notes set out on pages 25 to 40 and remuneration disclosures on
pages 14 to 19 are in accordance with the Corporations Act 2001, including:
i.complying with Accounting Standards, the Corporations Regulations 2001 and
other mandatory professional reporting requirements; and
ii.giving a true and fair view of the company's and consolidated entity's financial
position as at 30 June 2005 and of their performance, as
represented by the results of their operations and their cash flows, for the financial year ended
on that date; and
(b)there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable; and
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Richard Laufmann
Managing Director
Ballarat
29 August 2005
PricewaterhouseCoopers
abn 52 780 433 757
Freshwater Place
2 Southbank Boulevard
southbank vic 3006
gpo Box 1331L
melbourne vic 3001
dx 77
Website www.pwc.com/au
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
Independent audit report to the members of Ballarat Goldfields NL
------------------------------------------------------------------
Audit opinion
In our opinion, the financial report on pages 25 to 40 and remuneration disclosures,
on pages 14 to 19 of Ballarat Goldfields NL:
ogives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial
position of Ballarat Goldfields NL and the Ballarat Goldfields NL Group (defined below) as at 30 June 2005, and of
their performance for the year ended on that date, and
o are presented in accordance with the Corporations Act 2001, AASB 1046 Director and Executive Disclosures
by Disclosing Entities and other Accounting Standards and other mandatory financial reporting requirements in
Australia, and the Corporations Regulations 2001.
This opinion must be read in conjunction with the rest of our audit report.
Scope
The financial report, remuneration disclosures and directors' responsibility
The financial report comprises the statement of financial position, statement of financial performance, statement
of cash flows, accompanying notes to the financial statements, and the directors' declaration for both
Ballarat Goldfields NL and the Ballarat Goldfields NL Group (the consolidated entity), for the year ended 30 June 2005.
The consolidated entity comprises both the company and the entities it controlled during that year.
The company has disclosed information about the remuneration of directors and executives ("remuneration disclosures")
as required by AASB 1046, under the heading "remuneration report" on pages 12 to 19 of the directors' report, as
permitted by the Corporations Regulations 2001.
The directors of the company are responsible for the preparation and true and fair presentation of the financial
report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate
accounting records and internal controls that are designed to prevent and detect fraud and error, and for the
accounting policies and accounting estimates inherent in the financial report. The directors are also responsible
for the remuneration disclosures contained in the directors' report.
Audit approach
We conducted an independent audit in order to express an opinion to the members of the company. Our audit was
conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether
the financial report is free of material misstatement and the remuneration disclosures comply with AASB 1046
and the Corporations Regulations 2001. The nature of an audit is influenced by factors such as the use of
professional judgement, selective testing, the inherent limitations of internal control, and the availability
of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements
have been detected.
For further explanation of an audit, visit our website: http://www.pwc.com/au/financialstatementaudit
We performed procedures to assess whether in all material respects the financial report presents fairly, in
accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting
requirements in Australia, a view which is consistent with our understanding of the company's and the
consolidated entity's financial position, and of their performance as represented by the results of their
operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
oexamining, on a test basis, information to provide evidence supporting the amounts and disclosures
in the financial report, and
oassessing the appropriateness of the accounting policies and disclosures used and the reasonableness
of significant accounting estimates made by the directors.
When this audit report is included in an Annual Report, our procedures include reading the other information
in the Annual Report to determine whether it contains any material inconsistencies with the financial report.
While we considered the effectiveness of management's internal controls over financial reporting when determining
the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
Independence
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the
Corporations Act 2001.
PricewaterhouseCoopers
Tim Goldsmith - Partner
Melbourne
29 August 2005
> Annual Report 2004 > 2005 Shareholder Information
---------------------------------------------------
The shareholder information set out below was applicable as at 3 August 2005.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Range of holdingOrdinary SharesPercentage
1 - 1,000374,5160.05%
1,001 - 5,0002,985,2210.37%
5,001 - 10,0005,769,7970.72%
10,001 - 100,00081,896,35310.25%
100,001 - OVER707,868,32388.61%
Total798,894,210100.00%
There were 961 holders of less than a marketable parcel of ordinary shares. There were no holders of partly paid
ordinary shares and 1,458 holders of options issued under Ballarat Goldfields NL. Holders of fully paid shares
are entitled, on a poll, to one vote for each share.
(b) Equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
NameNumber HeldPercentage
1National Nominees Limited142,708,26417.75%
2JP Morgan Nominees Australia Limited67,782,3388.43%
3ANZ Nominees Limited66,158,7858.23%
4 HSBC Custody Nominees (Australia) Limited39,868,8684.96%
5 Westpac Custodian Nominees Limited38,205,7404.75%
6 HSBC Custody Nominees (Australia) Limited29,928,4223.72%
7 Merrill Lynch (Australia) Nominees Pty Ltd19,251,0612.39%
8 HSBC Custody Nominees (Australia) Limited16,711,8222.08%
9 International Commodity Finance Limited14,000,0001.74%
10Citicorp Nominees Pty Limited10.271.9311.28%
11Alchemy Securities Pty Ltd10,000,0001.24%
12Fortis Clearing Nominees Pty Ltd (Settlement A/C)9,835,2201.22%
13RFC Growth Fund Limited7,855,2590.98%
14Mr Colin Smith & Mrs Adrienne Smith (SF A/C)7,770,0000.97%
15Cogent Nominees Pty Limited (SMP Accounts)7,247,7210.90%
16ANZ Nominees Limited6,503,5360.81%
17Dr Sally Clare Stirzaker5,127,4000.64%
18International Commodity Finance Limited5,000,0000.62%
19Mechanised Mining Services Pty Ltd4,270,0000.53%
20Mr John S Hewson & Mrs Rosemary A Hewson 4,200,0000.52%
Total512,696,36763.76%
Substantial shareholders in the company include:
National Nominees Limited with 142,708,264 ordinary shares or 17.75% of issued capital,
JP Morgan Nominees Australia Limited with 67,782,338 ordinary shares or 8.43% of issued capital and
ANZ Nominees Limited with 66,158,785 ordinary shares or 8.23% of issued capital.
> Annual Report Tenement 2004 > 2005 Tenement Information and Diagram
----------------------------------------------------------------------
Tenement holdings as at 1 August 2005
Tenement NoLocationHolderBGF InterestExpiry Date
EL3018Ballarat EastBallarat Goldfields NL100%14 October 2005
MIN5396Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5397Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5398Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5399Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5400Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5401Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5402Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5037Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN5038Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN4621Ballarat EastBallarat Goldfields NL100%4 October 2008
MIN4194BerringaBerringa Resources P/L100%14 February 2012
EL3714Ballarat WestBallarat Goldfields NL100%4 October 2005
EL3391Ballarat WestBallarat Goldfields NL100%4 October 2005
MIN4953Ballarat WestBallarat Goldfields NL100%14 October 2008
MIN4847Ballarat SouthBallarat Goldfields NL100%1 November 2009
The information in this report that relates to Mineral Resources and Exploration Potential is based on information
compiled by Mr Steven Olsen. Mr Olsen is a full time employee of the Company, is a Member of the Australian Institute
of Mining and Metallurgy and is a Competent Person under the definition of the 2004 JORC Code. The Exploration
Potential in this report is conceptual in nature, and there is insufficient information to establish whether
further exploration will result in the determination of a Mineral Resource. Mr Olsen consents to the publication
of this information in the form and context in which it appears.
Acknowledgements Design and Production
Celtink Creative - Ballarat (03) 5333 1057
Printing Sovereign Press Ballarat - (03) 5338 2772
As a contribution to the protection of our environment, the internal pages of this report are printed on Cyclus Offset,
a 100% recycled paper made entirely from 100% post consumer waste.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EBLBXEVBXBBD
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