ORION METALS LIMITED ACN

Transcription

1 ORION METALS LIMITED ACN INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 AUGUST 2012

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3 Contents Page No. Corporate information 2 Directors report 3 Auditor s independence declaration 5 Half-year interim financial report Consolidated Statement of Financial Position 6 Consolidated Statement of Comprehensive Income 7 Consolidated Statement of Changes in Equity 8 Consolidated Statement of Cash Flows 9 Notes to the interim financial report 11 Directors' declaration 15 Independent auditor s review report 16 1

4 Corporate information Directors Company secretary Conglin Yue (Chairman) Bin Cai (Non-Executive Director) Yanchun Wang (Non-Executive Director) Dr Tao Li (Non-Executive Director) David Barwick (resigned 30 September 2012) Bill Lyne Registered office Level Eagle St Brisbane QLD 4000 Share registry Link Market Services Limited Level Queen Street Brisbane Qld 4000 Telephone: Facsimile: Auditor Lawyers Stock exchange listing Website address BDO Audit Pty Ltd Level Queen Street Brisbane Qld 4000 Telephone: Facsimile: Ashurst Australia Level 38, Riverside Centre, 123 Eagle Street, Brisbane QLD 4000 Telephone: Facsimile: shares are quoted on the Australian Securities Exchange under the code 'ORM' Competent Persons Statement Chris Creagh The information in this report that relates to exploration results and mineral resources is based on information compiled by Mr Chris Creagh, who is a Member of AusIMM and who has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code ). Mr Creagh is to be appointed as Chief Operating Officer of the Company. Mr Creagh consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. 2

5 Directors report The Directors of (ORM or the Company) submit herewith the interim financial report of the Company for the half-year ended 31 August Directors The names and details of the Directors of the Company in office during the half-year and until the date of this report are: Conglin Yue (Chairman appointed 25 July 2012) Bin Cai (Non-Executive Director - appointed 3 August 2012) Yanchun Wang (Non-Executive Director - appointed 25 July 2012) Dr Tao Li (Non Executive Director) David Barwick (Chairman until 25 July 2012, resigned as Non-Executive Director 30 September 2012) Andrew Gillies (Non-Executive Director - resigned 25 July 2012) Adrian Day (Non-Executive Director - resigned 25 July 2012) Principal activities The principal activity of the Company during the period was exploration for rare earth metals and gold. Review of operations The Company recorded a loss after tax of $1,345,227 for the half-year ended 31 August 2012 (31 August 2011: $899,342). The loss includes an impairment loss of $924,058 against the Company s investment in private exploration company Ultimate Resources Pty Ltd. Key activities for the period included: On 31 May 2012, in a joint announcement with the Conglin Group (Conglin), ORM advis ed the market that Conglin would make a cash offer of 16 cents per share, via an off-market takeover offer, for all of the Company s issued shares with the intention of acquiring a controlling interest in ORM. On 20 July 2012 Conglin advised the closure of the offer and that at the conclusion of the offer period Conglin controlled 68.9% of the issued capital of the Company. Following the completion of the takeover, Mr. Conglin Yue, his wife Ms Yanchun Wang and Conglin Group Managing Director Mr. Bin Cai were appointed as Directors of the Company. Messrs Andrew Gillies and Adrian Day resigned from the Board while Mr Tao Li remained as a Director. Mr. Yue was appointed Chairman in place of Mr. David Barwick who remained as a Director to aid the transition to the new Board. Since the end of the half-year period. Mr. Barwick has announced his resignation from the Board with effect from 30 September Since the completion of the takeover the management and operations of the Company have been under review by the major shareholder. In May 2012, a rock chip sampling programme was conducted at Killi Killi East which identified a potential 800 metre REE mineralized interval between the two known REE prospects in the tenement. An 1848 metre drilling programme was conducted to test the interval at Killi Killi East identified by the rock chip sampling and also to delineate the eastern extent of the broad anomalous gold zone discovered in previous drilling at Killi Killi West. Results from the drilling were generally disappointing although limited gold mineralization was intersected in 3 of the Killi Killi West holes. 3

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8 Consolidated statement of financial position As at 31 August 2012 Note $ 31 August 2012 $ 28 February 2012 Current assets Cash and cash equivalents 580, ,384 Financial assets 2,000,000 2,500,000 Trade and other receivables 68,945 54,339 Other current assets 35,666 4,726 Total current assets 2,684,723 3,084,449 Non-current assets Investment in associate Exploration and evaluation assets 1,183, ,127 Property, plant and equipment 4,500 5,000 Total non-current assets 1,188, ,127 Total assets 3,873,105 3,989,576 Current liabilities Trade and other payables 66, ,584 Convertible note 6 350,000 - Total current liabilities 416, ,584 Total liabilities 416, ,584 Net assets 3,457,034 3,876,992 Equity Issued capital 4 12,198,010 11,272,741 Options reserve 467, ,838 Accumulated losses (9,208,814) (7,863,587) Total equity 3,457,034 3,876,992 The above statement of financial position should be read in conjunction with the accompanying notes. 6

9 Consolidated statement of comprehensive income For the half-year ended 31 August 2012 Notes $ 2012 $ 2011 Other income 31,926 8,719 Consultant and contractor expense (143,404) (152,821) Depreciation expense (500) (5,739) Occupancy expenses (12,075) (18,249) Share-based payments - (55,300) Other administrative expenses (330,122) (251,316) Impairment loss - investments 5 (924,058) (200,000) Impairment loss - exploration and evaluation asset (43,919) (327,166) Results from operating activities (1,422,152) (1,010,591) Finance income 76, ,530 Finance costs - - Net finance income/(costs) 76, ,530 Profit/(Loss) before income tax (1,345,227) (899,342) Income tax expense - - Profit/(loss) after income tax (1,345,227) (899,342) Other comprehensive income - - Other comprehensive income, net of income tax - - Total comprehensive income for the period (1,345,227) (899,342) Loss attributable to: Owners of the Company (1,345,227) (899,342) Total comprehensive income attributable to: Owners of the Company (1,345,227) (899,342) Earnings per share Basic earnings per share $ (0.016) $ (0.011) Diluted earnings per share $ (0.016) $ (0.011) The above statement of comprehensive income should be read in conjunction with the accompanying notes. 7

10 Consolidated statement of changes in equity For the half-year ended 31 August 2012 Options Accumulated Issued capital reserve Losses Total $ $ $ $ Balance at 1 March ,272, ,838 (7,863,587) 3,876,992 Net loss - - (1,345,227) (1,345,227) Other comprehensive income Total comprehensive income - - (1,345,227) (1,345,227) Transactions with owners, recorded directly in equity Shares issued during the half-year 930, ,000 Transaction costs recognised during the half-year (4,731) - - (4,731) Balance at 31 August ,198, ,838 (9,208,814) 3,457,034 Balance at 1 March ,272, ,538 (6,361,182) 5,324,097 Net loss - - (899,342) (899,342) Other comprehensive income Total comprehensive income - - (899,342) (899,342) Transactions with owners, recorded directly in equity Options issued during the half-year - 55,300-55,300 Transaction costs recognised during the half-year (6,200) - - (6,200) Balance at 31 August ,266, ,838 (7,260,524) 4,473,855 The above statement of changes in equity should be read in conjunction with the accompanying notes. 8

11 Consolidated statement of cash flows For the half-year ended 31 August $ $ Cash flows from operating activities Receipts in the course of operations - - Payments to suppliers and employees (570,850) (516,710) Interest received 96,073 81,515 Net cash used in from operating activities (474,777) (435,195) Cash flows from investing activities Payments for investments (924,058) (200,000) Receipt/payment for financial assets 500,000 39,426 Proceeds from disposal of tenements - 400,000 Payments for exploration and evaluation assets (321,706) (434,989) Net cash used in investing activities (745,764) (195,563) Cash flows from financing activities Proceeds from the issue of share capital 930,000 - Share issue costs (4,731) (6,200) Proceeds from borrowings 350,000 - Net cash provided by/(used) by financing activities 1,275,269 (6,200) Net (decrease) in cash and cash equivalents 54,728 (636,958) Cash and cash equivalents at the beginning of the half-year 525, ,320 Cash and cash equivalents at the end of the half-year 580, ,362 The above statement of cash flows should be read in conjunction with the accompany notes. 9

12 Notes to interim finanical report for the half-year ended 31 August 2012 Note Contents Page No. 1 Basis of preparation 11 2 Operating segments 11 3 Material uncertainty regarding going concern 12 4 Contributed equity 12 5 Investment 12 6 Loans and borrowings 13 7 Loss for the half-year 13 8 Contingent liabilities 13 9 Events subsequent to the end of the reporting period 14 10

13 Notes to interim finanical report for the half-year ended 31 August Basis of preparation These general purpose financial statements for the interim half-year reporting period ended 31 August 2012 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. The historical cost basis has been used. These half-year financial statements do not include all the notes of the type normally included in annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statements. Accordingly, these half-year financial statements are to be read in conjunction with the annual financial statements for the year ended 28 February 2012 and any public announcements made by during the half-year reporting period in accordance with the continuous disclosure requirements of the Corporations Act The same accounting policies and methods of computation have generally been followed in these halfyear financial statements as compared with the most recent annual financial statements, except as follows: a) Convertible notes At initial recognition the fair value of the liability portion of a convertible note is determined (including any embedded derivatives which do not satisfy the requirements of AASB 132 to be classified as equity). If the note includes a component which satisfies the requirements of AASB 132 to be classified as equity this component is determined by deducting the fair value of the liability portion of the note from the fair value of the note as a whole. The residual, if any, is recognised in equity. The fair value of the liability component is allocated between the host debt instrument (loans and borrowings) and embedded derivative(s). These are subsequently measured as set out above. No gain or loss is recognised on initial recognition of the components of a convertible note. 2 Operating segments Identification of reportable operating segments The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The consolidated entity is managed primarily on a geographic basis, that is the location of the respective areas of interest (tenements) in Australia. Operating segments are determined on the basis of financial information reported to the board which is at the consolidated entity level. The consolidated entity does not have any products/services it derives revenue from. Accordingly, management currently identifies the consolidated entity as having only one reportable segment, being exploration for gold and rare earth metals (REE). There have been no changes in the operating segments during the year. Accordingly, all significant operating decisions are based upon analysis of the consolidated entity as one segment. The financial results from this segment are equivalent to the financial statements of the consolidated entity as a whole. 11

14 Notes to interim finanical report for the half-year ended 31 August Going concern The financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The ability of the consolidated entity to maintain continuity of normal business activities and to pay its debts as and when they fall due is dependent on the ability of the consolidated entity to successfully raise additional capital and/or successful exploration and subsequent exploitation of areas of interest through sale or development. 4 Contributed equity 31 August February 2012 $ $ 88,597,443 (29 February 2012: 79,597,443) fully paid ordinary shares 12,362,219 11,432,219 Transaction costs relating to share issues (net of tax) (164,209) (159,478) 12,198,010 11,272,741 Consolidated entity Consolidated entity # $ # $ a) Ordinary shares Balance at the beginning of the half-year 79,597,443 11,272,741 79,597,443 11,278,941 - Share placements at 10 cents per share 3,500, ,000 - Share placements at 10 cents per share 4,000, ,000 - Options exercised at 12 cents per share 1,500, , Share issue costs - (4,731) - (6,200) Balance at the end of the half-year 88,597,443 12,198,010 79,597,443 11,272,741 Dividends No dividends were declared or paid during the interim period. 5 Investment a) Investment in associate - - Reconciliation Reconciliation of the values at the beginning and end of the current and previous financial year are set out below: Opening balance - - Additions 924, ,000 Impairment of assets (924,058) (220,000) Closing balance

15 Notes to interim finanical report for the half-year ended 31 August Investment (Continued) The consolidated entity acquired an interest in Ultimate Resources Pty Ltd on 23 August 2011 for cash consideration of $200,000. This investment, after further due diligence, was increased by an additional cash payment of $20,000 on 1 October As at 29 February 2012 the consolidated entity held a 17.1% in Ultimate Resources Pty Ltd. In June 2012 the Company extended its holding in Ultimate Resources Pty Limited from 17.1% to 43.99% through the conversion of existing loans to equity and the provision of an additional $500,000 in funding to assist the company acquire its South Korean projects. Subsequent to Conglin announcing its takeover of Orion on 22 June 2012 Conglin advised that it had formed the view that the acquisition of Ultimate was not in the best interests of Orion s shareholders and should not proceed and the investment in Ultimate has been fully impaired. 6 Loan and borrowings $ $ Current Convertible notes unsecured (i) 350,000 - On 1 May 2012 the Company announced a $1.1 million financing comprising with its three largest shareholders, Conglin Investment Group, Jien Mining and Metallica Minerals Limited. The financing comprised the placement of 7,500,000 shares at 10 cents per share, plus a $350,000 converting loan facility with Conglin Investment Group. On 5 July 2012 the loan was repaid by the issue of convertible notes for $350,000 to Conglin Investment Group on the basis of one note for each 10 cents of the loan, with a maturity date of 4 January Conglin Investment Group can convert the notes into ordinary shares at any time up to maturity on the basis of one fully paid ordinary share for each note. 7 Loss for the half-year $ $ Share-based payments - 55,300 Impairment loss - investments 924, ,000 Impairment loss - exploration and evaluation assets 43, , , ,466 8 Contingent liabilities The possibility of native title claim applications at some future time, under the provisions of the Native Title Act (1993), may affect access to and tenure of exploration tenements. Any substantial claim may have an effect on the value of the tenement affected by the claim. No provision has been made in the accounts for the possibility of a native title claim application. The consolidated entity is liable to pay royalties of 1% of gross sales proceeds from the Killi Killi Hills project, capped at $100,000. Otherwise the Directors are not aware of any contingent liabilities or contingent assets that are likely to have a material effect on the results of the consolidated entity as disclosed in these financial statements. 13

16 Notes to interim finanical report for the half-year ended 31 August Events subsequent to the end of the reporting period On 28 September 2012 the Company issued 250,000 fully paid ordinary shares to Broughton Minerals Pty Ltd (BM), being the tranche of shares as part earn-in consideration under the joint venture agreement with Broughton Minerals Pty Ltd. The joint venture agreement requires the Company to issue 250,000 fully paid ordinary shares to BM by the earlier of 31 August 2012 of the completion of the initial exploration expenditure of $250,000 in the tenements covered by the agreement. The Company had not completed the initial exploration expenditure by 31 August 2012 and was granted an extension to issue the shares. There have been no other significant events subsequent to the end of the reporting period. 14

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