Nyota Minerals Limited A.B.N

Transcription

1 Nyota Minerals Limited A.B.N ANNUAL REPORT 30 JUNE 2012

2 CONTENTS Overview Highlights Chairman s Statement Key Facts Business Review Tulu Kapi Summary Exploration Summary Operations & Financial Review Board of Directors Governance Directors Report Remuneration Report Corporate Social Responsibility Corporate Governance Statement Financial Statements Auditor s independence declaration Financial Report Independent Audit Report to the Members Additional Information Shareholder Information Company Particulars Nyota Minerals Limited is an African mineral exploration and development company. Our current focus is on unlocking the mineral potential of Ethiopia, and on the development of Tulu Kapi, our flagship gold project in Western Ethiopia. We have the expertise through the experience of our talented staff and consultants to realise the potential that clearly exists in developing Ethiopia s next gold mine. We continue to evaluate further assets around Tulu Kapi as well as additional regional prospects in our Northern Blocks exploration, which we believe have the potential to become future standalone projects. We are committed to high standards of responsibility in developing our projects to sustain value over the long term and create a lasting positive legacy in the communities in which we operate. 1

3 HIGHLIGHTS OF THE YEAR Tulu Kapi 42,087m drilling to support exploration, resource upgrades and geotechnical and metallurgical test work related to the Definitive Feasibility Study ( DFS ); Two updates to the JORC compliant Mineral Resource during the Reporting Period to million tonnes at 2.90 g/t gold containing 1.67 Moz of gold; Geological modelling of UNDP Target, adjacent to the main resource, demonstrates good continuity and highlights opportunity for further extensions to mineralisation and scope for further increases; Peak drill assay intercept in the Tulu Kapi Feeder Zone of 6.11 g/t Au over 17m reaffirms the Feeder Zone's potential to provide the significant high grade component to future mine production; Immediately after the Reporting Period, the technical elements of the on going DFS were submitted to the Ethiopian Ministry of Mines ( MoM ) to enable it to commence its technical review of the Tulu Kapi project ahead of granting a Large Scale Mining Licence ( Mining Licence ); Proximal & Satellite Targets The Guji gold bearing saprolite was identified as a small portion of a larger, 2.8km long linear geochemical anomaly, extending from Komto in the south to Guji in the north; The first phase Guji drill programme was completed, with 64 holes drilled for a total of 5,381m and demonstrated that potentially economic mineralisation exists; In fill soil sampling defined an anomaly covering an area of approximately 2.5km 2 at Buneya North, coincidental rock chip samples of up to 7.2g/t and historical hard rock mining; Regional Exploration the Northern Blocks Initial drill programme at Bendokoro produced visible gold (associated with a peak intersection of 11.65g/t Au at 153m 154m depth) and a separate peak assay of 100 g/t over 0.64 m; A detailed fieldwork schedule is being planned for October 2012 to June 2013 based on results to date and previous airborne geophysical and regional soil geochemical sampling, in order to comprehensively explore the whole of the Northern Blocks ahead of further drilling; Financial $14.4 million ( 11 million) raised through a placing to new and existing shareholders and a subsequent, but related, subscription by International Finance Corporation with $2 million ( 1.3 million) being received shortly after the end of the Reporting Period; Cash on Balance Sheet of $14.5 million at 30 June 2012; Corporate Appointment of two independent non executive directors to the Board Neil Maclachlan as Chairman in March and Norman Ling, former Ambassador to Ethiopia, Djibouti and the African Union in June; and Appointment of a Chief Operating Officer in Ethiopia, tasked with delivering the Tulu Kapi mine once a Mining Licence has been secured and DFS finalised. 2

4 CHAIRMAN S STATEMENT Dear shareholders Firstly, I would like to introduce myself as your new Chairman, having joined the board and taken over from Melissa Sturgess in March As my first letter to shareholders, I am particularly pleased to be able to report that the year under review has been one of significant progress for your Company and brings us a step closer to the important transition phase from explorer to producer. Nyota has taken full advantage of the valuable discovery and development work undertaken over the past three years under the successful leadership of Melissa Sturgess and our CEO Richard Chase, who joined in the previous financial year. Operations The important milestones that have been achieved in 2012 include the completion of the infill drilling programme to update our Mineral Resource at Tulu Kapi which is expected to be announced in the next few weeks and which will provide the foundation to our Maiden Ore Reserve. Considerable progress has been made towards the completion of the Definitive Feasibility Study ( DFS ), the bulk of which has been submitted to the Ethiopian Government in support of our application for a large scale Mining Licence. Further work on optimising the mine plan, with the objective of improving the Project s economics, are needed before the DFS is finalised and released. Securing acceptable terms and conditions for the granting of the Mining Licence is a pre requisite to the completion of the DFS. We had hoped that the Mining Licence would have been granted by the end of September but the unfortunate death of the Prime Minister and party chief, the Hon Meles Zenawi with the resultant need for changes in the leadership of the Government has not unnaturally delayed this timetable. At the time of writing, the composition of the new Cabinet was not known. We have no reason to believe, however, that the leadership changes will adversely impact the Mining Licence process, other than to extend the application timetable. At this point in time, we are unable to provide any insight as to the extent of the anticipated delay but, based on the strong and open relationship which the Company has developed with the Ethiopian Government, your Board remains confident that the Mining Licence will be secured. Despite resource constraints with drill rigs diverted to the DFS, Nyota has been active in advancing many of its exploration targets during the year. At Tulu Kapi, the Feeder Zone has continued to provide exciting intercepts every time we have tested it. Although the current DFS does not take into account the possible underground development of Tulu Kapi, recent changes in the expected availability of power for the proposed mine and our improved understanding of the ore body at depth has led us to reconsider our strategy in respect of developing the Feeder Zone. As a result the Company has decided to allocate more resources to reviewing the underground option, which has the potential to significantly improve the overall economics of the Project. Proximal to Tulu Kapi, the exploration team has identified a multitude of targets within a 20 km radius that have the potential to become significant discoveries and provide the Tulu Kapi processing plant with feed material that will allow it to continue far beyond the initial 10 year life of mine that the Tulu Kapi DFS will be based on. We now need to focus on the next stage of developing these targets by generating initial Inferred Resources in this area. Further north, Nyota has one of the largest mineral exploration licence areas in Ethiopia (The Northern Blocks) covering almost 3,200 km 2. Whilst our exploration activity in this region is still at an early stage, we believe that it offers considerable potential for the discovery of new mineral resources. During the year we undertook an initial drilling campaign at Bendokoro which confirmed that the systems we were targeting are gold bearing. These results have justified the further allocation of funds to continue the exploration programme. Our focus in the coming year will be to undertake a thorough fieldwork programme to cover the entire area which we can then use alongside the drilling results to identify targets for follow up drilling in 2013/14. To the extent that our financial resources will allow, your Board will also consider other opportunities to expedite exploration on attractive prospects in this area. 3

5 CHAIRMAN S STATEMENT Governance In addition to the operational achievements described above and which are reported in more detail in the Operational and Financial Review, we have taken steps to broaden the experience and knowledge of your Board with the appointment earlier this year of Norman Ling, the former British Ambassador to Ethiopia, Djbouti and the African Union. He has joined the Board, as an additional independent Non Executive Director and his deep knowledge and understanding of Ethiopia should prove invaluable, particularly at this time of leadership change in Ethiopia and as we engage with the Government in securing the Mining Licence. Of further note I would like to highlight the fact that we have included a Corporate Social Responsibility report in the Annual Report to expand upon the work that we are doing in Ethiopia to support the community local to Tulu Kapi and as confirmation of our respect for the environment in which we operate. We have invested significant time and resource in this area but time and resource which is essential to us maintaining our social licence to operate. The infrastructure and organisation that we have created in Ethiopia is a significant asset to the group but one that is not clearly evident on the Balance Sheet or fully recognised by the market. Corporate Nyota received firm support from its shareholders in the year raising approximately $16.4 million ( 11 million) from a placing of shares to institutional and corporate investors and a subsequent subscription from International Finance Corporation ( IFC ). These funds were mainly applied in progressing the DFS and related infill drilling programme, to working capital and, to a lesser extent, on exploration in the Northern Blocks. We welcomed several new shareholders on to the register during the year, notably Centamin plc and Resource Capital Funds ( RCF ), each of which demonstrated their faith in the Company by taking significant stakes in the placing. RCF has further demonstrated its confidence in Nyota by increasing its shareholding since the placing. We look forward to their and other shareholders continued support for the development of Tulu Kapi as we move into the construction phase. During the year we have focussed on addressing our overhead costs and I am pleased to be able to report considerable success in reducing Nyota's administration expenses. Finally, I would like to thank my fellow directors and all of our staff for the major contribution they have made to the progress achieved in the year and most notably for undertaking the considerable workload placed on them in preparing the DFS. We face a number of challenges as we look forward to the year ahead, notably in completing the DFS and in the development of Tulu Kapi. I am nevertheless confident that with the continued support of our staff, shareholders, the Ethiopian Government and all our other stakeholders that these can be successfully overcome and that in a year s time I will be able to report further progress with the construction and development of Tulu Kapi. Neil Maclachlan London, 28 September

6 KEY FACTS Ethiopia is a vibrant and stable economy with a strong record of controlled, sustainable growth. There is tremendous potential, particularly in the natural resources sector. Africa's fastest growing non energy economy Based on annual average GDP growth from 2006 to 2011 Ethiopia has become Africa's fastest growing nonenergy economy. GDP is estimated to have grown by 7.5% during 2011 and Ethiopia s stability and its dynamic emerging economy has attracted foreign investors from a variety of industries. Enviable Infrastructure National roads run from Djibouti (which provides port access to Ethiopia) to within 10 km of the proposed mine site at Tulu Kapi. Ethiopia has vast hydropower projects that are operating or under construction which should provide Nyota with cheap and reliable power. Historic gold workings The area around Tulu Kapi has been known for many years to have potential for gold mining. During the 1930 s the Italians recovered gold from weathered rock and soil. Nyota has been active at Tulu Kapi and the Satellite & Proximal Targets for just three years and has invested approximately $50 million on exploration and evaluation. Responsible Development As part of the DFS an environmental and social impact assessment has been undertaken to enable Nyota to properly assess, evaluate and manage the negative and positive implications of the project at Tulu Kapi. Nyota will comply with the World Bank s Performance Standards for environmental and social management. Benefits to all Ethiopia will benefit at a national, regional and zonal level from the Tulu Kapi project: Revenue from royalties and taxes Reputation enhanced as a destination to do business Employment Development of the Tulu Kapi area Tulu Kapi is just the start We have many more targets within our exploration licences, which cover almost 3,400 km 2. We see the issuance of a Mining Licence for Tulu Kapi as just the first step in a long term relationship between Nyota and the people of Ethiopia. 5

7 TULU KAPI SUMMARY Tulu Kapi is Nyota s principal focus. The Project is currently the subject of a DFS and negotiations for a Mining Licence are continuing with the Ethiopian Ministry of Mines ( MoM ). Nyota is assessing follow on exploration opportunities from the Satellite & Proximal Targets within a 20 km radius of Tulu Kapi. Figure 1: Graphical Representation of the Tulu Kapi Mineral Resource showing the location of the Feeder zone, Northern Extension, UNDP and SW Extension Opportunities remain for the delineation of additional resources immediately adjacent to the Tulu Kapi deposit including the Feeder zone (discovery hole intercept: 23.05g/t), Northern Extension, UNDP and SW Extension; the location of which are set out in Figure 1 above. These targets are defined by a combination of airborne and ground geophysics, soil geochemical survey, trenching and initial drilling. Table 1: Summary of the JORC Code Compliant Mineral Resource Statement for Tulu Kapi Tulu Kapi Resource Estimate In Situ Model (WAI, March 2012) (Prepared in accordance with the guidelines of the JORC Code (2004)) Ore Type Saprolite Fresh Total Cut Off Grade (g/t) / 0.5 Tonnage (kt) 425 8,157 8,583 Indicated Inferred Au (g/t) kg ,056 25,852 Metal k.oz Tonnage (kt) 395 8,989 9,385 Au (g/t) Metal kg ,534 26,157 k.oz NB 1. Mineral Resources are not reserves until they have demonstrated economic viability based on a feasibility study or pre feasibility study. 2. Mineral Resources are reported inclusive of any reserves. 3. Grade represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery. 6

8 TULU KAPI SUMMARY The gold in the upper parts of the Tulu Kapi ore body is contained predominantly in sub horizontal and shallow dipping lenses in zones of alteration. Therefore, the effect of using regularly sized rectangular blocks to model it as one would mine it (and when all other factors are left unchanged) is to force the inclusion of low grade material and internal waste that must be removed along with the ore. As a result, the gold metal contained in the resource estimate remains almost unchanged but the number of tonnes increases and the average grade of those tonnes decreases. Table 2 below shows how the In Situ Mineral Resource Estimate model ("In Situ") changes when a geometrical mine plan comprising of 2.5m high benches is imposed upon it ("2.5m Bench Dilution"). The purpose to this exercise is to gain a better understanding of the likely tonnes and grade that will be treated by the process plant, as opposed to the tonnes and grade that is present "in situ" in the ground. Table 2: Summary of In Situ Model V s 2.5m Bench Model Tulu Kapi Resource Estimate In Situ Model V s 2.5m Bench Model (WAI, March 2012) (Prepared in accordance with the guidelines of the JORC Code (2004)) Ore Type In Situ 2.5m Bench Dilution Cut Off Grade (g/t) 0.4/ /0.5 Tonnage (kt) 8,583 13,114 Au (g/t) Indicated kg 25,852 24,644 Metal k.oz Inferred Tonnage (kt) 9,385 13,176 Au (g/t) Metal kg 26,157 24,079 k.oz Definitive Feasibility Study In September 2011, Nyota announced the appointment of the Lead Engineer and other key consultants for the DFS of Tulu Kapi, based on an open pit mine and a 2 million tonnes per annum Carbon in Leach ( CIL ) processing plant. Metallurgical test work shows approximately 93 per cent recovery and challenging logistics are offset by cheap grid power and simple gold recovery. Following extensive work during the year, Nyota announced on 6 July 2012 that it had submitted the technical elements of the on going DFS to the Ethiopian Ministry of Mines to enable it to commence its technical review of the Tulu Kapi project, which is a pre requisite for the terms of the Mining Licence to be agreed, while the economic parameters for the DFS, which should support the issue of a Mining Licence, are finalised. Mining Licence Application The application for a Mining Licence for Tulu Kapi was lodged with the MoM in May The Board believes that negotiations with the MoM progressed well during the Reporting Period and remains expectant of securing a large scale Mining Licence for Tulu Kapi in due course. 7

9 TULU KAPI SUMMARY Timeline March 2012 Updated Mineral Resource estimate million 2.90g/t gold containing 1,672,000 ounces of gold increase in the Indicated category of 82 per cent to 831,000 ounces of gold at an average grade of 3.01 g/t; and an Inferred Resource of 841,000 ounces of gold at an average grade of 2.79g/t. September 2011 July 2011 Commencement of the Definitive Feasibility Study SENET appointed as Lead Engineer Golder Associates appointed to undertake the Environmental & Social Impact Assessment and to design the tailings storage facility. WAI appointed to manage resource estimation and mine design/planning. Updated Mineral Resource estimate million 2.84g/t gold containing 1,460,000 ounces of gold Indicated Resource of 457,000 oz at an average grade of 3.04 g/t; and Inferred Resource of 1,003,000 oz at an average grade of 2.76 g/t May 2011 May 2010 Application for a Mining Licence Nyota lodged of an application for a Mining Licence with the Ethiopian Government in relation to Tulu Kapi Mineral Resource increases to 1.38 million ounces of gold million tonnes at 1.68g/t gold containing 1,380,000 ounces of gold representing a 38% increase on Nyota s previously stated objective of a 1 million ounce resource target and a 100% increase on the maiden Inferred Resource September 2009 Maiden Inferred Resource of oz Gold A maiden Inferred Resource is reported for Tulu Kapi in accordance with the JORC Code, comprising 690,000 ounces of gold at 0.5g/t Au cut off. 8

10 EXPLORATION SUMMARY Exploration beyond the immediate expansion of the Tulu Kapi deposit is focused in two distinct areas: Satellite & Proximal comprises multiple targets within a 20 km radius of Tulu Kapi with the potential to provide an extension of the 10 year mine life planned for Tulu Kapi; and Regional comprises the exploration within the Northern Blocks which are located approximately 100 km north of Tulu Kapi and which are expected to generate significant shareholder value in the longer term. Table 3: Summary of Licences Licence Interest Status Licence area (km 2 ) Tulu Kapi Tulu Kapi 100%* Development 8.44 Oromiya 100% Development 2.89 Satellite & Proximal Yubdo 100% Exploration Billa Gulliso 100% Exploration Northern Blocks Mendi 100% Exploration 1, Gombe, Dura & Bambasi 100% Exploration 1, Notes: * On the grant of the Large Scale Mining Licence the Ethiopian Government will be entitled to a 5% free carried interest in Tulu Kapi Application for Large Scale Mining Licence lodged on 11 May Figure 2: Licences location map Note: The relatively small Guji Getere and Oromiya licences are adjacent to the Tulu Kapi licence and highlighted in green on the map above. 9

11 EXPLORATION SUMMARY Satellite & Proximal Targets The exploration emphasis in respect of the Satellite & Proximal Targets is the completion of sufficient exploration and preliminary evaluation to demonstrate to shareholders that there is obvious potential to provide for an extension of mine life well beyond the 10 year initial programme planned for Tulu Kapi. Exploration is focussed along the four key trends: Tulu Kapi Trend The Tulu Kapi trend comprises a chain of topographic highs formed by a series of granitoids many of which are anomalous in gold. In addition to the Tulu Kapi and UNDP resources, these targets include Keley and Chalti. Ankori Trend The Ankori Trend is defined based on the regional geophysical surveys of a northwest trending series of magnetic highs and lows running parallel to the Tulu Kapi trend of granitoids. Targets include Buneya North, an anomaly covering an area of approximately 2.5 km 2 with gold in soil results peaking at 9.3g/t and with rock chip samples containing a peak of 7.2g/t gold plus anomalous zinc and copper. Guji Komto Trend The Guji gold bearing saprolite is a small portion of a larger, 2.5km 2.8km long linear geochemical anomaly, extending from Komto in the south to Guji in the north coincidental with a meta sedimentary/meta volcanic belt including mineralized ferruginous schists and limonitic quartz breccia. The gossan bodies are lenticular, typically 100m wide and several hundred meters long. A first phase of drilling at the Guji Saprolite target has demonstrated economic intersections of mineralised saprolite that provide scope for quick and low cost development of additional easily accessible resources to feed into the future Tulu Kapi plant. Guliso Trend The Guliso trend hosts a number of gold shows (the most significant of which is the Chago target) with significant gold in soil geochemical results, which appear to relate to regional scale shear systems with high concentrations of quartz carbonate tourmaline pyrite veins and possible volcanic massive sulphide style mineralisation. Regional Exploration Nyota s regional exploration area of interest comprises the Northern Blocks, approximately 100 km north of Tulu Kapi. The area covered is approximately 3,200 km 2 and is one of the largest exploration holdings in Ethiopia. Interpretation of satellite imagery undertaken in the year, covering the Northern Blocks, is expected to reinforce the targets previously generated through airborne geophysics, soil geochemical survey, rock chip sampling and reconnaissance mapping and thereby provide better definition of targets leading to more reliable prioritisation for subsequent detailed exploration post the wet season. The current key targets identified to date are the Boka Sirba and Bendokoro prospects the latter of which has yielded visible gold from the limited drilling that has been undertaken (peak assay of 11.65g/t Au at 153m 154m depth) and assays of up to 100 g/t over 0.64 m returned. 10

12 OPERATIONS AND FINANCIAL REVIEW 1. Overview The year to 30 June 2012 was a period of change for Nyota. The commencement of the Definitive Feasibility Study ( DFS ) for our flagship asset, Tulu Kapi, signalled the start of our development from an exploration company to a mining company. Important changes to your Board were also made to reflect this new chapter and ensure that the Group is best placed to maximise shareholder value. The focus of the Group s attention during the year has remained its strong portfolio of gold projects in Ethiopia for which its business strategy is three fold: The development of Ethiopia s next commercial gold mine at Tulu Kapi where Nyota is currently undertaking a DFS and which is currently the subject of a Large Scale Mining Licence application and continued exploration; Exploration of multiple targets within a 20 km radius of Tulu Kapi Satellite & Proximal Targets with the potential to provide for an extension of the 10 year mine life planned for Tulu Kapi; and Exploration of the 3,200 km 2 area within the Northern Blocks, located approximately 100 km north of Tulu Kapi which has the potential to provide shareholder value in the longer term. 2. Tulu Kapi The year saw considerable progress made towards the development of the Tulu Kapi deposit into Ethiopia s next commercial gold mine. Nyota expects to be the first non state owned company to be granted a Large Scale Mining Licence for gold in Ethiopia and continues to progress the DFS and to engage with the MoM in relation to its mining licence application, originally submitted in May Tulu Kapi Resource During the year, Nyota announced two updates to its JORC compliant Mineral Resource. The latest, in March 2012, estimated million 2.90g/t gold for 1,672,000 ounces of contained gold. This estimate represented an overall increase in the total Mineral Resource of 15 per cent and an upgrade and increase in the Indicated category of 82 per cent to 831,000 ounces of a grade of 3.01g/t gold. The current Mineral Resource statement prepared by WAI is set out in Table 1, above. The Tulu Kapi deposit is bounded by a series of faults with various orientations dominated by the Bedele Shear, which defines the southern boundary of the known deposit. Drilling during the year focused on these individual faults, with the result that it has been possible to model these structures in more detail and in the process establish fault bound blocks of mineralisation which have been individually modelled by WAI. The mineralisation within individual fault bound blocks shows subtle variations in dip and strike of the mineralised structures. These can now be identified and modelled, overcoming previous difficulties in demonstrating continuity between fault boundaries. With the containment of mineralisation within fault blocks it is possible to clearly demonstrate continuity which is reflected in the significant increase in the Indicated Resource. The new geological model also reflects the major input from the Group's exploration team based at Tulu Kapi and informed the 130 drill hole, 14,650m infill drilling programme initiated with WAI, aimed at converting a further 260,000 ounces of Inferred Resources to Indicated status by the end of Q for the purposes of the ongoing DFS. Opportunities for the delineation of additional resources immediately adjacent to the Tulu Kapi deposit include the Feeder zone, Northern Extension, UNDP and SW Extension. These targets are defined by a combination of airborne and ground geophysics, soil geochemical survey, trenching and initial drilling and are summarised below. 11

13 OPERATIONS AND FINANCIAL REVIEW Feeder Zone As part of the DFS, the diamond drill hole TKMT 001 was drilled to a final depth of m to provide core for metallurgical testing, and at depth to test the continuity of the deep high grade mineralisation which has not previously been defined in this part of the deposit. The drilling and assay results confirm the strike continuity of the deep high grade mineralisation by 60m to the SW and 40m (up dip) SE of previously intersected deep high grade mineralisation. Only mineralisation in the Feeder Zone was processed at Tulu Kapi and dispatched for gold assay as the balance of the drill core was sent directly to independent laboratory for metallurgical test work. Two mineralised intercepts were identified, the first returning a peak grade of 6.11 g/t Au over 17m and the second deeper zone returning a peak grade of 1.38 g/t Au over 8.54 m. The evidence of further extensions of mineralisation over substantial widths and at grades exceeding 6g/t Au reaffirm the Company's view that ultimately the Feeder Zone has the potential to provide a significant high grade component to future mine production. Shareholders are aware that drill rigs were reallocated to DFS drilling in order to support the application for the conversion of the current Exploration Licence to a Mining Licence but this recent high grade drill result supports the Company's intent to assign at least one diamond drill rig to further Feeder Zone drilling in Q4. Northern Extension The Northern Extension is one of the areas expected to result in further increases in the resource and step out drilling is continuing based on the positive results from the most recent holes drilled. The original Northern Extension mineralisation intersected was assumed to occur beyond the limits of the open pit and was to be mined via a cross cut from the decline designed to access the Feeder Zone. However, the tenor and extent of recent intersections indicate that the Northern Extension could be incorporated into the Tulu Kapi open pit profile or established as a separate secondary open pit. UNDP The UNDP target is located north of and adjacent to the main Tulu Kapi resource. Mineralisation is contained in a NE SW trending corridor dipping at degrees to the northwest and similar in morphology to the shallow Tulu Kapi lodes. An updated geological model demonstrates good continuity and provides the evidence necessary to warrant further drilling to test the strike extensions to the deposit and at the same time to complete infill drilling to upgrade the resource from an Inferred to an Indicated status. This drilling is scheduled to commence after the main Tulu Kapi infill drilling and will also determine whether the UNDP deposit is exploited as a separate pit development or be incorporated into the Tulu Kapi open pit. SW Extension Drilling has proven the presence of economic mineralisation beyond the previous limits of the ore body and the interim pit outline has been extended to accommodate this mineralisation. Additional drilling is required to test for further extensions. Definitive Feasibility Study In September 2011, Nyota announced the appointment of the lead engineer and other key consultants for the DFS for Tulu Kapi, based on an open pit mine and a 2 million tonnes per annum Carbon in Leach ( CIL ) processing plant. Metallurgical test work shows approximately 93 per cent recovery and challenging logistics are offset by cheap grid power and simple gold recovery. 12

14 OPERATIONS AND FINANCIAL REVIEW Following extensive work during the year, Nyota announced on 6 July 2012 that it had submitted the technical elements of the on going DFS to the Ethiopian Ministry of Mines to enable it to commence its technical review of the Tulu Kapi project, which is a pre requisite for the terms of the Mining Licence to be agreed, while the economic parameters for the DFS, which should support the issue of a Mining Licence, are finalised. Mining Licence Application The application for a Large Scale Mining Licence for Tulu Kapi was lodged with the MoM in May The Board believes that negotiations with the MoM progressed well during the Financial Year and remains expectant of securing a Mining Licence for Tulu Kapi. 3. Exploration Overview During the year, the DFS required the allocation of the bulk of the Group's drilling capacity and technical personnel. Although rig capacity for exploration was therefore limited, Nyota achieved the following significant milestones: Table 4: Exploration Milestones Q1 Q2 Q3 Q4 Metres drilled Tulu Kapi Extensions Satellite & Proximal Targets Northern Blocks New Feeder Zone high grade gold intersections over notable widths including peak intersections of: 23.30g/t Au over 1.20m, 14.50g/t Au over 8.00m, 7.30g/t Au over 14.40m 5.42g/t Au over 26.55m Three new discoveries reported as a result of the interpretation of field work and data collected from the Northern Blocks during the period February to July 2011 At Guji, the first phase of saprolite drilling was completed, aimed at assisting to identify easily accessible low cost resources that can be processed through the Tulu Kapi plant Comprehensive gold in soil geochemical coverage over the most prospective areas within the Proximal and Satellite Targets identified the Komto Guji trend, a gossanous body extending over a strike length of approximately 2.8km to the west of the Tulu Kapi deposit Fieldwork conducted in preparation for further drilling following the excellent initial results at the Bendokoro and Boka Sirba prospects Peak drill assay intercept in the Feeder Zone of 6.11 g/t Au over m reaffirming the Feeder Zone's potential to provide the significant high grade component to future mine production A 2.5km2 gold in soil geochemical anomaly with coincidental rock chip samples of up to 7.2g/t and historical hard rock mining was identified at Buneya North, close to Tulu Kapi Peak drill assay intercept at Bendokoro East, in the Northern Block, of 100 g/t Au over 0.64 m. A diamond drill hole at Bendokoro West returned visible gold and a corresponding g/t over a 1 m interval within silicified and mineralised porphyry dyke in year 42,087 2,656 2,244 The current status of each of the exploration programmes is detailed below: 13

15 OPERATIONS AND FINANCIAL REVIEW Satellite & Proximal Targets The exploration emphasis in respect of Satellite & Proximal Targets remains the completion of sufficient exploration and preliminary evaluation to demonstrate to shareholders that there is obvious potential to provide for an extension of mine life well beyond the 10 year initial programme planned for Tulu Kapi. The tenor of targets within the immediate vicinity of Tulu Kapi and their significance as possible future ore sources has not fully been appreciated as there are multiple targets identified to date within a 20km radius of Tulu Kapi that still require investigation. The selection of targets for follow up during the year was driven by the need to plan the final locations of key elements of infrastructure for the Tulu Kapi mine, including the processing plant, tailings storage facility and access roads. As a result, additional close spaced gold in soil sampling has been completed and some limited sterilisation drilling undertaken where targets are located "under" preferred infrastructure sites. The Tulu Kapi Trend The Tulu Kapi trend comprises a chain of topographic highs formed by a series of granitoids (mainly sericitised syenite), many of which are anomalous in gold. In addition to the Tulu Kapi and UNDP resources, these targets include Keley and Chalti. 830 soil samples and 119 grab samples have been taken during the year and, combined with historical data, have highlighted seven target areas warranting detailed follow up. Keley Syenite Comprises a mafic rich syenite with pervasive alteration of albite with quartz veinlets and pyrite, which is similar to Tulu Kapi gold bearing alteration. A campaign of rock chip sampling and trenching was undertaken and samples were analysed for Au. Grid soil tests returned a number of anomalous values (0.05 to 0.19 ppm) spatially associated with the albitised and pyrite plus quartz veinlet bearing part of the Keley Syenite. 27 rock chip samples were collected from the albitized part of the syenite and laboratory results are pending. Three trenches with a total length of 132m were excavated at Keley towards the end of the year, but assay results have been disappointing. A maximum of 0.61 g/ton over a meter was obtained from albitised syenite with quartz veinlets and sulphide. Chalti Syenite A geophysical survey and reappraisal of the available data, including drill core, was undertaken during the year. Based on this work, which showed strong chargebility and resistivity anomalies over the weathered ground southeast of the main Chalti massif, about 110 grid soil samples were collected and analysed for Au. Out of the samples, 47 of them show anomalous values between 0.01 to 0.68 ppm. Some additional fences of vertical reverse circulation drill holes are planned to test the target further. The Ankori Trend The Ankori Trend is defined based on the regional geophysical surveys of a northwest trending series of magnetic highs and lows running parallel to the Tulu Kapi trend of granitoids. Buneya North and Extension In fill soil sampling has defined an anomaly of greater than 45ppb gold in soil covering an area of approximately 2.5km 2 (peaking at 9.3g/t gold in soil) underlain by diorite, granite and meta sediment, subject to shear type deformation and intense alteration. Rock chip samples containing a peak of 7.2g/t gold plus anomalous zinc and copper were collected proximal to a site of historical small scale exploratory hard rock mining over an area of 200 meters by 400 meters. Gold is associated with quartz veining and pyrite mineralization in sericitised and silicified sheared host rocks. Mechanical trenching and an initial drill programme are planned. An initial diamond drilling programme is planned for late 2012 or early

16 OPERATIONS AND FINANCIAL REVIEW The Guji Komto Trend As reported in the quarterly report to 31 March 2012, the Guji gold bearing saprolite is a small portion of a larger, 2.5km 2.8km long linear geochemical anomaly, extending from Komto in the south to Guji in the north coincidental with a meta sedimentary / meta volcanic belt including mineralized ferruginous schists and limonitic quartz breccia. The gossan bodies are lenticular, typically 100m wide and several hundred meters long. Guji Saprolite The first phase Guji drill programme is complete, with 64 holes drilled for a total of 2,656m. Sample assays from nine of the 64 holes were pending at the end of the Reporting Period, with peak assays from those received detailed in Table 4, below. Drilling thus far covers only a 600m portion of the Guji gold in soil anomaly, with the anomaly open for 700m to the north, and 800m to the south. This initial drill programme was designed specifically to test the scope for the quick and low cost development of additional easily accessible resources to feed into the future Tulu Kapi plant from mineralisation found in near surface saprolitic mineralisation. The programme has concluded the following: economic intersections of mineralised saprolite exist (as previously announced on 11 June 2012); mineralisation is found where gold in soil geochemical anomalies are coincident with ground geophysical targets generated by the resistivity geophysical survey completed in late 2011; and anomalous gold in soil geochemistry occurs for a further approximate 800m south and 700m north of the current drill zone which is expected to return further mineralised gold intersections once drilled. Table 5: Guji Saprolite Drill Programme Peak Gold Intercepts Borehole ID Depth From (m) Depth To (m) Mineralised Width (m) Grade (g/t Au) GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ GRC_ A second phase of shallow reverse circulation drilling is being planned for late 2012, after the rainy season, aimed specifically at the extensions to mineralisation defined by the geophysical and geochemical surveys. Komto A road has been constructed to the Komto meta sediment target, the southernmost extension of the prospective Guji Komto Trend. Subject to trenching, reverse circulation drilling to confirm the depth extent of mineralization is planned and the drill pads prepared. Drilling expected to be undertaken in before the end of During the Q4 period, additional 34 rock chip samples were collected and the area is covered by detailed geological mapping at a scale of 1:5,000. Rock chip samples show sulphide mineralization (pyrite, galena and malachite staining) and laboratory results are pending. 15

17 OPERATIONS AND FINANCIAL REVIEW Regional Exploration Nyota s regional exploration area of interest comprises the Northern Blocks, approximately 100 km north of Tulu Kapi. The area covered is approximately 3,200 km 2 and is one of the largest exploration holdings in Ethiopia. Interpretation of satellite imagery undertaken in the year, covering the Northern Blocks, is expected to reinforce the targets previously generated through airborne geophysics, soil geochemical survey, rock chip sampling and reconnaissance mapping and thereby provide better definition of targets leading to more reliable prioritisation for subsequent detailed exploration post the wet season. The current key targets are summarised below. Bendokoro Twelve holes (for 2,244m) were drilled at the Bendokoro prospect in the first phase of drilling targeting rock chip and trench intersections coincidental with a complex but distinct NW SE lineation evident from the airborne geophysical survey conducted by Nyota in late Two distinct styles of gold mineralisation were observed: the first is associated with pyrite and rare chalcopyrite sulphide mineralisation and sericite alteration of the meta volcanic and schist host rocks and is typically in the range of g/t (for example BKBH008: 9.5m at 0.45g/t; BKBH009: 5.0m at 0.54g/t; BKBH10: 2.0m at 0.41g/t; BKBH001: 0.44g/t); and the second is associated with silicification and quartz veining. The latter includes the visible gold noted in borehole BKBH 003 (Bendokoro West) (including a peak of 11.65g/t Au at 153m 154m depth) and borehole BKBH 005, drilled to intersect the depth extension of the Bendokoro East target, assayed at 100 g/t over 0.64 m. In addition, elevated silver values have been noted in samples taken from boreholes on the eastern anomaly. The origins ("protolith") of the Bendokoro East gossan, which assayed up to 10.2g/t in rock chip, was not obvious in the boreholes drilled beneath it and therefore remains enigmatic. It is clear from the 2011/12 fieldwork that the Bendokoro target is gold bearing and that mineralisation is associated with epithermal alteration of preferential host rocks proximal to a regional shear zone. Drilling results from the central section are encouraging but narrow widths and poor continuity indicates low economic potential. However, as the target area is "pregnant" with gold the potential exists along shear extensions for more significant accumulations. Follow up field work is therefore underway, comprising soil sampling to the north and south of the main Bendokoro gold insoil geochemical anomaly and outcrop, mapping and sampling focusing on the western fault zone and associated silica alteration and sulphide mineralisation; a strike extent over more than 1km. In addition, the Bendokoro model will be extended to similar volcano sedimentary terrains and structures elsewhere in the Northern Block licenses. Boka Sirba Boka Sirba is a skarn target that extends over a strike length of approximately 15 km with other targets recently identified in its immediate vicinity. Detailed reconciliation of geophysical survey data, geological mapping and anomalous samples has proven that the quartzite meta sediments in the more distal epidote environment contain gold. This contradicts the initial model in which gold was thought to be restricted to the Boka Sirba marble unit of the endo skarn. Further work is therefore required before the intended initial drilling can commence; this is ongoing. In addition, soil sampling and mapping continues to target extensions to the mineralised assemblage of rocks which totals more than 15km of strike length. Excellent grades have been received for grab samples taken over the original Boka Sirba skarn with peak grades of g/t Au, 5.92 g/t Au, 5.85 g/t Au and 1.80 g/t Au. Two speculative trenches dug along strike from the main skarn outcrop returned low grades. 16

18 OPERATIONS AND FINANCIAL REVIEW Approximately 3 km due west, a new Boka Sirba target has been identified returning peak grab sample grades of g/t Au, g/t Au, 8.84 g/t Au and 5.92 g/t Au. This new target area (Boka West) shows mineralization of unknown strike extent that will be tested by trenching. Based on the high gold grades returned from grab sampling it is likely that additional metres will be added to the planned drilling at Boka Sirba to include this prospect. Muremera Nickel Project While the focus for the year has been Ethiopia, Nyota retains a 100% interest in the Muremera Nickel Project in Burundi which is located a short distance away along strike from Xstrata's Kabanga Nickel Project (which is on the Tanzanian side of the Burundi/Tanzania border), thought to be the single largest undeveloped nickel sulphide deposit in the world. The Muremera Exploration Licence was renewed during the year and is valid until July However, no substantive work was done on this project during the reporting period due to Nyota s focus on its Ethiopian gold operations. The Company is presently considering available options in relation to a possible divestment of its interest in the Muremera Nickel Project. 4. Corporate Nyota has undergone considerable change during the reporting period, as it commenced the transition from exploration to a development and mining company. Placing During the year Nyota raised $16.4 million ( 11 million) through a placing to new and existing shareholders ( Placing ) and a subsequent, but related, subscription by International Finance Corporation. The funds raised allowed the Group to maintain momentum with exploration drilling on its Northern Block exploration properties and provided corporate working capital to the Group beyond June 2012, allowing for steady progression to complete the DFS for Tulu Kapi and progress towards project finance. A total of 161,000,000 new ordinary shares were issued following the passing of certain resolutions by the Company's shareholders at a general meeting held on 7 March A further 21,727,650 new ordinary shares were issued in July As a result of the Placing, Centamin plc ( Centamin )(LSE: CEY), which subscribed for 67,000,000 new ordinary shares, became the largest shareholder in Nyota. Centamin is a an Arabian Nubian Shield focused gold mining company whose flagship project is the Sukari Gold Mine, located in the eastern desert of Egypt. Added to previous on market share purchases, Centamin currently holds 90,000,000 ordinary shares in Nyota, representing 13.6% of the Company s issued share capital. Board Changes Advancing the vision set out in the Chairman s statement to the Annual General Meeting last year, several changes were made to the composition of the Board such that it is now more closely aligned with best practice in corporate governance. On 21 March 2012, Neil Maclachlan was appointed as Non Executive Chairman of Nyota. Neil has extensive experience in the mining sector and in the City and full details of his background can be found on page 19. Just before the year end, Norman Ling, the former British Ambassador to Ethiopia, Djibouti and the African Union, was also appointed as a Non Executive Director of the Company and his details can also be found on page 19. These two appointments provide strong independent input to the Board and its committees and the Board envisages that they will play a key role in representing shareholder interests in the future. Additional appointments of non executive directors will be considered in the future. The former Chairman and founding director of Nyota, Melissa Sturgess retired from the Board during the year. She has been fundamental to forming and developing the Group s opportunities and relationships in Ethiopia. 17

19 OPERATIONS AND FINANCIAL REVIEW We have retained her expertise and knowledge as she continues to provide consulting services to the Company during a 12 month termination arrangement. The Board would like to place on record its thanks for her contribution to the Company over many years. Corporate Development The start of the DFS resulted in a significant increase in activity in Ethiopia and the Tulu Kapi camp has regularly accommodated in excess of 100 people, with subsistence provided for twice that number on a daily basis. The existing camp has been expanded and improved to cater for these numbers, and longer term a full construction camp will be built. This will be one of the first priorities following the issuance of a Large Scale Mining Licence, and as part of this the location of facilities will move from their current position sitting over the Tulu Kapi deposit. Quarterly management meetings are held in Addis Ababa with members of the Board attending alongside the management teams from Tulu Kapi and Addis Ababa. Competent Persons The Resource Statement included in this Annual Report is the responsibility of Mark L Owen, BSc, MSc, CGeol, EurGeol, FGS, Technical Director for Geology and Resources. Mr Owen is a full time employee of Wardell Armstrong International, an independent Consultancy and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration, and to the type of 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 and as defined in the AIM Note for Mining and Oil & Gas Companies. Mr Owen consents to the inclusion in this Annual Report of the matters based on their information in the form and context in which it appears and confirms that this information is accurate and not false or misleading. The technical exploration and mining information contained in this Annual Report has been reviewed and approved by Mr D Hage Pr.Sci.Nat, Chief Geologist for Nyota Minerals Limited. Mr Hage has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity to 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 and as a qualified person under the AIM Note for Mining and Oil & Gas Companies. Mr. Hage is an employee of Nyota Minerals Limited and is a Member of the South African Council for Natural Scientific Professions (SACNASP). Mr Hage consents to the inclusion in this Annual Report of such information in the form and context in which it appears. 18

20 BOARD OF DIRECTORS Neil Maclachlan Non Executive Chairman Neil Maclachlan has extensive experience in both the City and the mining industry and was appointed in March 2012 to help further the development of Nyota. With three decades of investment banking experience, he has held senior positions, including with HSBC Investment Banking at Wardley Australia and James Capel & Co Ltd. His banking experience spans Asia, Australia, and Europe. Additionally, Neil was the Executive Vice President, Asia, for Barrick Gold Corporation and a director of Golden Prospect Plc. Most recently, he was a director of publicly listed Extract Resources Ltd and Kalahari Minerals Plc ("Kalahari"), where he was part of the team that successfully negotiated and concluded the sale of Kalahari to Taurus Minerals, an indirect subsidiary of China Guandong Nuclear Power Corporation, in February Richard Chase Chief Executive Officer Richard Chase holds a BSc (Hons.) in Geology from the University of Birmingham and a MSc in Exploration Geology from the University of Rhodes, South Africa. In addition he is a Member of Institute of Materials, Minerals and Mining and a Fellow of The Geological Society. He has 20 years experience in the resources sector: eight of those working in the mining industry as an exploration and mining geologist with SAMAX Resources, which was acquired by Ashanti Goldfields in 1998 and the last eight with Ambrian Capital Plc, the AIM listed natural resources investment bank. Richard was Managing Director of the Board of Ambrian Partners Limited (a wholly owned subsidiary of Ambrian Capital plc) from September 2009 until May Martyn Churchouse Technical Director Martyn Churchouse is a geologist with an extensive background in exploration and mining in both Africa and Eastern Europe. He has a BSc in Geology, MSc in Mining & Geology and an MBA in International Business. He has significant experience in exploration, resource definition, mine development, production and corporate management with junior mining companies. Michael Langoulant Finance Director Mike Langoulant is a chartered accountant with 20 years' experience in corporate administration and fundraising for public companies. Mike spent ten years with large international accounting firms, and has acted as chief financial officer, company secretary and non executive director for a number of publicly listed companies. Mike has operated his own consultancy firm since David Pettman Non Executive Deputy Chairman David Pettman became a partner of UK stockbroker Williams de Broe in 1976 after he passed the Stock Exchange exams. He worked on the institutional sales desk for 20 years. In 1996, he began to specialise in the mining sector and was responsible for advising on the successful flotation of Aquarius Platinum Limited, Nyota Minerals Limited, Sylvania Resources Limited and Churchill Mining Plc. Dr. Evan Kirby Non executive Director Evan Kirby is a metallurgist with over 30 years' experience. He worked in South Africa for 17 years primarily for Impala Platinum, Rand Mines and Rustenburg Platinum Mines before moving to Australia in In Australia, Evan worked for Minproc Engineers and Bechtel before starting his own consulting business a decade later. With his broad experience, he has been involved in the development of a wide range of mining and minerals processing projects in Africa and Australia, as well as other parts of the world. Norman Ling Non Executive Director Norman Ling has held a series of appointments at the UK Foreign and Commonwealth Office in a career spanning more than 30 years. Norman's last post was as British Ambassador to Ethiopia, Djibouti and the African Union from 2008 to 2011, when he retired from government service. 19

21 DIRECTORS REPORT Your directors present their report on the consolidated entity (referred to hereafter as the Group ) consisting of Nyota Minerals Limited (referred to hereafter as Nyota or the Company ) and the entities it controlled at the end of, or during, the year ended 30 June 2012 ( the Financial Year ). Directors The following persons were directors of the Company during the whole of the Financial Year and up to the date of this report: David Pettman Richard Chase Martyn Churchouse Michael Langoulant Evan Kirby Neil Maclachlan and Norman Ling were appointed as directors on 21 March 2012 and 21 June 2012 respectively and continue in office at the date of this report. Melissa Sturgess was a director from the beginning of the financial year until her resignation on 21 March Information on Directors Biographies for each director detailing their experience and expertise are set out on page 19 of this annual report. Neil Maclachlan Aged 70 Non Executive Chairman (Appointed March 2012) Member of the Audit and Remuneration Committees. Qualifications BSc (Hons.) Biochemistry Interests in shares and options as at the date of this report Ordinary Shares 2,170,000 Options expiring 30 June 2015 (nil exercise price) 2,500,000 Current listed company directorships Oklo Resources Limited (since 2007) Eurogold Limited (since 2004) Former listed company directorships in last 3 years Kalahari Minerals plc (from 2009 to 2012) Extract Resources Limited (from 2009 to 2012) Brinkley Mining plc (from 2009 to 2010) Samson Oil & Gas Limited (from 1998 to 2011) David Pettman Aged 66 Non Executive Deputy Chairman (Appointed March 2010) Chairman of the Audit and Remuneration Committees Qualifications None Interests in shares and options as at the date of this report Ordinary Shares 720,000 $0.15 Options expiring 31 December ,000,000 $0.35 Options expiring 31 December ,000 Current listed company directorships None Former listed company directorships in last 3 years None 20

22 DIRECTORS REPORT Richard Chase Aged 41 Chief Executive Officer (Appointed June 2011) Qualifications BSc (Hons) Geology; MSc Exploration Geology Interests in shares and options GBP0.175 Options expiring 30 June ,700,000 GBP0.20 Options expiring 30 June ,800,000 Current listed company directorships None Former listed company directorships in last 3 years None Martyn Churchouse Aged 52 Technical Director (Appointed October 2009) Qualifications BSc (Hons.) Geology; MSc Mining & Geology; MBA Interests in shares and options $0.15 Options expiring 31 December ,000,000 $0.35 Options expiring 31 December ,667 Current listed company directorships None Former listed company directorships in last 3 years Carlton Resources plc (from 2005 to 2012) Michael Langoulant Aged 55 Finance Director (Appointed April 2005) Member of Audit and Remuneration Committees and Company Secretary Qualifications B Com; Chartered Accountant (CA) Interests in shares and options Ordinary Shares 3,486,129 $0.35 Options expiring 31 December ,000 Current listed company directorships White Cliff Minerals Limited (since 2007) Luiri Gold Limited (since 2011) Former listed company directorships in last 3 years None Evan Kirby Aged 61 Non Executive Director (Appointed November 2002) Qualifications BSc (Hons) Metallurgy; PhD Metallurgy Interests in shares and options Ordinary Shares 3,325,729 $0.35 Options expiring 31 December ,000 Current listed company directorships Luiri Gold Limited (since 2011) Bezant Resources Plc (since 2008) Former listed company directorships in last 3 years Great Australian Resources Limited (from 2008 to 2009) China Gold Mines Limited (from 2005 to 2010) 21

23 DIRECTORS REPORT Norman Ling Aged 59 Non Executive Director (Appointed 21 June 2012) Qualifications BA (Hons) German and Economic History Interests in shares and options GBP0.08 Options expiring 20 June ,200,000 Current listed company directorships None Former listed company directorships in last 3 years None Company secretary Until January 2012 Nyota had co company secretaries in Messrs R Jarvis and M Burchnall. In January 2012, M Langoulant, a Chartered Accountant and Finance Director of Nyota was appointed as Company Secretary. Directors Meetings The number of meetings of directors (including meetings of committees of directors) held during the Financial Year and the number of meetings attended by each Director is set out in the table below. Name Full Meetings of Directors Meetings of Committees Audit Committee Remuneration Committee Attended Held Attended Held Attended Held M Sturgess (resigned 21 March 2012) D Pettman M Churchouse ** ** ** ** M Langoulant E Kirby ** ** ** ** R Chase N Maclachlan 2 2 *** *** *** *** (appointed 21 March 2012) N Ling (appointed 21 June 2012) ** ** ** ** ** = Not a member of the relevant committee *** = Member of the relevant committee but no meetings of the relevant committee were held following the appointment = Attendee at meeting although not a committee member All other matters that required formal board resolutions were dealt with via circulating written rotary resolutions. In addition the directors met on an informal basis at regular intervals during the year to discuss the Company s affairs. Principal activities The principal activities of the Group during the course of the Financial Year were mineral exploration and evaluation in Ethiopia, East Africa. 22

24 DIRECTORS REPORT Review of operations Information on the operations and financial position of the Group and its business strategies and prospects is set out in the Operations and Financial Review section of this annual report. Dividends No dividend has been paid since the beginning of the Financial Year and no dividend has been recommended for the Financial Year. Likely developments and expected results The Group intends to complete the Definitive Feasibility Study ( DFS ) for Tulu Kapi and continue its negotiations with the Ethiopian Ministry of Mines for the grant of a Mining Licence. This would enable the Group to commence development of a mine and processing facility at Tulu Kapi. The Company also intends to continue its exploration of other tenement holdings in Ethiopia. Further commentary on expected results of certain operations of the Group is included in the Operations and Financial Review section of this annual report. Environmental regulation The Group s main country of operation is Ethiopia where mining and exploration are subject to environmental regulation under Ethiopian legislation. Field work programmes are carried out in accordance with the Group s environmental management policies and procedures. There have been no significant known breaches of these regulations and principles during the Financial Year. Significant changes in the state of affairs Significant changes in the state of affairs of the Group during the Financial Year were: In September 2011 the Company commenced work on a DFS for its Tulu Kapi project. The DFS comprises a significant work programme to be undertaken by the Company and its expert advisers with the objective of proving the economic viability of the Tulu Kapi project and supporting the project finance that will be required to develop the asset. The DFS was ongoing as at the balance sheet date. In March 2012 the Company issued 161,000,000 ordinary shares by way of a placement to UK and Australian investors at an issue price of $0.089/ 0.06 each to raise $14.4 million ( 9.6 million) in working capital. In June 2012 the International Finance Corporation ( IFC ) subscribed for 21,727,650 ordinary shares at $0.089/ 0.06 on the same terms as those investors that participated in the earlier placing to raise $2 million ( 1.3 million) in additional working capital. The ordinary shares were issued to the IFC after the balance sheet date, in July There were no other significant changes in the state of affairs of the Group that occurred in the Financial Year not otherwise disclosed in this report. Matters subsequent to the end of the Financial Year On 12 July 2012 the Company completed a placement of 21,727,650 ordinary shares at an issue price of $0.089/ 0.06 to raise $2 million ( 1.3 million) before costs. Other than the above no other matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantly affect: (a) the Group s operations in future financial years; (b) the results of those operations in future financial years; or (c) the Group s state of affairs in future financial years. Remuneration Report The remuneration report for 2012 is included as separate report, immediately following the Directors Report. 23

25 DIRECTORS REPORT Indemnification and Insurance of Directors and Officers During the Financial Year the Company has paid premiums in respect of a contract insuring all directors and officers of the Company and its controlled entities against liabilities incurred as directors or officers to the extent permitted by the Corporations Act Due to confidentiality clauses in the contract the amount of the premium has not been disclosed. Loans to directors and executives All existing loans to directors and executives were repaid during the Financial Year and no new loans were made. Information on loans to directors and executives, including amounts, interest rates and repayment terms are set out in note 18 to the financial statements. Shares under option At the date of this report 30,213,334 unissued ordinary shares of the Company are under option on the terms and conditions detailed below; of which 13,366,667 are under option to current directors of the Company as detailed in Note 18 to the Consolidated Financial Statements. These options do not entitle the holder to participate in any other share issue of the Company or any other entity. Date options granted Expiry date Issue price of shares Number under option 3 September September 2012 $0.11 5,300, December December 2012 $0.13 1,280, February December 2012 $0.15 7,000, March June 2013 $ , July June 2013 $ ,000 6 August June 2013 $ , November December 2015 $0.35 3,933,334 4 February January ,000,000 3 June June ,700,000 3 June June ,800,000 9 March June 2015 Nil 2,500, June June ,200,000 Shares issued on the exercise of options The following ordinary shares have been issued during the Financial Year upon the exercise of options. Date options granted Issue price of shares Number of shares issued 3 September 2009 $ ,000 Proceedings on behalf of 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 on behalf of the Company with leave of the Court under section 237 of the Corporations Act

26 DIRECTORS REPORT Non audit services There were no non audit services provided by the auditors of the parent entity (PricewaterhouseCoopers), its related practices and non related audit firms, other than BDO LLP which provided taxation and remuneration review services. The Audit Committee has considered the position and is satisfied that the provision of the non audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act The auditor s independence was not compromised. Auditor s independence declaration A copy of the auditor s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 45. Rounding of amounts The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the Directors' Report. Amounts in the Directors' Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. Auditor PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act This report is made in accordance with a resolution of the directors. N Maclachlan Non Executive Chairman London, 28 September

27 REMUNERATION REPORT An introductory message from the Board: As forecast in the Chairman s Statement at the 2011 AGM, the Company has appointed 2 additional independent non executive directors and subsequent to the year end the composition of the Remuneration Committee has changed, with your new directors taking a leading role. In addition, shareholder feedback on the 2011 remuneration report has been taken into account in remuneration considerations during the year and unnecessary share options, loans and the like have been cancelled or repaid where possible and appropriate. Remuneration to directors and key management personnel fell from $4.1 million to $3.1 million. As a small cap exploration company striving to develop its first gold project we need to be clever and creative in our attempts to attract and retain the talent that will drive shareholder value at Nyota. In the year ahead, the Remuneration Committee will perform a review of both the cash compensation and the Share Option Scheme at Nyota. With most options granted several years ago and at exercise prices well in excess of the current share price, we need to consider whether the Share Option Scheme is still fit for purpose. It is essential that we protect our key talent in the coming year so as to ensure we can effectively develop Tulu Kapi without undue interruption. The remuneration report that follows is set out under the following main headings: A Introduction B Principles used to determine the nature and amount of remuneration C Details of remuneration D Service agreements E Share based compensation The information in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act A Introduction This report details the nature and amount of remuneration for all key management personnel of Nyota Minerals Limited and its subsidiaries. The individuals covered by this report are: Non Executive Directors Mr N Maclachlan Chairman (appointed 21 March 2012) Mr D Pettman Deputy Chairman Mr E Kirby Mr N Ling (appointed 21 June 2012) Executive Directors Ms M Sturgess Executive Chairman (resigned 21 March 2012) Mr R Chase Chief Executive Officer Mr M Churchouse Technical Director Mr M Langoulant Finance Director Other Executives Mr M Burchnall Business Development Manager (resigned 31 December 2011) Mr R Jarvis Chief Financial Officer (resigned 31 December 2011) Mr P Goodfellow Chief Operating Officer (appointed 16 January 2012) Mr P Wilson Chief Financial Officer (appointed 26 April 2012) Mr A Rowland Business Development Manager (appointed 27 February 2012) 26

28 REMUNERATION REPORT B Principles used to determine the nature and amount of remuneration The objective of the Group s executive reward framework is to ensure that reward for performance is competitive and appropriate for the results delivered. The framework aims to align executive reward with the creation of value for shareholders. The key criteria for good reward governance practices adopted by the Board are: competitiveness and reasonableness; acceptability to shareholders; performance incentives; and transparency and capital management. The framework provides a mix of fixed fee, consultancy agreement based remuneration and share based incentives. The remuneration policy for determining the nature and amount of emoluments of Board members and senior executives of the Group is determined by the Remuneration Committee in accordance with a written Remuneration Committee Charter that is available on the Group s website. Nyota s aim is to ensure the remuneration packages properly reflect directors and executives duties and responsibilities. The Remuneration Committee will assess the appropriateness of the nature and amount of emoluments of such officer on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention and motivation of a high quality Board and executive team while incurring a cost which is acceptable to shareholders and appropriate for the Company s size. At this stage of the Group s development the remuneration policy is that no element of any director/executive package should be directly related to the Group s financial performance or the satisfaction of any specific condition. The overall remuneration policy framework however is structured in an endeavour to advance/create shareholder wealth. This policy has been consistent over the past several financial years. Non executive directors Fees and payments to non executive directors reflect the demands which are made on, and the responsibilities of, the directors. No additional fees are paid for directors undertaking roles on the committees of the Board. Apart from their duties as directors, some non executive directors may undertake work for the Company on a consultancy basis pursuant to the terms of their consultancy agreements. The nature of the consultancy work varies depending on the expertise of the relevant non executive director. Under the terms of these consultancy agreements non executive directors would receive a daily rate or monthly retainer for the work performed at a rate comparable to market rates that they would otherwise receive for their consultancy services. The amounts listed under Salaries & Fees hereafter includes both Director fees and consultancy fees received by non executive directors. Non executive directors fees and payments will be reviewed annually by the Remuneration Committee and are intended to be in line with the market. Executive directors All executive directors are either employees or perform some executive or consultancy services. However, with the exception of the CEO, each executive director receives a separate fixed fee for their services as a director, as the Board considers it important to distinguish between the executive/consulting and nonexecutive roles held by that individual. The Remuneration Committee intends to review this situation in the coming year. Retirement allowances for directors Apart from statutory superannuation payments paid on salaries and Australian base director fees there are no retirement allowances for directors. 27

29 REMUNERATION REPORT Executive pay The executive pay and reward framework has three components: base pay and benefits such as superannuation; short term incentives; and long term incentives through participation in Employee Share/Option Plans. Base pay All executive directors who are not employees currently receive a fixed monthly retainer as agreed with the Company. All salaries and monthly retainers are reviewed on at least an annual basis. Benefits Apart from statutory superannuation paid on salaries and Australian base director fees there are no additional benefits paid to directors and executives. Short term incentives Following consultation with external consultants the Group introduced the possibility of payment of bonus payments (in cash or in shares) if short term incentives/targets were met. The Remuneration Committee has the responsibility for determining short term incentive targets, whether these short term targets have been met and whether a bonus should be paid. There are no fixed entitlements to receive any short term incentive payment. During the year no short term incentives were paid to any of the Company s directors and no short term incentives were offered to the Company s directors that would have an impact on subsequent years. Long term incentives Information on the existing employee share and option awards is set out in note 18. Use of remuneration consultants In January 2012, the Remuneration Committee employed the services of BDO LLP (BDO) to review its existing remuneration policies and to provide recommendations in respect of both executive short term and long term incentive plan design. These recommendations also covered the group s key management personnel. Under the terms of the engagement, BDO provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 and was paid 12,000 (approx $18,500) for these services. BDO has confirmed that the above recommendations have been made free from undue influence by members of the Group s key management personnel. The following arrangements were made to ensure that the remuneration recommendations were free from undue influence: BDO was engaged by, and reported directly to, the chair of the remuneration committee. The agreement for the provision of remuneration consulting services was executed by the chair of the remuneration committee under delegated authority on behalf of the Board; The report containing the remuneration recommendations was provided by BDO directly to the chair of the Remuneration Committee; and BDO was permitted to speak to management throughout the engagement to understand company processes, practices and other business issues and obtain management perspectives. However, BDO was not permitted to provide any member of management with a copy of their draft or final report that contained the remuneration recommendations. As a consequence, the board is satisfied that the recommendations were made free from undue influence from any members of the key management personnel. In addition to providing remuneration recommendations, BDO also provided various audit and non audit services. For these all these services BDO was paid a total of 45,900 (approx $70,000). Details of these services are disclosed in note 19 of the financial statements. 28

30 REMUNERATION REPORT C Details of remuneration Amounts of remuneration Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the Group are set out in the following tables. The key management personnel of the Group are the directors of Nyota Minerals Limited and those executives that report directly to the Chief Executive Officer. Remuneration of key management personnel and other executives of the Group Directors & Key Management Personnel Short term benefits Post employment Share based payments * (Refer to below table) Salary and fees Cash bonus Superannuation benefits Termination Benefits Options Total Value of options as proportion of remuneration $ $ $ $ $ $ % Executive directors M Sturgess ,669 91, , , , , , , M Churchouse , , , ,350 38, , , M Langoulant ,600 5, , , ,312 5, , , R Chase , , , ,739 10,161 51, T Tucker , , ,395 Non executive directors D Pettman , , , , , , E Kirby ,850 5, , , ,312 16,000 5, , , N Maclachlan , , , N Ling Other key executives M Burchnall ,383 (23,331) 89,052 N/A ,980 11, , , R Jarvis ,000 9,000 (24,468) 84,532 N/A , , , P Goodfellow , ,608 P Wilson ,693 42,693 A Rowland ,092 70, ,831,508 19,908 91,844 1,166,114 3,109,374 Total ,824, ,602 11, ,670 1,318,760 4,062,675 1 M Sturgess retired as a Director on 21 st March These directors receive a director s fee equivalent to 40,000 per annum and have a separate agreement for executive and technical services rendered. 3 R Chase joined as CEO on 16 th May 2011 and was appointed a director on 3 rd June His employment contract currently provides for an annual salary of 200,000. His 2011 salary and fees Includes remuneration paid from date of employment but prior to his appointment as a director. 29

31 4 T Tucker retired as a Director on 3 rd March NYOTA MINERALS LIMITED REMUNERATION REPORT 5 N Maclachlan was appointed a Director 21 st March He receives a fee of A$150,000 per annum for his services as non executive director and Chairman. He does not have a separate consultancy agreement. 6 N Ling was appointed a Director on 21 st June He receives a fee of 40,000 per annum for his services as non executive director. He also has a consultancy agreement that allows for a fee of 48,000 per annum for the first twelve months, which may be increased subject to the Chairman s agreement. 7 M Burchnall left the Company on 31 st December R Jarvis left the Company on 31 st December P Goodfellow joined in January P Wilson joined in April A Rowland joined in March * Share and Option Based Payments are based on the Black & Scholes model and are calculated in accordance with AASB 2 Share Based Payment. 30

32 REMUNERATION REPORT During the year ended 30 June 2012, 9,666,666 share options that were significantly out of the money were voluntarily forfeited by directors and employees, and subsequently cancelled for no consideration. The share options were issued in November 2010 and had not yet vested to any director/employee. None of the optionholders received a financial benefit neither from the issue of the options nor from the option cancellation. Notwithstanding the above, application of the accounting standard AASB 2 Share Based Payment requires that the Company record an expense, in this Financial Year, based upon the full theoretical value of the options cancelled. The table below compares the Share and Option Based Payment expense components for the year ended 30 June 2012 to the theoretical cash value of directors and key management personnel shares and options held as at 30 June Details of individual director s shareholdings and option holdings are provided in Note 18 to the Consolidated Financial Statements. Name Executive Directors 2012 Share and Option Based Payments expense for accounting purposes $ 2012 Share and Option Based Payments expense on cancellation of options (2) $ 2012 Total Share and Option Based Payments expense for accounting purposes $ Value of employee shares and options that have vested and are in the money but are unexercised as of 30 June 2012(1) $ M Sturgess 94, , ,499 M Churchouse 75, , ,214 M Langoulant 41,326 93, ,578 R Chase 137, ,741 Non Executive Directors D Pettman 71,012 93, ,264 E Kirby 41,326 93, ,578 N Maclachlan 129, ,715 67,500 N Ling Other Key Executives M Burchnall 13,363 (36,694) (23,331) R Jarvis 12,226 (36,694) (24,468) P. Goodfellow P. Wilson A. Rowland Total 617, ,289 1,166,114 67,500 (1) This amount is calculated based on the difference between the market value of the Company s shares underlying the employee shares and options on the last trading day on which the Company s shares traded on the ASX on or before 30 June 2012, which was $0.081 on 29 June 2012, and the exercise price of the vested employee shares and options. (2) During the year ended 30 June 2012, 9,666,666 share options that were significantly out of the money were cancelled for no consideration. The share options were issued in November 2010 and the cancellation gave rise to an accounting expense under AASB 2 Share Based Payment. None of the option holders received a financial benefit from the cancellation. 31

33 REMUNERATION REPORT D Service agreements On appointment to the Board, all non executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of director. As at 30 June 2012 the following formal service agreements existed: Name Base remuneration Termination Termination benefit Richard Chase (Chief Executive Officer) GBP200,000 6 months notice Ordinarily none. In the event of a takeover, the Company may terminate without cause by paying 12 months base salary. Key Management Personnel varies 3 months notice Ordinarily none. In the first year following a change of control, 12 months base salary is payable if the Company terminates without cause or if the employee terminates on the grounds of diminution of responsibility or material variation. Other directors are retained on monthly retainers which are reviewed at least annually and can be terminated upon three months notice. E Share based compensation Employee share and option plans Shares and options have been granted under the employee incentive share plans and the employee incentive option plans, which have been approved by shareholders. The aim of the employee incentive share and option plans is to provide long term incentives to directors and executives to create and enhance shareholder wealth and to provide a mechanism to assist the company in its endeavours to retain key executives and employees. Under the plans employees are granted shares and options which only vest, unless the directors decide otherwise, if they are still employed by the Group at the end of the vesting period. The Board considers length of service, seniority, responsibilities, potential contribution and any other relevant matters in determining eligibility of participants. A participant who is invited to subscribe for shares under the share plan may also be invited to apply for a loan up to the amount payable in respect of the shares accepted by the participant. These loans are to be made on the following terms: Interest free; Applied directly against the issue price of the shares to be acquired under the plan; For a term to be determined by the Board; Repayable to the extent of the lesser of the issue price of the relevant shares issued, less any cash dividends applied against the outstanding principal; and the last market sale price of the shares on the date of repayment of the loan; The loan must be repaid in full prior to expiry of the loan; The Company will have a lien over the shares in respect of which a loan is outstanding; 32

34 REMUNERATION REPORT Shares issued under the plan are not transferable while a loan amount in respect of those shares remains payable; and Shares issued under the share plan will not be quoted on a publicly traded stock market while a loan amount in respect of those shares remains payable. For the purposes of this remuneration report and the annual report shares issued under the share plan with an interest free loan that has not been repaid are considered options. The plan rules contain a restriction on removing the 'at risk' aspect of the instruments granted to executives. Plan participants may not enter into any transaction designed to remove the 'at risk' aspect of an instrument before it vests. No shares were issued under the Employee Share Plan during the Financial Year. The options issued under the option plan will be granted free of charge. The exercise price for the options is to be not less than the weighted average share price for the last five trading days immediately preceding the options being offered to the participant. The Board has sole responsibility to determine the number of options and terms and conditions of options granted to any participant under the option plan. The expiry date of the options will be determined by the Board and, unless otherwise determined by the Board, will also lapse within one month of the participant ceasing to be a director, employee or consultant of the company or a controlled entity (subject to certain exceptions). The Board at its discretion may apply certain vesting conditions upon any options issued under the option plan. The options are not transferable without prior written approval from the Board. The options will not be quoted on a publicly traded stock market; however application will be made for ASX/AIM quotation of the shares issued upon the exercise of the options. The terms and conditions of each grant of options affecting remuneration in the current or future reporting periods are as follows: Grant date Expiry date Exercise price of Options Fair value at grant date % vested 3 September September 2012 $0.11 $ December December 2012 $0.13 $ February December 2012 $0.15 $ March June 2013 $0.17 $ July June 2013 $0.31 $ August June 2013 $0.31 $ November December 2015 $0.35 $ February January $ June June $ June June $ March June 2015 $ June June $0.018 Full details are given in Note 25 to the consolidated financial statements. Options granted under the plans carry no dividend or voting rights. The terms and conditions of each grant of employee shares under the share plan affecting remuneration in the current or future reporting periods are as follows: 33

35 REMUNERATION REPORT Grant date Attaching loan expiry date Issue price of shares Fair value at grant date % vested 3 September September 2013 $0.11 $ February February 2014 $0.15 $ Details of employee plan share and options provided during the year as remuneration to each director of the Company and each of the key management personnel of the Group are set out below. When exercisable, each option is convertible into one ordinary share of Nyota Minerals Limited. Further information on the employee share and option plans are set out in notes 18 and 25 to the Consolidated Financial Statements. Options granted during the year Value at grant date $ Number of Options vested during year Number of Options forfeited/ cancelled Value at forfeit/ cancellation date Directors of Nyota Minerals Limited M J Sturgess 2,333,333 M Churchouse 1,333,333 M J Langoulant 1,000,000 R Chase D Pettman 1,000,000 E Kirby 1,000,000 N Maclachlan 2,500, , ,333 N Ling 1,200,000 21,600 Other key management personnel M Burchnall 1,350,000 R Jarvis 1,350,000 P Goodfellow P Wilson A Rowland The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a Black Scholes option pricing model that takes into account the equity to be paid or exercise price, the term of the option, the impact of dilution, 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. Whist this is a commonly used valuation method and one that is required to be used by current legislation, the Board would like to draw shareholders attention to the fact that the underlying intrinsic value is, in all likelihood, significantly less than the value ascribed in the table above as at the date of this report. Shares provided on exercise of remuneration options During the year there have been no shares issued upon the exercise of employee options by the current directors or current other key management of the Group. 34

36 REMUNERATION REPORT Details of remuneration share based compensation benefits For each grant of shares/options in the tables above, the percentage of each grant that vested in the year, or were cancelled or were forfeited because the person did not meet the performance criteria is set out below. Set percentages of the shares/options vest at each anniversary of the grant provided vesting conditions are met. Name Year of grant 30 June Vested % % Forfeited/ Cancelled Vesting years 30 June M J Sturgess D Pettman R Chase M Churchouse E Kirby M J Langoulant N Maclachlan N Ling R Jarvis M Burchnall

37 CORPORATE SOCIAL RESPONSIBILITY Responsible development is at the heart of our culture and integral to our ability to deliver sustainable value. Nyota is committed to providing and maintaining a healthy and safe work place and responsibly managing all of the environmental aspects of our business. Nyota is committed to conducting its business in accordance with all applicable legislation, regulations and appropriate international industry standards including the Equator Principles, which cover environmental and social risk management for project finance. An Environmental & Community Relations team comprising nine persons is responsible for managing our relationship with the Tulu Kapi community on a day to day basis and setting policy for adoption by the Board. Most importantly, it is responsible for monitoring performance and recommending remedial action where necessary. Our performance is assessed annually, in detail, when we are obliged to produce an Annual Monitoring Report for Tulu Kapi, detailing compliance with Ethiopian regulatory requirements and the International Finance Corporation* Performance Standards/ Equator Principle environmental guidelines and social policies. During the Reporting Period, considerable resource was dedicated to updating and upgrading the Environmental and Social Impact Assessment ( ESIA ) which forms a key part of the Definitive Feasibility Study for Tulu Kapi. The ESIA is key to the development of mitigation measures to reduce or eliminate the potential negative environmental and social impacts from the development of Tulu Kapi. Although no Ethiopian regulations stipulate monitoring requirements for exploration, Nyota has adopted IFC Performance Standards by establishing programmes to collect environmental baseline data ((air and water quality), manage waste (hydrocarbon and human) and rehabilitate work sites where appropriate. In addition, Nyota has paid in excess of $230,000 during the year by way of compensation under Ethiopian law for temporary occupation of land for exploration activities, roads and drill pads. Formal and informal stakeholder consultations have been held throughout the exploration stage by Nyota and by local government. A stakeholder consultation report has been prepared by the DFS consultants and a Stakeholder Engagement Plan has been prepared to document the participatory approach to consultation. Consultations were held throughout the reporting period, both in the kebeles of stakeholders who may be directly and indirectly affected by proposed activities and at the higher Federal, regional, and zonal levels ^. Positive and negative issues and expectations have been incorporated into the updated ESIA which will be submitted to the Ethiopian Government as part of Nyota s application for a large scale Mining Licence. Note *: International Finance Corporation (part of the World Bank) is one of Nyota s largest shareholders and requires the preparation of the Annual Monitoring Report as a condition of its investment in Nyota. Note ^: Ethiopia follows a federal framework with the country divided into nine Regions. These are sub divided into Zones, which are a collection of districts or woreda which are in turn composed of a number of wards or kebele, which are the smallest unit of local government. 36

38 CORPORATE SOCIAL RESPONSIBILITY Environment We will assess the positive and negative effects of our activities, from exploration through closure, and support local initiatives that minimise or eliminate any negative effects of our activities on the natural environment and local communities. The mine plan proposed the DFS will minimise the footprint of the project and incorporate measures to reduce our impact to the extent that it is commercially and technically viable. Community It is imperative that we understand what is important to the communities in which we operate which we do by establishing and reviewing communication, consultation and information disclosure plans and by taking all stakeholder views into consideration. We also work to establish sustainable development relationships in the community and with government, businesses, and contractors based on mutual respect and honesty, with an emphasis on helping the most vulnerable. Nyota provides resources and funds for community development initiatives in the area around Tulu Kapi. Community development initiatives are based on stakeholder consultation and a preliminary needs assessment, and have been undertaken in collaboration with local government. Historic needs assessments identified education and access to potable water as priorities and Nyota has invested in excess of Birr 4 million ($250,000) directly in the school, community water supplies, and reforestation program. Additional investment has been made to repair and improve roads in and around the Project area and donations of medical textbooks and materials and labour for local health clinics in the local kebeles have also been provided this year. The financial commitment to a Community Development Plan will be incorporated into the Tulu Kapi mining agreement. Table 5.1.Community Development Projects as of 30 June 2012 Project Partnerships Completed Residents Benefited Secondary School Woreda Regional Government and Worke Gudji Secondary School Administration, Kapi Gurachu Kebele As of June classrooms (3 blocks), 1 administration office, 1 laboratory, 1 library, Furniture, blackboards, supplies, and fencing 763 registered students (grade 9 and grade 10) Water Supply None Construction Jan residents 1,000L potable water tank and faucets. Annual maintenance, water quality testing and chlorination Water wells Genji Woreda, Zonal Water Authority January ,000 residents Seedling nursery Genji Woreda Annual program providing approximately 100,000 seedlings +500 residents Health & Safety In order to improve Health & Safety performance at Tulu Kapi and to reduce operational risks, a Safety Management Program has been developed. Training is conducted by the safety department in the local languages Afan Oromo, Amharic and English, as required by the target audience. A total of 7 Lost Time Injuries ( LTIs ) were recorded in the Reporting Period, which resulted in a total of 118 lost work days (2011: 162 lost work days). All incidents involved contractor workers who were injured during drilling operations. Minimising LTIs is a top priority. 37

39 CORPORATE SOCIAL RESPONSIBILITY Training Nyota has employed up to 250 nationals at any one time. Training and development is the key to creating an effective and committed workforce. As part of developing its employees, Nyota provided financial support for five second degree students in geology and business management. We have continuous training and development plans for our geologists and support staff. All staff have an annual performance evaluation to ensure we maximise potential. Reforestation Since 2006, Nyota (including its predecessor) has been operating a nursery approximately 4 km northeast of Tulu Kapi. This year, the nursery grew and distributed over 100,000 seedlings to support erosion protection measures and reforestation initiatives in Genji Woreda. Water Long considered an emotive topic, Nyota identified potable water as a priority for its corporate responsibility programme. We currently provide chlorinated water to employees and people local to Tulu Kapi and have financed water wells in the local town. We continue to regularly monitor these local springs. 38

40 CORPORATE GOVERNANCE STATEMENT Approach to Corporate Governance Nyota Minerals Limited ( Company ) has adopted systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this statement. Commensurate with the spirit of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 2 nd edition (Principles & Recommendations), the Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance practices depart from a recommendation, the Board has offered full disclosure and an explanation for the adoption of its own practice. The following governance related documents can be found on the Company's website at under the section marked Corporate, "Corporate Governance": Charters Board Audit Committee Nomination Committee Remuneration Committee Policies and Procedures Policy and Procedure for Selection and (Re) Appointment of Directors Process for Performance Evaluations Policy on Assessing the Independence of Directors Code of Conduct (summary) Policy on ASX Listing Rule Compliance (summary) Compliance Procedures (summary) Procedure for the Selection, Appointment and Rotation of External Auditor Shareholder Communication Policy Risk Management Policy (summary) The Company reports below on how it has followed (or otherwise departed from) each of the recommendations during the 2011/2012 financial year ( Reporting Period ). Board Roles and responsibilities of the Board and Senior Executives (Recommendations: 1.1, 1.3) The Company has established the functions reserved to the Board, and those delegated to senior executives and has set out these functions in its Board Charter. The Board is collectively responsible for promoting the success of the Company through its key functions of overseeing the management of the Company, providing overall corporate governance of the Company, monitoring the financial performance of the Company, engaging appropriate management commensurate with the Company's structure and objectives, involvement in the development of corporate strategy and performance objectives, and reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance. Senior executives are responsible for supporting the Chief Executive Officer and assisting the Chief Executive Officer in implementing the running of the general operations and financial business of the Company in accordance with the delegated authority of the Board. Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first instance to the Chief Executive Officer or, if the matter concerns the Chief Executive Officer, directly to the Chair or the lead independent director, as appropriate. 39

41 CORPORATE GOVERNANCE STATEMENT Skills, experience, expertise and period of office of each Director (Recommendation: 2.6) A profile of each Director setting out their skills, experience, expertise and period of office is set out in the Directors' Report and Board of Directors section that immediately precedes it. The mix of skills and diversity for which the Board is looking to achieve in membership of the Board are: ability to provide guidance on the development of the Company s assets; independence; understanding of gold exploration and production; country knowledge and experience; investment banking and stock broking experience; geological; accounting and finance; and mining engineering with production experience. The Board considers that these skills and experience are appropriate for the Company as it transforms to a development and mining company. Director independence (Recommendations: 2.1, 2.2, 2.3, 2.6) For the period 1 July 2011 to 21 March 2012, the Board did not have a majority of directors who were independent. Two members of the six member Board were independent. During 2011 the Board commenced a review of its composition as the Company transforms to a development and mining company. During the Reporting Period, the Company announced its intention to appoint appropriate independent directors. On 21 March 2012, Melissa Sturgess retired from the Board, and was replaced by an independent non executive Chairman, Neil Maclachlan. Further, on 21 June 2012, Norman Ling, an independent non executive director was appointed to the Board. Accordingly, the Board now comprises a majority of independent directors. The independent directors of the Company are Evan Kirby, David Pettman, Norman Ling and Neil Maclachlan. These directors are independent as they are non executive directors who are not members of management and who are free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgment. The non independent directors of the Company are Mike Langoulant, Richard Chase, Martyn Churchouse. The independent Chair of the Board (since 21 March 2012) is Neil Maclachlan. Prior to that date, the nonindependent Chair of the Board was Melissa Sturgess. Whilst the Company recognises the benefit of having an independent director as Chair, the Board was of the view that Melissa Sturgess was the most appropriate person for the position of Chair at that time. David Pettman was appointed as lead independent director by the Board to assume the role of Chair in situations where Ms Sturgess was unable to act as Chair. The Chief Executive Officer is Richard Chase who is not also Chair of the Board. Independent professional advice (Recommendation: 2.6) To assist directors with independent judgement, it is the Board's policy that if a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of their office as a director then, provided the director first obtains approval from the Chair for incurring such expense, the Company will pay the reasonable expenses associated with obtaining such advice. Selection and (Re)Appointment of Directors (Recommendation: 2.6) In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed process whereby it evaluates the mix of skills, experience and expertise of the existing Board. In particular, the Nomination Committee (or equivalent) is to identify the particular skills that will best increase the Board's effectiveness. Consideration is also given to the balance of independent directors. Potential candidates are identified and, if relevant, the Nomination Committee (or equivalent) recommends an appropriate candidate for appointment to the Board. Any appointment made by the Board is subject to ratification by shareholders at the next general meeting. 40

42 CORPORATE GOVERNANCE STATEMENT The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. Each director other than the Managing Director, must not hold office (without reelection) past the third annual general meeting of the Company following the director's appointment or three years following that director's last election or appointment (whichever is the longer). However, a director appointed to fill a casual vacancy or as an addition to the Board must not hold office (without re election) past the next annual general meeting of the Company. At each annual general meeting a minimum of one director or one third of the total number of directors must resign. A director who retires at an annual general meeting is eligible for re election at that meeting. Re appointment of directors is not automatic. The Company s Policy and Procedure for the Selection and Re (Appointment) of Directors is disclosed on the Company s website. Board committees Nomination Committee (Recommendations: 2.4, 2.6) During the Reporting Period the Board did not have a separate Nomination Committee. In this period the Board believed that there would be no efficiencies gained by establishing a separate Nomination Committee. However it is the Board s intention to expand the role of the Remuneration and Nomination Committee such that it acts as a combined Remuneration and Nomination Committee to reflect the Company s transformation from exploration through to development and production. The Board has previously adopted a Nomination Committee Charter which will govern the role and responsibilities of the combined Remuneration and Nomination Committee in this respect. Audit Committee (Recommendations: 4.1, 4.2, 4.3, 4.4) For most of the Reporting Period the Audit Committee comprised of David Pettman (Chair of the Audit Committee), Michael Langoulant and Melissa Sturgess. Melissa Sturgess retired on 21 March 2012 and was replaced by Neil Maclachlan. The Audit Committee is not structured in compliance with Recommendation 4.2, as Ms Sturgess and Mr Langoulant (both executive directors) were members and the committee did not comprise a majority of independent directors. The Board considers that the members of the Audit Committee are and were the most appropriate for the Company s needs, given their experience and qualifications. However, with the change to the Board during the Reporting Period, the Board was able to form an Audit Committee that meets each of the requirements of Recommendation 4.2 except that Mr Langoulant, an executive director, is a member. The Board has adopted an Audit Committee Charter which describes the role, composition, functions and responsibilities of the Audit Committee. Details of each of the director's qualifications are set out in the Directors' Report. All committee members consider themselves to be financially literate and have industry knowledge. Further Mr Langoulant s qualification and experience as a Chartered Accountant enable him to meet the test of financial expertise. The Company has established procedures for the selection, appointment and rotation of its external auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as recommended by the Audit Committee (or its equivalent). Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company's business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit Committee (or its equivalent) and any recommendations are made to the Board. 41

43 CORPORATE GOVERNANCE STATEMENT Remuneration Committee (Recommendations: 8.1, 8.2, 8.3, 8.4) For most of the Reporting Period the Remuneration Committee comprised of David Pettman (Chair), Michael Langoulant and Melissa Sturgess. Melissa Sturgess retired on 21 March 2012 and was replaced by Neil Maclachlan. From 1 July 2011 to 21 March 2012, the Remuneration Committee was not structured in accordance with Recommendation 8.2, as it did not include a majority of independent directors. The Board considered that the members of the Remuneration Committee were the most appropriate for the Company s needs. However, with the change to the Board during the Reporting Period, the Board was able to form a Remuneration Committee that is structured in accordance with Recommendation 8.2. The Board has adopted a Remuneration Committee Charter which describes the role, composition, functions and responsibilities of the Remuneration Committee. Details of remuneration, including the Company s policy on remuneration, are contained in the Remuneration Report which forms of part of the Directors Report. The Company s policy is to remunerate non executive directors at market rates (for comparable companies) for time, commitment and responsibilities. Fees for non executive directors are not linked to the performance of the Company. Given the Company s stage of development and the financial restriction placed on it, the Company may consider it appropriate to issue unlisted options to non executive directors, subject to obtaining the relevant approvals. The grant of options is designed to attract and retain suitability qualified non executive directors. The maximum aggregate amount of fees that can be paid to non executive directors is subject to approval by shareholders at general meeting. The Company's Remuneration Committee Charter includes a statement of the Company's policy on prohibiting transactions in associated products which limit the risk of participating in unvested entitlements under any equity based remuneration schemes. Performance evaluation Senior executives (Recommendations: 1.2, 1.3) The Chair and Chief Executive Officer, in consultation with other Board members, are responsible for evaluating the performance of senior executives. The performance evaluation of senior executives is undertaken by meetings held with each senior executive and the Chair or Chief Executive Officer on an informal basis at least once a year. During the Reporting Period an evaluation of senior executives took place in accordance with the process disclosed above. Board, its committees and individual directors (Recommendations: 2.5, 2.6) The Chair is responsible for evaluating the performance of the Board and, when deemed appropriate, Board committees and individual directors. The Nomination Committee (or equivalent) is responsible for evaluating the Chief Executive Officer s performance against key performance indicators, and during the review key performance indicators for the forthcoming year are set. Evaluations of the Board and its committees are undertaken by way of round table discussions and individual directors by one on one interviews. During the Reporting Period an evaluation of the Board, its committees, individual directors and the Chief Executive Officer took place in accordance with the process disclosed above. 42

44 CORPORATE GOVERNANCE STATEMENT Ethical and responsible decision making Code of Conduct (Recommendations: 3.1, 3.5) The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the Company's integrity, the practices necessary to take into account its legal obligations and the reasonable expectations of its stakeholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. A summary of the Company s Code of Conduct is disclosed on the Company s website. Diversity (Recommendations: 3.2, 3.3, 3.4, 3.5) The Company is in the process of developing and adopting a Diversity Policy to reflect the circumstances of the Company and the industry in which the Company operates. Once adopted, this policy will be made available on the Company s web site. The Board recognises the benefits of diversity at boards, in senior management and within the organisation generally and recognises the organisation strengths, deeper problem solving ability and opportunity for innovation that diversity brings to an organisation. While no formal policy is currently in place the Company and the Board is committed to providing an environment in which all employees are treated with fairness, respect and have equal access to employment opportunities at work. The Company has well developed cultural awareness and social justice policies and practices that, where appropriate, contribute to the education and welfare of indigenous people within its areas of activity, including establishing the framework for sustainable development. Continuous Disclosure (Recommendations: 5.1, 5.2) The Company has established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability at a senior executive level for that compliance. Shareholder Communication (Recommendations: 6.1, 6.2) The Company has designed a communications policy for promoting effective communication with shareholders and encouraging shareholder participation at general meetings. Risk Management Recommendations: 7.1, 7.2, 7.3, 7.4) The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. Under the policy, the Board delegates day to day management of risk to the Chief Executive Officer, who is responsible for identifying, assessing, monitoring and managing risks. The Chief Executive Officer is also responsible for updating the Company's material business risks to reflect any material changes, with the approval of the Board. 43

45 CORPORATE GOVERNANCE STATEMENT In fulfilling the duties of risk management, the Chief Executive Officer has unrestricted access to Company employees, contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board. The Board has established a separate Audit Committee to monitor and review the integrity of financial reporting and the Company's internal financial control systems and risk management systems. The Audit Committee reports any issues regarding the management of material business risks that it considers should be brought to the Board s attention. In addition, the following risk management measures have been adopted by the Board to manage the Company's material business risks: the Board has established authority limits for management, which, if proposed to be exceeded, requires prior Board approval; the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's continuous disclosure obligations; and the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices. A review of this manual and the Company s policies has recently been completed and the Board s adoption of amendments/updates is expected shortly. The Board has continued the process of formalising and documenting its management of material business risks facing the Company. During the Reporting Period, the issue of risk was considered by the Board on a regular basis. A formal review of the Company s risk management system is underway. The key categories of risk of the Company, as reported on by management, include: cash management; financial reporting; ASX/AIM reporting compliance; project ownership retention; employee health and safety; retention of key employees; executive medivac/travel and insurance; environmental compliance; government/community relations/liaison; foreign exchange risk; and sovereign risk. The Board has required management to design, implement and maintain risk management and internal control systems to manage the Company's material business risks. The Board also requires management to report to it confirming that those risks are being managed effectively. The Board has received a report from management as to the effectiveness of the Company's management of its material business risks for the Reporting Period. The Chief Executive Officer and the Chief Financial Officer have provided a declaration to the Board in accordance with section 295A of the Corporations Act 2001and have assured the Board that such declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. 44

46 Auditor s Independence Declaration As lead auditor for the audit of Nyota Minerals Limited for the year ended 30 June 2012, 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 Nyota Minerals Limited and the entities it controlled during the period. Craig Heatley Partner Perth PricewaterhouseCoopers 28 September 2012 PricewaterhouseCoopers, ABN QV1, 250 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840 T: , F: , Liability limited by a scheme approved under Professional Standards Legislation.

47 FINANICAL REPORT Page Consolidated statement of comprehensive income 47 Consolidated balance sheet 48 Consolidated statement of changes in equity 49 Consolidated statement of cash flows 50 Notes to the consolidated financial statements 51 Directors declaration 93 Independent audit report to the members 94 These financial statements are the consolidated financial statements of the consolidated entity (referred to hereafter as the Group ) consisting of Nyota Minerals Limited (referred to hereafter as the Company or parent entity ) and its subsidiaries. The financial statements are presented in Australian currency. Nyota Minerals Limited is a company limited by shares incorporated and domiciled in Australia. Its registered office and principal place of business is Suite 2, 5 Ord Street, West Perth, Western Australia. A description of the nature of the consolidated entity's operations and its principal activities is included in the review of operations and activities on pages 6 to 18 which are not part of these financial statements. The financial report was authorised for issue by the directors on 28 September The directors have 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. All press releases, financial reports and other information are available on our website: 46

48 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE Notes $000 $000 Revenue from continuing operations Other revenue Expenses Administration 6 (6,551) (9,627) Foreign exchange gains / (losses) 628 (2,560) Impairment of assets 6 (668) (341) Share based compensation expense (1,443) (2,260) Loss before income tax (7,905) (14,558) Income tax benefit Loss for the year 26 (7,380) (14,418) Other comprehensive income / (loss) Exchange differences on translation of foreign operations (4,451) Changes in fair value of available for sale financial assets, net of tax 17 (215) 72 Total other comprehensive income / (loss) 156 (4,379) Total comprehensive loss for the year (7,224) (18,797) Total comprehensive loss attributable to members of Nyota Minerals Limited (7,224) (18,797) Cents Cents Loss per share from continuing operations attributable to ordinary equity holders of Nyota Minerals Limited Basic loss per share 24 (1.4) (3.6) Diluted loss per share 24 (1.4) (3.6) The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 47

49 CONSOLIDATED BALANCE SHEET AS AT 30 JUNE Notes $000 $000 ASSETS Current assets Cash and cash equivalents 8 14,475 25,633 Trade and other receivables ,522 Total current assets 15,463 27,155 Non current assets Available for sale assets Property, plant and equipment 11 1, Exploration and evaluation expenditure 12 48,668 26,993 Total non current assets 50,249 27,984 Total assets 65,712 55,139 LIABILITIES Current liabilities Trade and other payables 14 7,527 5,185 Total current liabilities 7,527 5,185 Total liabilities 7,527 5,185 Net assets 58,185 49,954 EQUITY Contributed equity , ,595 Reserves 17 1,286 (313) Accumulated losses 26 (120,708) (113,328) Total equity 58,185 49,954 The above consolidated balance sheet should be read in conjunction with the accompanying notes. 48

50 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012 Attributable to the owners of Nyota Minerals Limited Contributed Accumulated Reserves Total equity equity losses Note $000 $000 $000 $000 Balance at 30 June ,474 (98,910) 1,806 26,370 Loss for year (14,418) (14,418) Other comprehensive loss for year (4,379) (4,379) Total comprehensive loss for the year (14,418) (4,379) (18,797) Transactions with equity holders in their capacity as equity holders: Contributions of equity, after tax and transaction costs 16 40,121 40,121 Share based compensation 25 2,260 2,260 40,121 2,260 42,381 Balance at 30 June ,595 (113,328) (313) 49,954 Loss for year (7,380) (7,380) Other comprehensive income for year Total comprehensive income / (loss) for the year (7,380) 156 (7,224) Transactions with equity holders in their capacity as equity holders: Contributions of equity, after tax and transaction costs 16 14,012 14,012 Share based compensation 25 1,443 1,443 14,012 1,443 15,455 Balance at 30 June ,607 (120,708) 1,286 58,185 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 49

51 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE Notes $000 $000 Cash flow from operating activities Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) (6,363) (7,423) Interest received Other income received Net cash outflow from operating activities 23 (5,674) (6,954) Cash flow from investing activities Payments for exploration, evaluation and development of mining properties (19,408) (14,527) Payments for plant and equipment (571) (498) Loans to other parties (798) Payment for investments (146) Payment for equities (17) Net cash outflow from investing activities (20,125) (15,840) Cash flow from financing activities Proceeds from issue of shares 14,455 40,971 Payments for equity issue costs (443) (1,837) Net cash inflow from financing activities 14,012 39,134 Net (decrease) / increase in cash and cash equivalents (11,787) 16,338 Cash at the beginning of the financial year 25,633 11,862 Effects of exchange rate changes on cash and cash equivalents 629 (2,567) Cash and cash equivalents held at the end of the financial year 8 14,475 25,633 Non cash financing and investing activities 23 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 50

52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Nyota Minerals Limited and its subsidiaries. (a) Basis of preparation of financial report These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act Nyota Minerals Limited is a for profit entity for the purposes of preparing the financial statements. Compliance with IFRS The consolidated financial statements of the Nyota Minerals Limited group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets. Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. Going concern The directors have prepared cash flow projections showing the need to raise additional funds to finance the Group s proposed minimum exploration work programme and working capital requirements for the next 12 months. The Group itself does not generate sufficient cash flows from its operating activities to finance these requirements. The directors have a plan in place to mitigate such risk which includes reducing its corporate overheads and postponing expenditure on the Group s projects. The continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as they fall due are dependent upon the Group being successful in completing a capital raising in the next 12 months. As a result of these matters, there is a material uncertainty that may cast significant doubt on whether the Group will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report. However, the directors believe that the Group will be successful in the above matters and, accordingly, have prepared the financial report on a going concern basis. 51

53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (b) Principles of consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Nyota Minerals Limited (''Company'' or ''parent entity'') as at 30 June 2012 and the results of all subsidiaries for the year then ended. Nyota Minerals Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de consolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Minority interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive income, statement of changes in equity and balance sheet respectively. Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. The Group s share of its associates post acquisition profits or losses is recognised in profit or loss, and its share of post acquisition movements in reserves is recognised in other comprehensive income. The cumulative post acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as a reduction the carrying amount of the investment. When the Group s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where the investment will be recovered principally through a sale transaction rather than through continuing use it will be accounted for as a non current asset held for sale and measured at fair value at reporting dates. Any impairment of the investment will be recognised in profit and loss. 52

54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (c) Segment reporting Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Chief Executive Officer. The Group considers that it operates in distinct segments being different countries around the world. (d) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Australian dollars, which is Nyota Minerals Limited s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit and loss. (iii) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each profit and loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and all resulting exchange differences are recognised as other comprehensive income. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in profit and loss as part of the gain or loss on sale, where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. (e) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable Revenue is recognised for the major business activities when the following specific recognition criteria is met: Interest income Interest income is recognised on a time proportionate basis using the effective interest rate method. 53

55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (f) Income tax The income tax expense or revenue for the period is the tax payable on the current period s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. The Australian tax consolidation regime does not apply to the company because there are no Australian incorporated subsidiaries. (g) Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non controlling interest in the acquiree either at fair value or at the non controlling interest's proportionate share of the acquiree s net identifiable assets. The excess of the consideration transferred, the amount of any non controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the group's share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. 54

56 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (g) Business combinations (continued) Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. (h) Leases Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short term and long term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset's useful life and the lease term. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss on a straight line basis over the period of the lease. (i) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (j) Cash and cash equivalents For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. (k) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement no more than 30 days from the date of recognition. 55

57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (k) Trade receivables (continued) Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in profit and loss. (l) Investments and other financial assets Classification The Group classifies its investments in the following categories: loans and receivables and available for sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re evaluates this designation at each reporting date. (i) Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non current assets. Loans and receivables are included in receivables in the balance sheet. (ii) Available for sale financial assets Available for sale financial assets, comprising principally marketable equity securities, are non derivatives that are either designated in this category or not classified in any of the other categories. They are included in non current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Recognition and derecognition Purchases and sales of investments are recognised on trade date the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Subsequent measurement Available for sale financial assets are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available for sale are recognised in in other comprehensive income. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the profit and loss as gains and losses from investment securities. Fair value The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer s specific circumstances. 56

58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (l) Investments and other financial assets (continued) Impairment The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss is removed from equity and recognised in profit and loss. Impairment losses recognised as profit or loss on equity instruments classified as available for sale are not reversed through the profit or loss. (m) Property, plant and equipment Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the financial period in which they are incurred. Depreciation is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives, as follows: Plant and equipment 3 12 years Motor vehicles 3 5 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (note 1(i)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit and loss. 57

59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (n) Exploration and evaluation expenditure Exploration and evaluation costs include expenditure incurred in connection with the exploration for and the evaluation of economically recoverable mineral resources. These costs include costs of acquisition, exploration and appraisal costs and technical overheads directly associated with those projects. The Company's policy with respect to exploration and evaluation expenditure is to use the "area of interest" method. Under this method, exploration and evaluation costs are carried forward on the following basis: (i) (ii) (iii) (iv) (v) (o) Each area of interest is considered separately when deciding whether and to what extent to carry forward or write off exploration and evaluation costs; Exploration and evaluation costs related to an area of interest may be carried forward provided that rights to tenure of the area of interest are current and provided further that one of the following conditions are met: such costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sale; or exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing. The carrying values of exploration and evaluation costs are reviewed by directors where results of exploration and/or evaluation of an area of interest are sufficiently advanced to permit a reasonable estimate of the costs expected to be recouped through successful development and exploitation of the area of interest or by its sale. Expenditure in excess of this estimate is written off to the profit and loss account in the year in which the review occurs; The carrying values of exploration and evaluation assets are transferred to mine properties or intangible assets when the technical feasibility and commercial viability of extracting a mineral resources are demonstrable. Development costs related to an area of interest are carried forward as an asset to the extent that they are expected to be recovered either through sale or successful exploitation; and The carrying values of exploration, evaluation and development expenditure are transferred to mining properties and are carried forward and amortised on a unit of production basis. Mining properties Mine properties represent the acquisition costs and/or accumulation of exploration, evaluation and development costs in respect of areas of interest in which mining has commenced. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Amortisation is provided on a unit of production basis so as to write off the cost in proportion to the depletion of the proved and probable mineral resources. 58

60 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (p) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (q) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit and loss over the period of the borrowings using the effective interest method. The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders equity, net of income tax effects. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. (r) Provisions Provisions are recognised when the consolidated entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation. Rehabilitation and restoration costs Where the Group has obligations for site restoration related to its mining properties, the Group establishes restoration provisions for future mine closure costs when a legal or constructive obligation exists based on the present value of the future cash flows required to satisfy the obligations. Provisions expected to be utilised in the coming 12 months on areas with lives of less than one year are accounted for in profit and loss. Provisions not expected to be utilised in the coming 12 months are added to the capital cost of the related mining assets in mine properties and amortised over the resource life. The provision is accreted to its future value over the resource life through a charge to borrowing costs. Changes in the estimated cost of rehabilitation are applied on a prospective basis with an adjustment to capital cost. 59

61 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (s) Employee benefits (i) Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Share based payments Share based compensation benefits are provided to employees via the Nyota Minerals Limited Share and Option Plan. Information on these schemes is set out in note 25. The fair value of shares and options granted under the Nyota Minerals Limited Employee Share and Option Plans 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 shares and/or options. The fair value at grant date is determined using a Black Scholes option pricing model that takes into account the issue/exercise price, the term of the option, the impact of dilution, the non tradeable nature of the share/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 fair value of the shares and/or options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non market vesting conditions. Non market vesting conditions are included in assumptions regarding the employee loan recoverability and about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in profit and loss with a corresponding adjustment to equity. The value of shares issued to employees financed by way of a non recourse loan under the employee share scheme is recognised with a corresponding increase in equity when the company receives funds from either the employees repaying the loan or upon the loan termination. All shares issued under the plan with non recourse loans are considered, for accounting purposes, to be options. (t) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are included in the cost of the acquisition as part of the purchase consideration. (u) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year. 60

62 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income 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. (v) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow. (w) Rounding of amounts The Company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. (x) Parent entity financial information The financial information for the parent entity, Nyota Minerals Ltd, disclosed in note 28 has been prepared on the same basis as the consolidated financial statements, except as set out below: (i) (ii) (y) Investments in subsidiaries and associates Investments in subsidiaries and associates are accounted for at cost in the parent entity accounts. Dividends received from associates are recognised in the parent entity s profit and loss, rather than being deducted from the carrying value of the investment. Financial guarantees Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of investment. New Accounting Standards and Interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012 reporting periods. The Group s assessment of the impact of these new standards and interpretations is set out below. 61

63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) (i) AASB 9 Financial Instruments and AASB Amendments to Australian Accounting Standards arising from AASB 9 (effective from 1 January 2013*) AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect the Group's accounting for its financial assets. The standard is not applicable until 1 January 2013* but is available for early adoption. The Group is yet to assess its full impact, however, initial indications are that it may affect the group's accounting for it available for sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available for sale debt investments, for example, will therefore have to be recognised directly in profit or loss. There will be no impact on the Group s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASB 9. *In December 2011, the IASB delayed the application date of IFRS 9 to 1 January The AASB is expected to make the equivalent amendment to AASB 9. (ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures and AASB Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective 1 January 2013) In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated financial statements and associated disclosures. It is not expected that these standards will have an impact on the financial statements of the entity, however some disclosures to the notes to the financial statements may change. AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and interpretation 12 Consolidation Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns. There is also new guidance on participating and protective rights and on agent/principal relationships. While the Group does not expect the new standard to have a significant impact on its composition, it has yet to perform a detailed analysis of the new guidance in the context of its various investees that may or may not be controlled under the new rules. AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. 62

64 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Summary of significant accounting policies (continued) Parties to a joint operation will account for their share of revenues, expenses, assets and liabilities in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share joint control. The Group has no joint venture partnerships. Therefore, AASB 11 will not have any impact on the financial statements. AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of the standard by the Group will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Group s investments. Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of the ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a partial disposal concept. The group is still assessing the impact of these amendments. The Group does not expect to adopt the new standards before their operative date. They would therefore be first applied in the financial statements for the annual reporting period ending 30 June (iii) AASB 13 Fair Value Measurement and AASB Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013) AASB 13 was released in September It explains how to measure fair value and aims to enhance fair value disclosures. The Group does not use fair value measurements extensively. It is therefore unlikely that the new rules will have a significant impact on any of the amounts recognised in the financial statements. However, application of the new standard will impact the type of information disclosed in the notes to the financial statements. The Group does not intend to adopt the new standard before its operative date, which means that it would be first applied in the annual reporting period ending 30 June There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. 63

65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Financial risk management The Group's activities expose it predominantly to credit risk, market risk (including foreign exchange risk, price risk and interest rate risk) and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out by the Board of Directors. The Board provides principles for overall risk management, and is in the process of formalising and documenting these policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks. No derivative financial instruments have been used in the management of risk. The Group holds the following financial instruments: $ 000 $000 Financial assets Cash and cash equivalents 14,475 25,633 Trade and other receivables 862 1,374 Available for sale financial assets ,854 27,248 Financial liabilities Trade and other payables 7,527 5,185 7,527 5,185 Credit risk exposures The credit risk arises principally from cash and cash equivalents and deposits with banks and financial institutions. The Group minimises credit risk in relation to cash and cash equivalent assets by only utilising the services of the Australian Big 4 banks for Australian held cash assets and for international cash holdings recognised international financial institutions are used. The Group does not have a significant credit risk in relation to trade receivables. Market risk (a) Foreign exchange risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity s functional currency. The Group operates internationally and is exposed to foreign exchange risk primarily arising from currency exposures to British pounds, the US dollar and the Ethiopian birr. Sensitivity Based on the financial instruments held at 30 June 2012, had the Australian dollar weakened/strengthened by 10% against the pound ( ) with all other variables held constant, the Group and parent entity s post tax loss for the year would have been $1,353,000 lower/higher (2011 profit: $2,508,000 lower/higher), mainly as a result of foreign exchange gains/losses on translation of GBP denominated cash equivalents. The Group s exposure to other foreign exchange movements is not material. 64

66 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Financial risk management (continued) Market risk (b) Price risk As at 30 June 2012 the Group s exposure to equity securities price risk was not material. The exposure arises from various investments held by the Group. The Group is not currently exposed to commodity price risk. Sensitivity Based on the financial instruments held at 30 June 2012, if the market value of its equity securities was plus/minus 10% at 30 June 2012 with all other variables held constant, the Group s total comprehensive loss for the year would have been $52,000 (2011 loss: $24,000) higher/lower. (c) Interest rate risk The Group is exposed to fluctuations in interest rates. Interest rate risk is managed by maintaining a mix of floating rate deposits. As at 30 June 2012 the Group had no interest bearing borrowings. The Group holds no interest rate derivative financial instruments. Sensitivity At 30 June 2012, if interest rates had changed by +/ 50 basis points and all other variables were held constant, the Group s after tax loss and net equity would have been $145,000 (2011: $32,000) lower/higher as a result of higher/lower interest income on cash and cash equivalents. Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Surplus funds are only invested in AAA rated financial institutions. As at the reporting date the Group has no access to undrawn credit facilities. Fair value measurement The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as available for sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short term nature. The fair value of non current financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. 65

67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Financial risk management (continued) The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which their fair value is observable: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that included inputs for the assets or liability that are not based on observable market data (unobservable inputs) Level 1 Level 2 Level 3 Total $ 000 $ 000 $ 000 $ 000 Available for sale financial assets Equity securities Debt securities Total assets Level 1 Level 2 Level 3 Total $ 000 $ 000 $ 000 $ 000 Available for sale financial assets Equity securities Total assets

68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. (a) Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Income taxes The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgment is required in determining the worldwide provision for income taxes. There are transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made. (ii) Exploration and evaluation expenditure The Group s main activity is exploration and evaluation for minerals. The nature of exploration activities are such that it requires interpretation of complex and difficult geological models in order to make an assessment of the size, shape, depth and quality of resources and their anticipated recoveries. The economic, geological and technical factors used to estimate mining viability may change from period to period. In addition exploration activities by their nature are inherently uncertain. Changes in all these factors can impact exploration and evaluation asset carrying values, provisions for rehabilitation and the recognition of deferred tax assets. 67

69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Segment information (a) Description of segments Segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Chief Executive Officer. The Group considers that it operates in distinct segments being different countries around the world. Corporate Ethiopia Africa other Inter segment eliminations/unallocated * Total Revenue 2012 $ $ $ $ $ $ $ $ $ $000 Total segment revenue Result Segment result before tax (7,462) (9,538) (844) (2,109) (227) (351) 628 (2,560) (7,905) (14,558) Loss before tax (7,905) (14,558) Income tax benefit Loss after tax (7,380) (14,418) Assets Segment assets** 15,232 26,914 50,448 28, ,712 55,139 * Foreign exchange loss/(gain) 68

70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Segment information (continued) Corporate Ethiopia Africa other Inter segment eliminations/unallocated Total 2012 $ $ $ $ $ $ $ $ $ $000 Liabilities Segment liabilities** 1, ,422 4,418 7,527 5,185 Acquisition of property plant and equipment and other non current segment assets Other non cash expenses 1,443 2,260 1,443 2,260 Depreciation and amortisation expense Impairment of assets other financial assets other assets ** The individual segment s assets and liabilities are net of the Parent s investment in subsidiaries and net of intercompany receivables and payables. 69

71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Revenue $000 $000 Other revenue: Interest received Expenses Loss before income tax includes the following specific expenses: $000 $000 Impairment of financial assets Impairment of receivables (i) (452) Total impairment of financial assets (452) Impairment of other assets Impairment of exploration assets (ii) (216) (341) Total impairment of other assets (216) (341) (668) (341) Impairments i) The Company realised a loss on loans made to Carlton Resources. ii) The Company s investment in the Burundi exploration project was written down to zero. 70

72 6 Expenses (continued) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE $000 $000 Administration expenses include the following: Auditor fees (167) (209) Consulting expenses (1,484) (4,676) Depreciation (255) (148) Directors fees (227) (348) Employee benefits expense (1,315) (929) Legal fees (260) (82) Other expenses (2,597) (2,842) Rental expenses related to operating leases (246) (393) (6,551) (9,627) 71

73 7 Income tax NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE $000 $000 Income tax benefit Current income tax Current income tax (benefit) (525) (140) Deferred income tax Decrease in deferred tax liability continuing operations Income tax (benefit) reported in statement of comprehensive income (525) (140) Unrecognised deferred tax balances Unused tax losses for which no deferred tax asset has been recognised: 61,157 52,213 Potential tax benefit of net unrecognised deferred tax 30% 18,347 15,664 Represented by: Unrecognised deferred tax assets Revenue losses 5,766 4,535 Unrecognised deferred tax assets Capital losses 12,194 9,425 Unrecognised deferred tax assets Temporary differences 387 1,704 Net unrecognised deferred tax assets 18,347 15,664 72

74 7 Income tax (continued) NYOTA MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE $000 $000 Reconciliation of income tax benefit to prima facie tax benefit Loss before income tax (7,905) (14,558) Income tax 30% ( %) (2,372) (4,325) Difference in overseas tax rates Tax effect on amounts which are not deductible/(assessable) Share based payments Foreign expenditure 1,038 1,254 Sundry items 68 (140) (773) (1,995) Benefit of tax losses and temporary differences not brought to account 773 1,995 Tax credit for research and development expenditure incurred Income tax benefit The Australian tax consolidation regime does not apply to the group. 8 Current assets Cash and cash equivalents $000 $000 Cash at bank and on hand 1, Deposits at call 13,341 25,078 14,475 25,633 Interest earned from cash accounts and deposits ranged from 0% to 3.5% per annum (2011: 0% 4.75%). Risk exposure The Group s exposure to interest rate risk is discussed in Note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of cash and cash equivalents noted above. 73

75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Current assets Trade and other receivables $000 $000 Tax receivable 525 GST/VAT refund Prepayments Rent security bond 78 Employee loans (note 18) 85 Loan to others 798 Other receivables , Non current assets Available for sale financial assets Available for sale financial assets include the following classes of financial assets: $000 $000 Listed securities Equity securities Unlisted securities (a) Debt securities (a) Unlisted Securities Unlisted securities are traded in inactive markets. Included in unlisted securities are Ethiopian Government Bonds held by the Group s subsidiary undertakings Nyota Minerals (Ethiopia) Limited, Brantham Investments Limited and Towchester Investment Company Limited. 74

76 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Non current assets Property, plant and equipment Consolidated Plant & equipment $000 Motor vehicles $000 Total $000 At 30 June 2010 Cost Accumulated depreciation (131) (70) (201) Net book amount Year ended 30 June 2011 Opening net book amount Additions Depreciation charge (117) (31) (148) Closing net book At 30 June 2011 Cost ,099 Accumulated depreciation (248) (101) (349) Net book amount Year ended 30 June 2012 Opening net book amount Additions Depreciation charge (226) (29) (255) Closing net book ,064 At 30 June 2012 Cost 1, ,668 Accumulated depreciation (474) (130) (604) Net book amount ,064 75

77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Non current assets Exploration and evaluation expenditure Total $000 Year ended 30 June 2011 Opening balance 14,469 Additions 12,865 Impairment charge Burundi (341) 26,993 Year ended 30 June 2012 Opening balance 26,993 Additions 21,891 Impairment charge Burundi (216) 48,668 Ultimate recoupment of costs carried forward for exploration and evaluation is dependent upon: continuance of the Group's rights to tenure of the areas of interest; results of future exploration; and recoupment of costs through successful development and commercial exploitation, or alternatively by sale of the respective areas. 76

78 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Deferred tax asset The balance comprises temporary differences attributable to: $000 $000 Amounts recognised in profit and loss: Accruals Unrealised foreign exchange loss Set off against deferred tax liabilities (note 15) (107) (208) Deferred tax assets available after 12 months Current liabilities Trade and other payables $000 Trade payables 2,794 2,628 Other payables and accruals 4,733 2,557 7,527 5,185 77

79 15 Deferred tax liabilities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2012 The balance comprises temporary differences attributable to: $000 $000 Amounts recognised in profit and loss: Unrealised foreign gains on cash assets Set off against deferred tax assets (note 13) (107) (208) Deferred tax liabilities to be settled within 12 months Deferred tax liabilities to be settled after 12 months Contributed equity (a) Share capital Shares Shares $000 $000 Ordinary shares Ordinary shares fully paid 626,348, ,473, , ,595 Employee share plan shares 12,725,000 13,475,000 Total contributed equity 639,073, ,948, , ,595 78

80 16 Contributed equity (continued) (b) Movements in ordinary share capital: NYOTA MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2012 Date Details Number of shares Issue price $000 1/7/2010 Opening balance 304,143, ,474 8/11/10 Placement 134,392,307 $ ,741 16/11/2010 Options exercised 375,000 $ /11 13/12/2010 Employee share plan equity 375,000 $ paid up 23/12/2010 Acquisition of exploration 2,325,685 $0.425* 988 tenements 11/2/2011 Options exercised 22,311,995 $0.276/ ,147 Less: issue transactions costs (1,837) 30 June 2011 Balance 464,473, ,595 Date Details Number of shares Issue price $000 1/7/2011 Opening balance 464,473, ,595 9/8/2011 Options exercised 125,000 $ /3/2012 Placement 161,000,000 $0.089/ ,366 2/3/2012 Employee share plan equity paid up 750,000 $ Less: issue transactions costs (443) 30 June 2012 Balance 626,348, ,607 * Under Accounting Standards the deemed issue price for accounting purposes is the price on the day the shares are issued as opposed to the issue price that was agreed at the time of entering into the acquisition contracts. 79

81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Contributed equity (continued) (c) Movement in Employee Share Plan shares issued with limited recourse employee loans: Date Details Number of shares Opening balance 13,850,000 29/11/2010 Employee share plan loan repaid shares transferred to ordinary share capital (200,000) 29/11/2010 Employee share plan loan (175,000) repaid shares transferred to ordinary share capital 30 June 2011 Balance 13,475,000 2/3/2012 Employee share plan loan repaid shares transferred to ordinary share capital (750,000) 30 June 2012 Balance 12,725,000 As at 30 June 2012 the weighted average issue price of issued employee share plans shares on issue is $ Refer to note 25 for details of the employee share plan. (d) Share options Number of options Options exercisable at 0.23 on or before 31 January ,000,000 4,000,000 Employee compensation options (refer note 25) exercisable at $0.11 on or before 30 September ,300,000 5,425,000 exercisable at $0.13 on or before 31 December ,280,000 1,280,000 exercisable at $0.15 on or before 31 December ,000,000 7,000,000 exercisable at $0.17 on or before 30 June , ,000 exercisable at $0.31 on or before 30 June ,250,000 2,000,000 exercisable at $0.35 on or before 31 December ,933,334 4,833,334 exercisable at $0.35 on or before 31 December ,833,334 exercisable at $0.35 on or before 31 December ,833,332 exercisable at on or before 30 June ,700,000 1,700,000 exercisable at 0.20 on or before 30 June ,800,000 1,800,000 exercisable at $Nil on or before 30 June ,500,000 exercisable at 0.08 on or before 20 June ,200,000 30,213,334 37,955,000 80

82 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Contributed equity (continued) (e) Movement in share options Number of options To acquire ordinary fully paid shares at on or before 13 June 2014: Beginning of the financial year 22,311,995 (Exercised) / issued during year (22,311,995) Balance at end of financial year To acquire ordinary fully paid shares at 0.23 on or before 31 January 2016: Beginning of the financial year 4,000,000 Issued during year 4,000,000 Balance at end of financial year 4,000,000 4,000,000 Refer to note 25 for movements in the employee option plan including details of options issued, exercised, lapsed and cancelled during the year and options outstanding at the end of the financial year. (f) 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 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. (g) Employee share scheme Information relating to the employee share scheme, including details of shares issued under the scheme, is set out in note

83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Contributed equity (continued) (h) Capital risk management The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets. The Group has no debt. 17 Reserves Movements in reserves during the year were: $000 $000 Available for sale investments revaluation reserve Opening balance (43) (115) Revaluation (215) 72 Closing balance (258) (43) Share based payments reserve Opening balance 4,882 2,622 Expense for the year 1,443 2,260 Closing balance 6,325 4,882 Foreign currency translation reserve Opening balance (5,371) (920) Currency translation differences 371 (4,451) Closing balance (5,000) (5,371) Convertible note premium reserve Opening and closing balance Nature and purpose of reserves 1,286 (313) (i) Available for sale investments revaluation reserve Changes in the fair value and exchange differences arising on translation of investments, such as equities, classified as available for sale financial assets, are taken to the available for sale investments revaluation reserve. Amounts are recognised in profit and loss when the associated assets are sold or impaired. (ii) Share based payments reserve The share based payments reserve is used to recognise the fair value of employee share plan shares issued with an attaching limited recourse employee loan; and employee option plan options issued but not exercised. 82

84 17 Reserves (continued) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2012 (iii) Foreign currency translation reserve Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the net investment is disposed of. (iv) Convertible note premium reserve This reserve arose from an historic issue of convertible notes by the Company and relates to the value of the conversion rights that attached to the convertible notes issued, net of tax. 18 Key management personnel disclosures Refer to pages 18 to 21 for details of directors and key management personnel. (a) Key management personnel compensation $ $ Short term employee benefits 1,831,508 2,265,029 Post employment benefits 19,908 11,216 Termination payment 91, ,670 Share based payments expense 617,825 1,318,760 Expense relating to options cancelled during the year 548,289 3,109,374 4,062,675 (b) Equity instruments disclosure relating to key management personnel (i) Shares and options provided as remuneration and shares issued on exercise of such options Details of shares and options provided as remuneration, and of shares issued on the exercise of such options, together with the terms and conditions of the shares and options, can be found in section D of the remuneration report. 83

85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Key management personnel disclosures (continued) (b) Equity instruments disclosure relating to key management personnel (continued) (ii) Option holdings The numbers of options in the Company held during the current financial year by each director of Nyota Minerals Limited and other key management personnel of the Group, including their personally related parties, are set out below. Balance at start of the year Balance at end of the year 2012 Name Granted as compensation Forfeited/ cancelled Vested and exercisable Unvested Directors N Maclachlan 2,500,000 2,500, ,333 1,666,667 D Pettman 3,500,000 (1,000,000) 2,500,000 2,500,000 R Chase 3,500,000 3,500,000 3,500,000 M Churchouse 4,000,000 (1,333,333) 2,666,667 2,666,667 E Kirby 1,500,000 (1,000,000) 500, ,000 M Langoulant 1,500,000 (1,000,000) 500, ,000 N Ling 1,200,000 1,200,000 1,200,000 M Sturgess* 3,500,000 (2,333,333) 1,166,667 1,166,667 Other key management personnel M Burchnall 1,350,000 (1,350,000) R Jarvis 1,350,000 (1,350,000) P Goodfellow A Rowland P Wilson * No longer a director Balance at start of the year Balance at end of the year 2011 Name Granted as compensation Forfeited/ cancelled Vested and exercisable Unvested Directors M Sturgess 3,500,000 3,500,000 3,500,000 D Pettman 2,000,000 1,500,000 3,500,000 1,000,000 2,500,000 R Chase 3,500,000 3,500,000 3,500,000 M Churchouse 2,000,000 2,000,000 4,000,000 1,000,000 3,000,000 E Kirby 1,500,000 1,500,000 1,500,000 M Langoulant 1,500,000 1,500,000 1,500,000 T Tucker 4,500,000 (4,500,000) Other key management personnel M Burchnall 450, ,000 1,350, ,000 1,125,000 R Jarvis 450, ,000 1,350, ,000 1,125,000 84

86 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Key management personnel disclosures (continued) (iii) Shareholdings The numbers of shares in the Company held during the financial year by each director of Nyota Minerals Limited and other key management personnel of the Group, including their personally related parties, are set out below Name Balance at the start of the year Granted as compensation during the year Balance at the end of the year Other changes Directors N Maclachlan 2,170,000 2,170,000 D Pettman 670,000 50, ,000 R Chase M Churchouse E Kirby 3,325,729 3,325,729 M Langoulant 3,486,129 3,486,129 N Ling M Sturgess* 9,429,855 1,934,000 11,363,855 Other key management personnel of the Group M Burchnall** 1,750,000 1,750,000 R Jarvis** 1,750,000 1,750,000 P Goodfellow A Rowland 30,000 30,000 P Wilson 181, ,365 * Shareholding as at resignation as a director ** Shareholding as at resignation from the Group 2011 Name Balance at the start of the year Granted as compensation during the year Balance at the end of the year Other changes Directors M Sturgess 7,819,855 1,610,000 9,429,855 D Pettman 320, , ,000 R Chase M Churchouse E Kirby 3,325,729 3,325,729 M Langoulant 3,486,129 3,486,129 Other key management personnel of the Group M Burchnall 1,750,000 1,750,000 R Jarvis 1,750,000 1,750,000 85

87 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Key management personnel disclosures (continued) (c) Loans to key management personnel Details of loans made to directors of Nyota Minerals limited and other key personnel, including their personally related parties are set out below: Name Balance at the start of the year $ Movement during the year $ Balance at the end of the year $ Interest paid or payable during the year $ M Langoulant 68,000 (68,000) M Burchnall 15,997 (15,997) 83,997 (83,997) 19 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non related firms: $ $ a) PricewaterhouseCoopers Australia Audit and review of financial statements 76, ,264 b) Non PricewaterhouseCoopers audit firms Audit and review of financial statements 58,461 66,080 Other services 32, , ,344 86

88 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Contingencies/Commitments (a) Contingent liabilities The Group had no known contingent liabilities as at 30 June 2012 (2011: Nil). (b) Contingent assets Although the Group no longer has any legal interest in a Swaziland gold project it has retained a beneficial right to 50% of any sale proceeds should this project be on sold to a third party. The Group is unable to place a potential value on this contingent asset. Apart from the above the Group does not have any known contingent assets as at 30 June 2012 (2011: Nil). (c) Commitments $000 $000 Exploration program commitments payable Within one year 3,782 3,879 Later than one year but not later than 5 years 19 2, Related party transactions (a) Parent entity 3,801 6,744 The ultimate parent entity in the wholly owned group and the ultimate Australian parent entity is Nyota Minerals Limited. (b) Key management personnel Disclosures relating to key management personnel are set out in note Events occurring after the balance sheet date On 12 July 2012 the Company completed a placement of 21,727,650 ordinary shares at an issue price of $0.089/ 0.06 to raise $2 million ( 1.3 million) before costs. Other than the above no other matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantly affect: (a) the Group s operations in future financial years; (b) the results of those operations in future financial years; or (c) the Group s state of affairs in future financial years. 87

89 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Reconciliation of loss after income tax to net cash outflow from operating activities $000 $000 Loss after tax (7,380) (14,418) Depreciation and amortisation Foreign exchange (gain)/loss (628) 2,569 Share based compensation 1,443 2,260 Impairment of assets Impairment of loans 452 Change in operating assets and liabilities: Decrease in prepayments Increase in receivables (285) (247) Increase in payables 231 2,074 Net cash flow used in operating activities (5,674) (6,954) Non cash financing activities During the 2012 year a loan of $797,000 to Carlton resources plc was forgiven by Nyota. In exchange for the forgiveness of the loan Carlton Resources transferred 5,312,362 Luiri Gold Ltd shares to Nyota; and issued 3,000,000 Carlton Resources shares to Nyota. Nyota realised a loss of $452,397 on the loan forgiven. During the 2011 year the Company issued: 2,325,685 ordinary shares at $0.425 as consideration for the acquisition of additional Ethiopian exploration tenements. 24 Loss per share The following reflects the operating loss and share data used in the calculations of basic and diluted loss per share: $000 $000 Loss for year used in calculating basic and diluted loss per share (7,380) (14,418) Weighted average of shares used as the denominator Number Number Weighted average number of ordinary shares used in calculating basic loss per share 512,471, ,238,965 Information concerning the classification of securities: Certain granted options have not been included in the determination of diluted loss per share as they are not dilutive. Details relating to all options are set out in the Directors Report and note 25. * The shares and options are not dilutive as the Group is in a loss position for the year ended 30 June

90 25 Share based payments (a) Employee Option Plan NYOTA MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2012 Employee incentive option plans have been approved at shareholder general meetings. The Employee Option Plan is designed to provide long term incentives for senior managers and above (including executive directors) to deliver long term shareholder returns. Under the plan, participants are granted options which only vest if the employees are still employed by the Group at the end of the vesting period. Participation in the plan is at the board's discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Options are granted under the plan for no consideration. Options granted under the plan carry no dividend or voting rights. Set out below are summaries of options granted both under the plan and otherwise as compensation: Grant date Expiry date Exercis e price Opening balance Exercise d during the year Granted during the year Forfeited /cancelled during the year Closing balance Vested and exercisable at year end 3/9/ /9/2012 $0.11 5,425, ,000 5,300,000 5,300,000 21/12/200 31/12/2012 $0.13 1,280,000 1,280,000 1,280, /2/ /12/2012 $0.15 7,000,000 7,000,000 7,000,000 22/3/ /6/2013 $ , , ,666 15/7/ /6/2013 $0.31 1,500,000 (750,000) 750, ,000 6/8/ /6/2013 $ , , ,000 30/11/201 31/12/2015 $0.35 4,833,334 (900,000) 3,933,334 3,933, /11/201 31/12/2015 $0.42 4,833,334 (4,833,334) 0 30/11/201 31/12/2015 $0.50 4,833,332 (4,833,332) 0 4/2/ /1/ ,000,000 4,000,000 4,000,000 3/6/ /6/ ,700,000 1,700,000 3/6/ /6/ ,800,000 1,800,000 9/3/ /6/2015 $Nil 2,500,000 2,500, ,333 21/6/ /6/ ,200,000 1,200,000 Total 37,955, ,000 3,700,000 (11,316,666) 30,213,334 The average weighted exercise price of the above options is $ The fair value of options issued during the year was calculated as follows: Grant date Fair value Grant date Exercise Life of Risk free Expected Dividend share price price option interest rate volatility yield 9/3/2012 $0.11 $0.11 $0.00 N/a N/a N/a N/a 21/6/2012 $0.018 $0.064 $ years 4.90% 80% % 89

91 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE Share based payments (continued) (b) Employee Share Plan Employee incentive share plans have been approved at shareholder general meetings, the latest being 3 September No employee share plan shares were issued in the year ended 30 June 2012 (2011: Nil). For details of the shares issued to directors and key management personnel refer to note 18. (c) Expenses arising from share based payments $000 $000 Shares and options issued as employee remuneration 636 1,950 Expense related to options cancelled during year 733 Options issued to non employee classified consultant group ,443 2, Accumulated losses Movements in accumulated losses were as follows: $000 $000 Balance at beginning of year (113,328) (98,910) Net (loss) attributable to members of Nyota Minerals Limited (7,380) (14,418) Balance at end of financial year (120,708) (113,328) 90

92 27 Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2012 The parent entity of the Group is Nyota Minerals Limited, incorporated in Australia, and the details of its subsidiaries are as follows: Name of entity Country of incorporation Ownership interest 30 June 30 June % % Nyota Minerals (UK) Limited United Kingdom Nyota Minerals (Bermuda) Limited Bermuda Nyota Minerals (Ethiopia) Limited United Kingdom Yubdo Platinum and Gold Development Plc Ethiopia Ethiopian Resources Limited United Kingdom Danyland Limited South Africa Danyland Limited British Virgin Islands Danyland Limited Burundi Karrinyup Holdings Limited Mauritius Brantham Investments Limited British Virgin Islands 100 Towchester Investment Company Limited British Virgin Islands Parent Entity Disclosures The individual financial statements for the parent entity show the following aggregate amounts: Balance sheet 2012 $ $000 Assets Current assets 14,400 25,186 Non current assets 47,405 25,416 Total assets 61,805 50,602 Liabilities Current liabilities Total liabilities Equity Issued capital 177, ,595 Retained earnings (123,062) (118,699) Reserves Asset revaluation reserve (258) (43) Convertible note premium reserve Share based payments 6,325 4,882 Total equity 60,831 49,954 91

93 Financial performance NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE $ $000 Loss for the year (4,363) (19,637) Other comprehensive income (215) 72 Total comprehensive loss (4,578) (19,565) a) Guarantees entered into by the parent entity The parent entity has not provided financial guarantees for any of its subsidiaries (2011: nil). b) Contingent liabilities of the parent The parent entity did not have any contingent liabilities as at 30 June 2012 (2011: nil). c) Contractual commitments The parent entity did not have any contractual commitments as at 30 June 2012 (2011: nil). 92

94 DIRECTORS DECLARATION 30 JUNE 2012 In the directors opinion: (a) the financial statements and notes set out on pages 47 to 92 are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and giving a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of its performance 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. Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act This declaration is made in accordance with a resolution of the directors. N Maclachlan Non Executive Chairman London, 28 September

95 Independent auditor s report to the members of Nyota Minerals Limited Report on the financial report We have audited the accompanying financial report of Nyota Minerals Limited (the company), which comprises the balance sheet as at 30 June 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors declaration for the Nyota Minerals Limited group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year. Directors responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. PricewaterhouseCoopers, ABN QV1, 250 St Georges Terrace, PERTH WA 6000, GPO BOX D198, PERTH WA 6840 T , F , Liability limited by a scheme approved under Professional Standards Legislation

96 Independent auditor s report to the members of Nyota Minerals Limited (continued) Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act Auditor s opinion In our opinion: (a) the financial report of Nyota Minerals Limited is in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the consolidated entity s financial position as at 30 June 2012 and of its performance for the year ended on that date; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) the financial report and notes also comply with International Financial Reporting Standards as disclosed in Note 1. Materiality Uncertainty Regarding Continuation as a Going Concern Without qualifying our opinion, we draw attention to Note 1 (a) in the financial report, which indicates that the company will need to raise additional funds to finance the minimum exploration work programme and capital requirements for the next twelve months. These conditions, along with other matters set forth in Note 1 (a), indicate the existence of a material uncertainty that may cast significant doubt about the company s ability to continue as a going concern and therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report. Report on the Remuneration Report We have audited the remuneration report included in pages 26 to 35 of the directors report for the year ended 30 June The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. 95

97 Independent auditor s report to the members of Nyota Minerals Limited (continued) Auditor s opinion In our opinion, the remuneration report of Nyota Minerals Limited for the year ended 30 June 2012, complies with section 300A of the Corporations Act PricewaterhouseCoopers Craig Heatley Perth Partner 28 September