(ABN ) Rex Minerals Ltd and its controlled entities. 31 December 2011 Consolidated interim financial report

Transcription

1 (ABN ) Rex Minerals Ltd and its controlled entities 31 December 2011 Consolidated interim financial report

2 Corporate Directory DIRECTORS Paul Chapman (Chairperson) Steven Olsen (Managing Director) Richard Laufmann Alister Maitland COMPANY SECRETARY Amber Rivamonte PRINCIPAL & REGISTERED OFFICE 209 Dana Street Ballarat Victoria 3350 CONTACT DETAILS PO Box 626W Ballarat West Victoria 3350 Tel: Fax: SHARE REGISTRARS Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford Victoria 3067 AUDITORS KPMG 147 Collins Street Melbourne Victoria 3000 BANKERS ANZ Banking Group Limited Ord Minett Ltd 927 Sturt Street 120 Collins Street Ballarat Victoria 3350 Melbourne Victoria 3000 LEGAL ADVISORS Baker McKenzie 181 William Street Melbourne Victoria P a g e

3 Contents Page Directors report 4 Consolidated interim statement of financial position 15 Consolidated interim statement of comprehensive income 16 Consolidated interim statement of changes in equity 17 Consolidated interim statement of cash flows 18 Condensed notes to the consolidated interim financial statements 19 Directors declaration 21 Independent auditor s review report 22 Lead auditor s independence declaration 24 3 P a g e

4 Directors report The Directors present their report together with the consolidated interim financial report of Rex Minerals Ltd ( the Company or Rex ) and its consolidated entities ( the Group ) for the half-year ended 31 December 2011 and the review report thereon. Directors The Directors of the Company at any time during or since the end of the half-year are: Name Non-executive Paul Chapman Chairperson Richard Laufmann Non-Executive Director Alister Maitland Non-Executive Director Period of directorship Appointed 18 April 2007 Appointed 16 May 2007 Appointed 16 September 2011 Executive Steven Olsen Appointed 13 May 2007 Managing Director Principal activities The principal activity of the Group is minerals exploration, primarily for the discovery and development of copper-gold deposits in South Australia. There were no significant changes in the nature of the Group s principal activities during the financial period. Operating results The consolidated interim statement of comprehensive income shows a profit after tax of $15,907 for the half-year ended 31 December 2011 (2010: loss $189,649). 4 P a g e

5 Review of operations Rex Minerals Ltd is an Australian minerals exploration and development company with large scale copper-gold projects on the Yorke Peninsula, South Australia. Hillside Project Rex s flagship project is the Hillside copper-gold deposit, with most of Rex s recent expenditure focused on the definition of Mineral Resources at Hillside. The Hillside Mineral Resource is situated 12km south of the township of Ardrossan on the Yorke Peninsula, South Australia. Figure 1: Location diagram of the Hillside Project Area, South Australia Throughout 2011, Rex maintained a program of seven to eight drill rigs at Hillside for the purpose of making new copper discoveries, confirming the continuity of known copper mineralisation and providing other technical detail for various mining studies. An updated Mineral Resource estimate for Hillside was announced in July 2011 based on drilling completed up to the end of May The total Indicated and Inferred Resource at Hillside currently stands at 217 million 0.7% copper, 0.2g/t gold and 12.4% iron. This equates to 1.5 million tonnes of copper and 1.4 million ounces of gold confirming the Hillside deposit as one of Australia s largest copper discoveries over the past decade. 5 P a g e

6 Also in July 2011, Rex released a conceptual study which identified a number of key economic parameters for the potential development of a new copper-gold-iron ore mine on the Yorke Peninsula. The conceptual study was based on Resource drilling and work received up until April 2011 and provided broad capital and operating cost estimates based on a two-stage development (Stage One Mtpa, Stage Two 15-18Mtpa). In October 2011, the Company announced that with the benefit of an additional 3-6 months of drilling results and the discovery of high-grade and shallow copper results such as at Leprena, the focus for the upcoming pre-feasibility study would be on a 15 Mtpa processing plant from the commencement of operations. This change delivers substantially higher production, economies of scale and revenues in the first six years of a +10 year mine life compared to the conceptual study two stage approach. At 15 Mtpa Hillside would produce over 100,000t copper equivalent (copper of 70,000t, gold of 50,000ozs and iron ore of 1.3M) for a minimum of 10 years. The optimised 15 Mtpa production plan, compared to the initial conceptual study, is summarised below. Table 1: Approximate capital costs and copper equivalent (CuEq) production estimates based on conceptual study information and further exploration results. Upfront capital CuEq production Years 1-6 CuEq production Years Conceptual Study A$700 million 55,000t* >100,000t* Optimised Mine Plan A$900 million >100,000t* >100,000t* * Price Assumptions: Copper price = 3.20 US$/lb, Gold price = 1200 US$/ounce, Magnetite price = 120 US$/tonne, Exchange Rate AUD:US $0.80 (see Table 4 in Rex Conceptual Study announcement, 27 July 2011 for more detail on price assumptions). The cash costs for the copper production over the life of the project (inclusive of by-product credits) are estimated to be close to the world average, of approximately US$1.10/lb copper (GFMS copper report, March 2011). Hillside has been subject to intensive drilling in the past 18 months. To the end of December 2011, 362 diamond drill holes and 245 RC drill holes at Hillside (totalling 88,294m), had been drilled at Hillside. This drilling program has now defined continuous copper mineralisation over a number of structures covering over 2 km in strike length (Figure 2). Figures 3 to 8 show some examples of the structures that have been defined at Hillside along with an updated proposed open pit design. This design has been modified since the conceptual study to allow for the recent discovery of the shallow higher grade material. As the Hillside project moves from a concept phase and into the pre-feasibility study, Rex anticipates that many areas of the project can be optimised and improved. Drilling results over the past six months have identified new shallow zones of higher grade copper mineralisation that will form the focus of the mine optimisation studies along with other optimisation work. 6 P a g e

7 Figure 2: Hillside magnetic map and Drill Hole locations to the end of December P a g e

8 Figure 3: Hillside cross section 3500N (view looking north) Figure 4: Hillside cross section 3600N (view looking north) 8 P a g e

9 Figure 5: Hillside cross section 4100N (view looking north) Figure 6: Hillside cross section 4300N (view looking north) 9 P a g e

10 Figure 7: Hillside cross section 4900N (view looking north) Figure 8: Hillside cross section 5000N (view looking north) 10 P a g e

11 Regional Exploration Regional exploration on Rex s strategic holding along the Pine Point Copper Belt continued to gather pace over the second half of 2011, with detailed targeting work leading to drill testing. A number of the high priority targets were broadly tested with one or two drill holes where access was possible. During June to December 2011 some of the land on the Yorke Peninsula is under crop and being harvested which limits access in some locations. Many of the initial drill holes were designed to identify basic levels of geological information in areas that have never been tested previously. In the second half of 2011, Rex commenced initial drilling and received encouraging results at its priority targets of Equis, Ethel, and Port Julia. At an area called Target 13 nothing of immediate interest was observed from the first two drill holes, however this still remains a high priority target for further follow up. With the grain harvest completed, Rex recommenced its regional drilling activities in January 2012 with two diamond drill rigs. Equis Prospect The Equis prospect is located 3 km north-west of the Hillside deposit (Figure 10). Drilling at Equis was aimed at testing a number of high intensity magnetic anomalies and associated gravity anomalies. A program of three diamond drill holes was undertaken at Equis, with all drill holes intersecting encouraging alteration assemblages and widespread anomalous copper. The drilling intersected an extensive sequence of metavolcanic rocks with numerous granitic intrusions within the basement rocks. Of most encouragement, the basement rocks exist underneath less than ten metres of younger sedimentary cover. Of particular significance were drill holes EQDD002 and EQDD003, which both included intersections of disseminated and massive chalcopyrite (also the dominant copper mineral at Hillside) and pyrite (Figure 9). Additional exploration activities including soil sampling and an Induced Polarisation (IP) survey, have also subsequently been completed and will refine the next phase of drilling at Equis. Ethel Prospect The Ethel prospect is located 5km south of Hillside (Figure 10) and is adjacent to the interpreted position of a large regional fault (Pine Point Fault). At the Ethel prospect, drill hole ETDD001 tested a coincident high intensity magnetic and gravity anomaly. Visible copper sulphides were observed in the drill hole with a best result of 3.8% copper from 323m, together with alteration zones similar to that seen from other copper hosted mineralised locations in the district. The cover sequence in this area was observed to be less than 25m thick. 11 P a g e

12 Figure 9: Sections of massive chalcopyrite intersected in drill hole EQDD003 at 371m down hole Port Julia Prospect The Port Julia prospect is located 12km south of Hillside (Figure 10) and is defined by a distinct magnetic and associated subtle gravity anomaly. Drill hole PJDD005 was drilled in December 2011 to test the combined magnetic and gravity anomalies. This drill hole intersected a zone of extensive iron alteration with disseminated copper mineralisation (chalcopyrite). The massive overprinting of haematite and magnetite in this structure is significant, being a characteristic of the Olympic Dam, Prominent Hill and Hillside deposits. The assay results returned anomalous levels of copper and high levels of iron, with an overall result of 0.2% copper and over 35% iron. Copper results peaked at 0.4% copper and iron peaked at over 50%. The geological characteristics of this intersection were encouraging and therefore Port Julia will be a focus for some of the regional drilling in P a g e

13 Figure 10: Magnetic image and significant regional exploration targets defined by Rex on the Yorke Peninsula, SA 13 P a g e

14 Corporate To ensure expeditious project development, Rex has commenced preliminary financing discussions to ensure an alignment of sponsor, developer, and financier interests when the pre-feasibility study moves to a bankable study in The current scale and mine life of the Hillside project along with the significant regional potential offer a unique opportunity for potential partners to become involved in the project, particularly given the estimated quality of the copper and iron-ore concentrates. Rex believes that this will open up favourable financing options to fund the development of the project and will look comprehensively at various financing options that are available as the technical work continues on the project. Lead Auditor s Independence Declaration The lead auditor s independence declaration is set out on page 24 and forms part of the Directors Report for the half-year ended 31 December Signed in accordance with a resolution of the Directors: Steven Olsen Managing Director Dated at Ballarat this 24 th day of February P a g e

15 Consolidated interim statement of financial position As at 31 December Dec June 2011 Note $ $ Current assets Cash and cash equivalents 56,392,543 45,084,267 Term deposits - 34,000,000 Receivables 569, ,677 Other assets 622,776 9,420 Total current assets 57,584,997 79,978,364 Non-current assets Exploration and evaluation expenditure 6 73,245,215 51,958,831 Property, plant and equipment 11,670,641 11,102,663 Total non-current assets 84,915,856 63,061,494 Total assets 142,500, ,039,858 Current liabilities Trade payables 2,529,240 3,168,171 Employee benefits 353, ,438 Total current liabilities 2,882,697 3,437,609 Total liabilities 2,882,697 3,437,609 Net assets 139,618, ,602,249 Equity Issued capital 7(i) 137,665, ,665,189 Reserves 1,116,090 1,137,690 Retained earnings 836, ,370 Total equity 139,618, ,602,249 The condensed notes on pages 19 to 20 are an integral part of these consolidated interim financial statements. 15 P a g e

16 Consolidated interim statement of comprehensive income For the six months ended 31 December 2011 Note 6 months to 6 months to 31 Dec Dec 2010 $ $ Finance income 1,827,797 1,295,029 Other income Administrative expenses (836,007) (764,565) Depreciation expense (21,463) (46,180) Employee benefits expense (841,586) (558,965) Marketing expenses (113,185) (114,968) Profit/(loss) before income tax 15,907 (189,649) Income tax (expense)/benefit - - Total profit/(loss) for the period after tax 15,907 (189,649) Total comprehensive income attributable to members of Rex Minerals Limited 15,907 (189,649) Earnings/(loss) per share Basic and diluted earnings/(loss) per share (cents) 0.01 (0.15) The condensed notes on pages 19 to 20 are an integral part of these consolidated interim financial statements. 16 P a g e

17 Consolidated interim statement of changes in equity For the six months ended 31 December 2011 Share Capital $ Reserves $ Retained Earnings $ Total Equity Balance at 1 July ,948, ,080 (40,286) 53,428,471 Issue of ordinary shares 82,941, ,941,065 Transfer from share based payments reserve - (119,730) 119,730 - Total comprehensive income for the period - - (189,649) (189,649) Balance at 31 December ,889, ,350 (110,205) 136,179,887 $ Balance at 1 July ,665,189 1,137, , ,602,249 Transfer from share based payments reserve - (21,600) 21,600 - Total comprehensive income for the period ,907 15,907 Balance at 31 December ,665,189 1,116, , ,618,156 The condensed notes on pages 19 to 20 are an integral part of these consolidated interim financial statements. 17 P a g e

18 Consolidated interim statement of cash flows For the six months ended 31 December 2011 Note 6 months to 31 Dec months to 31 Dec 2010 $ $ Cash flows from operating activities Cash paid to suppliers and employees (1,928,693) (1,490,031) Interest received 2,312,318 1,282,349 Net cash from/(used in) operating activities 383,625 (207,682) Cash flows from investing activities Exploration and evaluation payments (21,849,536) (10,179,733) Acquisition of property, plant and equipment (735,094) (362,265) Deposits for acquisition of property, plant and equipment (503,989) - Proceeds from the sale of property, plant and equipment 13,270 - Proceeds from/ (Investment in) term deposits 34,000,000 - Net cash from/(used in) investing activities 10,924,651 (10,541,998) Cash flows from financing activities Proceeds from issue of share capital - 87,851,802 Payment of transaction costs - (4,910,737) Net cash from/(used in) financing activities - 82,941,065 Net increase in cash and cash equivalents 11,308,276 72,191,385 Cash and cash equivalents at beginning of the period 45,084,267 31,474,941 Cash and cash equivalents at period end 56,392, ,666,326 The condensed notes on pages 19 to 20 are an integral part of these consolidated interim financial statements. 18 P a g e

19 Condensed notes to the consolidated interim financial report 1. Reporting entity Rex Minerals Ltd (the Company ) is a Company domiciled in Australia. The address of the Company s registered office is 209 Dana Street, Ballarat, Victoria, The consolidated interim financial report of the Company as at and for the six months ended 31 December 2011 comprises the Company and its controlled entities (together referred to as the Group and individually as Group entities ). The Group primarily is involved in minerals exploration in Australia. The consolidated annual financial report of the Group as at and for the year ended 30 June 2011 is available upon request from the Company s registered office or at 2. Statement of compliance The consolidated interim financial report has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act The consolidated interim financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the consolidated annual financial report of the Group as at and for the year ended 30 June This consolidated interim financial report was approved by the Board of Directors on 24 February Significant accounting policies The accounting policies applied by the Group in this interim financial report are the same as those applied by the Group in its financial report as at and for the year ended 30 June Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 June Operating Segments The Group operates in one geographical segment being South Australia and one industry, mineral mining and exploration. 6. Exploration and Evaluation Expenditure Exploration and evaluation costs carried forward in respect of minerals exploration areas of interest: 6 months to 31 Dec months to 30 Jun 2011 $ $ Exploration and evaluation phases 73,245,215 51,958,831 Opening balance 51,958,831 32,427,483 Acquisitions - - Additions 21,286,384 19,531,348 Expenditure disposed of - - Closing balance 73,245,215 51,958,831 The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest. 19 P a g e

20 7. Issued capital and reserves (i) Movements in shares on issue: No of Issue $ shares price $ Opening balance at 1 January ,284, ,889,742 Exercise of Employee Options funds received 06/01/ , ,031 Exercise of Employee Options funds received 13/01/ , ,295 Issue of Ordinary Shares property purchase 31/03/ , ,001 Exercise of Employee Options funds received 31/03/ , ,020 Exercise of Founding Options funds received 14/04/ , ,500 Exercise of Options funds received 20/05/2011 1,000, ,000 Exercise of Founding Options funds received 17/06/2011 1,000, ,000 Issue of Ordinary Shares property purchase 24/06/ , ,600 Closing balance at 30 June ,635, ,665,189 Opening balance at 1 July ,635, ,665,189 Closing balance at 31 December ,635, ,665,189 (ii) Movements in options on issue: Date of Issue No. of Options Exercise Price $ Expiry Date Opening balance at 1 January ,704,000 Exercise of Options founding 06/06/2007 (1,750,000) /06/2011 Exercise of Options 12/09/2007 (1,000,000) /06/2011 Exercise of Options employees 03/12/2007 (60,000) /06/2011 Exercise of Options employees 04/06/2010 (33,000) /05/2013 Issue of Options employees 06/05/2011 1,600, /04/2014 Closing balance at 30 June ,461,000 Opening balance 1 July ,461,000 Lapsing of Options - employees (11/11/11) 06/05/2011 (40,000) /04/2014 Closing balance at 31 December ,421, Commitments The Group has capital expenditure commitments of $3,455,094 which will be satisfied within the year. 9. Contingent Liabilities The Group s bankers have provided guarantees amounting to $20,000 to certain government bodies as security over the Group s performance of rehabilitation obligations on certain tenements. The guarantees are backed by deposits amounting to $20,000 as at 31 December Subsequent events On 22 February 2012 the Company issued 211,765 shares as part consideration for the acquisition of property on the Yorke Peninsula, South Australia. Other than the event described above, no other matters have arisen since the end of the reporting period which may affect the operations, results, or state of affairs of the Group in future periods. 20 P a g e

21 Directors declaration In the opinion of the Directors of Rex Minerals Ltd ( the Company ): 1. the financial statements and notes set out on pages 15 to 20, are in accordance with the Corporations Act 2001 including: (a) giving a true and fair view of the Groups financial position as at 31 December 2011 and of its performance, for the half-year ended on that date; and (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and 2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors: Steven Olsen Managing Director Dated at Ballarat this 24 th day of February P a g e

22

23

24