Rusina Mining NL ABN Interim financial report for the half-year ended 31 December 2008

Transcription

1 ABN Interim financial report for the half-year ended 31 December 2008

2 Corporate Directory Directors Mr Gordon Getley Mr Robert Gregory Mr Philip Fillis Mr Antony Butler Chairman/Non Executive Director Managing Director/Chief Executive Officer Non Executive Director Non Executive Director Chief Financial Officer & Company Secretary Mr Mark Hanlon Principal Place of Business & Registered Office Level 1, 83 Havelock Street, West Perth WA 6005 Tel: Fax: Philippines Regional Office 4 th Floor, Pilgrim Building 111 Aguirre Street, Legaspi Village Makati City, Philippines 1229 Tel: Fax: Share Registry Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St George s Terrace, Perth WA 6000 Tel: (within Australia) (outside Australia) Fax: Auditors KPMG 235 St George s Terrace, Perth WA 6000 Australian Stock Exchange (ASX) Code RML London Stock Exchange (AIM) Code RMLA

3 Contents Interim financial report for the half-year ended 31 December 2008 Page Directors report 1 Auditor s independence declaration 3 Independent auditor s review report 4 Directors declaration 6 Condensed consolidated income statement 7 Condensed consolidated balance sheet 8 Condensed consolidated statement of changes in equity 9 Condensed consolidated cash flow statement 10 Notes to the condensed consolidated financial statements 11

4 Directors report Directors report The directors of Rusina Mining NL ( the Company ) submit the financial report of the consolidated entity and the Auditor s review report thereon for the half-year ended 31 December In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: Directors The names of the directors who have held office during or since the end of the half-year and until the date of this report are noted below. Directors were in office for this entire period unless otherwise stated. Mr Gordon Getley Mr Robert Gregory Mr Philip Fillis Mr Antony Butler Chairman/Non Executive Director Managing Director/Chief Executive Officer Non Executive Director Non Executive Director Review of operations Despite the significant deterioration in global economic conditions during the period the Company continued to make progress across its key areas of operation in the Philippines. Of most significance was the finalisation of the pre-feasibility study for the nickel heap leach project at Acoje. In addition the Company completed the acquisition of the Barlo copper/gold project and commenced the direct shipping of chromite. Nickel Heap Leach In November the Company released the results of the Acoje nickel heap leach pre-feasibility study (PFS) utilising partner European Nickel PLC s heap leach technology. The PFS results demonstrate an economically viable nickel laterite project using heap leach technology producing 24,500 tonnes a year of contained nickel and 930 tonnes of contained cobalt. The study for the Acoje project is based on a JORC Indicated Resource of million tonnes at 1.12% nickel and 0.05% cobalt (at a 0.8% nickel cutoff for saprolite and a 0.9% nickel cut off for limonite) giving the project an initial mine life of ten years. Mining will be at a rate of three million tonnes per annum, with a low strip ratio of 0.46, and cash costs are estimated at US3.10 per pound of nickel (at US6/lb Ni), net of by-products including a refining charge of 25% of the nickel price and a cobalt price of US10/lb. Further potential resources have been identified, the JORC Inferred Resources at Acoje and the Zambales Chromite deposit, which are expected to extend the mine life beyond 20 years and are expected to be confirmed to JORC Indicated Resource levels during the definitive feasibility study. The highlights of the PFS include: JORC combined limonite plus saprolite Indicated Resource of Mt at 1.09% nickel from an Inferred plus Indicated Resource of Mt at 1.06% nickel using a 0.8% cut off grade Estimated annual production of 24,500 tonnes of nickel and 930 tonnes of cobalt Estimated cash cost of US3.10/lb of nickel, net of by-products including refining costs at US6.00/lb nickel price and US10/lb cobalt price Total development estimated at US498 million Estimated capital cost per annual pound of nickel of US7.84 Post-tax Net Present Value of US375 million (at a 10% discount rate) and US6/lb nickel price and 10/lb cobalt Internal Rate of Return of 28.3% 3 year payback period Forecast annual sales of US260 million, based on a long term nickel price of US6.00/lb and including by-product credits Significant potential to increase NPV and IRR with extended mine life by confirming the JORC Inferred Acoje and Zambales Chromite deposits to JORC Indicated status

5 Directors report European Nickel ( EN ) and the Company have now moved into the definitive feasibility study ( DFS ) phase with the construction of the trial leach facility to demonstrate the large scale permeability and recovery of the Acoje ore. First leaching is on schedule for April In addition European Nickel have constructed a research laboratory at Acoje where larger 4m column test work as well as advanced metallurgical work on enhancing the final mixed hydroxide products can be undertaken as part of the DFS. The permitting of the full scale plant has also commenced and Chinese engineering group, China Tianchan Engineering Corporation, have conducted a site visit. European Nickel are funding the DFS by spending US10m to earn a 40% interest in the project. Direct Shipping Operations Shipping of nickel laterite ore was halted during the period due to low nickel prices and a significant reduction in demand from Chinese buyers. A trial high-grade shipment to a Japanese customer was made during the period and it is anticipated further cargoes may follow. Interest still exists for high iron shipments although margins are minimal. Small tonnages of chromite ore shipped via containers commenced during the period. The Acoje mine was once South-East Asia s largest chromite mine and the Company is looking for partners to reopen large-scale underground chromite mining. Exploration The Company has several exploration tenements under application. The main activities on these tenements has been gaining the requisite approvals from stakeholders and local government agencies prior to physical exploration activities can be undertaken. Corporate Activity Early in the period the Company finalised the acquisition of the Barlo project, a copper/gold prospect located some 30 km north of the Acoje tenement. A work programme is currently being finalised for this project. The Company continues to be mindful of its cash resources and has implemented a new pared-back budget, while pushing forward with its partner funded activities to further the development of its flag-ship Acoje project. The Geological Information in this review of operations is based on information compiled by Mr Scott Robson, who is a Member of The Australasian Institute of Mining and Metallurgy, and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration results, Mineral Resources and Ore Reserves". Mr Robson consents to the inclusion in this review of operations of the matters based on his information in the form and context in which it appears. Auditor s independence declaration The auditor s independence declaration is included on page 3 and forms part of the directors report for the halfyear ended 31 December Signed in accordance with a resolution of directors made pursuant to s.306(3) of the Corporations Act On behalf of the Directors Robert Gregory Managing Director 13 March

6 Lead Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Rusina Mining NL I declare that, to the best of my knowledge and belief, in relation to the audit for the financial half year ended 31 December 2008 there have been: (i) (ii) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. KPMG T R Hart Partner Perth 13 March 2009 KPMG, an Australian partnership, is part of the KPMG International network. KPMG International is a Swiss cooperative. 3

7 Independent auditor s review report to the members of Rusina Mining NL Report on the financial report We have reviewed the accompanying interim financial report of Rusina Mining NL, which comprises the consolidated interim balance sheet as at 31 December 2008, income statement, statement of changes in equity and cash flow statement for the interim period ended on that date, a description of accounting policies and other explanatory notes and the directors declaration of the Group comprising the company and the entities it controlled at the half-year s end or from time to time during the interim period. Directors responsibility for the interim financial report The directors of the company are responsible for the preparation and fair presentation of the interim financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the interim financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group s financial position as at 31 st December 2008 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As auditor of Rusina Mining NL, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. KPMG, an Australian partnership, is part of the KPMG International network. KPMG International is a Swiss cooperative. 4

8 Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Rusina Mining NL is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group s financial position as at 31 st December 2008 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 KPMG Trevor Hart Partner Perth 13 March

9 Directors declaration Directors declaration In the opinion of the directors of Rusina Mining NL: 1. The financial statements and notes thereto, as set out on pages 7 to 15, are in accordance with the Corporations Act 2001 including: (a) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations; and (b) giving a true and fair view of the consolidated entity s financial position as at 31 December 2008 and of its performance for the half-year then ended. 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. This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act On behalf of the directors Robert Gregory Managing Director 13 March

10 Condensed consolidated income statement Condensed consolidated income statement for the half-year ended 31 December 2008 Note Half-year ended 31 Dec 2008 Half-year ended 31 Dec 2007* Revenue 68,687 - Total Revenue 68,687 - Share of loss of associates (27,307) - Share of loss from joint venture (258,759) - Administration expenses (2,541,780) (2,359,826) Finance income 1,170, ,836 Finance costs - (2,676) Change in fair value of derivative liability 243,276 2,222,026 Loss on sale of assets (1,232) - Depreciation (87,785) (63,459) Profit/(Loss) before income tax expense 2 (1,433,937) 338,901 Income tax expense - - Profit/(Loss) for the period (1,433,937) 338,901 Attributable to Equity holders of the parent (1,464,737) 346,713 Minority interest 30,800 (7,812) Profit/(Loss) for the period (1,433,937) 338,901 Profit/(Loss) per share Basic (cents per share) (0.59) 0.17 Diluted (cents per share) (0.59) 0.14 Notes to the condensed consolidated financial statements are included on pages 11 to 15. * Restated refer to note

11 Condensed consolidated balance sheet Condensed consolidated balance sheet as at 31 December Dec June 2008 Note Current assets Cash and cash equivalents 5,374,508 6,192,933 Trade and other receivables 2,564,795 1,538,649 Other current assets - 131,400 Total current assets 7,939,303 7,862,982 Non-current assets Other financial assets - 48,107 Property, plant and equipment 414, ,907 Intangible assets 3 13,919,749 9,603,341 Total non-current assets 14,333,837 10,030,355 Total assets 22,273,140 17,893,337 Current liabilities Trade and other payables 3,584,644 2,398,240 Employee benefits 102,393 72,375 Derivative liability ,394 Provisions 20,212 - Total current liabilities 3,707,367 2,714,009 Total liabilities 3,707,367 2,714,009 Net assets 18,565,773 15,179,328 Equity Issued capital 4 57,369,493 56,877,493 Reserves 6,843,863 3,166,580 Accumulated losses (45,842,988) (44,904,360) Equity attributable to equity holders of the parent 18,370,368 15,139,713 Minority interest 195,405 39,615 Total equity 18,565,773 15,179,328 Notes to the condensed consolidated financial statements are included on pages 11 to

12 Condensed consolidated statement of changes in equity Condensed consolidated statement of changes in equity for the half year ended 31 December 2008 Fully paid ordinary shares Foreign currency translation reserve Option premium reserve Accumulated losses Attributable to equity holders of the parent Minority interest Balance at 1 July ,203,488 56,863 2,417,089 (43,505,544) 6,171,896 30,702 6,202,598 Exchange differences arising on translation of foreign operations - (170,788) - - (170,788) - (170,788) Income and expense recognised directly in equity - (170,788) - - (170,788) - (170,788) Loss attributable to equity holders of the parent , , ,713 Loss attributable to minority interest (7,812) (7,812) Total recognised income and expense - (170,788) - 346, ,713 (7,812) 338,901 Shares issued 3,437, ,437,288-3,437,288 Share-based payments , , ,411 Balance at 31 December 2007* 50,640,776 (113,925) 2,770,500 (43,158,831) 10,138,520 22,890 10,161,410 Total Balance at 1 July ,877,493 (884,564) 4,051,144 (44,904,360) 15,139,713 39,615 15,179,328 Exchange differences arising on translation of foreign operations - 3,896, ,896,692-3,896,692 Income and expense recognised directly in equity - 3,896, ,896,692-3,896,692 Profit attributable to equity holders of the parent (1,464,737) (1,464,737) - (1,464,737) Profit attributable to minority interest ,800 30,800 Total recognised income and expense - 3,896,692 - (1,464,737) (1,464,737) 30,800 (1,433,937) Shares issued 492, , ,000 Share-based payments , , ,700 Initial recognition of minority interest , ,990 Transfer between option premium reserve and accumulated losses following the lapse of options - - (526,109) 526, Balance at 31 December ,369,493 3,012,128 3,831,735 (45,842,988) 18,370, ,405 18,565,773 * Restated refer to note 6-9 -

13 Condensed consolidated cash flow statement Condensed consolidated cash flow statement for the half-year ended 31 December 2008 Half-year ended 31 Dec 2008 Half-year ended 31 Dec 2007 Cash flows from operating activities Receipts from operations 68,687 - Payments to suppliers and employees (1,576,381) (2,057,313) Exploration and evaluation expenditure (2,685,225) (3,851,187) Interest received 74,087 83,171 Net cash used in operating activities (4,118,832) (5,825,329) Cash flows from investing activities Payment for property, plant and equipment (30,675) (67,845) Proceeds from sale of property, plant and equipment 2,315 - Acquisition of other investments - (548,767) Loans to other entities (1,195) - Net cash used in investing activities (29,555) (616,612) Cash flows from financing activities Proceeds from issues of equity securities 492,000 6,426,012 Proceeds from borrowings - 28,906 Net cash provided by financing activities 492,000 6,454,918 Net increase/(decrease) in cash and cash equivalents (3,656,387) 12,977 Cash and cash equivalents at the beginning of the half-year 6,192,933 2,400,273 Effects of exchange rate fluctuations on cash held 2,837,962 - Cash and cash equivalents at the end of the half-year 5,374,508 2,413,250 Notes to the condensed consolidated financial statements are included on pages 11 to

14 Notes to the condensed consolidated financial statements Notes to the condensed consolidated financial statements for the half-year ended 31 December Statement of significant accounting policies Statement of compliance The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134: Interim Financial Reporting, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board ( AASB ). This condensed half-year financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the consolidated entity as in the full financial report. It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2008 and any public announcements made by Rusina Mining NL and its subsidiaries during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules. The half-year consolidated financial statements were approved by the Board of Directors on 13 March Basis of preparation The half-year report has been prepared on a historical cost basis, except for derivative financial instruments which are measured at fair value. Cost is based on the fair value of the consideration given in exchange for assets. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted. For the purpose of preparing the half-year report, the half-year has been treated as a discrete reporting period. Significant accounting judgement and key estimates The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. In preparing this half-year report, the significant judgements made by management in applying the consolidated entity s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June Adoption of new and revised accounting standards In the half-year ended 31 December 2008, the consolidated entity has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July It has been determined by the consolidated entity that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to the consolidated entity s policies

15 Notes to the condensed consolidated financial statements 2. Profit/(loss) before income tax expense 31 December December 2007 The following revenue and (expense) items are relevant in explaining the financial performance for the half-year: Share-based payments (306,700) (353,411) Share of profit payable to joint venture partners (523,824) - Change in fair value of derivative liability 243,276 2,222,026 Realised and unrealised foreign currency gains 1,096, , Intangible assets 31 December June 2008 Costs carried forward in respect of areas of interest: Exploration and evaluation at cost Balance at beginning of half-year 9,603,341 3,455,733 Expenditure and currency translation movement 4,316,408 6,176,614 Amortised as cost of sales - (29,006) Carrying amount at end of period 13,919,749 9,603, Issued capital 31 December June 2008 No. No. Fully paid ordinary shares Balance at beginning of half-year 242,202,715 56,877, ,122,471 47,203,488 Exercise of 3,000,000 options exercisable at cents 3,000, , Exercise of 38,623,418 listed options exercisable at cents ,623,418 7,650,522 Exercise of 837,000 options exercisable at , , cents 5,882,352 fully paid ordinary shares issued at 21 UK pence - - 5,882, ,811 3,658,537 fully paid ordinary shares issued at US cents - - 3,658, ,466 6,458,937 fully paid ordinary shares issued at cents - - 6,458,937 2,315, ,000 fully paid ordinary shares issued at cents , ,000 Share issue costs (1,358,096) 245,202,715 57,369, ,202,715 56,877,

16 Notes to the condensed consolidated financial statements 5. Segment information The following is an analysis of the revenue and results for the period, analysed by geographical segment, Rusina Mining Limited s primary basis of segmentation. The consolidated entity has two geographic segments, being Philippines and Australia and one business segment being mineral exploration activities. Segment revenue Services Financial Income Total * * * Philippines 68,687-2,729-71,416 - Australia - - 1,168,234 83,171 1,168, ,836 Consolidated 1,239, ,836 Segment result * Philippines (1,734,987) (619,601) Australia 270, ,314 Profit/(loss) for the period (1,464,737) 346,713 * Restated refer note

17 Notes to the condensed consolidated financial statements 6. Correction of prior period error At 31 December 2007, the Company recognised the issue of free attaching options to shares issued in foreign currencies within equity. In accordance with accounting standards, the options should have been accounted for as derivatives as the options result in a fixed amount of shares to be issued in exchange for a variable amount of cash, with changes in the fair value of the derivative recorded in the income statement. The Company has reflected this requirement by restating the income statement for the comparative period. This adjustment resulted in the following effects: Accounts Effected Amended 31 December 2007 Original 31 December 2007 Income Statement Profit/(Loss) for the period 338,901 (1,883,125) Profit/(Loss) per share 0.17 (0.94) Statement of Changes in Equity Issued capital 50,640,776 53,629,458 Accumulated losses (43,158,831) (45,380,857) 7. Share based payments The terms and conditions of the grants made during the six months ended 31 December 2008 are as follows: Series Grant date Number of instruments Vesting conditions Expiry date 1 27 November ,200,000 Vests in 3 equal tranches of 1,400,000 options each, when the share price is 33.33%, 66.66% and 100% greater than the exercise price of 20 cents 28 August November ,700,000 Vests in 2 equal tranches of 26 November ,000 options each, when the share price is 50% and 100% greater than the exercise price of 25 cents. 3 8 December ,900,000 Vests subject to various conditions related to the employees employment. 7 December 2011 Fair value of share options (using the Black-Scholes model) and assumptions for the six months ended 31 December 2008: Series 1 Tranche 1 Tranche 2 Tranche 3 Fair value at grant date 0.10 cents 0.62 cents 1.17 cents Share price on grant date 4.20 cents 4.20 cents 4.20 cents Exercise price 20 cents 20 cents 20 cents Expected volatility 98% 98% 98% Risk-free interest rate 3.75% 3.75% 3.75% Series 2 Tranche 1 Tranche 2 Fair value at grant date 0.14 cents 0.61 cents Share price on grant date 4.20 cents 4.20 cents Exercise price 25 cents 25 cents Expected volatility 98% 98% Risk-free interest rate 3.75% 3.75%

18 Notes to the condensed consolidated financial statements 7. Share based payments (contd) Series 3 Tranche 1 Fair value at grant date 1.69 cents Share price on grant date 3.90 cents Exercise price 10 cents Expected volatility 98% Risk-free interest rate 3.64% 8. Contingent liabilities There has been no change in contingent liabilities since the last annual reporting date. 9. Subsequent events There have been no material events subsequent to the reporting date