PARAMOUNT MINING CORPORATION LIMITED HALF-YEAR REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2013
DIRECTORS REPORT The Directors present their Financial Statement on the consolidated entity, being Paramount Mining Corporation Limited and its controlled entities, for the half-year ended 31 December 2013. DIRECTORS The Directors of Paramount Mining Corporation Limited during or since the end of the half-year are: Mr. Mo Munshi Mr. Terry Holohan Dr. Guy Anderson Mr. Mufti Habriansyah Mr. John Arbuckle Mr. Peter Bacchus REVIEW OF OPERATIONS OPERATING The loss from ordinary activities of the consolidated entity for the half-year ended 31 December 2013 after income tax was $1,275,516 (31 December 2012: $2,986,447). During the period no exploration expenditure was expensed directly, and no previously capitalised exploration expenditure was written off (31 December 2012: $72,446). At 31 December 2013 the Group had $447,071 (30 June 2013: $21,279) in cash and at call deposits. Capitalised mineral exploration and evaluation expenditure at 31 December 2013 is $8,762,993 (30 June 2013: $7,614,546. Capitalised mineral exploration expenditure increased by $1,148,447 as compared to corresponding period. Expenditure focused on the following project: GUNUNG ROSA Gunung Rosa is a high grade gold-silver and base metal project located 125km south east of Jakarta. The most prominent mineralised vein zone contained within the licence is a steeply dipping high grade gold silver and base metal mesothermal vein system in excess of 900 metres in strike length which is open along strike and to depth. The project has a 20-year Mining Permit (Operation/Production IUP), which was issued in 2010, and a Mineral Resource estimate of 634koz of Au (see ASX announcement of 9 October 2012). This poly-metallic mineralisation trending north-south extends under soil cover from surface to 240m depth, as an almost vertical, on average 2.26m wide, meso-thermal vein with a strike of 2.5km; it remains geologically open north, south and at depth. - 1 -
DIRECTORS REPORT Depth Tonnes Au Au Ag Zn Pb Cu gpt oz oz t t t 0-100m 525,000 11.73 197,950 513,593 16,308 4,493 2,312 100-300m 2,467,240 5.50 435,950 1,045,220 43,810 13,020 8,230 Total 2,992,240 6.59 633,900 1,558,813 60,118 17,513 10,542 Table 1: Inferred Mineral Resource estimate of 9 October 2012, cut-off grade of 1.5gpt Au Following a JORC 1992 Mineral Resource and Ore Reserve report underpinning a positive Definitive Feasibility Study in the early 1990s, on only 900m of this strike, the project was extensively developed underground by a mining decline, vertical shafts and development drives on four levels up until the Asian Financial Crisis whereupon it was curtailed due to the lack of availability of debt financing. This development work was carried out by the then operating company s consultant Century Metals and Mining NL. The project has not advanced since that time despite the significant increase in the value of gold in real terms. The project, now under Paramount management at the operating level from late 2012, is presently development phase with gold production expected within 18 months of the construction start. Map 1: The Gunung Rosa IUP is located in Indonesia s West Java Province, approximately 125km south of Jakarta, and near the major regional centres of Sukabumi and Cianjur. - 2 -
DIRECTORS REPORT On 19 September 2013, the Company announced that progress on the Gunung Rosa AMDAL had taken a key step forward. Following detailed discussions with the local community agreement was reached to start the environmental baseline study. Paramount held its inaugural public participation meeting in September 2013 at the Karyamukti Village Hall, near the Gunung Rosa mine-site. The meeting, chaired by the Mines Authorities from the Cianjur office, welcomed the Company representatives, the Company appointed environmental engineers, Mineralindo, and the members of the Community predominantly representing the four villages closest to the mine. On the same day, the Company advised that it had appointed the DrillCorp Group of Companies ( DrillCorp ) to carry out a 4,000 metre diamond drilling program at Gunung Rosa. The aim of the program is to increase the confidence in the existing 634,000 oz gold Resource and to further test the strike and depth extensions of the ore body to the north and south. The drilling program will raise the confidence in the Mineral Resource estimate needed to support the Preliminary and Definitive Feasibility Studies. The exploratory drilling should also demonstrate the scope for increasing the size of the Gunung Rosa project. The Company expects to announce market updates on the following key deliverables: The in-fill diamond drilling program to increase the confidence in the Mineral Resource estimates in the shallow (<100m from surface) levels of the ore body available for early mining. This program commenced in September 2013; The continuation of the metallurgical test-work program to complete the final design of the flow-sheet; The appointment of engineering contractors for major items such as the mine dewatering, mine refurbishment, detailed mine planning and tailings dam design; and The appointment of the engineering-study manager for the Preliminary, and subsequently Definitive, Feasibility Studies. The support that has been given by both the Community and Regional Authorities will put the Company in position to be able to start the construction phase in parallel with the completion of the Definitive Feasibility Study in 2014. - 3 -
DIRECTORS REPORT Map 2: Map of total 2,410 ha exploration permit (IUP) held by 85% controlled subsidiary PT CKP with proposed drilling on 900m of strike boxed and vein cluster discovered in 2012/13 highlighted as well as extent of field exploration planned. - 4 -
DIRECTORS REPORT Competent Persons Statement: The corporate activities carried out by Paramount over the last six months on finalising this agreement are of a technical, legal and corporate nature and the information in this Resolution has been reviewed by Mr Terry Holohan in conjunction with previous ASX announcements. Mr Holohan is a Member of the Institute of Materials, Minerals and Mining (UK) and is a Chartered Engineer with the Engineering Council (UK) as well a full time employee of Paramount and thus acts as their internal Competent Person. He has sufficient experience and knowledge relevant to an acquisition of this type as well as understanding the geology in the region and the engineering requirements for the development of such a mine under consideration. This knowledge and experience qualifies him as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Comments by Mr Holohan incorporated in this Review of Operation, are based upon field inspection of the Gunung Rosa Project area, West Java, including the drill core and results during 2012 along with input from his associates who have worked on the property. All of the significant information reported herein was available to and reviewed by Mr Holohan. Mr Holohan has consented to the inclusion in this Review of Operation of the matters based on this information in the form and context in which it appears. CORPORATE DEVELOPMENTS On 26 August 2013, the Company announced that in the interest of conserving and applying the Company s cash to the development of the Gunung Rosa Project, all key management personnel, including the Company s CEO and Managing Director, Mr Terry Holohan, have accepted an adjustment under which 25% of their remuneration will be payable in shares in the Company instead of cash, adjusted such that the share-based payment is effective from 1 June 2013. The suspension of trading was lifted on 27 August 2013, following the Company s announcement regarding a capital raising. The Company advised that it had secured a $3 million funding facility with shareholders and senior management. The terms of equity facility provided that, at the Company s option, the Company could issue shares up to a total value of $3 million by drawdowns of up to $1 million in a calendar month commencing from August 2013. Shares issued under the equity facility were priced at the lower of 5 cents per share or the VWAP for the 20 trading days immediately prior to the Company s 2013 Annual General Meeting. The Company raised approximately $2,489,680 and issued 64,957,985 shares (including share issues made after the end of the period of 28,943,826 shares for amount of $1,109,417) under the equity facility. Subsequent to period end, on 25 February 2014, the Company advised that the loan from Resource Global Finance Ltd which fell due on 30 November 2013 was to be extended to 28 February 2014 with a loan extension fee of 1,000,000 fully paid ordinary shares. The loan of USD334,912 was repaid in full by converting it into shares on 27 February 2014 at a conversion share price of $0.04 per share for a total of 9,365,548 shares. A loan from Cape Gannet Limited which fell due on 30 November 2013 was also extended to 28 February 2014 with a loan extension fee of 1,500,000 fully paid ordinary shares. On 27 February 2014, part of the loan, USD697,320, was converted into 19,500,000 shares at a conversion price of $0.04 per share and the remaining loan balance is USD152,680. The conversions aided the Company by conserving cash at a critical stage in the Company s development, while demonstrating the very high level of confidence held by lenders and shareholders in the Company s Gunung Rosa project. At the Annual General Meeting that was held on 28 November 2013, the shareholders approved new issues of 53,778,584 fully paid ordinary shares and 14,500,000 performance rights. Full details of the shareholder resolutions contained in the Notice of Annual General Meeting may be found at www.paramountmining.com - 5 -
DIRECTORS REPORT AUDITOR S INDEPENDENCE DECLARATION The lead auditor's independence declaration under section 307C of the Corporations Act 2001 for the half-year ended 31 December 2013 is set out on page 19. This report is signed in accordance with a resolution of the Board of Directors. Mo Munshi Chairman Dated this 14 th day of March 2014-6 -
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2013 31 December 2013 31 December 2012 $ $ Revenue Note Interest income 2 813 1,834 Other income 2 34,438 64,631 Total revenue 35,251 66,465 Operating costs: Depreciation 4,551 4,274 Employee benefits expenses 319,056 221,471 Equity-based payment expense 13,191 1,207,319 Exploration and project expenditure - 72,446 Occupancy expenses 64,440 30,113 Borrowing cost 100,000 657,000 Other operating costs 809,529 860,289 Total expenses 1,310,767 3,052,912 Loss before income tax Income tax refund / (expense) Loss after income tax Other comprehensive income Items that may be reclassified subsequently to Profit or Loss Currency translation differences (1,275,516) - (1,275,516) 109,649 (2,986,447) - (2,986,447) (76,946) Total other comprehensive income (loss) 109,649 (76,946) Comprehensive loss for the period (1,165,867) (3,063,393) Loss attributable to members of Paramount Mining Corporation Limited (1,228,964) (2,927,369) Non controlling interest (46,552) (59,078) (1,275,516) (2,986,447) Total comprehensive loss attributable to Paramount Mining Corporation Limited (1,103,341) (2,996,377) Non controlling interest (62,526) (67,016) (1,165,867) (3,063,393) Earnings per share Basic loss per share (cents) (0.270) (0.954) Diluted loss per share (cents) (0.270) (0.954) The accompanying notes form part of these financial statements. - 7 -
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013 31 December 2013 30 June 2013 Note $ $ CURRENT ASSETS Cash and cash equivalents 447,071 21,279 Trade and other receivables 15,654 27,533 Other current assets 98,201 24,393 TOTAL CURRENT ASSETS 560,926 73,205 NON-CURRENT ASSETS Trade and other receivables 17,786 17,985 Deferred exploration and evaluation costs Property, plant and equipment TOTAL NON-CURRENT ASSETS 8,762,993 23,653 8,804,432 7,614,546 27,985 7,660,516 TOTAL ASSETS 9,365,358 7,733,721 CURRENT LIABILITIES Trade and other payables 1,359,340 1,289,518 Short term provisions 34,488 36,046 Borrowings 3 2,090,819 2,022,083 TOTAL CURRENT LIABILITIES 3,484,647 3,347,647 TOTAL LIABILITIES 3,484,647 3,347,647 NET ASSETS 5,880,711 4,386,074 EQUITY Issued capital 4 27,260,574 25,162,061 Shares to be issued 4 548,800 - Reserves 5 2,732,665 2,593,851 Accumulated losses (23,970,851) (22,741,887) Total equity attributed to equity holders of the consolidated group 6,571,188 5,014,025 Non-controlling Interest (690,477) (627,951) TOTAL EQUITY 5,880,711 4,386,074 The accompanying notes form part of these financial statements. - 8 -
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 31 December 2013 31 December 2012 $ $ Cash flows from operating activities Receipts from customers 7,354 12,009 Payments to suppliers and employees (478,087) (767,377) Interest received 813 1,834 Net cash flows used in operating activities (469,920) (753,534) Cash flows from investing activities Exploration expenditure (1,033,352) (2,122,819) Payments to acquire fixed assets - (3,628) Net cash flows used in investing activities (1,033,352) (2,126,447) Cash flows from financing activities Proceeds from issue of shares 1,380,264 1,303,520 Proceeds from shares to be issued 548,800 Cost associated with share issues - (32,119) Proceeds from borrowings - 2,141,474 Net cash flows from financing activities 1,929,064 3,412,875 Net increase in cash and cash equivalents 425,792 532,894 Cash and cash equivalents at beginning of period 21,279 170,158 Cash and cash equivalents at end of period 447,071 703,052 The accompanying notes form part of these financial statements. - 9 -
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2013 Issued Capital Shares to be issued Accumulated Losses Reserves Noncontrolling interest Total Equity As at 1 July 2012 17,497,895 - (18,584,635) 1,215,484 (407,527) (278,783) Total comprehensive income for the period Loss for the period - - (2,927,369) - (59,078) (2,986,447) Other comprehensive income Currency translation differences - - - (69,008) (7,938) (76,946) Total other comprehensive income - - - (69,008) (7,938) (76,946) Total comprehensive income for the period - - (2,927,369) (69,008) (67,016) (3,063,393) Transactions with owner recorded directly into equity Issue of shares 3,798,818 - - - - 3,798,818 Share based payment - - - 729,088-729,088 Non-controlling interest - - - - 124,795 124,795 As at 31 December 2012 21,296,713 - (21,512,004) 1,875,564 (349,748) 1,310,525 As at 1 July 2013 25,162,061 - (22,741,887) 2,593,851 (627,951) 4,386,074 Total comprehensive income for the period Loss for the period - - (1,228,964) - (46,552) (1,275,516) Other comprehensive income Currency translation differences - - - 125,623 (15,974) 109,649 Total other comprehensive income - - - 125,623 (15,974) 109,649 Total comprehensive income for the period - - (1,228,964) 125,623 (62,526) (1,165,867) Transactions with owner recorded directly into equity Issue of shares 2,098,513 - - - - 2,098,513 Shares to be issued 548,800 - - - 548,800 Share based payment - - - 13,191-13,191 Non-controlling interest - - - - - - As at 31 December 2013 27,260,574 548,800 (23,970,851) 2,732,665 (690,477) 5,880,711 The accompanying notes form part of these financial statements. - 10 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 Note 1: Basis of Preparation of the Half Year Financial Statement The half-year financial statements are a general purpose financial statement, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standard AASB 134: Interim Financial Reporting, and other mandatory professional requirements. It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2013 and any public announcements made by Paramount Mining Corporation Limited during the half year in accordance with continuous disclosure requirements arising under the Corporations Act 2001. The half year statement does not include full disclosures of the type normally included in an annual financial statement and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statement. The half-year financial statement has been prepared on a historical cost basis, modified where applicable for financial assets and financial liabilities. For the purpose of preparing the half-year financial statement, the half-year has been treated as a discrete reporting period. The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those adopted and disclosed in the company s 2013 annual financial report for the financial year ended 30 June 2013, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards. Certain prior year comparatives have been reclassified to conform to the current half year s presentation. New and Revised Accounting Requirements Applicable to the Current Half-year Reporting Period. (i) Consolidated financial statements and disclosure of interests in other entities The Group has adopted the following new and revised Australian Accounting Standards from 1 July 2013 together with consequential amendments to other Standards: AASB 10: Consolidated Financial Statements; AASB 2011-7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards; and AASB 2012-10: Amendments to Australian Accounting Standards Transition Guidance and Other Amendments. These Standards became mandatorily applicable from 1 January 2013 and became applicable to the Group for the first time in the current half-year reporting period 1 July 2013 to 31 December 2013. The Group has applied these Accounting Standards retrospectively in accordance with AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors and the specific transition requirements in AASB 10. The effects of initial application of these Standards in the current half-year reporting period are as follows: - Consolidated financial statements: AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. Revised AASB 127 facilitates the application of AASB 10 and prescribes requirements for separate financial statements of the parent entity. On adoption of AASB 10, the assets, liabilities and non-controlling interests related to investments in businesses that are now assessed as being controlled by the Group, and were therefore not previously consolidated, are measured as if the investee had been consolidated (and therefore applied acquisition accounting in accordance with AASB 3: Business Combinations) from the date when the Group obtained control of that investee on the basis of the requirements in AASB 10. - 11 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 (CONTINUED) Note 1: Basis of Preparation of the Half Year Financial Statement (continued) Upon the initial application of AASB 10, retrospective restatement of financial statement amounts of the year that immediately precedes the date of initial application (ie 2012-2013) is necessary. When control is considered to have been obtained earlier than the beginning of the immediately preceding year (ie pre-1 July 2012), any difference between the amount of assets, liabilities and non-controlling interests recognised and the previous carrying amount of the investment in that investee is recognised as an adjustment to equity as at 1 July 2012. Although the first-time application of AASB 10 (together with the associated Standards) caused certain changes to the Group's accounting policy for consolidation and determining control, it did not result in any changes to the amounts reported in the Group's financial statements as the "controlled" status of the existing subsidiaries did not change, nor did it result in any new subsidiaries being included in the Group as a consequence of the revised definition. However, the revised wording of accounting policy for consolidation is set out below: The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Paramount Mining Corporation Limited) and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 11. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as non controlling interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. Going Concern Basis The financial statements of the Group have been prepared on a going concern basis which anticipates the ability of the Group to meet its obligations in the normal course of the business. As at 31 December 2013, the Group had total liabilities of $3,484,647, and had incurred a total comprehensive loss of $1,165,867 for the year ended 31 December 2013, with a cash and cash equivalents balance of $447,071. In the absence of the future capital raising noted below, current cash resources are not expected to be sufficient to meet forecast outgoings for a period at least 12 months from the date of this report. These conditions indicate a material uncertainty that may cast significant doubt about the consolidated entity s and parent entity s ability to continue as going concerns. The directors have prepared cash flow forecasts that indicate that the Company and the Group will have cash surpluses for a period of at least 12 months from the date of this report. This forecast is dependent on the raising of funds by way of equity raisings and or obtaining further loan funds in order for the Group to meet its exploration commitments and other costs. - 12 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 (CONTINUED) Note 1: Basis of Preparation of the Half Year Financial Statement (continued) Based on the cash flow forecasts and possible equity and/or debt funding described above, the directors are satisfied that the going concern basis of preparation is appropriate. The financial report has therefore been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. Should the consolidated entity and the parent be unable to continue as going concerns, they may be required to realise assets and extinguish liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities and appropriate disclosures that may be necessary should the consolidated entity and the parent be unable to continue as a going concern. The directors acknowledge that the company will need to adopt further strategies to ensure that funding is maintained. This includes, but is not limited to further capital or debt funding, the sale, relinquishment or introduction of joint venture contributions on areas of interest held, and seeking other prospective projects. 31 December 2013 31 December 2012 Note 2: Revenue $ $ Revenue Interest received 813 1,834 Other income 20,400 51,000 Rent received 14,038 13,631 Total Revenue 35,251 66,465 Note 3: Borrowings Borrowings comprise the following 31 December 2013 30 June 2013 Resource Global Finance Limited 375,487 366,427 Cape Gannet Limited 952,978 929,986 Bungarra Resources Limited 762,354 725,670 2,090,819 2,022,083 Refer to note 9 for details of loan repaid post 31 December 2013-13 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 (CONTINUED) Note 4: Issued Capital a. Ordinary Shares 31 December 2013 31 December 2013 At the beginning of reporting period Shares issued during the prior year (number of shares) 442,351,750 ($) 25,162,061 17 October 2013 6,000,000 300,000 28 November 2013 53,778,584 2,158,513 Capital raising costs - (360,000) 502,130,334 27,260,574 b. Shares to be issued 31 December 2013 31 December 2013 Shares to be issued (number of shares) 14,317,432 ($) 548,800 14,317,432 548,800 The shares to be issued were approved by shareholders at the AGM held on 28 November 2013 and were subsequently issued on 28 February 2014. Note 5: Reserves At the Annual General Meeting held on 28 November 2013, the shareholders approved the issue of 14,500,000 performance rights with details as follow: Quantity Expire Market capitalisation hurdle* (AUD) Fair value per Performance Rights (AUD) 7,250,000 30 November 2014 50,000,000 $0.0013 6,250,000 30 June 2015 70,000,000 $0.0006 1,000,000 31 March 2016 90,000,000 $0.0003 *The Performance Rights specified vest subject to the Company s Market Capitalisation being at or above the Market Capitalisation hurdle for 20 consecutive trading days at any time after the issue of the Performance Rights and before the relevant expiry date. The Performance Rights were issued on 2 January 2014 and the amount expensed during the period to 31 December 2013 was $13,191. - 14 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 (CONTINUED) Note 6: Segment Reporting a. Revenue and Segment Results 31 December 2013 Australia ($) Indonesia ($) Singapore ($) South Africa ($) Total ($) Revenue 14,841 10 20,400-35,251 Segment Results (757,800) (336,282) (146,400) (35,034) (1,275,516) 31 December 2012 Australia ($) Indonesia ($) Singapore ($) South Africa ($) Total ($) Revenue 15,455 10 51,000-66,465 Segment Results (2,408,172) (177,871) (362,659) (37,745) (2,986,447) b. Segment Assets and Segment Liabilities 31 December 2013 Australia ($) Indonesia ($) Singapore ($) South Africa ($) Total ($) Segment Assets 1,727,418 7,617,399 12,668 7,873 9,365,358 Segment Liabilities (2,715,553) (415,366) (342,854) (10,874) (3,484,647) 30 June 2013 Australia ($) Indonesia ($) Singapore ($) South Africa ($) Total ($) Segment Assets 1,075,001 6,634,306 17,371 7,043 7,733,721 Segment Liabilities (2,875,239) (178,182) (291,746) (2,480) (3,347,647) Note 7: Contingent Liabilities Performance Shares to Mr Mo Munshi On 3 February, 2010 the Company announced that, subject to certain conditions, specific tranches of fully paid ordinary shares in the Company may be issued to Mr Mo Munshi as a market-linked incentive package. The grant recognises the important role that Mr Munshi will play in raising appropriate finance to support the Company s ongoing projects at various stages of development. Details of the tranches and the associated contingent liability are shown below. The issues are contingent upon the Company s share price reaching and sustaining a price trigger as shown below for a period of 20 consecutive trading days, as well as upon subsequent shareholder approval. No cash will be raised by the issue of the shares to Mr Mo Munshi, although the Company s liability will be satisfied by the issue. - 15 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 (CONTINUED) Note 7: Contingent Liabilities (continued) Number of performance shares Price trigger Contingent liability 3,000,000 15 cents $450,000 3,000,000 30 cents $900,000 3,000,000 50 cents $1,500,000 On 18 October 2011 the Company announced that, Mr Holohan s remuneration package has been structured to incorporate equity incentives in the form of unlisted options to subscribe for fully paid ordinary shares in the Company, vesting as follows: Number of options Vesting date (subject to market capitalisation hurdle) 1,000,000 17 October 2014 ($300,000,000) Exercisable Within 6 months of vesting date Exercise price AUD0.50 In addition as disclosed under note 5, 14,500,000 performance rights were issued in the current period Note 8: Dividends There were no dividends paid or payable during the half year. Note 9: Events Subsequent to Reporting Date On 27 February 2014, credit facilities referred to in Note 3 were substantially converted into shares in the Company. The shares were issued pursuant to a resolution of shareholders at the Company s Annual General Meeting held on 28 November 2013. Details of loan conversions Lender Cape Gannet Ltd Resource Global Finance Ltd Loan balance USD850,000 USD334,912 Conversion amount USD697,320 USD334,912 Number of shares 19,500,000 9,365,548 Balance outstanding USD152,680 - Conversion date: 27 February 2014 Exchange rate: USD0.894 = AUD1.00, per the Reserve Bank of Australia s published USD/AUD exchange rate on 27 February 2014. In addition to the above, 28,943,826 shares were issued for a total of total $1,109,417 under equity facility. - 16 -
CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013 (CONTINUED) Note 10. Controlled Entities Country of Incorporation Percentage Owned (%) * December 2013 June 2013 Paramount Mining Ghana Limited (dormant) Ghana 100 100 Paramount Mining South Africa (Pty) Ltd South Africa 100 100 Paramount Mining Indonesia Pty Ltd Australia 100 100 Paramount Mining (Indonesia) Energy Pty Ltd Australia 100 100 Paramindo Singapore Pte Ltd Singapore 85 85 Paramindo Energi Singapore Pte Ltd Singapore 85 85 PT ParamIndo Indonesia 85 85 PT ParamIndo Energi Indonesia 85 85 PT Cikondang Kancana Prima Indonesia 72.25 72.25 PT Paramindo Cipta Persada Indonesia 76.5 76.5 PT Paramindo Cipta Persada Energi Indonesia 76.5 76.5 * Percentage of voting power is in proportion to ownership - 17 -
DIRECTORS DECLARATION In the opinion of the Directors of Paramount Mining Corporation Limited: 1. the financial statements and notes set out on pages 7 to 17 (a) give a true and fair view of the financial position of the consolidated entity as at 31 December 2013 and of its performance, as represented by the results of its operations and cash flows for the half year ended on that date; and (b) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations; and (c) the financial report also complies with International Financial Reporting Standards as disclosed in note 1; 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. This declaration is made in accordance with a resolution of the Board of Directors. Dated this 14 th day of March 2014... Mo Munshi Chairman - 18 -