Directors Tom Eadie (Non-Executive Chairman) Brendan Jesser (Non-Executive Director) Mark Hanlon (Non-Executive Director)
Registered office Level 4, 100 Albert Road South Melbourne Victoria 3205 Telephone: +61 3 9692 7222
Stock exchange listing Copper Strike Limited shares are listed on the Australian Securities Exchange (ASX
Copper Strike's main asset is 11 million shares in ASX-listed Syrah Resources Limited. The primary focus of the Board is to attempt to maximise Copper Strike shareholder value in this asset. This may be done by disposal of the shares or by being a long term holder. Either direction will lead to a large proportion of the available cash being returned to shareholders.
Copper Strike began the 2015 financial year with a new Board and a new strategy. The new Board was composed of Tom Eadie as Non-Executive Chairman, and Brendan Jesser and Mark Hanlon as Non-Executive Directors. The new strategy was to focus on cost reduction and striving to have the Copper Strike share price more fully reflect the value of its Syrah investment.
Cost reduction was achieved by having no executives, no office and no exploration or project generation expenditure. In addition, Director Salaries were reduced. The effectiveness of the cost reduction actions was clear in the last quarter of this financial year when total expenditure was $72,000.
The objectives of maximising value for shareholders and having the Copper Strike share price more fully reflect the value of the investment in Syrah, began with understanding the tax implications of a potential disposal of the Syrah shares for the company and for its shareholders. Grant Thornton completed a tax review in October 2014 and this was confirmed by the Australian Taxation Office in March 2015. The findings of the tax review were as follows:
For Copper Strike to generate sufficient franking credits to pay a fully franked dividend, it must:
Copper Strike believes that a franked dividend is in the best interest of shareholders.
Once the tax implications of disposal were understood, the next step is to enunciate a clear strategy for maximising the value of Copper Strike's key asset.
The Company notes that Syrah has completed a raising of $211 million in equity capital via an underwritten placement and rights issue. This raising allows Syrah to progress immediately into construction of its mine, processing plant and associated infrastructure to ensure production is targeted for the end of 2016/early 2017.
Copper Strike strongly supports the Syrah strategy in relation to the development of the Balama Project and furthering studies in relation to its proposed spherical graphite processing facilities in the United States and Mozambique and its proposed vanadium processing facility at Balama.
Copper Strike believes that the share price of Syrah has considerable upside once construction commences and Syrah releases further details in relation to its dealings with its offtake partners and other stakeholders. As such the directors are of the view that it is in shareholders' best interests for the Company to continue to hold this investment to ensure that the potential upside in relation to the development of the world class Balama Project is reflected within the Syrah share price.
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Copper Strike Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2015.
The following persons were directors of Copper Strike Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:
Mr Tom Eadie (Non-Executive Chairman) Mr Brendan Jesser (Non-Executive Director) Mr Mark Hanlon (Non-Executive Director)
During the financial year the principal continuing activities of the consolidated entity consisted of:
-
Reviewing potential exploration projects, and assessment of the Company's investment activities.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $135,904 (30 June 2014: $1,045,115). Refer to separate detailed review of operations preceding this Directors' report.
Financial Position
The net assets of the consolidated entity decreased by $3,211,298 to $31,593,930 as at 30 June 2015 (30 June 2014:
$34,805,228). The main reason for the decrease this financial year is due to the revaluation decrement of $4,402,002 attributable to the value of financial assets held.
The consolidated entity's working capital, being current assets less current liabilities decreased by $368,344 to $474,283 (30 June 2014: $842,627).
The Directors believe the consolidated entity is in a strong and stable position to expand and grow its current operations.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
Since 30 June 2015, the fair value of the investment in Syrah Resources Limited (ASX Code: SYR) has decreased to
$27,830,013 as at 28 September 2015. This is a decrease of $13,499,606 since 30 June 2015.
On 7 August 2015, the consolidated entity announced that it had renounced its entitlements in the Syrah Resources Institutional Entitlement Offer, and that the renounced entitlements were sold via the institutional bookbuild, with the proceeds from the sale in excess of the Offer Price returned to renouncing shareholders (less any applicable withholding tax). During the month of August 2015 the consolidated entity received $578,947 in relation to the sale of its renounced Syrah rights.
No other matter or circumstance has arisen since 30 June 2015 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The consolidated entity's main corporate focus in the coming periods is to seek to complete a transaction which could effectively utilise the consolidated entity's assets and expertise in mineral exploration. No such transaction is planned that will dilute Copper Strike shareholders' leverage to Syrah Resources Limited and its excellent Balama Graphite and Vanadium Project in Mozambique.
Environmental regulation
The company held participating interests in a number of mining and exploration tenements. The various authorities granting such tenements require the tenement holder to comply with the terms of the grant of the tenement and all directions given to it under those terms of the tenement. There have been no known breaches of the Company's environmental conditions, and no such breaches have been notified by any government agencies during the year ended 30 June 2015.
Information on directors
Name: Mr Tom Eadie
Title: Non-Executive Chairman
Qualifications: B.Sc (Hons). M.Sc., F.AusIMM, SA Fin
Experience and expertise: Tom Eadie has been executive chairman of the company since its inception in 2004,
and was recently appointed a non-executive chairman in June 2014. Prior to this role, Tom had twenty years experience within the junior resources sector, including one year running Austminex NL, and at technical to senior Executive levels with major mining companies including Pasminco, Aberfoyle Resources and Cominco. At Pasminco, he was Executive General Manager - Exploration & Technology for 11 years. At Aberfoyle, he began as Chief Geophysicist before being put in charge of all mineral sands and base metal exploration. He is a past board member of the Australasian Institute of Mining and Metallurgy and the Australian Mineral Industry Research Association. Tom has a B.Sc. (Hons) from the University of British Columbia, a M.Sc. in Physics (Geophysics) from the University of Toronto and a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia (now the Financial Services Institute of Australasia). He is currently Executive Chairman of unlisted explorer Jacana Minerals Limited.
Other current directorships: None
Former directorships (last 3 years): Syrah Resources Limited (ASX: SYR) (resigned 2 October 2014) Special responsibilities: None
Interests in shares: 3,045,714 fully paid ordinary shares
Interests in options: None
Name: Mr Brendan Jesser
Title: Non-Executive Director
Experience and expertise: Brendan has over 16 years' experience in direct financial markets, stockbroking and
corporate advisory, and has supported numerous listed and unlisted mining and industrial entities by providing both capital and corporate advisory services.
Other current directorships: None Former directorships (last 3 years): None Special responsibilities: None
Interests in shares: 400,000 fully paid ordinary shares
Interests in options: None
Name: Mr Mark Hanlon
Title: Non-Executive Director
Experience and expertise: Mark has over ten years of experience in the resources and resource services sector
as well as over ten years' experience in commercial and merchant banking. He has a broad background of senior executive experience across a wide range of industries including mining, mining services, electricity distribution, electronics contract manufacturing, paper & packaging and insurance. He has most recently been the Finance Director of ENK plc and previously held the position or equivalent position of CFO with listed companies such as Century Drilling and International Contract Manufacturing Limited. Mark is currently a Director of Rusina Mining NL and Company Secretary of VU Group Pty Ltd. He holds a Bachelor of Business in Finance and Accounting and a Master of Business in Banking and Finance.
Other current directorships: None
Former directorships (last 3 years): ENK plc (resigned 7 November 2012) Special responsibilities: None
Interests in shares: 2,013,567 fully paid ordinary shares
Interests in options: None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.
'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.
Company secretary
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a member of the Institute of Chartered Accountants and is a Registered Company Auditor. She graduated from Swinburne University in 1997, became a Chartered Accountant in 1999 and since February 2000 has been the principal of chartered accounting firm, Leydin Freyer.
The practice provides outsourced company secretarial and accounting services to public and private companies specialising in the Resources, technology, bioscience and biotechnology sector.
Melanie has over 23 years' experience in the accounting profession and has extensive experience in relation to public company responsibilities, including ASX and ASIC compliance, control and implementation of corporate governance, statutory financial reporting, reorganisation of Companies and shareholder relations.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2015, and the number of meetings attended by each director were:
Full Board
Attended Held
Mr Tom Eadie 6 6
Mr Brendan Jesser 6 6
Mr Mark Hanlon 6 6
Held: represents the number of meetings held during the time the director held office.
Remuneration report (audited)
The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
-
Principles used to determine the nature and amount of remuneration
-
Details of remuneration
-
Service agreements
-
Share-based compensation
-
Additional information
-
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's and company's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and conforms with the market best practice for delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:
-
competitiveness and reasonableness
-
acceptability to shareholders
-
alignment of executive compensation
-
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the consolidated entity and company depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
The Board has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the consolidated entity and company.
Alignment to shareholders' interests:
-
has economic profit as a core component of plan design
-
focuses on sustained growth in shareholder wealth, growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
-
attracts and retains high calibre executives
Alignment to program participants' interests:
-
rewards capability and experience
-
reflects competitive reward for contribution to growth in shareholder wealth
In accordance with best practice corporate governance, the structure of non-executive directors and executive remunerations are separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors' fees and payments are reviewed annually by the Board. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to determination of his own remuneration.
Executive remuneration
The consolidated entity and company aims to reward executives with a level and mix of remuneration based on their position and responsibility, which is both fixed and variable.
The executive remuneration and reward framework has four components:
-
base pay and non-monetary benefits
-
share-based payments
-
other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Board, based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations.
Executives can receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the consolidated entity and adds additional value to the executive.
In determining the level and make-up of executive remuneration, the Board negotiates a remuneration to reflect the market salary for a position and individual of comparable responsibility and experience. Due to the limited size of the company and of its operations and financial affairs, the use of a separate remuneration committee is not considered appropriate. Remuneration is regularly compared with the external market by participation in industry salary surveys and during recruitment activities generally. If required, the Board may engage an external consultant to provide independent advice in the form of a written report detailing market levels of remuneration for comparable Executive roles.
The long-term incentives ('LTI') includes long service leave.
Consolidated entity performance and link to remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The achievement of this aim has been through the issue of options to directors and executives to encourage alignment of personal and shareholder interests. The options provide an incentive to the recipients to remain with the Company and continue to work to enhance the company's value.
Employee share option plan
Copper Strike Limited operates an ownership-based scheme for executives and senior employees of the consolidated entity. In accordance with the provisions of the plan, as approved by shareholders at a previous annual general meeting, executives and senior employees may be granted options to purchase parcels of ordinary shares at an exercise price determined by the Board. Each employee share option converts into one ordinary share of Copper Strike Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The number of options granted is determined by the Board.
The purpose of the plan is to provide eligible employees with an incentive to remain with the company and to improve the longer term performance of the company and its return to shareholders. It is intended that the plan will enable the company to retain and attract skilled and experienced employees and provide them with the motivation to make the company more successful.
As at 30 June 2015 there were no options currently on issue under the plan.
Voting and comments made at the company's 2014 Annual General Meeting ('AGM')
The company received 97% of 'for' votes in relation to its remuneration report for the year ended 30 June 2014. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
Short-term benefits
Post- employment benefits
Long-term benefits
Share-based payments
Cash salary Annual Super- Long service Equity-
and fees Bonus leave annuation leave settled Total
2015 $ $ $ $ $ $ $
|
Non-Executive Directors:
Mr B Jesser
|
30,000
|
- -
|
2,850
|
-
|
- 32,850
|
|
Mr M Hanlon
|
30,000
|
- -
|
2,850
|
-
|
- 32,850
|
|
Mr T Eadie
|
45,000
|
- 13,562
|
4,275
|
46,857
|
- 109,694
|
|
Other Key Management Personnel:
|
Ms M Leydin * 84,000 - - - - - 84,000
189,000 - 13,562 9,975 46,857 - 259,394
* Fees paid to Leydin Freyer Corp Pty Ltd in respect of Company Secretarial and Accounting services.
Short-term benefits
Post- employment benefits
Long-term benefits
Share-based payments
Cash salary Non- Super- Long service Equity-
and fees Bonus monetary annuation leave settled Total
2014 $ $ $ $ $ $ $
|
Non-Executive Directors:
Mr B Jesser *
|
2,083
|
- - 193
|
- -
|
2,276
|
|
Mr M Hanlon *
|
2,083
|
- - 193
|
- -
|
2,276
|
|
Mr B Laws *
|
41,633
|
- - 4,163
|
- -
|
45,796
|
|
Mr J Dunlop *
|
41,633
|
- - 4,163
|
- -
|
45,796
|
|
Mr T Eadie **
|
3,125
|
- - 289
|
- -
|
3,414
|
|
Executive Directors:
Mr T Eadie **
|
266,054
|
- - 26,606
|
- 285,909
|
578,569
|
|
Other Key Management Personnel:
|
Ms M Leydin *** 84,000 - - - - - 84,000
440,611 - - 35,607 - 285,909 762,127
* Mr Brendan Jesser and Mr Mark Hanlon were appointed as Directors of the Company on 6 June 2014. Mr John Dunlop and Mr Barrie Laws resigned as Directors of the Company on 6 June 2014
** Mr Tom Eadie was terminated from his role as Executive Chairman of the Company, and was appointed as a Non- Executive Chairman on 6 June 2014. Tom Eadie received a termination payment of $285,909 under the terms of his executive director agreement, of which the amount has been accrued as at 30 June 2014.
*** Fees paid to Leydin Freyer Corp Pty Ltd in respect of Company Secretarial and Accounting services.
Service agreements
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2015.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2015.
There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2015.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2015 are summarised below:
|
2015
|
2014
|
2013
|
2012
|
2011
|
|
$
|
$
|
$
|
$
|
$
|
|
Revenue and other income
|
196,240
|
101,013
|
186,690
|
1,947,451
|
1,469,780
|
|
Net profit/(loss) before tax
|
(191,256)
|
(1,492,908)
|
(418,965)
|
854,302
|
(1,148,995)
|
|
Net profit/(loss) after tax
|
(135,904)
|
(1,045,115)
|
(256,376)
|
2,065,697
|
(1,148,995)
|
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2015 2014 2013 2012 2011
|
Share price at financial year start ($) 0.26
|
0.15
|
0.22
|
0.12
|
0.12
|
|
Share price at financial year end ($) 0.23
|
0.26
|
0.15
|
0.22
|
0.12
|
|
Basic earnings per share (cents per share) (0.13)
|
(0.98)
|
(0.24)
|
1.76
|
(0.91)
|
|
Additional disclosures relating to key management personnel
|
|
Shareholding
The number of shares in the company held during the financial
|
year by
|
each director
|
and other members
|
of key
|
management personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
Balance at Received Balance at
the start of as part of Disposals/ the end of the year remuneration Additions other the year
Mr T Eadie 3,045,714 - - - 3,045,714
Mr B Jesser 400,000 - - - 400,000
Mr M Hanlon 2,013,567 - - - 2,013,567
5,459,281 - - - 5,459,281
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of Copper Strike Limited under option outstanding at the date of this report.
Shares issued on the exercise of options
There were no ordinary shares of Copper Strike Limited issued on the exercise of options during the year ended 30 June 2015 and up to the date of this report.
Indemnity and insurance of officers
The company has indemnified the directors of the company for costs incurred, in their capacity as a director, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.
Proceedings on behalf of the 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.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 23 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 23 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
-
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
-
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.
There are no officers of the company who are former partners of Grant Thornton Audit Pty Ltd.
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.