Malachite Resources NL

Published : September 30th, 2015

Full Year Statutory Accounts - Year Ended 30 June 2015

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Full Year Statutory Accounts - Year Ended 30 June 2015

b343a5a4477352d1e66fbc.pdf


MALACHITE RESOURCES LIMITED


A.B.N. 86 075 613 268


CONSOLIDATED FINANCIAL REPORT


FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015


Page

Directors' report

2

Auditor's independence declaration

13

Consolidated statement of comprehensive income

14

Consolidated statement of financial position

15

Consolidated statement of changes in equity

16

Consolidated statement of cash flows

17

Notes to the consolidated financial statements

18

Directors' declaration

41

Independent auditor's report

42


This financial report is for the consolidated entity consisting of Malachite Resources Limited and its subsidiaries. The financial report is presented in Australian currency.


Malachite Resources Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:


Malachite Resources Limited

Suite 2, Level 10

8-10 Loftus Street

Sydney NSW 2000


A description of the nature of the Group's operations and its principal activities is included in the review of operations in the directors' report.


The financial report was authorised for issue by the directors on 30 September 2015. The Directors have the power to amend and reissue the financial report.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at a minimum cost to the company. All ASX releases, financial reports and other information are available on our website: www.malachite.com.au.


MALACHITE RESOURCES LIMITED


Annual Consolidated Financial Report

For The Financial Year Ended

30 June 2015


DIRECTORS' REPORT


Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Malachite Resources Limited (referred to hereafter as the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2015.


DIRECTORS

The names and positions of the directors of the consolidated entity during the financial year and up to the date of this report, unless otherwise stated, are:


Terry Cuthbertson

Non-executive Chairman, Age 65


Chartered Accountant and holds a Bachelor of Business Degree with extensive corporate finance expertise, having advised several businesses and government organizations in relation to mergers, acquisitions and financing. Formerly a Partner of KPMG Corporate Finance and NSW Partner in Charge of Mergers and Acquisitions, where he coordinated government privatisations, mergers, divestitures and public offerings on the ASX for the New South Wales practice. Terry is the former Group Finance Director of Tech Pacific Holdings Limited, which was one of the largest information technology distributors in Asia with annual turnover in 1999 of approximately $2 billion and is a former Director of Tech Pacific Limited's businesses in Hong Kong, Singapore, India, Philippines, Indonesia and Thailand. He is the Non-executive Chairman of ASX listed My Net Fone Limited, Montec International Limited, Austpac Resources NL, South American Iron and Steel Corporation Limited and Mint Wireless Limited. He is a Non-executive Director of iSentric Limited.


James Dean ACIP

Non-executive Director, Age 55


Corporate Advisor and Professional Investor with over 25 years professional experience in the finance industry and investment in mining, construction equipment, property development, feature film and biotech. Most experience has been related to evaluating the operational and financial performance of numerous businesses and then aptly negotiating and matching risk profiles with investment criteria. For more than 20 years he has held fiduciary positions with regard to shareholders and beneficiaries of various investment vehicles. Extensively travelled and possesses a worldwide network of business collaborators.


Andrew McMillan B Comm

Non-executive Director, Age 55


Currently a Director, Corporate Finance at Patersons Securities Limited and has over 25 years corporate advisory experience derived from mergers and acquisitions, equity capital markets and corporate restructuring across industrial and resources sectors. Specialised in equity capital markets transactions at Patersons since March 2003 where he has successfully completed numerous capital raisings.


The directors have been in office since the start of the financial year to the date of this report unless otherwise stated.


In the last three years none of the directors have held directorships in public companies other than those listed individually above.


COMPANY SECRETARY


Andrew J. Cooke LLB, FAICS

Lawyer with over 20 years experience in law, corporate finance and as a Company Secretary of listed resource companies. Responsible for corporate administration together with stock exchange and regulatory compliance.


MALACHITE RESOURCES LIMITED


DIRECTORS' REPORT (CONTINUED)


DIRECTORS' MEETINGS

The following table sets out the number of directors' meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member).

Board of Directors

Audit Committee

Remuneration Committee

Eligible to Attend

Attended

Eligible to Attend

Attended

Eligible to Attend

Attended

Mr T Cuthbertson

15

13

-

-

-

-

Mr J Dean

15

14

6

6

-

-

Mr A McMillan

14

14

6

5

-

-

DIRECTORS' INTERESTS

As at the date of this report.

Ordinary Shares

Options

Class B Options

Direct

Indirect

Direct

Indirect

Direct

Indirect

Mr T Cuthbertson

-

8,300,451

-

-

-

-

Mr J Dean

25,600,214

13,936,508

-

-

-

-

Mr A McMillan

3,788,980

-

-

-

-

-


PRINCIPAL ACTIVITIES


The principal activity of the consolidated entity during the financial year was the development and exploration of mineral deposits.


No significant changes in the nature of the principal activities occurred during the financial year.


OPERATING RESULTS

The results of the operations of the consolidated entity during the financial year were as follows:

2015

2014

$

$

Loss after income tax

(14,396,748)

(3,181,722)


DIVIDENDS

No dividends have been paid or declared since the start of the financial year. The directors do not recommend the payment of a dividend in respect of the year ended 30 June 2015 (2014: Nil).


REVIEW OF OPERATIONS

The Group's business activities have been primarily focused on advancing the development of the Lorena Gold Project (Lorena) located about 15km east of Cloncurry in northwest Queensland.


LORENA


Lorena Gold Project -MLs 7147, 90192 to 90196

In 2013 the Group and BCD Resources NL (BCD) entered into a joint venture deed (for a 50/50 Joint Venture) to develop Lorena. In order to earn its 50% share of the Lorena project, BCD was required to solely fund the development of the project to the point of commercial production, including construction and commissioning of a flotation facility at Lorena, capable of efficiently processing a minimum of 120,000 tonnes of ore per annum.


In May 2014, the amended Environmental Authority (EA) for Lorena was granted by the Queensland Department of Environment and Heritage Protection which allowed the development of Lorena to proceed. BCD commenced the development of the project.


In January 2015, BCD put the development of the project on hold after completing part of the construction so that it could review the development costs and sort out its funding arrangements to finalise the development and commissioning of Lorena. In January 2015, MKS Switzerland SA (MKS) as the ultimate secured lender to BCD appointed Receivers and Managers to BCD. In April 2015, BCD (Receivers and Managers appointed) appointed a Voluntary Administrator on behalf of MKS.


After numerous discussions with BCD which did not lead to an acceptable proposal for taking the Lorena project forward, in May 2015, the Group gave BCD notice terminating the Joint Venture Deed.


In July 2015, MKS offered financing to the Group for the Group to complete the development of the project in its own right. Under this offer, the Group was to sell a concentrate to MKS at the Lorena mine gate for 57% of the agreed gold contained in the concentrate produced from the open cut. The financing offer was subject to certain conditions precedent, one of which was a cost estimate within a Project Development Plan (PDP) to be prepared by the Group. In late July the Group engaged Ore Processing Services (OPS) to carry out a PDP. OPS, in conjunction with the Group, determined that the cost to complete the Lorena project was more than that determined by BCD and assumed by MKS. In September 2015, MKS and the Group agreed that without further financing from MKS and without a change in financing and concentrate purchase terms, the MKS financing offer could not be provided nor accepted. In September 2015, MKS withdrew its financing offer, and the Group and the Receivers of BCD are negotiating a settlement of the partly constructed Lorena concentrate plant.


The Group and OPS are currently in discussions, subject to financing, to complete the concentrate plant at Lorena and build a back end Carbon in Leach (CIL) plant to be able to produce gold dore on the Lorena site. The cost to build CIL plant at Lorena is roughly the same as the previously intended transport costs and capital treatment charges (in

excess of the operating costs) to treat a concentrate at BCD's Beaconsfield plant. -3 -


MALACHITE RESOURCES LIMITED


DIRECTORS' REPORT (CONTINUED)


REVIEW OF OPERATIONS (CONTINUED)

A number of parties have completed technical due diligence on Lorena and the Group is actively pursuing financing discussions with these parties to ensure that production can be achieved at the earliest opportunity.


Lorena is now expected to commence an open cut operation in 2016.


The Lorena gold project has potential for resource extensions at depth; however this requires confirmation by drilling which is expected to occur as soon as funding allows.


The Group believes that there are considerable regional opportunities once the plant is operating at Lorena.


EPM 18908 (100% Malachite)

The Group has negotiated an access agreement with the landowner of part of EPM18908 in order to carry out exploration drilling on the Lady Mary prospect. The Group is in the process of arranging an aboriginal cultural clearance of the Lady Mary prospect in preparation for a 9 hole, 500 metre in total, reverse circulation drilling program.


The Lady Mary prospect is within a short trucking distance of the Lorena gold mine.


OTHER TENEMENTS


Conrad Silver Project (MLs 5992, 6041 & 6042, EL5977 and EPL1050)

In May 2015, the Group entered into an agreement with Silver Mines Limited (SVL), an ASX listed company with code SVL, to sell the Conrad Silver Project (Conrad) for

$450,000 in cash, $125,000 in SVL shares and a 1% net smelter return. At the date of this report, SVL had paid the Group $175,000 with the balance of the cash $275,000 due at the earlier of 31 October 2015 or the completion of SVL's fully underwritten rights issue, which is expected is to be finalised mid-October 2015.


Tooloom Gold Project (MLs 1237, 1238 & 1385 and EL6263)

Under an agreement dated 5 August 2002 between Tooloom Gold Pty Ltd (Tooloom Gold) and the Group, Tooloom Gold has the right to mine and process alluvial gold on MLs 1237 and 1385.


Tooloom Gold has an approved Mining Operations Plan (MOP) for the mining and processing of alluvial gold on MLs 1237 and 1385. Tooloom Gold is currently in the process of resolving the amount of the required environmental bond with the NSW Government before it can proceed with mining.


During the period the Group considered a couple of joint venture opportunities regarding EL6263 but none were progressed.


FINANCIAL PERFORMANCE

During the 2015 financial year the consolidated net loss of $14.397 million (2014: loss of $3.182 million) reflected:



Expenses of $0.320 million incurred for the development of the Lorena Gold Project and the management of exploration tenements;

Expenses of $1.060 million for corporate administration and financing ;

An impairment charge of $12.271 million* to the carrying value of the Lorena Gold Project; and

An impairment charge of $0.745 million to the carrying value of the Conrad Silver Project.


*Includes an impairment charge of $10.9 million previously reported in the Group's half year accounts ending 31 December 2014.


FINANCIAL POSITION

Total equity decreased from $24.101 million as at 30 June 2014 to $10.268 million as at 30 June 2015 as a result of a net loss of $14.397 million and an increase in contributed equity and reserve of $13.833 million.


At 30 June 2015, the Group had liabilities in respect of Convertible Notes with a face value of $1.85 million maturing in October 2015 and unsecured loans held by Directors of

$0.30 million.


Subsequent to the 2015 financial year end, the Group successfully negotiated an extension of these Convertible Notes to 5 May 2016.


The Group expects to be able to repay the Convertible Notes (if not converted into equity at the holder's election) from cash flow generated from the Lorena Gold Project in 2016.


CASH FLOWS


Cash flows from operating activities was negative $1.030 million (2014: negative $1.158 million).

During the period the Group received proceeds from an option payment of $50,000 for the agreed sale of Conrad and raised $0.500 million (before costs) via the issue of convertible notes, the issue of $0.536 million in ordinary shares, and 0.225 million from unsecured loans.


MALACHITE RESOURCES LIMITED


DIRECTORS' REPORT (CONTINUED)


REVIEW OF OPERATIONS (CONTINUED)


Cash at 30 June 2015 was $0.361 million (2014: $0.166 million).


Subsequent to the 2015 financial year end, the Group successfully negotiated an extension of these Convertible Notes to 5 May 2016.


GOING CONCERN


(b) Significant matters relating to the ongoing viability of operations

Consistent with the nature of the Group's activities and its ongoing investment of funds into exploration and development projects the Group has experienced operating losses of $14,396,748 and negative cash flows from operations of $1,029,571 during the year ended 30 June 2015. At 30 June 2015, the Group has net current liabilities amounting to $1,789,349 (2014:$1,567,272). The Group's cash position at balance date was $360,543 which will not be sufficient to fund both the cash redemption of the Convertible Notes (if that is required) and the Group's forecast cash outflows from operations for the twelve month period to September 2016.


At 30 June 2015, the Group had liabilities in respect of Convertible Notes with a face value of $1,850,000 that mature in October 2015. Subsequent to 30 June 2015, the Group negotiated an extension of the Convertible Notes to 5 May 2016. At the date of this report, the Group received commitments from Convertible Noteholders to the total face value of $1,850,000 to extend the maturity for seven months on the existing terms with an extension fee of 1.75% of the face value of the Convertible Notes payable in Company shares (at a 20% discount to the Company's 30 day trading volume weighted average share price).


At 30 June 2015, the Group also had liabilities in respect of unsecured loan amounting to $300,000 that subject to shareholders' approval will be rolled over into Convertible Notes on terms which are identical to the existing Convertible Notes.


The Group relies on the Lorena Gold Project for the continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments. As previously disclosed, the development of this project will now be carried out directly by the Group and the Group has determined that its funding requirements to have Lorena in development are around $8 million.


As a result of these matters, there is a material uncertainty related to events or conditions that may cast significant doubt on whether the Group will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report.


The continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as and when they fall due are dependent upon the Group being successful in the following:

·


raising additional funding through equity or debt in the short term in the order of $8 million; this includes obtaining sufficient facilities to allow for the development of the Lorena project;

·

being successful in negotiating a settlement of the Lorena concentrate plant with the Receivers of BCD Resources NL;

·

extending the maturity of the Convertible Notes initially for a period of seven months and if necessary for a longer period of time to suit available resources and the timing of the cash flows from the Lorena Gold Project or alternatively, converting the Convertible Notes into shares or redeeming them via a capital raising;

·

achieving positive cash flows from the Lorena Gold Project as soon as practical through the development of the project to commercial production.


The Group has a successful track record over many years of raising new capital from both existing shareholders and strategic investors. This is demonstrated by the capital raised during this financial year. The Group has also been successful in extending the term of the Convertible Notes and raising additional Convertible Notes. The Group's initial discussions with parties to provide financing facilities allowing the Lorena Gold Project to commence production as soon as practical have commenced and the directors believe they will be able to obtain finance on terms and conditions which are commercially viable for the Group.


If the above plan is not successfully implemented, the Group may consider selling the Lorena Gold project or entering into a corporate transaction.

On that basis the directors believe it is reasonable to expect that the Group will be successful in the above matters and, accordingly, have prepared the financial report on a going concern basis. At this time, the directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report at 30 June 2015. Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of asset carrying amounts or the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.


The attached financial report for the year ended 30 June 2015 contains an independent auditor's report which includes an emphasis of matter paragraph in regard to the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern.

MALACHITE RESOURCES LIMITED DIRECTORS' REPORT (CONTINUED)

SIGNIFICANT CHANGES IN STATE OF AFFAIRS 2015

$

Significant changes in the state of affairs of the Group during the financial year were as follows:


  1. An increase in contributed equity of $492,979 (from $56,051,389 to $56,544,368) as a result of:


    Share placement issue of 107,200,000 shares @$.005 per share

    536,000

    536,000


    Less: Transaction cost


    (43,021)

    Net increase in share capital

    492,979


    MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR


    Since the end of the Financial Year the following matters have arisen that may significantly affect the operations of the Group:


    The Group successfully negotiated an extension and variation of the existing Convertible Notes. The revised key terms of the Convertible Notes are as follows:


    • Maturity Date of 5 May 2016;

    • Interest Rate of 15% per annum;

    • Conversion - at the election of Noteholders at any time;

    • Conversion Price - the lesser of $0.015 or 20% discount to the 30 Day VWAP at the time of conversion; and

    • Rollover fee - 1.75% of the issue price to be satisfied by the issue of Ordinary Shares at a 20% discount to the 30 VWAP to 5 October 2015.


    Except as described above, there has not been any matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.


    LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS


    The Group's main project is the Lorena Gold Project (Lorena).


    Subject to funding, approvals and negotiations with the Receivers of BCD regarding the partly built concentrate plant, Lorena is expected to be developed in 2016 and the Group expects to generate cash flows from Lorena via an open cut mining operation in 2016. Further cash flows from the project will depend on either establishing an underground operation at Lorena, which is contingent on the discovery of additional resources at depth, or by treating third party ores.


    The other projects held by the Group are at the exploration and evaluation stage only and as such it is not possible to postulate which, if any, will proceed to development and mining operations.



    ENVIRONMENTAL REGULATIONS


    The Group's activities in the mining industry are subject to regulations and approvals including mining heritage, environmental regulation, the implications of the High Court of Australia decisions in what are generally known as the 'Mabo' and 'Wik' cases and any laws of the Commonwealth or of a State or Territory regarding native and mining titles. Approvals, although granted in most cases, are discretionary. The question of native title has yet to be determined in some parts of the Group's interests and certain mining titles may be affected by native title. The Group does not believe the Lorena Gold Project mining leases are affected by native title.


    The Group has an environmental rehabilitation policy that is applied to each tenement upon grant. The policy has been adhered to and no breaches have occurred during the period.


    MALACHITE RESOURCES LIMITED


    DIRECTORS' REPORT (CONTINUED)


    SHARE OPTIONS

    2015

    2014

    Options on issue beginning of year

    169,416,504

    172,516,504


    Employee options issued


    -


    -

    Employee options expired

    (27,600,000)

    (3,100,000)

    Employee options exercised

    -

    -


    Listed options issued


    -


    -

    Listed options expired

    (141,816,504)

    -

    Listed options exercised

    -

    -


    Unlisted options issued


    -


    -

    Unlisted options expired

    -

    -

    Unlisted options exercised

    -

    -

    Options on issue end of year

    -

    169,416,504


    Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate or in the interest of any other registered scheme.


    Further information is given in Note 17 and 29 to the financial statements.


    INDEMNIFICATION OF OFFICERS AND AUDITORS


    Indemnification

    In accordance with the Constitution of Malachite Resources Limited each director and officer is indemnified on a full indemnity basis and to the full extent permitted by law against all losses, liabilities, costs, charges and expenses incurred by them as officers of Malachite Resources Limited or a related body corporate. The consolidated entity has not indemnified or agreed to indemnify the auditor of the consolidated entity against any liabilities incurred as auditor.

    Insurance Policies

    Since the end of or during the financial year the consolidated entity has paid premiums in respect of directors' and executive officers' liability and legal expenses insurance contracts for the year ended 30 June 2015. Such insurance contracts insure against certain liability (subject to specific exclusions) persons who are or have been directors or executive officers of the parent entity.

    Directors have not included details of the nature of the liabilities covered, or the amount of the premium paid, as such disclosure is prohibited under the terms of the insurance contract.


    PROCEEDINGS ON BEHALF OF THE COMPANY


    No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001 .


    REMUNERATION REPORT


    The remuneration report is set out under the following main headings:


    (a)


    Principles used to determine the nature and amount of remuneration

    (b)

    Details of remuneration

    (c)

    Service agreements

    (d)

    Share based compensation

    (e)

    Additional information

    (f )

    Other transactions of Key Management Personnel

    (g)

    Equity instrument disclosures relating to Directors and Key Management Personnel


    The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001 .


    (a)


    Principles used to determine the nature and amount of remuneration


    The Group's policy for determining the nature and amount of emoluments of board members and senior executives of the consolidated entity is as follows:


    The objective of the entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms with market best practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

    ·

    competitiveness and reasonableness

    ·

    acceptability to shareholders

    ·

    performance linkage / alignment of executive compensation

    ·

    transparency

    ·

    capital management.

    The Group has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the organisation.


    MALACHITE RESOURCES LIMITED


    DIRECTORS' REPORT (CONTINUED)


    REMUNERATION REPORT (CONTINUED)


    (a)


    Principles used to determine the nature and amount of remuneration (continued)


    Alignment to shareholders' interests:

    ·

    attracts and retains well qualified and suitably experienced applicants

    ·

    has the goal of economic profit as a core component of plan design

    ·

    focuses on sustained growth in shareholder wealth, consisting of growth in share price, and, in the longer term, payment of dividends and delivering an adequate 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

    ·

    provides a clear structure for earning rewards

    ·

    provides recognition for contribution.

    The framework provides a mix of fixed and variable pay, and a blend of short (STI) and long-term (LTI) incentives. As executives gain seniority with the Group, the balance of this mix shifts to a higher proportion of 'at risk' rewards.


    The overall level of executive reward takes into account the performance of the Group over a number of years, with greater emphasis given to the current year. Recognition is given to earnings in setting executive remuneration but, as the Group is involved in mineral exploration rather than mineral mining and production, relevant experience, industry standards and the annual exploration outcomes, rather than earnings, are given greatest weight in remuneration considerations.


    Executive remuneration includes a base salary that is set with reference to the market, a short term incentive that comprises of an at risk bonus payable to reflect performance and a long term incentive that provides scope for equity participation over the longer term.


    Non-executive directors

    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 Board has also drawn on external sources of information to ensure non-executive directors' fees and payments are appropriate and in line with the market.


    Directors' fees

    The current base remuneration was last reviewed with effect from 1 January 2015.


    Non-executive directors' fees are determined within an aggregate directors' fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $300,000 per annum and was approved by shareholders at the AGM on 28 November 2014.


    (b)


    Details of remuneration

    Cash remuneration packages are set at levels that are intended to attract and retain executives capable of managing and enhancing the consolidated entity's operations. Remuneration of individual non-executive Directors is determined by the Board and may be varied from time to time but always such that the aggregate (currently $139,622 per annum see table below) is within the maximum amount (currently $300,000 per annum) for which prior approval of the shareholders has been received.


    Remuneration non-executive Directors fees


    Remuneration fees received in their capacity as non-executive Directors.


    2015

    Directors

    Directors fees

    Mr T Cuthbertson

    60,962

    Mr J Dean

    39,330

    Mr A McMillan

    39,330

    139,622

    MALACHITE RESOURCES LIMITED


    DIRECTORS' REPORT (CONTINUED)


    REMUNERATION REPORT (CONTINUED)


  2. Details of remuneration (continued)


Details of the nature and amount of each element of the emoluments of each of the directors and the key management personnel of Malachite Resources Limited during the year ended 30 June 2015 are set out below.




Short-term Employee Benefits

Post- employment Benefits


Long-term Benefits


Share Based Payments


Total


Cash Salary and Fees


Cash Bonus


Non Monetary Benefits


Super-


Long Service Leave


Termination Benefits


Options

annuation

Paid

Accrued

Contributions

$

$

$

$

$

$

$

$

$


50,000


10,962


-


-


-


-


-


-


60,962

25,000

14,330

-

-

-

-

-

-

39,330

25,000

14,330

-

-

-

-

-

-

39,330


295,212


(3,612)


-


-


-


-


-


-


291,600

395,212

36,010

-

-

-

-

-

-

431,222


-


60,962


-


-


-


-


60,962

-

-

-

39,330

-

-

-

-

-

-

39,330

-

39,330

-

-

-

-

-

-

39,330

19,665


36,205

-

-

1,819

-

-

-

21,484


213,300


-


-


-


-


-


5,766


255,271

232,965

175,827

-

-

1,819

-

-

5,766

416,377

2015

Directors

Mr T Cuthbertson Mr J Dean

Mr A McMillan


Other key management personnel of the group

Mr G Hiller


2014

Directors

Mr T Cuthbertson Mr J Dean

Mr A McMillan Mr R Meares ^^

Other key management personnel of the group


Mr G Hiller


Key management personnel are the same for the Group and the Company.

There is no link between key management personnel remuneration and the share price or dividends. There is no relationship between the performance of the Group and remuneration over the past five years. All of the top paid executives are shown above.


^^ Resigned 31/12/13


The Directors have not been paid since the 1st July 2013. All Directors fees have been accrued from 1st July 2013. On 7 April 2015 it was agreed to convert some of this accrual to convertible notes (subject to shareholder approval), in the meantime they are held as a Current Liability - unsecured loan. Mr McMillan received $25,000 in cash which he then loaned immediately back to the group through an associated entity. The outstanding accrual for Directors fees is set out in the table below.


Directors fee accrual


Opening

balance

Accrual

current year

Cash

Conversion to convertible

Closing

balance

note *

2014

2015

Directors

Mr T Cuthbertson

60,962

60,961

(50,000)

71,923

Mr J Dean

39,330

39,330

(25,000)

53,660

Mr A McMillan

39,330

39,330

(25,000)

53,660


139,622


139,621


(25,000)


(75,000)


179,243


* subject to shareholder approval


The unsecured loans are subject to the same conditions as the convertible notes set out in note 15.

MALACHITE RESOURCES LIMITED



REMUNERATION REPORT (CONTINUED)


  1. Details of remuneration (continued)

    DIRECTORS' REPORT (CONTINUED)


    The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:


    Fixed remuneration

    At risk - STI

    At risk - LTI

    2015

    2014

    2015

    2014

    2015

    2014


    100%


    100%


    -


    -


    -


    -

    100%

    100%

    -

    -

    -

    -

    100%

    100%

    -

    -

    -

    -

    -

    100%

    -

    -

    -

    -


    100%


    98%


    -


    0%


    0%


    2%

    Directors

    Mr T Cuthbertson Mr J Dean

    Mr A McMillan Mr R Meares ^^


    Other key management personnel of the group

    Mr G Hiller


    ^^ Resigned 31/12/13


  2. Service agreements


    Remuneration for the CEO is formalised in a consultancy agreement. The agreement provides for a base rate of $1,350 per day. The agreement also provides for the provision of performance-related cash bonuses for key achievements in cost management and funding raising and participation, when eligible, in the Malachite Resources Limited Employee & Contractors Option Plan ('ECOP'). Refer note 5.


  3. Share based compensation Employee Option Plan

The Company operates an Employees and Contractors Option Plan ('Plan'). The Plan is administered by the Board. Only eligible persons (and their associates) may be

invited to participate in the Plan. Eligible persons include full time employees of the Company, permanent part-time employees, qualifying contractors and persons who may be a director, alternate director or company secretary of the Company or an entity in the Group. The Plan is designed to provide long term incentives for executives to deliver shareholder value.


Options are granted under the plan for no consideration. Options granted under the Plan carry no dividend or voting rights. Each option entitles the holder to subscribe for and be allotted one ordinary fully paid share in the capital of the Company. The exercise price is determined by the Directors at the time of issuing an invitation to participate in the Plan.


All options granted to Directors have been approved by Shareholders. Benefits are payable (or vest) upon expiry of vesting periods.

All options have expired


Details of options over ordinary shares in the Company provided as remuneration to each Director and officer of Malachite Resources Limited are set out below. When excercisable, each option is convertible into one ordinary share of Malachite Resources Limited. Further information on the options is set out in note 29 to the financial statements.



Directors and Officers

Number of options granted during the year

Number of options vested during the year

Numberof options expired or Total value of grant yet to vest forfeited during the year


Directors

2015

2014

2015

2014

2015

2014

Minimum

Maximum


-


-


-


-


-


-

$

$

Mr T Cuthbertson

-

-

Mr J Dean

-

-

-

1,500,000

3,000,000

-

-

-

Mr A McMillan

-

-

-

-

-

-

-

-

Mr R Meares ^^

-

-

-

1,500,000

-

2,000,000

-

-

Other key management

personnel of the group

Mr G Hiller

-

-

-

7,500,000

15,000,000

-

-

-

^^ Resigned 31/12/13

MALACHITE RESOURCES LIMITED



REMUNERATION REPORT (CONTINUED)


  1. Share based compensation (continued)

    DIRECTORS' REPORT (CONTINUED)


    The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the previous remuneration tables. The fair value at grant date is determined using a Black Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.


    During the current or prior year there were no options exercised by the directors under the employee option plan. During the year ended 30 June 2015 no options were granted to directors.

    Non-employee options

    Options


    2015

    Number held

    1 July 2014

    Acquired during year

    Expired during year

    Exercised during year

    Other changes

    Number held

    30 June 2015

    Vested and exercisable


    Listed

    Directors

    Mr A McMillan


    744,262


    - (744,262)


    - -


    -


    -


    Other key management personnel

    Mr G Hiller 166,667 - (166,667) - - - -


    Non-employee options issued as underwriting fee expired during the year.


  2. Additional information

    The Group's projects are all still at the exploration and evaluation stage and as a result, it does not yet have earnings from mining. In view of that, shareholder wealth is based on the market's view of the value of discoveries made to date, the Group's potential for future discovery success, and the quality and experience of its people. This is reflected in market capitalisation, which is also influenced by factors outside the Group's control, such as commodity prices and general market behaviour.


    Accordingly, remuneration policy for key management personnel is based primarily on the extent to which the corporate exploration and evaluation objectives are met, recognising that the timeframe for exploration success commonly exceeds one year. Key performance criteria include measuring actual expenditure against budget, the quality and relevance of geological and other scientific or technical work applied, and the selection, management and performance of field staff and outside contractors, such as drilling contractors. Where a project is sufficiently advanced for it to be appropriate, achievement of resource definition goals is also given considerable emphasis, as the market generally values defined resources more than resource potential. This aspect plays a significant role in setting the long term incentive component of remuneration.


  3. Other transactions of Key Management Personnel


    The Group had an opening balance of $50,000 in unsecured loans from Key Management Personnel. During the year, the Group received $225,000 in cash and $75,000 was converted from Directors fees refer Note (b) of the Remuneration Report. $50,000 of these unsecured loans have been rolled over to Convertible Notes and the remaining

    $300,000 will be rolled over to Convertible Notes subject to shareholder approval. The group also received $200,000 in convertible notes from Key Management Personnel. Total interest paid and accrued on these loans amounted to $67,267.


  4. Equity instrument disclosures relating to Directors and Key Management Personnel


  5. Share holdings

    The number of shares in the Company held during the financial year by each director of Malachite Resources Limited and other key management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.



    Number

    Purchased / acquired


    Sold


    Other changes


    Number

    Shares

    held

    during

    during

    held

    2015 1 July 2014 year year 30 June 2015


    Directors

    Mr T Cuthbertson

    5,000,000

    3,300,451

    - - 8,300,451

    Mr J Dean

    11,936,508

    27,600,214*

    - - 11,936,508

    Mr A McMillan


    Other key management personnel

    1,488,529

    2,300,451

    - - 3,788,980

    Mr G Hiller 5,645,834 1,256,475 - - 6,902,309


    * 25,600,214 shares controlled when Mr Dean became a Director of Construction Equipment Finance Limited.

    MALACHITE RESOURCES LIMITED


    DIRECTORS' REPORT (CONTINUED)


    (g) Equity instrument disclosures relating to Directors and Key Management Personnel (continued)


  6. Option holdings

  7. The number of options over ordinary shares in the Company held during the financial year by directors of Malachite Resources Limited and the other key management personnel of the Group, including their personally related parties, are set out below.


    Options Number Acquired Expired Exercised Other changes Number Vested and held during during year during year held exercisable

    2015 1 July 2014 year 30 June 2015


    Listed Directors

    Mr A McMillan 744,262 - (744,262) - - - -


    Other key management personnel

    Mr G Hiller 166,667 - (166,667) - - - -


    Unlisted Directors

    Mr J Dean 3,000,000 - (3,000,000) - - - -


    Other key management personnel

    Mr G Hiller 15,000,000 - (15,000,000) - - - -


    AUDITORS


    Non-audit services


    The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Company and/or the Group are important.


    No amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services provided during the year.


    Auditor's independence declaration

    A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is attached.


    Signed in accordance with a resolution of the directors.


    On behalf of the Directors




    Non-Executive Chairman Sydney, 30 September 2015

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Malachite Resources NL

EXPLORATION STAGE
CODE : MAR.AX
ISIN : AU000000MAR2
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Malachite Res. is a tin and lead exploration company based in Australia.

Malachite Res. holds various exploration projects in Australia.

Its main exploration properties are ELSMORE, MT LIDSTER, RIVERTREE, TOOLOOM, VOLGA, ABINGTON, CONRAD SILVER and DELUNGRA in Australia.

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Corporate Presentations of Malachite Resources NL
5/28/2008Lonsec Research Report- Resources Update (includes on Malach...
Annual reports of Malachite Resources NL
2008 Annual report
Project news of Malachite Resources NL
2/18/2011(Conrad Silver)ASX Announcement - Conrad Silver Project Update
2/11/2011Acquisition of Lorena Gold Project Completed
2/28/2010(Conrad Silver)New Work Extends Silver Mineralisation at Conrad
2/25/2010(Tooloom)Boardroom Radio Interview - Dr. Garry Lowder: Encouraging Ne...
1/11/2010(Tooloom)Drilling at Tooloom Gold Project Resumes after Bushfi
12/10/2009(Tooloom)Drilling at Tooloom Suspended due to Bushfires
10/20/2009(Tooloom)Drilling commenced at Tooloom Gold Project
9/7/2009(Delungra)Drilling to commence at Delungra
11/18/2008(Conrad Silver)ASX Announcement - Conrad Silver Project - Update
8/11/2008(Conrad Silver)Major Resource Upgrade for the Conrad Silver Project
8/4/2008(Conrad Silver)Conrad Silver Project - New Drilling Results Continue to Bui...
5/9/2008(Conrad Silver)Conrad Silver Project - Good Results continue
4/2/2008(Elsmore)INTERVIEW WITH MANAGING DIRECTOR
4/1/2008(Elsmore)New Tin Discovery at Elsmore Project
1/16/2008(Conrad Silver)Exciting Regional Potential at Conrad Silver Project
11/5/2007(Conrad Silver) Estimate over 10Moz of Silver Equivalent
10/8/2007(Conrad Silver)Spectacular New Results at Conrad Silver Project
8/13/2007(Conrad Silver)Resource Drilling at King Conrad Extended
6/3/2007(Conrad Silver)Conrad Silver Drilling Report #3
4/27/2006Silver drilling at Conrad highly successful: exciting…
Corporate news of Malachite Resources NL
7/14/2016Quarterly Activities and Cashflow Reports - June 2016
5/25/2016Shareholder Approval - Convertible Notes
5/24/2016Response to ASX Appendix 5B Query
12/16/2015Assays received from Lady Mary Prospect
12/4/2015Change of Director's Interest Notice - Andrew McMillan
12/4/2015Change of Director's Interest Notice - Terry Cuthbertson
12/4/2015Change of Director's Interest Notice - James Dean
11/30/2015Results of Meeting - AGM
11/26/2015Drilling Completed at Lady Mary Prospect
11/2/2015Quarterly Activities and Cash Flow Report
10/29/2015Notice of Annual General Meeting/Proxy Form
10/19/2015Appendix 3B - Convertible Note Rollover Fee Shares
10/1/2015AGM to be held 30 November 2015
9/30/2015Full Year Statutory Accounts - Year Ended 30 June 2015
9/30/2015Project and Corporate Update
9/2/2015Revised Terms Agreed re Sale of Conrad Silver Project
7/31/2015Quarterly Activities and Cashflow Report - June 15 Qtr
7/15/2015Proceeding with the Development of Lorena Gold Project
4/27/2015Share Purchase Plan Closing Date Extended
4/16/2015Share Purchase Plan Letter and Application Form
3/31/2015Trading Halt
3/16/2015Half Yearly Report and Accounts
3/2/2015MAROA Options Expire 31 March 2015
1/30/2015Quarterly Activities and Cash Flow Report - Dec 14 Qtr
1/22/2015Malachite Reviewing Position at Lorena Gold Project
1/21/2015Lorena Gold Project Update
1/21/2015Reinstatement to Official Quotation
1/21/2015Suspension from Official Quotation
1/15/2015Trading Halt
12/3/2014Appendix 3B - AGM approved Shares and Convertible Note
12/1/2014AGM Presentation
11/2/2014Convertible Notes
3/4/2011ASX Announcement - Placement Completed Raising $517,500
7/19/2010Quarterly Activities Report
5/26/2010Results of Meeting and Exploration Update
5/18/2010From Successful Explorer to Emerging Miner
4/29/2010Boardroom Radio Broadcast
1/28/2010Quarterly Activities Report
12/8/2009Completes $300k Placement
10/20/2009Boardroom Radio interview with Dr. Garry Lowder
10/15/2009form strategic alliance with Chinese Investor Group
9/4/2009Share Purchase Plan successfully raises $933,295
7/6/2009Tin Mining Plans Boosted by Results of Dry Processing Test W...
5/28/2009ASX Announcement - Placement Raises $312,140
3/11/2009(Audio) Audio Broadcast - 1.30 pm Today
2/17/2009(Audio) Interview with Dr. Garry Lowder - Exploration Update...
12/18/2008Interview with Dr. Garry Lowder - Upgraded Resource at Conra...
11/28/2008ASX Announcement - Directors Options to be Amended - Exercis...
11/7/2008Interviews with Dr. Garry Lowder
11/5/2008Tin Strategy
9/22/2008AGM to be held Tuesday 25 November 2008
9/17/2008Interview with Dr. Garry Lowder
8/20/2008ASX Announcement - Exploration Update
8/3/2008Silver Lining From Commodity Resurgence
7/24/2008June 08 Quarter Activities Report
7/2/2008Finance News Network - Interview with Dr. Garry Lowder
5/30/2008Lonsec Resources Update - Malachite Resources NL
4/23/2008(Video) Finance News Network Interview
2/11/2008Malachite Resources NL: ASX Announcement - Exploration Updat...
1/21/2008Quarterly Activities Report
12/18/2007Volga Drilling Further Update
12/14/2007Placement Raises $5.7m
11/21/2007Chairman's Address to the Annual General Meeting
11/19/2007Volga Project Update
11/16/2007 Placement of up to 20m Shares
9/17/2007Robust Mining Project Emerging
5/1/2007Exploration Update on Conrad Silver, Tooloom Gold and ISA re...
3/28/2007Conrad Drilling Update
2/28/2007Corporate Insights Interview
4/20/2006quaterly report ending 31 march 2006
1/26/2006More gold at Phoenix: deeper drilling enhances mine potentia...
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