maiden profit follows paddington acquisition

ASX/MEDIA ANNOUNCEMENT
15 August 2008

Maiden profit follows Paddington acquisition
Results for Announcement to the Market

Key points
�� EBITDA for FY2008 of $26.5M on revenue of $115M at average A$911 per oz
�� NPAT of $9.2M for FY2008
�� 2.9 cents earnings per share for FY2008
�� June cash balance $27M; cash flow from operations of $35.1M
�� Total assets (excl. Hedge tax adj and net of rehabilitation) of $137.6M
�� Project pipeline set to unlock shareholder value:
o Mount Morgan Mine Project: approval pending
o Homestead underground development: approval pending
o Paddington: 10-year Life of Mine Plan
o Sienna Coal Project: 60-hole drilling program underway to define Resources
�� FY2009 a development year providing the basis for 250,000 oz production in FY2010
Norton Gold Fields Limited (Norton), one of the largest ASX-listed (ASX: NGF) Australian gold
producers, posted a net profit after-tax of $9.238M for the financial year ending 30 June and
represents a turnaround of some $14M on the previous financial year.
The maiden profit marked Norton’s first year of production from its strategically located
Paddington Gold Mine in the Kalgoorlie region of Western Australia. Importantly, this profit was
against a backdrop of substantial challenges in the Australian gold mining industry including
strong cost pressures and energy supply issues from the Varanus Island gas explosion.
In addition to $16M on deposit which secures Norton’s environmental obligations, the Company
had $27M cash at bank as of 30 June.
“The Company’s fast track into the black since acquiring the Paddington Gold Mine, is a credit
to the capability and efforts of the Company’s executive team and staff,” said Jon Parker, the
Managing Director.
“Shareholders can see that the board and management have not only recognised assets with
substantial potential but also successfully transformed Norton through to profitable production.
Norton Gold Fields Limited • 79 Hope Street, South Brisbane, Queensland 4101•Australia
ACN 112 287 797 • Tel +61 (7) 3846 9200 • Fax +61 (7) 3846 9232 • www.nortongoldfields.com.au
“Acquiring Paddington was the second step in Norton’s strategy of becoming a major gold
company following the acquisition of the Mount Morgan Mine Project in Queensland.
“Norton’s Mount Morgan Mine Project is progressing on track. In July, the Board approved the
refurbishment and relocation of the Company’s Kundana plant to the Mount Morgan site in
anticipation of final Queensland Government approvals.
“Mount Morgan is planned to produce an initial 35-40,000 oz per year from FY2010 to augment
Norton’s current annual production of 150,000 oz.
“We have also made significant progress in our planning towards commencing underground
operations at Paddington in FY2009 which will help us ramp up production to 250,000 oz in
FY2010.
Mr Parker said Norton expected to increase its landholding in the Gold Fields region with the
acquisition of the Bellamel gold assets.
“I am confident we can apply to the Bellamel assets the same combination of management
and technical expertise now in use at Paddington. Bellamel shareholders will benefit from
Norton’s organisational, management and financing capabilities through Norton’s mining and
production business at Paddington. The combined entity will have significant JORC Codecompliant
Reserves and Resources in one of the world’s foremost gold provinces, together with
a major low cost processing plant.
“We are very happy with the level of acceptances which as of today is 22.64%. Norton’s offer of
four (4) Norton shares for every five (5) Bellamel shares is open to Bellamel shareholders until 29
August, unless extended,” Mr Parker concluded.
The accounts and Appendix 4e (Rule 4.2A) Preliminary Report are attached.
About Norton Gold Fields
Norton Gold Fields Limited is Australia’s fourth largest ASX-listed Australian gold producer. It also
has active gold, copper, and coal exploration projects.
Norton’s all-share offer to acquire Bellamel Mining Limited will, if accepted, add 1.68 Moz of
gold to the Paddington Resources, and further extend the life of the Paddington Mine. Bellamel
also has the potential to develop a 40-50,000 oz per year gold heap leach operation.
Additionally, the Bellamel properties are highly prospective for underground development.
The Company operates the Paddington Gold Mine near Kalgoorlie in Western Australia and is
planning to develop the Mount Morgan Mine Project in Queensland. Paddington has a 5Moz
resource and a 3 Mtpa CIP plant capable of producing more than 150,000 oz of gold per year.
With the planned addition of underground operations in FY2010, production is expected to lift to
250,000 oz of gold per year.
Norton plans to augment this with up to 40-50,000 oz of gold annually from the Mount Morgan
Mine Project.
Page 2 of 4
For further information
Jon Parker Warrick Hazeldine
Managing Director Director
Norton Gold Fields Limited Purple Communications
+61 (0) 408 921 551 +61 (0) 417 944 616
[email protected] [email protected]
Visit us at www.nortongoldfields.com.au
Competent Person’s Statement
The Mineral Resource statement, with the exception of the Mt Pleasant Mineral Resource estimate, has been compiled by Mr Ian Copeland who is
a Member of the Australasian Institute of Mining and Metallurgy, and qualifies as a Competent Person as defined in the 2004 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Ian Copeland is a full time staff member of Norton
Goldfields and consents to the inclusion in the release of the matters based on the information in the form and context in which it appears.
The Mt Pleasant Mineral Resource estimate, with the exception of the Homestead Mineral Resource estimate, has been compiled with the consent
of Mr David Williams, who is a Member of the Australasian Institute of Mining and Metallurgy, and qualifies as a Competent Person as defined in the
2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr David Williams is a full time staff
member of CSA Australia Pty Ltd and consents to the inclusion in the release of the matters based on the information in the form and context in
which it appears. The Homestead Mineral Resource estimate was compiled with the consent of Mr Ian Copeland.
The Mineral Resource estimate is tabulated inclusive of Ore Reserves. Cut-off grades used to estimate the Mineral Resource vary by deposit, ranging
from 0.7g/t Au up to 1.0g/t Au. Note rounding errors may occur in the tabulation of the Mineral Resource estimate.
Measured Resources are 0.65Mt at 1.7 g/t for 35,000 oz, Indicated Resources are 41.66Mt at 2.0 g/t for 2,720,000 oz and Inferred Resources of
29.64Mt at 2.2 g/t for 2,070,000 oz. Proven Reserves are 0.12Mt at 1.2 g/t for 4,700 oz, and Probable Reserves are 17.74Mt at 1.8 g/t for 1,007,700oz.
The information in this report that relates to the Mineral Resources of Bellamel Mining Limited is based on information provided by Mr Matthew Wood
who is a Member of the Australian Institute of Mining and Metallurgy. Mr Wood is the Chairman of Bellamel Mining Limited. Mr Wood has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2004 Edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. Mr Wood consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Measured Resources are 9.137Mt at 1.13 g/t for 331,075 oz, Indicated Resources are 12.54Mt at 1.41 g/t for 567,040 oz and Inferred Resources of
22.30Mt at 1.10 g/t for 784,265 oz
Page 3 of 4
Page 4 of 4
Appendix 4E (Rule 4.2A)
Preliminary Final Report
For the year ended 30 June 2008
Results for announcement to the market
(all comparisons are to the year ended 30 June 2007)
$’000 Up/down %movement
Revenue from ordinary 115,002 up 328,577
Profit/(Loss) from ordinary activities (NPAT) 9,238 up Note 1
Notes
1. The NPAT of $9.238M represents a movement up of $14.395M. Since the movement was from a loss
a percentage calculation cannot be reliably calculated. There are no minority interests.
Audit
This report is based on the consolidated financial report which has been audited.
Acquisitions and disposals
Details of acquisitions are provided in the attached Annual Financial report
Commentary on results for the period
The company acquired and operated the Paddington Gold Mine from 25 August 2007,
producing 125,526 oz of gold. A detailed summary of the years operations is provided in the
June quarterly report released on 1 August 2008.
Commentary on the results is also provided in the ASX release accompanying this statement.
Dividends
The Directors do not recommend payment of a dividend. No dividend was paid during the year
or the corresponding period. Consequently there is no record date.
Net tangible assets per share (fully diluted)
The net tangible assets per share were 5.75 cents for 2008 and 4.76 cents for 2007. The relevant
numbers excluding the accounting for the hedge position are 12.23 cents for 2008 and 4.76
cents for 2007.
Additional 4E disclosures
Additional disclosures requirements can be found in the Directors Report and consolidated
financial report attached to this report.
Norton Gold Fields Limited • 79 Hope Street, South Brisbane, Queensland 4101•Australia
ACN 112 287 797 • Tel +61 7 3846 9200 • Fax +61 7 3846 9232 • www.nortongoldfields.com.au
Annual Financial Report
2008
Table of Contents
Directors’ Report 3
Remuneration Report 8
Auditor’s Independence Declaration 19
Corporate Governance Statement 20
Financial Report
Income Statements 24
Balance Sheets 25
Statements of Recognised Income and Expense 26
Cash Flow Statements 27
Notes to the Financial Statements 28
Directors’ Declaration 73
Independent Audit Report to the Members 74
Shareholder Information 76
Corporate Directory 78
Page 3 of 78
Directors’ Report
Your Directors present their report together with the financial report of Norton Gold Fields Limited
(the Company) and of the Group, being the entities it controlled and the Group’s interest in
associates and joint ventures for the financial year ended 30 June 2008.
Directors
The following persons were directors of Norton Gold Fields Limited during the whole of the financial
year and up to the date of this report:
A. Anthony McLellan (Non-executive Chairman)
Jon B. Parker (Non-executive Director to 23 January 2008; Managing Director from 24 January 2008)
A. Timothy Prowse (Managing Director to 23 January 2008; Executive Director from 24 January 2008)
Mark McCauley (appointed Non-executive Director on 4 September 2007)
In addition, the following person was appointed alternate Director:
Ian McCauley (Alternate Director to Mark McCauley, appointed 14 February 2008)
Principal activities
During the year the principal continuing activities of the Group consisted of:
• Production of gold and exploration at Paddington in Kalgoorlie
• Acquisition, exploration and feasibility evaluation of the Mount Morgan Mine Project
• Exploration of the Sienna and Electra coal projects located near Middlemount in
Queensland
• Evaluation of other exploration and business development opportunities including an Offer
for the acquisition of Bellamel Mining Limited.
Significant changes in the nature of the principal activities occurred during the financial year:
Mining at Paddington Gold Pty Ltd
The acquisition of Paddington Gold Pty Ltd contributed revenues of $111,783,000 and net profit
before tax of $22,500,000 to the Group for the period from 24 August 2007 to 30 June 2008.
Business strategies and prospects for the future
Norton Gold Fields Limited is Australia’s second largest ASX-listed Australian gold producer. It also has
active gold, copper and coal exploration projects.
Norton’s all-share offer to acquire Bellamel Mining Limited (“Bellamel”) will, if accepted, add 1.68
Moz of gold to Paddington’s Resources and extend the life of the Paddington Mine. Bellamel also
has the potential to develop a 40-50,000 oz per year gold heap leach operation. Additionally, the
Bellamel properties are highly prospective for underground development.
The Company operates the Paddington Gold Mine near Kalgoorlie in Western Australia and is
planning to develop the Mount Morgan Mine Project in Queensland. Paddington has a 5.0Moz
Resource and a 3 Mtpa CIP plant capable of producing more than 150,000 oz of gold per year. With
the planned addition of underground operations in FY2010, production is expected to lift towards
250,000 oz of gold per year. Norton plans to augment this with up to 40-50,000 oz per year of gold
from the Mount Morgan Mine Project.
Page 4 of 78
Financial position of the entity
Net Assets of the Group have increased from $4,933,000 at 30 June 2007 to $32,363,000 at 30 June
2008. This change is largely the result of:
Increase
• A profit after tax of $9,238,000 for the financial year
• Capital raising of $75,000,000 in August 2007 ($35M ordinary shares and $40M from
convertible notes)
Decrease
• Net Liabilities at 30 June 2008 of gold put options, forward gold hedges and the associated
deferred tax.
Dividend
The Directors do not recommend payment of a dividend. No dividend was paid during the year.
Review of operations and operating results
During the year the Group conducted exploration and mining activities on the Group’s tenements
and milled gold resulting in a profit after tax of $9,238,000 (2007 – loss $4,609,000), and undertook the
following:
• Transaction to acquire the Paddington Gold Mine
• Transaction to acquire the Mount Morgan Mine Project
• Definition of coal targets at Sienna and Electra (Middlemount) in Queensland
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the financial year were as follows:
(a) Increase in contributed equity
An increase in contributed equity of $50,346,000 (from $10,049,000 to $60,395,000) primarily as
a result of a capital raising of $75,000,000 in August 2007 ($35M ordinary shares and $40M
from convertible notes) for the Paddington acquisition.
(b) Acquisition of Paddington Gold Pty Ltd
On 24 August 2007, Norton Gold Fields Limited acquired all of the issued shares in Paddington
Gold Pty Ltd, owner of an operating gold mine in Kalgoorlie, WA, for a total cash
consideration of $38,285,000 (including cash costs of acquisition). See Note 24 of the
Accounts.
(c) Acquisition of assets relating to Mount Morgan Mine Project
On 28 November 2007, Norton Gold Mine Pty Ltd acquired certain tenements and mining
information relating to the proposed Mount Morgan Mine Project in central Queensland for a
total of $4,525,000.
(d) Merger with Bellamel Mining Limited
On 29 May 2008, the Directors of Norton Gold Fields Limited and Bellamel Mining Limited
agreed to merge the two companies by means of an off-market takeover offer by Norton
for all the shares in Bellamel. This acquisition is subject to a number of conditions, including
Norton receiving acceptances of 90 percent from Bellamel shareholders. The offer closes on
29 August 2008.
Page 5 of 78
Matters subsequent to the end of the financial year
Further details of events subsequent to balance date are outlined at Note 34 of the Financial Report.
At an Extraordinary General Meeting held on 1 July 2008, a loan funded share scheme was
approved for the Managing Director J. Parker for the issue of 9,900,000 ordinary shares. These shares
vest on various service and market price hurdles.
Likely developments and expected results from operations
Future developments and business strategies of the Group will be as follows:
• Continuation of exploration for, and production of, gold at Paddington in Kalgoorlie
• Subject to final feasibility, development of the Mount Morgan Mine Project
• Continuation of exploration of the Sienna and Electra coal projects (Middlemount) in
Queensland
• Completion of the take-over of Bellamel Mining Limited
• Continuation of the evaluation of other exploration and business development opportunities.
Further information about likely developments in the operations of the Group and the expected
results of those operations in future financial years have not been included in this report because
disclosure of the information would be likely to result in unreasonable prejudice to the Group.
Environmental regulation
The Group’s projects operate under granted Environmental Authorities issued under the
Environmental Protection Act 1994 in Queensland and the Mining Act 1978 in Western Australia
(Department of Industry and Resources). The Group maintains its tenements in good standing and it
is not aware of any material non-compliance issues.
Information on directors
A. Anthony McLellan
Chairman – Non-executive
Experience and expertise:
Mr McLellan lived abroad for more than twenty-five years where he served as the Chief Executive of
a number of companies, including as president and CEO of the predecessor of Barrick Gold,
headquartered in Toronto. With a passion for the poor, Mr McLellan serves as chairman for Habitat
for Humanity Australia Inc, and is a Director of Opportunity International Australia.
Other current directorships:
Allomak Limited (Non-executive Director and Chairman since 2006)
Former directorships in last three years:
Felix Resources Limited (Non-executive Director from 2003 to 2007)
Bemax Resources Limited (Non-executive Director and Chairman until July 2008)
Special responsibilities:
Chairman
Interests in shares and options:
5,000,000 options over ordinary shares in Norton Gold Fields Limited
Page 6 of 78
Jon Parker
Managing Director
Experience and expertise:
Honours degree in Physical Chemistry from Sydney University in 1969 and Graduate Diploma of
Business Administration from Curtin University in 1979.
Over 30 years’ experience in the mining and energy industries in iron ore, bauxite, aluminium, coal,
gold and the power sectors.
Other current directorships:
Sundata Pty Ltd (Non-executive Chairman since July 2007)
JP Strategic Insights Pty Ltd (Director since March 2006)
Former directorships in last three years:
ITPM Pty Ltd (Non-executive Chairman from 2003 to 2007)
Felix Resources Limited (Managing Director from 2002 to 2006)
Special responsibilities:
None
Interests in shares and options:
4,196,000 ordinary shares in Norton Gold Fields Limited
2,000,000 options over ordinary shares in Norton Gold Fields Limited
9,900,000 ordinary shares with various future vesting periods via Loan Funded Share Scheme
(approved 1 July 2008)
A. Timothy Prowse
Executive Director
Experience and expertise:
Honours degree in mining engineering from Sydney University in 1978, Member of the Australian
Institute of Mining and Metallurgy. Holder of a first class South African Mine Manager’s certificate.
Over 26 years’ experience in the mining industry, primarily in gold, but with broad experience in coal
and base metals.
Other current directorships:
None
Former directorships in last three years:
Gold Aura Limited
Special responsibilities:
None
Interests in shares and options:
21,700,001 ordinary shares in Norton Gold Fields Limited
8,680,000 options over ordinary shares in Norton Gold Fields Limited
Page 7 of 78
Mark McCauley
Non-executive Director
Experience and expertise:
Currently Managing Director of RMM Capital, a Queensland-based private equity firm. Previous
professional experience includes four years as Chief Financial Officer for a large Australian coal
producer, Director Strategic Development for a private resource investment company, along with
various technical and operational roles with Mount Isa Mines Limited. A mining engineer and holder
of a first class Queensland Metaliferous Mine Manager’s certificate and graduate of the Harvard
Business School’s Advanced General Management program. Completed a Master of Business
Administration at Bond University in 1994.
Other current directorships:
RMM Capital Pty Limited (Executive Director since May 2007)
Ausmin Australia Pty Ltd (Non-executive Chairman January 2008)
Former directorships in last three years:
Monto Minerals Limited (Non-executive Director from October 2007 to June 2008)
Special responsibilities:
Chairman of Audit and Risk Management Committee
Interests in shares and options:
None
Ian McCauley
Non-executive Alternate Director to Mark McCauley
Experience and expertise:
Mr McCauley has had a distinguished career in the resources industry both as an executive and
investor. Amongst other things, he previously has been Chairman and a major shareholder of Felix
Resources Limited, and a Non-executive Director of Queensland Nickel Limited. Holds a Bachelor of
Engineering (Mining).
Other current directorships:
Belmont Park Investments Pty Ltd (including subsidiaries)
Clermont Bulk Haulage Pty Ltd
Former directorships in last three years:
Chairman of Felix Resources Limited
Special responsibilities:
None
Interests in shares and options:
Mr McCauley is a Director and Shareholder of BPI Norton Pty Ltd, an entity that holds the following
equity in Norton Gold Fields Limited:
• 64,550,000 ordinary shares
• 50 Convertible Notes (total convertible to 20,000,000 ordinary shares)
Company Secretary
The company secretary is Ms Leni Stanley CA, B.Com. Ms Stanley is currently a partner with a
Chartered Accounting firm and holds the office of company secretary with various companies.
Page 8 of 78
Co-company secretary is Mr Simon Brodie B.Bus CPA ACIS. A graduate of the Queensland University
of Technology, Mr Brodie is an accomplished finance executive with a strong background in the
resources industry. Mr Brodie was appointed company secretary on 18 December 2007.
Meetings of directors
The number of meetings of the Norton Gold Fields Limited’s Board of Directors and the Audit and Risk
Management Committee held during the year and the number of meetings attended by each
director were:
Remuneration Report
This remuneration report, set out under the following main headings, has been audited and
comprises pages 8 to 15:
A. Principles and Agreements
B. Details of Remuneration
C. Service Agreements
D. Share-based compensation
A. Principles used to determine the nature and amount of remuneration
The Board of Directors is responsible for determining and reviewing compensation arrangements for
the Directors and senior executives. The Board also reviews and approves the Managing Director’s
recommendations on the remuneration of key management personnel and staff.
Directors and Key Management Personnel
The following persons acted as Directors of the Company during or since the end of the financial
year:
A. Anthony McLellan (Non-executive Chairman)
Jon B. Parker (Managing Director)
A. Timothy Prowse (Executive Director)
Mark McCauley (Non-executive Director)
Ian McCauley (Alternate Director to Mark McCauley)
The term “Senior Management” used in this report refers to the following persons, who in conjunction
with the Directors form the group of Key Management Personnel:
Simon Brodie (Chief Financial Officer)
W. Andre Labuschagne (Project Director)
Jonathan Price (General Manager Paddington Gold)
The members of Key Management Personnel also include the five highest remunerated group
executives.
Board Meetings Audit and Risk Management
Eligible Attended Eligible Attended
A. Anthony McLellan 9 9 3 3
A. Timothy Prowse 9 9 - -
Jon Parker 9 9 - -
Mark McCauley 8 8 3 3
Page 9 of 78
Executive remuneration
The remuneration policy ensures that contracts for services are reviewed on a regular basis and
properly reflect the duties and responsibilities of the individuals concerned. Executive remuneration is
based on a number of factors including length of service, relevant market conditions, knowledge
and experience within the industry, organisational experience, performance of the Company and
the need for the remuneration to be competitive in order to attract and retain motivated people.
There are no guaranteed pay increases included in the senior executives’ contracts. For the prior
year ended 30 June 2007, Mr Prowse was the only executive of the Group.
The Directors are not entitled to any retirement benefits except those as provided by the
superannuation guarantee scheme, which is currently nine percent.
Executive remuneration includes cash and equity comprised of ordinary shares and/or share options.
Each member of key management personnel has a remuneration package negotiated on a caseby-
case basis with equity granted within the framework of the Employee Share Option Plan and
Employee Share Ownership Plan. The equity component is determined taking into account various
market and/or non market conditions before vesting. The details of shares and options and their
vesting conditions are set out below.
All risks associated with Options included in employee remuneration are borne by the recipient.
Relationship with company performance and shareholder wealth
The Company matches remuneration with overall total shareholder returns. Currently, share price is
regarded as the best proxy for this matching. As a consequence, remuneration is tied directly to
share price outcomes and vesting conditions are tied directly to the Company’s share price rather
than earnings.
In certain circumstances, remuneration is tied to the achievement of specific performance against
strategic project outcomes. Each of the strategic project outcomes are reported directly through to
the Board. As a result, each performance condition is directly assessed by the Board.
Non-executive directors
The current maximum amount of Non-executives’ fees approved by shareholders is fixed at $400,000
per annum. The Board determines, from time to time, the remuneration of Non-executive Directors.
In each case the Board takes extensive advice and considers the director’s responsibilities, the size
and scope of the company’s activities are benchmark with relevant organisations.
B. Details of remuneration
Details of the nature and amount of remuneration of the directors and key management personnel
of the Company and the consolidated entity are provided in the tables over the page.
There have been no other post-employment benefits paid to directors and key management
personnel other than those disclosed in the table over the page.
Page 10 of 78
Short-term benefits Post-employment benefits
Long-term
benefits Share-based payment
Directors
fees
Cash salary
and fees
Nonmonetary
Superannuation
Termination
Long service
leave Shares Options
Total
$ $ $ $ $ $ $ $ $
2008
Directors
A. Anthony McLellan 60,000 - - 5,400 - - - - 65,400
Jon Parker 1 - 169,516 - 42,496 - - - 376,867 588,879
A. Timothy Prowse 2 - 160,083 9,716 100,000 - 2,145 - - 271,944
Mark McCauley 49,667 - - 4,470 - - - - 54,137
Ian McCauley - - - - - - - - -
Senior Management
Simon Brodie 3 - 133,590 16,549 26,111 - - 336,322 - 512,572
W. Andre Labuschagne 4 - 130,000 - 6,564 - - 203,716 228,111 568,391
Jonathan Price 5 - 187,059 - 10,941 - - 240,840 - 438,840
109,667 780,248 26,265 195,982 - 2,145 780,878 604,978 2,500,163
2007
Directors
A. Anthony McLellan 60,000 - - 5,400 - - - 203,000 268,400
A. Timothy Prowse - 160,000 - 14,400 - - - - 174,400
Jon Parker 60,000 - - 5,400 - - - - 65,400
Jack Tan 6 - 15,256 - - 50,000 - - - 65,256
120,000 175,256 - 25,200 50,000 - - 203,000 573,456
1. Non-Executive Director until 23 January 2008
2. Managing Director until 23 January 2008
3. Appointed 6 November 2007
4. Appointed 1 January 2008
5. Appointed 5 September 2007
6. Resigned 14 November 2006
Page 11 of 78
The relative proportions of remuneration that are linked to corporate performance (ie. share price
vesting conditions for options and shares) and those that are fixed are as follows:
Fixed Remuneration Options Shares
2008 2007 2008 2007 2008 2007
Directors
A. Anthony McLellan 100% 24% - 76% - -
Jon Parker 36% 100% 64% - - -
A. Timothy Prowse 100% 100% - - - -
Mark McCauley 100% - - - - -
Ian McCauley - - - - - -
Jack Tan * - - - - - -
Senior management
Simon Brodie 34% - - - 66% -
W. Andre Labuschagne 24% - 40% - 36% -
Jonathan Price 45% - - - 55% -
* resigned 14 November 2006
C. Service Agreements
Remuneration and other terms of employment for the Managing Director are formalised in a service
agreement. The contractual arrangements contain certain provisions typically found in contracts of
this nature. Other major provisions of the agreements relating to the remuneration are set out below.
Non-executive Directors do not have formal service agreements. Terms of employment for other key
management personnel are set out below.
J Parker
Managing Director
Salary: Base salary of $400,000 per year inclusive of superannuation, indexed at CPI.
Term: No fixed term.
Termination: Benefit on early termination by the Company, other than for due cause, equal to six
months of salary plus three months notice or payment in lieu.
Share based:
- 3,300,000 ordinary shares vesting provided Mr Parker remains employed by the
Company on 1 January 2009
- 3,300,000 ordinary shares vesting when the VWAP20 is at least 85 cents ($0.85) per
ordinary share
- 3,300,000 ordinary shares vesting when the VWAP20 is at least 120 cents ($1.20) per
ordinary share.
A T Prowse
Executive Director
Salary: Base salary of $300,000 per annum inclusive of superannuation plus $12,000 motor
vehicle allowance per annum.
Term: No fixed term.
Termination: Benefit on early termination by the Company, other than for due cause, equal to six
months of salary plus three months notice or payment in lieu.
A A McLellan
Non-executive Chairman
Base Salary of $75,000 (plus 9 percent superannuation) per annum. Consulting fees of $1,800 per day
for additional consulting services as requested from time to time by the Managing Director.
M McCauley
Non-executive Director
Base Salary of $60,000 (plus 9 percent superannuation) per annum. Consulting fees of $1,800 per day
for additional consulting services as requested from time to time by the Managing Director.
Page 12 of 78
I McCauley
Alternative Non-executive Director to Mark McCauley
Nil remuneration.
S Brodie
Chief Financial Officer
Salary: Base salary package of $270,000 per annum inclusive of superannuation.
Term: No fixed term.
Termination: Benefit on early termination by the Company, other than for due cause, equal to six
months of salary plus three months notice or payment in lieu.
Share based:
- 875,000 ordinary shares vesting twelve months after commencement
- 750,000 ordinary shares vesting after the Issuer Conversion Right is exercisable on the
Convertible Notes
- 875,000 ordinary shares vesting when the VWAP of the ordinary share price reaches
$0.70 for 5 consecutive trading days.
W A Labuschagne
Project Director
Salary: Base salary package of $260,000 per annum inclusive of superannuation.
Term: No fixed term.
Termination: Benefit on early termination by the Company, other than for due cause, equal to six
months of salary plus three months notice or payment in lieu.
Share based:
- 500,000 ordinary shares vesting on completion of the Mount Morgan feasibility study
- 500,000 ordinary shares vesting when the VWAP of the ordinary share price reaches
$1.00 for 5 consecutive trading days
- 500,000 share options vesting six months after commencement
- 500,000 share options vesting twelve months after commencement.
Mr J Price
General Manager Paddington Gold
Salary: Base salary package of $240,000 per annum inclusive of superannuation.
Term: No fixed term.
Termination: Benefit on early termination by the Company, other than for due cause, equal to six
months of salary plus three months notice or payment in lieu.
Share based:
- 700,000 ordinary shares vesting twelve months after commencement
- 600,000 ordinary shares vesting after the Issuer Conversion Right is exercisable on the
Convertible Notes
- 700,000 ordinary shares vesting when the VWAP of the ordinary share price reaches
$0.70 for 5 consecutive trading days.
D. Share Based Compensation
Shares
The table over the page sets out the information on shares granted as remuneration to key
management personnel in the financial year and the performance conditions required for vesting.
Page 13 of 78
Granted
No.
Grant Date Fair Value per
share at grant
date
$
Vested at
30 June
2008
No.
Vesting conditions Expiry
2008
S. Brodie 875,000 6/8/07 $0.280 nil 12 months after employment
date
nil
S. Brodie 750,000 6/8/07 $0.280 nil Issuer Conversion Right available
on Convertible Notes
nil
S. Brodie 875,000 6/8/07 $0.280 nil VWAP of Ordinary Shares is 70c
for 5 consecutive days
nil
W. A.
Labuschagne
500,000 1/12/07 $0.493 nil Completion of Mount Morgan
feasibility study
nil
W. A.
Labuschagne
500,000 1/12/07 $0.493 nil VWAP of Ordinary Shares is $1.00
for 5 consecutive days
nil
J. Price 700,000 5/9/07 $0.240 nil 12 months after employment
date
nil
J. Price 600,000 5/9/07 $0.240 nil Issuer Conversion Right available
on Convertible Notes
nil
J. Price 700,000 5/9/07 $0.240 nil VWAP of Ordinary Shares is 70c
for 5 consecutive days
nil
The Issuer Conversion Right on the Convertible Notes requires that nine months elapse from the issue of
the Convertible Notes (ie. from 27 August 2007 to 27 May 2008) and that the share price is 37.5c or
higher for 20 consecutive trading days.
Of the shares disclosed above, the percentage that vested in the financial year and the percentage
forfeited are set out below.
Name Year granted Vested
%
Forfeited
%
Unvested
S. Brodie 2008 - - 100%
W. A. Labuschagne 2008 - - 100%
J. Price 2008 - - 100%
Options
Options are issued to directors and executives as part of their remuneration. The options are not
generally issued based on individual performance criteria. In the main options are issued to directors
and executives of Norton Gold Fields Limited and its subsidiaries to better align the interests of
executives and directors with the interest of shareholders.
Details of options over ordinary shares in the Company provided as remuneration to each director of
Norton Gold Fields Limited and each of the key management personnel of the parent entity and the
Group are set out on the table over the page. When exercisable, each option is convertible into one
ordinary share of Norton Gold Fields Limited. Further information on the options are set out in Note 25
and Note 27 to the financial statements.
Page 14 of 78
Granted No.
Grant
Date
Value per
Option at
Grant Date
$
Vested at
30 Jun 2008 Vesting Conditions
Exercise
Price
$ Expiry
2008
J. Parker 3,000,000 23/8/07 $0.084 3,000,000 Ordinary Share price
reaches $0.20
$0.12 6 mths post
cessation of
appointment
J. Parker 2,000,000 23/8/07 $0.063 2,000,000 Ordinary Share price
reaches $0.30
$0.20 6 mths post
cessation of
appointment
W. A.
Labuschagne
500,000 1/12/07 $0.297 nil Six months from
grant date
$0.40 nil
W. A.
Labuschagne
500,000 1/12/07 $0.297 nil Twelve months from
grant date
$0.40 nil
2007
A. Anthony
McLellan
3,000,000 14/4/07 $0.045 3,000,000 Ordinary Share price
reaches $0.20
$0.12 6 mths post
cessation of
appointment
A. Anthony
McLellan
2,000,000 14/4/07 $0.034 2,000,000 Ordinary Share price
reaches $0.30
$0.20 6 mths post
cessation of
appointment
All options were granted for nil consideration. Options carry no dividend or voting rights. When
exercisable, each option is convertible into one ordinary share.
Options granted during the year were part of remuneration. The number of options over ordinary
shares in the Company held during the financial year by key management personnel of the Group,
including personally related entities, are set out below.
Name Balance at
start of year
Granted
during
the year
Exercised
during
the year
Balance at
end of
the year
Vested and
exercisable at
end of year
2008
Directors
A. Anthony McLellan 5,000,000 - - 5,000,000 5,000,000
Jon Parker - 5,000,000 (3,000,000) 2,000,000 2,000,000
A. Timothy Prowse 8,680,000 - - 8,680,000 8,680,000
Mark McCauley - - - - -
Ian McCauley - - - - -
Senior management
Simon Brodie - - - - -
W. Andre Labuschagne - 1,000,000 - 1,000,000 -
Jonathan Price - - - - -
Total
13,680,000
6,000,000
(3,000,000)
16,680,000
15,680,000
* No options were granted between the end of the financial year and the date of this report.
Page 15 of 78
Name Balance at
start
of year
Granted
during
the year
Resignation
during
the year
Balance at
end
of year
Vested and
exercise able
at end of year
2007
Directors
A. Anthony McLellan - 5,000,000 - 5,000,000 5,000,000
A. Timothy Prowse 8,680,000 - - 8,680,000 8,680,000
Jack Tan 2,905,200 - (2,905,200) - -
Jon Parker - - - - -
Total
11,585,200
5,000,000
(2,905,200)
13,680,000
13,680,000
Shares Issued on Exercise of Compensation Options
Options exercised during the financial year that were granted as compensation in current or prior
periods:
No. of Ordinary
Shares Issued
Amount Paid per Share Amount Unpaid
per Share
Key Management Personnel
J. Parker 3,000,000 $0.12 -
The value of these options, which were exercised on 31 August 2007, was $0.13 per share. The options
disclosed above, the percentage that vested in the financial year and the percentage forfeited are
set out below.
Year granted
Vested
%
Forfeited
%
Total value of
grant unvested
J. Parker 2008 100% - -
W. A. Labuschagne 2008 - - 100%
A. Anthony McLellan 2007 100% - -
The assessed fair value at grant date of options granted to individuals is allocated equally over the
period from grant date to vesting date, and the amount is included in the remuneration tables above.
Fair values at grant date are independently determined using a binomial option pricing model that
takes into account the exercise price, the terms 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. Details are available in Notes 27 and 37 of the financial
report.
The audited section of the Remuneration Report ends here.
Page 16 of 78
Shares under option
Unissued ordinary shares of Norton Gold Fields Limited under option at the date of this report are as
follows:
Date options
granted
Vesting date Expiry date Exercise price Number
under option
25/2/2005 25/2/2005 8/8/2010 $0.20 9,526,800
30/4/2005 30/4/2005 8/9/2010 $0.20 2,094,800
17/6/2005 17/6/2005 8/8/2010 $0.20 6,013,200
15/9/2005 15/9/2005 8/10/2010 $0.20 8,281,400
14/11/2006 14/4/2007 6mths after termination $0.12 3,000,000
14/11/2006 14/4/2007 6mths after termination $0.20 2,000,000
23/8/2007 When VWAP* equals $0.30 or
6 months after grant
earlier of 6mths after
termination or 8 September
2010
$0.20 2,000,000
24/8/2007 24/8/2007 24/8/2009 $0.20 1,570,000
27/8/2007 27/8/2007 27/8/2009 $0.20 35,386,528
1/12/2007 1/7/2008 nil $0.40 500,000
1/12/2007 1/1/2009 nil $0.40 500,000
15/3/2008 15/3/2009 15/3/2010 $0.50 700,000
71,572,728
*VWAP means the volume weighted average trading price of Shares on ASX over a five business day period. No
option holder has any right under the options to participate in any other share issue of the Company or any other
entity.
Shares issued on the exercise of options
The following ordinary shares of Norton Gold Fields Limited were issued during the year ended 30 June
2008 on the exercise of options. No further shares have been issued since that date. No amounts are
unpaid on any of the shares.
Date options granted Issue price of shares Number of
shares issued
25/2/2005 $0.20 100,000
30/4/2005 $0.20 830,200
17/6/2005 $0.20 680,000
15/9/2005 $0.20 12,000
14/11/2006 $0.20 800,000
23/8/2007 $0.12 3,000,000
5,422,200
Indemnification of directors and officers
The Company has entered into agreements to indemnify Directors and Company Secretary’s against
certain liabilities which they may incur as a result of, or by reason of (whether solely or in part) being or
acting as an officer of the Company. The agreement requires the Company to indemnify officers of
the Company to the maximum extent permitted by the Corporations Act 2001.
At the date of this report no amounts have been paid in relation to the indemnity of any Director or
officer of the Company and no contracts insuring officers of the Company have been entered into.
The Company does not provide an indemnity to any auditor.
Page 17 of 78
The Company has paid premiums to insure each of the Directors against liabilities for costs and
expenses incurred by them in defending any legal proceedings arising out of their conduct while
acting in the capacity of Directors of the Company. The policy requires that the premium paid be kept
confidential.
Proceedings on behalf of 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.
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.
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 are important.
Details of the amounts paid or payable to the auditor (BDO Kendalls) for audit and non-audit services
provided during the year are set out below.
The Board of Directors has considered the position and, in accordance with the advice received from
the Audit and Risk Management Committee, is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act
2001. The Directors are satisfied that the provision of non-audit services by the auditor, BDO Kendalls, as
set out below, did not compromise the auditor independence requirements of the Corporations Act
2001 for the following reasons:
• all non-audit services have been reviewed by the audit committee to ensure they do not
impact the impartiality and objectivity of the auditor
• none of the services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the
auditor’s own work, acting in a management or a decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risk and rewards.
During the year the following fees were paid or payable for services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
Page 18 of 78
Assurance services
2008 2007
$’000 $’000
1. Audit services
BDO Kendalls:
Audit and review of financial reports and other audit work
under the Corporations Act 2001 174 15
----------------- ----------------
Total remuneration for audit services 174 15
2. Non-audit services
BDO Kendalls:
Taxation advice 7 4
----------------- ----------------
Total remuneration for non-audit services 7 4
----------------- ----------------
Total remuneration for services 181 19
========== =========
Auditor’s independence declaration
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001
is set out on page 19.
Rounding of amounts
The Company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the
financial statements and Directors’ Report have been rounded to the nearest thousand dollars.
Auditor
BDO Kendalls continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
Jon Parker
Managing Director
Brisbane
14 August 2008
Page 19 of 78
DECLARATION OF INDEPENDENCE BY CHRISTOPHER SKELTON TO THE DIRECTORS OF NORTON GOLD FIELDS LIMITED
As lead auditor of Norton Gold Fields Limited for the year ended 30 June 2008, I declare that, to the best of my
knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Norton Gold Fields Limited and the entities it controlled during the year.
BDO Kendalls (QLD)
C J Skelton
Partner
Brisbane
Dated: 14 August 2008
BDO Kendalls (QLD)
Level 18, 300 Queen St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Phone 61 7 3237 5999
Fax 61 7 3221 9227
[email protected]
www.bdo.com.au
ABN: 70 202 702 402
Page 20 of 78
Corporate Governance Statement
Norton’s approach to corporate governance is to have a set of values and behaviours that ensure
transparency and fair dealing and protect stakeholder interests. The Board guides and monitors the
business and affairs of the Group on behalf of the shareholders by whom they are elected and to
whom they are accountable.
The ASX document, ‘Principles of Good Corporate Governance and Best Practice
Recommendations’ (‘Guidelines’) applying to listed entities was published in March 2003 by the ASX
Corporate Governance Council with the aim of enhancing the credibility and transparency of
Australia’s capital markets. The Board believes that the Company’s policies and practices comply
with the Guidelines, any divergence from the guide lines is detailed in the assessment below.
Principle 1 - Lay solid foundations for management and oversight
The Board’s primary role is the protection and enhancement of shareholder value. The Board takes
responsibility for the overall operation and stewardship of the Company, which includes overseeing
Norton’s corporate governance program. The Board Charter sets out the following responsibilities of
the Board:
• Input into and approving the strategic direction of the Company
• Approving and monitoring budgets and capital expenditure
• Monitoring of financial performance, including the review and approval of significant financial
and other reporting
• Reviewing and ratifying the systems in place that manage the material risks to the Company
• Appointing, remunerating, removing and setting succession policies for the Managing Director,
Directors and senior executives
• Establishing and monitoring the achievement of management’s goals
• Encouraging ethical behaviour throughout the organisation.
The Board has delegated responsibility for the operation and administration of the Company to the
Managing Director and the executive management team. The Managing Director is accountable to
the Board for the authority that is delegated by the Board. The Board Charter supports all delegations
of responsibility. The Board has formally defined the specific functions reserved for the Board and its
committees, and those matters delegated to management.
Principle 2 - Structure the Board to add value
The Corporate Governance Charter requires the Board to comprise a minimum of three Directors, at
least half of which must be non-executive. It also requires the Chairman to be independent. The
Directors believe that the current four member composition of the Board adds value by ensuring
there is a broad range of experience, expertise, skills, qualifications and contacts relevant to the
size, scale and business of the Company. The roles of Chairman (A. Anthony McLellan) and
Managing Director (Jon Parker) are not exercised by the same individual. The Corporate Governance
Charter sets out a Corporate Code of Conduct. Norton’s Board evaluates directors’ actions against
that code.
Norton’s Board currently performs the functions of a nomination committee and where necessary will
seek the advice of external advisors in relation to this role. Norton’s Board shall, upon Norton reaching
the requisite corporate and commercial maturity, approve the constitution of a nomination
committee to assist the Board in relation to the appointment of Directors and senior management
The Audit and Risk Management Committee has two members who are non-executives. Norton is of
the view that this structure is suitable for the effective discharge of the responsibilities of the Audit and
Risk Management Committee. The Chairman (Mark McCauley) is an independent director and is not
the Chairman of Norton’s Board.
The Board has determined that all Non-executive Directors, including the Chairman, are independent
Page 21 of 78
and free of any relationship which may conflict with the interests of the Company. The Board defines
‘independence’ in accordance with the ASX Recommendations. In order to ensure that any
‘interests’ of a Director in a matter to be considered by the Board are known by each Director, each
Director has contracted with the Company to disclose any relationships, duties or interests held that
may give rise to a potential conflict. Directors are required to adhere strictly to constraints on their
participation and voting in relation to any matters in which they may have an interest.
Norton has a process to educate new directors about the nature of the business, current issues, the
corporate strategy and the expectations of Norton concerning the performance of directors.
Directors visit Norton’s mining operations and meet with management to gain a better understanding
of the business on a regular basis. During 2008 the Board and Audit and Risk Management Committee
visited Paddington on several occasions.
Directors are given access to continuing education opportunities to update and enhance their skills
and knowledge. Directors have right of access to all relevant Company information and to the
Company’s executives and, subject to prior consultation with the Chairman , may seek independent
advice from a suitably qualified adviser at Norton’s expense.
Principle 3 - Promote ethical and responsible decision making
The Board has adopted a code of ethics and values and a code of conduct for transactions in
securities as part of the Corporate Governance Charter. The purpose of these codes is to guide
Directors in the performance of their duties and to define the circumstances in which both they
and management, and their respective associates, are permitted to deal in securities.
The Board will ensure that restrictions on dealings in securities are strictly enforced. Both codes
have been designed with a view to ensuring the highest ethical and professional standards, as well
as compliance with legal obligations, and therefore compliance with the Guidelines.
Principle 4 - Safeguard integrity in financial reporting
An audit and risk management committee has been established by the Board and is governed by its
own charter. The Managing Director and Chief Financial Officer have each declared in writing to the
Board that the financial records of the Company for the year have been properly maintained and
present a true and fair view of the Company’s financial condition and operation results, in
accordance with the Corporations Act and the relevant accounting standards. In addition the Audit
Committee is charged with the responsibility of assisting the Board in ensuring and monitoring the
financial risks of the Company. The Committee reviews and assesses the adequacy of the Company’s
internal control and financial risk management systems, and accounting and business policies. The
Committee is given further assurance on the Company’s financial risk management systems through
Norton’s independent audit function (see Principle 7). The members of the Committee and its
function are disclosed under Principle 2 of this statement.
Principle 5 - Make timely and balanced disclosure
Norton is committed to providing relevant up-to-date information to its shareholders and the broader
investment community in accordance with the continuous disclosure requirements under the ASX
Listing Rules and the Corporations Act. The Board has implemented a continuous disclosure process to
ensure that information considered material by the Company is immediately lodged with the ASX.
Other relevant information, including Company presentations and updates by senior management, is
also disclosed to the ASX and on the Company website. The Norton website contains recent and
historical information, including ASX announcements, financial reports and presentations.
Page 22 of 78
Principle 6 - Respect the rights of shareholders
The Board in adopting a continuous disclosure process ensures that shareholders are provided with upto-
date Company information. Communication to shareholders is facilitated by the production of the
annual report, quarterly reports, public announcements, and the posting of ASX releases on Norton’s
website immediately after their disclosure to ASX. In addition, all shareholders are encouraged to
attend the AGM and use the opportunity to ask questions. The Company makes every endeavour to
respond to all questions. The external auditor attends the meeting and is available to answer questions
in relation to the conduct of the audit. The Board and senior management also respond to a range of
shareholder enquiries through a variety of means, including telephone, email, facsimilie and in writing.
The Board has adopted an internal communication strategy. A summary of the strategy is described
above.
Principle 7 - Recognise and manage risks
The Board and the Audit and Risk Management Committee will constantly seek to identify, monitor
and mitigate risk. Internal controls will be monitored on a continuous basis and, wherever possible
improved. The issue of risk management is formalised in the Corporate Governance Charter (which
the Directors believe complies with the Guidelines in relation to risk management) and the charter for
the audit and risk management committee and will continue to be kept under regular review by the
Board.
The Charter of the Audit and Risk Management Committee requires the Managing Director to state in
writing to the Board that the Group’s risk management and internal compliance and control system
is operating efficiently and effectively in all material respects.
Principle 8 - Encourage enhanced performance
The Corporate Governance Charter requires individual performance review and evaluation to be
conducted formally on an annual basis. As a nominations committee has not been appointed, this
review is conducted by the Board. The Board acknowledges that performance can always be
enhanced and will continue to seek and consider ways of further enhancing performance both
individually and collectively.
The criterion for the evaluation of each Director is their contribution to specific Board objectives,
including the following:
• Setting corporate strategies
• Identification, analysis and responses to risks and issues
• Monitoring of the Company’s progress against its business objectives
• Understanding and analysis of the Board papers presented by management
• Use of industry, financial and broad knowledge to add value to the deliberations of the Board.
In addition the Board monitors and evaluates the performance of the Managing Director and other
senior executives as appropriate. Further details in relation to Director and executive performance are
set out in the Remuneration Report on pages 8 to 15.
Principle 9 - Remunerate fairly and responsibly
The total annual remuneration paid to Non-executive Directors may not exceed the limit set by the
shareholders at an annual general meeting (currently $400,000). The remuneration of the Nonexecutive
Directors is fixed rather than variable. In relation to executive remuneration, the Board takes
advice regarding the nature and direction for the Company’s remuneration practices. The Board
ensures that a significant proportion of each senior manager’s remuneration is linked to his or her
performance and the Company’s performance. Performance reviews are conducted regularly to
determine the proportion of remuneration that will be ‘at risk’ for the upcoming year. Norton executives
participate in an option scheme that is linked to Nortons’s shares performance. Remuneration is also
benchmarked against the Company’s peers in the resources industry. Further details in relation to
Director and executive remuneration are set out in the Remuneration Report on pages 8 to 15.
Page 23 of 78
Principle 10 - Recognise the legitimate interests of stakeholders
Norton takes its responsibility to its stakeholders seriously. In addition to the policies and values
described under Principle 3, Norton has adopted a number of policies that address the interests of all
stakeholders, including the Code of Conduct, equal opportunity policy, environmental policy,
community relations policy and health and safety policy, to ensure all stakeholder interests are
recognised. In addition, the interests of stakeholders at our sites are specifically considered to ensure
that our business is conducted having regard to the local communities and to the environment in the
areas in which we operate. The Board believes that the Group and its policies and practices comply
with the Guidelines in this area.
Norton Gold Fields Limited
Income statements
For the year ended 30 June 2008
Page 24 of 78
Notes Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Revenue 4 115,002 709 3,354 35
Mining expenses (26,089) (811) - (5)
Milling expenses (29,451) (23) - -
Maintenance (8,964) - - -
Technical and support services (10,874) - - -
Selling expenses (4,286) - - -
Administration and corporate
expenses 5 (5,164) (600) (1,959) (329)
Professional and consulting fees (2,251) (179) (458) (21)
Impairment of assets 5 (313) (3,971) - (5,546)
Other expenses (1,108) (509) (244) (201)
Earnings/(losses) before interest, tax,
depreciation and amortisation 26,502 (5,384) 693 (6,067)
Depreciation and amortisation
expense 5 (4,679) (198) (7) -
Earnings/(losses) before interest and
tax 21,823 (5,582) 686 (6,067)
Fair value movement of gold put
options (2,151) - (2,151) -
Financing costs 5 (4,269) (130) (4,237) (89)
Profit/(Loss) before income tax 15,403 (5,712) (5,702) (6,156)
Income tax (expense)/benefit 6 (6,165) 1,103 545 -
Profit/(Loss) after income year 9,238 (4,609) (5,157) (6,156)
Cents Cents
Basic earnings/(loss) per share (cents) 36 2.85 (6.60)
Diluted earnings/(loss) per share
(cents) 36 2.38 (6.60)
The above income statements should be read in conjunction with the accompanying notes.
Norton Gold Fields Limited
Balance Sheets
As at 30 June 2008
Page 25 of 78
Note Consolidated
Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Current Assets
Cash and cash equivalents 7 26,944 3,728 26,089 -
Receivables 8 7,443 75 593 20
Inventories 9 19,604 - - -
Deferred tax asset 10 4,656 - 3,410 -
Derivative financial instruments 11 407 - 407 -
Total Current Assets 59,054 3,803 30,499 20
Non-Current Assets
Receivables 12 - - 9,314 6,395
Deferred tax asset 10 37,494 - 15,530 -
Derivative financial instruments 11 1,211 - 1,211 -
Other financial assets 13 - - 45,690 563
Exploration costs and purchased mine
properties
14 61,841 2,095 - -
Capitalised mining costs 15 14,287 3,534 - -
Property, plant and equipment 16 9,200 506 1,661 -
Other assets 17 16,036 5,345 16,000 5,309
Total Non-Current Assets 140,069 11,480 89,406 12,267
Total Assets 199,123 15,283 119,905 12,287
Current Liabilities
Trade and other payables 18 26,467 386 2,334 166
Borrowings 19 416 538 10,651 -
Provisions 20 4,009 - - -
Deferred tax liability 23 2,490 - 174 -
Derivative financial instruments 11 9,044 - 9,044 -
Total Current Liabilities 42,426 924 22,203 166
Non-Current Liabilities
Borrowings 21 35,291 8,089 35,291 8,089
Provisions 22 21,726 80 2 -
Deferred tax liabilities 23 21,975 1,257 - -
Derivative financial instruments 11 45,342 - 45,342 -
Total Non-Current Liabilities 124,334 9,426 80,635 8,089
Total Liabilities 166,760 10,350 102,838 8,255
Net Assets 32,363 4,933 17,067 4,032
Equity
Contributed equity 25 60,395 10,049 60,395 10,049
Reserves 26 (31,946) 208 (31,946) 208
Retained earnings/(Accumulated losses) 26 3,914 (5,324) (11,382) (6,225)
Total Equity 32,363 4,933 17,067 4,032
The above balance sheets should be read in conjunction with the accompanying notes.
Norton Gold Fields Limited
Statements of recognised income and expense
For the year ended 30 June 2008
Page 26 of 78
Notes Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Total equity at the beginning of the year 4,933 9,254 4,032 9,900
Net cash flow hedges
– gain/(loss) taken to equity
26 (38,070) - (38,070) -
Profit/(Loss) for the year 9,238 (4,609) (5,157) (6,156)
Total recognised income and expense for
the year
(23,899) (4,645) (39,195) (3,744)
Non-cash share based payments 26 5,916 208 5,916 208
Convertible Note equity component 25 1,109 - 1,109 -
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of transaction
costs and deferred tax
25 49,237 80 49,237 80
Total equity at the end of the year 32,363 4,933 17,067 4,032
The above statements of recognised income & expense should be read in conjunction with the
accompanying notes.
Norton Gold Fields Limited
Cash flow statements
For the year ended 30 June 2008
Page 27 of 78
Notes Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Cash flows from operating activities
Receipts in the course of operations 111,783 820 - -
Payments in the course of operations (70,386) (1,792) (764) (223)
Interest received 2,194 99 814 35
Hedge loss (4,884) - (4,884) -
Interest and borrowing costs paid (3,834) (42) (3,802) -
Other receipts 260 - - -
Net cash (used in)/provided by operating
activities 35 35,133 (915) (8,636) (188)
Cash flows from investing activities
Payments for plant and equipment (3,606) (1) (1,596) -
Receipts on disposal of plant and
equipment 11 - 3 -
Exploration and mine development costs (24,079) (256) - -
Acquisition of Paddington Gold Mine, net
of cash acquired and costs (33,285) (284) (33,285) -
Payment for deposit – Paddington Gold
Mine - (5,000) - -
Cash collateral for security deposits on
environmental bonds (16,000) (25) (16,000) -
Acquisition of Mount Morgan assets (4,525) - - -
Net cash used in investing activities (81,484) (5,566) (50,878) -
Cash flows from financing activities
Proceeds from issue of shares 36,898 80 36,898 80
Proceeds from issue of convertible notes 40,000 - 40,000 -
Ordinary share and convertible notes issue
costs paid (3,440) - (3,440) -
Payment for gold put options (3,769) - (3,769) -
Proceeds from borrowings - 8,000 - -
Repayment of borrowings (122) (169) - -
(Loans to)/received from related entities - - 15,914 (2,064)
Net cash /(used in)/provided by financing
activities 69,567 7,911 85,603 (1,984)
Net increase/(decrease) in cash held 23,216 1,430 26,089 (2,172)
Cash and cash equivalents at the
beginning of the year 3,728 2,298 - 2,172
Cash and cash equivalents at the end of
the year 7 26,944 3,728 26,089 -
The above cash flow statements should be read in conjunction with the accompanying notes.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 28 of 78
1. Corporate Information and Summary of Significant Accounting
Policies
Corporate Information
The financial report includes separate financial statements for Norton Gold Fields Limited as an
individual entity and the consolidated entity consisting of Norton Gold Fields Limited and its
controlled entities. Norton Gold Fields Limited is a listed public company limited by shares,
incorporated in Australia, whose shares are publicly traded on the Australian Securities Exchange.
The financial report for the year ended 30 June 2008 was authorised for issue in accordance with a
resolution of Directors on 14 August 2008.
Summary of Significant Accounting Policies
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian
Accounting Standards, including Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report is presented in Australian dollars. The accounts are prepared on a going
concern basis. Ounces (oz) referred to in this document are troy ounces, where one ounce is
approximately 31.103 grams.
Compliance with IFRSs
Australian Accounting Standards include Australian equivalents to International Financial
Reporting Standards (AIFRS). Compliance with AIFRS’s ensures that the financial statements and
notes of Norton Gold Fields Limited comply with International Financial Reporting Standards
(IFRS).
Historical cost convention
The financial report has been prepared on an accruals basis and is based on historical cost,
modified where applicable by the measurement at fair value of the selected non-current assets,
financial assets and financial liabilities.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Company’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 2.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform
to changes in presentation for the current financial year.
Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Class Order 98/100 and
accordingly, amounts in the financial report and directors’ report have been rounded off to the
nearest thousand dollars ($’000).
The principal accounting policies adopted in the preparation of the financial report are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 29 of 78
(b) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all controlled entities
of Norton Gold Fields Limited (“Company” or “parent entity”) as at 30 June 2008 and the results of
all subsidiaries for the year then ended. Norton Gold Fields Limited and its subsidiaries together are
referred to in the financial report as the Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the
power to govern the financial and operating policies, generally accompanying a shareholding of
more than one-half of the voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group controls
another entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases. A list of all controlled
entities is contained in Note 33.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
Group (refer to Note 1(i)).
Intercompany transactions, balances and unrealised gains or losses on transactions between
Group companies are eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.
(c) Segment reporting
A business segment is a group of assets and operations engaged in providing products or
services that are subject to risks and returns that are different to those of other business
segments. A geographical segment is engaged in providing products or services within a
particular economic environment and is subject to risks and returns that are different from those
of segments operating in other economic environments.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional
currency’). The consolidated financial statements are presented in Australian dollars, which is
Norton Gold Fields Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement.
(e) Revenue recognition
Fine gold metal and fine silver metal revenue is measured at the fair value of the consideration
received or receivable at the prevailing spot price. Revenue is recognised when the significant
risks and rewards of ownership have passed to the buyer and can be reliably measured. Risks
and rewards are considered passed to the buyer at the time of instructing AGR Matthey to sell
the 99.9% pure gold or silver from our fine metal account.
Gold-in-circuit and gold doré bar inventory is estimated at each period end. The variation in
movement during the period is recognised as “Other revenue”.
Interest revenue is recognised on a time proportional basis that takes into account the effective
yield on the financial asset.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 30 of 78
(f) Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s
taxable income based on the national income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences between the
tax bases of assets and liabilities and their carrying amounts in the financial statements, and to
unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates
expected to apply when the assets are recovered or liabilities are settled, based on those tax
rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or
liability is recognised in relation to these temporary differences if they arose in a transaction,
other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses
only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the
carrying amount and tax bases of investments in controlled entities where the parent entity is
able to control the timing of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
Tax consolidation legislation
Norton Gold Fields Limited and its wholly owned Australian controlled entities have decided not
to implement the tax consolidation legislation. Norton Gold Fields Limited and its wholly owned
Australian controlled entities have significant tax losses. Deferred tax balances are recognised in
those entities where the recovery of losses (and temporary differences) is probable.
(g) Inventories
Inventories are measured at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and conditions are accounted for
as follows:
• consumable stores and spares – purchase cost on weighted average cost;
• gold in circuit and in transit – cost of direct material and labour and a proportion of
manufacturing overhead based on normal operating capacity; and
• ore stockpiles – cost of direct material and labour and a proportion of manufacturing
overhead based on normal operating capacity.
(h) Leases
Leases of property, plant and equipment where the Group has substantially all the risks and
rewards of ownership are classified as finance leases.
Finance leases are capitalised at the lease’s inception at the lower of the fair value of the
leased property and the present value of the minimum lease payments, including any
guaranteed residual values. The corresponding rental obligations, net of finance charges, are
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 31 of 78
included in liabilities. Each lease payment is allocated between the liability and finance charges
so as to achieve a constant rate on the finance balance outstanding. The interest element of
the finance cost is charged to the income statement over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance leases is depreciated over the
estimated useful life of the asset. Where there is no reasonable certainty that the lessee will
obtain ownership, the asset is depreciated over the shorter of the lease term and the asset’s
useful life.
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the income statement on a straight-line basis
over the lease term.
(i) Acquisitions of assets
The purchase method of accounting is used to account for all acquisitions of assets (including
business combinations) regardless of whether equity instruments or other assets are acquired.
Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or
assumed at the date of exchange plus costs directly attributable to the acquisition. Where
equity instruments are issued in an acquisition, the value of the instruments is their published
market price as at the date of exchange unless, in rare circumstances, it can be demonstrated
that the published price at the date of exchange is an unreliable indicator of fair value and that
other evidence and valuation methods provide a more reliable measure of fair value.
Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date, irrespective of the
extent of any minority interest. The excess of the cost of acquisition over the fair value of the
Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement, but only after a reassessment of the identification
and measurement of the net assets acquired.
Where settlement of any part of the debt is deferred, the amounts payable in future are
discounted to present value at the date of exchange using the entity’s incremental borrowing
rate as the discount rate.
(j) Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purpose of assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For the purposes of
assessing impairment, where it is not possible to estimate recoverable amount for an individual
asset, assets are grouped at the lowest levels for which there are separately identifiable cash
flows (cash generating units).
(k) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that are
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 32 of 78
readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
(l) Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost, less provision for doubtful debts. Trade and other receivables are due for
settlement no more than 30 days from the date of recognition.
Collectibility of trade and other receivables is reviewed on an ongoing basis. Debts, which are
known to be uncollectible, are written off. An allowance for doubtful receivables is established
when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables. The amount of the provision is the difference
between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the effective interest rate. The amount of the allowance is recognised in the
income statement.
(m) Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction
costs, when the related contractual rights or obligations exist. Subsequent to initial recognition
these instruments are measured as set out below.
(i) Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise when the Group provides money, goods or
services directly to a debtor with no intention of selling the receivable. They are included in
current assets, except for those with maturities greater than 12 months after the balance sheet
date, which are classified as non-current assets.
(ii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities that the Group’s management has the positive intention and
ability to hold to maturity. These instruments were measured at amortised cost using the effective
interest rate method.
(iii) Available-for-sale financial assets
Available-for-sale financial assets include any financial assets not included in the above
categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and
losses arising from changes in fair value are taken directly to equity.
(iv) Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less
principal payments and amortisation.
Impairment
An assessment is made at each balance sheet date to determine whether there is objective
evidence that a specific financial asset or a group of financial assets may be impaired. If such
evidence exists, the estimated recoverable amount of that asset is determined by publicly
available information such as quoted market prices or by calculating the net present value of
future anticipated cash flows. In estimating these cash flows, management makes judgements
about a counterparty's financial situation and the net realisable value of any underlying
collateral.
In addition to an allowance account for specific provisions against individually significant
financial assets the Group also makes a collective allowance on portfolios of similar assets, that
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 33 of 78
are individually insignificant, for impairment losses that have been incurred but not yet identified.
On confirmation that the financial asset will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Financial assets are grouped on the basis of similar credit risk characteristics that are indicative of
the debtors' ability to pay all amounts due according to the contractual terms and the collective
impairment provision is estimated for any such group where credit risk characteristics of the
group of financial assets has deteriorated. Factors such as any deterioration in country risk,
industry performance, technological obsolescence as well as identified structural weaknesses or
deterioration in cash flows are taken into consideration and the amount of the provision is based
on the historical loss pattern within each group, adjusted to reflect current economic change.
Impairment losses on assets measured at amortised cost using the effective interest rate method
are calculated by comparing the carrying value of the asset with the present value of estimated
future cash flows at the original effective interest rate. Losses are recognised in the income
statement and interest on the impaired asset continues to be recognised as part of the
unwinding of the discount.
Where there is objective evidence that an available for sale financial asset is impaired (such as a
significant or prolonged decline in the fair value of an available for sale financial asset) and the
previous decline in the fair value of the asset has been recognised in equity the cumulative loss
that has been recognised in equity is transferred to the income statement. The cumulative loss
transferred is the difference between the cost of acquisition and the current fair value of the
asset included in equity. When a subsequent event reduces the impairment of an available for
sale debt security the impairment loss is reversed through the income statement. When a
subsequent event reduces the impairment of an available for sale equity instrument the
impairment loss is reversed through equity.
Derivative Instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at each reporting date. The accounting for
subsequent changes in fair value depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The Group designates derivatives as:
• Hedges of the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges).
The Group documents at the inception of the hedging transaction the relationship between
hedging instruments and hedge items, as well as its risk management objective and strategy for
undertaking various hedge transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions have been and will continue to be highly effective in offsetting changes in cash flows
of hedged items.
Trading derivatives are classified as current assets. The fair value of all derivatives are determined
with reference to publicly disclosed gold curve information. The value attached to the
derivatives coincides with the maturity dates of the derivatives and this value is then discounted
back using the base rate of interest as published by the Reserve Bank.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify
as cash flow hedges is recognised in equity in the derivative reserve. The gain or loss relating to
the ineffective portion is recognised immediately in the income statement within other income or
other expense.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 34 of 78
Amounts accumulated in the hedge reserve in equity are transferred to the income statement in
the periods when the hedged item will affect profit or loss (for instance when the forecast sale
that is hedged takes place).
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time
remains in equity and is recognised when the forecast transaction is ultimately recognised in the
income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement.
Share Capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not
meet the definition of a financial liability. The Group considers its ordinary share capital, reserves
and accumulated retained earnings as capital.
(n) Convertible Notes
The component of Convertible Notes that exhibits the characteristics of a liability is recognised as a
liability in the balance sheet.
On issuance of the convertible note, the fair value of the liability component is determined using a
market rate for an equivalent non-convertible bond and this amount is carried as a long term
liability on the amortised cost basis until extinguished on conversion.
The remainder of the proceeds is allocated to the conversion option that is recognised and
included in shareholders’ equity where material.
Issue costs are apportioned between the liability and equity components based on the allocation
of proceeds to the liability and equity components when the instruments are first recognised.
The carrying amount of the conversion option is not remeasured in subsequent years. Interest on
the liability component of the convertible note is recognised as an expense in the income
statement.
(o) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market prices at
the balance sheet date. The quoted market price used for financial assets held by the Group is
the current bid price; the appropriate quoted market price for financial liabilities is the current
ask price.
The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety
of methods and makes assumptions that are based on market conditions existing at each
balance date. Quoted market prices or dealer quotes for similar instruments are used for
long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are
used to determine fair value for the remaining financial instruments. The fair value of forward
exchange contracts is determined using forward exchange market rates at the balance sheet
date.
The nominal value less estimated credit adjustments of trade receivables and payables are
assumed to approximate their fair values. The fair value of financial liabilities for disclosure
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 35 of 78
purposes is estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Group for similar financial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short-term nature. The fair value of financial liabilities for
disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar financial instruments.
(p) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation and where
applicable impairment losses. Historical cost includes expenditure that is directly attributable to
the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement during the financial period in which they
are incurred.
Depreciation of assets is calculated on a straight line method to allocate their cost, net of their
residual values, over their estimated useful lives. The depreciation rates used for each class of
depreciable asset are:
Plant and equipment 8% - 60%
Land and Buildings 2.5% - 10%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (Note 1(j)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount.
These are included in the income statement.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not
in excess of the recoverable amount from these assets. The recoverable amount is assessed on
the basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values
in determining recoverable amounts.
(q) Exploration and evaluation costs
Exploration and evaluation costs incurred by or on behalf of the Group are accumulated
separately for each area of interest. The costs are carried forward where such costs are expected
to be recouped through successful development, or by sale, where exploration and evaluation
activities have not, at balance date, reached a stage to allow a reasonable assessment to be
made regarding the existence of economically recoverable reserves. The realisation of the value
of costs carried forward depends upon any commercial results that may be obtained through
successful development and exploitation of the area of interest or alternatively by its sale. If an
area of interest is abandoned or is considered to be of no further commercial interest the
accumulated exploration costs relating to the area are written off against income in the year of
abandonment.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 36 of 78
When production commences, the accumulated costs for the relevant area of interest are
amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves and resources.
A regular review is undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
(r) Rehabilitation provision
Provisions are made for mine rehabilitation and restoration. The present value of estimated
restoration obligations is recognised at commencement of the mining operations where a legal or
constructive obligation exists at that time. At each reporting date the expected rehabilitation
liability is remeasured in line with changes in discount rates and timing or amount of the costs to be
incurred.
Costs of site restoration are provided over the life of the facility from when exploration commences
and are included in the costs of that stage. Site restoration costs include the dismantling and
removal of mining plant, equipment and building structures, waste removal, and rehabilitation of
the site in accordance with clauses of the mining permits. Such costs have been determined using
estimates of future costs, current legal requirements and technology on an undiscounted basis.
(s) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of the year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition.
(t) Employee benefits
(i) Wages and salaries, annual and sick leave
Liabilities for wages and salaries, including non-monetary benefits expected to be settled within
12 months of the reporting date are recognised in the provision for employee benefits in respect
of employees' services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled. Amounts of unpaid annual leave are disclosed as other
current payables. Liabilities for non-accumulating sick leave are recognised when the leave is
taken and measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and
measured as the present value of expected future payments to be made in respect of services
provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields
at the reporting date on national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
(iii) Superannuation
The Group makes contributions to accumulation superannuation funds. Contributions are
recognised as an expense as they become payable.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via the Norton Gold Fields
Limited Employee Share Ownership Plan (for shares) and the Employee Share Option Plan (for
options). Information relating to these schemes are set out in Note 37.
The fair value of share or options granted under the Employee Share Ownership Plan or
Employee Share Option Plan is recognised as an employee benefit expense with a
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 37 of 78
corresponding increase in equity. The fair value is measured at grant date and recognised over
the period during which employees become unconditionally entitled to the shares or options.
The fair value at grant date for shares is determined by the market price at that date. The fair
value for options is independently determined using an 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.
Where the terms of options are modified, the expense continues to be recognised from grant
date to vesting date as if the terms had never been changed. In addition, at the date of the
modification, a further expense is recognised for any increase in fair value of the transaction as a
result of the change.
Where options are cancelled, they are treated as if vesting occurred on cancellation and any
unrecognised expenses are taken immediately to the income statement. However, if new
options are substituted for the cancelled options and designated as a replacement on grant
date, the combined impact of the cancellation and replacement options are treated as if they
were a modification.
(v) Bonus plans
The Group recognises a liability and an expense for bonuses where contractually obliged or
where there is a past practice that has created a constructive obligation.
(u) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
(v) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders
of the Company, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the period, adjusted for bonus
elements in ordinary shares issued during the period.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(w) Borrowing costs
In general, borrowing costs are expensed. Borrowing costs in relation to business combinations
are included as the cost of consideration of the investment.
(x) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the
GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of
the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The
net amount of GST recoverable from, or payable to, the taxation authority is included with other
receivables or payables in the balance sheet.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 38 of 78
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the taxation authority,
are presented as operating cash flow.
(y) Mining tenements
Mining tenements have a finite useful life and are carried at cost less any accumulated
amortisation and impairment losses. The carrying values of mining tenements are reviewed to
ensure they are not in excess of their recoverable amounts. The recoverable amount is assessed
on the basis described in Note 1(j).
Amortisation of mining tenements commences from the date when commercial production
commences and is charged to the income statement as cost of sales. Mining tenements are
amortised over the life of the mine using a units of production method.
(z) Capitalisation and amortisation of mining costs
The Group’s policy for each mine is to capitalise all pre-strip costs of mining (ie. expenditure
incurred to access and produce ore) until the average strip ratio (ie. the total pit ratio of waste to
ore over the life of the pit) is achieved. The Concept to Closure committee creates
documentation for the basis of capitalisation.
Amortisation of capitalised pre-strip costs is based on gold ounces produced compared to total
expected gold production over the life of the mine. Adjustments to expected life of mine
production is taken up as an adjustment to the remaining amortisation rate. Potential
adjustments are reviewed on a quarterly basis.
(aa) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not
mandatory for 30 June 2008 reporting periods. The Company’s assessment of the impact of
these new standards and interpretations is set out below.
i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting
Standards arising from AASB8
AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or
after 1 January 2009. AASB 8 will result in a significant change in the approach to segment
reporting, as it requires adoption of a ‘management approach’ to reporting on financial
performance. The information being reported will be based on what the key decision
makers use internally for evaluating segment performance and deciding how to allocate
resources to operating segments
The Group has not yet decided when to adopt AASB 8. Application of AASB 8 may result in
different segments, segment results and different types of information being reported in the
segment note of the financial report. However, at this stage, it is not expected to affect
any of the amounts recognised in the financial statements.
ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting
Standards arising from AASB 123 [AASB 1, AASB 107, AASB 111, AASB 116 & AASB138 and
Interpretations 1 & 12]
The revised AASB 123 is applicable to annual reporting periods commencing on or after 1
January 2009. It has removed the option to expense all borrowing costs and – when
adopted – will require the capitalisation of all borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset. There will be no impact on the
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 39 of 78
financial report of the Group, as the Group already capitalises borrowing costs related to
qualifying assets.
iii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to
Australian Accounting Standards arising from AASB 101
A revised AASB 101 was issued in September 2007 and is applicable for annual reporting
periods beginning on or after 1 January 2009. It requires the presentation of a statement of
comprehensive income and makes changes to the statement of changes in equity, but will
not affect any of the amounts recognised in the financial statements. If an entity has made
a prior period adjustment or has reclassified items in the financial statements, it will need to
disclose a third balance sheet (statement of financial position), this one being as at the
beginning of the comparative period. The Group intends to apply the revised standard
from 1 July 2009.
iv) Re-issued AASB 3 Business Combinations
The revised standard introduces more detailed guidance on accounting for step
acquisitions, adjustments to contingent consideration, assets acquired that the purchaser
does not intend to use, reacquired rights and share-based payments as part of purchase
consideration. Also, all acquisition costs will have to be expensed instead of being
recognised as part of goodwill. This re-issued standard is not mandatory until reporting
periods commencing 1 July 2009. The Group will be most impacted with respect to
acquisition costs for any business combinations that occur post-1 July 2009. There is no
requirement to retrospectively apply this updated standard when it comes into force.
v) AASB 2008-1 Amendments to AASB 2 – Share-based Payments – Vesting Conditions and
Cancellations
The definition of vesting conditions has changed and the accounting treatment clarified
for cancellations to share-based payment arrangements by the counterparty. This is to
ensure that conditions other than performance conditions do not result in a ‘true up’ of the
share-based payment expense and are treated in a manner similar to market conditions.
This amendment applies to periods commencing on or after 1 January 2009.
To date the entity has not issued any shares or options to employees that include nonvesting
conditions and as such there will be no impact on the financial statements when
this revised standard is adopted for the first time.
vi) IAS 27 Consolidated and Separate Financial Statements, IAS 18 Revenue and IAS 36
Impairment of Assets
These standards, issued May 2008, are to be issued as AASBs in the near future. When
issued, these standards will apply for periods commencing on or after 1 January 2009. The
impact of the standards is the removal of the definition of the “cost method” in IAS 27,
meaning that pre and post-acquisition dividends no longer need to be differentiated and
all dividends are to be recognised as revenue. However, whenever a dividend is received
from a subsidiary, associate or jointly controlled entity, an impairment test will be required
under IAS 36 where there is an indicator for impairment.
2. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that may have a financial impact on
the entity and that are believed to be reasonable under the circumstances. The estimates and
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 40 of 78
judgements that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below.
Deferred exploration and evaluation
Exploration and evaluation assets are assessed for impairment when facts and circumstances
suggest that the carrying amount of deferred exploration and evaluation asset may exceed
recoverable amount. Management considers the facts and circumstances at each reporting
period that would indicate whether the consolidated entity should test deferred exploration and
evaluation assets for impairment.
Mine properties
Mine properties are assessed for impairment when facts and circumstances suggest that the
carrying amount of mine properties may exceed recoverable amount. Management considers
the facts and circumstances at each reporting period that would indicate whether the
consolidated entity should test mine properties for impairment.
Share based payments
AASB2 requires the calculation of the fair value of shares or options issued to staff and for that
amount to be expensed to the income statement (with corresponding credit to the share based
payment reserve) over the estimated life from grant date to vesting date. This necessitates the
estimate of vesting date where vesting is subject to market conditions or otherwise.
Rehabilitation Provision
Paddington Gold Pty Ltd is required by the West Australian Department of Industry and
Resources to ensure that appropriate rehabilitation is carried out on tenements that are mined.
The amount of rehabilitation cost is an estimate based upon the estimated life of each mined
tenement, as well as the future timing and cost of such rehabilitation. The provision is constantly
revised as information about the life of mine, depth of mining and cost estimates are updated.
Derivative Financial Instruments
The Group has forward gold hedge contracts and forward put options to partially mitigate the
risk in downward gold price movement. At each reporting date, the outstanding derivatives are
marked-to-market as an estimate of the future cost to settle such derivatives, based upon
parameters at balance date. As the underlying drivers for these estimate are constantly
changing, the reported derivative financial assets and liabilities are an estimate that may
materially change post balance date.
JORC Compliant Resources and Reserves affecting amortisation
Accounting policy 1(z) “Capitalisation and amortisation of mining costs” states that amortisation
in the period is based upon gold produced compared to total expected gold production over
the life of the mine. Total expected gold production is based upon the resources and reserves for
each mine. These resources and reserves are based upon a competent person evaluation which
is Joint Ore Reserve Committee (JORC) Code compliant. These estimates are updated as further
drilling and mining information becomes available. In addition, the life of each mine is assessed
on a quarterly basis by the Concept to Closure Committee. As a result, future amortisation rates
may increase or decrease dependent upon changes to a mine’s resources and reserves over
the life of that mine.
3. Segment information
The Group operates solely within one business segment and one geographical segment, being
gold, copper and coal exploration and mining in Australia.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 41 of 78
4. Revenue
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
From continuing operations
Sales revenue
Gold sales at spot 111,158 - - -
Gold hedging losses (4,884) - (4,884) -
Silver sales 625 - - -
Other mining sales - 600 - -
Total Sales Revenue 106,899 600 (4,884) -
Other revenue
Interest 2,776 99 1,396 35
Management fees (Note 32) - - 6,842 -
Gold in circuit and doré bar variation 5,067 - - -
Other 260 10 - -
Total Other Revenue 8,103 109 8,238 35
Total Revenue 115,002 709 3,354 35
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 42 of 78
5. Expenses
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Profit/(Loss) before income tax expense includes
the following specific expenses:
Depreciation of property, plant and
equipment 1,708 164 7 -
Amortisation of mine costs 2,113 34 - -
Amortisation of deferred exploration costs 858 - - -
Total depreciation and amortisation 4,679 198 7 -
Rental expense relating to operating
leases – minimum lease payments 31 18 31 -
Finance costs
Interest and finance charges
(unrelated parties) 4,269 130 4,237 89
Employee Benefits
Salaries, wages and on-costs including
Directors 11,625 352 1,052 121
Non-cash share based payments 1,722 208 769 208
Defined contribution superannuation
expense 1,004 40 138 -
Total employee benefits 14,351 600 1,959 329
Movement in Ore Stockpile inventory 25 - - -
Impairment of assets
Exploration written off 313 294 - -
Mine properties - 3,677 - -
Investments - - - 5,546
Total impairment loss 313 3,971 - 5,546
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 43 of 78
6. Income Tax
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Income tax expense/(credit)
Current tax 663 - - -
Deferred tax -
- origination and reversal of temporary
differences 6,120 (1,283) (257) -
- adjustments for previous years (330) 180 - -
- benefit of tax losses previously
unrecognised (288) - (288) -
Total income tax expense/(credit) in the
income statement (continuing operations) 6,165 (1,103) (545) -
Reconciliation of income tax expense to
prima facie tax
Profit/(Loss) before income tax expense 15,403 (5,712) (5,702) (6,156)
Tax expense/(credit) at 30% (2007: 30%) 4,621 (1,713) (1,710) (1,847)
Tax effect of amounts which are not
deductible (taxable) in calculating taxable
income
Non-deductible expenses:
Entertainment 8 - -
Share-based payments 1,067 47 366 47
Interest 1,087 - 1,087 -
Previously unrecognised tax losses now
recognised as deferred tax assets (288) - (288) -
6,495 (1,666) (545) (1,800)
Under/(over) provision in prior years (330) 180 - (155)
Deferred tax assets not recognised - 383 - 1,955
Income tax expense/(credit) at effective
rate of 40.0% (2007: 19.3%) 6,165 (1,103) (545) -
Deferred income tax recognised directly in
equity
Aggregate current and deferred tax arising
during the reporting period and not
recognised in profit and loss but directly
debited or credited to equity:
Deferred income tax on transaction costs
of issuing equity instruments 1,905 - 1,905 -
Net loss on revaluation of cash flow hedges 16,316 - 16,316 -
18,221 - 18,221 -
Deferred income tax
Deferred tax assets have not been
recognised in respect of the following:
Deductible temporary differences - 184 - 1,802
Tax losses - 834 - 129
- 1,018 - 1,931
Potential benefit at 30% (2007: 30%) - 305 - 579
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred
tax assets have not been recognised in respect of these items because it is not probable that future
taxable profit will be available against which the consolidated entity can utilise the benefits from the
deferred tax assets.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 44 of 78
7. Current Assets – Cash and Cash Equivalents
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Cash at bank and in hand 10,845 19 10,089 -
Deposits at call - 3,709 - -
Term Deposits 16,099 - 16,000 -
26,944 3,728 26,089 -
Cash at bank and deposits at call earns interest at floating rates based on daily bank deposit rates. The
interest rate was between 0.0% and 7.30% (2007 – 6.1% to 6.45%). The term deposits have fixed interest rates
between 7.87% and 8.23% have a weighted average maturity of 60 days.
8. Current Assets – Other Receivables
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Other receivables 6,418 66 11 20
Interest receivable 582 - 582 -
Prepayments 443 9 - -
7,443 75 593 20
Other receivables arise from usual operating activities of the Group and the majority is in relation
to outstanding refunds of input tax credits and diesel fuel rebates from the government. As such,
the Group believes the credit quality of these other receivables to be very high. These are noninterest
bearing and are generally on 30 day terms. The interest receivable is due from two major
financial institutions (National Australia Bank and Suncorp). None of these current assets are past
due.
9. Inventories
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Raw Materials and Stores 8,524 - - -
Provision for obsolescence (803) - - -
Ore Stockpile 3,722 - - -
Gold in circuit 2,197 - - -
Gold doré 5,964 - - -
19,604 - - -
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 45 of 78
10. Deferred Tax Asset
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Current 4,656 - 3,410 -
Non-current 37,494 - 15,530 -
42,150 - 18,940 -
Deferred tax assets are attributed to the
following:
Derivative financial instruments – forward
hedge 16,316 - 16,316 -
Derivative financial instruments – put options 645 - 645 -
Capital costs 1,655 - 1,609 -
Land and buildings 6,392 - - -
Rehabilitation provision 7,340 - - -
Mining information 7,957 - - -
Tax losses 1,370 - 318 -
Trade payables 30 - 30 -
Employee entitlements 445 - 22 -
42,150 - 18,940 -
Movements - consolidated
Opening
Balance
Charged/
(credited)
to income
statement
Acquisition
of subsidiary
Charged/
(credited)
directly to
equity
Closing
Balance
$’000 $’000 $’000 $’000 $’000
Derivative financial instruments - 645 - 16,316 16,961
Capital costs - (250) - 1,905 1,655
Property, plant and equipment - (594) 6,986 - 6,392
Rehabilitation provision - 24 7,316 - 7,340
Mining information - (40) 7,997 - 7,957
Tax losses - 1,370 - - 1,370
Trade payables - 30 - - 30
Employee entitlements - 205 240 - 445
- 1,390 22,539 18,221 42,150
Movements - parent
Opening
Balance
Charged/
(credited)
to income
statement
Acquisition of
subsidiary
Charged/
(credited)
directly to
equity
Closing
Balance
$’000 $’000 $’000 $’000 $’000
Derivative financial instruments - 646 - 16,316 16,962
Capital costs - (297) - 1,905 1,608
Tax losses - 318 - - 318
Trade payables - 30 - - 30
Employee entitlements - 22 - - 22
- 719 - 18,221 18,940
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 46 of 78
11. Derivative Financial Instruments
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Gold put options
Current Assets 407 - 407 -
Non-current Assets 1,211 - 1,211 -
1,618 - 1,618 -
Forward gold hedge contracts
Current Liabilities (9,044) - (9,044) -
Non-current Liabilities (45,342) - (45,342) -
(54,386) - (54,386) -
The consolidated entity entered into forward gold hedges where it agreed to sell specified
ounces of gold at a predetermined gold price. The objective of these hedges is to match the
forward agreements with anticipated cash flows from future gold sales and as such are
considered “cash flow” hedges under AASB139. The fair value of all qualifying cash flow hedges
is recorded on the balance sheet. Movements in fair value, to the extent the hedges are
effective, are recorded as a separate component of equity and released to the income
statement at the time the hedged transaction occurs. The ineffective portion is recognised in
income immediately. The ineffectiveness in the current year was not significant.
The Company has also purchased gold put options to mitigate the risk of gold price decline.
Although the options are “out of the money” at 30 June 2008, the time value of the options is
disclosed as an asset.
At 30 June 2008, the Group had the following net derivative instruments (all designated as cash
flow hedges). Refer to Note 1(m) for the accounting policy on derivatives. In accordance with
AASB132 “Financial Instruments Presentation” paragraph 42, these disclosures are on a net basis
as the Company has a legally enforceable right to set off the recognised amounts and intends
to settle on a net basis:
Fixed forwards Bought Put Options
Hedging position Ounces AUD/oz Ounces AUD/oz
Financial year ending 30 June 2009 70,000 875 60,000 760
Financial year ending 30 June 2010 70,000 875 60,000 760
Financial year ending 30 June 2011 70,000 875 - -
Financial year ending 30 June 2012 70,000 875 - -
Total 280,000 120,000
Credit risk arises from the potential failure of counterparties to meet their obligations under the
respective contracts at maturity. This arises with amounts receivable from unrealised gains on
derivative financial instruments. At balance date the estimated value of the gold put options
receivable is $1,618,000. To mitigate the risk, the Group enters into derivate contracts only with
high credit quality Australian financial institutions.
To the extent of the financial liability, the counter-party (Lehman Brothers Australia) has a first
ranking fixed and floating charge over the assets of the Group.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 47 of 78
12. Non –current Assets - Receivables
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Loans to related parties - - 9,314 6,395
Refer to Note 32 for details.
The related party loan is an intercompany loan from the parent entity to its subsidiaries with no
fixed repayment terms. As such, there is no set due date and the loan is not impaired as at
balance date. These loans are to subsidiaries that have underlying net assets sufficient to support
the loans. The carrying value of these loans approximate their fair value.
13. Non-current Assets – Other Financial Assets
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Shares in subsidiaries (Note 33) - - 51,236 6,109
Provision for impairment - - (5,546) (5,546)
- - 45,690 563
The shares in subsidiaries were subjected to an analysis of impairment by reviewing future
discounted cash flows. The fair value of the shares in subsidiaries are carried at book value less
impairment, which does not exceed the recoverable amount.
14. Non-current Assets – Exploration Costs and Mine Properties
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Geological, geophysical, drilling and other
costs for exploration and purchased mine
properties – at cost 62,699 2,095 - -
Less: accumulated amortisation (858) - - -
61,841 2,095 - -
The costs carried forward above have been
determined as follows:
Opening balance 2,095 2,167 - -
Acquired in Paddington Gold Pty Ltd 50,996 - - -
Purchased from Barrick Gold 3,300 - - -
Costs incurred during the year 6,621 222 - -
Amortisation (858) - - -
Exploration written off (313) (294) - -
Closing balance as shown above 61,841 2,095 - -
The ultimate recoupment of costs carried forward for exploration and evaluation phases is
dependent upon the successful development and commercial exploitation or sale of the
respective mining areas.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 48 of 78
15. Non-current Assets – Capitalised Mining Costs
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Capitalised mining costs – at recoverable
amount 16,434 3,568 - -
Accumulated amortisation (2,147) (34) - -
14,287 3,534 - -
The capitalised mine costs carried forward
above have been determined as follows:
Opening balance 3,534 7,153 - -
Costs incurred during the year 12,866 92 - -
Impairment of mine properties - (3,677) - -
Amortisation during the year (2,113) (34) - -
Closing balance as shown above 14,287 3,534 - -
16. Non-current Assets – Property, Plant and Equipment
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Plant and Equipment
- Cost 10,339 677 1,668 -
- Accumulated Depreciation (1,583) (171) (7) -
8,756 506 1,661 -
Building improvements
- Cost 736 - - -
- Accumulated depreciation (292) - - -
444 - - -
Total written down value 9,200 506 1,661 -
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning
and end of the current financial year are set out below:
Consolidated Plant and
equipment
$’000
Building
improvements
$’000
Total
$’000
Carrying value
Balance at 30 June 2006 668 - 668
Additions 1 - 1
Disposals - - -
Depreciation (163) - (163)
Balance at 30 June 2007 506 - 506
Additions 3,681 - 3,681
Disposals (11) - (11)
Acquisitions through business
combinations 5,996
736 6,732
Depreciation (1,416) (292) (1,708)
Balance at 30 June 2008 8,756 444 9,200
A total of $323,000 of plant and equipment (2007: $484,000) is pledged against an equipment
loan. See Note 19 for further details.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 49 of 78
Parent Plant and
equipment
$’000
Building
improvements
$’000
Total
$’000
Carrying value
Balance at 30 June 2007 - - -
Additions 1,671 - 1,671
Disposals (3) - (3)
Depreciation (7) - (7)
Balance at 30 June 2008 1,661 - 1,661
17. Non-current Assets – Other Assets
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Deposit – Paddington Gold Mine acquisition - 5,000 - 5,000
Costs associated with Paddington Gold Mine
acquisition - 309 - 309
Security deposits 16,036 36 16,000 -
16,036 5,345 16,000 5,309
In the above table, $16.0m cash in Term Deposits for both the Consolidated and Parent entity is
collateralised against a guarantee by the National Australia Bank in favour of the West Australian
Department of Industry Resources for rehabilitation. This term deposit is at 8.07% interest per
annum and has a maturity of 55 days. In the Consolidated group, an additional $36,000 secures
our environmental bonds in Queensland.
18. Current Liabilities – Trade and Other Payables
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Unsecured liabilities
Trade payables 12,918 359 1,650 166
Other payables and trade accruals 13,114 27 249 -
Accrued interest 435 - 435 -
26,467 386 2,334 166
19. Current Liabilities – Borrowings
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Secured
Bank loans 416 538 - -
Unsecured
Intercompany loan - - 10,651 -
416 538 10,651 -
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 50 of 78
As the bank loan represents a chattel mortgage over equipment there is no amount of the
facility undrawn and available for use. Loans are effectively secured as rights to the assets
recognised in the financial report revert to the lender in the event of default. Weighted average
interest rate for loan was 9.39% (2007: 7.57%).
The fair value of on-balance sheet financial liabilities is determined by reference to market prices
where they exist or by discounting future cash flows by the current interest rate for liabilities with
similar risk profiles.
The carrying amounts of assets pledged as security for the current and non-current borrowings
are:
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current assets
Deposits at call 99 99 - -
Non-current assets
Property, plant and equipment 323 484 - -
Total assets pledged as security 422 583 - -
20. Current Liabilities – Provisions
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Employee benefits provision 94 - - -
Income Tax Provision 663 - - -
Provision for rehabilitation 3,252 - - -
4,009 - - -
21. Non-current Liabilities – Borrowings
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Convertible Notes 35,291 - 35,291 -
Investment loan - 8,089 - 8,089
35,291 8,089 35,291 8,089
(a) Convertible Notes
On 27 August 2007, a total of 400 Convertible Notes (Notes) were issued by the Company each
with a $100,000 face value to raise $40,000,000 in cash. The Notes have a fixed interest rate of
11.0% per annum with interest payable quarterly. The Notes mature on 27 August 2011. To the
extent of the face value of the Notes, the Noteholders have a fixed and floating charge over
the assets of the Group.
A total of $1,600,000 cash was paid in success fees on the completion of the Notes issue. These
costs are netted against the Notes balance.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 51 of 78
The Noteholders may convert the Notes into Ordinary Share Capital at any time up to 5 days
before maturity at a conversion price of $0.25. The Company can force conversion of the Notes
any time after 27 May 2008 if the average closing price of the Ordinary Share Capital for 20
consecutive days before conversion is greater than $0.375.
On issue of the Notes, the value of the conversion right, which is the difference between the
face value of the Notes and the fair value of the liability component, was valued at $1,109,000
and charged to equity (see Note 25). On conversion of the Notes to equity, the value of the
liability and accrued interest charges is credited to equity.
During the period, 20 Notes were converted into equity (see Note 25 (b)), resulting in 380 Notes
outstanding at 30 June 2008. At a conversion price of $0.25, the maximum number of ordinary
shares to be issued on conversion of the Notes is 152,000,000 at 30 June 2008.
(b) Investment loan
The loan in 2007 attracted an interest at the higher of 6% p.a. and the cash rate of the Reserve
Bank of Australia. Interest was payable in securities. During the year, the loan was repaid via an
issue of 8,164,431 convertible notes at a face value of $1 each. These notes were subsequently
converted and 51,027,695 fully paid ordinary shares were issued at $0.16 each and 25,513,848
options were issued at an exercise price of $0.20. These options expire on 27 August 2009.
22. Non-current Liabilities – Provisions
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Employee benefits provision 513 - 2 -
Provision for rehabilitation 21,213 80 - -
21,726 80 2 -
Movements in total provisions are set out in the table below:
Consolidated Group
Mine
Rehabilitation
Employee
Benefits
Income Tax Total
$’000 $’000 $’000 $’000
Opening balance at 1 July 2007 80 - - 80
Acquired through Paddington Gold Pty Ltd
24,385 534 -
24,919
Additional provisions - 73 663 736
Balance at 30 June 2008 24,465 607 663 25,735
Parent Entity
Opening balance at 1 July 2007 - - - -
Additional provisions - 2 - 2
Balance at 30 June 2008 - 2 - 2
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 52 of 78
Provision for Mine Rehabilitation
A provision has been recognised for the costs to be incurred for the restoration of mining sites
used for the exploration and mining of gold. It is anticipated that various mines will require
restoration within the next 20 years.
Provision for Employee Benefits
A provision has been recognised for employee entitlements relating to long service leave. In
calculating the present value of future cash flows in respect of long service leave, the probability
of long service leave being taken is based on historical data. The measurement and recognition
criteria relating to employee benefits has been included in Note 1 to this report. Annual leave
liabilities are classified as other payables under current liabilities.
Provision for Income Tax
A provision has been recognised for expected income tax based on profits earned in the current
financial year.
23. Deferred Tax Liabilities
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current 2,490 - 174 -
Non-current 21,975 1,257 - -
Deferred tax liabilities 24,465 1,257 174 -
Deferred tax liabilities are attributed to the
following:
Deferred exploration and evaluation costs 21,975 1,257 - -
Inventories 2,316 - - -
Other receivables 174 - 174 -
24,465 1,257 174 -
Movements:
Balance at start of year 1,257 2,360 - -
Acquisition of subsidiary 16,316 - - -
Debited/(credited) to income statement 6,892 (1,103) 174 -
Balance at end of year 24,465 1,257 174 -
Movements - consolidated
Opening
Balance
$’000
Charged/
(credited)
to income
statement
$’000
Acquisition of
subsidiary
$’000
Charged/
(credited)
directly to
equity
$’000
Closing
Balance
$’000
Deferred exploration and
evaluation costs 1,257 4,587
15,097 - 20,941
Mine Properties - 1,033 - - 1,033
Inventories - 1,098 1,219 - 2,317
Other receivables - 174 - - 174
1,257 6,892 16,316 - 24,465
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 53 of 78
Movements - parent
Opening
Balance
$’000
Charged/
(credited)
to income
statement
$’000
Acquisition of
subsidiary
$’000
Charged/
(credited)
directly to
equity
$’000
Closing
Balance
$’000
Other receivables - 174 - - 174
- 174 - - 174
24. Acquisition of Paddington Gold Pty Ltd
On 24 August 2007 Norton Gold Fields Limited acquired all of the issued shares in Paddington
Gold Pty Ltd, an operating gold mine in Kalgoorlie, WA, for a total net cash consideration of
$38,285,000. $5,000,000 of this amount was paid in the prior financial year as a cash deposit.
The acquired business contributed revenues of $111,783,000 and net profit before tax of
$22,500,000 to the Group for the period from 24 August 2007 to 30 June 2008. The amounts of
revenue and net profit for the full year, if Paddington Gold had been acquired at the start of the
financial year, could not be practicably measured.
Details of net assets acquired are as follows:
$’000
Purchase consideration
Net cash paid / Outflow of cash to acquire subsidiary * 37,316
Direct costs relating to the acquisition – cash 969
Direct costs relating to the acquisition – non-cash 6,127
Total purchase consideration 44,412
Fair value of net identifiable assets acquired (refer below)
44,412
* Includes $1,000,000 shares issued at fair value for cash (see Note 25(b)).
The Group has taken up the fair value of the assets and liabilities of Paddington Gold Pty Ltd at
acquisition. Fair values are based on discounted cash flows where applicable. The assets and
liabilities arising from the acquisition are as follows:
Fair value
$’000
Receivables 10,010
Inventories 11,242
Property, plant and equipment 6,732
Exploration, development and mine properties 50,996
Payables (9,649)
Provisions (24,919)
Net identifiable assets acquired
44,412
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 54 of 78
25. Contributed Equity
2008
Shares
2007
Shares
2008
$’000
2007
$’000
(a) Share capital
Fully paid ordinary shares 334,601,323 70,246,005 59,286 10,049
Convertible Note equity component - - 1,109 -
334,601,323 70,246,005 60,395 10,049
(b) Movements in ordinary share capital Note Number of
Shares
Issue
Price
Cents
$’000
Opening balance – 1 July 2006 69,846,005 9,969
Options exercised 400,000 20.0 80
Balance – 30 June 2007 70,246,005 10,049
Lehman Brothers Placement (i) 175,000,000 20.0 35,000
RAB Conversion (ii) 51,027,695 16.0 8,164
Ten3 Share Issue (i) 20,219,201 24.0 4,853
Barrick Shares issued under Paddington Gold Pty Ltd
acquisition
(i)
4,000,000 25.0 1,000
Barrick Shares issued under Paddington Gold Pty Ltd
acquisition
(i)
32,258 - -
J. Parker Options (iii) 3,000,000 12.0 360
Employee Share Ownership Plan Issue (iii) 353,964 28.5 101
Issued to A. Labuschagne (before becoming Key
Management Personnel)
(iii)
300,000 38.0 114
Seed Options Exercised (iii) 830,200 20.0 166
Conversion of 20 Convertible Notes with $100,000 face
value each
(iv)
8,000,000 25.0 2,000
Founder and Vendor Options Converted (iii) 780,000 20.0 156
Listed Options exercised (iii) 12,000 20.0 2
Employee and Contractor Options Exercised (iii) 800,000 20.0 160
Share issue costs - - (2,839)
Balance – 30 June 2008 334,601,323 59,286
(i) Ordinary Share Issue
Ordinary shares were issued at a price based approximately on volume weighted
average price of Norton Gold Fields Limited’s share price for five days leading up to the
transaction.
(ii) RAB Conversion
See Note 21(b) for further information.
(iii) Exercise of Options
See Note 37 for further information for options issued in the current or previous financial
year.
(iv) Convertible Notes
See Note 21(a) for further information.
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and proceeds on winding up of the
Company in proportion to the number of and amounts paid on the shares held. On a show of
hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to
one vote, and on a poll each share is entitled to one vote.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 55 of 78
(d) Equity component of Convertible Notes
This equity component relates to the value of conversion rights relating to the 11% Convertible
Notes included in non-current interest-bearing liabilities (refer Note 21).
(e) Options
Information relating to share based payments, including details of options issued, exercised and
lapsed during the financial year and options outstanding at the end of the financial year, is set
out in Note 37.
As at 30 June 2008, the number of options to purchase ordinary shares in the Company were as
follows:
Type Number of
Options at
30 Jun 2008
Number of
Options at
30 Jun 2007
Exercise
price
Expiry date
Type 1 8,281,400 8,293,400 $0.20 8 October 2010
Type 2 and 3 17,634,800 19,245,000 $0.20 8 August 2010
Type 4 - 800,000 $0.20 5 June 2008
Type 5 3,000,000 3,000,000 $0.12 6 months after
termination
Type 6 2,000,000 2,000,000 $0.20 6 months after
termination
Type 7 35,386,528 - $0.20 27 Aug 2009
Type 8 - - $0.12 6 months after
termination
Type 9 2,000,000 - $0.20 6 months after
termination
Type 10 1,570,000 - $0.20 24 Aug 2009
Type 11 700,000 - $0.50 15 Mar 2010
Type 12 1,000,000 - $0.40 nil
71,572,728 33,338,400
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 56 of 78
26. Reserves and Accumulated Losses
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(a) Reserves
Derivative reserve (38,070) - (38,070) -
Share based payment reserve 6,124 208 6,124 208
(31,946) 208 (31,946) 208
Movements:
Derivative reserve
Balance 1 July - - - -
Mark-to-market net adjustment (54,386) - (54,386) -
Deferred tax 16,316 - 16,316 -
Balance 30 June (38,070) - (38,070) -
Share-based payments reserve
Balance 1 July 208 - 208 -
Share and Option expense 5,916 208 5,916 208
Balance 30 June 6,124 208 6,124 208
(b) Retained earnings/(Accumulated losses)
Movements in retained earnings/
(accumulated losses) were as follows:
Balance 1 July (5,324) (715) (6,225) (69)
Net profit/(loss) for the year 9,238 (4,609) (5,157) (6,156)
Balance 30 June 3,914 (5,324) (11,382) (6,225)
(c) Nature and purpose of reserves
Financial instrument derivative reserve
The derivative reserve recognises the net amount after tax of unsettled forward gold hedging
and put options that are marked-to-market at the end of the period.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not
exercised at balance date.
27. Key Management Personnel Disclosures
(a) Key management personnel compensation
Consolidated Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Short-term employee benefits 916 295 599 125
Post-employment benefits 198 25 178 -
Termination benefits - 50 - -
Share-based payments 1,386 203 713 203
Total 2,500 573 1,490 328
In accordance with AASB 2008-4 and the change to AASB124 the detailed disclosures of key
management personnel have been transferred to the Directors’ Report. The relevant information
can be found in the remuneration report and includes:
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 57 of 78
- remuneration policy,
- amounts of remuneration,
- service agreements, and
- share based payments.
Equity instrument disclosures relating to key management personnel
Option holdings
The number of options over ordinary shares in the Company held during the financial year by key
management personnel of the Group, including their personally related entities, are set out
below. Options granted during the year were part of remuneration. There were no vested but
unexercisable options at the end of the financial year.
Name Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Balance at
end of the
year
Vested and
exercisable at
end of year
2008
Directors
A. Anthony McLellan 5,000,000 - - 5,000,000 5,000,000
Jon Parker - 5,000,000 (3,000,000) 2,000,000 2,000,000
A. Timothy Prowse 8,680,000 - - 8,680,000 8,680,000
Mark McCauley - - - - -
Ian McCauley - - - - -
Other KMP
Simon Brodie - - - - -
W. Andre Labuschagne - 1,000,000 - 1,000,000 -
Jonathan Price - - - - -
Total
13,680,000
6,000,000
(3,000,000)
16,680,000
15,680,000
Name Balance at
start of year
Granted
during the
year
Resignation
during the
year
Balance at
end of year
Vested and
exercisable at
end of year
2007
Directors
A. Anthony McLellan - 5,000,000 - 5,000,000 5,000,000
A. Timothy Prowse 8,680,000 - - 8,680,000 8,680,000
Jack Tan 2,905,200 - (2,905,200) - -
Jon Parker - - - - -
Total
11,585,200
5,000,000
(2,905,200)
13,680,000
13,680,000
Share holdings
The numbers of shares in the Company held during the financial year by key management
personnel of the consolidated entity, including their personally-related entities, are set out below.
Name Balance at
1 July (or
start date)
Net changes
- purchases
(sales)
Exercise
of options
Resignation
during the
year
Balance
at 30 June
Balance
held
nominally
2008
Directors
A. Anthony McLellan - - - - - -
Jon Parker 199,446 996,554 3,000,000 - 4,196,000 4,196,000
A. Timothy Prowse 21,700,001 - - - 21,700,001 -
Mark McCauley - - :- - - -
Ian McCauley 64,550,000 - - - 64,550,000 64,550,000
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 58 of 78
Other KMP
Simon Brodie - - - - - -
W. Andre
Labuschagne
- - - - - -
Jonathan Price - - - - - -
Total 86,449,447 996,554 3,000,000 - 90,446,001 68,746,000
Name Balance at
1 July (or
start date)
Net changes
– purchases
(sales)
Exercise
of options
Resignation
during the
year
Balance
at
30 June
Balance
held
nominally
2007
Directors
A. Anthony McLellan - - - - - -
A. Timothy Prowse 21,700,001 - - - 21,700,001 -
Jon Parker - 199,446 - - 199,446 -
Jack Tan 7,263,001 - - (7,263,001) - -
Total 28,963,002 199,446 - (7,263,001) 21,899,447 -
As at the reporting date, no vesting conditions had been met for shares to be issued as
remuneration.
Mr I. McCauley, as a director and shareholder of BPI Norton Pty Ltd, controls 50 Convertible
Notes (total convertible to 20,000,000 ordinary shares).
(b) Loans with key management personnel
No loans to key management personnel were made during the year and no loans were
outstanding at the reporting date. Subsequent to year end, a loan was made to J. Parker under
the Employee Share Scheme – refer Note 34 Events Occurring after the Balance Sheet Date.
(c) Other transactions with key management personnel
Consulting fees of $nil (2007: $92,000) were paid to A. Anthony McLellan on normal commercial
terms and conditions.
Consulting fees of $143,000 (2007: $67,000) were paid to J P Strategic Insights, an entity
associated with Jon Parker, on normal commercial terms and conditions.
Jon Parker is on the Advisory Board of Effective Negotiation Skills, a private company that
provides services at an arms length basis at market prices to the Norton Gold Fields Limited
group. The amount paid to ENS during the year was $68,000.
Norton Gold Fields Limited has entered into an arrangement during the financial year for
Sundata Pty Ltd to provide computer hardware and IT support on normal terms and conditions.
Jon Parker is the Non-executive Chairman of Sundata Pty Ltd. Due to his position on the Board of
Directors of Sundata Pty Ltd, Jon Parker did not have any involvement in the selection of
Sundata Pty Ltd as a supplier. The amount paid to Sundata Pty Ltd during the year was $29,000.
The Group has engaged RMM Capital to provide assistance in scoping the Mount Morgan Mine
Project and advising the group. Services were provided at an arms length basis at market prices
to the Group. A total of $102,000 was paid during the financial year. Mark McCauley is an
Executive Director of RMM Capital.
Norton Gold Fields Limited
Notes to the financial statements
For the year ended 30 June 2008
Page 59 of 78
28. Remuneration of Auditors
During the year the following fees were paid or payable for services provided by the auditor of
the parent entity, its related practises and non-related audit firms:
Consolidated Parent Entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
(a) Audit services
BDO Kendalls firm
Audit and review of financial reports 174 15 100 15
Total remuneration for audit services 174 15 100 15
(b) Non-audit services
BDO Kendalls audit firm:
Tax assistance 7 4 - 4
Total remuneration for non-audit services 7 4 - 4
Total remuneration 181 19 100 19
28. Financial Instruments
(a) Financial risk management objectives, policies and processes