Preliminary Final Report of Mincor Resources NLfor the Financial...

Preliminary Final Report of Mincor Resources NL
for the Financial Year Ended 30 June 2008

(ABN 42 072 745 692)
This Preliminary Final Report is provided to the Australian Stock Exchange (ASX) under
ASX Listing Rule 4.3A
Current Reporting Period: Financial Year ending 30 June 2008
Previous Corresponding Period: Financial Year ending 30 June 2007
Mincor Resources NL Appendix 4E
Preliminary final report
Period ending 30 June 2008
Results for announcement to the market
$’000
Revenue from ordinary activities Down 1.54% to 329,340
Profit from ordinary activities after tax attributable to
members Down 36.80% to 64,041
Net profit for the period attributable to members Down 36.80% to 64,041
Dividends Amount per security Franked amount
per security
Financial year ended 30 June 2008
Final dividend 6.0 cents 6.0 cents
Interim dividend 6.0 cents 6.0 cents
Financial year ended 30 June 2007
Final dividend 6.0 cents 6.0 cents
Interim dividend 6.0 cents 6.0 cents
Dividend payments
Date the final 2008 dividend is payable 26 September 2008
Record date to determine entitlements to the dividend 1 September 2008
Date final dividend was declared 20 August 2008
Total dividend per security (interim plus final)
Current year Previous year
Ordinary securities 12.0 cents 12.0 cents
Total dividends paid or payable on all securities
Current year
$’000
Previous year
$’000
Ordinary securities 23,801 23,610
Total 23,801 23,610
Mincor Resources NL Appendix 4E
Preliminary final report
Period ending 30 June 2008
Net Tangible Assets
Current year Previous year
Net tangible assets per ordinary security 119.9 cents 76.1 cents
Details of Entities Over Which Control Has Been Gained or Lost
Control gained over entities
Name of entity (or group of entities) Goldfields Mine Management Pty Ltd
Date control gained 2 July 2007
2008
$’000
Contribution of the controlled entity (or group of entities) to profit before tax
from ordinary activities during the period, from the date of gaining control. 39,705
2007
$’000
Net profit/(loss) of the controlled entity (or group of entities) for the whole
of the previous corresponding period. -
Loss of control of entities
Name of entity (or group of entities) N/A
Date control lost N/A
2008
$’000
Contribution of the controlled entity (or group of entities) to profit/(loss)
from ordinary activities during the period, to the date of losing control. N/A
2007
$’000
Contribution of the controlled entity (or group of entities) to profit/(loss)
from ordinary activities for the whole of the previous corresponding period. N/A
Mincor Resources NL Appendix 4E
Preliminary final report
Period ending 30 June 2008
Details of Associates and Joint Venture Entities
Ownership Interest Contribution to net
profit
Name of Entity
2008
%
2007
%
2008
$’000
2007
$’000
Associates - - - -
Joint Venture Entities - - - -
Aggregate Share of Profits/(Losses) - - - -
Other Information
Except for the matters noted above, all the disclosure requirements pursuant to ASX Listing Rule
4.3A are contained within Mincor Resources NL’s Consolidated Financial Statements for the year
ended 30 June 2008 which accompany this Preliminary Final Report.
This report is based on accounts which have been audited.
Annual Meeting
The annual meeting will be held as follows:
Place
Celtic Club
48 Ord Street
West Perth WA 6005
Date 5 November 2008
Time 11.00am
Approximate date the annual report
will be available Wednesday 1 October 2008
Sign here:
(Director)
Print name: David Moore
Date: 20 August 2008
MINCOR RESOURCES NL
ABN 42 072 745 692
ANNUAL REPORT
30 June 2008
Mincor Resources NL
TABLE OF CONTENTS
CORPORATE GOVERNANCE STATEMENT...................................................................................1
DIRECTORS’ REPORT .....................................................................................................................7
AUDITORS’ INDEPENDENCE DECLARATION .............................................................................23
INCOME STATEMENTS..................................................................................................................24
BALANCE SHEETS.........................................................................................................................25
STATEMENTS OF CHANGES IN EQUITY .....................................................................................26
CASH FLOWS STATEMENTS ........................................................................................................27
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS.......................................28
DIRECTORS’ DECLARATION.........................................................................................................78
INDEPENDENT AUDIT REPORT....................................................................................................79
Mincor Resources NL is a company incorporated and domiciled in Australia.
Its registered office is:
Level 1, 56 Ord Street
West Perth, Western Australia, 6005
AUSTRALIA
The financial report was authorised for issue by the directors on 20 August 2008. The directors have the
power to amend and re-issue the financial report.
Mincor Resources NL
1
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Mincor Resources NL (“the Company”) is responsible for corporate governance of
the Company. The Board has made it a priority to adopt systems of control and accountability as the basis
for the administration of corporate governance. The Board continually reviews its governance practices to
ensure they remain consistent with the needs of the Company.
In accordance with the ASX Corporate Governance Council’s Principle’s of Good Corporate Governance
and Best Practice Recommendations (“ASX Principles and Recommendations”), the Company publishes
information about its governance on the Company's website at www.mincor.com.au. This information
includes charters (for the board and its sub-committees), the Company's code of conduct and other policies
and procedures relating to the Board and its responsibilities such as:
• selection and appointment of new directors;
• process for performance evaluation;
• a summary of the policy for trading in company securities;
• a summary of the Company’s ASX continuous disclosure procedures;
• procedures for selection, appointment and rotation of external auditor;
• shareholder communication strategy; and
• summary of risk management policy.
The Company has followed each of the ASX Principles and Recommendations to the extent the Directors
considered they genuinely improve the Company’s internal processes and accountability to external
stakeholders. The Board continually reviews its governance practices to ensure they remain consistent with
the needs of the Company. The following table sets out where the Company has followed the
Recommendations or provided “if not, why not” reporting.
ASX P & R1 If not, why not2 ASX P & R1 If not, why not2
Recommendation 1.1 √ Recommendation 5.1 √
Recommendation 2.1 √ Recommendation 5.2 √
Recommendation 2.2 √ Recommendation 6.1 √
Recommendation 2.3 √ Recommendation 6.2 √
Recommendation 2.4 √ Recommendation 7.1 √
Recommendation 2.5 √ Recommendation 7.2 √
Recommendation 3.1 √ Recommendation 7.3 √
Recommendation 3.2 √ Recommendation 8.1 √
Recommendation 3.3 √ Recommendation 9.1 √
Recommendation 4.1 √ Recommendation 9.2 √
Recommendation 4.2 √ Recommendation 9.3 √
Recommendation 4.3 √ Recommendation 9.4 √
Recommendation 4.4 √ Recommendation 9.5 √
Recommendation 4.5 √ Recommendation 10.1 √
1 Indicates where the Company has followed the Principles & Recommendations
2 Indicates where the Company has provided “if not, why not” disclosure
ROLE OF THE BOARD
The Board of Directors operates pursuant to a charter which states that Mincor's goal is to develop into a
diversified mining company offering shareholders participation in the global expansion in demand for
minerals through profits and capital growth.
Mincor's fundamental aim is to be a profitable dividend payer while offering strong capital growth through a
disciplined and focused exploration and acquisition strategy.
Mincor Resources NL
2
CORPORATE GOVERNANCE STATEMENT (continued)
The Board's objectives are to:
(a) increase shareholder value within an appropriate framework which safeguards the rights and
interests of the Company’s shareholders; and
(b) ensure the Company is properly managed.
COMPOSITION OF THE BOARD
During the year the Board comprised a majority of independent directors (including the Chairman). Details
of the Directors are set out in the Directors’ Report.
In determining the independence of directors the Board has regard to the independence criteria as set out in
the ASX Principles and Recommendations. To the extent that it is necessary for the Board to consider
issues of materiality, the Board refers to the thresholds for qualitative and quantitative materiality as adopted
by the Board and contained in the Board Charter, which is disclosed in full on the Company’s website. The
Company assesses independence at the time of appointment of directors and monitors the independence of
directors as and when appropriate.
Applying the independence criteria, the Board considers that Messrs DJ Humann, IF Burston and JW
Gardner are independent.
In the interests of disclosure, the Board notes that Mr Humann is a director of and minority shareholder in
James Anne Holdings Pty Limited, a company which provides the services of Mr Humann to act as Director
and Chairman of the Company. James Anne Holdings Pty Ltd receives consulting fees for providing the
services of Mr Humann to the Company. The Directors (in the absence of Mr Humann) have ascertained the
level of consulting fees paid to James Anne Holdings Pty Ltd is not material to either the Company, James
Anne Holdings Pty Limited or Mr Humann and that the arrangement does not affect Mr Humann's non
executive status. Furthermore, the Board notes that Mr Humann is not an executive and does not have a
major shareholding in the Company. As such, the Board considers that there is limited scope for Mr
Humann's personal interests to conflict with those of shareholders.
All Directors receive a written letter on their appointment to the Board which sets out in detail the
expectations the Company has of the Director in discharging his duties as a director of the Company.
The Board delegates responsibility for the Company’s administration and operation to the Managing
Director, who is accountable to the Board.
MEETINGS
The Board holds at least 4 meetings per annum and on other occasions as required. Senior managers of
the Company are invited to attend meetings of the Board. Non executive Directors may meet independently
of the Executive Directors, although in this financial year no such meetings occurred. At each meeting of the
Board time is allocated for consideration of strategic planning issues.
RETIREMENT AND RE-ELECTION OF DIRECTORS
The Company's constitution requires one third of directors (other than the Managing Director and alternate
directors) to retire from office at each Annual General Meeting. Directors appointed by the Board are
required to retire from office at the next Annual General Meeting and are not taken into account in
determining the number of directors to retire by rotation at the Annual General Meeting.
Directors cannot hold office for more than three years following their appointment without submitting
themselves for re-election. Retiring directors are eligible for re-election by shareholders.
Mincor Resources NL
3
CORPORATE GOVERNANCE STATEMENT (continued)
APPOINTMENT OF NEW DIRECTORS
No new directors were appointed during the last financial year. The Board (subject to member’s voting rights
in a general meeting) is responsible for selection of new members and succession planning. Regard is
given to a candidate’s background and experience which is relevant to the business needs of the Company.
New directors are invited to join the Board by the Chairman, who makes the invitation based on
recommendations made by the Nomination Committee and approved by the Board.
EVALUATION OF BOARD AND EXECUTIVES
During the year, the Nomination Committee reviewed the performance of the Board as a whole. The review
was undertaken by way of round-table discussions relating to how the Board functions and operates
effectively. No significant adverse issues were identified.
The Managing Director was evaluated by the Board by way of informal discussion. The Managing Director’s
performance is also subject to continuous review through on-going discussions with the Chairman. Further,
the Managing Director evaluated the performance of all executives of the Company utilising personal
interview processes which were appropriately documented.
CONFLICT OF INTEREST
The Company’s code of conduct states that the Board, management and employees must not involve
themselves in situations where there is a real or apparent conflict of interest between them as individuals
and the interest of the Company. Where a real or apparent conflict of interest arises the matter should be
brought to the attention of the Chairman in the case of a Director, or the Managing Director in the case of a
member of management, or a supervisor in the case of an employee, so that it may be considered and dealt
with in an appropriate manner for all concerned.
REMUNERATION
Details of remuneration, including the Company’s policy on remuneration are contained in the
“Remuneration Report” which forms part of the Directors’ Report.
All compensation arrangements for Directors and key management personnel are determined at Board level,
in consultation with the Remuneration Committee, after taking into account the current competitive rates
prevailing in the market.
Remuneration levels of the Directors and key management personnel are set by reference to other similarsized
mining and exploration companies with similar risk profiles and are set to attract and retain executives
capable of managing the consolidated entity’s operations in Australia. Remuneration of non executive
Directors is determined by the Board within the maximum approved by the shareholders from time to time.
The Board undertakes an annual review of its performance against goals set at the start of the year. No
bonuses are paid to non executive Directors, nor are there any termination or other benefits paid on
retirement.
Details of the nature and amount of remuneration paid to each Director of Mincor Resources NL and each
key management personnel of the consolidated entity are provided in the ‘Remuneration Report’ contained
within the Directors’ Report.
INDEPENDENT ADVICE
If a Director considers it necessary to obtain independent professional advice to properly discharge the
responsibility of his office as a director, then, provided the Director first obtains approval for incurring such
expense from the Chairman, the Company will pay the reasonable expenses associated with obtaining such
advice.
BOARD COMMITTEES
The Board has three committees comprising the Audit, Nomination, and Remuneration Committees. Each
committee has a separate charter which describes their role, composition, functions and responsibilities.
Copies of each charter are set out on the Company’s website.
Mincor Resources NL
4
CORPORATE GOVERNANCE STATEMENT (continued)
Details of the number of meetings held and attendance at each committee meeting during the financial year
ended 30 June 2008 are detailed below.
NOMINATION COMMITTEE MEETINGS
Name No. of meetings held No. of meetings attended
DJ Humann (Independent) 1 1
DCA Moore 1 1
IF Burston (Independent) 1 1
REMUNERATION COMMITTEE MEETINGS
Name No of meetings held No of meetings attended
DJ Humann (Independent) 1 1
DCA Moore 1 1
IF Burston (Independent) 1 1
AUDIT COMMITTEE MEETINGS
Name No. of meetings held No. of meetings attended
IF Burston (Chairman, Independent) 4 4
DJ Humann (Independent) 4 4
JW Gardner (Independent) 4 4
The qualifications of each director are set out in the Directors Report. Mr Burston has over 30 years
experience in the extractive and related industries and therefore possesses the requisite industry knowledge
to participate on this committee. Mr Humann is a Chartered Accountant and therefore possesses the
requisite financial literacy and expertise to participate on this committee. Mr JW Gardner is an Independent
Director with requisite financial and industry knowledge.
The main responsibilities of the Audit Committee are to:
• Review and report to the Board on the annual financial report, the half-year financial report and all other
financial information published by the Company or released to the market;
• Assist the Board in reviewing the effectiveness of the organisation’s internal control environment
covering:
− effectiveness and efficiency of operations
− reliability of financial reporting
− compliance with applicable laws and regulations;
• Oversee the effective operation of the risk management framework; and
• Recommend to the Board the appointment, removal and remuneration of the external auditors, and
review the terms of their engagement, and the scope and quality of the audit.
In fulfilling its responsibilities, the Audit Committee receives regular reports from management and the
external auditors. It also meets with the external auditors at least twice a year – more frequently if
necessary. The external auditors have a clear line of direct communication at any time to the Chairman of
the Audit Committee and the Chairman of the Board.
The Audit Committee has authority, within the scope of its responsibilities, to seek any information it requires
from any employee or external party.
COMPANY'S REMUNERATION POLICIES
Details of remuneration, including the Company’s policy on remuneration, are contained in the
“Remuneration Report” which forms of part of the Directors’ Report.
Mincor Resources NL
5
CORPORATE GOVERNANCE STATEMENT (continued)
SHAREHOLDER INFORMATION
The Company values its relationship with shareholders and understands the importance of communication
with them in accordance with the requirements of the ASX. For this purpose the Company has two policies,
one for keeping shareholders up to date with Company information and one to ensure it is compliant with the
continuous disclosure obligations of the ASX.
To keep shareholders informed the Company maintains a website at www.mincor.com.au, on which the
Company makes the following information available:
• company announcements for the last three years;
• information briefings to media and analysts for last three years;
• notices of meetings and explanatory materials;
• financial information for last three years; and
• annual reports for last three years.
The Company sends a copy of its quarterly report to all Shareholders. It also sends copies of significant
announcements to Shareholders and any other person who registers with the Company as an 'Interested
Party'.
The Company understands the importance of ensuring the market has full and timely information available to
all on an equal basis. For this reason the Company has detailed compliance procedures for ASX listing rule
disclosure requirements which covers the following areas:
• providing guidelines for identifying disclosure material and monitoring share price movements;
• guidelines for trading halts;
• guidelines for decision making processes;
• details on record keeping, confidentiality, education of executives and staff, release of disclosure
material; and
• updating of procedures.
The Company has appointed an officer responsible for ensuring compliance with this policy.
FINANCIAL REPORTS
In accordance with the requirements of the Corporations Act 2001 and Principle 4 of the ASX Principles and
Recommendations the Managing Director and Chief Financial Officer have given relevant declarations,
statements and certifications in relation to the Company’s 30 June 2008 Annual Report.
RISK MANAGEMENT
The Board is responsible for overseeing the establishment and implementation of an effective risk
management system and reviewing and monitoring the Company's application of that system.
Implementation of the risk management system and day-to-day management of risk is the responsibility of
the Managing Director, with the assistance of senior management. The Managing Director is responsible for
reporting directly to the Board on all matters associated with risk management. In fulfilling their duties, the
Managing Director has unrestricted access to company employees, contractors and records and may obtain
independent expert advice on any matter he believes appropriate, with the approval of the Board.
In addition, the Company maintains a number of policies and practices designed to manage specific
business risks. These include:
• Audit Committee and Audit Committee Charter;
• insurance programmes;
• regular budgeting and financial reporting;
• clear limits and authorities for expenditure levels;
• procedures/controls to manage environmental and occupational health and safety matters;
• procedures for compliance with continuous disclosure obligations under the ASX listing rules; and
• procedures to assist with establishing and administering corporate governance systems and
disclosure requirements.
Mincor Resources NL
6
CORPORATE GOVERNANCE STATEMENT (continued)
The Company's risk management system is an on-going process. It is recognised that the level and extent
of the risk management system will evolve commensurate with the evolution and growth of the Company's
activities.
TRADING IN COMPANY SECURITIES
The Board has adopted a policy and procedure on dealing in the Company's securities by directors, officers,
employees, and consultants which prohibits dealing in Company securities when those persons possess
inside information. The policy contains a blackout period for directors, officers and senior accounting
employees and also prohibits short-term or speculative trading of the Company's securities.
CODE OF CONDUCT
A comprehensive code of conduct is set out in full on the Company’s website. This code of conduct sets out
the standard which the Board, management and employees of the Company are encouraged to comply with
when dealing with each other, shareholders, and the broader community.
The Board supports the highest standards of corporate governance, and requires its members and the staff
of the Company, to act with integrity and objectivity in relation to:
• Compliance with the law;
• Record keeping;
• Conflicts of interest;
• Confidentiality;
• Acquisitions and disposals of the Company’s securities; and
• Safe and equal opportunity employment.
The Board and management are also conscious of and aim to ensure fulfilment of the wider obligations of
Mincor Resources NL and its staff to people affected by its operations, and for responsible management of
the environment.
ASX PRINCIPLES AND RECOMMENDATIONS (2ND EDITION)
The Company has undertaken a review of its governance documentation as a consequence of the revision
to the ASX Principles and Recommendations. The Company will be reporting against the revised ASX
Principles and Recommendations in its next annual report.
Mincor Resources NL
7
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2008
The Directors present their report on the consolidated entity consisting of Mincor Resources NL (“the
Company”) and its controlled entities, for the year ended 30 June 2008.
DIRECTORS
The names of the Directors of Mincor Resources NL in office at the date of this report are:
Name Particulars Shareholding
Interest
DJ Humann
FCA, FCPA,
FAICD
(Chairman)
Experience and expertise
Mr Humann joined Mincor Resources NL on 30 September 1999 as a Non-executive Director
and Chairman of the Company. Mr Humann is a fellow of the Institute of Chartered
Accountants, Certified Practising Accountant and also a fellow of the Australian Institute of
Company Directors.
He was Chairman and Senior Partner of Price Waterhouse (Hong Kong and China firm) from
1986 until 1994. He was also the Managing Partner of Price Waterhouse, Asia Pacific Region,
and a member of the World Board of Price Waterhouse and of the global firm’s World
Executive Management Committee based in London and New York. He was formerly a
member of the Australia and New Zealand Firm’s Executive Policy Committee. Mr Humann is
a member of the boards of a number of public and private companies.
Other current directorships
Non-executive chairman of Advanced Braking Technologies Ltd (previously Safe Effect
Technologies Ltd), Atomaer Holdings Pty Ltd; Braemore Resources PLC; Exxaro Australia
Sands Pty Ltd, Logicamms Ltd and Matrix Metals Ltd.
Non-executive director of Durack Estates Ltd (Bahamas); and Rewards Holdings Pty Ltd.
Director of James Anne Holdings Pty Ltd.
Former directorships in last 3 years
Non-executive director of Durack Estates Pty Ltd from 1985 to 2007.
Non-executive director Durack International Pty Ltd from 1985 to 2007.
Non-executive chairman of Macmahon Holdings Ltd Group from 2000 to 2006.
Non-executive chairman of Tethyan Copper Company Ltd from 2000 to 2006.
Non-executive chairman of Jupiter Energy Ltd from 2003 to 2005.
Non-executive director of India Resources Ltd from 2006 to 2008.
Non-executive director of Monarch Gold Mining Co from 2006 to 2008.
Non-executive director of Territory Resources Ltd from 2008 to 2008.
245,000
shares
Mincor Resources NL
8
DIRECTORS’ REPORT (continued)
DIRECTORS (continued)
Name Particulars Shareholding
Interest
DCA Moore
(Managing
Director)
Experience and expertise
Mr Moore joined Mincor Resources NL on 30 September 1999 and is the Managing Director of
the Company. His previous experience includes 13 years with Shell/Billiton where he worked
internationally in minerals exploration, business development, project management and
strategic planning. In 1996 he left a position as Billiton’s Chief Geologist in Peru to join Iscor
Australia Pty Ltd as director of business development. In that role he established Iscor’s gold
and base metal exploration unit in Australasia. During 1999 he conducted the transactions that
lead to the creation of Mincor Resources NL and became Managing Director of that Company.
In 2000 Mr Moore founded Tethyan Copper Company Ltd and as Managing Director drove
that company’s development, spin-off, listing and growth until its successful cash takeover by a
joint venture between Antofagasta and Barrick in 2006. Mr Moore has worked extensively in
South America, southern and eastern Africa and Australasia. He holds a B.Sc (Eng) (Mining
Geology).
Other current directorships
None
Former directorships in last 3 years
Managing director of Tethyan Copper Company Ltd from 2000 to 2006.
4,045,000
shares
JW Gardner Experience and expertise
Mr Gardner is a Non-executive Director who joined the Company in February 1996. Mr
Gardner graduated from the University of Melbourne in 1962 with a Bachelor of Engineering
(Mechanical) degree and is a Fellow of the Institution of Engineers Australia. He also holds a
Master of Business Administration degree from Curtin University, Western Australia. After
holding directorships and senior management positions with Hawker Siddeley Engineering Pty
Ltd, Comsteel Vickers/ANI, Minproc Engineers Pty Ltd and Broken Hill Metals NL between
1970 and 1990, he formed his own Engineering Consultancy. He has consulted on many gold
and base metal projects both in Australia and overseas. Mr Gardner was chairman of Ghana
Manganese Company from 1995 until 2000. From 1993 until 2006 he was actively involved in
Canadian listed company, Guinor Gold Corporation where he was Chief Engineer, Mining
Projects. Since 1996 he has developed and managed the 100,000 ounce per annum Lero
gold Heap Leach Project and completed the LEFA Corridor project study and supervised the
EPCM contractor constructing its 350,000 ounce per annum multiple open pit and CIP Plant
project in remote Guinea, West Africa. Currently he is pursuing bauxite, uranium, copper and
gold exploration projects in West Africa and Australia.
Other current directorships
Non-executive director of Vortex Minerals Pty Ltd, Mineraus Resources Pty Ltd ,Viking Metals
Pty Ltd, Greenline Investments Pty Ltd, Bayfield Enterprises Pty Ltd and Aerial Holdings Pty
Ltd.
Former directorships in last 3 years
Non-executive director of Norske Precious Metals from 2006 to 2007.
1,218,176
shares
Mincor Resources NL
9
DIRECTORS’ REPORT (continued)
DIRECTORS (continued)
Name Particulars Shareholding
Interest
IF Burston Experience and expertise
Mr Burston is a Non-executive Director who joined the Company in January 2003. He holds a
Bachelor of Engineering (Mech) degree from Melbourne University and a diploma in
Aeronautical Engineering from Royal Melbourne Institute of Technology. He has completed
the Insead Management Program in Paris and the Harvard Advanced Management Program
in Boston. Mr Burston has over 30 years’ experience in the extractive and related industries.
His prior positions included Managing Director and Chief Executive Officer of Aurora Gold Ltd,
Chief Executive Officer of Kalgoorlie Consolidated Gold Mines; Vice President – WA Business
Development of CRA Ltd and Managing Director of Hamersley Iron Pty Ltd.
Other current directorships
Non-executive chairman of Imdex Ltd, Broome Port Authority and NRW Ltd.
Former directorships in last 3 years
Executive chairman of Aztec Resources Ltd from 2003 to 2007.
Executive chairman of Cape Lambert Iron Ore Ltd from 2006 to 2008.
Non-executive director of Aviva Corporation Ltd from 2003 to 2006.
50,000
shares
Mr J S Reeve was an Executive Director of the Company from the beginning of the financial year until he
passed away on 16 August 2007.
COMPANY SECRETARY
The name of the Company Secretary of Mincor Resources NL in office at the date of this report is:
Name Particulars
B Lynn
Mr Lynn is a Chartered Accountant with over 20 years experience. He joined Mincor in May 2001 and prior to
this held various senior financial positions with companies involved in the mining industry, including gold and
mineral sands.
REVIEW OF OPERATIONS AND SIGNIFICANT EVENTS
Mining Operations
During the year, the Company’s South Kambalda Operations (including Miitel, Mariners, Redross and
Wannaway Nickel Operations) produced 585,684 dry metric tonnes at an average grade of 2.36%, to
produce 11,782 tonnes of nickel-in-concentrate.
The Company’s North Kambalda Operations (including Otter Juan, Coronet and McMahon Nickel Operations
and Mincor’s 70% interest in the Carnilya Hill Nickel Operation) produced 136,931 dry metric tonnes at an
average grade of 3.77%, to produce 4,880 tonnes of nickel-in-concentrate.
Exploration and Development Projects
During the year, the Company spent $18.5 million, comprising $12.8 million on regional exploration activities
and $5.7 million on extensional exploration activities.
In June 2007 the Company approved the development of the Carnilya Hilll Nickel Project. The Carnilya Hill
Project commenced production in January 2008.
In November 2007 the Company approved the development of the McMahon Nickel Mine. The McMahon
Nickel Mine commenced production in July 2008.
Mincor Resources NL
10
DIRECTORS’ REPORT (continued)
REVIEW OF OPERATIONS AND SIGNIFICANT EVENTS (continued)
Exploration and Development Projects (continued)
In November 2007 the Company reached an agreement with BHP Billiton Limited to acquire a major
package of highly prospective nickel sulphide tenements in the Kambalda nickel district known as the
Bluebush Line. The Bluebush Line contains numerous higher grade nickel occurrences extending over a 40
kilometre strike length.
In February 2008 the Company unveiled a maiden copper resource at its Tottenham Project in New South
Wales of 3.7 million tonnes @ 1.1% copper for 41,850 tonnes of copper metal.
In March 2008 the Company announced a 42% increase in its Durkin Deeps nickel resource to 374,500
tonnes @ 5.1% nickel for 18,800 tonnes of contained nickel metal.
In June 2008 the Company entered into a zinc-lead joint venture agreement with the Japan, Oil, Gas and
Metals National Corporation (“JOGMEC”) covering the Company’s 100% owned Georgina Basin Project in
the Northern Territory. Under the joint venture agreement JOGMEC have the ability to earn up to 40% in the
Project by spending $4.5 million over 3 years. JOGMEC are required to spend a minimum commitment of
$1 million by March 2009.
Corporate
The Company has sold forward 4,150 tonnes of nickel to May 2010 at an average price of A$35,854 per
tonne.
During the year the Company paid $51.75 million to the former shareholders of Goldfields Mine Management
Pty Ltd as part of the $68.5 million acquisition of that company. A deposit of $11.785 million was paid in
June 2007 and the remaining $5 million was paid in July 2008 on satisfaction of certain conditions pertaining
to tenement licences.
On 28 September 2007 the Company paid its fifth fully franked annual dividend of 6 cents per share to
shareholders.
On 31 March 2008 the Company paid a fully franked interim dividend of 6 cents per share in respect of the
year ending 30 June 2008.
PRINCIPAL ACTIVITIES
The principal activities of the companies in the consolidated entity during the course of the year were the
mining and exploration of mineral resources.
No significant change in the activities occurred during the twelve months to 30 June 2008, except as outlined
below.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as noted elsewhere in this report, there have been no significant changes in the state of affairs of
the consolidated entity during the financial period.
GROUP RESULTS
The profit of the consolidated entity for the year after income tax was $64,041,000 (2007 profit:
$101,330,000).
DIVIDENDS
A fully franked dividend of 6 cents per share in respect of the year ended 30 June 2007 was paid on 28
September 2007. On 31 March 2008 a fully franked interim dividend of 6 cents per share in respect of the
year ended 30 June 2008 was paid. On 20 August 2008 the Directors declared a fully franked final dividend
of 6 cents per share in respect of the year ended 30 June 2008.
Mincor Resources NL
11
DIRECTORS’ REPORT (continued)
MEETINGS OF DIRECTORS’
The number of meetings of the Company’s board of Directors and of each board committee held during the
year ended 30 June 2008, and the number of meetings attended by each Director were:
Total Directors
Meetings Available
Directors Meetings
Attended
Total Audit Committee
Meetings Available
Audit Committee
Meetings Attended
DJ Humann 5 5 4 4
DCA Moore 5 5 - -
JW Gardner 5 5 4 4
IF Burston 5 3 4 4
JS Reeve 1 1 - -
FUTURE DEVELOPMENTS
Details of important developments occurring in this financial year have been covered in the Review of
Operations. The Company will continue to actively explore for minerals, and any significant information or
data will be released to the market and the shareholders pursuant to the Continuous Disclosure rules as and
when they are to hand.
Further information on likely developments in the operations of the consolidated entity and the expected
results of operations have not been included in this report because the Directors believe it would be likely to
result in unreasonable prejudice to the consolidated entity.
REMUNERATION REPORT
All compensation arrangements for Directors and key management personnel are determined at Board level
after taking into account the competitive rates prevailing in the market place.
Remuneration levels of the Directors and key management personnel are set by reference to other similar
sized mining and exploration companies with similar risk profiles and are set to attract and retain executives
capable of managing the consolidated entity’s operations in Australia. Remuneration levels for the
Managing Director and key management personnel are determined by the Board based upon
recommendations from the Remuneration Committee. Remuneration of Non-executive Directors is
determined by the Board within the maximum approved by the shareholders from time to time. The Board
undertakes an annual review of its performance against goals set at the start of the year. No bonuses are
paid to Non-executive Directors.
The information provided in this remuneration report has been audited as required by section 308 (3C) of the
Corporations Act 2001.
The remuneration report is set out under the following main headings:
a) Principles Used to Determine the Nature and Amount of Remuneration
b) Details of Remuneration
c) Service Agreements
d) Share-based Compensation
e) Additional Information
Mincor Resources NL
12
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
a) Principles Used to Determine the Nature and Amount of Remuneration
The Company’s key management personnel remuneration framework aligns their remuneration with the
achievement of strategic objectives and the creation of value for shareholders, and conforms with
market best practice for delivery of reward. The Board ensures that the remuneration of key
management personnel is competitive and reasonable, acceptable to shareholders, and aligns
remuneration with performance.
Remuneration of Non-executive Directors
Fees and payments to non-executive directors reflect the demands which are made on, and the
responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by
the Board. The Board receives advice from independent remuneration consultants to ensure nonexecutive
directors’ fees and payments are appropriate and in line with the market. The Chairman’s
fees are determined independently to the fees of non-executive directors based on comparative roles in
the external market. The Chairman is not present at any discussions relating to the determination of his
own remuneration.
i) Directors’ Fees
The current base remuneration was last reviewed with effect from 8 November 2006. The Chairman’s
and non-executive directors’ remuneration is inclusive of committee fees.
Fees for the Chairman and non-executive directors’ are determined within an aggregate directors’ fee
pool limit of $350,000, which was last approved by shareholders on 8 November 2006.
ii) Retirement Allowances for Directors
No retirement allowances exist for non-executive directors.
Remuneration of Key Management Personnel
The pay and reward framework for key management personnel has four components:
• Base pay and benefits
• Short-term performance incentives
• Long-term incentives through participation in employee share option plans, including the Mincor
Employee Share Option Plan and Mincor Resources Executive Share Option Scheme; and
• Other remuneration.
The combination of these comprises the key management personnel’s total remuneration.
i) Base Pay and Benefits
The base pay is inclusive of statutory superannuation and is structured as a total employment cost
package, which may be delivered as a combination of cash and prescribed non-financial benefits at the
executives’ discretion.
Key management personnel are offered a competitive base pay that comprises the fixed component of
pay and rewards. External remuneration consultants provide analysis and advice to ensure base pay is
set to reflect the market for a comparable role. Base pay for key management personnel is reviewed
annually to ensure the executive’s pay is competitive with the market. The pay of key management
personnel is also reviewed on promotion.
There is no guaranteed base pay increase included in any key management personnel’s contract. Key
management personnel receive benefits including car allowances and provision of accommodation.
Mincor Resources NL
13
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
a) Principles Used to Determine the Nature and Amount of Remuneration (continued)
ii) Short Term Incentives (STI)
The Company has established an Incentive Bonus Scheme, which is designed to encourage and
reward superior performance. The Incentive Bonus Scheme has both a company performance
component linked to the Company’s annual result as well as an individual component linked to the
employee’s performance. Whilst it is the Company’s intention to apply the Incentive Bonus Scheme
annually, it is solely at the discretion of the Directors.
For the year ended 30 June 2008, the Incentive Bonus Scheme was linked to group, individual business
and personal objectives.
iii) Long Term Incentives (LTI)
Long term incentives are provided to certain employees via the Executive Share Option Scheme and
2002 Employee Share Option Plan. Information on the Executive Share Option Scheme and the 2002
Employee Share Option Plan is set out in Note 34 to the financial statements.
b) Details of Remuneration
Details of the remuneration of the directors and the key management personnel of Mincor Resources
NL and the consolidated entity are set out in the following tables.
The key management personnel of Mincor Resources NL and the consolidated entity (as defined in
AASB 124) includes the Directors and the following executive officers who report directly to the
managing director and who have authority and responsibility for planning, directing and controlling the
activities of the consolidated and parent entity.
• ST Cowle – Chief Operating Officer
• B Lynn – Chief Financial Officer
• GL Fariss – General Manager, Corporate Development
• P Muccilli – Exploration Manager
All of the above persons were also key management personnel during the year ended 30 June 2007,
except Mr GL Fariss and Mr P Muccilli.
Mincor Resources NL
14
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
b) Details of Remuneration (continued)
i) Key Management Personnel of Mincor Resources NL and its Controlled Entities
2008
Short-Term Employee Benefits
Post -
employment
Benefits
Long-term
Benefits
Sharebased
Payments
Name Directors
Fees Salary Bonus
Nonmonetary
benefits
Other Superannuation
Long
service
leave
Options
Total
$ $ $ $ $ $ $ $ $
Non-executive
Directors
DJ Humann (Chairman) 100,100 - - - - 9,900 - - 110,000
JW Gardner 50,459 - - - - 4,541 - - 55,000
IF Burston 55,000 - - - - - - - 55,000
Sub-total 205,559 - - - - 14,441 - - 220,000
Executive Directors
DCA Moore* - 528,783 150,000 588 - 13,129 23,468 - 715,968
Other Key Management
Personnel
ST Cowle* - 304,283 51,136 588 - 13,129 6,552 - 375,688
B Lynn* - 296,660 26,752 588 - 29,160 7,000 31,719 391,879
GL Fariss* - 199,836 21,420 588 - 19,486 3,555 42,292 287,177
P Muccilli* - 191,614 15,606 588 - 18,703 5,445 42,292 274,248
Former
J Reeve (Passed away
16 August 2007)
-
44,434
-
88
-
3,853
660
-
49,035
Total 205,559 1,565,610 264,914 3,028 - 111,901 46,680 116,303 2,313,995
* Denotes one of the 5 highest paid executives of the Company and the consolidated entity, as required to be disclosed under
the Corporations Act 2001.
2007
Short-Term Employee Benefits
Post -
employment
Benefits
Long-term
Benefits
Sharebased
Payments
Total
Name Directors
Fees Salary Bonus
Nonmonetary
benefits
Other Superannuation
Long
service
leave
Options
$ $ $ $ $ $ $ $
Non-executive
Directors
DJ Humann (Chairman) 100,100 - - - - 9,900 - - 110,000
JW Gardner 50,459 - - - - 4,541 - - 55,000
IF Burston 55,000 - - - - - - - 55,000
Sub-total 205,559 - - - - 14,441 - - 220,000
Executive Directors
DCA Moore* - 471,726 29,100 588 - 12,686 11,942 - 526,042
JS Reeve* - 176,342 33,750 363 - 11,629 8,283 573 230,940
Other Key Management
Personnel
ST Cowle* - 250,685 25,696 588 27,733 12,686 6,962 2,321 326,671
M Hildebrand* - 218,726 21,120 - - 19,685 3,786 119,025 382,342
B Lynn* - 274,640 33,000 588 - 24,771 7,923 73,385 414,307
Total 205,559 1,392,119 142,666 2,127 27,733 95,898 38,896 195,304 2,100,302
* Denotes one of the 5 highest paid executives of the Company and the consolidated entity, as required to be disclosed under
the Corporations Act 2001.
Mincor Resources NL
15
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
b) Details of Remuneration (continued)
The relative proportions of remuneration that are linked to performance and those that are fixed are as
follows:
Name Fixed Remuneration At Risk - LTI At Risk - STI
2008 2008 2008
Directors of Mincor Resources NL
DJ Humann (Chairman) 100% - -
DCA Moore 79% - 21%
JW Gardner 100% - -
IF Burston 100% - -
JS Reeve 100% - -
Other Key Management Personnel of the consolidated entity
ST Cowle 86% - 14%
B Lynn 85% 8% 7%
GL Fariss 77% 15% 8%
P Muccilli 79% 15% 6%
ii) Cash bonuses and options
For each cash bonus and grant of options included in the above tables, the percentage of the available
bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited
because the person did not meet the service and performance criteria is set out below. No part of the
bonuses are payable in future years.
Cash Bonus Options
Name Paid
%
Forfeited
%
Year
granted
Vested
%
Forfeited
%
Financial
years in
which
options may
vest
Minimum
total value
of grant
yet to vest
$
Maximum
total value
of grant
yet to vest
$
DCA Moore 100 - - - - - - -
JS Reeve 100 - - - - - - -
ST Cowle 100 - - - - - -
B Lynn 100 2006 33 1/3 - 30/06/2009 Nil 212,500
GL Fariss 100 - 2006 33 1/3 - 30/06/2009 Nil 283,333
P Muccilli 100 - 2006 33 1/3 - 30/06/2009 Nil 283,333
c) Service Agreements
Remuneration and other terms of employment for the Managing Director and other key management
personnel are formalised in employment contracts. Each of these agreements provide for the
participation in the Company’s Incentive Option Schemes and Incentive Bonus Scheme. Other major
provisions of the agreements relating to remuneration are set out below.
All contracts with executives may be terminated early by either party providing between 1 to 3 months
notice, subject to termination payments as detailed below.
Mincor Resources NL
16
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
c) Service Agreements (continued)
DCA Moore, Managing Director
• No set term of agreement.
• Base salary, inclusive of superannuation, for the year ended 30 June 2008 of $600,000.
• Payment of a termination benefit on early termination by the Company, other than for gross
misconduct, equal to three months of the base salary.
ST Cowle, Chief Operating Officer
• No set term of agreement.
• Base salary, inclusive of superannuation, for the year ended 30 June 2008 of $318,000.
• Payment of a termination benefit on early termination by the Company, other than for gross
misconduct, equal to one month of the base salary.
B Lynn, Chief Financial Officer
• No set term of agreement.
• Base salary, inclusive of superannuation, for the year ended 30 June 2008 of $324,000.
• Payment of a termination benefit on early termination by the Company, other than for gross
misconduct, equal to one month of the base salary.
GL Fariss, General Manager, Corporate Development
• No set term of agreement.
• Base salary, inclusive of superannuation, for the year ended 30 June 2008 of $236,000.
• Payment of a termination benefit on early termination by the Company, other than for gross
misconduct, equal to one month of the base salary.
P Muccilli, Exploration Manager
• No set term of agreement.
• Base salary, inclusive of superannuation, for the year ended 30 June 2008 of $230,000.
• Payment of a termination benefit on early termination by the Company, other than for gross
misconduct, equal to one month of the base salary.
d) Share-based Compensation – Options
2002 Employee Share Option Plan
The 2002 Employee Share Option Plan (“Plan”) was introduced on 21 August 2002. Persons eligible to
participate in the Plan include Directors and all employees of the Company or companies or bodies
corporate in which the Company holds at least 20% of all the voting shares.
Options are granted under the Plan for no consideration for a maximum period of 5 years and can be
exercised at any time between the date the option is granted and the expiry date, subject to the
imposition of any specified vesting date determined at the discretion of the Directors. The employee’s
entitlements to the options are vested and the options carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share. Amounts receivable on the
exercise of the options are recognised as share capital.
The exercise price of options is based on the weighted average price at which the Company’s shares
are traded on the Australian Stock Exchange during the 5 trading days immediately before the options
are granted.
The Plan rules contain a restriction on removing the ‘at risk’ aspect of the instrument granted to Plan
participants. Plan participants may not enter into any transaction designed to remove the ‘at risk’
aspect of an instrument before it vests.
Mincor Resources NL
17
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
d) Share-based Compensation – Options (continued)
Prospectus Dated 6 December 2007
The Prospectus was issued on 6 December 2007. Persons eligible to participate pursuant to the
Prospectus include Directors and all employees of the Company.
Options are granted under the Prospectus for no consideration for a maximum period of 5 years and
can be exercised at any time between the date the option is granted and the expiry date, subject to the
imposition of any specified vesting date determined at the discretion of the Directors. The employee’s
entitlements to the options are vested and the options carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share. Amounts receivable on the
exercise of the options are recognised as share capital.
The exercise price of options is based on the weighted average price at which the Company’s shares
are traded on the Australian Stock Exchange during the 5 trading days immediately before the options
are granted.
Mincor Resources Executive Share Option Scheme
The Mincor Resources Executive Share Option Scheme (“Scheme”) was introduced on 8 May 2006.
Persons eligible to participate in the Scheme include key employees, who are determined at the
discretion of the Directors.
Options are granted under the Scheme for no consideration for a maximum period of 5 years and can
be exercised at any time between the date the option is granted and the expiry date, subject to the
imposition of any specified vesting date determined at the discretion of the Directors.
When exercisable, each option is convertible into one ordinary share. Amounts receivable on the
exercise of options are recognised as share capital.
The exercise price of options is based on the weighted average price at which the Company’s shares
are traded on the Australian Stock Exchange during the 5 trading days immediately before the options
are granted.
The Scheme rules contain a restriction on removing the ‘at risk’ aspect of the instrument granted to
Scheme participants. Scheme participants may not enter into any transaction designed to remove the
‘at risk’ aspect of an instrument before it vests.
Mincor Resources NL
18
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
d) Share-based Compensation – Options (continued)
The terms and conditions of each grant of options affecting remuneration in the previous, this or future
reporting periods are as follows:
Grant Date Date Vested and Exercisable Expiry Date Exercise
Price
Value per Option
at Grant Date
6 November 2003 (1) 50% after 6 November 2004;
50% after 6 November 2005 6 November 2008 $0.84 $0.286
22 December 2005 (1) 100% after 18 November 2006 25 October 2010 $0.70 $0.1834
8 May 2006 (2) 33 1/3% after 8 May 2007 7 May 2011 $0.85 $0.240
33 1/3% after 8 May 2008 7 May 2011 $0.85 $0.230
33 1/3% after 8 May 2009 7 May 2011 $0.85 $0.220
9 September 2006 (2) 100% after 30 June 2007 8 September 2011 $1.21 $0.4761
20 October 2006 (2) 33 1/3% after 18 October 2007 19 October 2011 $1.74 $0.753
33 1/3% after 18 October 2008 19 October 2011 $1.74 $0.753
33 1/3% after 18 October 2009 19 October 2011 $1.74 $0.753
6 December 2006 (1) 100% after 6 December 2007 5 December 2011 $2.16 $0.7989
24 July 2007(2) 33 1/3% after 22 July 2008 22 July 2012 $4.23 $1.53
33 1/3% after 22 July 2009 22 July 2012 $4.23 $1.53
33 1/3% after 22 July 2010 22 July 2012 $4.23 $1.53
25 March 2008 (2) 25% after 6 March 2009 5 March 2013 $3.23 $0.9552
25% after 6 March 2010 5 March 2013 $3.23 $0.9552
25% after 6 March 2011 5 March 2013 $3.23 $0.9552
25% after 6 March 2012 5 March 2013 $3.23 $0.9552
1 April 2008 (3) 100% after 5 June 2009 5 December 2012 $4.40 $0.9023
(1) Options granted under the 2002 Employee Share Option Plan which was approved by shareholders at the 2006 annual general
meeting. All staff are eligible to participate in the Plan.
(2) Options granted to certain senior executives under the Executive Option Scheme, pursuant to specified terms and conditions.
(3) Options granted pursuant to the Prospectus dated 6 December 2007.
All options granted carry no dividend or voting rights.
Options Provided as Remuneration
Details of options over ordinary shares in the Company provided as remuneration to each Director of
Mincor Resources NL and each of the key management personnel of the consolidated entity are set out
below. Further information on the options is set out in Note 34 to the financial statements.
Name Number of Options Granted
during the Year
Number of Options Vested
during the Year
2008 2008
Directors of Mincor Resources NL
DJ Humann (Chairman) - -
DCA Moore - -
JW Gardner - -
IF Burston - -
Other Key Management Personnel of the consolidated entity
ST Cowle - -
B Lynn - 250,000
GL Fariss - 333,333
P Muccilli - 333,333
Mincor Resources NL
19
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
d) Share-based Compensation – Options (continued)
Fair Value of Options Granted Pursuant to the Prospectus dated 6 December 2007
The assessed fair value at grant date of options granted under the Prospectus during the year ended
30 June 2008 was 90.23 cents per option. The fair value at grant date is independently determined
using the Binomial option valuation methodology 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.
The model inputs for the options granted during the year ended 30 June 2008 included:
a) options are granted for no consideration and are exercisable any time between 5 June 2009 and
the expiry date. Vested options are exercisable for a period of four years after vesting.
b) exercise price: $4.40
c) grant date: 1 April 2008
d) expiry date: 5 December 2012
e) share price at grant date: $2.89
f) expected price volatility of the Company’s shares: 75%
g) expected dividend yield: 4.3%
h) risk-free interest rate: 6.1%
Fair Value of Options Granted Under the Scheme
The assessed fair value at grant date of options granted under the Mincor Resources Executive Option
Scheme during the year ended 30 June 2008 was 153 cents per option for options granted on the 24
July 2007 and 95.52 cents per option for options granted on 25 March 2008. The fair value at grant
date is independently determined using the Binomial option valuation methodology 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.
The model inputs for the options granted during the year ended 30 June 2008 included:
2008 2007
Consideration and vesting
period
Options are granted for
no consideration and
will vest over 4 annual
instalments
Options are granted for
no consideration and
will vest over 3 annual
instalments
Options are granted for
no consideration and
will vest over 10 months
Options are granted for
no consideration and
will vest over 3 annual
instalments
Exercise price $3.23 $4.23 $1.21 $1.74
Grant date 25 March 2008 24 July 2007 9 September 2006 20 October 2006
Expiry date 5 March 2013 22 July 2012 8 September 2011 19 October 2011
Share price at grant date $2.78 $3.98 $1.305 $1.98
Expected price volatility of
the Company’s shares
75%
67%
50%
50%
Expected dividend yield 4.3% 2.55% 1.59% 1.59%
Risk-free interest rate 6.1% 6.5% 5.775% 6.0%
Mincor Resources NL
20
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
e) Additional Information
Relationship between Compensation and Company Performance
The overall level of key management personnel’s compensation takes into account the performance of
the consolidated entity over a number of years, with greater emphasis given to the current and prior
year. Over the past 5 years, the consolidated entity’s profit from ordinary activity after income tax has
grown at an average rate per annum of 83.2%. During the same period, average key management
personnel compensation has increased by approximately 17.5% per annum.
In considering the consolidated entity’s performance, due regard is given to shareholder wealth creation
including dividends paid, movements in the market value of the Company’s shares and any return of
capital to shareholders. The following table summarises the performance of the Company over the last
five financial years.
2008 2007 2006 2005 2004
Net profit attributable to shareholders of Mincor
Resources NL ($000)
64,041
101,330
29,309
20,302
11,309
Earnings per share (cents) 32.4 51.8 15.1 10.4 6.0
Dividends paid ($000) 23,722 17,596 7,786 4,859 2,680
Dividends paid per share (cents) 12.0 9.0 4.0 2.5 1.5
30 June share price ($) 3.32 4.70 0.95 0.63 0.71
Details of Remuneration
Further details relating to options are set out below:
Name
A
Remuneration
Consisting of
Options
B
Value at
Grant Date
$
C
Value at
Exercise Date
$
D
Value at
Lapse Date
$
B Lynn 8.1% - $935,000 -
GL Fariss 14.7% - $1,246,665 -
P Muccilli 15.4% - - -
A = The percentage of the value of remuneration consisting of options, based on the value of options
expensed during the current year.
B = The value at grant date calculated in accordance with AASB 2 Share-based Payment of options
granted during the year as part of remuneration.
C = The value at exercise date of options that were granted as part of remuneration and were
exercised during the year, being the intrinsic value of the options at that date.
D = The value at lapse date of options that were granted as part of remuneration and that lapsed during
the year. Lapsed options refer to options that vested but expired unexercised.
Mincor Resources NL
21
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT (continued)
e) Additional Information (continued)
Details of ordinary shares in the Company provided as a result of the exercise of remuneration options
to each Director of Mincor Resources NL and other key management personnel of the parent entity and
the consolidated entity during the year ended 30 June 2008 are set out below.
Name Date of Exercise
of Options
Number of Ordinary Shares
Issued on Exercise of Options
During the Year
Amount Paid
per Share
Other Key Management Personnel of the consolidated entity
ST Cowle 13 December 2007 5,000 $2.16
B Lynn 8 May 2008 250,000 $0.85
GL Fariss 8 May 2008 333,333 $0.85
SHARES UNDER OPTION
Unissued ordinary shares in the Company under option at the date of this report are as follows:
Date Options Granted Expiry Date Issue Price of Shares Number of Options
22 December 2005 25 October 2010 $0.70 60,000
8 May 2006 7 May 2011 $0.85 1,632,462
23 October 2006 19 October 2011 $1.74 667,001
6 December 2006 5 December 2011 $2.16 320,000
24 July 2007 22 July 2012 $4.23 100,000
25 March 2008 5 March 2013 $3.23 200,000
1 April 2008 5 December 2012 $4.40 695,000
3,674,463
No option holder has any right under the option to participate in any share issue of the Company or any
other entity.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
The following ordinary shares of the Company were issued during and/or since the year ended 30 June 2008
and up to the date of this report on the exercise of options granted under both the 2002 Employee Share
Option Plan and Executive Share Option Scheme. No amounts are unpaid on any of the shares.
Date Options Granted Issue Price of Shares Number of Shares Issued
6 November 2003 $0.84 28,000
22 December 2005 $0.70 82,000
8 May 2006 $0.85 918,332
9 September 2006 $1.21 250,000
23 October 2006 $1.74 182,999
6 December 2006 $2.16 130,000
1,591,331
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 20 August 2008 the Directors declared a fully franked dividend of 6 cents per share in respect of the year
ended 30 June 2008.
CORPORATE GOVERNANCE
The Company’s corporate governance policies and practices are set out separately in this document.
Mincor Resources NL
22
DIRECTORS’ REPORT (continued)
ENVIRONMENTAL MATTERS
The consolidated entity is subject to environmental regulation on its mineral properties. To the best of the
belief and knowledge of the Directors, no breach of environmental legislation occurred during the year and
up to the date of this report. Further details on environmental policy are set out in the Annual Report under
the Corporate Governance section and the Health, Safety and Environmental Policy section.
INSURANCE OF OFFICERS
During the financial year, the Company paid a premium of $41,570 to insure the Directors, secretary and
senior executives of the Company and its Australian based controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the officers in their capacity as officers of the Company and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Company.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Company and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit
services provided during the year are provided in Note 25 to the financial statements.
The board of Directors has considered the position and in accordance with the advice received from the
audit 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, as set out in Note 25, 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.
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act
2001 is set out separately in this report.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities &
Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the
Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
Dated in Perth this 20th day of August 2008 in accordance with a resolution of the Directors.
DCA Moore
Managing Director

Mincor Resources NL
24
INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
CONSOLIDATED PARENT ENTITY
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Revenue 3 329,340 334,507 232,488 334,507
Mining contractor costs (65,145) (56,566) (63,430) (56,566)
Ore tolling costs (25,955) (21,315) (21,288) (21,315)
Utilities expense (9,528) (4,607) (5,672) (4,607)
Royalty expense (14,397) (25,993) (12,398) (25,993)
Employee benefit expense (34,046) (15,263) (19,858) (15,263)
Finance costs 4 (548) (417) (492) (417)
Foreign exchange loss (2,010) (5,594) (894) (5,594)
Exploration costs expensed 4 (12,823) (10,333) (4,839) (10,153)
Depreciation and amortisation expense 4 (55,638) (35,002) (37,047) (35,002)
Other expenses from ordinary activities (17,308) (14,408) (12,507) (14,405)
Profit before income tax
91,942
145,009
54,063
145,192
Income tax expense 5 (27,901) (43,679) (16,737) (43,679)
Profit attributable to the members of Mincor
Resources NL
64,041
101,330
37,326
101,513
Cents Cents
Earnings per share 33 32.4 51.8
Diluted earnings per share 33 32.1 51.3
The above Income Statements should be read in conjunction with the accompanying notes.
Mincor Resources NL
25
BALANCE SHEETS AS AT 30 JUNE 2008
CONSOLIDATED PARENT ENTITY
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current Assets
Cash and cash equivalents 31 112,499 169,567 76,000 169,567
Trade and other receivables 6 32,877 57,197 28,551 57,662
Inventory 7 2,352 43 303 43
Derivative financial instruments 8 19,438 7,529 19,438 7,529
Other financial assets 9 - 11,750 - 11,750
Total Current Assets 167,166 246,086 124,292 246,551
Non-Current Assets
Available-for-sale financial assets 10 1,707 2,951 674 1,052
Property, plant and equipment 11 78,239 50,487 46,582 50,487
Exploration, evaluation and development
expenditure
12
66,369
7,485
23,038
5,749
Derivative financial instruments 8 15,476 3,764 15,476 3,764
Other financial assets 9 - - 113,576 2,047
Total Non-Current Assets 161,791 64,687 199,346 63,099
TOTAL ASSETS 328,957 310,773 323,638 309,650
Current Liabilities
Payables 13 47,532 42,270 84,879 42,269
Interest bearing liabilities 14 792 971 792 971
Current tax liabilities 15 1,954 33,039 1,954 33,039
Provisions 16 3,005 540 1,009 540
Derivative financial instruments 8 - 62,208 - 62,208
Total Current Liabilities 53,283 139,028 88,634 139,027
Non-Current Liabilities
Interest bearing liabilities 14 1,555 2,404 1,555 2,404
Provisions 16 3,951 1,883 2,386 1,883
Deferred tax liabilities 17 31,684 7,119 19,425 6,735
Derivative financial instruments 8 - 10,073 - 10,073
Total Non-Current Liabilities 37,190 21,479 23,366 21,095
TOTAL LIABILITIES 90,473 160,507 112,000 160,122
NET ASSETS 238,484 150,266 211,638 149,528
Equity
Contributed equity 18 31,244 29,481 31,244 29,481
Reserves 19 20,589 (25,547) 20,081 (26,662)
Retained profits 20 186,651 146,332 160,313 146,709
TOTAL EQUITY 238,484 150,266 211,638 149,528
The above Balance Sheets should be read in conjunction with the accompanying notes.
Mincor Resources NL
26
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
CONSOLIDATED PARENT ENTITY
Issued
Capital
$’000
Retained
Earnings
$’000
Other
Reserves
$’000
Total
Equity
$’000
Issued
Capital
$’000
Retained
Earnings
$’000
Other
Reserves
$’000
Total
Equity
$’000
Note
At 1 July 2007 29,481 146,332 (25,547) 150,266 29,481 146,709 (26,662) 149,528
Change in fair value of available-forsale
investments, net of tax
(871)
(871)
(264)
(264)
Change in fair value of cash flow
hedges, net of tax
-
-
46,447
46,447
-
-
46,447
46,447
Total income and expense
recognised directly in equity
-
-
45,576
45,576
-
-
46,183
46,183
Profit for the year - 64,041 - 64,041 - 37,326 - 37,326
Total recognised income and
expense for the year
-
64,041
45,576
109,617
-
37,326
46,183
83,509
Issue of shares on conversion of
options
1,763
-
-
1,763
1,763
-
-
1,763
Payment of dividends 21 - (23,722) - (23,722) - (23,722) - (23,722)
Cost of share based payment 19 - - 560 560 - - 560 560
At 30 June 2008 31,244 186,651 20,589 238,484 31,244 160,313 20,081 211,638
At 1 July 2006 27,313 62,598 (18,789) 71,122 27,313 62,792 (19,525) 70,580
Change in fair value of available-forsale
investments, net of tax
-
-
169
169
-
-
(210)
(210)
Change in fair value of cash flow
hedges, net of tax
-
-
(7,734)
(7,734)
-
-
(7,734)
(7,734)
Total income and expense
recognised directly in equity
-
-
(7,565)
(7,565)
-
-
(7,944)
(7,944)
Profit for the year - 101,330 - 101,330 - 101,513 - 101,513
Total recognised income and
expense for the year
-
101,330
(7,565)
93,765
-
101,513
(7,944)
93,569
Issue of shares on conversion of
options
2,168
-
-
2,168
2,168
-
-
2,168
Payment of dividends 21 - (17,596) - (17,596) - (17,596) - (17,596)
Cost of share based payment 19 - - 807 807 - - 807 807
At 30 June 2007 29,481 146,332 (25,547) 150,266 29,481 146,709 (26,662) 149,528
The above Statements of Changes on Equity should be read in conjunction with the accompanying notes.
Mincor Resources NL
27
CASH FLOWS STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
CONSOLIDATED PARENT ENTITY
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Cash Flows from Operating Activities
Receipts from customers (inclusive of GST) 339,516 369,890 241,209 369,890
Payments to suppliers and employees (inclusive of
GST)
(200,552)
(168,919)
(162,343)
(168,919)
138,964 200,971 78,866 200,971
Interest received 7,317 4,757 5,522 4,757
Other revenue 1,603 423 785 423
Interest paid (237) (401) (293) (401)
Income tax paid (53,809) (13,592) (38,134) (13,592)
Net Cash Inflow from Operating Activities 31(a) 93,838 192,158 46,746 192,158
Cash Flows from Investing Activities
Payments for acquisition of exploration properties (116) (1,135) (116) (1,135)
Payment for purchase of subsidiary, net of cash
acquired
30 (55,074) (11,750) (90,698) (11,750)
Payments for available-for-sale financial assets - (1,300) - (1,300)
Payments for property, plant and equipment (37,398) (28,769) (31,849) (28,769)
Proceeds from sale of property, plant and equipment - 5 - 5
Payments for exploration, evaluation and
development expenditure
(35,331) (9,414) (18,487) (9,231)
Loans from/(to) related parties - - 23,824 (182)
Repayments of loans from other parties - 65 - 65
Net Cash Outflow from Investing Activities (127,919) (52,298) (117,326) (52,297)
Cash Flows from Financing Activities
Proceeds from issues of shares 1,763 2,168 1,763 2,168
Dividends paid (23,722) (17,596) (23,722) (17,596)
Finance lease payments (1,028) - (1,028) -
Net Cash Outflow from Financing Activities (22,987) (15,428) (22,987) (15,428)
Net (Decrease)/Increase in Cash Held (57,068) 124,432 (93,567) 124,433
Cash at the Beginning of the Financial Year 169,567 45,135 169,567 45,134
Cash at the End of the Financial Year 31(b) 112,499 169,567 76,000 169,567
Non-cash financing and investing activities 32
The above Cash Flows Statements should be read in conjunction with the accompanying notes.
Mincor Resources NL
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. The financial
report includes separate financial statements for Mincor Resources NL as an individual entity and the
consolidated entity consisting of Mincor Resources NL and its subsidiaries.
a) Basis of Preparation
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent
Issues Group Interpretations and the Corporations Act 2001. Comparative information is reclassified
where appropriate to enhance comparability.
Compliance with IFRSs
Australian Accounting Standards include Australian equivalents to International Financial Reporting
Standards (“AIFRS”). Compliance with AIFRS ensures that the financial report of Mincor Resources NL
complies with International Financial Reporting Standards (“IFRS”).
Historical Cost Convention
These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative
instruments) at fair value either through profit or loss or equity and certain classes of property, plant and
equipment.
b) Principles of Consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Mincor
Resources NL (“company” or “parent entity”) as at 30 June 2008 and the results of all subsidiaries for
the year then ended. Mincor Resources NL and its subsidiaries together are referred to in this financial
report as the Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the consolidated entity
has power to govern the financial and operating polices, 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 consolidated entity
controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated
entity. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
consolidated entity (refer to Note 1(s)).
Intercompany transactions, balances and unrealised gains on transaction between Group companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Investments in subsidiaries are accounted for at a cost in the individual financial statements of Mincor
Resources NL.
Mincor Resources NL
29
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c) Segment Reporting
A business segment is identified for 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 identified when products or services are provided 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) Revenue Recognition
Sales revenue comprises revenue earned from the provision of products to entities outside the
consolidated entity. Sales revenue is recognised when the product is delivered and:
• risk has been passed to the customer;
• the product is in a form suitable for delivery;
• the quantity of the product can be determined with reasonable accuracy;
• the product has been despatched to the customer and is no longer under the physical control of the
producer; and
• the selling price can be determined with reasonable accuracy.
Sales revenue represents gross proceeds receivable from the customer. Sales are initially recognised
at estimated sales value when the product is delivered. Adjustments are made for variations in metal
price, assay, weight and currency between the time of delivery and the time of final settlement of sales
proceeds.
Interest income is recognised as it accrues using the effective interest rate method.
e) Property, Plant and Equipment
Office property, plant and equipment are stated at historical cost less depreciation. Historical costs
include 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.
Office property, plant and equipment are depreciated or amortised over their estimated useful economic
lives using either the straight line or reducing balance method. The expected useful lives are as follows:
• Plant and Equipment - 2 to 5 years
• Furniture and Fittings - 3 to 10 years
Refer to Notes 1(i), 1(j), 1(k) and 1(l) for the accounting policy with respect to exploration and evaluation
expenditure, development properties, mine properties, and mine buildings, machinery and equipment.
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.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
are included in the income statement.
Mincor Resources NL
30
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, deferred income tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled.
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
Mincor Resources NL and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, Mincor Resources NL and the controlled entities in the tax consolidated group account
for their own current and deferred tax amounts. These tax amounts are measured on the basis that
each entity is subject to tax as part of the tax consolidated group.
In addition to its own current and deferred tax amounts, Mincor Resources NL also recognises the
current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused
tax credits assumed from controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding arrangements with the tax consolidated entities are
recognised as amounts receivable from or payable to entities in the consolidated entity. Details about
the funding agreement are disclosed in Note 5.
Any difference between the amounts assumed and amounts receivable or payable under the tax
funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax
consolidated entities.
g) Foreign Currency Translation
i) Functional and Presentation Currency
Items included in the financial statements of each of the consolidated entity’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 Mincor
Resources NL’s functional and presentation currency.
Mincor Resources NL
31
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g) Foreign Currency Translation (continued)
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, except when
they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are
attributable to part of the net investment in a foreign operation.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair
value through profit or loss are recognised in profit and loss as part of the fair value gain or loss.
Translation differences on non-monetary items such as equities classified as available-for-sale financial
assets are included in the fair value reserve in equity.
iii) Group Companies
The results and financial position of all the consolidated entity’s entities (none of which has the currency
of a hyperinflationary economy) that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date
of that balance sheet;
• income and expenses for each income statement are translated at average exchange rates (unless
this is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
• all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities, and of borrowings and other currency instruments designated as hedges of such investments,
are taken to shareholders’ equity. When a foreign operation is sold or borrowings repaid, a
proportionate share of such exchange differences are recognised in the income statement as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at the closing rate.
h) Inventories
Raw materials and stores, work in progress and finished goods
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net
realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of
variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating
capacity.
Costs are assigned to individual items of stock on the basis of weighted average costs. Net realisable
value is the estimated selling price in the ordinary course of business less estimated costs of completion
and the estimated costs necessary to make the sale.
i) Exploration and Evaluation Expenditure
Identifiable exploration assets acquired are recognised as assets at their cost of acquisition.
Subsequent exploration and evaluation costs related to an area of interest are written off as incurred
except they may be carried forward as an item in the balance sheet where the rights of tenure of an
area are current and one of the following conditions is met:
• the costs are expected to be recouped through successful development and exploitation of the area
of interest, or alternatively, by its sale; and
Mincor Resources NL
32
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
i) Exploration and Evaluation Expenditure (continued)
• exploration and/or evaluation activities in the area of interest have not at the reporting date reached
a stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or in relation to, the area of interest
are continuing.
Acquired exploration assets are not written down below acquisition cost until such time as the
acquisition cost is not expected to be recovered through use or sale.
j) Development Expenditure
Development expenditure incurred by or on behalf of the consolidated entity is accumulated separately
for each area of interest in which economically recoverable reserves have been identified to the
satisfaction of the Directors. Such expenditure comprises net direct costs and an appropriate portion of
related overhead expenditure having a specific nexus with the development property.
Once a development decision has been taken, any deferred exploration and evaluation expenditure is
transferred to “Development Expenditure”.
All expenditure incurred prior to the commencement of commercial levels of production from each
development property, is carried forward to the extent to which recoupment out of revenue to be derived
from the sale of production from the relevant development property, or from the sale of that property, is
reasonably assured.
No amortisation is provided in respect of development properties until they are reclassified as “Mine
Properties” following a decision to commence mining.
k) Mine Properties
Mine properties represent the accumulation of all exploration, evaluation and development expenditure
incurred by or on behalf of the consolidated entity in relation to areas of interest in which mining of a
mineral resource has commenced.
When further development expenditure is incurred in respect of a mine property after the
commencement of production, such expenditure is carried forward as part of the mine property only
when it is probable that the associated future economic benefits will flow to the consolidated entity,
otherwise such expenditure is classified as part of the cost of production.
Amortisation of costs are provided on the unit-of-production method with separate calculations being
made for each mineral resource. The unit-of-production basis results in an amortisation charge
proportional to the depletion of the economically recoverable mineral reserves.
l) Mine Buildings, Machinery and Equipment
The cost of each item of buildings, machinery and equipment is written off over its expected useful life
using either the unit-of-production or straight-line method. Cost includes expenditure that is directly
attributable to the acquisition of the items. The unit-of-production basis results in an amortisation
charge proportional to the depletion of the recoverable mineral reserves. Each item’s economic life has
due regard to both its own physical life limitations and to present assessments of recoverable mineral
reserves of the mine property at which the item is located, and to possible future variations in those
assessments.
Estimates of remaining useful lives are made on a regular basis for all mine buildings, machinery and
equipment, with annual reassessments of major items.
The expected useful lives are as follows:
• Mine buildings – the shorter of applicable mine life and 5 years;
• Machinery and equipment – the shorter of applicable mine life and 2 to 10 years, depending on the
nature of the asset.
Mincor Resources NL
33
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
m) Borrowing Costs
Borrowing costs are recognised as expenses in the period in which they are incurred, except where
they are included in the cost of qualifying assets. Qualifying assets are assets that take more than 12
months to prepare for their intended use or sale.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the
weighted average interest rate applicable to the entity’s outstanding borrowings during the year. No
interest was capitalised in 2008 (2007: Nil).
Borrowing costs include:
• interest on bank overdrafts and short-term and long-term borrowings;
• amortisation of ancillary costs incurred in connection with the arrangement of borrowings, and
• finance lease charges.
n) Leased Non-Current Assets
Leases of property, plant and equipment where the consolidated entity 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 fair value of the leased property or, if lower, the present value of the minimum
lease payments. The corresponding rental obligations, net of finance charges, are included in interest
bearing liabilities. Each lease payment is allocated between the liability and finance cost 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 in accordance with policy 1(e) above.
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 period of
the lease.
Lease income from operating leases where the consolidated entity is a lessor is recognised in income
on a straight-line basis over the lease term.
o) Joint Ventures
The proportionate interests in the assets, liabilities and expenses of jointly controlled assets have been
incorporated in the financial statements under the appropriate headings. Details of the joint ventures
are set out in Note 28.
p) Employee Benefits
i) Wages and Salaries, Annual Leave and Sick Leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick
leave expected to be settled within 12 months of the reporting date are recognised in other payables 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. 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. 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.
Mincor Resources NL
34
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
p) Employee Benefits (continued)
iii) Share-based Payments
Share-based compensation benefits are provided to employees via the Mincor Resources NL 2002
Employee Share Option Plan, the Prospectus issued 6 December 2007 and an Executive Share Option
Scheme.
The fair value of options granted under both the Mincor Resources NL 2002 Employee Share Option
Plan, the Prospectus issued 6 December 2007 and the Executive Share Option Scheme is recognised
as an employee benefit expense with a corresponding increase in equity. The fair value is measured at
grant date and recognised over the period during which the employees become unconditionally entitled
to the options.
The fair value at grant date is independently determined using a Binomial option valuation model that
takes into account the exercise price, the term of the option, the vesting and performance criteria, the
impact of dilution, the non-tradeable nature of the option, 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.
The fair value of the options granted excludes the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable. At each balance
sheet date, the entity revises its estimate of the number of options that are expected to become
exercisable. The employee benefit expense recognised each period takes into account the most recent
estimate. The impact of the revision to original estimates, if any, is recognised in the income statement
with a corresponding adjustment to equity.
q) Cash and Cash Equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes deposits at call,
short-term bank bills, and cash at bank and in transit, all of which are used in the cash management
function on a day to day basis, net of outstanding bank overdrafts.
r) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to
the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within
30 days of recognition.
s) Business Combinations
The purchase method of accounting is used to account for all business combinations, including
business combinations involving entities or businesses under common control, regardless of whether
equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given,
equity investments 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 fair 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 consolidated entity’s share of
the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the
consolidated entity’s share of the fair value of the identifiable 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.
Mincor Resources NL
35
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
s) Business Combinations (continued)
Where settlement of any part of the cash consideration is deferred, the amounts payable in the future
are discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
t) 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 purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash generating units).
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal
of the impairment at each reporting date.
u) Investments and Other Financial Assets
Classification
The consolidated entity classifies its investments into the following categories:
• financial assets at fair value through profit or loss;
• loans and receivables;
• held-to-maturity investments, and
• available-for-sale financial assets.
The classification depends on the purpose for which the investments were acquired. The Company
determines the classification of its investments at initial recognition, and in the case of assets classified
as held-to-maturity re-evaluates this designation at each reporting date.
i) Financial Assets at Fair Value through Profit or Loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset
is classified in this category if acquired principally for the purpose of selling in the short term. The policy
of management is to designate a financial asset if there exists the possibility it will be sold in the short
term and the asset is subject to frequent changes in fair value.
Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in
this category are classified as current assets.
ii) 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 consolidated entity 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. Loans and receivables are included in trade and other receivables in
the balance sheet.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
u) Investments and Other Financial Assets (continued)
iii) Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the consolidated entity’s management has the positive intention and ability to
hold to maturity. Held to maturity financial assets are included in non-current amounts, except for those
with maturities less than 12 months from the reporting date, which are classified as current assets.
iv) Available-for-sale Financial Assets
Available-for-sale financial assets, comprising principally marketable equity securities, are
non-derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management intends to dispose of the
investment within 12 months of the balance sheet date.
Recognition and De-recognition
Purchases and sales of financial assets are recognised on trade-date – the date on which the
consolidated entity commits to purchase or sell the asset. Investments are initially recognised at fair
value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets at fair value through profit and loss are initially recognised at fair value and
transactional costs are expensed in the income statement. Financial assets are derecognised when the
rights to receive cash flows from the financial assets have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognised in equity are included in the income statement as gains and losses from investment
securities.
Subsequent Measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the
effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit and loss are
subsequently carried at fair value. Realised and unrealised gains and losses arising from changes in
the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the
income statement in the period in which they arise. Unrealised gains and losses arising from changes
in the fair value of non-monetary securities classified as available-for-sale are recognised in equity in
the available-for-sale investments revaluation reserve. When securities classified as available-for-sale
are sold or impaired, the accumulated fair value adjustments are included in the income statement as
gains and losses from investment securities.
Fair value
The fair values of quoted investments are based on current bid prices. If the market for a financial asset
is not active (and for unlisted securities), the consolidated entity establishes fair value by using valuation
techniques. These include reference to the fair values of recent arm’s length transactions, involving the
same instruments or other instruments that are substantially the same, discounted cash flow analysis,
and option pricing models refined to reflect the issuer’s specific circumstances.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
u) Investments and Other Financial Assets (continued)
Impairment
The consolidated entity assesses at each balance date whether there is objective evidence that a
financial asset or group of financial assets is impaired. In the case of equity securities classified as
available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is
considered as an indicator that the securities are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss – measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognised in profit and loss – is removed from equity and recognised in the income statement.
Impairment losses recognised in the income statement on equity instruments are not reversed through
the income statement.
v) Derivatives
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 method of recognising the
resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if
so, the nature of the item being hedged. The consolidated entity designates certain derivatives as
either:
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges);
or
• hedges of highly probable forecast transactions (cash flow hedges).
The consolidated entity documents at the inception of the transaction the relationship between hedging
instruments and hedged items, as well as its risk management objective and strategy for undertaking
various hedge transactions. The consolidated entity 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 fair values or cash flows of
hedged items.
The fair values of various derivative financial instruments used for hedging purposes are disclosed in
Note 8. Movements in the hedging reserve in shareholders’ equity are shown in Note 19. The full fair
value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity
of the hedged item is more than 12 months; it is classified as a current asset or a liability when the
remaining maturity of the hedged item is less than 12 months.
i) Fair Value Hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are
recorded in the income statement, together with any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk. If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of a hedge item for which the effective interest
method is used is amortised to profit or loss over the period to maturity using a recalculated effective
investment rate.
ii) 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 hedging reserve. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement within other income or other expense.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged
item affects profit or loss (for instance when the forecast sale that is hedged takes place). However,
when the forecast transaction that is hedged results in the recognition of a non-financial asset or a
non-financial liability, the gains and losses previously deferred in equity are transferred from equity and
included in the measurement of the initial cost or carrying amount of the asset or liability.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
v) Derivatives (continued)
ii) Cash Flow Hedge (continued)
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.
iii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any
derivative instrument that does not qualify for hedge accounting are recognised immediately in the
income statement and are included in other income or other expenses.
w) 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 consolidated entity is the current bid price
and 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 consolidated entity 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 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 consolidated entity for similar financial instruments.
x) 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. Incremental costs directly attributable to the issue of new
shares or options for the acquisition of a business are not included in the cost of the acquisition as part
of the purchase consideration.
y) Dividends
Provision is made for the amount of any dividend declared, determined or publicly recommended by the
Directors on or before the end of the financial period but not distributed at balance date.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
z) Earnings per Share
i) Basic Earnings per Share
Basic earnings per share is calculated by dividing the profit 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 financial year, adjusted for bonus elements in
ordinary shares issued during the year.
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.
aa) Rehabilitation and Mine Closure Costs
The consolidated entity has obligations to dismantle, remove, restore and rehabilitate certain items of
property, plant and equipment.
Under AASB 116 Property, Plant and Equipment, the cost of an asset includes any estimated costs of
dismantling and removing the asset and restoring the site on which it is located. The capitalised
rehabilitation and mine closure costs are depreciated (along with the other costs included in the asset)
over the asset’s useful life.
AASB 137 Provisions, Contingent Liabilities and Contingent Assets requires a provision to be raised for
the present value of the estimated cost of settling the rehabilitation and restoration obligations existing
at balance date. The estimated costs are discounted using a pre-tax discount rate that reflects the time
value of money. The discount rate does not reflect risks for which future cash flow estimates have been
adjusted. As the value of the provision represents the discounted value of the present obligation to
restore, dismantle and rehabilitate, the increase in the provision due to the passage of time is
recognised as a borrowing cost.
ab) Royalties
Royalties, to the extent that they represent period costs, are accrued and charged against earnings
when the liability from production or sale of the mineral crystallises.
In the case of business combinations, future royalty payments may represent contingent purchase
consideration. Where this is the case and an estimate of the probable payments can be reliably
measured, such amounts are included in the cost of the business combination.
ac) 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.
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.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ad) Critical Accounting Estimates and Judgements
Critical accounting estimates and judgements are continually evaluated and are based on
management’s historical experience and knowledge of relevant facts and circumstances at that time.
The consolidated entity makes estimates and judgements concerning the future. The resulting
accounting estimates and judgements may differ from the related actual results and may have a
significant effect on the carrying amounts of assets and liabilities within the next financial year and on
the amounts recognised in the financial statements. Information on such estimates and judgements are
contained in the accounting policies and/or notes to the financial statements.
Key accounting estimates include:
• estimation of sales revenue when product is delivered (Note 1(d));
• estimation of royalties based on estimated sales revenue;
• estimation of dismantling, restoration costs, environmental clean up costs and the timing of this
expenditure (Notes 1(aa) and 16);
• asset carrying value and impairment charges;
• determination of ore reserves; and
• capitalisation and impairment of exploration and evaluation expenditure.
Critical judgements in applying the entity’s accounting policies include determining:
• the effectiveness of forward foreign exchange contracts and futures commodity contracts as cash
flow hedges and fair value hedges (Note 1(v)).
ae) New Accounting Standards and Interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for
the 30 June 2008 reporting period. The consolidated entity’s and the parent entity’s assessment of the
impact of these standards and interpretations is set out below.
AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting
Standards arising from AASB 8
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 change in the approach to segment reporting, as it requires adoption of a
"management approach" to reporting on the 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 consolidated entity has not yet decided
when it will be adopting AASB 8. Application of AASB 8 may result in different segments, segment
results and different information being reported in the segment note of the financial report. However, it
will not affect any of the amounts recognised in the financial statements.
Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting
Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB
138 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 financial report of the consolidated or parent entity, as
the consolidated and parent entity already capitalises its borrowing costs for qualifying assets.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ae) New Accounting Standards and Interpretations (continued)
Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to
Australian Accounting Standards arising from AASB 101
The revised AASB 101 that was issued in September 2007 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 a
reclassification of items in the financial statements, it will also need to disclose a third balance sheet
(statement of financial position), this one being as at the beginning of the comparative period.
AASB 2008-1 Amendments to Australian Accounting Standard - Share-based Payments:
Vesting Conditions and Cancellations
AASB 2008-1 was issued in February 2008 and will become applicable for annual reporting periods
beginning on or after 1 January 2009. The revised standard clarifies that vesting conditions are service
conditions and performance conditions only and that other features of a share-based payment are not
vesting conditions. It also specifies that all cancellations, whether by the entity or by other parties,
should receive the same accounting treatment. The consolidated entity will apply the revised standard
from 1 July 2009, but it is not expected to affect the accounting for the consolidated entity's share-based
payments.
Revised AASB 3 Business Combinations, AASB 127 Consolidated and Separate Financial
Statements and AASB 2008-3 Amendments to Australian Accounting Standards arising from
AASB 3 and AASB 127
Revised accounting standards for business combinations and consolidated financial statements were
issued in March 2008 and are operative for annual reporting periods beginning on or after 1 July 2009,
but may be applied earlier. The consolidated entity has not yet decided when it will apply the revised
standards. However, the new rules generally apply only prospectively to transactions that occur after
the application date of the standard. Their impact will therefore depend on whether the consolidated
entity or parent entity will enter into any business combinations or other transactions that affect the level
of ownership held in the controlled entities in the year of initial application. For example, under the new
rules:
• all payments (including contingent consideration) to purchase a business are to be recorded at fair
value at the acquisition date, with contingent payments subsequently remeasured at fair value
through income;
• all transaction cost will be expensed;
• the Group will need to decide whether to continue calculating goodwill based only on the parent’s
share of net assets or whether to recognise goodwill also in relation to the non-controlling (minority)
interest; and
• when control is lost, any continuing ownership interest in the entity will be remeasured to fair value
and a gain or loss recognised in profit or loss.
af) Rounding of Amounts
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and
Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in
the financial report have been rounded off in accordance with that Class Order to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 2
FINANCIAL RISK MANAGEMENT
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including currency
risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the consolidated entity. The consolidated entity uses
derivative financial instruments such as forward foreign exchange contracts and commodity price futures to
hedge certain risk exposures. Derivatives are exclusively used for hedging purposes and not as trading or
other speculative instruments.
Financial risk management is carried out by senior management utilising policies approved by the Board of
Directors. The Board provides written policies covering specific areas, such as mitigating foreign exchange
and price risks, use of derivative financial instruments and investing excess liquidity. The consolidated entity
uses different methods to measure the different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of foreign exchange, commodity price and interest rate risks.
The consolidated entity hedges less than 60% of its proved and probable ore reserves from its combined
operations. The consolidated entity will not hedge more than 80% of its budgeted or forecast production over
any 6 month period and will not enter into hedging contracts that terminate less than 6 months before
planned exhaustion of ore reserves.
There has been no change to the consolidated entity’s exposure to market risks or the manner in which it
manages and measures the risk.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised financial assets
and financial liabilities are denominated in a currency that is not the entity’s functional currency. The
entity manages its foreign exchange risk exposure arising from future commercial transactions
through sensitivity analysis, cash flow management and forecasting.
The consolidated entity and parent entity is exposed to foreign exchange risk principally through the
sale of commodities denominated in US dollars. The consolidated entity hedges part of this exposure
through the use of derivative instruments in accordance with policies approved by the Board of
Directors.
The consolidated entity’s exposure to foreign currency risk at the reporting date was as follows:
30 June 2008 30 June 2007
USD USD
$’000 $’000
Cash and cash equivalents 16,838 35,902
Trade and other receivables 26,307 46,625
Derivative financial instruments
- Futures commodity contracts 89,975 137,989
- Forward foreign exchange contracts (83,083) (134,426)
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 2
FINANCIAL RISK MANAGEMENT (continued)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
The parent entity’s exposure to foreign currency risk at the reporting date was as follows:
30 June 2008 30 June 2007
USD USD
$’000 $’000
Cash and cash equivalents 7,179 35,902
Trade and other receivables 20,774 46,625
Derivative financial instruments
- Futures commodity contracts 89,975 137,989
- Forward foreign exchange contracts (83,083) (134,426)
Group sensitivity
Based on the financial instruments held at 30 June 2008, had the Australian dollar
strengthened/weakened by 10% against the US dollar with all other variables held constant, the
consolidated entity’s post-tax profit for the year would have been $2,141,000 lower/$3,203,000 higher
(2007: $6,081,000 lower/$7,435,000 higher), mainly as a result of foreign exchange gains/losses on
translation of US dollar denominated trade receivables and US dollar denominated cash and cash
equivalents.
Equity would have been $2,355,000 higher/$2,292,000 lower (2007: $2,685,000 higher/$3,279,000
lower) had the Australian dollar strengthened/weakened by 10% against the US dollar, arising mainly
from US dollar denominated trade receivables, US dollar denominated cash and cash equivalents and
currency hedging contracts.
Parent entity sensitivity
Based on the financial instruments held at 30 June 2008, had the Australian dollar
strengthened/weakened by 10% against the US dollar with all other variables held constant, the
consolidated entity’s post-tax profit for the year would have been $1,237,000 lower/$1,851,000 higher
(2007: $6,081,000 lower/$7,435,000 higher). This is as a result of foreign exchange gains/losses on
translation of US dollar denominated trade receivables and US dollar denominated cash and cash
equivalents.
Equity would have been $3,259,000 higher/$3,644,000 lower (2007: $2,685,000 higher/$3,279,000
lower) had the Australian dollar strengthened/weakened by 10% against the US dollar, mainly as a
result of US dollar denominated trade receivables, US dollar denominated cash and cash equivalents
and currency hedging contracts.
(ii) Price risk
The consolidated entity and the parent entity are exposed to commodity price risk and equity security
price risk. Commodity price risk arises from the sales of nickel, copper and cobalt. The entity manages
its commodity price risk exposure arising from future commodity sales through sensitivity analysis,
cashflow management and forecasting.
Equity security price risk arises from investments held by the consolidated entity and the parent entity
and are classified as available-for-sale instruments. The price risk for equity securities classified as
available-for-sale instruments is not material to post tax profit or total equity and has not been included
in the sensitivity analysis.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 2
FINANCIAL RISK MANAGEMENT (continued)
(a) Market risk (continued)
(ii) Price risk (continued)
Group sensitivity
Based on the financial instruments held at 30 June 2008, had commodity prices strengthened/
weakened by 10% against those recognised with all other variables held constant, the consolidated
entity’s post-tax profit for the year would have been $1,394,000 higher/$1,394,000 lower (2007:
$3,272,000 higher/$3,272,000 lower), and equity would have been $2,345,000 lower/$2,345,000
higher (2007: $9,322,000 lower/$9,322,000 higher).
Parent entity sensitivity
Based on the financial instruments held at 30 June 2008, had commodity prices strengthened/
weakened by 10% against those recognised with all other variables held constant, the consolidated
entity’s post-tax profit for the year would have been $991,000 higher/$991,000 lower (2007:
$3,727,000 higher/$3,727,000 lower), and equity would have been $2,748,000 lower/$2,7487,000
higher (2007: $9,322,000 lower/$9,322,000 higher).
(iii) Cash flow interest rate risk
Interest rate risk arises from the consolidated entity’s cash and cash equivalents earning interest at
variable rates. The significance and management of the risks to the consolidated entity and the
parent entity are dependant on a number of factors including:
• interest rates;
• level of cash, liquid investments and borrowings and their term;
• maturity dates of investments.
At the reporting date, the consolidated entity’s exposure to interest rate risk and the effective
weighted average interest rate for classes of financial assets and financial liabilities are set out
below:
30 June 2008 30 June 2007
Weighted Average Balance Weighted Average Balance
Interest Rate $’000 Interest Rate $’000
Cash and cash equivalents 6.05% 112,499 5.93% 169,567
Lease liabilities 9.72% 2,347 9.57% 3,375
The risk is managed by the consolidated entity and parent entity by maintaining an appropriate mix
between short term fixed and floating rate cash and cash equivalents.
Group sensitivity
Based on the financial instruments at 30 June 2008, if interest rates had changed by +/-50 basis
points from the year end rates with all other variables held constant, post-tax profit for the year and
equity would have been $393,000 higher/$393,000 lower (2007: $594,000 higher/$594,000 lower).
Parent entity sensitivity
Based on the financial instruments at 30 June 2008, if interest rates had changed by +/-50 basis
points from the year end rates with all other variables held constant, post-tax profit for the year and
equity would have been $266,000 higher/$266,000 lower (2007: $594,000 higher/$594,000 lower).
The consolidated entity and parent entity interest bearing liabilities have not been included in the
sensitivity analysis as their possible impact on profit or loss or total equity is not considered material.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 2
FINANCIAL RISK MANAGEMENT (continued)
(b) Credit risk
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with
banks and financial institutions, as well as credit exposure to trade customers, including outstanding
receivables and committed transactions and represents the potential financial loss if counterparties fail
to perform as contracted. The consolidated entity has credit policies in place and the exposure to
credit risk is monitored on an ongoing basis.
All revenue from operations and related trade receivables balances are due from BHP Billiton Limited
pursuant to Ore Tolling and Concentrate Purchase Agreements. The receivables balances are
monitored on an ongoing basis.
The age analysis of trade receivables past due but not impaired is disclosed in Note 6. The carrying
amount of trade receivables individually determined to be impaired and the movement in the related
allowance for impairment is also disclosed in Note 6.
For cash and cash equivalents, derivative financial instruments and deposits with banks and financial
institutions, the consolidated entity controls credit risk by setting minimum creditworthiness
requirements of counterparties, which for banks and financial institutions is a Standard & Poor’s rating
of A or better.
The carrying amount of financial assets recorded in the financial statements represent the
consolidated entity’s and parent entity’s maximum exposure to credit risk.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining at all times sufficient cash, liquid investments
and committed credit facilities to meet the operating commitments of the business.
The consolidated entity aims at maintaining flexibility in funding to meet ongoing operational
requirements, exploration and development expenditure and small-to-medium sized business
development opportunities by prudent cashflow management and maintaining committed credit
facilities.
To the extent that the consolidated entity and parent entity has liabilities on its cash flow hedges, the
consolidated entity and parent entity expects to produce sufficient nickel from its nickel operations to
deliver into its committed hedge contracts.
The consolidated entity and the parent entity had access to undrawn borrowings. Refer to Note 14 for
details at the reporting date.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 2
FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk (continued)
The following tables detail the consolidated entity’s and parent entity’s remaining contractual maturity
for its financial liabilities and derivatives. The amounts presented represent the future undiscounted
principal and interest cash flows.
At 30 June 2008 Less than 1 year
$’000
Between 1 and 5 years
$’000
Consolidated
Non-Derivative Financial Liabilities
Non-interest bearing liabilities 47,532 -
Lease liabilities 792 1,555
Total Non Derivative Financial Liabilities 48,324 1,555
Parent
Non-Derivative Financial Liabilities
Non-interest bearing liabilities 84,879 -
Lease liabilities 792 1,555
Total Non Derivative Financial Liabilities 85,671 1,555
At 30 June 2007
Less than 1 year
$’000
Between 1 and 5 years
$’000
Consolidated
Non-Derivative Financial Liabilities
Non-interest bearing liabilities 42,270 -
Lease liabilities 971 2,404
Total Non Derivative Financial Liabilities 43,241 2,404
Derivative Financial Liabilities
Futures commodity contracts – cash flow hedges 39,109 10,073
Futures commodity contracts – fair value hedges 23,099 -
Total Derivative Financial Liabilities 62,208 10,073
Parent
Non-Derivative Financial Liabilities
Non-interest bearing liabilities 42,269 -
Lease liabilities 971 2,404
Total Non Derivative Financial Liabilities 43,240 2,404
Derivative Financial Liabilities
Futures commodity contracts – cash flow hedges 39,109 10,073
Futures commodity contracts – fair value hedges 23,099 -
Total Derivative Financial Liabilities 62,208 10,073
Mincor Resources NL
47
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 3
REVENUE
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Revenue
Sale of goods 321,029 329,595 226,133 329,595
Other Revenue
Interest income 7,317 4,757 5,522 4,757
Sundry income 994 155 833 155
329,340 334,507 232,488 334,507
NOTE 4
EXPENSES
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Profit before income tax includes the following specific
expenses:
Expenses
Cost of sale of goods 136,549 95,314 106,611 95,314
Finance costs
- Interest paid or due and payable to other persons 293 417 293 417
- Unwinding of discount on rehabilitation 255 - 199 -
548 417 492 417
Exploration expenditure written off 12,823 10,333 4,839 10,153
Rental expenses relating to operating leases 450 246 450 246
Government royalty expense 8,485 19,671 8,485 19,671
Depreciation and amortisation:
- Mine property 47,144 24,114 29,980 24,114
- Plant and equipment 8,494 10,888 7,067 10,888
55,638 35,002 37,047 35,002
Mincor Resources NL
48
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 5
INCOME TAX EXPENSE
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
a) Income tax expense
Current tax 23,408 40,525 24,307 40,524
Deferred tax 5,030 3,939 (7,103) 3,940
Over provision in prior year (537) (785) (467) (785)
Aggregate income tax expense 27,901 43,679 16,737 43,679
b) Numerical reconciliation of income tax expense
to prima facie tax payable
Profit before income tax expense 91,942 145,009 54,063 145,192
Tax at the Australian tax rate of 30% (2007: 30%) 27,583 43,503 16,219 43,558
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Amortisation of property, plant and equipment 231 596 231 596
Over provision in prior year (537) (785) (467) (785)
Sundry items 624 365 754 310
Income tax expense 27,901 43,679 16,737 43,679
c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit or
loss but directly debited or credited to equity
Net deferred tax credited directly to equity (Note 19) (19,533) (3,242) (19,792) (3,404)
Mincor Resources NL and its wholly-owned Australian controlled entities implemented the tax
consolidated legislation from 1 July 2006. The accounting policy in relation to this legislation is set out
in Note 1(f).
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a
tax sharing agreement which, in the opinion of the directors, limits the joint and several liability of the
wholly-owned entities in the case of a default by the head entity, Mincor Resources NL.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully
compensate Mincor Resources NL for any current tax payable assumed and are compensated by
Mincor Resources NL for any current tax receivable and deferred tax assets relating to unused tax
losses or unused tax credits that are transferred to Mincor Resources NL under the tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the whollyowned
entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding
advice from the head entity, which is issued as soon as practicable after the end of each financial year.
The head entity may also require payment of interim funding amounts to assist with its obligations to
pay tax instalments. The funding amounts are recognised as current intercompany receivables or
payables (see Note 29(d)).
Mincor Resources NL
49
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 5
INCOME TAX EXPENSE (continued)
PARENT ENTITY
2008
$’000
2007
$’000
d) Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
83,855
20,777
The amounts represent the balance of the franking account as at the end of the financial year, adjusted
for:
i) Franking credits that will arise from the payment of the current tax liability;
ii) Franking debits that will arise from the payment of dividends recognised as a liability at the
reporting date;
iii) Franking credits that will arise from the receipt of dividends recognised as receivables at the
reporting date; and
iv) Franking credits that may be prevented from being distributed in subsequent financial years.
NOTE 6
TRADE AND OTHER RECEIVABLES
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Trade receivables 30,774 56,358 25,020 56,358
Other receivables 1,280 308 1,254 306
Prepayments 823 531 585 531
Amounts owing from controlled entities - - 1,692 467
32,877 57,197 28,551 57,662
Recoverability of the Company’s interest in loans to and shares in controlled entities is subject to the
successful exploitation and development of the controlled entities’ interests in mineral tenements or
alternatively, the sale of the Company’s interest in the loans and shares at amounts at least equal to the
book values.
The total revenue from operations and the related trade receivables’ balance are due from BHP Billiton
Limited pursuant to Ore Tolling and Concentrate Purchase Agreements.
a) Impaired Receivables
The consolidated entity and parent entity have no impaired receivables.
b) Past due but not impaired
Financial assets that are neither past due or impaired are trade receivables with companies with a
good collection track record with the consolidated entity.
Where financial assets are past due but not impaired, the consolidated entity has assessed that the
credit quality of these amounts has not changed and the amounts are still considered recoverable.
None of the current and non-current trade and other receivables are either impaired or past due but
not impaired.
Mincor Resources NL
50
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 6
TRADE AND OTHER RECEIVABLES (continued)
c) Effective interest rate and credit risk
All receivables in 2008 and 2007 are non-interest bearing and therefore have no exposure to interest
rate risk. The maximum exposure to credit risk at the reporting date is the carrying amount of each
class of receivable mentioned above. The consolidated entity does not hold collateral as security.
Refer to Note 2 for more information on the risk management policy of the consolidated entity.
d) Foreign exchange risk
Note 2(a)(i) details the trade and other receivables not denominated in Australian dollars and provides
an analysis of the sensitivity of trade and other receivables to foreign exchange risk.
NOTE 7
INVENTORY
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Stores – at net realisable value
2,049
-
-
-
Work in progress – at cost 303 43 303 43
2,352 43 303 43
NOTE 8
DERIVATIVE FINANCIAL INSTRUMENTS
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current Assets
Forward foreign exchange contracts - cash flow hedges 6,914 6,287 6,914 6,287
Futures commodity contracts – cash flow hedges 4,832 - 4,832 -
Forward foreign exchange contracts - fair value hedges 2,662 1,242 2,662 1,242
Future commodity contracts – fair value hedges 5,030 - 5,030 -
Total Current Derivative Financial Instrument Assets 19,438 7,529 19,438 7,529
Non-Current Assets
Forward foreign exchange contracts - cash flow hedges 3,072 3,764 3,072 3,764
Futures commodity contracts – cash flow hedges 12,404 - 12,404 -
Total Non-Current Derivative Financial Instrument Assets 15,476 3,764 15,476 3,764
Current Liabilities
Futures commodity contracts - cash flow hedges - (39,109) - (39,109)
Futures commodity contracts - fair value hedges - (23,099) - (23,099)
Total Current Derivative Financial Instrument Liabilities - (62,208) - (62,208)
Non-Current Liabilities
Futures commodity contracts - cash flow hedges - (10,073) - (10,073)
Total Non-Current Derivative Financial Instrument
Liabilities
-
(10,073)
-
(10,073)
Net Derivative Financial Instrument Assets/(Liabilities) 34,914 (60,988) 34,914 (60,988)
Mincor Resources NL
51
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 8
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
a) Instruments used by the Consolidated Entity
The consolidated entity is party to derivative financial instruments in the normal course of business in
order to hedge exposure to fluctuations in future commodity price and foreign exchange rates.
i) Forward Exchange Contracts – Cash Flow Hedges
The consolidated entity enters into forward exchange contracts where it agrees to sell specified
amounts of foreign currencies in the future at a predetermined exchange rate. The objective is to match
the contract with anticipated future cash flows from sales in foreign currencies, to protect the Company
against the possibility of loss from future exchange rate fluctuations. Exchange gains or losses on
forward exchange contracts are charged to the Income Statement except those relating to hedges of
specific commitments which are deferred and included in the measurement of the sale.
The following table sets out the net value of Australian dollars to be received under foreign currency
contracts, the weighted average contracted exchange rates and the settlement periods of outstanding
contracts for the consolidated entity.
Year Weighted Average Rate Total Value (AUD$’000)
Sell US Dollars 2008 2007 2008 2007
30 June 2008 - 0.7861 - 109,662
30 June 2009 0.7818 0.7678 50,959 42,244
30 June 2010 0.8386 0.7963 36,885 6,099
87,844 158,005
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is
recognised directly in equity. When the cash flows occur, the Company adjusts the initial measurement
of the component recognised in the income statement by the related amount deferred in equity.
For the Consolidated Entity and Parent Entity
At balance date these contracts represented assets of $9,986,000 (2007: $10,051,000).
During the year ended 30 June 2008 a gain of $14,087,000 (2007: gain of $5,520,000) was removed
from equity and transferred to sales revenue in the income statement.
ii) Commodity Price Contracts – Cash Flow Hedges
The Company has entered into forward sales contracts that oblige it to sell specified quantities of base
metals in the future at predetermined prices. The contracts are matched against anticipated future base
metal production to protect the Company against the possibility of a fall in base metal prices.
The following table sets out details of forward nickel sales contracts in place at 30 June 2008:
Year 2008 Nickel Tonnes 2007 A20v0e8ra ge Price (US$/T2o0n0n7e )
30 June 2008 - 3,526 - 24,448
30 June 2009 1,440 1,200 27,665 27,031
30 June 2010 1,010 150 30,627 32,377
Total 2,450 4,876
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is
recognised directly in equity. When the cash flows occur, the Company adjusts the initial measurement
of the component recognised in the income statement by the related amount deferred in equity.
For the Consolidated Entity and Parent Entity
At balance date these contracts represented assets of $17,236,000 (2007: liability of $49,182,000).
During the year ended 30 June 2008 a loss of $24,521,000 (2007: loss of $127,814,000) was removed
from equity and transferred to sales revenue as a reduction in the income statement.
Mincor Resources NL
52
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 8
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
iii) Forward Exchange Contracts - Fair Value Hedges
Certain forward exchange contracts are designated as fair value hedges as they protect the Company
against changes in the fair value of recognised assets. Changes in the fair value of the fair value
hedges are recorded in the Income Statement together with any changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk. A gain of $2,662,000 (2007: gain of
$1,242,000) was recognised in the income statement which was offset by a loss of $2,662,000 (2007:
loss of $1,242,000) of the hedged item.
iv) Commodity Price Contracts - Fair Value Hedges
Certain futures commodity contracts are designated as fair value hedges as they protect the Company
against changes in the fair value of recognised assets. Changes in the fair value of the fair value
hedges are recorded in the Income Statement together with any changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk. A gain of $5,030,000 (2007: loss of
$23,099,000) was recognised in the income statement which was offset by a loss of $5,030,000 (2007:
gain of $23,099,000) of the hedged item.
b) Interest rate, foreign exchange and commodity price risk
An analysis of the sensitivity of derivatives to interest rate, foreign exchange and commodity price risk is
provided at Note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of
each class of derivative financial assets mentioned above.
NOTE 9
OTHER FINANCIAL ASSETS
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Deposit for post balance date acquisition of controlled entity - 11,750 - 11,750
Non-Current
Shares in subsidiaries (refer Note 26)
At beginning of year - - 2,047 2,047
Additions (refer Note 30) - - 111,529 -
At end of year - - 113,576 2,047
These financial assets are carried at cost.
NOTE 10
AVAILABLE-FOR-SALE FINANCIAL ASSETS
At beginning of year 2,951 1,410 1,052 52
Additions - 1,300 - 1,300
Revaluation in current year transferred to equity (1,244) 241 (378) (300)
At end of year 1,707 2,951 674 1,052
Represented by:
Equity securities – listed 1,707 2,951 674 1,052
a) Listed investments
No analysis of the sensitivity of available-for-sale financial assets is provided in Note 2 as market risks
are not material to post tax profits or total equity.
Mincor Resources NL
53
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 11
PROPERTY, PLANT AND EQUIPMENT
Consolidated
Mine
Property
$’000
Plant &
Equipment
$’000
Leased Plant
& Equipment
$’000
Total
$’000
At 1 July 2006
Cost 126,827 20,494 8,502 155,823
Accumulated depreciation/amortisation (85,589) (10,570) (2,991) (99,150)
Net book amount 41,238 9,924 5,511 56,673
Year ended 30 June 2007
Opening net book amount 41,238 9,924 5,511 56,673
Additions 18,192 9,815 738 28,745
Disposals - - (46) (46)
Transfers - 14 103 117
Depreciation/amortisation charge (24,114) (8,055) (2,833) (35,002)
Closing net book amount 35,316 11,698 3,473 50,487
At 30 June 2007
Cost 145,019 30,309 9,194 184,522
Accumulated depreciation/amortisation (109,703) (18,611) (5,721) (134,035)
Net book amount 35,316 11,698 3,473 50,487
Year ended 30 June 2008
Opening net book amount 35,316 11,698 3,473 50,487
Acquisition of subsidiary (refer Note 30) 41,124 3,149 - 44,273
Additions 34,206 4,807 449 39,462
Disposals - (345) - (345)
Depreciation/amortisation charge (47,144) (7,172) (1,322) (55,638)
Closing net book amount 63,502 12,137 2,600 78,239
At 30 June 2008
Cost 220,349 37,920 9,643 267,912
Accumulated depreciation (156,847) (25,783) (7,043) (189,673)
Net book amount 63,502 12,137 2,600 78,239
Mincor Resources NL
54
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 11
PROPERTY, PLANT AND EQUIPMENT (continued)
Parent
Mine
Property
$’000
Plant &
Equipment
$’000
Leased Plant
& Equipment
$’000
Total
$’000
At 1 July 2006
Cost 126,827 20,494 8,502 155,823
Accumulated depreciation/amortisation (85,589) (10,570) (2,991) (99,150)
Net book amount 41,238 9,924 5,511 56,673
Year ended 30 June 2007
Opening net book amount 41,238 9,924 5,511 56,673
Additions 18,192 9,815 738 28,745
Disposals - - (46) (46)
Transfers - 14 103 117
Depreciation/amortisation charge (24,114) (8,055) (2,833) (35,002)
Closing net book amount 35,316 11,698 3,473 50,487
At 30 June 2007
Cost 145,019 30,309 9,194 184,522
Accumulated depreciation/amortisation (109,703) (18,611) (5,721) (134,035)
Net book amount 35,316 11,698 3,473 50,487
Year ended 30 June 2008
Opening net book amount 35,316 11,698 3,473 50,487
Additions 29,338 4,576 449 34,363
Disposals - (345) - (345)
Transfers - (876) - (876)
Depreciation/amortisation charge (29,980) (5,745) (1,322) (37,047)
Closing net book amount 34,674 9,308 2,600 46,582
At 30 June 2008
Cost 174,357 33,664 9,643 217,664
Accumulated depreciation/amortisation (139,683) (24,356) (7,043) (171,082)
Net book amount 34,674 9,308 2,600 46,582
Refer to Note 14 for information on non-current assets pledged as security by the parent entity or its
controlled entities.
Mincor Resources NL
55
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 12
EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Exploration and Evaluation Expenditure
Opening balance 7,485 6,351 5,749 4,615
Current year expenditure 12,823 10,333 4,839 10,153
Cost of acquisition – new tenements 116 1,134 116 1,134
Cost of acquisition – subsidiary (refer Note 30) 32,562 - - -
Expenditure transferred to development expenditure (22,462) - (155) -
Expenditure transferred to investment (278) - (278) -
Expenditure written off in current year (12,823) (10,333) (4,839) (10,153)
Closing balance 17,423 7,485 5,432 5,749
Development Expenditure
Opening balance - - - -
Acquisition of subsidiary (refer Note 30) 34 - - -
Expenditure transferred from exploration and evaluation
expenditure
22,462
-
155
-
Current year expenditure 26,450 - 17,451 -
Closing balance 48,946 - 17,606 -
Total Exploration, Evaluation and Development
Expenditure
66,369
7,485
23,038
5,749
NOTE 13
PAYABLES
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Trade payables 14,781 12,122 14,419 12,122
Other creditors and accruals 32,751 30,148 28,620 30,147
Amounts owing to consolidated entities - - 41,840 -
47,532 42,270 84,879 42,269
a) Foreign currency risk
Note 2(a)(i) details the trade and other payables not denominated in Australian dollars. An analysis of
the sensitivity of trade and other payables to foreign exchange and foreign currency risk is provided at
Note 2.
NOTE 14
INTEREST BEARING LIABILITIES
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Lease liabilities (secured) 792 971 792 971
Non-Current
Lease liabilities (secured) 1,555 2,404 1,555 2,404
Mincor Resources NL
56
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 14
INTEREST BEARING LIABILITIES (continued)
Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of
default.
Financing Arrangements
Entities in the consolidated entity have access to the following financing arrangements at balance date:
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Bonding Facility – secured 2,000 1,500 2,000 1,500
Less: Draw down portion (1,503) (1,100) (1,503) (1,100)
497 400 497 400
The Bonding Facility is denominated in Australian dollars and is secured by a first ranking charge over the
assets and undertakings of the parent entity and consolidated entities. An annual performance bond fee is
charged at market rates.
NOTE 15
TAX LIABILITIES
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Income tax 1,954 33,039 1,954 33,039
The current tax liability for the Company and consolidated entity of $1,954,000 (2007: $33,039,000)
represents the amount of income taxes payable in respect of current and prior financial periods.
The consolidated entity has entered into a tax funding agreement. Refer to Note 5.
NOTE 16
PROVISIONS
CONSOLIDATED PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Employee benefits 3,005 540 1,009 540
Non-Current
Rehabilitation 3,951 1,883 2,386 1,883
As at 30 June 2008 the consolidated entity employed 267 people (2007: 146 people).
Mincor Resources NL
57
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTE 16
PROVISIONS (continued)
Mine Rehabilitation
In accordance with State government legislative requirements, a provision for mine rehabilitation has been
recognised in relation to the consolidated entity’s nickel mining operations. The basis for accounting is set
out in Note 1(aa) of the significant accounting policies. Because of the long-term nature of the liability, the
key uncertainty in estimating the provision is the costs that will be incurred and the life of the mine.
a) Movements in Provisions
Movements in the rehabilitation provision during the financial year are set out below.
Consolidated
$’000
Parent
$’000
Rehabilitation 2008
Carrying amount at start of year 1,883 1,883
Acquired through acquisition of subsidiary (refer Note 30) 1,118 -
Amounts capitalised 758 367
Charged to the income statement
- additional provisions recognised 255 199
Amounts used during the period (63) (63)
Carrying amount at end of year 3,951 2,386
b) Amounts Not Expected to be Settled Within the Next 12 Months
The current provision for long service leave includes all unconditional entitlements where employees
have completed the required period of service and also those where employees are entitled to prorata
payments in certain circumstances. The entire amount is presented as current, since the Group
does not have an unconditional right to defer settlement. However, based on past experience, the
Group does not expect all employees to take the full amount of accrued long service leave or require
payment within the next 12 months. The following amounts reflect leave that is not expected to be
taken or paid within the next 12 months.