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TAW - Tawana Resources NL - Annual Report
Tawana Resources NL
(Incorporated in Australia)
(Registration number ACN 085 166 721)
Share code on the JSE Limited: TAW
ISIN: AU000000TAW7
Share code on the Australian Stock Exchange Limited: TAW
ISIN: AU000000TAW7
("Tawana" or "the Company")
Corporate Directory
Chairman`s Statement
Directors` Report
Corporate Governance Statement
Auditor`s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors` Declaration
Independent Auditor`s Report to the Members
Schedule of Mining Tenements
ASX Additional Information
CORPORATE DIRECTORY
Directors
Mr Warwick Grigor Non-Executive Chairman
Mr Euan Luff Executive Director
Mr Julian Babarczy Non-Executive Director
Mr Harry Hill Non-Executive Director
Joint Company Secretaries
Mr Winton Willesee
Mr Aaron Finlay
Principal Place of Business
and Registered Office
Level 1
2 Ross Place
South Melbourne VIC 3205
Contact Details
Website: www.tawana.com.au
Tel: +61 3 9602 4133
Fax: +61 3 9670 6643
Solicitors to the Company
Wilmoth Field Warne
Level 13
440 Collins Street
Melbourne VIC 3000
Share Registry
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001
Tel: +61 3 9415 5000
Fax: +61 3 9473 2500
Auditor
William Buck
Level 1
465 Auburn Road
Hawthorn East VIC 3123
Stock Exchange
Australian Securities Exchange
ASX Code: TAW
JSE Limited
JSE Code: TAW
CHAIRMANS STATEMENT
Dear Shareholders
This is the first time I have written to you as Chairman, following an approach
by major shareholders of Tawana in mid 2010, with a request to become Chairman
and oversee the rebuilding of the Company following a number of events that
included some unsuccessful exploration programs and the GFC. Many junior
exploration companies go through a similar cycle. It is a tough industry in
which to operate and it is not uncommon for companies to need to regenerate
themselves.
The starting point involves an evaluation of existing projects. Consequently,
we are actively rationalising the diamond interests that have formed the
backbone of the Company since its inception.
Simultaneously we need to look to new management as the Company needs new ideas
and fresh enthusiasm. Management is the most critical aspect of any company and
to this end we have recruited Mr Len Kolff as CEO of the Company. Len is a
geologist with over a decade of experience working with blue chip companies in
Africa on a number of exploration projects. We are most fortunate that he has
joined the company, bringing with him a strong level of discipline and
professionalism. His multi-lingual skills will be a real asset.
On the management front we are also very pleased to deliver the strategic
alliance with Gryphon Minerals Limited. Gryphon, one of the most successful
West African gold explorers, has selected Tawana as a company which it would
like to work with to identify exciting gold exploration projects at an early
stage, in frontier countries in West Africa. Liberia is the first such country.
Tawana has issued 15% of its shares to Gryphon in consideration for its
expertise and support, and access to licences. Gryphon`s commitment to Tawana
has been confirmed by its participation in the recent capital raising,
maintaining its equity.
The recent capital raising, being the issue of 100 million shares at 4.5 cents
to raise $4.5m net of costs, places the Company in the strongest financial
position that it has been in for many years. We would like to thank the Lead
Manager to the placement, BGF Equities Pty Ltd, for its support in this
placement as well as for its consistent support throughout 2010, a period which
was at times very difficult.
We go forward in 2011, with new projects in Liberia, new management, a solid
bank balance, and a very valuable asset with our 26% holding in Rakana, which
provides us with an indirect 7% holding in the Thabazimbi Joint Venture managed
by Aquila. We are on the front foot now and look forward to the future with
enthusiasm.
Of course, our success is directly attributable to the teamwork, dedication and
hard work of my colleagues and staff. I would like to thank them for their
continued dedication to the business. I would also like to thank all of our
shareholders for their confidence and support. I look forward to the
opportunities ahead for Tawana.
Mr Warwick Grigor
Non-executive Chairman
DIRECTORS` REPORT
Your directors submit their report for the year ended 31 December 2010 for
Tawana Resources NL ("the "Company") and its controlled entities (the
"Consolidated Entity").
Directors
The names and details of the Company`s directors in office during the financial
year and until the date of this report are as follows. Directors were in office
for the entire period unless otherwise stated.
Mr Euan Luff - Executive Director
Appointed 16 November 1998
Mr Luff is a Senior Partner of Wilmoth Field Warne, Solicitors. In his
professional capacity he acts as a legal adviser to a number of private and
public companies.
Mr Luff is a member of the Audit Risk and Compliance Committee.
Over the past 3 years, Mr Luff has held no other directorships with ASX-listed
companies.
Mr Warwick Grigor - Non-Executive Chairman
Appointed 20 April 2010
Mr Grigor is a graduate of the Australian National University, having completed
degrees in law and economics. He went straight from university to Hamersley
Iron Pty Ltd in Perth before being employed as a senior mining analyst and
research partner with stockbroking firms in Sydney. Mr Grigor retired from
County Natwest Securities Australia in 1991 to found Far East Capital Limited
("FEC"), a specialist research-based mining company financier and corporate
adviser.
In 2008, the FEC business was backed into a new stockbroker, BGF Equities Pty
Ltd, in return for a substantial shareholding. Mr Grigor is the Executive
Chairman of BGF which operates offices in Sydney, Melbourne and Hong Kong. It
is an institutional and high net-worth investor stockbroker with a strong focus
on the resources sector. In 2002, Mr Grigor was an inaugural inductee to the
ANU Economics and Commerce Department Hall of Fame.
Over the past 3 years, Mr Grigor has held directorships with the following ASX-
listed companies:
Company Commenced Ceased
Heritage Gold NZ Limited 19 Apr 2007 -
Peninsula Energy Limited 11 Apr 2005 -
Mr Harry Hill - Non-Executive Director
Appointed 21 August 2009
Mr Hill is a Certified Practising Accountant and a Fellow of the Chartered
Institute of Secretaries. He has over 30 years` experience having been a
director of several Australian publicly listed companies involved in minerals
exploration, mine development and mining operations, where he was involved in
restructuring corporations and re-purposing businesses and initial public
offers. His skills encompass business and strategic planning, finance and
corporate secretarial functions.
Mr Hill is a member of the Audit Risk and Compliance Committee.
Over the past 3 years, Mr Hill has held directorships with the following ASX-
listed companies:
Company Commenced Ceased
Future Corporation 17 Jun 2008 -
Australia Limited
Hawk Resources Limited 19 Apr 2006 28 July 2008
Mr Julian Babarczy - Non-Executive Director
Appointed 9 December 2009
Mr Babarczy is currently a Portfolio Manager at Regal Funds Management, where he
has primary responsibility for investments within the mining and oil and gas
sectors. Prior to this role, Mr Babarczy worked in investment banking for
Lazard, where he provided advice to both listed and unlisted companies on
capital raising and merger and acquisition transactions. Before joining Lazard,
Mr Babarczy held several roles in corporate finance, where he was instrumental
in a range of successful transactions including IPOs, secondary market capital
raisings, listed company advisory mandates and equities research across a broad
range of industry sectors. Julian holds a Bachelor of Business from Monash
University in Melbourne, is a Chartered Financial Analyst charterholder, and has
a graduate diploma in Applied Finance and Investment from the Securities
Institute of Australia.
Over the past 3 years, Mr Babarczy has held no other directorships with ASX-
listed companies.
Mr Stirling Horne
Appointed 31 July 2009
Resigned 4 February 2010
Mr Horne has worked almost exclusively in the insolvency field since 1965, when
he commenced work in the Official Receivers Office. During that time he has
been a leading practitioner in both the corporate and personal insolvency areas
including receivership, voluntary administration, liquidations of all types,
Part X and bankruptcy. In addition he has been involved in numerous engagements
where insolvency appointments were not appropriate.
As part of his role he has carried out investigations into such issues as
incorrect accounting, insolvent trading, undue preference payments, uncommercial
loans, hidden assets, etc. Flowing from these investigations many expert
reports have been written by him, which in turn, lead on occasion, to Mr Horne
being a witness for either the plaintiff or defendant in court proceedings. In
a career spanning 40 years Mr Horne has had experience in a very wide range of
industries.
Over the past 3 years, Mr Horne has held no other directorships with ASX-listed
companies.
Interests in the shares and options of the Company
As at the date of this report, the interests of the directors in the shares and
options of Tawana Resources NL were:
Name Number of ordinary Number of options
shares over ordinary
shares
Mr E Luff 21,589,740 6,104,150
Mr W Grigor 27,850,000 -
Mr H Hill - -
Mr J Babarczy 25,173,288 -
Company Secretaries
Mr Winton Willesee
Mr Willesee is an experienced Director and Company Secretary in the small
capitalisation sector of the ASX and brings to Tawana a broad range of
experience in company administration, corporate governance and corporate
finance.
Mr Willesee has a Master of Commerce, Post-Graduate Diploma in Business
(Economics and Finance), a Diploma in Education and a Bachelor of Business. He
is a Fellow of the Financial Services Institute of Australasia and a Member of
CPA Australia.
Mr Willesee is a Director of Base Resources Limited, Coretrack Limited, Cove
Resources Limited, Future Corporation Australia Limited and Newera Resources
Limited. He is also currently the Company Secretary of listed companies Base
Resources Limited, Boss Energy Limited, Future Corporation Australia Limited,
Greenvale Mining NL, Mantle Mining Corporation Ltd and Newera Resources Limited
along with a number of private and unlisted public companies.
Mr Aaron Finlay
Mr Finlay is a Chartered Accountant and Chartered Company Secretary with over 19
years` experience in the accounting and finance profession.
Mr Finlay is Finance Director and Company Secretary for ASX-listed Cleveland
Mining Company Limited. Prior to this he was Chief Financial Officer and
Company Secretary for ASX listed Mayne Pharma Group Limited and previously
INVESCO Australia`s Chief Financial Officer where he had responsibility for the
operations of finance, as well as the compliance, legal, and human resources
functions. Prior to that position, Mr Finlay was head of group tax and treasury
for INVESCO`s global operations in London. Prior to joining INVESCO, Mr Finlay
worked for PricewaterhouseCoopers (then Price Waterhouse) in London and Perth
for 7 years.
Operating results
The loss of the Consolidated Entity for the year ended 31 December 2010 after
providing for income tax amounted to $2,214,397 (2009: $974,886).
Financial position
The net assets of the Consolidated Entity are $6,906,424 as at 31 December 2010
(2009: $5,879,623).
Principal activities and significant changes in affairs
Tawana Resources NL`s principal activities consisted of mineral exploration, in
particular diamond and gold exploration. There were no significant changes in
the nature of the activities of the consolidated entity during the year that
have not been covered in this Annual Report.
REVIEW OF OPERATIONS
Background
Tawana was incorporated as a public company on 16 November 1998 in Australia.
Operating through its various subsidiaries, the Company is involved in the
exploration for, and evaluation of, diamondiferous kimberlites and alluvials,
primarily in South Africa and Botswana. The Company`s objective is to establish
viable ore reserves and turn such projects into profitable operations.
Recently the company has expanded its interests in evaluating other mineral
resources.
Tawana listed on ASX (as a primary listing) in April 2001 and JSE (as a
secondary listing) in November 2005. The Company`s head office is located in
Melbourne, Australia.
Corporate Activities and Subsequent Events
On 1 July 2010 the Company completed the placement of 66,000,000 shares at 1
cent per share to raise $660,000. Subsequently, on 22 March 2011, the Company
announced that it had raised an additional $4.5 million via share placement of
100 million shares at 4.5 cents with BGF Equities Pty Ltd acting as the lead
manager.
The Company announced the resignation of Stirling Horne as a Director on 4
February 2010. On 20 April 2010 the Company announced the appointment of
Warwick Grigor as non-executive Director and Chairman. Mr Grigor is the
Executive Chairman and Head of Research at BGF Equities Pty Ltd, and an
inaugural inductee of the ANU Economics and Commerce Department Hall of Fame in
2002.
The Company announced the appointment of Lennard Kolff van Oosterwijk (Len
Kolff) as CEO on 2 June 2010. Len joined Tawana having worked over the past
decade at Rio Tinto, where he was involved in a range of high profile projects
including the Simandou iron ore project and Northparkes Cu-Au mine. His
responsibilities have encompassed a broad range of disciplines, including the
design, implementation and supervision of multi-commodity exploration and
prefeasibility study resource drilling programs in West Africa and Australia.
On 19 January the Company announced a Strategic Alliance with Gryphon Minerals
Ltd (ASX: GRY) and the acquisition of initially five, now seven permit
applications, in Liberia, West Africa. Under the terms of the Alliance Gryphon
will assist Tawana with the identification, acquisition and exploration of
mineral permits in West Africa which are outside Gryphon`s core growth strategy.
Gryphon will also assist Tawana establish itself in West Africa and provide high
level technical, operational and logistical support.
As part of the agreement and after shareholder approval on 24 February 2010,
Tawana issued Gryphon 100 million fully paid ordinary shares, representing
approximately 14% of the issued capital on an undiluted basis. Gryphon is now
Tawana`s largest shareholder and as part of the agreement has the right to
nominate one nominee to the Board of Directors.
The Kareevlei Project Area is comprised of a cluster of five kimberlites located
approximately 100km northwest of Kimberley. On 18 August 2010 the Company
announced signing of a Heads of Agreement (HoA) for the sale of Kareevlei Wes to
Rolatseng Mining CC of South Africa. The key terms of the HoA were as follows:
* Payment of a ZAR150,000, non-refundable deposit within 14 days of the
signing of the HoA,
* Payment of ZAR1.35 million non-refundable sum within 30 days of the signing
of the HoA subject to the mining right being transferred to the purchaser,
* Payment of ZAR23.5 million within seven days of the completion of a Trial
Mining exercise.
The Company reported that there had been ongoing discussions that may lead to a
reduction of the total transaction price, in the range of 10-20%, due to an
expectation of a lower grade of the underlying mineral resource.
On 25 January 2011 the Company announced that an Addendum to the Heads of
Agreement for the sale of Kareevlei was signed with Rolatseng Mining CC. The
Purchase price was revised from ZAR25 million to ZAR22 million due to an
expectation of a lower grade as announced in the previous quarter. The revised
terms of the HoA were as follows:
* Payment of a ZAR150,000 non-refundable deposit within fourteen (14) days of
the signing of the HoA,
* Payment of a ZAR250,000 non-refundable deposit on 30th November 2010,
* Payment of ZAR1.1 million in five monthly instalments commencing 31st
January 2011 into trust or escrow and released to the vendor on transfer of
the Mining Right,
* Payment of ZAR20.5 million within seven days of completion of the Trial
Mining and reporting exercise and to be held in trust or escrow pending
transfer of the Mining Right.
The first two payments of ZAR150,000 and ZAR250,000 have been received by the
Company and steps are underway to transfer the Mining Right.
On 2 March 2011, the Company announced that two highly prospective mineral
permits have been formally approved by the Liberian Minister of Lands Mines and
Energy Dr. Roosevelt G. Jayjay, allowing Tawana to start exploration activities
before the onset of the wet season in June 2011.
On 22 March 2011, the Company announced that following the appointment of BGF
Equities as Lead Manager, the Company completed a placement of 100 million
shares at an issue price of 4.5 cents to raise $4.5 million before costs. The
funds raised by the placement will be used primarily to advance exploration
activities in Liberia, to fund initial drilling on targets defined and on
working capital on Tawana`s West African growth plans.
On 30 March 2011, the Company announced that it had issued 25 million fully paid
ordinary shares in the Company following the exercise of options previously on
issue.
Dividends paid or recommended
The Directors do not recommend the payment of a dividend and no amount has been
paid or declared by way of a dividend to the date of this report.
Future developments, prospects and business strategies
The consolidated entity will continue to concentrate on mineral exploration
particularly diamond exploration with emphasis on the development of its
existing projects.
Environmental issues
The Company is aware of its environmental obligations with regards to its
exploration activities and ensures that it complies with all regulations at all
times.
REMUNERATION REPORT (audited)
This report details the nature and amount of remuneration for each Director of
Tawana Resources NL, and for the executives receiving the highest remuneration.
Remuneration policy
The Board policy for determining the nature and amount of remuneration of
Directors and Executives is agreed by the Board of Directors as a whole. The
Board obtains professional advice where necessary to ensure that the Company
attracts and retains talented and motivated Directors and employees who can
enhance Company performance through their contributions and leadership.
Remuneration policy is based on industry practice rather than Company
performance and takes into account the risks and liabilities assumed by the
directors and executives as a result of their involvement in the activities
undertaken by the Company.
Executive Director Remuneration
In determining the level and make-up of executive remuneration, the Board
negotiates a remuneration to reflect the market salary for a position and
individual of comparable responsibility and experience. Remuneration is
compared with the external market by reference to industry salary surveys. If
required, the Board may engage an external consultant to provide independent
advice in the form of a written report detailing market levels of remuneration
for comparable executive roles.
Remuneration consists of a fixed remuneration component as considered
appropriate.
Non-Executive Director Remuneration
Non-Executive Directors` fees are paid within an aggregate limit which is
approved by the shareholders from time to time. Retirement payments, if any,
are determined in accordance with the rules set out in the Company`s
Constitution and the Corporations Act at the time of the Director`s retirement
or termination. Non-Executive Directors remuneration may include an incentive
portion consisting of bonuses and/or options, as considered appropriate by the
Board, which is subject to shareholder approval in accordance with the ASX
Listing Rules.
The aggregate remuneration, and the manner in which it is apportioned amongst
Non-Executive Directors, is reviewed annually. The Board considers the amount
of director fees being paid by comparable companies with similar
responsibilities and levels of experience of the Non-Executive Directors when
undertaking the annual review process.
REMUNERATION REPORT (audited) (continued)
The current maximum amount of Non-Executive Directors fees payable is fixed at
$100,000 in total, for each 12 month period commencing 1 January each year,
until varied by ordinary resolution of shareholders.
Executive Remuneration
Executive remuneration is paid according to experience and market conditions.
Executive remuneration is reviewed annually by the Remuneration and Nomination
Committee and recommendations made to the Board. Remuneration may include an
incentive portion consisting of bonuses and/or options, as considered
appropriate by the Board, which may be subject to shareholder approval in
accordance with the ASX Listing Rules. There is currently no formal bonus
scheme in place.
The Board considers the amount of executive remuneration being paid by
comparable companies with similar responsibilities and levels of experience of
the executive when undertaking the annual review process.
Details of remuneration for year ended 31 December 2010
Details of the remuneration of the Directors of Tawana Resources NL and its
controlled entities, are set out in the following tables.
Details of remuneration for years ended 31 December 2010 and 31 December 2009
Short-term benefits Post Share- Total Perf
employ based orm-
ment paymen ance
ts rela
ted
Salary Ca Non- Super-
and fees sh cash annuat
bo benefi ion
nu ts
s
2010 $ $ $ $ $ $ %
Directors
Mr E Luff 63,000 - - - 11,513 74,513 -
Mr W 27,889 - - - - 27,889 -
Grigor
Mr H Hill 40,000 - - - - 40,000 -
Mr J 42,521 - - - - 42,521 -
Babarczy
Mr S 4,166 - - - - 4,166 -
Horne
Key
Managemen
t
Personnel
Mr L 89,842 - - 21,971 34,208 146,021 -
Kolff
267,418 - - 21,971 45,721 335,110
During the 2010 year former director, Mr W Marx was paid $50,000 in settlement
of past services to the Company as Chief Executive Officer.
REMUNERATION REPORT (audited) (continued)
Short-term benefits Post Share- Total Perf
employ based orm-
ment paymen ance
ts rela
* ted
Salary Cash Non- Super-
and bonu cash annuat
fees s bene ion
fits
2009 $ $ $ $ $ $ %
Directors
Mr E Luff 52,000 - - - 27,468 79,468 -
Mr H Hill 14,409 - - - - 14,409 -
Mr J - - - - - - -
Babarczy
Mr S 20,000 - - - - 20,000 -
Horne
Ms N - - - - - - -
Mazwai
Mr N - - - - 41,202 41,202 -
Barrie
Mr B - - - - 13,734 13,734 -
Phillips
Mr W Marx - - - - 27,468 27,468 -
86,409 - - - 109,87 196,281
2
* These amounts represent the non-cash expense accrual for share options
granted in prior financial years.
Options granted as remuneration
All options issued to Directors and Key Management Personnel are issued for nil
consideration.
All options issued have been granted for up to a five year period, vesting
within 12 and 24 months from contract or issue date.
All options issued carry no dividend or voting rights. When exercised, each
option is converted into one ordinary share pari passu with existing ordinary
shares.
The terms and conditions of each grant of options affecting the remuneration of
Directors and Key Management Personnel in this, or future reporting periods, are
as follows:
The following table discloses the options granted as part of remuneration:
Options Option Option Total Value Number
granted s s value of of of
exerci lapsed options options options
sed granted, include vested
exercise d in at end
d and remun- of year
lapsed ration
for the
year
Number Fair Intrin Value
granted value sic at
at value time
grant at of
date exerci lapse
se
date
2010 Number $ $ $ $ $ Number
Mr L 10,000, 109,8 N/A N/A 109,828 34,208 -
Kolff 000 28
During the 2009 year there were no options granted as remuneration to directors
or key management personnel.
Shares issued on exercise of compensation options
During the year no share options were exercised.
REMUNERATION REPORT (audited) (continued)
Employment contracts of directors and senior executives
There are no contracts between the Company and the Directors. The Company has
entered into a standard appointment agreement with Mr Len Kolff which provides
for an appointment term of two years from 14 June 2010 and a notice period of
three months, together with an issue of options over fully paid ordinary shares
in the Company as noted above.
Meetings of directors
During the financial year, 20 meetings of Directors were held. Attendances by
each Director during the year were as follows:
Board meetings Audit, risk and
compliance,
Remuneration and
Nomination
committee meetings
Number Number Number Number
attended eligible attended eligible
to to
attend attend
Mr E Luff 19 20 2 2
Mr W Grigor 13 13
Mr H Hill 20 20 2 2
Mr J 19 20
Babarczy
Mr S Horne 2 2
Options
At the date of this report, the unissued ordinary shares of Tawana Resources NL
under option are as follows:
Grant Date of Exercise Number under
date expiry price option
22 Jul 1 Apr 2011 $0.10 13,240,053
2008
22 Aug 30 Nov 2011 $0.35 1,420,000
2007
18 Jun 18 Jun 2012 $0.07 4,000,000
2008
17 Jan 17 Jan 2013 $0.10 6,000,000
2009
17 Jan 17 Jan 2013 $0.07 6,750,000
2009
17 Jan 17 Jan 2014 $0.10 6,750,000
2009
23 Feb 23 Feb 2013 $0.01 50,000,000
2010
9 Sep 31 Jul 2012 $0.01 50,000,000
2010
9 Sep 9 Sep 2012 $0.03 5,000,000
2010
9 Sep 30 Jul 2013 $0.01 50,000,000
2010
9 Sep 9 Sep 2014 $0.05 5,000,000
2010
8 Mar 8 Mar 2014 $0.01 25,000,000
2011
223,160,053
During the years ended 31 December 2010 and 31 December 2009, no options were
exercised.
No person entitled to exercise an option had or has any right by virtue of the
option to participate in any share issue of any other body corporate.
Indemnifying officers or auditor
In accordance with the constitution, except as may be prohibited by the
Corporations Act 2001 every officer of the Company shall be indemnified out of
the property of the Company against any liability incurred by him in his
capacity as officer, auditor or agent of the Company or any related corporation
in respect of any act or omission whatsoever and howsoever occurring or in
defending any proceedings, whether civil or criminal. The terms of the policy
prevent disclosure of the amount of the premium payable and the level of
indemnification under the insurance contract.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the
Company or intervene in any proceedings to which the Company is a party for the
purpose of taking responsibility on behalf of the Company for all or any part of
these proceedings.
The Company was not a party to any such proceedings during the year.
CORPORATE GOVERNANCE STATEMENT
Non-audit services
The Company did not engage its external auditor to provide any non-audit
services during or since the end of the financial year.
Auditor`s independence declaration
The lead auditor`s independence declaration for the year ended 31 December 2010
has been received and is attached to this Directors` Report.
Signed in accordance with a resolution of the Board of Directors.
Mr Warwick Grigor
Non-executive Chairman
Dated at Melbourne this 31st day of March 2011
The Board members of Tawana Resources NL are committed to achieving and
demonstrating the highest standards of corporate governance. An extensive
review of the Company`s corporate governance framework was completed in light of
the best practice recommendations released by the Australian Securities Exchange
(ASX) Corporate Governance Council in March 2003. In August 2007, the ASX
Corporate Governance Council released a second edition of the principles. The
Board continues to review the framework and practices to ensure they meet the
interests of shareholders. The Company and its controlled entities together are
referred to as the consolidated entity in this statement.
The relationship between the Board and Senior Management is critical to the
consolidated entity`s long-term success. The Directors are responsible to the
shareholders for the performance of the Company in both the short and the longer
term and seek to balance sometimes competing objectives in the best interests of
the consolidated entity as a whole. Their focus is to enhance the interests of
shareholders and other key stakeholders and to ensure the consolidated entity is
properly managed.
Day to day management of the consolidated entity`s affairs and the
implementation of the corporate strategy and policy initiatives are formally
delegated by the board to the Managing Director and Senior Executives as set out
in the consolidated entity`s Delegated Authorised Policy.
A description of the Company`s main corporate governance practices is set out
below. All of these practices, unless otherwise stated, were in place for the
entire year.
Foundations for management and oversight
The Board has the overall responsibility to shareholders for all governance
matters of the consolidated entity. The Board remains primarily responsible for
the strategic direction and financial aspirations of the consolidated entity,
whilst delegating the responsibility of management to the Managing Director
and/or the senior management team.
The Board aims to fulfill its responsibilities by creating value for all
stakeholders that is sustainable and beneficial. Stakeholders include
shareholders, employees, customers, the community and the environment. The
Board has adopted a Charter that includes amongst other items, the specific
roles and responsibilities of the Board. Without limiting the Board`s function,
their specific responsibilities include:
* Approving objectives, strategies and financial plans and monitoring the
Company`s performance against these plans;
* Appointment of the Managing Director and reviewing his performance and
remuneration;
* Monitoring compliance with the regulatory requirements, ensuring all
consolidated entity employees act with integrity and due diligence in the
interests of the Company and stakeholders; and
* Review and approval of all significant policies and procedures across the
consolidated entity.
Board composition
The Board reviews from time to time the size, structure and composition of the
Board, taking into consideration the balance of skills, experience and knowledge
of Board members.
The Board was initially chaired at the commencement of the financial year by an
Executive (Non-Independent) Chairman. On the appointment of Mr Warwick Grigor,
the Board was subsequently chaired by a Non-executive (Independent) Chairman.
The Company has adopted a definition of independence consistent with the
guidance provided by the ASX Corporate Governance Council. Such a definition
provides that an Independent Director is a Non-Executive Director and is not a
member of management and:
* is not a substantial shareholder of the Company or an officer of, or
otherwise associated directly with, a substantial shareholder of the
Company;
* within the last three years has not been employed in an executive capacity
by the Company or another member of the consolidated entity, or been a
Director after ceasing to hold such employment;
* within the last three years has not been a principal or a material adviser
or a material consultant to the Company or member of the consolidated
entity, or an employee materially associated with the service provided;
* is not a material supplier or customer of the Company or other member of
the consolidated entity, or an officer of or otherwise associated directly
with a material supplier or customer;
* has no material contractual relationship with the Company or another member
of the consolidated entity other than as a Director of the Company;
* has not served on the Board for a period which could, or could reasonably
be perceived to, materially interfere with the Director`s ability to act in
the best interests of the Company; and
* is free from any interest and any business or other relationship which
could, or could reasonably be perceived to, materially interfere with the
Director`s ability to act in the best interests of the Company.
A substantial shareholder is defined to be a person or Company that has an
interest of 5% or more of the voting rights of the Company.
The Board has reviewed the position of all current directors in light of
the Company`s adopted definition of independence. The Board acknowledges
that it was not comprised of a majority of independent non-executive
Directors or chaired by an independent non-executive director for the whole
of the year. Non-compliance with the best practice recommendation of the
ASX Council`s requirements is attributable to the Company`s small size,
emerging rate of growth since listing, and identifying and attracting
suitable qualified directors with the right combination of skills.
As at the date of this report the Board is comprised of a majority of
independent directors and chaired by an independent non-executive director.
The following were Directors during the 2010 year:
Director Capacity Position Held Held office
office to
from
E Luff Executive Non- 20 Apr Current
Director Independent 2010
Executive Non- 31 Jul 20 Apr 2010
Chairman Independent 2009
Non-Executive Non- 16 Nov 31 Jul 2009
Director Independent 1998
W Grigor Non-Executive Independent 20 Apr Current
Chairman 2010
H Hill Non-Executive Independent 21 Aug Current
Director 2009
J Non-Executive Independent 9 Dec Current
Babarczy Director 2009
S Horne Non-Executive Independent 31 Jul 4 Feb 2010
Director 2009
At each annual general meeting one-third of the Directors or, if their number is
a multiple of three, then the number nearest to but not more than one-third of
the Directors must retire from office as follows:
(a) The directors to retire by rotation at an annual general meeting are those
directors who have been longest in office since their last election or
appointment.
(b) Directors elected or appointed on the same day may agree among themselves
which of them must retire.
A director must retire from office at the conclusion of the third annual general
meeting after which the director was elected, even if his or her retirement
results in more than one-third of all directors retiring from office. A
retiring director will be eligible for re-election.
Responsibilities
The responsibilities of the board include:
* providing strategic guidance to the company;
* reviewing and approving business and financial plans;
* monitoring ealizationon and financial performance;
* liaising with company`s auditors;
* appointing the Managing Director and reviewing his performance;
* enhancing and protecting the reputation of the organisation, and
* overseeing the operation of the systems and processes for compliance and
risk management reporting to shareholders.
Independent professional advice
Directors and Board committees have the right, in connection with their duties
and responsibilities, to seek independent advice at the Company`s expense.
Prior written approval of the Chairman is required, but this will not be
unreasonably withheld.
Performance assessment
The full Board is responsible for reviewing the performance of the Chairman. It
is the responsibility of the Chairman, to assess the performance of each of the
Directors. Due to the changes to the Board, the Board did not conduct
performance reviews during the 2010 year.
Corporate reporting
The Chairman and Company Secretary have made attestations recommended by the ASX
Corporate Governance Council as to the Company`s financial condition prior to
the Board signing this report.
Board committees
The Board has established an Audit Risk and Compliance Committee. In view of
the Company`s current stage and the small size of the Board, the roles that
would otherwise be performed by a remuneration committee and nomination
committee are performed by the full Board.
Audit Risk and Compliance Committee
The current members of the committee are:
* E Luff (Chairman)
* H Hill
The joint company secretaries also attend meetings of the Audit Risk and
Compliance Committee.
The committee is responsible for risk management and oversight of the Company`s
financial reporting policies and other operational risk areas. Furthermore, the
committee monitors the internal controls and the integrity of the Company`s
financial statements in compliance with the regulatory requirements. The
committee is also responsible for the appointment, evaluation and oversight of
the external auditor, ensuring that the independence of the external assurance
function is maintained.
The Audit Risk and Compliance Committee is not comprised of a majority of
independent non-executive directors. In light of the Company`s current stage
and constraints on the number of independent non-executive directors the Board
believes that this committee composition is optimal in the circumstances.
External auditors
The Audit Risk and Compliance Committee policy is to appoint external auditors
who clearly demonstrate quality and independence. The performance of the
external auditor is reviewed annually and applications for tender of external
audit services are requested as deemed appropriate, taking into consideration
assessment of performance, existing value and tender costs. William Buck Audit
(Vic) Pty Ltd was appointed as the external auditor in 2009. It is William Buck
Audit (Vic) Pty Ltd policy to rotate audit engagement partners on listed
companies at least every five years.
An analysis of fees paid to the external auditors, including a breakdown of fees
for non-audit services, is provided in the Directors` Report and in the notes to
the financial statements. It is the policy of the external auditor to provide
an annual declaration of their independence to the audit committee.
The external auditor is requested to attend the annual general meeting and be
available to answer shareholder questions about the conduct of the audit and the
preparation and content of the audit report.
Risk assessment and management
The Board, through the Audit Risk and Compliance Committee, is responsible for
ensuring there are adequate policies in relation to risk management, compliance
and internal control systems. In summary, the company policies are designed to
ensure strategic, operational, legal, reputation and financial risks are
identified, assessed, effectively and efficiently managed and monitored to
enable achievement of the Company`s business objectives.
Considerable importance is placed on maintaining a strong control environment.
There is an organisation structure with clearly drawn lines of accountability
and delegation of authority. Adherence to the Code of Conduct is required at
all times and the Board actively promotes a culture of quality and integrity.
The Company`s risk management policy and the operation of the risk management
and compliance system is managed by the Company`s Audit Risk and Compliance
Committee.
Detailed control procedures cover management accounting, financial reporting,
project appraisal, environment, health and safety, IT security, compliance and
other risk management issues.
In addition, the Board requires that each major proposal submitted to the Board
for decision is accompanied by a comprehensive risk assessment and, where
required, management`s proposed mitigation strategies.
Safety, Health and Environment Management System (SHEMS)
The Company ealizatio the importance of environmental and occupational health
and safety (OH&S) issues and is committed to the highest levels of performance.
To help meet this objective the SHEMS was established to facilitate the
systematic identification of environmental and OH&S issues and to ensure they
are managed in a structured manner. This system has been operating for a number
of years and allows the company to:
* monitor its compliance with all relevant legislation;
* continually assess and improve the impact of its operations on the
environment;
* encourage employees to actively participate in the management of
environmental and OH&S issues; and
* use energy and other resources efficiently.
Information on compliance with significant environmental regulations is set out
in the Directors` Report.
Code of conduct
These policies set out the ethical standards that govern the conduct of all
Directors and employees. The Company recognises the interests of all
stakeholders in the community and their role in creating shareholder value.
Every Director and employee is required at all times, to conduct themselves in a
manner consistent with the principles of honesty and integrity.
The Code requires Directors and employees, amongst other things, to comply with
the law, to disclose relevant interests that they may have and to act in the
best interests of the Company. The Code also covers confidentiality of
information and respect of privacy.
Continuous disclosure and shareholder communication
The Company has policies and procedures on information disclosure that focus on
continuous disclosure of any information concerning the consolidated entity that
a reasonable person would expect to have a material effect on the price of the
Company`s securities. These policies and procedures also include the
arrangements the Company has in place to promote communication with shareholders
and encourage effective participation at general meetings.
When analysts are briefed on aspects of the Company`s operations, the material
used in the presentation is released to the ASX. Procedures have also been
established for reviewing whether any price sensitive information has been
inadvertently disclosed and, if so, this information is also immediately
released to the market.
Securities policy
This policy provides guidance to all Directors`, officers and staff dealing in
Tawana`s securities. The Securities Policy prohibits trading for all persons
aware of unpublished price sensitive information about the Company. In
addition, it specifically limits the trade of Tawana`s securities by the
Company`s officers during certain periods of time prior to the release of both
the half year and full year results.
Significant accounting policies
Details of significant accounting policies are set out in Note 1 of the notes
forming part of the financial statements.
Directors` and executives` remuneration
The performance of the Company depends upon the quality of its Directors and
executives. To prosper, the Company must attract, motivate and retain highly
skilled Directors and executives.
The Board undertakes a review of the remuneration packages of all Directors and
executive officers on an annual basis. Remuneration packages are reviewed with
due regard to performance and other relevant factors.
In order to retain and attract executives of sufficient ealiza to facilitate the
efficient and effective management of the Company`s operations, the Remuneration
and Nomination Committee may seek the advice of external advisors in connection
with the structure of remuneration packages.
Remuneration packages contain the following key elements:
* Primary benefits, including salary/fees;
* Post employments benefits, including superannuation and prescribed
retirement benefits, and
* Other benefits
Details of Directors and Key Management Personnel are contained within the
Directors` Report.
Non-Executive Directors` fees are determined by the Board based on external
advice that is received from time to time and with reference to fees paid to
other Non-Executive Directors of comparable companies, taking account of the
specific duties in relation to the Company. Non-Executive Director`s fees are
within the limit agreed to by shareholders and represent the responsibilities of
the time spent by the Non-Executive Directors` in fulfilling their duties to the
Board.
Publicly available information
In accordance with the ASX Corporate Governance Council, the best practice
recommendations provide that specific documents should be publicly available.
All policies referred to in this section are available by contacting the
Company.
Dear Board Members
AUDITOR`S INDEPENDENCE DECLARATION
IN ACCORDANCE WITH SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF TAWANA RESOURCES NL
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the directors of Tawana
Resources NL.
As lead audit partner for the audit of the financial report of Tawana Resources
NL for the financial year ended 31 December 2010, I declare that to the best of
my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
Jeffrey Luckins
Director
William Buck Audit (VIC) Pty Ltd
ABN 59 116 151 136
Dated in Melbourne, Australia on this 31st day of March 2011
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
Note Consolidated
2010 2009
$ $
Revenue 4 68,751 23,173
Corporate costs (1,291,848) (330,266)
Depreciation (99,496) (147,461)
Employee benefits expense (454,986) (105,909)
Exploration expenses written - (3,945)
off
Finance costs (54,779) (19,408)
Impairment of exploration (259,754) -
expenditure
Other expenses 5 (55,109) (236,489)
Loss before income tax (2,147,221) (820,305)
expense
Income tax expense 6 - -
Net loss for the period from (2,147,221) (820,305)
continuing operations
Loss from discontinued 17 (67,176) (154,581)
operations after tax
Net loss for the period (2,214,397) (974,886)
attributable to Tawana
Resources NL
Other comprehensive income
(Loss) / gain on translation (199,348) 39,245
of foreign operations
Other comprehensive income (199,348) 39,245
for the period, net of tax
Total comprehensive income (2,413,745) (935,641)
for the period attributable
to Tawana Resources NL
Earnings per share from
continuing and discontinuing
operations
Basic loss (cents) 24 (0.47) (0.75)
Diluted loss (cents) 24 (0.47) (0.75)
Earnings per share from
continuing operations
Basic loss (cents) 24 (0.46) (0.63)
Diluted loss (cents) 24 (0.46) (0.63)
The above Statement of Comprehensive Income should be read in conjunction with
the accompanying notes
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2010
Note Consolidated
2010 2009
$ $
Current assets
Cash and cash equivalents 22(a) 835,470 348,609
Trade and other receivables 7 48,945 55,474
Other financial assets 8 2,960,354 -
Inventories 9 75,641 77,131
Total current assets 3,920,410 481,214
Non-current assets
Trade and other receivables 7 42,323 43,021
Investment in associate 10 16,640 16,640
Property, plant and equipment 11 186,892 310,769
Exploration expenditure 12 2,923,147 5,950,734
Total non-current assets 3,169,002 6,321,164
Total assets 7,089,412 6,802,378
Current liabilities
Trade and other payables 13 148,726 357,763
Provisions 6,875 14,992
Borrowings 14 - 200,000
Total current liabilities 155,601 572,755
Non-current liabilities
Provisions 27,387 -
Borrowings 14 - 350,000
Total non-current liabilities 27,387 350,000
Total liabilities 182,988 922,755
Net assets 6,906,424 5,879,623
Equity
Contributed equity 15 36,482,279 35,356,374
Reserves 16 (281,859) (2,397,152)
Accumulated losses (29,293,996) (27,079,599)
Total equity 6,906,424 5,879,623
The above Statement of Financial Position should be read in conjunction with the
accompanying notes.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Consolidated
Issued Reserves Accumulated Total
capital losses
$ $ $ $
Balance at 1 35,356,37 (2,397,152) (27,079,599) 5,879,623
January 2010 4
Loss for the - - (2,214,397) (2,214,397)
period
Other - (199,348) - (199,348)
comprehensive
income for the
period
Total - (199,348) (2,214,397) (2,413,745)
comprehensive loss
for the period
Disposal of - 454,759 - 454,759
foreign operation
Transactions with
owners in their
capacity as owners
Shares issued, net 1,125,905 - - 1,125,905
of costs
Share options - 1,859,882 - 1,859,882
issued and vested
Balance at 31 36,482,27 (281,859) (29,293,996) 6,906,424
December 2010 9
Balance at 1 34,708,73 (2,570,305) (26,104,713) 6,033,714
January 2009 2
Loss for the - - (974,886) (974,886)
period
Other - 39,245 - 39,245
comprehensive
income for the
period
Total - 39,245 (974,886) (935,641)
comprehensive loss
for the period
Transactions with
owners in their
capacity as owners
Shares issued, net 647,642 - - 647,642
of costs
Share options - 133,908 - 133,908
vested
Balance at 31 35,356,37 (2,397,152) (27,079,599) 5,879,623
December 2009 4
The above Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
STATEMENT OF STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
Note Consolidated
2010 2009
$ $
Cash flows from operating
activities
Receipts from customers 26,696 18,205
Payments to suppliers and (1,172,155) (507,950)
employees
Interest received 41,325 15,477
Interest paid (25,666) -
Net cash flows used in 22(b) (1,129,800) (474,268)
operating activities
Cash flows from investing
activities
Proceeds from sale of plant 9,276 7,776
and equipment
Purchase of plant and (2,425) -
equipment
Proceeds from sale of 57,544 -
discontinued operation
Payments for exploration (11,527) (202,167)
Environmental bonds refunded - 39,074
Net cash flows used in 52,868 (155,317)
investing activities
Cash flows from financing
activities
Proceeds from issue of shares 1,851,670 500,000
Capital raising costs (137,036) (88,659)
Repayment of borrowings (120,000) -
Proceeds from borrowings - 550,000
Net cash from financing 1,594,634 961,341
activities
Net increase in cash and cash 517,702 331,756
equivalents
Cash and cash equivalents at 348,609 18,090
beginning of period
Effects of exchange rates on (30,841) (1,237)
cash holdings in foreign
currencies
Cash and cash equivalents at 835,470 348,609
end of period
The above Statement of Cash Flows should be read in conjunction with the
accompanying notes
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
1. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these financial
statements are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated. The financial statements
include the consolidated entity consisting of Tawana 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 and the
Australian Accounting Standards Board, Urgent Issues Group Interpretations and
the Corporations Act 2001.
The financial report is presented in Australian dollars and rounded to the
nearest dollar.
The financial report is prepared on a going concern basis.
These financial statements have been prepared under the historical cost
convention.
Compliance with AIFRS
These financial statements comply with Australian Accounting Standards
("AASBs"). Compliance with AASBs ensures that these financial statements,
comprising the financial statements and notes thereto, comply with International
Financial Reporting Standards ("IFRS").
Critical accounting estimates
The preparation of financial statements in conformity with AASBs requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the consolidated entity`s
accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in Note 3.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of
all subsidiaries of Tawana Resources NL as at 31 December 2010 and the results
of all subsidiaries for the year then ended. Tawana Resources NL and its
subsidiaries together are referred to in these financial statements as the Group
or the consolidated entity.
Subsidiaries are all those entities, including special purpose entities, over
which the consolidated entity has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one-half
of the voting rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether
the 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.
Intercompany transactions, balances and unrealised gains on transactions between
consolidated entity 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 consolidated
entity.
1. Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
Associates
Associates are all entities over which the consolidated entity has significant
influence but not control, generally accompanying a shareholding of between 20%
and 50% of the voting rights. Investments in associates are accounted for in
the consolidated financial statements using the equity method of accounting,
after initially being recognised at cost.
The consolidated entity`s share of its associates` post acquisition profits or
losses is recognised in the Statement of Comprehensive Income, and its share of
post-acquisition movement in reserves is recognised in reserves. The cumulative
post-acquisition movements are adjusted against the carrying amount of the
investment. Dividends receivable from associates reduce the carrying amount of
the investment.
When the consolidated entity`s share of losses in an associate equals or exceeds
its interest in the associate, including other unsecured long-term receivables,
the consolidated entity does not recognise further losses, unless it has
incurred obligations or made payment on behalf of the associate.
Unrealised gains on transactions between the consolidated entity and its
associate are eliminated to the extent of the consolidated entity`s interest in
the associate. Unrealised losses are also eliminated unless the transactions
provide evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to ensure
consistency with the policies adopted by the consolidated entity.
(c) Foreign currency translation
The presentation currency of Tawana Resources NL and its subsidiaries is
Australian dollars (A$). The functional currency of Tawana Resources NL is
Australian dollars and the functional currency of the overseas subsidiaries is
South African Rand (Tawana Resources S.A. (Pty) Ltd and Diamond Resources (Pty)
Ltd) and Botswana Pula (Seolo Botswana Pty Ltd).
Transactions in foreign currencies are initially recorded in the functional
currency at the exchange rates prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are revalued
at the rate of exchange prevailing at the end of the reporting period. Foreign
exchange gains and losses resulting from the settlement of such transactions and
from translation at financial year end exchange rates are recognised in the
profit and loss.
As at the end of the reporting period the assets and liabilities of overseas
subsidiaries are translated into the presentation currency of Tawana Resources
NL at the rate of exchange prevailing at the end of the reporting period and the
Statement of Comprehensive Income is translated at the weighted average exchange
rates for the period. All translation differences are recognised in the foreign
currency translation reserve.
On disposal of a foreign entity, the deferred cumulative amount recognised in
equity relating to that particular foreign entity is recognised in the Statement
of Comprehensive Income.
1. Summary of significant accounting policies (continued)
(d) Revenue recognition
Revenue is measured at the fair value of consideration received or receivable.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the consolidated entity and the revenue can be reliably
measured. The following specific recognition criteria must also be met before
revenue is recognised.
Sale of goods and provision of services
Revenue is recognised when the significant risks and rewards of ownership of the
goods have passed to the buyer or when the service has been provided, and can be
measured reliably. Risks and rewards are considered passed to the buyer at the
time of delivery of the goods to the customer or on provision of the services.
Interest
Interest is recognised on a time proportion basis using the effective interest
method.
(e) 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 applicable 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 with the
carrying amounts in the consolidated financial statements. However, the
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 at the reporting 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 ealiza those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences
between the carrying amount and the tax base of investments in controlled
entities where the parent entity is able to control the timing of the reversal
of temporary differences and it is probable that the differences will not be
reversed in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities, and when the
deferred tax balances relate to the same taxation authority. Current tax assets
and tax liabilities are offset where the entity has a legally enforceable right
to offset and intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.
Current and deferred tax balances that are attributable to amounts recognised
directly in equity, are also recognised directly in equity.
1. Summary of significant accounting policies (continued)
(f) Impairment of assets
Assets, except for exploration and evaluation (refer to Note 1(g)) 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 inflows
which are largely independent of the cash inflows from other assets or groups of
assets (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.
(g) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of
each identifiable area of interest. The costs are only carried forward to the
extent that they are expected to be recouped through the successful development
of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of economically recoverable
resources and further work is intended to be performed.
Accumulated costs in relation to an abandoned area will be written off in full
against the profit and loss in the year in which the decision to abandon the
area is made.
When production commences, the accumulated costs for the relevant area of
interest will be amortised over the life of the area according to the rate of
depletion of the economically recoverable resources.
A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of
interest.
(h) Property, plant and equipment
Plant and equipment and buildings are stated at cost less accumulated
depreciation and any impairment losses. Land is stated at cost less any
impairment losses. Depreciation is calculated on a straight line basis over the
estimated useful life of the asset except for motor vehicles which is on a
diminishing value as follows:
Freehold buildings over 10 years
Plant and equipment over 7 years
Motor vehicle (Australia) 22.5%
Motor vehicle (overseas) over 4 years
The carrying values of all assets are reviewed for impairment when events or
changes in circumstances indicate the carrying value may not be recoverable in
accordance with Note 1(f).
Gains and losses on disposals are determined by comparing proceeds with the
carrying amount. These are included in the Statement of Comprehensive Income.
(i) Other financial assets
Investments in subsidiaries are accounted for at cost. Such investments include
both investments in shares issued by the subsidiary and other parent entity
interests that in substance form part of the parent entity`s investment in the
subsidiary. These include investments in the form of interest-free loans which
have no fixed repayment terms and which have been provided to subsidiaries as an
additional source of long term capital.
1. Summary of significant accounting policies (continued)
(j) Inventories
Inventories consisting of rough diamonds are stated at lower of cost or
estimated net ealizatio value. Cost comprises direct materials, direct labour,
and an appropriate proportion of variable and fixed overhead expenditure.
(k) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. Trade receivables are generally due for settlement within 30
days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts
which are known to be uncollectible are written off by reducing the carrying
amount directly. An allowance account is used when there is objective evidence
that the consolidated entity will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial ealizationon, and default or delinquency in payments, are considered
indicators that the trade receivable is impaired. The amount of the impairment
allowance is the difference between the asset`s carrying amount and the present
value of estimated future cash flows, discounted at the original effective
interest rate. Cash flows relating to short-term receivables are not discounted
if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in the Statement of
Comprehensive Income within other expenses.
When a trade receivable, for which an impairment allowance had been recognised,
becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are
credited against other expenses in the Statement of Comprehensive Income.
(l) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise
cash at bank and in hand and short-term deposits with an original maturity of
three months or less that are readily converted into known amounts of cash. For
the purposes of the statement of cash flows, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.
(m) Employee entitlements
Wages and Salaries, Annual Leave and Sick Leave
Liabilities for wages and salaries, including non-monetary benefits and annual
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.
Share-based payments
Share-based compensation benefits are provided to employees in accordance with
the Tawana Resources Employee Option Plan, an employee share scheme.
The fair value of options granted under the Tawana Resources Employee Option
Plan 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.
1. Summary of significant accounting policies (continued)
(m) Employee entitlements (continued)
Long Service Leave
Liabilities for long service leave are recognised, and are measured as the
present value of expected future payments to be made in respect of services
provided by employees.
(n) Provisions
Provisions are recognised when the consolidated entity has a present obligation,
legal or constructive, as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
(o) Leases
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 Statement of Comprehensive Income on a straight-line basis over the period
of the lease.
(p) Provision for rehabilitation
Environmental obligations associated with the retirement or disposal of long
lived assets will be recognised when the disturbance occurs and is based on the
extent of damage incurred. The provision is measured at the present value of
the future expenditure, and a corresponding rehabilitation asset is also
recognised. On an ongoing basis, the rehabilitation liability will be re-
measured in line with the changes in the time value of money (recognised as an
expense in the Statement of Comprehensive Income and an increase in the
provision), and additional disturbances will be recognised as additions to a
corresponding asset and rehabilitation liability. The rehabilitation asset will
be accounted for in accordance with the accounting policy applicable to the
asset to which it relates (i.e. exploration expenditure).
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the
consolidated entity prior to the end of financial year which are unpaid. The
amounts are unsecured and are usually paid within 30 days of recognition.
(r) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
* where the GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
* receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the Statement of Financial
Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the
GST component of cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation authority, are classified
as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable
from, or payable to, the taxation authority.
1. Summary of significant accounting policies (continued)
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction, net
of tax, from the proceeds. Incremental costs directly attributable to the issue
of new shares for the acquisition of a business are not included in the cost of
the acquisition as part of the purchase consideration.
(t) Earnings per share
xBasic earnings per share
Basic earnings per share is calculated by dividing the profit/(loss)
attributable to equity holders of the Company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
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.
(u) Preparation of financial statements in relation to the consolidated entity
From 28 June 2010, the Corporations Act 2001 no longer requires the preparation
of parent entity accounts, for the purpose of streamlining parent entity
reporting. Where the entity is required to prepare financial statements in
relation to the consolidated entity, the Corporations Regulations 2001 (the
Principal Regulations) specify supplementary information about the parent entity
that is to be included in a note to the consolidated financial statements. This
information is disclosed in Note 27.
(v) New accounting standards and interpretations
The AASB has issued new and amended accounting standards and interpretations
that have mandatory application dates for the current and future reporting
periods. With the exception of Interpretation 1053, which is not applicable to
the consolidated entity, the consolidated entity has decided to adopt all of
these accounting standards and interpretations. There was no significant change
to these financial statements, nor is there expected to be any significant
change arising from the adoption of these standards and interpretations.
2. Financial risk management
The consolidated entity`s exploration activities are being funded by equity and
do not expose the consolidated entity to significant financial risks. There are
no speculative or derivative financial instruments. Funds are invested for
various short term periods to match forecast cash flow requirements.
(a) Market risk
Foreign currency risk
The consolidated entity has foreign operations with functional currencies in the
South African Rand and the Botswana Pula. Both the parent company and each
subsidiary transacts predominantly in its own functional currency with little or
no foreign currency risk. Cash invested into each foreign operation through
intercompany loan accounts, with no fixed date of maturity on those loans, from
the parent to its foreign operations is considered to form part of the parent
company`s net investment in its foreign operations and therefore is considered
by the parent company to not represent a foreign currency risk.
2. Financial risk management (continued)
(b) Credit risk
Management does not actively manage credit risk.
On 18 August 2010 the Company announced that a Heads of Agreement for the sale
of Kareevlei was signed with Rolatseng Mining CC. The Purchase price is ZAR22
million and the terms of the HoA are as follows:
* Payment of a ZAR150,000 non-refundable deposit within fourteen (14) days of
the signing of the HoA,
* Payment of a ZAR250,000 non-refundable deposit on 30 November 2010,
* Payment of ZAR1.1 million in five monthly instalments commencing 31 January
2011 into trust or escrow and released to the vendor on transfer of the
Mining Right,
* Payment of ZAR20.5 million within seven days of completion of the Trial
Mining and reporting exercise and to be held in trust or escrow pending
transfer of the Mining Right.
The first two payments of ZAR150,000 and ZAR250,000 have been received by the
Company and steps are underway to transfer the Mining Right. The amount of
ZAR21.6 million remains outstanding from Rolatseng in relation to the sale of
Kareevlei in accordance with the terms and conditions of the sale agreement.
Other than the receivables from Rolatseng on the sale of Kareevlei, as noted
above, the consolidated entity has no significant exposure to credit risk from
external parties at period end given all the counterparties to its credit
exposures are related entities of the consolidated entity. The maximum exposure
to credit risk from related entities of the consolidated entity at the reporting
date is equal to the carrying value of financial assets at 31 December 2010.
Other receivables are of a low value. Activity with trade debtors is limited
and the recoverability has not been brought into question. There is no history
of bad debts.
(c) Liquidity and capital risk management
The consolidated entity`s objectives when managing capital are to safeguard
their ability to continue as a going concern, so that they can continue to
provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. In order
to maintain or adjust the capital structure, the consolidated entity may adjust
the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
During 2010, the consolidated entity`s strategy, which was unchanged from 2009,
was to keep borrowings to a minimum. The Company`s equity management is
determined by funds required to undertake exploration activities and meet its
corporate and other costs. Where joint venture partners participate in
particular projects the partners contribute monthly cash calls in proportion to
their respective interests or as agreed under any buy-in agreement.
(d) Cash flow and fair value interest rate risk
As the consolidated entity has no significant interest-bearing assets, the
consolidated entity`s income and operating cash flows are not materially exposed
to changes in market interest rates.
(e) Fair value estimation
The carrying amount of financial assets and financial liabilities recorded in
the financial statements approximate their respective fair values determined in
accordance with the accounting policies disclosed in Note 1.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectation of future events that may
have a financial impact on the entity and that are believed to be reasonable
under the circumstances.
Critical accounting estimates and assumptions
The consolidated entity makes estimates and assumptions concerning the future.
The resulting accounting estimates, will by definition, seldom equal the related
actual results. The estimates that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
(i) Recoverability of exploration expenditure
The consolidated entity tests annually whether the exploration and evaluation
expenditure incurred in identifiable areas of interest is expected to be
recouped through the successful development of the area or where activities in
the area have not yet reached a stage that permits reasonable assessment of the
existence of reserves and further work is expected to be performed. All
expenditure that does not meet these criteria is expensed in accordance with
Note 1(g).
(ii) Share based payment valuations
Details relating to the shares based payment valuations are detailed in Note 25.
4. Revenue and other income
Consolidated
2010 2009
$ $
Revenue from continuing
operations
Interest received 41,325 15,477
Other revenue 27,426 7,696
68,751 23,173
5. Expenses
Expenses from continuing
operations includes:
Auditors` remuneration 51,725 43,803
Compliance and regulatory 85,147 78,707
fees
Consultancy and legal fees 1,050,664 264,090
Occupancy costs - 99,522
Travel expenses 61,188 17,632
Employee benefits expense
includes:
Salaries and wages 174,256 -
Superannuation 15,096 -
Directors` fees 177,575 105,909
Share-based payments 86,083 -
Other employee expenses 1,976 -
454,986 105,909
. Income tax
(a) Income tax expense
Consolidated
2010 2009
$ $
Current tax - -
Deferred tax - -
Income tax expense - -
(b) Reconciliation of income tax expense to prima facie tax payable
Loss before income tax (2,214,397) (974,886)
expense
Tax at 30% (Australian (664,319) (292,466)
rate)
Tax effect of amounts that
are / are not deductible /
(taxable) in calculating
income tax:
- Exploration expenditure - 60,402
Tax losses not brought to 664,319 234,087
account
- 2,023
Difference in overseas tax - (2,023)
rates
Income tax expense - -
(c) Amounts recognised directly in equity
No amounts in respect of tax expense or benefit have been included directly in
equity.
(d) Tax losses
Unused tax losses for 35,668,000 35,003,681
which no benefit has been
recognised
Potential tax benefit at 10,588,046 10,389,380
applicable rate (30%
Australia, 29% South
Africa, 15% Botswana)
The future income tax benefit attributable to these losses has not been brought
to account because the benefit is not probable of ealization. The potential
future income tax benefits which may arise from these losses will only be
realised if:
* the consolidated entity derives future assessable income of a nature and
sufficient amount to enable the benefit of losses to be realised;
* the consolidated entity continues to comply with the conditions of
deductibility imposed in each legislative environment, and
* no changes in tax legislation adversely affect the consolidated entity in
realising the benefit from the deduction for the losses.
7. Trade and other receivables
Consolidated
2010 2009
$ $
Current
Trade debtors 5,175 11,425
GST and VAT receivable 19,043 44,049
Prepayments 24,727 -
48,945 55,474
Non-current
Other deposits 42,323 43,021
8. Other financial assets
Receivable for disposal of 2,960,354 -
Kareevlei Project - at net
present value
9. Inventories
Rough diamonds - at lower 75,641 77,131
of cost and recoverable
value
10. Investment in associate
Vecto Trade 436 (Pty) Ltd 16,640 16,640
- at cost
Tawana Resources NL acquired 30% of the issued shares in Vecto Trade 436 (Pty)
Ltd in September 2007 for the purpose of pursuing the St Augustines Project. No
expenditure has been committed to date. The associate has been dormant in its
operations pending the outcome of a judicial review over the prospecting rights
for this project area.
11. Property, plant and equipment
Freehold land and 186,142 339,341
buildings - at cost
Accumulated depreciation - (149,532)
186,142 189,809
Plant and equipment - at 1,206,989 1,251,897
cost
Accumulated depreciation (1,206,989) (1,137,655)
- 114,242
Motor vehicles - at cost 29,192 29,767
Accumulated depreciation (28,442) (23,049)
750 6,718
186,892 310,769
12. Exploration expenditure
The exploration and evaluation expenditure relates to the consolidated entity`s
projects in South Africa, Botswana and Angola.
Movement in carrying values
Consolidated
2010 2009
$ $
Balance at beginning of 5,950,734 5,883,355
year
Expenditure during the 11,527 201,340
year
Disposal of exploration (2,633,499) -
projects during the year
Expenditure written off (259,754) (3,945)
during the year
Foreign currency (145,861) (130,016)
translation
Balance at end of year 2,923,147 5,950,734
During the financial year exploration expenditure was written off in relation to
the Moshaiwa licenses PL86-87/2007 and Borolong license PL37/2003 which were
relinquished as part of Tawana`s ongoing project prioritisation.
13. Trade and other payables
Current
Trade creditors 56,878 338,355
Other creditors and 91,848 19,408
accruals
148,726 357,763
14. Borrowings
Current
Convertible notes - 200,000
Non-current
Convertible notes - 350,000
15. Contributed equity
(a) Issued capital
Ordinary shares, fully 36,482,279 35,356,374
paid
(b) Movements in share capital
2010 2009 2010 2009
Number Number $ $
Balance at 217,138,854 113,763,134 35,356,374 34,708,732
beginning of year
Shares issued 384,316,901 103,375,720 2,402,975 736,300
during year
Transaction costs - - (1,277,070) (88,658)
relating to share
issues
Balance at end of 601,455,755 217,138,854 36,482,279 35,356,374
year
15. Contributed equity (continued)
(c) Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at shareholders` meetings.
In the event of winding up of the Company, ordinary shareholders rank after all
other shareholders and creditors and are fully entitled to any proceeds of
liquidation.
16. Reserves
Note Consolidated
2010 2009
$ $
Foreign currency (a) (2,734,963) (2,990,374)
translation
Options (b) 2,430,220 570,338
Asset revaluation (c) 22,884 22,884
(281,859) (2,397,152)
(a) Foreign currency translation reserve
Exchange differences arising from the translation of foreign controlled entities
are taken to the foreign currency translation reserve, as described in Note
1(c)I.
(b) Options reserve
The options reserve records the fair value of options issued but not exercised.
Balance at beginning of 570,338 436,430
year
Options issued during year 25 1,859,882 133,908
Balance at end of year 2,430,220 570,338
(c) Asset revaluation reserve
The asset revaluation reserve records revaluations of non-current assets. This
is a historical reserve and there have been no movements in the years ended 31
December 2010 and 2009.
Balance at end of year 22,884 22,884
17. Discontinued operations
On 18 August 2010, the consolidated group announced its decision to sell its
interest in its Kareevlei deposit, thereby discontinuing its operations in this
business segment. A binding heads of agreement between the consolidated entity
and the purchaser, Rolatseng Mining CC, was signed on this day, effecting the
sale. A gain of approximately ZAR$2.7m (AUD$384,293) has been recognised on the
sale of the Kareevlei deposit with tax losses having been applied to any
resulting capital gain on sale. The consolidated group has not recognised any
tax expense from the transaction of sale due to the existence of previously
unrecognised tax losses.
17. Discontinued operations (continued)
The financial performance of the discontinued operation to the date of the sale
which is included in the profit or loss from discontinued operations, and
adjusted to the previous year`s comparatives, is as follows:
Consolidated
2010 2009
$ $
Revenue 26,696 -
Consideration received and 3,017,792 -
receivable
Written down value of area (2,610,806) -
of interest sold
Realised foreign currency (454,759) -
loss on disposal of foreign
operation
Other expenditure (46,099) (154,581)
(67,176) (154,581)
18. Key management personnel disclosures
(a) Directors and other key management personnel
The following persons were directors of Tawana Resources NL during the financial
year:
Euan Luff
Harry Hill
Julian Babarczy
Warwick Grigor (appointed 20 April 2010)
Stirling Horne (resigned 4 February 2010)
Key management personnel of the group for the year was as follows:
Lennard Kolff (Chief Executive Officer, appointed 2 June 2010)
(b) Compensation of key management personnel
Consolidated
2010 2009
$ $
Short-term employee 267,418 86,409
benefits
Post-employment benefits 21,971 -
Share-based payments 45,721 109,872
335,110 196,281
(c) Equity instrument disclosures relating to key management personnel
(i) Option holdings
The number of options over ordinary shares in the Company held during the
financial year by each director of Tawana Resources NL and other key management
personnel of the Company, including their personally related parties, are set
out below.
18. Key management personnel disclosures (continued)
(c) Equity instrument disclosures relating to key management personnel
(continued)
(i) Option holdings (continued)
2010
Name Balance Granted Exerci Other Balance at Options
at start during sed changes end of year vested and
of year year as during during exercisabl
remun- year year e at end
eration of year
Number Number Number Number Number Number
Director
s
Mr E 6,104,150 - - - 6,104,150 6,104,150
Luff
Mr H - - - - - -
Hill
Mr J - - - - - -
Babarczy
Mr W - - - - - -
Grigor
Mr S - - - - - -
Horne
Key
manageme
nt
personne
l
Mr L - 10,000,000 - - 10,000,000 -
Kolff
6,104,150 10,000,000 - - 16,104,150 6,104,150
2009
Name Balance Granted Exer Other Balance Options
at start during cise changes at end of vested
of year year as d during year year and
remun- duri * exercisab
eration ng le at end
year of year
Number Number Numb Number Number Number
er
Director
s
Mr E 2,104,150 4,000,000 - - 6,104,150 6,104,150
Luff
Mr H - - - - - -
Hill
Mr J - - - - - -
Babarczy
Mr S - - - - - -
Horne
Ms N - - - - - -
Mazwai
Mr N 4,270,000 6,000,000 - (10,270,000) - -
Barrie
Mr B 312,500 2,000,000 - (2,312,500) - -
Phillips
Mr W 2,814,000 4,000,000 - (6,814,000) - -
Marx
9,500,650 16,000,000 - (19,396,500) 6,104,150 6,104,150
* Balance at date of resignation
(ii) Shareholdings
The number of shares in the Company held during the financial year by each
director of Tawana Resources NL and other key management personnel, including
their personally related parties, is set out below. There were no shares
granted during the reporting year as remuneration.
18. Key management personnel disclosures (continued)
(c) Equity instrument disclosures relating to key management personnel
(continued)
(ii) Shareholdings (continued)
2010
Name Balance at Balance at Receiv Other Bala Balance at
start of date of ed acquisitio nce end of the
the year appoint- during n of at year
ment the shares date
year during the of
on year resi
exerci gnat
se of ion
option
s
Number Number Number Number Numb Number
er
Director
s
Mr E 7,344,870 - - 13,344,870 - 20,689,740
Luff
Mr H - - - - - -
Hill
Mr J 5,000,000 - - 20,000,000 - 25,000,000
Babarczy
Mr W - 19,850,000 - 8,000,000 - 27,850,000
Grigor
Mr S - - - - - -
Horne
Key
manageme
nt
personne
l
Mr L - - - - - -
Kolff
12,344,870 19,850,000 - 41,344,870 - 73,539,740
2009
Name Balance at Balance Recei Other Balance at Balance
start of at date ved changes date of at end
the year of durin during resignation of the
appoint- g the the year year
ment year
on
exerc
ise
of
optio
ns
Number Number Numbe Number Number Number
r
Director
s
Mr E 7,344,870 - - - - 7,344,87
Luff 0
Mr H - - - - - -
Hill
Mr J - 5,000,000 - - - 5,000,00
Babarczy 0
Mr S - 257,550 - (257,550) -
Horne
Ms N 5,437,457 - - 3,375,720 (8,813,177) -
Mazwai
Mr N 1,246,154 - - - (1,246,154) -
Barrie
Mr B 508,700 - - - (508,700) -
Phillips
Mr W 7,062,500 - - - (7,062,500) -
Marx
21,599,681 5,257,550 - 3,375,720 (17,888,081 12,344,8
) 70
(d) Loans to key management personnel
There were no loans to key management personnel of the consolidated entity,
including their personally related parties, as at 31 December 2010 or 31
December 2009.
(e) Other transactions with key management personnel
Mr E Luff, a director of the Company, is a senior partner of the legal firm
Wilmoth Field Warne, which received $229,630 in fees for the provision of legal
services. Payments were based on commercial terms and conditions.
19. Details of controlled entities
Name Country of Interest held
incorporati by the
on consolidated
entity
2010 2009
% %
Parent
Tawana Resources NL Australia
Controlled entities
Seolo Botswana (Pty) Botswana 100 100
Ltd
Tawana Resources South 100 100
(Pty) Ltd Africa
Diamond Resources South 100 100
(Pty) Ltd Africa
20. Contingent liabilities and commitments
The consolidated entity does not have any material contingent assets or
liabilities.
21. Segment information
The consolidated entity operates wholly in one business segment, being mineral
exploration and within one geographical segment, being Africa.
22. Notes to the Statement of Cash Flows
(a) Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and
at call in deposits with banks, net of bank overdrafts. Cash at the end of the
year is shown in the Statement of Financial Position as:
Consolidated
2010 2009
$ $
Cash on hand and at bank 815,470 348,609
Cash on deposit 20,000 -
835,470 348,609
22. Notes to the Statement of Cash Flows (continued)
(b) Reconciliation of net loss after tax to net cash flows from operations
Consolidated
2010 2009
$ $
Net loss (2,214,397) (974,886)
Adjustments for:
Depreciation 99,496 174,766
Impairment and write off 259,754 3,945
of non-current assets
Profit on sale of - (1,661)
property, plant and
equipment
Discontinued operation 67,176 -
Share-based payments 799,564 370,208
Interest paid through 29,113 -
share issues
Unrealised foreign 10,544 174,898
currency gain / loss on
translation
Changes in assets and
liabilities
(Increase) / decrease in:
Trade and other 7,227 (24,478)
receivables
Inventories 1,490 4,137
Increase / (decrease) in:
Trade and other payables (209,037) (147,314)
Provisions 19,270 (53,883)
Net cash from operating (1,129,800) (474,268)
expenses
23. Auditor`s remuneration
William Buck
Audit services 51,725 43,803
Non-audit services - -
51,725 43,803
Auditor of subsidiaries
Pricewaterhouse Coopers
Audit services 8,142 30,030
Non-audit services - -
8,142 30,030
24. Loss per share
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic loss per
share.
Classification of securities as potential ordinary shares
There are currently no securities to be classified as dilutive potential
ordinary shares on issue.
24.
Loss per share (continued)
2010 2009
Number Number
468,512,169 129,622,559
Weighted average number of
ordinary shares used in the
calculation of basic loss per
share
$ $
(2,214,397) (974,886)
Net loss from continuing and
discontinuing operations
(2,147,221) (820,305)
Net loss from continuing
operations
The loss per share calculation as disclosed on the Statement of Comprehensive
Income does not include instruments that could potentially dilute basic earnings
per share in the future as these instruments were anti-dilutive in the periods
presented. A summary of such instruments is as follows:
Equity securities Number of Number of
securities potential
ordinary
shares
198,160,053 198,160,053
Options over ordinary shares
Subsequent to year end the Company issued additional options which resulted in
the following additional potential ordinary shares as at the reporting date:
Equity securities Number of Number of
securities potential
ordinary
shares
223,160,053 223,160,053
Options over ordinary shares
25. Share-based payments
Summary of options on issue
Issue date Quantity Grant date Expiry date Exercise price
Various 13,240,053 Various 1 Apr 2011 $0.10
Various 1,420,000 Various 30 Nov 2011 $0.35
18 Jun 2008 4,000,000 18 Jun 18 Jun 2012 $0.07
2008
17 Jan 2009 6,000,000 18 Dec 17 Jan 2013 $0.10
2008
17 Jan 2009 6,750,000 18 Dec 17 Jan 2013 $0.07
2008
17 Jan 2009 6,750,000 18 Dec 17 Jan 2014 $0.10
2008
23 Feb 2010 50,000,000 23 Feb 23 Feb 2013 $0.01
2010
9 Sep 2010 50,000,000 9 Sep 2010 31 Jul 2012 $0.01
9 Sep 2010 * 5,000,000 9 Sep 2010 9 Sep 2012 $0.03
9 Sep 2010 50,000,000 9 Sep 2010 30 Jul 2013 $0.01
9 Sep 2010 * 5,000,000 9 Sep 2010 9 Sep 2014 $0.05
190,160,053
With the exception of the options marked with an asterisk, which vest on 9
September 2011, all share options are exercisable.
25. Share-based payments (continued)
Fair value of options granted during the year
The assessed fair value at grant date of options granted to individuals is
allocated equally over the period from grant date to vesting date. Fair values
at grant date are independently determined using a Black Scholes option pricing
model that takes into account the exercise price, term 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 following options were issued during the year ended 31 December 2010:
Issue Quantity Grant Expiry Exercise Fair Total
date date date price value fair
per value
option
23 Feb 50,000,000 23 Feb 23 Feb $0.01 $0.0079 $396,500
2010 2010 2013
9 Sep 50,000,000 9 Sep 31 Jul $0.01 $0.0133 $663,817
2010 2010 2012
9 Sep 5,000,000 9 Sep 9 Sep $0.03 $0.0100 $50,099
2010 2010 2012
9 Sep 50,000,000 9 Sep 30 Jul $0.01 $0.0143 $713,481
2010 2010 2013
9 Sep 5,000,000 9 Sep 9 Sep $0.05 $0.0119 $59,728
2010 2010 2014
160,000,000
The model inputs for the options granted during the year were as follows:
A B C B E
Quantity 50,000,000 50,000,000 5,000,000 50,000,000 5,000,000
Grant date 23 Feb 10 9 Sep 10 9 Sep 10 9 Sep 10 9 Sep 10
Expiry date 23 Feb 13 31 Jul 12 9 Sep 12 30 Jul 13 9 Sep 14
Grant date share $0.015 $0.025 $0.025 $0.025 $0.025
price
Exercise price $0.01 $0.01 $0.03 $0.01 $0.05
Expected 120% 120% 120% 120% 120%
volatility
Option life 2.7 1.7 1.9 2.6 3.7
(years)
Expected dividend 0% 0% 0% 0% 0%
yield
Risk free rate at 4.43% 4.60% 4.64% 4.62% 4.73%
grant date
No options were issued during the year ended 31 December 2009.
The cost of the issue of options was recorded in the financial statements as
follows:
* options issued during the financial year for consulting work and employee
remuneration, with a cost of $747,690 (2009: nil) were charged to the
profit or loss;
* options issued during 2008, and not yet vested at the commencement of the
financial year for director remuneration, with a cost of $51,874 (2009:
$133,908) were charged to the profit or loss; and
* options issued in satisfaction of capital raising costs, with a value of
$1,060,317 (2009: nil) were charged directly to equity.
26. Subsequent events
On 19 January 2011, the Company announced that the Strategic Alliance with
Gryphon Minerals Limited had been formally executed by both Boards and two
highly prospective mineral permits had been issued to Gryphon, allowing Tawana
to start exploration activities before the onset of the wet season in June 2011.
West Africa is the fastest growing gold producing region in the world and while
Liberia has significant potential to host large, world class deposits of gold,
copper, iron ore and other minerals it remains largely underexplored.
26. Subsequent events (continued)
On 2 March 2011, the Company announced that two highly prospective mineral
permits have been formally approved by the Liberian Minister of Lands Mines and
Energy Dr. Roosevelt G. Jayjay, allowing Tawana to start exploration activities
before the onset of the wet season in June 2011.
On 22 March 2011, the Company announced that following the appointment of BGF
Equities as Lead Manager, the Company completed a placement of 100 million
shares at an issue price of 4.5 cents to raise $4.5 million before costs. The
funds raised by the placement will be used primarily to advance exploration
activities in Liberia, to fund initial drilling on targets defined and on
working capital on Tawana`s West African growth plans.
On 30 March 2011, the Company announced that it had issued 25 million fully paid
ordinary shares in the Company following the exercise of options previously on
issue.
27. Supplementary information about the parent entity
Parent
2010 2009
$ $
Assets
Current assets 865,010 397,725
Total assets 7,110,335 6,660,927
Liabilities
Current liabilities 103,425 423,612
Total liabilities 103,425 781,304
Net assets 7,006,910 5,879,623
Equity
Issued capital 36,482,279 35,356,374
Reserves 2,453,104 593,222
Total equity 7,006,910 5,879,623
Profit and loss
Profit / (loss) (1,858,499) (935,641)
Comprehensive income
Total comprehensive income (1,858,499) (935,641)
There were no contingent liabilities, guarantees or capital commitments of the
parent entity not otherwise disclosed in these financial statements.
DIRECTORS` DECLARATION
In accordance with a resolution of the directors of Tawana Resources NL, I state
that:
In the opinion of the directors:
(a) the financial statements and notes as set out on pages 21 to 45 of the
Company and of the consolidated entity are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Company`s and the consolidated entity`s
financial position as at 31 December 2010 and of their performance for the
year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001;
and
(b) there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
`
2 The attached financial statements and notes thereto comply with
International Financial Reporting Standards as issued by the International
Accounting Standards Board as described in Note 1 to the financial
statements.
3 This declaration has been made after receiving the declarations required to
be made to the directors in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 31 December 2010.
On behalf of the Board
Mr Warwick Grigor
Non-executive Chairman
Melbourne, 31st March 2011
INDEPENDENT AUDITOR`S REPORT TO THE MEMBERS OF TAWANA RESOURCES NL and
controlled entities
ABN 69 085 166 721
Report on the Financial Report
We have audited the accompanying consolidated financial report comprising
Tawana Resources NL (the Company) and the entities it controlled at the
year`s end or from time to time during the financial year, which comprises
the statement of financial position as at 31 December 2010, the statement of
comprehensive income, the statements of changes in equity and the statements
of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the
directors` declaration.
Directors` Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the
financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such
internal controls as the directors determine is necessary to enable the
preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 1, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditor`s Responsibility
Our responsibility is to express an opinion on the financial report based on
our audit. We conducted our audit in accordance with Australian Auditing
Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial report. The procedures selected
depend on the auditor`s judgement, including the assessment of the risks of
material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control
relevant to the entity`s preparation and fair presentation of the financial
report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity`s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements
of the Corporations Act 2001.
INDEPENDENT AUDITOR`S REPORT TO THE MEMBERS OF TAWANA RESOURCES NL and
controlled entities (CONT)
ABN 69 085 166 721
Auditor`s Opinion
In our opinion:
a. the financial report of the consolidated entity is in
accordance with the Corporations Act 2001, including:
i. giving a t
INDEPENDENT AUDITOR`S REPORT TO THE MEMBERS OF
TAWANA RESOURCES NL and controlled entities
ABN 69 085 166 721
Report on the Financial Report
We have audited the accompanying consolidated
financial report comprising Tawana Resources NL
(the Company) and the entities it controlled at
the year`s end or from time to time during the
financial year, which comprises the statement of
financial position as at 31 December 2010, the
statement of comprehensive income, the statements
of changes in equity and the statements of cash
flows for the year then ended, notes comprising a
summary of significant accounting policies and
other explanatory information, and the directors`
declaration.
Directors` Responsibility for the Financial
Report
The directors of the company are responsible for
the preparation of the financial report that
gives a true and fair view in accordance with
Australian Accounting Standards and the
Corporations Act 2001 and for such internal
controls as the directors determine is necessary
to enable the preparation of the financial report
that is free from material misstatement, whether
due to fraud or error. In Note 1, the directors
also state, in accordance with Accounting
Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply
with International Financial Reporting Standards.
Auditor`s Responsibility
Our responsibility is to express an opinion on
the financial report based on our audit. We
conducted our audit in accordance with Australian
Auditing Standards. Those standards require that
we comply with relevant ethical requirements
relating to audit engagements and plan and
perform the audit to obtain reasonable assurance
about whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the financial report. The procedures selected
depend on the auditor`s judgement, including the
assessment of the risks of material misstatement
of the financial report, whether due to fraud or
error. In making those risk assessments, the
auditor considers internal control relevant to
the entity`s preparation and fair presentation of
the financial report in order to design audit
procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the
entity`s internal control. An audit also
includes evaluating the appropriateness of
accounting policies used and the reasonableness
of accounting estimates made by the directors, as
well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit, we have complied with
the independence requirements of the Corporations
Act 2001.
rue and fair view of the consolidated entity`s
financial position as at 31 December 2010 and of
its performance for the year ended on that date;
and
ii complying with Australian Accounting Standards
. (including the Australian Accounting
Interpretations) and the Corporations Regulations
2001; and
b. the financial report also complies with International
Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors` report
for the year ended 31 December 2010. The directors of the company are
responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Auditor`s Opinion
In our opinion, the Remuneration Report of Tawana Resources NL for the
year ended 31 December 2010, complies with section 300A of the
Corporations Act 2001.
ABN 69 085 166 721
Matters Relating to the Electronic Presentation of the Audited Financial
Report
This auditor`s report relates to the financial report of Tawana Resources
NL and the entities it controlled for the year ended 31 December 2010
included on Tawana Resources NL web site. The company`s directors are
responsible for the integrity of the Tawana Resources NL web site. We
have not been engaged to report on the integrity of the Tawana Resources
NL web site. The auditor`s report refers only to the financial report
and remuneration report. It does not provide an opinion on any other
information which may have been hyperlinked to/from these statements. If
users of this report are concerned with the inherent risks arising from
electronic data communications they are advised to refer to the hard copy
of the audited financial report to confirm the information included in
the audited financial report presented on this web site.
Jeffrey Luckins
Director
William Buck Audit (VIC) Pty Limited
ABN 59 116 151 136
Dated in Melbourne, Australia on this 31st day of March 2011
Mining tenements currently held by the consolidated entity are as follows:
Location Title held by % held by Title
Tawana
group
Daniel BHP Billiton World Various NC 30/5/1/1/088
Project Exploration Inc PR
South Africa
Kareevlei Wes Diamond Resources Pty 100% NC
South Africa Ltd 30/5/1/2/2/081
MR
St Augustines Vecto Trade 436 Pty 30% NC
South Africa Ltd (indirect) 30/5/1/1/5/402
PR
Lexshell Lexshell 366 Mining 50% NC
South Africa (Pty) Ltd 30/5/1/2/2/054
MR
Flinders Orogenic Exploration 80% EL 3200
Island Pty Ltd / Tawana
SA, Australia Resources NL
Eyre Orogenic Exploration 80% EL 3928
Peninsula Pty Ltd / Tawana
SA, Australia Resources NL
Flinders Orogenic Exploration 80% ELA 06/648
Island Pty Ltd / Tawana
SA, Australia Resources NL
Orapa Seolo Botswana (Pty) 100% PL 61/2007
Botswana Ltd
Perdevlei Tawana Resources 100% MTR 371/2007 PR
South Africa (Pty) Ltd / Motjoli
Additional information included in accordance with the Listing Rules of the
Australian Securities Exchange Limited. The information is current as at 25
March 2011.
ASX ADDITIONAL INFORMATIO
AS AT 25 MARCH 2011
1. Substantial shareholders
The names of substantial shareholders who had notified the Company in accordance
with section 671B of the Corporations Act are:
Gryphon Minerals Limited 100,000,000 shares
Spring Plains Pastoral Co (VIC) Pty Ltd 40,000,000 shares
Deck Chair Holdings Pty Ltd 33,130,000 shares
Trayburn Pty Ltd 27,850,000 shares
Mutual Trust Pty Ltd 25,500,000 shares
2. Statement of issued capital
(a) Distribution of fully paid ordinary shareholders
Size of holding Number Shares held
of
holders
1 - 1,000 177 112,860
1,001 - 5,000 394 1,202,305
5,001 - 10,000 281 2,255,362
10,001 - 100,000 653 25,191,478
100,001 and over 343 772,867,038
1,848 801,629,043
(b) All ordinary shares (whether fully paid or not) carry one vote per share
without restriction.
(c) At the date of this report there were 860 shareholders who held less than a
marketable parcel of shares.
3. Options
Exercise Expiry Number of Number
price date options of
holders
Listed options $0.10 1 Apr 13,240,053 241
2011
Unlisted options $0.35 30 Nov 1,420,000 7
2011
Unlisted options $0.07 18 Jun 4,000,000 1
2012
Unlisted options $0.10 17 Jan 6,000,000 1
2013
Unlisted options $0.07 17 Jan 6,750,000 6
2013
Unlisted options $0.10 17 Jan 6,750,000 6
2014
Unlisted options $0.01 23 Feb 50,000,000 1
2013
Unlisted options $0.01 31 Jul 50,000,000 1
2012
Unlisted options $0.03 9 Sep 5,000,000 1
2012
Unlisted options $0.01 30 Jul 50,000,000 1
2013
Unlisted options $0.05 9 Sep 5,000,000 1
2014
Unlisted options $0.01 8 Mar 25,000,000 1
2014
4. Quotation
Listed securities in Tawana Resources NL are quoted on the Australian Securities
Exchange and the Johannesburg Stock Exchange.
5. Twenty largest shareholders
The twenty largest shareholders hold 60.61% of the issued capital of the Company
as at 25 March 2011.
No Shareholder Number of Percenta
shares ge of
issued
capital
1 Gryphon Minerals Limited 100,000,000 12.47%
2 Merriwee Pty Ltd 54,191,667 6.76%
3 Spring Plains Pastoral Co 40,000,000 4.99%
(Vic) Pty Ltd
4 Deck Chair Holdings Pty Ltd 35,428,934 4.42%
5 BT Portfolio Services Limited 33,042,791 4.12%
6 Mahsor Holdings Pty Ltd 27,596,575 3.44%
7 Trayburn Pty Ltd 25,850,000 3.22%
8 Mr Julian Babarczy 25,173,288 3.14%
9 Gregorach Pty Ltd 19,850,000 2.48%
10 RL Holdings Pty Ltd 19,500,000 2.43%
11 Gryphon Minerals Limited 14,250,000 1.78%
12 Mikonos Investments Pty Ltd 14,246,183 1.78%
13 Lufgan Nominees Pty Ltd 13,975,308 1.74%
14 I E Properties Pty Ltd 13,000,000 1.62%
15 Mrs Margot Louise Brandenburg 11,800,000 1.47%
16 HSBC Custody Nominees 10,286,202 1.28%
(Australia) Limited
17 Gregorach Pty Ltd 8,000,000 1.00%
18 ABN Amro Clearing Sydney 6,725,600 0.84%
Nominees Pty Ltd
19 Domain Carpet Mills Pty Ltd 6,540,455 0.82%
20 Baystreet Pty Ltd 6,500,000 0.81%
485,957,003 60.61%
Date: 31/03/2011 13:53:59 Supplied by www.sharenet.co.za
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