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TAW - Tawana Resources NL - Annual Financial Statements
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")
Annual Financial Statements
Contents
Corporate directory
Chairman`s statement
Directors` report
Corporate governance statement
Financial report
Independent auditor`s report to the members
Shareholders information
CHAIRMAN`S STATEMENT
2007 was a very busy year for Tawana and our Company achieved several
milestones which had been eagerly awaited. Highlights were the granting of
the Mining Right over the Kareevlei Wes Project and the granting of a
Prospecting License over the Orapa Project in Botswana.
In summary, these were some of the achievements for Tawana in 2007;
* In April 2007, we announced that Tawana, through its 26% holding in
Rakana Consolidated Mining (Proprietary) Limited, which is in Joint Venture
with ASX-listed Aquila Resources Limited, now holds an interest in a suite of
iron-ore exploration tenements granted in the name of Aquila in the Northern
Cape and Thabazimbi areas of South Africa, strategically positioned adjacent
to existing iron-ore mines and associated infrastructure.
* Also in April 2007, we announced that Tawana had been granted a New
Order Mining Right over the Kareevlei Wes Diamond Project. This enabled us to
commence construction of the plant and infrastructure in preparation for
trial mining.
* In May 2007, we announced that Tawana has been granted a 3 year
prospecting license over 8 kimberlites (BK19 - BK26) in the Orapa Kimberlite
Field in Botswana, one of the largest diamondiferous kimberlite fields in the
world with 79 known kimberlites.
* In May 2007, we also announced a joint venture with Taormina Mining
(Proprietary) Limited, an unlisted South African company, to prospect and
evaluate a 4 hectare kimberlite pipe situated 25 kilometres north of
Kimberley, South Africa.
* In July 2007, we announced a joint venture with Kimberley Consolidated
Mining Limited, an unlisted South African company to prospect and evaluate a
number of anomalies of the 266 square kilometre Farm Carter Block,
surrounding the De Beers owned Finsch Mine at Lime Acres, South Africa. This
agreement also entitled Tawana to participate in the 3 known kimberlites on
the property (being the Shone, PPC and Bowden Pipes), subject to taking up
the relevant participating interest.
* In September 2007, we announced that Tawana had acquired a 30% stake in
the St Augustines kimberlite (via its shareholding in Vecto Trade 436
(Proprietary) Limited) located 600 metres west of the famous Kimberley Mine
("the Big Hole") in Kimberley, South Africa.
* In October 2007, we announced that treatment, examination and reporting
of third-party exploration samples from South Africa had been commercially
undertaken in the Melbourne Laboratory and that it was anticipated that more
business of this nature would be forthcoming.
* Also in October 2007, we announced that Tawana had placed 5,300,000
shares to institutional and sophisticated investors to raise A$795,000.
* In February 2008, we announced the signing of a joint venture agreement
with Nowak Investments (Pty) Limited over the Orapa, Borolong and Moshaiwa
projects.
* Also in February 2008 we announced the renounceable rights issue to
raise $1.8million, which was completed in early April 2008.
The Company`s current exploration focus is on the Kareevlei Wes, Tawana
Alluvials and St Augustines Projects in South Africa.
Active exploration, including trial mining is planned at Kareevlei Wes and
drilling is planned at St Augustines and at Lexshell, while an expert review
of proposed bulk sampling of the Tawana Alluvials will be implemented. Work
on the Orapa Project will be conducted by our Joint Venture partner.
Over the last 2 years, your Board has aggressively pursued the acquisition of
an interesting array of prospects. We have become a joint venture partner of
choice for many similarly placed junior listed exploration companies and our
management team is strategically positioned in the regions where we operate
to take advantage of the opportunities that are being offered to us.
I thank our Shareholders for their continuing support during a difficult
period on world markets and also thank our staff for their continued loyalty
and hard work.
Brian Phillips
CHAIRMAN
DIRECTORS` REPORT
Your Directors submit their report on the consolidated entity (referred to
hereafter as the Group) consisting of Tawana Resources N.L. and the entities
it controlled at the end of, or during, the year ended 31 December 2007.
DIRECTORS
Details of the Directors of the company in office at any time during or since
the end of the financial year and at the date of this report and their
qualifications, experience and special responsibilities are:
Wolfgang Marx Managing Director - BSc, BA, FAusIMM, CPGeo
Board Member since 16 November 1998. Wolf Marx is a qualified
geologist and has over 25 years experience in geology particularly in
exploration for gold and diamonds. He has not held directorships of other
listed companies in the past three years.
Interest in shares - 6,248,500
Interest in options - 1,999,500
Brian Phillips Non-Executive Chairman - AWASM FAusIMM MIMMM
Board Member since 4 April 2005. Brian Phillips is a qualified mining
engineer and has over 40 years experience in the mining industry. Brian is a
past director of The Australian Gold Council and past President of the
Victorian Minerals and Energy Council. He is non-executive chairman of
Indophil Resources N.L. and a non-executive director of Sally Mining Ltd. He
is a past director of MPI Mines Ltd, past non executive chairman of Leviathan
Resources Ltd, and past non executive director of Perseverance Corporation
Ltd. He is a member of the Audit and Risk Management Committee and the
Remuneration and Nomination Committee.
Interest in shares - 194,800
Interest in options - 41,133
Euan Luff Non-Executive Director - B Juris LL.B.AL.Arb.A.
Board Member since 16 November 1998. Euan Luff is Senior Partner of
Wilmoth Field and Warne, Solicitors. In his professional capacity he acts as
a legal adviser to a number of private and public Companies. He is a member
of the Audit and Risk Management Committee and the Remuneration and
Nomination Committee. He has not held directorships of other listed companies
in the past three years.
Interest in shares - 8,262,270
Interest in options - 3,021,460
COMPANY SECRETARY
Derrick Ehmke The Company appointed Edward Derrick Ehmke as Company
Secretary on 22 January 2007. Derrick has over 40 years business experience
in Finance, Administration and Information Technology in South Africa,
Australia and the United Kingdom. He is Fellow of the Institute of Corporate
Managers, Secretaries and Administrators.
Interest in shares - Nil
Interest in options - Nil
MEETINGS OF DIRECTORS
During the financial year thirteen meetings of Directors were held. The
numbers of meetings (including meetings of Committees of Directors) attended
by each of the Directors during the financial year were:
Director Directors` Meetings
No. Attended No. Held
W. Marx 13 13
B. Phillips 13 13
E. Luff 13 13
There were three meetings held of the Audit and Risk Management Committee,
which were attended by all members of that committee. There were two meeting
of the Remuneration and Nomination Committee which all members of that
committee attended.
PRINCIPAL ACTIVITIES
The principal activities of the Group consisted of mineral exploration,
particularly diamond exploration. There was no significant change in the
nature of the activities of the Group during the year.
RESULT AND DIVIDEND
The operating loss of the Group for the financial year after income tax
expense of $Nil was $7,386,000 (2006 $4,766,269) and the operating loss of
the Company after income tax of $Nil was $9,594,713 (2006 $5,819,027).
The Directors do not recommend the payment of a dividend (2006:Nil) nor has
one been recommended or paid since the end of the previous financial year.
REVIEW OF OPERATIONS
In the opinion of the Directors, the operations of the Group, likely
developments in the operations of the Group and the expected results of those
operations as known at the date of this report have been covered generally
herein and in the documents attached to this report.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, the state of affairs of the Group has not
been substantially affected by any material or unusual matter during the
financial year other than that referred to in the financial statements or
notes thereto.
ENVIRONMENTAL REGULATIONS
The Group`s operations are subject to various environmental regulations under
both Commonwealth and State Government legislation in Australia and under
Government legislation in South Africa and Botswana. The Directors have
complied with those regulations and are not aware of any breaches of the
legislation during the current financial year that are material in nature.
SUBSEQUENT EVENTS
On 28 March 2008 the company completed of a renounceable rights issue which
raised $540,510 before estimated transaction costs of $200,000. The funds
raised will be utilised for Tawana`s high potential exploration projects in
Southern Africa and for corporate and other costs.
The directors reserve the right to place the shortfall within the next three
months, in accordance with ASX Listing Rules.
In February 2008 Tawana Resources NL signed a joint venture with Nowak
Investments (Pty) Ltd over the Orapa, Borolong and Moshaiwa projects. This
will enable significant further exploration in these projects at minimal cost
to Tawana. Details of the agreement are contained in the Directors report
under Review of Operations.
Other than the above items there have not been any matters or circumstances
that have arisen since the end of the year that have significantly affected
or may significantly affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in subsequent financial
years.
FUTURE DEVELOPMENTS
The Group will continue to concentrate on mineral exploration particularly
diamond exploration with emphasis on the development of its existing
projects.
SHARE CAPITAL
During the year the Company allotted 5,300,000 ordinary shares at 15 cents
each, raising a total of $795,000. The funds raised were applied towards the
costs of the issue, ongoing exploration activities of the company and to
provide additional working capital.
The number of ordinary fully paid shares on issue at 31 December 2007 was
92,397,481.
On 28 March 2008 a renounceable rights issue was completed.. Refer to
subsequent events section above for further detail.
SHARE OPTIONS
Unlisted Options
During the year 1,000,000 options were issued to employees and directors of
the Company. These options were exercisable at 35 cents each on or before 30
November 2011.
In additional 5,300,000 unlisted options were issued to investors as part of
the ordinary share placement. These options are exercisable at 15 cents each
on or before 11 September 2009.
Listed Options
The number of listed options on issue at 31 December 2007 the exercise price
and the expiry date of the options are as follows:
22,344,144 options exercisable at $1.00 each, on or before 30 April, 2008.
The number of unissued ordinary shares under these options at the date of
this report is 22,344,144.
No options were exercised during the year (2006: Nil).
MANAGEMENT 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, Botswana and Australia. The Company`s objective is
to establish viable ore reserves and turn such projects into profitable
operations.
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.
A brief overview of Tawana`s diamond projects, which are all located in
prospective areas, follow.
Current Status of Projects in South Africa
Kareevlei Wes Project, Kimberley Region
(Operated by Tawana; 74% owned by Tawana and 26% owned by Seven Falls)
In April 2007 the Company was granted a new order Mining Right over the
Project by the Department of Minerals and Energy.
The Kareevlei Wes Project ("KWP") comprises a cluster of 5 kimberlitic pipes
(KV1-KV5), which vary in surface area from a large 5.5 ha (KV3) to a small
0.3 ha (KV4). Drilling to a depth of 100 meters showed that the tonnage of
KV3 is 13Mt and that of KV2 is 2Mt. The surface area of KV1 has been
determined by shallow drilling to be 1.2hectares. The key interest in this
project relates to the generally good quality of the diamonds in the
kimberlites.
As a result of bulk sampling conducted by extracting 6,500 tonnes of
kimberlite from the four largest pies, the grade of KV1 and KV2 was estimated
to be 8.57 cpht. Subsequent statistical analyses of the diamonds suggested
that the grade could be expected to be 11 cpht if larger parcels of diamonds
could be produced.
The grade of KV3 is variable due to several different phases encountered in
the top 30 - 40m as indicated by Bauer drilling. The northern 3 ha of the
pipe is composed of an homogenous phase of kimberlite and has an estimated
grade of 4.89cpht, based on processing the minus 6mm fraction.
Earlier 10.5 inch percussion drilling in the northern section of KV3 achieved
a higher grade of 6.10cpht. This discrepancy could be due to the fact that
the percussion drilling sampled deeper sections of the kimberlite.
The KV5 kimberlite was sampled with two Bauer holes. The estimated grade,
based on the minus 6mm fraction from the two holes was 3.70cpht and 8.06cpht,
with an average grade of 5.70cpht.
As previously reported (2007 Half Yearly Report) diamonds from KV1 and KV2
were valued at US$110/ct by independent valuers. These valuers predicted
substantially higher values for larger parcels of diamonds. This prediction
is supported by subsequent statistical analysis of a parcel from the KV1 and
KV2 kimberlites, which suggested that US$164/ct was a reasonable value
estimate for diamonds from these kimberlites.
Subsequently, a parcel of 33.24ct of diamonds from KV3 was valued US$170/ct.
At the estimated operating cost of open pit kimberlite mining and processing
in South Africa of US$7.53/t, the required breakeven grade at a diamond value
of US$170 /ct is 4.43 cpht. Valuations and costs are 2005 figures.
Kimberlite Size* Grade Diamond Value Cost****
ha Cpht Value*** US$/t US$/t
US$/carat
KV1 1.0 11** 164 18.04 7.53
KV2 1.2 11** 164 18.04 7.53
KV3 5.5 4.89- 170 8.31-10.37 7.53
6.10
KV5 2.1 5.70 N/A NA 7.53
* Based on 10.5 inch drilling to 100m for KV2 and KV3, surface percussion
drilling for KV1 and geophysical interpretation for KV5.
** Based on statistical analysis of a parcel of diamonds recovered from the
minus 6mm fraction of material excavated by Bauer drilling. Not JORC/SAMREC
compliant.
*** Larger parcels of diamonds may change the given values substantially.
**** Directors` estimated mining and operating costs (2005) of open cut
kimberlite mines in South Africa.
During 2007 the Company`s 25 tonne per hour DMS plant was relocated to
Kareevlei and has been commissioned in preparation for the commencement of
trial mining in 2008.
The Company considers that any tonnage and grade estimates do not satisfy the
definition of a Mineral Resource as set out in the JORC Code as insufficient
work has been conducted to be able to determine the grade and tonnage of the
deposit with greater accuracy. Further work may or may not establish a
Mineral Resource on the property. Accordingly, the estimate of grade is made
as provided by paragraph 18 of the JORC Code in relation to an exploration
target or exploration potential. The diamonds were recovered from the minus
19mm plus 1.5mm fractions of kimberlite sampled by 2.5m diameter Bauer drill
holes. The kimberlite material was processed in a DMS plant with diamond
recovery by a Flowsort x-ray plant and a grease table.
Tawana Alluvial Project, Lime Acres District, Kimberley Region
(Operated by Tawana; 70% owned by Tawana and 30% owned by Seven Falls (with
BHP Billiton participating in a 2.5% gross revenue royalty))
The Tawana Alluvial Project area encompasses two alluvial deposits, the
Feeder Channel and the Eastern Gravels, which extend from 300 meters from the
De Beers owned Finsch Mine for a distance of approximately 18 kilometres from
the mine. These deposits resulted from the discovery by Tawana during early
exploration of targets generated by BHP Billiton.
During 2004/2005/2006 large volumes of alluvial material were extracted by
percussion and large diameter Bauer drilling and processed in the Company`s
DMS plants. Remarkably, this resulted in the recovery of diamonds from all of
the holes drilled and the identification of zones of enrichment in the
channels. The Eastern Gravels were also identified as hosting higher quality
diamonds although additional exploration is needed to define minable zones.
The proposed next stage for the Tawana Alluvial Project is a large scale
operating trial. As a precursor to this, it is proposed to investigate the
most effective methods to extract diamonds from the channels and to determine
the most effective processing methods. It is proposed to contract South
African alluvial diamond specialists to advise on the project scope and
implementation, including the costs of conducting the operating trial.
St. Augustines Kimberlite Project, Kimberley Region
(Operated by Tawana; Tawana 30% equity in Vecto Trade 436 (Pty) Ltd)
Tawana announced on 27 September 2007 that it had acquired a 30% of the
issued shares in Vecto Trade 436(Pty) Ltd ("Vecto") from the major
shareholder, Galeshewe Mining Resources (Pty) Limited. In August 2007 Vecto
was granted a New Order Prospecting Right over the St Augustines kimberlite
located 600 metres west of the world famous Kimberley Mine or "Big Hole" in
Kimberley, South Africa. The St Augustines mine was thought to be located in
the northern half of the Prospecting Right due west of the Big Hole and this
has been confirmed.
The Kimberley Mine produced 14.5 million carats of diamonds from 22.5 million
tons at a grade of 64 carats per hundred tons. Mining ceased in 1914. The St
Augustines kimberlite was mined in the late 1890`s and records show that the
diamond quality was considered identical and the grade similar to that of the
nearby Kimberley Mine. Geological records indicate that the two kimberlite
pipes of the Kimberley Mine and St Augustines are located on the same
structure and are connected by a kimberlite fissure.
Mining at St Augustines ceased in 1902. Subsequently the tailings of the
Kimberley Mine were deposited over the St Augustines kimberlite. The removal
of these tailings has recently exposed in-situ kimberlite at St Augustines.
Records show that St Augustines was only partially mined to a depth of
approximately 240 metres as compared to the Kimberley Mine which was mined to
a depth of 1097 metres.
A non-invasive gravimetric survey conducted by Tawana in November 2007
identified the location of the original pit of the St Augustine`s mine. Two
new targets close to St Augustines have also been identified. The gravimetric
survey was undertaken to confirm the exact position of the known kimberlite
and to determine whether other kimberlites occurred in the Prospecting Right.
The two new targets are in the southern half of the Prospecting Right and
display similar gravity responses to that of the known St Augustines
kimberlite.
In January 2008, the Company was advised that De Beers Consolidated Mines
Limited (the surface owners of the land constituting the southern half of the
St Augustines Mine Prospecting Right) has applied for a Judicial Review and
setting aside of the Minister of Minerals and Energy`s administrative act in
granting the Prospecting Right, or alternatively, that portion of the
Prospecting Right in so far as it affects the southern half of the
Prospecting Right.
Tawana`s legal advisors in South Africa have advised that it is too early to
express an opinion as to the merits of the application or its prospects of
success since the Department of Minerals and Energy, which is opposing the
application on behalf of the Minister, has as yet not replied to the
allegations in the founding papers.
Pending determination thereof, however, South African legal advisers have
advised that the Prospecting Right remains registered and valid. They have
further pointed out that the original pit of the St Augustine`s mine is not
located in the southern half of the Prospecting Right.
Lexshell Alluvial Project, Kimberley Region
(Tawana 50% and operator / Guma Resources 50%)
The project is held under a Mining Right by Lexshell 366 Mining (Pty) Limited
("the Holder"). Tawana and Guma have entered into a Contractor`s Agreement
with the Holder which will enable Tawana to assess the economic potential of
the deposit and if warranted mine the diamonds on behalf of the joint venture
partners. The Holder will retain a 12% share of revenue after State royalties
and cost of sales.
The project is located on a palaeo-channel of the Vaal/Harts River adjacent
to established alluvial diamond mines.
The section of the Vaal/Harts River alluvials in which this project is
located is noted for the prolific production of large, high quality diamonds.
Mining has taken place here for about 100 years and the area still hosts one
of the largest alluvial diamond mines in the world.
Tawana will commence work on the assessment of the deposit during 2008.
Riverton Kimberlite Project, Kimberley Region
(Operated by Tawana; Tawana earning 70%, Taormina Mining (Pty) Ltd diluting
to 30%)
The Company entered into a joint venture with Taormina Mining (Pty) Limited
("Taormina"), an unlisted South African company, to prospect and evaluate a
kimberlite situated 25 km north of Kimberley, South Africa.
The Company`s 10 tph DMS plant was commissioned on site during the September
quarter 2007. A total of approximately 2300 tonnes of kimberlite was
excavated from 6 separate locations on the kimberlite, being representative
of the different kimberlite phases or types in the pipe. The bulk-sampling
program was designed to determine the diamond distribution in the pipe and to
gain an understanding of the grade and diamond quality at Riverton.
Results from the main, eastern lobe, of the pipe indicated that this section
contains diamonds that are on average larger than diamonds recovered from
other kimberlites in this region, but that overall the kimberlite is
considered by Tawana to be uneconomic.
Current Status of Projects in Botswana
Orapa Diamond Project
(100% owned by Tawana; Nowak Investments (Pty) Limited earning 51%)
In April 2007 the Company was granted a new prospecting licence over an area
of approximately 57 square kilometres, covering 8 kimberlites in the Orapa
kimberlite field in Botswana. Applications for this Prospecting Licence were
submitted by a number of companies on a competitive basis. The Prospecting
Licence is held in the name of Seolo Pty Ltd, a 100% owned Botswana
registered subsidiary of Tawana.
The Orapa kimberlite field is located in north eastern Botswana, and includes
the Orapa, Letlhakane and Damtshaa diamonds mines, which produce in excess of
13 million carats of diamonds per year. The Orapa kimberlite field is one of
the largest diamondiferous kimberlite fields in the world, containing 79
known kimberlites, of which the majority has been proven to be
diamondiferous. Orapa is one of the largest producing kimberlites in the
world and is 113 hectares in surface area.
Drilling of the BK19 - BK26 kimberlites in the Orapa Project area in Botswana
was completed by Tawana in November 2007. Drilling was conducted in two
phases. The first phase was designed to sample kimberlite to a depth of 100
metres in each of the eight kimberlites to gain an understanding of the
geology and mineral chemistry of the pipes. This drilling phase is complete
and the samples from the kimberlites have been transported to Tawana`s
processing facility in Kimberley, South Africa.
Kimberlitic minerals were recovered from samples of the drill cuttings and
analysed by electron microprobe. 13% of the kimberlitic garnets from BK24
were reported to be "G10" garnets, which signify that this kimberlite has a
high probability of being economically diamondiferous.
The second drilling phase was designed to determine the surface areas of
selected kimberlites. To date this drilling indicates that BK24 has a surface
area of between 3.3 and 3.6 ha. The pipe has basalt breccia infill to 30
metres depth which is thought to have caused an under-estimation of the
diamond grade when tested to this depth by previous explorers.
The kimberlites BK22 and BK23 were previously thought to be two separate
small pipes. Drilling by Tawana has shown this to be incorrect and that the
pipes are joined subsurface to form one 2.2ha body.
On 19 February 2008 Tawana announced that it had signed a joint venture
agreement with Nowak Investments (Pty) Limited over the Orapa, Borolong and
Moshaiwa projects. Nowak is able to earn 51% interest in the projects by
conducting and sole funding the first phase of exploration on the projects.
At the completion of the first phase Tawana will have the option to
participate and fund ongoing work pro-rata or to allow Nowak to continue sole
funding exploration to completion of a bankable feasibility study to earn 70%
interest in the project.
Borolong / Mashaiwa Diamond Project
(100% owned by Tawana; Nowak Investments (Pty) Limited earning 51%)
Exploration licenses in the prospective north eastern part of Botswana,
between the city of Francistown and the Orapa kimberlite province, were
granted to Tawana during early 2004. The licences cover areas which are
known to be geologically favourable for kimberlite intrusions, and which were
known to include sites where kimberlitic indicator minerals had been
recovered by earlier explorers.
Kimberlitic indicator minerals were recovered from soil samples collected
from targets during 2004, 2005 and 2006. Targets were identified from
existing magnetic and sampling data. Additional follow up sampling is
planned to take place during 2008.
On 19 February 2008 Tawana announced that it had signed a joint venture
agreement with Nowak Investments (Pty) Limited over the Orapa, Borolong and
Moshaiwa projects. Nowak is able to earn 51% interest in the projects by
conducting and sole funding the first phase of exploration on the projects.
At the completion of the first phase Tawana will have the option to
participate and fund ongoing work pro-rata or to allow Nowak to continue sole
funding exploration to completion of a bankable feasibility study to earn 70%
interest in the project.
Current Status of Projects in Australia
Flinders Island Project, South Australia
(80% owned by Tawana and 20% owned by Orogenic Exploration/Flinders Diamonds
Ltd earning in)
Flinders Island is situated 28 km west of the Eyre Peninsula of South
Australia.
Tawana and Orogenic entered into a joint venture agreement with Flinders
Diamonds Limited (FDL) in April 2007 under the terms of which FDL is able to
earn a 70% interest in the project by spending $2 million on the combined
Flinders Island and Eyre Peninsula Projects. In the event that FDL earns 70%
interest in the project, Tawana`s interest will reduce to 15%.
Eyre Peninsula Project, South Australia
(80% owned by Tawana and 20% owned by Orogenic Exploration/Flinders Diamonds
Ltd ("FDL") earning in.)
Tawana and Orogenic entered into a joint venture agreement with FDL in April
2007 under the terms of which FDL is able to earn a 70% interest in the
project by spending $2 million on the combined Flinders Island and Eyre
Peninsula Projects. In the event that FDL earns 70% interest in the project,
Tawana`s interest will reduce to 15%.
Pilbara Exploration, Western Australia
(Tawana 66.6%; De Beers Australia Exploration Limited 33.3%)
Stream sampling conducted by Tawana during 2006 resulted in the recovery of
kimberlitic indicator minerals to the north east of the Blacktop Kimberlite.
These indicator minerals were located in two discreet areas, which are
considered likely to host two kimberlite fissures. In an attempt to verify
this interpretation an airborne geophysical survey was conducted over the
areas.
Results of this survey are awaited.
Melbourne Laboratory
During 2007 the laboratory processed the Company`s samples from the South
African and Botswana projects and the Pilbara Exploration project in
Australia.
The specialised skills of the laboratory were also utilised by other South
African and Australian companies on a commercial basis.
Corporate
Fund Raising
In September 2007 the Company placed 5,300,000 shares, each with an attached
option, at 15 cents per shares with institutional investors to raise
additional working capital. Each option is exercisable at 15 cents on or
before 11 September 2011.
SCHEDULE OF MINING TENEMENTS
Mining tenements currently held by the economic entity are:
Location Title Held By % Held by Title
Tawana
Daniel Project, BHP Billiton World Various NC30/5/1/1/088PR
South Africa Exploration Inc
Kareevlei Wes, Diamond Resources 74% NC30/5/1/2/2/081MR
South Africa P/L
St Augustines, Vecto Trade 436 30% NC30/5/1/1/5/402PR
South Africa P/L (indirect)
Perdevlei, Tawana Resources 74% PP 59/2004
South Africa (SA) P/L
Riverton, Taormina Mining Earning 70% NC30/5/1/2/2/405PR
South Africa (Pty) Ltd
Lexshell, Lexshell 366 50% NC30/5/1/2/2/054MR
South Africa Mining (Pty) Ltd
Pilbara De Beers Australia 66.6% EL47/1125
Exploration, Exploration
Western Limited
Australia
Timber Creek, Tawana Resources 100% ERL 25981
N.T. Australia NL
Flinders Orogenic 80% EL3200
Island, South Exploration P/L /
Australia Tawana
Eyre Peninsula, Orogenic 80% EL3928
South Australia Exploration P/L /
Tawana
Flinders Orogenic 80% ELA06/648
Island, South Exploration P/L /
Australia Tawana
Borolong/ Seolo Botswana 100% PL 37/2003, 38/2003,
Mashaiwa, (Pty) Ltd PL 86/2007, 87/2007
Botswana
Orapa, Botswana Seolo Botswana 100% PL61/2007
(Pty) Ltd
REMUNERATION REPORT
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
E Additional information
The information provided under headings A-D includes remuneration disclosures
that are required under Accounting Standard AASB 124 Related Party
Disclosures. These disclosures have been transferred from the financial
report and have been audited. The disclosures in Section E are additional
disclosures required by the Corporations Act 2001 and the Corporations
Regulations 2001 which have not been audited.
A Principles used to determine the nature and amount of remuneration
(audited)
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.
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 and
during recruitment activities generally. If required, the Board may engage an
external consultant to provide independent advice in the form of a written
report detailing market levels of remuneration for comparable executive
roles.
Remuneration consists of a fixed remuneration 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 agreed to be determined in accordance with the rules set out in 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 may be subject to shareholder approval in accordance with the ASX
Listing Rules.
The amount of aggregate remuneration sought to be approved by shareholders
and the manner in which it is apportioned amongst Directors is reviewed
annually. The Board considers the amount of director fees being paid by
comparable companies with similar responsibilities and the experience of the
non-executive directors when undertaking the annual review process.
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 Pay
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 the experience of the
executive when undertaking the annual review process.
B Details of Remuneration (audited)
Amounts of remuneration
Details of the remuneration of the directors and the key
management personnel (as defined in AASB 124 Related Party
Disclosures) of Tawana Resources NL and the Group are set
out in the following tables.
The key management personnel of Tawana Resources NL
include the directors as per page 4 above and the
following executive officers, which are also the highest
paid executives of the group:
* C. Bailey - General Manager South African Operations
* A. Berryman - Laboratory Manager
The Group has no other executives.
Details of Remuneration for Year Ended 31 December 2007
Short- Term Post Share Based Total
2007 Benefits Employment Payment
Benefits
Cash Salary Superannuation Options
and Fees
$ $ $ $
Executive
Directors
W. Marx 141,837 78,163 - 220,000
Non-executive
Directors
B. Phillips 40,000 - - 40,000
E. Luff 37,500 - 16,058 53,558
Sub-total 219,337 78,163 16,058 313,558
directors
Other Key
Management
Personnel
A. Berryman 111,500 16,575 3,381 131,456
C. Bailey 150,000 13,500 10,986 174,486
Totals 480,837 108,238 30,425 619,500
Options Issued as Part of Remuneration for the Year Ended 31 December 2007
The details of options issued as part of remuneration during the year are
detailed in Section D.
Details of Remuneration for Year Ended 31 December 2006
The remuneration for each Director and each of the executive officers of the
Group receiving the highest remuneration during the year, who are also the
Key Management Personnel, was as follows:
Short- Term Post Share Based Total
2006 Benefits Employment Payment
Benefits
Cash Salary Superannuation Options
and Fees
$ $ $ $
Executive
Directors
W. Marx 84,098 135,902 - 220,000
L. Daniels 150,000 - - 150,000
Non-executive
Directors
B. Phillips 40,000 - - 40,000
E. Luff 37,500 - - 37,500
Sub-total 311,598 135,902 - 447,500
directors
Details of Remuneration for Year Ended 31 December 2006 (continued)
Other Key
Management
Personnel
H. Hill 90,000 - - 90,000
B. Tambanis 191,374 12,289 39,000 242,663
A. Berryman 105,417 14,988 2,000 122,405
C. Bailey 119,250 10,733 2,850 132,833
Totals 817,639 173,912 43,850 1,035,401
Options Issued as Part of Remuneration for the Year Ended 31 December 2006
The details of options issued as part of remuneration during the year are
detailed in the section on share based compensation options.
C Service Agreements (audited)
There are no contracts between the company and directors, executives or
consultants.
D Share Based Compensation (audited)
Options are granted under the Tawana Resources Employee Option Scheme which
was approved by shareholders at the 2005 annual general meeting.
All directors and staff (including Key Management Personnel) are eligible to
participate in the plan. Options are granted under the plan for no
consideration. Options are granted for a five year period, and 1/3 vests on
the date of granting of the options, 1/3 on the first anniversary of the date
of granting and 1/3 on the second anniversary of the date of granting.
Options granted under the plan carry no dividend or voting rights. When
exercisable, each option is converted into one ordinary share.
The terms and conditions of each grant of options affecting remuneration in
this or future reporting periods are as follows:
Grant Date Expiry Date Exercise Value per Date exercisable
Price option at
date of
grant
(a) 30/11/ 2006 30/11/2011 $0.35 $0.057 1/3 - 30/11/2006
30/11/ 2006 30/11/2011 $0.35 $0.067 1/3 - 30/11/2007
30/11/ 2006 30/11/2011 $0.35 $0.075 1/3 - 30/11/2008
(b) 30/11/2006 30/11/2011 $0.50 $0.039 30/11/2006
(c) 30/11/ 2006 30/11/2011 $0.35 $0.057 1/3 - 30/11/2006
30/11/ 2006 30/11/2011 $0.35 $0.067 1/3 - 30/11/2007
30/11/ 2006 30/11/2011 $0.35 $0.075 1/3 - 30/11/2008
(d) 31/05/2007 30/11/2011 $0.35 $0.0515 1/3 - 31/05/2007
31/05/2007 30/11/2011 $0.35 $0.0515 1/3 - 31/05/2008
31/05/2007 30/11/2011 $0.35 $0.0522 1/3 - 31/05/2009
(e) 25/06/2007 30/11/2011 $0.35 $0.0391 1/3 - 25/06/2007
25/06/2007 30/11/2011 $0.35 $0.0391 1/3 - 25/06/2008
25/06/2007 30/11/2011 $0.35 $0.0391 1/3 - 25/06/2009
D Share Based Compensation (audited) (continued)
(a) Three hundred and ninety thousand options exercisable at $0.35 were
issued to employees under the employee options scheme in 2006.
(b) One million options exercisable at $0.50 cents were issued to B. Tambanis
as part of his employment arrangement in 2006. Those options will have an
expiry date of 30/11/2011. These options vested on the day of granting of the
options.
(c) Two hundred and fifty thousand options exercisable at $0.35 were granted
to employees under the employee option scheme during 2006 but only accepted
in 2007.
(d) Five hundred thousand options exercisable at $0.35 where issued to E Luff
under the employee option scheme in 2007.
(e) Five hundred thousand options exercisable at $0.35 were granted to
employees under the employee option scheme in 2007.
Details of options over ordinary shares in the company provided as
remuneration to each Director of the Group and of each of the key management
personnel of the Group are set out below. When exercisable, each option is
convertible into one ordinary share of Tawana Resources N.L. Further
information on the options is set out in the notes to the financial
statements.
Name Number of Number of Number of Number of
options options options options
granted granted vested vested
during the during the during the during the
year year year 2007 year 2006
2007 2006
Directors
B. Phillips - - - -
W. Marx - - - -
E. Luff 500,000 - 166,666 -
Key
Management
B. Tambanis - 1,000,000 - 1,000,000
A. Berryman - 100,000 66,666 33,333
C. Bailey 250,000 150,000 133,333 50,000
The assessed fair value at grant date of options granted to the individuals
is allocated equally over the period from grant date to vesting date, and the
amount is included in the remuneration tables above. Fair values at grant
date are independently determined using a Binominal Tree option pricing model
that takes into account the exercise price, the term of the option, the
impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk
free interest rate for the term of the option.
No Directors or employees exercised options during 2007.
The model inputs for options granted during the year ended 31 December
2007 included:
(a) options are granted for no consideration, 33.3% of each tranche
vests and is exercisable on the date of granting ,and on the two
anniversary days of granting
(b) exercise price: $0.35 (2006 - $0.35)
(c) 500,000 options were granted on 31 May 2007 and 500,000 options
were granted on 25 June 2007 (2006 - 30 November 2006)
(d) expiry date: 30 November 2011 (2006 - 30 November 2011)
(e) share price at grant date of 31 May 2007: $0.193; share price at
grant date of 25 June 2007: $0.167 (2006 - $0.20)
(f) expected price volatility of the company`s shares: 49% at both
dates (2006 - 67%)
(g) expected dividend yield: 0.0% at both dates (2006 - 0.0%)
(h) Risk-free interest rate at grant date of 31 May 2007: 6.18%, and
at grant date of 25 June 2007: 6.39% (2006 - 5.88%)
E Additional Information - unaudited
Details of remuneration: cash bonuses and options
For each cash bonus and grant of options included in the tables on
pages 15 - 17, the percentage of the available bonus or grant that was
paid, or that vested, in the financial year, and the percentage that
was forfeited because the person did not meet the service and
performance criteria is set out below. The options vest over three
years, provided the vesting conditions are met, hence the minimum value
of the option yet to vest is nil. The maximum value of the options yet
to vest has been determined as the amount of the grant date fair value
of the options that is yet to be expensed. Tawana Resources N.L does
not have a formal bonus plan that is linked to the performance of the
company.
Cash Bonus Options
Name Paid For- Year Vest For- Financia Minimu Maximu
feited grante ed feited l years m m
d in which total total
options value value
may vest of of
grant grant
yet to yet to
vest vest
% % $ $
A. - - 2006 66.6 - 31/12/ - 1,252
Berryman % 2008
C. Bailey - - 2007 33.3 - 31/12/ - 4,037
- - 2006 % - 2009 - 1,877
66.6 31/12/
% 2008
E. Luff - - 2007 33.3 - 31/12/ - 9,809
% 2009
Further details relating to options are set out below.
A B C D E
Name Remuneration Value at Value at Value at Total of
consisting of grant exercise lapse columns B-D
options date date date
$ $ $ $
C. Bailey 3.30% 5,763 - - 5,763
E. Luff 29.98% 16,058 - - 16,058
A = The percentage of the value of remuneration consisting of options,
based on the value at grant date set out in column B.
B = The value at grant date calculated in accordance with AASB 2 Share-
based Payment of options granted during the year as part of
remuneration.
C = The value at exercise date of options that were granted as part of
remuneration and were exercised during the year.
D = The value at lapse date of options that were granted as part of
remuneration and that lapsed during the year.
Loans to directors and executives
There are currently no loans (2006: Nil) with Directors and executives.
Share options granted to directors and the most highly remunerated
officers
Options over unissued ordinary shares of Tawana Resources NL granted
during or since the end of the financial year to the most highly
remunerated officers of the company as part of their remuneration were
as follows:
Other executives of Tawana Resources NL Options granted
E. Luff 500,000
C. Bailey 250,000
The options were granted under the Tawana Resources NL Employee Option
Plan on 30 November 2006. Details of options granted to the directors
and the most highly remunerated officers of the Group can be found in
section D of the remuneration report on page 16. No options have been
granted since the end of the year.
No shares were issued on the exercise of options.
Insurance of Officers
During the financial year, Tawana Resources N.L. paid a premium of $24,200 to
insure the directors and secretary of the Company and its Australian based
controlled entities, and the managers of each of the divisions of the Group.
The liabilities insured are legal costs that may be incurred in defending
civil or criminal proceedings that may be brought against the officers in
their capacity as officers of entities in the Group and any other payments
arising from liabilities incurred by the officers in connection with such
proceedings. This does not include such liabilities that arise from conduct
involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves
or someone else or to cause detriment to the company. It is not possible to
apportion the premium between amounts relating to the insurance against legal
costs and those relating to other liabilities.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations
Act 2001 for leave to bring proceedings on behalf of the company, or to
intervene in any proceedings to which the Company is a party, for the
purpose of taking responsibility on behalf of the Company for all or
part of those proceedings.
No proceedings have been brought or intervened in on behalf of the
Company with leave of the Court under section 237 of the Corporations
Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional
to their statutory audit duties where the auditor`s expertise and
experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor
(PricewaterhouseCoopers) for audit and non-audit services provided
during the year are set out below.
The Board of Directors has considered the position and, in accordance
with the advice received from the audit and risk management committee,
is satisfied that the provision of the non-audit services is compatible
with the general standard of independence for auditors imposed by the
Corporations Act 2001. No non-audit services were provided by the
auditor during 2007.
During the year the following fees were paid or payable for services
provided by the auditor of the parent entity, its related practices and
non-related audit firms:
Consolidated
2007 2006
$ $
Assurance services
Audit services
PricewaterhouseCoopers Australian firm:
Audit and review of financial reports and 65,396 40,085
other audit work under the Corporations
Act 2001
Related practices of 35,214 37,169
PricewaterhouseCoopers Australian firm
Total remuneration for audit services 100,610 77,254
Other services
PricewaterhouseCoopers - -
Auditors` independence declaration
A copy of the auditors` independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 21.
Auditor
PricewaterhouseCoopers was appointed in accordance with section 327 of
the Corporations Act 2001.
This report is made in accordance with a resolution of directors.
W.T. Marx
Director
Dated at Melbourne this 31st day of March 2008
PricewaterhouseCoopers
ABN 52 780 433 757
Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331L
MELBOURNE VIC 3001
DX 77
Telephone 61 3 8603 1000
Auditor`s Independence Declaration
Facsimile 61 3 8603 1999
Website:www.pwc.com/au
As lead auditor for the audit of Tawana Resource N.L. for the year ended 31
December 2007, I declare that to the best of my knowledge and belief, there
have been:
a) no contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Tawana Resources during the period. and the
entities it controlled.
Tim Goldsmith Melbourne
Partner 31 March 2008
PricewaterhouseCoopers
Liability limited by a scheme approved under Professional Standards
Legislation
Corporate Governance Statement
Tawana Resources NL and the Board 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 Stock
Exchange Corporate Governance Council in March 2003. 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 Group in this statement.
The relationship between the Board and senior management is critical to the
Group`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
Group as a whole. Their focus is to enhance the interests of shareholders
and other key stakeholders and to ensure the Group is properly managed.
Day to day management of the Group`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 Group`s
delegations policy. These delegations are reviewed on an annual basis.
A description of the Company`s main corporate governance practices is set out
below. All 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 Tawana Group. The Board remains primarily responsible for the
strategic direction and financial aspirations of the Tawana Group, whilst
delegating the responsibility of management to the Managing Director and the
senior management team.
The Board aims to fulfil 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
Tawana Group employees act with integrity and due diligence in the interests
of the Company and stakeholders.
* Review and approve all significant policies and procedures across the
Tawana Group.
Board Composition
The Board, with the assistance of the Remuneration and Nomination Committee,
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 is currently chaired by a Non-executive Director.
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 group member, 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 group member, or an
employee materially associated with the service provided.
- is not a material supplier or customer of the Company or other group
member, or an officer of or otherwise associated directly with a material
supplier or customer.
- has no material contractual relationship with the Company or another
group member 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.
- 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
is not comprised of a majority of independent Non-Executive Directors. 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.
The following were Directors during the 2007 year;
Director Capacity Position Held Office Held Office
from: to:
W. Marx Managing Non 16 November Current
Director Independent 1998
B. Phillips Non-Exec 4 April Current
Director Independent 2005
E. Luff Non-Exec Non 16 November Current
Director Independent 1998
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:
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.
Directors elected or appointed on the same day may agree among themselves or
determine by lot 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.
Responsiblities
The responsibilities of the board include:
- providing strategic guidance to the company
- reviewing and approving business and financial plans
- monitoring organisational and financial performance
- liaising with company`s auditors
- appointing the Managing Director and reviewing his performance
- enhancing and protecting the reputation of the organisation
- 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, with advice from the Remuneration
and Nomination Committee, to assess the performance of each of the Directors
and senior executives. The Board has conducted its annual performance reviews
for the 2007 year, which involved open and constructive dialogue between the
respective parties, taking account of the objectives and measurable results
that have been achieved.
Corporate Reporting
The Managing Director and Company Secretary have made the following
certifications to the board:
that the Company`s financial reports are complete and present a true and fair
view, in all material respects, of the financial condition and operational
results of the Company and Group and are in accordance with relevant
accounting standards
that the above statement is founded on a sound system of risk management and
internal compliance and control which implements the policies adopted by the
Board and that the Company`s risk management and internal compliance and
control is operating efficiently and effectively in all material respects.
Board Committees
The Board has established a number of committees to assist in the execution
of its duties and to allow detailed consideration of complex issues.
Currently there are two committees in place being the Remuneration and
Nomination Committee and the Audit and Risk Management Committee. Each is
comprised of non-executive Directors. All matters determined by committees
are submitted to the full board as recommendations for Board decisions.
Remuneration and Nomination Committee
The current members are:
E. Luff (Chairman)
B. Phillips
The committee is responsible for making recommendations to the Board with
respect to the Company`s compensation policies, including equity based
programs.
The committee is also responsible for making recommendations to the Board for
identifying individuals suitably qualified to become Board members.
Particulars concerning Directors` and Executives` remuneration are set out in
the Directors` Report.
Audit and Risk Management Committee
The current members of the committee are:
E. Luff (Chairman)
B. Phillips
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.
External Auditors
The Company and audit 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.
PricewaterhouseCoopers was appointed as the external auditor in 2006. It is
PricewaterhouseCoopers 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 and risk management committee, is responsible
for ensuring there are adequate policies in relation to risk management,
compliance and internal control systems. These policies are available on the
company website. 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 Group`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 risk management policy and the operation of the risk management
and compliance system is managed by the company Risk Management Group which
consists of senior executives chaired by the Company Secretary. The Board
receives quarterly reports from this group on material risks that may impede
meeting business objectives.
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 recognises 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.
The Tawana Corporate Office and Laboratory have been certified to AS/NZS
4801:2001, OHSAS 18001:1999 (Occupational Health and Safety Management
Systems), and to AS/NZS ISO 14001:2004 (Environmental Management System)
since May 2005 and remain certified. This SHEMS meets or exceeds legislative
compliance and governs Tawana operations both within Australia and abroad.
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 Group 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.
All information disclosed to the ASX is posted on the company`s website as
soon as it is disclosed to the ASX. When analysts are briefed on aspects of
the Group`s operations, the material used in the presentation is released to
the ASX and posted on the company`s website. 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.
All shareholders receive a copy of the Company`s annual report.
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 Remuneration and Nomination Committee undertakes a review of the
remuneration packages of all Directors and Executive officers on an annual
basis and makes recommendations to the Board. Remuneration packages are
reviewed with due regard to performance and other relevant factors.
In order to retain and attract executives of sufficient calibre 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
Other benefits
Details of specified Directors and Executives 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,
ideally on the Company`s website. The Company makes available on the web-
site, within a reasonable time, any public statements by the Company.
Tawana Resources N.L. ABN 69 085 166 721
Annual Financial Report - 31 December 2007
Contents
Financial report:
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the financial statements
Directors` declaration
Independent audit report to the members
This financial report covers both Tawana Resources N.L. as an individual
entity and the consolidated entity consisting of Tawana Resources N.L. and
its subsidiaries. The financial report is presented in the Australian
currency.
Tawana Resources N.L. is a company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of
business is:
Tawana Resources N.L.
60 Wilson Street
South Yarra VIC 3141
A description of the nature of the consolidated entity`s operations and its
principal activities is included in the review of operations and activities
on pages 7 to 12 and in the Directors` report on page 5, both of which are
not part of this financial report.
The financial report was authorised for issue by the Directors on 28th March
2008. The Company has the power to amend and reissue the financial report.
Through the use of the internet, we have ensured that our corporate reporting
is timely, complete, and available globally at minimum cost to the Company.
All press releases, financial reports and other information are available on
our website: www.tawana.com.au.
INCOME STATEMENTS
For The Year Ended 31 December 2007
Consolidated Parent Entity
2007 2006 2007 2006
Note $ $ $ $
Revenue from
continuing 4 120,034 233,201 41,727 136,886
operations
Other income 4 - 216,242 - 216,242
Corporate costs (488,460) (535,330) (273,943) (401,528)
Depreciation (436,789) (832,518) (257,977) (334,031)
Employee benefits (686,814) (369,995) (611,055) (203,470)
expense
Exploration (5,288,919) (2,439,577) (5,288,919) (2,439,577)
expenses written
off
Foreign exchange - (61,661) - (27,457)
loss
Impairment of - - (2,670,612) (2,121,692)
financial assets
Prospecting fee - - (212,415) (202,855)
Travel costs (70,200) (253,233) - (71,794)
Other expenses 5 (534,852) (723,398) (321,519) (369,751)
Loss from (7,386,000) (4,766,269) (9,594,713) (5,819,027)
continuing
operations before
income tax
expense
Income tax - - - -
expense
Loss from (7,386,000) (4,766,269) (9,594,713) (5,819,027)
continuing
operation after
income tax
expense
attributable to
members of the
parent
Earnings per share from continuing operations attributable to the ordinary
equity holders of the company
Basic earnings 25 (0.083) (0.061)
per share
Diluted earnings 25 (0.083) (0.061)
per share
The above income statements should be read in conjunction with the
accompanying notes
BALANCE SHEETS
As at 31 December 2007
Consolidated Parent Entity
Notes 2007 2006 2007 2006
ASSETS $ $ $ $
Current
assets
Cash and 7 149,862 2,655,399 134,031 278,558
cash
equivalents
Trade and 8 88,981 561,231 77,417 138,654
other
receivables
Inventories 9 76,818 94,181 - -
Total 315,661 3,310,811 211,448 417,212
current
assets
Non-current
assets
Receivables 8 47,423 51,291 - -
Investment 10 16,640 16,640
in associate
Other 11 - - 3,887,738 7,730,151
financial
assets
Property, 12 850,889 1,371,547 442,862 778,414
plant and
equipment
Exploration 13 7,971,366 12,037,202 4,531,948 8,931,447
expenditure
Total non- 8,886,318 13,460,040 8,879,188 17,440,012
current
assets
Total Assets 9,201,979 16,770,851 9,090,636 17,857,224
LIABILITIES
Current
liabilities
Trade and 15 142,761 480,664 54,510 119,890
other
payables
Provisions 16 116,389 71,760 116,389 71,760
Total 259,150 552,424 170,899 191,650
current
liabilities
Non-current
liabilities
Provisions 16 30,784 51,291 - -
Non-interest 17 - - 7,692 7,692
bearing
liabilities
Total non- 30,784 51,291 7,692 7,692
current
liabilities
Total 289,934 603,715 178,591 199,342
Liabilities
Net Assets 8,912,045 16,167,136 8,912,045 17,657,882
EQUITY
Contributed 18 33,339,335 32,544,335 33,339,335 32,544,335
equity
Reserves 19 (2,148,733) (1,484,642) 260,323 206,447
Accumulated 20 (22,278,557) (14,892,557) (24,687,613) (15,092,900)
losses
Total Equity 8,912,045 16,167,136 8,912,045 17,657,882
The above balance sheets should be read in conjunction with the accompanying
notes.
STATEMENTS OF CHANGES IN EQUITY
Year Ended 31 December 2007
CONSOLIDATED Issued Retained Other Total
Capital Earnings Reserves
$ $ $ $
2006
At 1 January 2006 25,744,021 (10,126,288) (20,547) 15,597,186
Currency translation - - (1,511,658) (1,511,658)
differences
Profit/ (Loss) for the - (4,766,269) - (4,766,269)
period
Issue of executive and - - 47,563 47,563
staff options
Issue of shares 6,800,314 - - 6,800,314
At 31 December 2006 32,544,335 (14,892,557) (1,484,642) 16,167,136
2007
At 1 January 2007 32,544,335 (14,892,557) (1,484,642) 16,167,136
Currency translation - - (717,967) (717,967)
differences
Profit/ (Loss) for the - (7,386,000) - (7,386,000)
period
Issue of executive and - - 53,876 53,876
staff options
Issue of shares 795,000 - - 795,000
At 31 December 2007 33,339,335 (22,278,557) (2,148,733) 8,912,045
PARENT ENTITY Issued Retained Other Total
Capital Earnings Reserves
2006
At 1 January 2006 25,744,021 (9,273,873) 158,884 16,629,032
Profit/(Loss) for the - (5,819,027) - (5,819,027)
period
Issue of executive and - - 47,563 47,563
staff options
Issue of shares 6,800,314 - - 6,800,314
At 31 December 2006 32,544,335 (15,092,900) 206,447 17,657,882
2007
At 1 January 2007 32,544,335 (15,092,900) 206,447 17,657,882
Profit/ (Loss) for the - (9,594,713) - (9.594,713)
period
Issue of executive and - - 53,876 53,876
staff options
Issue of shares 795,000 - - 795,000
At 31 December 2007 33,339,335 (24,687,613) 260,323 8,912,045
The above statements of changes in equity should be read in conjunction with
the accompanying notes.
CASH FLOW STATEMENTS
For The Year Ended 31 December 2007
Consolidated Parent Entity
2007 2006 2007 2006
Note $ $ $ $
Cash Flows from
Operating
Activities
Receipts from 104,513 192,532 105,534 162,305
customers
Interest 81,088 178,102 2,781 81,787
received
Payments to (1,536,683) (1,424,877) (1,147,835) (1,085,642)
suppliers and
employees
Net cash 30 (1,351,082) (1,054,243) (1,039,520) (841,550)
outflow from
operating
activities
Cash Flows from
Investing
Activities
Purchase of (44,726) (10,437) - -
fixed assets
Proceeds on 52,961 1,714,576 46,667 1,714,576
sale of fixed
assets
Payments for (1,223,083) (4,727,419) (889,420) (4,261,252)
exploration
Advances to - - (196,188) (4,286,327)
related bodies
corporate
Advances from - - 1,155,574 -
related bodies
corporate
Investment in (16,640) - (16,640) -
associate
Loans repaid - (2,577) - -
Net cash (1,231,488) (3,025,857) 99,993 (6,833,003)
outflow from
investing
activities
Cash Flows from
Financing
Activities
Proceeds from 795,000 7,520,782 795,000 7,520,782
share issues
Cost of share - (720,468) - (720,468)
issues
Net cash inflow 795,000 6,800,314 795,000 6,800,314
from financing
activities
Net (1,787,570) 2,720,214 (144,527) (874,239)
increase/(decre
ase) in cash
and cash
equivalents
Cash and cash 2,655,399 1,340,481 278,558 1,152,797
equivalents at
beginning of
financial year
Effects of (717,967) (1,405,296) - -
exchange rates
changes on cash
and cash
equivalent
Cash and cash 30 149,862 2,655,399 134,031 278,558
equivalents at
end of
financial year
The above cash flow statements should be read in conjunction with the
accompanying notes.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial
report are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated. The financial report
includes separate financial statements for Tawana Resources N.L. as an
individual entity and the consolidated entity consisting of Tawana Resources
N.L. and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with
the Australian equivalents to International Financial Reporting Standards,
other authoritative pronouncements of the requirements of the Australian
Accounting Standards Board, Urgent Issues Group Interpretations and the
Corporations Act 2001.
The financial report covers the economic entity of Tawana Resources N.L. and
controlled entities, and Tawana Resources N.L. as an individual parent
entity.
The financial report is presented in Australian dollars and rounded to the
nearest dollar.
The financial report is prepared on a going concern basis. Refer to Note 31
for further details.
Compliance with AIFRS
The financial report complies with Australian Accounting Standards, which
include Australian equivalents to International Financial Reporting Standard
("AIFRS"). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards ("IFRS")
The Group has not elected to early adopt any standards in the annual
reporting period beginning 1 January 2007.
Historical cost convention
These financial statements have been prepared under the historical cost
convention.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group`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
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Tawana Resources N.L. as at 31 December 2007 and the
results of all subsidiaries for the year then ended. Tawana Resources N.L.
and its subsidiaries together are referred to in this financial report as the
Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over
which the Group has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one-half of the voting
rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that
control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group.
Intercompany transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.
Investments in subsidiaries are carried at cost less impairment losses in the
individual financial statements of Tawana Resources N.L.
(ii) Associates
Associates are all entities over which the Group 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
parent entity financial statements using the cost method and in the
consolidated financial statements using the equity method of accounting,
after initially being recognised at cost.
The Group`s share of its associates` post acquisition profits or losses is
recognised in the income statement, 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 are recognised in the
parent entity`s income statement, while in the consolidated financial
statements they reduce the carrying amount of the investment.
When the Group`s share of losses in an associate equals or exceeds its
interest in the associate, including other unsecured long-term receivables,
the Group does not recognise further losses, unless it has incurred
obligations or made payment on behalf of the associate.
Unrealised gains on transactions between the Group and its associate are
eliminated to the extent of the Group`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 Group.
(iii) Joint ventures
Jointly controlled assets
The proportionate interests in the assets, liabilities and expenses of a
joint venture activity have been incorporated in the financial statements
under the appropriate headings. Details of the joint venture are set out in
note 14.
(c) Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
to those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment and
is subject to risks and returns that are different from those of segments
operating in other economic environments.
(d) Foreign currency translation
The presentation currency of Tawana Resources N.L. and its subsidiaries is
Australian dollars (A$). The functional currency of Tawana Resources N.L. 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
retranslated at the rate of exchange prevailing at the balance sheet date.
As at the reporting date the assets and liabilities of these overseas
subsidiaries are translated into the presentation currency of Tawana
Resources N.L. at the rate of exchange prevailing at the balance sheet date
and the income statements are translated at the weighted average exchange
rates for the period. Translation differences on non-monetary assets are
included in the fair value reserve in equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in
equity relating to that particular foreign entity is recognised in the income
statement.
(e) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group 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.
Interest
Interest is recognised on a time proportion basis using the effective
interest method.
(f) Income tax
The income tax expense or revenue for the period is the tax payable on the
current period`s taxable income based on the 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
and their 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 by
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 utilise those temporary differences and losses.
Deferred tax liabilities 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
reverse 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 attributable to amounts recognised directly
in equity are also recognised directly in equity.
(g) Impairment of assets
Assets, except for exploration and evaluation (refer to note 1 (h)) 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.
(h) 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 profit 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.
(i) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any
impairment in value. Land and buildings are stated at cost less accumulated
depreciation and any impairment in value. 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
Impairment
The carrying values of plant and equipment are reviewed for impairment when
events or changes in circumstances indicate the carrying value may not be
recoverable in accordance with note 1 (g).
(j) 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.
(k) Inventories
Inventories consisting of rough diamonds are stated at lower of cost or
estimated net realisable value. Cost comprises direct materials, direct
labour and an appropriate proportion of variable and fixed overhead
expenditure.
(l) 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 Group 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
reorganisation, 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 income statement
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
income statement.
(m) Cash and cash equivalents
Cash and short-term deposits in the balance sheet 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 cash flow statement, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
(n) Employee entitlements
(i) 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.
(ii) Share-based payments
Share-based compensation benefits are provided to employees via the Tawana
Resources Employee Option Plan and an employee share scheme. Information
relating to these schemes is set out in note 27.
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. The Tawana Resource Employee Options plan was approved at the
2005 Annual General Meeting.
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.
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, 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.
(p) Leases - operating
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis over the period of
the lease.
(q) 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 income statement 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).
(r) Trade and other payables
These amounts represent liabilities for goods and services provided to the
Group prior to the end of financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.
(s) 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 balance sheet.
Cash flows are included in the cash flow statement 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.
(t) 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.
(u) Earnings per share
(i) Basic 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.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive potential ordinary
shares.
(v) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that
are not mandatory for the current reporting period. The Group`s assessment of
the impact of these new standards and interpretations is set out below.
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian
Accounting Standards AASB 8
AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing
on or after 1 January 2009. AASB 8 will result in a significant change in
the approach to segment reporting, as it required adoption of a `management
approach` to reporting on financial performance. The information being
reported will be based on what the key decision makers use internally for
evaluating segment performance and deciding how to allocate resources to
operating segments. The Group has not yet decided when to adopt AASB 8.
Application of AASB 8 may result in different segments, segment results and
different type of information being reported in the segment note of the
financial report. However it is not expected to affect any of the amounts
recognised in the financial statements.
(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to
Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB
107,m AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]
The revised AASB 123 is applicable to annual reporting periods commencing on
or after 1 January 2009. It has removed the option to expense all borrowing
costs and when adopted will require the capitalisation of all borrowing costs
directly attributable to the acquisition, construction or production of a
qualifying asset. There will be no impact on the financial report of the
Group, as the Group already capitalised borrowing costs relating to
qualifying assets.
(iii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8
Amendments to Australian Accounting Standards arising from AASB 101
A revised AASB 101 was issued in September 2007 and is applicable to annual
reporting periods beginning on or after 1 January 2009. It requires the
presentation of a statement of comprehensive income and makes changes to the
statement of changes in equity, but will not affect any of the amounts
recognised in the financial statements. The Group intends to apply the
revised standard from 1 January 2009.
The following standards, amendments and interpretations to published
standards are mandatory for accounting periods beginning on or after 1
January 2007 but they are not relevant to the Group`s operations:
(i) AASB-I 14 The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
(ii) AASB-I 11 AASB 2 - Company and Treasury Share Transactions and AASB
2007-1 Amendments to Australian Accounting Standards arising from AASB
Interpretation 11
(iii) AASB-I 12 Service Concession Arrangements, AASB 2007-2 Amendments to
Australian Accounting Standards arising from AASB Interpretation 12, revised
UIG 4 Determining whether an Arrangement contains a Lease and revised UIG 129
Service Concession Arrangements: Disclosures
(iv) AASB-I 13 Customer Loyalty Programmes
FINANCIAL RISK MANAGEMENT
The Group`s exploration activities are being funded by equity and do not
expose the Group to significant financial risks. There are no speculative or
financial derivative instruments. Funds are invested for various short term
periods to match forecast cash flow requirements.
Market risk
The Group operates internationally and is exposed to foreign exchange risk
arising from currency exposure to the South African Rand and Botswana Pula.
Exposure is limited to maintaining sufficient funds in the particular
countries to meet expenditure commitments.
Management does not actively manage foreign exchange risk.
The Group`s exposure to foreign currency risk at the reporting date was as
follows:
31 December 2007 31 December 2006
ZAR BWP ZAR BWP
Trade receivables 74,681 6,598 893,266 7,691
Cash and cash (88,283) 168,147 13,040,436 103,297
equivalents
Trade payables (256,583) (262,395) (1,751,017) (157,396)
Net Exposure (270,185) (87,650) 12,182,685 (46,408)
The carrying amount of the parent entity`s financial assets and liabilities
are denominated in Australian dollars.
Based on the financial instruments held at 31 December 2007, had the
Australian dollar weakened / strengthened by 10% against the other functional
currencies, with all other variables held constant the Group`s post tax
losses would increase / decrease by $6,086 (2006: $217,905)
Losses are less sensitive to movements in the Australian dollar / South
African Rand or Botswana Pula exchange rates in 2007 than 2006 because of the
decreased cash and cash equivalents held in foreign currencies.
None of the foreign denominated balances are accounted for as hedges in
accordance with AASB 139 therefore all foreign exchange movements would be
recognised within in the current period income statement and within retained
earnings,
Credit risk
Management does not actively manage credit risk.
The Tawana Resources Group has no significant exposure to credit risk from
external parties at period end given all of the counterparties to its credit
exposures are related entities of the Tawana Resource Group. The maximum
exposure to credit risk from related entities of the Tawana Resources Group
at the reporting date is equal to the carrying value of financial assets at
31 December 2007.
Other receivables are of a low value and all amounts are current. Activity
with trade debtors is limited and the recoverability has not been brought
into question. There is no history of bad debts.
Liquidity risk
The Tawana Resources Group`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 Group
may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
During 2007, the Group`s strategy, which was unchanged from 2006, 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.
Cash flow and fair value interest rate risk
As the Tawana Resources Group has no significant interest-bearing assets, the
Tawana Resources Group`s income and operating cash flows are not materially
exposed to changes in market interest rates.
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 Group 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.
Recoverability of exploration expenditure
The Group 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(h).
Activity at the following projects ceased during 2006 and 2007; Pilbara,
Black Top, Daniel Kimberlite, Riverton and Vleiplaats. Consequently the
Company has decided to write-off exploration expenditure relating to these
projects that was previously capitalised. Refer to note 13 for details.
Impairment of assets
The Group tests annually whether assets have suffered any impairment, in
accordance with note 1(g). The recoverable amount is based on the net asset
value of the investment in the subsidiary. Refer to note 11 for details.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
REVENUE & OTHER INCOME
Revenue from continuing
operations
Interest Income 81,088 178,102 2,781 81,787
Laboratory Income 38,946 55,099 38,946 55,099
120,034 233,201 41,727 136,886
Other income
Profit on sale of assets - 216,242 - 216,242
- 216,242 - 216,242
EXPENSES AND (GAINS)/LOSSES
Other expenses from continuing
operations includes
Administration costs 154,531 170,887 113,975 94,614
Auditors remuneration 100,610 81,071 65,396 43,903
Listing fees 48,129 165,378 48,129 165,378
Occupancy costs 111,265 83,579 47,258 65,856
Loss on sale of assets 75,634 - 30,908 -
Repairs and maintenance 24,549 100,768 - -
Other expenses 20,134 121,715 15,853 -
534,852 723,398 321,519 369,751
6. INCOME TAX
(a) Income tax
expense
Current tax - - - -
Deferred tax - - - -
Income tax expense - - - -
attributable to
continuing
operations
(b) Numerical
reconciliation of
income tax expense
to prima facie tax
payable
Loss from (7,386,000) (4,766,269) (9,594,713) (5,819,027)
continuing
operations before
tax
Tax at the
Australian rate of
30% (2006 - 30%)
Prima facie tax (2,215,800) (1,429,881) (2,878,414) (1,745,708)
(credit) on loss
from ordinary
activities
Tax effect of
amounts that are
not deductible
(taxable) in
calculating taxable
income:
Impairment of - - 801,184 636,508
investments
Benefit of tax 2,180,204 1,429,881 2,077,230 1,109,200
losses not brought
to account
(35,596) - - -
Difference in 35,596 - - -
overseas tax rates
Income Tax Expense - - - -
1.1
INCOME TAX (continued)
(c) Amounts recognised directly in equity
No amounts in respect of tax expense or benefit have been included directly
in equity.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
(d) Tax losses
Unused tax losses for 31,228,288 27,396,459 19,386,128 15,657,273
which no benefit has
been recognised
Potential tax benefit 9,231,257 8,142,082 5,815,838 4,697,182
at 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 realisation.
The potential future income tax benefits which may arise from these losses
will only be realised if:
* The group derives future assessable income of a nature and sufficient
amount to enable the benefit of the losses to be realised;
* The group continues to comply with the conditions of deductibility
imposed in each legislative environment, and
* No changes in tax legislation adversely affect the group in
realising the benefit from the deduction for the losses.
(e) Deferred tax
liabilities
Prepaid expenditure 5,097 - 5,097 -
Capitalised mineral 2,390,240 3,603,761 1,359,584 2,679,434
exploration
expenditure
Set off deferred tax (2,395,337) (3,603,761) (1,364,681) (2,679,434)
assets - tax losses
CASH AND CASH
EQUIVALENTS
Cash at bank and in 145,227 2,408,541 129,396 31,700
hand
Deposits at call 4,635 246,858 4,635 246,858
149,862 2,655,399 134,031 278,558
(a) Reconciliation to cash at the end of the year
The above figures are reconciled to cash at the end of the financial year
as shown in the statement of cash flows as follows:
Balance as above 149,862 2,655,399 134,031 278,558
Balance per statement 149,862 2,655,399 134,031 278,558
of cash flows
(b) Cash at bank and
on hand
These are non-interest bearing.
(c) Deposits at call
The deposits are bearing floating interest rates between 6.10% and 6.60%.
These deposits have a maturity of less than 30 days.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
TRADE AND OTHER
RECEIVABLES
Current
Trade debtors (b) 23,990 89,557 12,426 79,014
VAT receivable - 412,034 - -
Other debtors (c) 64,991 59,640 64,991 59,640
88,981 561,231 77,417 138,654
Non Current
Other (d) 47,423 51,291 - -
47,423 51,291 - -
There is no Director and Director related entity receivable.
Trade debtors are non-interest bearing and have repayment terms between 30
and 90 days. Their cost approximates fair value.
Other debtors consist of prepayments and is non-interest bearing.
Non-current assets are a deposit with the South African Department of
Minerals and Energy Affairs from Tawana Resources S.A. (Pty) Ltd for mine
rehabilitation costs which is only refundable once the rehabilitation has
been completed.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
INVENTORIES
Current
Rough diamonds - at 76,818 94,181 - -
lower of cost and
recoverable value
INVESTMENT IN
ASSOCIATE
Vecto Trade 436 (Pty) 16,640 - 16,640 -
Ltd - at cost
Tawana Resources N.L. 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.
OTHER FINANCIAL ASSETS
Non-current
Investment in - - 11,623,380 12,795,181
subsidiaries - at cost
Less: Accumulated - - (7,735,642) (5,065,030)
impairment losses
- - 3,887,738 7,730,151
The investment in subsidiaries includes non-interest bearing long-term
receivables, which have no fixed repayment terms. The investment in
subsidiaries has been written down to their recoverable value of the
subsidiary. The current year impairment expense is $2,670,612 (2006
$2,145,166)
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
Movement in impairment
Foreign currency - - 1,651,625 -
translations
Tawana SA (Pty) Ltd - - 1,018,987 2,145,166
Diamond Resources - - - (23,474)
(Pty) Ltd
- - 2,670,612 2,121,692
Investments have been impaired to their recoverable value.
PROPERTY, PLANT &
EQUIPMENT
Land and buildings - 369,865 400,033 - -
at cost
Accumulated (95,715) (66,145) - -
depreciation
274,150 333,888 - -
Plant and equipment - 2,153,231 2,347,020 1,151,233 1,310,004
at cost
Accumulated (1,642,784) (1,433,409) (708,371) (531,590)
depreciation
510,447 913,611 442,862 778,414
Motor vehicles - at 185,308 224,553 - -
cost
Accumulated (119,016) (100,505) - -
depreciation
66,292 124,048 - -
850,889 1,371,547 442,862 778,414
Movement in Carrying
Value
Freehold Land and
Buildings
Carrying value at 1 333,888 1,993,882 - 1,550,000
January
Disposals - (1,498,333) - (1,498,333)
Foreign currency (24,726) (69,678) -
translation
Depreciation expense (35,012) (91,983) - (51,667)
Carrying Value at 31 274,150 333,888 - -
December
Plant and Equipment
Carrying value at 1 913,611 1,666,379 778,414 1,060,779
January
Additions 44,726 8,570 - -
Disposals (78,475) - (77,575) -
Foreign currency (3,940) (69,201) - -
translation
Depreciation expense (365,475) (692,137) (257,977) (282,365)
Carrying Value at 31 510,447 913,611 442,862 778,414
December
Motor Vehicles
Carrying value at 1 124,048 199,724 - -
January
Additions - 1,867 - -
Disposals (12,271) - - -
Foreign currency (9,183) (29,145) - -
translation
Depreciation expense (36,302) (48,398) - -
Carrying Value at 31 66,292 124,048 - -
December
EXPLORATION EXPENDITURE
The exploration and evaluation expenditure relates to the economic
entity`s projects in South Africa, Botswana and Australia. Exploration in
Australia is operated under a joint venture as set out in note 14.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
At cost 14,064,021 12,037,202 4,531,948 8,931,447
14,064,021 12,037,202 4,531,948 8,931,447
Expenditure brought 12,037,202 9,749,360 8,931,447 7,109,772
forward at the
beginning of the year
Expenditure in the 928,417 1,460,567 594,754 994,400
year, excluding joint
venture activities
Expenditure in the 294,666 3,266,852 294,666 3,266,852
year, under joint
venture arrangements
(refer note 14)
Expenditure written (5,288,919) (2,439,577) (5,288,919 (2,439,577)
off during the year )
Expenditure carried 7,971,366 12,037,202 4,531,948 8,931,447
forward at the end of
the year
Expenditure written off during the year is as follows:
Australian projects 3,142,767 2,439,577 3,142,767 2,439,577
South African 2,146,152 - 2,146,152 -
projects
5,288,919 2,439,577 5,288,919 2,439,577
INTEREST IN JOINT
VENTURE
The economic entity has a majority interest in one unincorporated
exploration joint venture. Total expenditure to date is capitalised in
the balance sheet as Exploration Expenditure and the total value of the
write down of JV assets in 2007 was $3,063,292 (2006: Nil)
Consolidated Parent Entity
2007 2006 2007 2006
% % % %
% Interest held in
joint venture
- Pilbara joint 66.66 66.66 66.66 66.66
venture
$ $ $ $
Carrying amount of 498,226 3,266,852 498,226 3,266,852
investment in
exploration
activities (refer
note 13)
Share of joint
venture
assets/liabilities
Non-current assets 498,226 3,266,852 498,226 3,266,852
Net assets 498,226 3,266,852 498,226 3,266,852
Share of joint
venture
revenue/expenses
Revenues - - - -
Expenses - - - -
Loss before income - - - -
tax
Share of joint
venture commitments
Expenditure 116,988 1,359,000 116,988 1,359,000
commitments
Total commitments 116,988 1,359,000 116,988 1, 359,000
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
TRADE AND OTHER
PAYABLES
Current
Trade creditors (a) 110,761 117,158 22,510 117,158
Other creditors 32,000 363,506 32,000 2,732
142,761 480,664 54,510 119,890
Trade creditors are non-interest bearing and are normally settled on 30 day
terms. Their carrying value approximates their fair value.
Non-hedged foreign currency payables consist of $A 88,251 and is
represented by South African Rand of 244,170 and Botswana Pula of 262,395.
These are non-interest bearing and their carrying value approximates their
fair value.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
PROVISIONS
Current
Provision for 116,389 71,760 116,389 71,760
employee entitlements
Movement in provision
for employee
entitlements
Carrying amount at 71,760 - 71,760 -
start of the year
Leave taken (46,088) - (46,088) -
Annual leave 57,717 71,760 57,717 71,760
provision recognised
Long service leave 33,000 - 33,000 -
provision recognised
Carrying amount at 116,389 71,760 116,389 71,760
end of year
Nature and obligation
of provision
The employee entitlements relate to annual leave which has accrued and is
due and payable.
Non-current
Provision for 30,784 51,291 - -
rehabilitation
Movement in provision
for rehabilitation
Carrying amount at 51,291 13,427 - -
start of the year
Unused amounts (16,639) - - -
reversed
Foreign currency (3,868) (5,348) - -
translation and other
movements
Additional provisions - 43,212 - -
recognised
Carrying amount at 30,784 51,291 - -
end of year
Nature and obligation
of provision
The provision has been raised with regard to exploration sites which are
required to be rehabilitated once the exploration activity ceases.
NON CURRENT
LIABILITIES
- - 7,692 7,692
Non-interest bearing
loans
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
CONTRIBUTED EQUITY
Issued and paid up 33,339,335 32,544,335 33,339,335 32,544,335
capital
Ordinary Shares
Movements in ordinary share capital of the company during the past year
were as follows:
Details 2007 2006 2007 2006
No. of No. of $ $
Shares Shares
Beginning of 87,097,481 65,609,529 32,544,335 25,744,021
financial year
Options exercised - - - -
during the year(*)
Employee options - - - -
issued during the
year
Shares allotted 5,300,000 21,487,952 795,000 6,800,314
during the year
(**)(i)
End of financial year 92,397,481 87,097,481 33,339,335 32,544,335
* Weighted average Nil Nil
issue price
** Weighted average 15 cents 31.65 cents
issue price
(i) Net of share issue costs of Nil. The shares allotted were the result of
a placement to institutional and sophisticated investors. Each share was
issued with a free attached option exercisable at 15 cents on or before 11
September 2011. The funds were used for the Riverton Project, for the
construction of the trail mining plant at Kareevlei Wes and working capital.
Ordinary shares participate in dividends and the proceeds on winding up of
the parent entity in proportion to the number of shares held.
At shareholders meetings each ordinary share is entitled to one vote when a
poll is called, otherwise each shareholder has one vote on a show of hands.
Ordinary shares participate in dividends and the proceeds on winding up of
the parent entity in proportion to the number of shares held.
Options
Movements in listed options of the company during the past year were as
follows
Details 2007 2006
No. of Options No. of
Options
Beginning of financial year 22,344,144 21,869,144
Granted during the year - 475,000
Exercised during the year - -
Lapsed during the year - -
End of financial year 22,344,144 22,344,144
* Weighted average exercise $1.00 $1.00
price of options
Information relating to the Tawana Resources Employee Option Plan, including
details of options issued, exercised and lapsed during the financial year and
options outstanding at the end of the financial year, is set out in note 27.
Unlisted options
Unlisted Options to acquire ordinary shares have been granted to directors,
staff and contractors and consultants. No voting or other rights are
attached to the options. 1,640,000 options have been granted of which
760,000 have vested. Details are set out in the Remuneration Report under
Share Based Compensation Schemes.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
RESERVES
Foreign currency (2,409,056) (1,691,089) - -
translation reserve
(a)
Option reserve (b) 237,439 183,563 237,439 183,563
Asset revaluation 22,884 22,884 22,884 22,884
reserve (c)
(2,148,733) (1,484,642) 260,323 206,447
(a) Movement in
Foreign Currency
Translation Reserve
Balance at beginning (1,691,089) (179,431) - -
of year
Currency translation (717,967) (1,511,658) - -
differences
(2,409,056) (1,691,089) - -
(b) Movement in
Option Reserve
Balance at beginning 183,563 136,000 183,563 136,000
of year
Cost of share based 53,876 47,563 53,876 47,563
payments
237,439 183,563 237,439 183,563
(c) Movement in Asset
Revaluation Reserve
Balance at beginning 22,884 22,884 22,884 22,884
of year
22,884 22,884 22,884 22,884
(d) Nature and Purpose of Reserves
(i) Foreign Currency Translation Reserve
Exchange differences arising on translation of the foreign controlled
entities are taken to the foreign currency translation reserve, as described
in note 1 (c).
(ii) Option Reserve
This share based payment reserve is used to recognise the fair value of
options issued but not exercised.
(iii) Asset Revaluation Reserve
This is an historical reserve and there is no movement in the current or
prior years.
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
ACCUMULATED LOSSES
Balance at beginning 14,892,557 10,126,288 15,092,900 9,273,873
of year
Current period losses 7,386,000 4,766,269 9,594,713 5,819,027
22,278,557 14,892,557 24,687,613 15,092,900
KEY MANAGEMENT PERSONNEL DISCLOSURES
Directors
The following persons were directors of Tawana Resources NL during the
financial year:
Name Position
B. Phillips Non-executive Chairman
W. Marx Managing Director
E. Luff Non-executive Director
Other key management personnel
The following persons also had authority and responsibility for planning,
directing and controlling the activities of the group, directly or
indirectly, during the financial year:
Name Position Employer
A. Berryman Laboratory Manager Tawana Resources N.L.
C. Bailey General Manager Tawana Resources N.L.
Key management personnel compensation
The company has taken advantage of the relief provided by Corporation
Regulations 2M.6.04 and has transferred the detailed remuneration disclosures
to the directors` report. The relevant information can be found in pages 15
to 17 of the remuneration report.
Aggregate Key Management Personnel compensation by category is as follows;
Short- Term Post Share Total
Benefits Employment Based
Benefits Payment
Cash Salary Superannuation Options
and Fees
$ $ $ $
2007 Aggregate 480,837 108,238 30,425 619,500
2006 Aggregate 817,639 173,912 43,850 1,035,401
Equity instrument disclosures relating to key management personnel
(i) Options Provided as Remuneration and Shares Issued on Exercise of such
Options
Details of options provided as remuneration and shares issued on the exercise
of such options, together with terms and conditions of the options, can be
found in the remuneration report on pages 15 to 17.
(ii) Option Holdings
The numbers of options over ordinary shares in the company held during the
financial year by each director of Tawana Resources N.L. and other key
management personnel of the Group, including their personally related parties
are set out below:
2007
Name Balance Granted Exer- Other Balance Vested
at start during cised acquisi- at end of and exer-
of year the year during tions year cisable
the year during at end of
the year year
Directors
W. Marx 1,999,500 - - - 1,999,500 1,999,500
B. Phillips 41,133 - - - 41,133 41,133
E. Luff 1,854,812 500,000 - 666,650 3,021,462 2,688,128
Other Key
Management
Personnel of
the Group
A. Berryman 100,000 - - - 100,000 66,666
C. Bailey 150,000 250,000 - - 400,000 183,333
No options are vested and unexercisable at the end of the year.
2006
Name Balance Granted Exer- Other Balance Vested and
at start during cised acquisi- at end of exer-
of year the year during tions year cisable at
the year during end of
the year year
Directors
W. Marx 1,999,500 - - - 1,999,500 1,999,500
B. Phillips 41,133 - - - 41,133 41,133
L. Daniels 1,797,166 - - - 1,797,166 1,797,166
E. Luff 1,854,812 - - - 1,854,812 1,854,812
Other Key
Management
Personnel of
the Group
B. Tambanis - 1,000,00 - - 1,000,000 1,000,000
0
A. Berryman - 100,000 - - 100,000 33,333
C. Bailey - 150,000 - - 150,000 50,000
No options are vested and unexercisable at the end of the year.
(iii) Shareholdings
The number of shares in the company held during the financial year by each
director of Tawana Resources N.L. and other key management personnel of the
Group, including their related parties, are set out below. There were no
shares granted during the reporting period as compensation.
2007
Name Balance at Received Other Balance at
start of year during the acquisitions the end of
(Ordinary year on during the the year
Shares) exercise of year (Ordinary
options Shares)
Directors
of Tawana
Resources
N.L.
W. Marx 6,148,500 - 100,000 6,248,500
B. Phillips 194,800 - - 194,800
E. Luff 6,443,620 - 1,818,650 8,262,270
Other Key
Management
Personnel
of the
Group
A. Berryman - - - -
C. Bailey - - - -
2006
Name Balance at Received Other Balance at
start of year during the acquisitions the end of
(Ordinary year on during the the year
Shares) exercise of year (Ordinary
options Shares)
Directors
of Tawana
Resources
N.L.
W. Marx 5,998,500 - 150,000 6,148,500
B. Phillips 123,400 - 71,400 194,800
L. Daniels 5,391,499 - 25,501 5,417,000
E. Luff 5,564,436 - 879,184 6,443,620
Other Key
Management
Personnel
of the
Group
H. Hill - - - -
B. Tambanis - - - -
A. Berryman - - - -
C. Bailey - - - -
Loans to key management personnel
There were no loans to key management personnel of the Group, including their
personally related parties.
Other transactions with key management personnel
Mr E. Luff, a director of Tawana Resources N.L. is a senior partner of the
legal firm Wilmoth Field and Warne which received legal fees of $4,415 (2006
$154,803) for the provision of legal services. These services were provided
on normal commercial terms and conditions.
Mr A.B. Horwitz, a director of the subsidiary Tawana Resources S.A. (Pty) Ltd
is a partner of A.B. Horwitz & Associates , a law firm in Kimberly, South
Africa which received an amount of Nil - Rand Nil (2006: A$28,363 - Rand
146,110) during the year. This payment was based on normal commercial terms
and conditions.
Aggregate amounts of each of the above types of other transactions with key
personnel of the Group:
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
Amounts recognised as
expense
Legal fees 4,415 183,266 4,415 183,266
There is no amounts payable to or receivable from key management personnel of
the Group at the balance date.
DETAILS OF CONTROLLED Book value of Interest held by the
ENTITIES AND THE investment economic entity
COMPANY
2007 2006 2007 2006
$ $ % %
Controlled entities
Seolo Botswana (Pty) 555,080 358,892 100 100
Ltd (ii)
Tawana Resources S.A. 3,332,653 7,371,253 100 100
(Pty) Ltd (iii)
Diamond Resources (Pty) - - 100 100
Ltd (iv)
3,887,733 7,730,145
Joint venture
Tawana Diamonds 5 5 66.6 66.6
Australia P/L(v)
(i) Tawana Resources N.L. is incorporated in Australia.
(ii) Seolo Botswana (Pty) Ltd is incorporated in Botswana. Tawana Resources
SA (Pty) Ltd is incorporated in South Africa.
Diamond Resources (Pty) Ltd is incorporated in South Africa.
Tawana Diamonds Australia P/L is incorporated in Australia.
SEGMENT INFORMATION
The economic entity operated predominantly in the mineral exploration
industry in South Africa, Botswana and within Australia.
Primary Reporting - Geographic Segments
Australia Africa
2007 2006 2007 2006
$ $ $ $
Segment Revenue
External sales 38,946 55,099 - -
Intersegment sales - - 212,415 202,855
Other revenue 2,781 81,787 78,307 96,315
Total Segment 41,727 136,886 290,722 299,170
revenue
Segment Expenses
Segment expenses (4,527,786 (3,631,366) (5,648,860) (3,489,796)
Intersegment - - (212,415) (202,855)
expenses
Unallocated expenses - - - -
Total Segment (4,527,786) (3,631,366) (5,861,275) (3,692,651)
expense
Segment Assets
Segment assets 855,258 4,025,106 12,242,151 20,483,588
Unallocated assets - - - -
Total Segment 855,258 4,025,106 12,242,141 20,483,588
Assets
Segment Liabilities
Segment liabilities (170,899) (191,650) (4,014,465) (8,149,908)
Unallocated - - - -
liabilities
Total Segment (170,899) (191,650) (4,014,465) (8,149,908)
liabilities
Other
Acquisition of non-
current segment
assets
- Exploration assets 318,121 4,261,252 904,962 466,167
- Property plant and - - - 10,437
equipment
Depreciation 257,977 334,031 178,812 498,784
Foreign exchange - 27,457 - 34,204
losses / (gain)
Impairment of assets 2,670,612 2,121,692 - -
Exploration written 3,063,292 2,439,577 2,225,627 -
off
Eliminations Consolidated Entity
2007 2006 2007 2006
$ $ $ $
Segment Revenue
External sales - - 38,946 55,099
Intersegment sales (212,415) (202,855) - -
Other revenue - - 81,088 178,102
Total Segment revenue (212,415) (202,855) 120,034 233,201
Segment Expenses
Segment expenses 2,670,612 2,121,692 (7,506,034) (4,999,470)
Intersegment expenses 212,415 202,855 - -
Unallocated expenses - - - -
Total Segment expense 2,883,027 2,324,547 (7,506,034) (4,999,470)
Segment Assets
Segment assets (3,895,430) (7,737,843) 9,201,979 16,770,851
Unallocated assets - - - -
Total Segment (3,895,430) (7,737,843) 9,201,979 16,770,851
Assets
Segment Liabilities
Segment liabilities 3,895,430 7,737,843 (289,934) (603,715)
Unallocated - - - -
liabilities
Total Segment 3,895,430 7,737,843 (289,934) (603,715)
liabilities
Other
Acquisition of non-
current segment assets
- Exploration assets - - 1,223,083 4,727,419
- Property plant and - - - 10,437
equipment
Depreciation - - 436,789 832,815
Foreign exchange - - - 61,661
losses / (gain)
Impairment of assets (2,670,612) (2,121,692) - -
Exploration written - - 5,288,919 2,439,577
off
Secondary Reporting - Business Segments
The entity operates solely in the area of mineral exploration
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
AUDITORS` REMUNERATION
PricewaterhouseCoopers 65,396 40,085 65,396 40,085
Australian firm
Audit and review of
financial reports and
other audit work under
the Corporations Act
2001
Related practices of
PricewaterhouseCoopers
Australian firm
Audit of the group`s 35,214 37,169 - -
subsidiaries
Total Audit Fees 100,610 77,254 65,396 40,085
EARNINGS PER SHARE
Basic earnings/(loss) (0.083) (0.061)
per share
Diluted earnings/(loss) (0.083) (0.061)
per share
Weighted average number
of ordinary shares used
in the calculation of :
Basic earnings/ (loss) 88,723,782 78,144,168
per share
Diluted earnings/(loss) 88,723,782 78,144,168
per share
Listed options and unlisted options over ordinary shares could potentially
dilute earnings per share, but have been excluded from the calculation of
diluted earnings per share because of the uncertainty that the option will be
exercised.
RELATED PARTY TRANSACTIONS
Parent entity
Tawana Resources N.L. is the ultimate Australian parent company
Subsidiaries
Interests in subsidiaries are set out in note 22.
Key management personnel
Disclosures relating to key management personnel are set out in note 21.
Outstanding balances arising from sale/purchase of goods and services
No balances are outstanding at the reporting date in relation to transactions
with related parties.
Terms and conditions
All related party transactions were made on normal commercial terms and
conditions except that there are no fixed terms for repayment of loans
between the parties and no interest is charged on loans.
26. RELATED PARTY TRANSACTIONS (continued)
Transactions with related parties
The following transactions occurred with related parties:
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
Legal fees 4,415 154,903 4,415 154,903
(Wilmoth Field and
Warne, a legal firm of
which Mr E. Luff is a
senior partner received
legal fees for the
provision of legal
services)
Legal fees - 28,363 - -
(A.B. Horwitz &
Associates, a legal firm
in Kimberley controlled
by A.B. Horwitz, who is
a director of the
subsidiary, Tawana
Resources SA (Pty) Ltd
received payment for
services)
Prospecting fees - - 212,415 202,855
(Prospecting fees were
paid by Tawana Resources
N.L. to its two
subsidiaries, Tawana
Resources SA (Pty) Ltd
and Diamond Resources
(Pty) Ltd for
prospecting services)
4,415 183,266 216,830 357,758
Loans to/from related parties
Consolidated Parent Entity
2007 2006 2007 2006
Loans to subsidiaries $ $ $ $
Beginning of the year - - 7,652,577 5,515,404
Loans advanced - - 196,188 4,258,865
Loans repaid - - (1,367,989) -
Impairment recognised - - (2,670,612) (2,121,692
)
End of year - - 3,810,164 7,652,577
These loans are included in the net investments in subsidiaries. Refer to
Note 11.
Loans from subsidiaries
Beginning of the year - - 7,692 7,692
End of year - - 7,692 7,692
These loans are included in non current liabilities. Refer to Note 17.
SHARE-BASED PAYMENTS
Employee Option Plan
The establishment of the Tawana Resources Employee Option Plan was approved
by shareholders at the 2005 annual general meeting.
All staff are eligible to participate in the plan. Options are granted under
the plan for no consideration. Option are granted for a five year period,
and 1/3 vests on the date of granting the options, 1/3 on the first
anniversary of the date of granting and 1/3 on the second anniversary of the
date of granting.
Options are granted under the plant carry no dividends or voting rights.
When exercisable, each option is converted into one ordinary share.
Set out below is a summary of options granted under the plan:
Consolidated and parent entity
Grant Date Expiry Exercise Balance at Granted Exercised
Date price start of during the during the
year year year
$ Number Number Number
30/11/06 30/11/11 0.35 390,000 - -
30/11/06 30/11/11 0.35 250,000 - -
31/05/07 30/11/11 0.35 - 500,000 -
25/06/07 30/11/11 0.35 - 500,000 -
$ $
Weighted average exercise price 0.35 0.35
Grant Date Expiry Exercise Expired Balance at Exercisable
Date price during the end of year at end of
year year
$ Number Number Number
30/11/06 30/11/11 0.35 - 390,000 260,000
30/11/06 30/11/11 0.35 - 250,000 166,667
31/05/07 30/11/11 0.35 - 500,000 166,667
25/06/07 30/11/11 0.35 - 500,000 166,667
$ $
Weighted average 0.35 0.35
exercise price
No options were forfeited during the periods covered by the above table.
The fair value of options granted
The assessed fair value at grant date of options granted to the individuals
is allocated equally over the period from grant date to vesting date, and the
amount is remuneration. Fair values at grant date are independently
determined using a Binominal Tree option pricing model that takes into
account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the
term of the option.
No Directors or employees exercised options during 2007.
The model inputs for options granted during the year ended 31 December
2007 included:
(a) options are granted for no consideration, 33.3% of each tranche
vests and is exercisable on the date of granting ,and on the two
anniversary days of granting
(b) exercise price: $0.35 (2006 - $0.35)
(c) 500,000 options were granted on 31 May 2007 and 500,000 options
were granted on 25 June 2007 (2006 - 30 November 2006)
(d) expiry date: 30 November 2011 (2006 - 30 November 2011)
(e) share price at grant date of 31 May 2007: $0.193; share price at
grant date of 25 June 2007: $0.167 (2006 - $0.20)
(f) expected price volatility of the company`s shares: 49% at both
dates (2006 - 67%)
(g) expected dividend yield: 0.0% at both dates (2006 - 0.0%)
(h) Risk-free interest rate at grant date of 31 May 2007: 6.18%, and
at grant date of 25 June 2007: 6.39% (2006 - 5.88%)
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised
during the period as part of employee benefit expense were as follows:
Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
Options issued under 53,876 47,563 53,876 47,563
employee option plan
53,876 47,563 53,876 47,563
SUBSEQUENT EVENTS
On 28 March 2008 the company completed of a renounceable rights issue which
raised $540,510 before estimated transaction costs of $200,000. The funds
raised will be utilised for Tawana`s high potential exploration projects in
Southern Africa and for corporate and other costs.
The directors reserve the right to place the shortfall within the next three
months, in accordance with ASX Listing Rules.
In February 2008 Tawana Resources NL signed a joint venture with Nowak
Investments (Pty) Ltd over the Orapa, Borolong and Moshaiwa projects. This
will enable significant further exploration in these projects at minimal cost
to Tawana. Details of the agreement are contained in the Directors report
under Review of Operations.
Other than the above items there have not been any matters or circumstances,
that have arisen since the end of the year that have significantly affected
or may significantly affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in subsequent financial
years.
CONTINGENT LIABILITIES AND COMMITMENTS
(a) An Indemnity Guarantee of $7,500 is held by the bank for Tawana
Resources N.L for the Timber Creek Project mining tenement held in the
Northern Territory.
(b) Commitments
In order to maintain current rights of tenure to exploration tenements,
the Company and economic entity is required to outlay lease rentals and to
meet the minimum expenditure requirements of the Mines Departments. These
obligations, which relate only to the parent company Tawana Resources NL, are
subject to renegotiation upon expiry of the exploration leases or when
application for a mining licence is made.
There is also a five year lease on the premises occupied by the parent
entity at 60 Wilson Street, South Yarra, signed on 25 April 2006.
These obligations are not provided for in the accounts and are payable
as follows:-
2007 2006
$ $
No later than one year 256,988 984,000
Later than one year but not later than 326,667 1,604,000
five years
Later than five years - 46,667
Note Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
NOTES TO STATEMENTS OF CASH FLOWS
(a)
Reconciliation
of cash
For the
purposes of
this statement
of cash flows,
cash includes
cash on hand
and in `at
call` deposits
with banks,
net of bank
overdrafts.
Cash at the
end of the
year is shown
in the Balance
Sheet as:
Cash and cash 149,862 2,655,399 134,031 278,558
equivalents
(b)
Reconciliation
of net cash
provided by
operating
activities to
operating loss
after income
tax.
Operating (7,386,000) (4,766,269) (9,594,713) (5,819,027)
(loss) after
income tax
Non-cash flows
in operating
(loss)
Depreciation 436,789 832,518 257,977 334,031
expense
Options 53,876 47,563 53,876 47,563
expense
Exploration 5,288,919 2,439,577 5,288,919 2,439,577
expenditure
written off
Foreign - 61,661 - 27,457
exchange loss
Prospecting - - 212,415 -
fees
Profit on sale 4 - (216,242) - (216,242)
of assets
Loss on sale 5 75,634 - 30,908 -
of assets
Impairment of - - 2,670,612 2,121,692
assets
Changes in
assets and
liabilities
Increase/ (337,903) 322,057 (65,380) 26,456
(decrease) in
payables
Increase in 24,122 109,624 44,629 71,760
provisions
Decrease/ 17,363 (40,142) - -
(increase) in
inventories
Decrease in 3,868 10,033 - -
non current
receivables
Decrease in 472,250 145,377 61,237 125,183
receivables
Net cash (1,351,082) (1,054,243) (1,039,520) (841,550)
outflow from
operating
activities
GOING CONCERN
The consolidated entity has incurred a loss of $7,386,000 for the year ended
31 December 2007, has net current assets of $56,511 and a net asset balance
of $8,912,045. The financial report has been prepared on the basis of going
concern which contemplates continuity of normal business activities and the
realisation of assets and settlement of liabilities in the ordinary course of
business. The Directors believe this basis to be appropriate.
The ability of the Company to continue as a going concern and meet its debts
and commitments as they fall due is dependent on obtaining additional funding
to finance ongoing activities, including future production, mine development
and exploration activities. A renounceable rights issue was completed on 28
March 2008, which raised $540,510 before estimated transaction costs of
$200,000. The rights issue was not underwritten. Refer to note 28 for
further details. Management`s plans to obtain further financing include
seeking a joint venture partner to fund certain exploration projects and/or
raising additional funds through an equity placement. If the Company is
unable to implement its plans, it could be forced to modify, curtail or cease
operations.
As a result of these matters, there is significant uncertainty whether the
Company will continue as a going concern and therefore, whether it will
realise its assets and settle its liabilities and commitments in the normal
course of business and at the amounts stated in the financial report.
However, the directors believe that the Company will be successful in the
above matters and, accordingly have prepared the financial report on a going
concern basis. At this time, the directors are of the opinion that no asset
is likely to be realised for an amount less than the amount at which it is
recorded in the financial statement at 31 December 2007. Accordingly, the
accompanying financial statements do not include any adjustments relating to
the recoverability and classification of the asset carrying amount or the
amount and classification of liabilities that might be necessary if the
Company is unable to continue as a going concern.
DIRECTORS` DECLARATION
In the directors` opinion:
(a) The financial statements and notes set out on pages 28 to 59 are in
accordance with the Corporations Act 2001 including:
(i) complying with Accounting Standards, the Corporations Regulations 2001
and
other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the company`s and consolidated entity`s
financial position as at 31 December 2007 and of their performance for the
financial year ended on that date; 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; and
(c) the audited remuneration disclosures set out in pages 14 to 18 of the
directors` report comply with Accounting Standards AASB 124 Related Party
Disclosures and the Corporations Regulations 2001.
The directors have been given the declarations by the Managing Director and
the Company Secretary required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the board of
directors.
On behalf of the directors
W.T.Marx
Managing Director
Dated at Melbourne this 31st day of March 2008.
PricewaterhouseCoopers
ABN 52 780 433 757
Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331L
MELBOURNE VIC 3001
Telephone +61 3 8603 1000
Facsimile +61 3 8603 1999
Independent auditor`s report to the members of Tawana Resources N.L
Report on the financial report and the AASB 124 remuneration disclosures
contained in the directors` report
We have audited the accompanying financial report of Tawana Resources (the
company), which comprises the balance sheet as at 31 December 2007, and the
income statement, statement of changes in equity and cash flow statement for
the year ended on that date, a summary of significant accounting policies,
other explanatory notes and the directors` declaration for both Tawana
Resources and the Tawana Resources Group (the consolidated entity). The
consolidated entity comprises the company and the entities it controlled at
the year`s end or from time to time during the financial year.
We have also audited the remuneration disclosures contained in the directors`
report under the heading "remuneration report" in pages 14 to 19 of the
directors` report and not in the financial report.
Directors` responsibility for the financial report and the AASB 124
remuneration disclosures contained in the directors` report.
The directors of the company are responsible for the preparation and fair
presentation of the financial report in accordance with Australian Accounting
Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and
maintaining internal control relevant to the preparation and fair
presentation of the financial report that is free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the
circumstances. In Note 1(a), the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that
compliance with the Australian equivalents to International Financial
Reporting Standards ensures that the financial report, comprising the
financial statements and notes, complies with International Financial
Reporting Standards.
The directors of the company are also responsible for the remuneration
disclosures contained in the directors` report.
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. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free
from material misstatement. Our responsibility is to also express an opinion
on the remuneration disclosures contained in the directors` report based on
our audit.
Liability limited by a scheme approved under Professional Standards
Legislation An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial report and the
remuneration disclosures contained in the directors` report. The procedures
selected depend on the auditor`s judgement, including the assessment of the
risks of material misstatement of the financial report and the remuneration
disclosures contained in the directors` 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 and the remuneration disclosures contained in the directors`
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 and the
remuneration disclosures contained in the directors` report.
Our procedures include reading the other information in the Annual Report to
determine whether it contains any material inconsistencies with the financial
report.
For further explanation of an audit, visit our website
http://www.pwc.com/au/financialstatementaudit.
Our audit did not involve an analysis of the prudence of business decisions
made by directors or management.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements
of the Corporations Act 2001.
Auditor`s opinion on the financial report
In our opinion:
(a) the financial report of Tawana Resources is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the company`s and consolidated entity`s
financial position as at 31 December 2007 and of their 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(a). Auditor`s opinion on the AASB 124
remuneration disclosures contained in the directors` report (13(h))
In our opinion, the remuneration disclosures that are contained in pages 14
to 19 of the directors` report comply with section 300A of the Corporations
Act 2001.
Material Uncertainty Regarding Continuation as a Going Concern
Without qualifying our opinion, we draw attention to Note 31 in the financial
report which indicates that the company incurred a net loss of $7,386,000 and
has negative cash flows from operations during the year ended 31 December
2007. The company`s continuation as a going concern depends on its success in
obtaining additional capital or other funds and ultimately its ability to
generate revenues. These conditions, along with other matters as set forth in
note 31, indicate there is significant uncertainty as to whether the company
will continue as a going concern and, therefore whether it will realise its
assets and extinguish its liabilities in the normal course of business and at
the amounts stated in the financial report.
PricewaterhouseCoopers
Tim Goldsmith Melbourne
Partner 31 March 2008
Additional Shareholder Information as at 29 February 2008
Distribution of Equity Securities
The distribution of members and their holdings are as follows:
Range No. of Shareholders No. of Option Holders
1-1,000 228 564
1,001-5,000 557 724
5,001-10,000 418 196
10,001-100,000 702 228
100,001 and over 124 29
Total 2,029 1,661
Twenty Largest Equity Security Holders
The names of the twenty largest holders of quoted equity securities are
listed below:
Name Units Held % Holding
1. National Nominees Ltd 7,342,644 16.23
2. ANZ Nominees Ltd 6,737,037 14.89
3. Lufgan Nominees Pty Ltd 6.250,036 13.81
4. Hudson Holdings Pty Ltd 6,248,500 13.81
5. Nomathata Diamonds Inc 5,350,000 11.82
6. Osborne Flexible Fund 2,688,623 5.94
7. HSBS Custody Nominees 2,162,002 4.78
8. GRBK Investments 1,010,145 2.23
9. K Hemachandra 950,000 2.10
10. Darcy Brennan Super Pty Ltd 812,000 1.79
11. I and H Galash 780,000 1.72
12. Merrill Lynch (Australia) 775,178 1.71
13. N Gutta 670,000 1.48
14. F and L Wong and M Chui 600,000 1.33
15. T Gray 580,000 1.28
16. Forbar Custodians Ltd 546,066 1.20
17. Manfree Nominees 505,000 1.12
18. D Oakley 457,165 1.01
19. Eighty Eight Macorp Nominees 450,000 0.99
20. Macjon Pry Ltd 429,000 0.95
Percentage holding of twenty largest shareholders - 49.07 %
Twenty Largest Option Holders at 29 February 2008 - Options Expiry 30/04/08 @
$1.00
Name Units Held % Holding
1. Hudson Holdings Pty Ltd 1,999,499 18.04
2. Lufgan Nominees Pty Ltd 1,840,477 16.61
3. Nomathata Diamonds Inc 1,777,166 16.04
4. National Nominees Ltd 816,836 7.37
5. Victorian Pojects (Keen 556,599 5.02
Retirement)
6. G and W Butcher 500,000 4.51
7. Crescent Nominees 438,172 3.95
8. J Nugent 370,772 3.35
9. HSBS Custody Nominees 360,773 3.26
10. K Hemachandra 316,666 2.86
11. I and H Galash 301,334 2.72
12. Rare Earths & Minerals Pty Ltd 250,000 2.26
13. T Tabikh 250,000 2.26
14. Forbar Custodians Ltd 245,770 2.22
15. Victorian Projects (Keen 210,709 1.90
Family)
16. Drasco Pty Ltd 200,000 1.80
17. J. O`keefe 167,646 1.51
18. KB (CI) Nominees Ltd 166,666 1.50
19. BHP Billiton Minerals Pty Ltd 156,675 1.41
20. Douglas Mitchell Pty Ltd 155,295 1.40
Percentage holding of twenty largest option holders - 49.59%
Escrowed Securities
There are no securities subject to escrow.
Voting Rights
A registered holder of shares in the Company may attend general meetings of
the Company in person or by proxy and on a poll may exercise one vote for
each share held. There are no voting rights attached to options for ordinary
shares until the options have been exercised.
Corporate Details
The Company Secretary is Edward Derrick Ehmke
A Register of Securities is held at Computershare Investor Services Pty.Ltd.
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria. 3067. Telephone
Number: (03) 9415 5000, Facsimile : (03) 9473 2500,
The address of the Principal Registered Office in Australia is 60 Wilson
Street, South Yarra Victoria.3141 Telephone : (03) 9863 5222,Facsimile: (03)
9863 5288,
E-mail address wolf.marx@tawana.com.au
Stock Exchange Listing
The Company`s shares are listed on the Australian Stock Exchange Ltd and the
ASX code is TAW and on the JSE Limited where the JSE code is TAW.
The Company`s options are listed on the Australian Stock Exchange Ltd and the
ASX code is TAWO and on the JSE Limited where the code is TAWO.
CORPORATE DIRECTORY
DIRECTORS
Brian Phillips (Non-Executive Chairman)
Wolfgang Marx (Managing Director)
Euan Luff (Non-Executive Director)
COMPANY SECRETARY
Edward Derrick Ehmke
NOTICE OF ANNUAL GENERAL MEETING
The annual general meeting of Tawana Resources NL will be held at 60 Wilson
Street, South Yarra, Victoria on Friday 16 May 2008 at 11:00 am
REGISTERED OFFICE
60 Wilson Street
South Yarra
Melbourne Vic 3141
Telephone: (03) 9863 5222
Facsimile: (03) 9863 5288
Email: wolf.marx@tawana.com.au
Website www.tawana.com.au
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria, 3067
AUDITORS
PricewaterhouseCoopers
G.P.O.Box 1331L
Melbourne, Victoria, 3001
SOLICITORS
WilmothFieldWarne
Level 13, 440 Collins St
Melbourne VIC 3000
BANKERS
ANZ Banking Group Limited
1401 Toorak Road
Burwood VIC 3124
STOCK EXCHANGE LISTING
Home Exchange is the Australian Stock Exchange
Secondary Listing on the JSE Limited
ASX/JSE Code: Shares TAW
ASX/JSE Code: Options TAWO
SPONSOR
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 31/03/2008 13:46:11 Supplied by www.sharenet.co.za
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