Wrap Text
TAW - Tawana Resources NL - Annual Financial Report - 31 December 2008
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 REPORT - 31 DECEMBER 2008
(A Pdf version of this report may be found on the company`s website
www.tawana.com.au)
CHAIRMAN`S STATEMENT
The extreme turmoil and volatility on the world capital markets caused by
the ongoing global financial crisis has brought devastation to a large
number of mining related projects for various companies throughout the
world.
There appears to be no immediate respite to the onslaught of this financial
crisis resulting in companies either being proactive in structuring their
costs and operations to meet these extreme challenges or to go by the
financial wayside.
Tawana has undertaken a large number of initiatives over the past 12 months
to address the lack of liquidity in the financial markets and as a
consequence, the declining asset values of it`s projects.
In the last Quarter 2008 there has been a substantial cost reduction in
corporate overheads of Tawana. Specifically, as earlier released to the
market, the head office in Melbourne has been closed, as has the laboratory
which was running unprofitably. Corporate operating expenses have been
pruned by approximately 80% and a continuous watch undertaken on costs to
ensure that cash is directed to existing and potential projects to continue
to safeguard asset values and shareholder value.
During this extremely difficult period Tawana was proactive on a number of
corporate and financial strategies, some of which are detailed below.
* Tawana has set a new model for Black Empowerment involvement in South
Africa whereby our Black Empowerment partners in South Africa, Seven Falls
Trading Pty Ltd, have converted its 26% individual project interests into a
direct 8% equity in the holding company. This initiative has truly
incorporated the interests of Seven Falls within the umbrella of all
Tawana`s total operations in South Africa, Botswana and Australia and
thereby creating a model which will allow Tawana the flexibility to further
joint venture individual projects on a case by case basis with potential
investors.
* As a result of this transaction, we are pleased to announce the
appointment of Ms Nonkqubela Mazwai to the Board of Tawana. Ms Mazwai has
extensive experience in the public and private sectors of the South African
mining industry and has consulted for a number of major South African
parastatal corporations.
Ms Mazwai and her business partner, Mr Moloi, are the principal shareholders
in Motjoli Resources Pty Ltd, which is the major shareholder in Tawana`s
Black Empowerment partner and substantial shareholders of Seven Falls.
Nonkqubela will make an outstanding contribution to the Board and her
appointment clearly reflects the inclusion of our business partners at a
corporate level.
* Tawana announced to the market in November that we have reached an
agreement with DeBeers which will allow a drilling program to commence on
two highly prospective targets at St Augustine`s in the Kimberly of South
Africa, which is approximately 500m from the Big Hole.
The Big Hole produced 14.5 million carats of diamonds from 22.5 million
tonnes of a grade of 64 carats per 100 tonnes. Mining ceased at the Big Hole
in 1914. The drilling program confirmed the geology of the area and now
Tawana is evaluating strategies to undertake further exploration activity on
St Augustine`s.
Significant exploration continues by Aquila Resources Ltd (ASX-AQA) on its
Avontuur projects, north west of Kuruman in the northern cape province of
South Africa. Tawana has a 6.8% indirect interest in the project by virtue
of our association with our Black Empowerment partners through a joint
venture called Rakana Consolidated Mines Pty Ltd.
In early July, Aquila announced promising manganese drilling and sampling
results from the project which is two mineralised prospects some 20km apart
adjoining the northernmost farms on the main Kalahari Manganese Field.
* In an effort to diversify its exploration interests and take advantage
of mineral opportunities Tawana has embarked on the extensive evaluation of
gold, coal and iron ore projects in South Africa and Botswana.
The organisation has been trimmed down and focused to meet the challenges
and opportunities which present themselves in a market where liquidity is
extremely tight, but one which has seen the re-rating of asset values to
realistic levels.
The future presents outstanding opportunities for Tawana across a broad
range of resources on which the company will focus in the near term.
We are extremely confident that a successful resolution will be made on our
potential joint venture at our Kareevlei Wes project in which we were hoping
to already be in trial mining but a default by our potential joint partners
has meant a significant delay. We are working hard towards a resolution of
this impasse with the potential joint venture partners and hopefully will be
in a position to undertake further work on Kareevlei in the new year.
The company is holding numerous discussions with potential investors to re-
capitalise Tawana to allow it to achieve its strategic objectives of the
development of cash flow through its existing projects and thorough
investigation of new mineral opportunities.
The commitment of your Board and employees during this extremely difficult
period cannot be overstated.
Particular thanks go to Brian Phillips and Euan Luff for their selfless and
untiring contribution as board members, to Adrian Horwitz our Attorney in
South Africa and Director of our South African subsidiaries, to Knowledge
Whacha our mining engineer who has risen to the occasion, to our employees
who are the backbone of our company, and importantly, to our Black
Empowerment partners for joining with us in forming a truly inclusive
organisation.
We look forward to better times ahead which I am sure will see Tawana
realise its potential as a well positioned mining house.
Neil Barrie
CHAIRMAN
DIRECTORS` REPORT
Your Directors submit their report on the consolidated entity (or `Group`)
consisting of Tawana Resources N.L. (the `Company` or `Parent Entity`), and
the entities it controlled at the end of, or during the year ended 31
December 2008.
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 as follows.
Neil Barrie - Executive Chairman
Appointed to the Board - 20 June 2008
Experience - Neil Barrie has over 20 years
experience in mining evaluation
and corporate development
throughout Australia, South
African and Botswana. Neil was
also a former Director of KPMG.
Interest in Shares and - 1,246,154 Ordinary Shares
Options *
- 10,270,000 Options
Special Responsibilities - Nil
Directorships held in other - He has not held directorships of
listed entities other listed companies in the
past three years.
Brian Phillips - Non-Executive Director
Appointed to the Board - 4 April 2005
Qualifications - AWASM, FAusIMM, MIMMM
Experience - 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.
Interest in Shares and - 508,700 Ordinary Shares
Options *
- 2,312,500 Options
Special Responsibilities - He is a member of the Audit and
Risk Management Committee, and
the Remuneration and Nomination
Committee.
Directorships held in other - Brian is the Non-Executive
listed entities Chairman of Indophil Resources
N.L. and a Non-Executive Director
of Panoramic Resources 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.
Euan Luff - Non-Executive Director
Appointed to the Board - 16 November 1998
Qualifications - B Juris, LL.B, AL, Arb.A.
Experience - Euan Luff is Senior Partner of
WilmothFieldWarne, Solicitors. In
his professional capacity he acts
as a legal adviser to a number of
private and public Companies.
Interest in Shares and - 7,344,870 Ordinary Shares
Options *
- 6,104,150 Options
Special Responsibilities - He is the Chairman of the Audit
and Risk Management Committee,
and also Chairman of the
Remuneration and Nomination
Committee.
Directorships held in other - He has not held directorships of
listed entities other listed companies in the
past three years.
Nonkqubela Mazwai - Non-Executive Director
Appointed to the Board - 30 October 2008
Experience - Nonkqubela Mazwai is the CEO and
founding shareholder of Motjoli
Resources Pty Ltd, a 100% black
owned, controlled and managed
company. She has advised blue
chip mining companies (including
Anglo American and De Beers) on
mining compliance matters. She
has also designed business
processes for the implementation
of the Mineral and Petroleum
Resources Development Act for the
South African government`s
Department of Minerals and
Energy.
Interest in Shares and - 5,437,457 Ordinary Shares
Options *
Special Responsibilities - Nil
Directorships held in other - Nonkqubela was Deputy Managing
listed entities Director of Coal of Africa until
22 January 2008
Wolfgang Marx - Managing Director
Appointed to the Board - 16 November 1998
Resigned from the Board - 31 January 2009
Qualifications - BSc, BA, FAusIMM, CPGeo
Experience - Wolf Marx is a qualified
geologist and has over 25 years
experience in geology,
particularly in the field of gold
and diamond exploration.
Interest in Shares and - 7,062,500 Ordinary Shares
Options *
- 6,814,000 Options
* The relevant interest of each Director in the shares or options over
shares issued by the companies within the consolidated entity and other
related body corporates as notified by the Directors to the Australian
Securities Exchange as at the date of this report.
COMPANY SECRETARIAL
The name and details of the Company Secretaries in office during the
financial year and until the date of this report, are as follows.
Phillip Hains - Joint Company Secretary
Appointed - 18 December 2008
Experience - Phillips Hains is a Chartered
Accountant and specialist in
the public company environment.
He has served the needs of a
number of public company boards
of directors and related
committees. He has over 20 years
experience in providing
accounting, administration,
compliance and general management
services. He holds a Masters of
Business Administration from RMIT
and a Public Practice Certificate
from the Institute of Chartered
Accountants.
Terri Bakos - Joint Company Secretary
Appointed - 18 December 2008
Experience - Terri Bakos is a Chartered
Secretary and holds a B. Bus
(Accounting) from RMIT
University. She has over 16 years
experience providing accounting
and compliance services to listed
and unlisted public companies.
Derek Ehmke - Company Secretary
Appointed - 22 January 2007
Resigned - 18 December 2008
Experience - Derrick Ehmke has over 40 years
business experience in Finance,
Administration and Information
Technology in South Africa,
Australia and the United Kingdom.
He is a Fellow of the Institute
of Corporate Managers,
Secretaries and Administrators.
MEETINGS OF DIRECTORS
During the financial year eleven 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:
Board Meetings
Number Number
eligible attended
to
attend
Neil Barrie 7 7
Nonkqubela Mazwai 6 0
Wolf Marx 11 11
Euan Luff 11 11
Brian Phillips 11 11
Committee Meetings
Audit, Risk & Remuneration
Compliance Committee Committee
Number Number Number Number
eligible attended eligible attended
to attend to
attend
Neil Barrie 0 0 0 0
Nonkqubela Mazwai 0 0 0 0
Wolf Marx 1 1 0 0
Euan Luff 1 1 1 1
Brian Phillips 2 2 1 1
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity consisted of mineral
exploration, in particular diamond exploration. There was no significant
change in the nature of the activities of the consolidated entity during the
year.
RESULT AND DIVIDEND
The operating loss of the consolidated entity for the financial year after
income tax expense of $Nil (2007: $Nil) was $3,826,156 (2007 $7,386,000) and
the operating loss of the Company after income tax of $Nil (2007: $Nil) was
$4,446,719 (2007 $9,594,713).
The Directors do not recommend the payment of a dividend (2007: 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 consolidated entity,
likely developments in the operations of the consolidated entity, and the
expected results of those operations as known at the date of this report,
have been covered generally in this Annual Report.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, the state of affairs of the consolidated
entity has not been substantially affected by any material or unusual matter
during the financial year other than that referred to in this Annual Report.
ENVIRONMENTAL REGULATIONS
The operations of the consolidated entity 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 material breaches of the legislation during the current
financial year.
SUBSEQUENT EVENTS
Date Event
28/01/2008 The Company announced that payment for the
sale of 26% of the Kareevlei project had been
delayed.
31/01/2009 The Company announced that Mr Wolf Marx has
retired as Managing Director of the Company.
19/03/2009 $A 200,000 in funding has been raised by the
Company for working capital purposes.
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 consolidated entity, the
results of those operations, or the state of affairs of the consolidated
entity in subsequent financial years.
FUTURE DEVELOPMENTS
The consolidated entity 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 21,365,653 ordinary shares with
consideration ranging from $0.07 to $0.08 cents each, raising a total of
$1,627,996 before costs. 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 2008 was
113,763,134.
SHARE OPTIONS
During the year 13,240,053 listed options were issued as part of a rights
issue. The options are exercisable at $0.10 per option, on or before 1 April
2011.
During the year 4,000,000 unlisted options were issued to a consultant.
These options are exercisable at $0.07 on or before 18 June 2012.
Subsequent to year end, 19,500,000 unlisted options were issued to employees
and directors, exercisable at $0.07 to $0.10 up to 17 January 2014. These
options were granted on 18 December 2008.
As at the 31 December 2008, the Company had 13,240,053 listed options and
10,720,000 unlisted options on issue.
No options were exercised during the year (2007: Nil).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the year, Tawana Resources N.L. insured the Directors and Company
Secretaries of the Company and its Australian based controlled entities, and
the managers of each of the consolidated subsidiary entities.
The liabilities insured are legal costs that may be incurred in defending
civil or criminal proceedings that may be brought against the officers in
their capacity as officers of 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. The contract of
insurance prohibits the disclosure of the nature of the premium paid.
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.
LOANS TO DIRECTORS AND EXECUTIVES
There are currently no loans (2007: Nil) to Directors or executives.
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, for audit and non-
audit services provided during the year are set out below:
Consolidated
2008 2007
Audit services $ $
PricewaterhouseCoopers Australian firm
Audit and review of financial 60,245 65,396
reports
Related practices of 17,938 35,214
Pricewaterhousecoopers Australian
firm
Total remuneration for audit services 78,183 100,610
Non-audit services - -
Total remuenration for audit & non- 78,183 100,610
audit services
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 2008 (2007: nil).
REMUNERATION REPORT
The Remuneration Report can be found on pages 17 to 22.
CORPORATE GOVERANCE
The Corporate Governance Report can be found on pages 23 to 28.
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 29.
This report is made in accordance with a resolution of Directors.
Neil Barrie
Executive Chairman
Dated at Melbourne on this the 31st day of March 2009
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 and Botswana. The
Company`s objective is to establish viable ore reserves and turn such
projects into profitable operations.
Recently the company has expanded it`s interests in evaluating other
resources, primarily manganese, gold, copper, coal and iron ore.
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; 100% owned by Tawana.)
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.
To obtain a more realistic fair market value based on actual offers by
diamond buyers as opposed to the previous exercise of a reserve price
valuation, a parcel of 222.71 carats of diamonds from Tawana`s Kareevlei
Project was placed on tender in August 2008 in Kimberley, South Africa.
More than 50 independent diamond buyers were present over the tender period
and all had equal access to the diamonds.
The parcel was withdrawn from the sale after the close of the tender.
The average value obtained from the exercise was US$169 per carat. One stone
of 3.741 carats was valued at US$2,800 per carat.
Photo included in orginal document
Kareevlei Wes diamonds.
On 27 October 2008 the Directors of Tawana announced the conclusion of an
agreement with Risk Free Investments 2 (Proprietary) Limited t/a Agio
Diamond Investments ("Agio") for the sale of a 26% interest in Tawana`s
Kareevlei Project for Rand 12Million (Approximately A$1.7million at current
exchange rates).
The above mentioned payment has been delayed, and, as a potential
contingency, the Company is pursuing alternate sources of funding. The
Company is also holding discussions with different groups regarding possible
joint ventures on the Company`s projects.
In December Tawana commenced legal proceedings in the South African Supreme
Court for full payment of the amount in question. Tawana are confident of a
successful outcome in this litigation and shareholders will be kept informed
of developments as they are available.
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; 100% owned by Tawana).
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. (Figure 1) These deposits resulted from the discovery by
Tawana during early exploration of targets generated by BHP Billiton.
Figure 1: Image showing location of Tawana Alluvials immediately downstream
of the De Beers owned Finsch diamond mine.
Photo included in orginal document
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 mining. 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. The Company has not
activated this proposal and has limited expenditure to maintaining tenure.
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.
A drilling program to confirm the presence or absence of kimberlite or
related rock types in the two targets was completed during 2008.
A total of seven 6.5 inch holes were drilled using percussion air flush
drilling. All holes were logged at 1m intervals and a total of 220m was
drilled during the 3 day drilling program. The location of the 7 drill
holes is shown in Figure 1.
Photo included in original document
Figure 1: Gravity image showing location of 7 drill holes within
Prospecting Right south of the St Augustine road.
Of the 7 holes drilled, 6 were sited to determine the cause of the gravity
low anomalies and one (hole 4) was sited to determine the cause of the
gravity high. The hole that was drilled into the gravity high was
distinctly different to the remaining 6 holes in that it intersected 7m of
weathered to fresh dolerite between 2 to 9m. This is compatible with what
can be observed in the sidewalls of the Kimberley mine. All other holes
drilled were completely devoid of dolerite and intersected weathered shale
below the dump debris.
The gravity low anomalies are therefore attributed to weathered shale and no
kimberlitic material was intersected during the drilling program.
Prospecting activities over the northern portion of the Prospecting Right
will continue in order to evaluate the area associated with the old St
Augustine kimberlite mine area.
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.
No work was conducted on this project during 2008.
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.
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.
Tawana has been advised by Nowak that the sinking of shafts on the BK24
kimberlite commenced in June 2008 but was suspended during the December
quarter to allow for the implementation of certain additional safety
measures. A small amount of fresh kimberlite sample was processed and
results are pending.
Nowak has also collected 120 soil samples in the Moshaiwa Prospecting
Licence with the aim to locate the source of the kimberlitic indicator
minerals (including diamonds) found here previously. Processing of these
samples has been completed and results are pending.
Since the beginning of 2009,Tawana has been concerned at the slow progress
with this project. In the second quarter of 2009 Tawana will move to
restructure the equity position in the project.
BK24 Shaft sinking operations by Nowak.
Photo included in original document
Current Status of Projects in Australia
Tawana currently has no active involvement in exploration in Australia. The
status of projects in Australia is as follows:
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
Mines Limited (FMS) in April 2007 under the terms of which FMS 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 FMS earns 70%
interest in the project, Tawana`s interest will reduce to 15%.
FMS advised Tawana that it had conducted geophysical surveys over the island
and had identified a number of targets which it intended to drill test.
Eyre Peninsula Project, South Australia
(80% owned by Tawana and 20% owned by Orogenic Exploration/Flinders Diamonds
Ltd ("FMS") earning in.)
Tawana and Orogenic entered into a joint venture agreement with FMS in April
2007 under the terms of which FMS 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 FMS earns 70% interest in the project,
Tawana`s interest will reduce to 15%.
FMS conducted an airborne geophysical survey over the project area and
drilled a number of targets. No kimberlite was intersected.
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 during 2007.
Results of this survey were received and interpreted during 2008. Although
it was considered that kimberlite intrusives did occur in the area, it was
considered unlikely that any sizable kimberlite pipes were present.
Tawana withdrew from this Joint Venture after exploration work determined
that it is unlikely that any sizeable kimberlite pipes are present in the
Blacktop venture.
SCHEDULE OF MINING TENEMENTS
Mining tenements currently held by the consolidated entity are:
Location Title Held % Held by Tawana Title
By
Daniel Project BHP Various NC30/5/1/1/088PR
South Africa Billiton
World
Exploratio
n Inc
Kareevlei Wes Diamond 74% NC30/5/1/2/2/081M
South Africa Resources R
P/L
St Augustines Vecto 30% (indirect) NC30/5/1/1/5/402P
South Africa Trade 436 R
P/L
Perdevlei Tawana 74% PP 59/2004
South Africa Resources
(SA) P/L
Riverton Taormina Earning 70% NC30/5/1/2/2/405P
South Africa Mining R
(Pty) Ltd
Lexshell Lexshell 50% NC30/5/1/2/2/054M
South Africa 366 Mining R
(Pty) Ltd
Timber Creek Tawana 100% ERL 25981
N.T. Australia Resources
NL
Flinders Island Orogenic 80% EL3200
SA, Australia Exploratio
n P/L
/ Tawana
Eyre Peninsula Orogenic 80% EL3928
SA, Australia Exploratio
n P/L
/ Tawana
Flinders Island Orogenic 80% ELA06/648
SA, Australia Exploratio
n P/L
/ Tawana
Borolong/Mashaiw Seolo 100% PL 37/2003,
a Botswana 38/2003
Botswana (Pty) Ltd PL 86/2007,
87/2007
Orapa Seolo 100% PL61/2007
Botswana Botswana
(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 in this Remuneration Report has been audited as
required by section 308 (3c) of the Corporations Act 2001.
A: Principles used to determine the nature and amount of remuneration
The Board policy for determining the nature and amount of remuneration of
Directors and Executives is agreed by the Board of Directors as a whole. The
Board obtains professional advice where necessary to ensure that the Company
attracts and retains talented and motivated Directors and employees who can
enhance Company performance through their contributions and leadership.
Remuneration policy is based on industry practice rather than Company
performance and takes into account the risks and liabilities assumed by the
directors and executives as a result of their involvement in the activities
undertaken by the Company.
Executive Director Remuneration
In determining the level and make-up of executive remuneration, the Board
negotiates a remuneration to reflect the market salary for a position and
individual of comparable responsibility and experience. Remuneration is
compared with the external market by reference to industry salary surveys.
If required, the Board may engage an external consultant to provide
independent advice in the form of a written report detailing market levels
of remuneration for comparable executive roles.
Remuneration consists of a fixed remuneration component as considered
appropriate.
Non-Executive Director Remuneration
Non-Executive Directors` fees are paid within an aggregate limit which is
approved by the shareholders from time to time. Retirement payments, if any,
are determined in accordance with the rules set out in the Company`s
Constitution and the Corporations Act at the time of the Director`s
retirement or termination. Non-Executive Directors remuneration may include
an incentive portion consisting of bonuses and/or options, as considered
appropriate by the Board, which is subject to shareholder approval in
accordance with the ASX Listing Rules.
The aggregate remuneration, and the manner in which it is apportioned
amongst Non-Executive Directors, is reviewed annually. The Board considers
the amount of director fees being paid by comparable companies with similar
responsibilities and levels of experience of the Non-Executive Directors
when undertaking the annual review process.
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 levels of experience
of the executive when undertaking the annual review process.
B: Details of Remuneration
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 N.L. and its controlled entities, are set out in the following
tables.
The Key Management Personnel of Tawana Resources N.L. include the Directors
as per page 3 to 4 above and the following executive officers, which are
also the highest paid executives of the controlled entities:
* 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 2008
2008 Short - Post Employment Share
Term Benefits Based
Benefits Payment
Cash Superannuation Options Total
Salary
and Fees
$ $ $ $
Executive Directors
W. Marx 201,840 18,165 10,257 230,262
Non-Executive
Directors
B. Phillips 24,465 2,202 5,129 31,796
E. Luff 25,000 - 17,999 42,999
N. Barrie 35,833 - 2,559 38,392
N. Mazwai - - - -
Sub Total Directors 287,138 20,367 35,944 343,449
Other Key Management
Personnel
A. Berryman 107,999 9,720 1,252 118,971
C. Bailey 150,000 13,500 5,115 168,615
Totals 545,137 43,587 42,311 631,035
Options Issued as Part of Remuneration for the Year Ended 31 December 2008
The details of options issued as part of remuneration during the year are
detailed in Section D: Share Based Compensation.
Details of Remuneration for Year Ended 31 December 2007
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:
2007 Short - Post Employment Share
Term Benefits Based
Benefits Payment
Cash Superannuation Options Total
Salary
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 Directors 219,337 78,163 16,058 313,558
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: Share Based Compensation.
C: Service Agreements
There are no contracts between the Company and the Directors, the Executives
or the Consultants.
D: Share Based Compensation
Options granted to Directors and Key Management Personnel are granted either
under or outside of the Tawana Resources Employee Option Scheme (TREOS)
which was approved by shareholders at the 2005 annual general meeting.
All options issued to Directors and Key Management Personnel are issued for
nil consideration.
Options issued under the TREOS are granted for a five year period, 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 issued outside of the TREOS during the 2008 year were granted for up
to a five year period, vesting within 12 and 24 months from contract or
issue date.
All Options issued carry no dividend or voting rights. When exercised, each
option is converted into one ordinary share pari passu with existing
ordinary shares.
The terms and conditions of each grant of options affecting the remuneration
of Directors and Key Management Personnel in this, or future reporting
periods, are as follows:
D: Share Based Compensation (continued)
Grant Date Expiry Exercise Value per Quantity Date
Date Price option at Exercisable
date of
grant
(a 30/11/2006 30/11/2011 $0.35 $0.057 50,000 30/11/2006
)
30/11/2006 30/11/2011 $0.35 $0.067 50,000 30/11/2007
30/11/2006 30/11/2011 $0.35 $0.075 50,000 30/11/2008
(b 31/05/2007 30/11/2011 $0.35 $0.0515 166,666 31/05/2007
)
31/05/2007 30/11/2011 $0.35 $0.0515 166,667 31/05/2008
31/05/2007 30/11/2011 $0.35 $0.0522 166,667 31/05/2009
(c 25/06/2007 30/11/2011 $0.35 $0.0391 83,333 25/06/2007
)
25/06/2007 30/11/2011 $0.35 $0.0391 83,333 25/06/2008
25/06/2007 30/11/2011 $0.35 $0.0391 83,334 25/06/2009
(d 18/12/2008 17/01/2013 $0.10 $0.009 3,000,000 19/06/2009
)
18/12/2008 17/01/2013 $0.10 $0.009 3,000,000 19/06/2010
(e 18/12/2008 17/01/2013 $0.07 $0.011 5,000,000 17/01/2009
)
18/12/2008 17/01/2014 $0.10 $0.011 5,000,000 17/01/2010
(a) to (c) Options issued to employees & Directors under the employee
option scheme as part of their remuneration.
(d) Options granted to a Director as part of their remuneration. Options
were granted outside of the employee option scheme.
(e) Options granted to Directors as part of their remuneration. Options
were granted outside of the employee option scheme.
Details of options over ordinary shares in the Company provided as
remuneration to each Director and member of the Key Management Personnel of
the consolidated entity, whilst in their position as a Director or Key
Management Personnel, 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.
D: Share Based Compensation (continued)
* These options granted during the 2008 year, were not issued to key
management personnel until 18 January 2009.
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.
The model inputs for the options
granted during the 2008 year
were:
Group A Group B Group C
Quantity 6,000,000 5,000,000 5,000,000
Grant date 18/12/200 18/12/2008 18/12/2008
8
Issue date 17/01/200 17/01/2009 17/01/2009
9
Expiry date 17/01/201 17/01/2013 17/01/2014
3
Share price at grant date $0.03 $0.03 $0.03
Exercise price $0.10 $0.07 $0.10
Expected price volatility of 76% 76% 76%
the Company`s shares
Expected dividend yield 0% 0% 0%
Risk free rate at grant 3.57% 3.57% 3.57%
date
Value per option $0.009 $0.011 $0.011
Group A options vest 50% on 19/06/09 and 50% on 19/06/10
Group B options vested on date of issue.
Group C options vest 12 months from date of issue.
No Directors or employees exercised options during 2008 (2007: nil).
All options issued were granted for nil consideration.
D: Share Based Compensation (continued)
The model inputs for the options
granted during the 2007 year were:
Group A Group B
Quantity 500,000 250,000
Grant date 31/05/2007 25/06/2007
Expiry date 30/11/2011 30/11/2011
Share price at grant date $0.193 $0.167
Exercise price $0.35 $0.35
Expected price volatility of the 49% 49%
Company`s shares
Expected dividend yield 0% 0%
Risk free rate at grant date 6.18% 6.39%
Group A & B options vest 1/3 on the date of granting and 1/3 on
each of the subsequent anniversaries of the initial grant date.
E: Additional Information
For each grant of options included in the tables on pages 20-21, the
percentage of the available 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 maximum
value of the options yet to vest has been determined as the amount at the
grant date fair value of the options that is yet to be expensed.
Further details relating to options are set out below:
Name A B C D E
Remuneration Value at Value at Value at Total
consisting grant date exercise lapse date of
of options $ date $ Column
$ (B-D)
B. Phillips 16.10% 5,129 - - 5,129
W. Marx 4.50% 10,257 - - 10,257
N. Barrie 6.70% 2,559 - - 2,559
E. Luff 41.90% 17,999 - - 17,999
A. Berryman 1.10% 1,252 - (3,000) (1,748)
C. Bailey 3.00% 5,115 - - 5,115
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.
CORPORATE GOVERNANCE STATEMENT
Tawana Resources N.L. 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
Securities Exchange (ASX) Corporate Governance Council in March 2003. In
August 2007, the ASX Corporate Governance Council released a 2nd edition of
the principals. The Board continues to review the framework and practices to
ensure they meet the interests of shareholders. The Company and its
controlled entities together are referred to as the consolidated entity in
this statement.
The relationship between the Board and Senior Management is critical to the
consolidated entity`s long-term success. The Directors are responsible to
the shareholders for the performance of the Company in both the short and
the longer term and seek to balance sometimes competing objectives in the
best interests of the consolidated entity as a whole. Their focus is to
enhance the interests of shareholders and other key stakeholders and to
ensure the consolidated entity is properly managed.
Day to day management of the consolidated entity`s affairs and the
implementation of the corporate strategy and policy initiatives are formally
delegated by the board to the Managing Director and Senior Executives as set
out in the consolidated entity`s Delegated Authorised Policy.
A description of the Company`s main corporate governance practices is set
out below. All these practices, unless otherwise stated, were in place for
the entire year.
Foundations for Management and Oversight
The Board has the overall responsibility to shareholders for all governance
matters of the consolidated entity. The Board remains primarily responsible
for the strategic direction and financial aspirations of the consolidated
entity, whilst delegating the responsibility of management to the Managing
Director and/or the senior management team.
The Board aims to 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
consolidated entity employees act with integrity and due diligence in the
interests of the Company and stakeholders, and
* Review and approval of all significant policies and procedures across
the consolidated entity.
Board Composition
The Board, 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 was chaired by a Non-Executive Director until 20 June 2008 when
Brian Phillips stepped down as Chairman and Neil Barrie took the role of
Executive Chairman.
The Company has adopted a definition of independence consistent with the
guidance provided by the ASX Corporate Governance Council. Such a definition
provides that an Independent Director is a Non-Executive Director and is not
a member of management and:
* is not a substantial shareholder of the Company or an officer of, or
otherwise associated directly with, a substantial shareholder of the
Company;
* within the last three years has not been employed in an executive
capacity by the Company or another member of the consolidated entity, or
been a Director after ceasing to hold such employment;
* within the last three years has not been a principal or a material
adviser or a material consultant to the Company or member of the
consolidated entity, or an employee materially associated with the service
provided;
* is not a material supplier or customer of the Company or other member
of the consolidated entity, or an officer of or otherwise associated
directly with a material supplier or customer;
* has no material contractual relationship with the Company or another
member of the consolidated entity other than as a Director of the Company;
* has not served on the Board for a period which could, or could
reasonably be perceived to, materially interfere with the Director`s ability
to act in the best interests of the Company; and
* is free from any interest and any business or other relationship which
could, or could reasonably be perceived to, materially interfere with the
Director`s ability to act in the best interests of the Company.
A substantial shareholder is defined to be a person or Company that has an
interest of 5% or more of the voting rights of the Company.
The Board has reviewed the position of all current Directors in light of the
Company`s adopted definition of independence. The Board acknowledges that it
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.
Due to the stage of the Company`s development, the Board believes that the
most appropriate person for the position of Chairman is an Executive Officer
of the Company. The Executive Officer`s overall expertise is crucial to the
Company`s development and negates any perceived lack of independence.
The following were Directors during the 2008 year:
Director Capacity Position Held Office Held Office
from to
W. Marx Managing Non- 16 November 31 January
Director Independent 1998 2009
B. Non- Executive Independent 4 April 2005 Current
Phillips Director
E. Luff Non- Executive Non- 16 November Current
Director Independent 1998
N. Executive Non- 20 June 2008 Current
Barrie Chairman Independent
N. Non-Executive Non- 30 October 2008 Current
Mazwai Director Independent
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
which of them must retire.
A Director must retire from office at the conclusion of the third annual
general meeting after which the Director was elected, even if his or her
retirement results in more than one-third of all Directors retiring from
office. A retiring Director will be eligible for re-election.
Responsibilities
The responsibilities of the board include:
* providing strategic guidance to the company;
* reviewing and approving business and financial plans;
* monitoring 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, and
* overseeing the operation of the systems and processes for compliance
and risk management reporting to shareholders.
Independent Professional Advice
Directors and Board committees have the right, in connection with their
duties and responsibilities, to seek independent advice at the Company`s
expense. Prior written approval of the Chairman is required, but this will
not be unreasonably withheld.
Performance Assessment
The full Board is responsible for reviewing the performance of the Chairman.
It is the responsibility of the Chairman, 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 2008 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 Chairman and Company Secretary have made attestations recommended by the
ASX Corporate Governance Council as to the Company`s financial condition
prior to the Board signing this report.
Board Committees
The Board has established 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.
The Remuneration and Nomination Committee is comprised of Non-Executive
Directors but a majority are not independent and the chair of the committee
is not independent. In light of the Company`s current stage and constraints
on the number of independent Non-Executive Directors the board believes that
this committee composition is optimal in the circumstances.
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.
The Audit and Risk Management Committee is comprised of Non-Executive
Directors but a majority are not independent and the chair of the committee
is not independent. In light of the Company`s current stage and constraints
on the number of independent Non-Executive Directors the board believes that
this committee composition is optimal in the circumstances.
External Auditors
The Company`s 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. 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 consolidated entity`s
business objectives.
Considerable importance is placed on maintaining a strong control
environment. There is an organisation structure with clearly drawn lines of
accountability and delegation of authority. Adherence to the Code of Conduct
is required at all times and the Board actively promotes a culture of
quality and integrity.
The Company`s risk management policy and the operation of the risk
management and compliance system is managed by the Company`s Risk Management
Group which consists of senior executives chaired by the Company Secretary.
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.
Information on compliance with significant environmental regulations is set
out in the Directors` Report.
Code of Conduct
These policies set out the ethical standards that govern the conduct of all
Directors and employees. The Company recognises the interests of all
stakeholders in the community and their role in creating shareholder value.
Every Director and employee is required at all times, to conduct themselves
in a manner consistent with the principles of honesty and integrity.
The Code requires Directors and employees, amongst other things, to comply
with the law, to disclose relevant interests that they may have and to act
in the best interests of the Company. The Code also covers confidentiality
of information and respect of privacy.
Continuous Disclosure and Shareholder Communication
The Company has policies and procedures on information disclosure that focus
on continuous disclosure of any information concerning the consolidated
entity that a reasonable person would expect to have a material effect on
the price of the Company`s securities. These policies and procedures also
include the arrangements the Company has in place to promote communication
with shareholders and encourage effective participation at general meetings.
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 consolidated entity`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.
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, and
* Other benefits
Details of Directors and Key Management Personnel are contained within the
Directors` Report.
Non-Executive Directors` fees are determined by the Board based on external
advice that is received from time to time and with reference to fees paid to
other Non-Executive Directors of comparable companies, taking account of the
specific duties in relation to the Company. Non-Executive Director`s fees
are within the limit agreed to by shareholders and represent the
responsibilities of the time spent by the Non-Executive Directors` in
fulfilling their duties to the Board.
Publicly Available Information
In accordance with the ASX Corporate Governance Council, the best practice
recommendations provide that specific documents should be publicly
available, ideally on the Company`s website. The Company makes available on
the web-site, within a reasonable time, any public statements by the
Company.
All policies referred to in this section are available by contacting the
Company.
Auditor`s Independence Declaration
As lead auditor for the audit of Tawana Resources N.L. for the year ended 31
December 2008, I declare that to the best of my knowledge and belief, there
have been:
no contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation
to the audit.
This declaration is in respect of Tawana Resources and the entities it
controlled during the period.
Tim Goldsmith Melbourne
Partner 31 March 2009
PricewaterhouseCoopers
Tawana Resources N.L.
ABN: 69 085 166 721
Annual Financial Report - 31 December 2008
Financial report
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.
Suite 1, 1233 High Street
Armadale, Victoria, 3143
Australia
A description of the nature of the consolidated entity`s operations and its
principal activities is included in the Management Report on page 9 and in
the Directors` Report on pages 3 to 8, both of which are not part of this
financial report.
The financial report was authorised for issue by the Directors on 31st March
2009. 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 2008
Consolidated Parent Entity
Not 2008 2007 2008 2007
e
$ $ $ $
Revenue 4 56,996 120,034 47,039 41,727
Corporate (674,389) (488,460) (595,211) (273,943)
costs
Depreciatio (294,353) (436,789) (212,647) (257,977)
n
Employee (512,293) (686,814) (344,666) (611,055)
benefits
expense
Exploration (1,651,383) (5,288,919) (1,649,647) (5,288,919)
expenses
written off
Foreign 18,700 - 18,700 -
exchange
gain
Impairment - - (955,237) (2,670,612)
of
financial
assets
Prospecting - - (211,928) (212,415)
fee
Travel (135,344) (70,200) (100,346) -
costs
Other 5 (634,090) (534,852) (442,776) (321,519)
expenses
Loss before (3,826,156) (7,386,000) (4,446,719) (9,594,713)
income tax
expense
Income tax 6 - - - -
expense
Net loss (3,826,156) (7,386,000) (4,446,719) (9,594,713)
attributabl
e to
shareholder
s of the
parent
entity
Earnings per share
Not 2008 2007
e
Basic loss per share (cents per share) 25 (3.71) (8.32)
Diluted loss per share (cents per share) 25 (3.71) (8.32)
The above Income Statements should be read in conjunction with the
accompanying notes.
BALANCE SHEETS
As at 31 December 2008
Consolidated
Note 2008 2007
$ $
Current assets
Cash and cash 7 18,090 149,862
equivalents
Trade and other 8 30,996 88,981
receivables
Inventories 9 81,268 76,818
Total current 130,354 315,661
assets
Non-current assets
Trade and other 8 82,095 47,423
receivables
Investments in 10 16,640 16,640
Associates
Other financial 11 - -
assets
Property, plant and 12 495,222 850,889
equipment
Exploration 13 5,883,355 7,971,366
expenditure
Total non-current 6,477,312 8,886,318
assets
Total assets 6,607,666 9,201,979
Current liabilities
Trade and other 15 424,389 142,761
payables
Provisions 16 40,575 116,389
Total current 464,964 259,150
liabilities
Non-current
liabilities
Trade and other 15 80,689 -
payables
Provisions 16 28,299 30,784
Borrowings 17 - -
Total non-current 108,988 30,784
liabilities
Total liabilities 573,952 289,934
Net assets 6,033,714 8,912,045
Equity
Contributed equity 18 34,708,732 33,339,335
Reserves 19 (2,570,305) (2,148,733)
Accumulated losses 20 (26,104,713) (22,278,557)
Total equity 6,033,714 8,912,045
BALANCE SHEETS
(Continued)
Parent Entity
Note 2008 2007
$ $
Current assets
Cash and cash 7 4,995 134,031
equivalents
Trade and other 8 25,265 77,417
receivables
Inventories 9 - -
Total current 30,260 211,448
assets
Non-current assets
Trade and other 8 38,500 -
receivables
Investments in 10 16,640 16,640
Associates
Other financial 11 3,045,550 3,887,738
assets
Property, plant and 12 206,648 442,862
equipment
Exploration 13 3,146,194 4,531,948
expenditure
Total non-current 6,453,532 8,879,188
assets
Total assets 6,483,792 9,090,636
Current liabilities
Trade and other 15 321,122 54,510
payables
Provisions 16 40,575 116,389
Total current 361,697 170,899
liabilities
Non-current
liabilities
Trade and other 15 80,689 -
payables
Provisions 16 - -
Borrowings 17 7,692 7,692
Total non-current 88,381 7,692
liabilities
Total liabilities 450,078 178,591
Net assets 6,033,714 8,912,045
Equity
Contributed equity 18 34,708,732 33,339,335
Reserves 19 459,314 260,323
Accumulated losses 20 (29,134,332) (24,687,613)
Total equity 6,033,714 8,912,045
The above Balance Sheets should be read in conjunction with the accompanying
notes.
STATEMENTS OF CHANGES IN EQUITY
Year Ended 31 December 2008
Issued Reserves Accumulated Total
capital losses
Consolidated $ $ $ $
Balance as at 1 32,544,335 (1,484,642) (14,892,557) 16,167,136
January 2007
Shares issued net of 795,000 - - 795,000
costs
Options issued - 53,876 - 53,876
Currency translation - (717,967) - (717,967)
differences
Net loss for the - - (7,386,000) (7,386,000)
period
Balance at 31 33,339,335 (2,148,733) (22,278,557) 8,912,045
December 2007
Shares issued net of 1,369,397 - - 1,369,397
costs
Options issued - 198,991 - 198,991
Net loss for the - - (3,826,156) (3,826,156)
period
Currency translation - (620,563) - (620,563)
differences
Balance at 31 34,708,732 (2,570,305) (26,104,713) 6,033,714
December 2008
Issued Reserves Accumulated Total
capital losses
Parent Entity $ $ $ $
Balance as at 1 32,544,335 206,447 (15,092,900) 17,657,882
January 2007
Shares issued net of 795,000 - - 795,000
costs
Options issued - 53,876 - 53,876
Net loss for the - - (9,594,713) (9,594,713)
period
Balance at 31 33,339,335 260,323 (24,687,613) 8,912,045
December 2007
Shares issued net of 1,369,397 - - 1,369,397
costs
Options issued - 198,991 - 198,991
Net loss for the - - (4,446,719) (4,446,719)
period
Balance at 31 34,708,732 459,314 (29,134,332) 6,033,714
December 2008
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 2008
Consolidated Parent Entity
Note 2008 2007 2008 2007
$ $ $ $
Cash flows from
operating
activities
Receipts from 40,943 104,513 40,943 105,534
customers
Payments to (1,298,519) (1,536,683) (998,867) (1,147,835)
suppliers and
employees
Interest received 10,122 81,088 165 2,781
Other (provide 5,931 - 5,931 -
details if
material)
Net cash outflow 30 (1,241,523) (1,351,082) (951,828) (1,039,520)
from operating
activities
Cash flows related to
investing activities
Proceeds from 23,567 52,961 23,567 46,667
sales of plant and
equipment
Payment for (341) (44,726) - -
purchases of plant
and equipment
Payment for (537,650) (1,223,083) (263,893) (889,420)
exploration
Advances to - - (637,959) (196,188)
related entities
Advances from - - 461,772 1,155,574
related entities
Investments in - (16,640) - (16,640)
Associates
Net cash flow from (514,424) (1,231,488) (416,513) 99,993
investing
activities
Cash flows related to
financing activities
Proceeds from 1,497,904 795,000 1,497,904 795,000
issues of
securities
Capital raising (258,599) - (258,599) -
costs
Net cash inflow 1,239,305 795,000 1,239,305 795,000
from financing
activities
Net decrease in (516,642) (1,787,570) (129,036) (144,527)
cash and cash
equivalents
Cash and cash 149,862 2,655,399 134,031 278,558
equivalents at the
1st January 2008
Effects of 384,870 (717,967) - -
exchange rate
changes on cash
and cash
equivalents
Cash and cash 7 18,090 149,862 4,995 134,031
equivalents at 31
December, 2008
The above Cash Flow Statements should be read in conjunction with the
accompanying notes.
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the
financial report are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated. The financial
report includes separate financial statements for 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
Australian Accounting Standards, other authoritative pronouncements and the
Australian Accounting Standards Board, Urgent Issues Group Interpretations
and the Corporations Act 2001.
The financial report is presented in Australian dollars and rounded to the
nearest dollar.
The financial report is prepared on a going concern basis. Refer to Note 31
for further details.
These financial statements have been prepared under the historical cost
convention.
Compliance with AIFRS
The financial report complies with Australian Accounting Standards, which
include Australian equivalents to International Financial Reporting
Standards ("AIFRS"). Compliance with AIFRS ensures that the financial
report, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards ("IFRS").
The consolidated entity has not elected to early adopt any standards in the
annual reporting period beginning 1 January 2008.
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
consolidated entity`s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in Note 3.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Tawana Resources N.L. as at 31 December 2008 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 consolidated entity has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than
one-half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when
assessing whether the consolidated entity controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the consolidated entity. They are de-consolidated from the
date that control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the consolidated entity.
Intercompany transactions, balances and unrealised gains on transactions
between consolidated entity companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by
the consolidated entity.
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 consolidated entity has
significant influence but not control, generally accompanying a shareholding
of between 20% and 50% of the voting rights. Investments in associates are
accounted for in the 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 consolidated entity`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 consolidated entity`s share of losses in an associate equals or
exceeds its interest in the associate, including other unsecured long-term
receivables, the consolidated entity does not recognise further losses,
unless it has incurred obligations or made payment on behalf of the
associate.
Unrealised gains on transactions between the consolidated entity and its
associate are eliminated to the extent of the consolidated entity`s interest
in the associate. Unrealised losses are also eliminated unless the
transactions provide evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to
ensure consistency with the policies adopted by the consolidated entity.
(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
revalued 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 measured at the fair value of consideration received or
receivable. Revenue is recognised to the extent that it is probable that
the economic benefits will flow to the consolidated entity and the revenue
can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognised.
Sale of goods and provision of services
Revenue is recognised when the significant risks and rewards of ownership of
the goods have passed to the buyer or when the service has been provided,
and can be measured reliably. Risks and rewards are considered passed to the
buyer at the time of delivery of the goods to the customer.
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 with the carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction
other than a business combination, that at the time of the transaction,
affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or
substantially enacted at the reporting date and are expected to apply when
the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and the tax base of investments in
controlled entities where the parent entity is able to control the timing of
the reversal of temporary differences and it is probable that the
differences will not be reversed in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities, and when the
deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
Current and deferred tax balances that are attributable to amounts
recognised directly in equity, are also recognised directly in equity.
(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
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 consolidated entity will not be able to collect all
amounts due according to the original terms of the receivables. Significant
financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial 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, an employee share scheme. Information
relating to this scheme 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.
(iii) 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 consolidated entity has a present
obligation, legal or constructive, as a result of a past event and it is
probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
(p) Leases
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments made
under operating leases, net of any incentives received from the lessor, are
charged to the 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
consolidated entity prior to the end of financial year which are unpaid. The
amounts are unsecured and are usually paid within 30 days of recognition.
(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 consolidated
entity`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 (effective from 1 January 2009)
AASB 8 will result in a significant change in the approach to segment
reporting as it requires the 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 consolidated entity will adopt AASB 8 from 1 January 2009. Application
of AASB 8 is not anticipated to result in different segments, segment
results, and different types of information being reported in the segment
note of the 2009 financial report than is presented in this Annual Report.
(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to
Australian Accounting Standards arising from AASB 123 (effective from 1
January 2009)
The standard has removed the option to expense all borrowing costs, and when
adopted, it will require the capitalisation of all borrowing costs directly
attributable to the acquisition, construction, or production of a qualifying
asset. There will be no impact on the financial report of the consolidated
entity, as the consolidated entity already capitalises 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
(effective from 1 January 2009)
The revised AASB 101 requires the presentation of a statement of
comprehensive income and makes changes to the statement of changes in
equity, but will not affect any of the amounts recognised in the financial
statements. If the consolidated entity makes a prior period adjustment or
reclassifies items in the financial statements, it will need to disclose a
third Balance Sheet, being as at the beginning of the comparative period.
The consolidated entity intends to apply the revised standard from 1 January
2009.
(iv) AASB 2008-1 Amendments to Australian Accounting Standard - Share-based
Payments: Vesting Conditions and Cancellations (effective from 1 January
2009)
AASB 2008-1 clarifies that vesting conditions are service conditions and
performance conditions only and that other features of a share-based payment
are not vesting conditions. It also specifies that all cancellations,
whether by the entity or by other parties, should receive the same
accounting treatment. The consolidated entity will apply the revised
standard from 1 January 2009, but it is not expected to affect the
accounting for the consolidated entity`s share-based payments.
(v) Revised AASB 3 Business Combinations, AASB 127 Consolidated and Separate
Financial Statements and AASB 2008-3 Amendments to Australian Accounting
Standards arising from AASB 3 and AASB 127 (effective 1 July 2009)
The revised AASB 3 continues to apply the acquisition method of business
combinations, but with some significant changes. For example, all payments
to purchase a business are to be recorded at fair value at the acquisition
date, with contingent payments classified as debt subsequently remeasured
through the income statement. There is a choice on an acquisition-by-
acquisition basis to measure the non-controlling interest in the acquiree
either at fair value or at the non-controlling interest`s proportionate
share of the acquiree`s net assets. All acquisition-related costs must be
expensed.
The revised AASB 127 requires the effects of all transactions with non-
controlling interest to be recorded in equity if there is no change in
control and these transactions will no longer result in goodwill or gains
and losses. The standard also specifies the accounting treatment when
control is lost. Any remaining interest in the entity is remeasured to fair
value, and a gain or loss is recognised as a profit or a loss. This is
consistent with the consolidated entity`s current accounting policy.
The consolidated entity will apply the revised standards prospectively to
all business combinations and transactions with non-controlling interests
from 1 January 2010.
(vi) AASB 2008-6 Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Project (effective 1 July 2009)
The amendments to AASB 5 Discontinued Operations and AASB 1 First-Time
Adoption of Australian-Equivalents to International Financial Reporting
Standards are part of the IASB`s annual improvements project published in
May 2008. They clarify that all of a subsidiary`s assets and liabilities are
classified as held for sale if a partial disposal sale plan results in loss
of control. Relevant disclosures should be made for this subsidiary if the
definition of a discontinued operation is met. The consolidated entity will
apply the amendments prospectively to all partial disposals of subsidiaries
from 1 January 2010.
(vii) AASB 2008-7 Amendments to Australian Accounting Standards - Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or Associate
(effective 1 July 2009)
In July 2008, the AASB approved amendments to AASB 1 First-time Adoption of
International Financial Reporting Standards and AABS 127 Consolidated and
Separate Financial Statements. The consolidated entity will apply the
revised rules prospectively from 1 January 2010. After that date, all
dividends received from investments in subsidiaries, jointly controlled
entities, or associates will be recognised as revenue, even if they are paid
out of pre-acquisition profits, but the investments may need to be tested
for impairment as a result of the dividend payment. Under the entity`s
current policy, these dividends are deducted from the cost of the
investment. Furthermore, when a new intermediate parent entity is created in
internal reorganisations, it will measure its investment in subsidiaries at
the carrying amounts of the net assets of the subsidiary rather than the
subsidiary`s fair value.
(viii) AASB 2008-8 Amendment to IAS 39 Financial Instruments: Recognition
and Measurement (effective 1 July 2009)
AASB 2008-8 amends AASB 139 Financial Instruments: Recognition and
Measurement and must be applied retrospectively in accordance with AASB 108
Accounting Policies, Changes in Accounting Estimates and Errors. The
amendment makes two significant changes. It prohibits designating inflation
as a hedgeable component of a fixed rate debt, and it also prohibits
including time value in the one-sided hedged risk when designating options
as hedges. The consolidated entity will apply the amended standard from 1
January 2010. It is not expected to have a material impact on the
consolidated entity`s financial statements.
(ix) AASB Interpretation 17 Distribution of Non-cash Assets to Owners and
AASB 2008-13 Amendments to the Australian Accounting Standard arising from
AASB Interpretation 17
AASB-I 17 applies to situations where an entity pays dividends by
distributing non-cash assets to its shareholders. These distributions will
need to be measured at fair value and the entity will need to recognise the
difference between the fair value and the carrying amount of the distributed
assets in the income statement on distribution. The interpretation further
clarifies when a liability for the dividend must be recognised, and that it
is also measured at fair value. The consolidated entity will apply the
interpretation prospectively from 1 January 2010.
NOTE 2 FINANCIAL RISK MANAGEMENT
The consolidated entity`s exploration activities are being funded by equity
and do not expose the consolidated entity to significant financial risks.
There are no speculative or financial derivative instruments. Funds are
invested for various short term periods to match forecast cash flow
requirements.
Market risk
Foreign currency risk
The consolidated entity operates internationally and is exposed to foreign
risk arising from currency exposure to the South African Rand (ZAR) and
Botswana Pula (BWP). Exposure is limited to maintaining sufficient funds in
the particular countries to meet expenditure commitments.
Management does not actively manage foreign exchange risk.
The consolidated entity`s exposure to foreign currency risk at the reporting
date was a follows:
31 December 2008 31 December 2007
Financial Assets and ZAR BWP ZAR BWP
Liabilities
$ $ $ $
Trade receivables 34 1,633 12,427 1,197
Cash and cash 11,515 1,575 (14,690) 30,517
equivalents
Trade payables (38,998) (64,249) (42,695) (47,622)
Net exposure (27,449) (61,041) (44,958) (15,907)
The carrying amounts of the parent entity`s financial assets and liabilities
are denominated in Australian dollars (AUD).
Sensitivity analysis
The consolidated entity has conducted a sensitivity analysis of its exposure
to foreign currency risk. The sensitivity analysis below is conducted on a
currency by currency basis based on the year-end spot rates average annual
movement in the AUD/ZAR and AUD/BWP exchange rate over the past 5 years,
being 1% and 2% respectively.
This analysis assumes that all other variables, in particular interest
rates, remain consistent.
The analysis is performed on the same basis for 2007.
31 December 2008 31 December 2007
Financial Assets AUD AUD AUD AUD
and Liabilities +/- 1% +/- 2% +/- 1% +/- 2%
Increase Trade receivables - 33 124 24
Cash and cash 115 31 (147) 610
equivalents
Trade payables (390) (1,285) (427) (952)
Decrease Trade receivables - (33) (124) (24)
Cash and cash (115) (31) 147 (610)
equivalents
Trade payables 390 1,285 427 952
The foreign denominated balances are not accounted for as hedges in
accordance with AASB 139 therefore all foreign exchange movements would be
recognised within the current period income statement and within retained
earnings.
Credit risk
Management does not actively manage credit risk.
The consolidated entity has no significant exposure to credit risk from
external parties at period end given all the counterparties to its credit
exposures are related entities of the consolidated entity. The maximum
exposure to credit risk from related entities of the consolidated entity at
the reporting date is equal to the carrying value of financial assets at 31
December 2008.
Other receivables are of a low value. Activity with trade debtors is limited
and the recoverability has not been brought into question. There is no
history of bad debts.
Liquidity and capital risk management
The consolidated entity`s objectives when managing capital are to safeguard
their ability to continue as a going concern, so that they can continue to
provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. In
order to maintain or adjust the capital structure, the consolidated entity
may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
During 2008, the consolidated entity`s strategy, which was unchanged from
2007, 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 consolidated entity has no significant interest-bearing assets, the
consolidated entity`s income and operating cash flows are not materially
exposed to changes in market interest rates.
Fair value estimation
The carrying amount of financial assets and financial liabilities recorded
in the financial statements represents their respective fair values
determined in accordance with the accounting policies disclosed in Note 1.
NOTE 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectation of future
events that may have a financial impact on the entity and that are believed
to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The consolidated entity makes estimates and assumptions concerning the
future. The resulting accounting estimates, will by definition, seldom equal
the related actual results. The estimates that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Recoverability of exploration expenditure
The consolidated entity tests annually whether the exploration and
evaluation expenditure incurred in identifiable areas of interest is
expected to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of reserves and further work is
expected to be performed. All expenditure that does not meet these criteria
is expensed in accordance with Note 1(h).
Activity at the following projects ceased during 2007 & 2008; 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 consolidated entity 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.
NOTE 4 REVENUE & OTHER INCOME
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Revenue from continuing
operations
Interest received 10,122 81,088 165 2,781
40,943 38,946 40,943 38,946
Laboratory income
51,065 120,034 41,108 41,727
Other Income
Profit on sale of 5,931 - 5,931 -
assets
5,931 - 5,931 -
NOTE 5 EXPENSES
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Other expenses from
continuing operations
includes:
Administration costs 89,368 154,531 57,260 113,975
Auditors remuneration 78,183 100,610 60,245 65,396
Listing fees 74,151 48,129 74,151 48,129
Occupancy costs 198,251 111,265 128,839 47,258
Loss on sale of assets - 75,634 - -
Repairs and maintenance 46,273 24,549 - 30,908
Other expenses 147,864 20,134 122,281 15,853
634,090 534,852 442,776 321,519
NOTE 6 INCOME TAX
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
b) Numerical
reconciliation of
income tax expense
to prima facie tax
payable
Loss before income (3,826,156 (7,386,000 (4,446,719) (9,594,713
tax expense ) ) )
Tax at the (1,147,847 (2,215,800 (1,334,016) (2,878,414
Australian rate of ) ) )
30%
Tax effect of
amounts that are
not
deductible/(taxable
) in calculating
income tax:
- Impairment of - - 286,571 801,184
assets
- Exploration 97,716 - 79,689 -
expenditure
- 27,340 - 27,340 -
Other
Benefit of tax 1,010,676 2,180,204 940,416 2,077,230
losses not brought
to account
(12,115) (35,596) - -
Difference in 12,115 35,596 - -
overseas tax rates
Income tax expense - - - -
c) Amounts Recognised directly in equity
No amounts in respect of tax expense or benefit have been included directly
in equity.
d) Tax losses
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Unused tax losses 34,230,135 31,228,288 22,882,731 19,386,12
for which no benefit 8
has been recognised
Potential tax 10,155,293 9,231,257 6,864,819 5,815,838
benefit 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 consolidated entity derives future assessable income of a
nature and sufficient amount to enable the benefit of losses to be
realised;
- the consolidated entity continues to comply with the conditions of
deductibility imposed in each legislative environment, and
- no changes in tax legislation adversely affect the consolidated
entity in realising the benefit from the deduction for the losses.
NOTE 7 CASH AND CASH EQUIVALENTS
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Cash at bank and in hand 18,090 145,227 4,995 129,396
Deposits at call - 4,635 - 4,635
18,090 149,862 4,995 134,031
a) Reconciliation of 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:
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Balance as 18,090 149,862 4,995 134,031
above
Balance per statement of 18,090 149,862 4,995 134,031
cash flows
NOTE 8 TRADE AND OTHER RECEIVABLES
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Current
Trade debtors (a) 23,595 23,990 21,923 12,426
VAT/GST receivable 7,401 - 3,342 -
Other debtors (b) - 64,991 - 64,991
30,996 88,981 25,265 77,417
Non-current
Other (c) 82,095 47,423 38,500 -
82,095 47,423 38,500 -
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 are non-interest bearing.
Non-current assets include: i) Deposit with the South African Department of
Minerals and Energy Affairs from Tawana Resources S.A. (Pty) Ltd for mine
rehabilitation costs which is refundable once the rehabilitation has been
completed, and ii) Deposit held by a landlord for rental premises in
Australia which is only refundable once lease expires.
NOTE 9 INVENTORIES
NOTE 10 INVESTMENT IN ASSOCIATE
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.
NOTE 11 OTHER FINANCIAL ASSETS
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 the recoverable value of the
subsidiaries. The current year impairment expense is $955,237 (2007:
$2,670,612).
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Movement in impairment
Foreign currency - - - 1,651,625
translations
Tawana Sa (Pty) Ltd - - 821,790 1,018,987
Diamond Resources (Pty) - - 56,367 -
Ltd
Seolo Botswana (Pty) Ltd - - 77,080 -
- - 955,237 2,670,612
Investments have been impaired to their recoverable value.
NOTE 12 PROPERTY, PLANT & EQUIPMENT
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Freehold land and buildings 343,868 369,865 - -
- at cost
Accumulated depreciation (119,759) (95,715) - -
224,109 274,150 - -
Plant and equipment - at 1,740,059 2,153,231 822,437 1,151,233
cost
Accumulated depreciation (1,496,675) (1,642,784) (615,789) (708,371)
243,384 510,447 206,648 442,862
Motor vehicles - at cost 170,351 185,308 - -
Accumulated depreciation (142,622) (119,016) - -
27,729 66,292 - -
495,222 850,889 206,648 442,862
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Movement in carrying
value
Freehold land and
buildings
Carrying value at 1 274,150 333,888 - -
January
Foreign currency (20,525) (24,726) - -
translation
Depreciation expense (29,516) (35,012) - -
Carrying value at 224,109 274,150 - -
31 December
Plant and equipment
Carrying value at 1 510,447 913,611 442,862 778,414
January
Addition 341 44,726 - -
s
Disposals (23,567) (78,475) (23,567) (77,575)
Foreign currency (10,232) (3,940) - -
translation
Depreciation expense (233,605) (365,475) (212,647) (257,977)
Carrying value at 243,384 510,447 206,648 442,862
31 December
Motor vehicles
Carrying value at 1 66,292 124,048 - -
January
Disposals - (12,271) - -
Foreign currency (7,331) (9,183) - -
translation
Depreciation expense (31,232) (36,302) - -
Carrying value at 31 27,729 66,292 - -
December
495,222 850,889 206,648 442,862
NOTE 13 EXPLORATION EXPENDITURE
The exploration and evaluation expenditure relates to the consolidated
entity`s projects in South Africa, Botswana and Australia. Exploration in
Australia is operated under a joint venture as set out in Note 14.
NOTE 14 INTEREST IN JOINT VENTURE
During the financial year, Tawana Resources N.L. informed its joint venture
partner, De Beers, that it had decided to withdraw from its majority
interest in its one and only unincorporated exploration joint venture, the
Pilbara Joint Venture, under the terms allowed in the joint venture. The
total expenditure of $498,226 that had been previoulsy captialised in the
balance sheet as exploration expenditure was written off to the income
statement during the period.
All expenditure commitments for this joint venture have been extinguished.
Pilbara Joint
Venture
Consolidated Parent Entity
2008 2007 2008 2007
% % % %
% of interest held - 66.66% - 66.66%
in JV
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Carrying amount of - 498,226 - 498,226
investment
Share of joint venture
assets/liabilities
Non-current assets - 498,226 - 498,226
Net assets - 498,226 - 498,226
Share of joint venture
revenue/expenses
Revenues - - - -
Expenses - - - -
Loss before income - - - -
tax
Share of joint venture
commitments
Expenditure - 116,988 - 116,988
commitments
Total commitments - 116,988 - 116,988
NOTE 15 TRADE AND OTHER PAYABLES
Trade creditors and other 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 $A103,267 or South African
Rand ($ZAR) of 675,098. These are non-interest bearing and their carrying
value approximates their fair value.
Other creditors include an equity allotment deposit of $236,300 which will
be discharged through the issue of additional share capital during 2009 and
$20,482 owing to the Directors for which arrangements have been made to
defer or waive payment until the company has sufficient funds to repay the
debts and remain a going concern.
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Non Current
Other creditors 80,689 - 80,689 -
80,689 - 80,689 -
Non current other creditors are non-interesting bearing and are payable in
greater than 12 months.
NOTE 16 PROVISIONS
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Curren
t
Provision for employee 40,575 116,389 40,575 116,389
entitlements
Movement in provision for
employee entitlements
Carrying amount at start of 116,389 71,760 116,389 71,760
year
Leave taken or provision (93,507) (46,088) (93,507) (46,088)
written back
Annual leave provision 17,693 57,717 17,693 57,717
recognised
Long service leave - 33,000 - 33,000
provision recognised
Carrying amount at end of 40,575 116,389 40,575 116,389
year
Nature and obligation of provision
The employee entitlements relate to annual leave which has accrued and is
due and payable.
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Non Current
Provision for 28,299 30,784 - -
rehabilitation
Movement in provision for
rehabilitation
Carrying amount at start of 30,784 51,291 - -
year
Unused amounts reversed - (16,639) - -
Foreign currency (2,485) (3,868) - -
translation and other
movements
Additional provisions - - - -
recognised
Carrying amount at end of 28,299 30,784 - -
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.
NOTE 17 BORROWINGS
NOTE 18 CONTRIBUTED EQUITY
Consolidated Parent Entity
Note 2008 2007 2008 2007
$ $ $ $
Issued and paid
up capital
Ordinary 18a 34,708,732 33,339,335 34,708,732 33,339,335
Shares
Options over 18b - - - -
ordinary shares
34,708,732 33,339,335 34,708,732 33,339,335
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.
(i) 2008 Details Number Issue $
price $
3/04/2008 Rights issue to raise 6,990,053 0.08 559,204
working capital
17/06/2008 Issue to BEE partner to 2,125,600 0.07 148,792
satisfy South African
BEE requirements
17/06/2008 Rights issue to raise 1,250,000 0.08 100,000
working capital
7/07/2008 Rights issue to raise 2,000,000 0.08 160,000
working capital
22/07/2008 Rights issue to raise 3,000,000 0.08 240,000
working capital
13/10/2008 Issue to BEE partner to 6,000,000 0.07 420,000
satisfy South African
BEE requirements
21,365,653 1,627,996
The shares allotted as part of the rights issue were to institutional and
sophisticated investors. Each share was issued with a free attaching option
exercisable at 10 cents on or before 1 April 2011. Funds raised were used
for all projects in South Africa and Australia, and working capital
requirements.
The shares allotted were the result of a placement to institutional and
sophisticated investors. Each share was issued with a free attaching 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 project
at Kareevlei and working capital.
2008 2007
Not No. $ No. $
e
b Options over fully paid ordinary
) shares
At 1 January 27,644,144 - 22,344,144 -
Options issued (i) 13,240,053 - 5,300,000 -
during year
Expiration of (ii (22,344,144) - - -
options )
At 31 December 18,540,053 - 27,644,144 -
No voting or other rights are attached to options.
(i 2008 Detail Number Issue $
) s price $
3/04/2008 Listed free attaching 6,990,053 0.00 -
options to rights
issue
17/06/2008 Listed free attaching 1,250,000 0.00 -
options to rights
issue
7/07/2008 Listed free attaching 2,000,000 0.00 -
options to rights
issue
22/07/2008 Listed free attaching 3,000,000 0.00 -
options to rights
issue
13,240,053 -
2007 Detail Number Issue $
s price $
21/09/2007 Unlisted free 5,300,000 0.00 -
attaching options to
rights issue
5,300,000 -
(ii 2008 Detail Number Issue $
) s price $
30/04/2008 Expiration of listed (22,344,144) 0.00 -
options
(22,344,144) - -
NOTE 19 RESERVE
Consolidated Parent Entity
Not 2008 2007 2008 2007
e
$ $ $ $
Foreign currency 19a (3,029,619) (2,409,056) - -
translation reserve
Option reserve 19b 436,430 237,439 436,430 237,439
Asset revaluation 19c 22,884 22,884 22,884 22,884
reserve
(2,570,305) (2,148,733) 459,314 260,323
a Foreign currency translation
) reserve
Exchange differences arising from the translation of foreign
controlled entities are taken to the foreign currency translation
reserve, as described in Note 1(d).
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
Movement during the
year
At 1 January (2,409,056) (1,691,089) - -
Currency (620,563) (717,967) - -
translation
differences
At 31 December (3,029,619) (2,409,056) - -
NOTE 20 ACCUMULATED LOSSES
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
At 1 January 22,278,557 14,892,557 24,687,613 15,092,900
Current period losses 3,826,156 7,386,000 4,446,719 9,594,713
At 31 26,104,713 22,278,557 29,134,332 24,687,613
December
NOTE 21 KEY MANAGEMENT PERSONNEL DISCLOSURES
Directors
The following persons were Directors of Tawana Resources NL during the
financial year:
Key management personnel
The following persons also had authority and responsibility for planning,
directing and controlling the activities of the consolidated entity,
directly or indirectly, during the financial year:
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 17 to 22 of the Remuneration Report.
Aggregate Key Management Personnel compensation by category is as follows:
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 17 to 22.
(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 consolidated entity, including their personally
related parties are set out below:
2008 Balance at Granted Exercised
start of during the during the
year year year
Directors
Neil Barrie# 4,270,000 6,000,000 -
Brian Phillips 41,133 2,000,000 -
Euan Luff 3,021,462 4,000,000 -
Nonkquebela Mazwai - - -
Wolfgang Marx 1,999,500 4,000,000 -
Key Management Personnel
A Berryman 100,000 - -
C Bailey 400,000 - -
(Continued)
2008 Other Balance at Vested and
acquisition end of year exercisable
s/disposals at end of
during the year
year *
Directors
Neil Barrie# - 10,270,000 4,270,000
Brian Phillips 271,367 2,312,500 312,500
Euan Luff (917,312) 6,104,150 1,937,483
Nonkquebela Mazwai - - -
Wolfgang Marx 814,500 6,814,000 2,814,000
Key Management Personnel
A Berryman - 100,000 100,000
C Bailey - 400,000 316,666
* Other acquisitions/disposals during the year refers to options acquired
as part of a rights issue or those that lapsed.
# Balance of Mr Barrie`s options at start of year represents the balance
of options held on commencement as a director.
(Continued)
2007 Other Balance at Vested and
acquisition end of year exercisabl
s during e at end
the year* of year
Directors
Wolfgang Marx - 1,999,500 1,999,500
Brian Phillips - 41,133 41,133
Euan Luff 666,650 3,021,462 2,688,128
Key Management Personnel
A Berryman - 100,000 66,666
C Bailey - 400,000 183,333
* Other acquisitions/disposals during the year refers to options acquired
as part of a rights issue or those that lapsed.
(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
consolidated entity, including their related parties, are set out below.
There were no shares granted during the reporting period as compensation.
Loans to Key Management Personnel
There were no loans to Key Management Personnel of the consolidated entity,
including their personally related parties (2007: nil).
Other transactions with Key Management Personnel
NOTE 22 DETAILS OF CONTROLLED ENTITIES AND THE COMPANY
Country of Book value of
incorporation investment
2008 2007
$ $
Economic entity:
Tawana Resources N.L. Australia
Controlled entities:
Seolo Botswana (Pty) Ltd Botswana 77,080 555,080
Tawana Resources (Pty) Ltd South Africa 2,968,465 3,332,653
Diamond Resources (Pty) Ltd South Africa - -
3,045,545 3,887,733
Joint venture
Tawana Diamonds Australia 5 5
Australia Pty Ltd
5 5
(Continued)
Country of Interest held by the
incorporation economic entity
2008 2007
% %
Economic entity:
Tawana Resources N.L. Australia
Controlled entities:
Seolo Botswana (Pty) Ltd Botswana 100 100
Tawana Resources (Pty) Ltd South Africa 100 100
Diamond Resources (Pty) Ltd South Africa 100 100
Joint venture
Tawana Diamonds Australia 67 67
Australia Pty Ltd
NOTE 23 SEGMENT INFORMATION
The consolidated entity operated predominantly in the mineral exploration
industry in South Africa, Botswana and within Australia.
Primary reporting - Geographic segments
Australia
2008 2007
$ $
Segment Revenue
External sales 46,874 38,946
Intersegment sales - -
Other revenue 165 2,781
Total segment revenue 47,039 41,727
Segment Expenses
Segment expenses (3,579,956) (4,527,786)
Intersegment expenses (211,928) -
Unallocated expenses - -
Total Segment Expense (3,791,884) (4,527,786)
Total Segment Result (3,744,845) (4,486,059)
Segment Assets
Segment assets 7,185,664 855,258
Unallocated assets - -
Total Segment assets 7,185,664 855,258
Segment Liabilities
Segment liabilities (450,078) (170,899)
Unallocated liabilities - -
Total Segment Liabilities (450,078) (170,899)
Primary reporting - Geographic segments (Continued)
Africa
2008 2007
$ $
Segment Revenue
External sales - -
Intersegment sales 13,899 212,415
Other revenue 9,957 78,307
Total segment revenue 23,856 290,722
Segment Expenses
Segment expenses (556,559) (5,648,860)
Intersegment expenses - (212,415)
Unallocated expenses - -
Total Segment Expense (556,559) (5,861,275)
Total Segment Result (532,703) (5,570,553)
Segment Assets
Segment assets 4,799,327 12,242,151
Unallocated assets - -
Total Segment assets 4,799,327 12,242,151
Segment Liabilities
Segment liabilities (14,867,296) (4,014,465)
Unallocated liabilities - -
Total Segment Liabilities (14,867,296) (4,014,465)
Primary reporting - Geographic segments (Continued)
Eliminations
2008 2007
$ $
Segment Revenue
External sales - -
Intersegment sales (13,899) (212,415)
Other revenue - -
Total segment revenue (13,899) (212,415)
Segment Expenses
Segment expenses 253,363 2,670,612
Intersegment expenses 211,928 212,415
Unallocated expenses - -
Total Segment Expense 465,291 2,883,027
Total Segment Result 451,392 2,670,612
Segment Assets
Segment assets (5,377,325) (3,895,430)
Unallocated assets - -
Total Segment assets (5,377,325) (3,895,430)
Segment Liabilities
Segment liabilities 14,743,422 3,895,430
Unallocated liabilities - -
Total Segment Liabilities 14,743,422 3,895,430
Primary reporting - Geographic segments (Continued)
Consolidated
2008 2007
$ $
Segment Revenue
External sales 46,874 38,946
Intersegment sales - -
Other revenue 10,122 81,088
Total segment revenue 56,996 120,034
Segment Expenses
Segment expenses (3,883,152) (7,506,034)
Intersegment expenses - -
Unallocated expenses - -
Total Segment Expense (3,883,152) (7,506,034)
Total Segment Result (3,826,156) (7,386,000)
Segment Assets
Segment assets 6,607,666 9,201,979
Unallocated assets - -
Total Segment assets 6,607,666 9,201,979
Segment Liabilities
Segment liabilities (573,952) (289,934)
Unallocated liabilities - -
Total Segment Liabilities (573,952) (289,934)
NOTE 23 SEGMENT INFORMATION continued
Australia
2008 2007
$ $
Other
Acquisition of
non-current segment
assets
- exploration assets 263,893 318,121
- property, plant & - -
equipment
Depreciation 212,647 257,977
Foreign exchange (18,700) -
losses/(gain)
Impairment of assets 955,237 2,670,612
Exploration expenses 572,989 3,063,292
written off
(Continued)
Africa
2008 2007
$ $
Other
Acquisition of
non-current segment
assets
- exploration assets 273,757 904,962
- property, plant & 341 -
equipment
Depreciation 81,706 178,812
Foreign exchange - -
losses/(gain)
Impairment of assets - -
Exploration expenses 1,078,394 2,225,627
written off
(Continued)
Eliminations
2008 2007
$ $
Other
Acquisition of non-current
segment assets
- exploration assets - -
- property, plant & - -
equipment
Depreciation - -
Foreign exchange - -
losses/(gain)
Impairment of assets (955,237) (2,670,612)
Exploration expenses - -
written off
(Continued)
Consolidated
2008 2007
$ $
Other
Acquisition of non-current
segment assets
- exploration assets 537,650 1,223,083
- property, plant & 341 -
equipment
Depreciation 294,353 436,789
Foreign exchange (18,700) -
losses/(gain)
Impairment of assets - -
Exploration expenses 1,651,383 5,288,919
written off
Secondary Reporting - Business Segments
The entity operates solely in the area of mineral exploration.
NOTE 24 AUDITORS` REMUNERATION
Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
PricewaterhouseCoopers
Australian firm
Audit and review of financial 60,245 65,396 60,245 65,396
reports
Related practices of 17,938 35,214 - -
Pricewaterhousecoopers
Australian firm
78,183 100,610 60,245 65,396
Total remuneration for audit
services
NOTE 25 LOSS PER SHARE
Consolidated
2008 2007
cents cents
Basic loss/Headline loss per share (3.71) (8.32)
Diluted loss/Headline loss per share (3.71) (8.32)
No. No.
Weighted average number of ordinary 103,028,406 88,723,782
shares outstanding during the year used
in calculating basic and diluted EPS.
NOTE 26 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 other than those disclosed in Note 21.
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.
(f) Transactions with related parties
The following transactions occurred with related parties:
(g) Loans to/from related parties
Loans to subsidiaries
At 1 January - - 3,810,164 7,652,577
Loans advanced - - 637,959 196,188
Loans repaid - - (461,773) (1,367,989)
Impairment recognised - - (955,237) (2,670,612)
At 31 December - - 3,031,113 3,810,164
These loans are included in the net investments in subsidiaries. Refer Note
11.
Loans from
subsidiaries
At 1 January - - 7,692 7,692
At 31 December - - 7,692 7,692
These loans are included in non-current liabilities. Refer to Note
17.
NOTE 27 SHARE-BASED PAYMENTS
a)
Share based payments issued during the year
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. Options are granted for a five year
period, and 1/3 vest 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 are granted under the plan carry no
dividends or voting rights. When exercisable, each option is converted into
one ordinary share.
Other issues of options
The following options were granted during the year:
4,000,000 options were granted to a Consultant during the period. The terms
of the options were:
Expiry date: 18/06/2012
No dividends or voting rights attached
Exercise Price: $0.07
6,000,000 options were granted to Directors during the period. The terms of
the options were:
Expiry date: 17/01/2013
No dividends or voting rights attached
Exercise Price: $0.10
Vesting: 3,000,000 12 months from contract date & 3,000,000 24 months from
contract date.
13,500,000 options were granted to Directors & consultants during the
period. The terms of the options were:
Expiry date: 6,750,000 at 17/01/2013 & 6,750,000 at 17/01/2014.
No dividends or voting rights attached
Exercise Price: 6,750,000 at $0.07 & 6,750,000 at $0.10.
Vesting: 6,750,000 12 months from date of issue & 6,750,000 24 months from
date of issue.
b) Summary of outstanding share based payment options on issue
Issue Quantity Grant Expiry Exercise Value at
Date date date price grant
date
30/11/20 * 140,000 30/11/200 30/11/2011 0.35 0.057
06 6
30/11/20 ** 140,000 30/11/200 30/11/2011 0.35 0.067
06 6
30/11/20 ** 140,000 30/11/200 30/11/2011 0.35 0.075
06 * 6
30/11/20 * 1,000,000 30/11/200 30/11/2011 0.50 0.039
06 6
31/05/20 * 166,666 31/05/200 30/11/2011 0.35 0.0515
07 7
31/05/20 ** 166,667 31/05/200 30/11/2011 0.35 0.0515
07 7
31/05/20 ** 166,667 31/05/200 30/11/2011 0.35 0.0522
07 * 7
25/06/20 * 166,666 25/06/200 30/11/2011 0.35 0.0391
07 7
25/06/20 ** 166,667 25/06/200 30/11/2011 0.35 0.0391
07 7
25/06/20 ** 166,667 25/06/200 30/11/2011 0.35 0.0391
07 * 7
18/06/20 * 4,000,000 18/06/200 18/06/2012 0.07 0.035
08 8
17/01/20 = 3,000,000 18/12/200 17/01/2013 0.10 0.009
09 8
17/01/20 == 3,000,000 18/12/200 17/01/2013 0.10 0.009
09 8
17/01/20 # 6,750,000 18/12/200 17/01/2013 0.07 0.011
09 8
17/01/20 ## 6,750,000 18/12/200 17/01/2014 0.10 0.011
09 8
25,920,000
* Options vest upon issue
** Options vest 1 year from grant date
*** Options vest 2 years from grant date
# Options vest 1 year from issue date
## Options vest 2 years from issue date
= Options vest year from contract date
== Options vest 2 years from contract date
All options are to be settled with the physical delivery of ordinary
shares
c) Fair value of options granted during the year
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. Fair values at grant date are independently determined
using a Binomial 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.
The model inputs for the options granted during the 2008
year were:
A B C D
Quantity
4,000,000 6,000,000 6,750,000 6,750,000
Grant date 18/06/2008 18/12/200 18/12/2008 18/12/2008
8
Expiry date 18/06/2012 17/01/201 17/01/2013 17/01/2014
3
Share price at grant $ $ $ $
date 0.07 0.03 0.03 0.03
Exercise price $ $ $ $
0.07 0.10 0.07 0.10
Expected price 76% 76% 76% 76%
volatility of the
Company`s shares
Option life 4 years 4 years 4 years 5 years
Expected dividend 0% 0%
yield 0% 0%
Risk free rate at 6.69% 3.57% 3.57% 3.57%
grant date
The weighted average fair value of options granted during
the year is $0.0104.
d) Reconciliation of outstanding
options granted
2008 2007
Consolidated and No. of Weighted No. of Weighted
parent entity options Average options Average
Exercise Exercise
Price Price
Outstanding at 1 2,640,000 $0.4068 1,640,000 $0.4415
January
Granted 23,500,000 $0.0896 1,000,000 $0.3500
Lapsed (220,000) $0.3500 - -
Outstanding at 31 25,920,000 $ 0.1167 2,640,000 $0.4068
December
No options were exercised during the current year or the previous
year.
The share options outstanding at the end of the year had an exercise
price in the range of $0.07 to $0.35 (2007: $0.35 to $0.50).
e) Current year expense arising from share based
payments.
The value of share based payments expensed to the Income Statement
during the year is $198,991 (2007: $53,876). This amount appears in
the Employee Benefit Expense line of the Income Statement.
NOTE 28 SUBSEQUENT EVENTS
The following events occurred subsequent to balance date:
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 consolidated entity, the
results of those operations, or the state of affairs of the consolidated
entity in subsequent financial years.
NOTE 29 CONTINGENT LIABILITIES AND COMMITMENTS
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.
Commitments
In order to maintain current rights of tenure to exploration tenements, the
Company and consolidated entity is required to outlay lease rentals and to
meet the minimum expenditure requirements for the Mines Department. These
obligations, which relate only to the parent company Tawana Resources N.L.,
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 25 April 2006. These
obligations are not provided for in the accounts and are payable as follows:
Parent Entity
2008 2007
$ $
- not later than 12 months 256,988 256,988
- between 12 months and 5 years 69,679 326,667
NOTE 30 NOTES TO STATEMENTS OF CASH FLOWS
Consolidated
2008 2007
$ $
a Reconciliation of loss after
) income tax to cash flow from operations
Loss for the (3,826,156) (7,386,000)
period
Depreciation expense 294,353 436,789
Option expense 198,991 53,876
Exploration expense written off 1,651,383 5,288,919
Foreign exchange loss (18,700) -
Prospecting - -
fees
Profit on sale of assets - -
Loss on sale of assets - 75,634
Impairment of assets - -
Increase/(decrease) in trade and other 511,109 (337,903)
payables
Increase/(decrease) in provisions (75,814) 24,122
Decrease/(increase) in inventories - 17,363
Decrease/(increase) in non current (34,673) 3,868
receivables
Decrease/(increase) in trade and other 57,985 472,250
receivables
Cash flow from operations (1,241,523) (1,351,082)
(Continued)
Parent Entity
2008 2007
$ $
a Reconciliation of loss after income tax
) to
cash flow from operations
Loss for the (4,446,719) (9,594,713)
period
Depreciation expense 212,647 257,977
Option expense 198,991 53,876
Exploration expense written off 1,651,383 5,288,919
Foreign exchange loss (18,700) -
Prospecting 211,928 212,415
fees
Profit on sale of assets - -
Loss on sale of assets - 30,908
Impairment of assets 955,237 2,670,612
Increase/(decrease) in trade and other 345,565 (65,380)
payables
Increase/(decrease) in provisions (75,814) 44,629
Decrease/(increase) in inventories (1) -
Decrease/(increase) in non current (38,500) -
receivables
Decrease/(increase) in trade and other 52,155 61,237
receivables
Cash flow from operations (951,828) (1,039,520)
b) Reconciliation of cash
For the purposes of this statement of cash flows, cash includes cash on hand
and `at call` in deposits with banks, net of bank overdrafts. Cash at the
end of the year is shown in the Balance Sheet as:
Error! Not a valid link.c) Non-cash investing and financing activities
There are no non-cash investing or financing activities (2007: nil).
NOTE 31 GOING CONCERN
The consolidated entity has incurred a loss of $3,826,156 for the year ended
31 December 2008, has net assets of $6,033,714 and net current liabilities
of $334,610. Of the net current liabilities, $236,300 will be equity settled
(Refer Note 15) resulting in a net cash settled liability of $98,310.
Existing cash resources and additional cash raisings subsequent to year end
(Refer to Note 28) will provide the consolidated entity with sufficient
resources to discharge the remaining balance.
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 consolidated entity 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. The Directors
believe that they can raise additional funding to enable the consolidated
entity to continue to pursue its business activities through the issue of
additional equity, joint venturing arrangements and disposal of surplus
assets.
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 a 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 2008.
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 31 to 68 and the
remuneration disclosures on pages 17 to 22, 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 2008 and of their performance for the
financial year ended on that date; and
(b) there are reasonable grounds to believe that the consolidated entity
will be able to pay its debts as and when they become due and payable;
The Directors have been given the declarations by the Chairman 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
Neil Barrie
Chairman
Dated at Melbourne this the 31st day of March 2009.
Independent auditor`s report to the members of Tawana Resources N.L.
Report on the financial report
We have audited the accompanying financial report of Tawana Resources N.L.
(the `company`) and Tawana Resources Group (the `consolidated entity`),
which comprises the balance sheets as at 31 December 2008, and the income
statements, statements of changes in equity and cash flow statements for the
year ended on that date, a summary of significant accounting policies, other
explanatory notes and the directors` declaration for both Tawana Resources
N.L. and the Tawana Resources Group. 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.
Directors` responsibility for the financial 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 controls 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, 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.
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.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial report. The procedures selected
depend on the auditor`s judgement, including the assessment of the risks of
material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal
control relevant to the entity`s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity`s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
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
In our opinion:
(a) the financial report of Tawana Resources N.L. and Tawana Resources
Group 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 2008 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
the financial report also complies with International Financial Reporting
Standards as disclosed in Note 1.
Significant uncertainty regarding continuation as a going concern
Without qualification to the opinion expressed above, we draw attention to
Note 31 in the financial report which indicates that the consolidated entity
incurred a net loss of $3,826,156 and has negative cashflows from operations
during the year ended 31 December 2008. As at 31 December the consolidated
entity has net current liabilities of $334,610. The consolidated entity`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 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.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 22 of the
directors` report for the year ended 31 December 2008. The directors of the
company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Auditor`s opinion
In our opinion, the Remuneration Report of Tawana Resources N.L. for the
year ended 31 December 2008, complies with section 300A of the Corporations
Act 2001.
Matters relating to the electronic presentation of the audited financial
report
This auditor`s report relates to the financial report and remuneration
report of Tawana Resources N.L. (the company) for the year ended 31 December
2008 included on the Tawana Resources N.L. web site. The company`s directors
are responsible for the integrity of the Tawana Resources N.L. web site. We
have not been engaged to report on the integrity of this web site. The
auditor`s report refers only to the financial report and remuneration report
named above. It does not provide an opinion on any other information which
may have been hyperlinked to/from these statements or the remuneration
report. If users of this report are concerned with the inherent risks
arising from electronic data communications they are advised to refer to the
hard copy of the audited financial report and remuneration report to confirm
the information included in the audited financial report and remuneration
report presented on this web site.
PricewaterhouseCoopers
Tim Goldsmith Melbourne
Partner 31 March 2009
Shareholder Information
as at 10th March 2009
Ordinary Shares
113,763,134 fully paid ordinary shares are held by 1,898 individual
shareholders
All ordinary shares carry one vote per share.
Options
- 6,000,000 options exercisable at $0.10 on or before 17/01/2013 held by 1
individual holders
- 13,240,053 options exercisable at $0.10 on or before 01/04/2011 held by
286 individual holders
- 5,300,000 options exercisable at $0.15 on or before 11/09/2009 held by 4
individual holders
- 4,000,000 options exercisable at $0.07 on or before 18/06/2012 held by 1
individual holders
- 1,420,000 options exercisable at $0.35 on or before 30/11/2011 held by 8
individual holders
- 6,750,000 options exercisable at $0.07 on or before 17/01/2013 held by 6
individual holders
- 6,750,000 options exercisable at $0.10 on or before 17/01/2014 held by 6
individual holders
All options do not carry a right to vote. Voting rights will be attached to
the unissued shares when the options have been exercised.
Distribution of Equity Securities
The distribution of members and their holdings are as follows:
Fully paid
ordinary shares
1 - 1,000 218
1,001 - 5,000 534
5,001 - 10,000 347
10,001 - 100,000 654
100,001 - and over 145
Total number of shareholders 1,898
Unmarketable parcels 1,272
Twenty Largest Ordinary Shareholders
Pos. Holder Number %
1 National Nominees Ltd 8,314,597 7.31
2 Seven Falls Trading 155 5,437,457 4.78
(Pty) Ltd
3 Nomathata Diamonds Inc 5,350,000 4.70
4 ITA Nominees Pty Ltd 5,268,118 4.63
5 Lufgan Nominees Pty Ltd 3,843,904 3.38
6 Hudson Holdings Pty Ltd 3,617,500 3.18
7 Hudson Holdings Pty Ltd 3,445,000 3.03
8 Lufgan Nominees Pty Ltd 2,500,000 2.20
9 Pro Direct Investments 2,125,600 1.87
189 (Pty) Ltd
10 HSBC Custody Nominees 1,723,882 1.52
(Australia) Ltd
11 Mr Ian Gallash & Mrs 1,340,000 1.18
Helen Gallash
12 Katherine Pastoral 1,246,154 1.10
Company Pty Ltd
13 JP Morgan Nominees 1,236,036 1.09
Australia
14 Mrs Sally Clatworthy 1,200,000 1.05
15 Merrill Lynch 1,075,178 0.95
(Australia) Nominees Pty
Ltd
16 GRBK Investments Pty Ltd 1,010,145 0.89
17 Walker & Hall Fine Gifts 1,004,527 0.88
Ltd
18 Mr Geoffrey Clatworthy 1,000,000 0.88
19 Clatworthy Nominees Ltd 0.88
1,000,000
20 Mr Kirthi Hemachandra 950,000 0.84
52,688,098 46.31
Shareholder Information
as at 10th March 2009
Twenty Largest Listed Option Holders
Options Expire 30 November 2011 and are exercisable at $0.35
Pos. Holder Number %
1 National Nominees Ltd 1,656,789 12.51
2 Mr Geoffrey Clatworthy 1,000,000 7.55
3 Clatworthy Nominees Ltd 1,000,000 7.55
4 Mrs Sally Clatworthy 1,000,000 7.55
5 ITA Nominees Pty Ltd 1,000,000 7.55
6 Walker & Hall Fine Gifts Ltd 1,000,000 7.55
7 Lufgan Nominees Pty Ltd 937,500 7.08
8 Hudson Holdings Pty Ltd 625,000 4.72
9 PLC Nominess (Pty) Ltd 454,293 3.43
10 Mrs Natalie Laufmann 352,500 2.66
11 Mr Brian Phillips 312,500 2.36
12 Mr John Rowe 312,500 2.36
13 Katherine Pastoral Company Pty Ltd 270,000 2.04
14 Doman Carpet Mills Pty Ltd < ELM Mgmt 252,537 1.91
Consultants S/F A/c>
15 Rare Earths & Minerals Pty Ltd 250,000 1.89
16 Hudson Holdings Pty Ltd 189,000 1.43
17 Mr Ian Gallash & Mrs Helen Gallash 182,010 1.37
18 Mr Frank Wong & Mrs Lee Wong & Mr 150,000 1.13
Mark Chui
19 Bristen Pty Ltd 100,000 0.76
20 Fitba Pty Ltd
Total: 11,144,629 84.17
Unquoted Equity Securities Holdings Greater than 20%
There are no unquoted equity securities holding greater than 20%.
Substantial Shareholders
The names of substantial shareholders who have notified the Company in
accordance with Section 671B of the Corporations Act are:
- Hudson Holdings Pty Ltd & Associate
7,062,500 ordinary shares
- ITA Nominees Pty Ltd & Associates
6,245,733 ordinary shares
- R.E.Luff & Associates
7,244,870 ordinary shares
- Nomathata Diamonds Inc.
5,417,000 ordinary shares
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 Secretaries are Phillip Hains and Terri Bakos.
A Register of Securities is held at Computershare Investor Services Pty Ltd.
Yarra Falls, 452 Johnston Street, Abbotsford 3067, Victoria, Australia.
Telephone Number: +61 (0)3 9415 5000, Facsimile : +61 (0)3 9473 2500.
The address of the Principal Registered Office in Australia is:
Suite 1, 1233 High Street, Armadale 3143, Victoria, Australia.
Telephone : +61 (0)3 9824 5254, Facsimile: +61 (0)3 9822 7735.
Stock Exchange Listing
The Company`s shares are listed on the Australian Securities Exchange Ltd
and the ASX code is TAW and on the Johannesburg Stock Exchange where the JSE
code is TAW.
The Company`s options are listed on the Australian Securities Exchange Ltd
and the ASX code is TAWO and on the Johannesburg Stock Exchange where the
code is TAWO.
CORPORATE DIRECTORY
DIRECTORS
Neil Barrie Executive Chairman
Brian Phillips Non-Executive Director
Euan Luff Non-Executive Director
Nonkqubela Mazwai Non-Executive Director
COMPANY SECRETARIAL
Phillip Hains
Terri Bakos
REGISTERED OFFICE
Suite 1, 1233 High Street
Armadale, Victoria, 3143
Australia
Telephone: +61(0)3 9824 5254
Facsimile: +61(0)3 9822 7735
Website www.tawana.com.au
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria, 3067
Australia
AUDITORS
PricewaterhouseCoopers
2 Southbank Boulevard
Southbank, Victoria, 3006
Australia
SOLICITORS
WilmothFieldWarne
Level 13, 440 Collins Street
Melbourne, Victoria, 3000
Australia
BANKERS
ANZ Banking Group Limited
1401 Toorak Road
Burwood, Victoria, 3124
Australia
STOCK EXCHANGE LISTING
Home Exchange is the Australian Securities Exchange (ASX)
Secondary Listing on the Johannesburg Stock Exchange (JSE)
ASX/JSE Code: Shares TAW
ASX/JSE Code: Options TAWO
31 March 2009
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 01/04/2009 07:05:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
