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TAW - Tawana Resources NL - Annual Report for the year ended 31 December 2009
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 REPORT FOR THE YEAR ENDED 31 DECEMBER 2009
PDF version of this annual report can be found on Tawana`s website.
CONTENTS
Corporate Directory 3
Chairman`s Statement 4
Directors` Report 5
Corporate Governance Statement 22
Auditor`s Independence Declaration 28
Statement of Comprehensive Income 29
Statement of Financial Position 30
Statement of Changes in Equity 31
Statement of Cash Flows 32
Notes to the Financial Statements 33
Directors` Declaration 56
Independent Auditor`s Report to the Members 57
Schedule of Mining Tenements 60
ASX Additional Information 61
Directors
Mr Euan Luff Executive Chairman
Mr Julian Babarczy Non-Executive Director
Mr Harry Hill Non-Executive Director
Joint Company Secretaries
Mr Winton Willesee
Mr Aaron Finlay
Principal Place of Business
and Registered Office
Level 1
2 Ross Place
South Melbourne VIC 3205
Contact Details
Website: www.tawana.com.au
Tel: +61 3 9602 4133
Fax: +61 3 9670 6643
Solicitors to the Company
Wilmoth Field Warne
Level 13
440 Collins Street
Melbourne VIC 3000
Share Registry
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001
Tel: +61 3 9415 5000
Fax: +61 3 9473 2500
Auditors
William Buck
Level 1
465 Auburn Road
Hawthorn East VIC 3123
Stock Exchange
Australian Securities Exchange
ASX Code: TAW
CHAIRMAN`S STATEMENT
There is no denying that the past year has been full of
challenges for the Company and its shareholders. The
performance of the Company has been disappointing and to
this end significant changes have been made to the Board.
During the year Brian Phillips, Wolf Marx, Neil Barrie and
Nonkqubela Mazwai resigned from the Board. Stirling Horne,
Harry Hill and Julian Babarczy were appointed to the Board.
The new Board has the knowledge, breadth of experience and
determination to fulfill our vision which is to establish
Tawana as a significant exploration and mining Company.
Members of the new Board are all successful people in their
own right and bring a complementary blend of backgrounds in
operating within the Public Company arena.
Due to personal business commitments Stirling Horne resigned
in February 2010, and we appreciated his contribution as a
Board member.
To re-establish market credibility and ensure the Company
has the financial flexibility to succeed, it was necessary
for the new Board to raise funds to reduce the significant
debt that had accumulated within the Company. This was done
with total raisings, net of costs, of $647,642, in addition
to a successful rights issue raising a further $1,120,858
completed in February 2010. Consequently both debt and
creditors were reduced and the Company now operates with a
modest net cash balance enabling it to now maintain the
Company`s obligations on the current projects and to explore
new opportunities from a position of greater strength.
Over the previous year the Company had been unable to
maintain its obligations with regard to the legacy projects
it held. The new Board reviewed each of those projects and
decided that the most prudent use of the limited remaining
shareholder funds was to endeavour to enter into joint
venture arrangements on each project where the joint venture
partner funds the project and Tawana takes a reduced equity
interest in each project. We were pleased to advise in
December that the Company entered into a joint venture
agreement with Firestone Diamonds Plc in respect of the
Botswana Project and we are hopeful of achieving the same
arrangement with the South African Projects.
The current Board continues to systematically work through
the remaining assets and projects in which the Company has
an interest and is confident that additional material value
can be realised for shareholders.
I am particularly pleased with the direction the current
Board has agreed to follow and with their efforts to date.
The Company is now in a much stronger financial and
strategic position and I am confident the ensuing twelve
months will be an exciting time as the Board strives to add
shareholder value to the Company. I would also like to
thank the Company`s advisors and shareholders for their
continued support and patience.
Euan Luff
CHAIRMAN
DIRECTORS` REPORT
Your directors submit their report for the year ended 31
December 2009.
Directors
The names and details of the Company`s directors in office
during the financial year and until the date of this report
are as follows. Directors were in office for the entire
period unless otherwise stated.
Mr Euan Luff - Executive Chairman
Appointed 16 November 1998
Mr Luff is a Senior Partner of Wilmoth Field Warne,
Solicitors. In his professional capacity he acts as a legal
adviser to a number of private and public companies.
Over the past 3 years, Mr Luff has held no other
directorships with ASX-listed companies.
Mr Harry Hill - Non-Executive Director
Appointed 21 August 2009
Mr Hill is a Certified Practising Accountant and a Fellow of
the Chartered Institute of Secretaries. He has over 30
years` experience having been a director of several
Australian publicly listed companies involved in minerals
exploration, mine development and mining operations, where
he was involved in restructuring corporations and re-
purposing businesses and initial public offers. His skills
encompass business and strategic planning, finance and
corporate secretarial functions.
Over the past 3 years, Mr Hill has held directorships with
the following ASX-listed companies:
Company Commenced Ceased
Future Corporation 17 Jun 2008 -
Australia Limited
Hawk Resources Limited 19 Apr 2006 28 July 2008
Mr Julian Babarczy - Non-Executive Director
Appointed 9 December 2009
Mr Babarczy is currently a Portfolio Manager at Regal Funds
Management, where he has primary responsibility for
investments within the mining, oil and gas,
telecommunications, health and technology sectors. Prior to
this role, Mr Babarczy worked in investment banking for
Lazard, where he provided advice to both listed and unlisted
companies on capital raising and merger and acquisition
transactions. Before joining Lazard, Mr Babarczy held several
roles in corporate finance, where he was instrumental in a
range of successful transactions including IPOs, secondary
market capital raisings, listed company advisory mandates and
equities research across a broad range of industry sectors.
Julian holds a Bachelor of Business from Monash University in
Melbourne, is a Chartered Financial Analyst charterholder, and
has a graduate diploma in Applied Finance and Investment from
the Securities Institute of Australia.
Over the past 3 years, Mr Babarczy has held no other
directorships with ASX-listed companies.
Mr Stirling Horne
Appointed 31 July 2009
Resigned 4 February 2010
Mr Horne has worked almost exclusively in the insolvency field
since 1965, when he commenced work in the Official Receivers
Office. During that time he has been a leading practitioner
in both the corporate and personal insolvency areas including
receivership, voluntary administration, liquidations of all
types, Part X and bankruptcy. In addition he has been
involved in numerous workouts where insolvency appointments
were not appropriate.
As part of his role he has carried out investigations into
such issues as incorrect accounting, insolvent trading, undue
preference payments, uncommercial loans, hidden assets, etc.
Flowing from these investigations many expert reports have
been written by him, which in turn, lead on occasion, to Mr
Horne being a witness for either the plaintiff or defendant in
court proceedings. In a career spanning 40 years Mr Horne has
had experience in a very wide range of industries.
Over the past 3 years, Mr Horne has held no other
directorships with ASX-listed companies.
Ms Nonkqubela Mazwai
Appointed 30 October 2008
Resigned 21 August 2009
Ms Mazwai is the CEO and founding shareholder of Motjoli
Resources Pty Ltd. 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.
Over the past 3 years, Ms Mazwai has held no other
directorships with ASX-listed companies.
Mr Neil Barrie
Appointed 20 June 2008
Resigned 31 July 2009
Mr Barrie has over 20 years` experience in mining evaluation
and corporate development throughout Australia, South Africa
and Botswana. Mr Barrie was a former director of KPMG.
Over the past 3 years, Mr Barrie has held no other
directorships with ASX-listed companies.
Mr Brian Phillips
Appointed 4 April 2005
Resigned 27 July 2009
Mr Phillips is a qualified mining engineer and has over 40
years` experience in the mining industry. Mr Phillips is a
past director of the Australian Gold Council and past
President of the Victorian Minerals and Energy Council.
Over the past 3 years, Mr Phillips has held directorships with
the following ASX-listed companies:
Company Commenced Ceased
Indophil Resources NL 21 Apr 2005 -
Panoramic Resources Ltd 27 Mar 2007 -
Leviathan Resources Ltd 15 Nov 2004 24 Jan 2007
Perseverance Corporation 24 Jan 2007 18 Feb 2008
Ltd
Mr Wolfgang Marx
Appointed 16 November 1998
Resigned 31 January 2009
Mr Marx is a qualified geologist and has over 25 years`
experience in geology, particularly in the field of gold and
diamond exploration.
Over the past 3 years, Mr Marx has held no other directorships
with ASX-listed companies.
Interests in the shares and options of the Company
As at the date of this report, the interests of the directors
in the shares and options of Tawana Resources NL were:
Name Number of Number of
ordinary options over
shares ordinary
shares
Mr E Luff 14,689,740 6,104,150
Mr H Hill - -
Mr J Babarczy 10,000,000 -
Company Secretaries
Mr Winton Willesee
Mr Willesee is an experienced Director and Company Secretary
in the small capitalisation sector of the ASX and brings to
the Company a broad range of experience in company
administration, corporate governance and corporate finance.
Mr Willesee has a Master of Commerce, Post-Graduate Diploma in
Business (Economics and Finance), a Diploma in Education and a
Bachelor of Business. He is a Fellow of the Financial
Services Institute of Australasia and a member of CPA
Australia.
Mr Willesee is a Director of Base Iron Limited, Future
Corporation Australia Limited, Incitive Limited and Newera
Uranium Limited. He is currently the Company Secretary of
Base Iron Limited, Boss Energy Limited, Future Corporation
Australia Limited, Greenvale Mining NL, Incitive Limited,
Mantle Mining Corporation Ltd and Newera Uranium Limited as
well as Joint Company Secretary of Uran Limited.
Mr Aaron Finlay
Mr Finlay is a Chartered Accountant and Chartered Company
Secretary with over 18 years` experience in the accounting and
finance profession.
Mr Finlay is Chief Financial Officer and Company Secretary for
ASX-listed HalcyGen Pharmaceuticals Limited. Prior to this he
was Chief Financial Officer and Company Secretary for ASX and
NASDAQ listed pSivida Limited and previously INVESCO
Australia`s Chief Financial Officer where he had
responsibility for the operations of finance, as well as the
compliance, legal, and human resources functions. Prior to
that position, Mr Finlay was head of group tax and treasury
for INVESCO`s global operations in London. Prior to joining
INVESCO, Mr Finlay worked for PricewaterhouseCoopers (then
Price Waterhouse) in London and Perth for 7 years.
Operating results
The loss of the economic entity for the year ended 31 December
2009 after providing for income tax amounted to $974,886
(2008: $3,826,156).
Financial position
The net assets of the Company are $5,879,623 as at 31 December
2009 (2008: $6,033,714).
Principal activities and significant changes in affairs
Tawana Resources NL`s principal activities consisted of
mineral exploration, in particular diamond exploration. There
were no significant changes in the nature of the activities of
the consolidated entity during the year that have not been
covered generally in this Annual Report.
REVIEW OF OPERATIONS
Background
Tawana was incorporated as a public company on 16 November
1998 in Australia. Operating through its various
subsidiaries, the Company is involved in the exploration for,
and evaluation of, diamondiferous kimberlites and alluvials,
primarily in South Africa and Botswana. The Company`s
objective is to establish viable ore reserves and turn such
projects into profitable operations.
Recently the company has expanded its interests in evaluating
other resources.
Tawana listed on ASX (as a primary listing) in April 2001 and
JSE (as a secondary listing) in November 2005. The Company`s
head office is located in Melbourne, Australia.
Corporate Activities
On 10 August 2009 the Company announced it had entered into
funding arrangements with Cygnet Capital Pty Ltd (Cygnet) on
the following terms:
1. Placement of $500,000 by issuing 100,000,000 shares at
$0,005 to Sophisticated Investors (s708) to be split into two
tranches; and
2. Underwriting of a rights issue to raise $1,085,694 by way
of a 1:1 non-renounceable rights issue at $0.005.
On 25 August 2009 the first tranche of 17,560,414 placement
shares was issued within the Company`s 15% capacity to raise
$87,802, with the balance of the placement shares being
subject to shareholder approval at a meeting to be convened
later.
On 27 November 2009 the second tranche of 82,439,586 fully
paid ordinary shares were issued to institutional and
sophisticated investors who participated in a private
placement undertaken by Tawana to raise $412,197.93 to augment
working capital requirements as approved by shareholders at
the General Meeting held on 23 November 2009.
On 8 December 2009 the Company announced a 1 for 1 pro-rata
non-renounceable rights issue of up to 262,331,772 fully paid
ordinary shares in the capital of the Company (including
provisions for options exercises) (New Shares) at $0.005 per
New Share to Eligible Participants (as defined in the Offer
Document) (Rights Issue).
The Rights Issue closed for acceptances at 5.00 pm AEDT for
ASX and 5.00 pm Johannesburg time for JSE on 13 January 2010.
The Company received valid acceptances for 151,898,275 New
Shares raising $759,491.
The shortfall under the Rights Issue was approximately
72,273,444 ordinary shortfall shares. As the Rights Issue was
underwritten all New Shares not applied for under the Rights
Issue were issued to Cygnet Capital Pty Ltd or its nominees at
an issue price of $0.005 per share in accordance with the
Underwriting Agreement dated 7 December 2009 between the
Company and Cygnet Capital Pty Ltd.
On 2 February 2010 the Company announced that the shortfall
from the recently completed Rights Issue, being 72,273,400
shares, had been allotted.
The injection of funds raised through the Rights Issue has
strengthened the financial position of the Company. The
Company completed a partial rights issue raising $87,802.07 by
the issue of 17,560,414 shares.
The Company successfully negotiated and settled a loan to the
Company of $350,000 which was secured by a debenture over the
assets of the Company. This will, subject to shareholders`
approval, be converted into convertible notes to the value of
$350,000, by issuing notes which, if converted will mean
70,000,000 shares will be issued. These convertible notes
cannot be converted for six (6) months post the receipt of
funds.
The injection of funds through the partial rights issue and
the loan funds has strengthened the financial position of the
Company.
Cygnet was granted 50 million options exercisable within 3
years at an exercise price of 1 cent per share as part of its
fee on completion of the rights issue.
Otherwise no matters or circumstances have arisen since the
end of the reporting period, not otherwise disclosed in this
report, which significantly affected or may significantly
affect the operations of the economic entity, the result of
those operations or the state of affairs of the economic
entity in subsequent financial years.
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.
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 not been paid to date.
In December 2008 Tawana commenced legal proceedings in the
South African Supreme Court to obtain the full payment of the
amount in question. The Company has obtained judgment against
Agio and has attempted to but been unsuccessful in executing
upon the judgment.
The Company has over the past year been pursuing and having
discussions with a number of different groups regarding a
possible joint venture on this project to enable the
commencement of a 20,000 ton trial mining exercise. No work
has been done on this project over the past 12 months.
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.
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.
(PIC REMOVED HERE)
The proposed next stage for the Tawana Alluvial Project is a
large scale operating trial mining. The Company has not
activated this proposal and has only committed expenditure to
maintain the tenements. It has also attempted over the past
12 months to find a joint venture partner to assist with trial
mining.
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.
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.
Figure 1: Gravity image showing location of 7 drill holes
within Prospecting Right south of the St Augustine road.(PIC
REMOVED)
Prospecting activities over the northern portion of the
Prospecting Right will continue when the Company has available
funds 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 2009.
Rakana Consolidated Mines Pty Ltd
(26% owned by Tawana; 74% owned by Seven Falls
Rakana owns 26% of a joint venture with Aquila Resources
Limited in the Thabazimbi joint venture project at Avontuur.
This gives Tawana an indirect interest of 6.8% in the project.
The Chairman of Aquila Resources Limited, Tony Poli, has made
a number of announcements in respect of the Avontuur Project
and quoted below is a passage from their announcement to the
ASX on the 20th October 2009 which will give you some idea of
this project and where it is in its development.
Avontuur
The Avontuur tenement hosts the Avontuur Manganese Basin,
located north of the Kalahari Manganese Field in the Northern
Cape Province of South Africa (see figure 1). The tenement
currently hosts a JORG Compliant Inferred Resource of 34
million tonnes of manganese oxide ore averaging 40% Mn, as
notified to the ASX on 17 March 2008. A follow-up drilling
program is underway, with up to 5 drilling rigs in operation,
to increase the tonnage and enhance the grade of this
Resource.
FIGURE 1: LOCATION OF AVONTUUR (PIC REMOVED)
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.
In December 2009 Tawana entered into a Joint Venture Agreement
with Firestone Diamonds plc ("Firestone") a diamond mining and
exploration company, over its kimberlite exploration and
evaluation projects in Botswana, which includes 8 kimberlites
in the Orapa kimberlite field. Under this agreement Firestone
has the opportunity to earn initially up to a 70% interest in
any kimberlites in the prospecting licences controlled by
Tawana.
Firestone is an international diamond mining and exploration
company with operations in Botswana and South Africa.
Firestone is the largest holder of mineral rights in
Botswana`s diamondiferous kimberlite fields, controlling over
25,000 square kilometres around the major Orapa and Jwaneng
mines and the entire Tsabong kimberlite field.
Highlights
Firestone to acquire an interest in Tawana`s kimberlite
projects in Botswana:
Firestone can earn 70% by carrying out costs for the first
stage bulk stamping;
Tawana has the option to fund its remaining 30% interest from
that point and in the event it does not its interests shall
reduce to 15%.
Orapa prospecting licence:
contains 8 kimberlites and covers 57 square kilometers;
located close to Debswana`s Damtshaa Mine;
26 kilometers from Firestone`s BK11 mine development project;
Francistown prospecting licenses
cover an area of 1,500 square kilometers;
located in the right geological setting for discovery of
diamondiferous kimberlites;
Euan Luff, chairman of Tawana commented "with Firestone`s
major project close to Tawana`s project, Tawana now has the
ability to access the infrastructure of Firestone to develop
and exploit the economic potential of its kimberlites in the
Orapa area quickly and at relatively low cost. We are excited
about the potential of our kimberlites in the Opara area, and
look forward to updating our shareholders about the results of
Firestone`s initial review of the project in early 2010."
Orapa prospecting licence
The Orapa prospecting licence covers an area of 57 square
kilometres in the Orapa kimberlite field and contains a
cluster of 8 kimberlites, BK19-26. The largest of these
kimberlites, BK24, is located 2.5 kilometres from Debswana`s
Damtshaa Mine and 26 kilometres from Firestone`s BK11
kimberlite, which is due to commence commercial production in
Q2 2010. Firestone has commenced a review of the historical
data available from work carried out by Tawana and other
operators on BK19-26.
Francistown prospecting licences
The Francistown prospecting licenses cover an area of 1,500
square kilometres close to the town of Francistown in eastern
Botswana. Although no kimberlites have been discovered in
this area before now, the prospecting licenses are located in
the right geological setting for the discovery of
diamondiferous kimberlites. Firestone also commenced a review
of the historical data available from work carried out by
Tawana and other operators in this area.
Firestone can earn a 70% interest in any kimberlite by
financing all evaluation work on that kimberlite up to the
completion of a bulk sample of a minimum of 150 tonnes from
kimberlites less than 1 hectare in size, and of a minimum of
250 tonnes from kimberlites greater than 1 hectare in size.
Tawana will then have an option to fund its pro-rata share of
all further work on that kimberlite. If Tawana is unwilling or
unable to exercise this option, Firestone will be entitled to
earn an additional 15% by financing all further evaluation
work up to and including the making of a mine development
decision on that kimberlite. The agreement is subject to the
approval of the Minister of Minerals, Energy & Water
Resources.
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%.
During 2009 a report was produced by Orogenic which detailed
all the exploration activity conducted since the grant of the
license and recommended further drilling to investigate
geophysical targets.
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%.
During 2009 the exploration activity included further surface
loam sampling for heavy mineral kimberlite indicator minerals.
Dividends paid or recommended
The Directors do not recommend the payment of a dividend and
no amount has been paid or declared by way of a dividend to
the date of this report.
Events subsequent to balance date
The Rights Issue closed for acceptances at 5.00 pm AEDT for
ASX and 5.00 pm Johannesburg time for JSE on 13 January 2010.
The Company received valid acceptances for 151,898,275 New
Shares raising $759,491.37.
On 2 February 2010 the Company announced that the shortfall
from the recently completed Rights Issue, being 72,273,400
shares, had been allotted at an issue price of $0.005 per
share.
On 4 February 2010 the Company announced that Mr Stirling
Horne had resigned as a director of Tawana Resources NL.
On 24 February 2010 the Company announced the issue of 50
million options, expiring 23 February 2013 at an exercise
price of $0.01 in accordance with the shareholders meeting
approving the issue on 23 November 2009.
Future developments, prospects and business strategies
The consolidated entity will continue to concentrate on
mineral exploration particularly diamond exploration with
emphasis on the development of its existing projects.
Environmental issues
The Company is aware of its environmental obligations with
regards to its exploration activities and ensures that it
complies with all regulations at all times.
REMUNERATION REPORT
This report details the nature and amount of remuneration for
each Director of Tawana Resources NL, and for the executives
receiving the highest remuneration.
Remuneration policy
The Board policy for determining the nature and amount of
remuneration of Directors and Executives is agreed by the
Board of Directors as a whole. The Board obtains professional
advice where necessary to ensure that the Company attracts and
retains talented and motivated Directors and employees who can
enhance Company performance through their contributions and
leadership.
Remuneration policy is based on industry practice rather than
Company performance and takes into account the risks and
liabilities assumed by the directors and executives as a
result of their involvement in the activities undertaken by
the Company.
Executive Director Remuneration
In determining the level and make-up of executive
remuneration, the Board negotiates a remuneration to reflect
the market salary for a position and individual of comparable
responsibility and experience. Remuneration is compared with
the external market by reference to industry salary surveys.
If required, the Board may engage an external consultant to
provide independent advice in the form of a written report
detailing market levels of remuneration for comparable
executive roles.
Remuneration consists of a fixed remuneration component as
considered appropriate.
Non-Executive Director Remuneration
Non-Executive Directors` fees are paid within an aggregate
limit which is approved by the shareholders from time to time.
Retirement payments, if any, are determined in accordance with
the rules set out in the Company`s Constitution and the
Corporations Act at the time of the Director`s retirement or
termination. Non-Executive Directors remuneration may include
an incentive portion consisting of bonuses and/or options, as
considered appropriate by the Board, which is subject to
shareholder approval in accordance with the ASX Listing Rules.
The aggregate remuneration, and the manner in which it is
apportioned amongst Non-Executive Directors, is reviewed
annually. The Board considers the amount of director fees
being paid by comparable companies with similar
responsibilities and levels of experience of the Non-Executive
Directors when undertaking the annual review process.
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.
Details of remuneration for year ended 31 December 2009
Details of the remuneration of the Directors of Tawana
Resources NL and its controlled entities, are set out in the
following tables.
During the year ended 31 December 2009 there were no key
management personnel other than the directors of Tawana
Resources NL.
Details of remuneration for years ended 31 December 2009 and
31 December 2008
2009 Salary Post Cash Non- Share- Total Perfor
, fees Employ Bonus cash based m-ance
and ment Benefi paymen relate
comm- Benefi ts ts d
ission ts *
s (Super-
annuat
ion)
$ $ $ $ $ $ %
Directors
Mr E Luff 52,000 - - - 27,468 79,468 -
Mr H Hill 14,409 - - - - 14,409 -
Mr J - - - - - - -
Babarczy
Mr S 20,000 - - - - 20,000 -
Horne
Ms N - - - - - - -
Mazwai
Mr N - - - - 41,202 41,202 -
Barrie
Mr B - - - - 13,734 13,734 -
Phillips
Mr W Marx - - - - 27,468 27,468 -
86,409 - - - 109,87 196,28
2 1
* These amounts represent the non-cash expense accrual for share options
granted in prior financial years but not yet vested at the start of the 2009
financial year. No options were issued to directors in the year ended 31
December 2009.
2008 Salary Post Cash Non- Share- Total Perfor
, fees Employ- Bonus cash based m-ance
and ment Benefi paymen relate
comm- Benefi ts ts d
ission ts
s (Super-
annuat
ion)
$ $ $ $ $ $ %
Directors
Mr W Marx 201,84 18,165 - - 10,257 230,26 -
0 2
Mr B 24,465 2,202 - - 5,129 31,796 -
Phillips
Mr E Luff 25,000 - - - 17,999 42,999 -
Mr N 35,833 - - - 2,559 38,392 -
Barrie
Ms N - - - - - - -
Mazwai
287,13 20,367 - - 35,944 343,44
8 9
Key
Managemen
t
Personnel
Mr A 107,99 9,720 - - 1,252 118,97 -
Berryman 9 1
Mr C 150,00 13,500 - - 5,115 168,61 -
Bailey 0 5
257,99 23,220 - - 6,367 287,58
9 6
545,13 43,587 - - 42,311 631,03
7 5
Options granted as remuneration
All options issued to Directors and Key Management Personnel are issued for nil
consideration.
All options issued have been granted for up to a five year period, vesting
within 12 and 24 months from contract or issue date.
All options issued carry no dividend or voting rights. When exercised, each
option is converted into one ordinary share pari passu with existing ordinary
shares.
The terms and conditions of each grant of options affecting the remuneration of
Directors and Key Management Personnel in this, or future reporting periods,
are as follows:
The following table discloses the options granted as part of remuneration:
Options Options Options Total Value of
granted exercised lapsed value of options
options included in
granted, remuneration
exercised for the year
and
lapsed
Value at Intrinsic Value at
grant value at time of
date exercise lapse
date
$ $ $ $ $
2009
During the 2009 year there were no options granted as
remuneration to directors or key management personnel.
2008
Directors
Mr W Marx 10,257 - - 10,257 10,257
Mr B 5,129 - - 5,129 5,129
Phillips
Mr E Luff 17,999 - - 17,999 17,999
Mr N 2,559 - - 2,559 2,559
Barrie
Ms N - - - - -
Mazwai
35,944 - - 35,944 35,944
Key
Management
Personnel
Mr A 1,252 - - 1,252 1,252
Berryman
Mr C 5,115 - - 5,115 5,115
Bailey
6,367 - - 6,367 6,367
42,311 - - 42,311 42,311
Shares issued on exercise of compensation options
During the year no share options were exercised.
Employment contracts of directors and senior executives
There are no contracts between the Company and the Directors, the Executives or
the Consultants.
Meetings of directors
During the financial year, 10 meetings of Directors were held. Attendances by
each Director during the year were as follows:
Board meetings Audit, risk and
compliance
committee meetings
Number Number Number Number
attended eligible attended eligible
to to
attend attend
Mr E Luff 10 10 - -
Mr H Hill 7 7 - -
Mr J 1 1 - -
Babarczy
Mr S Horne 7 7 - -
Ms N Mazwai 1 3 - -
Mr N Barrie 3 3 - -
Mr B 1 2 - -
Phillips
Mr W Marx - - - -
Options
At the date of this report, the unissued ordinary shares of Tawana Resources NL
under option are as follows:
Grant Date of Exercise Number
date expiry price under
option
22 Jul 1 Apr 2011 $0.10 13,240,05
2008 3
22 Aug 30 Nov 2011 $0.35 1,420,000
2007
18 Jun 18 Jun 2012 $0.07 4,000,000
2008
17 Jan 17 Jan 2013 $0.10 6,000,000
2009
17 Jan 17 Jan 2014 $0.10 6,750,000
2009
17 Jan 17 Jan 2013 $0.07 6,750,000
2009
23 Feb 23 Feb 2013 $0.01 50,000,00
2010 0
88,160,05
3
During the years ended 31 December 2009 and 31 December 2008,
no options were exercised.
No person entitled to exercise the option had or has any right
by virtue of the option to participate in any share issue of
any other body corporate.
Indemnifying officers or auditor
In accordance with the constitution, except as may be
prohibited by the Corporations Act 2001 every officer of the
Company shall be indemnified out of the property of the
Company against any liability incurred by him in his capacity
as officer, auditor or agent of the Company or any related
corporation in respect of any act or omission whatsoever and
howsoever occurring or in defending any proceedings, whether
civil or criminal. The terms of the policy prevent disclosure
of the amount of the premium payable and the level of
indemnification under the insurance contract.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings
on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of
these proceedings.
The Company was not a party to any such proceedings during the
year.
Non-audit services
The Company did not engage its external auditor to provide any
non-audit services during or since the end of the financial
year.
Auditor`s independence declaration
The lead auditor`s independence declaration for the year ended
31 December 2009 has been received and can be found on page 28
of annual report.
Signed in accordance with a resolution of the Board of
Directors.
HARRY HILL
Director
Dated at Melbourne this 31st day of March 2010
CORPORATE GOVERNANCE STATEMENT
The Board members of Tawana Resources NL are committed to
achieving and demonstrating the highest standards of corporate
governance. An extensive review of the Company`s corporate
governance framework was completed in light of the best
practice recommendations released by the Australian Securities
Exchange (ASX) Corporate Governance Council in March 2003. In
August 2007, the ASX Corporate Governance Council released a
second edition of the principles. The Board continues to
review the framework and practices to ensure they meet the
interests of shareholders. The Company and its controlled
entities together are referred to as the consolidated entity
in this statement.
The relationship between the Board and Senior Management is
critical to the consolidated entity`s long-term success. The
Directors are responsible to the shareholders for the
performance of the Company in both the short and the longer
term and seek to balance sometimes competing objectives in the
best interests of the consolidated entity as a whole. Their
focus is to enhance the interests of shareholders and other
key stakeholders and to ensure the consolidated entity is
properly managed.
Day to day management of the consolidated entity`s affairs and
the implementation of the corporate strategy and policy
initiatives are formally delegated by the board to the
Managing Director and Senior Executives as set out in the
consolidated entity`s Delegated Authorised Policy.
A description of the Company`s main corporate governance
practices is set out below. All of these practices, unless
otherwise stated, were in place for the entire year.
Foundations for management and oversight
The Board has the overall responsibility to shareholders for
all governance matters of the consolidated entity. The Board
remains primarily responsible for the strategic direction and
financial aspirations of the consolidated entity, whilst
delegating the responsibility of management to the Managing
Director and/or the senior management team.
The Board aims to 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 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 throughout the financial year by
Executive (Non-Independent) Chairmen.
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 for the whole of the financial
year it was not comprised of a majority of independent non-
executive Directors or chaired by an independent non-executive
director. Non-compliance with the best practice
recommendation of the ASX Council`s requirements is
attributable to the Company`s small size, emerging rate of
growth since listing, and identifying and attracting suitable
qualified directors with the right combination of skills. As
at the date of this report the Board is comprised of a
majority of independent directors.
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 2009 year:
Director Capacity Position Held Held
office office
from to
E Luff Executive Non- 31 Jul Current
Chairman Independent 2009
Non-Executive Non- 16 Nov 31 Jul
Director Independent 1998 2009
H Hill Non-Executive Independent 21 Aug Current
Director 2009
J Non-Executive Independent 9 Dec Current
Babarczy Director 2009
S Horne Non-Executive Independent 31 Jul 4 Feb
Director 2009 2010
N Mazwai Director Non- 30 Oct 21 Aug
Independent 2008 2009
N Barrie Executive Non- 20 Jun 31 Jul
Chairman Independent 2008 2009
B Non-Executive Independent 4 Apr 27 Jul
Phillips Director 2005 2009
W Marx Managing Non- 16 Nov 31 Jan
Director Independent 1998 2009
At each annual general meeting one-third of the Directors or,
if their number is a multiple of three, then the number
nearest to but not more than one-third of the Directors must
retire from office as follows:
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, to
assess the performance of each of the Directors. Due to the
changes to the Board, the Board did not conduct performance
reviews during the 2009 year.
Corporate reporting
The Chairman and Company Secretary have made attestations
recommended by the ASX Corporate Governance Council as to the
Company`s financial condition prior to the Board signing this
report.
Board committees
The Board has established an Audit Risk and Compliance
Committee. In view of the Company`s current stage and the
small size of the Board, the roles that would otherwise be
performed by a remuneration committee and nomination committee
are performed by the full Board.
Audit Risk and Compliance Committee
The current members of the committee are:
E Luff (Chairman)
H Hill
The joint company secretaries also attend meetings of the
Audit Risk and Compliance Committee.
The committee is responsible for risk management and oversight
of the Company`s financial reporting policies and other
operational risk areas. Furthermore, the committee monitors
the internal controls and the integrity of the Company`s
financial statements in compliance with the regulatory
requirements. The committee is also responsible for the
appointment, evaluation and oversight of the external auditor,
ensuring that the independence of the external assurance
function is maintained.
The Audit Risk and Compliance Committee is not comprised of a
majority of independent non-executive directors. In light of
the Company`s current stage and constraints on the number of
independent non-executive directors the Board believes that
this committee composition is optimal in the circumstances.
External auditors
The Audit Risk and Compliance Committee policy is to appoint
external auditors who clearly demonstrate quality and
independence. The performance of the external auditor is
reviewed annually and applications for tender of external
audit services are requested as deemed appropriate, taking
into consideration assessment of performance, existing value
and tender costs. William Buck Audit (Vic) Pty Ltd was
appointed as the external auditor in 2009. It is William Buck
Audit (Vic) Pty Ltd policy to rotate audit engagement partners
on listed companies at least every five years.
An analysis of fees paid to the external auditors, including a
breakdown of fees for non-audit services, is provided in the
Directors` Report and in the notes to the financial
statements. It is the policy of the external auditor to
provide an annual declaration of their independence to the
audit committee.
The external auditor is requested to attend the annual general
meeting and be available to answer shareholder questions about
the conduct of the audit and the preparation and content of
the audit report.
Risk assessment and management
The Board, through the Audit Risk and Compliance Committee, is
responsible for ensuring there are adequate policies in
relation to risk management, compliance and internal control
systems. In summary, the company policies are designed to
ensure strategic, operational, legal, reputation and financial
risks are identified, assessed, effectively and efficiently
managed and monitored to enable achievement of the Company`s
business objectives.
Considerable importance is placed on maintaining a strong
control environment. There is an organisation structure with
clearly drawn lines of accountability and delegation of
authority. Adherence to the Code of Conduct is required at
all times and the Board actively promotes a culture of quality
and integrity.
The Company`s risk management policy and the operation of the
risk management and compliance system is managed by the
Company`s Audit Risk and Compliance Committee.
Detailed control procedures cover management accounting,
financial reporting, project appraisal, environment, health
and safety, IT security, compliance and other risk management
issues.
In addition, the Board requires that each major proposal
submitted to the Board for decision is accompanied by a
comprehensive risk assessment and, where required,
management`s proposed mitigation strategies.
Safety, Health and Environment Management System (SHEMS)
The Company 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 Company`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 Board undertakes a review of the remuneration packages of
all Directors and executive officers on an annual basis.
Remuneration packages are reviewed with due regard to
performance and other relevant factors.
In order to retain and attract executives of sufficient
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 website, 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
31 March 2010
The Board of Directors
Tawana Resources NL
Level 1, 2 Ross Place
SOUTH MELBOURNE VIC 3205
Dear Board Members
AUDITOR`S INDEPENDENCE DECLARATION IN ACCORDANCE WITH SECTION
307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF TAWANA RESOURCES NL
In accordance with section 307C of the Corporations Act 2001,
I am pleased to provide the following declaration of
independence to the directors of Tawana Resources NL.
As lead audit partner for the audit of the financial report of
Tawana Resources NL for the financial year ended 31 December
2009, 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
any applicable code of professional conduct in relation to the
audit.
Yours sincerely
Jeffrey Luckins
Director
William Buck Audit (VIC) Pty Ltd
ABN 59 116 151 136
Dated in Melbourne, Australia on this 31th day of March 2010
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
Not Consolidated Parent
e
2009 2008 2009 2008
$ $ $ $
Revenue 4 23,173 56,996 5,848 47,039
Corporate costs (330,266) (674,389) (227,782) (595,211)
Depreciation (174,766) (294,353) (112,590) (212,647)
Employee (105,909) (512,293) (105,909) (344,666)
benefits
expense
Exploration (3,945) (1,651,383) (3,945) (1,649,647)
expenses
written off
Foreign - 18,700 - 18,700
exchange gain
Impairment of - - (227,361) (955,237)
financial
assets
Prospecting fee - - - (211,928)
Travel costs - (135,344) - (100,346)
Finance costs (19,408) - (19,408) -
Other expenses 5 (363,765) (634,090) (244,494) (442,776)
Loss before (974,886) (3,826,156) (935,641) (4,446,719)
income tax
expense
Income tax 6 - - - -
expense
Net loss for (974,886) (3,826,156) (935,641) (4,446,719)
the period
Other
comprehensive
income
Foreign 39,245 (620,563) - -
currency
translation
Other 39,245 (620,563) - -
comprehensive
income for the
period, net of
tax
Total (935,641) (4,446,719) (935,641) (4,446,719)
comprehensive
income for the
period
Earnings per
share
Basic loss 25 (0.75) (3.71)
(cents)
Diluted loss 25 (0.75) (3.71)
(cents)
The above Statement of Comprehensive Income should be read in conjunction with
the accompanying notes
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2009
No Consolidated Parent
te
2009 2008 2009 2008
$ $ $ $
Current
assets
Cash and 7 348,609 18,090 342,284 4,995
cash
equivalen
ts
Trade and 8 55,474 30,996 55,441 25,265
other
receivabl
es
Inventori 9 77,131 81,268 - -
es
Total 481,214 130,354 397,725 30,260
current
assets
Non-
current
assets
Trade and 8 43,021 82,095 - 38,500
other
receivabl
es
Investmen 10 16,640 16,640 16,640 16,640
t in
associate
Other 11 - - 2,893,720 3,045,550
financial
assets
Property, 12 310,769 495,222 94,058 206,648
plant and
equipment
Explorati 13 5,950,734 5,883,355 3,258,784 3,146,194
on
expenditu
re
Total non- 6,321,164 6,477,312 6,263,202 6,453,532
current
assets
Total 6,802,378 6,607,666 6,660,927 6,483,792
assets
Current
liabiliti
es
Trade and 14 357,763 424,389 208,620 321,122
other
payables
Provision 14,992 40,575 14,992 40,575
s
Borrowing 15 200,000 - 200,000 -
s
Total 572,755 464,964 423,612 361,697
current
liabiliti
es
Non-
current
liabiliti
es
Trade and 14 - 80,689 - 80,689
other
payables
Provision - 28,299 - -
s
Borrowing 15 350,000 - 357,692 7,692
s
Total non- 350,000 108,988 357,692 88,381
current
liabiliti
es
Total 922,755 573,952 781,304 450,078
liabiliti
es
Net 5,879,623 6,033,714 5,879,623 6,033,714
assets
Equity
Contribut 16 35,356,374 34,708,732 35,356,374 34,708,732
ed equity
Reserves 17 (2,397,152) (2,570,305) 593,222 459,314
Accumulat 18 (27,079,599) (26,104,713) (30,069,973) (29,134,332)
ed losses
Total 5,879,623 6,033,714 5,879,623 6,033,714
equity
The above Statement of Financial Position should be read in conjunction with
the accompanying notes.
Consolidated
Issued Reserves Accumulated Total
capital losses
$ $ $ $
Balance at 1 34,708,732 (2,570,305) (26,104,713) 6,033,714
January 2009
Net loss for - - (974,886) (974,886)
the period
Shares issued, 647,642 - - 647,642
net of costs
Share options - 133,908 - 133,908
expense
Foreign - 39,245 - 39,245
currency
translation
adjustments
Balance at 31 35,356,374 (2,397,152) (27,079,599) 5,879,623
December 2009
Balance at 1 33,339,335 (2,148,733) (22,278,557) 8,912,045
January 2008
Net loss for - - (3,826,156) (3,826,156)
the period
Shares issued, 1,369,397 - - 1,369,397
net of costs
Share options - 198,991 - 198,991
expense
Foreign - (620,563) - (620,563)
currency
translation
adjustments
Balance at 31 34,708,732 (2,570,305) (26,104,713) 6,033,714
December 2008
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009
Parent
Issued Reserves Accumulated Total
capital losses
$ $ $ $
Balance at 1 34,708,732 459,314 (29,134,332) 6,033,714
January 2009
Net loss for - - (935,641) (935,641)
the period
Shares issued, 647,642 - - 647,642
net of costs
Share options - 133,908 - 133,908
expense
Balance at 31 35,356,374 593,222 (30,069,973) 5,879,623
December 2009
Balance at 1 33,339,335 260,323 (24,687,613) 8,912,045
January 2008
Net loss for - - (4,446,719) (4,446,719)
the period
Shares issued, 1,369,397 - - 1,369,397
net of costs
Share options - 198,991 - 198,991
expense
Balance at 31 34,708,732 459,314 (29,134,332) 6,033,714
December 2008
The above Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2009
Note Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Cash flows from
operating
activities
Receipts from 18,205 40,943 16,379 40,943
customers
Payments to (507,950) (1,298,519) (486,865) (998,867)
suppliers and
employees
Interest 15,477 10,122 - 165
received
Other - 5,931 - 5,931
Net cash flows 23(b (474,268) (1,241,523) (470,486) (951,828)
used in )
operating
activities
Cash flows from
investing
activities
Proceeds from 7,776 23,567 - 23,567
sale of plant
and equipment
Purchase of - (341) - -
plant and
equipment
Payments for (202,167) (537,650) (116,535) (263,893)
exploration
Environmental 39,074 - 38,500 -
bonds refunded
Investments in - - (75,531) (176,187)
subsidiaries
Net cash flows (155,317) (514,424) (153,566) (416,513)
used in
investing
activities
Cash flows from
financing
activities
Proceeds from 500,000 1,497,904 500,000 1,497,904
issue of shares
Capital raising (88,659) (258,599) (88,659) (258,599)
costs
Proceeds from 550,000 - 550,000 -
borrowings
Net cash from 961,341 1,239,305 961,341 1,239,305
financing
activities
Net decrease in 331,756 (516,642) 337,289 (129,036)
cash and cash
equivalents
Cash and cash 18,090 149,862 4,995 134,031
equivalents at
beginning of
period
Net foreign (1,237) 384,870 - -
exchange
differences
Cash and cash 7 348,609 18,090 342,284 4,995
equivalents at
end of period
The above Statement of Cash Flows should be read in conjunction with the
accompanying notes.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
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 NL as an individual entity
and the consolidated entity consisting of Tawana Resources NL and its
subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with
Australian Accounting Standards, other authoritative pronouncements and the
Australian Accounting Standards Board, Urgent Issues Group Interpretations and
the Corporations Act 2001.
The financial report is presented in Australian dollars and rounded to the
nearest dollar.
The financial report is prepared on a going concern basis.
These financial statements have been prepared under the historical cost
convention.
Compliance with AIFRS
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").
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
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of
all subsidiaries of Tawana Resources NL as at 31 December 2009 and the results
of all subsidiaries for the year then ended. Tawana Resources NL and its
subsidiaries together are referred to in this financial report as the Group or
the consolidated entity.
Subsidiaries are all those entities, including special purpose entities, over
which the consolidated entity has 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.
1. Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
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 NL.
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 Statement of Comprehensive Income, and its share of
post-acquisition movement in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount
of the investment. Dividends receivable from associates are recognised in the
parent entity`s Statement of Comprehensive Income, 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.
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.
(c) Foreign currency translation
The presentation currency of Tawana Resources NL and its subsidiaries is
Australian dollars (A$). The functional currency of Tawana Resources NL is
Australian dollars and the functional currency of the overseas subsidiaries is
South African Rand (Tawana Resources S.A. (Pty) Ltd and Diamond Resources (Pty)
Ltd) and Botswana Pula (Seolo Botswana Pty Ltd).
Transactions in foreign currencies are initially recorded in the functional
currency at the exchange rates prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are revalued
at the rate of exchange prevailing at the balance date.
1. Summary of significant accounting policies (continued)
(c) Foreign currency translation (continued)
As at the reporting date the assets and liabilities of these overseas
subsidiaries are translated into the presentation currency of Tawana Resources
NL at the rate of exchange prevailing at the balance date and the Statement of
Comprehensive Income is 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
Statement of Comprehensive Income.
(d) Revenue recognition
Revenue is measured at the fair value of consideration received or receivable.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the consolidated entity and the revenue can be reliably
measured. The following specific recognition criteria must also be met before
revenue is recognised.
Sale of goods and provision of services
Revenue is recognised when the significant risks and rewards of ownership of
the goods have passed to the buyer or when the service has been provided, and
can be measured reliably. Risks and rewards are considered passed to the buyer
at the time of delivery of the goods to the customer.
Interest
Interest is recognised on a time proportion basis using the effective interest
method.
(e) Income tax
The income tax expense or revenue for the period is the tax payable on the
current period`s taxable income based on the applicable income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full using the liability method on temporary
differences arising between the tax bases of assets and liabilities with the
carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business combination,
that at the time of the transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted at the reporting date and are
expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be
available to 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.
1. Summary of significant accounting policies (continued)
(e) Income tax (continued)
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.
(f) Impairment of assets
Assets, except for exploration and evaluation (refer to Note 1(g)) are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset`s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset`s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets, other than
goodwill that suffered an impairment, are reviewed for possible reversal of the
impairment at each reporting date.
(g) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of
each identifiable area of interest. The costs are only carried forward to the
extent that they are expected to be recouped through the successful development
of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of economically recoverable
resources and further work is intended to be performed.
Accumulated costs in relation to an abandoned area will be written off in full
against 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.
(h) 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(f).
1. Summary of significant accounting policies (continued)
(i) Other financial assets
Investments in subsidiaries are accounted for at cost. Such investments
include both investments in shares issued by the subsidiary and other parent
entity interests that in substance form part of the parent entity`s investment
in the subsidiary. These include investments in the form of interest-free
loans which have no fixed repayment terms and which have been provided to
subsidiaries as an additional source of long term capital.
(j) 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.
(k) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. Trade receivables are generally due for settlement within 30
days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts
which are known to be uncollectible are written off by reducing the carrying
amount directly. An allowance account is used when there is objective evidence
that the consolidated entity will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy
or financial 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 Statement of
Comprehensive Income within other expenses.
When a trade receivable, for which an impairment allowance had been recognised,
becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are
credited against other expenses in the Statement of Comprehensive Income.
(l) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise
cash at bank and in hand and short-term deposits with an original maturity of
three months or less that are readily converted into known amounts of cash.
For the purposes of the cash flow statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.
1. Summary of significant accounting policies (continued)
(m) Employee entitlements
Wages and Salaries, Annual Leave and Sick Leave
Liabilities for wages and salaries, including non-monetary benefits and annual
leave expected to be settled within 12 months of the reporting date are
recognised in other payables in respect of employees` services up to the
reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
Share-based payments
Share-based compensation benefits are provided to employees in accordance with
the Tawana Resources Employee Option Plan, an employee share scheme.
The fair value of options granted under the Tawana Resources Employee Option
Plan is recognised as an employee benefit expense with a corresponding increase
in equity. The fair value is measured at grant date and recognised over the
period during which the employees become unconditionally entitled to the
options.
Long Service Leave
Liabilities for long service leave are recognised, and are measured as the
present value of expected future payments to be made in respect of services
provided by employees.
(n) Provisions
Provisions are recognised when the consolidated entity has a present
obligation, legal or constructive, as a result of a past event and it is
probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
(o) Leases
Leases in which a significant portion of the risks and rewards of ownership are
retained by the lessor are classified as operating leases. Payments made under
operating leases, net of any incentives received from the lessor, are charged
to the Statement of Comprehensive Income on a straight-line basis over the
period of the lease.
(p) Provision for rehabilitation
Environmental obligations associated with the retirement or disposal of long
lived assets will be recognised when the disturbance occurs and is based on the
extent of damage incurred. The provision is measured at the present value of
the future expenditure, and a corresponding rehabilitation asset is also
recognised. On an ongoing basis, the rehabilitation liability will be re-
measured in line with the changes in the time value of money (recognised as an
expense in the Statement of Comprehensive Income and an increase in the
provision), and additional disturbances will be recognised as additions to a
corresponding asset and rehabilitation liability. The rehabilitation asset
will be accounted for in accordance with the accounting policy applicable to
the asset to which it relates (i.e. exploration expenditure).
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the
consolidated entity prior to the end of financial year which are unpaid. The
amounts are unsecured and are usually paid within 30 days of recognition.
1. Summary of significant accounting policies (continued)
(r) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable
from the taxation authority, in which case the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense item as applicable;
and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority
is included as part of receivables or payables in the Statement of Financial
Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the
GST component of cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation authority, are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction, net
of tax, from the proceeds. Incremental costs directly attributable to the issue
of new shares for the acquisition of a business are not included in the cost of
the acquisition as part of the purchase consideration.
(t) Earnings per share
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.
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.
1. Summary of significant accounting policies (continued)
(u) New accounting standards and interpretations
Accounting standards not previously applied
The consolidated entity has adopted the following new and revised Australian
Accounting Standards issued by the AASB which are mandatory to apply to the
current period. Disclosures required by these Standards that are deemed
material have been included in this financial report on the basis that they
represent a significant change in information from that previously made
available.
Presentation of Financial Statements
AASB 101 prescribes the content and structure of the financial statements.
Changes reflected in this report include:
the replacement of Income Statement with Statement of Comprehensive Income.
Items of income and expense not recognised in profit or loss are now disclosed
as components of "other comprehensive income";
the adoption of the separate income statement approach to the presentation of
the Statement of Comprehensive Income; and
other financial statements are renamed in accordance with the Standard.
Share-Based Payments
From 1 January 2009, AASB 2 has been clarified to show that vesting conditions
consist of service and performance conditions only. Other elements of a share-
based payment transaction should therefore be considered for the purposes of
determining fair value. Cancellations are also required to be treated in the
same manner whether cancelled by the entity or by another party.
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.
(a) 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.
2. Financial risk management (continued)
(a) Market risk (continued)
Foreign currency risk (continued)
The consolidated entity`s exposure to foreign currency risk at the reporting
date was as follows:
31 December 2009 31 December 2008
ZAR BWP ZAR BWP
$ $ $ $
Financial assets
and liabilities
Trade receivables 34 - 34 1,633
Cash and cash 4,296 2,029 11,515 1,575
equivalents
Trade payables (139,842 (9,302) (38,998) (64,249)
)
Net exposure (135,512 (7,273) (27,449) (61,041)
)
The carrying amounts of the parent entity`s financial assets and liabilities
are denominated in Australian dollars (AUD).
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 2008.
31 December 2009 31 December 2008
AUD AUD AUD AUD
+/-1% +/-2% +/-1% +/-2%
$ $ $ $
Financial assets
and liabilities
Increase
- Trade receivables - - - 33
- Cash and cash 63 124 115 31
equivalents
- Trade payables 1,533 3,035 (390) (1,285)
Decrease
- Trade receivables - - - (33)
- Cash and cash (63) (124) (115) (31)
equivalents
- Trade payables (1,533) (3,035) 390 1,285
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 Statement of Comprehensive Income and within retained
earnings.
(b) 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 2009.
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.
2. Financial risk management (continued)
(c) Liquidity and capital risk management
The consolidated entity`s objectives when managing capital are to safeguard
their ability to continue as a going concern, so that they can continue to
provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. In order
to maintain or adjust the capital structure, the consolidated entity may adjust
the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
During 2009, the consolidated entity`s strategy, which was unchanged from 2008,
was to keep borrowings to a minimum. The Company`s equity management is
determined by funds required to undertake exploration activities and meet its
corporate and other costs. Where joint venture partners participate in
particular projects the partners contribute monthly cash calls in proportion to
their respective interests or as agreed under any buy-in agreement.
(d) Cash flow and fair value interest rate risk
As the consolidated entity has no significant interest-bearing assets, the
consolidated entity`s income and operating cash flows are not materially
exposed to changes in market interest rates.
(e) Fair value estimation
The carrying amount of financial assets and financial liabilities recorded in
the financial statements represents their respective fair values determined in
accordance with the accounting policies disclosed in Note 1.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectation of future events that may
have a financial impact on the entity and that are believed to be reasonable
under the circumstances.
Critical accounting estimates and assumptions
The consolidated entity makes estimates and assumptions concerning the future.
The resulting accounting estimates, will by definition, seldom equal the
related actual results. The estimates that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
(i) Recoverability of exploration expenditure
The consolidated entity tests annually whether the exploration and evaluation
expenditure incurred in identifiable areas of interest is expected to be
recouped through the successful development of the area or where activities in
the area have not yet reached a stage that permits reasonable assessment of the
existence of reserves and further work is expected to be performed. All
expenditure that does not meet these criteria is expensed in accordance with
Note 1(g).
Activity at the following projects ceased during 2008; Pilbara, Black Top,
Daniel Kimberlite, Riverton and Vleiplaats. Consequently the Company wrote off
exploration expenditure relating to these projects that was previously
capitalised in the 2008 year. Refer to Note 13 for details.
3. Critical accounting estimates and judgements (continued)
Critical accounting estimates and assumptions (continued)
(ii) Impairment of assets
The consolidated entity tests annually whether assets have suffered any
impairment, in accordance with Note 1(f). The recoverable amount of
investments in subsidiaries is based on the net asset book value of the
investments in the subsidiaries, which management considers equal to net asset
values. Refer to Note 11 for details.
4. Revenue and other income
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Revenue from
continuing
operations
Interest received 15,477 10,122 - 165
Laboratory income 6,035 40,943 5,848 40,943
21,512 51,065 5,848 41,108
Other income
Profit on sale of 1,661 5,931 - 5,931
assets
5. Expenses
Other expenses from
continuing
operations
includes:
Administration 102,658 89,368 84,165 57,260
costs
Auditors` 43,803 78,183 13,773 60,245
remuneration
Listing fees 78,707 74,151 78,707 74,151
Occupancy costs 99,522 198,251 67,849 128,839
Repairs and 3,362 46,273 - -
maintenance
Other expenses 35,713 147,864 - 122,281
363,765 634,090 244,494 442,776
6. Income tax
(a) Income tax expense
Current tax - - - -
Deferred tax - - - -
Income tax expense - - - -
6. Income tax (continued)
(b) Reconciliation of income tax expense to prima facie tax payable
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Loss before income (974,886 (3,826,1 (935,641 (4,446,7
tax expense ) 56) ) 19)
Tax at 30% (292,466 (1,147,8 (280,692 (1,334,0
(Australian rate) ) 47) ) 16)
Tax effect of
amounts that are /
are not deductible
/ (taxable) in
calculating income
tax:
- Impairment of - - 68,208 286,571
assets
- Exploration 60,402 97,716 34,960 79,689
expenditure
- Other - 27,340 - 27,340
Tax losses not 234,087 1,010,67 177,524 940,416
brought to account 6
2,023 (12,115) - -
Difference in (2,023) 12,115 - -
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
Unused tax losses 35,003,6 34,230,1 23,474,4 22,882,7
for which no 81 35 78 31
benefit has been
recognised
10,389,3 10,155,2 7,042,34 6,864,81
Potential tax 80 93 3 9
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.
7. Cash and cash equivalents
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Cash on hand and at 348,609 18,090 342,284 4,995
bank
8. Trade and other receivables
Current
Trade debtors 11,425 23,595 11,392 21,923
GST / VAT 44,049 7,401 44,049 3,342
receivable
55,474 30,996 55,441 25,265
Non-current
Other deposits 43,021 82,095 - 38,500
9. Inventories
Rough diamonds - at 77,131 81,268 - -
lower of cost and
recoverable value
10. Investment in associate
Vecto Trade 436 16,640 16,640 16,640 16,640
(Pty) Ltd - at cost
Tawana Resources NL acquired 30% of the issued shares in Vecto Trade 436 (Pty)
Ltd in September 2007 for the purpose of pursuing the St Augustines Project.
No expenditure has been committed to date. The associate has been dormant in
its operations pending the outcome of a judicial review over the prospecting
rights for this project area.
11. Other financial assets
Investment in - - 11,811,9 11,736,4
subsidiaries - at 60 29
cost
Less accumulated - - (8,918,2 (8,690,8
impairment losses 40) 79)
- - 2,893,72 3,045,55
0 0
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 $227,361 (2008 $955,237).
Movement in carrying values
Balance at - - 3,045,55 3,887,73
beginning of year 0 8
Additions - - 75,531 113,049
Impairment - - (227,361 (955,237
) )
Balance at end of - - 2,893,72 3,045,55
year 0 0
12. Property, plant and equipment
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Freehold 339,341 343,868 - -
land and
buildings -
at cost
Accumulated (149,532) (119,759) - -
depreciatio
n
189,809 224,109 - -
Plant and 1,251,897 1,740,059 788,133 788,133
equipment -
at cost
Accumulated (1,137,655) (1,496,675) (694,075) (581,485)
depreciatio
n
114,242 243,384 94,058 206,648
Motor 29,767 170,351 - -
vehicles -
at cost
Accumulated (23,049) (142,622) - -
depreciatio
n
6,718 27,729 - -
310,769 495,222 94,058 206,648
Movement in carrying values
Freehold land
and buildings
Carrying 224,109 274,150 - -
value at 1
January
Foreign (2,844) (20,525) - -
currency
translation
Depreciation (31,456) (29,516) - -
expense
Carrying 189,809 224,109 - -
value at 31
December
Plant and
equipment
Carrying 243,384 510,447 206,648 442,862
value at 1
January
Additions 341 - -
Disposals (6,115) (23,567) - (23,567)
Foreign (431) (10,232) - -
currency
translation
Depreciation (122,596) (233,605) (112,590) (212,647)
expense
Carrying 114,242 243,384 94,058 206,648
value at 31
December
Motor
vehicles
Carrying 27,729 66,292 - -
value at 1
January
Foreign (297) (7,331) - -
currency
translation
Depreciation (20,714) (31,232) - -
expense
Carrying 6,718 27,729 - -
value at 31
December
310,769 495,222 94,058 206,648
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.
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
At cost 5,950,734 5,883,355 3,258,784 3,146,194
Expenditure
written off
during the year
is as follows:
Australian 3,945 572,989 3,945 572,989
projects
South African - 1,078,394 - 1,076,658
projects
3,945 1,651,383 3,945 1,649,647
Movement in carrying values
Balance at 5,883,355 7,971,366 3,146,194 4,531,948
beginning of
year
Expenditure 201,340 537,650 116,535 263,893
during the
year
Expenditure (3,945) (1,651,383) (3,945) (1,649,647)
written off
during the
year
Foreign (130,016) (974,278) - -
currency
translation
Balance at end 5,950,734 5,883,355 3,258,784 3,146,194
of year
14. Trade and other payables
Current
Trade creditors 338,355 148,088 189,212 44,821
Other creditors and 19,408 276,301 19,408 276,301
accruals
357,763 424,389 208,620 321,122
Non-current
Other creditors - 80,689 - 80,689
Trade creditors and other current 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 $154,730 or South African Rand
($ZAR) 963,403 and Botswana Pula (BWP) 56,500. These are non-interest bearing
and their carrying value approximates their fair value.
15. Borrowings
Current
Convertible notes 200,000 - 200,000 -
(i)
Non-current
Convertible notes 350,000 - 350,000 -
(ii)
Loans from - - 7,692 7,692
subsidiaries (iii)
350,000 - 357,692 7,692
(i) Convertible notes are convertible at $0.03 per share, with interest
payable at the Bank Bill Rate plus 3% per annum and maturing 13 July 2010.
(ii) Convertible notes are convertible at $0.005 per share, with interest
payable every 6 months at a rate of 11.00% per annum, for a term of 2 years.
(iii) Loans from subsidiaries are repayable on demand, and are non-interest
bearing.
16. Contributed equity
(a) Issued capital
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Ordinary shares, 35,356,3 34,708,7 35,356,3 34,708,7
fully paid 74 32 74 32
(b) Movements in share capital
Parent Parent
2009 2008 2009 2008
Number Number $ $
Balance at 113,763, 92,397,4 34,708,7 33,339,3
beginning of year 134 81 32 35
Shares issued 103,375, 21,365,6 736,300 1,627,99
during year 720 53 6
Transaction costs - - (88,658) (258,599
relating to share )
issues
Balance at end of 217,138, 113,763, 35,356,3 34,708,7
year 854 134 74 32
(c) Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at shareholders` meetings.
In the event of winding up of the Company, ordinary shareholders rank after all
other shareholders and creditors and are fully entitled to any proceeds of
liquidation.
17. Reserves
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Foreign currency (2,990,3 (3,029,6 - -
translation 74) 19)
Options 570,338 436,430 570,338 436,430
Asset revaluation 22,884 22,884 22,884 22,884
(2,397,1 (2,570,3 593,222 459,314
52) 05)
(a) Foreign currency translation reserve
Exchange differences arising from the translation of foreign controlled
entities are taken to the foreign currency translation reserve, as described in
Note 1(c).
Balance at (3,029,6 (2,409,0 - -
beginning of year 19) 56)
Foreign currency 39,245 (620,563 - -
translation )
differences
Balance at end of (2,990,3 (3,029,6 - -
year 74) 19)
17. Reserves (continued)
(b) Options reserve
The options reserve records the fair value of options issued but not exercised.
Note Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Balance at 436,430 237,439 436,430 237,439
beginning of
year
Options issued 25 133,908 198,991 133,908 198,991
during year
Balance at end 570,338 436,430 570,338 436,430
of year
(c) Asset revaluation reserve
The asset revaluation reserve records revaluations of non-current assets. This
is a historical reserve and there have been no movements in the years ended 31
December 2009 and 2008.
Balance at end of 22,884 22,884 22,884 22,884
year
18. Accumulated losses
Balance at (26,104,713) (22,278,557) (29,134,332) (24,687,613)
beginning
of year
Net loss (974,886) (3,826,156) (935,641) (4,446,719)
for the
year
Balance at (27,079,599) (26,104,713) (30,069,973) (29,134,332)
end of year
19. Key management personnel disclosures
(a) Directors and other key management personnel
The following persons were directors of Tawana Resources NL during the
financial year:
Euan Luff
Harry Hill (appointed 21 August 2009)
Julian Babarczy (appointed 9 December 2009)
Stirling Horne (appointed 31 July 2009, resigned 4 February 2010)
Nonkqubela Mazwai (resigned 21 August 2009)
Neil Barrie (resigned 31 July 2009)
Brian Phillips (resigned 27 July 2009)
Wolfgang Marx (resigned 31 January 2009)
(b) Compensation of key management personnel
Consolidated
2009 2008
$ $
Short-term employee 86,409 545,137
benefits
Post-employment - 43,587
benefits
Share-based 109,872 42,311
payments
196,281 631,035
19. Key management personnel disclosures (continued)
(c) Equity instrument disclosures relating to key management personnel
(i) Option holdings
The number of options over ordinary shares in the Company held during the
financial year by each director of Tawana Resources NL and other key management
personnel of the Company, including their personally related parties, are set
out below.
2009
Name Balance Granted Ex. Other Balance at Options
at start during during changes end of year vested
of year year as year during year and
remun- * exercisa
eration ble at
end of
year
Number Number Number Number Number Number
Directors
Mr E Luff 2,104,15 4,000,000 - - 6,104,150 6,104,15
0 0
Mr H Hill - - - - - -
Mr J - - - - - -
Babarczy
Mr S - - - - - -
Horne
Ms N - - - - - -
Mazwai
Mr N 4,270,00 6,000,000 - (10,270,000 - -
Barrie 0 )
Mr B 312,500 2,000,000 - (2,312,500) - -
Phillips
Mr W Marx 2,814,00 4,000,000 - (6,814,000) - -
0
9,500,65 16,000,00 - (19,396,500 6,104,150 6,104,15
0 0 ) 0
* Balance at date of resignation
2008
Name Balance at Granted Exer Other Balance at Options
start of during cise changes end of year vested
year year as d during year and
remun- duri exercisa
eration ng ble at
year end of
year
Number Number Numb Number Number Number
er
Directors
Mr N Barrie 4,270,000 - - - 4,270,000 4,270,00
0
Mr B 41,133 - - 271,367 312,500 312,500
Phillips
Mr E Luff 3,021,462 - - (917,312) 2,104,150 1,937,48
3
Ms N Mazwai - - - - - -
Mr W Marx 1,999,500 - - 814,500 2,814,000 2,814,00
0
9,332,095 - - 168,555 9,500,650 9,333,98
3
Other key
management
personnel
Mr A 100,000 - - - 100,000 66,666
Berryman
Mr C Bailey 400,000 - - - 400,000 183,333
500,000 - - - 500,000 249,999
Total 9,832,095 - - 168,555 10,000,650 9,583,98
2
19. Key management personnel disclosures (continued)
(c) Equity instrument disclosures relating to key management personnel
(continued)
(ii) Shareholdings
The number of shares in the Company held during the financial year by each
director of Tawana Resources NL, including their personally related parties, is
set out below. There were no shares granted during the reporting year as
remuneration.
2009
Name Balance Balance Receiv Other Balance at Balance
at start at date ed changes date of at end
of the of during during resignation of the
year appoint- the the year year
ment year *
on
exerci
se of
option
s
Number Number Number Number Number Number
Directors
Mr E Luff 7,344,870 - - - - 7,344,87
0
Mr H Hill - - - - - -
Mr J - 5,000,00 - - - 5,000,00
Babarczy 0 0
Mr S Horne - 257,550 - (257,550) -
Ms N Mazwai 5,437,457 - - 3,375,720 (8,813,177) -
Mr N Barrie 1,246,154 - - - (1,246,154) -
Mr B 508,700 - - - (508,700) -
Phillips
Mr W Marx 7,062,500 - - - (7,062,500) -
21,599,68 5,257,55 - 3,375,720 (17,888,081 12,344,8
1 0 ) 70
* Refer to Note 23(c)
2008
Name Balance Balance Received Other Balance at Balance
at start at date during changes date of at end of
of the of the year during resignation the year
year appoint- on the year
ment exercise
of
options
Number Number Number Number Number Number
Directors
Mr N Barrie - 684,984 - 561,170 - 1,246,154
Mr B 194,800 - - 313,900 - 508,700
Phillips
Mr E Luff 8,262,270 - - (917,400 - 7,344,870
)
Ms N Mazwai - 5,437,45 - - - 5,437,457
7
Mr W Marx 6,248,500 - - 814,000 - 7,062,500
14,705,57 6,122,44 - 771,670 - 21,599,68
0 1 1
Other key
management
personnel
Mr A - - - - - -
Berryman
Mr C Bailey - - - - - -
- - - - - -
14,705,57 6,122,44 - 771,670 - 21,599,68
0 1 1
19. Key management personnel disclosures (continued)
(d) Loans to key management personnel
There were no loans to key management personnel of the consolidated entity,
including their personally related parties, as at 31 December 2009 or 31
December 2008.
(e) Other transactions with key management personnel
Mr E Luff, a director of the Company, is a senior partner of the legal firm
Wilmoth Field Warne, which received fees for the provision of legal services.
Payments were based on commercial terms and conditions.
20. Details of controlled entities
Name Country Interest Book value of the
of held by investment
incorpor the
ation consolidat
ed entity
2009 2008 2009 2008
% % $ $
Parent
Tawana Resources Australi
NL a
Controlled
entities
Seolo Botswana Botswana 100 100 73,237 77,080
(Pty) Ltd
Tawana Resources South 100 100 2,820,48 2,968,47
(Pty) Ltd Africa 3 0
Diamond Resources South 100 100 - -
(Pty) Ltd Africa
2,893,72 3,045,55
0 0
21. Contingent liabilities and commitments
The consolidated entity is currently defending outstanding claims brought
against the consolidated entity by creditors in relation to past activities.
The consolidated entity is currently receiving legal advice and all claims are
expected to settle within the next 12 months. The directors are confident
these matters will be successfully resolved.
22. Segment information
The consolidated entity operates wholly in one business segment, being mineral
exploration and predominantly in one geographical segment, being Africa.
23. Notes to the Statement of Cash Flows
(a) Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and
at call in deposits with banks, net of bank overdrafts. Cash at the end of the
year is shown in the Statement of Financial Position as:
Consolidated Parent
2009 2008 2009 2008
$ $ $ $
Cash on hand and at 348,609 18,090 342,284 4,995
bank
(b) Reconciliation of net loss after tax to net cash flows from operations
Not
e
Net loss (974,886) (3,826,156) (935,641 (4,446,71
) 9)
Adjustments
for:
Depreciation 174,766 294,353 112,590 212,647
Option 133,908 198,991 133,908 198,991
expense
Impairment 3,945 1,651,383 231,306 2,606,620
and write off
of non-
current
assets
Profit on (1,661) - - -
sale of
property,
plant and
equipment
Foreign 174,898 (18,700) - (18,700)
exchange loss
Prospecting - - - 211,928
fees
Shares issued 23( 236,300 - 236,300 -
for corporate c)
costs
Changes in
assets and
liabilities
(Increase) /
decrease in:
- Inventories 4,137 - (1)
- Trade and (24,478) 57,985 (30,176) 52,155
other
receivables
- Non-current - (34,673) - (38,500)
receivables
Increase /
(decrease)
in:
- Trade and (147,314) 511,108 (193,191 345,565
other )
payables
- Provisions (53,883) (75,814) (25,582) (75,814)
Net cash from (474,268) (1,241,523) (470,486 (951,828)
operating )
expenses
(c) Non-cash financing and investing activities for the year
During the year, 3,375,720 fully paid ordinary shares were issued to director
Ms N Mazwai at $0.07 per share for nil cash consideration in respect of
corporate administrative work she had undertaken on behalf of the consolidated
entity. The total amount was expensed as corporate costs in the Statement of
Comprehensive Income.
24. Auditors` remuneration
Audit services 43,803 78,183 13,773 60,245
Non-audit - - - -
services
43,803 78,183 13,773 60,245
25. Loss per share
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic loss per
share.
Classification of securities as potential ordinary shares
There are currently no securities to be classified as dilutive potential
ordinary shares on issue.
2009 2008
Number Number
129,622,559 103,028,406
Weighted average number of
ordinary shares used in the
calculation of basic loss per
share
$ $
(974,886) (3,826,156)
Net loss
The loss per share calculation as disclosed on the Statement of Comprehensive
Income does not include instruments that could potentially dilute basic
earnings per share in the future as these instruments were anti-dilutive in the
periods presented. A summary of such instruments is as follows:
Equity securities Number of Number of
securities potential
ordinary
shares
38,160,053 37,130,053
Options over ordinary shares
Subsequent to year end the Company issued additional options which resulted in
the following additional potential ordinary shares:
Equity securities Number of Number of
securities potential
ordinary
shares
50,000,000 50,000,000
Options over ordinary shares
26. Share-based payments
Summary of options on issue
Issue Quantity Grant Expiry Exercise
date date date price
Various 13,240,053 Various 1 Apr $0.10
2011
Various 1,420,000 Various 30 Nov $0.35
2011
18 Jun 4,000,000 18 Jun 18 Jun $0.07
2008 2008 2012
17 Jan 6,000,000 18 Dec 17 Jan $0.10
2009 2008 2013
17 Jan 6,750,000 18 Dec 17 Jan $0.10
2009 2008 2014
17 Jan 6,750,000 18 Dec 17 Jan $0.07
2009 2008 2013
38,160,053
26. Share-based payments (continued)
Fair value of options granted during the year
The assessed fair value at grant date of options granted to individuals is
allocated equally over the period from grant date to vesting date. Fair values
at grant date are independently determined using a Binomial Tree option pricing
model that takes into account the exercise price, term of the option, 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.
Included as an expense in the Statement of Comprehensive Income is $133,908
(2008: $198,991) which relates to equity-settled share-based payment
transactions.
No options were issued during the year ended 31 December 2009. The model
inputs for the options granted during the 2008 year were as follows:
A B C D
Quantity 4,000,000 6,000,000 6,750,000 6,750,000
Grant date 18 Jun 18 Dec 18 Dec 18 Dec
2008 2008 2008 2008
Expiry date 18 Jun 17 Jan 17 Jan 17 Jan
2012 2013 2013 2014
Share price at $0.07 $0.03 $0.03 $0.03
grant date
Exercise price $0.07 $0.10 $0.07 $0.10
Expected 76% 76% 76% 76%
volatility
Option life 4 years 4 years 4 years 5 years
Expected dividend 0% 0% 0% 0%
yield
Risk free rate at 6.69% 3.57% 3.57% 3.57%
grant date
27. Subsequent events
The Rights Issue closed for acceptances at 5.00 pm AEDT for ASX and 5.00 pm
Johannesburg time for JSE on 13 January 2010. The Company received valid
acceptances for 151,898,275 New Shares raising $759,491.37.
On 2 February 2010 the Company announced that the shortfall from the recently
completed Rights Issue, being 72,273,400 shares, had been allotted at an issue
price of $0.005 per share.
On 4 February 2010 the Company announced that Mr Stirling Horne had resigned as
a director of Tawana Resources NL.
On 24 February 2010 the Company announced the issue of 50 million options,
expiring 23 February 2013 at an exercise price of $0.01 in accordance with the
shareholders meeting approving the issue on 23 November 2009.
In accordance with a resolution of the directors of Tawana Resources NL, I
state that:
In the opinion of the directors:
the financial statements and notes as set out on pages 29 to 55 of the Company
and of the consolidated entity are in accordance with the Corporations Act
2001, including:
giving a true and fair view of the Company`s and the consolidated entity`s
financial position as at 31 December 2009 and of their performance for the year
ended on that date; and
complying with Accounting Standards and Corporations Regulations 2001; and
there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be
made to the directors in accordance with section 295A of the Corporations Act
2001 for the financial year ended 31 December 2009.
On behalf of the Board
Harry Hill
Director
Melbourne, 31 March 2010
INDEPENDENT AUDITOR`S REPORT
Tawana Resources NL & Controlled Entities
ABN 69 085 166 721
Independent Auditor`s Report To the members of Tawana Resources NL
Report on the Financial Report
We have audited the accompanying financial report of Tawana Resources NL (the
company) and Tawana Resources NL and Controlled Entities (the consolidated
group), which comprises the statement of financial position as at 31 December
2009, the statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, a summary of significant
accounting policies, other explanatory notes and the directors` declaration of
the consolidated entity comprising 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 preparation and fair
presentation of the financial report in accordance with Australian Accounting
Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and
maintaining internal control relevant to the preparation and fair presentation
of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances. In Note
1, 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 (IFRS) ensures that
the financial report, comprising the financial statements and notes, complies
with IFRS.
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
directors, as well as evaluating the overall presentation of the financial
report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Matters Relating to the Electronic Presentation of the Audited Financial Report
This audit report relates to the financial report of consolidated entity for
the year ended 31 December 2009 included on the website of Tawana Resources NL.
The Directors of the consolidated entity are responsible for the integrity of
the website and we have not been engaged to report on its integrity. The review
report refers only to the financial report identified above and it does not
provide an opinion on any other information which may have been hyperlinked to
or from the financial 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 reviewed financial report to confirm the
information included in the reviewed financial report presented on the
company`s website.
Independence
In conducting our audit, we have complied with the independence requirements of
the Corporations Act 2001. We have given to the directors of the company a
written Auditor`s Independence Declaration, a copy of which is included in the
directors` report.
Audit Opinion
In our opinion:
(a) the financial report of Tawana Resources NL is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the company`s and consolidated group`s
financial position as at 31 December 2009 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001;
(b) the financial report also complies with International Financial Reporting
Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 11 of the report
of the directors for the year ended 31 December 2009. The directors of the
company are responsible for the preparation and presentation of the
Remuneration Report in accordance with s300A 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.
Audit Opinion
In our opinion the Remuneration Report of Tawana Resources NL for the year
ended 31 December 2009, complies with s300A of the Corporations Act 2001.
Jeffrey Luckins
Director
William Buck Audit (VIC) Pty Ltd
ABN 59 116 151 136
Dated in Melbourne, Australia on this 31th day of March 2010
SCHEDULE OF MINERAL TENEMENTS
Mining tenements currently held by the consolidated entity are as follows:
Location Title held by % held by Title
Tawana
group
Daniel BHP Billiton World Various NC30/5/1/1/088PR
Project Exploration Inc
South Africa
Kareevlei Wes Diamond Resources Pty 100% NC30/5/1/2/2/081MR
South Africa Ltd
St Augustines Vecto Trade 436 Pty 30% NC30/5/1/1/5/402PR
South Africa Ltd (indirect)
Lexshell Lexshell 366 Mining 50% NC30/5/1/2/2/054MR
South Africa (Pty) Ltd
Flinders Orogenic Exploration 80% EL 3200
Island Pty Ltd / Tawana
SA, Australia Resources NL
Eyre Orogenic Exploration 80% EL 3928
Peninsula Pty Ltd / Tawana
SA, Australia Resources NL
Flinders Orogenic Exploration 80% ELA 06/648
Island Pty Ltd / Tawana
SA, Australia Resources NL
Borolong / Seolo Botswana (Pty) 100% PL 37/2003, PL
Mashaiwa Ltd 38/2003
Botswana PL 86/2007, PL
87/2007
Orapa Seolo Botswana (Pty) 100% PL 61/2007
Botswana Ltd
ASX ADDITIONAL INFORMATION
AS AT 29 MARCH 2010
Additional information included in accordance with the Listing Rules of the
Australian Securities Exchange Limited. The information is current as at 29
March 2010.
1. Substantial shareholders
The names of substantial shareholders who had notified the Company in
accordance with section 671B of the Corporations Act are:
Spring Plains Pastoral Co (VIC) Pty Ltd 40,000,000 shares
Mutual Trust Pty Ltd 25,500,000 shares
Trayburn Pty Ltd 22,850,000 shares
Deck Chair Holdings Pty Ltd 33,130,000 shares
Acorn Capital Limited 8,082,097 shares
ITA Nominees Pty Ltd 7,245,733 shares
2. Statement of issued capital
(a) Distribution of fully paid ordinary shareholders
Size of holding Number Shares held
of
holders
1 - 1,000 180 117,831
1,001 - 5,000 412 1,264,969
5,001 - 10,000 293 2,339,452
10,001 - 100,000 530 17,276,843
100,001 and over 194 420,416,934
1,609 441,416,029
(b) All ordinary shares (whether fully paid or not) carry one vote per share
without restriction.
(c) At the date of this report there were 1,138 shareholders who held less
than a marketable parcel of shares.
3. Options
Exercise Expiry Number of Number
price date options of
holders
Listed options $0.10 1 Apr 13,240,053 241
2011
Unlisted options $0.35 30 Nov 1,240,000 7
2011
Unlisted options $0.07 18 Jun 4,000,000 1
2012
Unlisted options $0.10 17 Jan 6,000,000 1
2013
Unlisted options $0.10 17 Jan 6,750,000 6
2014
Unlisted options $0.07 17 Jan 6,750,000 6
2013
Unlisted options $0.01 23 Feb 50,000,000 1
2013
4. Quotation
Listed securities in Tawana Resources NL are quoted on the Australian
Securities Exchange and the Johannesburg Stock Exchange.
5. Twenty largest shareholders
The twenty largest shareholders hold 69.51% of the issued capital of the
Company as at 29 March 2010.
No Shareholder Number of Percentag
shares e of
issued
capital
1 Spring Plains Pastoral Co 40,000,000 9.06%
(Vic) Pty Ltd
2 Deck Chair Holdings Pty Ltd 32,000,000 7.25%
3 Mutual Trust Pty Ltd 25,500,000 5.78%
4 Mikonos Investments Pty Ltd 23,731,000 5.38%
5 Trayburn Pty Ltd 22,850,000 5.18%
6 Gregorach Pty Ltd 19,850,000 4.50%
7 BT Portfolio Services 18,850,000 4.27%
Limited
8 PLC Nominees (Proprietary) 18,256,508 4.14%
Limited
9 RL Holdings Pty Ltd 18,027,986 4.08%
10 Seven Falls Trading 155 17,626,354 3.99%
(Pty) Ltd
11 Mrs Margot Louise 10,850,000 2.46%
Brandenburg
12 Mr Julian Babarczy 10,000,000 2.27%
13 Mahsor Holdings Pty Ltd 8,775,000 1.99%
14 Lufgan Nominees Pty Ltd 7,687,808 1.74%
15 Azalea Family Holdings Pty 6,000,000 1.36%
Ltd
16 Kea Holdings Pty Ltd
17 Domain Carpet Mills Pty Ltd 5,411,455 1.23%
18 Nomathata Diamonds Inc 5,350,000 1.21%
19 Lufgan Nominees Pty Ltd 5,000,000 1.13%
20 Mr Ronald Russell Wilson 5,000,000 1.13%
306,766,111 69.51%
6. Twenty largest listed option holders
No Option holder Number Percentag
of e of
options option
class
1 PLC Nominees (Proprietary) 1,949,99 13.23%
Limited 9
2 National Nominees Limited 1,656,78 11.24%
6
3 RL Holdings Pty Ltd 0
4 Mr Geoffrey John Clatworthy 1,000,00 6.79%
0
5 Clatworthy Nominees Limited 1,000,00 6.79%
0
6 Mrs Sally Copeland 1,000,00 6.79%
Clatworthy 0
7 Walker & Hall Fine Gifts 1,000,00 6.79%
Ltd 0
8 Lufgan Nominees Pty Ltd 937,500 6.36%
9 Hudson Holdings Pty Ltd 625,000 4.24%
10 Mrs Natalie Laufmann 352,500 2.39%
11 Mr Brian Phillips 312,500 2.12%
12 Mr John Rowe 312,500 2.12%
13 Katherine Pastoral Company 270,000 1.83%
Pty Ltd
14 Domain Carpet Mills Pty Ltd 252,537 1.71%
15 Rare Earths & Minerals Pty 250,000 1.70%
Ltd
16 Hudson Holdings Pty Ltd 189,000 1.28%
17 Mr Ian Gallash & Mrs Helen 182,010 1.24%
Ruth Gallash
18 Mr Frank Wong & Mrs Lee Lee 150,000 1.02%
Wong & Mr Mark Chui
19 Bristen Pty Ltd 100,000 0.68%
20 Fitba Pty Ltd
12,740,3 86.46%
32
Date: 01/04/2010 11:46:01 Supplied by www.sharenet.co.za
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