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FINAL RESULTS FOR YEAR ENDED 30 UNE 2012
FERRUM CRESCENT LIMITED
(Previously Washington Resources Limited)
(Incorporated and registered in Australia and registered as an external company in the Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR ISIN: AU000000FCR2
(“Ferrum Crescent”)
Final Results for the Year Ended 30 June 2012
Ferrum Crescent Limited, the ASX, AIM and JSE quoted iron ore developer in Northern South Africa, today
announces its final results for the year ended 30 June 2012.
- Phase 3 exploration drilling programme completed
- Consisting of 11 holes totalling 990m of diamond core drilling and 13 holes totalling 1,600m of
reverse circulation (RC) drilling
- New JORC compliant resource at Moonlight Iron Ore Project of 307.8 million tonnes (”Mt”) @ 26.9%
Fe
- Inferred category of 172.1 Mt @ 25.3% Fe, Indicated of 83.0 Mt @ 27.4% Fe, Measured of 52.6
Mt @ 31.3% Fe
- Aeromagnetic survey over the Julietta and Gouda Fontein farms consisting of 2,827 line km on 50m
line spacing completed in June 2012 and currently being analysed by The Mineral Corporation
- Discussions to confirm logistical solutions (rail, power, water and port services) required for
progressing detailed feasibility study
- Several prospective targets identified to the south, east and west of the Moonlight Deposit
Financial Overview
- Cash at 30 June 2012 of $3,340,076 (2011: $8,116,009)
- Profit of $4,491,588 (2011: loss $8,141,794)
Corporate Highlights
- Successful admission to the Johannesburg Stock Exchange on 11 November 2011
- Mr Bob Hair appointed as Managing Director
Commenting on the final results, Chairman Ed Nealon said:
“This has been a year of significant progress for the Company. Following completion of our phase 3 drilling
programme, we have a new JORC compliant resource, consisting of a larger tonnage than previously
indicated. We have also identified several prospective targets around the Moonlight deposit. Our primary
focus is on logistics and infrastructure solutions and we remain in discussions with various parties in order
to progress our feasibility study. With work progressing well at Julietta and Gouda Fontein also, I expect
2013 to be a year of continued positive developments across all aspects of our operations. ”
Australia and Company enquiries: UK enquiries:
Ferrum Crescent Limited Ocean Equities Limited (Broker)
Ed Nealon T: +61 8 9380 9653 Guy Wilkes T: +44 (0) 20 7786 4370
Executive Chairman
RFC Ambrian Limited (Nominated Adviser)
Bob Hair T: +61 414 926 302 Richard Morrison T: +44 (0) 20 3440 6800
Managing Director Jen Boorer T: +44 (0) 20 3440 6800
Newgate Threadneedle (Financial PR)
Graham Herring/Beth Harris T: +44 (0) 20
7653 9850
South Africa enquiries: Sasfin Capital
Leonard Eiser T: +27 11 809 7500
Directors Report
Operational
Moonlight Deposit
The Company’s operational focus is the Moonlight Iron Ore Project in Limpopo Province in the Republic of
South Africa, which hosts iron ore occurrences that are magnetite bearing banded iron formations (“BIF”)
that have undergone varying intensities of metamorphic alteration. The BIFs are of Archaean age and
located in and adjacent to the Limpopo Mobile Belt (“LMB”) in the Limpopo Province, some 350 km north-
east of Johannesburg.
During the year, the Company continued various studies in relation to the Moonlight Iron Ore Project, with
such studies including pipeline route, beneficiation processes and plant location and study of water and
transport options. Various supporting plans and studies relating to the Group’s mining right application were
advanced, and the Company was in June 2012 notified by the Department of Mineral Resources that its
application had been granted. As required under the Mineral and Petroleum Resources Development Act
(Act No. 28 of 2002) and the National Environmental Management Act (Act 107 of 1998) of South Africa,
the Group had completed and submitted an environmental impact assessment (“EIA”) in support of the
Mining Right application. This EIA was found to be in compliance with the relevant regulations, meaning
that Turquoise Moon Trading 157 (Pty) Ltd, the Ferrum subsidiary that holds Moonlight, has its
environmental and other regulatory authority for mining the Moonlight Deposit.
The Mineral Corporation Consultancy (Pty) Ltd of South Africa (“The Mineral Corporation”) was during the
year commissioned by Ferrum to carry out an updated JORC compliant Mineral Resource estimate taking
into account the results of the Phase 3 drilling and assays on the Moonlight deposit (“the Report”) that had
been carried out in the previous financial year. Phase 3 consisted of 11 holes totalling 990m of diamond
core drilling and 13 holes totalling 1,600m of RC drilling, and the final assay results for this drilling were
received in July 2011.
The Table below contains details of the results of the Phase 3 drilling.
East North From To Interval
Depth
Hole Fe% SiO2% AL2O3% P2O5% LOI
(m)
(m) (m) (m) (m) (m)
FCL087 -81226 -2572349 130 0 13 13 35.43 44.40 1.64 0.021 0.48
25 31 6 32.41 48.37 2.17 0.019 1.34
FCL088 -80424 -2571500 150 96 139 43 31.34 45.16 2.63 0.054 0.70
FCL089 -80425 -2571699 138 64 73 9 36.86 38.92 1.73 0.087 0.07
94 101 7 34.37 45.00 1.58 0.048 0.05
104 132 28 33.97 45.01 1.66 0.065 0.08
FCL090 -80423 -2571894 105 22 32 10 37.14 43.42 1.06 0.050 0.35
70 80 10 28.91 49.72 2.84 0.047 0.59
87 98 11 32.99 43.21 3.25 0.076 0.75
FCL091 -80221 -2571706 160 79 92 13 33.20 45.76 2.06 0.056 0.09
106 119 13 34.38 44.62 1.91 0.054 0.13
135 145 10 29.38 47.67 2.39 0.054 1.33
FCL092 -80223 -2571498 170 82 87 5 33.92 45.20 1.64 0.115 0.21
92 135 43 35.26 43.91 1.46 0.127 -0.66
139 160 21 28.21 50.16 2.83 0.099 0.26
FCL093 -80022 -2571602 166 86 99 13 31.79 45.29 2.75 0.12 0.03
108 113 5 32.89 44.14 1.90 0.17 0.30
134 150 16 36.72 41.31 1.56 0.14 -0.49
FCL094 -80027 -2571803 80 30 38 8 34.66 43.27 2.09 0.060 0.57
56 63 7 34.41 44.37 1.42 0.057 0.05
FCL095 -79825 -2571696 144 29 43 14 33.91 45.63 1.72 0.14 0.51
69 74 5 34.29 41.52 1.72 0.14 0.82
111 118 7 33.65 42.54 2.39 0.17 -0.53
FCL096 -79628 -2571756 105 76 95 19 27.13 49.93 3.15 0.11 0.31
FCL097 -79425 -2571804 95 38 43 5 27.06 50.80 3.54 0.108 2.84
48 63 15 32.34 46.40 2.12 0.15 0.79
FCL098 -79228 -2571801 95 67 76 9 30.70 47.56 2.31 0.127 0.08
Table: Intercepts of iron mineralisation greater than or equal to 5m in width
The Mineral Corporation conducted a thorough re-interpretation of the geological structure of Moonlight,
based on historical Iscor data collated and validated by the Group and the recent Group exploration results.
Within the constraints of having a cut off grade of 16% iron, geological losses of 5% and a depth constraint
of between 100m and 250m, depending upon dip and the number of mineralised zones present, the JORC
compliant Mineral Resources at Moonlight are now estimated to be 307.8 million tonnes @ 26.9% and are
shown as follows:
Category Gross Net (attributable to Ferrum Crescent at
81.4%)
Tonne Fe SiO2 Al2O3 Contained Tonne Fe SiO2 Al2O3 Contained
(Mt) (%) (%) (%) Metal (Mt) (Mt) (%) (%) (%) Metal (Mt)
Inferred 172.1 25.3 51.2 4.8 43.5 140.1 25.3 51.2 4.8 35.4
Indicated 83.0 27.4 50.1 4.0 22.7 67.6 27.4 50.1 4.0 18.5
Measured 52.6 31.3 47.3 2.5 16.5 42.8 31.3 47.3 2.5 13.4
Total 307.8 26.9 50.3 4.2 82.8 250.5 26.9 50.3 4.2 67.4
Tonnes are rounded
Note: Ferrum Crescent subsidiary is the operator and owns 81.4% (the beneficial ownership interest as accounted for
at 30 June 2012 is 97%) of the Moonlight Iron Ore Project
Based on these results, the Board believes that whilst the total average Fe grade has decreased slightly
(previously estimated to be a JORC compliant resource of 74Mt @ 33% Fe in the Indicated Resource
category and 225Mt @ 29% Fe in the Inferred Resource category), the tonnage has increased
proportionately along with a substantial increase in the confidence and classification of the Mineral
Resource. Furthermore, the Board is of the opinion that the depth constraint of 250m (maximum) is
conservative, particularly as the previous estimation was not constrained in this way.
The revised structural interpretation presented by The Mineral Corporation also identified several targets
south, east and west of the Moonlight Deposit, which the Company believes warrant additional exploration
by the commissioning of a high-resolution airborne magnetic survey and drilling. Given that the size of the
resource is sufficient for in excess of 20 years of mining operations, management’s attention remained
primarily focused on finding definitive answers to logistical questions rather than on continued exploration.
A summary of the Mineral Resource estimate parameters is set out below in Table 5.
Competent Persons’ Statement:
The information that relates to Exploration Results and Mineral Resources in the report of which this statement is a
summary, is based on information compiled by Stewart Nupen, who is registered with the South African Council for
Natural Scientific Professionals (Reg. No. 400174/07) and is a member of the Geological Society of South Africa. Mr.
Nupen is employed by The Mineral Corporation, which provides technical advisory services to the mining and minerals
industry. Mr. Nupen has sufficient experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the
2004 Edition of the ‘Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves’ and as
defined in the June 2009 Edition of the AIM Note for Mining and Oil and Gas Companies. Mr. Nupen consents to the
inclusion in this statement of the matters based on his information in the form and context in which it appears.
Table: Mineral Resource Estimation Details
Drilling Technique Drilling data from Iscor and three phases of Ferrum Crescent exploration inform the estimates.
The drilling comprised open hole, RC and diamond core drilling and was all vertical. A total of
122 RC holes and 89 diamond core holes were accepted for the estimates.
Sampling Technique Limited information on the sampling techniques for the Iscor data is known. For the Ferrum
Crescent exploration, industry standard sampling techniques were adopted. RC samples (1m-
2m) were riffle split on site and diamond core samples were halved with a diamond saw.
Primary samples and quality control samples were submitted for analysis to Genalysis
Laboratory Services (Johannesburg) for analysis by Intertek Utama Services (Jakarta).
Drill Sample Recovery Limited information on the sample recovery for the Iscor data is known. With the exception of
surficial rubble, the sample recovery through the mineralised zones for the Ferrum Crescent
exploration was acceptable.
Geological Logging The Iscor data included electronic codes for the main lithological unit, certain sub-units, and
the core bedding angles. All geological information during Ferrum Crescent exploration was
logged in acceptable detail, and stored in an MS Access database. This included lithological,
structural and geotechnical information.
Quality of Assay No information on the quality of assay data for the Iscor data was obtained. The Ferrum
Data/QAQC Crescent samples were analysed at an accredited laboratory (Genalysis / Intertek), and
appropriate standards, blanks and duplicates inserted in the sample stream. The Mineral
Corporation has reviewed the results from these control samples and considers the accuracy
and reliability of the analyses to be acceptable.
Verification of The Iscor data was verified by means of the identification and re-surveying of borehole collars
Sampling and in the field, and by means of twin-drilling. On the basis of the twinning, the open-hole data from
Assaying Iscor (142 holes) was considered unacceptable for Mineral Resource estimation. The
remaining RC and diamond core drilling showed reasonably good correlation of mineralisation
depth and abundance, and was considered acceptable.
Surveying All Ferrum Crescent boreholes were surveyed by a registered surveyor. Of the Iscor holes,
127 collars were re-surveyed by a registered surveyor, and good correlation between the
historical and Ferrum Crescent survey locations were found.
Auditing No audits of the Iscor exploration results, with the exception of the verification described above
have been undertaken. The Mineral Corporation reviewed the results of the first two phases of
Ferrum Crescent’s drilling prior to carrying out the estimates. Phase 3 of Ferrum Crescent’s
exploration was carried out by The Mineral Corporation.
Database Integrity The compiled database for the estimates was housed in an MS Access database. In addition
to the verification and QA/QC already described, validation of the sampling data for over-
lapping sampling intervals, duplicate samples and spurious data was carried out.
Geological A thorough re-interpretation of the geological structure, and correlation between mineralised
Interpretation zones was carried out. Magnetite is interpreted to be hosted in four zones (Zone A to D),
which have been subjected to folding, parallel to the regional (Limpopo Mobile Belt)
orientation. Younger faulting, oriented parallel to and orthogonal to this trend are interpreted.
The geological interpretation is considered appropriate for the level of estimates, and the
Mineral Resource classification takes the confidence in the interpretation into account.
Dimensions D Zone is approximately 200m x 400m x 30m
C Zone (West) is approximately 1400m x 250m x 35m
C Zone (East) is approximately 1100m x 700m x 30m
B Zone is approximately 1500m x 800m x 25m
A Zone is approximately 1600m x 1200m x 17m
Geological Modelling Wireframes representing the geological interpretation were generated to constrain the block
model.
Drillhole compositing 5m vertical borehole composites were utilised, informed by an assumed minimum mining
Procedures height. These composites were not at right angles to the mineralised zones, but as the dips
are shallow (7° to 30° and typically less than 20°) and a 3-dimensional block model was used,
the use of vertical composites is unlikely to introduce any bias.
Variography Variograms parallel to the dip of the mineralised zones were calculated and modelled. Vertical
grade distribution utilised downhole variograms. Variograms of between 150m and 250m were
obtained in the plane of the mineralised zone and between 7m and 30m downhole.
Drillhole Spacing The combination of Ferrum Crescent’s exploration and the KIOL data has provided an
acceptable drillhole spacing which ranges from 100m x 100m to 200m x 300m.
Block Model Horizontal block dimensions were 50m x 50m and 5m in the vertical, informed by borehole
spacing and a conceptual minimum mining unit. The block model was rotated to the average
dip (12°).
Grade Estimation Ordinary kriging was employed for grade estimates. A three stage search strategy was
Methodology employed. A minimum of 5 and a maximum of 20 samples was used within the range of the
variogram for the first search. The second search was twice the volume of the first, and the
third extended to the limits of the mineralised zones. The search and variogram ellipse were
oriented to local dip and strike variations using “Dynamic Anisotropy” in Datamine Studio v3.
Accuracy and Plan and section plots were analysed to evaluate the adherence of the estimation
Confidence methodology to the geological model. The methodology was found to honour the grade
continuity trends, which are assumed to be parallel to the dip of the mineralised zones.
Moisture Tonnage was calculated on a dry basis.
Bulk Density The Iscor data included density measurements for all diamond core holes. No information was
provided on the methodology used to obtain these density data. The diamond core data from
Ferrum Crescent exploration included density measurements obtained by the ‘water
immersion’ method. A strong correlation between density and Fe was observed, and used to
estimate block density after grade estimation.
Mining Factors A minimum mining unit of 50m x 50m x 5m aided in the selection of block size. Approximate
stripping ratios were calculated to inform the maximum depth constraint for the Mineral
Resources.
Metallurgical On the basis of preliminary test work, The Mineral Corporation has assumed that the Fe can
Considerations be extracted by means of comminution and magnetic separation to form a magnetite
concentrate.
Cut-off Parameters A cut-off of 16% Fe and a maximum depth of between 250m and 100m depending on dip and
the number of mineralised zones was applied.
Resource The borehole spacing, surface mapping, structural interpretation, variography and kriging error
Classification estimates inform Mineral Resources which are classified as Inferred, Indicated and Measured.
In areas of well-defined geological structure and modest grade variability, the 100m x 100m
grid is sufficient for Measured Mineral Resources.
Resource Reporting The Mineral Resource estimates have been compiled in accordance with the guidelines
defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (The JORC Code, 2004 Edition).
Figure: Moonlight Deposit Geological Plan
The Group now has a granted Mining Right with associated mining environmental approvals. It has
sufficient resources to carry out mining operations for 20 years or more and confidence from historical
exploration records and from the Group’s own airborne and ground magnetic programs that there is
significant scope for expansion of the mineralisation within the Mining Right area.
Moonlight Iron Ore Project Concept
Recognising that adding value within the country is a strategic preference for all mining operations within
South Africa, Ferrum has consistently looked to planning the Project with beneficiation and other value-
adding processes to take place within the country. Project concepts have previously included the
production of pig iron at or near the Moonlight site. It has since been recognised by the Company,
however, that the most sustainable development concept for the Project is likely to involve mining at site
and the production there of an iron ore concentrate, which would be transported by way of slurry pipeline to
a manufacturing facility located at a place near a railhead. High quality iron ore pellets (which would be a
mixture of direct reduction iron (“DRI”) or DRI quality pellets, which would be suitable for use in electric arc
steel furnaces, and blast furnace pellets) would be transported by rail to local users and to a suitable port
facility for export internationally.
Several pelletiser sites and rail and port combinations have been considered, and the Company has
continued to seek confirmation from infrastructure providers (including rail, port and power suppliers) of
allocation of capacity for the Company. During the reporting period, the South African Government
announced that significant capital would be applied in upgrading rail and port facilities that service the
Waterberg Region, which is close to where the Moonlight Deposit is situated. This followed strategic
studies that revealed that the Waterberg Region, and the coal deposits in that region, are of critical
importance to future supply for the country’s power generation.
The Company in June 2011 entered into an offtake agreement with Swiss based Duferco SA, a leading
private company in the trading, mining, and end use of iron and steel products and raw materials for the
steel industry. Following due diligence on the mineral assets of the Company, Duferco concluded that the
Group should be able to produce direct reduction and/or blast furnace pellets equal to or better than current
world best product.
The offtake agreement with Duferco SA covers up to 6 Mpta of anticipated iron ore pellet production from
Ferrum Crescent’s Moonlight Project. Under the agreement, Ferrum Crescent will sell Duferco all of their
production available for export (in total 4.5 Mpta) and will give Duferco a first right of refusal over an
additional 1.5 Mpta per year to the extent that the product is not sold domestically, thus allowing Ferrum
Crescent to follow a growth strategy at its South African projects.
Corporate
Board change
During the reporting period, Mr Robert Hair resigned from his position of joint company secretary and
assumed the role of managing director.
JSE Listing and BEE Transaction
The Company entered onto the JSE Limited (“JSE”) with effect from 11 November 2011. The JSE listing is
in addition to the Company’s primary ASX and secondary AIM listings.
The JSE inward listing was entered into partly to facilitate the Group’s Black Economic Empowerment
(“BEE”) share exchange and investment at a listed company level, complying with the objectives of the
South African Government’s Mineral and Petroleum Resources Development Act (“MPRDA”) and the
revised Mining Charter. Ferrum Crescent’s BEE partner, Mkhombi Investments (Pty) Limited (“Mkhombi”),
owns a 26% stake in the Company’s South African operating subsidiary, Turquoise Moon Trading 157 (Pty)
Limited (“TMT”) (but an effective project interest of 3%). Mkhombi is a partner with significant industry
experience, and also includes two women’s organisations and a community trust representing local
Limpopo communities affected by the Company’s Moonlight Iron Ore Project. Mr Kofi Morna, who is a
director of Mkhombi, is also a director of Ferrum Crescent.
Shareholder approval for the “flip”, as the share exchange is known, was obtained following the end of the
reporting period.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
2012 2011
Note $ $
Continuing operations
Revenue 3(a) 205,183 149,717
Other income 3(b) 4,330 1,265,242
209,513 1,414,959
Administration expenses 3(c) (2,323,292) (3,523,878)
Occupancy expenses (104,205) (173,271)
Exploration expenditure (1,620,768) (3,014,345)
Profit / (loss) on remeasurement of financial liability 14 8,321,244 (1,623,385)
Foreign exchange gain 407 479,656
Share based payments 20 (3,183) (1,701,530)
Profit / (loss) before tax from continuing
operations 4,479,716 (8,141,794)
Income tax benefit / (expense) 5 - -
Profit / (loss) for the year from continuing
operations 4,479,716 (8,141,794)
Other comprehensive income
Foreign currency translation gain 11,872 4,397
Net fair value gains on available for sale investments - 665,242
Income tax on items of other comprehensive income - (199,573)
Release of unrealised gains reserve on disposal of
available for sale investments (net of tax) - (465,669)
Other comprehensive income for the year net of
tax 11,872 4,397
Total comprehensive profit / (loss) for the year, net
of tax 4,491,588 (8,137,397)
Profit / (loss) attributable to:
Owners of the parent 4,479,716 (8,141,794)
4,479,716 (8,141,794)
Total comprehensive profit / (loss) for the period
attributable to:
Owners of the parent 4,491,588 (8,137,397)
4,491,588 (8,137,397)
Earnings / (loss) per share Cents Cents
Basic earnngs / (loss) for the year attributable to
ordinary equity holders of the parent 8 1.53 (3.32)
Diluted earnings / ( loss) for the year attributable to
ordinary equity holders of the parent (1.30) (3.32)
Consolidated Statement of Financial Position
As at 30 June 2012
2012 2011
Note $ $
Assets
Current assets
Cash and short term deposits 9 3,340,076 8,116,009
Trade and other receivables 10 128,447 283,725
Other financial assets 12 39,469 42,842
Prepayments 158,584 31,580
Total current assets 3,666,576 8,474,156
Non-current assets
Plant and equipment 11 110,325 146,913
Other financial assets 12 144,297 -
Total non-current assets 254,622 146,913
Total assets 3,921,198 8,621,069
Liabilities and equity
Current liabilities
Trade and other payables 13 1,212,832 2,099,756
Financial Liability 14 95,379 8,416,623
Provisions 15 20,320 6,794
Total current liabilities 1,328,531 10,523,173
Total liabilities 1,328,531 10,523,173
Equity/(Shareholders’ Deficit )
Contributed equity 16 27,392,728 27,392,728
Accumulated losses 19 (16,038,018) (20,517,734)
Reserves 18 (8,762,043) (8,777,098)
Equity attributable to owners of the parent 2,592,667 (1,902,104)
Non-controlling Interest - -
Total equity 2,592,667 (1,902,104)
Total equity and liabilities 3,921,198 8,621,069
This Statement of Financial Position is to be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 30 June 2012
2012 2011
Note $ $
Operating activities
Interest received 209,513 149,608
Proceeds from sale of tenements - 600,000
Exploration expenditure (2,113,911) (3,177,214)
Payments to suppliers and employees (2,696,209) (2,668,148)
Net cash flows used in operating activities 24 (4,600,607) (5,095,754)
Investing activities
Purchase of plant and equipment (25,166) (158,702)
Proceeds from disposal of available for sale investments - 1,574,920
Payments for purchase of non-controlling interest - (3,235,830)
Net cash flows from/(used in) / in investing activities (25,166) (1,821,612)
Financing activities
Proceeds from issue of shares - 16,688,656
Payments of unsecured loans - (11,196)
Costs associated with issue of shares - (1,952,783)
Net cash flows from/(used in) financing activities - 14,724,677
Net increase/ (decrease) in cash and cash equivalents held (4,625,773) 7,807,311
Net foreign exchange difference (150,160) (220,527)
Cash and cash equivalents at 1 July 2011 8,116,009 529,225
Cash and cash equivalents at 30 June 2012 9 3,340,076 8,116,009
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2012
Share based Foreign
Accumulated payment exchange
Issued capital losses reserve Option reserve reserve Equity reserve Total equity
$ $ $ $ $ $ $
At 1 July 2010 12,146,950 (12,375,940) - 1,136,062 109,455 - (1,016,527)
Loss for the period - (8,141,794) - - - - (8,141,794)
Other Comprehensive Income (net of tax) - - - - 4,397 - 4,397
Total comprehensive loss (net of tax) - (8,141,794) - - 4,397 - (8,137,397)
Transactions with owners in their capacity as
owners:
Shares issued 16,619,411 - - - - - 16,619,411
Transaction costs on shares issued (1,952,783) - - - - - (1,952,783)
Shares issued under employee share plan 579,150 - (238,548) - - - 340,602
Employee share plan loan repaid - 69,245 - - 69,245
Share based payment to locally impacted community - - - - - 1,092,565 1,092,565
Options issued under employee option plan - - - 268,363 - - 268,363
Acquisition of non-controlling interest - - - - - (11,218,637) (11,218,637)
At 1 July 2011 27,392,728 (20,517,734) (169,303) 1,404,425 113,852 (10,126,072) (1,902,104)
Profit for the period - 4,479,716 - - - - 4,479,716
Other Comprehensive Income (net of tax) - - - - 11,872 - 11,872
Total comprehensive loss (net of tax) - 4,479,716 - - 11,872 - 4,491,588
Transactions with owners in their capacity as
owners:
Cost associated with shares issued under employee
share incentive plan - - 3,183 - - - 3,183
At 30 June 2012 27,392,728 (16,038,018) (166,120) 1,404,425 125,724 (10,126,072) 2,592,667
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
Selected Notes to the financial statements:
Note 1: Corporate information
The consolidated financial report of Ferrum Crescent for the year ended 30 June 2012 was authorised for
issue in accordance with a resolution of directors on 26 September 2012.
Ferrum Crescent Limited is a for profit company limited by shares domiciled and incorporated in Australia
whose shares are publicly traded on the Australian Stock Exchange (ASX), the London Stock Exchange
(AIM) and the JSE Limited (JSE).
The nature of operations and principal activities of the Group are described in the Directors’ Report.
Note 2: Statement of significant accounting policies
(a) Basis of preparation
The Financial Report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations and
complies with other requirements of the law.
The accounting policies detailed below have been consistently applied to all of the years presented unless
otherwise stated. The financial statements are for the consolidated entity consisting of Ferrum Crescent
Limited and its subsidiaries.
The Financial Report has also been prepared on a historical cost basis, except for available-for-sale
investments and derivative financial instruments which have been measured at fair value.
The Financial Report is presented in Australian dollars.
(b) Statement of compliance
The Financial Report complies with Australian Accounting Standards, as issued by the Australian
Accounting Standards Board, and complies with International Financial Reporting Standards (IFRS), as
issued by the International Accounting Standards Board.
Note 3: Revenue and expenses
Revenue and Expenses from Continuing Operations
2012 2011
Note $ $
(a) Revenue
Finance revenue:
Interest received 205,183 149,608
Other - 109
205,183 149,717
(b) Other income
Sale of available-for-sale investments (i) - 665,242
Sale of tenements (ii) - 600,000
Investment income 4,330 -
4,330 1,265,242
(c) profit and loss
Other expenses include the following:
Depreciation 38,322 17,585
Disposal of plant and equipment 1,074 2,891
Bad debt expenses - -
Consulting services 698,863 541,659
Employment related
- Directors fees 236,705 380,949
- Wages 231,137 482,529
- Superannuation 5,824 27,715
Corporate 524,046 733,367
Travel 223,276 518,275
Other 364,045 818,908
2,323,292 3,523,878
(b) (i) During 2011 Ferrum Crescent Limited entered into and completed an agreement with Northern
Uranium Limited (“Northern”) (ASX: NTU) to dispose all of its Australian minerals exploration
interests for a cash sum of $600,000. The offer from Northern was subject to both due diligence on
the Company’s tenement interests and the consent where relevant of joint venturers. Due diligence
was concluded favourably, and a pre-emptive right was exercised, with the result that the Group’s
Australian exploration assets were all sold during 2011.
The sale of these Australian exploration interests has enabled the Company and its management to
focus on developing its iron ore interests in Southern Africa and in particular to concentrate on
progressing Moonlight Iron Ore Project and finalising the mining right application process in respect
of the Moonlight Deposit.
(ii) In August and September 2010, the Group disposed of its interest in 12,460,071 shares and
1,873,667 options held in Northern Uranium for $1,574,920. These financial assets were designated
as available for sale, with all prior gains on such investments taken to equity. The fair value change
of the financial assets of $665,242 from 1 July 2010 to the date of sale was taken to the available for
sale reserve. The above amount represents the release of the unrealised gains reserve upon sale
(gross of tax).
(iii) On 1 April 2012 the Group entered into an insurance investment portfolio. This investment is to
ensure that the Group has funds available to facilitate Mine Rehabilitation.
Note 5: Income tax expense
2012 2011
$ $
Reconciliation of income tax expense/(income) to the pre-tax net loss
Profit / (Loss) before income tax 4,479,716 (8,141,794)
Income tax calculated at 30% on loss before income tax 1,343,915 (2,442,538)
Add tax effect of: non-deductible expenses (2,623,682) 683,242
Legal fees deduction (4,859) -
Unused tax losses and temporary differences not brought to account 1,284,626 1 759 296
Income tax expense/(income) - -
Analysis of deferred tax balances 2012 2011
Deferred tax liabilities $ $
Assessable temporary differences
Prepayments (47,575) (9,474)
Deferred tax liabilities offset by deferred tax assets 47,575 9,474
Net deferred tax liabilities - -
Deferred tax assets
Share issue expenses 380,726 512,506
Provisions 6,096 2,038
Financial liability 28,614 2,524,987
Unused tax losses 5,091,549 3,806,923
5,506,984 6,846,454
Total unrecognised deferred tax assets (5,459,409) (6,836,980)
Deferred tax assets 47,575 9,474
Deferred tax assets offset by deferred tax liabilities (47,575) (9,474)
Net deferred tax assets - -
Unused tax losses set out above have not been recognised due to uncertainty of future taxable profit
streams.
Note 8: Earnings per share
2012 2011
$ $
Basic earnings/(loss) per share (cents per share) 1.53 (3.32)
Diluted earnings/(loss) per share (cents per share) (1.30) (3.32)
Net profit /(loss) 4,479,716 (8,141,794)
Profit / (loss) used in calculating basic earnings / (loss) per share 4,479,716 (8,141,794)
Adjustments to basic profit / (loss) used to calculate dilutive
earnings /(loss) per share – Add back remeasurement of financial
liability (2011: N/A – anti-dilutive) (8,321,244) -
Profit / (loss) used in calculating dilutive earnings / (loss) per share (3,841,528) (8,141,794)
Number Number
Weighted average number of ordinary shares used in the
calculation of basic (loss)/earnings per share 292,246,705 245,275,224
Adjustments to weighted average number of ordinary shares
used in the calculation of diluted earnings / (loss) per share– Add
back potential shares related to financial liability (2011: N/A –
anti-dilutive) 2,890,273 -
Weighted average number of ordinary shares used in the
calculation of diluted (loss)/earnings per share 295,136,978 245,275,224
There have been no transactions involving ordinary shares or potential shares that would significantly
change the number of ordinary shares or potential ordinary shares outstanding between the reporting date
and the date of completion of these financial statements.
Potential dilutive shares not included in dilutive earnings per share was 24,446,727 (2011: 66,529,842)
Note 9: Cash and cash equivalents
2012 2011
$ $
Cash at bank 3,340,076 8,116,009
Cash at the end of the financial year as shown in the cash flow statement is
reconciled to items in the statement of financial position as follows:
Note 10: Trade and other receivables
2012 2011
$ $
Current
Sundry debtors 19,931 2,923
GST / VAT 108,516 280,802
128,447 283,725
(i) Non-trade debtors are non-interest bearing and are generally on 30-90 days terms. The carrying
amounts of these receivables represent fair value and are not considered to be impaired.
Note 11: Plant and equipment
Furniture, fittings Motor Leasehold
and equipment vehicles improvements Total
$ $ $ $
Year ended 30 June 2011
Opening net carrying value 7,578 - - 7,578
Additions 41,826 100,449 24,391 166,666
Disposals (2,891) - - (2,891)
Depreciation charge for the year (9,183) (8,402) - (17,585)
Exchange differences (2,110) (3,751) (994) (6,855)
Closing net carrying amount 35,220 88,296 23,397 146,913
At 30 June 2011
Cost 46,191 96,356 23,397 165,944
Accumulated depreciation (10,971) (8,060) - (19,031)
Net carrying value 35,220 88,296 23,397 146,913
Year ended 30 June 2012
Opening net carrying value 35,220 88,296 23,397 146,913
Additions 25,166 - - 25,166
Disposals (1,074) - - (1,074)
Depreciation charge for the year (17,012) (20,090) (1,220) (38,322)
Exchange differences (7,974) (10,719) (3,665) (22,358)
Closing net carrying amount 34,326 57,487 18,512 110,325
At 30 June 2012
Cost 56,689 80,250 19,486 156,425
Accumulated depreciation (22,363) (22,763) (974) (46,100)
Net carrying value 34,326 57,487 18,512 110,325
Note 12: Other financial assets
2012 2011
$ $
Current assets
Rental and Other Deposits 7,586 4,561
Rehabilitation Trust 31,883 38,281
39,469 42,842
Non- current assets
Investment Portfolio 144,297 -
144,297 -
An Investo Linked Investment portfolio has been setup with Momentum Insurance from 1 April 2012 to
cover the rehabilitation of all subsidiary mining activities in accordance with the requirements of the mining
leases.
This portfolio has an initial savings term of 10 years with an automatic increase of 10% to the contributions
on an annual basis. After the initial 10 years the investment automatically continues in periods of 5 years.
After automatic continuation the investment will qualify for a loyalty bonus at the end of each 5 year period.
The investment will be levied with allocation and management fees on a monthly basis.
Cash withdrawals may be made up to a restricted percentage of the net fund value at the time of the
withdrawal. The withdrawn amounts will not be taken into consideration when calculating the loyalty bonus
due on the portfolio. Withdrawals may be made after the investment reaches R7,517,000 in value.
On 16th July 2012 a Deed of Surety and Indemnity was signed ceding this investment portfolio to
Constantia Insurance Company Limited in return for a guarantee to the Directorate Mineral Regulation
(DMR) for the confirmed amount of R7,517,000.
Note 13: Trade and other payables
2012 2011
$ $
Current
Unsecured liabilities
Trade payables and other payables (i) 349,582 1,063,256
Minority interest obligation (ii) 863,250 1,036,500
1,212,832 2,099,756
(i) Trade and other payables are non-interest bearing and are normally settled on 30-day terms.
(ii) During the 2011 financial year, various agreements were entered into in respect of the minority
interest in the Moonlight Iron Ore Project.
A company, Mkhombi Investments (Pty) Ltd (“Mkhombi Investments”), which meets the requirements
of applicable South African legislation in respect of historically disadvantaged persons (referred to in
South Africa as being “BEE controlled”), entered into an agreement on 26 October 2010 with the then
current holder of 26% of Turquoise Moon Trading 157 (Pty) Ltd (“TMT”) to purchase that holder’s right,
title and interest in TMT for ZAR30 million (then approximately AUD4.4 million) (“TMT Sale
Agreement”). The South African Department of Mineral Resources expressed its support of the
transaction.
Nelesco 684 (Pty) Ltd (“Nelesco”), a wholly owned subsidiary of the Company, entered into agreements
with Mkhombi Investments and its holding company, Mkhombi AmaMato (Pty) Ltd (“AmaMato”), the terms
of which provide for the following to take place:
a) Nelesco would be issued shares in Mkhombi Investments such that it holds an initial 32.17%
interest in Mkhombi Investments, with the remaining 67.83% held by AmaMato;
b) AmaMato lent the sum of ZAR 7.5 million to Mkhombi Investments, to be applied as part of the
purchase price under the TMT Sale Agreement. The advance, which was made as at 31
December 2010, does not attract interest and is only repayable in certain circumstances (namely,
the failure of the conditions precedent set out in the Subscription Agreement, as defined below);
c) Nelesco lent the sum of ZAR 22.5 million to Mkhombi, to be applied as paying the balance of the
purchase price under the TMT Sale Agreement. The advance, which was made as at 31
December 2010, does not attract interest and is repayable in certain circumstances (namely, the
failure of the conditions precedent set out in the Subscription Agreement, as defined below);
d) Mkhombi Investments would issue shares and/ or Nelesco will transfer some of its shares in
Mkhombi Investments so that 11.54% of Mkhombi Investment’s shares on issue are held by a
trust representing the locally impacted community, with the resulting shareholdings being
AmaMato 60%, Nelesco 28.46%, and the locally impacted community 11.54%; and
e) AmaMato will, subject to the conditions precedent to the Subscription Agreement, as defined
below, sell its entire right, title and interest in, and all of its claims against, Mkhombi Investments
to Nelesco for ZAR 7.5 million (2012: A$863,250 / 2011:A$1,036,500).
A subscription agreement was entered into between the Company and AmaMato on 4 November 2010 (the
“Subscription Agreement”). On completion of the Subscription Agreement (subject to the fulfilment of the
conditions precedent to that agreement), AmaMato will subscribe for such number of shares in the
Company as is equal to 7.8% of the issued shares at that time (the “First Subscription”). The price payable
for the subscription of the Shares under the First Subscription will be ZAR 7.5 million.
AmaMato will also, on or before the later of (i) the date falling 10 business days after the Closing Date (as
defined in the Subscription Agreement and extension to the Subscription Agreement) and (ii) 30 November
2012 (the “Subscription Period”), which period will be extended by the Company for a period of 1 year in
the event that it raises not less than ZAR7.5 million in 2011, subscribe for a further 7.8% of the issued
shares of the Company (calculated by reference to the issued share capital of the Company at the time of
the First Subscription adjusted for any subsequent share splits, consolidations or bonus capitalisations) for
a further ZAR 7.5 million.
The conditions precedent to the Subscription Agreement, include no insolvency event occurring, the
granting of a mining right in respect of the Project, necessary South African Reserve Bank approvals and
shareholder and other approvals required under the Corporations Act and the AIM/ASX listing rules,
including shareholder approval.
In the event that the conditions precedent to the Subscription Agreement are not fulfilled by 1 November
2012, then AmaMato will have the right, for 60 days, to require Nelesco to purchase all of AmaMato’s
rights, title and interest in, and all its claims against, Mkhombi Investments for the price of ZAR 12.5 million.
Kofi Morna, a Director of Ferrum Crescent Limited (“Company”), is also a director of AmaMato and
Mkhombi Investments. He became a Director of the Company during the 2011 financial year for the
purposes of the above transaction. He holds an indirect non-controlling interest in AmaMato.
Upon completion of the Subscription Agreement, the Company will legally own directly and indirectly
through its wholly owned subsidiary, Mkhombi Investments, 97% of Turquoise Moon Trading 157 (Pty) Ltd
with the remaining 3% held by the GaSeleka Community. AmaMato will own 15.6% of the Company.
In the opinion of the Directors, the conditions precedent to the Subscription Agreement are essentially
procedural in nature, following the completion of the Company’s capital raising of 10 million pounds Sterling
(“GBP”) (equal to approximately AUD 16 million) before expenses, completed on 16 December 2010. As
such, while the Company’s legal interest in the Moonlight Iron Ore Project increased from 74% to
approximately 81.5%, the Directors hold an effective interest in the underlying project of 97% as at 31
December 2010 as a result of the minority purchase obligation.
Note 14: Financial liability
2012 2011
$ $
Current
Financial liability at fair value through profit and loss –
forward subscription agreement 95,379 8,416,623
95,379 8,416,623
The above liability will be settled in the Company’s shares and not in cash.
As described above, in the opinion of the Directors, the remaining procedural conditions precedent under
the Subscription agreement will be fulfilled within one year from balance date. Under the Subscription
Agreement, the Company has agreed to issue shares to AmaMato equal to 15.6% of the issued share
capital of the Company for ZAR15 million. The above financial liability, measured at fair value through
profit and loss, represents the Company’s best estimate of the fair value of this contractual arrangement.
Refer to Note 25 for the Group’s exposure to equity price risk on this amount. The gain on revaluation of
the financial liability during the period amounts to $8,321,244 (2011 loss of $1,623,385) which has been
recognised through the profit and loss.
Note 15: Provisions
2012 2011
$ $
Employee benefits 20,320 6,794
Note 16: Issued Capital
2012 2011 2012 2011
No. of shares No. of shares $ $
(a) Share Capital
Ordinary Shares
Ordinary shares fully paid 298,841,705 298,691,705 27,392,728 27,392,728
Employee share plan
shares (6,595,000) (6,445,000) (509,905) (509,905)
292,246,705 292,246,705 26,882,823 26,882,823
Capital management
When managing capital (which is defined as the Company’s total equity), management’s objective is to
ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and
benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the
lowest cost of capital available to the entity. As the equity market is constantly changing management may
issue new shares to provide for future exploration and development activity. The Company is not subject to
any externally imposed capital requirements.
(b) Movements in ordinary share capital
Date Number of
Details shares $
1 July 2010
Opening balance 177,754,699 12,146,950
8 July 2010 Issued shares resulting from 1:10 exchange
of listed options 8,012,006 -
7 October 2010
Issued at 12 cents per share 10,000,000 1,200,000
30 November 2010 Issue of treasury shares with non-recourse
loans 2,925,000 579,150
15 December 2010
Issued at 16 cents per share 100,000,000 15,419,411
Costs associated with share issues - (1,952,783)
01 July 2011
Opening Balance 298,691,705 27,392,728
23 February 2012
Issued at 10 cents per share 150,000 -
30 June 2012
Closing Balance 298,841,705 27,392,728
- Employee share plan shares on issue (6,595,000) (509,905)
292,246,705 26,897,823
If, any time during the exercise period, an employee ceases to be the employee, all share options held by
that employee will lapse one month after the employment end date. Therefore above employee shares are
recognised in issued capital when issued to the employees.
(c) Movements in employee share plan shares issued with limited recourse employee loans
Number of
Date Details shares $
1 July 2010 Opening balance 3,870,000 -
Issued during the year 2,925,000 579,150
Employee shares sold during the year & (350,000) (69,245)
repayment of loan
On issue at end of year 6,445,000 (509,905)
1 July 2011 Opening balance 6,445,000 (509,905)
Issued during the year 150,000 -
Employee shares sold during the year & - -
repayment of loan
On issue at end of year 6,595,000 (509,905)
This account is used to record the value of shares issued under the Executive Share Incentive Plan (ESIP).
The ESIP is accounted for as an “in-substance” option plan due to the limited recourse nature of the loan
between employees and the Company to finance the purchase of ordinary shares. The total fair value of
the “in substance” options issued under the plan is recognised as a share-based payment expense over
the vesting period, with a corresponding increase in equity. Information on the valuation of shares issued
under the ESIP during the period is disclosed in Note 19.
Note 18: Reserves
Share
based Foreign
payment Option exchange Equity
reserve Reserve reserve reserve Total
$ $ $ $ $
At 1 July 2010 - 1,136,062 109,455 - 1,245,517
Foreign currency translation - - 4,397 - 4,397
Options based payments expense - 268,363 - - 268,363
Share based payments expense 340,602 - - - 340,602
Share based payments transferred
to issued capital (579,150) - - - (579,150)
Repayment of employee loans 69,245 - - - 69,245
Share based payment to locally
impacted community - - - 1,092,565 1,092,565
Acquisition of non-controlling
interest (11,218,637) (11,218,637)
At 30 June 2011 (169,303) 1,404,425 113,852 (10,126,072) (8,777,098)
Currency translation differences - - 11,872 - 11,872
Cost associated with Shares issued
employee share incentive scheme 3,183 - - - 3,183
At 30 June 2012 (166,120) 1,404,425 125,724 (10,126,072) (8,762,043)
Nature and purpose of reserves
Share based payments reserve
This reserve is used to record the value of equity benefits provided to employees, consultants and directors
as part of their remuneration.
Options reserve
This reserve is used to record the value of options issued, other than share-based payments to directors,
employees and consultants as part of their remuneration.
Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation
of the financial statements of foreign subsidiaries.
Equity Reserve
The Equity reserve is used to record the acquisition of the non-controlling interest by the Group and to
record differences between the carrying value of non-controlling interests and the consideration paid /
received, where there has been a transaction involving non-controlling interests that do not result in a loss
of control.
The reserve is attributable to the equity of the parent.
Note 19: Accumulated losses
2012 2011
$ $
Accumulated losses at the beginning of the financial year (20,517,734) (12,375,940)
Net profit / (loss) for the reporting period 4,479,716 (8,141,794)
Accumulated losses at the end of the financial year (16,038,018) (20,517,734)
Note 20: Share Based Payments
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year were as follows:
2012 2011
$ $
Options issued in consideration for services (i) - 268,363
Amounts expensed for shares issued under the Company’s Executive Share
Incentive Plan (ii) 3,183 340,602
Share based payment - in respect of Moonlight Iron Ore Project (refer note 12) - 1,092,565
3,183 1,701,530
(i) Options issued in consideration for services
On 30 November 2010, the Company issued 2,950,000 options with an exercise price of 19.80 cents to
employees as approved by then shareholders meeting held on 30 November 2010. There are no voting
rights attached to the options and they may be exercised from 7 December 2011.
Fair value of options granted
The fair value at grant date of options issued is determined using a binomial option pricing model that takes
into account the exercise price, the term of the option, the impact of dilution, the non-tradable nature of the
option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the option.
There were no options issued in 2012.
The table below summarises the model inputs (post consolidation) for options granted during the period
year ended 30 June 2011:
Options granted for no consideration 2,950,000
Exercise price (AUD cents) 19.80
Issue date 30 November 2010
Expiry date 7 December 2013
Underlying security spot price at grant date (AUD cents) 18
Expected price volatility of the Company’s shares 92.0% - 95.0%
Expected dividend yield 0%
Expected life 1.51 – 2.27
Risk-free interest rate 4.80% - 4.85%
binomial model valuation per option (AUD cents per share) 7.8 - 9.3
The expected price volatility is based on the historic volatility of the Company’s share price in the market.
(ii) Shares issued under the Executive Share Incentive Plan (ESIP)
Executive Share Incentive Plan
Under the plan, eligible employees are offered shares in The Company at prices determined by the Board.
The Board has the ultimate discretion to impose special conditions on the shares issued under the ESIP
and can grant a loan to a participant for the purposes of subscribing for plan shares. Shares issued under
loan facilities are held on trust for the benefit of the participant and will only be transferred into the
participant’s name once the loan has been fully repaid. ESIP participants receive all the rights associated
with the ordinary shares.
Loans granted to participants are limited recourse and interest free unless otherwise determined by the
Board. The loans are to be repaid via the application of any dividends received from the shares and/or the
sale of the plan shares. Where the loan is repaid by the sale of shares, any remaining surplus on sale is
remitted to the participant while any shortfall is borne by the Group.
(ii) Shares issued under the Executive Share Incentive Plan (ESIP) (continued)
During the prior reporting period, the Company issued the following shares under the ESIP:
1. 350,000 shares at 19.8 cents per share to Mr Robert Van der Laan, Chief Financial Officer, on 30
November 2010 after shareholder approval.
2. 350,000 shares at 19.8 cents per share to Mr Lindsay Cahill, Mine Services Manager, on 30
November 2010 after shareholder approval.
3. 500,000 shares at 19.8 cents per share to Mr Grant Button, Non-executive director, on 30 November
2010 after shareholder approval.
4. 75,000 shares at 19.8 cents per share to Ms Theresa Miloseski, Administration Officer, on 30
November 2010 after shareholder approval.
5. 500,000 shares at 19.8 cents per share to Mr Robert Hair, Company Secretary, on 30 November
2010 after shareholder approval.
6. 350,000 shares at 19.8 cents per share to Mr Christian Kunze, Engineering Manager, on 30
November 2010 after shareholder approval.
7. 200,000 shares at 19.8 cents per share to Mr Andrew Nealon, Joint Company Secretary, on 30
November 2010 after shareholder approval.
8. 600,000 shares at 19.8 cents per share to Mr Ed Nealon, Non-Executive chairman, on 30 November
2010 after shareholder approval.
During the reporting period, the Company issued the following shares under the ESIP:
1. 150,000 shares at 10 cents per share to Ms Jackie Barry, Administration Officer, on 23 February
2012 after shareholder approval.
The above shares vest as follows:
? one third of shares vest after 12 months;
? one third of shares vest after 24 months; and
? one third of shares vest after 36 months.
If any time during the exercise period an employee ceases to be the employee, all options held by that
employee vest immediately and will lapse one month after the employment end date. As such, there is not
considered to be any service conditions attaching to the grant of shares under the ESIP, and the full
expense is recognised at grant date.
Fair value of award granted
Shares granted under the ESIP are accounted for as “in-substance” options due to the limited recourse
nature of the loan between the employees and the Company to finance the purchase of ordinary shares.
The fair value at grant date for the various tranches of rights issued under the ESIP is determined using a
binomial model using the following model inputs:
2012 2011
Shares issued 150,000 2,925,000
Loan price per share (AUD cents) 10.00 19.80
Valuation date 23 February 2012 7 December 2010
Loan expiry date 25 February 2015 7 December 2014
Underlying security spot price at valuation date (AUD 10 18
cents)
Expected price volatility of the Company’s shares 89% 89%
Expected dividend yield 0% 0%
Expected life 3.00 4.02
Risk-free interest rate 2.1% 4.95%
binomial model valuation per share (AUD cents per 10.00 11.6
share)
Note 21: Commitments
(i) At this stage the Company has no minimum obligations with respect to tenements
expenditure requirements.
(ii) Operating lease commitments are as follows:
2012 2011
$ $
Within 1 year 34,780 35,722
2 to 3 years 60,865 -
Total 95,645 35,722
The Company disposed of its Australian tenements during 2011 and whilst the Company still holds
tenements in South Africa, expenditure commitments in relation to these tenements have been met. The
Company has converted their South African prospecting rights into mining rights and applied for new
prospecting rights over adjacent land. The Company is subject to new commitments in relation to mining
and prospecting expenditure.
A subsidiary of the Group entered into a 36 month commercial office lease on 01 April 2012, with an 8%
annual escalation, for their head office in Johannesburg, South Africa. The value of the lease has been
annualised over the life of the Lease agreement as per the above.
Note 22: Contingent liabilities
There are no contingent liabilities as at 30 June 2012 other than an obligation under the BEE transaction
(detailed in note 13) to buy out the BEE shareholding in Mkhombi Investments for ZAR 12.5 million, should
one or more of the subscription agreement conditions not be met by the Company. Should this occur and
the Company not make alternative arrangements, the Company’s holding in the Moonlight Iron Ore Project
could cease to be in compliance with the BEE requirements of the MPRDA. The Company believes this to
be an unlikely scenario and in any event would endeavour to make alternative arrangements in order to
remain compliant with the MPRDA.
Note 23: Related party transactions
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
Subsidiaries
The consolidated financial statements include the financial statements of Ferrum Crescent Limited and the
subsidiaries listed in the following table.
% Beneficial Equity
Interest
Name Country of Incorporation 2012 2011
Ferrum Metals Pty Ltd Australia 100 100
Batavia Ltd Mauritius 100 100
Nelesco 684 (Pty) Ltd South Africa 100 100
Turquoise Moon Trading 157 (Pty) South Africa 97.14 97.14
Ltd
Mkhombi Investments (Pty) Ltd South Africa 88.46 88.46
Ferrum Crescent Limited is the ultimate Australian parent entity and the ultimate parent of the Group.
Transactions between Ferrum Crescent Limited and its controlled entities during the year consisted of loan
advances by Ferrum Crescent Limited. All intergroup transactions and balances are eliminated on
consolidation.
Loans to / (from) related parties
The following transactions were undertaken between the Company, executive officers and director-related
entities during 2011 and 2012
2012 2011
$ $
Consulting secretarial fees were paid to Athlone International
Consultants Pty Ltd, a company with which Andrew Nealon is
associated 45,000 71,667
Consulting secretarial fees were paid to Camcove Pty Ltd, a company
of which Robert Hair is a director and shareholder 249,000 164,364
Consulting fees were paid to T.C Droste Investments Pty Ltd, a
company of which Ted Droste is a director and shareholder 90,000 82,500
Director fees were paid to Nesongozwi Mining Corp Ltd, a company of
which Matodzi Nesongozwi is a director and shareholder - 18,000
Consulting fees were paid to Torbinup Resources Pty Ltd, a company
of which Lindsay Cahill is a director and shareholder 29,756 90,119
Kofi Morna, a Director of the Company, is also a director and shareholder of Mkhombi AmaMato, who, prior
to entering into the BEE subscription agreement had a majority interest in Mkhombi Investments. Upon
completion of the subscription agreement detailed in the review of operations section and Note 12 above,
Mkhombi AmaMato will directly own 15.6% or approximately 55,208,419 shares in the Company.
Note 24: Cash flow information
2012 2011
$ $
Reconciliation of cash flow from operations with (loss) / profit from
ordinary activities after income tax
Profit / (loss) from ordinary activities after income tax 4,479,716 (8,141,794)
Impairment of available for sale investments - -
Depreciation 38,322 17,586
Loss / (profit) on sale of plant and equipment 1,074 2,240
Profit on sale of available for sale financial assets - (665,242)
Loss / (profit) on remeasurement of financial liability (8,321,244) 1,623,285
Share based payment compensation 3,183 1701,530
Net exchange differences 11,140 73,398
Changes in assets and liabilities
(Increase )/ decrease in receivables 31,648 (141,937)
(Increase) / decrease in other operating assets (144,297) (74,422)
Increase / (decrease) in payables and other liabilities (713,675) 604,190
Increase/(decrease) in provisions 13,526 (94,688)
Cash flows from operations 4,600,607 (5,095,754)
Note 27: Subsequent events
At a meeting on 8 August 2012 it was ratified that the “Remuneration Sacrifice Share Plan” was
approved and that some liabilities existing at 30 June 2012 will be settled in shares during the 2013
financial year.
On 18 July 2012 the Momentum Investment policy was ceded to Constantia Insurance Company as
collateral to cover the value of R7,517,000 for the guarantee issued by them to the DMR (Department
of Minerals and Resources) for the Mine Rehabilitation provision.
Johannesburg
27 September 2012
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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