Kidman Resources Limited ABN 88 143 526 096
Financial Report for the period ended - 30 June 2011
1 Kidman Resources Limited Corporate directory 30 June 2011
Directors Mr Garrick Higgins (Non-Executive Chairman) Mr Shane Mele (Executive Director) Mr Nicholas Revell (Non-Executive Director)
Company secretary Ms Melanie Leydin
Registered office Suite 304 22 St Kilda Road ST KILDA VIC 3182 PH: +61 3 9692 7222 FAX: +61 3 9529 8057
Principal place of business Suite 3 Level 4, 12-20 Flinders Lane MELBOURNE VIC 3000
Share register Security Transfer Registrars Pty Ltd PO Box 535 Applecross WA 6953
Auditor Grant Thornton Audit Pty Ltd Level 2, 215 Spring Street MELBOURNE VIC 3000
Solicitors TressCox Lawyers Level 9, 469 La Trobe Street MELBOURNE VIC 3000
Stock exchange listing Kidman Resources Limited shares are listed on the Australian Securities Exchange (ASX code: KDR) ASX Code Options: KDRO
Website address www.kidmanresources.com.au
2 Kidman Resources Limited Directors' report 30 June 2011
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Kidman Resources Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled for the period ended 30 June 2011.
Directors The following persons were directors of Kidman Resources Limited during the whole of the financial period and up to the date of this report, unless otherwise stated:
Mr Garrick Higgins (Non-Executive Chairman - appointed 7 May 2010) Mr Nicholas Revell (Non-Executive Director - appointed 5 November 2010) Mr Shane Mele (Executive Director - appointed on 17 June 2011) Mr Harry Hill (Non Executive Director - resigned 18 August 2010) Mr Andrew Buxton (Managing Director - resigned on 17 June 2011)
Principal activities During the financial period the principal continuing activities of the consolidated entity consisted of: ● Exploration and development of precious and base metals deposits in New South Wales and the Northern Territory.
Dividends There were no dividends paid or declared during the current financial period.
Review of operations The loss for the consolidated entity after providing for income tax amounted to $601,593.
Refer to the Detailed Review of Operations that directly follows this report.
Financial position
The net assets of the consolidated entity increased by $3,796,607 as at 30 June 2011. During the period the company raised $4,398,200 (net of costs) through share issues.
The consolidated entity’s working capital, being current assets less current liabilities was $2,681,476 at 30 June 2011. During the period the consolidated entity had a negative cash flow from operating activities of $718,070 and $962,621 from exploration and evaluation activities.
As a result of the above the Directors believe the consolidated entity is in a strong and stable position to expand and grow its current operations.
Significant changes in the state of affairs During the period the Company issued 10,100,000 founder and seed capital shares raising $560,450, before costs. The company also issued 21,282,505 ordinary shares and 10,641,252 options exercisable at $0.20 (20 cents) on or before 29 November 2013, through the Company's initial public offering raising $4,256,501, before costs. Refer to Note 15 for further share issues.
There were no other significant changes in the state of affairs of the consolidated entity during the financial period.
Matters subsequent to the end of the financial period On 11 August 2011, the Company issued 40,000 ordinary shares as a result of a conversion of 40,000 KDRO options into fully paid ordinary shares of the Company, raising $8,000.
No other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
3 REVIEW OF OPERATIONS
HIGHLIGHTS
Raising $4.25 mil in new equity by way of IPO on ASX Discovery of multiple high grade copper lodes at Blind Calf prospect Completion of approx. 4600m of RC drilling at Blind Calf Best results to date include:
KD11-17 27m @ 6.08% Cu with 7.6/t Ag from 24m including 9m @ 11.8% Cu from 33m
KD11-14 12m @ 2.29% Cu from 29m 8m @ 2.21% Cu from 55m
KD11-22 16m @ 1.88% Cu from 71m
KD11-19 14m @ 1.82% Cu from 97m including 4m @ 3.85% Cu from 105m
Completion of sampling program at Hale River- Rare earths prospect Rare Earth dyke zones increased to 9 with approx. 3.5km of strike Appointment of Mr Shane Mele as Executive Director
PERSONNEL
On 17 June 2011 MR Shane Mele (B.Sc. (Hons) Geology) was appointed to the board of directors as Executive Director. He joins Mr Garrick Higgins (Non-Executive Chairman), and Mr Nick Revell (Non- Executive Director)
Shane Mele has 15 years of experience in Exploration Geology and Mine Geology with a particular focus on Base Metals and Gold, including extensive experience in the Lachlan Fold Belt, NSW, the location of several of Kidman’s most prospective projects.
During this time Shane worked with Mining Project Investors (MPI) for a period of seven years and also with Leviathan Resources, St Barbara and BCD Resources. His involvement at these companies has exposed Shane to leading edge exploration technologies and helped develop a multi-faceted approach to the exploration and mining industry.
Shane has been involved with the exploration and development of several discoveries, including the Golden Gift deposit at Stawell, Victoria and has significant experience advancing various projects to JORC compliant status.
More recently, at BCD Resources, Shane has gained exposure to corporate related activities including mergers, takeovers, and investor relations.
Prior to Mr Mele’s appointment, Mr Nick Revell was appointed back on 5th November 2010.
Mr. Revell has 22 years’ experience in mine geology and exploration geology, working with major mining Companies for 16 years as mine geologist. Mr. Revell established a consulting Company 6 years ago which specialises in mine development, due diligence and property valuation at all stages of development. Mr. Revell has wide experience in a number of commodities including gold, base metals and iron ore.
Mr Andrew Buxton resigned from the board on 17 June 2011.
4 CORPORATE
On 22 November 2010, the Company lodged a prospectus with ASIC in order to commence an Initial Public Offering of its shares.
The prospectus set out a minimum amount to be raised of $4.0m with the ability to accept over subscriptions up to $5.0m. The issue price per share was $0.20 (20 cents) with one (1) free attaching option ($0.20 price expiring on 29 November 2010) to be issued for every 2 shares subscribed for.
The offer closed on 11 January 2011 with applications totaling $4,256,501. The resulting 21,282,505 new shares and 10,641,252 options were allotted and issued on 12 January 2011.
On 13 January 2011, the Company was admitted to the Official List and on 18 January 2011, its shares and options commenced quotation on ASX (Shares ASX: KDR) (Options ASX: KDRO).
18,450,003 of the Company’s shares are subject to restriction agreements for varying lengths ranging from 6 months to 2 years. The result of this is that the number of quoted securities is 24,082,505 shares and 10,641,252 options. The total number of securities on issue for the Company as at the date of this report is 42,532,508 ordinary shares and 10,641,252 options.
At the issue price of $0.20 per share the Company had a market capitalization of approximately $8.5m.
PROJECTS
1. BLIND CALF- Central NSW
Highlights: Discovery of multiple high grade copper lodes Copper lodes remain open at depth 4600m of RC drilling completed Best intercept of 27m @ 6.08% Cu ( KD11-17)
In February 2011, Kidman reported encouraging results from the first reconnaissance drilling program by the Company at its 100% owned Blind Calf Project, approximately 65 km north of Condobolin, in central New South Wales. Since then, the project has made steady progress with the completion of 3 phases of RC drilling including for a total of approximately 4600m. A list of significant results can be viewed in table 1.
High grade copper intercepts of up to 7% have now been intersected in lodes beneath the Dunbar and Blind Calf shafts with grades up to 3% intersected at the Hilltop Shaft. These lodes, named after the nearby old mine shafts, are now known as Dunbar’s Lode, Blind Calf, and Hilltop Lodes. The mineralized lodes are observed to plunge steeply towards the north, dip steeply west, and remain open at depth.
This interpretation of the mineralized envelopes is analogous to other ‘Cobar style’ poly metallic mineralized pipes or lenses that typically have a slender diameter, are near vertical (but most with a northerly plunge) and tend to have significant vertical continuity.
A series of 5 copper-silver lenses have now been identified at the Blind Calf prospect with 1 gold-lead-zinc lense located on the western edge of the system (see figure 2 below).
Kidman re-assessed IP data collected from a geophysical survey conducted in 1971 and identified an IP anomaly west of the Dunbar shaft. This anomaly was targeted with drillhole KD11-08 and intersected a narrow lense of gold-lead-zinc (refer to figure 2 for drillhole intercept) 180m west of the Dunbar Lode. This lense is believed to be significant as it is a common feature associated with other well-known Cobar style deposits, such as CSA and Nymagee, and highlights the potential of the Blind Calf prospect.
5 The tenor of grade and number of lenses intersected from recent drilling is considered to be a significant breakthrough and presents Kidman with a great opportunity to develop this prospect going forward.
In the next phase of exploration Kidman will take a mutli-faceted approach and conduct detailed geophysical surveys including 3D IP, surface structural-geological mapping, and drilling, targeting known copper lodes down-plunge and test the near surface copper-oxide potential.
Figure 2: Blind Calf Prospect Plan – Best Intercepts from Phase 2 and Phase 3
The high grade copper lodes at Blind Calf have a strike length of 25-40m, dip from near vertical to steeply west (refer to cross-sections in figure 3 and 4) and plunge steeply north. Outside of the lodes, the mineralized lenses have a continuity of 50-200m. The deepest drillhole lode intercept (KD11-19) is located 100m below the surface and remains open at depth (see figure 4). The controls on the plunge of copper mineralization at this stage remains unknown but is interpreted to be related to the intersection angle of a north-south oriented shear and a NW-SE trending lithology/shear. Detailed structural and geological mapping is required to gain a better understanding of this relationship and will be part of an upcoming exploration program.
6 Table 1. Significant Blind Calf Drill Results
Drill Northing From To Azimunth Cu % EastingWGS84 mRL Depth Dip Interval Hole WGS84 (m) (m) (true) (0.4%Cutoff) (m) KD11-07 494806 6393170.8 399 34 35 240 232 -70 1 0.73
KD11-11 494742 6393194.4 401 34 35 198 94 -60 1 0.53
54 55 1 0.91
KD11-12 494772 6393329.3 406 78 81 198 98 -60 3 0.45
KD11-13 494608 6393456.8 422 32 41 198 100 -60 9 0.51
KD10-01 494803 6393169 400 41 63 105 241 -63 22 2.16
Including 55 62 7 4.04
KD11-14 494800 6393166 401 29 41 87 251 -60 12 2.29
Including 37 40 35.1
55 63 8 2.21
KD11-15 494801 6393169 401 29 36 99 285.1 -60 8 1.23
33 36 32.6
KD11-17 494789 6393178 403 24 51 99 217 -70 27 6.08
Including 33 42 9 11.8
KD11-18 494752 6393186.4 406 55 66 99 133.7 -60 11 1.33
KD11-19 494841 6393286.3 396 97 111 124 268.3 -60 14 1.82
Including 4 3.85
KD11-20 494829 6393281.3 397 29 35 99 266.1 -60 6 0.75
KD11-21 494777 6393315.9 405 67 77 100 148 -60 10 1.12
KD11-22 494777 6393317.2 406 71 87 124 148 -70 16 1.88
7 Figure 3. Dunbar Lode Cross-Section and results
8 Figure 4. Blind Calf Lode Cross-Section and results
9 Figure 5. Phase 3 drilling – Old mine shafts (looking south east, Blind Calf in foreground and Engine in background) June Qtr
PROJECTS
2. HALE RIVER- Northern territory
Highlights: Phase 1 and Phase 2 rock chip sampling programs completed Identified Rare Earth Oxide (REO) areas increased to 9 zones Major dyke zone strike length extended to 3.5km 29 rock chip samples have identified REO at grades greater than 0.3% Results include samples of up to 0.89% REO Further Copper samples identified up to 30.1% Cu
In December 2010, the Company completed its first reconnaissance sampling program at its 100% owned Hale River Project, approximately 150 km east of Alice Springs, in the Northern Territory. On 18 January 2011, the Company announced encouraging results from this program and that it had significantly expanded the extent of known Rare Earth anomalies with the Kidman tenement area.
The results extend the zones of dykes hosting Rare Earth Elements first discovered at Hale River by the Northern Territory Geological Survey in 2006, identifying Hale River as a potential new Rare Earths province. The best sample within that survey delivered a grade of 1.66% Rare Earth Oxides (REO) including Yttrium Oxide (Y203).
10 In December 2010 Kidman undertook a Phase 1 sampling program, which resulted in 10 samples out of 33 samples of the siliceous tan-black dyke material taken exhibited grades equal to or greater than 0.3% REO. The highest sample from this program returned a grade of 0.86% REO. This program also expanded the known REO bearing dyke zones from 4 to 8 zones. These results were announced to ASX on 18 January 2011.
Significantly the Phase 2 program has confirmed another new REO bearing dyke zone taking the total to 9 zones.
From a total of 46 rock chip samples that were taken in Phase 2, 18 of the samples had REO grades of 0.3% or above, with the highest sample returning a grade of 0.89%. The lateral extent of each of the two major dyke zones (The Main Dyke Zone and The Northern Dyke Zone) have been extended by approximately 1.2km providing an expanded total strike length of approximately 3.5km.
In particular, the Company is very encouraged by the consistency of the REO sample grades in this program. Elevated REO grades were found in almost all of the samples that were taken in Phase 2. The Company feels that this is an important step forward in terms of better understanding the nature of the mineralisation.
Figure 5 below shows the current distribution of identified REO samples within the Kidman tenement area at Hale River.
As was the case in Phase 1, the Company also assayed the Phase 2 samples for Copper. Significantly in the Phase 2 program, the Company has now determined that there is anomalous copper contained in the same rocks that comprise the REO dykes. The relationship between RRE and copper is not systematic and Company believes this indicates the copper is a later mineralised overprint. The results of Phase 2 have enabled the Company to clearly define several drill targets and an application for clearance to commence drilling has been made to the relevant authorities in the Northern Territory. Drilling is scheduled to commence shortly after approvals are granted. At this time the Company expects that to be in second quarter 2011.
11 Figure 5 – Identified REO Dyke Zones and all Kidman REE results
12
Figure 6. REE hosting dyke outcrop at Kidman’s Hale River project, Northern Territory
13 SAMPLE Year East_WGS84 North_WGS84 REO+Y2O3% Th(ppm) U(ppm) KAP-73 2011 544492 7336636 0.89 22.30 17.20 KAP-21 2010 544901 7337132 0.85 0.54 4.62 KAP-90 2011 543611 7335825 0.81 2.06 24.80 KAP-64 2011 545032 7337195 0.77 0.49 6.63
KAP-88 2011 543562 7335793 0.71 0.34 24.70 KAP-61 2011 544921 7337145 0.70 1.63 15.55 KAP-70 2011 544539 7336702 0.63 0.24 7.71
KAP-66 2011 545039 7337197 0.59 1.16 9.01 KAP-71 2011 544530 7336687 0.57 0.27 7.01 KAP-91 2011 543630 7335840 0.56 6.29 22.80 KAP-22 2010 545003 7337192 0.55 4.25 7.95 KAP-69 2011 544623 7336785 0.51 0.31 14.30 KAP-72 2011 544507 7336660 0.51 0.31 6.66 KAP-75 2011 544598 7336754 0.51 0.50 13.05 KAP-55 2011 544896 7337133 0.46 0.19 8.66 KAP-62 2011 545004 7337191 0.44 1.29 5.23 KAP-02 2010 542909 7335349 0.42 2.14 37.30
KAP-15 2010 544701 7336874 0.41 0.51 8.60 KAP-46 2010 544559 7337987 0.40 17.80 14.50 KAP-85 2011 544837 7337083 0.40 0.39 6.24
KAP-89 2011 543595 7335812 0.40 0.71 15.90 KAP-38 2010 544218 7337908 0.38 7.91 24.60 KAP-14 2010 544697 7336866 0.36 0.29 4.32 KAP-67 2011 544631 7336790 0.36 0.46 4.57 KAP-34 2010 542033 7335980 0.35 2.15 17.20 KAP-63 2011 545012 7337191 0.35 2.08 5.75 KAP-60 2011 544853 7337097 0.33 0.94 8.25 KAP-40 2010 544259 7337914 0.33 2.43 11.25 KAP-52 2010 544382 7334206 0.32 3.61 13.90
Table 2. Kidman Phase 1 and Phase 2 rock chip sampling results from Hale River
Note - the very low Thorium and Uranium content.
3. Other Projects
In addition to the projects described above, Kidman has a further five projects in the Lachlan Fold Belt in Central New South Wales. These projects are known as follows: Belmore Wilmatha Whinfell Jumble Plains Yethera
A detailed systematic assessment of each of these targets has commenced. Each target will be ranked and prioritized for future exploration efforts.
14 Kidman Resources Limited Directors' report 30 June 2011
Likely developments and expected results of operations Information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
Environmental regulation The consolidated entity holds participating interests in a number of mining and exploration tenements. The various authorities granting such tenements require the tenement holder to comply with the terms of the grant of the tenement and all directions given to it under those terms of the tenement. There have been no known breaches of the tenement conditions, and no such breaches have been notified by any government agency during the year ended 30 June 2011.
Information on directors
Name: Mr Garrick Higgins Title: Non-Executive Chairman (appointed 7 May 2010) Qualifications: B. Juris, LLB Experience and expertise: Mr Garrick Higgins is a partner of law firm TressCox Lawyers. His practice encompasses the corporate and securities industry, including mergers and acquisitions, takeovers, capital raisings, company floats and joint ventures. He has extensive experience in the mining, minerals, oil and gas sectors.
He has been a director of a number of ASX Listed companies operating in the mining and resources sector and is currently Chairman of In-tellinc Pty Ltd (the Tasmanian based incubarion Company). Other current directorships: None Former directorships (in the Somerton Energy Limited (resigned 22 April 2010) last 3 years): Special responsibilities: Member of Audit Risk and Compliance Committee and Remuneration and Nomination Committee. Interests in shares: 270,001 fully paid ordinary shares. Interests in options: 35,000 options exercisable at 20 cents on or before 29 November 2013.
15 Kidman Resources Limited Directors' report 30 June 2011
Name: Mr Nicholas Revell Title: Non-Executive Director (appointed 5 November 2010) Qualifications: B. AppSC, MAusIMM Experience and expertise: Nicholas Revell is a former Chief Mine Geologist of Fortescue Metal Group. He has extensive mining and exploration experience. His leadership was instrumental in helping Fortescue grow from an iron ore junior into one of the world’s largest iron ore producers. Mr Revell has occupied several senior exploration positions in exploration geology and property evaluation, working for ASX and TSX mining major companies for 20 years as an exploration geologist. He established a consulting company 20 years ago and specializes in exploration management, technical audit, due diligence and property valuation at all stages of development. He has wide experience in a number of commodities including Auriongold Ltd, North Limited, St Barbara; Crescent Gold (formerly Apollo Gold); and, MacArthur Minerals Ltd., where he participated in the gold, base metals and mineral sands. He has been responsible for project discovery of 340Mt Lake Giles Magnetite Project.
Other current directorships: Dynasty Metals Australia Limited Mayan Iron Corporation Limited Sunseeker Minerals Limited Forte Consolidated Limited
Former directorships (in the Rivera Resource Limited last 3 years): Special responsibilities: Chairman of Audit Risk and Compliance Committee and Remuneration and Nomination Committee. Interests in shares: 30,000 fully paid ordinary shares Interests in options: 25,000 options exercisable at 20 cents on or before 29 November 2013.
Name: Mr Shane Mele Title: Executive Director (appointed 17 June 2011) Qualifications: (B.Sc. (Hons) Geology) Experience and expertise: Shane Mele has 15 years experience in Exploration Geology and Mine Geology with a particular focus on Base Metals and Gold, including extensive experience in the Lachlan Fold Belt, NSW, the location of several of Kidman’s most prospective projects. During this time Shane worked with Mining Project Investors (MPI) for a period of seven years and also with Leviathan Resources, St Barbara and BCD Resources. His involvement at these companies has exposed Shane to leading edge exploration technologies and helped develop a multi faceted approach to the exploration and mining industry. Shane has been involved with the exploration and development of several discoveries, including the Golden Gift deposit at Stawell, Victoria and has significant experience advancing various projects to JORC compliant status. More recently, at BCD Resources, Shane has gained exposure to corporate related activities including mergers, takeovers, and investor relations. Other current directorships: None Former directorships (in the None last 3 years): Special responsibilities: None Interests in shares: None Interests in options: None
16 Kidman Resources Limited Directors' report 30 June 2011
Name: Mr Harry Hill Title: Non Executive Director (resigned 18 August 2010) Qualifications: CPA, FCIS Experience and expertise: Harry is a Certified Practising Accountant and Fellow of the Chartered Institute of Secretaries. He has over 25 years experience as a Director and Company Secretary of several publicly listed companies involved in mining and mineral exploration particularly in commodities of gold, nickel and diamonds and publicly listed companies operating in the field of education, construction and clothing, both wholesale and retail. Other current directorships: N/A Former directorships (in the N/A last 3 years): Special responsibilities: N/A Interests in shares: N/A Interests in options: N/A
Name: Mr Andew Buxton Title: Managing Director (resigned 17 June 2011) Experience and expertise: Andrew was the co-founder and executive director of Media Entertainment Group Limited which operated in six countries before being acquired by Consolidated Press Holdings Ltd.
He has had extensive commercial experience across the media, gaming and property industries. His skills are particularly focused in the areas of capital raising, corporate strategy and the financing, establishment and development of early stage enterprises. Other current directorships: N/A Former directorships (in the N/A last 3 years): Special responsibilities: N/A Interests in shares: N/A Interests in options: N/A
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.
'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.
Interests in shares and options stated above are as at the date of this financial report.
Company secretary Ms Leydin is a Chartered Accountant and is a Registered Company Auditor.
She graduated from Swinburne University in 1997, became a Chartered Accountant in 1999 and since February 2000 has been the principal of chartered accounting firm, Leydin Freyer.
In the course of her practice she audits listed and unlisted public companies involved in the resources industry. Her practice also involves outsourced company secretarial and accounting services to public companies in the resources sector. This involves preparation of statutory financial statements, annual reports, half year reports, stock exchange announcements and quarterly ASX reporting and other statutory requirements.
Ms Leydin has 19 years experience in the accounting profession and is a director and company secretary for a number of oil and gas, junior mining and exploration entities on the Australian Stock Exchange.
17 Kidman Resources Limited Directors' report 30 June 2011
Meetings of directors The number of meetings of the company's Board of Directors and of each board committee held during the period ended 30 June 2011, and the number of meetings attended by each director were:
Full Board Audit Committee Attended Held Attended Held Mr Nicholas Revell 11 11 1 1 Mr Garrick Higgins 11 11 1 1 Mr Andrew Buxton 11 11 - - Mr Harry Hill 1 1 - - Mr Shane Mele* - - - -
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
* Mr Shane Mele was appointed as a Director on 17 June 2011.
No meetings of the Remuneration Committee were held during the period.
Remuneration report (audited) The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Details of remuneration C Service agreements D Share-based compensation
A Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's and company's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and conforms with the market best practice for delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● competitiveness and reasonableness ● acceptability to shareholders ● alignment of executive compensation ● transparency
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the consolidated entity and company depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
Alignment to shareholders' interests: ● focuses on sustained growth in shareholder wealth, growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value ● attracts and retains high calibre executives
18 Kidman Resources Limited Directors' report 30 June 2011
Alignment to program participants' interests: ● rewards capability and experience ● reflects competitive reward for contribution to growth in shareholder wealth ● provides a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive directors and executive remunerations are separate.
Non-executive directors remuneration Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee.
ASX listing rules requires that the aggregate non-executive directors remuneration shall be determined periodically by a general meeting. The most recent determination was at the General Meeting held on 20 May 2010, where the shareholders approved an aggregate remuneration of $300,000.
Executive remuneration The consolidated entity and company aims to reward executives with a level and mix of remuneration based on their position and responsibility, which is both fixed and variable.
The executive remuneration and reward framework has three components: ● base pay and non-monetary benefits ● share-based payments ● other remuneration such as long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Nomination and Remuneration Committee, based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations.
Executives can receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the consolidated entity and adds additional value to the executive.
The long-term incentives ('LTI') includes long service leave and share-based payments. Shares are awarded to executives over a period of three years based on long-term incentive measures. These include increase in shareholders value relative to the entire market and the increase compared to the consolidated entity's direct competitors. The Nomination and Remuneration Committee intends to revisit the long-term equity-linked performance incentives specifically for executives during the year ending 30 June 2012.
Consolidated entity performance and link to remuneration Remuneration for certain individuals is not directly linked to performance of the consolidated entity. An individual member of staff’s performance assessment is done by reference to their contribution to the Company’s overall operational achievements. All Directors and Executives hold shares and options in the Company to facilitate goal congruence between Executives with that of the business and shareholders. Further information has not been disclosed as it is commercially confidential.
The Nomination and Remuneration Committee is of the opinion that the continued improved results can be attributed in part to the adoption of performance based compensation and is satisfied that this improvement will continue to increase shareholder wealth if maintained over the coming years.
19 Kidman Resources Limited Directors' report 30 June 2011
B Details of remuneration
Amounts of remuneration Details of the remuneration of the directors, other key management personnel (defined as those who have the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity) and specified executives of Kidman Resources Limited are set out in the following tables.
Post- employment Long-term Share-based 30/06/2011 Short-term benefits benefits benefits payments
Cash salary Non- Super- Long service Equity- Name and fees Bonus monetary annuation leave settled Total $$$$$$$
Non-Executive Directors: Mr Nicholas Revell ** 25,520 - - - - - 25,520 Mr Garrick Higgins *** 40,000 - - - - - 40,000
Executive Directors: Mr Andrew Buxton * 226,426 - - - - - 226,426
Other Key Management Personnel: Ms Melanie Leydin **** 90,994 - - - - - 90,994 382,940 - - - - - 382,940
* resigned 17 June 2011. This amounts includes $91,425 in relation to termination payments. ** appointed 5 November 2010. *** appointed 7 May 2010.
**** Fees paid to Leydin Freyer Corporate Pty Ltd in respect of Company Secretarial and Accounting services.
Mr Shane Mele has not been paid during the 2011 financial year.
20 Kidman Resources Limited Directors' report 30 June 2011
C Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:
Name: Mr Shane Mele Title: Executive Director Agreement commenced: 17 June 2011 Term of agreement: The contract is for a 24 month term to 17 June 2013.
Details: The Employment Agreement may be terminated in circumstances described below with the remuneration consequences as noted to the extent permitted by the Corporations Act and Listing Rules:
1. Resignation period by the Executive Director is one (1) month’s notice 2. Termination by the company giving one (1) months notice in writing or payment in lieu thereof, or a combination of notice and payment in lieu 3. The Company can immediately terminate Mr Mele’s employment with cause, in a number of circumstances, including where there is a serious breach of the Employment Agreement, serious misconduct, bankruptcy or conviction of any criminal offence.
Name: Mr Andrew Buxton Title: Managing Director (resigned 17 June 2011) Agreement commenced: 10 November 2010 Term of agreement: The contract was for a 24 month term commencinng on 10 November 2010. Details: Mr Buxton resigned on 17 June 2011 at which time the contract was terminated. As part of his termination he was paid six months fees totalling $90,000.
D Share-based compensation
Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the period ended 30 June 2011.
Options There were no options issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2011.
There were no options granted to or exercised by directors and other key management personnel as part of compensation during the period ended 30 June 2011.
This concludes the remuneration report, which has been audited.
Shares under option Unissued ordinary shares of Kidman Resources Limited under option at the date of this report are as follows:
Exercise Number Grant date Expiry date price under option
17 January 2011 29 November 2013 $0.20 10,601,252
21 Kidman Resources Limited Directors' report 30 June 2011
Shares issued on the exercise of options There were no shares of Kidman Resources Limited issued on the exercise of options during the period ended 30 June 2011.
Indemnity and insurance of officers The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
Indemnity and insurance of auditor The company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.
Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.
Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial period by the auditor are outlined in note 19 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial period, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 19 to the financial statements do not compromise the external auditor’s independence for the following reasons: ● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and ● none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision- making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.
Officers of the company who are former audit partners of Grant Thornton Audit Pty Ltd There are no officers of the company who are former audit partners of Grant Thornton Audit Pty Ltd.
22 Kidman Resources Limited Directors' report 30 June 2011
Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.
Auditor Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
______Mr Garrick Higgins Chairman
23 August 2011 Melbourne
23
Grant Thornton Audit Pty Ltd ACN 130 913 594 Level 2 215 Spring Street Melbourne Victoria 3000 GPO Box 4984 Melbourne Victoria 3001
T +61 3 8663 6000 F +61 3 8663 6333 E [email protected] W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Kidman Resources Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Kidman Resources Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD Chartered Accountants
B.L. Taylor Director - Audit & Assurance
Melbourne, 23 August 2011
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
24 Kidman Resources Limited Corporate Governance Statement 30 June 2011
The Board of Directors (‘the Board’) of Kidman Resources Limited (the ‘company’) is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of the company on behalf of the shareholders by whom they are elected and to whom they are accountable.
The table below summarises the company's compliance with the ASX Corporate Governance Council's Revised Principles and Recommendations.
Principles and Compliance Comply Recommendations
Principle 1 – Lay solid foundations for management and oversight
1.1 Establish the functions The Board is responsible for the overall Complies. reserved to the Board and corporate governance of the company. those delegated to manage The Board has adopted a Board charter that and disclose those formalises its roles and responsibilities and functions. defines the matters that are reserved for the Board and specific matters that are delegated to management. The Board has adopted a Delegations of Authority that sets limits of authority for senior executives. On appointment of a director, the company issues a letter of appointment setting out the terms and conditions of appointment to the Board.
1.2 Disclose the process for The Board meets annually to review the Complies. evaluating the performance performance of executives. The senior of senior executives. executives’ performance is assessed against performance of the Company as a whole.
1.3 Provide the information A Board charter has been disclosed on the Complies. indicated in Guide to company’s website and is summarised in this reporting on Principle 1. Corporate Governance Statement. Complies. A performance evaluation process is included in the Board Charter, which has been disclosed on the company’s website and is summarised in this Corporate Governance Statement. Complies. The Board will conduct a performance evaluation for senior executives at June 2012 in accordance with the process above.
Principle 2 – Structure the Board to add value
2.1 A majority of the Board The majority of the Board’s directors are Complies. should be independent independent directors of the company. directors. Mr Garrick Higgins is an independent Non- Executive Director and Chairman. Mr Nicholas Revell is an independent Non- Executive Director. Mr Shane Mele is an Executive Director.
25 Kidman Resources Limited Corporate Governance Statement 30 June 2011
Principles and Compliance Comply Recommendations
2.2 The chair should be an Mr Garrick Higgins is the Chairman and is an Complies. independent director. independent Non-Executive Director.
2.3 The roles of chair and chief Mr Garrick Higgins is the Chairman and Mr Complies. executive officer should not Shane Mele the Executive Director. be exercised by the same individual.
2.4 The Board should establish The company has established a Nomination The Committee only has 2 a nomination committee. and Remuneration Committee. members due to the size of the Board. To maintain The Board has undertaken a review of the mix independence the Board of skills and experience on the Board in light of decided it wasn’t appropriate the company’s principal activities and direction, to include an Executive and has considered diversity in succession Director on the Audit planning. The Board considers the current mix Committee in order to have of skills and experience of members of the the 3 members. Board and its senior management is sufficient to meet the requirements of the company. The Board supports the nomination and re- election of the directors at the company’s forthcoming Annual General Meeting.
2.5 Disclose the process for The company conducts the process for Complies. evaluating the performance evaluating the performance of the Board, its of the Board, its committees and individual directors as outlined committees and individual in the Board Charter which is available on the directors. company’s website. The Board’s induction program provides incoming directors with information that will enable them to carry out their duties in the best interests of the company. This includes supporting ongoing education of directors for the benefit of the company.
2.6 Provide the information This information has been disclosed (where Complies. indicated in the Guide to applicable) in the directors’ report attached to reporting on Principle 2. this Corporate Governance Statement. Complies Mr Garrick Higgins and Mr Nicholas Revell are independent directors of the company. A director is considered independent when he substantially satisfies the test for independence as set out in the ASX Corporate Governance Recommendations. Members of the Board are able to take independent professional advice at the expense of the company. Mr Garrick Higgins, Non-Executive Chairman, was appointed to the Board at incorporation of the Company in May 2010. Mr Shane Mele, Executive Director and Chief Executive Officer, was appointed to the Board in June 2011. Mr Nicholas Revell, Non-Executive Director, was appointed to the Board in November 2010.
26 Kidman Resources Limited Corporate Governance Statement 30 June 2011
Principles and Compliance Comply Recommendations Mr Andrew Buxton, Managing was appointed to the Board at incorporation in May 2010 and resigned in June 2011. The Board has undertaken a review of the mix of skills and experience on the Board in light of the company’s principal activities and direction, and has considered diversity in succession planning. The Board considers the current mix of skills and experience of members of the Board and its senior management is sufficient to meet the requirements of the company. In accordance with the information suggested in Guide to Reporting on Principle 2, the company has disclosed full details of its directors in the director’s report attached to this Corporate Governance Statement. Other disclosure material on the Structure of the Board has been made available on the company’s website.
Principle 3 – Promote ethical and responsible decision making The Board has adopted a code of conduct. The 3.1 Establish a code of Complies. code establishes a clear set of values that conduct and disclose the emphasise a culture encompassing strong code or a summary of the corporate governance, sound business code. practices and good ethical conduct.
The code is available on the company’s website.
3.2 Companies should The Board has undertaken a review of the mix Does not comply however the establish a policy of skills and experience on the Board in light of Board has committed the concerning diversity and the company’s principal activities and direction. company to review and disclose the policy or a prepare a Diversity Policy The Board will prepare a Diversity Policy that summary of that policy. that considers all aspects of considers the benefits of diversity, ways to The policy should include diversity in accordance with promote a culture of diversity, factors to be requirements for the Board corporate governance taken into account in the selection process of to establish measurable guidelines. candidates for Board and senior management objectives for achieving positions in the company, education programs gender diversity and for the to develop skills and experience in preparation Board to assess annually for Board and senior management positions, both the objectives and processes to include review and appointment progress in achieving of directors, and identify key measurable them. diversity performance objectives for the Board, CEO and senior management.
3.3 Provide the information On completion and acceptance of a Diversity Does not comply however the indicated in Guide to Policy, the company will report in each annual Board has committed the reporting on Principle 3. report the measurable objectives for achieving company to review and gender diversity set by the Board. prepare a Diversity Policy that considers all aspects of diversity in accordance with corporate governance guidelines. The company will include in the directors’ report the proportion of women employees and their positions held within the company. Does not comply.
27 Kidman Resources Limited Corporate Governance Statement 30 June 2011
Principle 4 – Safeguard integrity in financial reporting
4.1 The Board should establish The Board has established an audit and risk Complies. an audit committee. committee which operates under an audit and risk committee charter to focus on issues relevant to the integrity of the company’s financial reporting.
4.2 The audit committee Members of the audit and risk committee are The Committee only has 2 should be structured so Mr Nicholas Revell (Chair) and Mr Garrick members due to the size of that it consists of only non- Higgins. Mr Nicholas Revell is a Non-Executive the Board. To maintain executive directors, a Director and is not chair of the Board. The independence the Board majority of independent committee consists of two non-executive decided it wasn’t appropriate directors, is chaired by an directors. to include an Executive independent chair who is Director on the Audit not chair of the Board and Committee in order to have have at least 3 members. the 3 members.
The audit committee The Board has adopted an audit and risk Complies. should have a formal charter. charter. This charter is available on the company’s website.
4.4 Provide the information In accordance with the information suggested Complies. indicated in Guide to in Guide to Reporting on Principle 2, this has reporting on Principle 4. been disclosed in the directors’ report attached to this Corporate Governance Statement and is summarised in this Corporate Governance Statement. The members of the audit and risk committee are appointed by the Board and recommendations from the committee are presented to the Board for further discussion and resolution. The audit and risk committee held one meeting during the period to the date of the directors’ report and will meet at least twice per annum as a listed entity. The audit and risk charter, and information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners (which is determined by the audit committee), is available on the company’s website.
Principle 5 – Make timely and balanced disclosure
5.1 Establish written policies The company has adopted a continuous Complies. designed to ensure disclosure policy, to ensure that it complies compliance with ASX with the continuous disclosure regime under Listing Rules disclosure the ASX Listing Rules and the Corporations requirements and to Act 2001. ensure accountability at a This policy is available on the company’s senior executive level for website. that compliance and disclose those policies or a summary of those policies.
28 Kidman Resources Limited Corporate Governance Statement 30 June 2011
Principles and Compliance Comply Recommendations
5.2 Provide the information The company’s continuous disclosure policy is Complies. indicated in the Guide to available on the company’s website. reporting on Principle 5.
Principle 6 – Respect the rights of shareholders
6.1 Design a communications The company has adopted a shareholder Complies. policy for promoting communications policy. The company uses its effective communication website (www.kidmanresources.com.au), with shareholders and annual report, market announcements, media encouraging their disclosures and webcasting to communicate participation at general with its shareholders, as well as encourages meetings and disclose that participation at general meetings. policy or a summary of that This policy is available on the company’s policy. website.
6.2 Provide the information The company’s shareholder communications Complies. indicated in the Guide to policy is available on the company’s website. reporting on Principle 6.
Principle 7 – Recognise and manage risk
7.1 Establish policies for the The company has adopted a risk management Complies. oversight and management statement within the audit and risk committee of material business risks charter. The audit and risk committee is and disclose a summary of responsible for managing risk; however, these policies. ultimate responsibility for risk oversight and risk management rests with the Board. The audit and risk charter is available on the company’s website and is summarised in this Corporate Governance Statement.
7.2 The Board should require The Board believes the risk management and Management has not formally management to design and internal control systems designed and reported to the Board as to implement the risk implemented by the Directors and the Financial the effectiveness of the management and internal Officer are adequate given the size and nature Company’s management of control system to manage of the Company’s activities. The Board its material business risks. the company’s material informally reviews and requests management Given the nature and size of business risks and report internal control. the Company and the Board’s to it on whether those risks ultimate responsibility to are being managed manage the risks of the effectively. The Board Company this is not should disclose that considered critical. The management has reported Company intends to develop to it as to the effectiveness the risk reporting framework of the company’s into a detailed policy as its management of its material operations continue to grow. business risks.
7.3 The Board should disclose The Board has received a statement from the Complies. whether it has received chief executive officer and chief financial officer assurance from the chief that the declaration provided in accordance executive officer and chief with section 295A of the Corporations Act 2001 financial officer that the is founded on a sound system of risk
29 Kidman Resources Limited Corporate Governance Statement 30 June 2011
Principles and Compliance Comply Recommendations declaration provided in management and internal control and that the accordance with section system is operating efficiently and effectively in 295A of the Corporations all material respects in relation to the financial Act is founded on a sound reporting risks. system of risk management and internal control and that the system is operating efficiently and effectively in all material respects in relation to the financial reporting risks.
7.4 Provide the information The Board has adopted an audit and risk Complies. indicated in Guide to charter which includes a statement of the reporting on Principle 7. company’s risk policies. This charter is available on the company’s website and is summarised in this Corporate Governance Statement. The company has identified key risks within the business and has received a statement of assurance from the chief executive officer and chief financial officer.
Principle 8 – Remunerate fairly and responsibly
8.1 The Board should establish The Board has established a Nomination and Complies. a remuneration committee. Remuneration Committee and has adopted a remuneration charter. The remuneration committee: consists of a majority of independent directors Mr Nicholas Revell and Mr Garrick Higgins; is chaired by Mr Nicholas Revell an independent director; and has two members.
8.2 Clearly distinguish the The company complies with the guidelines for Complies. structure of non-executive executive remuneration packages and non- directors’ remuneration executive director remuneration. from that of executive No senior executive is involved directly in directors and senior deciding their own remuneration. executives.
30 Kidman Resources Limited Corporate Governance Statement 30 June 2011
Principles and Compliance Comply Recommendations
8.3 Provide the information The Board has adopted a Nomination and Complies. indicated in the Guide to Remuneration Committee charter. reporting on Principle 8. The company does not have any schemes for retirement benefits other than superannuation for non-executive directors.
Kidman Resources Limited’s corporate governance practices were in place for the financial year ended 30 June 2011 and to the date of signing the directors’ report.
Various corporate governance practices are discussed within this statement. For further information on corporate governance policies adopted by Kidman Resources Limited, refer to our website: www.kidmanresources.com.au
31 Kidman Resources Limited Financial report For the period ended 30 June 2011
Contents Page Financial report Statement of comprehensive income 33 Statement of financial position 34 Statement of changes in equity 35 Statement of cash flows 36 Notes to the financial statements 37 Directors' declaration 57 Independent auditor's report to the members of Kidman Resources Limited 58
General information
The financial report covers Kidman Resources Limited as a consolidated entity consisting of Kidman Resources Limited and the entities it controlled. The financial report is presented in Australian dollars, which is Kidman Resources Limited's functional and presentation currency.
The financial report consists of the financial statements, notes to the financial statements and the directors' declaration.
Kidman Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are:
Registered office Principal place of business Suite 304 Suite 3 22 St Kilda Road Level 4, 12-20 Flinders Lane ST KILDA VIC 3182 MELBOURNE VIC 3000
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial report.
The financial report was authorised for issue, in accordance with a resolution of directors, on 23 August 2011. The directors do not have the power to amend and reissue the financial report.
32 Kidman Resources Limited Statement of comprehensive income For the period ended 30 June 2011
Consolidated 7/5/10- Note 30/6/11 $
Revenue 4 102,657
Expenses Depreciation and amortisation expense 5 (4,463) Administration expenses (95,026) Corporate expenses (295,119) Employment expenses (309,642)
Loss before income tax expense (601,593)
Income tax expense 6 -
Loss after income tax expense for the period attributable to the owners of Kidman Resources Limited (601,593)
Other comprehensive income for the period, net of tax -
Total comprehensive income for the period attributable to the owners of Kidman Resources Limited (601,593)
Cents
Basic earnings per share 27 (2.38) Diluted earnings per share 27 (2.38)
The above statement of comprehensive income should be read in conjunction with the accompanying notes
33 Kidman Resources Limited Statement of financial position As at 30 June 2011
Consolidated Note 30/06/2011 $
Assets
Current assets Cash and cash equivalents 7 2,599,935 Trade and other receivables 8 204,370 Other 9 4,537 Total current assets 2,808,842
Non-current assets Property, plant and equipment 10 38,487 Intangibles 11 32,263 Exploration and evaluation 12 962,621 Other 13 81,760 Total non-current assets 1,115,131
Total assets 3,923,973
Liabilities
Current liabilities Trade and other payables 14 127,366 Total current liabilities 127,366
Total liabilities 127,366
Net assets 3,796,607
Equity Contributed equity 15 4,398,200 Accumulated losses (601,593)
Total equity 3,796,607
The above statement of financial position should be read in conjunction with the accompanying notes
34 Kidman Resources Limited Statement of changes in equity For the period ended 30 June 2011
Contributed Retained Total equity profits equity $$$$$$ Consolidated Balance at 7 May 2010 3 - 3
Other comprehensive income for the period, net of tax ------Loss after income tax expense for the period - - - (601,593) (601,593)
Total comprehensive income for the period - - - - (601,593) (601,593)
Transactions with owners in their capacity as owners: Contributions of equity 4,816,951 - 4,816,951 Less capital raising costs (418,754) - (418,754)
Balance at 30 June 2011 - - - 4,398,200 (601,593) 3,796,607
The above statement of changes in equity should be read in conjunction with the accompanying notes
35 Kidman Resources Limited Statement of cash flows For the period ended 30 June 2011
Consolidated 7/5/10- Note 30/6/11 $
Cash flows from operating activities Payments to suppliers and employees (inclusive of GST) (778,105) Interest received 77,845 Payments for secutity bonds on operating activities (17,810)
Net cash used in operating activities 26 (718,070)
Cash flows from investing activities Payments for security deposits on exploration licenses (70,000) Payments for property, plant and equipment (39,322) Payments for intangibles (8,252) Payments for exploration and evaluation (962,621)
Net cash used in investing activities (1,080,195)
Cash flows from financing activities Proceeds from issue of seed capital 560,453 Proceeds from initial public offering 4,256,501 Share issue transaction costs (418,754)
Net cash from financing activities 4,398,200
Net increase in cash and cash equivalents 2,599,935 Cash and cash equivalents at the beginning of the financial period -
Cash and cash equivalents at the end of the financial period 7 2,599,935
The above statement of cash flows should be read in conjunction with the accompanying notes
36 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below.
New, revised or amending Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
The adoption of these Accounting Standards and Interpretations did not have any impact on the financial performance or position of the consolidated entity.
Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates The preparation of the financial statements 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 2.
Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 23.
Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Kidman Resources Limited ('company' or 'parent entity') as at 30 June 2011 and the results of all subsidiaries for the period then ended. Kidman Resources Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those 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 effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity 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.
37 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 1. Significant accounting policies (continued)
Change in accounting policy from 7 May 2010 The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the 'business combinations' accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.
The change in accounting policy has been applied prospectively.
Accounting policy up to 6 May 2010 The acquisition of subsidiaries is accounted for using the purchase method of accounting. Refer to the 'business combinations' accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for using the parent entity extension method, where the difference between the consideration paid and the book value of the share of net assets acquired is recognised in goodwill.
Where the consolidated entity loses control over a subsidiary, the consolidated entity recognises a gain or loss directly to the income statement, being the difference between the consideration received and the share of the net assets disposed of. Any investment retained is accounted for at its proportionate share of net asset value at the date control is lost.
Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
Revenue recognition Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue Other revenue is recognised when it is received or when the right to receive payment is established.
38 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 1. Significant accounting policies (continued)
Income tax The income tax expense or benefit for the period is the tax payable on that 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 unused tax losses and under and over provision in prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or ● When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
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.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously.
Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables Other receivables are recognised at amortised cost, less any provision for impairment.
Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:
Plant and equipment 3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
39 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 1. Significant accounting policies (continued)
Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.
Software Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 years.
Exploration and evaluation assets Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.
Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets 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.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial period and which are unpaid. Due to their short-term nature they are measured at amortised cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Contributed equity Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Business combinations
Change in accounting policy from 7 May 2010 The change in accounting policy has been applied prospectively.
40 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 1. Significant accounting policies (continued)
Accounting policy up to 6 May 2010 The purchase method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.
Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
All identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially recognised at their fair values at the acquisition-date, irrespective of the extent of any minority interest. The excess of the cost of the acquisition over the fair value of the consolidated entity’s share of the identifiable net assets acquired is recognised as goodwill. If the cost of the acquisition is less than the consolidated entity's share of the fair value of the identifiable net assets acquired, the difference is recognised as a gain directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. The unwinding of the discount on deferred cash consideration is expensed to profit or loss as a finance cost. Contingent consideration is recognised when probable. Subsequent changes to contingent consideration is recognised as goodwill.
Business combinations are initially accounted for on a provisional basis until either the earlier of (i) 12 months from the date of the acquisition or (ii) the finalisation of fair values.
Earnings per share
Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Kidman Resources Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the financial period.
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.
Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
41 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 1. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2011. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions 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.
Estimation of useful lives of assets The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and definite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Tax losses The Company has not recognised a deferred tax asset with regard to unused tax losses and other temporary differences, as it has not been determined whether the Company will generate sufficient taxable income against which the unused tax losses and other temporary differences can be utilised in the foreseeable future.
Exploration and evaluation assets At each reporting date, the directors review the carrying value of each area of interest, with reference to the indicators of impairment outlined in AASB 6 - Exploration for and Evaluation of Mineral Resources.
Note 3. Operating segments
Identification of reportable operating segments The consolidated entity is organised into one operating segment which consists of exploration for base metal and rare earths within Australia. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
42 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 4. Revenue
Consolidated 7/5/10- 30/6/11 $
Other revenue Interest 102,657
Revenue - - - 102,657
Note 5. Expenses
Consolidated 7/5/10- 30/6/11 $
Loss before income tax includes the following specific expenses:
Depreciation Office equipment 3,594 Computer equipment 227 Mining equipment 315
Total depreciation - - - 4,136
Amortisation Software 327
Total depreciation and amortisation - - - 4,463
Other Rent 21,960 Initital public offering costs - not attributed to cost of capital raised 91,747
Total other - - - 113,707
43 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 6. Income tax expense
Consolidated 7/5/10- 30/6/11 $
Numerical reconciliation of income tax expense to prima facie tax payable Loss before income tax expense (601,593)
Tax at the Australian tax rate of 30% - (180,478)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Movement in accruals 4,800 Incorporation fees 251 Exploration expenditure (288,603) Capital raising costs (3,270) Accrued income (7,444) Accured superannuation 695
- - - (474,049) Current period tax losses not recognised 474,049
Income tax expense - - - -
Consolidated 7/5/10- 30/6/11 $
Deferred tax assets not recognised Deferred tax assets not recognised comprises temporary differences attributable to: Tax losses 474,049 Temporary difference (293,570)
Total deferred tax assets not recognised - - - 180,479
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in the statement of financial position as the recovery of this benefit is uncertain.
The taxation benefits of tax losses and temporary differences not brought to account will only be obtained if: i) the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; ii) the consolidated entity continues to comply with the conditions for deductibility imposed by law; and iii) no change in tax legislation adversely affects the consolidated entity in realising the benefits from deducting the losses.
44 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 7. Current assets - cash and cash equivalents
Consolidated 30/06/2011 $
Cash at bank 99,935 Cash on deposit 2,500,000
- - - 2,599,935
For details in relation to credit and interest rate risk, refer to Note 17.
Note 8. Current assets - trade and other receivables
Consolidated 30/06/2011 $
Bonds and deposits 6,050 Interest receivable 24,812 GST receivable 173,508
- - - 204,370
Note 9. Current assets - other
Consolidated 30/06/2011 $
Prepayments 4,537
Note 10. Non-current assets - property, plant and equipment
Consolidated 30/06/2011 $
Computer equipment - at cost 8,768 Less: Accumulated depreciation (227) - - - 8,541
Office equipment - at cost 31,155 Less: Accumulated depreciation (3,594) - - - 27,561
Mining Equipment at cost 2,700 Less: Accumulated depreciation (315) - - - 2,385
- - - 38,487
45 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 10. Non-current assets - property, plant and equipment (continued)
Reconciliations Reconciliations of the written down values at the beginning and end of the current financial period are set out below:
Computer Office Mining Equipment Equipment Equipment Total $$$$$$ Consolidated Balance at 7 May 2010 ------Additions - - 8,768 31,155 2,700 42,623 Depreciation expense - - (227) (3,594) (315) (4,136)
Balance at 30 June 2011 - - 8,541 27,561 2,385 38,487
Note 11. Non-current assets - intangibles
Consolidated 30/06/2011 $
Software - at cost 32,590 Less: Accumulated amortisation (327) - - - 32,263
- - - 32,263
Reconciliations Reconciliations of the written down values at the beginning and end of the current financial period are set out below:
Software Total $$$$$$ Consolidated Balance at 7 May 2010 ------Additions - - - - 32,590 32,590 Amortisation expense - - - - (327) (327)
Balance at 30 June 2011 - - - - 32,263 32,263
Note 12. Non-current assets - exploration and evaluation
Consolidated 30/06/2011 $
Exploration and evaluation assets 962,621 - - - 962,621
- - - 962,621
46 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 12. Non-current assets - exploration and evaluation (continued)
Reconciliations Reconciliations of the written down values at the beginning and end of the current financial period are set out below:
Exploration Total $$$$$$ Consolidated Balance at 7 May 2010 ------Additions 962,621 962,621
Balance at 30 June 2011 - - - - 962,621 962,621
Note 13. Non-current assets - other
Consolidated 30/06/2011 $
Security deposits 11,760 Exploration Security Bonds 70,000
- - - 81,760
Note 14. Current liabilities - trade and other payables
Consolidated 30/06/2011 $
Trade payables 86,311 Other payables 41,055
- - - 127,366
Refer to note 17 for detailed information on financial instruments.
Note 15. Equity - contributed
Consolidated Consolidated 30/06/2011 30/06/2011 Shares $
Ordinary shares - fully paid 42,532,508 4,398,200
47 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 15. Equity - contributed (continued)
Movements in ordinary share capital
Details Date No of shares Issue price $
Founder shares 7 May 2010 3 $1.00 3 Founder shares 21 May 2010 4,500,000 $0.00 450 Seed capital shares 15 June 2010 2,100,000 $0.10 210,000 Seed capital shares 16 June 2010 500,000 $0.10 50,000 Crowl Creek share sale agreement 15 July 2010 7,500,000 $0.00 - Bonus share issue 8 November 2010 3,650,000 $0.00 - Seed capital shares 8 November 2010 1,000,000 $0.10 100,000 Seed capital shares 10 November 2010 2,000,000 $0.10 200,000 Shares issued through initial public offering 12 January 2011 21,282,505 $0.20 4,256,501 Less cost of capital raising 12 January 2011 - (418,754)
Balance 30 June 2011 42,532,508 4,398,200
Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Capital risk management The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum 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.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current parent entity's share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
Options
For further information in relation to unissued ordinary shares of Kidman Resources Limited under option, refer to the Directors' report of this annual report.
Note 16. Equity - dividends
There were no dividends paid or declared during the current financial period.
48 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 17. Financial instruments
Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by Board. The policies employed to mitgate risk include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. The Board identifies risk and evaluates and evaluates the effectiveness of its responses.
Interest rate risk The consolidated entity's only exposure to interest rate risk is in relation to deposits held. Deposits are held with reputable banking financial institutions.
As at the reporting date, the consolidated entity had the following variable rate cash on deposit.
30/06/2011
Weighted average interest rate Balance %$ Consolidated Cash on deposit 6.20 2,500,000
Net exposure to cash flow interest rate risk - 2,500,000
An increase/decrease in interest rates of 30% or 1.86 percentage points would have an favourable/adverse affect on profit before tax of $46,500 per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts.
Credit risk Credit risk is managed on a consolidated entity basis. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has minimal exposure to credit risk as its only receivable relate to security deposits, interest receivable and GST refunds due.
Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
The consolidated entity’s working capital, being current assets less current liabilities was $2,681,476 at 30 June 2011. During the period the consolidated entity had negative net operating cash flows of $718,070. Based on this the directors are satisfied that that the consolidted entity will have sufficient funds to pay its debts as and when they fall due.
49 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 17. Financial instruments (continued)
Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted Remaining average 1 year or Between 1 Between 2 contractual Consolidated - 30/06/2011 interest rate less and 2 years and 5 years Over 5 years maturities %$ $ $ $ $ Non-derivatives Non-interest bearing Trade payables - 86,311 - - - 86,311 Other payables - 41,055 - - - 41,055 Total non-derivatives 127,366 - - - 127,366
The cash flows in the maturity analysis above are not expected to occur significantly earlier than disclosed.
Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial instruments.
Note 18. Key management personnel disclosures
Directors The following persons were directors of Kidman Resources Limited during the financial period:
Mr Garrick Higgins Mr Nicholas Revell (appointed 5 November 2010) Mr Shane Mele (appointed 17 June 2011) Mr Andrew Buxton (resigned 17 June 2011) Mr Harry Hill (resigned 18 August 2010)
Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:
Consolidated 7/5/10- 30/6/11 $
Short-term employee benefits 382,940
The aggregate compensation includes fees paid to Leydin Freyer Corporate Pty Ltd in respect of Company Secretarial and Accounting Services. Ms M Leydin is director and principal of that company.
50 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 18. Key management personnel disclosures (continued)
Shareholding The number of shares in the parent entity held during the financial period by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Received Balance at the start of as part of Disposals/ the end of 30/06/2011 the period remuneration Additions other the period Ordinary shares Mr Garrick Higgins * - - 170,001 - 170,001 Mr Nicholas Revell ** - - 30,000 - 30,000 Mr Andrew Buxton *** - - 5,010,001 (5,010,001) - Ms Melanie Leydin ** - - 30,000 - 30,000 - - 5,240,002 (5,010,001) 230,001
* acquired through initial public offering and on market acquisition ** acquired through initial public offering *** acquired 4,500,000 founder shares, purchased 500,000 shares off market and purchased 10,000 shares through initial public offering. Mr Buxton resigned as a Director on 17 June 2011.
Mr Shane Mele was appointed on 17 June 2011 and does not hold any ordinary shares.
Option holding The number of options over ordinary shares in the parent entity held during the financial period by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Expired/ Balance at the start of forfeited/ the end of 30/06/2011 the period Granted Exercised other the period Options over ordinary shares Mr Garrick Higgins * - - - 35,000 35,000 Mr Nicholas Revell * - - - 15,000 15,000 Ms Melanie Leydin * - - - 15,000 15,000 - - - 65,000 65,000
* acquired through initial public offering
Mr Shane Mele was appointed on 17 June 2011 and does not hold any options.
Mr Andrew Buxton received 5,000 options through the Company's initial public offering, and resigned on 17 June 2011.
All options on issue at 30 June 2011 have vested and are exercisable.
Related party transactions Related party transactions are set out in note 22.
51 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 19. Remuneration of auditors
During the financial period the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd, the auditor of the company, and its related practices:
Consolidated 7/5/10- 30/6/11 $
Audit services - Grant Thornton Audit Pty Ltd Audit or review of the financial report 31,000
Other services - Grant Thornton Audit Pty Ltd Independent accountant's report 8,250
- - - 39,250
Note 20. Contingent liabilities
There were no contingent liabilities at 30 June 2011.
Note 21. Commitments for expenditure
Consolidated 30/06/2011 $
Lease Commitments - operating Committed at the reporting date but not recognised as liabilities, payable: Within one year 45,237 One to five years 58,923
- - - 104,160
Exploration and evaluation Committed at the reporting date but not recognised as liabilities, payable: Within one year 364,265 One to five years 8,000
- - - 372,265
52 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 21. Commitments for expenditure (continued)
Operating lease commitments
Operating lease commitments includes the office lease for the next 3 years.
Exploration and evaluation
In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to outlay rentals and to meet the minimum expenditure requirements of the State Mine Departments. Minimum expenditure commitments may be subject to renegotiation and with approval may otherwise be avoided by sale, farm out or relinquishment. These obligations are not provided in the accounts and are payable.
Note 22. Related party transactions
Parent entity Kidman Resources Limited is the parent entity.
Subsidiaries Interests in subsidiaries are set out in note 24.
Key management personnel Disclosures relating to key management personnel are set out in note 18 and the remuneration report in the directors' report.
Transactions with related parties The following transactions occurred with related parties:
Consolidated 7/5/10- 30/6/11 $
Payment for goods and services: Payments for legal fees to TressCox Lawyers (an entity associated with Mr Garrick Higgins) 12,881 Payments of costs associated with the intital public offering to TressCox Lawyers (an entity associated with Mr Garrick Higgins) 68,797
Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the reporting date.
Loans to/from related parties There were no loans to or from related parties at the reporting date.
Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates.
53 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 23. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of comprehensive income Parent 7/5/10- 30/6/11 $
Loss after income tax - (601,593)
Total comprehensive income - (601,593)
Statement of financial position Parent 30/06/2011 $
Total current assets - 2,808,828
Total assets - 3,923,973
Total current liabilities - 127,366
Total liabilities - 127,366
Equity Contributed equity - 4,398,200 Accumulated losses - (601,593)
Total equity - 3,796,607
Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2011.
Capital commitments - Property, plant and equipment Refer to Note 21 for details. The operating lease commitments related to parent, however the exploration commitments related to the subsidiary in which the mining assets are being held.
Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment.
54 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 24. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1:
Equity holding Country of 30/06/2011 Name of entity incorporation %
Crowl Creek Exploration Limited * Australia 100.00 Casey Exploration Pty Ltd ** Australia 100.00
* acquired through a share sale agreement by issuing 7,500,000 ordinary shares to the vendor on or about 15 July 2010. The Company acquired did not comprise any net assets or liabilities at the date of acquisition. ** this subsidiary was incorporated on 12 May 2010. The company acquired did not comprise of any net assets or liabilities at the date of acquisition.
Note 25. Events occurring after the reporting date
On 11 August 2011, the Company issued 40,000 ordinary shares as a result of a conversion of 40,000 KDRO options into fully paid ordinary shares of the Company, raising $8,000.
No other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
Note 26. Reconciliation of profit/(loss) after income tax to net cash used in operating activities
Consolidated 7/5/10- 30/6/11 $
Loss after income tax expense for the period - - (601,593)
Adjustments for: Depreciation and amortisation 4,463 Payment for security deposits (included in cash flows from operating activities) (17,810)
Change in operating assets and liabilities: Increase in trade and other receivables (163,935) Increase in prepayments (4,537) Decrease in other operating assets Increase in trade and other payables 65,342
Net cash used in operating activities - - - (718,070)
55 Kidman Resources Limited Notes to the financial statements 30 June 2011
Note 27. Earnings per share
Consolidated 7/5/10- 30/6/11 $
Loss after income tax attributable to the owners of Kidman Resources Limited - (601,593)
Number
Weighted average number of ordinary shares used in calculating basic earnings per share 25,259,772
Weighted average number of ordinary shares used in calculating diluted earnings per share - 25,259,772
Cents
Basic earnings per share - (2.38) Diluted earnings per share - (2.38)
Diluted Earnings per Share
The rights to options held by option holders have not been included in the weighted average number of ordinary shares for the purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 “Earnings per Share”. The rights to options are non-dilutive as the consolidated entity has generated a loss for the period.
56 Kidman Resources Limited Directors' declaration
In the directors' opinion:
● the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
● the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements;
● the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 30 June 2011 and of its performance for the financial period ended on that date; 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.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the directors
______Mr Garrick Higgins Chairman
23 August 2011 Melbourne
57
Grant Thornton Audit Pty Ltd ACN 130 913 594 Level 2 215 Spring Street Melbourne Victoria 3000 GPO Box 4984 Melbourne Victoria 3001
T +61 3 8663 6000 F +61 3 8663 6333 E [email protected] W www.grantthornton.com.au
Independent Auditor’s Report To the Members of Kidman Resources Limited
Report on the financial report We have audited the accompanying financial report of Kidman Resources Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information 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 the preparation of the financial report that gives a true and fair view of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes such internal controls as the Directors determine are necessary to enable the preparation of the financial report to be free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.
Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards which require us to 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.
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
58 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 Company’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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Electronic presentation of audited financial report This auditor’s report relates to the financial report of Kidman Resources Limited and controlled entities for the year ended 30 June 2011 included on Kidman Resources Limited’s web site. The Company’s Directors are responsible for the integrity of Kidman Resources Limited’s web site. We have not been engaged to report on the integrity of Kidman Resources Limited’s web site. The auditor’s report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site.
Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion In our opinion: a the financial report of Kidman Resources Limited is in accordance with the Corporations Act 2001, including:
i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.
59 3
Report on the remuneration report We have audited the remuneration report included in pages 18 to 21 of the directors’ report for the year ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report In our opinion, the remuneration report of Kidman Resources Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD Chartered Accountants
B.L. Taylor Director - Audit & Assurance
Melbourne, 23 August 2011
60 Kidman Resources Limited Shareholder information 30 June 2011
The shareholder information set out below was applicable as at 3 August 2011.
Distribution of equitable securities Analysis of number of equitable security holders by size of holding:
Number of holders of ordinary shares
1 to 1,000 52 1,001 to 5,000 102 5,001 to 10,000 158 10,001 to 100,000 250 100,001 and over 47
609
Holding less than a marketable parcel 62
Equity security holders
Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares % of total shares Number held issued
Goldspy Pty Ltd 6,250,000 14.69 UBS Wealth Management Australia Nominees 5,024,000 11.81 Andrew T Buxton 5,000,000 11.76 Jinji Res Pty Ltd 1,600,000 3.76 Olivers Hill Pty Ltd 1,500,000 3.53 King Fame Group Pty Ltd 1,479,020 3.48 Sapphire Ridge Holdings Pty Ltd 1,250,000 2.94 Starfair Pty Ltd 1,000,000 2.35 Wadham Nominees Pty Ltd 800,000 1.88 Stuart McDonald 625,000 1.47 Citicorp Nominees Pty Ltd 602,041 1.42 Zolia Pty Ltd 375,000 0.88 Shepherd Webster and O'Neill 337,500 0.79 Aaron Smith & DA Evans 332,500 0.78 Mark Ronald Penny 312,500 0.73 Rocket Trading Pty Ltd 300,000 0.71 Christopher John Arms 250,000 0.59 Tykune Pty Ltd 250,000 0.59 Marketing Power Pty Ltd 250,000 0.59 MGH Holding Pty Ltd 220,000 0.52
27,757,561 65.27
61 Kidman Resources Limited Shareholder information 30 June 2011
Options over ordinary shares % of total options Number held issued
UBS Wealth Management Australia Nominess 2,451,800 23.04 Neal John Worhtington 716,679 6.73 Teston Investment Pty Ltd 500,000 4.70 Rocket Trading Pty Ltd 400,000 3.76 1A Pty Ltd 382,500 3.59 PR Baster & C Bellmore 337,418 3.17 Bess Annie Moraro 300,000 2.82 GS & RM Wadsworth 200,000 1.88 Kaos Investments Pty Ltd 200,000 1.88 R&C Distributions 190,000 1.79 Kevin John Howard 180,000 1.69 Valda Elizabeth Murden 150,000 1.41 John Kulinski 140,000 1.32 Christopher John Arms 125,000 1.17 Tykune Pty Ltd 125,000 1.17 Rofluer Nominees Pty Ltd 125,000 1.17 Mitchell Financial Group Pty Ltd 125,000 1.17 10Q Cap Pty Ltd 120,000 1.13 Pontre Securities Pty Ltd 100,000 0.94 BJ Wolff & GT Stanley 100,000 0.94
6,968,397 65.47
Unquoted equity securities Number Number on issue of holders
Escrowed ordinary shares 16,500,003 12
Substantial holders Substantial holders in the company are set out below:
Ordinary shares % of total shares Number held issued
Goldspy Pty Ltd 6,250,000 14.69 UBS Wealth Management Australia Nominees 5,024,000 11.81 Andrew T Buxton 5,000,000 11.76
62 Kidman Resources Limited Shareholder information 30 June 2011
Voting rights The voting rights attached to ordinary shares are set out below:
Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
There are no other classes of equity securities.
Tenements
Description Tenement number Interest owned
Whinfell (NSW) EL 7535 100.00% Yethera (NSW) EL 7536 100.00% Blind Calf (NSW) EL 7537 100.00% Wilmatha (NSW) EL 7538 100.00% Belmore (NSW) EL 7539 100.00% Jumble Plains (NSW) EL 7540 100.00% Bogong (NSW) EL 4152 100.00% Hale River (NT) EL 27962 100.00% Martingale (NT) EL 28065 100.00%
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