Annual Report 30 June 2008 www.apexminerals.com.au For personal use only Apex Minerals NL ABN 22 098 612 974 ApexCover08.indd 1 13/10/08 3:14:50 PM Corporate Directory DIRECTORS REGISTERED OFFICE Mark Ashley Managing Director Level 1, 10 Ord Street West Perth WA 6005 Mark Bennett Exploration Director PO Box 682, West Perth WA 6872 Glenn Jardine Operations Director SHARE REGISTRY Stephen Lowe Non Executive Director Advanced Share Registry Services Pty Ltd Todd Bennett Non Executive Director 110 Stirling Highway, Nedlands WA 6009 PO Box 1156, Nedlands WA 6909 Kim Robinson Non Executive Chairman Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871 COMPANY SECRETARY AUDITORS Graham Douglas Anderson Stantons International Level 1, 1 Havelock Street, West Perth WA 6005 PRINCIPAL OFFICE Telephone: (08) 9481 3188 Facsimile: (08) 9321 1204 Level 1, 10 Ord Street West Perth WA 6005 SOLICITORS PO Box 682, West Perth WA 6872 Telephone: (08) 6311 5555 Salter Power Facsimile: (08) 6311 5556 Level 2, 6 Kings Park Road, West Perth WA 6005 Email: [email protected] Telephone: (08) 9216 0900 Facsimile: (08) 9216 0901 ASX CODE: AXM ACN: 098 612 974 WEB: www.apexminerals.com.au For personal use only ApexCover08.indd 2 13/10/08 3:14:50 PM A Year of Highlights Positive Completion of Wiluna Implementation study in June forecasts cash costs of A$560/oz; A$62m equity raising completed in June; A$60.5m raised in September via issuance of Bonds, Warrants and Gold Upside Participation Notes; Major resource upgrades announced in February, June and September; Maiden reserve announced in June; Refurbishment of plant well advanced; Mining at Wiluna commenced in October; First gold pour expected in November; Second Lawlers Nickel JV with Barrick announced in June. Table of Contents Managing Director’s Address 2 Apex Project Location Map 5 Overview 7 Operations Project Development 14 Exploration and Resources 18 Resource Table 30 Reserves Table 32 Directors’ Report 34 Independent Auditor’s Report 44 Independence Declaration 46 Director’s Declaration 47 Income Statements 48 Balance Sheets 49 Statement of Changes in Equity 50 Cash Flow Statements 51 Notes to Financial Statements 52 For personal use only Corporate Governance Statement 86 Additional Information 91 Annual Report 08 1 MD & CEO Address Dear Fellow Shareholder, It is with pleasure I present to you the Annual Report Significant progress on the development of the for 2008. Apex has had an exciting year, and we Wiluna project was made throughout the year, with now stand on the cusp of beginning significant a number of development plans coming to fruition. and profitable gold production at Wiluna. First gold We successfully finalised the consolidation all the production is scheduled to commence in November required assets to commence our integrated mine 2008. Production for the 2009 calendar year is strategy, with the purchase of Wiluna, Wilsons and expected to be around 130,000 ounces increasing Youanmi. Detailed metallurgical test work and to 200,000 ounces per annum in subsequent years. engineering studies were undertaken for the project implementation study, culminating in the decision The results of the Project Implementation Study to commit to development in June 2008. announced in June and the imminent return to production have validated the integrated At this time the refurbishment of the Wiluna plant mine strategy adopted by Apex when it began is nearing completion, with over 150 workers on consolidating the Wiluna, Wilsons and Youanmi site and production on schedule to recommence projects in early 2007. As Apex moves into production, in November 2008. it will emerge as one of Australia’s largest domestically listed gold producers at competitive cash costs Overall cash costs are estimated to be $560 per ounce, delivering substantial cash margins. We have which will deliver a healthy cash margin based on significant growth opportunities ahead and are the current gold price. Apex’s medium term goal is now fully funded. to reach 500,000 oz per annum of profitable gold production and multiple growth options are open We have had substantial exploration success since to Apex to achieve this goal. acquiring these deposits, particularly at Wiluna, where gold resources now stand at over 1.5 million All necessary capital to develop the Wiluna Project has ounces. When we acquired Wiluna mid 2007, we set been raised. It is of great credit to Apex’s management our selves a target to increase the Reserve base from team and the strength of the project that the funds, approximately 6 to 9 months at that time to 3-5 years amounting to over $120 million were raised during the by the time we get back into production. year at a time of extreme global financial conditions which is adversely affecting all businesses in raising On 29 September we announced a 70% increase development finance. A $62 million placement was in the Indicated Resource base in the Calais area of achieved in March and a $60.5m Senior Secured the Wiluna mine to around 600,000 ounces. We are Note with detaching warrants and a rather unique currently re-calculating the Reserves there, but the Gold Upside Participation Note announced on new underground resource together with the new 29 September. open pit resource at Wiluna will, I’m confident, result in our getting close to the 5 year target. The funds from this raising now results in your company being fully funded and will enable The exploration success that we have experienced at the highly successful exploration program to be Wiluna in recent months has resulted in the process maintained at around $20 million per annum. plant being able to be fed completely with the lower cost Wiluna ore and the requirement to truck World economic conditions remain clouded, with supplementary feed from our nearby Wilsons deposit many markets continuing to suffer extreme volatility. For personal use only has been deferred such that commencement of the For centuries, gold has acted as the traditional store of development of this deposit has been put back at wealth and safe haven for investors in troubled times. least until the March 09 quarter. In these uncertain times, the outlook for gold remains extremely positive and this is an opportune time to be entering gold production. Apex Minerals NL 2 5 AUD Gold Price Year 1100 1000 900 I would like to thank the management team and staff at Apex for their hard work during 2008 and very 800 much look forward to the culmination of all their efforts in our first gold pour in late 2008. I would also 700 like to thank you, our shareholders for your loyalty and support over the past 12 months. 600 Kind Regards, 500 Oct Oct Oct Oct Oct Oct 03 04 05 06 07 08 5 USD Gold Price Year 800 Mark Ashley 700 Managing Director and Chief Executive Officer 600 500 400 300 200 Oct Oct Oct Oct Oct Oct 03 04 05 06 07 08 For personal use only All the photographs that appear in this Report reflect the current refurbishment occuring at the Wiluna plant, new mining fleet vehicles purchased and continued drilling. The focus is to present this by showing all the people actively engaged in the process. Annual Report 08 3 For personal use only Apex Minerals NL 4 Apex Project Locations Eastern Goldfields For personal use only Annual Report 08 5 For personal use only Apex Minerals NL 6 Overview THE REGIONAL GOLD STRATEGY IMPLEMENTATION STUDY Apex has assembled a portfolio of gold assets capable of The Implementation Study into the refurbishment of the elevating the company to producer status by early 2009. Wiluna gold treatment plant and the development of the The projects are located in the Eastern Goldfields of Wiluna, Wilsons and Youanmi high grade underground gold Western Australia as shown on page 5. mines was completed in June 2008. The study used reserves estimated in June 2008 based upon resource estimates Apex’s regional gold development strategy is to consolidate completed in May 2008. the ownership of various high grade, but currently undeveloped, refractory gold deposits. Following the The study showed that a minimum 3 year production completion of the Implementation Study in June, Apex is life could be supported at each of the mines feeding the set sequentially develop Wiluna, Wilsons and Youanmi lifting Wiluna plant. Formal Board approval to proceed with the group production to 200,000 ounces per annum. development of the project was given in June 2008, just 12 months after Apex took control of the Wiluna mine. The Aphrodite project also has the potential to be an additional processing hub producing either a high grade Following the resource expansion at Wiluna announced in gold concentrate for trucking to Wiluna for treatment September 2008 additional studies will now be undertaken through the BIOX® bacterial oxidation plant or, gold metal with a view to expanding the reserve and production base on site further increasing annual group gold production. at Wiluna. For personal use only Annual Report 08 7 Wiluna Project Location of New Resources For personal use only Apex Minerals NL 8 Overview continued WILUNA The Wiluna Gold Mine is located 1,000 kilometres northeast Geology and Title of Perth in the Eastern Goldfields of Western Australia. Apex took possession of the Wiluna operations with effect The Wiluna project comprises granted Mining Leases from 1 August 2007. The assets acquired as part the Wiluna and is situated at the northern end of the Norseman- transaction include all equipment necessary to operate a Wiluna greenstone belt – the most highly gold endowed modern gold mining and processing facility, namely: greenstone belt in Australia, which contains major gold mines such as those at Norseman, St.Ives, the Golden Mile, • 1Mtpa gold processing facility (including BIOX® bacterial Leonora and Thunderbox.