11
CORPORATE DIRECTORY
Directors Craig Readhead Non-Executive Chairman Mike Donaldson Non-Executive Director Jim Jewell Non-Executive Director Ross Kestel Non-Executive Director Peter Bowler Managing Director Rob Watkins Executive Director Exploration Company Secretary Greg Barrett Corporate Details Beadell Resources Ltd (ABN 50 125 222 291) Issued Capital 716,004,752 ordinary shares Registered and Corporate Ofce 2nd Floor, 16 Ord Street West Perth WA 6005 Telephone: +61 8 9429 0800 Facsimile: +61 8 9481 3176 Internet: www.beadellresources.com.au Brazil Ofces Rio De Janeiro Rua Voluntrios da Ptria, 89, 6 andar, Botafogo RJ Telephone: + 55 21 2122 0500 Facsimile: + 55 21 2122 0502 Tucano Minesite Estrada do Tapereb, SN, Pedra Branca do Amapari AP Telephone: +55 96 4009 4004 Facsimile: +55 21 2122 2438 Share Registry Computershare Investor Services Pty Ltd Level 5 115 Grenfell Street Adelaide SA 5000 Telephone: 1300 137 515 Telephone: +61 3 9415 4667 (from outside Australia) Stock Exchange Listing ASX Ltd ASX Code: BDR Auditor KPMG 235 St Georges Terrace Perth WA 6000
CONTENTS
Letter FroM CHairMan and ManaGinG director BRAZIL TUcano Gold ProJect Overview CIL Process Plant Construction Mining Operations Resource and Reserve Development Iron Ore COMMUNITY & ENVIRONMENT TARTARUGA PROJECT AUSTRALIA Tropicana East West Musgrave Lake Mackay Victoria RESOURCE & RESERVES TENEMENT SCHEDULE FINaNCIaL REPORT Directors REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS DECLARATION INDEPENDENT AUDITORS REPORT AUDITORS INDEPENDENCE DECLARATION ADDITIONAL sHareHolder INFORMATION 17 36 37 38 40 41 79 80 82 83 1 2 3 3 4 4 8 10 11 12 12 13 13 13 14 16
Front cover: Cat 777D Trucks Inside cover: Mining operations on AB1 pit. Back cover: A Tucano (Toucan) photographed in Brazil.
11
Dear Fellow Shareholder, Despite global uncertainties and share market volatility over the past twelve months, we have continued to add substantial value to our Company for the benet of you, our shareholders. Construction of the 3.5 million tonnes per annum carbon in leach gold plant at our Tucano gold and iron ore project continues apace and we look forward to the transition from gold developer to producer during CY 3rd quarter this year. Despite some minor delays with the construction timetable, I am pleased to report that we are still on track to build the gold plant for less than the initial US$100M budget. This will be a commendable achievement and full credit to all involved with the construction. Gold production will be high in the early years with 180,000 ounces of gold forecast for CY 2013. We are determined to greatly enhance the economics of our gold project and hence protect the Company from any unforseen downturn in the gold price by extracting maximum value possible from our extensive iron ore resources found within Beadells Mining Concession. To this end, we have recently commenced detailed engineering design for a Magnetic Separation Plant to enable extraction from the gold tailings of a high grade iron concentrate which should result in lower cash operating costs from our gold plant by 20 30%. Additionally, negotiations with third parties are continuing to monetise value from more than 200 million tonnes of high grade friable hematite iron ore located in and around our gold pits. We are condent these two initiatives will enable the production costs on our gold plant to be driven down to rank globally into the lowest cost quartile. Special mention needs to be made of the excellent team of talented people we have in Brazil, led by Silvano Andrade. Safety continues to be our number one priority on site as we vigorously pursue our aim of zero harm to all employees. Silvano has assembled a complete management team in place ready for the commencement of gold production over the coming months. Mining of our open pits has already commenced with new earthmoving equipment to supplement our existing eet on its way. Silvano and his team have an excellent working relationship with all of the relevant government agencies and stakeholders. This has enabled all permits and approvals to be obtained in a timely manner. Beadell is committed to fostering a harmonious relationship with all communities, both local and state. As a consequence, the Company has been the recent recipient of various awards. In addition, we have an experienced, stable and fully aligned Perth based executive management team, who together with our Brazil based site management team with a full complement of trained personnel and adequate funding means that the Company will transition into a long life, low cost gold producing company in 2012. Our team looks forward to rewarding you, our shareholders, as we become a protable gold mining house taking full advantage of the continued high gold prices. Yours faithfully,
BRAZIL
TUcANo Gold ProJect
OVERVIEW
Since acquiring the Tucano Gold Project in Brazil in January 2010, Beadell has completed a Denitive Feasibility Study (DFS), secured international bank nancing and is now constructing a 3.5 million tonne per annum Carbon in Leach (CIL) gold processing plant.
During the year mining was resumed at Tucano utilising the eet of earthmoving equipment acquired with the project. The resultant stockpile will enable the higher grade gold ore to be processed rst providing improved cash ows in the early period of operation. A maiden JORC compliant reserve of 1.25 million ounces of gold was announced in April 2011. The Companys aggressive ongoing drilling campaign will continue to add to the existing 4.3 million ounce gold resource at the project. The Tucano site is located in Amap State in northern Brazil, covering approximately 2,500km2 of mostly contiguous exploration licences and a mining concession. The nearest major populated centre to the Tucano site is Macap, situated on the northern bank of the Amazon River (Figure 1). Road access to the site is via 100km of paved road from Macap to Porto Grande followed by 116km of unpaved road. The site is just north of the equator, with annual rainfall averaging 2,370mm. The Tucano Mine site is currently powered by a 13.8KVa substation sourced from the Caoraci Nunes hydroelectric power station in Porto Grande.
BRAZIL
TUcANo Gold ProJect (Continued) Mining Operations
Mining operations recommenced at Tucano in June and initially concentrated on the mining of the two pits in the Tap D valley and the Tap AB eastern wall cutback. The Tap D valley is the site of the rst tailings facility at Tucano and as such the gold reserves within it have to be extracted prior to tailings placement. Concurrent to mining in this valley, construction of the tailings dam wall was undertaken. The dam wall was largely complete at the end of 2011 but will be nalised in 2012. The stripping of the eastern wall of the Tap AB pit is required to gain access to the high grade trough zone within the Tap AB 2 pit and this work has to be undertaken in the dry season (July-December) to maximise mining productivity. In addition, work was carried out to establishment strategic sediment dams (to control the generation of turbid water into the local river system) and the establishment of a new quarry to generate material for use in Haul road construction, CIL plant construction and general infrastructure. Major overhaul of the mines Caterpillar haul trucks and Liebherr excavators commenced to ensure high mechanical availability is achieved. In addition, a tender process was undertaken for new open pit equipment that is required for the ramp up of mine output in 2012. This future equipment will be obtained via an operating lease arrangement.
Technical and Resources Manager Paul Tan with Mine Geology Coordinator Ana Gloria N. Rosa
Mine Planning Meeting From left: Raimundo Joelson Catro Silva Mine Surveyor, Walber Gonalves Guimares Mine Supervisor, Fbio Ferreira de Oliveira Coordinator of Mine Planning, Joel Reis dos Santos Mine Surveyor, Luis Daniel Salgado Nunes Mining Engineer.
BRAZIL
TUcANo Gold ProJect (Continued)
In 2011 signicant additional drilling has been completed to both increase the resource and improve the conversion of inferred to indicate resources. A total of 30,000m of resource drilling and 36,000m of RC grade control drilling will be shortly be used to recalculate the resource and reserve at Tucano. Beadell recently purchased a Scramm 685 RC rig which has just arrived in Brazil. The RC rig has the capability of drilling up to 500m deep RC holes and will be used extensively at Tucano for drilling out the 7km strike length of the main trend as well as regional targets, grade control and iron ore. Outstanding new results were received from all the main deposits along the 7km Tucano trend including Tap AB, 14m @ 19.9g/t gold, 18.6m @ 12.5g/t gold and 17.6m @ 11.6g/t gold. A new discovery was made at Tap Sul, located along the southern strike extension of the Tap AB deposit. Results included 6m @ 14g/t gold and 4.6m @ 10.2g/t gold.
The Tucano region is considered highly prospective for additional discoveries and resource extensions along the main 7km long Tucano trend. A major drilling program is underway aiming to increase the resource by targeting a 3Moz addition from the current 4.3Moz JORC resource base. One of the most highly prospective targets is the Urucum Deeps area which will become the focus of an Underground scoping study in 2012. Recent drilling results including FD1315, 43m @ 4.8g/t gold including 23m @ 7.8g/t gold and FD1346, 4m @ 17.5g/t gold and 9m @ 16.2g/t gold, highlight this potential. The drill result in FD1346 is considered to be highly signicant representing the deepest drill intersection at the 2.5Moz Urucum deposit, and remaining completely open at depth.
BRAZIL
TUcANo Gold ProJect (Continued) Iron Ore
The Tucano gold project is highly unique in that signicant deposits of Itabirite Iron ore are coincident with the gold mineralisation. A large operating Iron Ore beneciation plant is located approximately 2km south of the Tap AB gold deposit with iron ore mined from the same Banded Iron Formation that hosts the gold mineralisation. In August 2011, Beadell announced a maiden iron ore resource of 209Mt @ 36.1% Fe. Potential extensions from Tap Sul and Tap Leste areas alone are estimated to contain an additional 120-180Mt of itabirite iron ore(1). Extensive drilling and resampling of gold holes was completed in 2011 at Tap Sul and Tap Leste and the results of this are currently being updated into a new iron ore resource. Large quantities of iron ore is located both within the gold ore and within the optimised gold pits. Beadell is currently stockpiling high grade iron ore and has in excess of 250,000t @ 42% Fe located near the mining concession boundary. Iron ore is currently treated as waste in the mining schedule and pit optimisations and the potential future sale of this material will have a material impact on the economics of the entire gold project.
Mining at Tap AB
(1) The potential quantity and grade related to Exploration Targets in this report is conceptual in nature as there has been insufcient exploration to dene a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.
Beadell has completed extensive metallurgical testwork on the iron in the gold ores. The results highlight that a high grade iron concentrate can be extracted at the back end of the gold plant prior to discharge into the tailings dam. Testwork indicates that a conventional magnetic separation plant will produce 400,000 to 500,000t of high grade iron concentrate annually. Detailed engineering drawings are well advanced and long lead time items are out for tender. With a small incremental Capex estimated to be $10-$15M a magnetic separation plant alone has the potential to reduce gold cash costs by 2030% annually.
Under the terms of an Exploration Agreement entered into in 2005 between Beadell Brasil Ltda and Anglo Ferrous Amapa Mineracao Ltda, Anglo Ferrous has undertaken exploration for iron ore within the area of Beadells 100% owned Mining Concession (which work comprises the re-assaying and some additional drilling forming part of the work undertaken to complete the maiden resource described above). If Anglo Ferrous wishes to mine iron ore on Beadells existing Mining Concession, then it must reach agreement with Beadell on terms of a Joint Operating Agreement. No such agreement has yet been reached.
Environmental team at work From left: Jos Correa and Edvaldo Soares
Amapari River
Tucano Accomadation
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TArtArUgA ProJect
Total JORC inferred resources of 5.5Mt @ 1.6g/t gold for 279,000 ounces exist at the project, including a higher grade core of mineralisation of 2.1Mt @ 2.7g/t for 185,000 ounces at a 1.5g/t lower cut off. The mineralisation remains open in all directions with excellent potential to rapidly increase the resource with additional drilling at the Jabuti and Rio de Ouro targets. An aeromagnetic and radiometric survey was recently own with several new targets areas identied for follow up drilling. A large resource drilling program using the new RC drill rig is planned for the second quarter 2012
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AUSTRALIA
TROPICANA EAST
The Tropicana East Project is located adjacent to the Anglogold Ashanti/Independence Group 6.4Moz Tropicana gold development project, 350km north-east of Kalgoorlie in Western Australia. Beadell has identied a 15m long zone of highly anomalous gold named the Hercules Shear Zone, located 60km along strike from Tropicana. The gold mineralisation is masked by approximately 30m of transported overburden. In December 2010, Beadell announced the discovery of signicant gold mineralisation at the Atlantis prospect at the southern end of the Hercules Shear Zone. Aircore drill results included 15m @ 24.8g/t gold and 19m @ 12.1g/t gold. First pass RC drilling at Atlantis in 2011 determined an unexpected moderate northwest dip of the mineralised shear zone with RC results including 3m @ 5.8g/t gold, 2m @ 7.7g/t gold and 2m @ 24.9g/t gold. A second zone of gold mineralisation was intersected a further 5km to the northeast at the Hercules prospect. Results included 19m @ 1.3g/t gold, 3.3m @ 2.2g/t gold and a composite result of 10m @ 7.8g/t gold. The Atlantis and Hercules prospects represent signicant early stage gold discoveries, located along the 15km long, sparsely drilled Hercules Shear Zone. Figure 6 Tropicana East project showing location of Atlantis and Hercules prospects on aeromagnetics
Figure 7 Tropicana East project showing location of Atlantis and Hercules prospects on aeromagnetics
12 Beadell Resources Limited Annual Report 2011
LAKE MACKAY
Joint venture partners, Meteoric Resources Ltd have identied several strong aeromagnetic anomalies considered to be excellent IOCG targets at Lake Mackay. Follow up work is being planned.
Skirmish Hill JV
The Skirmish Hill project covers an area of 560km2 in three contiguous granted tenements 80km southeast of BHPBs Nebo-Babel nickel deposit. The project is considered highly prospective for nickel sulphide, platinum group elements, and copper-gold mineralisation. Joint Venture partners Anglo American will complete rst pass RC drill testing of geophysical and geochemical anomalies in the near furure.
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Gold Resources
Brazil Tonnes ('000) Tucano Urucum Tapereba AB Tapereba C Tapereba D Duckhead Total Oxide Urucum Tapereba AB Tapereba C Tapereba D Total Primary Spent Ore Low Grade Total Stockpile Total Tucano Tartaruga Total Brazil Australia Tonnes ('000) Reedy Creek Beadell Total 7353 0.87 206 40176 1.51 1953 7353 0.87 Measured Grade g/t Au Ounces Tonnes ('000) ('000) 206 40176 1.51 Indicated Grade g/t Au Ounces Tonnes ('000) ('000) 609 49025 1953 5808 1545 7353 7353 0.85 0.95 0.87 0.87 159 47 206 206 40176 1.51 1953 42916 5500 48416 1.56 1.6 1.56 Inferred Grade g/t Au 2.4 1.57 Ounces Tonnes ('000) ('000) 47 2476 609 96554 2150 279 2429 10571 21049 7837 318 401 29605 1.54 1.62 1.23 1.25 1.09 1.50 522 1095 309 13 14 1431 3036 4712 1699 1124 1.21 1.88 1.39 1.22 118 284 76 44 4708 1985 1835 287 115 8930 19974 10755 2665 592 33986 1.43 1.32 1.04 1.58 17.06 1.53 1.67 1.47 1.25 1.2 1.26 217 84 61 15 63 440 1071 509 107 23 1709 7744 6697 3534 1411 115 19501 41023 18591 2983 993 63591 5808 1545 7353 90445 5500 95945 1.34 1.71 1.21 1.29 17.06 1.54 1.64 1.37 1.25 1.16 1.54 0.85 0.95 0.87 1.48 1.6 1.49 Total Grade g/t Au 2.4 1.49 Ounces ('000) 47 4634 335 369 137 59 63 962 2165 817 120 37 3139 159 47 206 4308 279 4587 Measured Grade g/t Au Ounces Tonnes ('000) ('000) Indicated Grade g/t Au Ounces Tonnes ('000) ('000) Inferred Grade g/t Au Ounces Tonnes ('000) ('000) Total Grade g/t Au Ounces ('000)
Gold Reserves
Tucano Tonnes (million) Urucum Oxide Tapereba AB Oxide Tapereba C Oxide Tapereba D Oxide Total Oxide Urucum Sulphide Tapereba AB Sulphide Tapereba C Sulphide Tapereba D Sulphide Total Sulphide Spent Ore Low Grade Total Stockpiles Proved Grade g/t Au Ounces Tonnes ('000) (million) 3.2 2.5 1.1 0.3 7.1 9.8 1.8 0.3 0.0 11.9 Probable Grade g/t Au 1.21 2.14 1.53 1.30 1.59 1.69 2.17 1.77 1.97 1.76 Ounces Tonnes ('000) (million) 124 173 53 12 362 534 127 15 2 677 3.2 2.5 1.1 0.3 7.1 9.8 1.8 0.3 0 11.9 Total Grade g/t Au 1.21 2.14 1.53 1.3 1.59 1.69 2.17 1.77 1.97 1.76 Ounces ('000) 124 173 53 12 362 534 127 15 2 677 Cut-off Grade g/t Au 0.63 0.60 0.64 0.37 0.61 0.72 0.68 0.72 0.45 0.71
Total Tucano
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18.9 23.1 23.5 23.2 25.4 27.7 29.6 29.0 45.8 44.6 25.8 32.9 26.5 29.1 28.5 28.7
13.4 10.9 8.9 10.0 5.1 6.7 9.4 8.5 0.9 1.0 6.1 4.1 5.0 6.8 8.9 8.1
1.1 0.7 0.5 0.6 0.3 0.4 0.3 0.2 0.1 0.1 0.1 0.1 0.3 0.4 0.2 0.2
0.05 0.07 0.08 0.07 0.13 0.11 0.16 0.14 0.08 0.09 0.16 0.14 0.13 0.10 0.15 0.13
0.3 1.2 2.0 1.5 2.4 1.9 2.1 2.0 0.4 0.7 2.7 1.9 2.2 1.5 2.1 1.9
0.0 0.1 0.1 0.1 0.1 0.2 0.4 0.1 0.1 0.1 0.3 0.1 0.1 0.1 0.1 0.1
10.5 8.9 8.4 8.7 5.0 5.3 7.8 7.0 0.2 1.0 5.1 3.6 4.8 5.5 7.5 6.8
Colluvium
Friable Oxide
Friable Transitional
Competency Statement Gold Resources Mineral resources were calculated using Ordinary Kriging (OK) methodology. The resources have been reported using a 0.5 g/t lower cut off. Top cuts vary between lodes and deposits, according to the statistical distributions of the grades. The resources have been divided into oxide and primary domains. For the purposes of reporting, the transitional material has been included as oxide. The information in this report relating to Tucano Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Daniel Guibal who is a member of the Australian Institute of Mining and Metallurgy and has sufcient exploration experience which is relevant to the various styles of mineralisation under consideration to qualify as a Competent Person as dened in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Guibal is a full time employee of SRK and he consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report relating to Tartaruga and Reedy Creek Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Robert Watkins who is a member of the Australian Institute of Mining and Metallurgy and has sufcient exploration experience which is relevant to the various styles of mineralisation under consideration to qualify as a Competent Person as dened in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Watkins is a full time employee of Beadell Resources Ltd and he consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Gold Reserves The information in this report relating to Open Pit Gold Ore Reserves is based on information compiled by Mr Sjoerd Rein Duim who is a member of the Australian Institute of Mining and Metallurgy and who has sufcient experience which is relevant to the styles of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as dened in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Duim is a full time employee of SRK Consulting and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report relating Stockpile Gold Ore Reserves is based on information compiled by Mr Robert Watkins who is a member of the Australian Institute of Mining and Metallurgy and has sufcient exploration experience which is relevant to the various styles of mineralisation under consideration to qualify as a Competent Person as dened in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Watkins is a full time employee of Beadell Resources Ltd and he consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Iron Resources Mineral resources were calculated using Ordinary Kriging (OK) methodology. The resources have been reported using a 25% Fe lower cut off. All Mineral Resources are stated as wet metric tonnes, assays in dry basis. The information in this report relating to Tucano Mineral Resources or Ore Reserves is based on information compiled by Mr Daniel Guibal who is a member of the Australian Institute of Mining and Metallurgy and has sufcient exploration experience which is relevant to the various styles of mineralisation under consideration to qualify as a Competent Person as dened in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Guibal is a full time employee of SRK and he consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report relating to Exploration targets is based on information compiled by Mr Robert Watkins who is a member of the Australian Institute of Mining and Metallurgy and has sufcient exploration experience which is relevant to the various styles of mineralisation under consideration to qualify as a Competent Person as dened in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Watkins is a full time employee of Beadell Resources Ltd and he consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Under the terms of an Exploration Agreement entered into in 2005 between Beadell Brasil Ltda and Anglo Ferrous Amapa Mineracao Ltda, Anglo Ferrous has undertaken exploration for iron ore within the area of Beadells 100% owned Mining Concession (which work comprises the re-assaying and some additional drilling forming part of the work undertaken to complete the maiden resource described above). If Anglo Ferrous wishes to mine iron ore on Beadells existing Mining Concession, then it must reach agreement with Beadell on terms of a Joint Operating Agreement. No such agreement has yet been reached.
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TENEMENT SCHEDULE
Interests in mining tenements.
At the date of the Directors Report, the Companys interests in signicant mining and exploration tenements were as follows:
Area (Km2) 467 416.9 210.2 216 216 215.4 557.2 560 215.4 129.3 606.9 411.8 27.4058 5 0.1406 0.7646 34.53 80.6479 917.385 74.1148 99.08 88.094 100 83.9939 61.9873 449.407 397.141 447.208 552.963 97.931 898.286 474.661 875.006 91.904 32.623 228.902 100 64.377 930.009 637.128 88.094 100 982.885 Interest % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 70 100 70 70 100 100 100 100 70 70 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 70 Area (Km2) 63.6 63.6 63.6 232.1 71 485 358.4 898.241 96 1.2393 969.063 100 100 788.408 93.088 863.436 137.685 36.4799 2.9142 806.479 262.134 88.0941 982.885 22.659 311.072 0.1278 832.944 487.078 252.746 9.714 839.939 4.9554 0.6903 93.229 0.0078 0.0139 5.5622 47.315 Interest % 30 30 100 30 100 100 100 100 100 100 100 100 100 100 100 100 70 100 100 70 100 100 70 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 70 100 70
Location Tropicana (WA) Tropicana (WA) Tropicana (WA) Musgrave (WA) Musgrave (WA) Musgrave (WA) Naretha (WA) Zanthus (WA) Musgrave (WA) Musgrave (WA) Musgrave (WA) Musgrave (WA) Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano
Description E38/1913 E39/1215 E69/2585 E69/2066 E69/2067 E69/2150 E28/2174 E28/2215 E69/2151 E69/2152 E69/2780 E69/2781 3264/1953 2757/1959 801225/1977 851528/1980 850852/1987 850853/1987 850857/1987 850858/1987 850859/1987 850860/1987 850863/1987 850864/1987 850865/1987 850866/1987 851676/1992 852730/1993 852730/1993 854262/1993 851766/1994 851770/1994 851771/1994 852336/1994 855033/1994 855037/1994 855399/1994 858017/1995 858050/1995 858051/1995 858076/2009 858045/2009 858078/2009
Location Lake MacKay (WA) Lake MacKay (WA) Lake MacKay (WA) Lake MacKay (WA) Reedy Creek (VIC) Reedy Creek (VIC) Naretha West (WA) Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano
Description E80/3820 E80/3821 E80/3822 E80/3823 EL 4460 EL 4987 E28/2175 858062/1995 858092/1996 858263/1996 858264/1996 858265/1996 858000/1998 858010/1999 858010/1999 858012/1999 858038/1999 858073/2001 858052/2002 858053/2002 858060/2002 858012/2003 858013/2003 858037/2003 858042/2003 858013/2004 858016/2004 858017/2004 858054/2004 858062/2004 858086/2004 858114/2004 858065/2005 858001/2006 858068/2006 858001/2007 858049/2007
Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano Brazil, Tucano
16
DIRECTORS REPORT
For the year ended to 31 December 2011
The directors present their report together with the nancial report of the Beadell Resources Limited (the Company) Group, being the Company and its subsidiaries, for the year ended 31 December 2011 (the period) and the auditors report thereon.
1. DIRECTORS
The directors of the Company at any time during or since the end of the period are:
Dr Michael Donaldson BA (Hons), PhD, MAIG, MAICD Independent Non-Executive Director Appointed 31 July 2007
Dr Donaldson has over 30 years experience in the minerals industry, including 15 years with Western Mining Corporation in nickel, gold and base metals exploration. Dr Donaldson was the Exploration Manager of Coolgardie Gold NL, and General Manager Exploration with Sons of Gwalia Ltd and Ashton Mining Ltd, and General Manager Mapping with the Geological Survey of Western Australia. More recently Dr Donaldson was Group Chief Geologist with AIM-listed Lithic Metals and Energy. Dr Donaldson is a member of the Remuneration and Nomination Committee and the Audit Committee.
Mr Jim Jewell B.Eng (Hons), ACSM, MAusIMM Non-Executive Director Appointed 14 April 2010
Mr Jewell is a Mining Engineer with over 30 years experience in the extraction of Gold, Nickel, Tin and Uranium. He has a strong technical and operations background, having been a Mine General Manager in Western Australia for 7 years and has also been responsible for the execution of numerous large mining projects overseas. Mr Jewell is a member of the Remuneration and Nomination Committee.
Mr Ross Kestel B.Bus, CA, MAICD Non-Executive Director Appointed 29 February 2012
Mr Kestel has acted as a director and company secretary of a number of public companies involved in mineral exploration, mining, mine services, property development, manufacturing and technology industries and was a director of a mid tier accounting practice for over 25 years. Mr Kestel is currently a non executive director of Regis Resources Ltd, Equator Resources Ltd, Xstate Resources Ltd, Jatenergy Ltd and Resource Star Ltd. During the past three years he has also served as a non executive director of the ASX listed companies VDM Group Ltd, Jabiru Metals Ltd and Dioro Exploration NL. Mr Kestel is a member of the Remuneration and Nomination Committee and the Audit Committee.
17
DIRECTORS REPORT
For the year ended to 31 December (continued) 1. DIRECTORS (CONTINUED)
Mr Bowler has most recently been the Managing Director of Agincourt Resources Ltd and was instrumental in driving its rapid growth. He was also a founding Director of Nova Energy Ltd. As Managing Director of Agincourt Resources Ltd, he facilitated the takeover by Oxiana Ltd in April 2007. Mr Bowler was previously the Director of Operations for Agincourt Resources Ltd and responsible for all facets of the Wiluna Gold Operation including contract negotiations, overseeing feasibility studies, employee health and welfare, completion of sensitive heritage clearances with local indigenous communities, environmental management and business development. Mr Watkins is the former Exploration Manager for Agincourt Resources Ltd and has over 20 years exploration experience in Australia, Brazil, Indonesia and Africa where he has a track record of exploration success.
Mr Peter Bowler Dip Farm Management (Hons) Managing Director Appointed 3 May 2007
Mr Robert Watkins BSc (Hons), MAusIMM Exploration Director Appointed 3 May 2007
2. COmpAnY SECRETARY
Mr Gregory Barrett CA, FFin, B.Comm has held the position of company secretary since 2007. Mr Barrett has over 20 years management, corporate advisory, nance and accounting experience working for several listed and unlisted public companies for which he has held the role as company secretary for over 15 years. He is the former nance executive and Company Secretary for Agincourt Resources Ltd and had previously worked for KPMG before specialising in the mining industry. Mr Barrett is also the Companys Chief Financial Ofcer.
3.
DIRECTORS MEETINGS
The number of directors meetings and number of meetings attended by each director in the capacity of director of the Company from beginning to end of the period are: Audit Committee Meetings A B 2 2 2 2 2 2 Remuneration & Nomination Committee Meetings A B 1 1 1 1 1 1 -
Director Mr Craig Readhead Mr Jim Jewell Dr Michael Donaldson Mr Peter Bowler Mr Robert Watkins
Board Meetings A B 12 12 10 12 11 12 12 12 12 12
4.1
BOARd OF dIRECTORS
The Board has delegated responsibility for the operation and administration of the Company to the Managing Director and the executive management team. The Board Charter supports this delegation of responsibility by formally dening the specic functions reserved for the Board and those matters delegated to management. The Companys Statement on Board and Management Functions is available on the Companys website.
Board processes
To assist in the execution of its responsibilities the Board has established an Audit Committee and a Remuneration and Nomination Committee. These committees have written mandates and operating procedures, which are reviewed as necessary. The Board regularly and closely monitors the Companys nancial performance and ensures that accurate and timely reporting systems are established. The Board has implemented internal procedures designed to provide reasonable assurance as to the effectiveness and efciency of operations, the reliability of nancial reporting and compliance with relevant laws and regulations. The full Board holds 12 scheduled meetings each year, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specic signicant matters that may arise. No Director participates in any deliberation regarding his own remuneration or related issues. The agenda for meetings is prepared in conjunction with the Chairman, Executive Directors and Company Secretary. Standing items include the nancial reports, strategic matters, governance and compliance. Submissions are circulated in advance. Executives are regularly involved in board discussions and directors are in continual contact with the wider group of employees.
19
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 4. CORpORATE gOVERnAnCE STATEmEnT
the capability and experience of the key management personnel, the key management personnels ability to control the relevant segments performance, the Groups performance regarding exploration and/ or acquisition success as reected by growth in share price and delivering constant returns on shareholder wealth. Compensation structures may include xed and performance linked compensation and share based payments.
Fixed compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges), as well as employer contributions to superannuation funds.
20
the expiry of the exercise date, the option holder ceasing to be an employee by reason of dismissal, resignation or termination of employment, ofce or services for any reason, the expiry of 30 days after the option holder ceases to be an employee by reason of retirement, or; a determination by directors that the option holder has acted fraudulently, dishonestly or in breach of his or her obligations to the Group. shares issued pursuant to the exercise of carry the same rights and entitlements as other shares on issue; and options are not quoted on the ASX. Performance hurdles Options issued may contain a requirement to achieve performance hurdles for the options to vest and become exercisable. No options granted in the period contained performance hurdles other than vesting conditions. All performance hurdles in respect of options previously granted have been achieved.
Other benets
With the exception of Mr Silvano Andrade (General Manager Operations Brazil), key management personnel are not entitled to receive additional benets as part of the terms and conditions of their appointment. Mr Andrade receives various non cash insurance benets as part of the terms and conditions of his employment.
Service contracts
It is the Groups policy that service contracts for key management personnel are unlimited in term and capable of termination by either party. All service contracts with key management personnel, with the exception of Mr Andrade require 3 months written notice. Mr Andrades contract requires 30 days written notice. In the case of wilful or fraudulent misconduct, the Group retains the right to terminate all service contracts without notice. Key management personnel are entitled to receive on termination of employment their statutory entitlements, including any accrued annual and long service leave, together with any superannuation benets. Each service contract outlines the components of compensation paid to the key management personnel but does not prescribe how compensation levels are modied year to year.
Non-executive directors
Non-executive directors may receive up to $70,000 in base remuneration. The Chairperson may receive up to $130,000 in base remuneration.
21
22
4.
Salary & Non cash Super (post Share based fees (short Cash bonus Benets employpayments term) (short term) (short term) ment) (options) Total $ % % $ $ $ $
12 months ended 31 December 2011 Directors 98,000 52,000 52,000 58,055 260,055 26,933 100,404 7,371,319 9,332.299 7,354 (16,491)** 131,730 19,579 161,459 394,229 -% -% 26,978 282,657 661,385 51% 26,978 2,042,263* 2,420,991 87% 41,417 4,084,525* 4,684,134 89% 87% 84% 43% 41% -% 5,031 204,227* 265,153 77% 77% 204,227* 263,225 78% 78% 408,452* 511,452 80% 80%
Non-executive directors
Mr Readhead, Chairman
103,000
Mr Jewell
58,998
DIRECTORS REPORT
Dr Donaldson
55,895
Executive directors
Details of the nature and amount of each major element of remuneration of each director of the Company and other key management personnel are as set out following:
460,192
299,750
Executives
299,750
155,136
140,867
Mr Barrett, Company Secretary, CFO Mr Andrade, GM Operations Brazil (appointed 12 July 2011) Mr Torresini, GM Operations Brazil (resigned 6 May 2011) Total compensation (Group)
1,573,588
The Board of Directors resolved to issue options to Directors and employees on 20 July 2010. At the time of the resolution, the options were issued at a 4% discount to the Companys 30 day VWAP. Director options were approved by Shareholders on 29 November 2010. In the period from Directors resolution to Shareholder approval the Companys share price increased 285%. When this signicantly increased share price and associated volatility are used as inputs in the Black and Scholes Option Pricing Model to value the options for accounting purposes, the resultant accounting value is signicantly higher than other options resolved to be issued by Directors on 20 July 2010 that did not require Shareholder approval some 4 months later.
** Mr Torresinis 750,000 options were forfeited during the period due to failure to meet vesting conditions. Share based payments expenses in relation to these options were reversed in the period.
Directors 2,025 15,750 11,700 11,700 41,175 39,251* 19,625* 19,625* 392,507* 196,253* 230,626 16,491** 914,378 75,501 43,625 44,150 583,257 337,953 372,326 146,201 1,603,013 52% 45% 44% 67% 58% 62% 11% 52% 45% 44% 67% 58% 62% 11%
Non-executive directors
Mr Readhead, Chairman
36,250
Mr Jewell
24,000
Dr Donaldson
22,500
Executive directors
175,000
130,000
Executives
130,000
129,710
647,460
Total $
No cash bonuses have been awarded to key management personnel in prior periods. Amounts included in remuneration for the period represent the amount that vested based on achievement of personal goals and satisfaction of specied performance criteria. No amounts vest in future periods in respect of bonus schemes for the period.
23
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 4. CORpORATE gOVERnAnCE STATEmEnT 4.3 REmunERATIOn REpORT AudITEd 4.3.6 Options over equity instruments granted as compensation: vesting, forfeiture and exercise audited
Options granted prior period Number of options granted 12 Months ended 31 December 2011 Directors Mr Readhead, Chairman Mr Jewell Dr Donaldson Mr Bowler Mr Watkins Executives Mr Barrett Mr Andrade Mr Torresini 6 months ended 31 December 2010 Directors Mr Readhead Mr Jewell Dr Donaldson Mr Bowler Mr Watkins Executives Mr Barrett Mr Torresini 500,000 -% -% -% -% 500,000 500,000 500,000 -% -% -% -% -% -% -% -% -% -% 5,000,000 750,000 100% -% -% -% -% 100% 1,000,000 500,000 500,000 10,000,000 5,000,000 100% 100% 100% 100% 100% -% -% -% -% -% % vested in current period % forfeited in current period
Options that vested to directors and Mr Barrett in the period were subject service conditions and performance hurdles in the form of a one year service period from grant date and a decision to mine at the Tucano Gold Project. Both the service condition and performance hurdle were satised in respect of these options. Options the vested to Mr Andrade contained only service conditions, which were satised.
24
Options granted current period % forfeited in current period fair value per option at grant date $ Number of options vested in period Number of options vested
% vested
% forfeited
grant date
expiry date
1,000,000 600,000 -% -% -% -% -% -% 33% -% -% -% -% -% -% -% -% -% 12 July 2011 0.43 31 December 2014 500,000 500,000 10,000,000 5,000,000
5,000,000 200,000 -
5,000,000 200,000 -
-% -% -% -% -% -% -%
-% -% -% -% -% -%
29 November 2010 29 November 2010 29 November 2010 29 November 2010 29 November 2010
31 December 2014 31 December 2014 31 December 2014 31 December 2014 31 December 2014
0.10 0.35
5,000,000 -
5,000,000 -
25
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 4.4 AudIT COmmITTEE
The Audit Committee has a documented charter, approved by the Board. The Committee must have at least three members; all members must be non executive directors with a majority being independent. The Committee advises on the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Group. The members of the Audit Committee during the year were: Mr Readhead, B.Juris, LL.B Independent Non Executive Chairman Dr Donaldson, BA (Hons) PhD Independent Non Executive Mr Jewell, B.Eng (Hons) Non Executive The external auditors are invited to all Audit Committee meetings. Directors and executives of the Company may also be invited to committee meetings, at the discretion of the Committee. The Committee met once during the period and committee members attendance is disclosed in section 3. The Audit Committee Charter is available on the Companys website. system rest with management. The Audit Committee is responsible for reviewing the Groups risk management systems and internal nancial control systems.
Financial
There is a budgeting system with a budget approved annually by the Board of Directors. Monthly actual results (including comparison to budget) are reported to the Board monthly. Revised forecasts for the year are prepared when facts and circumstances assumed in the budget have materially changed. The Group reports its nancial results to shareholders on a half yearly basis. Practices have been established to ensure business transactions and commitments are properly authorised and executed and nancial exposures are controlled. The Group is exposed to credit, liquidity and market risks. Management monitors and manages the nancial risks relating to the operations of the Group through regular reviews of the Groups exposure to these risks.
26
The Group uses derivatives to limit its exposures to market risks. Hedging programs must be undertaken in compliance with the Groups Approved Hedging Policy. In summary, the Approved Hedging Policy governs and approves; hedging counterparties, hedging instruments that may be used, mandatory hedging limits, discretionary hedging limits, time periods of hedging programs, and; minimum hedging prices. Valuations of hedging programs are performed and reported to the Board monthly. Further details of the Companys policies relating to nancial risk management can be found at note 4 of the nancial statements.
Code of conduct
The Group has advised each director, manager and employee that they must comply with the Groups Corporate Code of Conduct. The code may be viewed on the Companys website, and covers the following: commitment of the Board and management to the corporate code of conduct; responsibilities to shareholders and the nancial community generally to increase shareholder value within an appropriate framework which safeguards the rights and interests of the Companys shareholders and the nancial community;
Insurances
The Group maintains a suite of insurances which are reviewed annually or as appropriate. External experts are engaged annually to review the Groups current and anticipated insurance requirements.
27
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 4.6 EThICAL STAndARdS (CONTINUED)
compliance with systems of control and accountability which the Company has in place as part of its corporate governance with openness and integrity; responsibilities to clients, customers and consumers to comply with all legislative and common law requirements which affect the Companys business, in particular those in respect of occupational health and safety, the environment, native title and cultural heritage; employment practices so that the best available staff and consultants with appropriate skills are recruited to ll vacant positions and to ensure a safe work place and maintain proper occupational health and safety practices commensurate with the nature of the Companys business and activities; responsibilities to the community to recognise, consider and respect environmental issues which arise in relation to the Companys activities and comply with all applicable legal requirements; responsibilities to the individual to recognise and respect the rights of individuals and to the best of the Companys ability will comply with the applicable legal rules regarding privacy, privileges, private and condential information; obligations relative to fair trading to deal with others in a way that is fair and will not engage in deceptive practices; conicts of interest; compliance with the code so that any breach of compliance is reported as appropriate; periodic review of the code, and; code of conduct for executives, covering; a) active promotion of the highest standards of ethics and integrity, b) disclosure of any actual or perceived conicts of interest of a direct or indirect nature, c) respecting the condentiality of information, d) dealing with the Companys customers, suppliers, competitors and each other, e) protection of the assets of the Company, f) reporting any breach of the code of conduct to the Chairman. Before trading, or giving instructions for trading in the Companys securities, a director must: notify the Chairman in writing of his intention to trade; conrm that he does not hold any unpublished price sensitive information; have been advised by the Chairman that there is no reason to preclude him from trading in the Companys securities as notied; and; comply with any conditions on trading imposed by the Chairman. Where the Chairman intends to trade in the Companys securities, he must notify and obtain clearance in the abovementioned manner from the Managing Director before trading, or giving instructions for trading.
Conict of interest
The Board, management and employees must not involve themselves in situations where there is a real or apparent conict of interest between them as individuals and the interest of the Group. Where a real or apparent conict of interest arises the matter should be brought to the attention of the Chairman in the case of a board member, the Managing Director in the case of a member of management and a supervisor in the case of an employee, so that it may be considered and dealt with in an appropriate manner for all concerned. Details of director related entity transactions with the Company and the Group are set out in note 29 of the nancial statements.
28
In the case of any other key management personnel, they must notify and obtain clearance from the Managing Director before trading, or giving instructions for trading. Notications prior to trading must be evidenced by prior written communication, whether by letter, facsimile, e-mail, or other visible form of communication. In the case of Directors only, section 205G of the Corporations Act requires that a Director must notify the Australian Securities Exchange Limited of the acquisition or disposal of any security of the Company. A copy of any such notication should be forwarded by the relevant Director to the Company Secretary within 5 business days of a deal occurring.
requirements of applicable Accounting Standards and the Corporations Act and is lodged with the Australian Stock Exchange. The half yearly report is available on the Companys website and sent to any shareholder who requests it; the quarterly report contains summarised cash ow nancial information and details about the Companys activities during the quarter. The quarterly report is available on the Companys website and is sent to any shareholder who requests it; proposed major changes in the Group which may impact on share ownership rights are submitted to a vote of shareholders; the Companys website is well promoted to shareholders and shareholders may register to receive updates.
Company website
All of the above information is made available on the Companys website within one day of public release, and is e-mailed to all shareholders who lodge their e-mail contact details with the Company. Information on lodging e-mail addresses with the Company is available on the Companys website.
General Communication
The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the Groups state of affairs. Information is communicated to shareholders as follows: the annual report is distributed to all shareholders who request a copy. The Board ensures that the annual report includes relevant information about the operations of the Group during the year, changes in the state of affairs of the Group and details of future developments, in addition to the other disclosures required by the Corporations Act; the half yearly report contains summarised nancial information and a review of the operations of the Group during the period. The half year audited nancial report is prepared in accordance with the
29
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 4.8 DIVERSITY
The Board has not yet adopted a Diversity Policy. No consideration is given to gender, age or ethnicity when selecting new employees or advancing existing employees. All prospective employees are employed and current employees are advanced based on individual achievements, skills and expertise.
Gender representation
31 December 2011 Representation Board Key management personnel Senior management Group Female 8% 8% Male 100% 100% 92% 92% 31 December 2010 Female 17% 8% Male 100% 100% 83% 92%
Key management personnel excludes directors which are reported as part of Board representation.
5.
PRInCIpAL ACTIVITIES
The principal activities of the Group during the period were: mining and construction activities at the Groups Tucano project (Tucano) located in Northern Brazil, and; exploration for and evaluation of mineral resources in Australia and Brazil. Other than the commencement of mining and construction activities at Tucano, there were no signicant changes in the nature of the activities of the Group during the period ended 31 December 2011.
ii) the information concerns an incomplete proposal or negotiation; iii) the information comprises matters of supposition or is insufciently denite to warrant disclosure; iv) the information is generated for the internal management purposes of the Company; or v) the information is a trade secret.
30 Beadell Resources Limited Annual Report 2011
Review of operations
Tucano Background Tucano is 100% owned by the Group and is located in Amap State, Brazil. The project was acquired in April 2010 and a denitive feasibility study into recommencing operations was completed during the period. Other signicant milestones achieved included the releases of a maiden gold and iron ore resources and gold reserve, commencement of construction and resumption of mining at Tucano. Denitive Feasibility Study (DFS) ndings The DFS was commenced in June 2010 and completed in May 2011. Key DFS ndings (May 2011) Physical (including stockpiles) Total ore mined and milled tonnes Grade g/t gold Stripping ratio waste/ore Recovery % Recovered gold ounces 26,397,416 1.47 4.9:1 90.6 1,126,135
The reserve does not include any provision for the signicant amount of iron mineralisation within and adjacent to the open pits. This would have a materially positive impact on reserves as all of the extensive iron mineralisation is treated as waste in the current gold pit optimisations. The joint mining of gold and iron ore at Tucano is discussed below at Tucano iron ore. Gold Resource The Tucano gold JORC compliant resource for Tucano was estimated in November 2010 and totalled 4.3Moz of gold at a 0.5g/t lower cut off grade and comprises: Gold grade (g/t) 0.78 1.51 1.56 1.47 Gold ounces (millions) 0.184 1.953 2.150 4.286
The DFS made no reference or allowance for the extensive iron ore resources which are prevalent within the current pit shells. The inclusion of this ore into the pit optimisations would result in a materially positive improvement in project economics. The joint mining of gold and iron ore at Tucano is discussed below at Tucano iron ore. Reserves and resources Maiden Gold Reserve In April 2011 the Group announced a maiden JORC compliant reserve at Tucano totalling 1.25Moz of gold. The reserve comprises an open pit reserve of 19.0Mt @ 1.7g/t gold for 1.04Moz. Signicant stock piles located adjacent to the plant site have been re-estimated after the completion of close spaced RC drilling. A new reserve for the stock pile totals 7.4Mt @ 0.87g/t gold for 0.21Moz. The reserve at 0.65g/t lower cut off grade comprises:
During the period Tucano received nal regulatory approvals. The federal mining regulator approved the recommencement of mining at Tucano and the state government environmental operating licence was also approved. There are no further regulatory impediments to recommencing gold production at Tucano. Construction In 2011 the Group commenced construction of the 3.5Mtpa CIL plant at Tucano and is nearing completion, with the current construction schedule indicating rst ore to the mill in third quarter of 2012. Mining Mining commenced at Tucano in June 2011. Since commencement, mining activities have been focussed on developing the open pits of Tap AB, Tap C and Tap D. Project nance In October 2011 the Group signed an Agreement with Macquarie Bank Limited for a limited recourse US$80 million Project Finance Facility to complete construction and commence operations at Tucano. The Agreement allows for the provision of an additional US$10 million, should the Group require further funding for cost overrun purposes. Since satisfying conditions precedent, the Group has drawn down US$75 million of the facility.
31
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 6. OpERATIng RESuLTS And REVIEw OF OpERATIOnS (CONTINUED)
As required by the facility, a total of 135,000 ounces of gold have been at forward sold (hedged) at US$1,600 per ounce and US$160 million of Brazilian Real (BRL) hedged at a at forward value of USD1.00 to BRL1.9525 over the 3 year term of the facility. The Group has also executed a US$20 million Mining Equipment Lease Facility for the purchase of additional earthmoving equipment to supplement the existing extensive eet. Iron ore Maiden Resource In August 2011 the Group announced a maiden JORC compliant iron ore resource at Tucano (Tap Norte). The Tap Norte iron ore resource totals 209.1Mt @ 36.1% Fe. The resource comprises a form of hematite rich banded iron formation (BIF) iron ore known as friable itabirite iron ore. Friable itabirites are beneciated to concentrate the iron ore to form high grade sinter and pellet feed iron t for smelting. A considerable amount of compact iron ore beneath the friable itabirite resource has not been included in the current resource estimate and remains a major potential additional source of iron ore. The resource at 25% lower cut off grade comprises: Resource category Measured Indicated Inferred Total Tonnes (million) 2.9 72.5 133.7 209.1 Fe % 40.4 37.2 35.4 36.1 SiO2 % 26.5 29.1 28.5 28.7 Al2O3 % 5.0 6.8 8.9 8.1 TiO2 % 0.3 0.4 0.2 0.2 P % 0.13 0.10 0.15 0.13 Mn % 2.2 1.5 2.1 1.9 K2O % 0.1 0.1 0.1 0.1 LOI % 4.8 5.5 7.5 6.8
Iron ore resource within existing gold reserve Within existing gold optimised pits there is a total resource of 35.9Mt @ 35.5% iron. This iron ore comprises the majority of the current waste within those pits. Realising economic value for the iron ore within the gold pits will reduce operating costs for the gold operation. Importantly, there has been no joint optimisation of iron ore and gold. This joint optimisation is expected to increase the size of the open pits and materially increase existing gold reserves, as widespread, high grade iron ore is located within and adjacent to current gold pit walls. Treatment of CIL gold tailings for iron ore The Group has evaluated the viability of an initiative to produce iron ore pellet feed from future CIL tailings by way of modications to the 3.5Mtpa CIL gold plant currently under construction. Metallurgical test work performed has determined that high grade iron ore pellet feed can be economically recovered from CIL tailings and a scoping study performed by ProMet Engineers has indicated that high grade (66-67%) iron ore concentrate of 250,000 500,000 tonne per annum can be achieved using a standard magnetic separation process. Capital Expenditure for the magnetic separation plant is estimated to be in the range of US$10-15 million. Extraction and sale of iron ore concentrate from CIL gold tailings will signicantly reduce gold production costs. The Group has appointed ProMet Engineers to produce engineering drawings for the magnetic separation plant with construction of this project estimated to be completed in late 2012. Logistics and off take opportunities are being investigated for the concentrate. Iron ore strategic partnership The group continues to explore opportunities to mine iron ore resources at Tucano either through a Joint Mining Agreement with Anglo American plc or through a strategic partnership with a third party.
32
Tropicana East Tropicana East is 100% owned by the Group and is located in Western Australia and was acquired in 2007. The project is located adjacent to the AngloGold Ashanti Independence Groups Tropicana 5Moz gold deposit. The Group has intersected high grade gold mineralisation at the Hercules and Atlantis prospects. The prospects are approximately 5km apart and located on the 15km long Hercules Shear Zone (HSZ). Potential for additional gold discoveries along the HSZ is considered to be high and the Group is planning further drilling to target potential extensions and high grade plunges of the mineralisation. Tartaruga Tartaruga is 100% owned by the Group and is located in Amap State, Brazil. The project was acquired in 2007 and a JORC compliant resource has been estimated for the project. The Tartaruga gold JORC compliant resource totals 0.3Moz of gold. The resource was estimated at a 0.5g/t lower cut off grade and comprises: Reserve category Inferred Total Tonnes (millions) 5.5 5.5 Gold grade(g/t) 1.60 1.60 Gold ounces (millions) 0.279 0.279
Preparations for recommencement of exploration at the Tartaruga project are underway. During the period the Group was awarded an adjoining tenement that to the northern tenement boundary of the main concession. The northern tenement is known to contain signicant gold mineralisation.
7. DIVIdEndS
No dividends were declared or paid during the period ended, or since 31 December 2011.
9. LIkELY dEVELOpmEnTS
The Group remains focussed on recommencing gold production at Tucano. The Groups 3.5Mtpa CIL plant is currently partially constructed, with completion and maiden gold pour expected by the third quarter of 2012. The Group also intends to construct and commission a magnetic separation plant at Tucano in order to extract an iron concentrate from the CIL gold tailings. The Group will continue to explore other opportunities associated with its iron ore resources at Tucano and will continue exploration activities on Australian and Brazilian exploration assets, with a particular emphasis on opportunities at Tucano, Tartaruga and Tropicana East.
33
DIRECTORS REPORT
For the year ended to 31 December 2011 (continued) 10. DIRECTORS InTERESTS
The relevant interest of each director in the shares, debentures, interests in registered schemes and rights or options over such instruments issued by the companies within the Group and other related bodies corporate, as notied by the directors to the Australian Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report are; Options over ordinary shares issued in respect of shareholdings 1,000,000 1,000,000
Director Craig Readhead Jim Jewell Michael Donaldson Ross Kestel Peter Bowler Robert Watkins
Options over ordinary shares issued as remuneration 1,000,000 500,000 1,000,000 10,500,000 5,500,000
11.
ShARE OpTIOnS
All options expire on the earlier of their expiry date or if not vested, on termination of the employees employment.
Since the end of the period the Company has not issued ordinary shares as the result of the exercise of options.
34
13.
NOn-AudIT SERVICES
During the period KPMG, the Companys auditor, has provided taxation advisory services in addition to their statutory duties in Australia and Brazil, in the amount of $23,350 and $5,982 respectively. The board has considered the non-audit services provided during the period by the auditor and is satised that the provision of those non-audit services during the period by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001.
PETER BOWLER
Managing Director Dated at Perth, this 23rd day of March 2011.
35
17 16 10 19 11
40,133 846 542 5,781 442 47,744 166 2,230 77,658 8,860 973 443 90,330 138,074
41,904 115 1,294 5,728 1,570 50,611 18,792 8,817 250 27,859 78,470
16 14 13 12 19 15
23 21 18 26
8,661 1,361 13,814 24 23,860 58 10,254 41,442 9,765 61,519 85,379 52,695
23 19 18 26
25
The notes on pages 41 to 78 are an integral part of these consolidated nancial statements.
36
Note Revenue Cost of sales Gross prot/(loss) Other income Administrative expenses Project exploration and evaluation expenses Results from operating activities Finance income Finance expense Net nance income 6
Loss for the period before income tax Income tax benet Loss for the period after income tax Other comprehensive loss Effective portion of changes in fair value of cash ow hedges Foreign currency translation differences for foreign operations Other comprehensive loss for the period net of tax Total comprehensive loss for the year Loss attributable to: Equity holders of the Company Loss for the period Other comprehensive loss attributable to: Equity holders of the Company Total comprehensive loss for the period Loss per share: Basic Loss per share ($) Diluted Loss per share ($) 9
(14,614) (14,614)
19 8
20 20
(0.05) (0.05)
(0.02) (0.02)
The notes on pages 41 to 78 are an integral part of these consolidated nancial statements.
37
38
Note 95,566 (2,216) (4,742) (4,742) (4,742) (8,839) (8,839) (8,839) (34,840) (34,840) 2,022 3 (31,755) 8 19 63,620 (34,840) (4,742) (8,839) (13,581) (48,821)
Share based Option payments premium reserve reserve $000 $000 Hedging reserve $000 Accumulated losses $000 Total equity $000
Balance at 1 January 2011 Total comprehensive loss for the period Loss for the period Other comprehensive loss Foreign currency translation differences Effective portion of changes in fair value of cash ow hedges Total other comprehensive loss Total comprehensive loss for the period Transactions with owners recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares Equity transaction costs Share based payments Total contributions by and distributions to owners Balance as at 31 December 2011 22 30,189 (1,255) 28,934 124,500 3 (6,958) 8,562 8,562 10,584 (8,839) (66,595)
The notes on pages 41 to 78 are an integral part of these consolidated nancial statements.
Note 95,592 2,858 (5,074) (5,074) (5,074) (14,614) (14,614) 1,314 3 (17,141) 8 82,626 (14,614) (5,074) (5,074) (19,688)
Share based payments reserve $000 Accumulated losses $000 Total equity $000
Balance at 1 January 2010 Total comprehensive loss for the period Loss for the period Other comprehensive loss Foreign currency translation differences Total other comprehensive loss Total comprehensive loss for the period Transactions with owners recorded directly in equity Contributions by and distributions to owners Equity transaction costs (26) 22 (26) 95,566 (2,216) 708 708 2,022 3 (31,755)
Share based payments Total contributions by and distributions to owners Balance as at 31 December 2010
The notes on pages 41 to 78 are an integral part of these consolidated nancial statements.
39
Note Cash ows from operating activities Cash receipts from customers Cash paid to suppliers and employees Income tax refund received Net cash provided by (used in) operating activities Cash ows from investing activities Interest received Proceeds from sale of property, plant and equipment Proceeds from the sale of intangible assets Payments for evaluation and exploration expenditure Payments for mine development Payments for acquisition of property, plant and equipment Cash paid as securities Net cash provided by (used in) investing activities Cash ows from nancing activities Proceeds from issue of share and options Transaction costs paid related to the issue of shares Proceeds from borrowings Net cash provided by (used in) nancing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate uctuations on cash held Cash and cash equivalents at the end of the period
17b
17a
The notes on pages 41 to 78 are an integral part of these consolidated nancial statements.
40
1. REpORTIng EnTITY
Beadell Resources Limited (the Company) is a company limited by shares and incorporated in Australia, whose shares are publicly traded on the Australian Stock Exchange. The address of the Companys registered ofce is Level 2, 16 Ord Street, West Perth, Western Australia. The consolidated nancial statements of the Company as at and for the period from 1 January 2011 to 31 December 2011 comprise the Company and its subsidiaries (together referred to as the Group and individually as Group entities). The nature of the operations and principal activities of the Group are described in the Directors Report.
assumptions and estimation uncertainties that have a signicant risk of resulting in a material adjustment within the next nancial year. Critical judgements Going concern A key assumption underlying the preparation of the nancial statements is that the Group will continue as a going concern. An entity is a going concern when it is considered to be able to pay its debts as and when they are due, and continue in operation without any intention or necessity to liquidate or otherwise wind up its operations. A signicant amount of judgement has been required in assessing whether the Group is a going concern. The Group held cash on hand and on deposit as at 31 December 2011 of $40.133 million. As at 31 December 2011 the Group has a net working capital surplus of $23.466 million. For the period ended 31 December 2011 the Group incurred a loss of $34.840 million. As at 31 December 2011 the Group held assets of $138.074 million. Cash ows from operations and investment activities was negative $82.484 million. The directors consider the going concern basis of preparation to be appropriate based on forecast cash ows and condence of raising additional funds if required. The cash ow forecast depends upon successful operation of mining and production activities in accordance with the ramp up schedule and gold price and foreign exchange assumptions to enable cash ow forecasts to be achieved. Should the ramp up of operations not successfully achieve forecasts or forecast gold and foreign exchange rates not be achieved, the Group may require additional funding in the form of debt or equity or a combination of the two. Estimates and assumptions Restoration obligations Signicant estimation is required in determining the provision for site restoration as there are many factors that may affect the timing and ultimate cost to rehabilitate sites where construction, mining and/ or exploration activities have taken place. These factors include future development and exploration activities, changes in the cost of goods and services required for restoration activities and changes to the legal and regulatory framework governing restoration obligations. These factors may result in future actual expenditure differing from amounts currently provided.
b) Basis of measurement
The consolidated nancial statements have been prepared on the historical cost basis except for derivative nancial instruments measured at fair value.
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Determination of future taxable prots requires estimates and assumptions as to future events and circumstances, in particular, whether successful development and commercial exploitation, or alternatively sale, of the respective area of interest will be achieved. This includes estimates and judgements about commodity prices, ore reserves, exchange rates, future capital requirements, future operational performance and the timing of estimated cash ows. Changes in these estimates and assumptions could impact on the amount and probability of estimated taxable prots and accordingly the recoverability of deferred tax assets. Impairment of assets The recoverable amount of each non nancial asset or cash generating unit (CGU) is determined as the higher of the value in use and fair value less costs to sell. Determination of the recoverable amount of an asset or CGU based on a discounted cash ow model, requires the use of estimates and assumptions, including: the appropriate rate at which to discount cash ows, timing of cash ows, the expected life of the area of interest, commodity prices, exchange rates, ore reserves, future capital requirements and operational performance. Changes in these estimates and assumptions impact the recoverable amount of the asset or CGU and accordingly could result in an adjustment to the carrying amount of that asset or CGU. Hedge accounting Judgement is necessary when determining whether a derivative nancial instrument qualies for hedge accounting, such as whether forecast transactions are highly probable as required by AASB 139 Financial Instruments: Recognition and Measurement. The assessment of whether forecast transactions are highly probable is judgmental and is subject to changes to the timing and magnitude of underlying transactions. Fair value estimates for derivative nancial instruments The fair value of nancial instruments that are not traded in an active market is determined by using valuation techniques. Judgement is used to select a method and make assumptions that are mainly based on market conditions existing during and at the end of each reporting period.
Where provisional accounting has been used, the Group completes nal valuations within a year of acquisition. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and entity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination. Contingent liabilities contingent liability of the acquiree is assumed A in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. Non-controlling interest The Group measures any non-controlling interest at its proportionate interest in the identiable net assets of the acquiree. Transaction costs T ransaction costs that the Group incurs in connection with a business combination, such as nders fees, legal fees, due diligence fees, and other professional and consulting fees, are expensed as incurred.
a) Basis of consolidation
i. Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the nancial and operating policies of an entity so as to obtain benets from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The nancial statements of subsidiaries are included in the consolidated nancial statements from the date that control commences until the date that control ceases. ii. Transactions and balances eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated nancial statements. iii. Business combinations For every business combination, the Group identies the acquirer, which is the combining entity that obtains control of the other combining entities or businesses. Control is the power to govern the nancial and operating policies of an entity so as to obtain benets from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Measuring goodwill or discount in a business combination The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identiable assets acquired and liabilities assumed, all measured as of the acquisition date. Where the net amount of identiable assets exceeds fair value of consideration transferred, a discount on acquisition has arisen and the resultant gain is recognised in the Groups prot or loss. Provisional accounting for fair values is used where the Group has not completed nal valuations.
b) Foreign currency
Foreign currency transactions ransactions in foreign currencies are translated to T the functional currency of the operation at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at balance sheet date are translated to the presentation currency at the balance date at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for the effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. on-monetary assets and liabilities denominated N in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non monetary items in a foreign currency that are measured in terms of historical cost are measured using the exchange rate at the date of the transaction.
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c) Financial instruments
i. Derivative nancial instruments, including hedge accounting
The Group holds derivative nancial instruments to manage its foreign currency and gold price risk exposures. On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument and hedged item, including risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedge relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash ows of the respective hedged items during the period for which the hedge is designated and whether the actual results of each hedge are within a range of 80 to 125%. For a cash ow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash ows that could ultimately affect reported prot or loss. Derivatives are recognised initially at fair value. Attributable transaction costs are recognised in prot or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are accounted for as described below.
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Cash and cash equivalents Cash and cash equivalents comprise cash at bank, cash on hand and short term deposits at call. Short term deposits have original maturities of 3 months or less that are readily convertible to known amounts of cash and are subject to insignicant risk of changes in fair value. Trade and other receivables Receivables are initially recorded at fair value and subsequently measured at amortised cost using, less any allowance for impairment. Trade and other receivables are usually settled in 30 to 60 days and due to their short term nature are generally not discounted. Trade and other payables Trade and other payables are carried at amortised cost. The amounts are unsecured and typically settled in 30 to 60 days of recognition. Due to their short term nature, balances are generally not discounted. Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Subsequent to initial measurement, borrowings are recorded at amortised cost using the effective interest rate method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual drawdown of the facility, are recognised as prepayments and amortised on a straight line basis over the term of the facility. Borrowings are classied as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. iii. Share capital Ordinary shares Ordinary Shares are classied 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. Dividends Dividends are recognised as a liability in the period in which they are declared.
ii. Gold on carbon sales Revenue is recognised when the risks and rewards of ownership have been transferred to the buyer and recovery of the consideration is probable, associated costs can be measured reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. iii. Royalty income The Group recognises revenue from royalties based on a percentage of iron ore sales from certain tenements where the Group has assigned its iron ore rights. Revenue is recognised when the amount of iron ore sales can be measured reliably after the actual sale.
ii. activities in the area of interest have not at the reporting date, reached a state which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and signicant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if: i. sufcient data exists to determine technical feasibility and commercial viability, and;
ii. facts and circumstances suggest the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash generating units (CGUs) to which the exploration activity relates. The CGU shall not be larger than the area of interest. Once technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are rst tested for impairment and then reclassied to mine property assets within property, plant and equipment.
d) Revenue
i. Rental income Rental income is recognised in prot or loss on a straight-line basis over the term of the lease.
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Depreciation methods, useful lives and residual values are reviewed at each reporting date.
h) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classied as nance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and the leased assets are not recognised on the Groups statement of nancial position.
i) Leases
Lease payments Payments made under operating leases are recognised in prot or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
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Determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether the arrangement is or contains a lease. This will be the case if the following criteria are met: the fullment of the arrangement is dependent on the use of a specic asset(s); and the arrangement contains the right to use the assets(s). At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a nance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed nance charge on the liability is recognised using the Groups incremental borrowing rate.
an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash ows are discounted to their present value using a pre-tax discount rate that reects current market assessments of the time value of money and the risks specic to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inows from continuing use that are largely independent of the cash inows of other assets or groups of assets, known as CGUs. An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses are recognised in prot or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amount of assets in the unit (group of units) on a pro rata basis. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
j) Impairment
Financial assets A nancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A nancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash ows of that asset. An impairment loss in respect of a nancial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash ows discounted at the original effective interest rate. All impairment losses are recognised in prot or loss and any subsequent reversals of impairment losses are also recognised in prot or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. Individually signicant nancial assets are tested for impairment on an individual basis. The remaining nancial assets are assessed collectively in groups that share similar credit risk characteristics. Non-nancial assets The carrying amounts of the Groups non-nancial assets (excluding deferred tax assets and inventories) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated. The recoverable amount of
k) Employee benets
Dened contribution plans A dened contribution plan is a post-employment benet plan under which an entity pays xed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to dened contribution plans are recognised as a personnel expense in prot or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Short-term benets Liabilities for employee benets for wages, salaries and annual leave represent present obligations resulting from employees services provided to reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting date including related, where material, on-costs, such as workers compensation insurance and payroll tax. Non-accumulating benets, such as sick leave, are expensed as the benets are taken by the employees.
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l) Income tax
I ncome tax expense comprises current and deferred tax. Income tax expense is recognised in prot or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. urrent tax is the expected tax payable on the C taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. D eferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for nancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable prot, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. eferred tax assets and liabilities are offset if D there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. deferred tax asset is recognised to the extent A that it is probable that future taxable prots will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benet will be realised.
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n) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outow of economic benets will be required to settle the obligation. Provisions are determined by discounting the expected future cash ows at a pre-tax rate that reects current market assessments of the time value of money and the risks specic to the liability. Site restoration Mine closure and restoration costs include the costs of dismantling and demolition of infrastructure or decommissioning, the removal of residual material and the remediation of disturbed areas specic to the site. Provisions are recognised at the time that the environmental disturbance occurs. The provision is the best estimate of the present value of the future cash ows required to settle the restoration obligation at the reporting date, based on current legal requirements and technology. Future restoration costs are reviewed annually and any changes are reected in the present value of the restoration provision at the end of the nancial year. The amount of the provision for future restoration costs is capitalised as an asset and recognised in property, plant and equipment and is depreciated over the useful life of the mineral resource. The unwinding of the effect of discounting on the provision is recognised as a nance cost. Restoration expenditure is capitalised to the extent that it is probable that the future economic benets associated with restoration expenditure will ow to the Group.
q) Operating segments
The Group determines and presents operating segments based on the information that is provided to the Board, who is the Groups chief operating decision maker. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. An operating segments operating results are reviewed regularly by the Board to make decisions about the allocation of resources to the segment and to assess its performance, and for which discrete nancial information is available. Segment results that are reported to the Board include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise predominantly of administrative expenses. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.
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s) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost principle and includes expenditure incurred in acquiring inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
t) Intangible assets
Intangible assets that are acquired by the Group and have nite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. Intangibles are amortised over life of mine. Amortisation is calculated over the cost of the asset less residual value. Amortisation is recognised on a straight line basis in prot or loss over estimated useful lives. Amortisation methods, useful lives and residual values are reviewed at each reporting period and adjusted if appropriate.
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AASB 13 Fair value Measurement explains how to measure fair value when required by other AASBs. It does not introduce new fair value measurements, nor does it eliminate the practicability exceptions to fair value that currently exist in certain standards. AASB 13 will become mandatory for the Groups 31 December 2013 nancial statements. AASB 12 Disclosures of Interests in Other Entities contains the disclosure requirements for entities that have interest in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. AASB 12 will be mandatory for the Groups 31 December 2013 year end. The Group has not yet determined the potential impact of these amendments. AASB 119 Employee Benets (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) amended AASB 119 focussing on but not limited to the accounting for dened benet plans. In addition it changes the denition of short-term and other long-term employee benets and some disclosure requirements. The amendments to AASB 119 will be mandatory for the Groups 31 December 2013 year end. The Group has not yet determined the potential impact of these amendments. AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income introduces the separate classication of those items that would be reclassied to prot and loss in the future and those that would never be reclassied to prot or loss and the impact on those items. The amendments to AASB 2011-9 will be mandatory for the Groups December 2013 year end. The Group has not yet determined the potential impact of this amendment.
Credit risk
Credit risk is the risk of nancial loss to the Group if a customer or counterparty to a nancial instrument fails to meet its contractual obligations, and arises principally from the Groups receivables, cash and cash equivalents.
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Note Australia Cash and cash equivalents Security given for bank guarantees Other receivables, goods and services tax and equivalent taxes Exposure to credit risk Brazil Cash and cash equivalents Security given for bank guarantees Other receivables, goods and services tax and equivalent taxes Derivative assets Exposure to credit risk Total Cash and cash equivalents Security given for bank guarantees Other receivables, goods and services tax and equivalent taxes Derivative assets Exposure to credit risk
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its nancial obligations as they fall due. The Groups approach to managing liquidity is to ensure, as far as possible, that it will always have sufcient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Groups reputation. As the Group is primarily engaged in the development of its Tucano Project, the Group will continue to have a negative cash ow until the Tucano Project itself becomes cash ow positive. If the Group exhausts its cash reserves and available undrawn borrowings prior to the Tucano Project becoming cash ow positive, the Group may require additional nancing to fund working capital, construction, debt service and other commitments. The Group prepares detailed models as part of its system of budget planning which are used to predict liquidity needs and support funding activities. The progress of construction activities and commencement of production activities are monitored regularly to determine cash out ows to date and monitor cash requirements.
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Liquidity risk is managed by monitoring actual and budgeted cash out ows for the Group. The following are the contractual maturities of nancial liabilities, including estimated interest payments: Carrying amount $000 31 December 2011 Trade and other payables Borrowings Derivative nancial liabilities Balance as at 31 December 31 December 2010 Trade and other payables Balance as at 31 December 3,066 3,066 3,066 3,066 3,009 3,009 57 57 8,719 55,256 10,254 74,229 Contractual cash ows $000 8,719 62,775 10,270 81,764 6 months or less $000 8,661 1,327 9,988
The following table indicates periods in which the cash ows associated with derivatives that are cash ow hedges are expected to occur and impact prot or loss: Carrying amount $000 31 December 2011 Gold forward contracts Foreign exchange forward contracts Balance as at 31 December 31 December 2010 Trade and other payables Balance as at 31 December (3,066) (3,066) (3,066) (3,066) (3,009) (3,009) 57 57 1,391 (10,230) (8,839) Contractual cash ows $000 1,391 (10,230) (8,839) 6 months or less $000 -
It is not expected that the cash ows included in the maturity analysis could occur signicantly earlier, or at signicantly different amounts.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Groups income or the value of its holdings of nancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Group is exposed to uctuations in foreign currency rates, interest rates and metals prices (principally gold upon commencement of gold production at Tucano). In each case, future operational cash ows and ability to service current and future borrowings are affected by these uctuations. The Groups strategy is to mitigate foreign exchange and metal price risks by use of derivatives to partially hedge these exposures. Derivatives are not used mitigate interest rate risks. Derivatives contracts entered into are further discussed at note 19.
Currency risk
Currency risk arises from investments and borrowings that are denominated in a currency other than the respective functional currencies of Group entities.
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Sensitivity analysis
Assuming all other variables remain constant, a 10% strengthening of the Australian dollar at 31 December 2011 against the BRL would have resulted in a decreased loss of $2,641,000. A 10% weakening of the AUD would have had the equal but opposite effect, assuming all other variables remain constant. This analysis is based on exchange rate variances the Group considered to be reasonably possible at the end of the period. The following signicant exchange rates applied during the year: Average rate Reporting date spot rate 12 months 6 months ended ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 AUD BRL 1 USD 1 0.581 0.969 0.613 1.061 0.528 0.983 0.589 0.984
Prole
At the reporting date the interest rate prole of the Groups interest-bearing nancial instruments was:
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Consolidated 31 December 31 December 2011 2010 $000 $000 Fixed rate instruments Financial assets Financial liabilities Net xed rate instruments Variable rate instruments Financial assets Financial liabilities Net variable rate instruments 300 (55,256) (59,076) 40,276 40,276 12,352 12,352 29,802 29,802
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Total liabilities Less: cash and cash equivalents Net debt Total equity Add: net amounts accumulated in equity related to cash ow hedges Adjusted capital Debt to adjusted capital ratio
In determining the funding mix of debt and equity, consideration is given to the ability of the Group to service loan interest and repayment schedules, lending facility compliance ratios and amount of free cash ow desired. The Group may raise additional capital through the issue of new shares or borrowings for exploration, development and/or asset acquisition, should the Group require additional capital to carry out those activities.
5. OpERATIng SEgmEnTS
The Group has two reportable segments; Australian exploration and evaluation and Brazilian exploration, evaluation and development, which are the Groups strategic business units. The strategic business units are managed separately because they are governed by different regulatory regimes. For each of the strategic business units, the Board reviews internal management reports on a monthly basis. Brazil $000 (348) (1,535) (839) (15,276) 3,322 (1,060) (8,950) Australia $000 (63) (3,342) (37) (4,040) Total $000 (348) (1,535) (902) (18,618) 3,322 (1,097) (12,990)
Information about reportable segment loss 12 months ended 31 December 2011 Project nance interest expenses Impairment of segment assets Depreciation Reportable segment loss before income tax 6 months ended 31 December 2010 External revenues and royalties Depreciation Reportable segment loss before income tax
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Reconciliation of reportable segment loss Total loss for reportable segments Unallocated amounts - Corporate income - Corporate expenses Consolidated loss before tax Brazil $000 97,421 34,123
6 months 12 months ended ended 31 December 31 December 2010 2011 $000 $000 (18,618) (12,990) 2,539 (18,918) (34,997) Australia $000 1,744 1,761 1,828 (3,452) (14,614) Total $000 99,165 35,884
Information about reportable segment assets 31 December 2011 Reportable segment assets 31 December 2010 Reportable segment assets
Reconciliation of reportable segment assets Total assets for reportable segments Unallocated amounts - Corporate assets Consolidated assets
31 December 31 December 2011 2010 $000 $000 99,165 35,884 38,909 138,074 42,586 78,470
Geographical segments
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of assets Non-current Revenues Non-current Revenues assets as at 6 months assets as at 12 months 31 December ended 31 31 December ended 31 2010 December 2010 2011 December 2011 $000 $000 $000 $000 1,744 1,761 87,004 1,778 26,098 1,582 90,330 1,778 27,859
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7. PERSOnnEL ExpEnSES
Consolidated 6 months 12 months ended ended 31 December 31 December 2010 2011 $000 $000 4,817 1,752 1,384 477 851 272 1,513 1,027 8,562 708 17,127 4,236
Note Wages, salaries and benets Contributions to dened contribution plans Increase in liability for annual leave Other personnel expenses Share-based payment transactions Personnel expenses
22
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9. InCOmE TAx
No tax is payable by the Group. Deferred tax assets are brought to account only to the extent required to offset deferred tax liabilities and where it is probable of recovery. All other tax losses are not brought to account as it is not probable that future taxable income will be available against which the Group can utilise these benets.
Income Statement
Consolidated 31 December 31 December 2011 2010 $000 $000 157 157 (34,840) (11,149) (5,585) 10,942 (5,663) 11,455 (14,614) 812 (1,600) 6,155 (2,287) 308 (1,562) (1,826) -
Current income tax charge R&D tax refund received Tax income reported in the statement of comprehensive income Numerical reconciliation between tax loss and pre-tax accounting loss Pre tax accounting loss for the period Income tax benet at the Groups tax rates of Australia: 30%, Brazil: 34% Income not assessable for tax purposes Expenditure not allowable for tax purposes Temporary differences not recognised Current year losses for which no deferred tax asset was recognised Recognition of prior year losses Recognition of unrecorded federal tax credits Current income tax charge
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10. InVEnTORIES
Consolidated 31 December 31 December 2011 2010 $000 $000 5,781 5,728 5,781 5,728
Spare parts, raw materials and consumables Balance at the end of the period
Opening balance Transfers from property, plant and equipment Effect of movement in exchange rates Provision for impairment Balance at the end of the period
Part of the existing site infrastructure at the Groups Tucano project was presented as non-current assets held for sale following the commitment of the Groups management to a plan to sell several signicant items. During the period the Group was not successful in disposing of these items and has determined the carrying value of the items is no longer recoverable.
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31 December 2011 Cost Opening balance Transfers to mineral properties under development Additions Disposals Effect of movements in exchange rates Balance at 31 December 2011 Depreciation Opening balance Depreciation expensed Depreciation capitalised to mineral properties under development Disposals Effect of movements in exchange rates Balance at 31 December 2011 Carrying amount Opening balance Balance at 31 December 2011
31 December 2010 Cost Opening balance Additions Capital works in progress Disposals Transfers to non-current assets held for sale Effect of movements in exchange rates Balance at 31 December 2010 Depreciation Opening balance Depreciation for the period Disposals Effect of movements in exchange rates Balance at 31 December 2010 Carrying amount Opening balance Balance at 31 December 2010
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Exploration and evaluation assets reect capitalised acquisition costs only. The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest. Upon demonstrating the technical feasibility and commercial viability of the extraction of mineral resources the Groups Tucano project, the exploration and evaluation assets attributable to Tucano were reclassied as mineral properties under development.
Opening balance Security for bank guarantees given Security for bank guarantees released Balance at the end of the period
The Group has established various facilities with the Groups bankers. The facility is secured by cash, held in cash balances with the Groups bankers in xed rate deposits for rolling terms of three to six months. The average interest rate applied during the period was 5%. Interest accruing on balances is payable to the Group. The facilities have been established to issue bank guarantees to satisfy the Groups environmental and ofce lease bond requirements.
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Other receivables Goods and services and equivalent indirect taxes Balance at the end of the period Current Non current Balance at the end of the period
Bank balances Cash and cash equivalents in the statement of cash ows
Note Cash ows from operating activities Loss for the period Adjustments for: Net nance income Depreciation Equity-settled share-based payment transactions Loss (prot) on sale of property, plant and equipment Impairment losses recognised Change in provisions Exploration and evaluation expenditure classied as investing activities Operating prot/(loss) before changes in working capital Change in inventories Change in trade and other receivables Change in trade and other payables Change in prepayments Cash (used in)/provided by operating activities Income tax refund received Net cash (used in)/provided by operating activities
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Secured loans Balance at end of the period Current Non current Balance at end of the period
Facility Agreement
In October 2011 the Group entered into a US$90 million Facility Agreement with Macquarie Bank Limited. The Facility was established to fund the development of the Tucano Gold Project and expires on 31 December 2014. Interest rates are xed for terms of 3 to 6 months from drawing or rolling of principal amounts. The Facility is secured by a rst priority charge over all assets of the Group until commercial production and various other performance parameters are achieved (Project Completion). At Project Completion, the Facility will be secured by a rst priority charge over Groups wholly owned subsidiary, Beadell Brasil Ltda (incorporating the Tucano Gold Project) and the Groups ownership interests in Beadell Brasil Ltda and the Tucano Gold Project. As at 31 December 2011, the Group had drawn US$60 million from the facility. The weighted average interest rate that applied during the period was 4.46% per annum. The Group is currently negotiating a US$20 million extension to its existing Facility Agreement. This matter is further described at note 31 subsequent events.
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Weighted average effects Opening balance Effect of shares issued Weighted average number of ordinary shares at the end of the period
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Current Salaries, wages and benets accrued Liability for annual leave Total employee benets
Current Opening balance Options granted during the period Options exercised during the period Options cancelled during the period Options outstanding at the end of the period Options exercisable at the end of the period
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Number of options Grant date/period Key Management Personnel 500,000 27 August 2009 1,500,000 25 November 2009 Vesting Vested Vested Vested Vested 200,000 Vested, 200,000 vesting 12 July 2012 and 200,000 vesting 12 July 2013 Vested Vested Vested Vested 21 January 2012 1 August 2012 15 September 2011 5 October 2012 11 October 2012 9 November 2012 1 January 2015 31 December 2014 31 December 2014 31 December 2014 $0.65 $0.65 $0.65 $0.85 1 January 2015 $0.85 1 January 2015 $0.80 31 December 2014 $0.65 31 December 2014 $0.19 3.95 3.57 3.95 3.49 2.79 2.74 2.72 3.15 31 December 2013 $0.12 3.84 31 December 2012 $0.30 3.93 $0.07 $0.05 $0.10 $0.35 $0.48 $0.45 $0.43 $0.36 $0.29 $0.33 31 December 2014 31 December 2014 $0.19 $0.65 3.59 2.97 $0.44 $0.43 31 December 2014 $0.19 3.95 $0.10 31 December 2013 31 December 2013 $0.12 $0.12 3.84 3.60 $0.05 $0.07 Expiring
5,000,000
20 July 2010
17,000,000 600,000
Other employees
200,000
28 July 2008
300,000
27 August 2009
830,000
20 July 2010
1,500,000
6 December 2010
500,000
21 January 2011
500,000
6 July 2011
50,000
15 September 2011
50,000
5 October 2011
50,000
11 October 2011
50,000
9 November 2011
Vesting conditions of unvested options Key Management Person must be in the Groups employment as at 12 July 2012 Key Management Person must be in the Groups employment as at 12 July 2012 Employee must be in the Groups employment as at 21 January 2012 Employee must be in the Groups employment as at 1 August 2012 Employee must be in the Groups employment as at 15 September 2012 Employee must be in the Groups employment as at 5 October 2012 Employee must be in the Groups employment as at 11 October 2012 Employee must be in the Groups employment as at 9 November 2012
500,000
21 January 2011
The outstanding balance of employee share options are options as at 31 December 2011 is represented by:
500,000 50,000
50,000
5 October 2011
50,000
11 October 2011
50,000
9 November 2011
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The grant date fair value of employee share options was measured using the Black-Scholes formula. The inputs to the model used to determine the fair value of options granted during the period were: Employees granted 2011 6 July $0.45 -% 3.49 $0.87 $0.85 66.59% 4.73% 3.58% 3.52% 3.45% 3.71% 65.39% 64.81% 66.16% 66.02% $0.76 $0.85 $0.85 $0.65 $0.65 $0.65 $0.75 $0.65 $0.81 $0.65 66.50% 4.42% 3.15 2.79 2.74 2.72 2.97 9 November $0.33 -% 15 September $0.44 -% 5 October $0.29 -% 11 October $0.36 -%
(Continued)
12 months ended 31 December 2011 Fair value at grant date Expected dividends
21 January $0.48 -%
3.95
$0.82 $0.80
72.29%
5.29%
No other features of options granted were incorporated into the measurement of fair value. Employees granted 2010 20 July $0.10 -% 3.9 $0.19 $0.19 64.14% 4.77% 5.01% 66.59% $0.67 $0.65 $0.19 $0.19 64.14% 4.77% 3.6 3.9 6 December $0.38 -% 20 July $0.10 -% Key Management personnel granted 2010 29 November $0.45 -% 3.6 $0.57 $0.19 65.86% 5.12% 6 December $0.38 -% 3.6 $0.67 $0.65 66.59% 5.01%
12 months ended 31 December 2010 Fair value at grant date Expected dividends
No other features of options granted were incorporated into the measurement of fair value.
Employee share options forfeited during the period ended 31 December 2011
750,000 options were forfeited on 6 May 2011 due to failure to meet vesting conditions stated in the terms and conditions of the Employee Share Option Scheme.
Opening balance Share options granted equity settled Share options forfeited equity settled Share based payments recognised
Opening balance Options granted during the period Options outstanding at the end of the period Options exercisable at the end of the period The following table illustrates the value of these share based payment options:
Consolidated 31 December 31 December 2011 2010 $000 $000 1,076 1,076 1,076 1,076
Opening balance Share options granted equity settled Closing share based payments recognised
Trade and other payables Balance at the end of the period Current Non-current Balance at the end of the period
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Less than one year Between one and ve years Operating lease rentals payable
The Group leases property and equipment in Australia and Brazil under operating leases. Leases of equipment run for periods ranging from one to three years with lease payments being xed throughout the duration of each equipment lease. The Groups property leases run for periods ranging from one to three years.
Leases as lessor
Non-cancellable operating lease rentals are receivable as follows: Consolidated 31 December 31 December 2011 2010 $000 $000 340 340 85 426 425 766
Less than one year Between one and ve years Operating lease rentals receivable
The Company has entered into a sub-lease agreement to lease a portion of its head ofce space where the Company is head lessee. The sub-lease agreement expires within 2 years, coincident with the expiration of the head lease agreement.
Share capital On issue at the beginning of the period Issued for cash On issue at the end of the period
Share capital
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are fully paid and rank equally with regard to the Companys residual assets.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the nancial statements of foreign operations.
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Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash ow hedging instruments related to hedged transactions that have not yet occurred.
26. PROVISIOnS
Consolidated 31 December 31 December 2011 2010 $000 $000 11,159 13,260 319 455 893 (1,583) (999) 9,789 24 9,765 9,789 (1,321) (1,235) 11,159 11,159 11,159
Balance at beginning of the period Unwind of discount on site restoration costs Provisions made during the period Provisions reversed during the period Effect of movements in exchange rates Balance at the end of the period Current Non-current Balance at the end of the period
The Groups provisions comprise provisions for site restoration of $8,189,000 (2010: $8,723,000), legal proceedings of $1,575,000 (2010: $2,436,000) and community contributions of $24,000 (2010: nil).
Site restoration
The provision includes estimates of costs associated with reclamation, rehabilitation and other costs associated with the restoration of the present mine site. Estimates of restoration costs are based on current legal requirements and future costs that have been discounted to their present value.
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Not yet provided for Minimum exploration expenditure commitments Within one year Contractual commitments Within one year Capital and other commitments within one year Contractual commitments One year or later and no later than ve years Capital and other commitments one year or later and no later than ve years Capital commitments
Community fund
The Group has an agreement with the Municipality of Pedra Branca and the Municipality of Serra do Navio in whose region the Groups Brazilian Tucano Gold Project resides. The agreement requires the Group make annual payments of R$550,000 (approximately A$290,000). R$357,500 is payable to the Municipality of Pedra Branca and R$192,500 is payable to the Municipality of Serra do Navio.
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28. COnTIngEnCIES
Consolidated 31 December 31 December 2011 2010 $000 $000 528 589 528 589
The directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrice of economic benets will be required or the amount is not capable of reliable measurement.
Short-term employee benets Post-employment benets Share based payments Key management personnel compensation
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Transaction with related party Legal services Project management & technical services Total and current liabilities
1 January 2011 Directors Mr Readhead Mr Jewell Dr Donaldson Mr Bowler Mr Watkins Executives Mr Barrett Mr Andrade Mr Torresini 1,000,000 500,000 1,000,000 11,500,000 6,500,000 6,500,000 750,000
Exercised -
Cancelled (750,000)
Vested during the period 1,000,000 500,000 500,000 10,000,000 5,000,000 5,000,000 200,000 -
For the six months ended 31 December 2010: Vested and exercisable at 31 December 2010 500,000 1,500,000 1,500,000 1,500,000 -
1 January 2010 Directors Mr Readhead Mr Jewell Dr Donaldson Mr Bowler Mr Watkins Executives Mr Barrett Mr Torresini 500,000 1,500,000 1,500,000 1,500,000 -
Exercised -
Further details regarding options granted as compensation to key management personnel during the year can be found at note 22.
74 Beadell Resources Limited Annual Report 2011
Movements in shares
The movement during the reporting period in the number of ordinary shares in Beadell Resources Limited held, directly, indirectly or benecially, by key management personnel, including their related parties, is as follows; For the twelve months ended 31 December 2011: 1 January 2011 Directors Mr Readhead Dr Donaldson Mr Jewell Mr Bowler Mr Watkins Executives Mr Barrett Mr Andrade 8,351,651 8,351,651 12,000 2,233,333 410,000 12,543,333 6,650,001 Appointments during the period 31 December 2011 500,000 500,000 12,000 1,733,333 410,000 12,543,333 6,150,001
Purchased -
Exercise of options -
Sold
For the six months ended 31 December 2010: 1 January 2010 Directors Mr Readhead Dr Donaldson Mr Jewell Mr Bowler Mr Watkins Executives Mr Barrett Mr Torresini* *resigned during period No shares were granted to key management personnel during the reporting period as compensation. 8,351,651 282,964 8,351,651 282,964 12,000 2,233,333 410,000 12,543,333 6,650,001 Appointments during the period 31 December 2010 12,000 2,233,333 410,000 12,543,333 6,650,001
Purchased -
Exercise of options -
Sold
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Statement of comprehensive income Other income Administrative expenses Project exploration and evaluation expenses Results from operating activities Finance income Finance expenses Net nance income Loss for the period before income tax Income tax recovery Loss for the period after income tax Other comprehensive loss Other comprehensive loss for the period net of tax Total comprehensive loss for the period Loss attributable to: Equity holders of the Company Loss for the period * Administrative expenses include impairments on investments in subsidiaries.
76 Beadell Resources Limited Annual Report 2011
(48,421) (48,421)
(19,775) (19,775)
Consolidated 31 December 31 December 2011 2010 $000 $000 3,747 163 471 279 4,660 1,614 130 13,454 34,400 1,137 50,735 55,395 2,218 424 2,642 58 58 2,700 52,695 124,500 10,588 (82,393) 52,695 12,165 91 319 12,575 1,614 146 35,582 14,523 250 52,115 64,690 822 191 1,013 57 57 1,070 63,620 95,566 2,026 (33,972) 63,620
Statement of nancial position Assets Cash and cash equivalents Prepayments Trade and other receivables Other current assets Total current assets Exploration and evaluation assets Property, plant and equipment Investments Loans receivable Other non-current assets Total non-current assets Total assets Liabilities Trade and other payables Employee benets Total current liabilities Trade and other payables Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Accumulated losses Total equity
Statement of nancial position Audit services KPMG Australia Audit and review of nancial reports Overseas KPMG rms Audit and review of nancial reports Audit services Other services KPMG Australia Taxation services Overseas KPMG rms Taxation services Other services
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DIRECTORS DECLARATION
1. a) In the opinion of the directors of Beadell Resources Limited (the Company): the consolidated nancial statements and notes 1 to 35 that are contained within and the Remuneration report in the Directors report, set out in section 4.3, are in accordance with the Corporations Act 2001, including: i) giving a true and fair view of the Groups nancial position as at 31 December 2011 and of its performance for the nancial year ended on that date; and
ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. There are reasonable grounds to believe that the Company and the group entities identied in note 33 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Class Order 98/1418. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive ofcer and chief nancial ofcer for the period ended 31 December 2011. The directors draw attention to note 2(a) to the consolidated nancial statements, which includes a statement of compliance with International Financial Reporting Standards.
2.
3.
4.
PETER BOWLER
Managing Director Dated at Perth, this 23rd day of March 2011.
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Lead Auditors Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Beadell Resources Limited I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 31 December 2011 there have been: (i) (ii) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
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a)
Substantial Shareholders lodged with the Company Number of Shares Held 48,737,792 % of Shares Held 7.4%
b) Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15 17 18 19 20
Listing of 20 Largest Shareholders Name of Ordinary Shareholder National Nominees Ltd HSBC Custody Nominees (Australia) Ltd JP Morgan Nominees Australia Ltd JP Morgan Nominees Australia Ltd Cash Income Account Citicorp Nominees Pty Ltd UBS Wealth Management Australia Nominees Pty Ltd Cogent Nominees Pty Ltd Equity Trustees Ltd Oz Minerals Investments Pty Ltd AMP Life Ltd UBS Nominees Pty Ltd HSBC Custody Nominees (Australia) Ltd Pershing Australia Nominees Pty Ltd CS Fourth Nominees Pty Ltd Braidwood Investments Pty Ltd Hookipa Pty Ltd Twynam Agricultural Group Pty Ltd Robert Holmes Watkins Citicorp Nominees Pty Ltd Lujeta Pty Ltd Number of Shares Held 157,406,127 101,132,057 78,874,138 35,903,575 33,016,649 16,497,040 13,229,213 12,800,000 12,800,000 12,331,993 10,149,664 9,899,386 9,885,021 9,622,200 9,100,001 7,254,650 5,975,000 5,850,001 5,444,305 5,376,042 % of Shares Held 22.0% 14.1% 11.0% 5.0% 4.6% 2.3% 1.9% 1.8% 1.8% 1.7% 1.4% 1.4% 1.4% 1.3% 1.3% 1.0% 0.8% 0.8% 0.8% 0.8%
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Range 1 1,000 1,001 5,000 5,001 10,000 10,001 100,000 100,001 over Total d) e)
Number of shareholders holding less than a marketable parcel is 225 Voting rights i) Ordinary Shares On a show of hands every shareholder present in person or by proxy shall have one vote and upon a poll, each share shall have one vote.
ii) Options The Companys options have no voting rights. f) Stock exchange listing Beadell Resources Limited shares are listed on the Australian Stock Exchange. The Companys ASX code is BDR. Unlisted share options Exercise price $0.30 $0.35 $0.50 $0.12 $0.1875 $0.1875 $0.65 $0.80 $0.80 Expiry date 30 June 2012 30 June 2012 30 June 2012 30 June 2013 21 April 2014 30 June 2014 30 June 2014 1 January 2015 1 January 2015 Number of holders 2 3 3 6 2 10 7 1 2
g)
Number of options 200,000 1,500,000 1,500,000 2,300,000 10,000,000 22,830,000 2,250,000 500,000 550,000
Macquarie Bank Ltd and Macquarie Capital Group Ltd each hold 5,000,000 Unlisted Share Options, representing 24% of the number of Unlisted Share Options on issue. Braidwood Investments (WA) Pty Ltd holds 11,500,000 Unlisted Share Options, representing 28% of the number of Unlisted Share Options on issue.
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