Half-yearly report
(Thomson Reuters ONE) -
AIM release
10 March 2010
Discovery Metals Limited
Interim Results
Discovery Metals Limited (ASX/BSE: "DML", AIM: "DME") ('Discovery Metals' or
"Company") has reported strong financial results for the half year ended 31
December 2009.
Financial highlights from the half year included:
· Total assets increased by 51% during the half year to AUD$49.1 million.
· Total equity increased by 53% during the half year to AUD$47.4 million.
· A further AUD$15.5million raised in equity by placement and a Share
Purchase Plan.
· Discovery Metals remains debt free.
· Cash at 1 December was AUD$17.6 million
Operational highlights from the half year included:
· Mineral Resources (Plutus, Petra and Zeta prospects) of 60.4Mt (at) 1.4% Cu
and 19.5 g/t Ag (at a cut-off grade of 0.6% Cu).
· The Bankable Feasibility Study (BFS) was 80% complete at the end of
2009, progressing well towards completion in March 2010.
· The Boseto Copper Project economics were updated in October 2009 and the
project continues to show robust economics and costs in the middle of the cost
curve.
On 9 March 2010, Discovery Metals announced that the Boseto copper concentrate
sales contract has been awarded to Transamine, a global non-ferrous raw
materials trading company. Transamine will subscribe for 25 million Discovery
Metals' shares and the A$19 million raised will be used towards the construction
of the Boseto Copper Project after internal and external approvals.
Discovery Metals' Managing Director, Brad Sampson said, "Discovery Metals
continues to advance towards its goal to commission Botswana's largest copper
mine in late 2011."
"We have made significant progress and are on the cusp of moving from an
exploration and feasibility company into a development company. We have tracked
our path through the Global Financial Crisis and, with continued support of our
shareholders, expect to realise the first development of the Kalahari Copper
Belt in north-west Botswana. The year ahead is full of excitement and plenty of
hard work."
"We are also pleased to welcome JOGMEC as the funder and partner for continued
exploration of the Dikoloti Nickel Project in eastern Botswana."
Boseto Project Background
Discovery Metals' Boseto Copper Project (100% owned) is located in north-west
Botswana, approximately 80 kilometres south-west of the town of Maun, within the
district of Ngamiland. A seven tenement package was granted to Discovery Metals
in September 2005 and fieldwork on this tenement package commenced in October
2005. The Government of Botswana approved the Company's renewal of these
tenements in September 2008 and all prospective areas were retained by the
Company. In June 2008, Discovery Metals was granted an additional seven
tenements extending from the south-west boundary of the original 2005 granted
tenements through to the Namibian border, adding 5,700 km2 to the area held
under prospecting licenses, to bring the total current tenement area to 10,100
square kilometres. The outer limit of the exploration licence area starts
approximately 60 km south-west of Maun and stretches in a south-westerly
direction for approximately 300 km to the Namibian border.
The Boseto Copper Project is located within a belt of significant copper-silver
mineralisation that extends from the well known and more highly developed
Zambian Copper Belt across north-west Botswana and into Namibia. The poorly
explored and undeveloped portion of this belt in north-west Botswana is known as
the Kalahari Copper Belt.
Copper in the Boseto Project area occurs predominantly in chalcocite, with minor
amounts of bornite and other copper sulphides present. At shallow depths,
malachite and chrysocolla exist in significant proportions within some areas of
the mineral resource.
The total Mineral Resource for the Boseto Copper Project, reported in accordance
with The Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, "2004 Edition") at a cut off of 0.6%
Cu is:
60.4 Mt (at) 1.4% Cu and 19.5 g/t Ag containing 846 kt copper metal and 38 Moz
silver
consisting of:
Measured Resources of 3.9 Mt (at) 1.6% Cu and 23.0g/t Ag;
Indicated Resources of 7.8 Mt (at) 1.5% Cu and 22.8g/t Ag; and
Inferred Resources of 48.7 Mt (at) 1.4% Cu and 18.7g/t Ag
Discovery Metals is currently undertaking a Bankable Feasibility Study for the
Boseto Copper Project which is planned for completion in March 2010.
Competent Persons Statement
The information in this report that relates to Exploration Results is based on
information compiled by Mr Fred Nhiwatiwa who is a Member of the Australasian
Institute of Mining and Metallurgy (MAusIMM). Mr Nhiwatiwa is a full-time
employee of Discovery Metals Limited. Mr Nhiwatiwa has sufficient experience
which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves".
The information in this report as it relates to the Zeta, Plutus and Petra
Mineral Resources for the Boseto Copper Project was reviewed by David Arnott,
who is a MAusIMM. Mr Arnott is employed fulltime by Snowden Mining Industry
Consultants Pty Ltd (Snowden). Mr Arnott has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves". Mr Arnott and Mr
Nhiwatiwa consent to the inclusion in the report of the matters based on
information provided by them and in the form and context in which it appears.
Enquiries: For further information contact:
Discovery Metals Limited
Brad Sampson
Managing Director
Tel: +617 3218 0200
Fairfax I.S. PLC Conduit PR
Ewan Leggat / Laura Littley Jos Simson/Emily
Fenton
Tel: +44 (0)20 7598 5368 Tel: +44 (0)
20 7429 6603
Mobile: +44 (0)7899 870 450
Further information on the Company is available on its website:
www.discoverymetals.com.au
DISCOVERY METALS LIMITED
INTERIM FINANCIAL REPORT
For The Six Months Ended 31 December 2009
Dollar figures refer to Australian dollars unless otherwise stated
Your directors present their report on Discovery Metals Limited and its
subsidiaries ("the consolidated group") for the half year ended 31 December
2009.
THE BOARD OF DIRECTORS
The names of the directors of Discovery Metals Limited in office at any time
during or since the end of the half year are:
GORDON GALT (Date of Appointment 09.05.07)
B.Eng (Hons), B Comm, Grad Dip Applied Finance, MAusIMM, MAICD
Chairman and member of the Audit and Financial Risk Committee
Mr Galt is a mining engineer with post-graduate qualifications in finance.
During his career, Mr Galt has worked in senior management, technical and
operational roles across a wide range of commodities, primarily in gold, coal,
magnesium and copper/lead/zinc. During the past ten years Mr Galt has worked
mainly as the Managing Director of companies engaged in the development and
operation of large resource projects, and he has also spent a period of time in
banking. Mr Galt is currently engaged in funds management.
During the past three years Mr Galt has held the following listed company
directorships:
· Aquila Resources Limited from August 2007 to present
· Navigator Resources Limited from August 2008 to present
· Gloucester Coal Limited from April 2004 to August 2007
STUART BRADLEY SAMPSON (Date of Appointment 01.02.08)
B. Eng (Hon), MBA, AMP Oxf, MAusIMM, MAICD
Managing Director
Brad Sampson has over 20 years Australian and International experience as a
mining engineer. He has worked extensively in open cut and underground mine
operations and developments in Southern Africa, Australia and the Pacific. He
previously held an executive role in Thiess Ltd and has been in General
Management roles with Gold Fields Limited at St Ives gold mine in Western
Australia and at the Kloof operation in South Africa. He has also held the
position of General Manager-PNG for Emperor Mines Limited. Brad has also held
positions with Anglo American, Ross Mining NL and Comalco. Mr Sampson is also
the managing director of all Discovery Metals subsidiaries registered in
Botswana.
MORRICE CORDINER (Date of Appointment 30.05.03)
LLB, ASIA
Non-Executive Director and Chairman of the Audit and Financial Risk Committee
Mr Cordiner is a corporate lawyer by training and has in excess of 15 years
experience in the finance and resources industries. Based in Sydney, Australia,
he is a founding Director of Discovery Metals, and was instrumental in
identifying the original projects and strategic alliance with Falconbridge Inc
that formed the original assets of the Company in 2003. Over the last 6 years
Mr Cordiner has been involved in the successful development and financing of a
number of junior listed resource companies with projects in gold, nickel, copper
and zinc. He has been actively involved in raising funds for these ventures on
the Australian Stock Exchange, the London AIM market and the Toronto Stock
Exchange. Mr Cordiner was a non-executive director of the ASX and TSX
dual-listed gold explorer, Andean Resources Limited (December 2003 to November
2009) and was a non-executive director of the ASX listed zinc-lead explorer,
Meridian Minerals Limited (July 2008 to November 2009).
RIBSON GABONOWE (Date of Appointment 30.05.08)
BSc (Mining Engineering), MSc (Mineral Economics), MBA
Non Executive Director
Ribson Gabonowe is a well known mining engineer with over 25 years of experience
in the mining industry. For twelve years to Dec 2006, Ribson was the Director of
Mines of Botswana, responsible for administering the legal and fiscal framework
governing mineral exploitation. In this role Ribson was involved in
negotiations of mineral agreements for copper, nickel, diamonds, coal and soda
ash.
During the past three years Ribson held directorships in the following
companies:
* Morupule Colliery (Pty) Ltd
* Botswana Diamond Valuing Company (Pty) Ltd
* BCL Limited (Pty) Ltd
Ribson is currently a director of Kukama Mining and Exploration, African Coal
(Pty) Ltd, Atlas Minerals (Pty) Ltd and Gabor Consulting (Pty) Ltd. Mr Gabonowe
is also a director of all Discovery Metals subsidiaries registered in Botswana.
JEREMY READ (Date of Appointment 01.02.08)
BSc (Hons), MAusIMM
Non Executive Director (Managing Director 30.05.03 to 01.02.08)
Jeremy Read has 22 years domestic and international minerals exploration
experience and was previously the Manager of BHP Minerals Australian Exploration
Team. He has extensive exploration experience for gold, nickel sulphides and
base metals. Mr. Read played a critical role in the discovery of the Kabanga
North Nickel deposit, in Tanzania which is currently undergoing feasibility
studies. He is skilled in developing new technical teams, management of
technical/specialist service groups, project generation activities, risk
management, multi-commodity mineral exploration, company listings and capital
raisings. During his employment with BHP Mr Read participated in the
development of several significant strategic exploration alliances. Mr Read was
the founding managing director of Discovery Metals from its incorporation in May
2003 until his appointment as a non-executive director on 1 February 2008. He
is also the founding managing director of Meridian Minerals Limited.
JOHN SHAW (Date of Appointment 14.11.06)
BSc (Geological Engineering), FAusImm, MCIM, FAICD, SME
Non Executive Director and member of the Audit and Financial Risk Committee
John Shaw has over 40 years experience in exploration, development and
operations of open cut and underground mines. He previously was Vice President
of the Australian Operations of Placer Dome Asia Pacific Limited and Managing
Director of Kidston Gold Mines. Mr Shaw is a former Chairman of Gallery Gold
Limited, Zimbabwe Platinum Mines Limited, Tri Origin Minerals Limited, Albidon
and Lodestone Exploration Limited. He was also involved with the development of
the Mupane Gold Mine in NE Botswana. Mr Shaw is a non executive director of
IAMGOLD Corporation and Quadra Australia Pty Ltd.
During the past three years Mr Shaw has held the following listed company
directorships:
· IAMGOLD Corporation from March 2006 to present
· Albidon Limited February 2008 to April 2009
· Tri Origin Minerals Limited from October 2003 to February 2008
ROSLYNN SHAND (Date of Appointment 24.05.07)
BA, LLB, FCIS
Company Secretary
Roslynn Shand has a combined degree in Arts/Law from the University of
Queensland, is a fellow of the Chartered Secretaries Australia and has
considerable experience in the company secretarial area. She has been a company
secretary for over 15 years for entities in the financial, agricultural and
mining sectors.
Principal Activity
The principal activity of the Company during the year was mineral exploration,
and in particular the continued development of its Boseto copper project in
Botswana.
No significant change in the nature of the consolidated entity's principal
activity occurred during the year.
Dividends Paid or Recommended
The directors do not recommend the payment of a dividend for this financial
year. No dividend has been declared or paid by Discovery Metals Limited since
the end of the previous financial year.
Operating Results
The result of the consolidated group for the half year amounted to a loss of
$1,806,171 (2008: loss $2,268,190).
Number of Employees
There are thirty one (31) full-time employees employed by the consolidated
entity in Australia and Botswana. All other roles are currently undertaken
under contracted arrangements, or by part-time employees.
Significant Changes in State of Affairs
No significant changes in the state of affairs of the consolidated entity
occurred during the year.
After Balance Date Events
No other matters or circumstances have arisen since the end of the financial
year which significantly affected or may significantly affect the operations of
the consolidated entity, the results of those operations or the state of affairs
of the consolidated entity in future financial years other than those noted in
Note 7 in the Notes to the Financial Statement.
Future Developments
Other than as referred to in this report, further information as to likely
developments in the operations of the consolidated entity and the expected
results of those operations would, in the opinion of the directors, be
speculative and not in the best interests of the consolidated entity.
Review of Operations
The directors continued to operate the consolidated group in the best interest
of the shareholders.
Financial Position
The net asset position of the consolidated group at 31 December 2009 was
$47,348,584 (30 June 2008: $30,978,963).
The consolidated group has written off $nil (2008: $700,000) on exploration
during the half year. All Australian tenements have been or are in the process
of being relinquished or transferred to other parties and have been previously
written off.
REVIEW OF OPERATIONS
During the last six months of 2009, Discovery Metals Limited ("DML") has
continued to focus its activities on the Boseto copper project in north-west
Botswana. Work continues on the Bankable Feasibility Study (BFS) for the Boseto
copper project, which is due for completion by the end of March, 2010.Activity
on the Dikoloti nickel project in eastern Botswana recommenced following the
signing of a Joint Exploration Agreement with the Japanese government agency,
JOGMEC.
Boseto Copper Project (DML 100%)
The Boseto copper project comprises fourteen (14) prospecting licences covering
an area of 10,100 square kilometres in north-western Botswana. The project
covers a large area of significant copper-silver mineralisation within the
Ghanzi Formation. By the reporting date, DML had reported the following Mineral
Resources from three (3) specific prospect locations within the Boseto copper
project area:
Zeta 35.4Mt (at) 1.4% Cu and 22.3g/t Ag (at a cut-off of 0.6% Cu), consisting
of:
3.9Mt (at) 1.6%Cu and 23.0 g/t Ag Measured mineral resource
7.0Mt (at) 1.5%Cu and 23.8 g/t Ag Indicated mineral resource, and
24.5 Mt (at) 1.4% Cu and 21.8g/t Ag Inferred mineral resource;
Plutus 15.9Mt (at) 1.6% Cu and 16.4 g/t Ag (at a cut-off of 0.6% Cu) Inferred
mineral resource;
Petra 0.8Mt (at) 1.4%Cu and 14.0 g/t Ag Indicated mineral resource; and
8.3Mt (at) 1.2% Cu and 14.1 g/t Ag (at a cut-off of 0.6% Cu) Inferred
mineral resource.
Total 60.4Mt (at) 1.4% Cu and 19.5 g/t Ag (at a cut-off of 0.6% Cu)
The in-fill drilling required for the Bankable Feasibility Study was completed
in September 2009. The three mineral resources remain open at depth and along
strike.
Boseto Copper Project Bankable Feasibility Study (BFS)
The Boseto copper project is currently in its BFS stage with completion of work
timetabled for the end of March 2010. The economics for the Boseto copper
project was updated in September 2009 and shows a very robust project at copper
prices above $2.00 per pound.
Further details are reported in the Quarterly Activity Report released to the
ASX and AIM exchanges and the Company's website www.discoverymetals.com.au
State of Affairs
No significant changes in the group state of affairs occurred during the half
year.
Competent Persons Statement
The information in this report that relates to Exploration Results is based on
information compiled by Mr Fred Nhiwatiwa who is a Member of the Australasian
Institute of Mining and Metallurgy (MAusIMM). Mr Nhiwatiwa is a full-time
employee of Discovery Metals Limited. Mr Nhiwatiwa has sufficient experience
which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves".
The information in this report as it relates to the Zeta, Plutus and Petra
Mineral Resources for the Boseto Copper Project was reviewed by David Arnott,
who is a MAusIMM. Mr Arnott is employed fulltime by Snowden Mining Industry
Consultants Pty Ltd (Snowden). Mr Arnott has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves".
Messrs Nhiwatiwa and Arnott consent to the inclusion in this report of the
matters based on information provided by them and in the form and context in
which it appears
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the
company or intervene in any proceedings to which the Company is a party for the
purpose of taking responsibility on behalf of the Company for all or any part of
those proceedings.
The Company was not a party to any such proceedings during the half year.
Non-audit Services
The board of directors, in accordance with advice from the audit committee, is
satisfied that the provision of non-audit services during the year is compatible
with the general standard of independence for auditors imposed by the
Corporations Act 2001. The directors are satisfied that the services disclosed
below did not compromise the external auditor's independence for the following
reasons:
· all non-audit services are reviewed and approved by the audit committee
prior to commencement to ensure they do not adversely affect the integrity and
objectivity of the auditor; and
* the nature of the services provided do not compromise the general principles
relating to auditor independence in accordance with APES 110: Code of Ethics
for Professional Accountants set by the Accounting Professional and Ethical
Standards Board
·
There were no fees for non-audit services paid or payable to the external
auditors during the half year ended 31 December 2009.
Auditor's Independence Declaration
The lead auditor's independence declaration for the half year ended 31 December
2009 has been received and can be found on page 19 of this combined report.
Signed in accordance with a resolution of the Board of Directors.
Brad Sampson
Gordon Galt
Managing Director
Chairman
Brisbane. Dated this 10(th) day of March, 2010
STATEMENT OF COMPREHENSIVE INCOME
For the Half Year Ended 31 December 2009
CONSOLIDATED GROUP
31 Dec 31 Dec
2009 2008
$ $
Revenues 174,475 403,439
Compliance expenses (416,664) (275,675)
Depreciation and amortisation (38,324) (34,401)
Exploration expenditure written off 0 (700,000)
Legal support (89,579) (229,136)
Rent (82,457) (81,800)
Salaries and consultants (761,129) (675,677)
Travel expenses (237,418) (146,318)
Share based payments (121,103) (290,987)
Interest expenses 0 (32)
Other expenses (233,974) (237,603)
-------------------------
Profit/(loss) before income tax expense (1,806,171) (2,268,190)
Income tax expense
-------------------------
Other Comprehensive Income
-------------------------
Exchange translation difference 2,550,356 2,798,436
-------------------------
Total Comprehensive Income for the period 744,185 530,246
-------------
Basic earnings per share
(cents per share) (0.88) (1.57)
Diluted earnings per share
(cents per share) (0.88) (1.57)
The accompanying notes form part of these financial statements
STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
CONSOLIDATED GROUP
31 Dec 30 Jun
ASSETS 2009 2009
$ $
CURRENT ASSETS
Cash & cash equivalents 17,605,002 8,732,079
Trade & other receivables 650,919 435,999
-------------------------------
TOTAL CURRENT ASSETS 18,256,018 9.168,078
-------------------------------
NON-CURRENT ASSETS
Plant and equipment 586,430 511,865
Exploration expenditure 30,169,050 22,828,658
Other financial assets 0 0
Related party loans 0 0
Intangible assets 63,599 0
-------------------------------
TOTAL NON-CURRENT ASSETS 30,819,079 23,340,523
-------------------------------
TOTAL ASSETS 49,075,097 32,508,601
-------------------------------
CURRENT LIABILITIES
Trade & other payables 1,493,347 1,372,269
Short-term provisions 233,166 157,369
-------------------------------
TOTAL CURRENT LIABILITIES 1,726,513 1,529,638
-------------------------------
-------------------------------
TOTAL LIABILITIES 1,726,513 1,529,638
-------------------------------
NET ASSETS 47,348,584 30,978,963
EQUITY
Issued capital 59,201,233 43,696,900
Share reserve 2,836,134 2,715,031
Translation reserve 3,037,291 486,935
Accumulated losses (17,726,074) (15,919,903)
-------------------------------
TOTAL EQUITY 47,348,584 30,978,963
The accompanying notes form part of these financial statements
STATEMENT OF CHANGES IN EQUITY
For the Half Year Ended 31 December 2009
Issued Share Accumulated Option Foreign Total
Capital (Losses) Reserve Currency
Translation
Reserve
CONSOLIDATED $ $ $ $ $
ENTITY
2009
Balance at 1 27,864,491 (16,157,523) 1,819,551 642,432 14,168,951
July 2008
Currency - - - 2,798,436 2,798,436
Translation
Differences
(Loss) for the - (2,268,190) - - (2,268,190)
half year
Shares issued 8,342,453 - - - 8,342,453
during the
half year
Transaction (343,973) - - - (343,973)
costs for
shares issued
Cost of share - - 290,987 - 290,987
based payments
-----------------------------------------------------------------
Balance as at 35,862,971 (18,425,713) 2,110,538 3,440,868 22,988,664
31 December
2008
-----------------------------------------------------------------
2008
Balance at 1 43,696,900 (15,919,903) 2,715,031 486,935 30,978,963
July 2009
Currency - - - 2,550,356 2,550,356
Translation
Differences
(Loss) for the - (1,806,171) - - (1,806,171)
half year
Shares issued 16,112,976 - - - 16,112,976
during the
half year
Transaction (608,643) - - - (608,643)
costs for
shares issued
Cost of share - - 121,103 - 121,103
based payments
-----------------------------------------------------------------
Balance as at 59,201,233 (17,726,074) 2,836,134 3,037,291 47,348,584
31 December
2009
-----------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Half Year Ended 31 December 2009
CONSOLIDATED GROUP
31 Dec 31 Dec
2009 2008
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers - -
Payments to suppliers and employees (2,564,764) (943,606)
Management fee received 30,750 0
Interest received 141,491 395,581
Interest paid 0 (32)
Refunds received 2,235 7,859
-------------------------
Net cash used in operating activities (2,390,289) (540,198)
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration (7,340,392) (6,652,400)
Purchase of plant and equipment (112,889) (88,563)
Purchase of intangibles (63,599) (2,211)
Purchase of investments 0
Proceeds from disposal of assets 0
Proceeds from Joint Venture partner 725,500 0
-------------------------
Net cash used in investing activities (6,791,380) (6,743,174)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 16,112,976 8,342,453
Share Issue costs (608,643) (343,973)
-------------------------
Net cash provided by financing activities 15,504,333 7,998,480
-------------------------
Net increase (decrease) in cash held 6,322,664 715,108
Cash at the beginning of the period 8,732,079 5,526,526
Effect of exchange rates 2,550,356
---------------------------
Cash at the end of the period 17,605,099 6,241,634
---------------------------
The accompanying notes form part of these financial statements
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the Half Year Ended 31 December 2009
Note 1: Statement of Significant Accounting Policies
Basis of Preparation
The half-year consolidated financial statements are a general purpose financial
report prepared in accordance with the requirements of the Corporations Act
2001 and Australian Accounting Standards including AASB 134: Interim Financial
Reporting. Compliance with Australian Accounting Standards ensures that the
financial statements and notes also comply with International Financial
Reporting Standards.
It is recommended that this financial report be read in conjunction with the
annual financial report for the year ended 30 June 2009 and any public
announcements made by Discovery Metals Limited and its controlled entities
during the half-year in accordance with continuous disclosure requirements
arising under the Corporations Act 2001.
The accounting policies have been consistently applied by the entities in the
consolidated group and are consistent with those in the June 2009 financial
report. The half-year report does not include full disclosures of the type
normally included in an annual financial report.
Reporting Basis and Conventions
The half-year report has been prepared on an accruals basis and is based on
historical costs modified by the revaluation of selected non-current assets,
financial assets and financial liabilities for which the fair value basis of
accounting has been applied.
(a) Principles of Consolidation
A controlled entity is any entity over which Discovery Metals Limited has the
power to govern the financial and operating policies so as to obtain benefits
from its activities. In assessing the power to govern, the existence and effect
of holdings of actual and potential voting rights are considered.
As at reporting date, the assets and liabilities of all controlled entities have
been incorporated into the consolidated financial statements as well as their
results for the year then ended. Where controlled entities have entered (or
left) the Consolidated Group during the year, their operating results have been
included (or excluded) from the date control was obtained (or ceased).
All inter-group balances and transactions between entities in the Consolidated
Group, including any unrealised profits or losses, have been eliminated on
consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those adopted by the parent entity.
(b) Exploration and Development Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are only carried
forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet
reached a stage that permits reasonable assessment of the existence of
economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full
against profit in the year in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of
interest are amortised over the life of the area according to the rate of
depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of
interest.
Note 1: Statement of Significant Accounting Policies (continued)
Costs of site restoration are provided over the life of the facility from when
exploration commences and are included in the costs of that stage. Site
restoration costs include the dismantling and removal of mining plant, equipment
and building structures, waste removal, and rehabilitation of the site in
accordance with clauses of the mining permits. Such costs have been determined
using estimates of future costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective
basis. In determining the costs of site restoration, there is uncertainty
regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly the costs have been determined on the basis
that the restoration will be completed within one year of abandoning the site.
(c) Change in Accounting Policy
The Company has adopted the following new and revised Australian Accounting
Standards issued by the AASB which are mandatory to apply to the current interim
period. Disclosures required by these Standards that are deemed material have
been included in this financial report on the basis that they represent a
significant change in information from that previously made available.
(i) Presentation of financial statements
The Company has applied the revised AASB 101Presentation of Financial Statements
(2007) from 1 January 2009. The revision of this standard now requires the
Company to present all non-owner changes to equity ('comprehensive income') in
the statement of comprehensive income. The Company has presented the income
statement and non-owner changes in equity in one statement of comprehensive
income. All owner changes in equity are presented separately in the statement
of changes in equity. The presentation requirements have been applied for the
entire reporting period and comparative information has been re-presented to
also comply with the revised AASB 101.
(ii) Segment reporting
The Company has applied AASB 8 Operating Segments with effect from 1 July
2009. Previously operating segments were reported in accordance with AASB 114
Segment reporting. AASB 8 requires the entity to identify operating segments and
disclose segment information on the basis of internal reports that are provided
to, and reviewed by, the Board of the Company to allocate resources and assess
performance. As a result of the adoption of AASB 8, the Company's reportable
segments now represent the basis on which the Company reports its segment
information to the Board on a monthly basis. Comparative segment information
has been represented to comply with the requirements of AASB 8. The change in
policy has resulted in a change to the disclosure presented and not the
Company's profit or earnings per share.
Note 3: Profit/(loss) for the year
Profit/(loss) from ordinary activities before income tax has been determined
after:
CONSOLIDATED GROUP
Expenses 2009 2008
$ $
Interest received 141,491 395,579
Remuneration of auditor
Australia - audit & review services 12,100 10,350
Australia - non-audit services 0 0
Botswana - audit fees paid to Ernst & Young 16,718 16,635
-----------------------
28,718 26,985
Depreciation of fixed assets & intangibles 38,324 34,401
Exploration expenditure written off 0 700,000
Note 4: Segment Reporting
The consolidated entity operates in one business segment being the mining
industry, in two geographical locations, being Australia and Botswana. The
company has two strategic business units, which operate separately under
different management structures due to the geographical separation and the
Company's primary focus on the Boseto Copper Project. The business units are:
1. The 100% owned Boseto Copper Project in north-west Botswana;
2. The 85% owned Dikoloti Nickel Project in eastern Botswana which is in
joint exploration with JOGMEC.
The operating segment analysis presented in these financial statements reflects
operations analysis by business. It best describes the way the Company is
managed and provides a meaningful insight into the business activities of the
Company.
The following tables present details of revenue and operating profit by business
segment. The information disclosed in the tables below is derived directly from
the internal financial reporting system used by corporate management to monitor
and evaluate the performance of our operating segments separately.
(a)
Total
Boseto Dikoloti Consolidated
2009 Copper Nickel Corporate Group
For the half year ended Project Project
31 December 2009 $ $ $ $
Revenue from external customers 0 0 0 0
Inter-segment revenue 0 0 600,000 600,000
Interest & Refunds 71,957 71,768 143,725
Reportable segment profit/(loss) (1,951) (2,599) (1,801,621) (1,806,171)
before income tax
JOGMEC Exploration Fee 30,750 30,750
Reportable Segment Assets as at
31 December 2009 31,776,904 4,144,864 50,035,127 85,956,894
2008
For the half year ended
31 December 2008 $ $ $ $
Revenue from external customers 0 0 0 0
Inter-segment revenue 0 0 0 0
Interest & Refunds 177,129 226,310 403,439
Reportable segment profit/(loss) 1,435,657 0 (3,703,848) (2,268,190)
before income tax
Exploration Fee 0 0 0 0
Reportable segment assets as at
30 June 2009 26,009,607 3,517,258 34,428,008 63,954,873
NOTE 4: SEGMENT REPORTING (Continued)
(b) Reconciliation of reportable segment profit or loss
+----------------------------------------------+-------------+-------------+
| For the six months ended 31 December | 2009 ($) | 2008 ($) |
+----------------------------------------------+-------------+-------------+
| Total profit or loss for reportable segments | (1,206,171) | (2,268,190) |
+----------------------------------------------+-------------+-------------+
| Finance costs | 0 | 0 |
+----------------------------------------------+-------------+-------------+
| Elimination of inter-segment profits | (600,000) | 0 |
+----------------------------------------------+-------------+-------------+
| Profit before tax from continuing operations | (1,806,171) | (2,268,190) |
+----------------------------------------------+-------------+-------------+
(c) Reconciliation of reportable segment assets
+-------------------------------------+----------------------+---------------+
| As at: | 31 December 2009 ($) | 30 June 2009 |
| | | ($) |
+-------------------------------------+----------------------+---------------+
| Reportable segment assets | 85,956,894 | 63,954,873 |
+-------------------------------------+----------------------+---------------+
| Elimination of inter-segment assets | (36,881,798) | (31,446,272) |
+-------------------------------------+----------------------+---------------+
| Total Assets | 49,075,097 | 32,508,601 |
+-------------------------------------+----------------------+---------------+
(d) Assets by geographical region
+---------------+------------------+---------------+
| As at: | 31 December 2009 | 30 June 2009 |
| | ($) | ($) |
+---------------+------------------+---------------+
| Australia | 13,933,864 | 6,121,155 |
+---------------+------------------+---------------+
| Botswana | 35,141,233 | 26,387,446 |
+---------------+------------------+---------------+
| Total Assets | 49,075,097 | 32,508,601 |
+---------------+------------------+---------------+
(e) There are no customers for the period under review since the Company is
still in exploration and feasibility study stage.
Note 5: Contingent Liabilities
There are no known contingent liabilities. There has been no change in
contingent liabilities and assets since the last annual reporting date.
Note 6: Issued Capital
The shares issued in the publicly listed parent entity are the same for the
consolidated group. The parent entity holds all the issued shares in all four
Botswana subsidiaries.
6 months 12 months 6 months 12 months
Period 31 December 30 June 31 December 30 June
2009 2009 2009 2009
$ $ Shares Shares
Fully paid ordinary shares $59,201,233 $43,696,900 230,261,453 194,078,380
as at reporting date
(a) Ordinary Shares
At beginning of reporting $43,696,900 194,078,380 130,102,195
period $27,864,491
Shares issued during the
period:
- Issued at 18 cents each $7,914,662 43,970,345
- Issued at 30 cents each $340,876 $150,000 1,136,253 500,000
- Issued at 42 cents each $8,192,453 19,505,840
- Issued at 45 $15,772,100 35,046,820
cents each
Transaction costs relating
to share issues ($608,643) ($424,706)
------------------------- -------------------------
At end of reporting period 59,201,233 $43,696,900 230,261,453 194,078,380
Note 7: Events Subsequent to Reporting Date
No other matters or circumstances have arisen since the end of the financial
half year which significantly affected or may significantly affect the
operations of the consolidated entity, the results of those operations or the
state of affairs of the consolidated entity in future financial years other than
the following:
· On 28 January 2010, the Company released its quarterly activities
report containing updates to both the Boseto bankable feasibility studies and
its drilling and exploration activities on the Boseto leases and the recommenced
exploration work at Dikoloti.
· On 28 January 2010, the Company responded to an Australian Stock
Exchange query on an increase in price and trading activity following a number
of favourable broker and analyst reports.
· On 24 February 2010, the Company held a General Meeting. Approval was
obtained from shareholders for the Company's Share Plan and issue of the shares
to directors pursuant to the Share Plan.
· On 9 March 2010, the Company announced the award of the Boseto copper
concentrate off-take and the placement of 25 million shares for A$19 million
with a global non-ferrous metal trader Transamine.
The directors of Discovery Metals Limited declare that:
1. The financial statements and notes, as set out on pages 9 to 17 hereof:
(a) comply with Accounting Standards AASB 134 Interim Financial
Reporting and the Corporations Regulations; and
(b) give a true and fair view of the economic entity's financial
position as at 31 December 2009 and of the performance for the half-year ended
on that date.
2. In the directors' opinion there are reasonable grounds to believe that
the consolidated entity will be able to pay its debts as and when they become
due and payable.
The Company and its wholly-owned subsidiaries, have entered into a deed of cross
guarantee under which the Company and its subsidiaries guarantee the debts of
each other.
At the date of this declaration, there are reasonable grounds to believe that
the companies which are party to this deed of cross guarantee will be able to
meet any obligations or liabilities to which they are, or may become subject to,
by virtue of the deed.
This declaration is made in accordance with a resolution of the Board of
Directors.
Brad Sampson
Gordon Galt
Managing Director
Chairman
Brisbane, 10(th) March 2010.
AUDITOR'S INDEPENDENCE DECLARATION
As lead auditor for the review of the financial report of Discovery Metals
Limited for the half year ended 31 December 2009, I declare that, to the best of
my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporation Act 2001 in
relation to the review; and
(ii) any applicable code of professional conduct in relation to the review.
RSM Bird Cameron Partners
Chartered Accountants
W E Beauman
Partner
Sydney, NSW
Dated: 10(th) March 2010
[HUG#1392388]
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