for personal use only - asx2013/03/14 · mineralised zones at the “ariana norte” and “ariana...

ABN: 66 119 641 986

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

For

per

sona

l use

onl

y

CONTENTS

Page 1 of 30

Page Directors’ Report 2 Auditor’s Independence Declarations 11 Consolidated Statement of Comprehensive Income 12 Consolidated Statement of Financial Position 13 Consolidated Statement of Changes in Equity 14 Consolidated Statement of Cash Flows 15 Notes to financial statements 16 Note 1. Nature of operations 16 Note 2. General information and basis of preparation 16 Note 3. Significant accounting policies 16 Note 4. Estimates 17 Note 5. Significant events and transactions 17 Note 6. Basis of consolidation 18 Note 7. Cash and cash equivalents 18 Note 8. Financial assets 18 Note 9. Plant and equipment 18 Note 10. Exploration and evaluation expenditure 19 Note 11. Issued capital 21 Note 12. Segmental reporting 24 Note 13. Exploration capital commitments 25 Note 14. Other financial liabilities and commitments 26 Note 15. Related party transactions 26 Note 16. Earnings per share 27 Note 17. Events subsequent to year end 27 Note 18. Company information 27 Directors’ declaration 28 Independent auditor’s review report 29

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 2 of 30

Your directors present their report, together with the financial report on Red Gum Resources Limited (“Company”) for the half-year ended 31st December 2012. Corporate and operational highlights Activity Highlights • Significantly upgraded prospectivity of Cerro

Huancash Project area, Peru, following successful completion of surface exploration program.

• Detailed geological mapping and ground geophysical (magnetics) survey supports extension of Ariana mineralisation corridor through the Cerro Huancash tenement.

• Surface geochemical survey sample results from Cerro Huancash reported very high grades of base and precious metals associated with skarn and replacement style mineralisation in limestones.

• Induced polarisation survey confirms potentially extensive sulphide mineralisation at depth beneath surface geochemistry anomalies at Cerro Huancash.

• Letters of Intent for option agreement to acquire 100% of the Majada Project, Chile, provides emphasis to copper-gold portfolio mix.

• Due diligence conducted on Majada Project

indicating potential Iron Oxide Copper-Gold (IOCG) associated mineralisation of potentially considerable (+5kms) strike length.

• Positive metallurgy confirmed following maiden drilling and discovery of polymetallic mineralisation at the La Negra Project in Chile.

• La Negra Project now 100% owned following

exercise of Option.

Photo 1: IP survey at Cerro Huancash For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 3 of 30

Current directors The names of each person who has been a director during the half-year and to the date of this report are: • Dr Raymond Shaw – Non-Executive Chairman

(appointed on 11th May 2006) • Dr Paul Pearson – Managing Director

(appointed on 1st July 2011) • Mr Torey Marshall – Non-Executive Director

(appointed on 16th June 2007) Company secretary Mr Malcolm Lucas-Smith Corporate Activities During the Reporting Period the Company: • On 18 July 2012 announced the expiry of an escrow

period on 2,887,159 shares on 3 August 2012; • On 8 October 2012 announced the expiry of an

escrow period on 1,895,000 shares on 28 October 2012.

• At its annual general meeting shareholders approved a resolution to approve new measures under Listing Rule 7.1A enabling the Company to issue equity securities equivalent to an additional 10% (the Additional Capacity) of the number of ordinary securities on issue by way of placements over a 12 month period.

• At the end of the Reporting Period there were 44,552,795 shares on issue and 30,425,932 restricted (escrowed) securities. There were no other significant corporate activities during the year ended 30 June 2012 nor the prior year.

•

Photo 2: Strongly mineralised skarn outcrops within the Cerro Huancash Project area, Peru.

Operating results The net loss attributable to members of the Company for the half-year ended 31st December 2012 was $438,823 (2011: $107,494). Review of activities During the half-year ended 31st December 2011 $230,883 (year ended 30th June 2012: $2,279,878) of tenement expenditure was capitalised and $50,637 (31st December 2011: $nil) was expensed. The Company did keep all its tenements in good standing with all regulatory authorities in Peru and Chile. Exploration activities During the Reporting Period (1 July 2012 to 31 December 2012) the Company undertook exploration activities in the following project areas. Cerro Huancash Project The Cerro Huancash Project covers an area of 575.6 hectares located approximately 100 km northeast of Lima and is accessible by road year round. Cerro Huancash is a zinc-lead-silver early stage exploration project and the target style is skarn- and replacement-style polymetallic mineralisation hosted in Cretaceous limestones. Previous exploration in the area, surrounding Cerro Huancash, has identified a highly prospective zone herein referred to as the “Ariana Corridor”, of approximately 8 km length, reporting very strong zinc, copper, lead, silver and gold anomalies. Cerro Huancash covers a +3 km segment of this prospective belt. Recently a private company, Southern Peaks Mining, announced on its website the discovery of significant copper, zinc, lead, silver and gold mineralised zones at the “Ariana Norte” and “Ariana Sur” prospects, immediately adjacent to Red Gum’s property (Figure 1). The Company is aware that these prospects are currently the focus for intensive drilling exploration. Operational activities at Cerro Huancash during the Reporting Period were as follows:

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 4 of 30

Field Geological Mapping A field campaign of 1:5,000 mapping, commenced in June 2012, was completed in August 2012. This field mapping identified substantial areas of intrusive intermediate igneous rocks cutting the host limestone sequence, as well as small mineralised showings associated with zones of skarn- and replacement-style mineralisation. In addition, it has been successful in outlining the traces of district-scale NNW-SSE striking fault systems that appear to control the alteration and related mineralisation. This cluster of sub-parallel faults systems mark the trace of the mineralised “Ariana Corridor”, a district-scale belt of faulting and mineralisation which strikes NNW-SSE through Cerro Huancash and into adjacent properties. The Corridor averages about 400 metres in width through the Cerro Huancash project.

Figure 1: Map showing mineralized Ariana Corridor, the Ariana Norte and Ariana Sur Prospects, plus Red Gum Resources claim (light blue) and claims controlled by other parties (light green).

Surface Geochemistry Sampling A surface geochemical sampling program (96 rock samples) was conducted in tandem with the surface geological mapping program. Subsequent assays as reported to the ASX in July and September 2012 contained high grade base and precious metal mineralisation from old workings hosted by discontinuous skarn outcrops over a +1.2 x 0.4 kilometre area. Assay results included: • Zinc assays up to 19.0%, lead up to 17.75%,

copper up to 0.89%, with 17 (41%) of the samples reporting >1% of zinc or lead (or both);

• Silver assays up to 2,460 g/t, with 12 (29%) of the samples reporting >100 g/t silver and 5 samples reporting >500 g/t silver; and

• Gold assays up to 0.74 g/t, with 15 (37%) reporting >0.1 g/t gold;

The mineralization occurs in irregular and discontinuous bodies of sulphidic skarn cutting marble-limestone of the Jumasha Formation. This surface mineralisation is interpreted as being part of a larger mineral system/s developed along the Ariana Corridor,. The strongly mineralised outcrops located to date potentially represent the surface expression of a voluminous skarn/replacement polymetallic system at depth: this segment of the Ariana Corridor within the Cerro Huancash Project has never been drilled. Ground Magnetics Preliminary results of a ground magnetic survey were announced to the ASX in July 2012. Red Gum engaged Fugro Ground Geophysics to acquire approximately 75 line kilometres of total magnetic intensity (TMI) data along a series of ENE-WSW oriented traverses across the Cerro Huancash Project area at intervals of approximately 200 m. TMI is a very useful tool for directly identifying alteration/mineralisation in polymetallic carbonate replacement systems. As illustrated in Figure 2 the survey identified a number of strong magnetic anomalies potentially associated with economic skarn and replacement-style base/precious metal mineralisation.

0 1

km

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 5 of 30

Figure 2 showing TMI anomalies (highs in warmer colours) and location of geochemical assay results across Cerra Huancash project area. Induced Polarization Survey During the Reporting Period Fugro Ground Geophysics was contracted to record an IP Survey along 8 lines for a total 10.1 line kilometres. The survey used a dipole-dipole array with a 100 m spacing. The survey provided a subsurface profile of chareability and resistivity which can be related to zones of anomalous mineralisation. As reported in ASX releases in November and December 2012 the survey results proved to be very positive for the overall prospectivity of the project. Highly chargeable zones are well developed across the project area and consistent along the strike length of the Ariana Corridor. Figure 3 shows the location of the IP traverses and Figures 4 and 5 charegability inversion sections generated using the Res2Dinv software. Spatial variations in chargeability and resistivity most likely reflect a large sulphidic mineral system whose physical properties vary probably as a result of variations in mineral composition and concentration as well as fracturing. The highly resistive and chargeable zones possibly map zones of silica stckworking with disseminated sulphides, ie. A potential mineralized porphyry stock or stocks.

Figure 3 showing the location of the Induced Polarisation traverses across the Cerro Huancash Project area superimposed onto the TMI anomalies. Chargeability cross-sections are shown in Figures 4 and 5.

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 6 of 30

Figures 4 & 5 : Examples of chargeability sections, showing combined high chargeability features on Lines 62000 and 30000. Refer to Figure 3 for line locations. F

or p

erso

nal u

se o

nly

DIRECTORS’ REPORT

Page 7 of 30

La Negra Project, Chile Red Gum owns 100% of the La Negra Project, which comprises 11 separate mining and exploration concessions totalling approximately 2,600 hectares. During the Reporting Period Red Gum continued with follow-up work after the completion of an initial drilling program of approximately 2,400 metres completed during H1 2012. Although the drilling was quite widely spaced intersections of significant mineralisation (as announced to the market in May 2012) coupled with the results of a previously acquired Induced Polarisation Survey (Figure 6) suggested the presence of a mineralized breccia bodies, comprising possibly steep, structurally-controlled zones and/or stratabound “manto” zones emplaced parallel to the shallow-dipping volcanic host stratigraphy. The drilling program was confined to the northern, approximately one third, of the total strike length of the breccia system meaning that considerable upside exists for expanding the size of the known mineralisation. The Company’s target is to define a near surface oxide and sulphide open pittable resource that is amenable to open pit exploitation. Metallurgical Studies During the Reporting Period Promet101, Red Gum’s Consultant metallurgists to the project, completed preliminary metallurgical sampling of key intersections and samples were submitted to the Kamloops, B.C., Canada laboratory of G&T Metallurgical Services. Initial results were released to the market on 13 August 2012 and in summary the flotation tests provided very positive results for the sulphide sample trials, with favourable liberation and recovery characteristics. Tests showed low levels of arsenic and pyrite which will simplify flotation circuit performance. In addition elevated levels of gold and silver in the oxide samples may provide significant upside.

Exercise of Option Previously, the Company purchased an option to acquire 100% of the La Negra project through its wholly owned subsidiary. Following receipt of favourable assay results from the drilling program the Company resolved to make the final payment of US$500,000 in order to acquire 100% ownership of the property. Red Gum’s 100% ownership of the La Negra Project was registered on 19 July 2012.

Figure 6: Cross-sections looking north showing drilling on sections 2000N and 1700N (see Figure 2). Silver and lead values are plotted as histograms for reference.

Figure 7: Showing mineralised breccia, chalcopyrite and sphalerite, retrived from borehole RDH005 at 57.40 metres.

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 8 of 30

New Opportunities – Majada Project

As part of the Company’s strategy of balancing its commodity weighting towards copper and gold, Red Gum announced during the Reporting Period that it had entered into eight separate letter agreements (Letters of Intent) with a number of private individuals for an option to acquire 100% of the Majada Copper-Gold Project. Majada is located within the Iron Oxide Copper-Gold (IOCG) Belt of northern Chile, approximately 120 kilometres south of La Serena in Region IV. Under the terms of the LOIs Red Gum had 60 days to decide whether to execute formal purchase agreements (“Option Agreements”) between the respective mineral claim holders (“Owners”) and acquire 100% of the Majada Copper-Gold project. If Red Gum were to decide to execute the Option Agreements, the Company would acquire the 100% interest in the Project over three years by making staged cash payments to the Owners. The Majada Project consists of 587 hectares of third party exploitation mineral claims, distributed in two geographically separated areas; Majada Este and Majada Oeste. In addition, Red Gum has applied for new exploration claims adjoining the Majada Oeste area, totaling an additional 400 hectares, which will provide a buffer area in which the Company can evaluate the potential for additional extensions. The Majada Project encompasses two separate Copper-Gold mineralised trends totalling over 5 kilometres in length in central Chile in a region that hosts a number of third party substantial mineral deposits (Figure 8). Numerous historical oxide pits and workings previously exploited IOCG-style Copper-Gold mineralisation, particularly the shallow oxides (refer photos) along the mineralised trends, with previous sampling reporting values in excess of 1% Copper and 1 g/t Gold. The presence of strong bornite and chalcopyrite mineralisation in a number of old underground workings suggests that the oxide mineralisation exposed at surface passes downwards into largely unexploited copper sulphides.

There is no evidence of previous drilling and limited pre-existing geophysical data completed by a reputable contractor further supports the existence of sulphide mineralisation beneath the surficial oxides. The transaction remains subject to the completion of legal and technical due diligence, and to formal legal documentation.

Photo 3: Showing typical copper oxide workings along strike across the Majada Project area

Photo 4: Old gold workings adjacent to Majada. Gold is mined in oxides to a depth of around 10 m. The limonite colours suggest the presence of sulphides underlying the oxides.

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 9 of 30

Figure 8: Showing regional location of significant mineral deposits relative to Majada and La Negra.

Figure 9: Mineral claims comprising the Majada Project relative to San Lorenzo and Manuelito projects.

For

per

sona

l use

onl

y

DIRECTORS’ REPORT

Page 10 of 30

Significant Events There were no significant changes in the state of affairs of the Company during the Reporting Period apart from those referred to elsewhere in this Report. The likely future activities and developments of the Company during the remainder of the current financial year will involve on-going principal activities in the energy sector, primarily for copper-gold and polymetallic mineral exploration Capital During the half-year no securities have been issued. The Company had the following securities on issue at 31st December 2012:

Number

Ordinary shares 74,978,727 Unquoted stock options on issue 4,000,000 At 31st December 2012 ordinary shares held in escrow amounted to 30,425,932. Events subsequent to balance date Extension of the original 60 day due diligence period for the Majada Copper-Gold Project has successfully been negotiated until 25th March 2013 Dated at Sydney this 8 March 2013. Signed in accordance with a resolution of the directors. Dr Raymond D Shaw Non-Executive Director and Chairman

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

Vicky

Typewritten Text

of 30

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012 Note 31 December

2012 30 June

2012 $ $Assets Current Assets Cash and cash equivalents 1,007,044 2,791,578 Other receivables 283,762 140,528Total Current Assets 1,290,806 2,932,106 Non-Current Assets Financial asset - -Plant and equipment 9 2,493 3,680 Exploration and evaluation expenditure 10 3,532,013 3,301,130Total Non-Current Assets 3,534,506 3,304,810 Total Assets 4,825,312 6,236,916 Current Liabilities Trade and other payables 208,249 1,209,392Provisions employee benefits 28,055 5,358Total Current Liabilities 236,304 1,214,750 Total Liabilities 236,304 1,214,750 Net Assets 4,589,008 5,022,166 Equity Issued Capital 11 6,049,789 6,049,789 Foreign Currency Translation Reserve (1,262) 16,202Share Option Reserve 11 46,258 23,129Accumulated Losses (1,505,777) (1,066,954) Total Equity 4,589,008 5,022,166

This statement should be read in conjunction with the Notes to the Financial Statements

For

per

sona

l use

onl

y

of 30

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2012 Note 31 December

2012 31 December

2011 $ $ Revenue – interest income 25,406 14,219 Exploration expenses written off 11 (50,637) - Office and administration expenses (68,341) (36,769) Professional fees (142,916) (43,134) Directors fees and remuneration (188,931) (26,727) Depreciation expense (1,187) (1,608) Other expenses (12,217) (13,475) Loss before tax (438,823) (107,494) Income tax (expense)/benefit - - Loss for the period attributable to members (438,823) (107,494) Other Comprehensive income Exchange difference on translating foreign operations (17,464) - Total comprehensive income/(loss) for the period (456,287) (107,494) Earnings per share Cents Cents Basic and diluted earnings per share from continuing operations 16 (0.585) (0.215)


For

per

sona

l use

onl

y

of 30

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Note Ordinary Shares

ForeignCurrency

translationReserve

Share Option Reserve

Accumulated Losses

Total

$ $ $ $ $ Balance 30 June 2011 1,446,221 - - (545,846) 900,375Issue of shares during the period 10 5,161,264 - - - 5,161,264Loss for the period - - - (107,494) (107,494)Share issue costs during the period (588,861) - - - (588,861)Balance 31 December 2011 6,018,624 - - (653,340) 5,365,284 Balance 30 June 2012 6,049,789 16,202 23,129 (1,066,954) 5,022,166Issue of shares during the period 10 - - - - -Equity based remuneration - 23,129 23,129Loss for the period - (17,464) - (438,823) (456,287)Balance 31 December 2012 6,049,789 (1,262) 46,258 (1,505,777) 4,589,008


For

per

sona

l use

onl

y

of 30

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED DECEMBER 2012 31 December

2012 31 December

2011 $ $Cash flows from operating activities Payments to suppliers and directors (502,050) (168,697)Net Cash (used in)/provided by operating activities (502,050) (168,697) Cash flows from investing activities Interest received 25,406 14,219 Payments for exploration expenditure (1,307,890) (328,716)Payments for plant and equipment - (4,223)Net Cash (used in)/provided by investing activities (1,282,484) (318,720) Cash flows from financing activities Proceeds from the issue of share capital - 4,772,065Payments for share issue costs - (287,047)Net Cash provided by/(used in) financing activities - 4,485,018 Net increase/(decrease) in cash and cash equivalents (1,784,534) 3,997,601 Cash and cash equivalents at the beginning of the financial period 2,791,578 341,111 Cash and cash equivalents at the end of the financial period 1,007,044 4,338,712


For

per

sona

l use

onl

y

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Page 16 of 30

1. Nature of operations Red Gum Resources Limited’s and its subsidiaries’ (“Group”) principal activity was global mineral exploration. The Group is focusing on Chile and the central Peruvian Polymetallic Belt because the potential for the discovery of large base metal (Cu-Pb-Zn-Ag) and copper-gold deposits is exceptional. Its exploration portfolio is actively managed and rationalised as part of the management process, ensuring only the best projects are retained and explored. 2. General information and basis of preparation These condensed interim consolidated financial statement (“the interim financial statements”) of the Group are for the six months ended 31st December 2012 and are presented in Australian dollars (“$”), which is the functional currency of the parent company. These general purpose interim financial statements have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standards Board (“AASB”) 134: Interim Financial Reporting. They do not include all of the information required in the annual financial statements in accordance with International Financial Reporting Standards (“IFRS”), and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30th June 2011 and any public announcements made by the Group during the half-year in accordance with continuous disclosure requirements under the Australian Stock Exchange (“ASX”) Listing Rules and Corporations Act 2001. The interim financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The interim financial report covers the Company, Red Gum Resources Limited (“Company”) and its 100% subsidiaries Red Gum Resource (Peru) Pty Ltd, Red Gum Resources (Chile) Pty Ltd, Red Gum Chile SpA and Central Peru Resources SAC (“Group”). Red Gum Resources Limited is a public company, incorporated and domiciled in Australia. The registered office Suite 9 Lester Court, 75a Angas Street, Adelaide SA 5000. The Company was incorporated on 11th May 2006. The interim financial statements for the half-year ended 31st December 2012 (including the comparatives) were approved by the board of directors on 8th March 2013. 3. Significant accounting policies The significant accounting policies that have been used in preparation of these consolidated interim financial statements are summarised below. The interim financial statements have been prepared using measurement basis specified by the Australian Accounting Standards for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. The interim financial statements have been prepared in accordance with the accounting policies adopted in the Group's last annual financial statements for the year ended 30th June 2012, except for the adoption of Amendments to AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income. The relevant amendments and their effects on the current period or prior periods are described below.

For

per

sona

l use

onl

y


Page 17 of 30

3. Significant accounting policies (continued) The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements. Amendments to AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income The adoptions of this standard which requires entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently, and changes the title of ‘statement of comprehensive income’ to ‘statement of profit or loss and other comprehensive income’. The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on the Group’s accounting policies or the amounts reported during the current half-year period. The adoption of AASB 2011-9 has resulted in changes to the Group’s presentation of its half-year financial statements. 4. Estimates When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group's last annual financial statements for the year ended 30th June 2012. 5. Significant events and transactions The Group's management believes that the Group is well positioned despite the continuing difficult economic circumstances. Factors contributing to the Group's strong position are its highly prospective exploration portfolio and the potential for future mineral discovery and value adding, its experienced management team and its operational familiarity with the countries in which it explores, and the fact that The Group does not expect to need additional borrowing facilities in the next 12 months as a result of its significant financial resources, existing facilities and strong liquidity reserves.

Overall, the Group is in a strong position despite the current economic environment, and has sufficient capital and liquidity to service its operating activities and debt. The Group's objectives and policies for managing capital, credit risk and liquidity risk are described in its recent annual financial statements.

For

per

sona

l use

onl

y


Page 18 of 30

6. Basis of consolidation The Group incorporated a new wholly owned Australian subsidiary, Red Gum Resources (Chile) Pty Ltd on 22nd July 2011. In September 2011 a Share Purchase Agreement was signed between the Company and Red Gum Resources (Chile) Pty Ltd. Under the agreement the Red Gum Resources (Chile) Pty Ltd will issue 1,000 shares acquire 100% of Red Gum Resources Chile SpA, a Chilean company. 7. Cash and Cash Equivalents In the period to 31st December 2012, Red Gum has used the cash and assets in a from readily convertible to cash that it had at the time of admission, in a way consistent with its business objectives as disclosed in its Prospectus dated 21st November 2011. 8. Financial Assets Parent 31 December

2012 $

30 June2012

$Non-current financial assets Shares in controlled entity 70,000 70,000 9. Plant and equipment Plant & Equipment 31 December

2012 $

30 June2012

$At cost 14,601 14,601Accumulated depreciation (12,108) (10,921)Accumulated impairment - -Total plant & equipment 2,493 3,680 Movement in carrying amounts Gross carrying amount at the beginning of the period 3,680 2,961Additions - 4,222Disposals - -Depreciation expense (1,187) (3,503)Gross carrying amount at the end of the period 2,493 3,680 The following useful lives are used in the calculation of depreciation: - Plant & equipment 3 to 40 years

F

or p

erso

nal u

se o

nly


Page 19 of 30

10. Exploration and evaluation expenditure 31 December

2012 $

30 June2012

$Gross carrying amount at the beginning of the year 3,301,130 1,021,252Amounts capitalised during the year 230,883 2,279,878Amounts written off during the year - -Gross carrying amount at the end of the year 3,532,013 3,301,130 During the period ended 31st December 2012 $50,637 (30th June 2012 $nil, 31st December 2011: $nil) of Tenement Administration Costs were expensed in the Statement of Comprehensive Income rather than capitalised. The directors have reviewed the Capitalised Tenement costs and do not consider that any impairment is necessary for the year ended 31st December 2012 (30th June 2012 and 31st December 2011: $nil). The following mineral tenements are currently held by the Company: Tenement description Tenement code Location Area (approx) Interest held Cerro Huancash(3) n/a Peru 9 km2 100% Chongos A(3) n/a Peru 10 km2 100% Chongos n/a Peru 9 km2 100% Chongos n/a Peru 9 km2 100% La Negra n/a Chile 20 km2 100%

Capitalised Expenditure:

31 December 2012

$

30 June2012

$Cerro Huancash 278,735 182,304Chongos A 131,999 121,388Chongos B 130,328 119,712Chongos C 123,391 112,752La Negra 2,832,238 2,764,974Majada 35,322 - 3,532,013 3,301,130 Peru The Company through its wholly owned subsidiary, Red Gum Resources (Peru) Pty Ltd holds all of the shares in the Central Peru Resources (“CPR”), which in turn holds 100% of the four Peruvian Tenements. The $70,000 acquisition cost has been capitalised as tenement cost. Chile The Company through its wholly owned subsidiary, Red Gum Resources (Chile) Pty Ltd holds all of the shares in the Red Gum Resources Chile SpA (“Red Gum Chile”), which in turn holds 100% of the La Negra Option. F

or p

erso

nal u

se o

nly


Page 20 of 30

10. Exploration and evaluation expenditure (continued) La Negra During the Reporting Period the Company exercised the Option Deed dated 10th November 2009, with Inversiones y Mineria Andale Ltda (Andale) for a total consideration of USD $1,020,000 and the issue of 1,000,000 shares in the Company, whereby the Company has been granted an option to acquire 100% of the interest in La Negra. In accordance with Chilean law, in September 2011 the Company established a wholly owned Chilean subsidiary called Red Gum Resources Chile SpA (Red Gum Chile). Red Gum Chile has entered into a further Option Agreement (La Negra Option) with Andale pursuant to Chilean law. A summary of the Andale Option is set out below. Under the La Negra Option Andale had granted Red Gum Chile an irrevocable option to acquire the La Negra project which is made up of the exploration mining concessions named “Karina 1”, “Karina 2”, “Karina 3”, “Karina 4”, “Karina 5”, “Karina 6”, “Karina 7”, “Karina 8” and “Karina 9”, and the exploitation mining concessions named “Karina1/20” and “Karina 21/40”. The La Negra Option is registered in the Mortgages and Encumbrances Registry of the Custodian of Mines of Combarbalá. The Company has paid Andale $1,057,392 (USD$1,020,000) to secure the right to acquire the La Negra Option as follows: • Final $500,000 (USD $500,000i) included in creditors at 30th June 2012 and paid in July 2012; • paid in January 2011 $390,951 (USD $375,000). • paid in December 2010 $26,102 (USD $25,000); • paid in October 2010 $26,206 (USD $25,000); • in July 2010 $80,000 deemed consideration capitalised as a result of the issue of 800,000 ordinary shares;

and • In previous year ending 30 June 2010 option costs of $114,133 (USD $95,000) cash and $20,000 deemed

consideration for 200,000 shares were capitalised. Red Gum Chile could acquire the La Negra Project by exercising the La Negra Option at any time up until 30th June 2012 (Option Expiry Date). The Company exercised that option and paid Andale $500,000 (USD$500,000) in July 2012. At the date of registration of the La Negra Option with the Custodian of Mines, no encumbrances are registered in respect of the La Negra concessions. As a result of the registration of the La Negra Option with the Custodian of Mines of Combarbala, Red Gum Chile’s right to acquire the La Negra Project is recognised and protected under Chilean Mining law. Majada During the year the company entered into eight separate letter agreements (Letters of Intent) with a number of private individuals for an option to acquire 100% of the Majada Copper-Gold Project. Under the terms of the LOIs Red Gum had 60 days to decide whether to execute formal purchase agreements (“Option Agreements”) between the respective mineral claim holders (“Owners”) and acquire 100% of the Majada Copper-Gold project. If Red Gum were to decide to execute the Option Agreements, the Company would acquire the 100% interest in the Project over three years by making staged cash payments to the Owners. The transaction remains subject to the completion of legal and technical due diligence, and to formal legal documentation.

i Exchange rate AUD$1:USD$1

For

per

sona

l use

onl

y


Page 21 of 30

10. Issued Capital 31 December

2012 $

30 June2012

$ 74,978,727 (30th June 2012: 74,978,727) ordinary shares 6,049,789 6,049,789 Ordinary shares At the beginning of reporting period 6,049,789 1,446,221 Shares issued during the period - - Shares issued during the prior year - Shares issued in July 2011(1) - 246,700- Shares issued in August 2011(2) - 761,000- Shares issued in November 2011(3) - 150,000- Shares issued in December 2011(4) - 4,003,564- Shares issued in June 2012(5) - 13,750 Total shares issued during the period 6,049,789 5,175,014 Less: Share issue costs - (571,446) At the end of reporting period 6,049,789 6,049,789

31 December

2012 No.

30 June 2012

No.Ordinary shares At the beginning of reporting period 74,978,727 44,800,000 Shares issued during the year - - Shares issued during the prior year: - Shares issued in July 2011(1) - 2,242,727- Shares issued in August 2011(2) - 6,918,182- Shares issued in November 2011(3) - 750,000- Shares issued in December 2011(4) - 20,017,818- Shares issued in June 2012(5) - 250,000 Total shares issued during the year - 30,178,727 At the end of reporting period 74,978,727 74,978,727 Notes:- Prior Reporting Period (1) In July 2011, 2,242,727 shares in July 2011 and at $0.11 per share. The funds raised amounted to

$246,700; of the funds raised $264,199 of the funds were received as at 30th June 2011 and they were shown as other creditors on the statement of financial position at 30 June 2011.

(2) In August 2011, 6,918,182 shares were issued at $0.11 per share. The funds raised amounted to $761,000.

(3) In November 2011, 750,000 shares were issued to Dr Pearson at a deemed price of 20 cents per share in connection with the termination of the management and Finder’s Fee Agreements with Ore-Forming Solutions S.A.

(4) In December 2011, 20,017,818 shares were issued as part of the Initial Public Offering. (5) On 29th June 2012, 250,000 ordinary shares were issued in lieu of a $13,750 cash payment for work done

by a related party.

For

per

sona

l use

onl

y


Page 22 of 30

11. Issued capital (continued) a. Share Option Reserve 31 December

2012 $

30 June2012

$Equity based remuneration At the beginning of the period 23,129 -Share Options issues to Dr Paul Pearson 23,129 23,129At the end of the period 46,258 23,129 The share option reserve records items recognised on the valuation of share options over the vesting period. On 8th December 2011, 3,000,000 Options were issued to Managing Director, Dr Paul Pearson. The Options fair values were valued using Black-Scholes option pricing model. The valuation amounted to $323,800 over the vesting period ending on 25th November 2018. In the year ended 31st December 2012, $24,129 (30th June 2012: $24,129) has been charged to the comprehensive income statement. The Black-Scholes option pricing model was based on an interest free rate of 5.5% and 75% volatility. b. Shares Options The Company has the following history of share options outstanding:

Number of Options

Weighted Average Exercise

Price At 1st July 2011 - -Issued 8th December 2011 4,000,000 $0.40 At 30th June 2012 4,000,000 $0.40 At 1st July 2012 4,000,000 $0.40Issued during period - - At 31st December 2012 4,000,000 $0.40

For

per

sona

l use

onl

y


Page 23 of 30

11. Issued capital (continued) The following table summarises information about the share options outstanding:

Expire Date

Number of Options

31 December 2012

Exercise Price

31 December 2012

Number of Options 30 June

2012

Exercise Price

30 June2012

25th November 2016(1) 1,000,000 $0.30 or $0.35 1,000,000 $0.30 or $0.3525th November 2017(1) 1,000,000 $0.35 or $0.40 1,000,000 $0.35 or $0.4025th November 2018(1) 1,000,000 $0.40 or $0.60 1,000,000 $0.40 or $0.6025th November 2014(2) 1,000,000 $0.25 1,000,000 $0.25 Balance at end of period 4,000,000 $0.40 4,000,000 $0.40 Notes: (1) During the prior period 3,000,000 Options were issued to Managing Director, Paul Pearson. (2) During the prior period 1,000,000 Option were issues to CCZ Corporate Finance Pty Ltd in accordance with the mandate letter. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The 3,000,000 options were issued to Dr Paul Pearson under his managing director’s employment agreement as follows: • First Tranche Options: 1,000,000 Options exercisable at the higher of IPO price plus 10 cents; and IPO

price plus 15 cents, if on the date of exercise of the First Tranche Options, the VWAP for the previous 30 trading days is equal to or above the IPO price. The First Tranche Options vest 2 years after ASX listing date.

• Second Tranche Options: 1,000,000 Options exercisable at the higher of IPO price plus 15 cents; and IPO price plus 20 cents, if on the date of exercise of the Second Tranche Options, the VWAP for the previous 30 trading days is equal to or above the IPO price. The Second Tranche Options vest 4 years after ASX listing date.

• Third Tranche Options: 1,000,000 Options exercisable at the higher of IPO price plus 20 cents; and IPO price plus 40 cents, if on the date of exercise of the Third Tranche Options, the VWAP for the previous 30 trading days is equal to or above the IPO price. The Third Tranche Options vest 3 years after ASX listing date.

The Options expire unless exercise on the following dates: • First Tranche Options 3 years from First Tranche Options vesting date; • Second Tranche Options 3 years from Second Tranche Options vesting date; • Third Tranche Options 3 years from Third Tranche Options vesting date; • the Agreement is terminated or the Managing Director ceases to be an employee of the Company for any

reason other than as a result of serious misconduct, the Options will expire 3 months from the date of termination; and

• if the Agreement is terminated, the Options will expire on the date of termination. F

or p

erso

nal u

se o

nly


Page 24 of 30

12. Segmental information Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on geographical location. The Group's reportable segments under AASB 8 are therefore as follows. • Australia • Peru • Chile

The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment.

Australia $

Peru $

Chile $

Total $

31 December 2012 REVENUE Total revenue -external interest received 25,406 - - 25,406 RESULT Segment result (384,186) (7,150) (47,487) (438,823) Finance costs - - - - Loss before income tax (384,186) (7,150) (47,487) (438,823) Income tax expense - - - - Loss after income tax (384,186) (7,150) (47,487) (438,823) OTHER Depreciation and amortisation of segment assets 1,187 - - 1,187 31 December 2012 ASSETS Segment assets 1,535,959 194,168 3,095,185 4,825,312 LIABILITIES Segment liabilities 169,175 11,837 55,292 236,304 31 December 2011 REVENUE Total revenue -external interest received 14,219 - - 14,219 RESULT Segment result (107,494) - - (107,494) Finance costs - - - - Loss before income tax (107,494) - - (107,494) Income tax expense - - - - Loss after income tax (107,494) - - (107,494) OTHER Depreciation and amortisation of segment assets 1,608 - - 1,608

For

per

sona

l use

onl

y


Page 25 of 30

12. Segmental information (continued)

Australia $

Peru $

Chile $

Total $

30 June 2012 ASSETS Segment assets 2,258,159 481,776 3,496,981 6,236,916 LIABILITIES Segment liabilities 216,226 23,951 974,573 1,214,750 Accounting Policies Segment revenues and expenses are those directly attributable to the segments. Segment assets include all assets used by a segment and consist principally of cash, receivables, exploration and evaluation expenditure and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities consist principally of payables, employee benefits, accrued expenses, provisions and borrowings. Segment assets and liabilities do not include deferred income taxes. Intersegment Transfers Segment revenues, expenses and results include transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the Company at an arm’s length. These transfers are eliminated on consolidation. At 31st December 2012 and 30th June 2012 there were no such intersegment transfers. 13. Exploration expenditure commitments 31 December

2012 30 June

2012 $ $No longer than 1 year 61,000 36,000Longer than 1 year and not longer than 5 years 244,000 134,000Longer than 5 years 61,000 36,000 366 000 206,000 The exploration expenditure commitments relate to the Group’s share of exploration and evaluation expenditure required to comply with the licence terms issued by the relevant regulatory body and in accordance with the agreements listed below. These obligations may be subject to re-negotiation, may be farmed out or may be terminated as a result of relinquishment. They have not been included for in the financial statements.

For

per

sona

l use

onl

y


Page 26 of 30

13. Exploration expenditure commitments (continued) La Negra (Chile) The Group must maintain the La Negra Project in good administrative standing, at 31st December 2012 the costs were estimated at $25,000 (30th June 2012: $25,000) per annum. Red Gum Chile acquired the La Negra Project in July 2012 by exercising the La Negra Option and paying to Andale USD$500,000. The total consideration for the Project comprised of USD $1,020,000 and the issue of 1,000,000 shares in the Company. Other Projects (Chile) In addition, the Group have a number of other Chile Projects that once all options have been exercised must also be maintained in good administrative standing; at the 31st December 2012 these costs are estimated at $27,000 (30th June 2012: $nil) per annum. Central Peru Polymetallic Belt (Peru) The Group must maintain the Peru Projects in good administrative standing, at 31st December 2012 the costs were estimated at $9,000 (30th June 2012: $9,000) per annum. 14. Other financial liabilities and commitments The Company and CCZ Corporate Finance Pty Ltd (“CCZ”) entered into a Mandate Letter whereby CCZ would provide corporate advisory services. The Company has signed a 12 month lease arrangement for office accommodation in April 2012, the annual rent being $14,000 (30th June 2012: $14,000). There are no other financial liabilities, leasing commitments, capital commitments, or provision at the 31st December 2012 (30th June 2012: $nil). Refer to note 13 for detail of exploration expenditure commitment and Annual Report 2012 for employment agreements. 15. Related party transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Transactions and balances with related parties: Other Related Parties 31 December

2012 $

31 December 2011

$ Directors fees and remuneration Directors remuneration payable Dr Paul Pearson(1) 205,826 72,000Directors fees payable to Vibrante Solutions Pty Ltd(2) 24,000 -Directors fees payable to Raymond Shaw 32,500 -Directors remuneration payable to Charles Carnie - -Total Directors fees and remuneration 262,325 72,000Directors remuneration payable Dr Paul Pearson reallocated to projects (Note 10) (73,395) (45,728)Directors fees and remuneration charged to comprehensive income statement 188,931 26,272

For

per

sona

l use

onl

y


Page 27 of 30

15. Related party transactions (continued)

31 December 2012

$

30 June 2012

$Balances Annual leave balance payable to Paul Pearson(1) 28,055 5,357Balance payable to Vibrante Solutions Pty Ltd(2) 52,117 102,117Balance payable to Norman Zillman 13,067 13,067Balance payable to related parties 93,239 120,541

(1)Paul Pearson’s remuneration includes $23,129 of equity based remuneration (refer to Note 11 for further detail) and $28,055 of annual leave provisions.

(2)Vibrante Solutions Pty Ltd in which Director, Mr Marshall is a director and shareholder. Other transactions The directors were reimbursed for expenses incurred.

16. Earnings per share Both the basic and diluted earnings per share have been calculated using the loss attributable to shareholders of Red Gum Resources Limited as the numerator. The weighted average number of shares for the purposes of calculating the basic and diluted number of shares is 74,987,727 (2011: 49,951,143). The Options are not dilutive as at 31st December 2012. 17. Events subsequent to balance date Extension of the original 60 day due diligence period for the Majada Copper-Gold Project has successfully been renegotiated until 25th March 2013.

18. Company details The registered office and principal place of business of the Company is: Red Gum Resources Limited Lester Court, Suite 9 75a Angas Street Adelaide SA 5000

Chile: Level 13, Office 02 6401 Avenida Apoquindo, Las Condes Santiago, Chile. Peru: Calle Charcarilla Nro. 478, Oficina A. Urb. Santa Cruz. San Isidro. Lima 27, Peru.

For

per

sona

l use

onl

y

DIRECTORS’ DECLARATION

Page 28 of 30

The directors of the Company declare that: 1. the financial statements and notes, as set out of Red Gum Resources Limited are in accordance

with the Corporations Act 2001, including: a. give a true and fair view of the financial position as at 31st December 2012 and of the

performance for the half-year ended on that date; and b. complying with Accounting Standard AASB 134 Interim Financial Reporting; and 3. there are reasonable grounds to believe that the Company will be able to pay its debts as and

when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Dr Raymond D Shaw Non-Executive Director and Chairman Sydney, 8th March 2013

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

for personal use only - asx2013/03/14 · mineralised zones at the “ariana norte” and “ariana...

Documents