2015 Annual Report
Table of contents
1 Corporatedirectory
2 Chairman’sreport
5 Directors’report
21 Financialstatements
22 Consolidatedincomestatement
23 Consolidatedstatementofcomprehensiveincome
24 Consolidatedbalancesheet
25 Consolidatedstatementofcashflows
26 Consolidatedstatementofchangesinequity
27 Notestotheconsolidatedfinancialstatements
63 Directors’declaration
64 Auditor’sindependencedeclaration
65 Independentauditor’sreporttothemembers
67 Statementofcorporategovernance
82 Shareholderinformation
The consolidated financial statements are presented in United States Dollars (“$”), unless otherwise stated,
which is the Company’s presentation currency.
1
DIRECTORSMark Victor Caruso
Executive Chairman and Chief Executive Officer
Joseph Anthony Caruso
Non-Executive Director
Peter Patrick Torre
Non-Executive Director and Company Secretary
Guy Redvers Walker
Senior Independent Non-Executive Director
Colin Ross Hastings
Independent Non-Executive Director
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA40MurrayRoadNorth
WelshpoolWA6106
Telephone:+61(8)62531100
Facsimile: +61(8)92583601
Email: [email protected]
AUDITORSBDO Audit (WA) Pty Ltd
38StationStreet
SubiacoWA6008
SOLICITORSTDC Legal Pty Ltd
Level15,251AdelaideTerrace
PerthWA6000
ENSafrica
150WestStreet
Sandton
Johannesburg2196
SouthAfrica
Steinepreis Paganin
Level4,TheReadBuildings
16MilliganStreet
PerthWA6000
BANKERSNational Australia Bank
Suite7,51KewdaleRoad
WelshpoolWA6106
SHARE REGISTRYLink Market Services Limited
Level4,CentralPark
152StGeorgesTerrace
PerthWA6000
STOCK EXCHANGE LISTINGTheCompany’ssharesarelistedontheAustralian
SecuritiesExchange(ASX)underASX Code MRC
WEBSITE ADDRESSwww.mineralcommodities.com
COMPETENT PERSON STATEMENTTheinformation,ifany,inthisreportwhichrelatesto
explorationresults,mineralresourcesororereserves
forXolobeniMineralSandsProjectisbasedon
informationcompiledbyMrAllenMaynard,whois
aMemberoftheAustralianInstituteofGeosciences
(“AIG”),acorporatememberoftheAustralasian
InstituteofMining&Metallurgy(“AusIMM”)and
independentconsultanttoMineralCommoditiesLtd.
MrMaynardisthedirectorandprincipalgeologist
ofAlMaynard&AssociatesPtyLtdandhasover
35years’ofexplorationandminingexperience
inavarietyofmineraldepositstyles.MrMaynard
hassufficientexperiencewhichisrelevanttothe
styleofmineralisationandtypeofdepositunder
considerationandtotheactivitywhichheis
undertakingtoqualifyasaCompetentPersonas
definedinthe2004Editionofthe“AustralasianCode
forreportingofExplorationResults,Exploration
Targets,MineralResourcesandOreReserves”
(JORCCode).Thisinformationwaspreparedand
firstdisclosedundertheJORCCode2004.Ithas
notbeenupdatedsincetocomplywiththeJORC
Code2012onthebasisthattheinformationhasnot
materiallychangedsinceitwaslastreported.Mr
Maynardconsentstoinclusioninthereportofthe
mattersbasedonthisinformationintheformand
contextinwhichitappears.
Theinformation,ifany,inthisreportwhichrelates
toexplorationresults,mineralresourcesorore
reservesforTorminMineralSandsProjectisbasedon
informationcompiledbyMrAdriaanduToit,whoisa
MemberoftheAusIMMandanindependentconsultant
toMineralCommoditiesLtd.MrduToitisthedirector
andprincipalgeologistofAEMCOPTYLTDandhas
over23years’ofexplorationandminingexperiencein
avarietyofmineraldepositsandstyles.MrduToithas
sufficientexperiencewhichisrelevanttothestyleof
mineralisationandtypeofdepositunderconsideration
andtotheactivitywhichheisundertakingtoqualify
asaCompetentPersonasdefinedinthe2012Edition
oftheJORCCode.TheinformationfromMrduToit
waspreparedundertheJORCCode2012Edition.
MrduToitconsentstoinclusioninthereportofthe
mattersbasedonthisinformationintheformand
contextinwhichitappears.
Corporate directory
2
Chairman’s report
DearShareholders,
OnbehalfoftheBoardofyourCompany,itiswith
pleasurethatIpresenttheannualreportfortheyear
ended31December2015.
Iswasanothersolidyearofoperationalperformance
attheTorminMineralSandsProject(Tormin)and
itispleasingtoreportanetprofitaftertaxof
US$10.6million.Thekeymetricscontainedwithin
theaccompanyingreport,coupledwiththeBoard’s
optimisticviewonfutureperiods,underpinthe
Board’sdecisiontodeclareamaidendividendof
oneAustraliancentpershare.
AsIcommentedatthetimeofthedividend
declaration,itwasalongandarduousprocessin
gettingtheTorminProjecttodevelopmentstage,and
theoperatingperformancetodatehassomewhat
vindicatedtheBoard’sresolvetocontinueitsstrategy
ofdevelopingthisasset.TheBoardexpectsitscapital
managementstrategy,whichincludesreturnsto
shareholderstocontinueinthecomingperiodsasit
rollsouttheexistingexpansioninitiatives,whichwill
furtheroptimisetheoperatingperformanceofthe
Company.
TheCompany’simpeccablesafetyrecordcontinues
tobeindustrybeststandard,withtheCompany
celebrating1,000,000losttimeinjuryfreehours
duringtheyear.
TheCompanypositioneditselfduringtheyear,
throughthecancellationoftheWogenofftake
agreement,tosellitsnon-magneticheavymineral
concentratetobuyersonanunrestrictedbasis.
ThiswasofbenefittotheCompanyandprovided
fortheopportunitytodirectlymarketitsproduct
inordertoachievethebesteconomicoutcome.
ThelegacyissuesassociatedwithBlastritewere
alsoresolvedduringtheyear,withtheHighCourtof
SouthAfricadismissingBlastrites’CourtApplication.
Garnetconcentrateproductioncontinuedtobe
suppliedandsoldunabatedunderthecontractwith
GMAandstockpiledwithinSouthAfrica.TheGarnet
concentratewillthenbeshippedatGMA’sdiscretion.
Inaddition,theCompanyhascementeditslong
heldbeliefinthepotentialoftheTorminoffshore
andonshoreresourceenhancementbyentering
intoanagreementtopurchasetheGeelwalKaroo
farmtotalingsome1741hectaresfromTronox,where
itsexistingprocessingoperationsarebased.This
underpinsfuturespatialareaforanyexpansion
initiatives.
TheCompanycontinueditsinvestmentin
optimisationandexpansiontoincreaseproduction
ofitscurrentprocessingcapabilities.Duringtheyear,
itcommissionedthefirstphaseoftheseprocessing
upgradesontimeandonbudget,beingtheTailings
ScavengerPlant(TSP)andtheTailingsReturn
Systemtothebeach.ThesecondstageGSPwillbe
commissioninginthesecondhalfof2016andwill
substantiallyincreasefinishedconcentrateproduction
andcontainedvaluableheavyzircon,rutile,ilmenite
andgarnetintherespectivefinishedconcentrates.
Resourcedevelopmentandtenureisalwaysa
matterofimportanceforaminingcompany.Inthe
2014AnnualReport,wewerepleasedtobeable
toreportareplenishmentoftheminedresource,
albeitresultinginareclassificationintotheinferred
category.Giventhenatureofthedepositthe
Companyismining,despitetheCompany’sbest
endeavours,itisdifficulttobeabletoreportanything
greaterthananinferredresourceduetotheconstant
changesoccurringonthebeach.Wecanhowever
reportthatthetonnesminedhaveagainreplenished.
Afullupdateonthisreplenishmentisincludedinthe
CorporateGovernanceSectionofthisAnnualReport.
TheCompanywaspleasedtoadvisethatit’sSouth
Africansubsidiary,MineralSandsResourcesPtyLtd
(“MSR”),wasgrantedanewprospectingrightby
theDepartmentofMineralResources–SouthAfrica.
Theawardedprospectingrightrepresentsanarea
~10,500hainsizeseawardfromtheTorminminearea.
Inadditiontotheawardedrights,MSRhaslodged
twonewprospectingapplicationsalongthebeach
andsurfzonenorthofitscurrentminingoperations
aswellasoverthewholeofthenewlyacquired
GeelwalKaroofarm.Thisfirstapplicationrepresentsa
targetareaof~24km(398ha)alongthecoastlineand
thesecondapplicationanareaof1741ha.Historical
andin-houseexplorationworkhaveindicatedboth
areastobeprospectiveforheavymineralsand
deposits.Theseapplicationsarecurrentlyunder
reviewforapprovalbytheDepartmentofMineral
Resources–SouthAfrica.
The Company’s impeccable safety record continues to be industry best standard, with the Company celebrating 1,000,000 lost time injury free hours during the year.
3
AminingrightapplicationfortheXolobeniMineral
SandsProjectwasalsolodgedinMarch2015.The
Companyholdstheprospectingrightstofourofthe
fiveblocksintheXolobeniMineralSandsProject.
Theminingrightapplicationhasbeenlodged
notwithstandingthepreviouslyadvisedobjections
receivedtotheprospectingrightapplicationtothe
remainingblock,theKwanyanablock.TheCompany
continuestofollowdueprocessinrespecttoits
developmentoftheXolobeniProject.Despitethis,
ithasbeenanunenviabletaskwithopponentsto
thedevelopmentcastingallkindsofdispersions
abouttheactivitiesoftheCompanyinorderto
supporttheircause.Wereiterateoneveryoccasion,
thattheCompanysimplycontinuestofollowthe
properprocessandwearehappytoengageinthe
appropriateforums.
Weseethetangiblebenefitsprovidedtomembers
oftheXolobenicommunitythroughtheirinvolvement
withtheTorminprojectandwecontinuetoactwithin
thespiritoftheBlackEconomicEmpowerment
modeltosociallyupliftdisadvantagedpeople.The
contributionofour50%BEEjointshareholderinthe
Company’ssubsidiaryMSRinassistinginbridgingthe
culturaldividethatcansometimesexistinmanaging
theexpectationsofinterestedandeffectedparties
andcommunitiesissignificant.Wethankthemfor
theirpatienceandguidanceandwehopetobe
abletodeliverontheirdreamofbringingeconomic
benefitstotheircommunity.
TheCompanyrespectsthatwhilstithaslegal
tenuretoconductvariousstudiesunderitsmining
rightsapplication,nopieceofpaperissuedbya
Governmentregulatorderogatestherequirement
ofanapprovedsociallicencetooperate.Withouta
healthyengagementandpresenceinthecommunity,
weareunabletoeffectivelymanageeconomic,
environmentalandsocialexpectations.
TheCompanyacceptsthatsomeenvironmental
andsocialimpactsarenotacceptabletocertain
stakeholders,andthatuncertaintythroughvagueor
limitedinformationabouttheXolobeniprojectexists.
Italsoacceptsthatsomepeoplewillbeideologically
opposed.TheCompanywillcontinuetoactivelyseek
toengagewithallinterestandaffectedparties(IAP)
membersofthelocalcommunityofXolobeni.
Intheinterim,theCompanycontinuestoadvocate
negotiatingapeacefulsiteaccesstocompleteits
environmentalimpactassessmentstudies,sothatwe
canprovidethelocalcommunitywiththenecessary
informationtheyneedtoadequatelyassessfor
themselvesthebenefitsoffutureminingoperations
inXolobeni.
4
ThereweresomechangesintheBoardthrough
theyear.Followinganinternalreview,theBoard
identifiedthatwiththedevelopmentoftheTormin
MineralSandsProjectandprogressionofitsXolobeni
project,afurtherdirectorappointmentwiththe
appropriatetechnicalandgeologicalexperience
waswarranted.Followingaprocessofnomination
andinterviewsconductedbytheRemuneration
andNominationCommittee,MrRossHastingswas
offeredandacceptedtheposition.
TheBoardalsoappointedoneofitsexisting
IndependentNon-ExecutiveDirectors,MrGuyWalker,
tothepositionofSeniorIndependentNon-Executive
Director.Followingtheaforementionedinternalreview
andtheappointmentofmyselfastheCEOofthe
CompanyinadditiontomyExecutiveChairmanship.
MrJamesLeahydecidednottostandforelection
attheCompany’slastAnnualGeneralMeetingand
thereforeretiredbyrotation.TheBoardthanksJames
forhiseffortsonceagain,andthecontributionhe
madethroughouthistenureasadirectorofthe
Company.
OnbehalfoftheBoardIwouldagainliketothank
allthededicatedteamonsiteandattheCompany’s
respectiveofficesfortheireffortsanddedication
throughouttheyear.Itisthroughtheseeffortsthat
youasshareholdersarenowbenefitingandwemust
continuetoacknowledgeandrewardtheeffortsof
ouremployees.
Welookforwardtobeingabletoreportthecontinued
growthanddevelopmentoftheCompanyandto
thankyou,ourshareholders,foryoursupportnotonly
throughouttheyear,butfortheentirejourneytodate.
Mark V. Caruso
Chairman
The Company was pleased to advise that it’s South African subsidiary, Mineral Sands Resources Pty Ltd (“MSR”), was granted a new prospecting right by the Department of Mineral Resources – South Africa.
5
Directors’ report
YourDirectorspresenttheirreportontheconsolidated
entity(referredtohereafterasthe“Group”)consisting
ofMineralCommoditiesLtd(the“Company”)andthe
entitiesitcontrolsattheendof,orduring,theyear
ended31December2015.Theconsolidatedfinancial
statementsarepresentedinUnitedStatesDollars
(“$”),unlessotherwisestated,whichistheCompany’s
presentationcurrency.
DIRECTORSThefollowingpersonswereDirectorsofthe
Companyduringthewholeofthefinancialyear
anduptothedateofthisreport,unlessotherwise
indicated:
Mark Victor Caruso
Joseph Anthony Caruso
Peter Patrick Torre
Guy Redvers Walker
Colin Ross Hastings -appointed2April2015
James Gerald Leahy -resigned27May2015
PRINCIPAL ACTIVITIESTheprincipalactivitiesoftheGroupduringtheyear
weremineralsandsminingandprocessingatthe
Group’sTorminMineralSandsProject(“Tormin”or
the“TorminProject”)intheWesternCapeProvinceof
SouthAfrica,undertakingproceduresandevaluation
forthefuturedevelopmentoftheXolobeniMineral
SandsProject(“Xolobeni”orthe“XolobeniProject”)
intheEasternCapeProvinceofSouthAfrica,and
investigationsintoothermineralresources.
DIVIDENDSSubsequenttoyearend,theDirectorsdeclaredafinal
unfrankeddividendfortheyearended31December
2015of1Australiancentperordinaryshare,atotal
distributionofA$4,049,416basedonthenumber
ofordinarysharesonissueasat31December2015.
Asthedividendisunfranked,thereareincome
taxconsequencesfortheownersoftheCompany
relatingtothisdividend.
REVIEW OF OPERATIONSInformationontheoperationsandfinancialpositionof
theGroupanditsbusinessstrategiesandprospectsis
setoutinthereviewofoperationssetoutbelow:
TheTorminProjectsuccessfullycompleteditssecond
fullyearofproductionachievingthefollowingkey
operatingandfinancialmetrics:
Production – Full Year
Mining:1,624,636tonnesminedatagradeof49.57%
HeavyMineralConcentrate(“HMC”)consistingof:
• 28.94%Garnet;
• 16.15%Ilmenite;
• 3.88%Zircon;and
• 0.60%Rutile.
Production and Processing:597,950tonnesprocessed
throughtheSecondaryConcentratorPlant(“SCP”)to
produce:
• 284,990tonnesGarnetconcentrate;
• 109,959tonnesIlmeniteconcentrate;and
• 44,489tonnesZircon/Rutileconcentrate.
Sales – Full Year: $46.2m
Zircon/Rutile concentrate:45,240wetmetrictonnes
Ilmenite concentrate:Nilwetmetrictonnes
Garnet concentrate:372,466wetmetrictonnes
Corporate and Cash
Cash:Cashbalanceof$4.2millionasat31December
2015,plus$7.0millionintradeandotherreceivables.
Debt:Thebalanceof$0.6millionowingonthe
WogenPacificLimitedpre-financingfacilitywas
repaidinfullon2March2015.
$1.2millionofshareholderloansrepaidandabalance
of$1.2millionasat31December2015,repayableby
30September2016.
SAFETYDuringtheyear,theCompanycelebrated1millionlost
timeinjury(“LTI”)freehours.TheCompanyhasnow
workedinexcessof1,270,000manhourswithoutan
LTIsinceoperationscommencedinOctober2013.
TheCompany’ssafetyrecordcontinuestobeindustry
beststandard.
6
MININGForthefullyearto31December2015,1,624,636
tonneswereminedatTormin(approximately1%
abovebudget)ataHMCgradeof49.57%.
MiningcontinuedtoperforminlinewithallKey
PerformanceIndicators(“KPIs”)intermsofproduction
withsignificantreductionsinoperatingcostsinthe
secondhalfoftheyearduetothedepreciatingRand
anddieselfuelcostsasaresultofglobaldepressed
crudeoilpricing.
Duringtheyear,theCompanyhasgainedaccessto
thepreviouslydeemedexcisedConservationareaon
themininglease.Thisarea,totallingsomeadditional
2.8kilometresofaccessibleminingarea,had
previouslybeenunminedandnotonlyallowedhigher
gradeZircontobeaccessed,butalsogaveadditional
replenishmenttimetootherareasundertheRunof
Mine(“ROM”)plan.
Miningtechniquesalsoevolvedtodealwiththe
ongoingreplenishmentprocessofthebeach.
Themobilisationinthelatterhalfoftheyearof
aspecialisedlargerCaterpillarD8Tlowground
pressure(“LGP”)bulldozerallowedasurfacemining
techniquetobedevelopedwhichinvolvesstripping
ofthelowergradesilicadepositionfromthe
replenishedareasthusexposinghighgradelenses
ofHMbearingore.Thisprocessallowsamuchmore
flexibleminingapproachwhichoptimisesandlimits
beachexcavationbelowsealevelandlimitstotal
materialmovement.
Thecommissioningofthetailingsreturnpumping
systemmitigatedandalleviatedtheloadingand
haulageofPrimaryBeachConcentrator(“PBC”)and
SecondaryConcentratorPlant(“SCP”)processing
tailstothebeachbytraditionalearthmoving
methods.Thisresultedinmuchbetterutilisationof
truckandloaderminingequipment.
PROCESSINGPBCbudgetedproductionwasnotachieveddueto
thedelayintheinstallationandcommissioningof
theGarnetStrippingPlant(“GSP”)causedbythe
Blastrite(Pty)Ltdlitigation.
Atotalannualproductionof473,445tonnesofHMC
wasproducedthroughthetwoPBCs.
TheCompanyprocessed597,950tonnesthrough
theSCPforthe2015year,being8%belowbudget.
ThebalanceofSCPfeedof124,505tonneswas
sourcedasdirectfeedfromhighgradeROMmaterial,
whichrequirednoprimaryconcentrationduetoits
extremelyhighgrade.
TheannualizedprocessingthroughputfortheSCP
continuedat80tonnesperhour(“tph”),wellabove
nameplatecapacityof63tph.Onanadjustedbasis
forthedelayintheGSP,theSCPcontinuedto
operateabovebudget.
SCPplantrecoverieswereslightlydownfortheyear,
afteradjustingforthedelayintheGSP,butwerein
linewithexpectationsduetotheincreasedSCPfeed
gradeandadditionalthroughput.
Annualnon-magneticZircon/Rutileconcentrate
productionto31December2015was44,489tonnes.
AnnualIlmeniteandGarnetconcentrateproduction
to31December2015was109,959tonnesand
284,990tonnesrespectively.
Totalprocessingunitcashcostswerewithinbudget
afteradjustingforthebudgetassumptionthattheGSP
wouldbecommissionedbythestartofOctober2015.
Allaspectsofprimaryandsecondaryprocessing
productionthroughthePBCsandtheSCPwere
alsoaffectedbyindustrialactionduringtheyear,
whicheffectivelyresultedinfivetosixweeksof
subduedproductionduetounavailabilityofthefull
labourforceandstrikeactionfromUnionmembers
preventingaccessattimestoprocessingplantona
fulltimebasis.
Inadditiontherewasatotalmainpowerstation
failurewhichresultedin4dayslosttime.
TheCompanyalsodeliveredtheTailingsScavenger
Plant(“TSP”)expansion,thetailingsreturnsystem
capitalprojectandiswelladvancedwiththe
implementationoftheGSPproject.Itisalsowell
advancedwithprogressingtheengineeringdesign
fortheinstallationofEskomMainsPowertothe
site,whichwillsignificantlyreduceoperatingcosts.
Collectivelytheseprojects,whencommissioned,
willdelivernotonlymaximumoptimizationofthe
processingroutesbutlifttheproductionprofileof
theCompanyinrankingamongstitspeers.
Thefocusin2016willnowturntooptimisingrecoveries
fromboththePBCandSPCprocessingcircuits,which
willbemucheasiertocontrolwiththecommissioning
andoperationofthetwoTSPsandtheGSP.
TORMIN SALES AND MARKETINGSalesrevenuefortheyearwas$46.2m,withannual
salesof:
• Zircon/Rutileconcentrates:45,240wetmetric
tonnes
• Ilmeniteconcentrate:Nilwetmetrictonnes
• Garnetconcentrate:372,466wetmetrictonnes
6
7
TheCompanyterminatedthePre-Financeand
MarketingAgreementbetweentheCompanyand
WogenPacificLimitedduringthefirsthalfoftheyear.
ThisallowedtheCompanytofreelymarketandsellits
non-magneticZircon/Rutileconcentratetobuyerson
anunrestrictedbasisfortheremainderoftheyear.
Garnetconcentrateproductionwassuppliedandsold
undercontractwithGMAGarnetGroup(“GMA”)and
stockpiledwithinSouthAfrica.TheGarnetconcentrate
willbeshippedatGMA’sdiscretion.Therevenuefor
stockpileGarnetisinitiallylowerwithfullsalesvalue
receiveduponshipment.
AlthoughtheCompanycontinuedtoreceiveactive
enquiriesforitsIlmeniteproductthroughoutthe
year,itwasunabletosecureanofftakepartnerfor
thisproduct.Thisisnotafunctionofthequalityof
theproduct,ratherafunctionoftheglobalIlmenite
productthroughouttheperiod.TheCompanywill
continuetoengagewithpotentialofftakersduring
thecourseof2016.
BLACK ECONOMIC EMPOWERMENT (“BEE”)TheCompanyworkedcloselywithitsjointshareholder
initsSouthAfricansubsidiaryMineralSands
ResourcesPtyLtd(“MSR”)andBEEpartner,Blue
BantryInvestments255(Pty)Ltd(“BlueBantry”),in
continuingtoassistinbridgingtheculturaldividethat
cansometimesexistinmanagingtheexpectationsof
interestsandeffectedpartiesandcommunities.
Investmentcontinuesinpersonaldevelopment
throughprogrammesthatarefocusedoneducation,
trainingandgainfulemployment,includinginternships
inthePerthCorporateofficeformentoringand
traininginmanagementreportingandaccounting.
Thecompletionoftheupgradeonthelocal
KoekenaapSchool/CommunityResourceCentre,
whichincludesanewlibraryandcomputerclassroom,
wasachievedduringthesecondhalfoftheyearand
wasofficiallyopenedinJanuary2016.Inadditionto
itsSocialLabourPlan(“SLP”)commitmentsatTormin,
theCompanyalsocontinuestoprovidesupporttothe
Xolobenicommunitythroughthebuildingofnurseries
andsupportingcattleandpoultryprogrammeswhich
willresultinsustainableprovisionofbasicfoodneeds.
TORMIN RESOURCEWorkwasundertakenduringFebruary2016onthe
annualTorminResourceReview.
Approximately1.625milliontonnesweremined
fortheyearended31December2015.Thebeach
replenishmentcontinueswithmultipleminingof
designatedoreblocksoccurringuptofivetimes.
Sincecommencement,theCompanyhasminedcirca
2.7milliontonnesatgreaterthan4%containedzircon.
ThistonnageandgradeexceedstheoriginalLOM
statedintheJORCResourcesandReservestatement
andisconsistentwiththebeachreplenishment
processwhichiscurrentlyoccurring.Theupdated
2015InferredJORCResourceandReserveconfirms
that2.7milliontonnesofmaterialata28.01%Heavy
Mineralisremaining.
7
Supplementary, nutritional food programme
8
TORMIN - PROSPECTING ACTIVITIESTheCompanywaspleasedtoadviselateintheyear
thatMSRhasbeengrantedanewprospectingright
bytheDepartmentofMineralResources–South
Africa(“DMR”).
Theawardedprospectingrightrepresentsanarea
ofapproximately10,500hainsizeseawardfromits
currentmining(Torminmine)andprospectingareas.
TheawardingofthisrightextendsMSR’sprospecting
areaupto10kmoffshorefromitscurrentmining
area.Theprospectingareaistobeinvestigated
foritsoffshoreheavymineralsandpotentialthatis
currentlythesourceofreplenishmenttakingplaceon
thebeachheldunderminingrights.
MSRhasconductedabathymetricandsub-bottom
seafloorprofilinggeophysicalsurveyoverthe
surfzoneareaheldunderPR10036.Thesurvey,
conductedbyanindependentfirm,willprovide
detailedinformationthatistobeusedtoplanan
underwaterexplorationdrillsamplingcampaign.
Thissurveyisinsupportoftheaeromagneticand
radiometricaerialsurveyworkdoneduring2014by
XcaliburGeophysics.The2014surveyidentifiedoff-
shoreheavymineralsandexplorationtargets.
Inconjunctionwithoffshorebathymetricstudies,
theCompanyfinalisedtheselectionofaspecialised
offshoredrillingandminingsamplercontractorwho
willmobilisetositeinthesecondquarterof2016to
conductresourcedrillingandsamplingofthesurf
zoneareai.e.theareabetweenthelowtideandthe
wavecrestformation.Theobjectiveofthisprogram
istoachieveanoffshoreInferredJORCresource.
Inadditiontotheawardedrights,MSRhaslodgeda
newprospectingandbulksamplingapplication(WC
30/5/1/2/10226PR)alongthebeachandsurfzone
northofitscurrentminingoperations.Thisapplication
representsatargetareaofapproximately24kmalong
thecoastline.Historicalexplorationworkbynon-
relatedpartieshasindicatedtheareaisprospective
forheavymineralsanddeposits.Thisapplicationis
subjecttoafullpublicparticipationprocessandan
environmentalimpactassessmentforbulksampling
asisrequiredunderSouthAfricanlegislation.
Theaboveactivitiesareindicativeofthelongterm
plansofMSRtoextendtheheavymineralsand
resourceofitsTorminminingoperationandunderpin
theeconomicviabilityofitscurrentoperations.
XOLOBENI MINERAL SANDS PROJECTTheCompanyholdstheprospectingrightstofourof
thefiveblocksintheXolobeniMineralSandsProject.
AMiningRightApplicationwasacceptedinApril
2015andtriggeredthePublicParticipationProcess
fortheEnvironmentalScopingReportSubmission.
ThePublicParticipationProcessresultedinthe
submissionoftheEnvironmentalScopingReport
duringthefirsthalfof2015.
TheCompanymadegoodprogressthroughoutthe
yearwithitsconsultantstoconductallnecessary
baselineandtechnicalstudiestomovetheproject
throughtothesubmissionofanEnvironmental
ImpactAssessment(“EIA”)Report,whichisrequired
aspartoftheMiningRightApplicationprocess.
AnextensionforthesubmissionofthefinalEIA
hasbeengrantedtotheCompanyuntilApril2016.
9
AreassessmentoftheMiningRightApplicationwill
takeplaceintheMarch2016quarter,whichmay
delaythefinalsubmissionoftheEIA.
TheCompanyismaintainingitseffortstoconclude
baselinestudieswithintheregulatorytimeframes.
CORPORATE AND FINANCIALItwasanactiveyearfortheCompanycorporately.
AsdisclosedtotheASXinDecember2014,an
applicationwasmadeintheHighCourtofSouth
Africa(WesternCapeDivision,CapeTown)by
Blastrite(Pty)Ltd(“Blastrite”)toseekrelieffor
anorderthatMSRmaynotdealwithanyentity
orpersonotherthanBlastriteinrelationtothe
discussionandconsiderationrelatingtoanypotential
Garnetand/orotherabrasivemediaresourcethat
maybepresentinoronthebeachdepositlocated
withintheTorminProject;andanorderthatMSRmay
notrenewitsexistingofftakeagreementwithGMA
fortheperiod1July2015to30June2016.
Followingahearingon19December2014,Blastrite
withdrewitsapplicationtoseekinterimreliefand
wereorderedtopaytheCompany’scostsoccasioned
bytheapplication.Blastriteproceededtomakean
applicationforfinalreliefwhichwasdeferredtooral
evidenceandheardinJune2015.
InOctober2015,theCompanywaspleasedtoadvise
thatBlastite’sCourtApplicationhadbeendismissed.
ThedismissalfollowsBlastrite’swithdrawalofits
initialapplicationtoseekinterimreliefinDecember
2014.BlastritehasbeenorderedtopayMRC’scosts
occasionedbytheemploymentoftwolegalcounsel,
allofthecostsoccasionedbythereferraltooral
evidence,thecostsoccasionedbythediscovery
applications,includingthecostsoccasionedbythe
Company’spartiesdiscoveryapplications.
Asstatedwhentheinitialapplicationwasmade
byBlastriteinDecember2014,theCompany’s
viewwasthattheApplicationwasanabuseofthe
Courtprocess,foundedonincorrectfactsandwas
ofnomeritand,assuch,theCompanyandother
respondentsstrenuouslyopposedtheApplication.
TheCompanywasverypleasedwiththeBlastrite
litigationoutcome.
TheShareholderloansobtainedin2014wereextended
to30September2015,andthensubsequentlypaid
downby50%laterintheyearwiththebalance
extendedto30September2016.
Thereductionofshareholderdebtispartofthe
Company’soverallcapitalmanagementstrategy.
WhilsttheCompanyhadthecapacitytorepaythe
debtintotal,itspreferredpositionwastoretain
50%toprovidefurtherflexibilityinworkingcapital
management.
TheCompanyassessedfinancingoptionsforits
GarnetStrippingPlant(“GSP”)expansioninitiative
andwaspleasedtoadvise,subsequenttoyearend,
thatithadenteredintoa$4.5millionfinancing
arrangementwithGMA.
TheCompanyalsoconcludedthepurchase
agreementofthe1,787hectarefarmonwhich
itsTorminprocessingfacilitiesarelocated.The
purchaseremovesallrestrictionsthatwereformally
inplaceunderthepreviousLandUseagreement
andincreasestheavailablelandusagefromthe
existing9.89hectareswhich,subjecttoregulatory
authority,providessignificantlymorelandtoexpand
theprocessingfacility’sfootprintandstockpiling
area,allowingforoptimisationoftheoperational
performance.
CONSOLIDATED RESULT AND FINANCIAL POSITIONTheprofitoftheGroupafterincometaxandnon-
controllinginterestswas$10.6m(2014:$8.4m).Thenet
assetsoftheGrouphaveincreasedfrom$31.2masat
31December2014to$31.7masat31December2015.
Revenuefortheyearwas$46.5m(2014:$35.0m),
withprofitbeforeincometaxexpenseof$12.9m
(2014:$3.9m).
OUTLOOK TheCompanywillproceedtocompletethe
constructionoftheGSPbyJune2016.
TheCompanyisinapositiontotakeadvantageof
anyincrementalincreaseinZirconpricingandhas
significantupsideinthesaleofIlmeniteconcentrate.
Operationally,theCompanywillcontinuetoenjoy
thebenefitsofaweakerRandonitsSouthAfrican
costbaseinconjunctionwithUSdenominatedsales
revenue.
WiththeGSPprocessingplantupgrade,the
Companyisanticipatingsignificantgrowthin
productionin2016.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRSDetailsoftheyear’soperationalperformanceandthe
resultingfinancialimpactissetoutintheReviewof
Operationsabove.
Noeventortransactionhasarisenintheinterval
betweentheendofthefinancialyearandthedate
ofthisreportofamaterialandunusualnaturelikely,
otherthanwhathasbeendisclosedelsewhereinthis
financialreport,intheopinionoftheDirectorsofthe
Company,toaffectsignificantlytheoperationsofthe
Group,theresultsofthoseoperationsorthestate
ofaffairsoftheCompanyortheGroupinfuture
financialyearsunlessotherwisedisclosedinthis
Directors’Report.
10
EVENTS SINCE THE END OF THE FINANCIAL YEARTheCompanywaspleasedtoadvise,inFebruary2016,thatMSRhassecured$4.5millionviaaloanfacilityfrom
GMAtofundthecompletionofitsGSP.TheGSPwillbeinstalledatthefrontoftheexistingSCP.Theinstallation
oftheGSPwillincreasethenon-magneticfeedgradetotheSCPbyremovingtheGarnetfractionfromtheHMC
priortotheSCP.This,inturn,willallowahighgradeZirconconcentratetobefedtotheexistingmagneticcircuit,
andtherebyincreasenon-magneticconcentrateproduction.
CompletionoftheGSPisexpectedonoraround30June2016.
TheloanagreemententeredintowithGMAprovidesfor$4.5millionfundingwith3yearrepaymentterms
commencingonthere-startofshippingofgarnetconcentrateproducttoGMA(plannedforJanuary2017).
TheofftakeagreementpreviouslyenteredintowithGMAhasalsobeenamendedtoincreasethetermofthe
agreementtothelifeofmine,andanincreaseintheannualofftaketonnageto210,000tonnesupfrom150,000
tonneswithanoptiontotakeallotherremainingGarnetconcentrateproduction.TheCompanyproduced
approximately285,000tonnesofGarnetfortheyearended31December2015.
Therehavebeennoothermaterialmattersarisingsubsequenttotheendofthefinancialyear.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONSLikelydevelopmentsintheoperationsoftheGroupthatwerenotfinalisedatthedateofthisreportareincluded
intheReviewofOperationsaboveandasdetailedintheOutlooksection.
TheBoardwillcontinuetoreviewotherprojectsandopportunitiesintheinterestsofincreasingshareholdervalue.
ENVIRONMENTAL REGULATIONTheGroupissubjecttovariousenvironmentalregulationsinrespecttoitsexploration,developmentand
productionactivities.
Inthecourseofitsnormalminingandexplorationactivities,theGroupadherestoenvironmentalregulations
imposeduponitbytherelevantregulatoryauthorities,particularlythoseregulationsrelatingtoground
disturbanceandtheprotectionofrareandendangeredfloraandfauna.
SCHEDULE OF MINING AND PROSPECTING TENEMENTSMiningandprospectingtenementscurrentlyheldorunderapplicationbytheGroupare:
Country Location Number Type of Right Status Interest
South Africa Tormin (WC)30/5/1/2/2/163MR Mining Approved 100%
South Africa Tormin (WC)30/5/1/2/2/162MR Mining Approved 100%
South Africa Tormin (WC)30/5/1/1/2/10036PR Prospecting Approved 100%
South Africa Tormin (WC)30/5/1/1/2/10199PR Prospecting Approved 100%
South Africa Tormin (WC)30/5/1/1/2/10226PR Prospecting Under Application 100%
South Africa Tormin (WC)30/5/1/1/2/10229PR Prospecting Under Application 100%
South Africa Xolobeni EC30/5/1/1/2/6PR Prospecting Approved 100%
South Africa Xolobeni EC30/5/1/1/2/10025PR Prospecting Under Application 100%
South Africa Xolobeni EC 10025 MR Mining Under Application 100%
GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTSTheDirectorshaveconsideredcompliancewiththeNationalGreenhouseandEnergyReportingAct2007which
requiresentitiestoreportannualgreenhousegasemissionsandenergyuseinAustralia.Forthemeasurement
period,theDirectorshaveassessedthattherearenocurrentreportingrequirements,butmayberequiredtodo
sointhefuture.
11
INFORMATION ON DIRECTORSMark Victor Caruso
Executive Chairman and Chief Executive Officer
Age54
Experience and expertiseMrCarusohasextensiveexperienceinmining,
earthmovingandcivilengineeringconstruction
earthworks.HehasbeenaDirectoroftheCompany
sinceSeptember2000.HewaspreviouslyChairman
ofAlliedGoldMiningPLC(AGMP),responsiblefor
thedeliveryoftheGoldRidgeProjectintheSolomon
IslandsandtheSimberiGoldProjectinPapuaNew
Guinea.AfterresigningfromAGMP,hetransitioned
intothepositionofExecutiveChairmanofthe
CompanyinAugust2012.
Other current directorshipsPerpetualResourcesLimited
Former directorships in the last 3 yearsNone
Special responsibilitiesChairmanoftheBoard
ChiefExecutiveOfficer
Interests in shares and options78,554,014ordinarysharesintheCompany–indirect
holding1
15,784ordinarysharesintheCompany–directholding
5,000,000optionsoverordinarysharesinthe
Company
Joseph Anthony Caruso
Non-Executive Director
Age70
Experience and expertiseMrCarusowasappointedasNon-ExecutiveDirector
oftheCompanyinSeptember2000.Heisadirector
ofZurichBayHoldingsPtyLtdandConstruction
ManagerofSimtoAustraliaPtyLtd,bothofwhichare
involvedinmining,earthmovingandcivilengineering
constructionearthworks.Hehasconsiderable
experienceinmanagingandadministrationof
engineering,mining,rawmaterialsproduction
operations,earthmovingandrelatedinfrastructure
utilitiesservicesresourcecontracts.
Other current directorshipsNone
Former directorships in the last 3 yearsNone
Special responsibilitiesMemberoftheRemunerationandNomination
Committee
Interests in shares and options77,007,485ordinarysharesintheCompany1
1 J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd, which holds 77,007,485 shares in the Company. Mr Mark Caruso also holds shares indirectly through Regional Management Pty Ltd.
12
Peter Patrick Torre
CA, AGIA, MAICD
Non-Executive Director and Company Secretary
Age44
Experience and expertiseMrTorrewasappointedCompanySecretaryof
theCompanyinJuly2006,andasaDirectorof
theCompanyon1April2010.HeisaChartered
Accountant,aCharteredSecretaryandamemberof
theAustralianInstituteofCompanyDirectors.Hewas
previouslyapartnerofaninternationallyaffiliatedfirm
ofCharteredAccountants.MrTorreistheCompany
SecretaryofseveralASXlistedcompanies.
Other current directorshipsNone
Former directorships in the last 3 yearsNeoResourcesLimited,MissionNewEnergyLimited
Special responsibilitiesCompanySecretaryandmemberoftheAudit,
ComplianceandRiskCommittee
Interests in shares and options
Guy Redvers Walker BCA, CA, CFA, CMInstD
Senior Independent Non-Executive Director
Age46
Experience and expertiseMrWalkerisahighlyaccomplisheddirectorand
seniorinvestmentmanagementexecutivewithover
20years’financialmarketsexperience.Hecurrently
andinthepasthassatontheboardsoflistedmining
companiesincludingexploration,developmentand
productioncompanies.Hehasextensiveexperience
incapitalraisingthroughbothtraditionalbanksand
alternativelenders.
Other current directorshipsMetalsExplorationplc
Former directorships in the last 3 yearsBacanoraMineralsLtd
ENKplc
NavigatorResourcesLimited
Special responsibilitiesSeniorIndependentNon-ExecutiveDirector,
ChairmanoftheAudit,ComplianceandRisk
CommitteeandmemberoftheRemunerationand
NominationCommittee
Interests in shares and options125,000ordinarysharesintheCompany
Colin Ross HastingsBSc (Geology), MSc (Economic Geology), MAusIMM
Independent Non-Executive Director
Age65
Experience and expertiseMrHastingswasappointedasanon-executive
DirectorinApril2015.Heisageologistwithover30
years’experienceinminingandexploration,project
generationandprojectdevelopment,covering
Australiaandoverseas.Hehasastronggeotechnical
backgroundwith10years’experienceinthisfieldand
hasextensiveexperienceinminingrelateddisciplines
andprocesses.From1996to2014,MrHastingswas
involvedwithAlliedGoldPLC’sSimberiGoldProject
wherehisrolesincludedmanagementofexploration
andthefeasibilityandpre-developmentstudiesfor
mineconstruction.MrHastingsthenprogressed
toGeneralManagerResourceDevelopmentand
concludedhistenureatStBarbarasubsequenttothe
mergerbetweenitandAlliedGoldMiningPLC.
Other current directorshipsPerpetualResources
Former directorships in the last 3 yearsNone
Special responsibilitiesChairmanoftheRemunerationandNomination
CommitteeandmemberoftheAudit,Complianceand
RiskCommitteesincehisappointmenton2April2015.
Interests in shares and optionsNil
13
MEETINGS OF DIRECTORSThenumberofmeetingsoftheCompany’sBoardofDirectorsandeachoftheBoardcommitteesheldduringthe
yearended31December2015,andthenumberofmeetingsattendedbyeachDirectorwere:
Meetings of committees
NameDirectors’ Meetings
Audit, Compliance and Risk
Remuneration and Nomination
Number of meetings held
A being total of meetings eligible to attend B being total of meetings actually attended
A B A B A B
Mark Victor Caruso 5 5 - - - -
Joseph Anthony Caruso 5 4 - - 4 4
Peter Patrick Torre 5 5 4 4 - -
Guy Redvers Walker 5 5 4 4 4 4
James Gerald Leahy (resigned 27 May 2015) 3 2 2 1 2 2
Colin Ross Hastings (appointed 2 April 2015) 4 4 2 2 2 2
OthermattersofBoardbusinesshavebeenresolvedbycircularresolutionsofDirectors,whicharearecordof
decisionsmadeatanumberofinformalmeetingsoftheDirectorsheldtocontrol,implementandmonitorthe
Company’sactivitiesthroughouttheyear.
REMUNERATION REPORT (AUDITED)ThisremunerationreportsetsouttheremunerationinformationfortheCompany’snon-executiveDirectors,
executiveDirectors,otherkeymanagementpersonnelandthekeyexecutivesoftheGroupandtheCompany.
Theremunerationreportissetoutunderthefollowingmainheadings:
A. Principlesusedtodeterminethenatureandamountofremuneration
B. Detailsofremuneration
C. Serviceagreements
D. Share-basedcompensation
E. Additionalinformation
F. Othertransactionswithkeymanagementpersonnel
A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION Inordertoretainandattractexecutivesofsufficientcalibretofacilitatetheefficientandeffectivemanagement
oftheCompany’soperations,theBoardreviewstheremunerationpackagesofallkeymanagementpersonnel,if
any,onanannualbasisandmakesrecommendations.Remunerationpackagesarereviewedwithdueregardto
performanceandotherrelevantfactors.
Remunerationpackagesmaycontainthefollowingkeyelements:
(a)Directors’fees;
(b)Salaryandconsultancy;and
(c)Benefits,includingtheprovisionofamotorvehicleandsuperannuation.
Feespayabletonon-executiveDirectorsreflectthedemandswhicharemadeon,andtheresponsibilitiesofthe
Directors.TheBoardreviewsnon-executiveDirectors’feesandpaymentsonannualbasis.
Executivesareofferedacompetitivebasepaywhichisreviewedannuallytoensurethepayiscompetitivewith
themarket.
TherewereshorttermcashincentivesprovidedtoboththeExecutiveChairmanandChiefFinancialOfficer
(“CFO”).Long-termincentivesareprovidedtoDirectorsandotherkeymanagementpersonneltoincentivise
themtodeliverlong-termshareholderreturns.ThesearedeterminedbasedonwhattheBoardviewsas
reasonablebasedonmarketconditions.AnygrantofsecuritiestoDirectorsoftheCompanymustbeapproved
byshareholdersinageneralmeeting.
TheDirectorsarenotrequiredtoholdanysharesintheCompanyundertheconstitutionoftheCompany;
however,toalignDirectors’interestswithshareholders’intereststheDirectorsareencouragedtoholdsharesin
theCompany.
14
Asat31December2015,theshorttermcashbonusincentivesareupto25%ofbasepaycalculatedonCompany
performanceandotherkeyperformanceindicators.Directors’feesarefixed.
2015 2014 2013 2012 2011 2010
Profit /(loss) for the year after tax (USD) 10,576,785 8,376,344 (1,569,980) (1,233,344) (2,206,055) (1,494,207)
Closing share price (AUD) 10.0 cents 11.0 cents 18.5 cents 9.9 cents 7.5 cents 8.1 cents
Voting and comments made at the Company’s 2015 Annual General MeetingTheCompanyreceivedtheunanimoussupportofshareholderspresentontheremunerationreportattheAGMfor
the2014financialyearand99.7%ofproxyvoteswereinfavouroftheresolutiontoapprovetheremunerationreport.
TheCompanydidnotreceiveanyspecificfeedbackattheAGMorthroughouttheyearonitsremunerationpractices.
B. DETAILS OF REMUNERATIONThekeymanagementpersonneloftheGrouparetheDirectorsoftheCompanyandMrTonySheard,theCFO.
MrTonySheardwasappointedasafulltimeemployeeon1January2015.MrSheardwasactinginhiscapacityas
aconsultantupto31December2014.TheamountsdisclosedareapplicableforboththeCompanyandtheGroup.
DetailsoftheremunerationofDirectorsandthekeymanagementpersonnel(asdefinedinAASB124Related
PartyDisclosures)oftheCompanyandtheGrouparesetoutinthefollowingtables.Therearenolongterm
benefitsamountsduetoDirectorsandkeymanagementpersonnel,otherthanthosedisclosed.Non-cash
benefitsintheformofoptionswereprovidedtokeymanagementpersonnelduringtheyear.Thefollowingfees
areapplicabletoDirectorsandkeymanagementpersonneloftheCompany.
Name YearCash salary
(A$)Cash bonus
(A$)
Annual and long service
leave (A$)
Post-employment
benefits (A$)
Share-based payments (Options)
(A$)Totals
(A$)
Percentage performance
based (%)
Share based payments as a percentage of remuneration
(%)
Directors
Executive Chairman
Mark Caruso (*) 2015 547,945 150,000 43,882 52,055 149,590 943,472 15.9 15.9
2014 293,228 - 86,534 27,124 - 406,886 - -
Non-Executive Director
Joseph Caruso 2015 63,934 - - 6,066 - 70,000 - -
2014 50,248 - - 4,648 - 54,896 - -
Peter Torre 2015 150,000 - - - - 150,000 - -
2014 135,360 - - - - 135,360 - -
Guy Walker 2015 80,000 - - - - 80,000 - -
2014 63,920 - - - - 63,920 - -
Ross Hastings
(appointed 2 April 2015)
2015 52,311 - - 4,828 - 57,139 - -
2014 - - - - - - - -
James Leahy
(resigned 27 May 2015)
2015 32,667 - - - - 32,667 - -
2014 63,920 - - - - 63,920 - -
Total Director
Remuneration
2015 926,856 150,000 43,882 62,949 149,590 1,333,278 11.3 11.2
2014 606,676 - 86,534 31,772 - 724,982 - -
Other Key Management Personnel
Tony Sheard (**) 2015 251,142 59,813 9,981 23,858 26,182 370,976 16.1 7.1
2014 92,045 - - - - 92,045 - -
Andrew Lashbrooke
(resigned 12 Sept 2014)
2015 - - - - - - - -
2014 270,720 - - - - 270,720 - -
Total Key Management
Personnel Remuneration
2015 1,177,998 209,813 53,863 86,808 175,773 1,704,254 12.3 10.3
2014 969,441 - 86,534 31,772 - 1,087,747 - -
15
* Mark Caruso’s comparative remuneration has been re-stated to include annual leave and long service leave previously not included.
**Tony Sheard commenced employment as a consultant on 18 August 2014 and received consultancy fees of $92,045 for the year ended 31 December 2014. Effective from 1 January 2015, he entered into a service agreement with the Company. It has no fixed term, with a total remuneration package of A$275,000 per annum. There are no termination benefits unless made constructively redundant in which case he receives 12 months’ remuneration.
Othershortandlongtermbenefitsformingpartof
theserviceagreementsaredetailedbelow:
Cash bonusTheExecutiveChairmanwasentitledtoan
annualbonusof25%oftheBaseRemuneration,
measuredagainstthefollowingcriteria,20%
weightingforeach:
1. Mineproductionagainstbudget;
2. Securingandenteringintoanofftake
agreementforIlmenite;
3. AchievingBudgetEarningsbeforeInterest,
Tax,DepreciationandAmortisation
(“EBITDA”)takingintoaccountuncontrollable
variablesatthediscretionoftheBoard;
4. Completionofreplenishmentstudieson
minedareassufficienttoallowresultstobe
reportedtotheASX;and
5. SubmissionofaMiningRightApplicationin
2015fortheXolobeniMineralSandsProject.
Futurebonuseswillbeatthesolediscretionof
theBoard.
Themeasurableobjectiveswerechosentoensure
theExecutiveChairmanwasincentivisedtomeet
budgetedproductionandEBITDA;secureofftake
agreementsfortheCompany’sremainingproduct
notcurrentlybeingsoldintothemarket;to
continuetoexpandandreplenishtheCompany’s
Resources,andtoprogresstheCompany’sother
mineralsandsprojectinSouthAfrica.
TheChairmanoftheRemunerationandNomination
Committeeassessedtheperformanceofthe
ExecutiveChairman,andreviewedhisperformance
againsttheabovesetmeasurableobjectives,taking
intoaccountothermitigatingfactorsthroughout
theyear.Objectives1,3,4and5wereassessed
asbeingmet.Objective2wasnotmet,however
theExecutiveChairmanalsoachievedotherkey
strategicandoperationalobjectivesthroughoutthe
yearwhichwerenotsetbytheRemunerationand
NominationCommitteeandtheCommitteehas
useditsdiscretiontoawardthefullbonusof25%
ofbaseremunerationduetothesignificantefforts
oftheExecutiveChairmanthroughouttheyear.
TheCFOwasentitledtoanannualbonusof25%
oftheBaseRemuneration,measuredagainstthe
followingcriteria,onethirdweightingforeach:
1. Performanceagainstscopeofservicesset
outintheemploymentcontractatthesole
discretionoftheExecutiveChairman;
2. BoardReportingwithinsettimingeach
month;and
3. AchievingEBTIDAagainstbudgettaking
intoaccountuncontrollablevariablesatthe
discretionoftheBoard.
Futurebonuseswillbeatthesolediscretionof
theBoard.
Themeasurableobjectiveswerechosentoalign
thetwokeyexecutivesincentivesintermsof
meetingbudgetedEBITDA,thisistoensurethe
CFOperformedeachofthetasksoutlinedinhis
employmentcontractwhicharetypicalofthatfor
aCFOposition,andtimelyreportingtotheBoard
toensurebusinessdecisionscanbemadeona
timelyandinformedbasis.
TheExecutiveChairmanassessedthe
performanceoftheCFOagainsttheabove
measurableobjectivesandawarded33%for
objective1,20%forobjective2and34%for
objective3,beingatotalof87%ofthetotal
achievablebonus.
Grant of optionsThefollowingoptionswereissuedduringtheyear:
• 5,000,000UnlistedOptionstotheExecutive
ChairmanexercisableatA$0.20onorbefore
30May2018andsubjecttothefollowing
vestingconditions:
(i) 1,666,668vestingimmediately;
(ii)1,666,666vestingon8June2016;and
(iii)1,666,666vestingon8June2017.
• 1,000,000UnlistedOptionstotheCFO
exercisableatA$0.20onorbefore31March
2018andsubjecttothefollowingvesting
conditions:
(i) 333,334vestingimmediately;
(ii)333,333vestingon31March2016;and
(iii)333,333vestingon31March2017.
Relative proportions of fixed vs variable remuneration expenseThefollowingtableshowstherelativeproportions
ofremunerationthatarelinkedtoperformance
andthosethatarefixed,basedontheamounts
disclosedasstatutoryremunerationexpensein
theprevioustable:
16
Name
Fixed Remuneration At Risk - STI At Risk - LTI
2015 2014 2015 2014 2015 2014
Directors
Executive Chairman
Mark Caruso 68% 100% 16% n/a 16% n/a
Non-Executive Directors
Joseph Caruso 100% 100% 0% n/a 0% n/a
Peter Torre 100% 100% 0% n/a 0% n/a
Guy Walker 100% 100% 0% n/a 0% n/a
James Leahy 100% 100% 0% n/a 0% n/a
Ross Hastings 100% n/a 0% n/a 0% n/a
Other Key Management Personnel
Tony Sheard 71% 100% 23% n/a 6% n/a
Andrew Lashbrooke n/a 100% n/a n/a n/a n/a
C. SERVICE AGREEMENTS Noformalservicecontractwassignedwiththe
ExecutiveChairmanhowever,thefollowingwere
thetermsunderwhichtheExecutiveChairmanwas
employedthroughouttheyear:
Mark Caruso
Commencement date6August2012
TermNofixedterm
Total Remuneration packageA$600,000perannum,effectivefrom12September
2014,(inclusiveof9.5%superannuation)andcash
bonusassetoutabove
Termination benefits 12months’basesalaryplusanypaymentinlieuof
notice
TheRemunerationandNominationCommittee
engagedtheservicesofaremunerationconsultant,
SherwoodLoveandAssociates,toprovidea
recommendationinrespecttoMrMarkCaruso’s
remuneration.MrCaruso’sremunerationwasset
basedontherecommendationmadebySherwood
LoveandAssociates.
Theremunerationrecommendationswerefree
fromundueinfluenceastheyweremadetoand
directedbytheRemunerationandNomination
CommitteeunderthedirectionoftheChairman
ofthatCommittee.TheBoardissatisfiedthatthe
remunerationrecommendationwasmadefreefrom
undueinfluencebytherelevantmemberofthekey
managementpersonnelashedidnothaveanyinput
intotherecommendations.Therecommendations
weremadetotheRemunerationandNomination
CommitteeandSherwoodLoveandAssociatesonly
tookinstructionsfromtheCommittee.
TheCompanypaidafeeofA$10,000toSherwood
LoveandAssociatesfortheirreportonMrMark
Caruso’sremuneration.
Peter Torre
Commencement date1November2012
TermNofixedterm
Total Remuneration packageA$150,000perannum
Termination benefits12months’basesalaryplusanypaymentinlieuof
notice
Tony Sheard
Commencement date1January2015
TermNofixedterm
Total Remuneration packageA$275,000perannum(inclusiveof9.5%
superannuation)andcashbonusassetoutabove
Termination benefits Nilunlessconstructiveredundancyinwhichcase12
months’salary
Therearenootherserviceagreements.
17
D. SHARE BASED COMPENSATIONThefollowingoptionsweregrantedasremunerationduringtheyearended31December2015(2014:Nil):
MarkCaruso 5,000,000
TonySheard 1,000,000
Thetermsandconditionsofeachgrantofoptionsareasfollows:
Grant Date Expiry dateExercise
priceFair Value
at grant date
Options at the start of the year
Granted during
the year
Exercised during
the year
Forfeited during
the year
Lapsed during the
year
Balance at the end
of the year
Vested at the end
of the year
21 Dec 2012 31 Dec 2015 20 cents 3.35 cents 10,000,000 - - - (10,000,000) - -
21 Dec 2012 31 Dec 2015 35 cents 2.23 cents 1,000,000 - - - (1,000,000) - -
27 May 2015 30 May 2018 20 cents 4.90 cents - 5,000,000 - - - 5,000,000 1,666,668
07 Sept 2015 31 Mar 2018 20 cents 5.40 cents - 1,000,000 - - - 1,000,000 333,334
Total 11,000,000 6,000,000 - - (11,000,000) 6,000,000 2,000,002
TherelevantinterestofeachDirectorandkeymanagementpersonnelinthesharecapitaloftheCompany,
shownintheRegisterofDirectors’andKeyManagementPersonnelShareholdingatthedateoftheDirectors’
Reportisasfollows:
Balance as at 1 January 2015
Received as remuneration
Increase as a result of options
exercised Net change
Balance as at 31 December
2015
Mark Caruso • Indirect 78,354,014 - - 200,000 78,554,014
• Direct 15,784 - - - 15,784
Joseph Caruso 77,007,485 - - - 77,007,485
Peter Torre 625,000 - - - 625,000
Guy Walker 125,000 - - - 125,000
Ross Hastings - - - - -
James Leahy - - - - -
Tony Sheard 100,000 - - 50,000 150,000
DetailsofoptionsoverordinarysharesintheCompanyprovidedasremunerationtokeymanagementpersonnel
areshownbelow:
Balance as at 1 January 2015
Received as remuneration
Options exercised
Options lapsed
Balance as at 31 December
2015
Mark Caruso 1,000,000 5,000,000 - (1,000,000) 5,000,000
Joseph Caruso 1,000,000 - - (1,000,000) -
Peter Torre 1,000,000 - - (1,000,000) -
Guy Walker 1,000,000 - - (1,000,000) -
James Leahy 1,000,000 - - (1,000,000) -
Ross Hastings - - - - -
Tony Sheard - 1,000,000 - - 1,000,000
Total 5,000,000 6,000,000 - (5,000,000) 6,000,000
18
E. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
MineSiteConstructionServices(“MSCS”),acompany
associatedwithMrMarkCarusoandMrJosephCaruso
hasprovidedthefollowingsservicestotheCompany
during2015:
Provision of office space.TheamountpaidbytheCompanytoMSCSforthe
yearended31December2015was$47,734.Thisis
consideredtobeanarm’slengthcommercialrent.
Thereisnoformalsubleaseinplace.
Provision of secretarial staff to the Executive Chairman.TheamountpaidbytheCompanytoMSCSfor
theyearended31December2015was$57,784.
TheamountspayablearepursuanttoanExecutive
ServiceAgreementandhavebeenreimbursedonan
arm’slengthbasisatnormalcommercialrates.
Provision of technical staff.TheamountpaidbytheCompanytoMSCSfor
theyearended31December2015was$299,422.
Theamountspayablehavebeeninrespecttothe
provisionoftechnicalstaffattheGroups’headoffice
andattheTorminprojectandhavebeenreimbursed
onanarms-lengthbasisatnormalcommercialrates.
Asat31December2015,amountpayabletoMSCSis
$92,105.
AsannouncedbytheCompanyon30May2014,the
Companyobtainedanunsecuredshorttermworking
capitalfacilityofupto$4mfrommajorshareholders.
ThisincludedaA$2millionfacilityprovidedby
RegionalManagementPtyLtd(“RMS”),arelated
partyofMrMarkCaruso,theExecutiveChairmanof
theCompany.
PursuanttotheLoanAgreemententeredinto
betweentheCompanyandRMS,thelenderprovided
afinancefacilitycappedatA$2milliononthe
followingarm’s-lengthandcommercialterms:
• Loanisunsecured;
• Interestof13%perannum;
• Linefeeof1%andestablishmentfeeof1%;
• Repaymenttotakeinthreeequaltrancheson31
January2015,28February2015and31March2015;
and
• Defaultinterestof10%ifnotrepaidonthe
repaymentdate.
AsannouncedbytheCompanyon23February
2015,RMSagreedtoextendthetermoftheloanit
providedto30September2015.Asannouncedby
theCompanyon5August2015,RMSagreedtothan
repaymentof50%oftheprincipalandtoextend
thetermoftheremainingbalanceoftheloanto
30September2016toprovidetheCompanywith
flexibilitywithitsfundingarrangementsfortheGSP.
Asat31December2015,thebalance(including
interestpayable)outstandingis$597,872.Interest
paidamountedto$159,246in2015.
End of the audited remuneration report
19
INSURANCE OF OFFICERSDuringthefinancialyear,theGrouphaspaidan
insurancepremiumtoinsuretheDirectorsand
secretariesoftheCompanyanditscontrolledentities.
Theannualpremiumpaidwas$49,703representing
$9,940perDirector.Theliabilitiesinsuredarelegal
coststhatmaybeincurredindefendingcivilor
criminalproceedingsthatmaybebroughtagainst
theofficersintheircapacityasdirectorsorofficersof
entitiesintheGroup,andanyotherpaymentsarising
fromliabilitiesincurredbytheofficersinconnection
withsuchproceedings.Thisdoesnotincludesuch
liabilitiesthatarisefromconductinvolvingawilful
breachofdutybytheofficersortheimproperuse
bytheofficersoftheirpositionorofinformationto
gainadvantageforthemselvesorsomeoneelseorto
causedetrimenttotheGroup.
PROCEEDINGS ON BEHALF OF THE GROUPNopersonhasappliedforleaveofCourttobring
proceedingsonbehalfoftheGrouporintervenein
anyproceedingstowhichtheGroupisapartyfor
thepurposeoftakingresponsibilityonbehalfofthe
Companyforalloranypartofthoseproceedings.
NON-AUDIT SERVICESTheCompanymaydecidetoemploytheauditoron
assignmentsadditionaltotheirstatutoryauditduties
wheretheauditor’sexpertiseandexperiencewiththe
Companyand/ortheGroupareimportant.
Detailsoftheamountspaidorpayabletotheauditor
forauditandnon-auditservicesprovidedduringthe
yeararesetoutbelow.
TheBoardofDirectorshasconsideredthe
positionand,inaccordancewithadvicereceived
fromtheAudit,ComplianceandRiskCommittee,
issatisfiedthattheprovisionofthenon-audit
servicesiscompatiblewiththegeneralstandard
ofindependenceforauditorsimposedbythe
CorporationsAct2001.TheDirectorsaresatisfied
thattheprovisionofnon-auditservicesbythe
auditor,assetoutbelow,didnotcompromise
theauditorindependencerequirementsofthe
CorporationsAct2001forthefollowingreasons:
• allnon-auditserviceshavebeenreviewedbythe
Audit,ComplianceandRiskCommitteetoensure
theydonotimpacttheimpartialityandobjectivity
oftheauditor;and
• noneoftheservicesunderminethegeneral
principlesrelatingtoauditorindependenceasset
outinAPES110CodeofEthicsforProfessional
Accountants.
20
Duringtheyear,thefollowingfeeswerepaidorpayableforservicesprovidedbyBDOAudit(WA)PtyLtdand
BDOTax(WA)PtyLtd,itsrelatedpracticesandrelatedfirms:
31 Dec 2015 $
31 Dec 2014 $
Audit services
Audit and review of financial reports
BDO Audit (WA) Pty Ltd 60,790 68,281
BDO Cape Town South Africa 48,588 32,871
109,378 101,152
Non-audit services
Taxation and company secretarial (South African entities)
BDO Tax (WA) Pty Ltd 80,366 90,768
BDO Cape Town South Africa 6,964 5,555
87,330 96,323
Auditor’s independence declarationAcopyoftheauditor’sindependencedeclarationasrequiredundersection307CoftheCorporationsAct2001
issetoutonpage64andformspartofthisreport.
AuditorBDOAudit(WA)PtyLtdcontinuesinofficeinaccordancewithsection327oftheCorporationsAct2001.
Thisreporthasbeenmadeinaccordancewitharesolutionofthedirectors.
Mark Caruso
Executive Chairman
Perth,WesternAustralia
29February2016
21
22 Consolidatedincomestatement
23 Consolidatedstatementofcomprehensiveincome
24 Consolidatedbalancesheet
25 Consolidatedstatementofcashflows
26 Consolidatedstatementofchangesinequity
27 Notestotheconsolidatedfinancialstatements
63 Directors’declaration
64 Auditor’sindependencedeclaration
65 Independentauditor’sreporttothemembers
Financial statements
22
Notes31 Dec 2015
$31 Dec 2014
$
Revenue from continuing operations
Sale of product 3 46,180,153 33,270,806
Other revenue 3 278,384 1,689,143
46,458,537 34,959,949
Other income 4 - 502
Expenses
Mining and processing costs 4 (30,546,945) (27,077,759)
Other expenses from ordinary activities
Administration expenditure 4 (2,411,730) (3,425,917)
Exploration and evaluation expenditure written off - (29,601)
Impairment charge (172,398) -
Finance costs 4 (396,315) (477,927)
Profit before income tax 12,931,149 3,949,247
Income tax (expense) / benefit 5 (2,354,364) 4,427,097
Profit after income tax 10,576,785 8,376,344
Profit is attributable to:
Owners of Mineral Commodities Ltd 10,576,785 8,376,344
Non-controlling interest - -
10,576,785 8,376,344
Cents Cents
Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the Company:
Basic earnings per share 28 2.61 2.07
Diluted earnings per share 28 2.57 2.01
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated income statementFortheyearended31December2015
23
Consolidated statement of comprehensive incomeFortheyearended31December2015
Notes31 Dec 2015
$31 Dec 2014
$
Profit for the year 10,576,785 8,376,344
Other comprehensive income
Changes in the fair value of available-for-sale financial assets 18 6,387 -
Exchange differences on translation of foreign operations 18 (10,240,709) (2,549,618)
Other comprehensive income for the year, net of tax 342,463 5,826,726
Total comprehensive income for the year 342,463 5,826,726
Total comprehensive income for the year is attributable to:
Owners of Mineral Commodities Ltd 342,463 5,826,726
Non-controlling interest - -
342,463 5,826,726
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
24
Notes31 Dec 2015
$31 Dec 2014
$
ASSETS
Current assets
Cash and cash equivalents 6 4,227,444 4,216,052
Trade and other receivables 7 2,348,737 3,084,929
Inventories 8 2,301,803 6,123,021
Available-for-sale financial assets 63,866 64,228
Total Current Assets 8,941,850 13,488,230
Non-current assets
Trade and other receivables 7 4,650,398 665,553
Property, plant and equipment 9 11,302,408 14,642,240
Mine development expenditure 10 5,217,072 5,003,743
Exploration expenditure 11 5,323,062 6,019,727
Mine properties 12 2,372,287 4,617,463
Deferred tax assets 13 3,517,369 4,036,956
Total Non-Current Assets 32,382,596 34,985,682
Total Assets 41,324,446 48,473,912
LIABILITIES
Current liabilities
Trade and other payables 14 3,153,297 5,683,843
Unearned revenue 15 - 4,130,000
Borrowings 16 2,970,210 7,235,413
Provisions 17 252,938 141,768
Total Current Liabilities 6,376,445 17,191,024
Non-current liabilities
Provisions 17 78,086 77,167
Long term borrowings 16 988,584 -
Deferred tax liabilities 13 2,204,851 -
Total non-current Liabilities 3,271,521 77,167
Total Liabilities 9,647,966 17,268,191
NET ASSETS 31,676,480 31,205,721
Equity
Contributed equity 18 63,437,092 63,437,092
Reserves 18 (20,508,920) (10,402,894)
Accumulated losses 18 (11,365,331) (21,942,116)
Parent entity interest 31,562,841 31,092,082
Non-controlling interest 18 113,639 113,639
Total equity 31,676,480 31,205,721
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Consolidated balance sheet asat31December2015
25
Consolidated statement of cash flowsFortheyearended31December2015
Notes31 Dec 2015
$31 Dec 2014
$
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax) 37,475,013 36,177,065
Payments to suppliers and employees (28,336,874) (27,737,444)
Net cash inflow from operating activities 19 9,138,139 8,439,621
Cash flows from investing activities
Exploration expenditure (845,318) (96,407)
Payments for property, plant and equipment (3,356,090) (1,863,340)
Payments for development expenditure (1,869,848) (3,198,386)
Payments for general fixed assets - (256,131)
Proceeds from sales of investments - 17,647
Interest received 8,113 12,889
Net cash outflow from investing activities (6,063,143) (5,383,728)
Cash flows from financing activities
Proceeds from the issue of shares and options (net of costs) - (3,235)
Proceeds from borrowings 3,203,052 2,907,010
Repayment of borrowings (5,139,048) (2,236,045)
Interest paid on borrowings (669,586) (944,926)
Net cash outflow from financing activities (2,605,582) (277,196)
Net increase in cash and cash equivalents 469,414 2,778,697
Cash and cash equivalents at beginning of financial year 6 4,216,052 1,503,316
Effects of exchange rate changes on cash and cash equivalents (458,022) (65,961)
Cash and cash equivalents at end of financial year 6 4,227,444 4,216,052
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
26
Consolidated statement of changes in equity
For the year ended 31 December 2015
Contributed equity
$Reserves
$
Accumulated losses
$Totals
$
Non-controlling
interest $
Total equity $
At 1 January 2015 63,437,092 (10,402,894) (21,942,116) 31,092,082 113,639 31,205,721
Profit for the year - - 10,576,785 10,576,785 - 10,576,785
Other comprehensive loss
for the year - (10,234,322) - (10,234,322) - (10,234,322)
Total comprehensive income / (loss) for the year - (10,234,322) 10,576,785 324,463 - 324,463
Transaction with owners in
their capacity as owners
Contribution of equity net
of transactions
Issue of unlisted options - 128,296 - 128,296 - 128,296
Balance at the end of the year 63,437,092 (20,508,920) (11,365,331) 31,562,841 113,639 31,676,480
For the year ended 31 December 2014
Contributed equity
$
Reserves
$
Accumulated losses
$
Totals
$
Non-controlling
interest
$
Total equity
$
At 1 January 2014 63,440,327 (7,853,276) (30,318,460) 25,268,591 113,639 25,382,230
Profit for the year - - 8,376,344 8,376,344 - 8,376,344
Other comprehensive loss
for the year - (2,549,618) - (2,549,618) - (2,549,618)
Total comprehensive income / (loss) for the year - (2,549,618) 8,376,344 5,826,726 - 5,826,726
Transaction with owners in their
capacity as owners
Contribution of equity net of
transactions
Issue of unlisted options (3,235) - - (3,235) - (3,235)
Balance at the end of the year 63,437,092 (10,402,894) (21,942,116) 31,092,082 113,639 31,205,721
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
27
Notes to the consolidated financial statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Theprincipalaccountingpoliciesadoptedin
thepreparationoftheseconsolidatedfinancial
statementsaresetoutbelow.Thesepolicieshave
beenconsistentlyappliedtoalltheyearspresented,
unlessotherwisestated.Thefinancialstatements
arefortheconsolidatedentityconsistingof
MineralCommoditiesLtd(the“Company”)andits
subsidiaries(togetherarereferredtohereafterasthe
“Group”).MineralCommoditiesLtdisanAustralian
domiciledpubliclistedcompany.
(a) Basis of preparationThesegeneralpurposefinancialstatementshave
beenpreparedinaccordancewithAustralian
AccountingStandardsandInterpretations
issuedbytheAustralianAccountingStandards
BoardandtheCorporationsAct2001.Mineral
CommoditiesLtdisafor-profitentityforthe
purposeofpreparingthefinancialstatements.
(i) CompliancewithIFRS
Theconsolidatedfinancialstatementsofthe
GroupalsocomplywithInternationalFinancial
ReportingStandards(IFRS)asissuedbythe
InternationalAccountingStandardsBoard(IASB).
(ii) Historicalcostconvention
Thefinancialstatementshavebeenpreparedona
historicalcostbasis,exceptforthefollowing:
• available-for-salefinancialassets,financial
assetsandliabilities(includingderivative
instruments)
• certainclassesofproperty,plantand
equipmentandinvestmentproperty–
measuredatfairvalue
• assetsheldforsale–measuredatfairvalue
lesscostofdisposal,and
(iii)Newandamendedstandardsadoptedbythe
Group
Therewerenonewstandardsoramendmentsto
standards,whichrequiredadoptionforthefirst
timefortheannualreportingperiodcommencing
1January2015.
(iv)Newstandardsandinterpretationsnotyet
adopted
Certainnewaccountingstandardsand
interpretationshavebeenpublishedthatare
notmandatoryfor31December2015reporting
periodsandhavenotbeenearlyadoptedbythe
Group.IthasbeendeterminedbytheGroupthat
thereisnoimpact,materialorotherwise,ofthe
abovestandardsonitsbusinessand,therefore,
nochangeisnecessarytotheGroupaccounting
policies.Refertonote1(x)forfurtherdetails.
(b) Principles of consolidation(i) Subsidiaries
Subsidiariesareallentities(includingstructured
entities)overwhichtheGrouphascontrol.The
GroupcontrolsanentitywhentheGroupis
exposedto,orhasrightsto,variablereturnsfrom
itsinvolvementwiththeentityandhastheability
toaffectthosereturnsthroughitspowertodirect
theactivitiesoftheentity.Subsidiariesarefully
consolidatedfromthedateonwhichcontrolis
transferredtotheGroup.Theyaredeconsolidated
fromthedatethatcontrolceases.
Intercompanytransactions,balancesand
unrealisedgainsontransactionsbetweenGroup
companiesareeliminated.Unrealisedlossesare
alsoeliminatedunlessthetransactionprovides
evidenceofanimpairmentofthetransferredasset.
Accountingpoliciesofsubsidiarieshavebeen
changedwherenecessarytoensureconsistency
withthepoliciesadoptedbytheGroup.
Non-controllinginterestsintheresultsand
equityofsubsidiariesareshownseparatelyinthe
consolidatedincomestatement,statementof
comprehensiveincome,statementofchangesin
equityandbalancesheetrespectively.
Asnotedinnote21(ii),theCompany,viaits
whollyownedsubsidiaryMRCResources
ProprietaryLimited(“MRCR”),hasa50%interest
intheissuedcapitalinMineralSandsResources
ProprietaryLimited(“MSR”).WhilsttheGroup
controls50%ofthesharevotingpower,ithas
beendeterminedthattheGroupeffectivelyhas
100%controlduetoitscontrolovertherelevant
activitiesforaccountingpurposes,controls
themanagementofMSR,andalsocontrolsthe
BoardofMSRduetoprovisionssetoutinthe
ShareholdersAgreemententeredintobetween
theshareholdersofMSR.
Thereforethesefinancialstatementsinclude
100%oftheresultsofMSR.Inadditiontothe
holdingoftheissuedcapital,theGroupalso
holdsClassAandBpreferencesharesinMSR
whicheffectivelyprovidesfortherepaymentof
thecapitalinvestmentanddeemedinvestment
bytheCompany’sBlackEmpowermentpartner.
DuetothetermsattachedtotheseAandB
PreferenceShares,theyarecategorisedasan
equityinstrument.AstheApreferenceshares
andBpreferenceshareswouldberedeemed
outofdistributableprofitsandnetassetsof
MSRbeforeallotherordinaryshareholders,until
suchtimeasthenetassetsexceedthevalueof
theunredeemedAandBpreferenceshares,no
valuehasbeenattributedtothenon-controlling
interest.Untilthattime,thenon-controlling
interesthasnorightstotheassetsorresults
oftheCompany,andthereforehasnotbeen
allocatedanyvalueinthesefinancialstatements.
28
(ii) Associates
Associatesareentitiesoverwhichthegroup
hassignificantinfluencebutnotcontrolorjoint
control.Thisisgenerallythecasewherethegroup
holdsbetween20%and50%ofthevotingrights.
Investmentsinassociatesareaccountedforusing
theequitymethodofaccounting(see(iii)below),
afterinitiallybeingrecognisedatcost.
(iii)Equitymethod
Undertheequitymethodofaccounting,the
investmentsareinitiallyrecognisedatcostand
adjustedthereaftertorecognisetheGroup’sshare
ofthepost-acquisitionprofitsorlossesofthe
investeeinprofitorloss,andthegroup’sshare
ofmovementsinothercomprehensiveincome
oftheinvesteeinothercomprehensiveincome.
Dividendsreceivedorreceivablefromassociates
andjointventuresarerecognisedasareduction
inthecarryingamountoftheinvestment.
WhentheGroup’sshareoflossesinanequity-
accountedinvestmentequalsorexceedsitsinterest
intheentity,includinganyotherunsecuredlong-
termreceivables,theGroupdoesnotrecognise
furtherlosses,unlessithasincurredobligationsor
madepaymentsonbehalfoftheotherentity.
Unrealisedgainsontransactionsbetweenthe
Groupanditsassociatesandjointventures
areeliminatedtotheextentoftheGroup’s
interestintheseentities.Unrealisedlosses
arealsoeliminatedunlessthetransaction
providesevidenceofanimpairmentofthe
assettransferred.Accountingpoliciesofequity
accountedinvesteeshavebeenchangedwhere
necessarytoensureconsistencywiththepolicies
adoptedbytheGroup.
TheGrouptreatstransactionswithnon-controlling
intereststhatdonotresultinalossofcontrolas
transactionswithequityownersoftheGroup.
Achangeinownershipinterestresultsinan
adjustmentbetweenthecarryingamountsof
thecontrollingandnon-controllingintereststo
reflecttheirrelativeinterestsinthesubsidiary.Any
differencebetweentheamountoftheadjustment
tonon-controllinginterestsandanyconsideration
paidorreceivedisrecognisedinaseparate
reservewithinequityattributabletoownersofthe
Company.
(c) Segment reportingOperatingsegmentsarereportedinamanner
thatisconsistentwiththeinternalreporting
providedtothechiefoperatingdecisionmaker.
Thechiefoperatingdecisionmakerhasbeen
identifiedasthedirectorsthatmakestrategic
decisions.
(d) Foreign currency translation(i) Functionalandpresentationcurrency
Itemsincludedinthefinancialstatementsofeach
oftheGroup’sentitiesaremeasuredusingthe
currencyoftheprimaryeconomicenvironment
inwhichtheentityoperates(‘thefunctional
currency’).Theconsolidatedfinancialstatements
arepresentedinUnitedStates(USD)dollars,
whichistheCompany’spresentationcurrency.
• assetsandliabilitiesforeachbalancesheet
presentedhavebeentranslatedattheclosing
rateatthedateofthatstatementofbalance
sheet;
• resultsforthecashflowstatementwere
translatedataveragedailyexchangerates
from1January2015to31December2015;and
• exchangedifferencesontranslatingincome,
expensesandmovementsinequityand
reservesatannualaverageexchangerates
andassetsandliabilitiesatclosingexchange
ratesfromfunctionalcurrencytopresentation
currencyaretakentotheforeigncurrency
translationreserveintheequitysectionand
underothercomprehensiveincome/(expense)
inthestatementofcomprehensiveincome.
(ii) Transactionandbalances
Foreigncurrencytransactionsaretranslatedinto
functionalcurrencyusingtheexchangeratesat
thedatesofthetransactions.Foreignexchange
gainsandlossesresultingfromthesettlement
ofsuchtransactionsandfromthetranslationof
monetaryassetsandliabilitiesdenominatedin
foreigncurrenciesatyearendexchangeratesare
generallyrecognisedinprofitorloss.Theyare
deferredinequityiftheyrelatetoqualifyingcash
flowhedgesandqualifyingnetinvestmenthedges
orareattributabletopartofthenetinvestmentin
aforeignoperation.
Foreignexchangegainsandlossesthatrelate
toborrowingsarepresentedintheincome
statement,withinfinancecosts.Allotherforeign
exchangegainsandlossesarepresentedinthe
incomestatementonanetbasiswithinother
incomeorotherexpenses.
Non-monetaryitemsthataremeasuredatfair
valueinaforeigncurrencyaretranslatedusing
theexchangeratesatthedatewhenthefairvalue
wasdetermined.Translationdifferencesonassets
andliabilitiescarriedatfairvaluearereportedas
partofthefairvaluegainorloss.Forexample,
translationdifferencesonnon-monetaryassets
andliabilitiessuchasequitiesheldatfairvalue
throughprofitorlossarerecognisedinprofit
orlossaspartofthefairvaluegainorloss
andtranslationdifferencesonnon-monetary
assetssuchasequitiesclassifiedasavailable-
for-salefinancialassetsarerecognisedinother
comprehensiveincome.
29
(ii) Groupcompanies
Theresultsandfinancialpositionofforeign
operations(noneofwhichhasthecurrencyofa
hyperinflationaryeconomy)thathaveafunctional
currencydifferentfromthepresentationcurrency
aretranslatedintothepresentationcurrencyas
follows:
• assetsandliabilitiesforeachbalancesheet
presentedaretranslatedattheclosingrateat
thedateofthatbalancesheet;
• incomeandexpensesforeachincome
statementandstatementofcomprehensive
incomearetranslatedataverageexchange
rates(unlessthisisnotareasonable
approximationofthecumulativeeffectofthe
ratesprevailingonthetransactiondates,in
whichcaseincomeandexpensesaretranslated
atthedatesofthetransactions);and
• allresultingexchangedifferencesare
recognisedinothercomprehensiveincome.
Onconsolidation,exchangedifferencesarising
fromthetranslationofanynetinvestmentin
foreignentities,andofborrowingsandother
financialinstrumentsdesignatedashedges
ofsuchinvestments,arerecognisedinother
comprehensiveincome.Whenaforeignoperation
issoldoranyborrowingsformingpartofthenet
investmentarerepaid,theassociatedexchange
differencesarereclassifiedtoprofitorloss,aspart
ofthegainorlossonsale.
Goodwillandfairvalueadjustmentsarisingonthe
acquisitionofaforeignoperationaretreatedas
assetsandliabilitiesoftheforeignoperationand
translatedattheclosingrate.
(e) Revenue RecognitionRevenueismeasuredatthefairvalueofthe
considerationreceivedorreceivable.Amounts
disclosedasrevenuearenetofreturns,trade
allowances,rebatesandamountscollectedon
behalfofthirdparties.
Revenueisrecognisedtotheextentthatitis
probablethattheeconomicbenefitswillflow
totheentityandtherevenuecanbereliably
measured.Thefollowingspecificrecognition
criteriamustalsobemetbeforerevenueis
recognised:
(i) Saleofgoods
Revenuefromthesaleofgoodsisrecognised
whenthereispersuasiveevidenceindicatingthat
therehasbeenatransferofrisksandrewards
tothecustomer,generallyfortheGroup,thisis
basedonfree-on-boardsaleswheretransferof
risksandrewardspassesatportoforigin.Sales
revenuecomprisesgrossrevenueearnedfrom
theprovisionofproducttocustomers.Salesare
initiallyrecognisedatestimatessalesvaluewhen
theproductisdelivered.Adjustmentsaremade
forvariationsinmetalsprice,assay,weightand
moisturecontentbetweenthetimeofdelivery
andthetimeoffinalsettlementofsalesproceeds.
(ii) StockpiledRevenue
Revenuefromthestockpilingofgoodsis
recognisedwhenthereisevidencethatthere
hasbeenatransferofrisksandrewardsto
thecustomer.Thisisbasedonacontractual
obligationofthecustomertotakefinaldelivery
andmakefullandfinalpaymentforallamounts
deliveredtothestockpile.
(iii)Unearnedrevenue
Unearnedrevenuerepresentsrevenuethat
hasbeenreceivedbytheGroupforrequested
goodswheretherisksandrewardshavenot
yetbeentransferredasthegoodshavenot
beensubstantiallyprovided.Deferredrevenue
isrecognisedasrevenuesubsequenttothisin
accordancewiththeGroup’srevenuerecognition
policy.
(iv)Interestincome
Interestandotherincomearerecognisedasit
accruesonatimeproportionbasisusingthe
effectiveinterestmethod.
(f) Income taxTheincometaxexpenseorrevenuefortheperiod
isthetaxpayableonthecurrentperiod’staxable
incomebasedontheapplicableincometax
rateforeachjurisdictionadjustedbychangesin
deferredtaxassetsandliabilitiesattributableto
temporarydifferencesandtounusedtaxlosses.
Thecurrentincometaxchargeiscalculatedon
thebasisofthetaxlawsenactedorsubstantively
enactedattheendofthereportingperiodinthe
countrieswheretheCompany’ssubsidiariesand
associatesoperateandgeneratetaxableincome.
Managementperiodicallyevaluatespositions
takenintaxreturnswithrespecttosituations
inwhichapplicabletaxregulationissubjectto
interpretation.Itestablishesprovisionswhere
appropriateonthebasisofamountsexpectedto
bepaidtothetaxauthorities.
Deferredincometaxisprovidedinfull,usingthe
liabilitymethod,ontemporarydifferencesarising
betweenthetaxbasesofassetsandliabilitiesand
theircarryingamountsintheconsolidatedfinancial
statements.However,deferredtaxliabilitiesarenot
recognisediftheyarisefromtheinitialrecognition
ofgoodwill.Deferredincometaxisalsonot
accountedforifitarisesfrominitialrecognition
ofanassetorliabilityinatransactionotherthan
abusinesscombinationthatatthetimeofthe
transactionaffectsneitheraccountingnortaxable
profitorloss.Deferredincometaxisdetermined
usingtaxrates(andlaws)thathavebeenenacted
orsubstantiallyenactedbytheendofthe
30
reportingperiodandareexpectedtoapplywhen
therelateddeferredincometaxassetisrealisedor
thedeferredincometaxliabilityissettled.
Deferredtaxassetsarerecognisedfordeductible
temporarydifferencesandunusedtaxlossesonly
ifitisprobablethatfuturetaxableamountswill
beavailabletoutilisethosetemporarydifferences
andlosses.Deferredtaxliabilitiesandassets
arenotrecognisedfortemporarydifferences
betweenthecarryingamountandtaxbases
ofinvestmentsinforeignoperationswherethe
Companyisabletocontrolthetimingofthe
reversalofthetemporarydifferencesanditis
probablethatthedifferenceswillnotreversein
theforeseeablefuture.
Deferredtaxassetsandliabilitiesareoffset
whenthereisalegallyenforceablerighttooffset
currenttaxassetsandliabilitiesandwhenthe
deferredtaxbalancesrelatetothesametaxation
authority.Currenttaxassetsandtaxliabilitiesare
offsetwheretheentityhasalegallyenforceable
righttooffsetandintendseithertosettleonanet
basis,ortorealisetheassetandsettletheliability
simultaneously.
From1January2014,theCompanyanditswholly-
ownedAustraliancontrolledentitieshaveformed
anincometaxconsolidatedgroupunderthetax
consolidationregimewithMineralCommodities
Ltdastheheadentity.Theheadentityandeach
subsidiaryinthetaxconsolidatedgroupcontinue
toaccountfortheirowncurrentanddeferredtax
amounts.Thetaxconsolidatedgrouphasapplied
the“separatetaxpayerwithingroup”approachin
determiningtheappropriateamountoftaxesto
allocatetomembersofthetaxconsolidatedgroup.
Inadditiontoitsowncurrentanddeferredtax
amount,theheadentityalsorecognisesthe
currenttaxliabilities(orassets)andthedeferred
taxassetsarisingfromunusedtaxlossesand
unusedtaxcreditsassumedfromeachsubsidiary
inthetaxconsolidatedgroup.
Assetsorliabilitiesarisingunderthetaxfunding
agreementswiththetaxconsolidatedentities
arerecognisedasamountsreceivablefromor
payabletootherentitiesinthetaxconsolidated
group.Thetaxfundingarrangementensurethat
theintercompanychargeequalsthecurrenttax
liabilityorbenefitofeachtaxconsolidatedgroup
member,resultinginneitheracontributionbythe
headentitytothesubsidiariesnoradistribution
bythesubsidiariestotheheadentity.
(i) Investmentallowancesandsimilartax
incentives
CompanieswithintheGroupmaybeentitled
toclaimspecialtaxdeductionsforinvestments
inqualifyingassetsorinrelationtoqualifying
expenditure(eg.theResearchandDevelopment
TaxIncentiveregimeinAustraliaorother
investmentallowances).TheGroupaccounts
forsuchallowancesastaxcredits,whichmeans
thattheallowancereducesincometaxpayable
andcurrenttaxexpense.Adeferredtaxasset
isrecognisedforunclaimedtaxcreditsthatare
carriedforwardasdeferredtaxassets.
(g) LeasesLeasesofproperty,plantandequipmentwhere
theGroup,aslessee,hassubstantiallyalltherisks
andrewardsofownershipareclassifiedasfinance
leases.Financeleasesarecapitalisedatthelease’s
inceptionatthefairvalueoftheleasedproperty
or,iflower,thepresentvalueoftheminimumlease
payments.Thecorrespondingrentalobligations,
netoffinancecharges,areincludedinothershort-
termandlong-termpayables.Eachleasepayment
isallocatedbetweentheliabilityandfinancecost.
Thefinancecostischargedtotheprofitorloss
overtheleaseperiodsoastoproduceaconstant
periodicrateofinterestontheremainingbalance
oftheliabilityforeachperiod.Theproperty,plant
andequipmentacquiredunderfinanceleasesis
depreciatedovertheasset’susefullifeoroverthe
shorteroftheasset’susefullifeandtheleaseterm
ifthereisnoreasonablecertaintythattheGroup
willobtainownershipattheendoftheleaseterm.
Leasesinwhichasignificantportionoftherisks
andrewardsofownershiparenottransferredto
theGroupaslesseeareclassifiedasoperating
leases.Paymentsmadeunderoperatingleases
(netofanyincentivesreceivedfromthelessor)
arechargedtoprofitorlossonastraight-line
basisovertheperiodofthelease.
Leaseincomefromoperatingleaseswherethe
Groupisalessorisrecognisedinincomeon
astraight-linebasisovertheleaseterm.The
respectiveleasedassetsareincludedinthe
balancesheetbasedontheirnature.
(h) Impairment of assetsGoodwillandintangibleassetsthathavean
indefiniteusefullifearenotsubjecttoamortisation
andaretestedannuallyforimpairment,ormore
frequentlyifeventsorchangesincircumstances
indicatethattheymightbeimpaired.Other
assetsaretestedforimpairmentwheneverevents
orchangesincircumstancesindicatethatthe
carryingamountmaynotberecoverable.An
impairmentlossisrecognisedfortheamount
bywhichtheasset’scarryingamountexceeds
itsrecoverableamount.Therecoverableamount
istheh
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