December 2010 Half Yearly Report and Accounts

Transcription

Dragon Mountain Gold Limited
ABN 82 111 005 282
and Controlled Entities
Interim Financial Report
For the Half-Year Ended 31 December 2010
This interim financial report does not include all the notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2010 and any public
announcement made by Dragon Mountain Gold Limited during the interim reporting period in accordance with the continuous
disclosure requirements of the Corporations Act 2001.
ABN 82 111 005 282
CONTENTS
Directors’ Report
1
Auditor’s Independence Declaration
5
Consolidated Interim Comprehensive Income Statement
6
Consolidated Interim Statement of Financial Position
7
Consolidated Interim Statement of Changes in Equity
8
Consolidated Interim Cash Flow Statement
9
Notes to the Financial Statements
10
Directors’ Declaration
15
Independent Auditor’s Review Report
16
ABN 82 111 005 282
DIRECTORS’ REPORT
Your Directors present their report together with the financial report of the Group (“DMG” or “the Company”), being Dragon
Mountain Gold Limited and its controlled entities for the six months ended 31 December 2010.
1.
Directors
The names of Directors in office at any time during or since the end of the interim period are:
Robert Gardner
John Lewis*
Paul Piercy
Ben Zhu**
*
**
Resigned 14 February 2011
Appointed 1 February 2011
2.
Operating Results
The consolidated loss of DMG for the interim period excluding minority equity interests amounted to $1.04 million (2009: $1.63
million).
3.
Review of Operations
CORPORATE
Since 30 June 2010 the Company has converted Convertible Notes to the value of $1.95 million into 10,947,672 shares. The
Convertible Notes were part of a group of notes totalling $4.40 million issued by the Company in 2009. Notes valued at
$450,000 remain outstanding.
On 6 July 2010 the Company converted the balance of the La Jolla Cove Investors Inc (“La Jolla”) Convertible Note in the
amount of $292,046 into 2,050,886 shares. This was the final conversion pursuant to the US$1.5 million Convertible Note
between La Jolla and DMG. The Company did not exercise its rights to a second note and as such the Company’s
arrangements with La Jolla have been completed.
During the September Quarter DMG appointed Mr Glenn Sheldon as General Manager China and Mr Steve Allnutt as
Exploration Manager China. Mr Sheldon was instrumental in Sino Gold Mining Limited’s original exploration success in China.
Together Mr Sheldon and Mr Allnutt provide DMG with significant geological expertise and in excess of 30 years experience in
mining in China and around the world. With the assistance of a number of new Chinese staff, Mr Sheldon and Mr Allnutt are
supervising and managing the new exploration program and will be instrumental in assisting the Board to maximise the
valuation of the Lixian Gold Project in the future.
In October 2010 DMG entered an Exclusivity Agreement with a Chinese investor in relation to its Lixian Gold Project. The
Agreement was for a period of 28 days during which time the investor was granted full access to Company information for the
purpose of preparing and submitting a formal offer to the Company. The exclusivity period was extended by DMG in November
2010. Pursuant to the terms of the Agreement, the Company agreed to suspend all contact with third parties relating to
investments in the Company.
In November 2010 DMG received a non-binding conditional proposal from a Chinese investor to acquire 100% of DMG.
Pursuant to the terms of the non-binding proposal, each shareholder of DMG would be offered an indicative cash price of $0.55
for each DMG share held. The proposal was subject to a number of pre-conditions including:
•
DMG and the Chinese investor completing due diligence investigations to their satisfaction;
•
The parties negotiating and executing an implementation agreement for the proposed Scheme of Arrangement; and
•
DMG and the Chinese investor commencing and reaching commercial agreement with minority stakeholders of the
DMG projects.
•
The due diligence investigations will include DMG satisfying itself of the counterparty's ability to fund the proposal.
Page 1 of 16
ABN 82 111 005 282
DIRECTORS’ REPORT
DMG is continuing to negotiate with the Chinese investor and is working towards the removal of the preconditions of the offer,
in order for a binding agreement to be finalised. However, as the exclusivity period has lapsed, DMG is also having discussions
with other interested parties.
EXPLORATION AND DEVELOPMENT
Liba Licences
During the December Quarter, work in regard to finalising the formal reports to meet Chinese code and reporting standards was
completed for the Wa Wu Gou Licence, located between the established Zhao Gou and Ma Gou Licences.
A review of all past work at both the Zhao Gou and Ma Gou Licences was also undertaken. Work progressed on the geological
logging and interpretations to meet Chinese Resource reporting standards. Results and scope of works from planning for infill
drilling at the Ma Gou main zone of mineralisation together with the less explored southern zone, completed in the prior quarter,
was used as a basis for discussions with selected drilling contractors capable of delivering quality drilling services. This
programme, to be undertaken in 2011, will have the potential to deliver an upgrade in resource classification, both to JORC and
Chinese code, adding value to the deposit.
Jinshan Licences
In the past the Company has concentrated exploration expenditure on the Liba Licence where proven JORC resources of
approximately 2.80 million ounces Au (52.29 million tonnes at 1.6 g/t Au using a cut-off grade of 0.5) have been defined. DMG
plans to continue the work required to develop these resources but will also focus its exploration effort on the less explored
Jinshan Licences which cover far greater area (32.5 km2) than Liba (5.14 km2). When compared to Liba the existing
exploration results at Jinshan show that Jinshan has significant potential.
During the December Quarter an exploration program was designed such that it would provide information necessary for the
assessment of JORC standard resources on orebodies which currently have only Chinese standard resources.
The drilling and other in ground work provided the Company with the technical information necessary for the extension of the
two yearly licence renewals which were completed and provided to MOLAR before the year end.
Prior to the exploration program started in October, the Company explored the eastern portion of the Jinshan 30 mineralised
zone only. This structurally controlled shear-hosted mineralisation has strike extent in excess of 1,600m. Recent drilling by the
Company had shown mineralisation extends to depths in excess of 250m and remains open to the north. Low level working
indicates that there may be zones of mineralisation, of similar strike, extent and grade to the Jinshan main zone, at several
localities within the Jinshan Licences that to date have not been drill tested.
The exploration work was undertaken by the Gansu Non-Ferrous Metallurgical Bureau on the four Jinshan Licences. The work
was planned such that the results of the exploration met both foreign and Chinese reporting standards.
Drilling on the western extension of the Jinshan 30 mineralisation commenced in the first week of September. The fourth hole
of the programme was completed in the current quarter, for a total of 500 metres of diamond drilling. Mineralisation was
confirmed in an area 240 to 400m west of DMG’s 2008 Jinshan 30 drilling program.
Drill hole ZK 8-10 intersected significant grade gold mineralisation over 11.8m at 4.45 g/t Au (including 3.3m at 9.77 g/t Au) at a
depth down hole of 101.7 metres. Further sub-vertical lenses of mineralisation were intersected deeper in this hole with a 17.8
metre down hole intersection reporting 0.85 g/t Au at a depth of 134.5m and a 9 metre intersection reporting 1.15 g/t Au at
181.6 metres depth (Table 1 – significant intersections for all holes highlighted).
Page 2 of 16
ABN 82 111 005 282
DIRECTORS’ REPORT
Table 1: Significant Mineralised Intersections Using Minimum 0.2 g/t Au cut-off
Hole ID
Samp No
ZK4-10
ZK0-10
ZK4-11
ZK4-11
ZK4-11
ZK4-11
ZK4-11
ZK8-10
ZK8-10
ZK8-10
ZK8-10
ZK8-10
Including
ZK8-10
ZK8-10
ZK8-10
ZK8-10
ZK8-10
From
To
Recovery %
Interval
Au g/t
55.70
35.62
7.10
58.40
76.50
113.00
121.50
23.80
64.20
81.90
88.50
101.70
103.20
124.80
134.50
164.10
177.60
181.60
71.30
37.20
10.10
62.90
80.60
115.70
123.00
34.30
73.20
85.50
94.50
113.50
106.50
127.80
152.30
165.30
179.10
190.60
84.5
90.7
93.3
84.5
92.7
92.6
86.7
82.9
92.2
94.4
88.3
91.5
90.9
90.0
90.0
91.7
86.7
92.2
15.60
1.58
3.00
4.50
4.10
2.70
1.50
10.50
9.00
3.60
6.00
11.80
3.30
3.00
17.80
1.20
1.50
9.00
0.68
0.58
0.78
0.60
0.47
1.60
3.15
0.39
0.90
0.33
0.70
4.45
9.77
0.50
0.85
0.98
1.08
1.15
Exploration including geological mapping, trench sampling and IP traversing on the three smaller Licences to the west was also
completed during the Quarter. Drill testing of identified targets in these Licences was undertaken. Two diamond holes were
drilled at Dazhuangli for a total of 273 metres. Results from the second hole ZKD-2 returned the following results from spotted
phyllitic schists (Table 2):
Table 2: Significant Mineralised Intersections Using Minimum 0.2 g/t Au cut-off
Hole ID
ZKD-2
ZKD-2
ZKD-2
From
10.00
34.00
50.50
To
11.50
35.50
53.50
Interval
1.50
1.50
3.00
Au g/t
0.74
0.96
1.64
Single diamond holes drilled on the western end of the Shibuzi Licence (300 metres) and Chenjiagou (224.6 metres) Licence
reported no significant gold mineralisation.
However, these were vertical holes due to access difficulties and significant exploration potential exists on the Shibuzi Licence
with many old mine workings across the licence. Exploration at Shibuzi in 2011 will focus on the eastern end of the Licence
where previous local activity will provide the exploration machinery better access.
A detailed review of all 2010 exploration results and plans for future exploration programs will be undertaken in the coming
Quarter.
SUBSEQUENT EVENTS
On 1 February 2011 Mr Ben Zhu accepted an appointment as Director of Dragon Mountain Gold Limited. On 14 February 2011
Mr John Lewis resigned as a Director and Company Secretary of DMG.
Page 3 of 16
ABN 82 111 005 282
DIRECTORS’ REPORT
No matters or circumstances other than the above events have arisen since the end of the six months which significantly
affected or may significantly affect the operations of the economic entity, the results of those operations, or the state of affairs
of the economic entity in future financial years.
4.
Rounding of Amounts
The company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission.
Amounts in the Directors’ Report and the interim financial report have been rounded off to the nearest thousand dollars in
accordance with that Class Order, unless otherwise indicated.
5.
The lead Auditor’s Independence Declaration for the interim period ended 31 December 2010 has been received and can be
found on page 5 of the Directors’ Report.
Robert Gardner
Executive Director
Dated this 16th day of March 2011
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ABN 82 111 005 282
DIRECTORS’ REPORT
6.
Page 5 of 16
ABN 82 111 005 282
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR HALF-YEAR ENDED 31 DECEMBER 2010
Note
Consolidated Group
31 Dec 2010
31 Dec 2009
$’000
$’000
Employee benefits expenses
(344)
(487)
Depreciation expenses
(40)
(46)
Administration expenses
(705)
(653)
Marketing expenses
Other expenses
Share based payment expenses
4
Impairment of exploration expenditure
Results from operating activities
Finance income
-
-
(2)
(2)
(116)
(59)
(16)
(30)
(1,223)
(1,277)
23
(250)
Borrowing expenses
(304)
(355)
Net finance income
(281)
(605)
(1,504)
(1,882)
Loss before income tax
Income tax expense
Loss for the period
-
-
(1,504)
(1,882)
(4,191)
(3,217)
Other comprehensive income
Adjustment from translation of foreign controlled entities
Income tax relating to components of other comprehensive income
Total comprehensive income/(loss) for the period
Loss attributable to non-controlling interest
Loss attributable to owners of the parent
Total comprehensive income attributable to non-controlling interest
-
-
(5,695)
(5,099)
(460)
(256)
(1,044)
(1,626)
(167)
(808)
Total comprehensive income attributable to owners of the parent
(5,528)
(4,291)
Basic loss per share (cents per share)
(2.57)
(0.60)
Diluted earnings per share (cents per share)
(2.57)
(0.60)
The above consolidated interim comprehensive income statement should be read in conjunction with the accompanying notes.
Page 6 of 16
ABN 82 111 005 282
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010
Note
31 Dec 2010
30 Jun 2010
$’000
$’000
Cash and cash equivalents
1,708
2,450
Trade and other receivables
37
22
Other current assets
521
85
2,266
2,557
ASSETS
CURRENT ASSETS
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation expenditure
5
999
1,305
36,840
40,018
TOTAL NON-CURRENT ASSETS
37,839
41,323
TOTAL ASSETS
40,105
43,880
Trade and other payables
1,609
2,047
Interest bearing liabilities
3,472
3,849
32
41
LIABILITIES
CURRENT LIABILITIES
Employee benefits
Unearned income
11
TOTAL CURRENT LIABILITIES
500
-
5,613
5,937
TOTAL LIABILITIES
5,613
5,937
NET ASSETS
34,492
37,943
Issued capital
53,784
51,656
Reserves
7,331
7,508
(27,376)
(22,141)
33,739
37,023
EQUITY
Accumulated losses
Total equity attributable to owners of the parent
Non-controlling interest
TOTAL EQUITY
753
920
34,492
37,943
The above consolidated interim balance sheet should be read in conjunction with the accompanying notes.
Page 7 of 16
ABN 82 111 005 282
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
Issued
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Share Based
Payment
Reserve
Noncontrolling
Interests
Total
$’000
$’000
$’000
$’000
$’000
$’000
45,307
(17,338)
6,219
1,833
2,121
38,143
317
-
-
-
-
317
Total comprehensive income
attributable to owners of the parent
-
(1,626)
(2,665)
-
-
(4,291)
attributable to non-controlling
interests
-
-
-
-
(808)
(808)
CONSOLIDATED GROUP
Balance at 30 June 2009
Shares Issued
Share based payment expense
-
-
-
59
-
59
Balance at 31 December 2009
45,624
(18,964)
3,554
1,892
1,313
33,419
Original Balance at 30 June 2010
51,656
(22,141)
5,521
1,987
920
37,943
Shares Issued
2,128
-
-
-
-
2,128
attributable to owners of the parent
-
(5,235)
(293)
-
-
(5,528)
attributable to non-controlling
interests
-
-
-
-
(167)
(167)
Share based payment expense
-
-
-
116
-
116
Balance at 31 December 2010
53,784
(27,376)
5,228
2,103
753
34,492
The above consolidated interim statement of changes in equity should be read in conjunction with the accompanying notes.
Page 8 of 16
ABN 82 111 005 282
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
Consolidated Group
31 Dec 2010
31 Dec 2009
$’000
$’000
(1,005)
(1,634)
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Interest paid
Receipt from exclusivity agreement
11
Net cash used in operating activities
23
6
(31)
(2)
500
(1,513)
(1,630)
Purchase of property, plant and equipment
-
(1)
Proceeds from sale of property, plant and equipment
-
10
Payments for exploration expenditure
(869)
(1,085)
Net cash used in investing activities
(869)
(1,076)
604
-
604
2,149
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Net cash provided by financing activities
Net increase/(decrease) in cash held
(778)
(557)
Cash at beginning of half year
2,450
2,091
Effect of exchange rate fluctuations on cash held
Cash at end of financial year
36
(17)
1,708
1,517
The above consolidated interim cash flow statement should be read in conjunction with the accompanying notes.
Page 9 of 16
ABN 82 111 005 282
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1.
REPORTING ENTITY
Dragon Mountain Gold Limited (the “Company”) is a company incorporated and domiciled in Australia. The address of the
Company’s registered office is Suite 4, 62-64 Ord Street, West Perth, Western Australia 6005. The consolidated financial
statements of the Company as at and for the interim period ended 31 December 2010 comprise the Company and its controlled
entities (together referred to as the “Group” and individually as “Group entities”). The Group primarily is involved in gold
exploration, evaluation and development in China.
NOTE 2.
BASIS OF PREPARATION
Statement of Compliance
The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and
AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting
Standard IAS 34 Interim Financial Reporting. The half-year report does not include notes of the type normally included in an
annual financial report and shall be read in conjunction with the most recent annual financial report.
The financial statements were approved by the Board of Directors on 16th March 2011.
Functional and Presentation Currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.
Going Concern
The Interim Financial Statements have been prepared on a going concern basis that contemplates the continuity of normal
business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business.
The Group has a working capital deficiency at 31 December 2010 of $3.35m which principally comprises cash of $1.7m, trade
and other payables of $1.6m and short term funding liabilities of $3.5m. Of the short term funding liabilities, $2.0m relates to a
Loan provided by a third party. The loan has been extended until October 2011 and has therefore been disclosed as a current
liability.
In order to facilitate the Group’s objective of the construction of a processing plant at its gold mining leases in China, the Board
has and will continue to consider the following steps to correct the working capital deficiency:
•
Negotiating improved terms of trade with creditors;
•
Seeking short term funding to meet expenses;
•
Negotiating with parties interested in partnering the Company in the development of the projects in China.
Seeking short term funding to meet expenses
The Company has undertaken the following fundraising activities since 30 June 2010:
•
The Company raised $0.604 million via the conversion of options issued; and
•
The Board continues to consider options for further capital raisings in the future.
Negotiating with parties interested in partnering the Company in the development of the projects in China
The short term funds generated above will fund the Company while it concludes negotiations with parties interested in
partnering with the Company in developing the projects in China and to specifically assist by providing the funding for the next
phase of its development, being the construction of a processing plant in China. The Company is in advanced negotiations with
a number of these parties.
The Directors have a reasonable expectation that the completion of the funding arrangements above will be successful and
thereby allow the Company to fund settlement of current obligations and continue its operations and developments in China.
Alternatively, the Company has the option of raising funds through the issue of additional equity in the company or through
trading its assets.
However, if the Company is unsuccessful in raising sufficient equity or correcting the working capital deficiency, there is
significant doubt about the consolidated entity’s ability to continue as a going concern and therefore whether it will realise its
Page 10 of 16
ABN 82 111 005 282
assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. No
allowances have been made in the financial report for such adjustments.
NOTE 3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the
Group in its consolidated financial report as at and for the year ended 30 June 2010.
Use of Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods affected.
In preparing this consolidated interim financial report, the significant judgements made by management in applying the Group’s
accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated
financial report as at and for the year ended 30 June 2010.
Financial Risk Management
The Group’s financial risk management objectives and policies are consistent with that disclosed in the consolidated financial
report as at and for the year ended 30 June 2010.
Derivative financial instruments
Derivatives are initially recognised at fair value; attributable transaction costs are recognised in profit or loss when incurred.
Subsequent to initial recognition, derivatives are measured at fair value and changes are accounted for in the income
statement.
Accounting Standards not Previously Applied
The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent
with those adopted and disclosed in the Groups’ 2010 annual financial report for the financial year ended 30 June 2010, except
for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian
Accounting Standards and with International Financial Reporting Standards.
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.
New and revised Standards and amendments thereof and Interpretations effective for the current reporting period that are
relevant to the Group include:
•
Amendments to AASB 5, 8, 101, 107, 117, 118, 136 and 139 as a consequence of AASB 2009-5 Further Amendments to
Australian Accounting Standards arising from the Annual Improvements Project.
AASB 2009-5 Introduces amendments into Accounting Standards that are equivalent to those made by the IASB under its
program of annual improvements to its standards. A number of the amendments are largely technical, clarifying particular
terms, or eliminating unintended consequences. Other changes are more substantial, such as the current/non-current
classification of convertible instruments, the classification of expenditure on unrecognised assets in the statement of cash flows
and the classification of leases of land and buildings.
The adoption of these amendments has not resulted in any changes to the Group’s accounting policies and has no affect on
the amounts reported for the current or prior periods.
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ABN 82 111 005 282
NOTE 4.
SHARE BASED PAYMENT EXPENSES
The terms and conditions of the Options granted in the six months ended 31 December 2010 are as follows:
Type of Option
Number Granted
Grant Date
Expiry Date
Exercise price
$
Unlisted Performance
1,830,000
26/11/2010
16/04/2015
0.20
200,000
16/04/2010
16/04/2015
0.20
1,830,000
26/11/2010
16/04/2015
0.25
200,000
16/04/2010
16/04/2015
0.25
The options outstanding at 31 December 2010 had a weighted average exercise price of $0.33 and a weighted average
remaining contractual life of 2.54 years. Exercise prices range from $0.20 to $0.85.
The basis for measuring fair value is consistent with that disclosed in the consolidated financial report as at and for the year
ended 30 June 2010.
NOTE 5.
EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are
only carried forward to the extent where right of tenure of the area of interest is current and that they are expected to be
recouped through sale on the successful development of that area of interest or where exploration and evaluation activities in
the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically
recoverable reserves.
When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated costs in respect of
that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each
accounting period and accumulated costs written off to the extent that they will not be recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production
commences.
Opening balance
Additions
Consolidated
Consolidated
31 Dec 2010
30 June 2010
$’000s
$’000s
40,018
39,809
854
2,064
Effect of movements on exchange rates
(4,032)
(1,855)
Closing balance
36,840
40,018
NOTE 6.
SEGMENT INFORMATION
The Company has identified its operating segments based on the internal reports that are reviewed and used by the board of
directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
The Company currently operates in one business segment being that of mineral exploration. The financial information
presented in the statement of comprehensive income and statement of financial position is the same as that presented to the
chief operating decision maker.
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ABN 82 111 005 282
NOTE 7.
SHARE CAPITAL
During the reporting period the Company issued shares as a result of conversion of convertible notes and exercise of options
as follows:
Balance at the beginning of the year
Consolidated
Consolidated
31 Dec 2010
30 June 2010
Number
Number
210,828,943
178,334,317
Shares issued during the year
Direct placement at 20 cents each
-
10,000,000
Conversion of Convertible Notes
12,998,558
22,494,626
Exercise of options
2,470,000
-
226,297,501
210,828,943
Balance at the end of the year
Balance at the beginning of the year
$’000
$’000
51,656
45,307
Shares issued during the year
Direct placement at 20 cents each
Conversion of Convertible Notes
Exercise of options
Balance at the end of the year
NOTE 8.
-
2,000
1,634
4,349
494
-
53,784
51,656
RELATED PARTIES
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
Directors and key management personnel receive compensation in the form of short-term employee benefits, post-employment
benefits and share based payments (see note 4).
Options were granted to Directors and key management personnel during the 6 months ended 31 December 2010 as
compensation as follows:
Name
Number Granted
Grant Date
Expiry Date
Exercise price
$
John Lewis
1,500,000
John Lewis
1,500,000
26/11/2010
30/04/2015
0.20
26/11/2010
30/04/2015*
Paul Piercy
0.25
330,000
26/11/2010
30/04/2015
Paul Piercy
0.20
330,000
26/11/2010
30/04/2015
0.25
*Second tranche for John Lewis has been cancelled as a performance criterion has not been met.
Since the end of the previous financial year the following contract was entered into between a Director and the Company;
Highhope Holdings Pty Ltd
Highhope Holdings Pty Ltd (“Highhope”) is controlled by Robert Gardner, the Company’s Executive Director. Highhope loaned
an amount of $1.0 million to the Company in November 2010. The loan was made under terms equivalent to those in an armslength transaction and is to be repaid after 12 months or upon settlement of the sale to a third party. The loan is interest bearing
at 10% per annum, unsecured and subject to fixed repayment terms.
With the exception of the transactions below, no other material contracts involving directors’ interests existed at 31 December
2010.
TheGold Corporation Pty Ltd
TheGold Corporation Pty Ltd is controlled by Robert Gardner, the Company’s Executive Chairman.
Page 13 of 16
ABN 82 111 005 282
Consulting services provided by Mr Gardner in respect of the Company’s operations are paid to TheGold Corporation Pty Ltd.
For the six months ended 31 December 2010, an amount of $177,134 was recognised as an expense in respect of these
consulting services.
The Lewis Corporation Pty Ltd
The Lewis Corporation Pty Ltd is controlled by John Lewis, the Company’s former Executive Director.
Consulting services provided by Mr Lewis in respect of the Company’s operations are paid to The Lewis Corporation Pty Ltd.
For the six months ended 31 December 2010, an amount of $92,650 was recognised as an expense in respect of these
consulting services.
Subsidiaries
Loans were made by the Company to subsidiaries and by subsidiaries to subsidiaries to fund the Company’s operations with
following outstanding balances:
•
Loan to Warrior Advance Pty Ltd: $21,284,461
The loan is repayable at call. The Parent Company does not expect to recall the loan within the next twelve months.
NOTE 9. CONTINGENT LIABILITIES
There has been no change in contingent liabilities since the last annual reporting date.
NOTE 10. EVENTS SUBSEQUENT TO BALANCE DATE
Since the balance date, the following matters have taken place:
•
Conversion of 20 Convertible Notes and interest to a total of $230,000
•
550,000 options were exercised for a total price of $110,000
No other matters or circumstances other than the above events have arisen since the end of the half year which significantly
affected or may significantly affect the operations of the economic entity, the results of those operations, or the state of affairs
of the economic entity in future financial years.
NOTE 11. UNEARNED INCOME
During the reporting period the Company received $500,000 as consideration for granting an exclusivity period to a potential
buyer. The terms of the agreement were as follows;
•
$500,000 would be offset against purchase price if buyer finalised the purchase of the Company.
•
If the Company withdrew from negotiations, the $500,000 will be converted to share capital at a rate of 20cents per share.
Although the exclusivity period lapsed on 5th November 2010, the balance is currently treated as unearned income as
negotiations are still continuing and none of the above mentioned events have occurred at or since balance date.
Page 14 of 16
ABN 82 111 005 282
DIRECTORS’ DECLARATION
In the opinion of the Directors of Dragon Mountain Gold Limited (the “Company”):
1.
2.
The financial statements and notes set out on pages 6 to 14, are in accordance with the Corporations Act 2001,
including:
a.
Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its
performance, for the half year ended on that date; and
b.
Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001;
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
Signed in accordance with a resolution of Directors:
Robert Gardner
Executive Director
Dated this 16th day of March 2011
Page 15 of 16
ABN 82 111 005 282
INDEPENDENT AUDITOR’S REVIEW REPORT
Page 16 of 16

December 2010 Half Yearly Report and Accounts

Transcription

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