Untitled - Aditya Birla Minerals

Transcription

Mr G.D. Birla & Mr Aditya Birla,
our founding fathers.
We live by their values.
Integrity, Commitment,
Passion, Seamlessness
and Speed
Mr G.D. Birla & Mr Aditya Birla.
Mr Kumar Mangalam Birla.
CORPORATE DIRECTORY
DIRECTORS
Mr Debu Bhattacharya
Chairman
Mr Sanjay Loyalka
Chief Executive Officer and Managing Director
Mr Kanaga Dharmananda
Independent Non-Executive Director
Mr Andy Hogendijk
Independent Non-Executive Director
Mr Mysore Prasanna
Non-Executive Director
COMPANY SECRETARY
Mr Peter Torre
KEY EXECUTIVES
Mr Peter McMickan
General Manager – Geology and Business Development
Mr Mark Griffiths
General Manager – Nifty Copper Operation
Mr Peter Mulroney
General Manager – Mt Gordon Copper Operation
Mr Sanjay Bhartia
Assistant Vice President, Finance and Commercial
Ms Susan Turnley
Corporate Human Resource Manager
REGISTERED AND PRINCIPAL OFFICE
Aditya Birla Minerals Limited
ABN 37 103 515 037
Office
Level 3: Septimus Roe Square
256 Adelaide Terrace
PERTH WA 6000
Postal Address
PO Box 3074
256 St George’s Terrace
PERTH WA 6832
Contact
Telephone:
+61 8 9366 8800
Facsimile:
+61 8 9366 8805
Email:
investorrelations@adityabirla.com.au
Web:
www.adityabirlaminerals.com.au
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 2 : Reserve Bank Building
45 St Georges Terrace
PERTH WA 6000
Telephone:
+61 8 9323 2000
Facsimile:
+61 8 9323 2033
01
Contents
Page
Chairmans Report......................................................
02
Management Discussion and Analysis.......................
04
Shareholder Information............................................. 22
Directors’ Report........................................................ 25
Corporate Governance Statement...............................
37
Auditors’ Independence Declaration...........................
41
Independent Audit Report........................................... 42
Income Statement...................................................... 44
Balance Sheet............................................................ 45
Cash Flow Statement.................................................
46
Statement of Changes in Equity.................................. 47
Notes to the Financial Statements..............................
48
Directors’ Declaration................................................
88
Corporate Directory.................................................... IBC
ADITYA BIRLA MINERALS LIMITED ANNUAL REPORT | 2006 - 2007
02
Chairman’s Report
Dear Fellow Shareholder,
The year 2006-07 has been a turning point for your company when it posted an impressive
turnaround in all key performance parameters. With a 74% growth in sale of product, the
earnings before tax swung positively by $27.2 million. We believe this to be the foundation
for a period of very aggressive growth in both revenues and earnings.
You would be very pleased to note that the mine life
has yet once again been extended at Mt Gordon.
Whilst the ramp up of the Nifty Sulphide Project
has been slower than planned due to general
resource crunch owing to vibrant resource sector
and heightened economic activity particularly in
Western Australia.The management has responded
well to this situation and has been able to attract
and retain the core group of key personnel. During
the year, transition into owner mining operations
was achieved successfully. There are associated
challenges, which consequently, the management
is hopeful of meeting.
Consequently, the trend line of the ramp up is
favorably tilted. In this context, it is very pleasing
to note that the very fast track nature of the overall
time frame of the project from scoping study to full
production in about 4 years, particularly for a very
large underground operation, benchmarks amongst
the fastest projects globally. The current capital
cost of the project is also, I understand, amongst
the lowest globally in terms of annual copper
capacity in comparison to the current generation
of copper projects.
I am also pleased to share with you that the Aditya
Birla Group has been rated as the Best Employer
2007 in India by Hewitt Economic Times survey.
Your Company will continue to benefit from best
practices adopted by the Group in this area.
With effect from 15th September 2006, your
Company’s shares have been included in the
benchmark ASX 300 index in just 4 months of
listing in May 2006.
At Nifty Oxide, mining activity ceased during the
year, in accordance with plan as your company
focuses on unlocking copper inventory from the
heap leach pads. A sizeable resource base remains
in the pit though, which can be mined in later years,
if the factors associated therewith are conducive.
03
Chairman’s Report (Cont.)
The demand outlook for copper remains robust
with global consumption growth expected to be in
3.5-4% region. In addition, the copper market is
expected to remain finely balanced in the short to
medium and hence copper prices are expected to
remain firm. Following a large growth in smelter
capacity and supply response not matching that
growth, the copper concentrate market is also
expected to remain in short supply over the short to
medium term.
Your Company continues to look and evaluate
a number of attractive options to grow its core
business in line with our vision to be a mining
entity that generates above average returns to our
shareholders.
I would
ld also
l like to take this opportunity to place on
record, your Board and my personal appreciation of the
dedication and uncompromising commitment of an
overwhelming majority of your Company’s employees.
Yours faithfully,
D.Bhattacharya
04
Management Discussion and Analysis
Overview
FY 2007 will always
be remembered as a
turning point in ABML’s
history as it was a
year which saw
many landmarks:
700
1. Commissioning of Nifty Sulphide Project
in a most aggressive time frame for a
large underground copper mine, in a very
remote location.
a. Progession of Nifty from scoping study
stage in mid 2003 to commissioning in
mid 2006 and full projected capacity in
mid 2007.
6. Agreement with BioteQ for water
treatment and metal recovery plant at
Mt Gordan.
7. Inclusion of Aditya Birla Minerals Limited
in the ASX300 index.
PROJECT TIME & COST PER TON (US$)
Recent Copper Mines - Australian Companies
Capex cost - ton per annum
CAPEX (US$m)
5. Pre-feasibility studies on the Esperanza
South deposit is well advanced.
b. Further, what is very pleasing is the fact
that the project capital cost at around
US$3000 per ton of annual copper
capacity is at less than half of today’s
generation of copper projects globally.
600
500
400
300
200
100
40
60
Time (months)
Source: various public domain information.
80
3. Encouraging drill results in Duke Project
Area north of Nifty.
4. Increase in reserves and extension of the
mine at Mt Gordon to September 2009.
PROJECT TIMELINE & TOTAL CAPITAL COST
(Recent Metals Mines)
20
2. Completion of open pit mining at
Nifty Oxide.
100
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
20
40
60
Time (months)
Source: various public domain information.
80
100
120
05
Review of Operations
Revenue increased from US$185 million
in FY2006 to US$324 million in FY2007
as a result of higher realised prices from
US$3,314/t (USc150/lb) in FY2006 to
US$5,395/t (USc245/lb) in FY2007. Other
income of $7.6 million is on account of gain
on sale of surplus assets.
Depreciation and amortisation charges were
higher by approximately $3.3 million during
the year, mainly due to commissioning of
Nifty Sulphide. It was partly offset by the
closure of Nifty open pit.
NIFTY COPPER OPERATION
NIFTY OPEN CUT
Production
The Nifty Copper Oxide Operations produced
15,312 metric tonnes of copper cathode
for the year. The open pit operations mined
0.65Mt of ore at a grade of 1.48% copper,
and 0.92Mt at 1.34% copper was crushed
and stacked for the year. The open pit
ceased operations in mid July 2006 with the
completion of the Eastern Cut Back No.2.
UNIT WISE PRODUCTION
60,000
COPPER (t)
50,000
40,000
30,000
Recovery from heap leach processing at Nifty
improved substantially during the period
up to which fresh ore was being stacked
due to further optimisation of the leaching
parameters. Post stacking of ore in second
half FY2007, leaching recoveries from old
heaps continues to be very encouraging.
Future Developments
Development work to retreat the pads through
a wet process was further developed during
the year. The objective is to develop a process
to economically improve the recovery rate of
copper. Work included the drilling of the pads
to re-confirm the potential reserve remaining
in the pads and a series of off site laboratory
scale metallurgical tests to better define the
type of unit processes that will be required in
a wet process to retreat the pads.
20,000
10,000
FY06
Nifty - Sulphide Project
FY07
Nifty Copper Oxide Operations
Mt Gordon
NIFTY HEAP LEACH RECOVERY
100%
90%
80%
70%
60%
50%
FY05
FY06
FY07(h1)
Nifty Processing Plant
06
Review of Operations (Cont.)
NIFTY UNDERGROUND RECONCILIATION
Copper Metal Project to Date
3 0 ,0 0 0
Copper Metal Tonnes
2 5 ,0 0 0
2 0 ,0 0 0
1 5 ,0 0 0
1 0 ,0 0 0
5 ,0 0 0
M e ta l
NIFTY UNDERGROUND
Production
Capital and operating
development progressed
through the year to
continue to allow for the
ongoing development
of the long hole open
stopes in the main ore
zone below the 16 Level.
The underground operations advanced with
9,360 metres of development. The main
decline has advanced below the 21st level.
Project to date; the total development metres
are 19,226. Water pumped for the year was
2.19 gigalitres.
Ore development was undertaken on the
14 to 20 levels with a total ore production
of 744,000 @ 2.58% copper trucked to
surface. The expansion of the underground
operations from the development phase into
production saw a successful transition into
owner mining and consequent growth from
nine (9) underground Birla employees to
ninety (90) by year end.
Fin a l M in e D e sig n
2 7 ,0 9 0
G ra d e C o n tro l
2 7 ,3 6 2
In doing so, the support services
successfully developed appropriate training
packages and pushed the strong expansion of
the Occupational Health and Safety system.
However, the ramp up has been delayed
as already outlined in previous Company
announcements due to scarce project labour
resources in this part of the world and due
to poor performance of development and
construction contractors. This resulted in lower
production. Sales for the year were affected
due to weather related delays in shipments in
March 2007 following 3 consecutive cyclones
in the region that month.
A ctu a l
2 8 ,3 1 8
07
Project to date; mining has produced
10% more ore tonnes at 5% less grade
for 4.5% more metal than the resource
model prediction. The reason lies in the
identification during mining of additional ore
on the margins of the ore body that was not
identified in the resource model. The bulk
of the ore body has performed very close to
model expectations with no areas of poor
performance.
By the end of the year the conveyor system
and the underground crusher chamber was
completed. Commissioning of the system
commenced in mid March 2007 and is staged
to become the main hoisting system to bring
ore to the surface early into the coming year.
Nifty Underground Crusher
Nifty Underground Conveyor
08
The last quarter of the year saw the
installation of the sandfill plant which
commenced filling operations into the first
extracted long hole open stope. Sandfill
CONCENTRATOR RECOVERY
operations will remain in place until the
new paste fill plant is constructed and
resulting in a requirement to move the
planned location of the paste fill plant.
The concentrator progressed from its
commissioning stage in late March 2006,
to a production unit that produces at a
current recovery of 93% and concentrate
grade of 26%. Concentrator reliability and
uptime has impacted the ramp up which has
experienced a gradually improving trend as
initial problems are being resolved. It has now
been demonstrated that the concentrator can
produce concentrate at levels that will enable
the achievement of copper output targets.
It should be noted, however, that milling
rates are nominated at a design head grade
and therefore will be less during times when
higher head grade is being delivered. The
performance for the year produced 86,882wmt
of concentrate for 18,710 copper tonnes from
a feed of 1.01Mt at a head grade of 2.45%.
Installation of two 2.5mW solar gas turbine
generators to provide emergency power in the
event of the failure of the site’s TM2500 21mw
Gas turbine generator has been completed.
ADITYA BIRLA MINERALS
ALS LIMITED ANN
ANNUAL REPORT | 2006 - 2007
90%
80%
Recovery %Cu
commissioned in 2007. This project being
delayed as a result of an unexpected failure
of the northern wall of the Nifty open pit,
100%
70%
60%
50%
40%
A pr
M ay J un
Port Hedland Storage Facility
J ul
A ug S ept O c t N ov D ec J an
Feb M ar A pr
09
Global mine site costs have increased by more than 50% since
2003. Cost increases have been sharp in recent years at our
operations. The cost increase in Western Australia has been
particularly sharp due to the acute shortage of resources.
Nifty Solar Gas Turbine Generators
Cost
NIFTY COST FACTOR TRENDS
GLOBAL COPPER MINESITE COSTS
200
220
200
150
180
160
100
140
120
50
100
2003-4
2003
2007
Mining
Flotation
2004-5
Manpower Costs
Reagents
2005-6
Fly In Fly Out Costs
Ocean Freight
2006 -
Fuel cost
Source: AME, Company Estimates Indexed Cost, 2003 Base to 100.
Future Developments
Underground capital and operating
development is continuing at a pace to
ensure that long hole open stoping continues
on schedule in 2007. This is the primary
objective to ensure that the development of
the stoping blocks in the bulk mining area will
sustain the mining operation for the life of the
underground mine.
A transition from contract to owner mining is
planned for mine development activities in the
third quarter. At this time the majority of the
mine’s capital development will be complete
with a corresponding reduction in scheduled
development rates.
In optimising the underground mobile
fleet, underground projects will include the
development of an underground service bay,
fuel bay and crib room centrally located in the
footwall zone of the stoping blocks where the
haulage routes pass nearby.
As a result of the unexpected failure of the
northern wall of the Nifty open pit, the sinking
of the forth ventilation shaft has been brought
forward. This shaft will be developed in a
stable area on the southern side of the open
pit and is expected to be completed this
calendar year.
A flash flotation cell will be designed and
installed in the concentrator to improve the
recovery of the scheduled high grade ores
that the underground operation will present in
the coming year. As a simple cost reduction
investment a lime facility will be constructed
to replace the bulk of the caustic soda reagent
addition system.
10
MOUNT GORDON COPPER OPERATION
MAROOCHYDORE
RESOURCES AND RESERVES
Production
The Mount Gordon operation produced
23,394 metric tonnes of copper for the year
from mining and processing of ores from the
Mammoth underground and stockpiled low
grade Esperanza material.
Aditya Birla Minerals Limited, through its
wholly owned subsidiary Birla Maroochydore
Pty Ltd purchased a 50% interest in the
Maroochydore Copper Project joint venture,
located approximately 100km southeast of
Nifty and approximately 60km south southeast
of the Telfer copper–gold mine. Renison Bell
Limited, which holds the remaining 50%
interest, has now granted consent for the
transfer of ownership.
The tables on pages 13 and 14 illustrate
the resource and reserve statements of each
subsidiary as at 31 March 2007.
• Following Cyclone Larry, flooding of the
underground and continued inundation of
water through acid saturated stopes which
hampered development and mining
operations severely in the first quarter.
• The losses incurred in production during
September and October were due to the
cessation of mining to take precautionary
measures in the D lens/2 lens pillar as
well as the consequent mass blasting of
the pillar.
• Completion of mining the higher grade 2
lens at the beginning of the year resulted
in a drop in grade when the D lens came
on stream.
The process plant and maintenance teams
have performed exceptionally well over the
last year, resulting improved productivity
as a result of better performance and less
downtime due to unplanned shut downs.
A number of metallurgical projects have
been completed during the year as well as
equipment projects, which have all assisted
with achieving the excellent results.
Both SX/EW and leach plants have been sold
– their removal will be complete by the end of
May 2007.
A total mineral resource of approximately
51mt at an average grade of 1.0% copper (at
a cut–off grade of 0.5% copper) and 0.04%
cobalt has been defined at the Maroochydore
deposit.
It is intended to undertake resource
confirmation drilling and further metallurgical
test work and progress to a pre-feasibility
study of the deposit during 2007.
MT GORDON PLANT UPTIME %
100%
95%
90%
85%
80%
75%
70%
65%
60%
Apr -05
May -05
Jun -05
Jul -05
Aug -05
Sep -05
Oct -05
Nov -05
Dec -05
Jan -06
Feb -06
Mar -06
Apr -06
May -06
Jun -06
Jul -06
Aug -06
Sep -06
Oct -06
Nov -06
Dec -06
Jan -07
Feb -07
Mar -07
The Mammoth underground had a number of
major disruptions during the year namely:
Changes to the resources and reserves at Nifty
and Mt Gordon are as a result of additional
drilling, open pit and underground mining
undertaken, a revised estimation methodology
and ongoing re-interpretation by Birla of
all mineralised zones within the mine area.
There have been no changes to the previously
reported resources
urces at Maroochydore.
Maroochydo
Availability
11
Nifty Operations
Resources were estimated as at 31 March
2007 by Aditya Birla Minerals and reviewed
by Snowden Mining Industry Consultants
(Snowden).
The Nifty sulphide resource is now reported
as 32.8Mt at 2.8% Cu at a 1.2% cut-off grade.
The main changes to the resource model have
occurred as a result of the infill underground
drilling of the deposit, particularly at the
south and east end, and refinements to the
estimation parameters. The resource has been
depleted as a result of mining (by 21,000t)
during the reporting period.
The in situ oxide resource has been depleted
as a result of mining during the period April
to June 2006. This material now reports to the
heap leach inventory.
The heap leach inventory tonnes have
increased but there is a decrease in grade and
contained copper as a result of heap leaching
during the reporting period. Reserves were
estimated as at 31 March 2007 by Aditya Birla
Minerals Limited personnel in conjunction
with AMC Consultants.
Due to higher copper price and higher costs
compared to previous years, the current
reserve is now reported at 1.2% copper cut
off. The sulphide reserve figure of 22Mt @
2.5% Cu delivers a 10 year mine life at a
production rate of 2.2Mtpa. Underground
infill drilling, intersection of ore by mine
development and comprehensive mapping
has improved understanding of the ore
body shape and fault geometry. Ensuing
re-interpretation shows the ore body to be
thinner in some areas and to expand east,
south and west due to a redistribution of
metal from the central areas of the deposit to
the peripheries of the deposit.
The change in reserve tonnes compared to
previously reported figures is due to thinning
of the ore body and metal redistribution
to the fringes. The decrease in reserve
grade is a function of the lower cut off. The
mineralisation on the fringes of the deposit
may require more costly mining methods
hence this has not been included in the
current mine plan. This mineralisation may
be included in the future once further infill
drilling is completed and detailed evaluation
and optimization of appropriate mining
methods is carried out.
Ore reserves of approximately 40,000t of
copper are expected to be recovered from the
ongoing continuous leaching of crushed ore
inventory on the leach pads.
The Nifty ore body is open to the east, south
and west as depicted in the figure below.
There is potential that further drilling and
mine planning may expand and upgrade the
resource for potential conversion to reserves.
NIFTY RESOURCE POTENTIAL
12
Mount Gordon Operation
Resources were estimated as at 31 March
2007 by Aditya Birla Minerals and reviewed
by Snowden Mining Industry Consultants
(Snowden). The Mount Gordon operation
hosts a large resource of approximately 500kt
of copper within the Mammoth and Esperanza
mineralised systems.
Overall the Mt Gordon resource has marginally
decreased from 505,000t to 491,000t of
contained copper, with more tonnes (5%
higher) at lower grade (7% lower) compared
to last year.
There has been a significant shift in resource
category as a result of the underground
drilling, with 69% of the resource tonnes
now reporting into the higher confidence
Measured and indicated category,
compared to 59% last year. The resource
has been depleted as a result of mining (by
approximately 26,000t of copper metal), and
this has been in-part replaced.
The main change occurred at Mammoth
where the in situ sulphide resource has been
maintained. This is due to underground
drilling extending the resource below 4720
rl on the B, D and F lenses. The drilling has
now effectively defined the limits of the B-D
lens system. Some 9,000t of metal has been
deducted from the resource base as a result
of mining of broken ore stocks and adopting a
more conservative grade estimation on B and
C lens broken ore stocks.
The drilling program completed as part of
the Esperanza South PFS has translated into
an increase in tonnage with a corresponding
decrease in grade for this deposit, resulting
in a decrease of 1,000 metal tonnes. This
change is primarily attributed to two surface
drill holes SD462 and SD463, which recorded
lower than expected grade intersections.
However, reserves have marginally increased
compared to last year (3.3Mt @ 2.3 Cu
for 76,000t of copper metal) and have
extended the currently known mine life to
September 2009.
The higher tonnage but lower grade reserve
is a function of a reduction in cut-off grade to
1.5%, and general decrease in grade within
the planned mining areas of the deposit. Ore
reserves quoted consist of Measured and
Indicated resources at Mammoth for which
definitive mining plans have been prepared.
The low conversion of resources to the
76,000t reserve is largely a function of drill
density and timely mine design at Mammoth.
Pre-feasibility studies to potentially convert
the Esperanza South resource to a reserve are
in progress.
Remaining reserves at Esperanza are restricted
to low grade surface stocks (0.1 million
tonnes).
Maroochydore
The Maroochydore resources were originally
calculated by Snowden in 1996 and are as
reported by Straits Resources Limited last in
2001. These resources have not been further
reviewed by Aditya Birla Minerals Limited.
13
Aditya Birla Minerals Limited Mineral Resources as at 31 March 2007
Cut off Grade Measured Resource Indicated Resource Inferred Resource
Total Resource
%
Tonnes
Tonnes
Tonnes
Tonnes
(Mt) Cu% Co%
(Mt) Cu% Co%
(Mt) Cu% Co%
(Mt) Cu% Co%
Nifty Copper Operation
In situ Oxide and Supergene
0.4
3.0
1.1
Broken Ore Stocks - Oxide and Supergene
N/A
0.3
Low Grade Oxide Stockpile
0.4
Sub Total Oxide and Supergene
4.0
1.1
3.0
1.0
10.0
1.1
1.1
0.3
1.1
0.3
1.0
0.3
1.0
3.6
1.1
4.0
1.1
3.0
1.0
10.6
1.1
7.4
2.2
2.0
2.3
32.8
2.8
0.1
2.7
In situ Sulphide
1.2
23.3
3.1
Broken Ore Stocks - Sulphide
N/A
0.1
2.7
23.4
3.1
7.4
2.2
2.0
2.3
32.9
2.8
27.0
2.8
11.4
1.8
5.0
1.5
43.5
2.4
16.7
0.2
16.7
0.2
18.1
2.7
0.1
2.5
18.2
2.7
51.4
1.0 0.04
113.1
1.8
Sub Total Sulphide
Total Mineral Resource
Heap Leach Inventory
1
Mt Gordon Copper Operation
In situ Sulphide
1.5
0.9
2.7
N/A
0.1
2.5
1.0
2.7
11.5
2.7
5.7
2.6
11.5
2.7
5.7
2.6
26.6
1.1
0.04
24.8
0.9
49.5
1.6
35.5
1.3
Maroochydore Copper Project
Total Resource Oxide and Supergene
TOTAL (excl Nifty heap leach inventory)
0.5
28.0
2.8
0.04
1. Recoverable copper in inventory under leach is additional to measured mineral resources
The information in this report which relates to Mineral Resources for the Nifty and Mt Gordon operations is based on and accurately reflects reports prepared by Mr Geoff Bullen.
The information in this report which relates to Mineral Resources for the Maroochydore project is based on and accurately reflects reports prepared by Mr Ian Glacken. Mr Bullen and
Mr Glacken have the necessary experience relevant to the style of mineralisation, the type of deposit and the activity undertaken to qualify as a ‘Competent Person’ under the JORC
Code for Reporting of Mineral Resources and Ore Reserves (2004 Edition). Mr Bullen and Mr Glacken have given their consent to the inclusion of the material in the form and context
in which it appears. Mr Bullen is an employee of Aditya Birla Minerals Limited and Mr Glacken is employed by Snowden Mining Industry Consultants.
In all Resources and Reserves tables, significant figures do not imply precision. Figures are rounded according to JORC Code guidelines.
14
Aditya Birla Minerals Limited Mineral Resources as at 31 March 2007
Cut Off
Grade%
Proven Reserve
Tonnes(Mt)
Cu%
Probable Reserve
Tonnes(Mt)
Cu%
Total Reserve
Tonnes(Mt)
Cu%
In situ Leachable
0.4
0.2
1.1
Broken Ore Stocks - Leachable
N/A
0.3
Low Grade Oxide Stockpile
0.4
Sub Total Leachable
0.5
1.2
0.7
1.2
1.1
0.3
1.1
0.3
1.0
0.3
1.0
0.8
1.1
0.5
1.2
1.3
1.1
2.0
1.7
22.0
2.5
0.1
2.7
In situ Sulphide
1.2
20.0
2.6
N/A
0.1
2.7
20.1
2.6
2.0
1.7
22.1
2.5
20.9
2.5
2.5
1.6
23.4
2.4
16.7
0.2
16.7
0.2
3.2
2.3
0.1
2.5
3.3
2.3
Sub Total Sulphide
Total Mineral Reserve
2
Heap Leach Inventory
Mt Gordon Copper Operation
In situ Sulphide
1.5¹
0.2
2.5
N/A
0.1
2.5
0.3
2.5
3.0
3.0
2.2
2.2
1. Reserves are generally based on a 1.5% cut off grade, however minor individual lower grade stopes are included in the reserve.
2. Recoverable copper in inventory under leach is additional to proven mineral reserves
The information in this report which relates to Mineral Reserves for the Nifty and Mt Gordon operations is based on and accurately reflects reports prepared by Mr Ric Jose (for Mt
Gordon) and AMC Consultants (for Nifty). Mr Jose has the necessary experience relevant to the style of mineralisation, the type of deposit and the activity undertaken to qualify as
a ‘Competent Person’ under the JORC Code for Reporting of Mineral Resources and Ore Reserves (2004 Edition). Mr Jose and AMC Consultants have given their consent to the
inclusion of the material in the form and context in which it appears. Mr Jose is an employee of Aditya Birla Minerals Limited.
The Measured and Indicated Minerals Resources tabled above are inclusive of those Mineral Resources modified to produce the Ore Reserves.
In all Resources and Reserves tables, significant figures do not imply precision. Figures are rounded according to JORC Code guidelines.
15
EXPLORATION
Nifty
The Nifty deposit is located in the Proterozoic
age Yeneena Basin, bounded to the west by
the Archaean Pilbara Craton. Exploration over
the past 30 years has resulted in the discovery
of a number of significant mineral deposits
within the region, including:
• Nifty and Maroochydore, strata bound.
• Mt. Isa style copper mineralisation.
• Telfer, a world class hypogene, partly
strata bound gold-copper deposit.
• World class Kintyre uranium deposit.
• Woodie Woodie manganese deposit.
Aditya Birla Minerals Limited has a strategic
and semi-contiguous tenement holding
of approximately 1,500 km2 along the
prospective western margin of the basin.
During 2005/6, a regional reconnaissance
program was successful in defining new
prospects through regional geophysics, soil
sampling and aircore drilling.
In the near mine environment a narrow zone of
possible strata bound copper mineralisation
was intersected at Nifty NW at a horizon that
is stratigraphically below the Nifty Carbonate
Member (YNC216 3m @ 1.13% Cu). This
has implications for possible repetitions of
Nifty style mineralisation below the current
resource, and further drilling is planned.
In 2006 a total of 5,172m of aircore,
1,091.0m of RC and 2,911.8m of diamond
core drilling was completed. Aircore
traverses were drilled across targets at the
Warrabarty West, Grevillea, Duke and Coolbro
prospects following up anomalous results
from previous aircore drilling programs.
Geophysical anomalies at Duke/Dromedary
and Goosewacker prospects were tested with
RC drilling. Diamond holes were drilled at
the Nifty NW, Nifty SE and Citadel prospects
to test conceptual targets derived from new
geological/geophysical interpretations.
The Duke project area is located 40km north
of Nifty within a 10 km diameter circular zone
of magnetite destruction interpreted to be
caused by a high-level granitoid intrusive.
Several isolated gravity anomalies coincident
with magnetic anomalies were located close
to the regionally significant Camel-Tabletop
Fault. Transported cover up to 100 metres
thick masks much of the bedrock geology.
Seven broadly spaced reconnaissance
reverse circulation percussion (RC) holes,
TRC011 – TRC017 were drilled in the
Duke project area to test a number of these
point source magnetic/ gravity anomalies.
Results for TRC011 and TRC012 were highly
encouraging, with TRC011 returning an
intercept of 9m at 5.56% Zn from 111m down
hole, including 3m @ 10.96% Zn from 111m
down hole. TRC012 returned 2m @ 1.44%
Zn from 99m down hole.
These results are considered to be significant
given the tenor of zinc mineralization in a
new project area where there is very sparse
previous drilling. This area, now referred
to as the Dromedary prospect, is a priority
prospect for further drilling in 2007/8.
16
!"#$%&
''
Maroochydore
Legal issues relating to Maroochydore have
now largely been resolved. An exploration
program involving resource confirmation
drilling and metallurgical test work for the
2007 field season has been prepared and
work has commenced to implement this
program.
Mt Gordon
Aditya Birla Minerals Limited holds
prospective exploration tenure covering
approximately 1,200km2 adjacent to the Mt
Gordon mine. The Mt Gordon copper deposits
are closely associated with the regionally
extensive Mt Gordon Fault Zone within the
Western Fold Belt of the Mount Isa Inlier.
Exploration over the past three years has
primarily been focused on the near-mine
area on the main structures that control the
!""#
$""%
#$&""
mineralisation at Mammoth and Esperanza,
namely the Mammoth Fault, the Mammoth
Extended Fault and the Esperanza Fault. The
aim of this work was to locate additional
shallow resources that could supplement
the existing operations. Some success was
achieved with the discovery of the Greenstone
resource (423,000t @ 3.1% Cu). This
demonstrates that it is probable that other
resources of this scale can still be discovered
within the near mine environment. Aditya Birla
Minerals Limited will continue to test targets
along the main faults structures adjacent to
the mine workings.
A second focus for exploration was the
Esperanza Fault near the Esperanza South
deposit. In 2006 extensions to the Esperanza
South resource were discovered with hole
SD453 intersecting 5m @ 9.23% Cu from
311m. The deposit remains open at depth.
Prospectivity also remains immediately to the
north towards the Sabre prospect where a best
intersection of 8m @ 3.17% Cu from 81m in
diamond hole SD454 was recorded.
The regional tenements cover numerous
prospects and occurrences from which a
large database of information on previous
exploration is available. Some targets from
this database had been advanced to a drill
ready stage while others have been identified
but require geological mapping, rock chip
sampling and soil sampling. A number of
geophysical targets have also been identified
which will require drill testing. The priority
targets generated during the year were at
Conquest, Mt. Osprey and Eagles Nest.
Drilling at Conquest in 2006 intersected a
best result of 33m at 0.45% Cu including 2m
at 2.87% Cu from 58m.
17
HEALTH AND SAFETY
ENVIRONMENT
Aditya Birla Minerals Limited has a strong
commitment to the health and safety of all
of its employees and contractors and builds
in safe working practices to all activities
undertaken.
A number of major environmental projects
have been undertaken this year which are in
line with our commitment to our environmental
plan of operations, the Environmental
Protection Agency consent order and forward
planning for the future. A strong environmental
awareness across the mine has assisted in
getting projects off the ground:
At the Nifty site an upward trend in its overall
Lost Time Injury Frequency Rate (“LTIFR”)
was experienced with the finalisation of the
concentrator construction crews, the ramp
up of the underground crusher and conveyor
contractor crews along with the increase
in the overall underground workforce.
Considerable resources in Occupational
Health and Safety and training have been
committed to the project to stabilise this trend
with the objective of bringing this measure
back to at least industry standard.
Safety has progressed exceptionally well
with all the Mt Gordon teams being willing
participant in all aspects of the safety
programmes and training that has taken place.
• The construction of the Mill Creek dam
has commenced.
• The Esperanza tailings dam water level
has reduced during the last 12 months.
The capping trial is completed and is
being monitored.
• The annual limnology program has been
carried out and is showing an improved
environmental performance from the
mine.
• The process plant usage of recycled
water from the tails dam has resulted in
a significant reduction in the usage of
raw water which has gone a long way to
improving the water management on
the mine.
• Completion of Failure Impact Assessment
for Greenstone dam as agreed with the
Department of Natural Resources and
Water.
• Assessment with BioteQ has progressed
with construction expected to start in the
new financial year.
As a result the LTIFR for Mt Gordon is
well below the average for Queensland
metalliferous mines.
Two risk assessment audits have been
carried out at Mt Gordon by external auditors
during the year. Deficiencies highlighted
in both audits have been actioned on and
approximately 90% of the recommendations
have been implemented.
Mt. Gordon Village
18
OUTLOOK – COPPER INDUSTRY
World economic growth
is assumed to be around
4 per cent in 2007
and over the medium
term, compared with an
estimated around 5%
in last few years.
Copper Sheets
In the United States, the pace of economic
expansion in 2007 is expected to be lower
than in 2006, as weaker activity in the housing
market slows residential investment and
growth in consumer spending. Nevertheless,
business investment is likely to remain strong,
especially in light of strong corporate profits
and favourable long term interest rates.
While signs of economic improvements are
emerging in Japan and Western Europe,
economic growth in these countries/regions
is expected to remain modest in the next
few years.
19
Economic growth in China is expected to remain strong over the short
to medium term. Continued growth in commodity demand in China is
expected to provide support for commodity prices on world markets.
Following on to the copper market, demand
from developing nations including China
and India continues to be one of the main
factors driving global consumption growth.
China’s demand in particular is expected to
grow at a healthy pace and account for nearly
50% of global demand growth. Whilst there
was some slowdown in late 2006 for global
refined copper consumption due to destocking, we have seen a renewed tightness in
the physical market.
Partially off-setting the buoyant demand
witnessed else-where was a sharp decline in
new housing starts data emanating from the
USA and which had an impact on the overall
market sentiments.
Owing to a sharp surge in prices, substitution
The key features of the copper market in the
remains a threat in the immediate future.
However, going forward copper consumption
is expected to continue to grow globally at
last two to three years have been low stocks
and mine supply problems. An increasing
mine supply bottleneck has been limiting
a healthy rate of around 3%-4% over the
next few years, even assuming there may
be a negative impact on demand due to
the utilisation of the smelting and refining
capacity. Current prices should be stimulating
an investment boom in copper mining, but
down-sizing of copper products in certain
applications. Copper is considered to be one
of the oldest and most essential of metals to
the results of increased investment are slow
in coming through. A number of large mines
continue to face operating difficulties and
keep home, commerce and industry running.
Copper’s chemical characteristics and ability
to alloy with other metals allows a wide
variety of applications.
we continue to witness globally the adverse
impact on production of ongoing shortages of
major equipment, consumables (especially
truck tyres) and skilled labour.
These constraints on production are likely to
keep the market tight for several years. The
refined copper market is expected to remain
firmly balanced at a very low inventory level
throughput most of this year - In an 18mn tpy
market a forecast modest surplus by most
analysts is statistically insignificant.
20
STRATEGY
Aditya Birla Minerals
Limited strategy is
to maximise total
shareholder returns.
We intend to pursue
this strategy through:
• Improving the returns on our existing
invested capital by extracting maximum
value from our existing assets; and
• Pursuing opportunities that deliver returns
in excess of its cost of capital by adding
new projects through focused exploration
and disciplined acquisitions.
PEOPLE
Aditya Birla Minerals
Limited believes that
its people are integral
to the growth of your
company and in
establishing a world
class organisation
based within Australia.
Nifty Village
Aditya Birla Minerals continues to focus
on the following initiatives to achieve this
strategy:
• Operational productivity - we will
continue existing operational productivity
and cost control programs at both the
Nifty and Mt Gordon operations.
• Commodity price exposure consistent
with Aditya Birla Minerals Limited current
policy - we intend to continue to operate
with the Company’s hedging policy
which provides that any commodity and
currency hedging will be modest and
short-term in duration and consistent with
prudent financial management practices.
During the year ended 31 March 2007,
we employed on average 300 permanent
employees.
Our human resources strategy emphasises
a relationship with our employees that is
based on shared accountability for achieving
business and personal success. Our
strategy supports the development of a high
performance work culture and our company
values.
• Resource renewal - we will seek to extend
the economic life of our existing mines
and leverage our existing infrastructure
through exploration in the vicinity of its
current operations, and
• Acquisitions group - we have established
an in-house technical group to
proactively identify advanced copper
projects and existing operations world
wide for potential acquisition.
to March 2009. Our recruitment process is
focused on mutually rewarding relationship and
a high performance organisation being created
by continuous improvement, our most recent
example being the transition to an 8 and 6
roster for operational personnel (both surface
and underground). We believe that generally
our industrial relations with our employees
is good, with the company experiencing no
industrial unrest during the period.
Our remuneration system includes an
incentive payment component for our senior
and executive managers and a cash payment
retention plan for all existing employees who
remain with the group over a three year period
Mr Sanjay Loyalka
21
Financial Report
Contents
Page
Shareholder Information............................................. 22
Directors’ Report........................................................ 25
Corporate Governance Statement...............................
37
Auditors’ Independence Declaration...........................
41
Independent Audit Report........................................... 42
Income Statement...................................................... 44
Balance Sheet............................................................ 45
Cash Flow Statement.................................................
46
Statement of Changes in Equity.................................. 47
Notes to the Financial Statements..............................
48
Directors’ Declaration................................................
88
22
Financial Report
Shareholder Information
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows. The information is
current as at 18 June 2007.
1. Annual General Meeting
Date:
20 August 2007
Venue: Novotel Langley Perth
2. Registered Office:
Level 3, Septimus Roe Square
Perth WA 6000
Tel: 08 9366 8800
www.adityabirlaminerals.com.au
3. Reporting Calender
•
First Quater reporting under Chapter 5 of the ASX Listing Rules for the quater ended 30 June 2007: End July 2007
•
Second Quarter reporting under Chapter 5 of the ASX Listing Rules for the quarter ended 30 September 2007: End October 2007
•
Financial Reporting for the Half Year ended 30 September 2007: End November 2007
•
Third Quarter reporting under Chapter 5 of the ASX Listing Rules for the quarter ended 31 December 2007: End January 2008
•
Fourth Quarter reporting under Chapter 5 of the ASX Listing Rules for the quarter ended 31 March 2008: End April 2008
•
Financial reporting for the full year ended 31 March 2008: End May 2008
•
Annual General Meeting for the year ended 31 March 2008: End August 2008
4. Listing Details
The Company is listed on the Australian stock Exchange under the code ABY.
5. Investor Correspondence:
Mr Peter Torre
Company Secretary
Level 3, Septimus Roe Square
Perth WA 6000
Tel: 08 9366 8800
peter@prosperacorporate.com.au
23
Financial Report
Shareholder Information (Cont.)
6. 20 Largest Shareholders
The names of the 20 largest shareholders of ordinary shares are listed below:
Name
Number
Issued Shares Held
%
159,820,001
51.00
NATIONAL NOMINEES LIMITED
31,564,580
10.07
J P MORGAN NOMINEES AUSTRALIA LIMITED
25,189,279
8.04
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
13,073,834
4.17
ANZ NOMINEES LIMITED CASH INCOME A/C
7,510,699
2.40
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
7,434,642
2.37
SUNCORP CUSTODIAN SERVICES PTY LTD
6,683,679
2.13
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5,660,445
1.81
CITICORP NOMINEES PTY LIMITED
4,610,297
1.47
ZERO NOMINEES PTY LTD
2,015,000
0.64
QUEENSLAND INVESTMENT CORPORATION
1,836,606
0.59
HULFAM INVESTMENTS LTD
1,750,000
0.56
AMP LIFE LIMITED
1,730,443
0.55
COGENT NOMINEES PTY LTD
1,590,132
0.51
MARZON PTY LTD
1,477,500
0.47
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED BKCUST A/C
1,408,287
0.45
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED PIIC A/C
1,300,153
0.41
WILDFLOWER INVESTMENTS PTY LTD EVANS FAMILY S/F A/C
1,221,229
0.39
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED MLCI A/C
998,217
0.32
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED PIPOOLED A/C
964,804
0.31
277,839,827
88.66
HINDALCO INDUSTRIES LIMITED
24
Financial Report
Shareholder Information (Cont.)
7. Distribution of Securities
(a) Analysis of numbers of shareholders of ordinary shares by size and holding:
Category
(size of holding)
1 - 1,000
Share Holders
Units
375
270,358
1,214
3,937,334
5,001 - 10,000
677
5,593,733
10,001 - 100,000
582
15,453,704
100,001 and over
55
288,117,422
2,903
313,372,551
1,001 - 5,000
(b) The numbers of shareholders holding less than a marketable parcel of shares are:
Number of holders
Number of shares
20
1,909
8. Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:
Hindalco Industries Limited 159,820,001 Ordinary Shares
9. Voting Rights
Ordinary Shares:On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share shall have one vote.
10. Restricted Securities
There are, as at the date of this statement, 159,820,001 fully aid ordinary shares which are subject to a voluntary escrow arrangement. These
shares are owned by Hindalco Industries Limited.
The arrangement prohibits the transfer of ownership or control of, or undertaking or omitting to undertake any act which has the effect of
transferring ownership or control over, any of Hindalco’s shares up to and including the first business day after the announcement of Aditya Birla
Minerals Limited’s audited financial results for the financial year ended 31 March 2007 to the Australian Stock Exchange.
11. Share Buy Backs
There is no current on market share buy back.
25
Financial Report
Directors’ Report
The Directors present their report for the year ended 31 March 2007.
DIRECTORS
The names and details of the directors of Aditya Birla Minerals Ltd in office during the financial year and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.
Names, qualifications and special responsibilities
MR DEBU BHATTACHARYA (Non-Executive Chairman)
Qualifications:
Bachelor of Technology with Honours in Chemical Engineering
Experience and other directorships:
Mr Bhattacharya has over 30 years of functional experience based on various positions held
in Unilever Plc, including manufacturing, research and development, sales and marketing and
general management. Prior to assuming charge as Managing Director of Hindalco Industries
Limited, Mr Bhattacharya was the Managing Director of Indo Gulf Corporation Limited, and
subsequently Indo Gulf Fertilisers Limited. Mr Bhattacharya is also Chairman of Utkal Alumina
International Limited, a joint venture company with Alcan Inc, as well as director of Aditya Birla
Management Corporation Limited, Birla Management Centre Services Limited, Dahej Harbour and
Infrastructure Limited, a wholly owned subsidiary of Hindalco, Minerals and Minerals Limited,
Aditya Birla Power Company Limited and Aditya Birla Science and Technology Company Limited.
Prior to Joining the Aditya Birla Group in 1998, Mr Bhattacharya held previous positions with
Hindustan Lever Limited and Unilever Plc, and was the Chairman of Hind Lever Chemicals Limited,
a leading performance chemicals company in India.
Mr Bhattacharya is also the recipient of the prestigious “India Business Leader of the Year Award in
2005” and the much coveted “The Asia Corporate Citizen of the Year Award 2005”
Special Responsibilities:
Member of Aditya Birla Minerals Limited’s Remuneration and Nomination Committee
26
Financial Report
Directors’ Report (Cont.)
MR SANJAY LOYALKA (Chief Executive Officer and Managing Director)
Qualifications:
Bachelor of Commerce with Honours, Chartered Accountant
Mr Loyalka has been employed by the Aditya Birla Group since 1988 and has over 15 years of
functional experience in roles including finance, sales and marketing, and general management.
Prior to his appointment as Chief Executive Officer and Managing Director of Aditya Birla Minerals
in May 2003, Mr Loyalka held various roles within the Aditya Birla Group including Chief Financial
Officer of Indo Gulf Corporation Limited, Senior Vice President of Grasim Industries Limited and
various positions with Hindustan Gas and Industries Limited. Mr Loyalka has been involved in several
strategic initiatives including mergers and acquisitions transactions and being the Project Manager
for implementing a Value Based Management System in the Aditya Birla Group of companies.
Chief Executive Officer and Managing Director of Aditya Birla Minerals Limited
MR KANAGA DHARMANANDA (Independent non-executive Director)
Qualifications:
Bachelor of Jurisprudence with Honours, Bachelor of Laws with Honours Master of Civil Law and,
Master of Laws
Mr Dharmananda has over 17 years of experience in commercial law, and in providing advice on
transactions and litigation within a number of industries, particularly the mining industry. He was
a partner of the law firm Corrs Chambers Westgarth from 1995 to 1997 and again from 2002 to
2005. In January 2006 he commenced as a barrister at Francis Burt Chambers. At various times
he has been Counsel with the United Nations, Geneva, and Counsel with Mitsubishi Corporation,
Tokyo. Mr Dharmananda is a member of the specialist Corporations Committee of the Business
Law Section of the Law Council of Australia. He is a Visiting Fellow of the Law School at the
University of Western Australia.
Member of the Audit, Compliance and Risk Committee and the Remuneration and Nomination
Committee.
27
Financial Report
MR ANDY HOGENDIJK (Independent non-executive Director)
Qualifications:
AAUQ, Fellow Certified Practising Accountant, Fellow of the Australian Institute of Company Directors
Mr Hogendijk has extensive senior management and financing experience having previously been
Chief Financial Officer of Suncorp Metway Limited, Commonwealth Bank of Australia Limited
and John Fairfax Group. Mr Hogendijk has also held several senior positions with Shell Company
Australia and Australian Paper Manufacturers. He was a director of Hills Motorway and Magnesium
International Limited. Mr Hogendijk is currently Chairman of Gloucester Coal Limited and a NonExecutive Director of Magellan Flagship Fund Ltd.
Chairman of Audit, Compliance and Risk Committee.
MR BRUCE MCGOWAN (Independent non-executive Director)
Qualifications:
Bachelor of Economics, Graduate of the Institute of Company Directors
Mr McGowan has extensive experience at senior management levels in the resources, services,
transport and logistics, and manufacturing sectors in Australia and internationally. Mr McGowan
was previously Chief Executive Officer of Freightlink, President of BHP Billiton Transport and
Logistics and General Manager of the Port Kembla Coal Terminal. Mr McGowan has previously
been Chairman of the Victorian Sea Freight Council and is a member of the Australian Logistics
Council. He is currently a director of FreightLink and Tasports.
Chairman of Remuneration and Nomination Committee.
28
Financial Report
MR MYSORE PRASANNA (Non-executive Director)
Qualifications:
Bachelor of Science, Master of Law, Member of the International Bar Association.
Mr Prasanna commenced his career with General Insurance Corporation of India and worked for
over 27 years with organisations including Alfa Laval, Brook Bond India Limited and Larsen &
Toubro Limited. Mr Prasanna joined the Aditya Birla Group as President, Corporate Legal Cell
and has been instrumental in establishing the Corporate Legal Cell for the Aditya Birla Group. Mr
Prasanna is currently the Group Executive President of the legal function. Mr Prasanna is also a
director of a number of other companies, including Birla Management Centre Services Ltd, Utkal
Alumina International Ltd, Idea Cellular Ltd and Rosa Power Supply Company Ltd. Mr Prasanna
was the Chairman of the Legal Affairs Committee and is currently an adviser to the Managing
Committee of Bombay Chamber and the Co-Chairperson of the Legal Affairs Committee of
Associated Chambers of Commerce and Industry of India.
Member of Audit, Compliance and Risk Committee
COMPANY SECRETARY
PETER PATRICK TORRE
Mr Torre is the Principal of the corporate advisory firm, Prospera Corporate. Prior to establishing
Prospera Corporate, Mr Torre was a partner of an internationally affiliated firm of chartered accountants,
working within its corporate services division for over 9 years where he also held the position of
Chairman of the National Corporate Services Committee. Mr Torre is the company secretary of other
public listed companies in Australia and is a Director of Carbine Resources Limited and CI Resources
Limited.
Mr Torre holds a Bachelor of Business, is a Chartered Accountant, a Chartered Secretary and a
member of the Australian Institute of Company Directors.
INTERESTS IN THE SHARES OF THE COMPANY
The relevant interests of directors either directly or through entities controlled by the directors in the share capital of the Company as at the date of
this report are:
Director
Mr Debu Bhattacharya
Mr Sanjay Loyalka
Mr Kanaga Dharamanda
Mr Andy Hogendijk
Mr Bruce McGowan
Mr Mysore Prasanna
Ordinary Shares
10,000
10,000
10,000
10,000
-
29
Financial Report
Fi
DIVIDENDS
No dividends were paid or declared during the financial year or in the period to the date of this report.
PRINCIPAL ACTIVITIES
The principal activities of the Company and its subsidiaries (“the consolidated entity”) during the course of the financial year were the exploration,
mining, processing and marketing of copper metal. There has been no change in these activities during the financial year.
OPERATING AND FINANCIAL REVIEW
The profit from ordinary activities for the Consolidated entity for the financial year ended 31 March 2007, after income tax was $1.9 million
(2006: $17.1 million loss).
FY07
(March)
FY06
(March)
% Variation
Tonnes
2,828,279
3,535,694
-20%
%
1.9%
1.8%
Cu Contained
Tonnes
54,584
64,519
-15%
Ore Processed
Tonnes
3,418,545
2,969,415
15%
%
1.9%
1.9%
Cu Contained
Tonnes
65,571
56,761
16%
Cu in Cathode / Concentrate Produced
Tonnes
58,415
45,693
28%
%
89%
81%
Sale of product
A$ 000’s
323,568
185,471
EBIT
A$ 000’s
14,984
(12,209)
EBT
A$ 000’s
2,671
(24,499)
PAT
A$ 000’s
1,870
(17,149)
Ore Mined
Grade
Grade
Recovery
74%
The Company did an IPO during the year and 153.6mn shares were issued consequently. The Company’s shares have been listed on the ASX.
30
Financial Report
Nifty Oxide Operations Review
15,312 metric tonnes of copper cathode was produced during the year compared to 17,240 metric tonnes last year. As planned open pit mining
operations were completed during the year after 15 years of continuous production. Run of mine ore stocked were also crushed and stacked to the
leach pads by year end. Cathode production will continue on a reducing scale as copper inventory is removed from the Heaps.
Nifty Sulphide Project
The Nifty Copper Sulphide Concentrator successfully produced 86,882 metric tonnes of concentrate containing 19,710 metric tonnes of
contained copper, this concentrate being transported and shipped via the new Port Hedland facilities, which proves the operation of the Nifty
concentrator and concentrate handling systems. Concentrate production was lower than planned due to delays in the commissioning of the
underground conveyor and crushing system.
Underground operations progressed with 9,360 metres of development being achieved for the year compared to 6,699 metres in the prior year.
This brings the total development achieved by the project to date to 19,226 metres resulting in the decline reaching the 21st level, the lowest
planned production level. Mining of the first long hole open stopes was successful commenced.
Commissioning of the underground crushing and conveying system was commenced in March 2007, significantly behind schedule, delays
being due to a combination of factors including slower than planned mining rates, ground water inflows, contractors performance, and manpower
shortages. Haulage rates of 450tph compared with capacity of 500tph were achieved at the commencement of the commissioning operations.
Mount Gordon Operations
Operations Review
Mt Gordon shipped 23,394 metric tonnes of contained copper for the year compared with 28,453 metric tonnes for the previous year.
Underground production at mammoth was lower due to reducing grade as mining of 2 Lens was completed and D Lens became the main source
of ore. Delays were also experienced as a result of geotechnical issues with the pillar between 2 Lens and D lens and flooding caused by tropical
cyclones.
The Solvent Extraction Electrowinning (“SXEW”) section of the ore processing plant was sold and is currently being dismantled for transportation
by the new owners as at the date of this report.
Maroochydore Joint Venture
During the year, Renison Bell has approved the assignment by Straits Exploration (Australia) Pty Ltd of its interests in the Maroochydore joint
venture to Birla Maroochydore Pty Ltd. However, legal formalities for the transfer of title in the name of Birla Maroochydore Pty Ltd is still under
progress as at 31 March 2007.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors there are no significant changes in the state of affairs of the Company or of the consolidated entity that occurred
during the financial year not already disclosed in this report, the financial statements or notes attached thereto.
SIGNIFICANT EVENTS AFTER BALANCE DATE
The consolidated entity has arranged an $80 million working capital facility with $25 million sub limit for the issuance of guarantees and letters
of credit with BNP Paribas. This facility is in addition to the existing facility with HSBC. As per the terms and conditions of this arrangement, the
consolidated entity will have access to a total facility amount up to $200 million. This facility will be renewed in November 2007 along with the
existing loan facility.
In the opinion of the Directors there are no other significant events after balance date of the Company or of the consolidated entity that occurred
during the financial year not already disclosed in this report, the financial statements or notes attached thereto.
31
Financial Report
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in future
financial years has not been included in the Directors’ Report because disclosure of this information could be unreasonably prejudicial to
the Company.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The consolidated entity’s operations are subject to significant environmental regulations under Western Australia and Queensland legislation in
relation to its mining activities.
The consolidated entity undertakes regular monitoring of licence requirements, with performance against licence conditions reported to regulators
on a regular basis and as required.
The consolidated entity also monitors progress of the operations towards meeting the requirements of the mining industry code for environmental
management.
At Nifty, the operations were all performed within the requirements under the Western Australian Environment Act and Regulations. Additionally, all
reporting of environmental performance against licence conditions were reported.
At Mt Gordon subsequent to the overtopping of the Mill Creek Dam during the extreme weather conditions, on the 22nd of March 2006, caused by
Cyclone Larry, a mutual court consent was negotiated with the Environmental Protection Agency (“EPA”). The order included the construction of a
larger Mill Creek dam, undertaking planning to manage the up stream water of Esperanza Creek, waste dump rehabilitation and the construction of
a water treatment plant to process the water stored in Esperanza Pit.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company’s parent, Hindalco Industries Ltd, has taken a policy under which all Directors and Officers of Hindalco and all its subsidiary
companies (world wide) are both indemnified and insured. The policy in turn serves to cover all Directors and Officers of Aditya Birla Minerals
Limited’s subsidiary companies in Australia.
REMUNERATION REPORT
This report outlines the remuneration arrangements in place for Directors and other key management personnel of Aditya Birla Minerals Limited.
The consolidated entity is taking advantage of Corporations Regulation 2M.6.04 and as a result is presenting the disclosures required by AASB
124 Related Party Transaction Aus 25.4 to Aus 25.7.2 in the Remuneration Report within the Directors’ Report. These remuneration disclosures
have been audited. For the purposes of this report Key Management Personnel (KMP) of the consolidated entity are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Company and the consolidated entity, directly
or indirectly, including any director of the Company, and includes the five executives in the Company and the consolidated entity receiving the
highest remuneration.
a) Compensation of Key Management Personnel
It is the Company’s objective to attract and retain high quality Directors and executive officers. One aspect to achieve this is by remunerating
Directors and executive officers in a manner consisted with employment market conditions. To assist in achieving this object, the Company may
link the nature and amount of executive Directors’ and officers’ emoluments to the Company’s financial and operational performance.
The Remuneration and Nomination Committee is delegated the task of devising packages to attract and retain Directors and executives of the
calibre necessary to ensure the success of Aditya Birla Minerals. However, the Committee will avoid paying more than is necessary or deemed
reasonable to achieve this aim. To this end, the Committee has the power to use the services of an external remuneration consultant. The
Committee may from time to time recommend to the Board for its approval, the creation or amendment of executive incentive schemes.
Management salary packages are reviewed annually with the objective of making them competitive relative to industry measures.
32
Financial Report
Non-executive Directors
Independent non-executive Directors will receive a set fee per year and be reimbursed for out-of-pocket expenses incurred as a result of their
directorship or in connection with the business of Aditya Birla Minerals Limited.
The annual fee of each independent non-executive Director is $77,000. The fees represent the total reward arrangement inclusive of
superannuation contributions. Independent non-executive Directors will not receive any other retirement benefits.
Additionally, the independent non-executive Directors receive an annual fee of $7,500 for being a member of a Board Committee or an annual
fee of $17,500 for being a Chairman of the Audit, Compliance and Risk Committee or $12,500 for being Chairman of the Remuneration and
Nomination Committee (each of these additional fees also being inclusive of superannuation contributions).
Hindalco-nominated non-executive Directors will be reimbursed for out-of-pocket expenses incurred as a result of their directorship or in
connection with the business of Aditya Birla Minerals Limited. The Hindalco nominated non-executive Directors have voluntarily elected not to
receive an annual fee at this time. However, if it were later proposed that they be paid an annual fee, any such fees would need to be approved in
accordance with the Company’s Constitution. The aggregate of the fees paid to non-executive Directors must be fixed by ordinary resolution of
shareholders and any subsequent fees must not exceed that amount without shareholder approval. The maximum aggregate has currently been set
at $500,000 per annum.
Senior management
In accordance with the Company’s Constitution and subject to any contract with the Company and to the ASX Listing Rules, the Board may fix the
remuneration of any executive Director. Such remuneration may consist of salary, bonuses or any other element but must not be a commission on
or percentage of profits or operating revenue.
Executive Director
The employment arrangements for Mr Loyalka, as the sole executive Director and Chief Executive Officer and Managing Director, provide for
remuneration comprising salary, cash allowances and superannuation totalling $241,750.
Additionally, benefits including housing, car, medical and education allowances are provided which are valued at approximately $158,739 plus
FBT as applicable. Mr Loyalka’s employment arrangements cover a three-year tenure that commenced from 13 March 2006, with the option of
extension on a one year basis at the discretion of the Board. Mr Loyalka’s employment arrangements may be terminated by either party with six
months notice.
Short Term Incentives
Short-term incentives are delivered under the Employee Incentive Scheme, which rewards individuals for meeting or exceeding KPIs that are set
at the beginning of each financial year and are aligned to Aditya Birla Minerals Limited budget. KPIs include Group and personal objectives and
measures. The setting of KPIs and the relative weightings given to the different categories of KPI effectively incentivises short-term performance.
The performance level achieved against each KPI is measured and awards are calculated and paid according to the level of performance.
The Group KPIs measure performance in delivering against specific health, safety and environment targets and achieving specified levels of
performance against financial targets.
No provision has been made for the financial year ended 31st March 07 for any short term incentive since the KPIs have not been met.
Retention Plan
Aditya Birla Minerals Limited has a retention scheme that provides for a cash payment based on the continued employment at the end of 24 and
36 months.
Except as disclosed above with respect to Mr Sanjay Loyalka, executives are employed under contracts of employment with standard commercial
terms, such as having no fixed term of expiry, notice periods of between one and three months and termination payments in lieu of notice.
33
Financial Report
b) Details of Key Management Personnel
Directors
Name
Position
Date of Appointment
Date of Resignation
Mr D Bhattacharya
Non-executive Chairman
18 April 2003
-
Mr S Loyalka
15 May 2003
-
Mr M Prasanna
Non-executive Director
20 January 2003
-
Mr A Hogendijk
Independent non-executive Director
6 March 2006
-
Mr B McGowan
6 March 2006
-
Mr K Dharmananda
6 March 2006
-
Date of Appointment
Date of Resignation
Executives
Name
Position
Mr S Bhartia
Assistant Vice President (Finance and Commercial)
2 September 2004
-
Mr R Dennis
Chief Operating Officer
9 February 2004
-
Mr R Beazley
General Manager – Birla Nifty Pty Ltd
30 January 2006
-
20 April 2006
-
30 August 2006
-
Mr P Mulroney
General Manager – Birla Mt Gordon Pty Ltd
Mr P McMickan
General Manager – Geology
34
Financial Report
b) Details of Key Management Personnel
REMUNERATION OF DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
Post
Employment
Short Term
Salary & Fees
Cash Bonus
Non-monetary
Benefits
Superannuation
$
$
$
$
2007
Directors
Mr D Bhattacharya
Mr S Loyalka
Mr M Prasanna
Mr A Hogendijk
Mr B McGowan
Mr K Dharmananda
Total
Executives
Mr S Bhartia
Mr R Dennis
Mr R Beazley
Mr P Mulroney
Mr P McMickan
Total
1
-
85,909
81,364
83,636
470,682
-
158,739
158,739
122,806
258,606
240,000
242,442
150,682
1,014,536
-
149,339
37,040
186,379
194,152
194,152
20,093
1,398
1,360
1,379
24,230
115,704
37,187
152,891
11,328
23,542
20,283
14,450
69,603
219,773
-
2006
Directors
Mr D Bhattacharya
Mr S Loyalka
Mr M Prasanna
Mr A Hogendijk1
Mr B McGowan1
Mr K Dharmananda1
Total
13,977
13,598
13,788
242,305
-
Executives
Mr S Bhartia
Mr R Dennis
Mr P Eaton
Mr J West
Mr C Boreham
Total
113,278
235,422
202,833
138,053
224,200
913,786
-
Appointed 6 March 2006
200,942
-
21,977
8,591
8,136
8,364
47,068
12,281
25,860
24,000
24,244
15,068
101,453
Total
$
400,489
94,500
89,500
92,000
676,489
284,426
321,506
264,000
266,686
165,750
1,302,368
415,187
15,375
14,958
15,167
460,687
240,310
296,151
223,116
152,503
224,200
1,136,280
35
Financial Report
During the year none of the Directors or named executives received a cash bonus.
The key management personnel include the five highest paid company and group executives. There would be no difference in disclosure had the
disclosure been made in accordance with AASB 124 “Related Party Disclosure”.
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended
by each director were as follows:
Directors’
Meetings
Name
Audit Committee
Meeting
Remuneration
Committee Meeting
Number of meetings held
A
being total of meetings eligible to attend
A
B
A
B
A
B
B
being total of meetings actually attended
Mr D Bhattacharya
Mr S Loyalka
Mr M Prasanna
Mr K Dharmananda
Mr A Hogendijk
Mr B McGowen
9
9
9
9
9
9
3
9
9
9
9
8
4
4
4
-
4
4
4
-
2
2
2
0
2
2
COMMITTEE MEMBERSHIP
As at the date of this report the company had an Audit, Risk and Compliance Committee and a Remuneration and Nomination Committee of the
Board of Directors.
Members acting on the committees of the Board are:
Audit, Risk and Compliance
Mr A Hogendijk (Chairman)
Mr M Prasanna
Mr K Dharmananda
Remuneration and Nomination
Mr B McGowan (Chairman)
Mr D Bhattacharya
Mr K Dharmananda
PROCEEDINGS ON BEHALF OF THE COMPANY
There are no proceedings on behalf of the company under section 237 of the Corporations Act 2001 in the financial year or at the date
of this report.
ROUNDING
The Company is a company of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order,
amounts in this report and the accompanying financial report have been rounded off to the nearest thousand dollars, unless otherwise stated.
36
Financial Report
NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or by another person or firm on the auditor’s
behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 and do not compromise
auditor independence.
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are detailed in note 3 of the
financial statements.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Aditya Birla Minerals Limited support and
have adhered to the principles of corporate governance. The Company’s Corporate Governance Statement is contained on pages 37-40 of this report.
AUDITOR’S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires the company’s auditors, Ernst & Young, to provide the directors with a written Independence
Declaration in relation to their audit of the financial report for the year ended 31 March 2007. This written Auditor’s Independence Declaration is
included on page 41 of this report.
Signed in accordance with a resolution of the Directors.
Debu Bhattacharya
Chairman
Perth, 26 April 2007
Sanjay Loyalka
Managing Director
37
Financial Report
Corporate Governance Statement
The Board of Directors of Aditya Birla Minerals Limited (“the Company”) is responsible for the corporate governance of the company. The Board
guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are
accountable.
In accordance with the Australian Stock Exchange (ASX) Corporate Governance Council’s (“CGC”) “Principles of Good Corporate Governance and
Best Practice Recommendations” the Corporate Governance Statement must contain certain specific information and must disclose the extent to
which the Company has followed the guidelines during the period. Where a recommendation has not been followed, that fact must be disclosed
together with the reasons for the departure.
The Company’s corporate governance practices were in place throughout the year and are compliant, unless otherwise stated, with the Corporate
Governance Council’s principles and recommendations, which are noted below.
Principle 1.
Lay solid foundations for management and oversight
Principle 2.
Structure the Board to add value
Principle 3.
Promote ethical and responsible decision making
Principle 4.
Safeguard integrity in financial reporting
Principle 5.
Make timely and balanced disclosure
Principle 6.
Respect the rights of shareholders
Principle 7.
Recognise and manage risk
Principle 8.
Encourage enhanced performance
Principle 9.
Remunerate fairly and responsibly
Principle 10.
Recognise the legitimate interests of stakeholders
The Board has developed policies and practices consistent with the ASX Recommendations, with such adjustments as the Board believes are
appropriate for the particular circumstances of the Company. Consistent with these policies, a summary of the corporate governance policies and
practices adopted by the Company is set out below.
Role of the Board of Directors
The Board of Aditya Birla Minerals Ltd is responsible for setting the Company’s strategic direction and providing effective governance over the
Company’s affairs in conjunction with the overall supervision of the Company’s business with the view of maximising shareholder value. The
Board’s key responsibilities are to:
(a) chart the direction, strategies and financial objectives for Birla Minerals and monitor the implementation of those policies, strategies and
financial objectives;
(b) monitor compliance with regulatory requirements, ethical standards and external commitments;
(c) based on nomination from Hindalco, the company’s major shareholder, appoint, evaluate the performance of, determine the remuneration of,
plan for the succession of and, where appropriate, remove the Chief Executive Officer; and
(d) ensure that the Board continues to have the mix of skills and experience necessary to conduct the Company’s activities, and that appropriate
directors are selected and appointed as required.
The Board has adopted a Board Charter, which sets out in more detail the responsibilities of the Board. The Board Charter sets out the division of
responsibility between the Board and management to assist those affected by decisions to better understand the respective accountabilities and
contribution to Board and management.
In accordance with the Company’s Constitution, the Board delegates responsibility for the day–to–day management of the Company to the Chief
Executive Officer (subject to any limits of such delegated authority as determined by the Board from time to time). Management as a whole is
charged with reporting to the Board on the performance of the Company.
38
Financial Report
Corporate Governance Statement (Cont.)
Board structure and composition
Under the Board Charter, the Board will comprise six members, of which at least three must be independent non–executive Directors.
Independence, in this context, is defined to mean a non–executive Director who is free from any interest and any business or other relationship
that could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company. The
definition of independence in ASX Recommendation 2.1 is taken into account for this purpose.
A Director cannot hold the position of both Chairman and Chief Executive Officer.
The Companys’ non–executive Directors may not hold office for a continuous period in excess of three years or past the third annual general
meeting following their appointment, whichever is longer, without submitting for re–election. Directors are elected or re–elected, as the case
may be, by shareholders in a general meeting. Directors may offer themselves for re–election. A Director appointed by the Directors (e.g., to fill a
casual vacancy) will hold office only until the conclusion of the next annual general meeting of the Company but is eligible for re–election at that
meeting.
The Charter provides that the Board will meet at least six times a year, and that non–executive Directors will meet together without the presence of
executive Directors at least twice each year.
Under the Company’s Constitution, voting requires a simple majority of the Board. The Chairman does not presently hold a casting vote, however
if the Board were to later resolve to permit the Chairman to have a casting vote, this would need to be approved by a majority of Directors.
Board and management effectiveness
The Charter contemplates that the Board will annually assess the performance of the Board as a whole, and the individual Directors, as well as
the effectiveness of the Board Charter. Responsibility for the overall direction and management of the Company, its corporate governance and
the internal workings of the Company rests with the Board notwithstanding the delegation of certain functions to the Chief Executive Officer
and management generally (such delegation effected at all times in accordance with the Company’s Constitution and its corporate governance
policies).
An evaluation procedure in relation to the Board, individual Directors, Board Committees and Company executives is to be implemented by the
Board. To ensure management, as well as Board effectiveness, the Board has direct responsibility for evaluating the performance of the Chief
Executive Officer, while the outcomes of other executives’ performance appraisals are reported to the Nomination and Remuneration Committee.
Furthermore, individual Directors’ performance is evaluated by reference to the Director’s contribution to monitoring and assessing management
performance in achieving strategies and budgets approved by the Board (among other things).
Financial reporting
The Chief Executive Officer and the Chief Financial Officer are required to state in writing that the Company’s financial reports present a true
and fair view, in all material respects, of the Company’s financial condition and operational results in accordance with the relevant accounting
standards.
Committees of the Board of Directors
The Board has established two permanent Board committees to assist the Board in the performance of its functions:
(a) the Audit, Compliance and Risk Committee; and
(b) the Remuneration and Nomination Committee.
Each committee has a charter, which sets out the Committee’s purpose and responsibilities. The Committees are described further below.
The names of the members of the two committees are set out in the Directors’ Report.
39
Financial Report
Audit, Compliance and Risk Committee
The purpose of the Audit, Compliance and Risk Committee is to provide assistance to the Board in its review of:
(a) the Company’s financial reporting, internal control structure and risk management systems;
(b) the internal and external audit functions; and
(c) the Company’s compliance with legal and regulatory requirements in relation to the above.
The Audit, Compliance and Risk Committee has specific responsibilities in relation to the Company’s financial reporting process; the assessment
of accounting, financial and internal controls; the appointment of external auditor; the assessment of the external audit; the independence of the
external auditor; and setting the scope of the external audit.
The Audit, Compliance and Risk Committee must comprise at least three non–executive Directors that have diverse, complementary
backgrounds, with two independent non–executive Directors. The Chairman of the Audit, Compliance and Risk Committee must be an independent
non–executive Director.
The members of the Audit, Compliance and Risk Committee are: Mr Hogendijk (Chairman), Mr Dharmananda, and Mr Prasanna.
Remuneration and Nomination Committee
The purpose of the Remuneration and Nomination Committee is to discharge the Board’s responsibilities relating to the nomination and selection
of Directors and the compensation of the Company’s executives and Directors.
The key responsibilities of the Remuneration and Nomination Committee are to:
(a) ensure the establishment and maintenance of a formal and transparent procedure for the selection and appointment of new Directors to the
Board; and
(b) establish transparent and coherent remuneration policies and practices, which will enable the Company to attract, retain and motivate
executives and Directors who will create value for shareholders and to fairly and responsibly reward executives.
The Remuneration and Nomination Committee must comprise at least three non–executive Directors, two of which must be independent non–
executive Directors. The Chairman of the Remuneration and Nomination Committee must be an independent non–executive Director.
The members of the Remuneration and Nomination Committee are: Mr McGowan (Chairman), Mr Dharmananda, and Mr Bhattacharya.
The remuneration policy which sets out the terms and conditions for the chief executive officer and other senior executives is set out in the
Remuneration Report included in the Directors Report.
Timely and balanced disclosure
The Company is committed to promoting investor confidence and ensuring that shareholders and the market have equal access to information
and are provided with timely and balanced disclosure of all material matters concerning the Company. Additionally, the Company recognises its
continuous disclosure obligations under the ASX Listing Rules and the Corporations Act. To assist with these matters, the Board has adopted a
Continuous Disclosure and Shareholder Communication Policy.
The Continuous Disclosure and Shareholder Communication Policy allocates roles to the Board and management in respect of identifying material
information and co–ordinating disclosure of that information where required by the ASX Listing Rules.
The Policy also identifies authorised company spokespersons and the processes the Company has adopted to communicate effectively with its
shareholders. In addition to periodic reporting, the Company will ensure that all relevant information concerning the Company is placed on its
website.
40
Financial Report
Ethical and responsible decision–making
Code of Conduct
The Board has created a framework for managing the Company including internal controls, business risk management processes and appropriate
ethical standards.
The Board has adopted practices for maintaining confidence in the Company’s integrity including promoting integrity, trust, fairness and honesty
in the way employees and Directors conduct themselves and the Company’s business, avoiding conflicts of interest and not misusing company
resources. A formal Code of Conduct has been adopted for all employees and Directors of the Company.
Securities Trading Policy
A Securities Trading Policy has been adopted by the Board to set a standard of conduct, which demonstrates the Company’s commitment to
ensuring awareness of the insider trading laws, and that employees and Directors comply with those laws. The Securities Trading Policy imposes
additional share trading restrictions on Directors, the Company Secretary, executives and employees involved in monthly financial accounting
processes (“specified persons”).
Under the Securities Trading Policy, specified persons are only permitted to buy and sell securities if they do not possess non–public price
sensitive information and trading occurs outside of specified restricted periods. These periods are the periods commencing on the first day of the
month before the end of the half–year or full year period and ending on the next business day after the announcement of the results for that period.
In addition, before a specified person can deal in the Company’s securities they must obtain clearance from the appropriate officer, confirming that
there is no reason why they cannot trade.
Other Information
Aditya Birla Minerals Ltd has included on its website www.adityabirlaminerals.com.au full details of its corporate governance regime.
41
Financial Report
Auditor’s Independence Declaration
42
Financial Report
Independent Audit Report
43
Financial Report
Independent Audit Report (Cont.)
44
Financial Report
Income Statement
For the Year Ended 31 March 2007
Consolidated
The Company
Notes
2007
$’000
2006
$’000
2007
$’000
2006
$’000
Sale of product
2(a)
323,568
185,471
Other revenue
2(a)
390
144
75
323,958
185,615
75
(287,004)
(180,295)
Continuing operations
Total revenue
Cost of sales
2(d)
Gross profit
Other income
36,954
2(b)
-
-
(1,032)
(30)
(21,722)
(12,661)
-
-
2(d)
(1,388)
(11,425)
14,984
(12,209)
84
3,961
2(c)
(12,313)
(12,290)
(211)
(1,441)
2,671
(24,499)
(127)
2,520
7,350
119
4
Net profit/(loss) attributable to members of the parent
(801)
1,870
(17,149)
Earnings per share (cents per share)
5
0.63
The above income statement should be read in conjunction with the accompanying notes.
1,267
9,508
Profit/(Loss) before income tax
Basic and diluted for profit/(loss) for the year attributable to
ordinary equity holders of the parent
75
-
(2,951)
Profit/(Loss) before income tax and finance costs
Income tax (expense)/benefit
1,267
-
7,627
Distribution expenses
Finance costs
1,267
(6,487)
Administration expenses
Other expenses
5,320
-
(10.89)
1,041
(8)
2,724
203
2,723
45
Financial Report
Balance Sheet
As at 31 March 2007
Notes
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total Current Assets
Non-current Assets
Inventories
Property, plant and equipment
Deferred exploration and evaluation expenditure
Deferred tax assets
Other financial assets
Other
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Interest-bearing liabilities
Provisions
Derivatives
Total Current Liabilities
Non-current Liabilities
Provisions
Derivatives
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Consolidated
2007
2006
$’000
$’000
7
8
9
10
6,225
9,496
68,196
557
84,474
9,286
23,492
69,111
1,358
103,247
8
9
11
12
4
13
10
87,747
423,753
20,864
1,811
36
534,211
618,685
69,757
359,002
17,138
16,546
8,285
470,728
573,975
14
15
16
17
46,104
88,221
2,408
8,498
145,231
15
16
17
18
The Company
2007
2006
$’000
$’000
7
16
12
80
-
32
55
878
970
280,903
51,078
121,195
453,176
453,231
22,907
31,460
137,074
191,441
192,411
72,305
137,652
1,396
81,031
292,384
775
119
2,693
3,587
1,126
32,476
33,602
38,830
21,715
60,545
205,776
412,909
179,781
18,713
3,861
202,355
494,739
79,236
3,587
449,644
33,602
158,809
450,663
159,820
450,663
159,820
(31,327)
(33,197)
(6,427)
(47,387)
EQUITY
Issued capital
Accumulated losses
Cash flow hedge reserve
TOTAL EQUITY
18
412,909
79,236
(1,019)
(1,011)
449,644
158,809
The above balance sheet should be read in conjunction with the accompanying notes.
46
Financial Report
Cash Flow Statement
Notes
Consolidated
Consolidated
The company
The company
2007
$’000
2006
$’000
2007
$’000
2006
$’000
337,844
197,751
(340,034)
(184,053)
Cash flows from/(used in) operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
110
Interest paid
Net cash flows used in operating activities
26(a)
64
5
139
(1,587)
(1,269)
75
1,129
(11,030)
(18,630)
(211)
(1,441)
(13,110)
(4,927)
(1,659)
(1,442)
(32,440)
(59,428)
-
-
(66,496)
(75,541)
-
-
18,627
18,465
-
-
Cash flows from/(used in) investing activities
Payment for plant and equipment
Payments for exploration, evaluation and mine
development
Proceeds from sale of plant and equipment
Advances to related parties
-
-
(253,228)
(14,519)
Payments for investment in Birla Nifty Pty Ltd
-
-
-
(16,000)
(80,309)
(116,504)
(253,228)
(30,519)
Proceeds from issue of shares
299,427
16,000
299,427
16,000
Payment of transaction costs – issue of shares
(12,188)
Proceeds from borrowings
194,214
Net cash flows used in investing activities
Cash flows from/(used in) financing activities
Repayment of finance lease liabilities
Repayment of borrowings
-
(12,188)
(368)
(95)
-
(367,679)
(134,683)
(32,476)
Proceeds from borrowings – related entities
-
Repayment of borrowings – related entities
(19,556)
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
26 (b)
21,773
(483)
93,850
121,713
431
282
4,120
4,551
The above cash flow statement should be read in conjunction with the accompanying notes.
219,201
-
254,763
3,100
12,881
(11)
31,970
(124)
9
3,838
12
3
4,120
(112)
12
47
Financial Report
Statement of Changes in Equity
Note
Consolidated
At 1 April 2005
Transfer of deferred gain or loss on designated
hedges, net of tax, to hedge reserve on transition to
AASB 139 Financial Instruments
Movement in unrealised losses on Cash
Flow hedges, net of tax
Total loss for the period recognised directly in equity
Loss for the period after tax
Total loss for the period
Issue of ordinary shares
At 31 March 2006
Movement in Cash Flow hedges, net of tax
Total profit for the period recognised directly in equity
Issued capital
$’000
143,820
Retained profits
(Accumulated Cash Flow Hedge
losses)
Reserve
$’000
$’000
Total Equity
$’000
(16,048)
-
127,772
-
(8,120)
(8,120)
-
-
(39,267)
(39,267)
-
-
(47,387)
(47,387)
16,000
159,820
(17,149)
(17,149)
(33,197)
(47,387)
(47,387)
(17,149)
(64,536)
16,000
79,236
-
-
40,960
40,960
40,960
40,960
1,870
42,830
299,427
(8,584)
-
Profit for the period after tax
Total profit for the period
Transaction costs on share issue, net of tax
299,427
(8,584)
1,870
1,870
-
40,960
-
At 31 March 2007
450,663
(31,327)
(6,427)
412,909
Parent
At 1 April 2005
143,820
(3,734)
-
140,086
2,723
-
2,723
Profit for the period after tax
16,000
-
-
16,000
At 31 March 2006
159,820
(1,011)
-
158,809
299,427
(8,584)
-
-
299,427
(8,584)
-
(8)
-
(8)
(1,019)
-
Loss for the period after tax
At 31 March 2007
450,663
449,644
The above statement of changes in equity should be read in conjunction with the accompanying notes.
48
Financial Report
Notes to and Forming Part of the Financial Report (Cont.)
1. Summary of Significant Accounting Policies
(a) Corporate Information
The financial report of Aditya Birla Minerals Limited for the year ended 31 March 2007 was authorised for issue in accordance with a
resolution of the directors on 25 April 2007.
Aditya Birla Minerals Limited (the parent) is a company limited by shares incorporated and domiciled in Australia whose shares are publicly
traded on the Australian Stock Exchange with effect from 12 May 2006.
The address of the registered office is Level 3, 256 Adelaide Terrace, Perth, WA, 6000.
(b) Basis of Preparation and Going Concern
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations
Act 2001, applicable Accounting Standards and other mandatory professional reporting requirements.
The financial report has been prepared on a historical cost basis, except for trade receivables and derivative financial instruments which have
been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars (‘000s) unless otherwise
stated under the option available to the Company under ASIC Class Order 98/0100. The company is an entity to which the class order applies.
As at 31 March 2007 the group has a working capital deficiency of A$60.8 million and has utilised approximately A$93 million of cash during
the year as part of its operating and investing activities. In addition, the group’s banking facilities are fully utilised as at 31 March 2007.
The working capital deficiency is a result of a large proportion of the group’s finance facilities being due for repayment over the next twelve
months.
The cash utilised from operating activities is primarily due to the slow ramp up of the Nifty Sulphide project mainly as a result of the delays in
commissioning the underground crusher and conveyor system and the commodity hedging loss incurred during the year.
The cash utilised from investing activities is primarily due to the development of the Nifty underground mine and associated plant and
equipment.
Management are satisfied the group can continue on a going concern basis. This opinion is based on the following matters:
(i) The underground crusher and conveyor system is in the process of being ramped up;
(ii) As a result of the ramping up of the Nifty Sulphide project, the group is forecast to generate enhanced cashflows from operations as
compared to last year;
(iii) The group has recently secured an additional $80 million working capital facility with BNP Paribas (“BNP”). This facility has a
maturity on 30 November 2007;
(iv) Management are satisfied that the existing facilities with HSBC and the new facility with BNP will be renewed when due;
(v) The large out of the money hedge book in place at the commencement of the 31 March 2007 year has been delivered into during the
year.
49
Financial Report
1. Summary of Significant Accounting Policies (Cont.)
(c) Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting
Standards (‘AIFRS’). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto,
complies with International Financial Reporting Standards (‘IFRS’).
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been
adopted for the annual reporting period ended 31 March 2007. These are outlined in the table below:
Reference
Affected Standard(s)
Nature of Change to
Accounting Policy
Application
Date of
Standard*
Application
Date for Group
1 Jan 07
1 Apr 07
Amendments to Australian Accounting
Standards [AASB 132, AASB 101, AASB
114, AASB 117, AASB 133, AASB 139,
AASB 1, AASB 4, AASB 1023 & AASB
1038]
AASB 7 is a disclosure standard
so will have no direct impact
on the amounts included in the
Group’s financial statements.
AASB 7
Financial Instruments: Disclosures
As above.
1 Jan 07
1 Apr 07
UIG 9
Reassessment of Embedded Derivatives
No change to accounting policy
required. Therefore no impact.
1 Jun 06
1 Apr 07
UIG 10
Interim Financial Reporting and Impairment
1 Nov 06
1 Apr 07
2007-2
Amendments to Australian Accounting
Standards [AASB 1, AASB 117, AASB 118,
AASB 120, AASB 121, AASB 127, AASB
131 & AASB 139]
1 Jan 08
1 Apr 08
AASB
2005-10
However, the amendments will
result in changes to the financial
instrument disclosures included in
the Group’s financial report.
* Application date is for the annual reporting periods beginning on or after the date shown in the above table.
The following amendments are not applicable to the consolidated entity and therefore have no impact
AASB
Amendment
2006-1
Affected Standard(s)
AASB 121 “The Effects of Changes in Foreign Exchange Rates”
2006-2
AASB 1 “First-time Adoption of Australian Equivalents to International Financial Reporting Standards”
2006-3
AASB 1045 “Land Under Roads: Amendments to AAS 27A, AAS 29A and AAS 31A”
2007-1
AASB 2 “Share-based Payment”
UIG 8
UIG 11
UIG12
Service Concession Arrangements
50
Financial Report
(d) Principles of consolidation
The consolidated financial statements comprise the financial statements of Aditya Birla Minerals Limited (the parent entity) and its controlled
entities, referred to collectively throughout these financial statements as the “consolidated entity”.
Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up
to the date control ceased.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.
The balances and effects of transactions between controlled entities included in the consolidated financial statements have been fully
eliminated.
(e) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the consolidated entity and revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Copper Sales
Revenue from sales of copper concentrate and copper cathode is recognised upon shipment or discharge when there has been a passing of
the significant risks and rewards of ownership, which means the following:
• The product is in a form suitable for delivery and no further processing is required by, or on behalf of the consolidated entity;
• The quantity and quality (grade) of the product can be determined with reasonable accuracy;
• The selling price can be measured reliably;
• It is probable that the economic benefits associated with the transaction will flow to the consolidated entity;
• The costs incurred or to be incurred in respect of the transaction can be measured reliably; and
• Copper concentrate sales revenue is subject to adjustments due to weight, price and currency variations.
Interest income
Revenue is recognised as interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).
Dividends
Revenue is recognized when the shareholders’ right to receive the payment is established.
(f) Foreign currency transactions
Both the functional and the presentation currency of the parent entity and its controlled entities is Australian dollars ($).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange ruling at the balance sheet date.
All differences in the financial report are taken to the income statement.
The accounting policy for hedge transactions is set out in Note 1(i).
51
Financial Report
(g) Income Tax
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of the assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses,
to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of
unused tax assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• in respect of taxable temporary difference associated with investments in subsidiaries, deferred tax asset are only recognised to the
extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Effective from incorporation, for the purposes of income taxation, Aditya Birla Minerals Limited and its 100% owned subsidiaries have formed
a tax consolidated group. Aditya Birla Minerals Limited is the head entity of the tax consolidated group. Members of the consolidated entity
have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a pro-rata basis.
In addition the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax
payment obligations. At the balance date, the possibility of default is remote.
52
Financial Report
(h) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the amount of GST
incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item as applicable.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing
activities, which is recoverable from, or payable to, the ATO is classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the ATO.
(i) Derivative financial instruments and hedging
The consolidated entity benefits from the use of derivative financial instruments to manage commodity price, interest rates and foreign
currency exposures.
Instruments used to manage natural exposures to commodity prices, exchange rates and interest rates include put and call options, swaps
and foreign exchange contracts.
Derivative financial instruments are initially recognised in the balance sheet at fair value and are subsequently re-measured at their fair values.
For the purposes of hedge accounting, hedges are classified as either fair value hedges when the consolidated entity hedges the exposure to
changes in the fair value of a recognised asset or liability; or cash flow hedges where the hedge exposure to variability in cash flows that is
either attributable to a particular risk associated with a recognised asset or liability or an expected transaction.
The method of recognising the resultant gain or loss is dependent on the nature of the item being hedged.
At the inception of the transaction, the consolidated entity documents the relationship between the hedging instrument and hedged items, as
well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives
designated as hedges to resultant cash flows from specific quotational periods.
Changes in the fair value of derivatives that are designated against future sales qualify as cash flow hedges and if deemed highly effective,
are recognised in equity to the extent of the hedge’s effectiveness. Any ineffectiveness in the hedge relationship is taken immediately to the
Income Statement. Amounts deferred in equity are transferred to the income statement and classified as revenue in the same periods during
which the designated hedged sales are recognised.
Certain derivative instruments do not qualify for hedge accounting under the specific rules in AASB 139. Changes in the fair value of any
derivative instruments that do not qualify for hedge accounting under AASB 139 are recognised immediately in the income statement.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting under AASB 139, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the commitment or expected transaction
occurs. However, if the committed or expected production is no longer expected to occur, the cumulative gain or loss reported in equity is
immediately transferred to the income statement.
53
Financial Report
(j) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three
months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
(k) Trade and other receivables
On initial recognition trade debtors are designated at fair value through profit and loss, accordingly trade debtors are measured at fair value as
at reporting date.
The majority of sales revenue is invoiced and received in US dollars.
Generally 100% of the copper cathode sales invoice value is to be settled within 10 days of presentation of delivery documents.
In the case of copper concentrate, on presentation of documents the customer settles 90% of the provisional invoice value within 3-5 days
of receipt of consignment and the remaining 10% is settled within 3-5 days of presentation of the final invoice at the end of the quotational
period. The final price is based on the average LME copper price for the month of settlement.
Other receivables are recognised and carried at original invoiced amount less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the consolidated entity will not be able to collect the debts.
Bad debts are written off when identified. No interest is charged on overdue accounts.
(l) Inventories
Inventories comprise broken ore, copper in ore and under leach, concentrate and cathode which are carried at the lower of weighted average
cost and net realisable value.
Cost comprises direct material, labour and other expenditure together with an appropriate portion of fixed and variable overhead expenditure
based on the weighted average costs incurred during the period in which such inventories were produced.
Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost and
net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated
costs necessary to make the sale.
(m) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value.
Items of property, plant and equipment are depreciated as outlined below.
• mining plant & equipment: unit of production based on economically recoverable reserves.
• other plant and equipment: straight line depreciation at a rate of 10% to 50% per annum, depending on the item of plant.
The cost of property, plant and equipment constructed by the consolidated entity includes the costs of all materials used in construction,
direct labour, borrowing costs incurred during construction and an allocation of overheads.
Borrowing costs included in the cost of property, plant and equipment are those costs, which are directly attributable to the construction, or
production of qualifying assets and that would have been avoided if the expenditure on the construction of the property, plant and equipment
had not been made.
54
Financial Report
(m) Property, plant and equipment (Cont.)
Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is
completed and available for use.
Mining Properties in Production or Under Development
Mine properties in production (including exploration, evaluation and development expenditure) are accumulated and brought to account
at cost less accumulated amortisation in respect of each identifiable area of interest. Amortisation of capitalised costs is provided on a
production output basis, proportional to the depletion of the mineral resource of each area of interest expected to be ultimately economically
recoverable.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation that
area of interest. Should the carrying value of expenditure not yet amortised exceed its estimated recoverable amount in any year, the excess is
written off to the income statement.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value
may not be recoverable.
For an asset that does not generate largely independent cash flows the recoverable amount is determined for the cash-generating unit to
which the asset belongs. If any indication of impairment exists and where the carrying values exceed the estimated recoverable amount, the
assets or cash generating unit are written down to their recoverable amount through the Income Statement.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the
time value of money and the risks specific to the asset or group of assets being assessed.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate
of recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (cash generating unit). A reversal of impairment loss is recognised in
profit and loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a
revaluation increase.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the item) is included in the income statement in the period the item is derecognised.
(n) Exploration, Evaluation, Development and Restoration costs
Exploration and Evaluation Expenditure
Exploration and evaluation expenditure is stated at cost and is accumulated in respect of each identifiable area of interest.
Such costs are only carried forward in respect of areas of interest for which the rights of tenure are current and where:
• such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by
its sale; or
• activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves and active and significant operations in, or in relation to the area are continuing.
55
Financial Report
(n) Exploration, Evaluation, Development and Restoration costs (Cont.)
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that
area of interest. Where carried forward expenditure does not satisfy the policy stated above it is written off to the income statement in the
period in which it is incurred.
Accumulated costs in relation to an abandoned area are written off to the income statement in the period in which the decision to abandon the
area is made.
Rehabilitation, Restoration and Environmental Costs
Long-term environmental obligations are based on the consolidated entity’s environmental management plans, in compliance with current
environmental and regulatory requirements.
The costs include obligations relating to reclamation, waste site closure, plant closure, and other costs associated with the restoration of the
site.
Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance (to the extent that
it relates to the development of an asset) that has been incurred as at the balance sheet date. Increases due to additional environmental
disturbances are capitalised and amortised over the remaining lives of the mines. These increases are accounted for on a net present value
basis.
Annual increases in the provision relating to the change in the net present value of the provision are accounted for in the income statement as
borrowing costs.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other
circumstances. Cost estimates are not reduced by the potential proceeds from the sale of assets or from plant clean-up at closure.
(o) Deferred mining costs
Certain mining costs, principally those that relate to the stripping of waste and which relate to future economically recoverable ore to be
mined, have been capitalised and included in the balance sheet as deferred mining in other assets (non current).
These costs are deferred or taken to the cost of production as the case may be, so that each tonne of ore mined bears the average cost of
waste removal per tonne of ore, as determined by the waste to ore ratio derived from the current pit design. The waste to ore ratio and the
remaining life of the mine are regularly assessed by the Directors and senior management to ensure the carrying value and the rate of deferral
is appropriate.
(p) Recoverable amount of assets
At each reporting date, the consolidated entity assesses whether there is any indication that an asset may be impaired. Where an indicator of
impairment exists, the consolidated entity makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds
its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. Recoverable amount is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that
are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessment of the time value of money and the risks specific to the asset or group of assets being assessed.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no
longer exist or may have decreased. If such indication exists the recoverable amount is estimated.
56
Financial Report
(p) Recoverable amount of assets (Cont.)
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and loss unless the asset is carried at its
revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in
future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(q) Trade and other payables
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the consolidated entity.
Trade accounts are normally settled in accordance with the terms of trade.
Payables to related parties are initially recognised at their fair value and subsequently measured at amortised cost.
(r) Interest-bearing liabilities
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the
borrowing.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation
process.
(s) Leased assets
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment
of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use
the asset.
Finance leases
Leases which effectively transfer to the consolidated entity substantially all the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease
payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are recognised as an expense in income statement.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements and amortised over the unexpired
period of the lease or the estimated useful life of the improvement, whichever is shorter.
Operating leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating
lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.
57
Financial Report
(t) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits
include wages and salaries, annual leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months
of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is
settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of
services provided by employees up to the reporting date.
Obligations for contributions to contribution superannuation plans are expensed as incurred.
(u) Borrowing costs
Borrowing costs are recognised as an expense when incurred, except where the borrowing costs incurred are directly associated with the
construction, purchase or acquisition of a qualifying asset, in which case the borrowing costs will be capitalised as part of the cost of the
asset.
(v) Provisions
A provision is recognised when a legal or constructive obligation exists as a result of a past event, it is probable that an outflow of economic
benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the consolidated entity expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is
presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax
discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(w) Investments
Interests in controlled entities are included in other financial assets at the lower of cost and recoverable amount.
(x) Issued capital
Issued and paid up capital is recognised at the fair value of the consideration received by the consolidated entity. Any transaction costs
arising on the issue of ordinary shares are recognised directly in equity as a reduction, net of tax, of the proceeds received.
(y) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit attributable to members of the company, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses;
and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary
shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
58
Financial Report
(z) Significant accounting judgements, estimates and assumptions
(i) Mine rehabilitation provision.
The consolidated entity assesses its mine rehabilitation provision annually in accordance with the accounting policy stated in note
1(n). Significant judgement is required in determining the provision for mine rehabilitation as there are many transactions and other
factors that will affect the ultimate liability payable to rehabilitate the mine site. Factors that will affect this liability include future
development, changes in technology, commodity price changes and changes in interest rates. When these factors change or become
known in the future, such difference will impact the mine rehabilitation provision in the period in which they change or become
known.
(ii) Units of production method of depreciation
The company applies the units of production method of depreciation of its mine assets based on ore tonnes mined. These
calculations require the use of estimates and assumptions. Significant judgement is required in assessing the available reserves
and the production capacity of the plants to be depreciated under this method. Factors that are considered in determining reserves
and resources and production capacity are the company’s history of converting resources to reserves and the relevant time frames,
the complexity of metallurgy, markets and future developments. When these factors change or become known in the future, such
differences will impact pre tax profit and carrying values of assets.
(iii) Ore under Leach
The consolidated entity carries copper in ore and under leach at the lower of weighted average cost and net realisable value. This
assessment requires an estimation of the recoverable tonnes of copper under leach, the future copper price and exchange rate and
future processing cost to extract the copper under leach. The net realisable value is based on a long term copper price assumption of
A$5,516 (2006: A$4,691), current processing cost and the estimated tonnes of recoverable copper.
Changes in the above assumption could have a material impact on the assessed net realisable value of copper in ore and
under leach.
59
Financial Report
Consolidated
2007
$’000
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
2. Revenues and Expenses
(a) Revenue
Sale of product
Other revenue
Finance revenue
Other
Total revenue
Breakdown of finance revenue
Bank interest receivable
Interest - related parties
(b) Other income
Insurance claim proceeds
Gain on sale of plant and equipment
(c) Finance costs
Loans
Finance charges payable under finance leases
Less finance costs capitalised
Unwinding of discount on rehabilitation provision
323,568
185,471
110
280
390
323,958
5
139
144
185,615
110
5
110
5
7,627
7,627
10,809
221
11,030
1,283
12,313
3,129
6,379
9,508
18,540
91
18,631
(6,530)
189
12,290
-
75
-
75
75
1,129
138
1,267
1,267
75
75
5
1,124
1,129
-
-
211
211
211
1,441
1,441
1,441
60
Financial Report
Consolidated
2007
$’000
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
2. Revenues and Expenses (Cont.)
Expenses included in the income statement
Depreciation of plant and equipment
10,510
8,637
Amortisation of mine properties
18,224
16,826
-
-
132
101
-
-
Exploration expenditure
Government royalties
Movement in mining inventory
-
-
14,370
10,247
-
-
(20,522)
(44,736)
-
-
6,882
11,456
-
-
NRV write down of inventory
Minimum lease payments – operating lease
Salaries, wages expense and other employee benefits
6,867
2,881
-
-
34,534
21,498
-
(3,194)
(Write-back)/ Impairment of investment
Net foreign exchange differences
-
-
-
(5,494)
(31)
(1,196)
470
3. Auditor’s Remuneration
The auditor of Aditya Birla Minerals Ltd is
Ernst & Young (Australia)
Amounts received or due and receivable by
Ernst & Young for:
- an audit or review of the financial report of the entity
and any other entity in the consolidated group
- other services in relation to the entity and any other
entity in the consolidated group
- tax compliance
190,550
163,761
-
-
85,579
117,222
-
-
- business advisory in relation to ASX listing
236,094
138,293
236,094
138,293
- independent accountants report
-
206,878
-
206,878
512,223
626,154
236,094
345,171
No audit fee has been borne by the parent company as the entire fee has been allocated to subsidiaries generating revenue.
61
Financial Report
Consolidated
2007
$’000
4. Income Tax
The major components of income tax are:
Income statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of
previous years
Deferred income tax
Relating to origination and reversal of temporary
differences
Income tax expense/(benefit) reported in the income
statement
Statement of changes in equity
Deferred income tax related to items charged or credited
directly to equity
Net loss on cash flow hedges
Capital raising
Income tax expense/(benefit) reported in equity
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
-
-
-
-
-
-
-
-
801
(7,350)
(119)
(203)
801
(7,350)
(119)
(203)
17,555
(3,604)
13,951
(16,829)
(16,289)
(3,604)
(3,604)
-
2,671
(24,499)
(127)
2,520
2,671
(24,499)
(271)
(398)
(3,194)
(674)
801
(7,350)
(119)
(203)
801
(7,350)
(119)
(203)
A reconciliation between tax expense and the product
of accounting profit before income tax multiplied by the
Group’s applicable income tax rate is as follows:
Accounting profit/(loss) before income tax
Expenditure not allowable for income tax purposes:
- impairment of investment in controlled entity
- other
Adjusted accounting profit/(loss) before income tax
At the Group’s statutory income tax rate of 30% (2006:
30%)
Income tax expense/(benefit) reported in the income
statement
62
Financial Report
Income
Statement
2007
$’000
Income
Statement
2006
$’000
(70,524)
(3,367)
(73,891)
5,877
(378)
(389)
(1,637)
(485)
27,967
667
-
6,473
6,129
20,986
20,308
31,245
370
(241)
8
5,159
90,437
4,951
666
(20,986)
16,549
(370)
241
(4,861)
21
23
(623)
(736)
(20,986)
(8,843)
(370)
422
6
282
(5,159)
-
(801)
(7,350)
(359)
24
-
(179)
1,402
-
(142)
(61)
-
Balance Sheet
2007
$’000
Balance Sheet
2006
$’000
(64,647)
(378)
(389)
(5,004)
(485)
(70,903)
11,424
6,803
2,755
48,525
-
4. Income Tax (Cont.)
Deferred income tax
Deferred income tax at 31 March relates to the following
CONSOLIDATED
Deferred tax liabilities
Accelerated depreciation for tax purposes
Unrealised foreign exchange gain
Hedge premium/deferred exchange gain
Consumables
Others
Gross deferred income tax liabilities
CONSOLIDATED
Deferred tax assets
Audit fees
Trading stock
Provisions & payables
Project pool deduction
Unrealised hedge loss recognised in equity
Recognition of income tax losses
Unrealised foreign exchange loss
Diesel fuel rebate
Superannuation
Intangible adjustments
Unrealised hedge losses
Share issue costs
Tax effect on share issue cost recognised in equity
Others
Gross deferred income tax assets
298
(716)
3,604
21
72,714
Deferred tax income / (expense)
PARENT
Deferred tax liabilities
Unrealised foreign exchange gain
Others
Gross deferred income tax liabilities
PARENT
Deferred tax assets
Unrealised hedge loss
Recognition of income tax losses
Income tax losses transferred from subsidiaries
Share issue costs
(359)
24
(335)
-
1,244
48,050
(716)
179
(889)
32,170
-
-
63
Financial Report
Balance Sheet
2007
$’000
Balance Sheet
2006
$’000
Income
Statement
2007
$’000
Income
Statement
2006
$’000
4. Income Tax (Cont.)
Tax effect on share issue cost recognised in equity
Others
Gross deferred income tax assets
3,604
(769)
51,413
Deferred tax income / (expense)
-
-
31,460
(769)
119
-
(203)
The consolidated entity has tax losses arising in Australia of $161.8 million (2006: $104.2 million) that are available indefinitely for offset
against future taxable profits of the consolidated group. As the consolidated entity is expected to have taxable income in the future considering
the recent commissioning of the Nifty underground sulphide project, the future income tax benefit amount with these losses has been
recognised in the final results of the Company and the consolidated entity.
Tax consolidation
Effective from incorporation, for the purposes of income taxation, Aditya Birla Minerals Limited and its 100% owned subsidiaries have formed
a tax consolidated group. Aditya Birla Minerals Limited is the head entity of the tax consolidated group. Members of the consolidated entity
have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a pro-rata basis.
In addition the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax
payment obligations. At the balance date, the possibility of default is remote.
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the allocation of
current taxes to members of the tax consolidated group in accordance with their accounting profit for the period, while deferred taxes are
allocated to members of the tax consolidated group in accordance with the principles of AASB 112 Income Taxes.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries’ intercompany accounts
with the tax consolidated group head company, Aditya Birla Minerals Limited. Because under UIG 1052 Tax Consolidation Accounting the
allocation of current taxes to tax consolidated group members on the basis of accounting profits is not an acceptable method of allocation
given the group’s circumstances, the difference between the current tax amount that is allocated under the tax funding agreement and the
amount that is allocated under an acceptable method is recognised as a contribution/distribution of the subsidiaries’ equity accounts.
In preparing the accounts for Aditya Birla Minerals Limited for the current year, the following amounts have been recognised as taxconsolidation contribution adjustments:
The Company
2007
$
Total increase/(reduction) to investments in controlled entities (note 13)
(15,879)
The Company
2006
$
(6,462)
64
Financial Report
5. Earnings Per Share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Consolidated
2007
$’000s
Net profit/(loss) attributable to ordinary equity holders of the parent
1,870
2007
Thousands
Weighted average number of ordinary shares for basic and diluted earnings per share.
6. Dividends Paid and Proposed
No dividends have been paid, declared or recommended by Aditya Birla Minerals Limited.
295,703
Consolidated
2006
$’000s
(17,149)
2006
Thousands
157,475
65
Financial Report
Consolidated
2007
$’000
7. Cash and Cash Equivalents
Cash – denominated in AUD
Cash – denominated in USD
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
2,211
4,014
6,225
6,226
3,060
9,286
7
7
12
3,569
724
4,293
5,203
9,496
7,077
8,555
15,632
7,860
23,492
16
16
80
80
12
Terms and conditions
Cash at bank earns interest at floating rates
based on daily bank deposit rates.
8. Trade and Other Receivables
Current
Trade debtors
Receivables-related parties
Other Debtors
Non-current
Loans to controlled entities
-
-
280,903
22,907
Terms and conditions relating to the above financial instruments
(i) Details of the terms and conditions of credit sales are set out in note 1(k).
(ii) Loans to controlled entities are non-interest bearing and are repayable on demand.
66
Financial Report
Consolidated
2007
$’000
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
9. Inventories
Current
Copper at cost
29,902
4,472
-
-
Copper in-circuit at cost
1,066
1,854
-
-
Copper in ore at cost
1,932
14,860
-
-
Copper in ore at net realisable value
Copper in ore and under leach at cost
Copper in ore and under leach at net realisable
value
Consumable stocks at cost
Less: Allowance for obsolescence on
consumables and stores
Non-current
Copper in ore and under leach at net realisable
value
10. Other Assets
Current
Prepayments
IPO costs
2,553
5,623
-
-
16,062
17,572
-
-
2,020
13,504
-
-
14,959
11,524
-
-
-
-
(298)
68,196
69,111
-
-
87,747
69,757
-
-
87,747
69,757
-
-
557
557
Non-current
Deferred mining costs
Employee loans
(298)
36
36
480
878
1,358
8,267
18
8,285
32
32
878
878
-
-
67
Financial Report
Consolidated
2007
$’000
11. Property, Plant and Equipment
Plant and Equipment
Plant and equipment, at cost
Less: Accumulated depreciation
Leased Equipment
Leased equipment
Less: Accumulated depreciation
Mine Properties
Mine properties, at cost
Less: Accumulated amortisation
Capital Work in Progress
Capital work in progress, at cost
Total Property, Plant & Equipment
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
166,656
(27,537)
139,119
169,145
(18,248)
150,897
-
-
7,590
(886)
6,704
1,090
(513)
577
-
-
288,114
(51,876)
236,238
222,569
(33,652)
188,917
-
-
41,692
18,611
-
-
423,753
359,002
-
-
150,897
289
9,070
(11,000)
(10,137)
139,119
61,631
2,114
95,644
(35)
(8,457)
150,897
Reconciliation
Reconciliation of the carrying amounts for each class
of property, plant and equipment are set out below.
Plant and Equipment
Carrying amount at beginning of period
Additions
Transfer from capital works in progress
Disposals
Depreciation
Carrying amount at end of period
-
Leased Equipment
Additions
577
6,500
743
-
-
Depreciation
(373)
6,704
(166)
577
-
-
-
68
Financial Report
The Company
2007
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
23,548
8,231
31,932
5,737
-
-
249
202,032
(11,300)
222,760
(14,121)
23,548
-
-
156,893
90,740
-
-
45,618
5,147
(5,626)
(202,032)
-
13,219
54,499
(1,565)
156,893
-
-
8,476
6,300
(1,298)
13,478
236,238
9,616
(1,140)
8,476
188,917
-
-
18,611
37,547
(9,070)
(5,396)
41,692
62,336
122,876
(16,458)
(95,644)
(54,499)
18,611
-
-
The Company
2006
$’000
11. Property, Plant and Equipment (Cont.)
Mine Properties (in production)
Expenditure incurred during the period
Transfer from capital work in progress
Transfer from mine properties (under commissioning)
Amortisation
Mine Properties (under commissioning)
Expenditure incurred during the period
Transfer from capital works in progress
Amortisation
Transfer to mine properties (in production)
Rehabilitation Asset (relating to Mine Properties)
Additions during the year
Amortisation
Total carrying amount of mine properties at end of period
Capital Work In Progress
Additions
Disposals
Transfer to plant and equipment
Transfers to mine properties
Borrowing costs
No amount of borrowing costs were capitalised for the year ended 31 March 2007 (2006:$6.53 million).
69
Financial Report
The Company
2007
$’000
The Company
2006
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
17,138
15,086
-
-
3,726
2,052
-
-
20,864
17,138
-
-
12. Deferred Exploration and Evaluation Expenditure
Exploration and evaluation costs carried forward in respect of
mining areas of interest
Pre-production - Exploration and evaluation phases
Opening balance
Additions
Closing balance
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and
commercial exploitation or sale of the respective areas.
During the year, Renison Bell has approved the assignment by Straits Exploration (Australia) Pty Ltd of its interests in the Maroochydore joint
venture to Birla Maroochydore Pty Ltd. However, legal formalities for the transfer of title in the name of Birla Maroochydore Pty Ltd is still
under progress as at 31 March 2007.
70
Financial Report
Consolidated
2007
$’000
The Company
2007
$’000
The Company
2006
$’000
-
10,000
10,000
Consolidated
2006
$’000
13. Other Financial Assets
Non current
Investment in Birla Maroochydore Pty Ltd, at cost
-
Less: Adjustment due to tax losses distributed
-
-
(3,295)
(3,253)
Net carrying value
-
-
6,705
6,747
Investment in Birla Nifty Pty Ltd, at cost
-
-
138,038
138,038
-
-
(26,310)
-
111,728
130,327
-
24,000
24,000
Net carrying value
Investment in Birla Mt Gordon Pty Ltd, at cost
-
(7,711)
-
-
(18,444)
(21,206)
Less: Provision for impairment
-
-
(2,794)
(2,794)
Net carrying value
-
-
2,762
-
121,195
137,074
Further details of investments in controlled entities are provided in note 19. For further details on adjustments due to tax losses distributed refer
to note 4.
14. Trade and other payables
Current
Trade creditors
25,770
36,251
24
Other creditors and accruals
17,829
33,498
86
2,505
2,556
665
957
46,104
72,305
775
1,126
Payable to related entities
(i) Trade and other creditors are normally settled in accordance with the terms of trade.
(ii) Payables to related entities are non-interest bearing and are repayable on demand.
169
-
71
Financial Report
Consolidated
2007
$’000
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
15. Interest Bearing Liabilities
Current
Project refinancing/working capital (a) & (b)
87,058
Lease liabilities - (a) (ii) & (b) (ii)
137,537
119
32,476
1,163
115
88,221
137,652
-
33,133
179,168
-
-
5,697
613
-
-
38,830
179,781
-
-
119
32,476
Non-current
Project refinancing/working capital (a) & (b)
Finance lease liabilities - (a) (ii) & (b) (ii)
(a) Terms and conditions relating to the above financial instruments:
i.
Project refinance/working capital loan is linked with BBSY.
ii. The lease liabilities have an average term of 4 years with the option to purchase the assets at the completion of the lease term at a
nominal value.
iii. Repayment terms of various project finance/working capital loans are as follows:
(b)
•
Working capital loan facility of $119.5 million is annually renewable; and
•
Sulphide Project loan for Nifty for $35.5 million is repayable at $0.59 million per quarter.
iv. Subsequent to the year end, the amount of the project finance/working capital facility (which includes bank guarantees) has been
temporarily increased from $155 million to $170 million. However, it will be amortised to $133 million on 30 June 2007. Refer to
Note 15c for further details of this facility.
Securities
i.
Security for loans pertain to consolidated entity:
a) A first ranking fixed and floating charge over the assets and undertaking of Birla Nifty Pty Ltd limited to $68 million plus interest
and costs.
b) First registered mining mortgages over mining tenements of Birla Nifty Pty Ltd limited to $68 million plus interest and costs.
c) A second ranking fixed and floating charge over the assets and undertaking of Birla Nifty Pty Ltd securing all amounts
outstanding under the group facilities.
d) A first ranking fixed and floating charge over the assets and undertaking of Aditya Birla Minerals Limited and Birla Mt Gordon Pty
Ltd securing all the amounts outstanding under the group facility except for amount covered under (a) and (b) above.
e) Registered mining mortgage over mining tenements held by Aditya Birla Minerals Limited, Birla Nifty Pty Ltd and Birla Mt.
Gordon Pty Ltd securing all amounts outstanding under the group facilities except for amounts covered under (a) and (b) above.
ii. Secured lease liabilities are secured by a charge over the leased assets.
72
Financial Report
Consolidated
2007
$’000
Consolidated
2006
$’000
The Company
2007
$’000
The Company
2006
$’000
15. Interest Bearing Liabilities (Cont.)
(c) Financing facilities
The consolidated entity had access to the following
financing facilities at balance date:
Total facilities available:
- Multi currency revolving advance & single
fully drawn - (a)
- Bank guarantees, letter of credit - (b)
118,508
281,600
36,492
-
20,000
37,400
-
-
- Equipment refinance loan - (c)
-
3,000
-
-
- Pre-shipment finance - (d)
-
15,000
-
- Related party advance - (e)
-
19,556
-
12,571
155,000
356,556
-
32,571
118,504
281,039
-
19,905
36,492
36,207
-
-
Facilities utilised at balance date:
- Multi currency revolving advance & single
fully drawn - (a)
-
-
2,110
-
-
-
14,000
-
-
Facilities not utilised at balance date:
- Multi currency revolving advance & single fully
drawn - (a)
19,556
-
12,571
154,996
-
352,912
-
32,476
4
561
-
95
1,193
-
-
-
-
890
-
-
-
1,000
-
-
4
3,644
-
95
73
Financial Report
15. Interest Bearing Liabilities (continued)
a) Multi currency revolving advance
This loan was provided to facilitate the working capital and projects requirements, and provide a general corporate loan.
b) Bank guarantee and letter of credit
Bank guarantees have been provided mainly to the following parties:
i. Queensland and West Australian regulatory bodies for mining leases of Birla Mt Gordon Pty Ltd and Birla Nifty Pty Ltd
ii. Electricity, gas, logistic and other service providers.
c) Equipment refinance loan
This loan facility has been repaid during the year.
d) Pre-Shipment Finance
This loan facility has been repaid during the year.
e) Related Party Advance
This advance from Hindalco Industries Ltd was repaid during the year.
The Company
2007
$’000
The Company
2006
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
2,408
1,396
-
-
2,408
1,396
-
-
20,809
18,214
-
-
906
499
-
-
21,715
18,713
-
-
16. Provisions
Current
Employee entitlements (see Note 27)
Non-current
Rehabilitation
Employee entitlements (see Note 27)
The nature of the provisions is described in note 1(n), 1(t) and 1(v).
74
Financial Report
The Company
2007
$’000
The Company
2006
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
18,214
17,878
-
-
6,300
147
-
-
-
-
16. Provisions (Cont.)
Movements in provisions
Rehabilitation
Carrying amount at the beginning of financial year
Additional provision recognised
Amount spent during the current year
Increase in value due to time passage
(4,988)
-
1,283
189
-
-
20,809
18,214
-
-
1,895
1,610
-
-
Additional provision (Net)
1,419
285
-
-
Carrying amount at the end of financial year
3,314
1,895
-
-
-
27
-
-
Amounts utilised during the year
-
(27)
-
-
-
-
-
-
-
3,524
Employee Entitlements
Restructuring
17. Derivatives
Current
Deferred liability on foreign currency contracts and interest
rate swap, net
Deferred metal hedge net liability
-
8,498
77,507
2,693
-
8,498
81,031
2,693
-
Non-current
Deferred metal hedge liability
-
3,861
-
-
-
3,861
-
-
The Company enters into commodity hedges with counter-parties on behalf of its subsidiaries. The Company has entered into back to back
agreements with its subsidiaries for all such hedging transactions and hence net income or loss is recognised in the books of the subsidiaries.
The deferred metal hedge liability is on account of marked to market loss on the hedges outstanding as at 31 March 2007.
75
Financial Report
2007
$’000
2006
$’000
450,663
159,820
Shares
$’000
18. Contributed Equity and Reserves
Issued and paid up capital
313,372,551 Ordinary shares (2006: 159,820,001 Ordinary Shares)
At 1 April 2005
143,820,001
143,820
16,000,000
16,000
At 31 March 2006
159,820,001
159,820
Issue of ordinary shares on 12 May 2006 for cash (AUD1.95 each)
153,552,550
299,427
Movements in fully paid ordinary shares
-
At 31 March 2007
(8,584)
313,372,551
450,663
Terms and conditions of contributed equity
Ordinary Shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds
from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Effective from 1 July 1998, the Corporation legislation in place abolished the concept of authorised capital and par value shares. Accordingly,
the Parent company does not have authorised capital nor par value in respect of its issued shares.
Nature and purpose of reserve
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
19. Interests in Controlled Entities
Country of
% Shares Held
% Shares Held
Incorporation
2007
2006
Birla Nifty Pty Ltd
Australia
100%
100%
Birla Maroochydore Pty Ltd
Australia
100%
100%
Birla Mt Gordon Pty Ltd
Australia
100%
100%
76
Financial Report
20. Related Parties
Hindalco Industries Ltd – Ultimate Holding Company
The consolidated entity has a secure, long-term partnership with Hindalco Industries Ltd. The consolidated entity’s copper in concentrate
production is sold to Hindalco Industries Ltd under contract at arm’s length terms. These contractual arrangements extend to the LOM of the
Nifty operations and the Mt Gordon operation (the Nifty Concentrate Sales Agreement and the Mt Gordon Concentrate Sales Agreement).
Treatment and Refining Charges (Tc/Rc) are negotiated annually with reference to the published benchmark set by major Japanese smelters
and include standard industry Price Participation (PP) levels. For the year ended 31 March 2007 Tc was set at US$95 per dry metric tonne of
copper concentrate and Rc was set at US$0.095 per pound of payable copper, which is 96.5% of contained copper in copper concentrate. PP
was set at 10% of the copper LME price, for the quotational period, which exceeds US$0.90 per pound.
During the year ended 31 March 2007, transactions between the consolidated entity and Hindalco Industries Ltd, consisted of sales and
advances made under normal terms and conditions to/by the ultimate parent entity – Hindalco Industries Ltd, a company incorporated in India
Aditya Birla Minerals Limited also held loans with Hindalco Industries Ltd and paid Hindalco a guarantee fee on certain loan/Hedging facilities
guaranteed by Hindalco during the year. The guarantee fee is paid at normal rates charged by the commercial banks.
The value of transactions with Hindalco Industries Ltd during the year and balance outstanding at the end of the year has been set out in the
table below:
Trade receivables
Advances at year end:
- Payables
- Interest bearing liabilities
Transactions during the year:
- Sales of copper concentrate*
- Interest on loan
- Equity contributions
- Corporate Guarantee fees
Consolidated
2007
$’000
724
1,859
294,730
(1,344)
(632)
Consolidated
2006
$’000
8,555
The Company
2007
$’000
-
1,910
19,556
19
107,979
(785)
(16,000)
(655)
(457)
-
-
The Company
2006
$’000
311
12,571
(315)
(16,000)
-
*During the year ended 31 March 2007, the consolidated entity sold 38,081 tonnes of copper contained in concentrate to Hindalco (29,079 tonnes during the year ended 31 March
2006). Sales of copper concentrate have been reported net of Tc/Rc charges of $54.2 million (2006: $26.6 million)
Birla Resources Pty Limited
Aditya Birla Minerals Limited also holds a loan of $0.65 million with Birla Resources Pty Ltd, a subsidiary of Hindalco Industries Ltd.
77
Financial Report
20. Related Parties (Cont.)
Wholly owned group
Aditya Birla Minerals Limited is the ultimate Australian parent company and its ultimate parent company is Hindalco Industries Ltd.
The wholly owned group consists of Aditya Birla Minerals Limited and its controlled entities. Ownership details are set out in Note 19.
The Company enters into commodity hedges with counter-parties on behalf of its subsidiaries. The Company has entered into back to
back agreements with its subsidiaries for all such hedging transactions and hence net income or loss is recognised in the books of the
subsidiaries. Loans to controlled entities include $2.7 million on account of receivables against all such hedges as at 31 March 2007.
The value of transactions with the wholly owned entities during the year and balance outstanding at the end of the year has been set out in the
table below:
Consolidated
2007
$’000
-
Consolidated
2006
$’000
-
The Company
2007
$’000
280,903
The Company
2006
$’000
22,097
(i) Loans to controlled entities are repayable on demand.
(ii) For the year ended 31 March 2007, the consolidated entity has not made any allowance for doubtful debts relating to amounts owed by
related parties. An impairment assessment is undertaken each financial year by examining the financial position of the related party and
the market in which the related party operates to determine whether there is objective evidence that a related party receivable is impaired.
When such objective evidence exists, the consolidated entity recognises an allowance for the impairment loss.
(iii) Outstanding balances at year-end, other than loans, are unsecured, interest free and repayable on demand.
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Financial Report
21 Key Management personnel
(a) Details of Key Management Personnel
Directors
Name
Position
Mr D Bhattacharya
Mr S Loyalka
Mr M Prasanna
Mr A Hogendijk
Mr B McGowan
Mr K Dharmananda
Non-executive Chairman
Non-executive Director
Executives
Name
Position
Mr S Bhartia
Mr R Dennis
Mr R Beazley
Mr P Mulroney
Mr P McMickan
Assistant Vice President (Finance and Commercial)
Chief Operating Officer
General Manager – Birla Nifty Pty Ltd
General Manager – Birla Mt Gordon Pty Ltd
General Manager – Geology
Date of Appointment
Date of Resignation
18 April 2003
15 May 2003
20 January 2003
6 March 2006
6 March 2006
6 March 2006
-
Date of Appointment
Date of Resignation
2 September 2004
9 February 2004
30 January 2006
20 April 2006
30 August 2006
-
(b) Compensation of Key Management Personnel
Short term employee benefits
Post employment benefits
Total
The Company
2007
$’000
The Company
2006
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
1,830,336
1,503,134
-
-
148,521
93,833
-
-
1,978,857
1,596,967
-
-
The consolidated entity is taking advantage of Corporations Regulation 2M.6.04 and as a result has presented the disclosure required by AASB
124 Related Party Transaction Aus 25.4 to Aus 25.7.2 in the Remuneration Report within the Directors’ Report. These remuneration disclosures
have been audited.
(c) Shareholdings of Key Management Personnel (Consolidated)
Balance 1 April 2006
Movement during the year
Balance 31 March 2007
Directors
Mr D Bhattacharya
Mr S Loyalka
Mr M Prasanna
Mr A Hogendijk
Mr B McGowan
Mr K Dharmananda
Name
-
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
Executives
Mr S Bhartia
Mr R Dennis
Mr R Beazley
Mr P Mulroney
Mr P McMickan
-
30,000*
-
30,000
-
*40,000 shares were acquired on 12th May 2006 under the IPO and 10,000 shares were sold during the year.
79
Financial Report
22. Financial Instruments
(a) Financial Risk Management Policies and Objectives
Aditya Birla Minerals’ current policy provides that any commodity and currency hedging will be modest and short-term in duration and
consistent with prudent financial management practices. It is currently contemplated that hedging arrangements for swaps or sold call options
will not exceed 25% of the forward rolling 12 month expected production.
The company’s goal is to achieve, by use of financial instruments in combination with physical sales a minimum net revenue per tonne sold,
which is higher than the production cost and, over a period of time, better than the average market price. The company will monitor and
review its ability to achieve these goals.
(b) Foreign exchange risk
The sales revenue of the consolidated entity is principally denominated in US dollars.
The consolidated entity’s policy is to enter into forward foreign exchange contracts for sales expected in US Dollars in each financial period
within approved limits. The amount of anticipated future sales is forecast in light of current production and sales plans.
Forward foreign exchange contracts
At 31 March 2007 the consolidated entity did not hold any foreign currency forward contracts to sell US dollars. (31 March 2006: US $69.7
million at an average rate of 0.7396)
The following table sets out the gross value of US dollars sold under forward foreign currency contracts, the weighted average contracted
exchange rates and the settlement periods of outstanding contracts for the consolidated entity:
Weighted
Average Rate
31/3/07
Sell US Dollars
Consolidated
31/3/07
US $’000
Not later than one year
-
-
Later than one year
-
-
Total
-
-
Weighted Average
Rate
31/3/06
0.7396
Consolidated
31/3/06
US $’000
69,660
-
-
0.7396
69,660
The net fair value of the above contracts as at 31 March 2006 was $3.410 million (“out of the money”). These contracts have been settled
during the year with the net gain or loss on settlement recognised in the Income Statement.
Foreign currency option contracts
The following table sets out the gross value of US dollars sold under forward foreign exchange option contracts, the contracted exchange rates
and the settlement periods of the outstanding option contracts for the consolidated entity:
Contracted Rate
Sell US Dollars
31/3/07
Put Option
-
Consolidated
31/3/07
Call Option
-
31/3/07
US $’000
-
Contracted Rate
31/3/06
Put Option
0.7540
Consolidated
31/3/06
Call Option
0.7180
31/3/06
US $’000
5,000
The net fair value of the above contracts as at 31 March 2006 was a liability of $121,005. These contracts have been settled during the year with
the net gain or loss on settlement recognised in the Income Statement.
80
Financial Report
(c) Commodity price risk
The consolidated entity enters into option contracts as part of its policy to manage its exposure to commodity price movements. The contracts
outstanding at the reporting dates shown were:
Tonnes Hedged
31/3/07
Average Price
31/3/07
US $
Tonnes Hedged
31/3/06
Average Price
31/3/06
US $
10,000
6,701
4,200
3,072
10,000
5,755
4,200
2,842
12,250
6,636
27,300
3,511
Copper – Sell Call Options
Copper – Buy Put Options
Copper – Swap
The mark to market of the above contracts as at 31 March 2007 is a liability of $8.5 million (31 March 2006: liability of $81.3 million).
Included in above contracts are 6,250 tonnes (31 March 2006: 6,000 tonnes) with a mark to market asset of $ 1.7 million (31 March 2006:
liability of $17.1 million). These contracts were designated against copper sales which have occurred in the period to 31 March 2007 and will be
settled at the end of the quotational period of the specific sale to which they have been designated against or contacts considered to be ineffective
hedges. In accordance with AASB 139, this change in fair value has been recognised in the income statement along with the related hedged sale.
(d) Credit risk exposures
The consolidated entity’s maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets, other
than derivatives, is the carrying amount of these assets as indicated in the balance sheet.
In relation to derivative financial instruments, credit risk arises from the potential failure of counterparties to meet their obligations under the
contract or arrangement. The consolidated entity’s maximum credit risk exposure in relation to these is the total mark to market gain, should
the counterparties not honour their obligations.
The Company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with various customers
against letters of credit, bank guarantees, and/or advance payment arrangements.
(e) Net fair values of financial assets and liabilities
The carrying amounts and estimated net fair values of financial assets and financial liabilities (including derivatives) held at each reporting
date are given below.
The net fair value representing the mark to market of a financial asset or a financial liability is the amount at which the asset could be
exchanged or liability settled in a current transaction between willing parties after allowing for transaction costs.
81
Financial Report
Consolidated
31/3/07
Carrying Amount
$’000
Financial Assets
Current
Cash and cash equivalents
Derivatives:
- Forward exchange contracts
- Interest rate swap
Total financial assets
Financial Liabilities
Current
Payables
Derivatives:
- Foreign currency option contracts
- Forward exchange contracts
- Commodity forward/option
contracts- recognised
Non-Current
Derivatives:
- Commodity forward/option contracts
Total financial liabilities
Net financial liabilities
6,225
9,496
Consolidated
31/3/07
Net Fair Value
$’000
Financial Liabilities
Current
Payables
Interest – bearing liabilities
Derivatives:
- Commodity forward/option
contracts - recognised
Net financial assets/(liabilities)
31/3/06
Net Fair Value
$’000
6,225
9,496
9,286
23,492
9,286
23,492
15,721
15,721
7
32,785
7
32,785
46,104
88,221
46,104
88,221
-
-
-
72,305
137,652
72,305
137,652
121
3,410
121
3,410
8,498
8,498
81,031
81,031
38,830
38,830
179,781
179,781
181,653
(165,932)
181,653
(165,932)
3,861
478,161
(445,376)
3,861
478,161
(445,376)
The Company
31/3/07
31/3/07
Carrying Amount
Net Fair Value
$’000
$’000
Financial Assets
Current
Cash and cash equivalent
Non-Current
31/3/06
Carrying Amount
$’000
The Company
31/3/06
31/3/06
Carrying Amount
Net Fair Value
$’000
$’000
7
16
7
16
12
80
12
80
280,903
280,926
280,903
280,926
22,907
22,999
22,907
22,999
775
119
775
119
1,126
32,476
1,126
32,476
2,693
2,693
-
-
3,587
277,339
3,587
277,339
33,602
(10,603)
33,602
(10,603)
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Financial Report
(f) Interest rate risk exposures
The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rates of classes of financial assets and
liabilities is set out below
31 March 2007 (Consolidated)
Weighted average Floating interest
Interest
rate
rate
$’000
Fixed interest
maturing
1 to 5 Years
$’000
Non-interest
bearing
$’000
Total
$’000
Financial assets:
Cash
4.85%
6,225
-
6,225
-
6,225
-
9,496
9,496
-
9,496
15,721
43,599
43,599
Financial liabilities:
Payables
-
-
Advance from related entity
-
-
Borrowing from related entities
-
Finance lease liability
7.85%
Bank and other loans
6.90%
-
-
-
2,505
6,860
120,191
-
Derivatives
-
2,505
-
6,860
-
120,191
8,498
8,498
120,191
6,860
54,602
181,653
Net financial (liabilities)
(113,966)
(6,860)
(45,106)
(165,932)
Fixed interest
maturing
1 to 5 Years
$’000
Non-interest
bearing
$’000
31 March 2006 (Consolidated)
Weighted average Floating interest
Interest
rate
rate
$’000
Total
$’000
Financial assets:
Cash
3.51%
9,286
-
-
9,286
-
-
23,492
23,492
9,286
-
23,492
32,778
Financial liabilities:
Payables
-
-
69,749
69,749
6.16%
19,556
-
-
19,556
-
-
2,556
2,556
Finance lease liability
10.28%
-
728
-
728
Bank and other loans1
6.21%
Advance from related entity
297,149
-
-
297,149
Derivatives
-
-
84,892
84,892
316,705
728
157,197
474,630
(307,419)
(728)
(133,705)
(441,852)
83
Financial Report
31 March 2007 (Company)
Financial assets
Cash
Financial liabilities
Payables
Derivatives
31 March 2006 (Company)
Financial assets
Cash
Financial liabilities
Payables
Advance from related entities
Weighted
average
Interest
rate
5.95%
Floating interest
rate
$’000
7
Weighted
average
Interest
rate
1.75%
-
16
16
119
119
(112)
-
110
665
2,693
3,468
(3,452)
Floating interest
rate
$’000
12
12
6.75%
6.10%
Non-interest
bearing
$’000
7
6.90%
Fixed interest
maturing
1 to 5 Years
$’000
12,571
19,905
32,476
(32,464)
Fixed interest
maturing
1 to 5 Years
$’000
Non-interest
bearing
$’000
-
80
80
169
957
1,126
(1,046)
Total
$’000
7
16
23
110
665
119
2,693
3,587
(3,564)
Total
$’000
12
80
92
169
12,571
957
19,905
33,602
(33,510)
1
The consolidated entity held an interest rate swap for $32 million @ 6.1% (including bank margin) having a maturity date on 5 October 2006.
Borrowings from Hindalco Industries Ltd and Birla Resources Pty Ltd (the related entities) had been provided with no security and have no fixed
term of repayments.
Advances from Hindalco Industries Ltd were repayable within twelve months or were to be netted off against proceeds from concentrate sales.
The interest rate applicable to this advance was linked with LIBOR plus 50 basis points.
84
Financial Report
The consolidated entity enters into interest rate swaps as part of its policy to manage its exposure to interest rate movements. The
contracts outstanding at the reporting dates shown were:
Principal Hedged
31/3/07
A$000
(g) Interest Rate Swap
Average Price
31/3/07
-
-
Principal Hedged
31/3/06
A$000
32,000
Average Price
31/3/06
6.1%
The maturity date of the interest rate swap was 5 October 2006.
The net fair value of the above contract as at 31 March 2006 was an asset of $6,849. This contract has been settled during the year with the
net gain or loss on settlement recognised in the income statement.
The Company did not enter into any interest rate swaps during the year.
23. Segment Reporting
The consolidated entity operates in one business and geographic segment, being the mining and production of copper in Australia.
24. Commitments
Capital Expenditure
Estimated capital expenditure contracted for at
reporting date, but not provided for:
Payable not later than one year
Payable later than one not later than five years
Payable later than five years
Operating Leases
The consolidated entity has entered into contracts
for the provision of vehicle fleet and infrastructure as
follows:
The Company
2007
$’000
The Company
2006
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
4,660
4,660
35,546
35,546
-
-
5,665
15,335
2,189
23,189
-
-
7,976
16,948
2,108
27,032
The Consolidated entity has entered into operating leases on certain motor vehicles and equipment. These leases have an average life of
between 2 and 5 years with no renewal option included in the contracts.
There are no restrictions placed upon the Consolidated entity by entering into these leases.
Finance Leases
Less: Future finance charges
Present value of future lease charges
1,714
6,726
8,440
(1,580)
6,860
239
835
1,074
(347)
727
-
-
The Consolidated entity has entered into finance leases on certain plant equipment. These leases have an average term of 4 years with
the option to purchase the assets at the completion of the lease term at a nominal value.
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Financial Report
24. Commitments (Cont.)
• Capital expenditure - commitments were given to the sulphide project at Nifty of $4.7 million (31/3/06: $35.5 million).
• Operating leases - these commitments represent payments due for the lease of vehicles and portable infrastructure.
• Finance lease – these commitments represent payments due by Birla Nifty Pty Ltd for Filter Press and Acid Tank.
Other commitments
In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to outlay lease rentals and to meet the
minimum expenditure requirements of the relevant regulatory bodies per annum. Minimum expenditure requirements excluding lease rentals
are $2.39 million (31 March 2006: $2.19 million). These commitments are subject to renewal of the leases, renegotiation upon expiry of the
exploration leases or when application for a mining lease is made. These commitments are not provided for in the financial statements.
For the transportation of gas from Port Hedland to Nifty the consolidated entity has agreed to pay minimum transportation charges of $2.41
million per annum (31 March 2006: $2.41 million). The gas transportation agreement is valid until 6 December 2019.
25. Contingent Liabilities
Birla Nifty is involved in a dispute involving approximately $0.69 million with MacMahon Contractors Pty Ltd in relation to the provision of
mining services at the Nifty site. No formal proceedings have been commenced at this stage. The parties are endeavouring to settle the
dispute.
Birla Nifty is involved in a dispute with Asset Kinetics Pty Ltd (Asset Kinetics), a contractor providing transport services at the Nifty site. Asset
Kinetics has made a claim for damages of approximately $0.65 million (plus interest) in relation to the provision of the transport services.
Birla Nifty is defending the claim vigorously.
Black Rock Services Pty Ltd (Black Rock) has made a claim against Birla Nifty for damages of approximately $0.99 million (plus interest) in
relation to the design and construction of a copper concentrate storage shed at Port Hedland. Birla Nifty is defending the claim vigorously
and intends to make a counterclaim against Black Rock.
No provision has been recognised in the financial statements on account of aforesaid contingent liabilities.
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Financial Report
Consolidated
2007
$’000
26. Notes to the Statement of Cash Flows
(a) Reconciliation of net profit/(loss) after income tax to
net cash flows from operating activities
Net profit / (loss) from ordinary activities after income tax
Consolidated
2006
$’000
The Company
2007
$’000
(8)
The Company
2006
$’000
1,870
(17,149)
2,723
Depreciation
10,510
8,637
-
-
Amortisation
16,926
16,826
-
-
Profit on sale of plant and equipment
(7,627)
(6,379)
-
-
Adjustments for non cash items:
Fair value change on rehabilitation provision
189
-
-
Warranty claim written off
-
(201)
-
-
Interest capitalisation
-
(6,530)
-
-
(Write-back)/ impairment of investment
-
-
-
(3,194)
(7,350)
(119)
(203)
-
(1,196)
-
Income tax expense/(benefit)
1,298
801
Net exchange differences
-
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
64
(877)
786
581
(49)
(60)
11,788
9,786
-
-
(Increase)/decrease in inventories
(17,075)
(35,503)
-
-
Increase/(decrease) in deferred hedge liability
(17,880)
14,747
-
-
Increase/(decrease) in trade and other creditors
(26,201)
28,606
(351)
(Increase)/decrease in prepayments
(Increase)/decrease in deferred mining
Increase/(decrease) in other provisions
Increase/(decrease) in employee entitlements
Increase/(decrease) in provision for rehabilitation
Net cash used in operating activities
13,979
1,419
(11,472)
-
-
285
169
-
-
-
(3,704)
-
-
-
(13,110)
(4,927)
(1,659)
(1,442)
6,225
9,286
(1,674)
(5,166)
(119)
4,551
4,120
(112)
(b) Reconciliation of cash
For the purpose of the statement of cash flows cash and
cash equivalents comprise the following at 31 March:
Cash
Bank overdraft
Bank overdraft is included in interest bearing liabilities
(note 15)
(c) Disclosure of financing facilities
(Refer to Note 15)
7
12
12
87
Financial Report
27. Employee Entitlements
Aggregate liability for employee entitlements,
including on-costs
Current
Non-current
The Company
2007
$’000
Consolidated
2007
$’000
Consolidated
2006
$’000
2,408
1,396
-
-
906
499
-
-
365
232
-
-
The Company
2006
$’000
Number of employees
Number of employees at year end
28. Events Subsequent to Balance Date
The consolidated entity has arranged $80 million working capital facility with $25 million sub limit for the issuance of guarantees and letters
of credit with BNP Paribas. This facility is in addition to the existing facility and as per the terms and conditions of this arrangement, the
consolidated entity will have access to a total combined facility amount of up to $200 million. This facility will be renewed in November 2007
along with the existing loan facility.
88
Financial Report
Directors’ Declaration
In accordance with a resolution of the Directors of Aditya Birla Minerals Limited, we state that:
1. In the opinion of the Directors:
a) the financial statements, notes, and the additional disclosures included in the Directors’ Report designated as audited, of the Company
and of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the of the Company’s and consolidated entity’s financial position as at 31 March 2007 and of their
performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 31 March 2007.
Signed in accordance with a resolution of the directors.
Debu Bhattacharya
Chairman
Dated at Perth this 26th day of April 2007
Sanjay Loyalka
Managing Director

Untitled - Aditya Birla Minerals

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