2012 ANNUAL REPORT ABN ANNUAL REPORT

Transcription

1 2012 ANNUAL REPORT ABN ANNUAL REPORT

2 CORPORATE DIRECTORY AND CONTENTS PAGE BOARD OF DIRECTORS Kerry McHugh Non-Executive Chairman David Busch Managing Director Marcus Michael Executive Director Stephen Gemell Non-Executive Director Ross Smyth-Kirk Non-Executive Director COMPANY SECRETARY Marcus Michael PRINCIPAL OFFICE Level 4, 80 Arthur Street North Sydney NSW 2060 T: F: REGISTERED OFFICE Level 1, 115 Cambridge Street WEST LEEDERVILLE WA 6007 T: F: E: W: SOLICITORS Sydney - Jones Day Perth - Steinepreis Paganin AUDITORS Stantons International SHARE REGISTRY Security Transfer Registrars Pty Ltd PO Box 535 APPLECROSS WA 6953 CONTENTS PAGE Corporate Directory 2 Review of Operations 3 Directors Report 10 Consolidated Statement of Comprehensive Income 19 Consolidated Statement of Financial Position 20 Consolidated Statement of Changes in Equity 21 Consolidated Statement of Cash Flows 22 Notes to the Financial Statements 23 Directors Declaration 46 Auditor s Independence Declaration 47 Independent Auditor s Report 48 Corporate Governance Statement 50 Shareholder Information 57 Schedule of Mineral Concession Interests 58 ASX CODE ARD Ordinary Fully Paid Shares ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 2

3 REVIEW OF OPERATIONS During the year the Company continued exploration and development at Kempfield, Sunny Corner and West Wyalong tenement areas. HIGHLIGHTS Managing Director appointed Kempfield Silver Project - Argent completes acquisition of 100% interest in Kempfield Project - Substantial infill and extensional drilling results in Resource upgrade - State Significant Project status awarded by NSW Department of Planning - Mining Lease application lodged 24 January Substantial progress with Feasibility Study - Additional exploration Sunny Corner West Wyalong Capital Structure Argent Minerals Limited ( Argent or the Company ) completed the year with a 100% interest in the Kempfield Silver Project, substantial progress in the Kempfield feasibility study, continued advances of the Sunny Corner and West Wyalong projects, and a cash balance of million at 30 June MANAGING DIRECTOR APPOINTED On 4 April 2012, Argent announced the appointment of Mr David Busch as Managing Director of the Company. Mr Busch is an engineer (B.Eng (Elec), BSc, MAusIMM) with more than 25 years experience in strategic leadership roles including business and project management on behalf of Australian majors BHP Billiton and Macquarie Bank, and international process control and automation leader Honeywell. Mr Busch brings with him broad senior management experience from operational to board levels including founder and managing director of Australian minerals exploration companies, and as chairman of a publicly listed equipment finance company in Indonesia. Prior to joining Argent Mr Busch led the development of Goodrich Resources Ltd and its listing on the ASX. Mr Busch is a member of the Australian Institute of Mining and Metallurgy. KEMPFIELD PROJECT Argent completes acquisition of 100% interest in Kempfield Project On 12 September 2011 the Company completed the acquisition of Golden Cross Resources Limited ( GCR ) 30% interest in the Kempfield Silver Project through the payment of 1 million in cash and the issue of 1 million in fully paid ordinary shares at an approximate price of per share. Argent now owns a 100% interest in the Kempfield Silver Project, increasing earnings potential as well as simplifying management and the approvals process. This acquisition further strengthens Argent s position and complements the strategic move made in the previous financial year to acquire a 115 hectare pastoral property under which the vast majority of the Kempfield Resource is located. In the interests of corporate governance best practice including the simplification of accounting and regulatory reporting, the Kempfield Silver Project has been transferred to Argent (Kempfield) Pty Ltd, a wholly owned subsidiary of Argent. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 3

4 REVIEW OF OPERATIONS Substantial infill and extensional drilling results in Resource upgrade The Company has conducted an additional 12,500 metres of drilling, including quality assurance and quality control since its previous resource announcement on 23 November Analysis of the enhanced database of 480 holes totalling 41,000 metres resulted in the announcement of a revised Mineral Resource estimate on 26 April 2012, featuring the following highlights: 33 million ounces of silver hosted in 22 million tonnes; 82% of Resource now classed as Measured or Indicated; and A significant increase in Measured and Indicated contained metals. The revised resource estimate represents a significant improvement on the previous resource statement and provided vital input to the feasibility study, increasing the Company s confidence level in the Resource on which the study is based. The following tables summarise the resource announcement. For full details of the 2012 resource statement and comparisons to the 2010 resource statement please refer to the ASX announcement dated 26 April Table 1: Upgraded Kempfield Resources as at 26 April 2012 (Cutoff grades 50 g/t Ag equivalent 1 and 25 g/t Ag for Primary and Oxide/Transitional respectively) Silver (Ag) Gold (Au) Lead (Pb) Zinc (Zn) Resource Tonnes (Mt) Grade (g/t) Contained Metal (Moz) Grade (g/t) Contained Metal ( 000oz) Grade % Contained Metal ( 000t) Grade % Contained Metal ( 000t) Oxide/ Transitional* N/A N/A N/A N/A Primary ** % % 200 TOTAL*** N/A 97 N/A 200 * Approximately 90% of the Oxide and Transitional material is Measured or Indicated (Resource tonnes basis) ** Approximately 79% of the Primary material is Measured or Indicated (Resource tonnes basis) *** Approximately 82% of the Total Resource is Measured or Indicated (Resource tonnes basis) Table 2 summarises the Resource by category and Table 3 sets out the contained metals in the Measured and Indicated categories. Table 2: Resource by Category (Cutoff grades as noted for Table 1 above) Resource Tonnes (Mt) Silver (Ag) Grade (g/t) Grade (%) Gold (Au) Oxide / Transitional Measured Indicated Inferred Total Oxide / Transitional Lead (Pb) Zinc (Zn) Primary Measured Indicated Inferred % 0.58% 0.66% Total Primary % 1.3% Total Resource N/A N/A 1.2% 1.2% 1.4% ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 4

5 REVIEW OF OPERATIONS Table 3: Measured and Indicated: Resource Tonnes and Contained Metal (Cutoff grades as noted for Table 1 above) Contained Metal Resource Tonnes Mt* Moz Silver (Ag) Oxide / Transitional Measured Indicated Measured + Indicated As % of Total Oxide /Transitional 90% 93% 93% 000oz Gold (Au) 000t Lead (Pb) 000t Zinc (Zn) Primary Measured Indicated Measured + Indicated As % of Total Primary 79% 83% 79% 78% 77% Oxide / Transitional + Primary Measured Indicated Total Measured + Indicated As % of Total Resource 82% 86% 82% 78% 77% * Mt except where noted otherwise i.e. as % The Resource remains open along strike and at depth and some induced polarisation geophysical anomalies are yet to be drill-tested g/t Silver Equivalent Cutoff Grade. This Resource is only reported in Resource tonnes and contained metal (ounces of silver and gold, and tonnes for lead and zinc). A silver equivalent was not employed for the oxide/transitional material estimation and was based on a 25 g/t silver only cutoff grade. The Resource estimate for the Primary material was based on a silver equivalent cutoff grade of 50g/t and was based on the following assumptions made by Argent: Silver price: 30/oz (0.9645/g) Gold price: 1,500/oz Lead price: 2,200/tonne Metallurgical recoveries: Silver and gold 80% Lead and zinc recoverable and payable 55% of head grade Based on metallurgical testing to date, Argent is of the opinion that silver and gold recoveries will be 80%, and recoverable and payable lead and zinc at 55% of the head grade. Argent is also of the opinion that this is consistent with current industry practice. These metallurgical recoveries were included in the calculation of silver equivalent cutoff grades used for reporting of mineral resources. State Significant Project Status awarded by NSW Department of Planning The award of State Significant Project by the NSW Government Planning and Infrastructure Department ( Planning Department ) recognises the importance of the project to the state and is aimed at streamlining the approval process. This is a new project approval process announced by the NSW Government on 1 October 2011 and is only available for projects with a capital expenditure of greater than 50 million. It provides a central highranking NSW government coordination point for facilitating a potentially complex approval process involving multiple stakeholders. An important outcome is that the Director General has defined the set of requirements ( DGR s) that will need to be addressed in the Environmental Impact Statement ( EIS ) as a key part of the Kempfield Silver Project Development Approval process. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 5

6 REVIEW OF OPERATIONS The application will trigger the provisions of the Native Title legislation as there is a native title application over parts of the proposed Mining Lease area. Argent has been in regular contact with the Native Claimant since the Company listed on the ASX in Mining Lease Application lodged 24 January 2012 Following the grant of State Significant Project Argent Minerals lodged an application for a Mining Lease over the project area on 24 January The following diagram sets out the Mining Lease area in relation to the project and property boundaries overlaid on an aerial photograph. The included pit outlines are example only of a pit optimisation calculation, and are likely to be altered according to the final mine design. Figure 1 Proposed Mining Lease area and property boundaries overlaid on a satellite photograph of the Kempfield Silver Project area. Substantial progress with Feasibility Study Following the revised resource estimate Argent assessed the improved potential to mine the deposit in two stages in order to optimise cash flows, the Company s capital requirements, and shareholder returns. The oxide and transitional layers, being from surface to an approximate depth of 40 metres, present an opportunity for the Company to mine and extract leachable materials as the first stage, and match outgoing cash for the flotation plant investment and associated mine development closer to when it will actually be required for the deeper and larger primary layer as the second stage. A core aim of the business model is to establish the earliest positive cash flow for a robust project, and a quantum of self-financing in order to fund the Company s continued development and growth. Other potential benefits include optimised environmental impact, and reduced operational and capital expenditures. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 6

7 REVIEW OF OPERATIONS The Company is focussing its feasibility study efforts on the first stage, with the aim of establishing an open cut mining and processing operation at Kempfield that will initially produce silver and gold doré bars. Transport of this form of product is relatively simple and cost effective, and refinery terms and conditions are typically quite favourable. The Australian mining industry has been significantly impacted by rising equipment and labour costs as well as a decline in commodity prices, and Argent is no exception. However, whilst many Australian sourced supplies to the mining industry have increased in price, this has opened up opportunities for overseas suppliers to manufacture and ship competitively priced, high quality alternatives into the Australian market. Argent Minerals is investigating the sourcing and prefabrication of processing plant offshore at a potentially significantly lower cost than Australian-sourced price estimates. Argent Minerals also believes that it is well-placed for sourcing competitive labour locally. As news travels about the Kempfield Silver Project, the Company continues to be approached by locals in search of employment closer to home. Argent Minerals looks forward to working with the local communities in this regard. The Company s clear preference is to build a stable local employment base in the region and avoid fly-in-fly-out arrangements with their related costs and issues. The following diagram shows a block model of mineralisation in the context of a preliminary pit design option as a basis for mine scheduling and cash flow analysis. It should be noted that the pit designs have not yet been finalised and therefore the final design could vary from this example. McCarron Central McCarron North BJ McCarron South Southern Conglomerate North and South Figure 2: Preliminary Pit Design Showing Resource Blocks Additional exploration - Kempfield During the final quarter Argent Minerals conducted a review of the Kempfield mineralisation and other deposits within the exploration licence, with the aim of developing the next phase of exploration for potential resource extensions and other potential ore feeds for the Kempfield Silver Project. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 7

8 REVIEW OF OPERATIONS The review of the Kempfield mineralisation zones and drill results indicated that 9 historical diamond cores within the preliminary pit shells had been originally assayed with a base metals focus, and not tested for either silver or gold. The core located in the NSW Government s Londonderry core library has been relogged, cut and reassayed using standard Argent analytical methods (ICP for base metals and fire assay for gold). The assay results have been received and confirm the presence of silver and gold in varying grades in the core intervals which had not been previously assayed for gold or silver. This new assays will be released in a separate report following completion of the analysis. SUNNY CORNER Having already earned a 51% interest in the Sunny Corner Farmin with Golden Cross Operations Pty Ltd, Argent has continued to invest in the project and is well on the way to earning a 70% interest. During the year and subsequent to balance date Argent has focused its exploration efforts on two key aspects: The discovery of potential additional feeds from shallow gold deposits within the existing tenement portfolio through reconnaissance mapping, rock chip and soil sampling in the following prospects, mainly amongst old mine workings: - St George s Reef; - Bushranger s Hill; - Blackbutt Mountain; - Sure Gift; - Silver Mines South; - Paddy Lackey; and - Dunn s Reef. The discovery of potential extensions of the known Sunny Corner mineralisation through Reverse Circulation ( RC ) drilling of the Silver Hill prospect. The first activity (discovery of potential additional feeds) comprised 19 rock chip samples and 158 soil samples (to a depth of 30cm) selected from the 7 prospects. Various gold anomalies were detected by the assays and the results will be announced following completion of the analysis. Drilling of the Silver Hill prospect was delayed by a requirement to perform an environmental Assessment of Significance. Four out of five planned RC holes were drilled subsequent to balance date in July 2012, for a total of 274 metres. These holes successfully intersected the prospective stratigraphy of the Sunny Corner Formation at Silver Hill. However, no significant mineralisation was observed, so the fifth hole was cancelled. The lack of significant mineralisation was confirmed by subsequent assays. Only a further 36,023 needs to be invested in exploration by 1 June 2013 for Argent Minerals to reach the 686,000 target and earn a 70% interest in the JV. Figure 3: Expenditure and Farm-in Summary for Sunny Corner Project ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 8

9 REVIEW OF OPERATIONS WEST WYALONG During the year Argent conducted an exploratory drilling programme at the Pine Ridge prospect in the tenement, targeting the previously defined anomaly (a coincident magnetic and gravity high), and potential extensions to intersected gold reefs. The programme, totalling 70,501 for the year, comprised six RC holes designed to follow up mineralised intervals from three prior holes AWGC001 AWGC 003. The depths were extended from the original programme of 80 metres to between metres due to an apparent lack of mineralisation at the time of drilling, for a total of 558 metres. Several mineralised intervals were recorded. However, the results were in summary disappointing, and a decision was adopted to discontinue further investigation of these anomalies in favour of other anomalies in the tenement. Subsequent to balance date, the West Wyalong Farm-in and Joint Venture Agreement ( JVA ) between Argent Minerals and GCR was amended on 16 August and 20 September Under the amended JVA: Argent Minerals has until 30 June 2013 (previously 31 December 2012) to complete the qualifying expenditure total of 750,000 (unchanged) to earn a 51% interest. Having invested a total contribution of 490,548 to exploration as of 30 June 2012, Argent is required to invest an additional 259,452 to achieve the 51% interest; and Argent Minerals has until 30 June 2014 (previously 1 June 2013) to earn a 70% interest by investing an additional 400,000 (previously 350,000). CAPITAL STRUCTURE On the 12 September 2011 the Company issued 4,280,309 shares to Golden Cross Resources Limited (ASX:GCR) as part consideration for the acquisition of its 30% interest in the Kempfield Silver Project. The shares were issued at the VWAP over the 5 days prior to signing the Sale Agreement, being approximately per share. At the date of this report the Company has on issue 141,700,493 fully paid ordinary shares and 2,000,000 unlisted options exercisable on or before 28 February 2013 at an exercise price of per share. COMPETENT PERSONS STATEMENTS The information in this report that relates to Mineral Resources on the Kempfield Tenements is based on information compiled by Mr Arnold van der Heyden who is a Member of the Australian Institute of Geoscientists and a full time employee of H & S Consultants Pty Ltd ( Information ). Mr van der Heyden has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as "Competent Person" as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr van der Heyden consents to the inclusion in this Report of the Information in the form and context in which it appears. The information in this report that relates to Exploration is based on information compiled by Vladimir David who is a member of the Australian Institute of Geoscientists, and a technical consultant to Argent Minerals Limited, and who has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activities being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. Mr David consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 9

10 DIRECTORS REPORT The Directors of Argent Minerals Limited ( the Company ) submit herewith the consolidated annual financial report of Argent Minerals Limited for the period 1 July 2011 to 30 June In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: DIRECTORS The names and particulars of the directors of the Company during the financial year and as at the date of this report are as follows. Directors were in office for the entire period unless otherwise stated. KERRY MCHUGH B.Com (Hons) Non-Executive Chairman Appointed 10 April 2012 Kerry held the position of Executive Chairman from 21 September 2007 until his appointment as Non-Executive Chairman. He brings a diverse in-depth commercial knowledge to the Board of Argent. Prior to this appointment Kerry was part of the senior management team that grew Plutonic Resources Limited from a market capitalization of approximately 100 million in 1990 to over 1 billion in As the General Manager of Business Development at Plutonic, Kerry had responsibility for identifying, undertaking and integrating acquisitions, most notably that of the Forsyth group of companies with their five operating gold mines. Kerry was also closely involved in major equity raisings, other corporate issues and strategic planning. At Pioneer International Limited ( ) he held a strategic planning role and was involved in acquisitions in the building products area. He successfully managed the sale of Pioneer s diverse portfolio of mining assets, including the sale of the Narbalek U3O8 stockpile and the Cable Sands companies. Prior to 1987 he held various positions in the Commonwealth Public Service, including Senior Executive Service positions in the Department of Primary Industry and Energy and its predecessors. During the past three years he has not served as a director of any other listed companies. DAVID BUSCH B.Eng (Elec), BSc, MAusIMM Managing Director Appointed 10 April 2012 David is a qualified engineer with more than 25 years experience in strategic leadership roles, including business and project management on behalf of Australian majors BHP Billiton and Macquarie Bank, and international process contract and automation leader Honeywell. David brings with him broad senior management experience from operational to board levels, including founder and managing directors of Australian minerals exploration companies and as chairman of a publicly listed equipment finance company in Indonesia. David most recently led the development of an ASX listed company and its listing on the ASX and is a member of the Australian Institute of Mining and Metallurgy. During the past three years he has also served as a director of the following listed companies; Company Date of Appointment Date of Resignation Goodrich Resources Limited 18 August March 2012 ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 10

11 DIRECTORS REPORT MARCUS MICHAEL B.Bus, CA Executive Director and Company Secretary Appointed 4 April 2007 Marcus Michael is a Chartered Accountant and has over 20 years industry experience. He has provided consulting services to a broad range of public and private entities. Marcus Michael has been involved with private equity consulting, capital and debt funding and corporate reconstruction since 1990 and is a Director of Marshall Michael Pty Ltd, Chartered Accountants. Marcus Michael graduated from Curtin University in 1990 with a Bachelor of Business and has been a member of the Institute of Chartered Accountants since During the past three years he has also served as a director of the following listed companies; Company Date of Appointment Date of Resignation St George Mining Limited October 2009 Not Applicable Beacon Minerals Limited March 2012 Not applicable STEPHEN GEMELL B.Eng (Hons), FAusIMM (CP), MAIME, MMICA Non-executive Director Appointed 7 July 2010 Stephen Gemell has more than 35 years experience in the Australasian and global mining industry. He has been Principal of Gemell Mining Engineers, an independent multi-discipline consultancy, since its formation in Kalgoorlie in His experience includes operational management in underground and open pit mining and supervision of CIP/CIL, flotation and alluvial plants. During the past three years he has also served on the board of the following listed companies; Company Date of Appointment Date of Resignation Eastern Iron Limited January 2010 Not Applicable Golden Cross Resources Limited June 2012 Not Applicable Indochine Mining Limited March 2011 Not Applicable UCL Resources Limited October 2011 Not Applicable UXA Resources Limited March 2005 December 2011 ROSS SMYTH-KIRK B.Com, CPA, F.Fin Non-executive Director Appointed 25 May 2011 Ross Smyth-Kirk was a founding Director of the former leading investment management company, Clayton Robard Management Limited and has had extensive experience in investment management including a close involvement with the minerals and mining sectors. He has been a Director on several company boards over the past 30 years in Australian and the UK as well as Chairman of the Australian Jockey Club (AJC). During the past three years he has also served as a director of the following listed companies; Company Date of Appointment Date of Resignation Kingsgate Consolidated Limited November 1994 Not Applicable ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 11

12 DIRECTORS REPORT Company Secretary MARCUS MICHAEL CA, B.Bus For details relating to Marcus Michael, please refer to the details on directors above. DIRECTORS INTERESTS At the date of this report, the Directors held the following interests in Argent Minerals. Name Ordinary Shares Unlisted Options expiring 28 February 2013 Kerry McHugh 1,219,972 1,000,000 David Busch NIL NIL Marcus Michael 4,812,000 1,000,000 Stephen Gemell 500,000 NIL Ross Smyth-Kirk 3,579,545 NIL No directors, except Marcus Michael and Stephen Gemell have an interest, whether directly or indirectly, in an agreement or proposed agreement with Argent Minerals Limited for the year ended 30 June Marshall Michael Pty Ltd Chartered Accountants, which Marcus Michael is a Director of, provides accounting, bookkeeping and secretarial services to the Company and Gemell Mining Services Pty Ltd, which Stephen Gemell is a Director of, provides consulting services to the Company. PRINCIPAL ACTIVITIES The principal activity of the Company is mineral exploration in New South Wales, Australia. RESULTS AND REVIEW OF OPERATIONS The results of the consolidated entity for the financial year ended 30 June 2012 is a comprehensive after income tax loss of 5,786,451 (2011: loss of 7,227,945). A review of operations of the consolidated entity during the year ended 30 June 2012 is provided in the Review of the Operations immediately preceding this Directors Report. LIKELY DEVELOPMENTS The consolidated entity s focus over the next financial year will be on its key projects, Kempfield, Sunny Corner and West Wyalong. Further commentary on planned activities in these projects over the forthcoming year is provided in the Review of Operations. The Company will also assess new opportunities especially where these have synergies with existing projects. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There have not been any significant changes in the state of affairs of the Company during the financial year, other than those noted in this financial report. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 12

13 DIRECTORS REPORT ENVIRONMENTAL ISSUES The Company is aware of its environmental obligations with regards to its exploration activities and ensures that it complies with all regulations when carrying out exploration work. DIVIDENDS PAID OR RECOMMENDED The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. DIRECTORS MEETINGS During the financial year, 9 meetings of Directors were held. Attendances by each director during the year were as follows: Name Eligible to attend Attended K McHugh 9 8 D Busch* 3 3 M Michael 9 8 S Gemell 9 9 R Smyth-Kirk 9 9 *D Busch was appointed to the Board on 10 April 2012 REMUNERATION REPORT AUDITED Remuneration policy The remuneration policy of Argent Minerals Limited has been designed to align directors objectives with shareholder and business objectives by providing a fixed remuneration component, which is assessed on an annual basis in line with market rates and equity related payments. The Board of Argent Minerals Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors to run and manage the Company. The Board s policy for determining the nature and amount of remuneration for Board members is as follows: The remuneration policy and setting the terms and conditions for the executive directors and other senior staff members is developed by the Remuneration Committee and approved by the Board based on local and international trends among comparative companies and industry generally. It examines terms and conditions for employee incentive schemes, benefit plans and share plans. Independent advice is obtained when considered necessary to confirm that executive remuneration is in line with market practice and is reasonable within Australian executive reward practices. Executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The entity is an exploration entity, and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives are paid market rates associated with individuals in similar positions within the same industry. Options and performance incentives may be issued particularly as the entity moves from an exploration to a producing entity and key performance indicators such as profit and production and reserves growth can be used as measurements for assessing executive performance. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 13

14 DIRECTORS REPORT The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Executive Directors, in consultation with independent advisors, determine payments to the non-executives and review their remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the annual General Meeting and is currently 250,000 per annum. Fees for non-executive directors are not linked to the performance of the Company. However, to align Directors interests with shareholder interests, the directors are encouraged to hold shares in the Company. Details of directors and executives The following table provides employment details of persons who were, during the financial year, members of key management personnel of the entity. Directors Position Held as at 30 June 2012 and any changes during the year K McHugh Non-Executive Chairman Commenced 10 April 2012, previously Executive Chairman D Busch Managing Director Commenced 10 April 2012 M Michael Executive Director S Gemell Non-Executive Director R Smyth-Kirk Non-Executive Director D White Project Manager Executive directors remuneration and other terms of employment are reviewed annually by the non-executive directors having regard to performance against goals set at the start of the year, relative to comparable information and independent expert advice. Except as detailed in the Remuneration Report, no director has received or become entitled to receive, during or since the financial year end, a benefit because of a contract made by the Company or a related body corporate with a director, a firm of which a director is a member or an entity in which a director has a substantial financial interest. This statement excludes a benefit included in the aggregate amount of emoluments received or due and receivable by directors and shown in the Remuneration Report, prepared in accordance with the Corporations Regulations, or the fixed salary of a full time employee of the Company. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 14

15 DIRECTORS REPORT Directors Remuneration of directors and executives Remuneration for the financial year ended 30 June Short Term Benefits Salary and Fees Non- Monetary (i) Post Employment Benefits Superannuation Long Term Benefits Long Service Leave Equity settled share-based payments Shares/Option s Total Value of options in proportion of remuneration % K McHugh ,566 9,526 22, , ,500 6,680 11,475-61, , D Busch ,090 2,141 5, , M Michael ,000 3,817 9, , ,464 3,153 5,100-61, , S Gemell ,000 1,908 4, , ,059 1,796 4, ,270 - R Smyth-Kirk ,000 1,908 4, , , ,557 - D White , , , ,275 - D Daws ,559 1,339 3, ,188 - C Daws , , ,410 - J Ogilvie Total ,356 19,300 45, , ,451 13,908 26, , , (i) Non monetary benefits are for directors and officers liability and legal expense insurance premiums. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 15

16 DIRECTORS REPORT Equity Instruments Details of vesting profiles of the options for the financial year ended 30 June 2012 granted as remuneration to each key management person of the group is detailed below. Options Granted Directors Number Date % vested in year % forfeited in year Financial year in which grant vests K McHugh ,000, February February 2013 D Busch M Michael ,000, February February 2013 S Gemell R Smyth-Kirk D White During the year no remuneration options were awarded and no remuneration options lapsed or were exercised. Employment contracts of directors and executives The Company has entered into an agreement with Mr Kerry McHugh whereby Mr McHugh receives remuneration of 75,000 per annum plus statutory superannuation. Prior to June 2012 in his capacity as Executive Chairman, Mr McHugh s remuneration was 260,000 per annum plus statutory superannuation. The Company has entered into an employment agreement with Mr David Busch whereby Mr Busch receives remuneration of 250,000 per annum plus statutory superannuation. The agreement came in effect on 10 April 2012 the date of Mr Busch s appointment. The agreement may be terminated subject to a 3 month notice period. The Company has entered into an employment agreement with Mr Marcus Michael whereby Mr Michael receives remuneration of 100,000 per annum plus statutory superannuation. The agreement may be terminated subject to a 3 month notice period. The Company entered into an agreement with Mr Stephen Gemell whereby Mr Gemell receives remuneration of 50,000 per annum plus statutory superannuation. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 16

17 DIRECTORS REPORT The Company entered into an agreement with Mr Ross Smyth-Kirk whereby Mr Smyth-Kirk receives remuneration of 50,000 per annum plus statutory superannuation. END OF REMUNERATION REPORT INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every officer or agent of the Company shall be indemnified out of the property of the entity against any liability incurred by him in his capacity as officer or agent of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal. During the year the Company agreed to pay an annual insurance premium of 19,300 (2011: 13,908) in respect of directors and officers liability and legal expenses insurance contracts, for directors, officers and employees of the Company. The insurance premium relates to: Costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever the outcome. Other liabilities that may arise from their position, with the exception of conduct involving a willful breach of duty. SHARE OPTIONS Unissued shares On 28 February 2011, 2,000,000 unlisted options were issued to Mr McHugh and Mr Michael. As at the date of this report none of these options had been exercised. There are no other options on issue at the date of this report. Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any other entity. EVENTS SUBSEQUENT TO BALANCE DATE No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the consolidated entity, the results of those operations, or the state of the affairs of the consolidated entity in future financial years. AUDITOR S INDEPENDENCE DECLARATION The auditor s independence declaration for the year ended 30 June 2012 has been received and forms part of the directors report and can be found on page 47 of the financial report. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 17

18 DIRECTORS REPORT NON AUDIT SERVICES The Company s auditor, Stantons International, did not provide any non-audit services to the Company during the financial year ended 30 June Signed in accordance with a resolution of the directors made pursuant to s 298(2) of the Corporations Act On behalf of the directors. KERRY McHUGH Non Executive Chairman Dated this 25 September 2012 ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 18

19 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012 Australian Dollar () Note 30 JUNE JUNE 2011 REVENUE FROM CONTINUING OPERATIONS 3 323,614 94,650 EXPENDITURE Administration expenses 4 1,017, ,348 Exploration and development expenditure written off 5,237,624 3,504,171 LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX (5,931,142) (4,399,869) Income tax benefit/(expense) 5 144,691 - LOSS FROM CONTINUING OPERATIONS AFTER INCOME TAX (5,786,451) (4,399,869) DISCONTINUED OPERATIONS Loss from discontinued operations after income tax - (2,828,076) NET LOSS ATTRIBUTABLE TO MEMBERS OF THE COMPANY (5,786,451) (7,227,945) Other comprehensive income - - TOTAL COMPREHENSIVE LOSS (5,786,451) (7,227,945) TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO MEMBERS OF THE COMPANY (5,786,451) (7,227,945) LOSS PER SHARE 15 From continuing and discontinued operations cents per shares Basic and diluted (4.1) (8.4) From continuing operations (4.1) (5.1) From discontinued operations - (3.3) The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 19

20 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012 Australian Dollar () Note 30 JUNE JUNE 2011 CURRENT ASSETS Cash and cash equivalents 16 (a) 3,344,740 4,744,794 Trade and other receivables 9 (a) 254,864 5,831,995 Other assets 9 (b) 48,112 10,177 TOTAL CURRENT ASSETS 3,647,716 10,586,966 NON CURRENT ASSETS Other financial asset - deposits 41,579 38,744 Property, plant and equipment , ,085 TOTAL NON CURRENT ASSETS 559, ,829 TOTAL ASSETS 4,207,114 11,171,795 CURRENT LIABILITIES Trade and other payables ,056 2,549,662 Provisions 12 8,906 - TOTAL CURRENT LIABILITIES 372,962 2,549,662 TOTAL LIABILITIES 372,962 2,549,662 NET ASSETS 3,834,152 8,622,133 EQUITY Issued capital 13 (a) 20,813,972 19,815,502 Reserves 13 (b) 123, ,991 Accumulated losses 14 (17,103,811) (11,317,360) TOTAL EQUITY 3,834,152 8,622,133 The above consolidated statement of financial position should be read in conjunction with the accompanying notes ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 20

21 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012 Australian Dollar () SHARE ACCUMULATED SHARE OPTION TOTAL CAPITAL LOSSES RESERVE EQUITY BALANCE AT 1 JULY ,998,702 (4,089,415) 405,736 1,315,023 Profit (loss) for the year - (7,227,945) - (7,227,945) Other comprehensive income Total comprehensive loss - (7,227,945) - (7,227,945) Shares issued during the year 17,009, ,009,958 Shares to be issued on conversion of options 3,426, ,426,005 Transfer from option reserve on conversion of options 405,736 - (405,736) - Share based payments , ,991 Shares and options issue expenses (761,545) - - (761,545) Share buy back during the year (5,263,354) - - 5,263,354 BALANCE AT 30 JUNE ,815,502 (11,317,360) 123,991 8,622,133 BALANCE AT 1 JULY ,815,502 (11,317,360) 123,991 8,622,133 Profit (loss) for the year - (5,786,451) - (5,786,451) Other comprehensive income Total comprehensive loss - (5,786,451) - (5,786,451) Share based payments 1,000, ,000,000 Shares and options issue expenses (1,530) - - (1,530) BALANCE AT 30 JUNE ,813,972 (17,103,811) 123,991 3,834,152 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 21

22 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012 Australian Dollar () Note 30 JUNE JUNE 2011 CASH FLOWS FROM OPERATING ACTIVITIES Expenditure on mining interests (6,194,788) (1,354,091) Payments to suppliers and employees (988,176) (836,247) Interest received 288,896 79,575 Other - GST (6,170) (65,418) Net cash outflows from operating activities 16 (b) (6,900,238) (2,176,181) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant & equipment (11,222) (544,207) Term deposit 2,836 (1,907) Subsidiary Argent (Bullant) Pty Ltd - (7,050,432) Net cash of disposed subsidiary - (970,998) Net cash outflows from investing activities (8,386) (8,567,544) CASH FLOW FROM FINANCING ACTIVITIES Issue of shares and options net of capital raising costs 5,508,570 14,094,271 Net cash inflows from financing activities 5,508,570 14,094,271 Net increase (decrease) in cash and cash equivalents (1,400,054) 3,350,546 Cash and cash equivalents at the beginning of the financial year 4,744,794 1,394,248 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 16(a) 3,344,740 4,744,794 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 22

23 NOTES TO THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE CORPORATE INFORMATION The consolidated financial report of Argent Minerals Limited ( Argent or the Company ) and its consolidated entities ( the consolidated entity or group ) for the year 1 July 2011 to 30 June 2012 was authorized for issue in accordance with a circular resolution of the directors on 25 September Argent Minerals Limited is a Company limited by shares, incorporated in Australia. The Company s shares are publicly traded on the Australian Securities Exchange (ASX). The nature of the operations and principal activity of the consolidated entity is mineral exploration. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation of the Financial Report The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law. The financial report has also been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of the financial assets and financial liabilities. The financial report is presented in Australian dollars. (b) Going Concern The directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. The consolidated entity has recorded a net consolidated accounting loss of 5,786,451 and net operating cash outflow of 6,900,238 for the year ended 30 June The directors believe the going concern basis is appropriate as: The cash assets of the Company at 30 June 2012 were 3,344,740; and, The costs will be reduced if necessary to meet available cash. As a result of the above, the Board is confident that the Company will have sufficient funds to finance its operations in the 2012/2013 Financial Year. (c) Adoption of new and revised standards The following new standards and amendments to standards are mandatory for the financial year beginning 1 July Amendments to AASB 7 Financial Instruments: Disclosure ; Amendments to AASB 101 Presentation of Financial Statements ; AASB 1054 Australian Additional Disclosures and AASB Amendments to Australian Accounting Standards arising from Trans-Tasman Convergence Project ; and AASB 124 Related Party Disclosures ; (revised December 2009). The adoption of these standards did not have any impact in the current period or any prior period and is unlikely to affect future periods. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 23

24 NOTES TO THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 (d) 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 ). (e) Income Tax Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of 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 liability 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 that accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, 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 the 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 utilized: 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 deductible temporary differences with investments in subsidiaries, associates and interest in joint ventures, deferred tax assets in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. The carrying amount of deferred income tax is reviewed at each balance sheet date and reduced to the extent that is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. 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 not in the income statement. (f) Exploration and evaluation expenditure Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method and with AASB 6 Exploration for and Evaluation of Mineral Resources. For each area of interest, exploration and evaluation expenditure is written off in the period in which the expenditure is incurred. Expenditure incurred in the acquisition of tenements and rights to explore may be capitalised and recognised as an exploration and evaluation asset. Exploration and evaluation assets are initially measured at cost at recognition. Exploration and evaluation expenditure incurred by the Company subsequent to acquisition of the rights to explore is expensed as incurred. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 24

25 NOTES TO THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 Capitalised acquisition costs are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset to which it has been allocated, being no larger than the relevant area of interest is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its 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 in previous years. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development costs. (g) Development Development expenditure is recognised at cost less accumulated amortisation and any impairment losses. Where commercial production in an area of interest has commenced, the associated costs are amortised over the estimated economic life of the mine on a units-of-production basis. Changes in factors such as estimates of proved and probable reserves that affect unit-of production calculations are dealt with on a prospective basis. (h) Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Interest Revenue is recognised as the 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. (i) Cash and cash equivalents Cash and short-term deposits in the consolidated statement of financial position comprises of cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (j) Employee benefits Provision is made for the consolidated entity s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with entitlements arising from wages and salaries and annual leave which will be settled after one year, have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Other employee benefits payable later than one year have been measured at the present value of the estimated cash outflows to be made to those benefits Contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred. ARGENT MINERALS LIMITED 2012 ANNUAL REPORT PAGE 25