-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SWtlcMAkAqz8UKOBrJPNNOLCRcrGrB/Q2gpJZxh3NFaGpt3TkDH4GGrlK3Wq9HeM yM76zK2SoFH+jKrr6Xf8Kg== 0000950133-98-000779.txt : 19980318 0000950133-98-000779.hdr.sgml : 19980318 ACCESSION NUMBER: 0000950133-98-000779 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960417 ITEM INFORMATION: FILED AS OF DATE: 19980317 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COEUR D ALENE MINES CORP CENTRAL INDEX KEY: 0000215466 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 820109423 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-08641 FILM NUMBER: 98567674 BUSINESS ADDRESS: STREET 1: 400 COEUR D ALENE MINES BLDG STREET 2: 505 FRONT AVE CITY: COEUR D ALENE STATE: ID ZIP: 83814 BUSINESS PHONE: 2086673511 MAIL ADDRESS: STREET 1: 400 COEUR D ALENE MINES BLDG STREET 2: 505 FRONT AVE CITY: COEUR D'ALENE STATE: ID ZIP: 83814 8-K/A 1 COEUR D'ALENE MINES CORP. 8-K AMENDMENT #4 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 8-K/A No. 4 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date or Report (Date of earliest event reported): April 17, 1996 COEUR D'ALENE MINES CORPORATION (Exact name of registrant as specified in its charter) Idaho 1-8641 82-0109423 ------------------------------- ----------- ---------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 505 Front Ave., P. O. Box "I" Coeur d'Alene, Idaho 83816 --------------------- ---------- (Address of principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (208) 667-3511 The undersigned registrant hereby amends the following items, financial statement, exhibits or other portions of its Current Report on Form 8-K, filed on April 30, 1996, as set forth in the pages attached hereto: Item 7 - Financial Statements of Business Acquired Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereto duly authorized. COEUR D'ALENE MINES CORPORATION By: /s/ JAMES A. SABALA ------------------------------- James A. Sabala Senior Vice President and Chief Financial Officer Date: March 17, 1998 2 The current Report on Form 8-K of Coeur d'Alene Mines Corporation ("Coeur") dated April 17, 1996 and filed on April 30, 1996, reported Coeur's acquisition of shares of Gasgoyne Gold Mines N.L., an Australian gold mining company ("Gasgoyne"). Amendment No. 2 to the Form 8-K, which was filed on July 1, 1996, set forth the historical financial statements of Gasgoyne called for by Item 7(a) of Form 8-K and Rule 3-05 of Regulation S-X, and the pro forma financial information required under Item 7(b) of Form 8-K and Article 11 of Regulation S-X. The purpose of this amendment is to revise certain of such historical financial statements and pro forma financial information. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Business Acquired. The following lists the historical financial statements, set forth in Australian dollars, of Gasgoyne attached hereto:
Page(s) ------- Audited consolidated balance sheet as of June 30, 1995, and June 30, 1994,. . . . .. . . . . . . . . . . . . . . . . . 4 Audited consolidated profit and loss account for the years ended June 30, 1995, and June 30, 1994 . . . . . . . . . . 5 Audited consolidated cash flow statement for the years ended June 30, 1995 and June 1994. . . . . . . . . . . . . . . . 6 Notes to consolidated financial statements for year ended June 30, 1995. . . . . . . . . . . . . . . . . . . . . . . 7-32 Independent audit report for the year ended June 30, 1995. . 34 Audited consolidated balance sheet as of June 30, 1994, and June 30, 1993,. . . . .. . . . . . . . . . . . . . . . . 35 Audited consolidated profit and loss statement for the years ended June 30, 1994 and June 30, 1993 . . . . . . . . . 36 Audited consolidated cash flow statement for the years ended June 30, 1994 and June 30, 1993 . . . . . . . . . . . . 37 Notes to consolidated financial statements for year ended June 30, 1994. . . . . . . . . . . . . . . . . . . . . . . 38-61 Independent audit report for the years ended June 30, 1994 and June 30, 1993. . . . . . . . . . . . . . . . . . . . . 62
2 3
Page(s) ------- Unaudited consolidated balance sheet as of March 31, 1996 . . 63 Unaudited consolidated profit and loss accounts for the nine months ended March 31, 1996, and March 31, 1995 . . . . . . 64 Unaudited consolidated condensed cash flow statement for the nine months ended March 31, 1996 and March 31, 1995 . . . . 65 Note to unaudited consolidated financial statements for the nine months ended March 31, 1996 . . . . . . . . . . . . . 66-70
(b) Pro Forma Financial Information. The following lists the unaudited pro forma financial information , set forth in U.S. dollars, attached hereto:
Page(s) ------- Unaudited pro forma consolidated balance sheet as of March 31, 1996. . . . . . . . . . . . . . . . . . . . . . . 72-73 Unaudited pro forma consolidated statement of operations for the three months ended March 31, 1996 . . . . . . . . . . . 74 Unaudited pro forma consolidated statement of operations for the year ended December 31, 1995. . . . . . . . .. . . . . 75 Notes to unaudited pro forma consolidated financial statements. . . . . . . . . . . . . . . . . . . . . . . . 76-77
3 4 B A L A N C E S H E E T S
AS AT 30 JUNE 1995 ECONOMIC ENTITY COMPANY --------------------------- --------------------------- Notes 1995 1994 1995 1994 $ $ $ $ ---------- ---------- ---------- ---------- CURRENT ASSETS Cash 11,729,852 12,174,918 3,096,156 2,327,685 Receivables 5 485,760 105,527 247,097 113,679 Investments 6 894,298 93,792 894,298 93,792 Inventories 7 3,837,518 1,789,217 3,837,518 1,789,217 Other 8 710,450 1,605,567 692,390 1,604,853 ---------- ---------- ---------- ---------- TOTAL CURRENT ASSETS 17,657,878 15,769,021 8,767,459 5,929,226 ---------- ---------- ---------- ---------- NON-CURRENT ASSETS Receivables 9 2,195,295 -- 2,195,295 Investments 10 30,010 10 2,010,058 1,851,661 Property, plant and equipment 11 3,374,626 3,011,607 3,181,556 2,993,806 Intangibles 12 542,893 827,221 79,431 166,082 Other 13 15,869,346 10,097,303 14,374,635 9,588,455 ---------- ---------- ---------- ---------- TOTAL NON-CURRENT ASSETS 22,012,170 13,936,141 21,840,975 14,600,004 ---------- ---------- ---------- ---------- TOTAL ASSETS 39,670,048 29,705,162 30,608,434 20,529,230 ---------- ---------- ---------- ---------- CURRENT LIABILITIES Creditors and borrowings 14 2,803,636 2,196,515 2,659,410 2,117,436 Provisions 15 7,878,610 4,464,814 7,878,610 4,464,814 Other 16 277,304 331,112 277,304 331,112 ---------- ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 10,959,550 6,992,441 10,815,324 6,913,362 ---------- ---------- ---------- ---------- NON-CURRENT LIABILITIES Creditors and borrowings 17 67,651 68,626 67,651 68,626 Provisions 18 1,787,135 2,084,463 2,079,150 2,471,500 Other 19 134,255 584,572 134,255 584,572 ---------- ---------- ---------- ---------- TOTAL NON-CURRENT LIABILITIES 1,989,041 2,737,661 2,281,056 3,124,698 ---------- ---------- ---------- ---------- TOTAL LIABILITIES 12,948,591 9,730,102 13,096,380 10,038,060 ---------- ---------- ---------- ---------- NET ASSETS 26,721,457 19,975,060 17,512,054 10,491,170 ========== ========== ========== ========== SHAREHOLDERS' EQUITY Share capital 20 7,677,548 6,762,572 4,997,035 4,082,059 Reserves 21 2,620,449 303,500 2,620,449 303,500 Retained profits 9,071,348 5,216,974 9,894,570 6,105,611 ---------- ---------- ---------- ---------- Shareholders' equity attributable to members of the chief entity 19,369,345 12,283,046 17,512,054 10,491,170 Outside equity interests in controlled entity 22 7,352,112 7,692,014 -- -- ---------- ---------- ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 26,721,457 19,975,060 17,512,054 10,491,170 ========== ========== ========== ==========
The above balance sheets should be read in conjunction with the accompanying notes 4 5 P R O F I T A N D L O S S A C C O U N T S
FOR THE YEAR ENDED 30 JUNE I995 ECONOMIC ENTITY COMPANY ------------------------------ ----------------------------- NOTES 1995 1994 1995 1994 $ $ $ $ ----------- ----------- ----------- ----------- Operating Revenue 2 33,397,785 23,918,760 32,753,843 24,984,725 ----------- ----------- ----------- ----------- Operating profit before income tax 3 13,405,097 8,067,211 13,451,530 9,390,102 Income tax attributable to operating profit 4 4,733,949 2,758,996 4,638,927 3,146,033 ----------- ----------- ----------- ----------- Operating profit after income tax 8,671,148 5,308,215 8,812,603 6,244,069 Outside equity interests in operating profit after income tax (206,870) (47,217) -- -- ----------- ----------- ----------- ----------- Operating profit after income tax attributable to members of the chief entity 8,878,018 5,355,432 8,812,603 6,244,069 Retained profits at the beginning of the financial year 5,216,974 3,035,784 6,105,611 3,035,784 ----------- ----------- ----------- ----------- Total available for appropriation 14,094,992 8,391,216 14,918,214 9,279,853 Dividends provided for or paid 31 5,023,644 3,174,242 5,023,644 3,174,242 ----------- ----------- ----------- ----------- Retained profits at the end of the financial year 9,071,348 5,216,974 9,894,570 6,105,611 =========== =========== =========== ===========
The above profit and loss accounts should be read in conjunction with the accompanying notes. 5 6 S T A T E M E N T O F C A S H F L O W S FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY -------------------------------- ------------------------------ Notes 1995 1994 1995 1994 $ $ $ $ ---------- ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 32,802,014 23,144,108 32,803,221 23,144,108 Payments to suppliers and employees 16,352,339) (17,542,830) (15,987,164) (17,339,856) Interest received 587,758 262,663 209,074 79,480 Interest and other costs of finance paid (11,115) (25,156) (11,115) (25,156) Income tax paid (2,320,911) (1,097,197) (2,320,911) (1,097,197) Net cash provided by operating activities 29(c) 14,705,407 4,741,588 14,693,105 4,761,379 CASH FLOWS FROM INVESTING ACTIVITIES Payment for mineral exploration, evaluation and development (9,995,746) (1,821,644) (9,003,242) (1,389,958) Payments for investments (1,094,903) (362,219) (1,062,903) (862,219) Proceeds from sale of investments 112,249 1,255,418 92,599 1,255,418 Payment for property, plant and equipment (858,014) (1,014,500) (652,549) (994,825) Proceeds from sale of equipment 21,896 71,963 21,896 71,963 Loan to other entities (2,195,295) (2,195,295) Net cash used in investing activities (14,009,813) (1,870,982) (12,799,494) (1,919,621) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 16,450 404,050 16,450 404,050 Payment of prospectus issue expenses -- (765,208) -- -- Repayment of borrowings (31,294) (1,024,168) (31,294) (1,024,168) Dividends paid (1,110,296) (2,516,820) (1,110,296) (2,516,820) Proceeds from issue of shares to minority interest in the controlled entity -- 10,568,072 -- -- Net cash from financing activities (1,125,140) 6,665,926 (1,125,140) (3,136,938) Net increase (decrease ) in cash held (429,546) 9,536,532 768,471 (295,180) Cash at beginning of the financial year 12,159,398 2,622,866 2,327,685 2,622,865 Cash at the end of the financial year 29(a) 11,729,852 12,159,398 3,096,156 2,327,685
The above statements of cash flows should be read in conjunction with the accompanying notes. 6 7 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies adopted by the economic entity in the preparation of the financial statements is set out in this note. The financial statements adopted are prepared in accordance with applicable Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) and the Corporations Law, including the disclosure requirements of Schedule 5 of the Corporations Regulations. The accounting policies adopted are consistent with those of the previous year. (a) HISTORICAL COST The financial statements have been prepared under the convention of historical cost accounting and do not take into account changing money values. (b) PRINCIPLES OF CONSOLIDATION The consolidated accounts comprise the accounts of the company and its controlled entity, Pilbara Mines N. L. A controlled entity is any entity controlled by the company. Control exists where the company has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with the company to achieve its objectives. All inter-company balances and transactions between entities in the economic entity, including any unrealized profits or losses, have been eliminated on consolidation. Outside equity interests in the results and equity of the controlled entity are shown separately in the consolidated profit and loss account and balance sheet respectively. (c) INTERESTS IN JOINT VENTURES The economic entity's interests in production joint ventures are brought to account by including the amount of: (i) the entity's interest in each of the individual assets employed in the joint ventures; (ii) the entity's share of liabilities incurred by the joint ventures, and (iii) the entity's interest in the expenses incurred in relation to the joint ventures. (d) REVENUE RECOGNITION (i) Refined gold which is subject to forward sales contracts, is recognized as revenue at the appropriate forward sales price at the point at which the bullion has been refined and is available for delivery. Unrealized gains or losses relating to forward gold sales contracts outstanding at balance date are not reflected in the profit and loss account. (ii) Funds received on the sale of call options, other than in circumstances where the call option is related to forward selling arrangements, are recognized as revenue when received. (e) INCOME TAX Tax effect accounting procedures are followed using the liability method of tax effect accounting, whereby the income tax expense for the year is matched with the accounting result after allowance 7 8 for permanent differences. 8 9 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 Future income tax benefits are not brought to account unless realization of the asset is assured beyond reasonable doubt in respect to timing differences, and virtually certain in respect of tax losses. Income tax on cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when the timing differences reverse. (f) INVENTORIES (i) Ore stockpiles and gold in circuit are valued at the lower of cost and net realisable value. Cost comprises direct material, labor and transportation expenditure incurred in getting inventories to their existing location and condition, together with an appropriate portion of fixed and variable overhead expenditure based on weighted average costs incurred during the period in which such inventories were produced. (ii) Stores and consumable are valued at the lower of weighted average cost and net realisable value. (g) EXPLORATION AND DEVELOPMENT EXPENDITURE Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development, exploration or sale of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence, or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing. Expenditure which no longer satisfies the above policy is written off against profits. When production commences, the accumulated costs for the relevant area of interest are amortized over the life of the area according to the rate of depletion of the economically recoverable reserves. Any costs of site restoration are provided for during the relevant production stages and included in the costs of that stage. 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. (h) Restoration, Rehabilitation and Environmental Costs Restoration, rehabilitation and environmental expenditure to be incurred during the production phase of operations is accrued when the need for such expenditure is established and then written off immediately as part of the cost of production of the mine property concerned. There is no provision in the accounts for restoration, rehabilitation and environmental expenditure to be incurred subsequent to the cessation of production at a mine property. (i) PROPERTY, PLANT AND EQUIPMENT (i) The cost of each item of buildings, machinery and equipment held at minesites is written off over its expected economic life. Each item's economic life has due regard both to its own physical life limitations and to present assessments of economically recoverable resources of the mine property at which the item is located, and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. 9 10 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 The total net carrying values of mine buildings, machinery and equipment at each mine property are reviewed regularly and, to the extent to which these values exceed their recoverable amounts, that excess is fully provided against in the financial year in which this is determined. (ii) Other assets are depreciated over their expected useful lives on the straight line or reducing balance basis as appropriate. (j) LEASES Leased assets, other than operating leases, where substantially all the risks and benefit incident to the ownership of the asset but not the legal ownership are transferred to the company are classified as finance leases. Finance leases are capitalized recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual value. Leased assets are amortized over their estimated useful lives. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Lease payments under operating leases are charged as expenses in the periods in which they are incurred. (k) INTANGIBLES Intangibles comprise expenses incurred in connection with the prospectus issued by the company and its controlled entity which are being amortized over a period of 5 years commencing from the date of the successful flotation of the shares. (1) Employee Entitlements The amounts expected to be paid to employees for their pro-rata entitlement to annual and sick leave are accrued annually at current pay rates having regard to experience of employee departures and periods of service. (m) Recoverable Amount of Non-current Assets The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revealed to its recoverable amount. Where net cash inflows are derived from a group of assets working together, the recoverable amount is determined on the basis of the relevant group of assets. The expected net cash flows included in determining recoverable amounts of non-current assets are not discounted to their present values. (n) Segmental Information The economic entity operates predominantly in the mining industry in Western Australia. (o) Cash For the purpose of the statement of cash flows, cash includes: (i) cash on hand and in at call deposits with banks or financial institutions, net of bank overdrafts; and (ii) investments in money market instruments with less than 14 days to maturity. 10 11 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ------------------------- 1995 1994 1995 1994 $ $ $ $ ---------- ---------- ---------- ----------- 2 OPERATING REVENUE Gold sales 31,404,187 20,832,079 31,404,187 20,832,079 Gold call option fee - 1,000,000 - 1,000,000 Sales of investments 131,899 1,255,418 112,249 1,255,418 Sales of plant and equipment 21,896 71,963 21,896 71,963 Interest received 824,077 262,663 209,074 79,480 Sales of tenements - - - 1,250,000 Other income 1.015,726 496,637 1,006,437 495,785 ---------- ---------- ---------- ----------- 33,397,785 23,918,760 32,753,843 24,984,725 ========== ========== ========== ===========
3 OPERATING PROFIT The operating profit before income tax has been determined after crediting and charging the following specific items: (a) Crediting as income Interest received from unrelated corporations 824,077 262,663 209,074 79,480 Profit on disposal of plant and equipment - 2,014 - 2,014 Profit on share trading - 915,300 - 915,300 (b) Crediting as abnormal Profit on sale of tenements - - - 1,172,838 Gold call option fee - 1,000,000 - 1,000,000 ---------- --------- ------- ---------- - 1,000,000 - 2,172,838 ---------- --------- ------- ---------- Income tax at 33% - 330,000 - 717,037 ---------- --------- ------- ----------
11 12 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- --------- ---------- --------- (c) Charging as expenses Amortisation - assets under finance leases 31,636 28,909 31,636 28,909 - prospectus issue expenses 239,693 144,043 86,652 86,652 - exploration and development expenses 633,106 439,281 633,106 439,281 Depreciation - property, plant and equipment 468,368 396,268 440,758 394,394 Exploration expenditure on areas written off 186,244 - 127,017 Interest paid to unrelated corporations - 12,513 - 12,513 Lease finance charges 11,115 12,643 11,115 12,643 Loss on disposal of investments 13,751 - 11,401 Loss on disposal of plant and equipment 528 - 528 Operating lease rentals 76,881 44,564 58,843 44,564 Provision for employee entitlements 5,557 3,089 5,557 3,089 4 INCOME TAX Operating profit before income tax 13,405,097 8,067,211 13,451,530 9,390,102 ---------- --------- ---------- --------- Income tax @ 33% (1994 - 33%) 4,423,682 2,662,180 4,439,005 3,098,734 Permanent differences - Amortisation of prospectus expenses 79,099 47,534 28,595 28,595 - Other 1,768 38,435 (1,935) 18,704 ---------- --------- ---------- --------- 4,504,549 2,748,149 4,465,665 3,146,033 Effect on deferred income tax of change in tax rate from 33% to 36% 148,928 - 173,262 - Future income tax benefits not recognized 80,472 10,847 - - ---------- --------- ---------- --------- Income tax attributable to operating profit 4,733,949 2,758,996 4,638,927 3,146,033 ========== ========= ========== =========
12 13 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ----------------------- 1995 1994 1995 1994 $ $ $ $ ---------- --------- --------- --------- Provision for income tax 5,031,277 2,260,444 5,031,277 2,260,444 Provision for deferred income tax (297,328) 498,552 (392,350) 885,589 ---------- --------- --------- --------- 4,733,949 2,758,996 4,638,927 3,146,033 ========== ========= ========= =========
The future income tax benefit of $80,472, (1994 - $10,847) attributable to tax losses of the controlled entity has not been brought to account as realization of the benefit is not virtually certain. The benefit will only be obtained if: (a) the controlled entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the loss to be realized; (b) the controlled entity continues to comply with the conditions for deductibility imposed by tax legislation; and (c) no changes in tax legislation adversely affect the controlled entity in realizing the benefit from the deductions for the loss. 5 CURRENT ASSETS - RECEIVABLES Trade debtors 156,320 47,536 153,976 55,833 Other debtors 329,440 57,991 93,121 57,846 --------- ------- --------- ------- 485,760 105,527 247,097 113,679 ========= ======= ========= ======= 6 CURRENT ASSETS - INVESTMENTS Investment listed on a prescribed stock exchange at cost 894,298 93,792 894,298 93,792 ========= ======= ========= ======= Market value 1,014,228 142,180 1,014,228 142,180 ========= ======= ========= =======
13 14 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ----------------------- 1995 1994 1995 1994 $ $ $ $ ---------- --------- --------- --------- 7 CURRENT ASSETS - INVENTORIES Ore stockpiles - at cost 3,188,208 1,226,977 3,188,208 1,226,977 Gold in circuit - at cost 52,120 161,493 52,120 161,493 Stores and consumables - at cost 597,190 400,747 597,190 400,747 ---------- --------- --------- --------- 3,837,518 1,789,217 3,837,518 1,789,217 ========== ========= ========= ========= 8 CURRENT ASSETS - OTHER Prepayments 209,115 74,092 191,055 73,378 Gold on metal account 501,335 1,531,475 501,335 1,531,475 ---------- --------- --------- --------- 710,450 1,605,567 692,390 1,604,853 ========== ========= ========= ========= 9 NON-CURRENT ASSETS - RECEIVABLES Unsecured loans 2,195,295 - 2,195,295 - ---------- --------- --------- --------- These monies have been advanced in terms of agreements relating to the Awak Mas Gold Project in terms of which the company is required to contribute funds for feasibility studies. Repayment of these loans is contingent upon the Project proceeding and generating adequate positive cash flow. 10 NON-CURRENT ASSETS - INVESTMENTS Investments in unlisted companies at cost 30,010 10 20,010 10 Investment in controlled entity at cost - - 1,990,048 1,851,651 ---------- --------- --------- --------- 30,010 10 2,010,058 1,851,661 ========== ========= ========= ========= The controlled entity is a listed company. Market value of traceable shares - - 220,000 100,000 Cost of escrowed shares - - 1,750,000 1,750,000
14 15 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ----------------------- 1995 1994 1995 1994 $ $ $ $ ---------- --------- --------- --------- 11 NON-CURRENT ASSETS - PROPERTY PLANT AND EQUIPMENT Freehold land at cost 95,789 44,160 95,789 44,160 ---------- --------- --------- --------- Buildings at cost 697,562 611,531 697,562 611,531 Less: accumulated depreciation 195,606 133,507 195,606 133,507 ---------- --------- --------- --------- 501,956 478,024 501,956 478,024 ---------- --------- --------- --------- Plant and equipment, at cost 4,229,069 3,535,095 4,003,929 3,515,420 Less: accumulated depreciation 1,521,025 1,116,125 1,488,955 1,114,251 ---------- --------- --------- --------- 2,708,044 2,418,970 2,514,974 2,401,169 ---------- --------- --------- --------- Plant and equipment under lease 143,011 118,311 143,011 118,311 Less: accumulated amortisation 74,174 47,858 74,174 47,858 ---------- --------- --------- --------- 68,837 70,453 68,837 70,453 ---------- --------- --------- --------- 3,374,626 3,011,607 3,181,556 2,993,806 ========== ========= ========= ========= l2 NON-CURRENT ASSETS - INTANGIBLES Prospectus issue expense 1,106,889 1,151,523 432,993 432,993 Less: accumulated amortisation 563,996 324,302 353,562 266,911 ---------- --------- --------- --------- 542,893 827,221 79,431 166,082 ========== ========= ========= ========= 13 NON-CURRENT ASSETS - OTHER Deferred mining costs (a) 1,225,544 4,682,483 1,225,544 4,682,483 Expenditure on mineral exploration evaluation and development (b) 14,643,802 5,414,820 13,149,091 4,905,972 ---------- --------- --------- --------- 15,869,346 10,097,303 14,374,635 9,588,455 ========== ========= ========= =========
(a) Deferred mining costs represent costs of mining waste in excess of the estimated ratio of waste to ore over the mine life. 15 16 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ------------------------- 1995 1994 1995 1994 $ $ $ $ ---------- ---------- ----------- ---------- (b) Expenditure on mineral exploration evaluation and development on areas of interest represents: in the exploration or evaluation phase 5,044,713 3,225,491 3,550,002 2,716,643 ---------- ---------- ----------- ---------- in which production has commenced 11,272,815 3,229,949 11,272,815 3,229,949 Less: accumulated amortisation 1,673,726 1,040,620 1,673,726 1,040,620 ---------- ---------- ----------- ---------- 9,599,089 2,189,329 9,599,089 2,189,329 ---------- ---------- ----------- ---------- 14,643,802 5,414,820 13,149,091 4,905,972 ========== ========== =========== ========== The carrying value of mineral exploration, evaluation and development expenditure is dependent upon the discovery and exploitation of commercially viable mineral deposits, the generation of sufficient future income therefrom or sale for at least carrying value. 14 CURRENT LIABILITIES - CREDITORS AND BORROWINGS Bank overdraft -- 15,520 -- -- Trade creditors 1,184,115 1,312,527 1,131,101 1,255,968 Other creditors 1,598,721 847,368 1,507,509 840,368 Lease liabilities 20,800 21,100 20,800 21,100 ---------- ---------- ----------- ---------- 2,803,636 2,196,515 2,659,410 2,117,436 ========== ========== =========== ========== 15 CURRENT LIABILITIES - PROVISIONS Employee entitlements 71,540 65,983 71,540 65,983 Dividends 2,813,230 2,115,357 2,813,230 2,115,357 Income tax 4,993,840 2,283,474 4,993,840 2,283,474 ---------- ---------- ----------- ---------- 7,878,610 4,464,814 7,878,610 4,464,814 ========== ========== =========== ========== 16 CURRENT LIABILITIES - OTHER Prepaid gold sales and fees 277,304 331,112 277,304 331,112 ========== ========== =========== ==========
16 17 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- --------- ---------- ---------- 17 NON CURRENT LIABILITIES - CREDITORS AND BORROWINGS Lease Liabilities 67,651 68,626 67,651 68,626 ========== ========== ========== ========== 18 NON-CURRENT LIABILITIES - PROVISIONS Deferred income tax 1,787,135 2,084,463 2,079,150 2,471,500 ========== ========== ========== ========== 19 NON CURRENT LIABILITIES - OTHER Prepaid gold sales and fees 134,255 584,572 134,255 584,572 ========== ========== ========== ========== 20 SHARE CAPITAL Authorised 100,000,000 shares of 20 cents each 20,000,000 20,000,000 20,000,000 20,000,000 ========== ========== ========== ========== Issued and paid up 46,867,173 ordinary shares of 20 cents each (1994 - 42,292,293) 9,373,435 8,458,459 9,373,435 8,458,459 Discount on shares (4,376,400) (4,376,400) (4,376,400) (4,376,400) ---------- ---------- ---------- ---------- 4,997,035 4,082,059 4,997,035 4,082,059 Company's share in new issue of capital by controlled entity (refer note 34) 2,680,513 2,680,513 - - ---------- ---------- ---------- ---------- 7,677,548 6,762,572 4,997,035 4,082,059 ========== ========== ========== ==========
20.1 Movement in parent entity issued share capital
Number $ ---------- --------- Opening balance 42,292,293 4,082,059 Allotted on conversion of options 35,000 7,000 Allotted pursuant to the Dividend Reinvestment Plan final dividend 1994 1,921,819 384,364 interim dividend 1995 815,907 163,181 Bonus share issue 1,802,154 360,431 ---------- --------- 46,867,173 4,997,035
17 18 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 20.2 At balance date the company had on issue the following unquoted options to subscribe for ordinary shares:
1995 1994 Exercise Price Expiry Date ---- ---- -------------- ----------- 92,000 92,000 $1.45 28 June 1997 121,000 121,000 $2.24 29 June 1997 795,000 830,000 $0.47 30 June 1997 2,530,000 - $1.30 22 December 1997 100,000 - $1.47 28 April 1998 3,638,000 1,043,000
20.3 At balance date the controlled entity had on issue to persons not being members of the economic entity, 36,510,146 (1994 - 30,420,146) options to subscribe for ordinary shares in the controlled entity at an exercise price of 20 cents per share, exercisable on or before 30 June 1998.
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- -------- ---------- -------- 21 RESERVES Share Premium at beginning of year 303,500 68,050 303,500 68,050 On conversion of 35,000 (1994 -872,037) options at a premium of 27 cents per share 9,450 235,450 9,450 235,450 On ordinary shares allotted pursuant to the dividend reinvestment plan: 1,921,819 shares at a premium of 90 cents per share 1,729,637 - 1,729,637 - 815,907 shares at a premium of $1.15 per share 938,293 - 938,293 - ---------- -------- ---------- -------- 2,980,880 303,500 2,980,880 303,500 Utilised for issue of 1,802,154 bonus shares (360,431) - (360,431) - ---------- -------- ---------- -------- 2,620,449 303,500 2,620,449 303,500 ========== ======== ========== ======== 22 OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITY Outside equity interest comprises: Share capital 7,651,816 7,786,813 - - Accumulated losses (299,704) (94,799) - - ---------- -------- ---------- -------- 7,352,112 7,692,014 - - ========== ======== ========== ========
The outside equity interests in the issued and paid-up capital of the controlled entity comprises 50,890,362 (1994: 52,840,362) fully paid ordinary shares of 20 cents each. The share capital held by the company, prior to the issue to outside equity interests, were issued at a discount. 18 19 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 23 COMMITMENTS FOR EXPENDITURE 23.1 Exploration Tenement Leases In order to maintain current rights of tenure to exploration tenements, the company and economic entity is required to outlay lease rentals and to meet the minimum expenditure requirements of the Western Australia Mines Departments. These obligations are subject to renegotiation upon expiry of the exploration leases or when application for a mining licence is made. These obligations are not provided for in the accounts and are payable:
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ --------- ---------- ---------- ---------- Not later than one year 1,777,553 1,556,452 1,285,451 1,022,390 Later than one year, but not later than 2 years 3,393,369 1,777,553 2,942,601 1,285,451 Later than 2 years, but not later than 5 years 6,129,641 5,018,537 5,304,116 3,856,353 ---------- ---------- ---------- ---------- 11,300,563 8,352,542 9,532,168 6,164,194 ========== ========== ========== ==========
The dynamic nature of tenement portfolio management is such that the actual expenditures will vary significantly from these "commitments", depending upon the results of future exploration and farm-out opportunities. 23.2 Joint Venture Commitments The company and economic entity have the following cumulative commitments in respect of exploration joint ventures to which they are farming in and are not provided for in the accounts: Not later than one year 319,000 155,250 270,000 106,250 Later than one year, but not later than 2 years 503,859 101,250 465,000 52,250 Later than 2 years, but not later than 5 years 585,000 38,859 585,000 -- ---------- -------- ---------- ------- 1,407,859 256,500 1,320,000 158,500 ========== ======== ========== =======
If a participant to a joint venture defaults and fails to contribute its share of joint venture obligations, then the joint venturers are jointly and severally liable to meet the obligations of the defaulting venturer. In this event the interest in the tenement held by the defaulting participant may be redistributed to the remaining joint venturers. In the event of a default, a commitment exists in respect of expenditure commitments due to be met by the company's defaulting joint venture partner. 19 20 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY --------------------- --------------------- 1995 1994 1995 1994 $ $ $ $ ------- ------- ------- ------- 23.3 Lease Commitments (a) Finance leases - plant and equipment due within 1 year 20,800 30,267 20,800 30,267 due within 1-2 years 35,431 32,102 35,431 32,102 due within 2-5 years 49,168 44,549 49,168 44,549 Minimum lease payments 105,399 106,918 105,399 106,918 Less: future finance charges 16,948 17,192 16,948 17,192 Provided for in the accounts 88,451 89,726 88,451 89,726 (b) Non-cancellable operating leases due within 1 year 101,250 -- 101,250 due within 1-2 years 253,125 101,250 253,125 101,250 due within 2-5 year 320,625 573,750 320,625 573,750 Not provided for in the accounts 675,000 675,000 675,000 675,000
23.4 Forward Sales Contracts At balance date the company had outstanding gold par forward sales contracts for 130,695 (1994 - 144,346) ounces at an average price of $588 (1994 - $570) per ounce with monthly deliveries of 2,600 ounces per month to 20 February 2000. 23.5 GOLD CALL OPTION At balance date the company had outstanding a gold call option expiring 27 March 1998 to deliver 20,000 ounces at a price of $580 per ounce exercisable by the option holder. 20 21 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 24 JOINT VENTURES 24.1 The economic entity has interests in the following unincorporated joint ventures:
VENTURE PRINCIPAL ACTIVITIES PERCENTAGE INTEREST ---------------------- JOINT 1995 1994 ------------------------ --------------------------------- ------ ------ Company Yilgarn Star Exploration Gold Exploration 50 50 Yilgarn Star Production Production from Yilgarn Star Mine 50 50 Star Milling Operation of Burbidge Gold Plant 50 50 Marvel Loch Gold Exploration 50 50 Boodarding Gold Exploration 44.25 44.25 McGowans Find Gold Exploration 45* 45* Toomey Hills Gold Exploration 47.5* 47.5* Dulcie Gold Exploration 40* 24.5* Polar Bear Gold Exploration 25 25 Duke Gold Exploration 24.5 24.5 Wilga Well Gold Exploration 90* 90* Sunrise Dam Gold Exploration 80* 80* Sunrise Dam West Gold Exploration 80 80 Norseman Gold Exploration 49 100 Wilga Well West Gold Exploration 80 80 Olga Rocks Gold Exploration 45* 45* Laverton South Gold Exploration 80* Nil Controlled Entity Whim Creek Base Metal Exploration 70 70* Mt Fraser Base Metal Exploration 51 51*
* Earning interest in accordance with respective joint venture agreements. 21 22 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 24.2 JOINT VENTURE ASSETS AND LIABILITIES The company's share of assets and liabilities in the above joint ventures has been included in the balance sheet of the company under the following classifications.
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- ---------- ---------- ---------- CURRENT ASSETS Cash 335,074 123,703 335,074 123,703 Receivables 94,121 57,846 94,121 57,846 Inventories 3,837,517 1,789,217 3,837,517 1,789,217 Other 73,005 54,514 73,005 54,514 ---------- ---------- ---------- ---------- TOTAL CURRENT ASSETS 4,339,717 2,025,280 4,339,717 2,025,280 ---------- ---------- ---------- ---------- NON-CURRENT ASSETS Property, plant and equipment 2,747,934 2,714,217 2,747,934 2,714,217 Other - Exploration evaluation and development 12,579,166 3,907,911 12,072,701 3,703,958 - Deferred mining 1,225,544 4,682,483 1,225,544 4,682,483 ---------- ---------- ---------- ---------- TOTAL NON-CURRENT ASSETS 16,552,644 11,304,611 16,046,179 11,100,658 ---------- ---------- ---------- ---------- TOTAL ASSETS 20,892,361 13,329,891 20,385,896 13,125,938 ========== ========== ========== ========== CURRENT LIABILITIES Creditors and borrowings 2,411,073 1,992,234 2,411,073 1,992,234 Provisions 65,503 55,686 65,503 55,686 ---------- ---------- ---------- ---------- TOTAL LIABILITIES 2,476,576 2,047,920 2,476,576 2,047,920 ========== ========== ========== ========== 24.3 Joint Venture Contributions The net contribution of joint venture activities to operating profit before income tax may be summarised as follows: Share of costs incurred by production joint ventures 17,298,822 13,520,368 17,298,822 13,520,368 Additional costs incurred by company 285,282 338,285 285,282 338,285 ---------- ---------- ---------- ---------- 17,584,104 13,858,653 17,584,104 13,858,653 Revenue from sale of company share of gold produced and other income of joint ventures 31,771,702 21,175,665 31,771,702 21,175,665 ---------- ---------- ---------- ---------- Net contribution 14,187,598 7,317,012 14,187,598 7,317,012 ========== ========== ========== ==========
22 23 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 24.4 Contingent Liability Participants in the Yilgarn Star Production Joint Venture, being the Company, Orion Resources N.L. ("Orion") and Gemini Mining Pty Ltd ("Gemini") were served with a Writ issued by Boral out of the Supreme Court of Western Australia claiming damages for alleged breach of contract in the sum of $4,991,832.03, together with interest and costs. The Company, Orion and Gemini ("Yilgarn Star Participants") intend to vigorously defend the action by Boral. Based upon advice received by the solicitors and Counsel engaged to review Boral's claims, it is the view of the Yilgarn Star Participants that Boral's claims have no foundation and that the Yilgarn Star Participants have no liability to Boral. The Company has received a claim from Orion Resources NL, the manager of the Star Milling Joint Venture in which the Company is a participant. The claim is seeking repayment of milling tolls earned by the joint venture, which were incorrectly allotted by the manager to the account of the Company. The Company is still assessing the basis of the claim.
ECONOMIC ENTITY COMPANY ---------------------- --------------------- 1995 1994 1995 1994 $ $ $ $ -------- ------- ------- ------- 25 REMUNERATION OF THE DIRECTORS Amounts received, or due and receivable by directors of the company from the company and its controlled entity 584,172 434,235 Amounts received, or due and receivable by directors of each entity in the economic entity from the company and its controlled entity 593,768 434,235
Directors remuneration includes superannuation payments and is disclosed in accordance with class order 94/1529 "Disclosure of Directors Remuneration" issued by the Australian Securities Commission. Number of directors of the company whose remuneration was within the following bands: $ O - 9,999 - 1 $ 10,000 - 19,999 2 1 $ 40,000 - 49,999 1 - $ 70,000 - 79,999 - 1 $ 80,000 - 89,999 1 1 $ 90,000 - 99,999 1 - $ 120,000 - 129,999 - 1 $ 130,000 - 139,999 - 1 $ 150,000 - 159,999 1 - $ 180,000 - 189,999 1 -
26 AUDITORS' REMUNERATION Amounts received, or due and receivable by the auditors for: (a) Auditing the accounts of the company 17,850 22,250 14,350 15,250 (b) Other services 9,450 10,575 6,200 2,075
23 24 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 27 RELATED PARTY TRANSACTIONS The directors of the company during the year were P G Crabb, R W Crabb, R J Dunn, B J Hurley, D J Porter, F R Madden and J S F Dunlop. (a) Directors' remuneration and superannuation is disclosed in note 25. (b) Legal fees of $91,775 (1994 - $97,822) were paid by the economic entity and joint ventures in which it has an interest in the normal course of business to a firm in which R W Crabb is a partner. (c) Consultancy fees totalling $244,486 (1994 - $309,635) were paid to P G Crabb, R J Dunn, B J Hurley, D J Porter, F R Madden and J S F Dunlop and their director related entities by the economic entity and joint ventures in which it has an interest for services relating to exploration activities, and is included in directors remuneration. (d) Charges for drilling services totalling $24,990 were paid to a director related entity by the company and joint venturers of P G Crabb on normal terms and conditions. (e) Aggregate amounts receivable from and payable to directors and their director related entities at the end of the financial year were $800 (1994 - $1,071) and $17,617 (1994 - $26,769) respectively. (f) The company has entered into joint venture agreements with Gemini Mining Pty Ltd (formerly Bredelle Pty Ltd) a company in which R W Crabb and P G Crabb has an interest. (g) Directors and their related entities acquired the following equity interests in companies in the economic entity during the year.
NUMBER OF NUMBER OF NUMBER OF NUMBER OF SHARES OPTIONS SHARES OPTIONS 1995 1995 1994 1994 ---------- --------- ---------- ------- Gasgoyne Gold Mines N.L. ordinary shares, on exercise of options 25,000 - 695,000 issued pursuant to Employee Option Plan - 1,515,000 - - Pilbara Mines N L issued pursuant to a prospectus - - 4,145,818 1,947,909 issued pursuant to the Directors, Consultants and Employees Share Option Plan - 3,680,000 - - (h) Directors and their related entities hold the following equity interests in companies in the economic entity at balance date Gasgoyne Gold Mines N.L. 16,007,473 1,870,000 15,602,615 395,000 Pilbara Mines NL 4,705,818 6,010,909 4,145,818 1,947,909
24 25 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 28 CONTROLLED ENTITY The controlled entity and contributions to consolidated profit:
CONTRIBUTION TO CONSOLIDATED OPERATING PROFIT AFTER INCOME TAX ATTRIBUTABLE TO COUNTRY OF % INVESTMENT MEMBERS OF THE INCORPORATION OWNED AT COST CHIEF ENTITY ---------------- -------------------- ---------------------- 1995 1994 1995 1994 1995 1994 $ $ $ $ $ $ --------- ----- ------- --------- --------- --------- --------- Chief Entity: Gasgoyne Gold Mines N.L. Australia 9,005,525 5,458,268 Controlled Entity: Pilbara Mines N.L. Australia 38.1 36.8 1,990,048 1,851,651 (127,507) (102,836) ------- --------- --------- --------- --------- 1,990,048 1,851,651 8,878,018 5,355,432 ======= ========= ========= ========= =========
Pilbara Mines N L is considered a controlled entity because the company has the capacity to dominate the decision making in relation to the financial and operating policies of the controlled entity so that the controlled entity operates with the company to achieve its objectives. 29 NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of Cash For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows:
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- ---------- ---------- --------- Cash 1,410,478 305,839 1,405,599 305,839 Deposits at call 10,319,374 11,869,079 1,690,557 2,021,846 Bank overdraft - (15,520) - - ---------- ---------- ---------- --------- 11,729,852 12,159,398 3,096,156 2,327,685 ========== ========== ========== =========
Deposits at call includes $283,050 to secure a bank guarantee to the lessor of the company's office premises. 25 26 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 (b) Non-cash Financing and Investing Activities (i) During the financial year the company paid dividends which were satisfied by the issue of fully franked bonus shares with an aggregate value of $3,215,475; (ii) During the financial year the company acquired plant and equipment by means of finance leases with an aggregate value of $38,700 (1994 - $12,188); (iii) During the financial year the controlled entity acquired tenements by means of issue of shares in controlled entity to outsiders totalling $50,000. These acquisitions are not reflected on the statement of cash flows.
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- --------- ---------- --------- (c) Reconciliation of Net Cash provided by Operating Activities to Operating Profit After Income tax Operating profit after income tax 8,671,148 5,308,215 8,812,603 6,244,069 Depreciation 500,004 396,268 472,394 324,394 Amortisation 872,799 612,233 719,757 554,842 Loss/(Profit) on sale of investments 13,751 (915,300) 11,401 (915,300) Loss/(Profit) on sale of equipment 528 (2,014) 528 (2,014) Exploration costs written off 186,244 - 127,017 - Movements in - - Provision for income tax 2,710,366 1,163,247 2,710,366 1,163,247 - - Provision for deferred income tax (297,328) 498,552 (392,350) 885,589 Profits on sale of tenements - - - (1,172,838) Change in assets and liabilities (Increase)/Decrease in debtors (380,233) 138,268 (133,4l8) 130,116 (Increase) in inventories (2,048,301) (884,987) (2,048,301) (884,987 (Increase) in prepaid expenses (135,023) (25,061) (117,677) (24,347) Decrease/(Increase) in gold on metals accounts 1,030,140 (1,238,560) 1,030,140 (1,238,560) Decrease/(Increase) in deferred mining costs 3,456,939 (1,543,930) 3,456,939 (1,543,930) Increase in creditors 622,941 315,793 542,274 252,234 Increase in provision for employee entitlements 5,557 3,180 5,557 3,180 (Decrease)/Increase in deferred gold sales and fees (504,125) 915,684 (504,125) 915,684 ---------- --------- ---------- --------- Net cash provided by operating Activities 14,705,407 4,741,588 14,693,105 4,761,379 ========== ========= ========== =========
26 27 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1995 1994 1995 1994 $ $ $ $ ---------- ---------- ---------- ---------- 30 EARNINGS PER SHARE Basic earnings per share (cents per share) 20.2 12.64 Diluted earnings per share (cents per share) 19.5 12.41 (a) Weighted average number of ordinary shares outstanding during the year used in calculation of basic earnings per share 44,000,666 42,010,011 (b) Classification of securities Diluted earnings per share is calculated after classifying 3,517,000 (1994 - 922,000) options exercisable at below market price at balance date as potential ordinary shares. 121,000 options have not been considered dilutive as they are exercisable at above market price. 31 DIVIDENDS PAID AND PROPOSED Interim ordinary dividend of 5 cents per share paid (fully franked, 1994 - unfranked 100%) 2,210,414 1,059,627 2,210,414 1,059,627 Proposed final ordinary dividend of 6 cents per share (fully franked, 1994 fully franked) 2,813,230 2,114,615 2,813,230 2,114,615 ---------- ---------- ---------- ---------- 5,023,644 3,174,242 5,023,644 3,174,242 ========== ========== ========== ==========
32 EVENTS OCCURRING AFTER BALANCE DATE Since 30 June 1995 the following significant events have occurred: (a) On 1 September 1995 the company announced that it had entered into a Facility Agreement with Citibank Limited to provide a line of credit to a maximum of $10,500,000 which may be drawn by the company in cash or the gold equivalent thereof. The facility is for a period of three years; (b) On 6 September 1995 the company dispatched the takeover offer documents to the controlled entity's share and option holders. The consideration being offered by the company for: (i) the acquisition of the controlled entity shares is the allotment and issue of one company share credited as fully paid for every 12 controlled entity shares; and (ii) the acquisition of the controlled entity options is the allotment and issue of one company share credited as fully paid for every 40 of controlled entity options. The offer was subject to specified conditions as outlined in the company's offer documents which were dispatched to share and option holders on 6 September 1995. As at 27 September 1995 the company and its associates were entitled to 64,492,614 (75.97%) of the controlled entity shares (of which 31,366,671 are held directly by the company) and 31,177,166 controlled entity options (of which 14,583,332 are directly held by the company). Subsequent to 27 September 1995, 100% of the shares and options were acquired. From 21 April 1997, Gasgoyne Gold Mines NL sold its interest in Pilbara Mines NL and it ceased to be a controlled entity; 27 28 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 32 EVENTS OCCURRING AFTER BALANCE DATE (continued) (c) On 13 September 1995, the company and its joint venture partner, Lone Star Exploration NL, gave notice of exercise of the Option in relation to the Awak Mas Gold Project and paid the first payment of US$1 million. The company's equity holding in the Awak Mas Gold Project was 45%. Balance of consideration under the Masmindo Option Agreement was $US3 million. In 1997, the company entered into an agreement to sell its interest in the Awak Mas Gold Project in Indonesia. Under the contract the settlement was deferred until 8 January 1998; (d) The allotment in 1996 of 4,471,000 fully paid ordinary shares on the conversion of options at varying premiums; (e) The allotment of 1,140,156 fully paid ordinary shares in the 1996 financial year pursuant to the Dividend Reinvestment Program; (f) During 1996, pursuant to a takeover offer, Sons of Gwalia Limited acquired a controlling interest in the Company. Coeur d'Alene Mines Corporation became a significant shareholder; (g) In 1997, it was agreed between the shareholders of the company that all the attributable gold production of Gasgoyne Gold Mines be sold to Sons of Gwalia Ltd and Coeur d'Alene Mines Corporation, in accordance with their respective ownership interests, at the total cost of production; and (h) During 1997, 1,509,335 fully paid ordinary shares of 20 cents were cancelled and extinguished under a capital reduction program approved by the Supreme Court of New South Wales. Further details on the above events can be obtained in the subsequent year's annual report. 28 29 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 33 US GAAP RECONCILIATION Financial statements in the United States are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). In Australia, financial statements are prepared in accordance with accounting standards issued by the Australian Accounting Standards Board ("Aust. GAAP") which are codified in Australian Corporations Law. The statements of cash flows, which have been prepared in accordance with Australian GAAP, comply with International Accounting Standards No. 7. The principal differences between U.S. GAAP and Aust. GAAP as they relate to Gasgoyne are summarised below: EXPLORATION EXPENDITURES Gasgoyne defers ongoing exploration expenditures until the viability of a project is determined. If a decision is made to proceed with a project the expenditures are amortised over the life of the mine. If a decision is made to abandon a project the expenditures are written off at the time of such determination. Under U.S. GAAP, exploration expenditures are expensed until management determines, from a detailed analysis of reserve potential, capitalization is appropriate based on the establishment of proven and probable reserves. A mine generally enters this stage when a decision is made to develop the site based on completion of a favourable feasibility study. Capitalized exploration expenditures are amortised using the units-of-production method based on proven and probable reserves. PROSPECTUS ISSUE COSTS Gasgoyne capitalizes prospectus costs incurred in raising equity and amortizes them over five years. Under U.S. GAAP, costs associated with a raising equity are netted off against the proceeds obtained from the offering. OPTION PREMIUMS ON GOLD CALL OPTIONS In 1994, Gasgoyne recognised income of $1,000,000 for premiums received on the sale of a gold call option contract. Under U.S. GAAP, the premiums received on this call option would be deferred and recognised over the contract period. In addition, the gold call option would be marked to market to the extent that any losses were expected to be incurred under this option contract. UNITS OF PRODUCTION DEPRECIATION AND AMORTISATION Gasgoyne amortizes mine development and pre-production expenditures together with estimates of expected future development expenditures using the units-of-production method based on its estimate of future life-of-mine production. Gasgoyne's estimate of future life-of-mine production includes proven and probable reserves plus a portion of resources which has not yet been converted to reserves but which Gasgoyne believes there is sufficient confidence that such resources will be converted to reserves after further delineation drilling. If a significant change in estimated future life-of-mine production occurs during the period, amortisation expense for that period is adjusted to reflect the change. Under U.S. GAAP, mine development and pre-production expenditures, excluding any provision for expected future development expenditures, are amortised using the units-of-production method based on published proven and probable reserves only. A significant change in proven and probable reserves is treated prospectively for amortisation purposes. CONSOLIDATION AND EQUITY ACCOUNTING OF PILBARA MINES NL In 1995 and 1994, Gasgoyne consolidated its investment in Pilbara Mines NL ("Pilbara") of 38.1% and 36.8% respectively under Aust. GAAP because Gasgoyne had the capacity to dominate the decision making in relation to the financial and operating policies of Pilbara in part because a majority of the directors of Pilbara were also directors of Gasgoyne during these years. Under U.S. GAAP, a controlling financial interest for consolidation purposes generally results from the ownership, directly or indirectly, of over 50% of the voting shares of another company. As a result, Pilbara has been deconsolidated for U.S. GAAP purposes from 1994 when Gasgoyne diluted its holding in this company from 100% to 35.57%. Under U.S. GAAP, the equity method of accounting has been followed for the 38.1% and 36.8% investment in Pilbara in 1995 and 1994 respectively as Gasgoyne was considered to exercise significant influence over the operating and financial policies of Pilbara. Summarized financial information of Pilbara Mines NL is as follows:
1995 1994 $ $ ---------- ---------- Condensed Profit and Loss Account information: Operating revenue 643,942 184,035 Operating loss after income tax (334,377) (150,053) Condensed Balance Sheet information: Current assets 8,893,609 9,848,256 Non-current assets 3,137,450 2,407,304 Current liabilities 147,416 87,540 Non-current liabilities - - Shareholders equity 11,883,643 12,168,020
29 30 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 33 US GAAP RECONCILIATION (continued) INCOME TAXES Both Aust. GAAP and U.S. GAAP require the use of the liability method of accounting for income taxes. However, while there are differences in how the liability method is applied under U.S. GAAP and Aust. GAAP, these differences, as they relate to Gasgoyne, have not been significant. At 30 June 1995, Gasgoyne restated its deferred tax balances in accordance with Aust. GAAP to reflect the increase in Australian tax rate from 33% to 36% announced by the Australian Treasurer in Parliament on 19 May 1995. The new tax legislation was effective from 19 May 1995 but did not receive royal assent until 27 July 1995. Under U.S. GAAP, the effect of a change in tax rate is not recognised until the period in which it was enacted. INVESTMENTS Gasgoyne carries investments in listed and unlisted securities at cost except that declines in market value judged to be other than temporary are recognised in determining operating profit. Under U.S. GAAP, Gasgoyne's investments would be classified as available-for-sale investments effective from 1 July 1993 upon adoption of Statement of Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities" and would be carried at market value. Unrealised gains and losses on these investments are recorded as a separate component of shareholders' equity except that declines in market value judged to be other than temporary are recognised in determining net income. The cumulative effect as of 1 July 1993 on adoption of SFAS 115 was an increase in the opening balance of shareholders' equity by $620,494 (net of $305,616 in deferred income taxes) to reflect the net unrealised gains on securities classified as available-for-sale that were previously classified as held for investment and carried at cost. DIVIDENDS Gasgoyne retroactively records dividends declared after an accounting period has ended but before its financial statements are issued. Under U.S. GAAP, common stock dividends payable are recorded in the period in which they are declared. PROFIT AND LOSS ACCOUNT RECONCILIATION Reconciliation of consolidated profit and loss accounts determined in accordance with Aust. GAAP to profits under U.S. GAAP is as follows:
Year Ended Year Ended 30 June 1995 30 June 1994 $ $ --------- --------- Operating profit after income tax as reported under Aust GAAP 8,878,018 5,355,432 Reconciliation to U.S. GAAP: Exploration expenditure (1) (833,359) (748,433) Prospectus issue costs (2) 86,651 86,652 Amortisation of option premium (3) 500,000 (875,000) Units of production depreciation (4) (83,612) 58,789 Equity method adjustment for investment in Pilbara Mines (5) (138,981) (112,216) Effect on deferred income tax of change in tax rate (6) 173,262 0 Tax effect of U.S. GAAP adjustments (7) 109,006 440,207 --------- --------- Operating profit after income tax in accordance with U.S. GAAP 8,690,984 4,205,431 ========= ========= Basic earnings per share in accordance with U.S. GAAP 18.61 9.45 ========= ========= Fully diluted earnings per share in accordance with U.S. GAAP 18.61 9.45 ========= =========
30 31 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 33 US GAAP RECONCILIATION (continued)
As at As at 30 June 1995 30 June 1994 $ $ ---------- ---------- Shareholders' equity attributable to members of Gasgoyne Mines NL as reported under Aust. GAAP 19,369,345 12,283,046 Reconciliation to U.S. GAAP: Write-off of exploration expenditure (1) (3,550,002) (2,716,643) Prospectus issue costs (2) (79,431) (166,082) Amortisation of option premium (3) (375,000) (875,000) Units of production depreciation (4) (163,666) (80,054) Adjustment to investment in Pilbara Mines NL (6) 549,461 549,461 Equity method adjustment for investment in Pilbara Mines NL (5) (251,197) (112,216) Effect on deferred income tax of change in tax rate (7) 173,262 0 Tax effect of U.S. GAAP adjustments (8) 1,375,473 1,266,467 Unrealised gains on available-for-sale securities net of tax (9) 80,353 32,420 Current Year dividend provided (10) 2,813,230 2,115,357 ---------- ---------- Adjusted shareholders' equity according to U.S. GAAP 19,941,828 12,296,756 ========== ==========
(1) Under U.S. GAAP, exploration expenditures must be expensed as incurred. Capitalised exploration expenditures included in shareholders' equity at 1 July 1992 have also been adjusted against shareholders' equity in 1993. (2) Under U.S. GAAP, costs associated with raising equity are netted off against proceeds received in shareholders' equity. Capitalised prospectus costs included in shareholder' equity at 1 July 1992 have also been adjusted against shareholders' equity in 1993. (3) Under U.S. GAAP, premiums received from the sale of call option contracts are deferred and amortised over the contract period. (4) Under U.S. GAAP, units-of-production depreciation and amortisation is calculated using proven and probable reserves and changes in reserves are applied prospectively. (5) Under U.S. GAAP, earnings of investments in associated companies are accounted for using the equity method of accounting. Consolidated earnings of Pilbara attributable to members of Gasgoyne under Aust. GAAP have been reversed and Pilbara has been equity accounted after making appropriate U.S. GAAP adjustments to Pilbara's financial statements. (6) Under U.S. GAAP, the investment in Pilbara Mines NL has been adjusted after making appropriate U.S. GAAP adjustments within Pilbara's financial statements for (1), (2) and (5) differences. (7) Under U.S. GAAP, the effect of a change in tax rate is not recognised until the period in which it was enacted. (8) Represents the income tax effect resulting from (1) to (7) above. (9) Under U.S. GAAP, investments in available-for-sale listed and unlisted securities are recorded at market value. (10) Under U.S. GAAP, dividends payable are recorded in the period in which they are declared. 31 32 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 34 RESTATEMENT OF FINANCIAL STATEMENTS During the year ended 30 June 1994 Pilbara Mines NL raised $10,568,072 via a public issue of shares. This had the effect of diluting the company's interest in Pilbara Mines from 100% to 35.57%. An extraordinary gain of $2,680,513 (nil tax effect) was reported as income arising on dilution in the published 1994 financial statements. Paragraph 31 of AASB 1024 "Consolidated Accounts" state that "...Where a subsidiary makes a new issue of capital, the only effect on the consolidated accounts will be an increase in the equity of the economic entity, to the extent that the issue of capital was subscribed by outside equity interests, and a corresponding increase in cash or other assets. The economic entity will not experience any movement in its retained profits or accumulated losses as a result of the capital issue..." The gain should not, therefore, have been reported as income in the consolidated accounts. Rather, it represented the parent entity's interest in a post acquisition capital issue to outside equity interests of a controlled entity. The financial statements have been amended as follows to comply with AASB 1024: - - consolidated profit after tax for the year ended 30 June 1994 has been reduced by $2,680,513, reversing the extraordinary gain as reported; - - consolidated retained earnings as at 30 June 1995 and 30 June 1994 have been reduced by $2,680,513; - - consolidated share capital attributable to the parent entity as at 30 June 1995 and 30 June 1994 has increased by $2,680,513. There is no effect on the reported net assets as at 30 June 1995 and 30 June 1994. 32 33 INDEPENDENT AUDIT REPORT TO THE DIRECTORS OF COEUR d'ALENE MINES CORPORATION SCOPE We have audited the financial statements being the consolidated balance sheets, consolidated profit and loss accounts and consolidated cash flow statements of Gasgoyne Gold Mines N.L. for the years ended 30 June 1995 and 1994. The financial statements include the consolidated accounts of the economic entity comprising the company and its controlled entity. The company's directors are responsible for the preparation and presentation of the financial statements and the information they contain. We have conducted an independent audit of these financial statements in order to express an opinion on them to the directors of Coeur d'Alene Mines Corporation. For the reasons set out in note 34, the original financial statements for the years ended 30 June 1995 and 30 June 1994 have been restated. We were not the auditor of the company's previously issued financial statements for the 1994 financial year. We have however, audited the adjustments described in note 34 that were applied to restate the 1995 and 1994 financial statements. Our audit has been conducted in accordance with Australian Auditing Standards, which do not differ in any material respect from auditing standards generally accepted in the United States, to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with Australian accounting standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views), so as to present a view of the company and of the economic entity which is consistent with our understanding of their financial position and the results of their operations and cash flows. The audit opinion expressed in this report has been formed on the above basis. AUDIT OPINION In our opinion, the restated financial statements of Gasgoyne Gold Mines N.L. are properly drawn up: (a) so as to give a true and fair view of the state of affairs as at 30 June 1995 and 1994 and of their profit and cash flows for the two years ended 30 June 1995 of the company and the economic entity; and (b) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements. Accounting principles generally accepted in Australia vary in certain respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of consolidated operating profit for each of the two years ended 30 June 1995 and the determination of consolidated shareholders' equity attributable to shareholders of Gasgoyne Gold Mines NL as at 30 June 1995 and 1994 to the extent indicated in note 33 to the financial statements. COOPERS & LYBRAND Chartered Accountants Perth, Western Australia 23 February 1998. 33 34 BALANCE SHEETS AS AT 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------- ------------------------ Notes 1994 1993 1994 1993 $ $ $ $ --- ----------- ---------- ---------- ---------- CURRENT ASSETS Cash 12,174,918 2,629,333 2,327,685 2,629,332 Receivables 5 105,527 243,795 113,679 243,795 Investments 6 93,792 173,341 93,792 173,341 Inventories 7 1,789,217 904,230 1,789,217 904,230 Other 8 1,605,567 341,946 1,604,853 341,946 --- ----------- ---------- ---------- ---------- TOTAL CURRENT ASSETS 15,769,021 4,292,645 5,929,226 4,292,644 --- ----------- ---------- ---------- ---------- NON-CURRENT ASSETS Investments 9 10 10 1,851,661 11 Property, plant and equipment 10 3,011,607 2,480,045 2,993,806 2,480,045 Intangibles 11 827,221 252,734 166,082 252,734 Other 12 10,097,303 7,171,010 9,588,455 7,171,010 --- ----------- ---------- ---------- ---------- TOTAL NON-CURRENT ASSETS 13,936,141 9,903,799 14,600,004 9,903,800 --- ----------- ---------- ---------- ---------- TOTAL ASSETS 29,705,162 14,196,444 20,529,230 14,196,444 --- ----------- ---------- ---------- ---------- CURRENT LIABILITIES Creditors and borrowings 13 2,196,515 2,867,782 2,117,436 2,867,782 Provisions 14 4,464,814 2,640,965 4,464,814 2,640,965 Other 15 331,112 - 331,112 - --- ----------- ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 6,992,441 5,508,747 6,913,362 5,508,747 --- ----------- ---------- ---------- ---------- NON-CURRENT LIABILITIES Creditors and borrowings 16 68,626 84,493 68,626 84,493 Provisions 17 2,084,463 1,585,911 2,471,500 1,585,911 Other 18 584,572 - 584,572 - --- ----------- ---------- ---------- ---------- TOTAL NON-CURRENT LIABILITIES 2,737,661 1,670,404 3,124,698 1,670,404 --- ----------- ---------- ---------- ---------- TOTAL LIABILITIES 9,730,102 7,179,151 10,038,060 7,179,151 --- ----------- ---------- ---------- ---------- NET ASSETS 19,975,060 7,017,293 10,491,170 7,017,293 === =========== ========== ========== ========== SHAREHOLDERS' EQUITY Share capital 19 6,762,572 3,913,459 4,082,059 3,913,459 Reserves 20 303,500 68,050 303,500 68,050 Retained profits 5,216,974 3,035,784 6,105,611 3,035,784 --- ----------- ---------- ---------- ---------- Shareholders' equity attributable to members of the chief entity 12,283,046 7,017,293 10,491,170 7,017,293 Outside equity interests in controlled entity 21 7,692,014 - - - --- ----------- ---------- ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 19,975,060 7,017,293 10,491,170 7,017,293 === =========== ========== ========== ==========
The above balance sheets should be read in conjunction with the accompanying notes. 34 35 PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------- ------------------------- Notes 1994 1993 1994 1993 $ $ $ $ --- ----------- ----------- ----------- ----------- Operating Revenue 2 23,918,760 19,466,278 24,984,725 19,466,278 === =========== =========== =========== =========== Operating profit before income tax 3 8,067,211 7,647,770 9,390,102 7,647,770 Income tax attributable to operating profit 4 2,758,996 2,706,138 3,146,033 2,706,138 --- ----------- ----------- ----------- ----------- Operating profit after income tax 5,308,215 4,941,632 6,244,069 4,941,632 Outside equity interests in operating profit items after income tax (47,217) - - - --- ----------- ----------- ----------- ----------- Operating profit after income tax attributable to members of the Chief Entity 5,355,432 4,941,632 6,244,069 4,941,632 Retained profits at the beginning of the financial year 3,035,784 582,819 3,035,784 582,819 --- ----------- ----------- ----------- ----------- Total available for appropriation 8,391,216 5,524,451 9,279,853 5,524,451 Dividends provided for or paid 30 3,174,242 2,488,667 3,174,242 2,488,667 --- ----------- ----------- ----------- ----------- Retained profits at the end of the financial year 5,216,974 3,035,784 6,105,611 3,035,784 === =========== =========== =========== ===========
The above profit and loss accounts should be read in conjunction with the accompanying notes. 35 36 STATEMENTS OF CASH FLOWS FOR YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------- ------------------------ Notes 1994 1993 1994 1993 $ $ $ $ ---- ----------- ---------- ---------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 23,144,108 19,186,524 23,144,108 19,186,524 Payments to suppliers and employees (17,542,830) (12,724,933) (17,339,856) (12,724,933) Interest received 262,663 117,485 79,480 117,485 Interest and other costs of finance paid (25,156) (82,382) (25,156) (82,382) Income tax paid (1,097,197) - (1,097,197) - ---- ----------- ---------- ---------- ----------- Net cash provided by operating activities 28(c) 4,741,588 6,496,694 4,761,379 6,496,694 ---- ----------- ---------- ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Payment for mineral exploration evaluation and development (1,821,644) (1,118,249) (1,389,958) (1,118,249) Payments for investments (362,219) (125,003) (862,219) (125,004) Proceeds from sale of investments 1,255,418 81,966 1,255,418 81,966 Payment for property, plant and equipment 28(b) (1,014,500) (944,249) (994,825) (944,249) Proceeds from sale of equipment 71,963 55,000 71,963 55,000 ---- ----------- ---------- ---------- ----------- Net cash used in investing activities (1,870,982) (2,050,535) (1,919,621) (2,050,536) ---- ----------- ---------- ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 404,050 221,050 404,050 221,050 Payment of prospectus issue expenses (765,208) - - - Proceeds from borrowings - 354,374 - 354,374 Repayment of borrowings (1,024,168) (2,033,938) (1,024,168) (2,033,938) Dividends paid (2,516,820) (2,052,221) (2,516,820) (2,052,221) Proceeds from issue of shares to minority interest in the controlled entity 10,568,072 - - - ---- ----------- ---------- ---------- ----------- Net cash from financing activities 6,665,926 (3,510,735) (3,136,938) (3,510,735) ---- ----------- ---------- ---------- ----------- Net increase (decrease) in cash held 9,536,532 935,424 (295,180) 935,423 Cash at beginning of the financial year 2,622,866 1,687,442 2,622,865 1,687,442 ---- ----------- ---------- ---------- ----------- Cash at the end of the financial year 28(a) 12,159,398 2,622,866 2,327,685 2,622,865 ==== =========== ========== ========== ===========
The above statements of cash flows should be read in conjunction with the accompanying notes. 36 37 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies adopted by the economic entity in the preparation of the financial statements is set out in this note. The policies adopted are in accordance with applicable Accounting Standards and the Corporations Law, including the disclosure requirements of Schedule 5 of the Corporations Regulations. (a) HISTORICAL COST The financial statements have been prepared under the convention of historical cost accounting and do not take into account changing money values. (b) PRINCIPLES OF CONSOLIDATION The consolidated accounts comprise the accounts of the company and its controlled entity, Pilbara Mines N. L. A controlled entity is any entity controlled by the company Control exists where the company has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with the company to achieve its objectives. All inter-company balances and transactions between entities in the economic entity, including any unrealized profits or losses, have been eliminated on consolidation. Where the controlled entity has entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased. (c) INTERESTS IN JOINT VENTURES 1. The economic entity's interests in production joint ventures are brought to account by including the amount of: (i) the entity's interest in each of the individual assets employed in the joint ventures; (ii) the entity's share of liabilities incurred by the joint ventures, and (iii) the entity's interest in the expenses incurred in relation to the joint ventures. (d) REVENUE RECOGNITION (i) Refined gold which is subject to forward sales contracts, is recognised as revenue at the appropriate forward sales price at the point at which the bullion has been refined and is available for delivery. Unrealized gains or losses relating to forward gold sales contracts outstanding at balance date are not reflected in the profit and loss account. (ii) Gold delivered as repayment of the gold loan is accounted for as in note 1 (m). (iii) Funds received on the sale of call options, other than in circumstances where the call option is related to forward selling arrangements, are recognised as revenue when received. 37 38 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 (e) INCOME TAX Tax effect accounting procedures are followed using the liability method of tax effect accounting, whereby the income tax expense for the year is matched with the accounting result after allowance for permanent differences. Future income tax benefits are not brought to account unless realization of the asset is assured BEYOND reasonable doubt in respect to timing differences, and virtually certain in respect of tax losses. (f) INVENTORIES (i) Ore stockpiles and gold in circuit are valued at the lower of cost and net realisable value. Cost comprises direct material, labour and transportation expenditure incurred in getting inventories to their existing location and condition, together with an appropriate portion of fixed and variable overhead expenditure based on weighted average costs incurred during the period in which such inventories were produced. (ii) Stores and consumables are valued at the lower of weighted average cost and net realisable value. (g) EXPLORATION AND DEVELOPMENT EXPENDITURE Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. Any costs of site restoration are provided for during the relevant production stages and included in the costs of that stage. A regular review is undertaken of each area of interest to determine the appropriateness of continuing carry forward costs in relation to that area of interest. (h) RESTORATION, REHABILITATION AND ENVIRONMENTAL COSTS Restoration, rehabilitation and environmental expenditure to be incurred during the production PHASE of operations is accrued when the need for such expenditure is established and then written off immediately as part of the cost of production of the mine property concerned. There is no provision in the accounts for restoration, rehabilitation and environmental expenditure to be incurred subsequent to the cessation of production at a mine property. 38 39 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 1994 (i) PROPERTY, PLANT AND EQUIPMENT (i) The cost of each item of buildings, machinery and equipment held at mine sites is written off over its expected economic life. Each item's economic life has due regard both to its own physical life limitations and to present assessments of economically recoverable resources of the mine property at which the item is located, and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The total net carrying values of mine buildings, machinery and equipment at each mine property are reviewed regularly and, to the extent to which these values exceed their recoverable amounts, (based on undiscounted cash flows), that excess if fully provided against in the financial year in which this is determined. (ii) Other assets are depreciated over their expected useful lives on the straight line or reducing balance basis as appropriate. (j) LEASES Leased assets, other than operating leases, where substantially all the risks and benefit incident to the ownership of the asset but not the legal ownership are transferred to the company are classified as finance leases. Finance leases are capitalised recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual value. Leased assets are amortised over their estimated useful lives. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Lease payments under operating leases are charged as expenses in the periods in which they are incurred. (k) INTANGIBLES Intangibles comprise expenses incurred in connection with the prospectus issued by the company and its controlled entity which are being amortised over a period of 5 years commencing from the date of the successful flotation of the shares. (l) EMPLOYEE ENTITLEMENTS The amounts expected to be paid to employees for their pro-rata entitlement to annual and sick leave are accrued annually at current pay rates having regard to experience of employee departures and periods of service. (m) GOLD LOAN The gold loan is carried in the financial statements at a rate equal to the price of gold at the date of drawdown. Gold delivered as repayment of the loan is recorded as sales and as a reduction of liability at the same historical gold price as at drawdown. 39 40 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 (n) Segmental Information The economic entity operates predominantly in the mining industry in Western Australia. (o) Cash For the purpose of the statement of cash flows, cash includes: (i) cash on hand and in at call deposits with banks or financial institutions, net of bank overdrafts; and (ii) investments in money market instruments with less than 14 days to maturity. (p) Comparative Figures Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year. (q) Recoverable Amount of Non-current Assets The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revealed to its recoverable amount. Where net cash inflows are derived from a group of assets working together, the recoverable amount is determined on the basis of the relevant group of assets. The expected net cash flows included in determining recoverable amounts of non-current assets are not discounted to their present values.
ECONOMIC ENTITY COMPANY ------------------------- ------------------------- 1994 1993 1994 1993 $ $ $ $ ----------- ----------- ----------- ----------- 2 OPERATING REVENUE Gold sales 20,832,079 18,640,278 20,832,079 18,640,278 Gold call option fee 1,000,000 - 1,000,000 - Royalties received - 65,210 - 65,210 Sales of investments 1,255,418 81,966 1,255,418 81,966 Sales of plant and equipment 71,963 55,000 71,963 55,000 Interest received 262,663 122,032 79,480 122,032 Sales of tenements - - 1,250,000 - Other income 496,637 501,792 495,785 501,792 ----------- ----------- ----------- ----------- 23,918,760 19,466,278 24,984,725 19,466,278 =========== =========== =========== =========== 3 OPERATING PROFIT The operating profit before income tax has been determined after crediting and charging the following specific items: ) Crediting as income Interest received from unrelated corporations 262,663 122,032 79,480 122,032 Profit on share trading - 13,365 - 13,365 Profit on disposal of plant and equipment (2,014) 4,160 (2,014) 4,160 Profit on the sale of investments 915,300 - 915,300 -
40 41 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- ---------- ---------- --------- b) CREDITING AS ABNORMAL Profit on sale of tenements - - 1,172,838 - Gold call option fee 1,000,000 - 1,000,000 - ---------- ---------- ---------- --------- 1,000,000 - 2,172,838 - ---------- ---------- ---------- --------- Income tax at 33% 330,000 - 717,037 - ---------- ---------- ---------- --------- c) CHARGING AS EXPENSES Amortisation - assets under finance leases 28,909 21,740 28,909 21,740 - prospectus issue expenses 144,043 86,651 86,652 86,651 - exploration expenses 439,281 366,438 439,281 366,438 Depreciation - plant and equipment 396,268 618,673 394,394 618,673 Exploration expenditure on areas written off - 177,312 - 177,312 Interest paid to unrelated corporations 12,513 72,517 12,513 72,517 Lease finance charges 12,643 9,864 12,643 9,864 Operating lease rentals 44,564 39,771 44,564 39,771 Royalties paid - 574,105 - 574,105 Provision for employee entitlements 3,089 28,647 3,089 28,647 4 INCOME TAX Operating profit before income tax 8,067,211 7,647,770 9,390,102 7,647,770 ---------- ---------- ---------- --------- Income tax @ 33% (1993 - 39%) 2,662,180 2,982,630 3,098,734 2,982,630 ---------- ---------- ---------- --------- Permanent differences - Amortisation of prospectus expenses 47,534 33,794 28,595 33,794 - Other 38,435 25,768 18,704 25,768 ---------- ---------- ---------- --------- 2,748,149 3,042,192 3,146,033 3,042,192 Utilization of unrecognized future income tax benefits of prior years - (47,707) - (47,707) Effect on deferred income tax of change in tax rate from 39% to 33% - (288,347) - (288,347) Future income tax benefits not recognised 10,847 - - - ---------- ---------- ---------- --------- Income tax attributable to operating profit 2,758,996 2,706,138 3,146,033 2,706,138 ========== ========== ========== =========
41 42 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- ---------- ---------- ---------- Provision for income tax 2,260,444 1,120,227 2,260,444 1,120,227 Provision for deferred income tax 498,552 1,585,911 885,589 1,585,911 ---------- ---------- ---------- ---------- 2,758,996 2,706,183 3,146,033 2,706,138 ---------- ---------- ---------- ---------- The future income tax benefit of $l0,847 attributable to tax losses of the controlled entity has not been brought to account as realization of the benefit is not virtually certain. The benefit will only be obtained if: (a) the controlled entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the loss to be realized; (b) the controlled entity continues to comply with the conditions for deductibility imposed by tax legislation; and (c) no changes in tax legislation adversely affect the controlled entity in realizing the benefit from the deductions for the loss. 5 CURRENT ASSETS - RECEIVABLES Trade debtors 47,536 243,795 55,833 243,795 Other debtors 57,991 - 57,846 - ---------- ---------- ---------- ---------- 105,527 243,795 113,679 243,795 ========== ========== ========== ========== 6 CURRENT ASSETS - INVESTMENTS Investment listed on a prescribed stock exchange at cost 93,792 173,341 93,792 173,341 ---------- ---------- ---------- ---------- Market Value 142,180 1,099,452 142,180 1,099,452 ========== ========== ========== ==========
42 43 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- -------- ---------- -------- 7 CURRENT ASSETS - INVENTORIES Ore stockpiles 1,226,977 569,351 1,226,977 569,351 Gold in circuit 161,493 191,142 161,493 191,142 Stores and consumables 400,747 143,737 400,747 143,737 ---------- -------- ---------- -------- 1,789,217 904,230 1,789,217 904,230 ========== ======== ========== ======== 8 CURRENT ASSETS - OTHER Prepayments 74,092 49,031 73,378 49,031 Gold on metal account 1,531,475 292,915 1,531,475 292,915 ---------- -------- ---------- -------- 1,605,567 341,946 1,604,853 341,946 ========== ======== ========== ======== 9 NON-CURRENT ASSETS - INVESTMENTS Investments in unlisted companies at cost 10 10 10 10 Investment in controlled entity at cost - - 1,851,651 1 ---------- -------- ---------- -------- 10 10 1,851,661 11 ========== ======== ========== ======== The controlled entity is a listed company Market value of tradeable shares - - 100,000 - Cost of escrowed shares - - 1,750,000 - 10 NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT Freehold land at cost 44,160 41,189 44,160 41,189 ---------- -------- ---------- -------- Buildings at cost 611,531 237,307 611,531 237,307 Less: accumulated depreciation 133,507 63,916 133,507 63,916 ---------- -------- ---------- -------- 478,024 173,391 478,024 173,391 ========== ======== ========== ========
43 44 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- ---------- ---------- ---------- Plant and equipment, at cost 3,535,095 2,974,780 3,515,420 2,974,780 Less: accumulated depreciation 1,116,125 806,088 1,114,251 806,088 ---------- ---------- ---------- ---------- 2,418,970 2,168,692 2,401,169 2,168,692 ---------- ---------- ---------- ---------- Plant and equipment under lease 118,311 129,683 118,311 129,683 Less: amortisation 47,858 32,910 47,858 32,910 ---------- ---------- ---------- ---------- 70,453 96,773 70,453 96,773 ---------- ---------- ---------- ---------- 3,011,607 2,480,045 2,993,806 2,480,045 ========== ========== ========== ========== 11 NON-CURRENT ASSETS - INTANGIBLES Prospectus issue expenses 1,151,523 432,993 432,993 432,993 Less: amortisation 324,302 180,259 266,911 180,259 ---------- ---------- ---------- ---------- 827,221 252,734 166,082 252,734 ========== ========== ========== ========== 12 NON-CURRENT ASSETS - OTHER Deferred mining costs (a) 4,682,483 3,138,553 4,682,483 3,138,553 Expenditure on mineral exploration evaluation and development (b) 5,414,820 4,032,457 4,905,972 4,032,457 ---------- ---------- ---------- ---------- 10,097,303 7,171,010 9,588,455 7,171,010 ========== ========== ========== ==========
12 (a) Deferred mining costs represent costs of mining waste in excess of the estimated ratio of waste to ore over the mine life. 44 45 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FOR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- ---------- ---------- ---------- 12 (b) Expenditure on mineral exploration evaluation and development on areas of interest represents: - in the exploration or evaluation phase 3,225,491 1,968,230 2,716,643 1,968,230 ---------- ---------- ---------- ---------- - in which production has commenced 3,229,949 2,665,566 3,229,949 2,665,566 Less: accumulated amortisation 1,040,620 601,339 1,040,620 601,339 ---------- ---------- ---------- ---------- 2,189,329 2,064,227 2,189,329 2,064,227 ---------- ---------- ---------- ---------- 5,414,820 4,032,457 4,905,972 4,032,457 ========== ========== ========== ========== The carrying value of mineral exploration, evaluation and development expenditure is dependent upon the discovery and exploitation of commercially viable mineral deposits, the generation of sufficient future income therefrom or sale for at least carrying value. 13 CURRENT LIABILITIES - CREDITORS & BORROWINGS Bank overdraft 15,520 6,467 - 6,467 Trade creditors 1,312,527 950,170 1,255,968 950,170 Other creditors 847,368 893,932 840,368 893,932 Lease liabilities 21,100 22,517 21,100 22,517 Gold loan, secured - 994,696 - 994,696 ---------- ---------- ---------- ---------- 2,196,515 2,867,782 2,117,436 2,867,782 ========== ========== ========== ========== 14 CURRENT LIABILITIES - PROVISIONS Employee entitlements 65,983 62,803 65,983 62,803 Dividends 2,115,357 1,457,935 2,115,357 1,457,935 Income tax 2,283,474 1,120,227 2,283,474 1,120,227 ---------- ---------- ---------- ---------- 4,464,814 2,640,965 4,464,814 2,640,965 ========== ========== ========== ========== 15 CURRENT LIABILITIES - OTHER Prepaid gold sales and fees 331,112 - 331,112 - ========== ========== ========== ========== 16 NON CURRENT LIABILITIES - CREDITORS AND BORROWINGS Lease Liabilities 68,626 84,493 68,626 84,493 ========== ========== ========== ==========
45 46 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- ---------- ---------- ---------- 17 NON-CURRENT LIABILITIES - PROVISIONS Deferred income tax 2,084,463 1,585,911 2,471,500 1,585,911 ========== ========== ========== ========== 18 NON CURRENT LIABILITIES - OTHER Prepaid gold sales and fees 584,572 - 584,572 - ========== ========== ========== ========== 19 SHARE CAPITAL AUTHORISED 100,000,000 shares of 20 cents each 20,000,000 20,000,000 20,000,000 20,000,000 ISSUED AND PAID UP 42,292,293 ordinary shares of 20 cents each (1993 - 41,449,293) 8,458,459 8,289,859 8,458,459 8,289,859 Discount on shares (4,376,400) (4,376,400) (4,376,400) (4,376,400) ---------- ---------- ---------- ---------- 4,082,059 3,913,459 4,082,059 3,913,459 Company's share in new issues of capital by controlled entity (refer to note 33) 2,680,513 - - - ---------- ---------- ---------- ---------- 6,762,572 3,913,459 4,082,059 3,913,459 ========== ========== ========== ==========
19.1 Movement in parent entity issued share capital Number $ ---------- --------- Opening balance 41,449,293 3,913,459 Allotted on conversion of options 843,000 168,600 ---------- --------- 42,292,293 4,082,059 ========== =========
19.2 At balance date the company had on issue the following unquoted options to subscribe for ordinary shares exercisable on or before 30 June 1997
1994 1993 Exercise Expiry Price Date - ------- --------- ----- ------------ 830,000 1,665,000 $0.47 30 June 1997 92,000 100,000 $1.45 30 June 1997 121,000 - $2.24 30 June 1997
19.3 At balance date the controlled entity had on issue to persons not being members of the economic entity, 30,420,146 options to subscribe for ordinary shares in the controlled entity at an exercise price of 20 cents per share, exercisable on or before 30 June 1998. 46 47 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ----------------------- ---------------------- 1994 1993 1994 1993 $ $ $ $ --------- ------- -------- ------- 20 RESERVES Share Premium at beginning of year 68,050 10,000 68,050 10,000 On conversion of 872,037 options at a premium of 27 cents per share 235,450 58,050 235,450 58,050 --------- ------- -------- ------- 303,500 68,050 303,500 68,050 ========= ======= ======== ======= 21 OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITY Outside equity interest comprises: Share capital 7,786,813 - -- -- Accumulated losses (94,799) - - - --------- ------- -------- ------- 7,692,014 - -- -- ========= ======= ======== =======
The outside equity interests in the issued and paid-up capital of the controlled entity comprises 52,840,362 fully paid ordinary shares of 20 cents each. The share capital held by the company, prior to the issue to outside equity interests, was issued at a discount. 22 COMMITMENTS 22.1 EXPLORATION AND DEVELOPMENT EXPENDITURE In order to maintain the exploration leases, licenses and permits in which the company and other joint venturers are involved, all participants are committed to fulfil the minimum annual expenditure conditions under which the tenements are granted. These obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal course of operations of the company. 22.2 INTERESTS IN JOINT VENTURE The company has entered into joint ventures with other parties for the purpose of exploiting and developing its mining tenements. If a participant to a joint venture defaults and fails to contribute its share of joint venture obligations, then the joint venturers are jointly and severally liable to meet the obligations of the defaulting venture. In this event the interest in the tenement held by the defaulting participant may be redistributed to the remaining joint venturers. In the event of a default, a commitment exists in respect of expenditure commitments due to be met by the company's defaulting joint venture partner. 47 48 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY --------------------- ---------------------- 1994 1993 1994 1993 $ $ $ $ ------- ------- -------- ------- 22.3 Lease Commitments (a) Finance leases - plant & equipment due within 1 year 30,267 34,359 30,267 34,359 due within 1-2 years 32,102 28,547 32,102 28,547 DUE WITHIN 2-5 years 44,549 72,716 44,549 72,716 ------- ------- -------- ------- Minimum lease payments 106,918 135,622 106,918 135,622 Less: future finance charges 17,192 28,612 17,192 28,612 ------- ------- -------- ------- Provided for in the accounts 89,726 107,010 89,726 107,010 ======= ======= ======== ======= (b) Non-cancellable operating leases due within 1 year - 39,864 - 39,864 due within 1-2 years 101,250 36,542 101,250 36,542 due within 2-5 year 573,750 - 573,750 -- ------- ------- -------- ------- Not provided for in the accounts 675,000 76,406 675,000 76,406 ======= ======= ======== =======
22.4 Forward Sales Contracts At balance date the company had outstanding gold par forward sales contracts for 144,346 (1993-117,599) ounces at an average price of $570 (1993-$492) per ounce. 22.5 Gold Call Option At balance date the company had outstanding a gold call option expiring 28 March 1996 to deliver 22,325 ounces at a price of $580 per ounce exercisable by the option holder. 48 49 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 23 JOINT VENTURES 23.1 The economic entity has interests in the following unincorporated joint ventures:
JOINT VENTURE PRINCIPAL ACTIVITIES PERCENTAGE INTEREST 1994 1993 ------------------------ ---------------- ---- ---- COMPANY Yilgarn Star Exploration Gold Exploration 50 50 Yilgarn Star Production Production from Yilgarn Star Mine 50 50 Star Milling Operation of Burbidge Gold Plant 50 50 Marvel Loch Gold Exploration 50 50 Boodarding Gold Exploration 44.25 44.25 McGowans Find Gold Exploration 45* 45 Toomey Hills Gold Exploration 47.5* 47.5 Centenary Gold Exploration Nil 47.5 Dulcie Gold Exploration 24.5* 40 LSD Gold Exploration 95 95 Polar Bear Gold Exploration 25 17.5 Wilga Well Gold Exploration 90* 90 Sunrise Dam Gold Exploration 80* Nil Norseman Gold Exploration 100 35 Wilga Well West Gold Exploration 80 Nil Sunrise Dam West Gold Exploration 80 80 Olga Rocks Gold Exploration 45* Nil Salt Creek Base Metal Exploration Nil 85 CONTROLLED ENTITY Whim Creek Base Metal Exploration 70* 70 Mt Fraser Base Metal Exploration 51* 51
* Earning interest in accordance with respective joint venture agreements. 23.2 JOINT VENTURE ASSETS AND LIABILITIES The company's share of assets and liabilities in the above joint ventures has been included in the balance sheet of the company under the following classifications.
ECONOMIC ENTITY COMPANY ----------------------- ----------------------- 1994 1993 1994 1993 $ $ $ $ --------- --------- --------- --------- CURRENT ASSETS Cash 123,703 372,391 123,703 372,391 Receivables 57,846 129,502 57,846 129,502 Inventories 1,789,217 904,230 1,789,217 904,230 Other 54,514 32,096 54,514 32,096 --------- --------- --------- --------- TOTAL CURRENT ASSETS 2,025,280 1,438,219 2,025,280 1,438,219 ========= ========= ========= =========
49 50 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY ------------------------ ------------------------ 1994 1993 1994 1993 $ $ $ $ ---------- --------- ---------- --------- NON-CURRENT ASSETS Property, plant and equipment 2,714,217 2,280,288 2,714,217 2,280,288 Other - Exploration evaluation and development 3,907,911 2,726,076 3,703,958 2,726,076 - - Deferred mining 4,682,483 3,138,553 4,682,483 3,138,553 ---------- --------- ---------- --------- TOTAL NON-CURRENT ASSETS 11,304,611 8,144,917 11,100,658 8,144,917 ---------- --------- ---------- --------- TOTAL ASSETS 13,329,891 9,583,136 13,125,938 9,583,136 ========== ========= ========== ========= CURRENT LIABILITIES Creditors and borrowings 1,992,234 1,722,163 1,992,234 1,722,163 Provisions 55,686 40,861 55,686 40,861 ---------- --------- ---------- --------- TOTAL LIABILITIES 2,047,920 1,763,024 2,047,920 1,763,024 ========== ========= ========== ========= 23.3 JOINT VENTURE CONTRIBUTIONS The net contribution of joint venture activities to operating profit before income tax may be summarized as follows: Share of costs incurred by production joint ventures 13,520,368 9,920,245 13,520,368 9,920,245 Additional costs incurred by company 338,285 645,396 338,285 645,396 ---------- --------- ---------- --------- 13,858,653 10,565,641 13,858,653 10,565,641 Revenue from sale of company share of gold produced and other income of joint ventures 21,175,665 19,038,674 21,175,665 19,038,674 ---------- --------- ---------- --------- Net contribution 7,317,012 8,473,033 7,317,012 8,473,033 ========== ========= ========== =========
23.4 CONTINGENT LIABILITY Participants in the Yilgarn Star Production Joint Venture, being the Company, Orion Resources N.L. ("Orion") and Gemini Mining Pty Ltd ("Gemini") were served with a Writ issued by Boral out of the Supreme Court of Western Australia claiming damages for alleged breach of contract in the sum of $4,991,832.03, together with interest and costs. The Company, Orion and Gemini ("Yilgarn Star Participants") intend to vigorously defend the action by Boral. Based upon advice received by the solicitors and Counsel engaged to review Boral's claims, it is the view of the Yilgarn Star Participants that Boral's claims have no foundation and that the Yilgarn Star Participants have no liability to Boral. The Company has received a claim from Orion Resources NL, the manager of the Star Milling Joint Venture in which the company is a participant. The claim is seeking repayment of milling tolls earned by the joint venture, which were incorrectly allotted by the manager to the account of the Company. The Company is still assessing the basis of the claim. 50 51 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994
ECONOMIC ENTITY COMPANY --------------------- --------------------- 1994 1993 1994 1993 $ $ $ $ ------- ------- ------- ------- 24 REMUNERATION OF THE DIRECTORS Amounts received, or due and receivable by directors of the company from the company and its controlled entity 434,235 275,433 Amounts received, or due and receivable by directors of each entity in the economic entity from the company and its controlled entity 434,235 275,433 Directors remuneration includes superannuation payments and is disclosed in accordance with class order 94/947 "Disclosure of Directors Remuneration" issued by the Australian Securities Commission. Number of directors of the company whose remuneration was within the following bands: $ 0 - 9,999 1 1 $ 10,000 - 19,999 1 1 $ 30,000 - 39,999 - 1 $ 40,000 - 49,999 - 1 $ 50,000 - 59,999 - 1 $ 60,000 - 69,999 - - $ 70,000 - 79,999 1 - $ 80,000 - 89,999 1 - $120 000 - 129 999 1 1 $130 000 - 139 999 1 - 25 AUDITORS' REMUNERATION Amounts received, or due and receivable by the auditors for: (a) Auditing the accounts of the company 22,250 15,100 15,250 15,100 (b) Other services 10,575 2,525 2,075 2,525
26 RELATED PARTY TRANSACTIONS The directors of the company during the year were P G Crabb, R W Crabb, R J Dunn, D Dunnet (resigned 29 November 1993), B J Hurley and D J Porter. (a) Directors' remuneration and superannuation is disclosed in note 24. (b) Legal fees of $97,822 (1993 - $56,791) were paid by the economic entity and joint ventures in which it has an interest in the normal course of business to a firm in which R W Crabb is a partner. 51 52 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 (c) Consultancy fees totalling $309,635 (1993 - $202,493) were paid to P G Crabb, R J Dunn, D Dunnct, B J Hurley, D J Porter and their director related entities by the economic entity and joint ventures in which it has an interest for services relating to exploration activities, and is included in directors' remuneration. (d) Aggregate amounts receivable from and payable to directors and their director related entities at the end of the financial year were $1,071 (1993 - $6,938) and $26,769 (1993 - $1,935) respectively. (e) The company has entered into joint venture agreements with Orion Resources N L, a company of which D Dunnet (a former director) is a director and Bredelle Pty Ltd a company in which R W Crabb has an interest. (f) Directors and their related entities acquired, on normal commercial terms and conditions and at market rates, the following equity interests in companies in the economic entity during the year.
Number of Number of Shares Options ---------- --------- Gasgoyne Gold Mines N.L. On exercise of options 695,000 Pilbara Mines N L Pursuant to a prospectus 4,145,818 1,947,909 (g) Directors and their related entities hold the following equity interests in companies in the economic entity at balance date. Gasgoyne Gold Mines N.L. 15,602,615 395,000 Pilbara Mines N L 4,145,818 1,947,909
52 53 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 27 CONTROLLED ENTITY The controlled entity and contributions to consolidated profit:
Contribution To Consolidated Operating profit after income tax attributable to Country Of % Investment members of the Incorporation Owned At Cost Chief Entity 1994 1993 1994 1993 1994 1993 $ $ $ $ $ $ ------------- ---- ---- ---- ---- ---- ---- CHIEF ENTITY: Gasgoyne Gold Mines N.L. Australia 5,458,268 4,941,632 CONTROLLED ENTITY: Pilbara Mines N.L. Australia 36.8 100.0 1,851,651 1 (102,836) -- --------- --------- 5,355,432 4,941,632 ========= =========
Pilbara Mines NL (previously Gasgoyne Metals NL) is considered a controlled entity because the company has the capacity to dominate the decision making in relation to the financial and operating policies of the controlled entity so that the controlled entity operates with the company to achieve its objectives. 28 NOTES TO THE STATEMENT OF CASH FLOWS (a) RECONCILIATION OF CASH For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows:
ECONOMIC ENTITY COMPANY ------------------------ ----------------------- 1994 1993 1994 1993 $ $ $ $ ---------- --------- --------- --------- Cash 305,839 413,127 305,839 413,126 Deposits at call 11,869,079 2,216,206 2,021,846 2,216,206 Bank overdraft (15,520) (6,467) - (6,467) ---------- --------- --------- --------- 12,159,398 2,622,866 2,327,685 2,622,865 ========== ========= ========= =========
Deposits at call includes $283,050 to secure a bank guarantee to the lessor of the company's office premises. 53 54 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 (b) NON-CASH FINANCING AND INVESTING ACTIVITIES During the year the economic entity and the company acquired plant and equipment with an aggregate fair value of $12,188 (1993 - $103,323) by means of finance leases. These acquisitions are not reflected on the statement of cash flows. During the year, the company received 29,166,666 ordinary fully paid shares of 20 cents par (discount of 14 cents) and 10,416,666 options to subscribe for ordinary fully paid shares at a price of 20 cents (exerciseable on or before 31 May 1998) in Pilbara Mines NL. This was in consideration for the sale of mining tenements to Pilbara Mines NL and the conversion of existing loans to the company.
ECONOMIC ENTITY COMPANY ----------------------- ----------------------- 1994 1993 1994 1993 --------- --------- --------- --------- $ $ $ $ (c) RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO OPERATING PROFIT AFTER INCOME TAX Operating profit after income tax 5,308,215 4,941,632 6,244,069 4,941,632 Depreciation 396,268 618,673 394,394 618,673 Amortisation 612,233 474,829 554,842 474,829 Profit on sale of investments (915,300) (13,365) (915,300) (13.365) Profit on sale of equipment (2,014) (4,160) (2,014) (4,160) Exploration costs written off - 177,312 - 177,312 Profits on sale of tenements - - (1,172,838) - Movements in - Provision for income tax 1,163,247 1,120,227 1,163,247 1,120,227 Movements in - Provision for deferred income tax 498,552 1,585,911 885,589 1,585,911 Change in assets and liabilities Decrease in debtors 138,268 (101,187) 130,116 (101,187) Decrease/(Increase) in inventories (884,987) 371,012 (884,987) 371,012 Decrease/(Increase) in prepaid expenses (25,061) 13,497 (24,347) 13,497 Increase in gold on metals accounts (1,238,560) (20,756) (1,238,560) (20,756) Increase in deferred mining costs (1,543,930) (3,138,553) (1,543,930) (3,138,553) Increase in creditors 315,793 442,975 252,234 442,975 Increase in provision for employee entitlements 3,180 28,647 3,180 28,647 Increase in deferred gold sales and fees 915,684 - 915,684 - Net cash provided by operating activities 4,741,588 6,496,694 4,761,379 6,496,694 29 EARNINGS PER SHARE Basic earnings per share (cents per share) 12.64 12.0 Diluted earnings per share (cents per share) 12.41 11.8 a) Weighted average number of ordinary shares outstanding during the year used in calculation of basic earnings per share 42,010,011 41,041,793
54 55 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 (b) CLASSIFICATION OF SECURITIES Diluted earnings per share is calculated after classifying 922,000 options exercisable at below market price at balance date as potential ordinary shares. 121,000 options have not been considered dilutive as they are exercisable at above market price. 30 DIVIDENDS PAID AND PROPOSED
ECONOMIC ENTITY COMPANY ----------------------- ----------------------- 1994 1993 1994 1993 $ $ $ $ --------- --------- --------- --------- Interim ordinary dividend of 2.5 cents per share paid 28 February 1994 (unfranked 100%, 1993 - unfranked 100%) 1,059,627 1,030,732 1,059,627 1,030,732 Proposed final ordinary dividend of 5 cents per share (fully franked, 1993 unfranked 100%) 2,114,615 1,457,935 2,114,615 1,457,935 --------- --------- --------- --------- 3,174,242 2,488,667 3,174,242 2,488,667 ========= ========= ========= =========
31 EVENTS OCCURRING AFTER BALANCE DATE Since 30 June 1994 the following significant events have occurred: (a) On 1 September 1995 the company announced that it had entered into a Facility Agreement with Citibank Limited to provide a line of credit to a maximum of $10,500,000 which may be drawn by the company in cash or the gold equivalent thereof. The facility is for a period of three years; (b) On 6 September 1995 the company dispatched the takeover offer documents to the controlled entity's share and option holders. The consideration being offered by the company for: (i) the acquisition of the controlled entity shares is the allotment and issue of one company share credited as fully paid for every 12 controlled entity shares; and (ii) the acquisition of the controlled entity options is the allotment and issue of one company share credited as fully paid for every 40 of controlled entity options. The offer was subject to specified conditions as outlined in the company's offer documents which were dispatched to share and option holders on 6 September 1995. As at 27 September 1995 the company and its associates were entitled to 64,492,614 (75.97%) of the controlled entity shares (of which 31,366,671 are held directly by the company) and 31,177,166 controlled entity options (of which 14,583,332 are directly held by the company). Subsequent to 27 September 1995, 100% of the shares and options were acquired. From 21 April 1997, Gasgoyne Gold Mines NL sold its interest in Pilbara Mines NL and it ceased to be a controlled entity; (c) On 13 September 1995, the company and its joint venture partner, Lone Star Exploration NL, gave notice of exercise of the Option in relation to the Awak Mas Gold Project and paid the first payment of US$1 million. The company's equity holding in the Awas Mas Gold Project was 45%. Balance of consideration under the Masmindo Option Agreement was $US3 million. In 1997, the company entered into an agreement to sell its interest in the Awak Mas Gold Project in Indonesia. Under the contract the settlement was deferred until 8 January 1998; (d) The allotment in 1996 of 4,471,000 fully paid ordinary shares on the conversion of options at various premiums; 55 56 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 31 EVENTS OCCURRING AFTER BALANCE DATE (continued) (e) The allotment of 3,877,881 fully paid ordinary shares in the 1995 and 1996 financial years pursuant to the Dividend Reinvestment Program; (f) During 1996, pursuant to a takeover offer, Sons of Gwalia Limited acquired a controlling interest in the Company. Coeur d'Alene Mines Corporation became a significant shareholder; (g) In 1997, it was agreed between the shareholders of the company that all the attributable gold production of Gasgoyne Gold Mines be sold to Sons of Gwalia Ltd and Coeur d'Alene Mines Corporation, in accordance with their respective ownership interests, at the total cost of production; and (h) During 1997, 1,509,335 fully paid ordinary shares of 20 cents were cancelled and extinguished under a capital reduction program approved by the Supreme Court of New South Wales. Further details on the above events can be obtained in the subsequent year's annual reports. 32 U.S. GAAP RECONCILIATON Financial statements in the United States are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). In Australia, financial statements are prepared in accordance with accounting standards issued by the Australian Accounting Standards Board ("Aust. GAAP") which are codified in Australian Corporations Law. The statements of cash flows, which have been prepared in accordance with Australian GAAP, comply with International Accounting Standards No. 7. The principal differences between U.S. GAAP and Aust. GAAP as they relate to Gasgoyne are summarised below: EXPLORATION EXPENDITURES Gasgoyne defers ongoing exploration expenditures until the viability of a project is determined. If a decision is made to proceed with a project the expenditures are amortised over the life of the mine. If a decision is made to abandon a project the expenditures are written off at the time of such determination. Under U.S. GAAP, exploration expenditures are expensed until management determines, from a detailed analysis of reserve potential, capitalization is appropriate based on the establishment of proven and probable reserves. Capitalized exploration expenditures are amortised using the units-of-production method based on proven and probable reserves. PROSPECTUS ISSUE COSTS Gasgoyne capitalizes prospectus costs incurred in raising equity and amortizes them over five years. Under U.S. GAAP, costs associated with a raising equity are netted off against the proceeds obtained from the offering. OPTION PREMIUMS ON GOLD CALL OPTIONS In 1994, Gasgoyne recognised income of $1,000,000 for premiums received on the sale of a gold call option contract. Under U.S. GAAP, the premiums received on this call option would be deferred and recognised over the contract period. In addition, the gold call option would be marked to market to the extent that any losses were expected to be incurred under this option contract. UNITS OF PRODUCTION DEPRECIATION AND AMORTISATION Gasgoyne amortizes mine development and pre-production expenditures together with estimates of expected future development expenditures using the units-of-production method based on its estimate of future life-of-mine production. Gasgoyne's estimate of future life-of-mine production includes proven and probable reserves plus a portion of resources which has not yet been converted to reserves but which Gasgoyne believes there is sufficient confidence that such resources will be converted to reserves after further delineation drilling. If a significant change in estimated future life-of-mine production occurs during the period, amortisation expense for that period is adjusted to reflect the change. Under U.S. GAAP, mine development and pre-production expenditures, excluding any provision for expected future development expenditures, are amortised using the units-of-production method based on published proven and probable reserves only. A significant change in proven and probable reserves is treated prospectively for amortisation purposes. 56 57 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 32 U.S. GAAP RECONCILIATON (continued) CONSOLIDATION AND EQUITY ACCOUNTING OF PILBARA MINES NL In 1994 Gasgoyne consolidated its investment in Pilbara Mines NL ("Pilbara") of 38.1% and 36.8% respectively under Australian GAAP because Gasgoyne had the capacity to dominate the decision making in relation to the financial and operating policies of Pilbara in part because a majority of the directors of Pilbara were also directors of Gasgoyne during these years. Under U.S. GAAP, a controlling financial interest for consolidation purposes generally results from the ownership, directly or indirectly, of over 50% of the voting shares of another company. As a result, Pilbara has been deconsolidated for U.S. GAAP purposes from 1994 when Gasgoyne diluted its holding in this company from 100% to 35.57%. Under U.S. GAAP, the equity method of accounting has been followed for the 36.8% investment in Pilbara in 1994 as Gasgoyne was considered to exercise significant influence over the operating and financial policies of Pilbara. Summarized financial information of Pilbara Mines NL is as follows:
1994 1993 $ $ ---------- ---------- Condensed Profit and Loss Account information: Operating revenue 184,035 - Operating loss after income tax (150,053) - Condensed Balance Sheet information: Current assets 9,848,256 1 Non-current assets 2,407,304 - Current liabilities 87,540 - Non-current liabilities - - Shareholders equity 12,168,020 1 ---------- ----------
INCOME TAXES Both Aust. GAAP and U.S. GAAP require the use of the liability method of accounting for income taxes. However, while there are differences in how the liability method is applied under U.S. GAAP and Aust. GAAP, these differences, as they relate to Gasgoyne, have not been significant. INVESTMENTS Gasgoyne carries investments in listed and unlisted securities at cost except that declines in market value judged to be other than temporary are recognised in determining operating profit. Under U.S. GAAP, Gasgoyne's investments would be classified as available-for-sale investments effective from 1 July 1993 upon adoption of Statement of Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities" and would be carried at market value. Unrealised gains and losses on these investments are recorded as a separate component of shareholders' equity except that declines in market value judged to be other than temporary are recognised in determining net income. The cumulative effect as of 1 July 1993 on adoption of SFAS 115 was an increase in the opening balance of shareholders' equity by $620,494 (net of $305,616 in deferred income taxes) to reflect the net unrealised gains on securities classified as available-for-sale that were previously classified as held for investment and carried at cost. DIVIDENDS Gasgoyne retroactively records dividends declared after an accounting period has ended but before its financial statements are issued. Under U.S. GAAP, common stock dividends payable are recorded in the period in which they are declared. 57 58 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 32 U.S. GAAP RECONCILIATON (continued) PROFIT AND LOSS ACCOUNT RECONCILIATION Reconciliation of consolidated profit and loss accounts determined in accordance with Aust. GAAP to profits under U.S. GAAP is as follows:
Year Ended Year Ended 30 June 1994 30 June 1993 $ $ ------------ ------------ Operating profit after income tax as reported under Aust GAAP 5,355,432 4,941,632 Reconciliation to U.S. GAAP: Exploration expenditure (1) (748,433) (739,977) Prospectus issue costs (2) 86,652 86,651 Amortisation of option premium (3) (875,000) 0 Units of production depreciation (4) 58,789 (138,843) Equity method adjustment for investment in Pilbara Mines NL (5) (112,216) 0 Effect on deferred income tax of change in tax rate (7) 0 0 Tax effect of U.S. GAAP adjustments (8) 440,207 308,946 --------- --------- Operating profit after income tax in accordance with U.S. GAAP 4,205,431 4,458,409 ========= ========= Basic earnings per share in accordance with U.S. GAAP 9.83 10.63 ========= ========= Fully diluted earnings per share in accordance with U.S. GAAP 9.83 10.63 ========= ========= As at As at 30 June 1994 30 June 1993 $ $ ------------ ------------ Shareholders' equity attributable to members of Gasgoyne Mines NL as reported under Aust. GAAP 12,283,046 7,017,293 Reconciliation to U.S. GAAP: Write-off of exploration expenditure (1) (2,716,643) (1,968,210) Prospectus issue costs (2) (166,082) (252,734) Amortisation of option premium (3) (875,000) 0 Units of production depreciation (4) (80,054) (138,843) Adjustment to investment in Pilbara Mines NL (6) 549,461 - Equity method adjustment for investment in Pilbara Mines NL (5) (112,216) 0 Effect on deferred income tax of change in tax rate (7) 0 0 Tax effect of U.S. GAAP adjustments (8) 1,266,467 826,260 Unrealised gains on available-for-sale securities net of tax (9) 32,420 0 Current Year dividend provided (10) 2,115,357 1,457,935 ---------- --------- Adjusted shareholders' equity according to U.S. GAAP 12,296,756 6,941,701 ========== =========
(1) Under U.S. GAAP, exploration expenditures must be expensed as incurred. Capitalised exploration expenditures included in shareholders' equity at 1 July 1992 have also been adjusted against shareholders' equity in 1993. (2) Under U.S. GAAP, costs associated with raising equity are netted off against proceeds received in shareholders' equity. Capitalised prospectus costs included in shareholder' equity at 1 July 1992 have also been adjusted against shareholders' equity in 1993. (3) Under U.S. GAAP, premiums received from the sale of call option contracts are deferred and amortised over the contract period. (4) Under U.S. GAAP, units-of-production depreciation and amortisation is calculated using proven and probable reserves and changes in reserves are applied prospectively. (5) Under U.S. GAAP, earnings of investments in associated companies are accounted for using the equity method of accounting. Consolidated earnings of Pilbara attributable to members of Gasgoyne under Aust. GAAP have been reversed and Pilbara has been equity accounted after making appropriate U.S. GAAP adjustments to Pilbara's financial statements. (6) Under U.S. GAAP, the investment in Pilbara Mines NL has been adjusted after making appropriate U.S. GAAP adjustments within Pilbara's financial statements for (1), (2) and (5) differences. (7) Under U.S. GAAP, the effect of a change in tax rate is not recognised until the period in which it was enacted. (8) Represents the income tax effect resulting from (1) to (7) above. (9) Under U.S. GAAP, investments in available-for-sale listed and unlisted securities are recorded at market value. (10) Under U.S. GAAP, dividends payable are recorded in the period in which they are declared. 58 59 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 33 RESTATEMENT OF FINANCIAL STATEMENTS During the year ended 30 June 1994 Pilbara Mines NL raised $10,568,072 via a public issue of shares. This had the effect of diluting the company's interest in Pilbara Mines from 100% to 35.57%. An extraordinary gain of $2,680,513 (nil tax effect) was reported as income arising on dilution in the published 1994 financial statements. Paragraph 31 of AASB 1024 "Consolidated Accounts" states that "...Where a subsidiary makes a new issue of capital, the only effect on the consolidated accounts will be an increase in the equity of the economic entity, to the extent that the issue of capital was subscribed by outside equity interests, and a corresponding increase in cash or other assets. The economic entity will not experience any movement in its retained profits or accumulated losses as a result of the capital issue..." The gain should not, therefore, have been reported as income in the consolidated accounts. Rather, it represented the parent entity's interest in a post acquisition capital issue to outside equity interests of a controlled entity. The 1994 financial statements have been amended as follows to comply with AASB 1024: - - consolidated profit after tax for the year ended 30 June 1994 has been reduced by $2,680,513, reversing the extraordinary gain as reported; - - consolidated retained earnings as at 30 June 1994 have been reduced by $2,680,513; - - consolidated share capital attributable to the parent entity as at 30 June 1994 has increased by $2,680,513. There is no effect on the reported net assets as at 30 June 1994. 59 60 INDEPENDENT AUDIT REPORT TO THE DIRECTORS OF COEUR d'ALENE MINES CORPORATION SCOPE We have audited the financial statements being the consolidated balance sheets, consolidated profit and loss accounts and consolidated cash flow statements of Gasgoyne Gold Mines NL for the financial years ended 30 June 1994 and 1993. The financial statements include the consolidated accounts of the economic entity comprising the Company and the entities it controlled at the year end or from time to time during the financial year. The Company's directors are responsible for the financial statements. We have conducted an independent audit of these financial statements in order to express an opinion on them to the directors of Coeur d'Alene Mines Corporation. For the reasons set out in note 33, the original financial statements for the year ended 30 June 1994 have been restated. We were not the auditor of the company at that time. We have however, audited the adjustments described in note 33 that were applied to restate the 1994 financial statements. Our audit has been conducted in accordance with Australian Auditing Standards, which do not differ in any material respect from auditing standards generally accepted in the United States, to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with Australian accounting concepts and standards so as to present a view which is consistent with our understanding of the Company's and the economic entity's financial position, the results of their operations and their cash flows. The audit opinion expressed in this report has been formed on the above basis. AUDIT OPINION In our opinion, the restated financial statements of Gasgoyne Gold Mines NL are properly drawn up: (a) so as to give a true and fair view of the state of affairs as at 30 June 1994 and 1993 and the profit and cash flows for each of the two financial years ended 30 June 1994 of the Company and the economic entity; and (b) in accordance with applicable Statement of accounting concepts and applicable Accounting Standards. Accounting principles generally accepted in Australia vary in certain respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of consolidated operating profit for each of the two years ended 30 June 1994 and the determination of consolidated shareholders' equity attributable to shareholders of Gasgoyne Gold Mines NL as at 30 June 1994 and 1993 to the extent indicated in note 32 to the financial statements. COOPERS & LYBRAND Chartered Accountants Perth, Western Australia 23 February 1998. 60 61 GASGOYNE GOLD MINES N.L. AND CONTROLLED ENTITY BALANCE SHEET AS AT MARCH 31, 1996
Consolidated ($ Australian) CURRENT ASSETS Cash 11,710,261 Receivables 283,549 Investments 988,764 Inventories 3,148,703 Other 1,075,983 ----------- TOTAL CURRENT ASSETS 17,207,260 ----------- NON-CURRENT ASSETS Receivables 8,347,223 Investments 626,079 Property, plant and equipment 6,887,072 Intangibles 363,123 Other 16,067,863 ----------- TOTAL NON-CURRENT ASSETS 32,291,360 ----------- TOTAL ASSETS 49,498,620 ----------- CURRENT LIABILITIES Accounts payable 4,181,160 Borrowings 8,316,309 Provisions 3,448,723 Other 82,570 ----------- TOTAL CURRENT LIABILITIES 16,028,762 ----------- NON-CURRENT LIABILITIES Borrowings 55,702 Provisions 1,745,688 Other 134,255 ----------- TOTAL NON-CURRENT LIABILITIES 1,935,645 ----------- TOTAL LIABILITIES 17,964,407 ----------- NET ASSETS 31,534,213 ----------- SHAREHOLDERS' EQUITY Share capital 6,525,906 Reserves 13,272,621 Retained profits 11,735,676 ----------- Shareholders' equity attributable to members of the chief entity 31,534,213 Outside equity interests in controlled entity - ----------- TOTAL SHAREHOLDERS' EQUITY 31,534,213 ===========
The above balance sheet should be read in conjunction with the accompanying notes. 61 62 GASGOYNE GOLD MINES N.L. AND CONTROLLED ENTITY PROFIT AND LOSS ACCOUNT FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995
Consolidated ------------------------------------- 1996 1995 ($ Australian) ($ Australian) --------------- -------------- Sales Revenue 25,145,705 23,443,091 Other Revenue 1,775,779 598,600 ----------- ----------- Total Operating Revenue $26,921,484 $24,041,691 =========== =========== Operating profit before abnormal items and income tax 8,566,261 9,542,991 Abnormal items before income tax (2,354,740) ----------- ----------- Operating profit before income tax 6,211,521 9,542,991 Income tax attributable to operating profit 3,316,998 3,519,145 ----------- ----------- Operating profit after income tax 2,894,523 6,023,846 Outside equity interests in operating profit after income tax (68,216) (273,218) ----------- ----------- Operating profit after income tax attributable to members of the Chief Entity 2,962,739 6,297,064 Retained profits at the beginning of the reporting period 9,071,348 5,216,974 ----------- ----------- Total available for appropriation 12,034,087 11,514,038 Dividends provided for or paid 298,401 2,211,206 ----------- ----------- Retained profits at the end of the reporting period $11,735,686 $ 9,302,832 =========== ===========
The above profit and loss account should be read in conjunction with the accompanying notes. 62 63 GASGOYNE GOLD MINES N.L. AND CONTROLLED ENTITY CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995
Consolidated ---------------------------------- 1996 1995 ($ Australian) ($ Australian) -------------- -------------- Net cash provided by operating activities 5,857,651 9,918,064 ----------- ----------- Net cash used in investing activities (14,388,354) (8,692,862) ----------- ----------- Net cash used in financing activities 8,511,112 (1,121,546) ----------- ----------- Net increase (decrease) in cash held (19,591) 103,656 Cash at beginning of the reporting period 11,729,852 12,159,398 ----------- ----------- Cash at the end of the reporting period 11,710,261 12,263,054 =========== ===========
The above statement of cash flows should be read in conjunction with the accompanying notes. 63 64 NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS RECONCILIATION TO U.S. GAAP Financial statements in the United States are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). In Australia, financial statements are prepared in accordance with accounting standards issued by the Australian Accounting Standards Board ("Aust. GAAP") which are codified in Australian Corporations Law. The principle differences between U.S. GAAP and Aust. GAAP as they relate to the Company are summarized below: EXPLORATION EXPENDITURES Gasgoyne defers ongoing exploration expenditure until the viability of a project is determined. If a decision is made to proceed with a project, the expenditures are amortized over the life of the mine. If a decision is made to abandon a project, the expenditures are written off at the time of such determination. Under U.S. GAAP, exploration expenditures incurred prior to the entry of the mine site development stage are expensed as incurred. A mine generally enters this stage when a decision is made to develop the site based on completion of a favorable feasibility study. Following completion of a favorable feasibility study, pre-production exploration expenditures are capitalized and amortized using the units-of-production method based on proven and probable reserves. PROSPECTUS ISSUE COSTS Gasgoyne capitalizes prospectus costs incurred in raising equity and amortizes them over five years. Under U.S. GAAP, costs associated with raising equity are offset against the proceeds obtained from the offering. OPTION PREMIUMS ON GOLD CALL OPTIONS In 1994, the Company recognized income of $1,000,000 for premiums received on the sale of a gold call option contract. Under U.S. GAAP, the premiums received on the call option would be deferred and recognized over the contract period. In addition, the gold call option would be marked to market to the extent that any losses were expected to be incurred under this option contract. 64 65 NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS UNITS OF PRODUCTION DEPRECIATION AND AMORTIZATION Gasgoyne amortizes mine development and pre-production expenditures together with estimates of expected future development expenditures using the units-of-production method based on its estimate of future life of mine production. Gasgoyne's estimate of future life-of-mine production includes proven and probable reserves plus a portion of resources which has not yet been converted to reserves but which Gasgoyne believes there is sufficient confidence that such resources will be converted to reserves after further delineation drilling. If a significant change in estimated future life-of-mine production occurs during the period, amortization expense for that period is adjusted to reflect the change. Under US GAAP, mine development expenditures are amortized using the units-of-production method based on published proven and probable reserves only. A significant change in proven and probable reserves is treated prospectively for amortization purposes. CONSOLIDATION AND EQUITY ACCOUNTING OF PILBARA MINES NL In 1995 and 1994, Gasgoyne consolidated its investment in Pilbara Mines NL ("Pilbara") of 38.1% and 36.8%, respectively, under Australian GAAP because Gasgoyne had the capacity to dominate the decision making in relation to the financial and operating policies of Pilbara in part because a majority of the directors of Pilbara were also directors of Gasgoyne during these years. Under U.S. GAAP, a controlling financial interest for consolidation purposes generally results from the ownership, directly or indirectly, of over 50% of the voting shares of another company. As a result, Pilbara has been deconsolidated for U.S. GAAP purposes from 1994 when Gasgoyne diluted its holding in this company from 100% to %35.57%. Under U.S. GAAP, the equity method of accounting would be followed for the 38.1% and 36.8% investment in Pilbara in 1995 and 1994, respectively. In September 1995, the Company issued stock to acquire the outside equity interest of Pilbara Mines N.L. Under Australian GAAP, acquisition costs are expensed as incurred. While under U.S. GAAP, acquisition costs are capitalized as part of the purchase price. INCOME TAXES Both Aust. GAAP and U.S. GAAP require the use of the liability method of accounting for income taxes. However, while there are differences in how the liability method is applied under U.S. GAAP and Aust. GAAP, these differences, as they relate to the Company, have not been significant. At June 30, 1995, the Company restated its deferred tax balances in accordance with Aust. GAAP to reflect the increase in Australian tax rate from 33% to 36% announced by the Australian Treasurer in Parliament on May 19, 1995. The new tax legislation was effective from May 19, 1995 but did not receive royal assent until July 27, 1995. Under U.S. GAAP, the effect of a change in tax rate is not recognized until the period in which it was enacted. 65 66 NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS INVESTMENTS Gasgoyne carries investments in listed and unlisted securities at cost except that declines in market value judged to be other than temporary are recognized in determining operating profit. Under U.S. GAAP, Gasgoyne's investments would be classified as available-for-sale investments effective from July 1, 1993 upon adoption of Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115) and would be carried at market value. Unrealized gains and losses on these investments are recorded as a separate component of shareholders' equity except that declines in market value judged to be other than temporary are recognized in determining net income. The cumulative effect as of July 1, 1993 on adoption of SFAS 115 would be an increase in the opening balance of shareholders' equity by $624,494 (Net of $305,616 in deferred income taxes) to reflect the net unrealized gains on securities classified as available-for-sale that were previously classified as held for investment and carried at cost. DIVIDENDS Gasgoyne retroactively records dividends declared after an accounting period has ended but before its financial statements are issued. Under U.S. GAAP, common stock dividends payable are recorded in the period in which they are declared. PROFIT AND LOSS ACCOUNT RECONCILIATION Reconciliation of consolidated profit and loss accounts determined in accordance with Aust. GAAP to profits under U.S. GAAP is as follows:
Nine Months Ended March 31 ----------------------------------- 1996 1995 -------------- -------------- ($ Australian) ($ Australian) Operating profit after income tax as reported under Australian GAAP $ 2,962,739 $6,297,064 Reconciliation to U.S. GAAP Pilbara acquisition expense (11) 312,963 Exploration expenditures (1) (3,863,291) (625,019) Prospectus issue costs (2) 64,988 64,988 Amortization of option premium (3) 375,000 375,000 Units of production depreciation (4) (63,750) (62,709) Accounting for Pilbara Mines NL (5),(6) 137,388 (104,333) Effect on deferred income tax of change in tax rate (7) (173,262) Tax effect of U.S. GAAP adjustments (8) 1,333,353 81,754 ----------- ---------- Operating profit after income tax in accordance with U.S. GAAP $ 1,086,128 $6,026,745 =========== ==========
66 67 NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS RECONCILIATION OF SHAREHOLDERS' EQUITY
Nine Months Ended March 31 -------------------------------- 1996 1995 -------------- -------------- Shareholders' equity attributable to members ($ Australian) ($ Australian) of Gasgoyne Gold Mines NL as reported under Australian GAAP $31,534,213 $12,688,981 Pilbara acquisition costs (10) 312,963 Write-off of capitalized exploration expenditure (1) (7,413,293) (3,341,662) Prospectus issue costs (2) (14,443) (101,098) Amortization of option premium (3) (500,000) Units of production depreciation (4) (227,416) (142,763) Equity accounting for investment in Pilbara Mines NL (5) (216,549) Adjustment to investment in Pilbara Mines NL (6) (113,810) 549,461 Tax effect of U.S. GAAP adjustments (8) 2,708,826 1,371,846 Unrealized gains on available-for-sale securities net of tax (9) 80,353 ----------- ----------- Adjusted shareholders' equity according to U.S. GAAP $26,787,040 $10,388,569 =========== ===========
(1) Under U.S. GAAP, exploration expenditures must be expensed as incurred. Capitalized exploration expenditures included in shareholders' equity at July 1, 1992 have also been adjusted against shareholders' equity. (2) Under U.S. GAAP, costs associated with raising equity are offset against proceeds received in shareholders' equity. Capitalized prospectus costs included in shareholders' equity at July 1, 1992 have also been adjusted against shareholders' equity in 1993. (3) Under U.S. GAAP, premiums received from the sale of call option contracts are deferred and amortized over the contract period. (4) Under U.S. GAAP, units-of-production depreciation and amortization is calculated using proven and probable reserves and changes in reserves are applied prospectively. 67 68 NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (5) Under U.S. GAAP, earnings of investments in associated companies are accounted for using the equity method of accounting. Consolidated earnings of Pilbara attributable to members of Gasgoyne under Australian GAAP have been reversed and Pilbara has been equity accounted after making appropriate U.S. GAAP adjustments to Pilbara's financial statements. (6) Under U.S. GAAP, the investment of Pilbara Mines NL has been adjusted after making appropriate U.S. GAAP adjustments within Pilbara financial statements for (1), (2) and (5) differences. (7) Under U.S. GAAP, the effect of a change in tax rate is not recognized until the period in which it was enacted. (8) Represents the income tax effect resulting from (1) to (8) above. (9) Under U.S. GAAP, investments in available-for-sale listed securities are recorded at market value. (10) Gasgoyne acquired the outside equity interests of Pilbara Mines NL, bringing its total ownership to 100%. Under U.S. GAAP, acquisition costs are capitalized. 68 69 Unaudited Pro Forma Consolidated Financial Statements (In U.S. Dollars) The historical balance sheet and income statement information, included in the Coeur pro forma financial information that follows, has been adjusted "as if" the transaction, that occurred after the date of this historical information, had occurred at the date of the historical information. This pro forma information is intended to help readers understand the impact of the transaction by showing how the transaction might have affected the historical financial statements. The following Pro Forma Consolidated Balance Sheet as of March 31, 1996, and Pro Forma Consolidated Statements of Operations of Coeur for the three months ended March 31, 1996, and for the year ended December 31, 1995, give effect to the acquisition of the outstanding shares of Gasgoyne acquired by Coeur. The pro forma information is based on the historical financial statements of Coeur giving effect to the acquisition of shares of Gasgoyne and the assumptions and adjustments in the accompanying notes to the Pro Forma Financial Statements. Gasgoyne's net income for the twelve month period ended December 31, 1995, decreased by US$2.0 million (A$2.7 million) or 31%, as compared to the twelve month period ended June 30, 1995. The decrease is primarily due to a decrease in gold production at the Yilgarn mine, which reflects the mines transition from an open pit to an underground mining operation. Coeur believes that the reduced level of net income in 1995 is not indicative of the results to be achieved during the remainder of 1996 because the mine successfully completed the transition to an underground mine during the first quarter of 1996. The Pro Forma Consolidated Financial Statements have been prepared by the Company's management based on the historical financial statements of the Company. These Pro Forma Financial Statements may not be indicative of the results that actually would have occurred if the acquisition of shares had been in effect on the dates indicated or which may be obtained in the future. The Pro Forma Financial Statements should be read in conjunction with the historical financial statements and notes herein of Coeur an Gasgoyne for the periods covered. 69 70 UNAUDITED COEUR D'ALENE MINES CORPORATION PRO FORMA BALANCE SHEET
March 31, 1996 --------------------------------------------------- ASSETS (In thousands and U.S. dollars) Historical Pro Forma Pro Forma Balance Note Adjustments Balances ---------- ---- ----------- --------- CURRENT ASSETS Cash and cash equivalents $ 83,918 (D) $18,968 $ 83,918 (B) ($18,968) Funds held in escrow 2,271 2,271 Short term investments 98,122 98,122 Receivables 21,459 21,459 Inventories 29,432 29,432 -------- --------- -------- Total Current Assets 235,202 0 235,202 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment(net) 83,803 83,803 MINING PROPERTIES Operational mining properties(net) 119,436 119,436 Developmental properties 110,908 110,908 -------- --------- -------- 230,344 230,344 OTHER ASSETS Notes receivable 5,000 5,000 Debt issuance costs, net of accumulated amortization 4,548 4,548 Marketable securities 18,137 18,137 Investment in unconsolidated affiliate (B) 46,869 (B),(C) (142) 46,727 Other 1,487 1,487 -------- -------- -------- Total 29,172 46,727 75,899 -------- -------- -------- $578,521 $ 46,727 $625,248 ======== ======== ========
See notes to unaudited Pro Forma Consolidated Financial Statements. 70 71 UNAUDITED COEUR D'ALENE MINES CORPORATION PRO FORMA BALANCE SHEET
LIABILITIES AND SHAREHOLDERS March 31, 1996 --------------------------------------------------- EQUITY (In thousands) Historical Pro Forma Pro Forma Balance Note Adjustments Balances ---------- ---- ----------- --------- CURRENT LIABILITIES Accounts payable - trade $ 3,434 $ 3,434 Accrued liabilities 7,207 7,207 Accrued interest 3,624 (D) 349 3,973 Accrued salaries & wages 3,959 3,959 Cash dividends payable 3,071 3,071 Current portion of obligations under capital leases 1,659 1,659 --------- ------- -------- Total Current Liabilities $ 22,954 349 $ 23,303 OTHER LIABILITIES Subordinated Convertible bonds payable - 6% 50,000 50,000 Subordinated Convertible bonds payable - 6.375% 100,000 100,000 Limited recourse project financing 24,000 24,000 Bank loan payable (D) 18,997 18,997 Deferred taxes 1,399 (E) (287) 1,112 Other LT Liability 9,695 9,695 --------- ------- -------- Total Long Term Liabilities $185,094 18,710 $203,804 SHAREHOLDERS' EQUITY Common stock par value $1.00 per share - authorized 60,000,000 shares, issued 21,524,093 including 1,059,211 shares held in treasury) 21,524 (B) 1,420 22,944 Preferred stock, par value $1.00 per share - authorized 10,000,000 shares, issued 6,588,235 6,588 6,588 Capital Surplus 372,090 (B) 26,452 398,542 Accumulated deficit (15,756) (204) (15,960) Repurchased and nonvested shares (13,244) (13,244) Unrealized gains(losses) on securities (729) (729) --------- ------- -------- Total Stockholders Equity 370,473 27,668 398,141 --------- ------- -------- Total Liabilities & Equity $578,521 $46,727 $625,248 ========= ======= ========
See notes to unaudited Pro Forma Consolidated Financial Statements. 71 72 UNAUDITED COEUR D'ALENE MINES CORPORATION PRO FORMA STATEMENT OF OPERATIONS
For the three month period ended March 31, 1996 --------------------------------------------------- ASSETS (In thousands) Historical Pro Forma Pro Forma Balance Note Adjustments Balances ---------- ---- ----------- --------- INCOME From mine operations: Sale of concentrates and dore' $ 22,609 $ 22,609 Less cost of operations 19,596 19,596 ---------- --------- -------- Gross Profits 3,013 3,013 OTHER INCOME Interest and other 1,931 1,931 Income from unconsolidated affiliate (B), (C) (142) (142) ---------- --------- --------- Sub-Total 1,931 (142) 1,789 ---------- --------- -------- Total Income 4,944 (142) 4,802 EXPENSES Administration 1,088 1,088 Accounting and legal 274 274 General corporate 1,650 1,650 Interest 684 (D) 349 1,033 Mining exploration 1,039 1,039 ---------- --------- -------- Idle facilities Total Expenses 4,735 349 5,084 ---------- --------- -------- Net Income (loss) from continuing operations before income taxes 209 (491) (282) (Provision) benefit for income taxes (76) (E) 287 211 ---------- -------- -------- Net Income (loss) from continuing $ 133 $ 204 $ (71) operations ========== ========= ========= Earnings per Share Data: Weighted average number of shares of Common Stock and equivalents used in calculation 20,502 21,922 ========= ======== Net Income (loss) from continuing $ .01 $ .00 operations ======== ========
See notes to unaudited Pro Forma Consolidated Financial Statements. 72 73 UNAUDITED COEUR D'ALENE MINES CORPORATION PRO FORMA STATEMENT OF OPERATIONS
For the year ended December 31, 1995 --------------------------------------------------- ASSETS (In thousands) Historical Pro Forma Pro Forma Balance Note Adjustments Balances ---------- ---- ----------- --------- INCOME From mine operations: Sale of concentrates and dore' $ 89,239 $ 89,239 Less cost of operations 72,210 72,210 ---------- -------- Gross Profits 17,029 17,029 OTHER INCOME Interest and other 9,504 9,504 Loss from unconsolidated $ affiliate (B),(C) (548) (548) ---------- --------- --------- Sub-Total 9,504 (548) 8,956 ---------- --------- -------- Total Income 26,533 (548) 25,985 EXPENSES Administration 3,677 3,677 Accounting and legal 1,626 1,626 General corporate 6,207 6,207 Interest 9,746 (D) 1,395 11,141 Mining exploration 4,854 4,854 Idle facilities 1,481 1,481 ---------- --------- -------- Total Expenses 27,591 1,395 28,986 ---------- --------- -------- Net loss from continuing operations before income taxes (1,058) (1,943) (3,001) (Provision) benefit for income taxes 200 (E) (600) (400) ---------- --------- --------- Net loss from continuing $ $ $ operations (1,258) (1,343) (2,601) ========= ========= ========= Earnings per Share Data: Weighted average number of shares of Common Stock and equivalents used in calculation 15,888 16,998 ========= ======== Income(loss)from continuing operations $ (.08) $ (.15) ========= =========
See notes to unaudited Pro Forma Consolidated Financial Statements. 73 74 Notes to the Unaudited Pro Forma Consolidated Financial Statements Note A: The historical balance sheet and income statement information, included in the pro forma financial information preceding these notes, have been adjusted "as if" the transaction, that occurred after the date of this historical information, had occurred at the beginning of the period presented. This pro forma information is intended to help readers understand the impact of the transaction by showing how it might have affected the historical financial statements. The Pro Forma Consolidated Balance Sheet as of March 31, 1996, includes the effects of events that are directly attributable to the acquisition of Gasgoyne. The Pro Forma Consolidated Statements of Operations assume the acquisition had occurred as of the beginning of the period covered and include the effects of events that are directly attributable to the acquisition. The effective date of closing of the Gasgoyne transaction was April 17, 1996. Coeur's offer to acquire outstanding shares of Gasgoyne from the holders thereof, on a basis of seven shares of Coeur common stock plus A$96 in exchange for each 100 Gasgoyne shares, expired on April 17, 1996. Note B: The Company's investment in Gasgoyne is accounted for by the Equity Method. An analysis of this investment as of the beginning of the periods presented, is as follows:
3/31/96 12/31/95 ----------- ----------- Investment in Gasgoyne prior to April 17, 1996, acquisition transaction $ 14,397 $ 14,397 Acquisition transaction: Cash Paid 15,699,782 15,699,782 Fair market value of Coeur common stock issued 27,886,297 27,886,297 Acquisition Costs 3,268,494 3,268,494 ----------- ----------- Investment in Gasgoyne 46,868,970 46,868,970 Equity in Earnings of Gasgoyne for periods presented 304,370 1,546,615 Less amortization of the excess of cost of the acquisition over the underlying equity in the net assets of Gasgoyne 446,077 2,094,690 ----------- ----------- Net carrying value of investment $46,727,263 $46,320,895 =========== ===========
Average exchange rates used for the three months ended March 31, 1996 is US$.76 and US$.74 for the twelve months ended December 31, 1995. Coeur has excluded its share of non-recurring expenses of $125,136 and $119,946, respectively, attributed to Gasgoyne's net income related to the costs incurred in connection with the acquisition. Note C: The excess cost of the investment over the underlying equity in the net assets of 74 75 Gasgoyne is estimated to be 48.1 million at December 31, 1995 and has been paid based on the potential value of Gasgoyne's mining properties. Coeur is currently amortizing the excess cost by the unit-of-production method over the estimated total reserves. Approximately $446,000 and $2,095,000 was amortized for the periods ended March 31, 1996, and December 31, 1995, respectively. Note D: The cash portion of the acquisition costs was financed by a loan facility provided by Rothschild Australia Limited and provides for a maximum of $50 million of borrowings at an annual interest rate equal to LIBOR plus 1.5%. The interest rate used for the calculation of pro forma interest is 7.344% . The loan is collateralized by Coeur's shareholding in Gasgoyne. The agreement also contains certain financial covenants pertaining to Coeur. The pro forma's reflect the adjustment for the interest that would have been incurred on this debt for the respective periods presented. Note E: Income tax effects on the pro forma income are calculated based on Coeur's tax rate of 36% applicable to Federal and State income taxes adjusted for Coeur's ability to utilize net operating loss carryforwards in 1995. The tax provision is further determined on the basis that Coeur's equity in earnings of Gasgoyne is permanently invested in Australia. 75 -----END PRIVACY-ENHANCED MESSAGE-----