RNS Number : 6676E
Cape Lambert Iron Ore Limited
30 September 2008
30 September 2008
Cape Lambert Iron Ore Limited
Annual Results
Cape Lambert Iron Ore Limited ("Cape Lambert" or the "Company") (ASX: CFE, AIM: CLIO) is pleased to announce its annual results for the
year ended 30 June 2008.
Extracts are set out below and the full Annual Report will be posted to shareholders and is available on the ASX website www.asx.com.au
under the Company's trading code CFE and on the Company's website www.capelam.com.au
FOR MORE INFORMATION PLEASE CONTACT:
Cape Lambert Iron Ore Limited:
Tony Sage +61 (0)8 9380 9555
Australian Enquiries:
Professional Public Relations
David Tasker +61 (0)8 9388 0944/ +61 433 112 936
UK Enquiries:
Nominated Adviser:
Grant Thornton UK LLP
Fiona Owen +44 (0)20 7383 5100
AIM Broker:
Collins Stewart Europe Limited
Adrian Hadden +44 (0)20 7523 8353
Oliver Quarmby +44 (0) 20 7523 8354
Conduit PR:
Jos Simson +44 (0)20 7429 6603/+44 (0)7899 870 450
Jane Stacey +44 (0)20 7429 6606
Website: www.capelam.com.au
Cape Lambert Iron Ore Limited and Controlled Entities
Chairman's Report
Dear Shareholder
I am delighted to be reporting on a landmark year for your Company in 2007/2008, with the successful sale of the Cape Lambert magnetite
iron ore resource and associated tenements, located in the Pilbara region of Western Australia.
I would like to thank former Chairman Ian Burston who contributed significantly in unlocking upfront value for the 1.56 billion tonne
JORC compliant flagship asset, which settled in August for AUD$400 million with MCC Mining (Western Australia Pty Ltd), a wholly owned
subsidiary of Chinese company China Metallurgical Group Corporation ("MCC").
The sale provides Cape Lambert with significant cash reserves and the capital required for the Board to execute its new strategy of
acquiring earlier stage projects, which have a longer time-frame to development. Our strategy for the current year and beyond will be a
renewed focus on identifying, developing and exploiting new mining assets and a fast track of exploration activities at the Cape Lambert
South Iron Ore, which will now be the focus of our Pilbara exploration program.
Since year end, the Company has secured Exploration License 47/1493 for the highly prospective tenement, enabling us to progress drill
testing the 3km long, magnetic anomaly located in the license area. At the time of writing this report, drilling of the project, located
immediately south of, and an extension to, MCC's Project, is expected to occur in October.
We are equally excited about the binding agreement Cape Lambert has signed since year end, to acquire 30% of Marampa Iron Ore Limited
("Marampa"), a Bermuda registered, wholly owned subsidiary of African Minerals Limited ("African Minerals") and owner or the Marampa iron
ore project located in Sierra Leone. In a cash/scrip deal valued at more than US$45 million, the proposed investment comes after more than
eight months of due diligence by the Company, including several site visits by senior technical executives and former Chairman Ian Burston.
The Board views the proposed acquisition as further testament to our renewed commitment to invest in projects that we feel bring
considerable upside and create long-term value for shareholders.
Finally, the Board is proposing to undertake an equal reduction of capital to Shareholders1 via a cash distribution and an unfranked
dividend, totaling approximately AUD$100 million. At the time of writing this report, the exact amount to be paid to Shareholders and a
timetable applicable to the payments is expected to be announced on or around 30 September.
Antony Sage
Executive Chairman
1 Return of capital and unfranked dividend payments are only applicable to Shareholders in the Company as at the Record Date and do not
apply to option holders.
Cape Lambert Iron Ore Limited and Controlled Entities
Directors' Report
The directors of Cape Lambert Iron Ore Limited (the "Company") submit herewith the annual financial report on the consolidated entity,
consisting of the Company and the entities it controlled for the financial year ended 30 June 2008. In order to comply with the provisions
of the Corporations Act 2001, the directors report as follows:
The names and particulars of the directors of the Company during or since the end of the financial year are:
Directors
Name Particulars
Ian Burston Executive Chairman (Resigned 18 August 2008)
Antony Sage Executive Chairman (Appointed 18 August 2008)
Brian Maher Non-Executive Director
Timothy Turner Non-Executive Director
Peter Landau Non-Executive Director
Ian Burston Executive Chairman (Resigned 18 August 2008)
Qualifications AM, CitWA, B.E(Mech), DipAeroEng (RMIT), HonDSc,
FIEAust, CPEng, FAusIMM, FAICD
Experience Dr Burston has exceptional skills in resource
management and has more than 30 years of top-level
experience in extractive and related industries. Dr
Burston holds a Bachelor of Engineering (Mech) degree
from Melbourne University and a Diploma in
Aeronautical Engineering from Royal Melbourne
Institute of Technology. He has completed the Insead
Management Program in Paris and the Harvard Advanced
Management Program in Boston.
Formerly Dr Burston has held positions as Managing
Director of Portman Limited, Managing Director and
Chief Executive Officer of Aurora Gold Ltd, Chief
Executive Officer of Kalgoorlie Consolidated Mines
Pty Ltd, Vice President - WA Business Development CRA
Ltd and Managing Director Hamersley Iron Pty Ltd. He
was a non-executive Director of the Esperance Port
Authority for ten years. Dr Burston is currently a
non-executive Chairman of Broome Port Authority, NRW
Ltd and Imdex Ltd, and a non-executive Director of
Mincor Resources NL.
Antony William Paul Sage Executive Chairman (Appointed 18 August 2008, prior
to that, an Executive Director for the year ended 30
June 2008)
Qualifications B.Com, FCPA, CA, FTIA
Experience Mr Sage has in excess of 22 years experience in the
fields of corporate advisory services, funds
management and capital raising. Mr Sage is based in
Western Australia and has been involved in the
management and financing of listed mining companies
for the last 14 years. Mr Sage was a founding
Director of International Goldfields Limited and its
merger partner Hamill Resources Limited (the merged
entity now being Cape Lambert Iron Ore Limited). Mr
Sage is also a Director of currently listed
International Goldfields Limited (ASX Code IGC).
Brian Maher Non-Executive Director
Qualifications B.E(Min.), FAusIMM, FIMM
Experience Mr Maher has over 40 years experience in the mining
industry, covering both underground and open cut
operations, as a miner, supervisor, mining engineer,
mine manager consultant, contractor and managing
director. He has worked throughout the world,
including Australia, Liberia, Guyana and the
Philippines. He has spent over 12 years in the iron
ore industry.
Mr Maher has a Bachelor of Mining Engineering from
the University of Melbourne, and is a fellow of both
the Australian Institute of Mining and Metallurgy and
The Institution of Mining and Metallurgy. Mr Maher
has held senior management positions with leading
mining and engineering companies throughout the world
including Hamersley Iron, Broken Hill South, Griffin
Coal, Thyssen Mining Construction, Lameco Iron Ore,
Kinhill Engineers, Linden Mining, Minproc Engineers
and Nissho Iwai Mineral Sands.
Peter Landau Non-Executive Director
Qualifications LLB, BCom
Experience Mr Landau is a corporate lawyer and advisor who has
previously worked with Grange Consulting Group,
Clayton Utz and general counsel at Co-operative Bulk
Holdings. Mr Landau is responsible for providing
general corporate, capital raising, transaction and
strategic advice to numerous ASX listed and unlisted
companies. Mr Landau has project managed a
significant number of mining exploration and
development transactions including capital raisings,
M & A joint ventures and financings. Mr Landau is a
director of a number of ASX listed companies with
particular focus on mining, oil and gas exploration
and development in Australia and Africa. Mr Landau is
currently a non-executive director of View Resources
Limited, and executive director of NKWE Platinum
Limited and Range Resources Limited.
Timothy Paul Turner
Non-Executive Director and Company Secretary
Qualifications B.Bus, FCPA, FTIA, Registered Company Auditor
Experience Mr Timothy Paul Turner has joined Cape Lambert Iron
Ore Ltd in the dual position of Director and Company
Secretary. As senior partner with Accounting firm,
Hewitt Turner & Gelevitis, Mr Turner specialises in
domestic business structuring, corporate and trust
tax planning and corporate secretarial. He also has
in excess of 20 years experience in new ventures,
capital raisings and general business consultancy.
Mr Turner has a Bachelor of Business (Accounting and
Business Administration), is a Registered Company
Auditor, a Fellow of CPA Australia, a Fellow of the
Taxation Institute of Australia. Mr Turner is also a
Director of currently listed International Goldfields
Limited (ASX Code IGC), Global Iron Ore Limited (ASX
Code GFE) and Legacy Iron Ore Limited (ASX Code LCY).
Directorships of Other Listed Companies
Directorships of other listed companies held by Directors in the 3 years immediately before the end of the financial year are as
follows:
Name Company Period of
directorship
Ian Burston (Resigned 18 Aztec Resources Ltd 2003 to 2007
August 2008) Imdex Limited 2000 to present
Mincor Resources NL 2003 to present
Aviva Corporation Ltd 2003 to 2006
NRW Ltd 2006 to present
Broome Port Authority 2003 to present
Antony Sage International Goldfields Limited January 2006 to
Global Iron Limited present
NFX Gold Inc (TSX VE) October 2007 to
present
June 2004 to January
2006
Brian Maher - -
Peter Landau View Resources Limited May 2004 to
Konekt Limited September 2007
Continental Capital Group Limited December 2002 to
Nuenco NL July 2006
Blaze International Limited December 2002 to
NKWE Platinum Limited present
Range Resources Limited September 2004 to
BioProspect Limited October 2006
Poseidon Nickel Limited (formerly Niagara May 2004 to April
Limited) 2007
September 2006 to
present
November 2005 to
present
May 2007 to present
June 2005 to April
2007
Timothy Turner International Goldfields Limited January 2006 to
Global Iron Ore Limited present
Legacy Iron Ore Limited November 2007 to
present
July 2008 to present
Principal Activities
The principal activity of the consolidated entity during the financial year was mineral exploration.
There were no significant changes in the nature of the consolidated entity's principal activities during the financial year.
Review of Operations
Highlights for the 2008 Financial Year
* Successful completion of sale agreement regarding the sale of the Company's namesake magnetite iron ore project (the "Project") to
MCC Mining (Western Australia) Limited ("MCC Mining" - a wholly owned subsidiary of China Metallurgical Group Corporation) for AUD$400
million (with AUD$80million of this being contingent on licences being obtained by the buyer within 2 years of the date of the sale
agreement). A AUD$5million cash deposit was received in June 2008. An additional cash payment of AUD$235million was received on 6 August
2008 and a further AUD$80million cash payment was received on 15 September 2008;
* As a precursor to the sale and during the 2008 Financial Year, the Company completed substantial value adding activities at the
Project including;
* * 113 reverse circulation ("RC") drill holes for a total advance of 37,619m;
* 26 diamond holes for a total advance of 5,794m;
* 7,443 Davis Tube Recovery tests on composite RC chip samples;
* An updated mineral resource estimate of 1.56 billion tonnes grading at 31.2% Fe1;
* Preliminary mining, engineering and infrastructure studies;
* Metallurgical test work program commenced on diamond core; and
* Flora and fauna baseline environmental surveys, hydrogeological and geotechnical studies commenced.
* The Company has retained a strategic position in the Pilbara region through its Cape Lambert South project ("Cape Lambert South").
This project comprises an identified 3km long, untested, magnetic anomaly that represents the southern extension of the Project sold to MCC
Mining. Drilling is scheduled to commence in October 2008.
Overview
Cape Lambert Iron Ore Limited is an Australian domiciled, ASX (CFE) and London AIM (CLIO) listed company that is focused on creating
wealth for shareholders by acquiring and adding value to early definition steel making mineral assets for development or sale.
The Company's key focus during the 2008 Financial Year was on completing various drilling programs and technical studies at the Project
(which was subsequently sold to MCC Mining), which is located on Exploration Licence E47/1462 in the Pilbara region of Western Australia.
In October 2007, the Company successfully completed the acquisition of three adjacent tenements (E47/1233, E47/1248 and E47/1271)
prospective for iron ore, which increased the Project's total, coastal landholding to 373km2.
On 26 February 2008, Cape Lambert signed a Memorandum of Understanding ("MoU") with Chinese conglomerate China Metallurgical Group
Corporation for the sale of the Project, for a total cash consideration of AUD$400 million (with AUD$80million of this being contingent on
licences being obtained by the buyer within 2 years of the date of the sale agreement). The sale included all tenements comprising the
Project, namely E47/1462, E47/1233, E47/1248 and E47/1271. The sale consideration was to be paid in three tranches; AUD$240 million was to
be paid at Settlement on 6 August 2008 (AUD$5million of this was received as a deposit in June 2008 with the balance received on 6 August
2008), AUD$80 million was to be paid 45 days after Settlement, 6 August 2008 (and was received on the 15 September 2008) and the final
payment of AUD$80 million is to be paid if the buyer is able to obtain the grant of a mining lease and related construction approvals in
respect of the Project within 2 years of the settlement date. Subsequent to year end on 6 August 2008, the Company became liable for a commission payable of AUD$38million to an unrelated party upon
settlement of the sale transaction. Effective 6 August 2008, MCC Mining commenced managing the Project.
The Company has retained a strategic position in the Pilbara region through Cape Lambert South. Cape Lambert South is located on
recently granted Exploration Licence E47/1493, which has an area of approximately 35km2 and is the southern extension of the 1.56 billion
tonne magnetite Project sold to MCC Mining. This tenement has an identified 3km long, untested, magnetic anomaly located on its eastern
margin, which lies within the highly prospective Cleaverville geological formation. Drilling is scheduled to commence in October 2008.
Note: Refer ASX release dated 30 January 2008 for full resource details including resource classification and Competent Persons
statement.
Looking Forward
The Company's immediate focus is to continue to assist MCC Mining with management transition whilst progressing the commencement of
drilling at Cape Lambert South.
Over the next 6 to 12 months, the Company will work closely with MCC Mining on its development plans for the Project so that procurement
of a mining lease and related construction approvals can be progressed with an aim to receiving the final payment of AUD$80 million.
The Company has and will continue to aggressively review early definition mineral assets that provide feed stocks to the steel making
process both in Australia and overseas, for either joint venture and/or acquisition.
CORPORATE
Sale of Cape Lambert Iron Ore Project
On 26 February 2008, Cape Lambert signed a Memorandum of Understanding ("MoU") with Chinese conglomerate China Metallurgical Group
Corporation for the sale of the Project, for a total cash consideration of AUD$400 million (with AUD$80million of this being contingent on
licences being obtained by the buyer within 2 years of the date of the sale agreement). The sale included all tenements comprising the
Project, namely E47/1462, E47/1233, E47/1248 and E47/1271. The sale consideration was to be paid in three tranches; AUD$240 million was to
be paid at Settlement on 6 August 2008 (AUD$5million of this was received as a deposit in June 2008 with the balance received on 6 August
2008), AUD$80 million was to be paid 45 days after Settlement, 6 August 2008 (and was received on the 15 September 2008) and the final
payment of AUD$80 million is to be paid if the buyer is able to obtain the grant of a mining lease and related construction approvals in
respect of the Project within 2 years of the settlement date. Subsequent to year end on 6 August 2008, the Company became liable for a commission payable of AUD$38million to an unrelated party upon
settlement of the sale transaction. Effective 6 August 2008, MCC Mining commenced managing the Project.
Global Iron Limited Spin Off Transaction
On 1 June 2007, the Company notified the market of its intention to spin out its rights to explore for and mine iron ore over
approximately 160 tenements into a separate company, Global Iron Limited ("Global Iron"). These rights had a $Nil carrying value in the
Company's trial balance.
At the General Meeting of Shareholders held on 16 July 2007, the Company received Shareholder approval to proceed with the listing of
Global Iron.
On 20 September 2007, the Company announced it had confirmed the completion of the in-specie distribution of 3,125,000 Global Iron
shares to its members as approved at the General Meeting of Shareholders held on 16 July 2007.
This transaction was accounted for in the year ended 30 June 2008. The in-specie distribution was on the basis of 1 share in Global Iron
for every 80 shares held in Cape Lambert Iron Ore. It was concluded to be a transaction with shareholders and thus no profit and loss
impact recorded on the transaction.
Results for the Year
The consolidated entity made an after tax profit for the year of $2,179,472 (2007: loss of $3,945,284), primarily as a result of a
$3,522,268 income tax benefit realised in relation to a deferred tax asset brought to account (2007: $Nil).
Events Subsequent to Balance Sheet Date
Cape Lambert Iron Ore Project Sale Agreement
On 26 February 2008, Cape Lambert signed a Memorandum of Understanding ("MoU") with Chinese conglomerate China Metallurgical Group
Corporation for the sale of the Project, for a total cash consideration of AUD$400 million (with AUD$80million of this being contingent on
licences being obtained by the buyer within 2 years of the date of the sale agreement). The sale included all tenements comprising the
Project, namely E47/1462, E47/1233, E47/1248 and E47/1271. The sale consideration was to be paid in three tranches; AUD$240 million was to
be paid at Settlement on 6 August 2008 (AUD$5million of this was received as a deposit in June 2008 with the balance received on 6 August
2008), AUD$80 million was to be paid 45 days after Settlement, 6 August 2008 (and was received on the 15 September 2008) and the final
payment of AUD$80 million is to be paid if the buyer is able to obtain the grant of a mining lease and related construction approvals in
respect of the Project within 2 years of the settlement date. Subsequent to year end on 6 August 2008, the Company became liable for a commission payable of AUD$38million to an unrelated party upon
settlement of the sale transaction. Effective 6 August 2008, MCC Mining commenced managing the Project.
Proposal for a 30% Investment in African Hermatite Iron Ore Project
On 1 September 2008, Cape Lambert Iron Ore signed a conditional agreement to make a 30% investment in Marampa Iron Ore Limited, a wholly
owned subsidiary of African Minerals Limited and owner of the Marampa iron ore project. If the proposed transaction is completed in
accordance with the terms of the conditional agreement, Cape Lambert Iron Ore will issue 44,000,000 shares and invest US$25,000,000 in the
project to fund a feasibility study as consideration. As at the date of this report, completion of the investment is still subject to the
successful conclusion of due diligence by the Company and the receipt of all necessary regulatory approvals.
Conversions and Issuances of Options
Subsequent to the end of the financial year, the following options have been issued or converted into ordinary fully paid shares in the
Company:
On 11 July 2008, the Company issued 823,770 ordinary fully paid shares pursuant to the exercise of options for cash consideration of
$228,185.
On 16 July 2008, the Company issued 56,075,143 ordinary fully paid shares pursuant to the exercise of options for cash consideration of
$15,532,815.
On 25 July 2008, the Company issued 1,437,000 ordinary fully paid shares pursuant to the exercise of options for cash consideration of
$458,049.
On 4 August 2008, the Company issued 8,350,000 options exercisable at $0.50 per option, expiring on 30 June 2010. Based on a grant date
share price of $0.62, expected volatility of 50%, an option life of 1.904 years, no dividend yield and a risk free interest rate of 7.5%,
the total value of these options is $2,107,540.
On 8 August 2008, the Company issued 5,494,000 ordinary fully paid shares pursuant to the exercise of options for cash consideration of
$1,571,838.
On 29 August 2008, the Company issued 49,180,000 ordinary fully paid shares pursuant to the exercise of options for cash consideration
of $16,072,860.
On 12 September 2008, the Company issued 3,751,950 ordinary fully paid shares pursuant to the exercise of options for cash consideration
of $1,039,290.
Other than the above, no event has arisen since 30 June 2008 that would be likely to materially affect the operations of the
consolidated entity, or its state of affairs not otherwise disclosed in the entity's financial report.
Changes in State of Affairs
During the financial year there was no significant change in the state of affairs of the consolidated entity other than that referred to
in the Review of Operations.
Likely Developments and Expected Results of Operations
The consolidated entity will continue its mineral exploration activity at and around its exploration projects with the object of
identifying commercially viable resources.
Dividends
No cash dividends were paid during the year, however an "In-specie" issue of Global Iron Limited shares was made to shareholders of the
Company. The shares issued were held in escrow until 21 January 2008.
Subsequent to year end, the Directors are recommending the payment of a dividend and capital distribution to shareholders of the Company
to be made with funds from the sale of tenements to MCC Mining.
Environmental Regulations
The consolidated entity is aware of its environmental obligations with regards to its exploration activities and ensures that it
complies with all regulations when carrying out any exploration work.
Share Options
Share Options Granted to Directors and Executives
During and since the end of the financial year, an aggregate of nil share options were granted to the following directors and executives
of the Company:
Directors and Executives Number of Options Issuing Entity Number of Options Outstanding
Granted
Ian Burston (Resigned 18
August 2008)(i)
- CFE 3,300,000
Antony Sage - - -
Brian Maher - - -
Timothy Turner - - -
Peter Landau - - -
- 3,300,000
(i) The 3,300,000 options outstanding was the balance as at the date of resignation on 18 August 2008.
Share Options on Issue at Year End
Details of unissued shares or interests under option are:
Issuing Entity Number of Shares Class of Shares Exercise Price of Expiry Date of Options
Under Option Option
CFE 97,237,191 ORD $0.277 31 October 2008
CFE 50,000,000 ORD $0.327 31 October 2009
CFE 28,000,000 ORD $0.377 31 October 2010
CFE 500,000 ORD $0.427 22 October 2008
CFE 3,300,000 ORD $1.400 30 June 2009
The holders of such options do not have the right, by virtue of the option, to participate in any share issue or interest issue of any
other body corporate or registered scheme.
Details of shares or interests issued during the financial year as a result of the exercise of options are:
Issuing Entity Number of Shares Class of Shares Amount Paid for Amount Unpaid on Shares
Issued Shares
CFE 70,328,505 ORD $24,182,864 $-
Indemnification of Officers
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every Officer or agent of the Company
shall be indemnified out of the property of the Company against any liability incurred by him in his capacity as Officer, auditor or agent
of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any
proceedings, whether civil or criminal.
During the financial year, the Company has paid insurance premiums in respect of directors' and officers' liability. The insurance
premiums relate to:
* Costs and expenses incurred by the relevant officers in defending legal proceedings, whether civil or criminal and whatever their
outcome; and
* Other liabilities that may arise from their position, with the exception of conduct involving wilful breach of duty or improper
use of information to gain a personal advantage.
In accordance with a confidentiality clause under the insurance policy, the amount of the premium paid to insurers has not been
disclosed. This is permitted under S300(9) of the Corporations Act 2001.
Directors' Meetings
The following table sets out the number of directors' meetings (including meetings of committees of directors) held during the financial
year and the number of meetings attended by each director (while they were a director or committee member). During the financial year, 8
board meetings were held.
Board of Directors
Directors Eligible to Attend Attended
Ian Burston (Resigned 18 August 2008)
8 8
Antony Sage 8 8
Peter Landau 8 3
Brian Maher 8 7
Timothy Turner 8 8
Directors' Shareholdings
The following table sets out each director's relevant interest in shares, debentures, and rights or options in shares or debentures of
the Company or a related body corporate as at the date of this report.
Directors Ordinary Shares
Antony Sage 20,604,250
Brian Maher 738,000
Timothy Turner 1,157,858
Peter Landau -
22,500,108
Remuneration Report
Remuneration Policy for Directors and Executives
This report details the nature and amount of remuneration for each director and executive of the Company.
Details of Directors and Executives
Directors
Ian Burston - Executive Chairman (Resigned 18 August 2008)
Antony Sage - Executive Chairman (Appointed 18 August 2008, prior to that, Executive Director for the year)
Peter Landau - Non-Executive Director
Timothy Turner - Non-Executive Director
Brian Maher - Non-Executive Director
Principles used to Determine the Nature and Amount of Remuneration
The remuneration policy of the Company has been designed to align director objectives with shareholder and business objectives by
providing a fixed remuneration component which is assessed on an annual basis in line with market rates. The Board of the Company believes
the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors to run and manage the
Company.
The Board's policy for determining the nature and amount of remuneration for Board members is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior staff members, was developed by
the Executive Chairman and approved by the Board after seeking professional advice from independent external consultants.
In determining competitive remuneration rates, the Board seeks independent advice on local and international trends among comparative
companies and industry generally. It examines terms and conditions for employee incentive schemes, benefit plans and share plans.
Independent advice is obtained to confirm that executive remuneration is in line with market practice and is reasonable in the context of
Australian executive reward practices.
All executives receive a base salary (which is based on factors such as length of service and experience), superannuation and fringe
benefits.
The consolidated entity is an exploration entity, and therefore speculative in terms of performance. Consistent with attracting and
retaining talented executives, directors and senior executives are paid market rates associated with individuals in similar positions within
the same industry. The Board endorses the use of incentive and bonus payments for directors and senior executives. Certain Board members
were issued shares as part of the terms of the Initial Public Offer and also upon appointment to the Board as part of their salary packages.
Board members have largely retained these securities which assist in aligning their objectives with overall shareholder value.
Options and performance incentives may also be issued as the consolidated entity moves from exploration to producing entity, and key
performance indicators such as profits and growth can then be used as measurements for assessing Board performance. At present, there are no
performance based options or incentives on issue.
The executive directors and executives receive a superannuation guarantee contribution required by the government, which is currently 9%
and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to increase
payments towards superannuation.
All remuneration paid to directors is valued at the cost to the Company and expensed. Shares given to directors and executives are
valued as the difference between the market price of those shares and the amount paid by the director or executive. Options are valued using
the Black-Scholes option pricing model.
The Board's policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Executive Chairman, in consultation with independent advisors, determines payments to the non-executive directors and
reviews their remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees that can be
paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are
not linked to the performance of the Company. However, to align directors' interests with shareholder interests, the directors are
encouraged to hold shares in the Company and are able to participate in the employee option plan.
Company Performance, Shareholder Wealth and Directors' and Executives' Remuneration
The remuneration policy aims to increase goal congruence between shareholders and directors via the issue of options to the majority of
directors to encourage the alignment of personal and shareholder interests. During the financial period, the Company's share price traded
between a low of $0.25 and a high of $0.76. The price volatility is a concern to the Board but is not considered abnormal for a junior
explorer such as Cape Lambert Iron Ore Limited. In order to keep all investors fully informed and minimise market fluctuations, the Board is
determined to maintain promotional activity amongst the investment community so as to increase awareness of the Company and to stabilise the
Company's share price in line with a consistent and stable financial position and base value of assets.
Director and Executive Details
The directors and executives of Cape Lambert Iron Ore Limited during the year were:
* Ian Burston (Resigned 18 August 2008)
* Antony Sage
* Brian Maher
* Timothy Turner
* Peter Landau
Details of Remuneration
Remuneration packages contain the key elements incorporated in the Company's Remuneration Policy as detailed above.
The following table discloses the remuneration of the directors and key management personnel of the Company:
Primary Post Emplo-yment Long Term
Benefits % of Total Remuneration
2008 Cash Salary & Fees Cash Bonus Non-Mone-tary Super-an-nuation Share Based Payment Long Service
Leave Total Fixed At Risk Short Term At Risk Long Term
Benefi-ts Equity Options
Incentive Incentive
$ $
% %
$ $ $
$
$ %
Directors
Ian Burston (Resigned 18
August 2008)
189,000 - - - -
- 189,000 100% 0% 0%
Antony Sage
350,000 - - - -
- 350,000 100% 0% 0%
Brian Maher
24,600 - - - -
- 24,600 100% 0% 0%
Timothy Turner
48,000 - - - -
- 48,000 100% 0% 0%
Peter Landau
48,000 - - - -
- 48,000 100% 0% 0%
Other Key Management Personnel
Jeff Hamilton
244,650 - - - 177,000
- 421,650 58% 0% 42%
Kim Bischoff
60,600 - - - -
- 60,600 100% 0% 0%
Joe Ariti 290,390 - - - 354,000
- 644,390 45% 0% 55%
1,255,240 - - - 531,000
- 1,786,240
Primary Post Employ-ment Long Term Benefits
% of Total Remuneration
2007 Cash Salary & Fees Cash Bonus Non-Monet-ary Superan-nuation Share Based Payment Long Service Leave Total
Fixed At Risk Short Term At Risk Long Term
Benefi-ts Equity Options
Incentive Incentive
$ $
% %
$ $
$ $
$
%
Directors
Ian Burston
214,408 - - - 342,453 - 556,861
39% 0% 61%
Antony Sage
350,000 - - - 366,462 - 716,462
49% 0% 51%
Brian Maher
31,800 - - - - - 31,800
100% 0% 0%
Timothy Turner
24,000 - - - - - 24,000
100% 0% 0%
Peter Landau
4,000 - - - - - 4,000
100% 0% 0%
Other Key Management Personnel
Jeff Hamilton
63,000 - - - - - 63,000
100% 0% 0%
Kim Bischoff
- - - - - - -
- - -
Joe Ariti 217,124 - - - - - 217,124
100% 0% 0%
904,332 - - - 708,915 -
1,613,247
The Company is committed to remunerating its senior executives in a manner that is market-competitive and consistent with best practice
as well as supporting the interests of shareholders. Consequently, under the Senior Executive Remuneration Policy the remuneration of senior
executive may be comprised of a performance bonus designed to reward actual achievement by the individual of performance objectives and for
materially improved Company performance. By remunerating senior executives through performance and long-term incentive plans in addition to
their fixed remuneration the Company aims to align the interests of senior executives with those of shareholders and increase Company
performance.
2004 2005 2006 2007 2008
Closing Share Price 30 June $0.305 $0.145 $0.350 $0.690 $0.660
Profit/(loss) for the year ($723,317) ($4,222,043) ($15,030,508) ($3,945,284) $2,179,472
Basic EPS ($0.0062) ($0.0303) ($0.0757) ($0.0158) $0.0077
Value of Options Issued to Directors, Executives and Key Management Personnel
The Employee Incentive Scheme, approved by the shareholders in December 2000, entitles each option holder to one share exercisable any
time up to or on the expiry date at the stated exercise price; does not confer the right to a change in exercise price; subject to the
Corporations Act 2001, the ASX Listing Rules and the Company's Constitution are freely transferable; the shares, upon exercise of the
options, will rank pari passu with the Company's then issued shares; will be applied for quotation; the Option Holder can participate in a
pro rata issue to the holders of the underlying securities in the Company if the Options are exercised before the record date of an
entitlement; in the event of any reconstruction of the issued capital of the Company, all rights of the option holder will be changed to the
extent necessary to comply with the Listing Rules applying to the reconstruction of capital, at the time of the reconstruction. There are no
performance conditions attached to the options and they were issued for Nil consideration.
The following table discloses the value of options granted, exercised or lapsed during the year:
Options Granted Options Exercised Options Lapsed Total Value of Percentage of Total
Value at Grant Value at Exercise Options Granted, Remuneration for the
Date Date Exercised or Lapsed Year that Consists
Value at Time of Options
of Lapse %
$
$ $
$
Directors
Ian Burston (Resigned 18
August 2008)
- 76,375 195,715 272,090 -
Antony Sage - 1,058,828 219,094 1,277,922 -
Brian Maher - 84,487 - 84,487 -
Timothy Turner - 110,770 - 110,770 -
Peter Landau - - - - -
Other Key Management Personnel
Jeff Hamilton 177,000 177,000 - 177,000 42%
Kim Bischoff - - - - -
Joe Ariti 354,000 354,000 - 354,000 55%
Total 531,000 1,861,460 414,809 2,276,269
Service Agreements
Executive Directors
The employment conditions of the managing director, Ian Burston were approved by the Board on 3 July 2006 with a salary of $1,350 per
day of services provided plus GST, capped at a maximum amount of $350,000 (2007: $350,000) per annum plus GST. Subsequent to year end, Ian
Burston resigned his position of Executive Chairman.
The employment conditions of the executive director, Tony Sage were approved by the Board on 17 June 2006 with a salary of $350,000
(2007: $350,000) per annum plus GST.
Under the terms of the above contracts, employment may be terminated by the Company or respectively either Mr Burston or Mr Sage
(whichever relevant) by giving the other 4 weeks notice in writing. Alternatively, the employment may be terminated by the Company providing
compensation instead of the period of notice required. Termination payments due are four weeks in lieu of notice if the termination period
is not worked out. Termination payments are not payable on resignation or dismissal for serious misconduct. In the instance of serious
misconduct, the Company can terminate employment at any time. The employment contracts are for a period of three (3) years from the date of
entering the agreement.
Non-Executive Directors
The employment conditions of the non-executive director, Brian Maher were approved by the Board on commencement of employment with a
salary of $600 (2007: $600) per day plus GST.
The employment conditions of the non-executive director, Timothy Turner were approved by the Board on 30 November 2007 with a salary of
$48,000 (2007: $18,000) per annum plus GST.
The employment conditions of the non-executive director, Peter Landau were approved by the Board on commencement of employment with a
salary of $4,000 (2007: $4,000) per month plus GST.
Other Key Management Personnel
The employment conditions of the contractor, Jeff Hamilton were approved by the Board on commencement of employment in April 2006 with a
salary of $1,100 (2007: $1,000) per day plus GST.
The employment conditions of the contractor, Kim Bischhoff were approved by the Board on commencement of employment in February 2008
with a salary of $1,200 (2007: $Nil) per day plus GST.
The employment conditions of the contractor, Joe Ariti were approved by the Board on commencement of employment in August 2006 with a
salary of $1,500 (2007: $1,200) per day plus GST.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity or intervene in any proceedings to
which the consolidated entity is a party for the purpose of taking responsibility on behalf of the consolidated entity for all or any part
of those proceedings.
The consolidated entity was not a party to any such proceedings during the year.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is included on page 15 of
the financial report.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
Timothy Turner
Director
Perth, 26 September 2008
Cape Lambert Iron Ore Limited and Controlled Entities
Income Statements
For the Financial Year Ended 30 June 2008
Consolidated Parent Entity
Note 2008 2007 2008 2007
$ $ $ $
Revenue 2(a) 1,542,218 968,095 1,531,854 965,202
Other income 2(a) 1,230,322 2,099,591 1,230,322 2,099,591
Employee benefits expense (699,685) (1,415,166) (699,685) (1,415,166)
Consulting expenses (1,898,464) (1,577,390) (1,898,464) (1,545,605)
Occupancy expenses (350,388) (141,317) (350,388) (141,317)
Compliance and regulatory (196,332) (169,044) (191,895) (166,227)
expenses
Travel and accommodation (359,286) (347,705) (359,286) (347,705)
Share registry maintenance (131,423) (67,955) (131,423) (67,955)
Other expenses (362,581) (404,206) (388,985) (372,939)
Depreciation and amortisation 2(b) (41,413) (70,753) (40,152) (70,200)
expense
Impairment of exploration 2(b) - (2,803,195) - -
expenditure
Impairment of investment in
controlled entities 2(b) - - (1,040,896) -
Reversal of impairment of loan
to controlled entity 2(b) - - 204,549 -
Loss on disposal of plant and 2(b) (75,764) (16,239) (75,764) (16,239)
equipment
Loss before income tax benefit
2(b) (1,342,796) (3,945,284) (2,210,213) (1,078,560)
Income tax benefit 3 3,522,268 - 15,028,701 -
Profit/(loss) after income tax
benefit 2,179,472 (3,945,284) 12,818,488 (1,078,560)
Profit/(loss) for the year
2,179,472 (3,945,284) 12,818,488 (1,078,560)
Earnings/(loss) per share:
Basic (cents per share) 18 0.77 (1.58)
Diluted (cents per share) 18 0.47 (1.58)
Cape Lambert Iron Ore Limited and Controlled Entities
Balance Sheets
As at 30 June 2008
Consolidated Parent Entity
Note 2008 2007 2008 2007
$ $ $ $
Current Assets
Cash and cash equivalents 16,137,185 1,917,384 16,007,468 1,837,787
Trade and other receivables 7 260,446 5,047,730 258,523 5,052,170
16,397,631 6,965,114 16,265,991 6,889,957
Non-current assets classified 8 56,861,281 - - -
as held for sale
Total Current Assets 73,258,912 6,965,114 16,265,991 6,889,957
Non-Current Assets
Trade and other receivables 9 8,268 11,541 19,900,847 6,693,090
Financial assets 10 4,051,037 4,429,490 35,539,492 36,958,841
Restricted cash 11 170,903 288,448 147,491 266,448
Property, plant and equipment 12 160,320 238,561 158,696 235,676
Exploration and evaluation 13 28,000 38,324,659 - -
expenditure
Deferred tax asset 3 3,864,067 - 20,935,988 -
Total Non-Current Assets 8,282,595 43,292,699 76,682,514 44,154,055
Total Assets 81,541,507 50,257,813 92,948,505 51,044,012
Current Liabilities
Trade and other payables 14 617,634 2,261,318 1,620,932 3,243,260
Deferred income 8 5,000,000 - 5,000,000 -
Total Current Liabilities 5,617,634 2,261,318 6,620,932 3,243,260
Non-Current Liabilities
Deferred tax liability 3 8,361 - - -
Total Non-Current Liabilities 8,361 - - -
Total Liabilities 5,625,995 2,261,318 6,620,932 3,243,260
Net Assets 75,915,512 47,996,495 86,327,573 47,800,752
Equity
Issued capital 15 82,008,254 54,094,995 82,008,254 54,094,995
Reserves 16 15,458,304 17,663,230 15,458,304 17,663,230
Accumulated losses 17 (21,551,046) (23,761,730) (11,138,985) (23,957,473)
Total Equity 75,915,512 47,996,495 86,327,573 47,800,752
Cape Lambert Iron Ore Limited and Controlled Entities
Statements of Changes in Equity
For the Financial Year Ended 30 June 2008
Consolidated Issued Capital Accumulated Losses Share Based Payment Available for Sale Total
Reserve Revaluation Reserve
$ $ $ $ $
Balance at 1 July 2006 52,993,719 (19,816,446) 16,526,778 138,130 49,842,181
Loss for the year - (3,945,284) - - (3,945,284)
Available for sale financial
instruments:
* transferred to profit or
loss on sale - - - (138,130) (138,130)
Total recognised income and - (3,945,284) (138,130) (4,083,414)
expense
Share based payments - - 1,136,452 - 1,136,452
Contributions of equity net of
transaction costs 1,101,276 - - - 1,101,276
Transactions with equity
holders in their capacity as 1,101,276 - 1,136,452 - 2,237,728
equity holders
Balance at 30 June 2007 54,094,995 (23,761,730) 17,663,230 - 47,996,495
Balance at 1 July 2007 54,094,995 (23,761,730) 17,663,230 - 47,996,495
Removal of accumulated losses
from subsidiary sold during - 31,212 - - 31,212
the year
Profit for the year 2,179,472 - - 2,179,472
Total recognised income and - 2,210,684 - - 2,210,684
expense
Share based payments 2,000,000 - 1,192,050 - 3,192,050
Contributions of equity net of
transaction costs 25,579,821 - (3,396,976) - 22,182,845
Tax effect of capital raising 333,438 - - - 333,438
costs
Transactions with equity
holders in their capacity as 27,913,259 - (2,204,926) - 25,708,333
equity holders
Balance at 30 June 2008 82,008,254 (21,551,046) 15,458,304 - 75,915,512
Parent Entity Issued Capital Accumulated Losses Share Based Payment Available for Sale Total
Reserve Revaluation Reserve
$ $ $ $ $
Balance at 1 July 2006 52,993,719 (22,878,913) 16,526,778 138,130 46,779,714
Loss for the year - (1,078,560) - - (1,078,560)
Available for sale financial
instruments:
* transferred to profit or
loss on sale - - - (138,130) (138,130)
Total recognised income and - (1,078,560) - - (1,216,690)
expense
Share based payments - - 1,136,452 - 1,136,452
Contributions of equity net of
transaction costs 1,101,276 - - - 1,101,276
Transactions with equity
holders in their capacity as 1,101,276 - 1,136,452 - 2,237,728
equity holders
Balance at 30 June 2007 54,094,995 (23,957,473) 17,663,230 - 47,800,752
Balance at 1 July 2007 54,094,995 (23,957,473) 17,663,230 - 47,800,752
Profit for the year - 12,818,488 - - 12,818,488
Total recognised income and - 12,818,488 - - 12,818,488
expense
Share based payments 2,000,000 - 1,192,050 - 3,192,050
Contributions of equity net of
transaction costs 25,579,821 - (3,396,976) - 22,182,845
Transactions with equity
holders in their capacity as 27,579,821 - (2,204,926) - 25,374,895
equity holders
Tax effect of capital raising 333,438 - - - 333,438
costs
Balance at 30 June 2008 82,008,254 (11,138,985) 15,458,304 - 86,327,573
Cape Lambert Iron Ore Limited and Controlled Entities
Cash Flow Statements
For the Financial Year Ended 30 June 2008
Consolidated Parent Entity
Note 2008 2007 2008 2007
$ $ $ $
Cash flows from operating
activities
Receipts from customers
(inclusive of goods and - - - -
services tax)
Payments to suppliers and
employees (inclusive of goods (17,580,961) (9,004,694) (8,615,489) (2,767,243)
and services tax)
Interest received 785,404 585,513 776,962 582,379
Interest paid - (300) - (300)
Other revenue 114,007 613,000 114,007 613,000
Net cash used in operating 25(b) (16,681,550) (7,806,481) (7,724,520) (1,572,164)
activities
Cash flows from investing
activities
Payment for plant and (38,936) (173,903) (38,936) (173,903)
equipment
Payment for exploration assets (2,000,000) (200,000) - -
Purchase of equity investments (69,500) (228,335) (69,500) (228,335)
Payments for security bonds - (137,104) - (115,104)
Receipts from security bonds 117,545 - 118,957 -
Non-refundable deposit - Ding 750,000 - 750,000 -
Sale
Non-refundable deposit - MCC 5,000,000 - 5,000,000 -
Sale
Proceeds from sale of equity 1,678,048 193,974 1,678,048 193,974
investments
Loans to non associated - (3,862,323) - (3,893,534)
entities
Loans to controlled entities - - (11,008,562) (6,431,179)
Proceeds from loans from non
associated entities 3,854,056 - 3,854,056 -
Net cash provided by/(used in)
investing activities 9,291,213 (4,407,691) 284,063 (10,648,081)
Cash flows from financing
activities
Proceeds from issues of equity 21,610,138 1,421,983 21,610,138 1,421,983
securities
Payment for share issue costs - - - -
Net cash provided by financing 21,610,138 1,421,983 21,610,138 1,421,983
activities
Net increase/(decrease) in
cash and cash equivalents 14,219,801 (10,792,189) 14,169,681 (10,798,262)
Cash and cash equivalents at
the beginning of the financial 1,917,384 12,709,573 1,837,787 12,636,049
year
Cash and cash equivalents at
the end of the financial year 25(a) 16,137,185 1,917,384 16,007,468 1,837,787
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LMMLTMMAJMLP
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