Saturday 29 September 2007

Discovery Metals Limited - Annual report & accounts

Annual report & accounts (28 September 2007) for DISCOVERY METALS LIMITED

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2007
A complete copy of the Financial Report for the year ended 30 June2007 is available on the Company's website

THE BOARD OF DIRECTORS
The names of the directors of Discovery Metals Limited in office at any time during or since the end of the year are:
  • GORDON GALT (Date of Appointment 09.05.07)B.Eng (Hons), B Comm, Grad Dip Applied Finance, MAusIMM, MAICD. Chairman Gordon Galt is a senior mineral resources executive and an experienced director with international mineral industry experience. During his career, Mr Galt has worked in senior management, technical and operational roles across a wide range of commodities, primarily in gold, coal, magnesium and copper/lead/zinc. Mr Galt is by training, a mining engineer withpost-graduate qualifications in finance. Both degrees are from the University of Queensland. During the past ten years Mr Galt has worked mainly as the Managing Director of companies engaged in the development and operation of large resource projects, and he has also spent a period of time in banking. Mr Galt is currently engaged in funds management and corporate advisory work. In previous roles, Mr Galt has demonstrated a track record of creating shareholder value through analysis of a company's strategic position, followed by implementation of appropriate corporate strategies, fund raising and motivating teamsof senior resource professionals.During the past three years Mr Galt has held the following listedcompany directorships: * Gloucester Coal Limited from April 2004 to August 2007 * Magnesium International Limited from August 2002 to January 2006 * Aquila Resources Limited from August 2007 to present.
  • JEREMY READ (Date of Appointment 30.05.03)BSc (Hons), MAusIMMManaging DirectorJeremy Read has 20 years domestic and international mineral'sexploration experience and was previously the Manager of BHP MineralsAustralian Exploration Team. He has extensive exploration experiencefor nickel sulphides and played a critical role in the discovery ofthe Kabanga North Ni deposit, in Tanzania. He is skilled indeveloping new technical teams, management of technical/specialistservice groups, project generation activities, risk management andmulti-commodity mineral exploration. During his employment with BHP Mr Read participated in the development of several significantstrategic exploration alliances. Mr Read has been the ManagingDirector of Discovery Metals since its incorporation in May 2003.
  • MORRICE CORDINER (Date of Appointment 30.05.03)LLB, ASIANon-Executive DirectorMorrice Cordiner has over 17 years experience in the Finance andResources industries both in the UK and Australia and has beeninvolved in the financing and management of a number of junior listedcompanies, predominantly in the mining sector. Mr Cordiner wasformerly an executive director of Waverley Mining Australia, a fundsmanagement group that specialised in investing in the AustralianResource sector. In this capacity he held a number of Boardpositions as Waverley's representative on its investee companyBoards.During the past three years Mr Cordiner has held the following listedcompany directorships: * Andean Resources Limited from 12 December 2003 to present * AIM Resources Limited from 16 May 2002 to 30 September 2004 * Golden Valley Gold Mines from 11 October 1999 to 14 January 2004.
  • JOHN SHAW (Date of Appointment 14.11.06)BSc (Geological Engineering), FAusImm, MCIM, FAICD, SMENon Executive DirectorJohn Shaw has over 40 years experience in exploration, developmentand operations of open cut and underground mines. He previously wasVice President of the Australian Operations of Placer Dome AsiaPacific Limited and Managing Director of Kidston Gold Mines. Mr Shawis a former Chairman of Gallery Gold Limited and Zimbabwe PlatinumMines Limited, and was involved with the development of the MupaneGold Mine in NE Botswana. Mr Shaw is also Chairman of LodestoneExploration Limited and Tri Origin Minerals Limited and a nonexecutive director of IAMGOLD Corporation and Quadra Australia PtyLtd.During the past three years Mr Shaw has held the following listedcompany directorships: * IAMGOLD Corporation from March 2006 to present * Tri Origin Minerals Limited from October 2003 to present * Lodestone Exploration Limited from May 2002 to present * Gallery Gold Limited from November 2003 to March 2006 * Kingsgate Consolidated Limited from September 2000 to March 2005.
  • TOM EADIE (Date of Appointment 14.10.03 - Resigned 09.05.07)BSc (Hons), Msc, FAusIMM, ASIAChairpersonTom Eadie has twenty-five years of experience within the juniorresources sector and technical to senior executive levels with majormining companies such as Pasminco, Aberfoyle Resources and Cominco.At Pasminco he was Executive General Manager Exploration & Technologyfor 11 years. He is a past director of the AusIMM.During the past three years Mr Eadie has held the following listedcompany directorships : * Austminex NL from 11 June 2002 to 11 June 2003 * Copper Strike Limited from 24 November 2004.
  • SCOTT REID (Date of Appointment 30.05.03 - Resigned 01.08.06)BSc, Grad Dip Sco (Geophys), ASIANon-Executive DirectorScott Reid has a background in mineral exploration (geophysics)worldwide, financial analysis of resource projects and companies andapplied finance and mineral economics. He is a specialist corporateadvisor and resources analyst in the small cap mining, mineral andenergy sectors. Mr Reid has extensive experience in mergers andacquisitions, rights issues, IPO's and other capital raisings,drafting and managing prospectuses, compliance process and investorrelations. He has been a director of a number of listed companies.During the past three years Mr Reid has held the following listedcompany directorships: * AIM Resources Limited * Andean Resources Limited from 12 December 2003 to 26 April 2005.
  • KARL SCHLOBOHMB Comm, B Econ, M Tax, CA, AICDChief Financial Officer (Date of Appointment 24.05.07)Company Secretary (Date of Appointment 01.08.06 - Resigned 24.05.07)Karl Schlobohm has over 15 years experience in chartered accountingand business advising and is a member of the Institute of ChartedAccountants and the Australian Institute of Company Directors. MrSchlobohm is currently a director of Prosperity Advisers, and alsoacts as the company secretary of the ASX listed Linc Energy Limitedand Agenix Limited, where he is also a non-executive director. He isalso the Chairman of the public unlisted Australasian Retail MediaGroup which specialises in the provision of in-store retail radio forSuper Cheap Auto, K-Mart and IGA stores throughout Queensland.
  • ROSLYNN SHAND (Date of Appointment 24.05.07)BA, LLB, FCISCompany SecretaryRoslynn Shand has a combined degree in Arts/Law from the Universityof Queensland, is a fellow of the Chartered Secretaries Australia andhas considerable experience in the company secretarial area. She hasbeen a company secretary for over 15 years for entities in thefinancial, agricultural and mining sectors.

During the year ended 30 June 2007, no ordinary shares of DiscoveryMetals were issued on the exercise of options granted in thatperiod. No person entitled to exercise the option had or has anyright by virtue of the option to participate in any share issue ofany other body corporate.Principal ActivityThe principal activity of the company during the year was mineralexploration, and in particular the continued development of its MaunCopper Project in Botswana.No significant change in the nature of the consolidated entity'sprincipal activity occurred during the year.Dividends Paid or RecommendedThe directors do not recommend the payment of a dividend for thisfinancial year. No dividend has been declared or paid by DiscoveryMetals Limited since the end of the previous financial year.Operating ResultsThe result of the consolidated entity amounted to an after-tax lossof $2,355,337 (2006: loss $3,565,662).Number of EmployeesThere are eleven (11) full-time employees employed by theconsolidated entity in Australia and Botswana. All other roles arecurrently undertaken under contracted arrangements, or by part-timeemployees.Risk ManagementThe Board is responsible for ensuring that risks, and alsoopportunities, are identified on a timely basis and that activitiesare aligned with the risks and opportunities identified by the Board.The company believes that it is crucial for all Board members to be apart of this process, and as such the Board has not established aseparate risk management committee.The Board has a number of mechanisms in place to ensure thatmanagement's objectives and activities take into account the risksidentified by the Board, and management reports to the Board formallyeach month in this regard.Where appropriate the Board engages independent experts orprofessional advisors to assist with the identification and/ormanagement of any key risk areas identified.Tenement ScheduleT.

No significant changes in the state of affairs of the consolidated entity occurred during the year.

After Balance Date Events

No other matters or circumstances have arisen since the end of thefinancial year which significantly affected or may significantlyaffect the operations of the consolidated entity, the results ofthose operations or the state of affairs of the consolidated entityin future financial years other than the following:

  1. On 18 July 2007, the company announced its intentions tocommence drilling to provide the data for a pre-feasibility study forits Maun Copper project in Botswana.
  2. The company made market announcements on 14 and 23 August2007, and 25 September 2007 regarding the potential expansion of theZeta and Plutus Prospects at the Maun Copper project site in Botswana.
  3. On 30 August 2007, the company announced its initialmetallurgical testing on the copper-silver mineralisation for its Maun Copper project produced positive results, confirming historicaldata and providing potential copper recoveries from the Zeta Prospectof 95%.
  4. On 30 August 2007, at the company's Extraordinary GeneralMeeting, shareholders approved the issue of 2 million options to MrGordon Galt, a director. The options were issued in two tranches of1 million each, and are eligible to be exercised any time prior to 1May 2010. The first tranche has an exercise price of 30 cents pershare, and the second tranche 35 cents per share.
  5. On 31 August 2007, the company announced that its initialmetallurgical test results for nickel sulphide mineralisation at itsDikoloti Nickel project in Botswana produced encouraging results.
  6. On 18 September 2007, the company announced that it hadsuccessfully raised $11.4 million across the Australian, Botswana andLondon markets for the purposes of funding the feasibility studiesfor its Maun Copper project in Botswana.
  7. On 20 September 2007, the company announced the appointmentof Mr Christian Heili as Manager of the feasibility studies for itsMaun Copper Project in Botswana.Future DevelopmentsOther than as referred to in this report, further information as tolikely developments in the operations of the consolidated entity andthe expected results of those operations would, in the opinion of thedirectors, be speculative and not in the best interests of theconsolidated entity.

Directors Meetings

During the year, ten (10) meetings of directors were held. As well as formal meetings of directors, executive and non-executive directors are in frequent communication by way of telephone.

Review of Operations

The directors continued to operate the consolidated entity in the best interest of the shareholders.

Financial Position

The net asset position of the consolidated entity at 30 June 2007 was $6,039,685 (30 June 2006: $2,179,222).The consolidated entity has written off $Nil (30 June 2006 :$1,979,534) on exploration during the year.

REMUNERATION REPORT

This report details the nature and amount of remuneration for eachdirector of Discovery Metals Limited.Remuneration PolicyThe remuneration policy of Discovery Metals Limited has been designedto align director objectives with shareholder and business objectivesby providing a fixed remuneration component and offering specificlong-term incentives. The Board of Discovery Metals Limited believesthe remuneration policy to be appropriate and effective in itsability to attract and retain the best executives and directors torun and manage the consolidated entity as well as create goalcongruence between directors and shareholders.The Board's policy for determining the nature and amount ofremuneration for Board members is as follows:The remuneration policy, setting the terms and conditions for theexecutive director was developed by the Board. All executives receivea base salary (which is based on factors such as length of serviceand experience), superannuation, options and incentives. The Boardreviews executive packages annually by reference to the consolidatedentity's performance, executive performance and comparableinformation from industry sectors and other listed companies insimilar industries.The Board policy is to remunerate non-executive directors at marketrates for comparable companies for time, commitment andresponsibilities. The Board determines payments to the non-executivedirectors and reviews their remuneration annually, based on marketpractice, duties and accountability. Independent external advice issought when required. The maximum aggregate amount of fees that canbe paid to non-executive directors is subject to approval byshareholders at the Annual General Meeting. Fees for non-executivedirectors are not linked to the performance of the consolidatedentity. However, to align directors' interest with shareholderinterests, the directors are encouraged to hold shares in DiscoveryMetals Limited. Furthermore, and subject to approval by shareholdersat a general meeting, directors are granted options to acquire sharesin the company.Performance Based RemunerationThe company currently has no performance based remuneration componentbuilt into director and executive remuneration packages.

Director and Executive Remuneration

Details of remuneration provided to directors who include the most highly remunerated executives for the year ended 30 June 2007,including payments made to companies.

Details of remuneration provided to the consolidated entity's next most highly remunerated executives for the year ended 30 June 2007, including payments made to companies.

Employment Contract of Executive Director

The employment conditions of the Managing Director, Mr J Read, areformalised in a contract of employment which is reviewed annually. This contract may be terminated by either Mr Read giving at least onemonth's notice in writing or Discovery Metals giving at least sixmonth's notice in writing. The Board gained approval at Discovery Metal's 2006 annual general meeting for Mr Read to participate in the issue of 3,000,000 unlisted options at various exercise prices

Environmental Issues

The exploration activities of the entity re subject to environmentalregulation under the laws of the country in which those explorationactivities are conducted. Currently, this includes Australia and Botswana. The environmental laws and regulations of each countrygenerally address the potential impact of the consolidated entity'sactivities in the areas of water and air quality, noise, surfacedisturbance and the impact upon flora and fauna. The directors arenot aware of any environmental matter which would have a materiallyadverse impact on the overall business of the consolidated entity.Indemnifying Officers or AuditorDuring or since the end of the financial year the company has givenan indemnity or entered into an agreement to indemnify, or paid oragreed to pay insurance premiums as follows:The company has paid premiums to insure all of the current directorsagainst liabilities for costs and expenses incurred by them indefending any legal proceedings arising out of their conduct whileacting in the capacity of director of the company, other than conductinvolving a wilful breach of duty in relation to the company. It isa condition of the insurance contract that the amount of the premiumis not disclosed.Proceedings on Behalf of the Consolidated EntityNo person has applied for leave of Court to bring proceedings onbehalf of the consolidated entity or intervene in any proceedings towhich the consolidated entity is party for the purpose of takingresponsibility on behalf of the consolidated entity for all or anypart of those proceedings.The consolidated entity was not party to such proceedings during theyear.

For further information:

Posted by Farouk Pandor - Natural Resource Management Consultancy at 9/29/2007 09:26:00 pm

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